Uncertain times require targeted measures - also in procurement. Jan-Henner Theissen, founder and CEO of the purchasing consultancy targetP!, knows exactly what such measures should look like. In this interview, he explains how digital solutions are shaping modern procurement, why it's not too late for good risk management, and what he thinks of the upcoming Supply Chain Act.
Mr. Theissen, you recently published a book entitled "Digitaler Einkauf im Mittelstand". With this book, you want to encourage small and medium-sized companies to eventually go digital. Why do you think this transformation is still happening so slowly?
This is precisely the question we want to answer: Why is progress often so slow? I was lucky enough to be in charge of my first project in this field back in 2002; at that time still like a kind of pioneer. But now it's 2022, and what I and many of my colleagues see is that there is still a great deal of reluctance and even fear when it comes to digitalizing procurement. At the same time, there is simply a lack of understanding in many places as to what digitization actually means in its entirety. Digitalization involves much more than simply buying one or two digital systems and then implementing them.
And you want to clear up this misperception in your book now?
After all the projects we've done, we thought: Let's just share our experiences. Let's just try to give people something away from classic literature and classic hero stories that takes away a little bit of the fear and brings a little bit more clarity. What does it mean to adopt certain digital solutions for procurement? What can I really achieve with them? How can I improve my value proposition? How can I increase my impact as the procurement department? Simply sharpening the understanding of what digitalization can really do for me.
But just gaining this understanding is not enough, is it?
Even if I make myself unpopular now: Unfortunately, you still see procurement managers in medium-sized companies who find it very difficult to argue these issues internally and who then give in immediately at the first resistance. I consider this a great pity, because in procurement I am used to pushing things through and, if necessary, dealing with resistance. But it's just as much the fault of the external view of the system providers, who find it just as difficult to get this message across.
Let's take a look at the current state of the global economy. This should have benefited the procurement sector over the last few years, do you agree?
The past few years certainly played into the procurement departments' hands. Simply because we have seen what it means when supply chains are suddenly no longer stable and when availability is no longer guaranteed; what procurement can do for a company in such a situation if it is powerful and if it has the means to act. I think that was a genuine "wow" effect for many companies in the past few years. At that time, many managers also realized: We now have to invest into our procurement department.
Do you currently sense this change of mindset at the companies you advise with your consultancy?
According to some partners and providers of digital solutions, business has slowed down again somewhat in recent months because more attention is being paid to the issue of cost management. Now it's more like: Yes, we want to invest in digital solutions, but we have to put money into other things first; for example, into new supplier relationships or the relocation of production sites. So on the one hand, the current situation is perfect for procurement to show what it can achieve to stabilize a company in a crisis. On the other hand, there is of course the problem that the corresponding funds are simply not available in full or as budgeted. And then, of course, it becomes relatively difficult without the right arguments.
So, in addition to money, courage is currently needed to get a grip on the situation in the long term?
The second aspect is the more important one to get a grip on the situation. Saving money alone is not enough. Procurement has long wanted to get out of this situation of being perceived only as a money-saving machine. Instead, we want to make a holistic contribution to value. In times like these, this means that the material arrives on time, that I am in a position to produce and deliver, and thus perhaps also to generate a competitive advantage for my company. But it also means that I have stable supply chains and am able to come up with innovations even in times of crisis. But that really takes courage.
But isn't this all taking far too long in light of the current difficult situation?
If I invest now, I definitely have the chance to achieve this famous return-on-investment immediately. For example, if I start managing my costs now or launch cost optimization projects and implement them professionally and with the support of digital solutions, I will see the successes immediately or very soon.
In addition to digitalization, you are also focusing on the topic of risk management. How can this area contribute to the current situation? And doesn't good risk management at best start already before a crisis?
That' s right, risk management always starts before the crisis. Today, forecasts from economic institutes and risk experts suggest that things won't get any easier before 2023 or 2024. Actually, I don't want to sound too negative, but we are also assuming that the next two years will be more than challenging. The topic of risk management therefore remains a top 3 priority for every purchasing organization.
In the second part of the interview, Jan-Henner Theissen will tell us what modern risk management can look like and what he thinks of the upcoming Supply Chain Act.
You can already take a look at Jan-Henner Theissen's book: Find the book
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