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The impact of digital transformation and creativity on the future role of procurement

Where is the procurement function in its transformation journey? And what does its future look like?

Episode highlights


Where procurement is in its digital transformation journey
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Defining outcomes rather than requirements
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The breadth of procurement's scope to add value
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The creative challenges for services procurement
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Innovation and the application of new ideas
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Posted by: ZivioReading time: 76 minutes

With Jason Pereira, Partner & Procurement Lead, John Lewis

00:00:00 - The journey through procurement at John Lewis
00:07:30 - Where procurement is in its digital transformation
00:12:45 - The breadth of procurement's scope to add value
00:20:20 - The creative challenges for services procurement
00:29:00 - Innovation and the application of new ideas
00:36:00 - Defining outcomes rather than requirements
00:46:45 - The role of data in creative problem solving
00:50:00 - Responsibility for service delivery and supplier relationships
00:56:40 - Moving procurement away from being seen as a road block
01:06:00 - The biggest hurdles for procurement

Transcript

Jonny Dunning:
0:00       Excellent stuff. Okay. So very pleased to welcome Jason Pereira from John Lewis to join me for a podcast, actually in-person for once, which is super exciting to talk about digital transformation and creativity and the impact of these two things on the future role of procurement. Firstly, it’s nice to be in an actual studio, isn’t it?

Jason Pereira:    0:24       Yes. And thank you, Johnny for the opportunity. And it’s a very different experience for me. So yeah, it’s very nice, really different.

Jonny Dunning: 0:32       Yeah, it’s very different for me as well. Normally, I’m stuck in my kind of loft room with a strangely angled ceiling talking into a Zoom call. But I must admit, this is a really, I liked the idea of doing podcasts like this. It’s nice to be able to interact over Zoom and things like that. Sometimes it’s difficult to pick up people’s kind of physical cues and things like that as well in terms of the conversation. But yeah, let’s see how it goes.

Jason Pereira:    0:54       I’ll try to moderate my looks as we go through.

Jonny Dunning: 0:57       Excellent stuff. So we’ll just start with you want to just give us a bit of background about what you do at John Lewis? And just a little bit about your journey in the procurement industry.

Jason Pereira:    1:08       Yeah. So John Lewis, I’ve been with John Lewis for 10 years now, which is the longest term I’ve been anywhere in my career. But at John Lewis, I run a goods not for resale, our procurement team, our focus area is retail and professional services. So it actually is quite a broad remit. So we cover all the services we buying for the John Lewis business, for ranging from consultancy, to contingent labor, travel to banking, but also we support the retail operations, their long consumable lines that we need in regards to running the retail operations. And this is from carrier bags through to container pots, or, dare I say, the dreaded toilet roll. So it’s a wide range of activities.

Jonny Dunning: 2:02       And how is it, in terms of the way that the procurement setup is broken down within John Lewis, how is that kind of structured? Because it sounds like what you’re doing will go across some direct and some indirect as well. Is that correct? Obviously, primarily indirect.

Jason Pereira:    2:19       Yeah, it’s primarily indirect. But you’re absolutely right. We support areas for John Lewis around financial services, for example, or some services are in the retail space. But we tend to be focusing on goods that are not for sale. Okay. So from that perspective, it is very much indirect. 

Jonny Dunning: 2:41       Right. Okay. Cool. And what sort of path did you take? Am I right, saying you were kind of finance at university?

Jason Pereira:    2:49       Yes. I mean, my qualification is finance marketing. But it’s a strange path. No one leaves University thinking they’re going to go into procurement. And the old joke is Chandler Bing from F.R.I.E.N.D.S. They always say that his role was procurement. In technically is IT procurement. But no one actually ever realize what that was. And no one actually ever talked about it. My path into procurement is through the automotive industry. So I started when my first roles were in the automotive industry in supply chain, where we provided components to what we tend to be tier one suppliers. So engineer or engine components, plastic components, for the automotive industry back in the 80s, was a good route into procurement. I then bounced along a number of different roles in the automotive industry. And then from that, sort of embarked on a role in what I tend to be indirect. So buying services, as opposed to buying products, which I found much more interesting. And why I found it much more interesting was because you had a degree of creativity in regards to the servicing. So it’s not so much buying against a technical drawing or a component list, is actually solutioning what the business wants, and actually questioning maybe what the business wants? The old adage is that if you come to me and say, “Can you go and buy me a pen?” In the direct field, you tend to buy exactly what you’re asked to buy. In the indirect field, you actually start to question what are you actually looking for? Is it a pen? Is it a pencil? Is it some method of recording information? It could be something completely different. And that’s why I found interesting and that’s why I’ve stayed in the industry for 30 years now.

Jonny Dunning: 4:45       It’s really interesting point, because I sometimes get the feeling that when it comes to services, categories or services areas of procurement. For some people, that’s an area they’d rather avoid because of the complexity to it. Whereas, as you say, opens up this a whole new opportunity for creativity. Do you think it’s a certain type of person that’s more suited to that type of area?

Jason Pereira:    5:14       Definitely! I think it is more in round Value Engineering then procurement of a particular function or a particular product. It’s that curiosity and that creativity, I think that person has to be naturally curious, has to want to question the boundaries, has to want to be able to think how can I improve in either what the services I’m buying? Or the objective of the business? That’s the type of person that sells in this sort of procurement field.

Jonny Dunning: 5:50       And would you agree with the suggestion that maybe procurement has come later to services, in terms of some areas of the business being a bit more protective, whether it’s marketing or legal or other areas, maybe not letting procurement in so much? 

Jason Pereira:    6:04       Absolutely. So everyone buys services in their private lives, then they everyone buys travel, everyone buys insurance. So everyone believes they can do the same for a business, why isn’t any different? And in some circumstances, it isn’t. But it’s, I think, having that ability to cross fertilize ideas, having that ability to pull together the right questions, and actually question what the motivation of the business is, and also what the objective of us moving forward? That’s where real value add from a procurement person will come to show.

