Like their American neighbors, Canadian companies are beginning to transform procurement into a strategic, centralized function. They are shifting away from procurement models focused solely on cost savings and vendor management in favor of those that drive revenue and real business value.

1. The Director’s Report:
DRIVING BUSINESS VALUE THROUGH
PROCUREMENT
By Marissa Alvord, Program Director, ProcureCon Canada
CANADA
This report was prepared using data gained from 6 weeks of intensive research and
interviews with industry leaders.
CANADA

2. The Director’s Report: Driving Business Value Through Procurement
Canadian Procurement Teams Evolving Into Strategic
Centralized Sourcing Centers
While the effects of the economic downturn of 2008 were
felt in every corner of the globe, its impact on the Canadian
economy was not as pronounced as it was on the economies
of the United States and Western Europe. In the United
States, companies responded to the downturn by rethinking
corporate structures and developing new ways to improve
their bottom lines. One of the primary innovations American
businesses developed was the transformation of procurement
into a strategic, centralized function. Over time, US companies
shifted away from procurement models focused solely on
cost-savings and vendor management in favor of procurement
departments responsible for driving revenue and creating
real business value. It has become increasingly clear that the
procurement department can deliver great value to the bottom
line very rapidly.
Because this innovation was born of necessity, Canadian
companies did not experience the same sense of urgency
to adopt this new paradigm. Canadian companies have
traditionally lacked centralized procurement departments,
leaving many departments and business owners to handle
their own purchasing. This paradigm is changing, however,
and we are seeing a shift in Canada to a more centralized
procurement structure in which all purchasing comes through
the procurement department. Like all organizational shifts, this
has led to some resistance to change. As a result, procurement
teams are now tasked with developing more precise
purchasing knowledge while conveying to business leaders the
value procurement can bring to business as a whole.
Creating a centralized and efficient procurement department
requires lots of capabilities including ERP systems to cut
POs and manage orders, spend analytics tools to get a clear
picture of spend, market intelligence to make informed
decisions, vendor management tools to ensure relationships
with suppliers are well managed, risk management software
to assess and manage the risks associated with sourcing in a
global market place, eProcurement solutions, Pcards for staff
purchasing within a certain threshold, reverse auctions to get
a competitive price in an RFP, and Procure to Pay software to
integrate purchasing with the accounts payables department.
One of the biggest shifts we’re seeing is a move from
transactional vendor relationships to true supplier partnerships.
On both sides of the supplier relationship, parties are looking
to establish true partnerships that will deliver supplier
innovation. True supplier innovation means partnering with
a supplier to reduce cost and add value, such as reducing
product packaging to achieve cost savings and become more
sustainable.
With procurement teams tasked with delivering maximum
business value, simple cost cutting is no longer an adequate
strategy. Instead, procurement departments must begin
thinking more innovatively about creating additional revenue
streams.
From a talent perspective, as procurement teams expand,
junior buyers are entering the ranks, many of whom lack some
of the soft skills and market knowledge necessary to do the
job. Companies in the US and Canada are experiencing a talent
shortage. Additional training is needed to bolster skillsets
and succession planning is becoming a priority as seasoned
procurement professionals prepare to retire.
The ever-changing global marketplace requires procurement to
keep up-to-date with global markets, commodities, news, and
risk. Economic fluctuations contribute to the foreign exchange
rate, which has huge implications for a company’s decisions
about offshoring or re-shoring. Developing a presence in Asia
presents additional challenges for risk mitigation and quality
assurance. Finally, supply chains are susceptible to a variety of
risks at any moment, from natural disasters to geo-political
tension to conflict. Procurement teams must have contingency
plans in place to ensure the supply chain is not disrupted.
With a variety of important new challenges and opportunities
facing Canadian procurement departments, it is more
important than ever for procurement professionals to exchange
best practices and learn how best in class procurement teams
are performing. ProcureCon Canada is the only forum for
those professionals to make the connections and develop
the knowledge necessary to transform their procurement
departments into centralized profit centers.
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“I think the bleeding is over. We still have competitive
pressures, but what I’m saying is that the industry is in
position to take advantage of the stronger U.S. economy
and the fact that the dollar has depreciated by 10 per
cent is also significant.”
– Benjamin Tal, Deputy Chief Economist, CIBC, April 2014

