From Supplier Collaboration through to managing Innovation, we talk with the best minds in Procurement, Supply Chain and Innovation on how organisations can take a giant leap in how they approach their supplier ecosystems.
In this chat Jon shares with us some valuable insight into his time as CPO and goes into detail on the key areas he feels organisations need to consider when executing on supplier collaboration and innovation programs.
If you can’t listen to it all, and I highly recommend you do, here are three quick takeaways:
- Collaboration is easy when things are going smooth but collaboration is hard when things get sticky, when things are challenging when results aren’t coming through. And so it does require a real commitment to a culture and behaviour shift that has to happen across the organisation. Not just lip service. To drive SC&I through requires fundamental change management across the organisation, it has to be a business initiative.
- Programs and people become frustrated when Supplier Collaboration is done without strategic objectives. What you do with supplier collaboration & innovation has to have relevance to your customers, to your stakeholders, be that the board or the executive committee, the leads or the functions or the business units and it has to have relevance to shareholders. So it has to deliver something.
- Procurement have to create the ‘Pull’. Procurement really need to help the executive team understand why SC&I is crucial to the achievement of their business goals. You need to be super clear on the business plan and the business outcomes. Leadership are not going to get where they need to get to without collaborating with third parties. So it’s up to procurement to create that vision around which everybody can align.
You can read the full conversation below:
Hi there. This is Alex Basso from Vizibl and we are here to talk about supplier collaboration and innovation. Welcome to another session of the Vizibl podinar. I am honoured to be with Jonathan Kirby to talk about supplier collaboration and innovation. Jon is the CEO of Accelerate Procurement, former CPO of Barclays and AstraZeneca and former CEO of Strategic Sourcing Excellence and Blink Solution Limited. Jon is the perfect example of an expert and thought leader in procurement. And I can’t wait to learn more about him. Good morning, Jon. Thanks for joining us. How are you?
Morning Alex, pleasure to be with you or afternoon I should say for you. I’m doing okay. I think like most of us just surviving under the lockdown and more desperate need of a haircut than I’ve ever been.
Same here same here. I think by the end of by the end of these of these lockdown I’ll have grown dreadlocks for sure. So, yeah, Jon. So the topic for these for these webinars today. We know it’s about Supply, collaboration and innovation. However, even though I’ve introduced you at the beginning, and what I’ve said is most of the things that people would find if they research Jon Kirby via Google or find you on LinkedIn, how would you describe yourself? Who is Jon Kirby?
Yeah, sure. So I guess first thing people probably wouldn’t know. And it’s a bit of a giveaway with the accent. I’m originally from the UK, although most people mistake me for Australian even people from back in England now because I’ve got an inflection from having lived 15 of the last 20 years in the US. So on the east coast of the US, married with three kids who are all not enjoying the lockdown at all. My son’s back from college and two girls in high school. So two teenage girls not being able to socialise is not a lot of fun for them, but not a lot of fun for outside. But, as you say, CEO of Accelerate Procurement and co-founder and executive chairman of Blink Solutions, which is a terrific company focused on BI with a platform with a number of functional modules that sits underneath that. And then prior to that 30 years in industry held a number of different roles, as you mentioned, CPO, CIO, Head of Supply Chain, some COO responsibilities across a number of different companies. So AstraZeneca, Barclays, Compass Group and Ford. And then I left AstraZeneca in 2013, and had a real entrepreneurial itch that needed to be scratched and started two companies. So Blink Solutions with my partner, Gareth Bartlett, and then Strategic Sourcing Excellence, which was a procurement consulting organisation and really, that came about having sat on the other side of the table and being frustrated with some of the options that were put in front of me you can either complain about it or do something about it. So I decided to do something about it. We ran that company for two years, and it was acquired by Genpact, the business services firm. Went to work with Genpact for a couple of years, led their source to pay business loan, which was a good time, hugely successful. But then left there and set up Accelerate last year and Accelerate is really focused primarily on advisory activity with some managed services. So we look at operating models for companies we’ll do diagnostics across their relationship optimization, which is obviously what we’ll come on to talk about expense optimization. And we’re in some fairly interesting discussions with some partners as well about creating some fairly unique value propositions to bring to the market. So a bit of an interesting journey set on both sides of the table as a buyer and as a seller and as an operator. And so with that, comes a lot of experience of what works well, what doesn’t work well, and it’s been a fun journey.
