Sebastian Chua is the epitome of a progressive procurement professional. Formerly serving as Chairman, The Procurement Council, Supply Chain Asia. Highly decorated throughout the Procurement World Sebastian provides candid responses to the questions we posed.
Sebastian, how has your procurement function evolved, and the expectations placed upon it changed over time?
As the head of procurement in a public agency I was tasked to to transform its procurement from a back-end administrative function to a strategic business enabler. Prior to the transformation, the procurement’s focus is primarily on compliance to the Instruction Manual, publication of tenders and quotations, processing of PO and prevention of lapses or fraud.
The full value of the procurement discipline is not consistently recognised and not optimally leveraged in achieving business commitments and success. Procurement therefore must transform to communicate its value beyond compliance, uncover new opportunities to stay relevant and become a strategic business partner.
Since then, we have always endeavored to create value and deliver results for our stakeholders, while upholding public accountability. We strive to enable business success through our vision, mission, theme, and motto.
Our vision is creating values, delivering results. This is made possible by our motto where procurement constantly discover new values to deliver different results.
Our mission is to enable business success through collaboration, and not just dealing with day to day purchasing matters.
We stand by these 3L’s of procurement themes – To listen, To Learn and To Lead.
We also applied the balanced scorecard concept of “Internal Business Process”, “Customers”, “Financial”, “Learning & Growth” to deliver a holistic procurement value in terms of “Proper, Simpler, Faster, Closer, Cheaper & Smarter”.
Over the years, we have shifted from tactical procurement to strategic focus, developing a procurement portfolio consisting of category management expertise, supplier risk management, and supplier relationship management, in building market capability and driving supplier-enabled innovation.
Today, the procurement function is expected to:
Know our business: We spend time in understanding the long-term ambition and current priorities. We ask, be curious and stay interested.
We understand our company’s growth targets and how much we can impact financially on the growth targets, and also how much our supplier innovation can contribute to the growth.
Know our suppliers: They are our company’s external resource with an infinite pool of outstanding capabilities, talent, solutions, and we should bring them in.
We can help to identify, select, develop, and manage the best suppliers with a view to maximizing their contribution to our business strategy.
Engage with true intent: We know our audience – their motivations, objectives and engage them in a manner where our intent aligns with their business needs. Collaborations are formed when both parties understand each other’s intent and meet/exceed those expectations.
We never talk about saving money first. Most stakeholders will think that all procurement cares about is saving money and when we save money, they will get their budget cut. Instead, we ask our stakeholders – What is important to them? Have they had any quality or delivery problems or are they seeking for any innovative solution?
We make sure that our functional story takes second place to our business story when it comes to building powerful relationships with our key stakeholders. We focus the majority of our CEO face time on super-strategic issues and how we plan to handle them, and the decisions we need. We keep our functional KPI’s and the engineering of procurements’ processes in the background unless asked.
Enhance our procurement brand: Our brand is at the core of the relationship. To enhance our brand, we need to invest in our procurement team to ensure they have the capability and capacity to deliver. Our solutions should be user friendly, self-service, and customer centric. Finally, our processes should be balanced – moderated so that we are not seen as complex or overly administrative, burdensome.
We build trust at the core of our relationships. Building trust requires time, patience, and commitment of resources. Trust cannot be a flavour of the month. It requires leading by example from the CPO and leading by example at every procurement level. Our key performance indicators must be aligned with the objective of trust in focus.
How do you feel procurement is perceived in general? Why is this so?
In most companies, procurement is perceived as an unglamorous, unloved part of the business. A fast track to nowhere. Sourcing and supplier management is strictly about costs, and all that matters is playing hardball to get these as low as possible. Procurement has no connection to innovation or strategy or creating positive value.
Why is this so?
There are many contributing factors, internal and external.
Internally, how do we as procurement people see ourselves? Do we have the desire to change? No one can teach us the passion, purpose, drive, and innovation. Only we can be our own worst enemy.
Many times, we are surrounded with negative thinking people, so we don’t grow. We should change our environment in order to watch our growth. And no matter how much the world tries to hold us back, we should always continue with the belief that what we want to achieve is possible.
Believing we can become successful is the most important step in achieving it. The conditioning of the mind is very strong. When we condition ourselves to be tied down, we lose. Breakthrough thinking is required to break new grounds.
Shall we still struggle with these 3 myths of procurement?
We Cannot Rock The Boat
We Cannot Fail
We Are Too Junior To Make A Difference
The truth is that really it is up to all of us! We can rock the boat when it is the right thing to do. It is not about failure, but rather the learning and adapting. Everyone and anyone can make a difference. So, are we ready to accept the truth?