Jonny Dunning: 6:45       Yeah, so one of the things that I’m really excited to talk to you about a little bit later is data. But I think it kind of ties into what you’re saying about creativity, adding insights, providing value. It’s critical to understand the information that is available when you’re buying services. And I think, in some ways, that’s a lot harder to capture than information around what you’re buying in the goods arena. And part of that comes down to digitalization or digitization. So digitization being data in a digital format, digitalization being taking a process and putting it into a kind of software workflow. That’s obviously part of the kind of digital transformation journey. If you look at procurement as a whole function, where would you say it is in the kind of evolution of its digital transformation journey?

Jason Pereira:    7:44       It’s very early days. We were talking earlier, over a coffee before this, I believe b2c is much more advanced in adopting innovation and change. b2b is always decades behind. I relate to digital transformation. Like for example, payments, in the commercial world today. 10 years ago, cash payments, check payments are still very much recognized as a method of payment. Digital Transformation is effectively us transferring from that cash to wireless, to the contactless payments, and that’s a very similar thing. Think about now, hardly anyone goes into a bank to pay in a cheque. Hardly anyone pays a cash nowadays. 

Jonny Dunning: 8:38       A lot of places won’t accept cash. 

Jason Pereira:    8:39       A lot of places won’t accept cash. So that’s in effect, what digital transformation will do through procurement. We will take the information, we will take those transactions from the transaction of cash and cheques and put into the digital world that freedom of information. Yes, is going to mean changes for us. Yes, it’s gonna mean changes for roles. But it also means a lot more opportunity. So us going back to your point of the question, where the early stages, yet, there’s a lot more to come, but that we shouldn’t be afraid of it, we should be embracing it. Because I think that will free the procurement teams and the worlds up to actually go and face what we actually should be good at is that creativity, and that ability to really add value and change.

Jonny Dunning: 9:31       Yeah, I definitely see it as pushing procurement up the value chain. Because as you say, the more you do digital transformation, digitalization, you’re always going to be automating what were previously manual processes. As you said, before, we were chatting about this earlier and you were sort of saying, “Back in the day, jobs like typist or that, there were certain roles that there were, that just don’t exist now.” And that’s always going to be the case these things will evolve. But it allows hopefully this higher function of actually get more data, analyze more data, use the value of that data. And I’ve always thought that the way that procurement sit at the kind of intersection of internal workings and external supplier relationships, you’re at the kind of fulcrum of a lot of amazing data. For example, if you having a consulting operation going on, you’ve got the internal feedback on what they’re trying to do and how well that consultancy is doing. And you’ve got the external feedback about how that consulting firm are trying to work with your internal team. And stuff that they might notice about the way the internal teams operate, or the way that the business is thinking. And within procurement, if you’re involved in that relationship, then you’re privy to both sides of that information. And I think that’s quite unique, really.

Jason Pereira:    10:52     It is unique. But I think that’s also probably one of the failings of procurement, as being that gatekeeper of information, that we know where best to source the set product, we know how to enact the process within the organization, and effectively being that gatekeeper to make it work. Yes, that’s been a fruitful role for us in the past. But is it really what we want to play in going forward? I would argue not. I would argue, let’s have a freedom of information in terms of the process flow. Let’s automate that process. Yes, use the adoption of AI, for example, for identifying the right vendor to supply the right service or good, let that happen. Where we should be focusing on is a value add. So let’s think about creatively is, how do we actually make things better? How best can we drive innovation in the business? Let’s ask those questions and play in that space, rather than the transactional space.

Jonny Dunning: 11:55     Yeah, and, that’s really where the digital transformation is about technology, supporting that creativity, taking away the kind of stuff that needs to be automated, providing the data and allowing bright people to use their insights to add value to the business. So as an industry, procurement is fairly early in its evolution of digital transformation. But I feel like as an industry, it’s kind of a fairly new in or as a role of function, I feel like it’s fairly new when you can compare it to some other kind of corporate functions, in terms of the breadth and the scope of what procurement deal with now. Would you agree with that, in terms of comparing it to like, I don’t know, finance function or sales and marketing, for example?

Jason Pereira:    12:47     Yes. I would agree with that. I mean, finance marketing, I think have been around industry in business for a good number of years. And I think well established in terms of people understanding what their roles are, and how they contribute to the success of the business. I think procurement, legal, you could even argue probably in that same sort of space. Where do you need them? What’s the value of them? Are they anti-sales? For example, I’ve often heard the label before. And it shouldn’t be any of those. It should be about streamlining a process or streamlining the ability of the business to meet its objectives. And I think that’s down to the individuals in the function as well. Goes back to my previous point, we can quite happily play in that transactional space being the procurement police that direct traffic of requisition to sourcing to vendor. And, we will find ourselves lost in the future because inevitably, digitalization, transformation will actually change that. If we then move up the value chain, and start to think about how we can add our creative input, our knowledge, our commercial acumen to the success of their business, then we can start to have a better role within the business and a better reputation, probably, across industry.

Jonny Dunning: 14:22     Yeah, and I think services, indirect procurement and services due to the level of complexity of what you’re buying, not necessarily the supply chain complexity, which is I feel almost like the reverse when you’re looking at goods and materials. Surely, that’s the area to apply that most effectively. I mean, it’s, firstly, the growth in the spend on services is so huge. If you look at I know, insurance and financial services, it’s in like the 90, high 90% range, in terms of what they spend is on services. And on average, I think globally, it’s something like 55% or something like that or from around 50% on services across all industries. But it’s where a lot of the complexity lies, I feel.

Jason Pereira:    15:06     I think you’re right, I think equally as industry adapt to the new world and effectively industry to 4.0, I think we’ll find more complexity across a range of areas. Labor is a particular one, with recent changes 35. I think that puts... 

Jonny Dunning: 15:30     Which changes?

