Procurement should move from Saving As A Service (SAAS) to Value As A Service (VAAS)

2 min read

Oct 1, 2023 8:58:46 PM

At the Digital Transformation workshop of the Control Towers group I was inspired by the keynote of Mikkel Hippe Brun (Co-founder, Tradeshift) that gave an inspiring speech about how to be disruptive in your business.

He started off with an example of the Dollar Shave Club that was disruptive by launching their business with a viral video and an innovative idea. Within three years they were able to conquer 53% of the online market and 20% overall. Would your business be agile enough to respond within 24 hours to this disruptor with a campaign that only costed $4,5K?

The Dollar Shave Club was valued 1 billion dollar only a few months ago and is considered by their customers as a lifestyle brand instead of a company that sells commodity products. This is a classic example of having a product that is demand driven instead of traditional procurement where you would focus on acquiring the right goods, in bulk, in faraway locations with a long lead time.

What’s happening today that creates this kind of change?

Exponential Innovation (we’re used to build progress, come up with ideas, invest resources in product development -> disruptors uses network of internet and partners all of the world as resources to come up with ideas and build ideas in a platform fashion)
Hyper competition (leverage a huge network of partners all around the world; not dependent on own resources which is scalable)
Unpredictability (in the market)

This example affected the biggest manufacturer of razors but you might think this will never happen in your business. To be disruptive you need to be agile or in the long term facing incompetence will set you back.

"Are you ready to react with agility rapidly?"

How should organizations Change?

From efficiency to responsiveness
From Hierarchy to Networks
From Controlling to empowering
From office and office hours to working anytime and anywhere
From customers and partners to communities and ecosystems

According to a survey of the Hackett group (process improvement leader) innovation was marked as the highest priority by more than 60% of the respondents but only 30% acted on it. In order to manage this change Chief Procurement Officer should become the Chief Agility Officers.

One of the deliverables of CPO’s was to deliver Savings As A Service (SAAS) this shouldn’t be the case anymore but instead they should offer:

Value as a Service (to his/her company)
Agility as a Service
Topline growth as a Service

"How are you going to change your organization to become disruptive?"

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Procurement should move from Saving As A Service (SAAS) to Value As A Service (VAAS)

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