Absolutely, absolutely. I guess, as you said, 360 view on, on loads of things and loads of experience. And this is mainly why I was so interested to talk to you about SC&I because here at Vizibl while we talk a lot about a SC&I and this is one of the questions for questions that I wanted to ask you. We talked about a lot about a SC&I on our it’s in our blood in our DNA. However, I think sometimes it’s interesting to just step away and let someone else talk about SC&I. And what how would you How would you describe it? What is supply collaboration and innovation in your own words, how would you describe?
Yeah, sure. I mean, I think for me, and I think it’s a good use of the words, collaboration and innovation, which I’ll come on to, but I think for me, it’s really about relevance, outcomes and challenge, so most people would acknowledge and recognise this not feasible sense of sensible or even fiscally prudent to think that you as an organisation are going to have all of the answers to be able to drive your business forward. And so it’s important to be able to access and harness the talent, the creativity and the resources from other companies, also individuals with the way the gig economy is going as well, to be able to drive your company forward. So for me, whatever role I’ve had, it wasn’t just procurement, there was a real understanding, belief and passion that collaborating with suppliers and driving innovation and pulling that through external parties is going to help drive performance and transformation. So just picking up on on those two words, innovation and collaboration. I think it’s interesting that for a lot of people innovation isn’t a word associated with big disruptive changes. So it has to be meaningful. It has to be something that’s that sizable that’s a unique breakthrough. And it doesn’t have to be that it’s a spectrum that can run, you know, from end to end. So it can go from FinTech, big strategic partnerships around how you go to market all the way through to how do you deliver operational efficiency improvements that drive the business forward. And so I think people sometimes get intimidated by the word innovation. And it’s important to contextualise that and frame that. And the other thing is collaboration – collaboration is an easy thing to say. If you ask anybody if they want to collaborate, everybody says they do. Collaborate and when things are going well and everybody’s having success, no problem, very enjoyable. Collaboration is hard when things get sticky, when things are challenging when results aren’t coming through. And so it does require a real commitment to a culture and behaviour shift that has to happen across the organisation. Not just your organisation. But the organisations that you work with,
And I also think people associate collaboration, unfortunately with sometimes ideation without direction and focus on outcomes. And ideation without focus and direction and outcome, the conversation which is nice to have and nothing happens and eventually everybody gets frustrated and so things aren’t sustained. So it does come with a lot of accountability and ownership. So I think just back to the, what it really means to me around relevance, outcomes and challenge is starting with relevance. What you do with supplier collaboration & innovation has to have relevance to your customers, to your stakeholders, be that the board be the executive committee be the leads or the functions or the business units and it has to have relevance to shareholders. So it has to deliver something. So that question around what what really matters, so what to the company and making sure that you can frame why you’re doing this is critically important because you need to create a pull versus a push for this to have traction and to stay good. You can bombard people with lots of different ideas from suppliers. But if there’s no focus, and again, it won’t be sustained.
The second one in terms of outcomes is and I think this is really important to conversatio we’ll have around procurement. It’s not just about cost reduction. Obviously, it’s about how you drive revenue growth. It’s about new product development. It’s about going to market. It’s about market expansion. It’s about risk and resiliency. Look what’s happening in the world today. I mean, the world is going to change significantly when you look at how companies operate, how they go to market where their supply chains are so risk resiliency, agility, user experience. So understanding those outcomes is key because you’ve got to prioritise and focus. And then the last one is challenge, which is, again, a little bit of the flip side, the hardest side of collaboration that people don’t always see. Which is you’ve got to be prepared to challenge and to accept challenge. So one of the things, I think is really important, and I always used to make a point of selling not just suppliers, but people within the companies that I worked at was we don’t want “Yes” suppliers. We don’t work with suppliers because we want to tell them what they should be doing for them just to say to us, we’re doing what you told us. We’re engaged with them because they’re leaders in their field. They’re the experts. We want to learn not just from them, but from their customers from the other verticals and industries that they work with. Because that’s where some of that innovation can come from. It doesn’t have to be brand new for everybody. It can just be new for us in the application there.