Jason Pereira:    15:32     Well, I think that then create another whole dimension. Yeah, in my area, we talked about total workforce management. And you don’t look at employees versus contractors versus consultants in order to fill the role you look at what is the function you actually want to create? And how best can you utilize that function, or that activity, as we face into new world? And dare I say millennials, they’re not necessarily interested in joining a business and working for 10 years or longer. They’re interested in about the experience and how this adds to their own particular CV or development. So from that perspective, we have to think differently, we have to think about contingent labor, as being across all those areas of activity in terms of employees, consultants, contractors, and how we fulfill that role. So that in itself creates where it wasn’t before a degree of complexity. And that’s where I think where procurement can start to add as being a solutions architect, in terms of how best we can fulfill those requirements of the business.

Jonny Dunning: 16:57     Yeah, I mean, if you look at the kind of growth of the gig economy, freelancing, independent working, that kind of thing, alongside other factors that have maybe come out of the pandemic, where organizations have looked more towards, “Well, I just need a thing done. It doesn’t matter where somebody is, or when they’re doing it, I just need a thing to be done.” Are you seeing more of a trend towards addressing the task or the problem that needs solving rather than saying, this is a role? Or is that kind of, is it split? How much of a weighting do you see towards just an output based process where it’s starts with what do we need to get done?

Jason Pereira:    17:40     I do think task orientated delivery is going to be much more focused across the businesses in very near future. And I think with the pandemic, obviously, hopefully, we’re through that now. And the change that’s happened to the working environment, people are working from home the fact where we said at the very start of this podcast, it’s nice that we’re physically in the same room breaks that relationship between person-location function. So if you then break that relationship, do I you need to be in the same country? Do I need to be doing it in real time? Is it the fact that I’m really driven by the task rather than the relationship with the individual? And I think that is not only the future, that is something we should be embracing, because that means that we as a business can be much more dynamic in terms of delivery, but also innovation and drive. I’m not constricted to what’s available to me in my 60-mile radius of an office location, I can get the best people for the best price for the best delivery in order to carry out that particular function. 

Jonny Dunning: 18:54     It’s quite liberating really, isn’t it? 

Jason Pereira:    18:56     It is, but it’s a different mindset. And I’m not saying as a business, we’re exactly there. But that is what everyone is believing is in the near future. And I think, next five years or so I think we’ll see a much more Task Orientated Adoption Model then than we have in the past. Who would have said two years ago, we’ve all been working from home?

Jonny Dunning: 19:21     Exactly. I’ve been involved with stuff around the gig economy and output based task based working for a few years now. And it’s incredible to see how much the pandemic kind of brought that forward. It just accelerated it. But just going back to, so obviously, on the digitalization side, procurement is a newer function than some it’s relatively early in its digital transformation journey. And I think, I would say to a certain extent, the digitalization of how organizations procure goods and materials is more advanced than, for example, the way they procure services because it’s just a different thing. But also, if you look at the technology suite available in market, that marketing segment is massive. It’s a giant industry, it’s very well established in procurement. It’s kind of an emerging area. So the digitalization side of it is clearly important factor. It’s something that’s happening. But I’m very interested to talk to you more about the creativity side of it, because it’s really an answer as to how that applies to the people who are doing great things in procurement. But also, I’ve been no look at that through the lens of your particular business, in your particular industry, and the type of challenges that you face where creativity can be applied, because there must have been some things during the pandemic that required some creativity from you guys, in terms of how you were just in the type of business that you are?

Jason Pereira:    20:54     Yes, I mean, absolutely. The pandemic put all businesses under a huge degree of stress. And especially being in the retail industry as we were, and the way we’re split between our grocery section and our general merchandising section. They’re on their separate paths. So we were very lucky, because we had or have a very much of an online presence. So we were able to keep that open during the pandemic, and maybe closed some of the John Lewis stores when we needed to. But the Waitrose stores stayed open. So supply chain wise, a lot of the teams are focused on effectively just ensuring that the stores remained open and had the right chemicals and the cleaning equipment, and we have the right supplies. But also feeding into the online delivery, we were found ourselves under a huge amount of pressure in terms of bringing in contingent labor to operate in our warehouses and support the business going forward. I think in regards to the creativity side, our business is going through a huge degree of change. We’re 150 odd year plus legacy business and seen significant degree of change. But equally, retail is changing. And as we diversify as the business, from retail to other areas. We’re talking about built around, we’re talking about financial services. We are also requiring procurement to support those functions as well. In regards to how we function and where the creativity comes into play, I think this is really a key challenge for everyone in procurement. It’s, as you rightly said, is well recognized that procurement has a role, let’s say, direct procurement. In regards to services, it’s one where we are still very much trying to establish ourselves in some degree in new areas, be it financial services for us as a business or for other parties around support services for people, as well as breaking into the areas like marketing, for example, where we are supporting something or wished. Additionally, the stakeholder has effectively looked after themselves. So we are effectively bringing a different thought process to procurement and different views in terms of ideas that we’ve seen elsewhere. As I mentioned before, cross fertilization of ideas from different categories or different areas of spend, and maybe overlaying those into new areas and say, “Well, have you thought of this? Have you thought of that? And how we can do things differently?”

Jonny Dunning: 23:58     Do you find that that cross fertilization? So obviously, there’s the ideas side of it, what about the supply chain, in the sense that you’ve obviously got different areas of the business? And even in like different departments? Do you find as much cross fertilization or that awareness of the supply chain across the whole business? I imagine that’s quite difficult to do.

