Listen, Understand and Collaborate: The New Approach to Procurement
When procurement works well, it works for everyone.
But how do we get there when our needs and goals are so diverse, even within a single company or department?
Sylvie Noel is the Chief Procurement Officer of Covéa, the leading French mutual insurance company employing more than 25,000 people in the service of over 16 million policyholders. She’s also president of a professional association of 122 CPOs who work across sectors on a global level. We caught up with her to discuss her personal insights on the future of procurement and the changes we can all be making now to ensure we stay intuitive, innovative and flexible.
When we talk about optimising procurement in a strategic sense, what does that mean for you personally?
“First of all, I think in any company we have to have a clear overview of what procurement is doing and how far its reach has extended within the company, because sometimes the reality is quite different from your expectation. In most cases, getting that overview requires an audit of sorts, which involves listening to a wide variety of stakeholders, to the procurement team itself and ideally also to external suppliers. It’s very interesting to survey different types of people in the same way, from those who are working heavily with procurement to those who are less directly involved. That’s what I find provides the best overview.
For me, it’s vital to involve all relevant parties, including accounting, legal, controllers: anyone who participates in the procurement process, whose work impacts the results of your final negotiation. From there you can get a true overview of how procurement works within the company, what it covers or doesn’t cover and what all stakeholders really think about it. Do they see procurement as something simply mandatory, bound by regulation? Do they see any added value that procurement brings? If so, what kind of added value?
That’s where you can start within your company. The next step is to optimise what you have seen and heard. This is where we can improve upon accuracy and compliance. In procurement, we’re now dealing with many diverse regulations across different countries. You might see this as a challenge to be overcome, and of course it is difficult to deal with, but personally, I would say that regulation itself can offer a wonderful opportunity. It gives you a chance to work with people who might previously have been reluctant to work with procurement, who now, thanks to regulation, understand the added value which procurement can provide.
To me, ‘strategic’ optimisation comes down to working on ways in which procurement can offer real added value. What should procurement be doing, where and how should it be done? It’s about the benefits it can bring to every type of stakeholder. That might well mean working in different ways from what we’ve always been used to. It doesn’t mean we don’t do the work, it means we work with a more precise and relevant focus.”
What’s your approach to managing risk when it comes to working with third-party suppliers?
“We’ve been talking about regulation and of course supplier risk management does involve regulation because it’s mandatory for everybody, but it’s also about much more than that. Considering regulation alone would be much too easy! We have to look beyond regulation to get the most complete view. That’s how we can understand which supplier might pose a risk for our business. Whether we’re talking about a product or a service; if we stop working with that supplier tomorrow, what would be the consequences and how could we deal with them?
The right approach will always be tailored to your business and your industry. If you’re working with raw materials or producing something, for example, you always have to have a backup option, so you’re covered in case the companies you’re working with have issues with their own supply. What I think is crucial is to test new potential solutions, even if the systems which are already in place seem to be running smoothly. There may always be a way to do better or feel safer. The same thinking applies when it comes to procurement of services. Naturally, many services are provided internally. But many are also, for whatever reason, secured from third-party suppliers. It’s crucial that we manage our supplier relationships in adaptive ways in order to mitigate the huge risk which comes from putting our trust out there.”
Across industries, we’re facing rapidly evolving markets and find ourselves racing to play catch-up. How has this impacted on the way procurement works?
“In the past, procurement has tended to focus first on acquiring hard skills: people who have perfect knowledge of processes, risk, stakeholders and so on. But the landscape has changed. Now, we more and more form relationships as business partners. We’re co-operating with stakeholders and perhaps also with suppliers from the very beginning, creating a common project together.
It’s now much more a question of listening, of adapting, of providing and sourcing solutions. Of course, we still need hard skills, but those are generally easier to acquire. It’s more of a challenge to find people with soft skills who are able to change their ways of thinking and behaving, who can work cooperatively and also as leaders. It’s much more complicated and it requires a completely different mindset.”
In what ways can tech tools sustain compliance and transparency?
“During my time at Covéa and throughout my career, implementing a management system has never been an end goal in and of itself. It’s always a means to an end, a way to sustain and have a clear overview of the procurement process, so we can enhance added value where possible.
At Covéa we have a purely digital process tool which covers absolutely everything, starting from the import of the budget right through to the final purchase orders. We have details of all suppliers in that tool, as well as evaluations of those suppliers and all the tenders which have been sent. All the changes made to any given file by any specific person are sent as notifications through the tool’s inbuilt chat system. Everyone naturally has a complete view of the entire process.
In the past, there has been a lot of talk of the so-called ‘black tunnel’. People complain that when you go through procurement you enter a black tunnel of confusion, with no transparency. That black tunnel is a thing of the past. You can now see with a single click where you’re at within the process; whether the tender has been sent, whether we have a problem with the supplier, whether there’s a legal issue, anything.
Not only can you see what’s happening, but you can also immediately get involved. That intuitively leads to a better quality of service. In concrete terms, if one person from my team has a problem, anyone else on the project can look into their files to check and understand what’s happening. All the information you need is at your fingertips, which gives an excellent view of both compliance and quality of service.”
What role do you see AI playing in the future of procurement?
“AI will be playing a huge role in the future of procurement, I’m convinced of that. We’re already working on a couple of ways in which we can optimise our processes to eliminate anything which is non-useful. When it comes to sourcing, for instance, we’re mostly either searching online or visiting exhibitions to try and find new suppliers. Now we can work with databases which use AI to provide us with keywords related to the best supplier for any given product or service. It’s a whole new way of working.
Another area where AI can play a huge role is contracts. When we’re working on contracts, we see that due to GDPR and other regulations we have to adhere to, we need to have a lot of information at our fingertips which can be accessed quickly and easily. Again, we use AI to streamline this process entirely. AI allows procurement professionals to work not less but differently. We have more room to focus on discovering and implementing that added value which is so crucial for stakeholders and for the company itself.”
How could a company begin to devise and align shared goals for business and procurement?
“My ideal solution is already being put in place at a number of companies. The idea is to come together at the beginning of the year, when we’re working on the new budget, and to agree on a set of shared goals. Let’s say we want to create a new product or we’re looking for a new solution. Which KPIs can we share between us? What are our common wants and what are the biggest priorities: revenue, compliance, innovation or something else?
Achieving that alignment is crucial. I can see it beginning to happen at some companies within the industrial sector and I really hope I begin to see it in other companies across different sectors. For me, sharing goals and ensuring we look in the same direction is the key to any company’s success.”