So I think, that’s what it really means for me. And we’ve taken that through the companies that, that we’ve worked in the companies that we’re consulting with, and if you look at Blink Solutions as an example, I mean, I think that’s been key to our success is we’re prepared to challenge clients around what are their relevant outcomes, and then deliver that for them so that it becomes meaningful and tangible.
Exactly. Yeah. And that that was super insightful. And this is as you said now, this is one of the questions that I wanted to ask you. So what has been your your experience with SC&I what you’ve lived because sometimes we just hear about people talking about SC&I, some people believing SC&I seeing the benefits absolutely, truly believing on a SC&I but but we, it’s very hard, at least even myself, sometimes I’ve done some research, and it’s hard to find real use cases. People who have have actually done it or who have, you know, have experience in it? And what’s what’s your experience in SC&I what were the learnings? Or how how.
Yeah, yeah, it’s a great question. I think, you know, there’s, there’s lots of tales, lots of experiences that people have had with a lot of false starts. And like most experience, there’s, there’s a lot of good there’s a lot of success, but there’s also a lot of painful learnings and they’re the ones that mean the most because then you can reflect on them and make the necessary changes.
So I think stepping back a little bit, especially as it relates to CPOs. I think one of the things that used to frustrate me when I was working as a CPOCPOs and I engage with other CPAs and procurement leaders there was this victim mentality around How procurement not having a seat at the table. Always used to frustrate me. That phrase just made no sense to me. It’s not about role. It’s not about title. It’s not about function. It’s about the value that you bring and the value that you deliver. So again, back to that, are you relevant? Are you delivering outcomes? And are you challenging because that’s what people value. And if you do that, then you’ll have a seat at the table, regardless of your role, whether it’s as a CPO or you move forward. And I think SC&I is a really unique vehicle platform for CPOs to make themselves relevant, and to really deliver value through to the organisation. So putting together a really clear vision of the value proposition, that procurement can deliver for the business, it’s about EPS. It’s about EBITDA it’s about risk working capital, and certainly innovation. is important. And again, framing it against the historical position where 60% to 70% of a company’s operating expenses with third parties is a good place to start. But that’s only going to increase in my opinion. If you look at corporate strategies for major organisations now with an increasing partnering, increasing digitization, what’s happening with the gig economy, what’s happening with the desire to increase fairization and agility within the organisation. There’s going to be an increased dependency on relationships with third parties.
So I think one of the experiences is clearly being able to have a conversation with the business at the business level. It has to be a business initiative. It’s not a procurement initiative, procurement can lead it, procurement can facilitate it because your remit is you look after third parties, but it has to be a business initiative. And then depending on the start point, you have to be able to segment your existing supply base appropriately. And it’s not about spend, it’s about criticality to the business and those outcomes that really matter. And then once you’ve done that segmentation, take it to the next level of intelligence, which is really mapping the value streams and the supply chains that matter within the business by criticality. And so you can understand against those targeted outcomes when you need to focus. Now you’re creating alignment and you’re creating traction with the business around things that they’re interested in things that are on their scorecard, their personal objective, so now you’re connecting.
