Procurement consultant Lance Younger explains why procurement services could be on the rise, how consultancy work is changing, and how he recommends clients adapt to digital
Lance Younger’s procurement pedigree is second to none. Having led and delivered transformations at high growth and FTSE 250 companies – including Goldman Sachs, GSK, Vodafone and Dyson – he has undertaken several high-profile consultancy roles with the likes of Ariba and, most recently, Deloitte. Within those roles, he has led teams that have allowed clients and their suppliers to consistently exceed objectives and delivery against key metrics.
He recently became Managing Director at Inverto, the leading procurement and supply chain management consultancy that works with businesses to accelerate EBIT through sourcing and procurement transformation, digital procurement, enterprise cost reduction and supplier management. We spoke to Lance about the shift in procurement services, why consultancy is starting to change and how he manages digital transformation programmes.
Procurement as a Service (PaaS) is getting a lot of press. Is that the next major trend in the profession?
About 10 years ago, there was a lot of hype about it in terms of being able to outsource parts or all of procurement, especially for mid-sized companies and some of the big BPO providers like Accenture, Cap Gemini, Accenture or IBM.
At the time, there was a lot of conversation about it. The supply side was not as mature as the demand was. Companies would consider outsourcing departments or categories to third parties, but they could not offer the same service levels or the savings that were supposed to come from outsourcing procurement.
What I have seen over the last 10 years is the supply-side improve in terms of capacity and the offering has become more sophisticated. PaaS can mean everything from how accounts payable is managed through to how you manage strategic sourcing, through to how you are managing data on particular commodities and prices, through to the provision of software tools as well. You
can see there is a lot of different ways that PaaS can be acquired by organisations.
“I do not yet think it will have an exponential growth; it will happen in increments, it is more likely to be more significant where procurement is not viewed as significantly as other departments”
Tech is the great enabler. Is it making PaaS more realistic or attractive?
What I have seen more of recently is the bundling of bits of services and software. Some might argue technology and knowledge management has accentuated that, so it is a lot easier for providers to package up solutions, insights, knowledge or actions into packages that people will want to buy on demand. Arguably procurement functions are more agile, so able to use these services in a more on-demand way.
PaaS is increasing because supply and demand is more sophisticated. I do not yet think it will have an exponential growth; it will happen in increments, it is more likely to be more significant where procurement is not viewed as significantly as other departments, so financial services
The other thing to bear in mind is that because procurement’s remit has expanded from commercial to risk to innovation to sustainability, what you are seeing is different ways of procurement being used as a utility. Basically, procurement is either providing or accessing information, for example in third-party supplier management or risk management, which is more of a utility. So it is not just about cost, it is about risk and innovation.
Is this development blurring the lines between procurement consultancy and procurement utility?
The lines are becoming blurred, certainly where we sit. In terms of what we do, if you look at the market more broadly, within the procurement space you have pure pay procurement strategy consulting houses, e.g. McKinsey, that work with the board and operating models. That will be dome as procurement as a service, because it is based on organisational demand and services.
The next level down is where the big four operate – including Deloitte and EY – they are offering procurement consulting. Some of that can be seen as ‘as a service’, but typically, when it is a service, it is on a three-year contract, it is on-demand and you work in a partnership. You want someone on X day to do Y thing; and you give some a call. That is what a lot of consulting teams would like to do.
You then have BPO providers, niche speciality providers that work in the outsourced space. Sitting alongside those are software and tools providers that provide access to indices and services that procurement need.
Our core clients are in retail, consumer products, industrial goods and private equity. Within industrial, we have got automotive, process engineering to manufacturing; we also work with financial services, pretty much across the private sector. We do everything from transformation, operational model, people design, process and implementation; it is digital procurement – the deep dive into designing a digital procurement footprint and implementing it. The digital blends with changes in operating model and shared services.
Tech shifts rapidly at the moment. Does that make sustainable digital transformation much harder to deliver?
I think the bow wave of digital activity was last year, I think now people have a clear understanding of what they want their tech architecture to be like. So while there are still rapid advancements being made in tech, people understand better what the implications are, so they can now absorb that into the organisation better than they could last year. To that end, they are planning for adaptability.
“there are still rapid advancements being made in tech, people understand better what the implications are, so they can now absorb that into the organisation better than they could last year”
OK, so the approach is much more flexible?
Exactly. When organisations approach digital transformation, we recommend a twin track approach, i.e. their core systems, which they are going to change over the medium to long-term and that are combined with their ERP. We combine that with small and fast solutions that are rolled out in 16-week increments and that show an ROI in less than a year. By looking at that, you can do many of the iterations on spend analytics solutions and risk solutions, whilst in turn basically evolving your core ERP solution.
And ROI is critical. It is certainly one of the major barriers in the shipping industry.
If you go twin track, you accept that some stuff will be slow, and you have investment cycles linked into that, and you have some of the things that matter but that are going to be faster, albeit rolled out in iterations. A lot of people, whether they realise it or not, are doing that anyway. In the initial phase, you would implement the modules that are more ROI heavy much earlier; typically, these are analytics and sourcing upfront because that will give you the savings you need to be able to fund the journey, but also demonstrate ROI. From there, it is all about building and consolidating value and innovation.