Jason Pereira:    24:18     Yes, I think procurement itself is going through for a change. So traditionally, we would be in that transactional sort of delivery hub. And then I suppose over the last 10, maybe 15 years, we sort of moved into the next field, which is traditionally what you’re taught category management. So we started to analyze the market and we start to provide that information back into the industry or back into the business around horizon planning and what the art of the possible. Then next step would be the supply chain. We started looking at the end to end delivery of this product or service and start thinking about innovation change in regards to supply chain, the next step from there would be value chain. And from the value chain, you are starting to now think about how can procurement contribute to the objectives and values of the business, and how we can start thinking about the relationships we have? And also the methods of not only procurement, but utilization of the services for the business. Ultimately, where we want to be, in the innovation, we actually want to be the go to place where effectively procurement can start to introduce innovation to the business. And we talked about cross fertilization of ideas. That’s where we should be looking to add true innovation, where we’re a conduit into the business for people who have got budding ideas or for some new technology, and we can effectively start to take those concepts and introduce them into the business with a potential solution to a problem that the business may be facing. So that’s where we need to be going. It’s around the people and the drive of people in procurement to take us from the areas where traditionally feel comfortable in which is that digital delivery stroke category management, through to supply chain, value chain and ultimately to that innovation. 
Jonny Dunning: 26:34     And how well do you feel that is supported, not only in your own organization, but when you talk to your peers, how well do you feel that journey is supported within organizations by the C suite effectively?

Jason Pereira:    26:46     Yes, I think it’s down to us to sell the concept. So my own organization, we’re definitely knocking on the door in regards to value generation. Because in my own organization, procurement, we have procurement policies, where you can say there is a strong mandate that a degree of spend should be going through procurement. But I think, my personal feeling is if you depend upon a mandate or depend upon the policy, then you’ve lost already. It’s around having the hearts and minds of the business to say, what is the value that procurement can bring? And I think this is where we tasked our team to go forth and actually identify innovation, identify potential solutions to problems that the business are face. And that’s what we need to be thinking, not in terms of product or service, but solutions to key issues in order to unlock the business objectives.

Jonny Dunning: 27:50     Yeah, and when you look at that innovation, for me, so you’re acting as a conduit for innovative suppliers to come in and solve problems, whatever shape or size though suppliers may be. I think that’s of critical importance. And I think a lot of companies, pardon me can tend to overlook innovation, they might have it as a tick box of, you’ve just, someone’s just beaten up a supplier and a quarterly business review. And at the end of it, there’s, “Okay, five minutes left, give me some innovation in the supplier crushed in the corner.” I feel like a lot of it comes down to that supply chain visibility as well, because the innovation side of it is important, critical. But it needs to be made visible across the business. But also I think that then if you have got that visibility, it then opens up the door to be able to ensure that you’ve got access to a diverse supply chain, sustainable supply chain, maybe build a bigger supply chain, create that kind of resilience. If you can make that visible and control it, then as you say, you’re a gateway for the suppliers to be able to add value to your business to add capacity and add capability. But I think I tend to feel that a lot of compensations would suggest to me that there is not really that much visibility, particularly in areas like services where it’s less likely to be catalogued efficiently, it can sit in silos within different parts of the business of particular suppliers that could add innovation in other areas, for example, do you think would you agree?

Jason Pereira:    29:25     Yes, I mean, innovation doesn’t necessarily mean new suppliers. Innovation exists in potentially in your current supply base. I’m off the view. There’s very few new ideas. Ideas already exist. It’s having applications for those new ideas. And that’s where I think procurement can add value in looking and understanding what is out there and maybe applying that in the right situation. What’s difficult for us, as you rightly touched upon, and most businesses is having those conversations with supplier base, both ones that are in existence and new avenues, and actually having an open conversation. Not only you know, what’s new, but also having maybe some shared objectives in regards to what is troubling me? What is troubling my business? Dare I say, what keeps us awake at night? And having that joint ability to have shared information, but also sharing solutions potentially will help to resolve those issues. That’s partly from a supplier relationship management point of view that we need to be looking at, and having those more in depth conversations, rather than having a transactional view of the world. Equally, I think it’s tasks that for procurement, the side that you’re right, it’s not a 10-minute conversation at the end of an hour’s meeting. This should be 30% of our activities should be driving innovation, and horizon planning. So what are the issues that you’re facing today? But what are the issues we’re facing in the near future? And what is out there, not only in my industry sector, not only as Innovation Development for that particular issue, but what is out there, broadly speaking, can actually be resolving these problems will be pacing, is that degree of agility that we’re going to need in order to be successful going forward?

Jonny Dunning: 31:39     Yeah, and I think it’s for some organizations or for some procurement teams, it’s a bit of a mindset shift. 

Jason Pereira:    31:44     Of course. 

Jonny Dunning: 31:45     But I think it very much ties into what you were saying about workforce, and how organizations get work done. Because extended workforce in all its forms. I think a lot more organizations are now just taking a broader view of the overall organizational capacity and capability, which extends beyond just the core team, the core set of permanent employees, for example. So that’s where working really closely and building great relationships with your suppliers. I think organizations are starting to be more open, as you say about, for example, these are the challenges, what do you guys think? I’m sure there’s some incredible innovation that can be tapped into that, if people aren’t asking the question, suppliers might not volunteer it or they might not realize the requirement for it, or they might just not feel they’re in a position to put that forward. So it feels like kind of opening the arms a little bit and accepting them as a wider part of the business.

Jason Pereira:    32:45     Procurement can’t be painting by numbers. It isn’t about coloring the box in a particular color, and then moving on to the next section. It has to be a sharing of ideas, sharing of concepts and having open ended questions. And you’re absolutely right, it is a change of mindset, the solutions won’t come from within the business, it won’t come from within the teams, it is out there. But out there could be anywhere. And you only know in regards to having those open-ended conversations. But also, which goes back to your point nicely, having an ecosystem and platform that will enable that and understanding that supplier service X may actually have the solution for Category B. But having that ability to across the industry on and the businesses to see what those are the possibilities?

Jonny Dunning: 33:44     Yeah, I’ve seen some organizations, certainly the we’re working with going a lot further down the route of things like expressions of interest. So when they’ve got kind of visibility of a centralized supply chain, just being able to just kind of fish in a bit of a larger pool to understand people’s capabilities. And we’ve got some stuff coming up. It’s based around this, who’s interested in this, where who’s this applicable to? And obviously, there’s some cool things you can do around using technology to match a leaving a loose requirement with particular capabilities within different organizations. But before you even get to trying to define a requirement, we’re certainly seeing some organizations just go a bit broader with that kind of thought process, which I guess is kind of is a step in that direction.