And then I think there’s some experience that I’ve seen with a lot of companies that we’ve consulted with and worked with where they’ve decided that we need to look at supplier collaboration and innovation, but they just looked at what they’ve got. So they just focus on their incumbents. And your incumbents can work differently, and certainly have got to learn new tricks. But the real change that’s needed is likely to come outside of your existing supply base. So you need to think about “how do we identify new companies, new individuals”, again, I think it is individuals as well as companies that you can work with that will bring through these innovations that are required that will drive the business forward. So is it large or small? Is it startups? Is it within a vertical? Is it within a horizontal? Are they competitors? Are they adjacent? You know, don’t rule anything out? But again, the focus there has to be against those outcomes that have been prioritised. And then how do you attract and onboard these companies? And individuals, you know, why would they work with you? And not a lot of people put enough thought into? It’s not supplier preferencing. In its old sense, this is about how, how do you bring companies through that can see a creative value being created for themselves, as well as you, in a way of working and engagement that makes sense for all parties. Because there are a lot of innovative organisations out there that are free from bureaucracy that are working in a very fast-paced environment and the thought of going to work with a big corporate with a lot of regulations and policies and procedures, it just puts them off.
How do you make yourself attractive, I think the other side of that is is making sure that you have a perspective that’s shared across the organisation and a degree of pragmatism. And that’s around creating clear expectations of when things get delivered. So having a roadmap of how these come through and experiences led me to believe this, there’s really three horizons they can work to there. The first one is something that’s real, that’s tangible that’s been utilised, executed somewhere else today. So it’s in production. The second horizon is something that’s in a proof of concept, pilot, MVP, product or service that needs to be tested. Is it being tested just within your organisation? Is it being tested elsewhere? Can you do a bit of spread betting with some other companies to really leverage those investments and bring them through and the third one is, you know, leaning towards design thinking and it’s conceived you understand what’s possible. But it’s it’s not even at that design or developed stage yet. And I think those three horizons are important for a couple of reasons. One is expectation internally to help people understand how much investment is going to be required, how much time because each of those horizons come with a different level of investment. The second one is back to the relationship piece, which is there’s a lot of fairy dust in the market, there’s a lot of and the worst thing you can do when you’re looking to collaborate is start with a set of false promises that actually we can do this we’ll be able to deliver in two months and then it doesn’t happen because everybody just loses their appetite and they’re done and it’s over the trust is eroded.
Another major piece that gets missed, and it gets missed with the why, why would companies work with you is the need for a different commercial construct. If you’re going to enter into a relationship where you’re really going to bring through innovation, it requires the company, the companies you’re working with on the other side to make a very conscious decision and commitment around how they allocate their investment, how they allocate their best and brightest to work. And if there’s no upside for them, then they’re not going to do that. They’re going to make financially prudent decisions for their organisation as well. So how do you frame a commercial construct that works? So risk reward in its its simplest, highest level sense, but how does that actually run through and how do you have your organisation understand that that makes sense for the greater good, so I think having that vehicle put for what it is, is really important.
And then lastly, I think it, it’s obvious, but it’s, again, not something that comes naturally to a lot of people is change management. To drive SC&I through requires fundamental change management across the organisation, it has to be a business initiative. The resistance that’s likely to come is as much internal as it is an external. If you’re talking about making some fundamental changes to the way an organisation has worked in the past, into the future, there are going to be people internally that don’t want that to happen, and they’re going to be governed by rules, fears, stories and beliefs. “We tried that before. It doesn’t work that they do it for somebody else in a different industry. It won’t work here.” And so you’ve got to create a very structured systematic approach thats objective, tied back to those business outcomes so that everybody understands the reason we’re doing this, the why, is because we need to achieve this to be relevant, and to deliver the outcomes that the business needs. And what that does is it enables you to highlight the emotional resistance and you know, just unnecessary derailers that you’ll see.
