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Star trio urge procurement to be innovative

Monday, October 30, 2017


L - R: Gordon Donovan, Rick Newnham, Sam Walsh and Mark Lamb at the CIPS WA Branch event on Monday, 30 October


CIPS President Sam Walsh has urged procurement professionals to develop their business acumen in order to become valuable strategic assets within their organisation.

Speaking to over 100 attendees at a CIPS WA Branch event on Monday, 30 October, Walsh drew upon his experience as CEO of mining giant Rio Tinto to provide insight on how procurement professionals can build their profile within business.

“When procurement start to think of themselves as business people who work in procurement, rather than procurement people who work in business then they can really start to unlock value and gain influence,” Walsh said.

With the event focusing on procurement’s role in the business of the future, Walsh expanded on how procurement can keep its relevance within business going forward.

“Understanding what creates the right value that your business partners need is critical.  Have you ever bought something and not fully understood what is was for? Then how can you begin to understand where to unlock the value? Ensure you have a good nexus with your end customer and understand what creates value for them.

“At Rio Tinto procurement was always aligned with the company strategy and the savings achieved were instrumental in making us a sustainable business, in what is a pretty turbulent market. We took $4.8 billion of costs out of our business and procurement made up around $2 billion of that.”

Taking place at the Pan Pacific Perth, the event commenced with Rick Newnham, Chief Economist of the Chamber of Commerce and industry of Western Australia, providing an economic overview of Western Australia.

Of particular note, Newnham highlighted that innovative start-ups are increasing exponentially and while automation will positively impact on work-life balance, 40% of operational jobs within Australia will be at risk, with the retail, trade and transport industries at the top of the list. The effects of this have not yet been witnessed however, as WA unemployment remains on trend with the Australia-wide average (5.7% within Western Australia v 5.5% Australia-wide).

Other observations raised by Newnham include business investment is beginning to stabilise within Western Australia following a decline in recent years, and the growing impact of China’s trading has on Australia’s GDP with 1% change in Chinese GDP resulting in a 0.3% change in Australia’s GDP.

The final presentation of the night was delivered by Gordon Donovan FCIPS, Director – Network Value Engineering ANZ at SAP Ariba, who illustrated how the digital transformation is currently underway within business. Donovan highlighted a recent Hackett report which noted that among critical development areas for business, procurement is one that is less equipped to support the business digital transformation objectives.

Donovan further explained that if procurement is to adapt and be recognised as a strategic business function, it needs to also consider digital as only a part of the procurement transformation journey, and start driving value beyond pure cost savings and building stronger relationships with customers and key stakeholders.

As an example of the value procurement can provide beyond cost savings, Donovan pointed to leadership role the function can take in eradicating modern slavery, a particularly relevant issue with two-thirds of the 40-million people who suffer this malpractice are in the Asia Pacific region.

Following the event, attendees had the opportunity to network while enjoying a selection of canapes and beverages thanks to the sponsorship of SAP Ariba.