3. The Procurement Industry’s Top Drivers
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Solving Procurement’s Top Challenges
Now more than ever, procurement
departments have to effectively manage
internal stakeholder relationships and
overcome resistance to change.
As procurement has become a centralized function,
procurement departments have worked to align with other
business units in order to deliver maximum value. This has
meant the consolidation of purchasing responsibilities under
the centralized procurement division, which has had to develop
a deep knowledge of each individual business unit. The
challenge for these centralized procurement divisions will be to
effectively align critical business goals with procurement goals
in order to generate comprehensive business value.
Cost cutting is no longer enough;
procurement divisions must deliver
value and drive revenue through
innovation.
In the shift from transaction-driven to business-driven,
procurement departments must seek out new ways to drive
revenue and deliver greater value to the business. In order
to create greater business value, procurement divisions
are focusing on a variety of competencies and capabilities,
including process automation, integrated solutions, data
analytics, spend analytics, and risk management. The
relationship between procurement departments and suppliers
has evolved into a partnership, rather than a transactional
vendor management approach. This in turn has helped to drive
supplier innovation.
The globalized nature of modern
procurement presents an array of
unique challenges and opportunities.
Shifts in foreign exchange rates can have huge impacts
on a company’s ability to buy offshore. Rising labor and
energy costs in Asia can affect material pricing and availability.
And changes in government policies like customs procedures,
tariffs, and trade regulations can sway purchasing decisions.
Procurement teams operating in the global marketplace must
keep up-to-date with a myriad of issues in order to make sound
decisions. Global sourcing also presents a huge range of risk,
including natural disasters, inclement weather, and geo-political
crises, among others. Procurement professionals must ensure a
harmonized global procurement structure to maintain quality
and ensure a compliant and efficient supply chain.
Staffing and succession planning
continue to be a challenge.
As procurement departments expand, many are experiencing
staffing challenges. Many teams are seeing a gap in experience,
with junior buyers entering businesses without some of the
skills necessary for success. At the same time, many seasoned
procurement professionals are beginning to look toward
retirement, creating a need for sound succession plans.
Procurement teams are now looking to align with other business
units to understand their needs and map capabilities to ensure
robust staffing that can support a changing environment. Finally,
training must be reexamined to consider what is necessary to aid
career progression and improve staff retention.
Today’s procurement professionals have been tasked
with creating real business value for their
companies, particularly by driving revenue. The focus
on revenue generation has increased the demand for
automated tools to analyze spend and examine market
intelligence.
The C-suite is looking for procurement to align with
business units to deliver increased value across the
business. This requires procurement professionals to
build relationships with internal stakeholders and
overcome resistance to change.
Staffing is a perennial challenge for procurement
departments. Unfortunately, we are beginning to see
a gap as junior buyers begin their careers and seasoned
procurement professionals look to retirement. The time
is ripe for sound succession planning and strategies to
retain staff.
The industry is experiencing a shift away from
vendor management to supplier relationship
management. In this model, procurement
departments must treat suppliers as true partners to
optimize value and drive innovation, which requires
a more robust approach to supplier relationship
management.
As companies become more global in scope and
in supply chain, procurement must keep up with
a constantly changing market environment. This
includes global supply chain risk management
and offshoring and reshoring strategies.
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The Director’s Report: Driving Business Value Through Procurement

4. The Director’s Report: Driving Business Value Through Procurement
Why You Should Attend
Procurecon Canada
ProcureCon Canada brings together Canada’s top procurement experts
·· You will network and learn from 45+ procurement executives from a variety of
industries who will share best practices and case studies in a practitioner-driven
format.
Highly interactive format
·· Targeted presentations, roundtable discussions, panels, and structured networking
functions to ensure meaningful engagement, a variety of learning formats, and
deeper networking.
Fresh content
·· Staffing and succession planning, supplier innovation, sourcing in Asia, and
analytics and sustainable intelligence are just some of the new themes we will
cover this year.
Access the leaders you want to meet and develop meaningful relationships
·· With 200 senior-level attendees, ProcureCon Canada is large enough to meet
a diverse range of new contacts, yet intimate enough to cultivate in-depth
discussions.
Vendor attendance and participation is limited
·· Experience true peer-to-peer learning and networking, instead of a series of sales
pitches.
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Want to hear more from Canada’s premier
procurement leaders? See what they will be
discussing at ProcureCon Canada 2015.
CANADA
Click Here For More Info Download the ProcureCon Canada Agenda
CANADA
“Canada’s manufacturers
kicked off the
second half of 2014
on stronger footing,
clearly benefiting
from improving global
economic activity – it’s
encouraging to see
the momentum. And
with the U.S. economy
pushing ahead, we
expect this trend to
continue.”
– Paul Ferley, Assistant Chief
Economist, RBC
CANADA
CANADA