Absolutely no, that’s fantastic. And you answered most of the questions I had here, which were the how how? And one of the things you mentioned there, which I find super interesting, and you said it a couple of times is the importance of, of knowing that this is a this is an initiative that should be led by procurement, because as you said, they are the ones in touch with partners, suppliers, and startups, academics, whoever they want to collaborate with, but making sure that they, even though they are living it, the impact is not just directly focused on procurement this is for the entire business. And this is something that at the beginning when I was when I was trying to understand SC&I it was hard to understand for me because I thought it was all around procurement. But then once I realised and understood that said, look, wait a minute, procurement is just the driver, because they are in touch with these third parties. However, the impact in the business and not just innovation because and this is why I love supplier collaboration and innovation. And in that order, because first comes collaboration. And this is only my personal view, but first comes to collaboration and then comes innovation. And innovation is just an outcome. You could have other outcomes like sustainability, maybe also through innovation, and even and correct me if I’m wrong, but I guess through good collaboration and having a better relationship with your suppliers, increasing trust, you might actually get some cost reduction as well.
Absolutely. And I think that’s a big difference and people can get hung up on on maintenance antics. But yeah, a big issue I think that still exists in a lot of organisations is around supplier relationship management, which if you ask five people, you’ll be 15 different definitions of what it means exactly. But very often it’s focused on measurement and assessment of what’s contracted. And to be honest, especially when you’re getting into big outsourcing contracts and strategic engagement, at the time, the contractor is out of date because the business dynamics change. And so that’s where behaviours become important and agility and focusing on outcomes. It doesn’t mean you don’t need a contract clearly but you’re not managing against a set contract and I think a lot of supplier relationship management behaviours focused on that with then a little addendum at the end, which was and we want to do innovation. But that’s not gonna unlock the best and brightest and the allocation of the resources and assets of the companies that you’re working with. It’s just an addendum on the end. So you’re right I mean, it can run through. Again, innovation isn’t just something that’s unique breakthrough in something completely brand new. It can be cost reduction. Actually, we, we did a lot of work at AstraZeneca on supplier development, we had a formal supplier development programme which was integrating with our suppliers down through the vertical but also across the horizontal. So just as a simple example, we spent directly probably five $600 million on corrugated packaging across the organisation. We paid for over a billion dollars worth of corrugated packaging because a lot of what we bought in corrugated packaging was a component part of the product. Being able to work with our suppliers to say, well Is there something we can do to fundamentally restructure the supply chain together rather than just leveraging on consignment our pricing that enabled us to take real costs out not just margin? We did this with laboratory supplies so we bought them the people we bought them from supply them to other clients. CROs that we worked with bought the laboratory supplies so so how do you bring people together to collaborate in an ecosystem with multiple parties, but make sure that it delivers value for all and it isn’t just leveraging, you know, a single contract with more volume for lower prices?
Absolutely. Absolutely. And just looking now because I’m pretty sure I’m living in a situation we are now I cannot hold myself from asking this question, which is more about the future now, because we know this Coronavirus situation even though we don’t want to talk about these every single day so I don’t want this to make very long this would be just the last the last question, but how not just procurement, but how do you see how important is SC&Igoing to be in the future after this situation? How do you think it is going to change? Some companies are going to realise that maybe they actually need more collaboration with their suppliers, or maybe not at all. How do you say now in the next in the next few years?
I think it’s it’s been becoming ever more important over the last couple of decades, but I think what this situation is going to do is it’s going to put a lot of organisations in a position where they’re going to have to fundamentally relook at how their business is structured. The amount of fixed costs that they have, how do they varialise, how do they pivot and become much more agile and I think, unfortunately, out of situations like this, there’s there’s opportunities but there’s also companies that are going to struggle. So companies are going to have to really focus on how do they, how do they build themselves for the new world, not just 2021, but beyond. And then for the other reasons that I mentioned around some of the disruptors in the marketplace and increase digitization, I think it’ll become more and more important. So, you know, I think there’s, there’s really four, four things that people should think about, especially people in procurement roles, but it was the same for me in the CIO CPO roles around supplier collaboration and innovation.
