Ivalua NOW 2023 – Dispatch #2: From PROcurement to PREcurement: Managing the Evolution

Ivalua NOW 2023 – Dispatch #2: From PROcurement to PREcurement: Managing the Evolution

The Ardent Partners analyst team descended on Nashville on May 3rd and 4th for the ivalua NOW 2023: Americas conference. This event was well attended and came on the heels of the company’s slightly larger EMEA conference which was held in Paris at the end of March. Ivalua typically selects unique venues for its annual user conferences and this year was no different with the event taking place in the Country Music Hall of Fame and included field trips to the Grand Ole Opry and Gibson’s Garage.

It has been 10 years since Ardent first attended (and participated) in Ivalua’s annual event back in 2013 and it has been a pretty impressive decade of growth and innovation for the company. Ivalua reached many major milestones over the past year which included: passing 900 total employees, exceeding $150 million dollars in annual revenues, supporting almost 1500 certified Ivalua consultants, and launching the “Environmental Impact Center.”

Over the next few weeks, we’ll be sharing dispatches from various sessions attended at the event. Last week, Ardent Partners’ founder and chief research officer Andrew Bartolini shared our first dispatch detailing the opening keynote from Ivalua CEO David Khuat-Duy.

Keynote Session: From PROcurement to PREcurement: Managing the Evolution

Today’s second dispatch from the ivalua NOW 2023 event features Nadia Malek, vice president procurement and administrative services for Desjardins, the largest federation of credit unions in North America, and her keynote session titled “From PROcurement to PREcurement: Managing the Evolution.”

Malek focused her discussion on the evolution of procurement from a cost-focused function to becoming a strategic role in the enterprise where data analysis and engagement with the business and suppliers are paramount. She shared her beginnings in procurement as a cost analyst at Bell Helicopter in 1993. Buyers would approach her about price increases suppliers were demanding. It was her job to examine the labor and material costs to arrive at a number that made sense for the business — usually significantly lower than what the supplier demanded. If buyers achieved that target, it was a sign of procurement excellence. Those days of going into the cost trenches and emerging victorious are now gone. It is a different environment today.

Instead, Malek says due to market complexities, there now needs to be a three-pronged approach to procurement: pre-procurement, procurement, and post-procurement with data at the center. Data is the key to the evolution of procurement enabling CPOs and their teams to turn data into valuable information — a rare skill in the enterprise. She delved into a few major areas of data focus to illustrate this point.

Structured data. Throughout her career, Malek asked executives and procurement colleagues at every company she’s worked for how much is spent with suppliers. In most instances, few knew the answer. At Desjardins, it’s $3 billion, with 80% spent with 120 suppliers — a stunning amount for a company with a large social and economic impact on its communities and Canada in general. It also represented a tremendous volume of data. Enter Ivalua.

Ivalua partnered with Desjardins to structure its data throughout the company. This initiative led to two strategic outcomes: It enabled Malek to create conversations with stakeholders around various data points as well as establish the credibility to initiate those discussions and build bridges between procurement and business colleagues. The effort also assured goal alignment among procurement, business units, and the enterprise. Armed with the appropriate data, Malek can address potential supplier risks associated with spend allocation, diversity goals, and environmental metrics prior to contract negotiations. These pre-procurement discussions are void of cost analysis, and instead are more broadly focused on business objectives and risks.

Data security. Data is the crown jewel of the enterprise and it needs to be protected. Data resides internally and externally with cybersecurity as a focal point of risk mitigation. As a financial institution, Desjardins security of customer and member data is even more critical. Procurement should be involved in that initiative with awareness of the IT security measures in place. Why? Because a data breach will involve questions for procurement around contracts and clauses concerning security. Thus, it is imperative to have structured contract data and know where specific information resides.

Third-party risk management. Twenty years ago, few in procurement were thinking about third-party risk, says Malek. Today, it’s a topic of daily discussion — with geopolitical issues, material shortages, and supply chain disruptions dominating conversations. As such, there exists a deep interconnection between procurement and the supply chain that must be managed — and risk mitigation through data analytics plays a crucial role. Approach these risks by extending bridges with external suppliers and building a partnership to address looming threats.

In many ways, CPOs and their teams are now engineers. The bridges they’re building today internally and with customers and suppliers are part of an evolving environment. The world is changing, and procurement must evolve with it. At the same time, it’s imperative that procurement build its story for the present and the future. Define procurement policy in the enterprise. Develop a technology roadmap. Ask for the resources that procurement needs to do its job.

As the world evolves, protect your information, initiate data discussions, and build your story for how procurement is perceived within the enterprise and beyond.

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