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Digitization and Transformation in Procurement with Michael van Keulen, Ep #176

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Michael van Keulen (MVK) was born and raised in Amsterdam. He was at Foot Locker 15 years ago when they embraced e-sourcing with Iasta. He started in financing but fell in love with procurement. He set up the procurement function in Europe at VF Corp which caught the eye of corporate. So they asked him to lead their global transformation. He then joined Lululemon five years ago and built their procurement infrastructure from the ground up. He brought them into the modern era.

Now, MVK is the Chief Procurement Officer at Coupa Software. With over 20 years in procurement and finance—on both sides of the table—he knows the industry inside and out. In this episode of Negotiations Ninja, we take a deep dive into digital implementation, getting stakeholders on board, and the best practices to follow.

Outline of This Episode

  • [2:15] MVK’s background in procurement
  • [4:44] Similarities from the inside and outside
  • [6:45] The resistance to digitally transform
  • [9:22] The right stakeholders to get on board
  • [14:33] The questions to ask technology partners
  • [18:32] Where procurement tech is going
  • [21:30] Benchmarking data at scale
  • [28:06] Stakeholder engagement is the key to success
  • [29:19] How to connect with MVK

How are both sides of procurement similar?

MVK notes that procurement is always a methodical approach. Whether you’re working in procurement in the clothing industry or offering software to the procurement industry, it’s still a seven-step process. It starts with identifying the requirements and the needs of the baselines to set a baseline. Then you scope the market for suppliers that can satisfy those requirements.

Then you run a competitive event and go into the contracting phase. Once that has gone through the right channels, the contract is executed. You then begin to monitor the performance of that supplier. Michael has learned whether you’re in retail, technology, FMCG, Pharma, etc.—the procurement process is very similar and can be digitized. Procurement is transferable knowledge.

Why such a resistance to digital transformation?

Why do so many procurement leaders resist digital transformation? MVK points out that digitization is ready for procurement, but procurement isn’t always ready for digitization. Why? The maturity level of the profession. Some industries—like automotive—are mature from a procurement standpoint. Most other industries are still immature. The CIO and CFO have a big seat at the table compared to the CPO. As a result, it requires procurement to step up and make the business case and stand behind it in a powerful way. You have to be willing to put your career on the line.

You have to claim you’ll drive the value that you’re articulating. To do that, you need the platform and the solution. What often happens is that IT takes over the conversation. At the end of the day, IT is there to support the business; they turn it into an IT conversation, rather than a “what’s the best solution for the business,” which makes it hard for the CPO to tell that story and show the ROI.

They used to say, “Well, I got an ERP, so I’ll run some analytics on that and then use taxonomy to classify taxonomy,” etc., and you become rearview mirror procurement instead of forward-facing procurement. The key is that it’s about the positioning of procurement and the ability to properly articulate what the value is that digitization brings to the table.

Get the right stakeholders to get on board

MVK emphasizes the need to create partnerships in your organization. There are many different stakeholders in the process. Who do you need to connect with? The first one is finance. If you’re going to automate AP, it has large downstream ramifications in the procurement to pay process. Whether it’s paper-based or a scanning engine, AP says they have automated their downstream. So why are you digitizing it?

The second group to build a strong partnership with is IT. You need forward-thinking IT leaders. You have to get them behind the digitization journey. You need to clearly articulate why it’s so important for the organization. The third group is legal. There is contract life-cycle management in your digitization journey. The bottom line? Whatever platform you choose, you need to run a proper process.

Ultimately, the business itself needs to adopt digitization. If no one adopts it, your ROI will go down the tube. Companies think if the end-user adopts the technology, they’ll be fine. But to do business, the supplier needs to adopt it as well. It needs to be intuitive. Get your users in front of the platforms you’re choosing between. Then you need to think about your suppliers. Will they accept whatever you decide to implement? If they don’t, people will look for ways to go around the system.

If everyone is on board, you’ll get support for your story, and the change management will be easier.

Stakeholder engagement is the key to success

MVK cannot stress it enough. It will get sensitive and contentious. People will challenge you. Don’t be afraid to step up. “There has never been a better time to be in procurement. There has never been a better time to do what we do. We are uniquely qualified and uniquely positioned to drive our companies forward. Digitization is a part of that. But we have to elevate our profession.” It is procurement’s time to lead. It always starts with a partnership.

What questions should you ask technology partners during implementation? How do you get your company and stakeholders to embrace AI? How about benchmarking good data and how it can be a game-changer for your organization? Listen to the full conversation for the full benefit of MVK’s expertise.

Resources & People Mentioned

Connect with Michael van Keulen

Connect With Mark

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