Why B2B Procurement Teams are Leaving up to 30% of Top Line on Table - Q&A with Herbert Brecheis скачать в хорошем качестве

Why B2B Procurement Teams are Leaving up to 30% of Top Line on Table - Q&A with Herbert Brecheis

Why Procurement Teams Are Leaving up to 30% Of Their Top Line on the Table Herbert Brecheis is the CIO of Chain IQ, a leading B2B marketplace operator, and Tradeshift partner. He took time to speak with us during a webinar we hosted, exploring both the challenges and opportunities procurement leaders face in a rapidly changing business landscape. Watch highlights from our interview with Herbert below, and read on for more insights from our conversation. What do you see as some of the major drivers for digital transformation across procurement? We’re moving fast from an analog world into a digital one. That brings with it a number of new considerations, such as the potential for new levels of transparency in terms of pricing. Put together with other significant trends, such as globalization, we’re seeing immense pressure on margins. Margin erosion is one of the key catalysts for transformation so that businesses can continue to meet their profitability targets. But that’s not all. Issues such as climate change and geopolitical uncertainty are triggering a wider shift in our priorities and values. That’s driving a reappraisal of how and where we do business and with whom. These are all issues beyond cost-savings that demand fresh thinking and a different approach. This is where B2B marketplace operators like Chain IQ come in. Are there specific categories of procurement that are ripe for innovation? Procurement is high on the agenda for businesses in every sector. But indirect procurement remains a relatively neglected space. When we’re speaking to prospects, we typically see that they’re leaving anywhere between 5% and 30% of their top line on the table just by not paying enough attention to indirect. The journey to world-class procurement often starts with cost savings, but it quickly goes beyond that. For example, customers look to us to help them meet regulatory requirements and uncover market insights. We help clients meet their ESG targets. Indirect procurement has become a strategic issue for our clients. For the vast majority of prospects we speak to, it’s clear that indirect procurement is not their core business, and there’s a really solid case for outsourcing to a company like ours. For us, it’s core business. We see more and more that procurement teams will look to outsource indirect procurement to a company like ours. How can procurement teams elevate their role in terms of value creation across the wider business? It starts with the C-Level in the organization. Procurement teams need to have an acute understanding of the objectives that are formulated at the C-Level and how they can support that. Going back to the 5-30% of savings that’s left on the table, that’s a good example of a shared objective. In other situations, shared objectives might tie back to compliance or adherence to strong ESG criteria. Aligning these objectives from the outset and then delivering against them gives procurement teams a much greater opportunity to secure their seat at the table. What makes the marketplaces model such a compelling proposition for procurement professionals? I like to frame the opportunity by calling out my ‘three Cs’ Competitiveness: We do indirect procurement at scale, so we’re creating a lot of extra purchasing power by volume bundling. That’s not something that businesses can do themselves. Compliance: A lot of what gets left on the table comes down to a lack of control. People just go off and purchase what they need outside of any approved route. This loss of control has real consequences. A report by the Hackett Group found that negotiated cost reductions lost through maverick spending could account for up to 16% of all spend. Convenience: When employees put in a purchasing request, they don’t want to go through a complicated and bureaucratic process. What they really want is the kind of experience they get at home when they’re purchasing online. The really cool thing about marketplaces in B2B is that the user experience is every bit as good as in the consumer world. In fact, the B2B user experience is even more convenient because you don’t have to pull your credit card. Your buying credentials are already in the background, so every purchase goes against relevant cost centers automatically. Chain IQ has found huge success as a marketplace operator. What’s your secret? Technology is a key ingredient, and that’s taken care of by Tradeshift. What you also need for a successful marketplace is access to a community of buyers and sellers. If you start with a green field, it will be very hard. You could easily end up in a kind of chicken and egg situation where buyers won’t join until there are sufficient sellers and vice versa.