Workday Podcast: Driving Procurement Transformation Through Strategic Contract Management

Danyelle Guernsey: How do we make sure our business is sustainable in the long term? How can we stay ahead of surprise renewals? Which of our suppliers are essential, and which should we rethink?

These are the kinds of questions that procurement leaders are facing on the heels of the pandemic. And with 95% of sourcing and procurement teams experiencing some form of disruption in 2020, its effects aren’t going away anytime soon. For many companies, the answers to these questions might require a complete reimagining of contract management.

我是你的主人,Danyelle水手衫,今天的Workday Podcast, we're diving deep into contract management and its role in elevating strategic sourcing within the business. Today I'm joined by Canda Rozier. She's the founder and president of Collabra Consulting where she focuses on procurement transformation, sourcing excellence, and cost improvement. Before starting her own business, she was most recently the CPO of Global Procurement and Real Estate at NTT Security. Welcome, Canda. Thanks so much for joining us today.

Canda Rozier: Hi Danyelle, thanks for having me on the podcast.

Guernsey: Of course. So first off, I noticed that you identified yourself as a procurement evangelist on LinkedIn, and I really love that term. So I was hoping we could start with you just telling us a bit more about yourself and your journey and what the term procurement evangelist really means to you.

Rozier: Well, I'll start with the last part of the question. So, you know, by definition, an evangelist is someone who, who, publicly and passionately promotes and supports a cause or an idea. And I feel that's what I do with procurement and sourcing and supply chain. I am absolutely passionate about the best practices, about how to transform organizations, and how to, to really elevate the stature of procurement and sourcing, within a company. So that's why I call myself an evangelist. And I'm glad that it resonated with you.

A little about my journey, I've been a chief procurement officer and also, sort of wearing a couple hats, head of global real estate and facilities at several global companies. I've, as a part of those roles, taken each of those organizations' procurement and sourcing through a major transformation, different transformations, but through transformations in terms of, digitalization, automation, as well as process, policy, procedure, organization, and ultimately, shareholder value.

Guernsey: I totally agree that, you know, evangelist, it's such an active term, right? And I think it really does take that kind of energy and action to propel sourcing forward and to really undergo and drive these transformations. So, I just love that you notice that and identify as that. So, we know that procurement has always been an integral part of the business, but, to your point, when you're speaking about all these transformations, I think procurement itself has undergone quite a transformation in the past couple of decades. And that's only been exponentially accelerated in the past two-or-so years, with the disruption caused by the pandemic.

We're now on the heels of that. We're kind of coming out of the pandemic, but, yet again, we're entering even more economic uncertainty. There's worldwide inflation, we have supply chain and stock market volatility, the energy market's been heavily disrupted. All of these factors are creating price pressures that are challenging businesses, really across all industries. And of course, that deeply affects procurement. So I was wondering if you could take a few minutes just to talk about the state of procurement today as well as the trends that you've been seeing in your own consulting business.

Rozier: You know, you're absolutely right. The transformation within procurement, I think, has been visible to a large degree, probably since the early 2000s. And it’s accelerated over the last ten years, and then, to your point, wow. Since the beginning of the pandemic—the last two-and-a-half, roughly, years—we've seen an acceleration in terms of pressures on procurement, supply chain, and sourcing, and of course, business in general. But how procurement has had to adapt and respond has really come under a microscope, I think, in the last two, two-plus years.

And some of that has created new and different opportunities for how procurement is evolving and how sourcing's evolving. And then along with some of these new evolution points, it's also accelerated and, and really put, almost in the crosshairs - and I, I mean that kind of in good way—procurement in terms of elevating the stature of source and procurement and supply chain as a part of a company's overall risk management program.

And so, I think there's a lot that's been at play and so where does that lead us in terms of trends that I'm seeing? I think that one of the trends is that risk management used to not be part of a typical conversation about procurement and sourcing. If you think back ten years ago, it was very rare that it was part of the conversation. Now risk management is absolutely top of mind for companies, for CFOs, and for procurement leadership. And so I think that's been one of the very good new changes that I've seen is the role of risk management and the role of procurement in, not owning risk management, but in really being an active participant, in using and enabling risk management for a company.

And I know one of the topics for today's podcast is contract management, and that certainly, risk management and the role of contract management are very closely-aligned. And then, of course, there's other aspects of risk in terms of general supply chain and cyber risk that weren't part of the discussion ten years ago, and absolutely are part of the discussion now.

And the other thing that I would add in terms of a trend is the pandemic and the impacts on companies and, as you point out, all the continuing pressures, that are beyond the pandemic in terms of financial, economic, geopolitical, etc. You know, there's so many pressures on companies now, and that has really highlighted the importance of how procurement can help companies do more that they should be doing more efficiently. And technology then becomes a key, a key tool and a key enabler to that. What systems do you have? What visibility to data do you have? What ability do you have to look holistically across an ecosystem of systems and turn that into proactive business decisioning for your company?