And just for simplicity, because I’m a simple guy, I’ll frame them around the why, the what, the how and the who. And so, you know, the why if you’re, if you’re deciding this is going to be important, which I truly believe it is. And I think it’s a differentiator. Not just for companies but for individuals so if you want to raise and elevate your position and relevance within your organisation, and you want to pursue this then then starting with the why is – help the executive team really understand why SC&I is crucial to the achievement of their business goals. So the business plan the business outcomes, they are not going to get there, in most cases without collaborating with third parties. To create that vision that everybody can align to. So again, you’re creating this pull rather than the push because what all that happens with a push it turns everybody into the teenager that says, I’m going to find a way not to do it.
And then as we said, I think it it has to be a business initiative, but put procurement forward as the function that can lead it that can facilitate it but it has to have engagement and sponsorship and ownership from the rest of the business. Then really think about the why for partners. You know, that can’t be something that you come to later in the process. You have to think about why will people want to work with you? Why are will your incumbents decide it’s different this time? Why will they believe you that you want to work in a different way, so that takes some some thought.
In terms of the what, it’s just about framing, framing, framing, going back to those prioritised business outcomes, what matters, because otherwise you can create a platform a vehicle for supplier innovation, you get lots of ideas coming in, people are busy, they can’t do everything. They don’t deliver outcomes, and you learn to lose advocacy. So really focus on what matters, understand those outcomes, do the segmentation, and then you can focus deliver when and people will see it and they’ll want more of it.
I think the third one in terms of the the how is just, it’s just good old structure you got to have, you’ve got to have a very structured approach. Do the segmentation and prioritisation, you’ve got to have the right behaviours, goals, governance, PMO technology in place to do it. You’ve got to have aligned scorecards and objectives internally and with the people that you’re going to work with. I mean, people do what they get measured on. The commercial contracts, we talked about lots of communication, again, a lot of companies I’ve seen that have fallen down on this journey, is because they don’t communicate and they don’t come back to their framing. And then I think just a really tactical one, back to startups is you’ve got to simplify the onboarding process for buyers to come in and work with you. They don’t want to have to go through a process that takes three weeks and fill in lots and lots of forms. But dealing with somebody in an innovative new capacity not in production capacity shouldn’t require the same level of onboarding rigour.
And then the last one in terms of the who is, again, simple stuff but hard to do. Get those stakeholders internally identified, aligned, put them in sponsorship roles where it makes sense. Look at your own internal capabilities. Do you have the right capabilities to do this? Do you need to augment with some external help? Are you going to recruit? How do you develop the internal team? It’s the journey so you can do those things to make it sustainable. And then same for your partners and suppliers, you know, understand, who are they who you’re going to work with? What are their motivations? How are they on specific incentives, etc.
That’s that’s, that’s fantastic. Actually, I love the structure of the why the how, well the why the what the how, the who, especially because even sometimes when when, when I talked to thought leaders or experts in procurement, and they all kind of, you know the why and the what is fantastic because everyone, everyone kind of understands it. The way is always super inspirational. So, you know, you can always find loads of excitement there. However, in the how, as you said, that’s where most people struggle the most not in just supplier collaboration, innovation, I’m guessing it’s with everything else. But especially with SC&I, if you’ve never done it in the past, it’s something new. So I really like the ones you said it be great to maybe create a list step which steps out of out of this that we can share with with everyone. Yeah, fantastic. So we are over 30 minutes. I don’t want to keep these too long. I’ll be talking here for ages with you about SC&I and whatnot. But in case there’s something else you want to share, again, I would ask many, many questions, but I think less is more sometimes. So I will keep it simple here in case people have questions once we share these, we can make sure we have a podcast 2.0 where we discuss new topics people can share with us their thoughts, and we can do another one in the future with you, john, what do you think?
Love to I mean, it’s it’s a, it’s a really rewarding and interesting area is something I’m passionate about. I mean, as I said, the learnings are huge. The opportunities and the successes that come through there are terrific, so yeah, anytime, Alex.It’s always a pleasure.
Fantastic. So thank you. Thank you very much. Take care. And I’m sure we’ll talk we’ll talk again on these on these podcasts.
Jon 33:52 Thanks take care.