Jason Pereira:    34:30     Yeah, I mean procurements. We like to hide behind an RFP or our Xprocess, and we like to produce pages and pages of information in terms of requirements and say, “Well, there you go, what do you? What do you do? What do you propose in terms of fulfilling that need?” It’s not wrong, but it’s not particularly creative, either. Because if you spend pages and pages of documents to define what it is, then you’re already restricting what it potentially could be? And I think having often a lot that open question, in terms of, “This is my problem. What do you propose as being the solution?” Should be much more widely adopted than potentially it is?

Jonny Dunning: 35:13     And how do you feel that procurement can best insert themselves as a function into that process. So, for example, if you’re buying an item, goods and materials is fairly clearly defined as to what you’re buying, there’s obviously going to be potentially huge complexities around the supply chains, timings, all that sort of thing. But when you’re buying services, a lot of the time, it’s quite hard to define what it is you actually want. Or you might start with a loose requirement, a stakeholder might need some have a requirement around cybersecurity, for example, and they might not be an expert in cybersecurity, they’re going out to consultancies, who are experts in those areas? How do you think procurement can most effectively facilitate and add value to that process in terms of the requirement definition whether in collaboration with suppliers, or directly dealing with the requester?

Jason Pereira:    36:04     Comes back to my earlier point, part of the success or the piece, I like about services procurement is defining what that potentially is. It comes down to questioning, it comes back to what are you actually looking to do? Are you defining what the requirement is? are you defining what the output is? If you define the output, and there’s different ways of addressing it course, you’re not going to be a subject matter expert in cybersecurity. But you can ask the right questions. And by asking the right question, you can get to find what you’re actually looking to achieve and how you achieve that, then you put that back into the market? This is what I’m looking to achieve, how do I get there? And I think simply as that. Now, I say simple as that, obviously, it’s a lot more complex, but we should be looking at the outcome definitions rather than the actual what it is that we’re looking to define.

Jonny Dunning: 37:00     Yeah, I couldn’t agree more. And I think, you know, we see a lot of really interesting supplier collaboration. At the point of defining that requirement, if you’re going out with a fairly loose requirement, or a requirement that might be iterative, a little bit like a kind of agile process where it kind of develops as it goes. Who better to ask than the experts who are going to potentially be delivering that? And supplier A might have a completely different approach and methodology to supplier B. And, but by having a range of options, where people are know that they’re in a competitive process that allows innovation to potentially come into it even at that stage, where you might be suggesting an outline, or that request might be soliciting, suggesting an outline. And a supplier says, “We potentially got a different way of doing that. We’ve done it elsewhere. Here’s an opportunity.” How much would you see procurement getting involved with the process once that information has come back to the requester? Would it be kind of advising them on their choices? Or how much involvement would you see procurement having at that point?

Jason Pereira:    38:08     So I see procurement being engaged throughout the process. So for helping to define what the outcome is to effectively running a process to support the right selection, through to contracting, even post contracting to engagement. So the teams I work with, for example, depending on the size and the complexity, and indeed the importance to the business, we stay engaged. So post contract, we work on a supplier relationship framework to ensure that any of the longer term relationships that we have, at the beginning of the engagement is at least performing the same, if not better, at the end of the engagement. So it’s one that we would stay with, from cradle to grave. In regards to the analysis piece, that’s the difficulty. Procurement loves to do data analysis, we love to be able to show different charts and different complexities and mechanisms to compare supplier A, B and C and give a recommendation on the best one using different viewpoints. It’s important, but what’s important is the capability of having the right delivery for the right solution. The cost, yes, you need to take different angles, but do I really care that the rate card for supplier A is 10% higher than rate cards fly B? Because if I’m using X number of hours, does that really important? Is that going to benefit the business? Or is there a degree if contractualization I can assure that supply B will deliver my proven concept and, you know, stand by that, in terms of ensuring that it not only delivers the best price, but to the best outcome.

Jonny Dunning: 40:13     Yeah, and I think that’s where it comes into the post contract side of it, which I think is, in my view, an area is it kind of, you know, as organizations become more mature with their functions, they develop along a certain pathway. I feel like the delivery side of it is an area that for a lot of organizations, source to contract. The level of sophistication there, particularly when it comes to services, I feel like the post contract side of it is something that’s...?

Jason Pereira:    40:45     A source contract is literally the tip of the iceberg It’s that gets you to the starting position. It’s post contract, that’s where the real potential is, very rarely does a contract start at the beginning and end as the same at the end. It’s a degree of reiteration. And it’s quite possibly the decisions you’ve made, in order to identify the said supplier or set partner at that stage is based on information looking backwards. I always say, when we look at partner relationships, it’s having that ability to jump off the cliff together, knowing that you’re going to end up something that you probably don’t even know what’s at the bottom of that cliff. But you feel that the relationship you have there is the right relationship, that you’re can face that together in regards to facing those issues. It’s very often you don’t know what you’re going to be facing. And I go back to our point about the pandemic, we’ve had supplier relationships where we’ve effectively leant upon our suppliers to ensure that we could stay operational. Now, who could have foreseen that we would had the pandemic the way that we had, and we were overarching in terms of our supplier relationships to ensure that they could effectively provide us with solutions? Where dare I say, price wasn’t the number one factor at that moment in time is around security supply, is around having that flexibility to turn on a 10 pence piece and go in a different direction, but that their success, or their ability to deliver success for us ensure that we will stay operational during a very difficult time.

Jonny Dunning: 42:34     Yeah. So that, to me, speaks clearly about the requirement for aligned goals, which again, comes back to outputs and outcomes. Because yes, you could look at rate cards, supplier a slightly cheaper than supplier B, and how long is it going to take supplier A compared to supplier B? And what about the complexity that comes up when halfway through the particularly obviously, in services where this complexity comes up, things always change, how is that supplier going to deal with it being a Moveable Feast? We see a lot of people looking at things like win ratio versus average cost overrun and stuff like that. Again, that’s looking at more of the quantitative metrics. But there’s all the qualitative side of it as well. So okay, that supplier took longer to deliver the project. But why is that? Was it due to internal factors? And actually, from a qualitative perspective, did the team feel like that supplier did a great job, as you say, “Working together,” so that it might have taken that supplier longer, but they’re committing more time to your project, your piece of work? So I think that really gets into the nuances of it, rather than just looking at it as a kind of like, very binary situation.

