In a world of increasing disruption and wider change including Brexit and other geopolitical factors, there is a greater need for companies to be operating in a faster and more flexible way, says Guy Strafford.
The EVP market engagement at procurement specialists Proxima Group, says it is also a time “of hesitation, getting the ship in order” after the economy has grown for nine years, reflected in a recent KPMG report.
Strafford says finance leaders who over the years have developed more strategic responsibilities within their organisations are attuned to these issues, especially in regard to supply chain risk. “There is a greater need for CFOs to consider sustainability and risk in the supply chain, to know who suppliers are,” says Strafford.
To that end Proxima recently acquired Meronomi, a service that captures information on suppliers from social media and other channels so that a comprehensive view can be gleaned on any individual supplier. “It’s vital to have good information about your key suppliers, in order for boards to make better decisions about who they are working with,” he says.
He says Proxima is fixed on finding better ways for companies to work in a smarter ways with suppliers to source more innovative ideas and other benefits. “We are spending a lot of time figuring out the best way of bringing the external supplier, who can provide a lot of innovation, into the organisation. “We don’t know all the answers yet. But acquiring Meronomi is part of that journey for us, as is international growth.”
Strafford says a lot of companies are challenged by the fact that to be more entrepreneurial, agile and fast-moving, they need staff to be more entrepreneurial. “The difficult bit is that the really entrepreneurial people are entrepreneurs. Companies are recruiting from a pool of people who aren’t the true entrepreneur-types, if they were, they’d be running their own businesses. So is it easier to deal with entrepreneurial suppliers and harness their abilities, particularly if you spend more on suppliers than you do on staff?
“The challenge is that the entrepreneurial companies aren’t necessarily the biggest ones, so as a business you’ve got to be willing to deal with mid-size or smaller organisations who are more nimble and more entrepreneurial,” says Strafford. “That goes against the grain of business over the last 30 years which has been to rationalise to big suppliers. It goes against the economies of scale argument. Quite a lot of large organisations we are dealing with at the moment are beginning to grapple with these ideas,” he notes.
Strafford has been in the procurement game for a long time. For three decades he has been working on supplier-based solutions that can exploit changing technology and provide better solutions in changing market conditions.
As a member of both the Chartered Institute of Purchasing and Supply and a Fellow of the Institute of Chartered Accountants, he wears two hats offering him insights into the role finance plays in supply chain economics.
As such he is a regular speaker in this space, discussing themes such as the future of the procurement industry, virtualisation of business and how companies can get more out of supplier relationships.
Coming from an entrepreneurial family background, Strafford was keen to develop businesses himself and after studying PPE at Oxford University and training as a chartered accountant at KPMG, he met future partners with whom he launched the business that would become Proxima.
In this role as EVP market engagement at Proxima he has responsibility for market-facing programmes to help clients and industry leaders bring context to the challenges procurement faces within their organisations.
“We had this idea there was something in procurement. I had just done some procurement consulting work and could see that there had been a lot of development on the sales side in training and the sales proposition, people were thinking about that side of the P&L. Then in the early 1990s we had the de-layering movement, which was all about addressing the people cost of a organisation.
“We started to ask who’s dealing with procurement? In the mid-1990s we developed a consultancy to help large companies address their spending challenges. But we then developed a second business called Buy.co.uk to help consumers buy utilities and other services- almost an early version Moneysupermarket.com,” says Strafford.
But in the internet slowdown that followed, Buy.co.uk was sold off and the partners bought out shareholders and focused on developing the consultancy- as procurement and outsourcing became more mainstream. “We started growing business providing procurement and outsourcing. What has then happened over time, in recent years, the outsourcing has gone down but procurement has got a lot more sophisticated than it was, with large businesses looking to finesses their procurement capability,” says Strafford.
The business evolved into buyingTeam, one of Europe’s leading provider of end-to-end procurement services. In 2012 its name was changed to Proxima, reflecting the scope and range of services that the company now offered its portfolio of blue-chip, multi-national clients in a changing environment.
Strafford describes the many factors that are changing the landscape: increased value from virtualised business models, the move from a manufacturing to a service-based economy and regulatory and structural changes that have led to the UK becoming a centre of procurement with 20% of world outsourcing market based in Britain. “We’ve adapted as the landscape has changed,” he says.
Given that the post-Brexit economy is expected to bring a slowdown, there is a huge onus on improving efficiencies in the supply chain, says Strafford. “If we think that the economy is going to soften in the next year, year and a half, part of where we’re going to go is to help organisations become recession-ready. It’s about tightening up, so that you’ve got a war chest when going into a recession,” he says.
“Operating in a smarter, more efficient way gives you more cash to do different things and operate in different ways. There’s lots of research supporting the idea that those who invest during a recession do better than those who don’t coming out of the other side, by creating a war chest to take advantage of the opportunities that a recession may bring.
“Getting good discipline now means you’re training the organisation, preparing it to become match-fit for what is going to be a different type of match. In good times everyone is worried about growth, making good operational trade-offs to get growth, but now we might be at a stage where the answer is trying to get fit in order to be more recession ready,” he says.
All these elements point to a world of greater collaboration with suppliers. “An absolutely logical consequence of what has happened over the last 30-40 years of more trade and specialisation, that there will continue to be organisations having to constantly reassess what are their key value-creating levers are. The answer may well be looking at what others can do better so that companies can focus on what they’re best at,” says Strafford.