To accept the truth, as an individual, we need to find new ways of doing things, and not rely only on the tested solutions. When faced with a challenge, we should believe that we already have the keys to innovate, not the tools and technology, just a change in our attitudes.
As a manager, we have the responsibility to create the space for our staff to allow innovation to happen.
As an organisation, it needs to cultivate a “do less achieve more” culture rather than focusing on “doing more with less”.
Training is sometimes seen as the fix-it-all solution. Can we fix issues just by teaching people to be transformational or innovative? Besides training and development, there are other ways that need to be fixed as well in cultivating an innovative culture. For example:
A culture that needs to be addressed
Work processes that need to be optimized
Discussions that need to happen
Silos need to be torn down
All these happen outside the training environment.
Externally, how do we manage our stakeholders’ perception of procurement? The single biggest challenge for procurement has always got to be with stakeholder leadership. Usually, this comes from complaints like: they don’t value us, they resist the change we want to make, they don’t bring us in early enough to the conversation.
Procurement has to manage the on-going challenge of not only extracting value but communicating this value to our business leaders. Ultimately, value is in the eyes of the beholders.
In my experience of 25 + years in procurement, the same issue still keeps coming around. The truth is that these challenges won’t go away unless we make them disappear! Do we see these stakeholders as our customers? Do we examine what their experience is in dealing with us? After all, we do provide a service to them.
Most of us understand that a high performance does not guarantee us a high customer satisfaction! The key factor to customer satisfaction is to focus on business contribution, not so much on our procurement performance.
When I first embarked on a transformation project, I asked my key stakeholders: what are your best interaction with procurement?
Their reply was, no interaction. So what has gone wrong?
To be honest, quite a lot and it has got to do with procurement not properly managing the perception. As a result, procurement is not commonly perceived to be innovative.
Perception can be a reality and it can kill our reputation.
What should procurement do better?
Research has shown that Procurement should be regarded in a new light, because it has the potential to be a CEO’s secret weapon in these fast-moving, disruptive times.
So how do we start?
First, we can start with three “A” protocol:
Ambition – we must have a strong sense of ambition, believing in a better future for procurement and together we want to build that future.
Action – We must move to act and not be paralysed by overthinking or the fear of failure. It is only through thinking and doing, that we can learn more and prove what works and what does not.
Alignment – The solutions to our problems today cut across the domains of different stakeholders. We need to draw connections between problems and solutions.
To transform, we have to accept that all things are difficult before they become easy. It will always seem impossible until it is done. There is no golden rule for transformation. We just have to try, learn, change, and try again.
It is in our nature, for most of us, to prefer the status quo over uncertainty and worry about trying new things that would cause us to make mistakes. These are valid concerns. However, we need to look beyond these uncertainties and worries, and be open to new ideas and adapt to new realities. Most importantly, we are clear of the objectives to be achieved, plan in advance and understand the trade-off.
True transformation comes from true influence. However, the painful reality is, if we cannot get buy-in from other people, then our ideas of transformation will not get any traction. Sometimes, it is the simplest ideas that move things and people in ways we never imagined. To transform, it does not mean we have to achieve big things. It can start with this simple principle: THINK BIG, START SMALL, ACT FAST.
To transform, we also have to accept that there will be risk of mistakes or failure when we try!
Why is Failure so important for success?
Failure creates thinking, it encourages problem-solving, and it builds our character. I like this saying, “Good decisions come from experience. But experience comes from bad decisions.” Indeed, success is not final, failure is not fatal. It is the courage to continue that counts.
However, most of us, including me are fearful of failure.
Fear has two meanings: Forget Everything And Run (F.E.A.R) or Face Everything And Rise (F.E.A.R). The choice is ours.
Next, we need to find out what defines a success. To me, the theory of success refers to the quality of our business conversations. Often, a quality conversation would determine the quality of our decision or action. For Procurement, our success is defined by how well we shape and manage the web of relationship, within and outside our organisation.
To transform procurement, it is essential to make it easier for people to come to us, make it fun and interactive. Have a mandatory policy to set procurement in place, but once that is achieved, make people want to come to us rather than they must, because of the policy.
In a non-mandated environment, procurement must consistently sell its value. However, most procurement people seldom include sales techniques as part of their career development.
Procurement should drive innovation by putting stakeholder’s value first. If we save money and diminish their ability to succeed, then we are counterproductive as our stakeholders will not engage us again.
Therefore, we need to embed a service culture into our way of working, and this can begin from a conversation with an end objective of a true partnership. When I solicit feedback from the business leaders on areas of development for procurement, this is the reply that I received occasionally – Procurement sometimes does not listen to understand, they listen to reply.
The first rule of any business is to listen to the customers. Procurement is a customer centric function where listening is so important.