Jason Pereira:    43:47     businesses around relationships at the end of the day. And what we do is we take from a procurement perspective, we take multiple different viewpoints from multiple angles, in order to understand whether we have competence. At the end of the day, it’s competence. So do we have competence in supplier A versus B in order to deliver what we needed to deliver? And it is a nuance, there is a degree of binary data analysis that will have to be there in order to produce the right story to not only our business and our stakeholders, but also to justify a decision. But equally, at the end of the day, there is that still that leap of faith, especially when you’re talking about services, because it isn’t tangible. But there’s that leap of faith and that leap of faith, you need to feel 100% comfortable that you are making the right decision, which is coming back to your earlier point around post contract. Post contract is one of the most important things I think procurement can maintain in regards to a relationship not only to drive in essence is the relationship of procurement within the business, but also to ensure that what has been said during the RFX is actually delivered. And the or iterations of that contract is being developed. So when you then get to the next stage at the end of the three-year term, and you go back out to market, you’re not re-educating yourself and what the requirements are, you’re actively engaged. And you actually know what the future requirement will be.

Jonny Dunning: 45:30     Yeah, and I think that’s where capturing that flexibility is something that technology is kind of catching up with, in the sense of being able to provide that post contract visibility, managing variations and changes, tying it all in understanding performance in real time, procurement, and the stakeholders, whether on the buying or supply side, having visibility when stuffs milestones are running late, why is that? You know, flagging stuff. So, yeah, it just brings the whole conversation together, because otherwise, you just end up with a situation where the CFO comes to the CPO, and says, “We need to cut some spend, let’s look at the consulting spend, all people can generally see is how much they spent with certain suppliers,” PDF stuck in a repository somewhere, it might have milestones, it might not, they might change. So taking that information, and having it in a digital format, and measuring it on an ongoing basis, adds in a whole different layer. But it does require the drivers within the organization and the expertise within procurement to manage that, which leads me nicely on to the point in more detail around data. So clearly, one of the important topics from today’s conversation is about creativity. And that creativity needs to work from certain types of information, in terms of the data that you have access to, and the data that you would like to see, your procurement team and other procurement teams have access to are there any particular areas where you feel it’s lacking, or where it needs improving, or where it adds maybe greater value in other areas?

Jason Pereira:    47:12     I think this data is important. It’s important because in order, so pull together thought processes themes, you need to base that in something you need to understand, so what? And data helps to facilitate the “so what.” The creativity side of it is that if I come out and have a great solution for an issue, I need to be able to embed it into the so what question for the business? Why is it important? What’s gonna change? Is it going to be financial benefit to us? And that’s where the data’s guide comes in. I think the other data side of it, which I suppose to your question, what would I like to see enhanced, is a method of capturing post contract review. Often are not when you ask people, how did supplier A perform, we’re going for a QBR, for example, a quarterly business review, what’s your feelings? It’s whatever they have felt or experience in the last six weeks is often what’s being interpreted. Not the last 12 months or 18 months, it’s never really what’s in the forefront of their mind. It’s having an ability to capture what’s good, what’s bad, what can be improved throughout the duration of the contract? Often not, when people talk about supplier relationships, they talked about performance in terms of delivery. But delivery is one aspect, especially when you’re working in the services field, delivery could be a milestone at the end of a long journey. But how they’ve engaged throughout that journey equally needs to be interpreted and captured. And I think that’s, I think one area of improvement that we would like to see about a simple, easy method to capture from a 360-degree point of view, multiple different points. Now, we try and do that. We are introducing methods to do that. But it’s not a digital sensor, people can’t naturally see what one stakeholder might be thinking of said supplier versus another. And having that overarching view on what the overall 360-degree view of not only supplier relationship, but also suppliers view of the other businesses.

Jonny Dunning: 49:33     Yeah, it’s very interesting. We see a lot of stuff where people are building supply chains and housing that in a digital kind of internal marketplace, effectively, that information can be shared quite often, it’s all internal information, not next, necessarily the view from the supplier or that though that is something that some people are building in. But in terms of the accountability for ongoing performance in project review being placed on the buyer stakeholder. Do you see that as something that people accept quite readily?

Jason Pereira:    50:10     So in my business, it’s not the buyers responsibility, it’s not the procurements responsibility is the business contract managers responsibility, right. And the business contract manager is effectively the key relationship manager within the business. So we, as a procurement function is there to help to facilitate the relationship. But if you’re buying a service, you’re buying it to fulfill a need for you, as a stakeholder, as a budget holder within the business. So I think from that point of view, anything we can provide in terms of an ecosystem structure methodology to help foster that relationship is going to be very beneficial.

Jonny Dunning: 50:54     And do you think it would be well received by those that who would be responsible for maintaining that information providing that feedback? I mean, if you’re digitalizing, the process then a system can say to you, “Oh, that milestone or that invoice has just been approved? You know, how is the performance of the supplier at this point,” based on whatever, qualitative and quantitative factors, the system may prompt them on, do you think that will be well received?

Jason Pereira:    51:20     I think so. I mean, I go back to my earlier point, b2c is much more innovative than b2b. If I look at Uber, for example, you have a rating, when you use Uber, you have a rating that the drivers actually rate you as a customer. So not only do you rate them, but you have a similar rating. I think that’s a very powerful viewpoint. Because often or not, when I talked to suppliers, I talked to suppliers or services, they say, “You’re a great customer, but you’re very difficult to work with. And we can offer you innovation, we can offer you change, but you need to change X, Y and Z,” and often not that’s lost, that viewpoint is lost. And effectively coming back to that joint working relationship. If I can do something different as well, if I can change something that will make the relationship with my supplier easier, and ultimately deliver value. Shouldn’t I be looking at this as well? It can’t just be a one-way street. I can’t keep on bashing at the supplier to reduce cost.

