Tradeshift CEO Christian Lanng took the stage in Orlando, Florida at ProcureCon Indirect East yesterday to discuss procurement, digital disruption, and why the two go together now more than ever. He started off noting the shakeups affecting every major industry.
“I’m not a procurement person, I come from the software industry. We’ve been working on disrupting all of the collaboration between buyers and sellers…There’s a massive amount of change going on among the Fortune 500…I’m working with companies right now that are fighting for their lives.”
The talk centered around the agility imperative for large companies. Those failing to adapt their tools and processes face a steep uphill battle and constant onslaughts from would-be disruptors. Lanng continued with the example of Dollar Shave Club, a disruptor that’s gone from non-existent to the foremost online seller of razor blades and the second overall seller.
They were able to accomplish this beginning with a launch produced in one day for $4,500. It was, of course, their massively popular YouTube video–since watched 22 million times.
But what does a shaving upstart have to do with procurement (other than well-groomed facial hair)? The industry leader took 24 months to respond to this emerging competitive threat. This wasn’t as much a business intelligence blunder as it was one of production and strategy–disciplines resting at the core of procurement.
If procurement at shaving incumbents like Gillette and Schick had had the ability to rapidly evaluate and shift vendors, implement just-in-time delivery, or the charter to look beyond cost savings to strategy, the story might have been different. Instead, the incumbents’ supply chains were simply too rigid to change course and in less than two years they had been completely disrupted.
How can you prevent this?
The Chief Procurement Officer is now the Chief Agility Officer. There is no more such thing as “savings as a service.” Instead, the mantra is now:
But this can’t be accomplished without the right tools. That’s why Tradeshift got into procurement. Because businesses can’t be agile in a world of catalog buying and preferred vendors. Those are the relics of a strictly cost savings-orientation that no longer works. Instead, businesses now need the ability to buy anywhere at anytime, mimicking the flexibility of consumer buying. This isn’t something to avoid, it’s how to empower employees to get ahead of strategic threats and protect market share.
Consider that Silicon Valley funded $50 billion in startups last year. That’s $50 billion in new competition. Many of these companies are placing technology accelerating at the pace of Moore’s Law at the core of their business. It simply isn’t an option for the Fortune 5000 to be static. Supply chains and the procurement that fuels them can be a great strategic asset if leveraged properly–or an albatross around the neck if not.
“This is a perfect storm of change happening and we’re sitting here talking about how we can tweak our processes 5%. It’s a little bit like rearranging the deck chairs on the Titanic to be frank…We want to move from efficiency to responsiveness. It’s not just about being effective, it’s about being responsive and agile. Command-and-control will have a very hard time fighting against someone who can make decisions in real time.” – Christian Lanng
Check out the complete presentation:
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