Following the successful SUPPLY CLUSTERS annual conference in Sydney last month, Jonathan Dutton reviews some of the key messages…
A full house of buyers was on hand for a re-constituted SUPPLY CLUSTERS annual conference on 29th August – their first major event for more than six years, during which time Supply Clusters membership has grown to new heights.
With seven key-note speakers, BD teams from the 13 different sponsors, including Platinum sponsor Konica-Minolta, and over 20 staff attending, more than 150 people were in the main room as I opened proceedings as MC for the morning KEYNOTE sessions. A remarkable attendance in a very crowded procurement conferencing market, even with the positive support of Media Partner – PASA Connect.
Insights that save
The theme of the conference was INSIGHTS THAT SAVE; and whilst the focus was on new savings from newer categories, there was also invaluable time on other key procurement topics – notably:
- How to implement a plan for the Modern Slavery Act
- Indigenous procurement opportunities
- The criticality of analytics for managing future supply-side spend
Deep dive workshops covered three key categories particularly – Foreign Exchange, Energy buying and Harnessing technology in a fast-moving market. A fourth workshop I facilitated focused on, ‘How to use aggregation as part of your procurement strategy’ – the subject of the last article I wrote in July.
Supply Clusters growth
CEO, Oliver Lazarevic, opened the event and explained how SUPPLY CLUSTERS has grown sixfold since the 2014 re-launch under new management, following the untimely passing of the previous owner – Ian Cook, who founded SUPPLY CLUSTERS in 1994. Annual conferences used to be a staple of SUPPLY CLUSTERS dating back more than 15 years or so… and, Oliver explained, they will be again in future.
Oliver committed to growing the current 37 category offerings available to SUPPLY CLUSTERS current members and reiterated the commitment to keeping annual membership fees to their new minimum – “less than hiring a consultant for a day”.
His 10 buying tips in 10 minutes challenged many buyers in the room on the breadth of their purchasing knowledge across just 10 top INDIRECT categories – nobody in the room knew them all!
New savings – from old categories
Energy may not be a new category in itself, but HOW TO BUY it is evolving quickly, as is Australian energy policy around the country. A show of hands indicated almost 100% of attendees concerned about rising energy costs.
A few successful energy buyers have even turned themselves into energy wholesalers – selling energy back to the national grid at peak times from renewable sources. In effect, turning their energy cost centre into a corporate profit centre!
Both sponsor Cherry Energy and Supply Clusters category-consultant John Huggart from ENERGY ACTION, enlightened the audience on the three key issues facing companies on energy policy:
- The rising cost of energy – and how to offset this
- Assurance of supply – especially during peak usage times
- Emissions reduction
John Huggart briefly covered the top three innovative procurement strategies for energy including reverse auctions, corporate power agreements and progressive procurement techniques. He also urged everyone to check their bills – they are wrong surprisingly often.
New savings from addressing new categories
A new category for purchasing attention is FX – foreign exchange: a professional challenge in volatile currency markets. But many organisations in Australia operate overseas without an overseas entity and are paying relatively high currency conversion fees, bank charges and artificial exchange rates.
Presenters, Wade Ranford and Tony Nguyen, from currency provider, and sponsor XE, explained how their category can sometimes make instant savings of around 50% for some buyers utilising the current standard contract available through Supply Clusters.
The criticality of DATA, analytics and cyber-security to supply-side management
A front cover of ‘The Economist’ in 2017 proclaimed DATA as the most important commodity in future – even more than so than oil perhaps. This point introduced three contributors covering the criticality of IT and, particularly, data towards successful procurement strategy.
Mario Riberio, GM for Data Analytics at Blackwoods, explained the key issues – starting with cleaning data as one of the greatest challenges and the role of “The Cleansing Janitor” so critical. He offered the four key challenges of data management:
- Data quality
- Data security
- Data governance
- Data analysis
Mario also warned to be wary of simple solutions that don’t easily scale into full production enterprise-wide solutions across the business. He also explained that clean data was not fundamentally an IT problem – but a change management challenge, as many of the data problems organisations face are human-driven ones.
Daniel Johns, from IT services provider ASI Solutions, warned on cyber-security. To make the point, he pre-searched the delegate’s 91 organisations in the room. All but two companies had their employee and company credentials on offer for sale by fraudsters in the darker recesses of the internet.
Developing the 5 stages of IT maturity was a longer-term answer to IT vulnerability he explained; adding that good IT management reflected well on the brand in the current age.
Lynette Walsh from AON added some strategic suggestions to offset the risks of cyber-security including insurance and other commercial risk solutions.
Risk Management … and transfer strategies
The leaders of the AON insurance partnerships team, Athena Manley and Lynette Walsh highlighted the Top Ten business risks faced in Australia, and offered a swift assessment of which were insurable.
Eradicating Modern Slavery – but how …?
In a compelling presentation prepared by Nicole D’Souza and Meredeth Roach, from platinum sponsor Konica-Minolta, the question of how to get started on the new Modern Slavery Act 2018 (MSA) was addressed.
They articulated described the key requirements of the act, and of the pending act in NSW, and hinted on the key next steps for procurement. Risk workshops can be a practical way to identify areas of risk for modern slavery in supply chains: starting with countries ad industries at ‘high risk’ of utilising slavery.
United nations award winner, Greg Welsh – CEO of Winya furniture, offered many insights to help build lasting social change. He felt “black-clad” companies suddenly 51% indigenous owned were sometimes damaging to indigenous Australians. And offered several strong examples of how to incorporate aboriginal people in the corporate supply chain in positive and longer-term ways – without necessarily just purchasing from indigenous-owned firms. Effectively ‘insights that save’ in a different way.
How to make aggregation a key part of your procurement strategy…
Aggregation works. Building volume to get a better deal is a founding principle of the procurement profession. Buyers instinctively get it. Yet aggregation doesn’t always work as a strategy. It isn’t always the right answer. And buyers often find plenty of reasons not to aggregate with others.
This workshop covered the Kraljic Matrix as the cornerstone of a strategic approach to procurement and addressed key questions such as – when is using external aggregation most valuable? When is it most right? And, when not? This was also covered, in part, in my previous article in July. The session also covered the 7 benefits of using aggregation and the 7 myths surrounding aggregation – both topics of previous articles.
A small part of this workshop was an extract from the JDC ‘STRATEGIC PROCUREMENT Masterclass’ which runs as an open public training course twice each year – the next in Melbourne on 28/29 November – more details at https://procurementandsupply.com/pasa-comprara-partnership-training-page-academy-procurement-events-calendar/
Ultimately, the greatest benefit of AGGREGATION is often simply to save time. To obviate the long-winded market sourcing step for an INDIRECT category that can take such effort and resources when there is so much more to do. Particularly, supporting strategic and operational core business supply lines.