Jonny Dunning: 52:31     Yeah, I totally agree with you. And I think it ties into again, some of the kind of workforce changes is, there’s always the phrase, “The war for talent,” in whichever type of capacity that may be in. And I think that applies to the service and supply chain as well, in the sense that whether it’s from an ethical EVP point of view, if the supplier doesn’t feel aligned with their customer, they may be less inclined to work with them. It is very much a two-way street. So either maybe there isn’t an ethical alignment, or maybe there’s actually that the client are difficult to work with, that could really hinder that supplier from wanting to commit their time to that particular end customer. So yeah, it’s kind of the script gets flipped a little bit, doesn’t it? But again, it’s what you were talking about, arms together and jumping off the precipice and engaging in that journey together. Particularly with the speed of technological change, and the dynamic factors that are operating in the market. People have to take risk and move quickly. And companies can’t operate on their own, they need a good resilient set of suppliers around them. So yeah, I think that’s a very good point about it being a two-way process. Like I say, we tend to see that the information mainly being captured internally at the moment. But I think it’s part of the evolution in the sense that as that builds up, and people are able to more readily see supplier performance based on quantitative metrics against has on time on budget, and to scope at a milestone level throughout their project delivery or KPI level, whatever it may be. As that evolves, it’s going to be a question more about that kind of intersection point I was talking about earlier, where actually procurement can help facilitate a lot of information coming back into the business. If you did this easier, it would massively benefit, you made this easier, it massively benefits your business. We could help you more and help you more effectively if you added this into your process, or if you consider X, Y and Z. So this huge opportunity. It feels like there’s just massive opportunity for improvement. 

Jason Pereira:    54:44     I think the real challenge is that whole ecosystem in terms of free flow of information should happen on its own, it should be self-service. Yeah, it shouldn’t be someone collating data or Asking the question and putting surveys out on a calendar basis in order to capture information, it should be happening in real time, constantly throughout the engagement. So at any point, be at the stakeholder, be it procurement be, at the supplier or anyone else involved in the relationship or the ecosystem, she’ll be able to access that information and actually see any point, the status of the relationship, that’s really where such a tool come into its own.

Jonny Dunning: 55:32     Yeah, that’s some pretty powerful data at that point, isn’t really?

Jason Pereira:    55:37     It is. And it doesn’t have to be infinite. It just needs to be easily captured, easily captured at any point from multiple different viewpoints. But effectively having that degree of automation, really. And I think that’s the challenge in regards to the digital transformation, to free procurement up to go and focus higher up the value chain, to focus on innovation and drive, rather than this gatekeeper or this person who holds information.

Jonny Dunning: 56:15     Yeah. And as you said earlier, the kind of consumer world has, to a large extent solve the problem of getting that information without being too annoying. Yeah. It’s critical, the only the best will survive and get to the Uber kind of size. So just touching on what you mentioned there about moving away from procurement being seen as a blocker. One of the things that you mentioned to me before is getting away from this idea of kind of borrowing someone’s watch to tell them the time. What do you see as the main reasons for procurement being seen as a blocker at the moment? And what do you see as the kind of the route forward?

Jason Pereira:    57:02     I think one of the main reasons, procurement can potentially be seen as a blocker is because we’re process orientated. We tend to either stand behind a policy or a process to funnel people through a particular workflow, which has the advantage. I absolutely understand that. But the old adage of, and it’s used to get with consultancies, actually, that they bury watch to tell you at the time, is because they lakhs to be no new ideas in effect. But I think it’s important that procurement has an opinion. I think we need to be having a voice around concepts, ideas, strategy that the business needs to hear. Historically, procurement is around options. So I have a problem. “There’s option A, B and C. There you are. Here’s my options Mr. Stakeholder, which one would you like to do?” That’s not value add, in my opinion, I think those options should be, “My strong recommendation is this. And the reason why is exactly as I’ve laid out,” that is, I think, where once you have an opinion, and people start to listen, the stakeholders in any business know their business. In order for you to regurgitate information and tell you spend data or burritos in terms of how we spent the money and how many suppliers we have is not value add, you’re regurgitating the same information that probably the stakeholder knows better than procurement. So we need to be pulling together the ideas of what’s using the data and actually analyzing the data and overlaying our own viewpoints in order to dry for that opinion.

Jonny Dunning: 59:04     Yeah, because when people say, “Creativity,” for me, that naturally brings to mind a kind of feeling of like it being something organic, which is, in direct opposition to an absolutely formal, structured, rigid process. Now, clearly, there needs to be a certain amount of process underlying what’s going on. An organization needs to be organized. But I think that bringing that organic side to it. It feels like that’s a step away from where a lot of traditional procurement teams are maybe living. Firstly, would you agree with that, and I’ve got a second part of a question. I’ll ask you in a second. Does that ring true with you?

Jason Pereira:    59:52     I think procurement teams tend to live in the comfortable space of big data, data through analysis drawing forth conclusions from data, which is fine. But it doesn’t take a very business orientated procurement lead department in order to do that.

Jonny Dunning: 1:00:19  So how do you see procurement functional, procurement teams that maybe aren’t in this creative space in the creative mindset yet? How do you see them most effectively transitioning towards that? Is it upskilling? Is it a different type of person? Clearly, it’s going to be a combination of automating some of the parts of the process that need to be automating, as well. But what do you see is the kind of route forward?

Jason Pereira:    1:00:47  So the automation we have to say is given, because without you freeing up individuals to be explorative, and asking questions, you’re never be able to get into that space. For me, it’s the questions, of that curiosity. It’s the why are we doing it? Can we do it better? Again, the old adage of it, if it ain’t broken, don’t fix it is absolute rubbish. Because if that was true, we wouldn’t have had any development or any innovation ever.

Jonny Dunning: 1:01:19  The original iPhone was pretty good. Where we’re now? 14? or whatever.

Jason Pereira:    1:01:23  is exactly. But it’s how we can do things better. Why are we doing things the way we’re doing now? And, you know, can we look to improve? I think that restlessness in terms of drive and innovation has to be culturally inbred within procurement. And as I said, I would love to say, all procurement teams spend at least 30% of their time, if not more, on looking for the innovative development, the next thing rather than data analysis.

Jonny Dunning: 1:01:55  And do you think that transition can be facilitated by the right leadership within procurement? Or do you think in terms of procurement teams bringing on talent? Do you think teams are maybe going to start looking for slightly different qualities and slightly different people? Or is it a question obviously, just a mindset change?

Jason Pereira:    1:02:14  Both, I think leadership is important in terms of recognizing the drive for innovation change, and allowing the freedom of people to be inquisitive. And, exploratory, in terms of new areas, new markets, I think mindset is important and also the type of people. Again, I mean, I’m people used to think accountants are, were boring, and they sat in that space of figures and regimented delivery. I’m not an accountant, myself, but it’s not actually true is a very wide degree of flexibility and creativity and accountancy, and they should be in procurement as well. There are multiple different solutions to every problem. But in order to understand what the best solution is, we need to explore all the options. And there is no single answer. And I think that is in a set a mindset and we, in the current leadership in procurement today have to go and sell that concept out to the new generation, that this is not, this is not at all. So Ron, this is just as creative of marketing, just as innovative as tech. This is solutioning potential problems of the future for the business. And, and we need to sell that concept.

Jonny Dunning: 1:03:48  I think it’s a great sell. In terms of, of getting people coming into the industry excited about it, just words like freedom, creativity, innovation, these are the things that get people excited, and they’re the sort of things that I think, get the right type of people excited, because they don’t want to be constrained to a very rigid box. And they do want to use their own mind and their own ideas and, feel like they’ve got some agency in the process. So I think that’s a much better sell than maybe a procurement as someone coming into procurement might have been faced with 10 years ago, or maybe even five years ago. It’s quite refreshing because I know a lot of people talk about falling into procurement. But I think that procurement are fundamentally problem solvers. And that has a wide variety of aspects to it and you need a wide range of capability. You need to be flexible. You need to be able to work on your own initiative, need to build relationships and work with different parties and juggle things. So it’s one of those things that people seem to maybe fall into because it wasn’t as never been really necessarily that clearly defined, because it’s quite multifaceted. But taking on more of this creative type of role, and having that freedom, definitely makes it sound much more attractive from my point of view.

Jason Pereira:    1:05:17  I have been in the industry 30 years now. So I must be doing something for me to stay here. But yes, I think so. I think it is a very exciting industry, it’s very exciting in terms of problem solving. In our particular department, we’re at the forefront of innovation and change for the business. We’re working on concepts that effectively will drive the future direction of the business over the next 1010 years or so. And it’s very exciting that you get to see different activities across the business and different views. So I think it’s a great opportunity for people coming into the industry.

Jonny Dunning: 1:06:01  Yeah, I definitely agree. So I’ve got two final key questions. I just wanted to ask you, one of them is about kind of horizon planning to an extent, but it’s the question is basically, what do you see as the biggest hurdles you faced within procurement up to this point? And what do you see as the biggest hurdles moving forward?

Jason Pereira:    1:06:27  I think, looking back, the biggest hurdles is understanding where procurement fitted into the organization. And I think establishing what value we could actually deliver. And the niche that we wanted to play in was difficult. And I think, to your earlier points, we probably are still fighting that battle in some areas. But I think it’s more around individual areas or business relationships rather than after the business. I think, if anything, the industry now, it’s appreciated that there is a function for procurement. And there is a benefit for procurement. It just needs to be commonly adopted across all areas of spend, I suppose. Going forward, I think the challenge for us is getting to the forefront to drive that innovation. I think business industry 4.0 is going to go through a massive change. So the idea of that transactional functional procurement is should be left alone. And let tech lead digitalization transformation fulfill that role, we should be looking at those future solutions, because industry will go through a massive change. As for example, we talked briefly around labor, the concept of being employed, I think will disappear over the next 10 years. It is around engagement and delivery of task rather than this retention of employment. And I think that makes us industry much more agile, business much more agile. But it’s that that providing that ecosystem to how we engage how we deliver, and how we effectively go back and repeat is going to be the key challenge for procurement.

Jonny Dunning: 1:08:29  Yeah, I think some fascinating areas there. And that kind of looking forward side of it, especially when you’re looking at the makeup of organizations. It shows the importance of the power of brand, as well as the what the organization stands for, how it operates, what it means in the world, what its mission is in the world. So some of the things that you just described there, I think are pretty exciting. But the last question I was going to ask you was, from your own personal point of view, what are you most excited about, if you kind of look forward over the next few years?

Jason Pereira:    1:09:02  I think I’m most excited about that change. I’m very excited that business will be faced with significant challenge. And that, that suppose that being unleashed in terms of being their dynamic, agile business, I mean, we’re sitting in the studio in in London at the moment in an office building with multiple offices on multiple businesses under the same roof. Now we could be sitting next door to another studio or a tech developers or payment solution and it’s all going on it’s a hive of activity. And that in itself means businesses not what they used to be years ago, big established corporations that employing hundreds of people. It is small agile units of a various people coming in delivering a ton task, moving out. And going on to the to the next, that interconnectivity I think is really exciting. And I look forward to maybe being providing a solution that will help my business or indeed any other business to face into that challenge.

Jonny Dunning: 1:10:16  Excellent. Like you say, business has got to move business and all of us are going to move with the times. And I think we’re all gonna have to move pretty fast. But listen, thank you so much for joining me. I found that a really interesting conversation. I feel like there’s so much more we could talk about, but, I’m sure that there’ll be other opportunities to do that, but yet really appreciate your time. Thank you very much. 

Jason Pereira:    1:10:36  Thank you. Thank you for the opportunity.

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