Guernsey: Right.

Rozier: I apologize. I may have sort of gone down a rabbit trap there.

Guernsey: No worries. I definitely want to hit on a lot of these points a little bit later on, so thank you for bringing that all up. What I think I'm hearing from you, and correct me if I'm wrong, is that the time is now for procurement. You know, we're seeing this increased emphasis on risk management, like you're saying, this increased need for businesses to really understand, what their contracts mean and what they're really getting from their suppliers, and amidst all this disruption and all of this uncertainty, sourcing leaders are really the ones who can help maintain that business continuity.

But, as you were saying, I think one area that can be especially challenging for procurement leaders is contract management. Even the largest companies often are storing their contracts across different databases and email chains. Maybe they're in shared drives, sometimes even in desk drawers. It can be hard to stay on top of contractual obligations and mitigate that risk. So, I'm curious: what do you think is the role that contract management plays in taking strategic sourcing to that next level?

Rozier:这是一个很有趣的问题,因为ownership doesn't necessarily lie with procurement because, of course, legal, in almost all companies, and often risk management or the audit governance control function in a company has perhaps the primary ownership of contracts management. But as relates to supplier contracts, if procurement isn't, not only just on board, but really an equal partner in the solution for contracts management, my experience is it won't succeed.

And often, procurement must be the driver. And by the way, I've always said my best friends in most of the companies I've worked in have been the attorneys because I've known, as a procurement leader, that I can't be successful and I can't get my job done, nor can my teams, without the legal department.

But often, attorneys say, "We're going to support you through the legal process. Great. The contract's been negotiated. It's been drafted. It's been signed," and as you said, we put it in the anything from the file drawer to the pile in the corner of the attorney's office to the email string to, maybe we scanned it, and we put in a few keyword indexing in our system, and legal is done with it.

So, it falls to procurement most of the time to be staying on top of that supplier contract, and that's everything from knowing when are trigger points that you need to be aware of: early termination, out clauses, auto-renew dates or notices to avoid auto-renew dates, contractual obligations on both sides.

And one of the conversations that I've often had with business owners, with the key business stakeholders is that procurement can't know how the supplier's performing. We're not going to be part of the day-to-day interactions with the supplier. We're not going to know if the supplier is meeting SLAs. We're not going to be tracking KPIs, necessarily, for a supplier. So, it really takes the partnership with the business stakeholder who is day-to-day dealing with the supplier and knowing on an ongoing basis what the business's road map for using that supplier for whatever the goods and services are that you're getting from the supplier. And you've got to have the relationship between procurement and the key business stakeholders and then back with legal.

So, you've got a close-knit working relationship that has to be very balanced. And my experience is that often procurement ends up being the initiator and the driver in that multi-party relationship—sometimes out of necessity, sometimes out of default. But usually, because procurement can kind of sit in the middle, the business owner will be coming to procurement, probably, if there's issues, and procurement already has the original relationship with legal in terms of the contract negotiation. So, it makes sense that procurement is in a leading position, for how to drive this internal relationship around contract management and contract oversight.

Guernsey: Definitely. And I want to hit on a point that you're saying that there's an opportunity here for procurement teams to use that position as kind of the driver of these stakeholder relationships and really step up and, not just support their businesses, but actually guide them through these tricky waters that we're seeing. We have those very volatile supply chains, very uncertain demand.

And I think part of that process, not only having great, great collaboration between all the different teams that procurement works with, but I think part of it is also embracing technology, right? So, I want to talk a bit about that now.

We've seen this giant leap towards digitization across the business, but especially in procurement, which has been historically underserved when it comes to technology. And with so many teams having shifted to remote work, and stakeholders and suppliers now spread across these different geographies. Procurement can be challenged with ensuring one, they know where all their contracts are and what their obligations are; but also, that they’re keeping in line with their stakeholders in ensuring that those suppliers are, are really delivering.

因为采购,当然,不是一个omnipresent force. They're humans as well, so they really need to keep in lockstep with these stakeholders. So, I’d like to know from you, how does technology play into leveling up, not only contract management but ultimately the entire procurement organization?

Rozier: You made a great point earlier that I want to bring back into this discussion, and that's that the pandemic and remote work. What we're seeing—that I think will be, at least for the foreseeable future—some sort of hybrid workplace that will still be heavily weighted towards some degree of remote working. That has really crystalized the necessity for systems and technology to, to enable work across the whole of a company's business, but in this example, specifically around procurement, sourcing, contract management, supplier engagement, and then, of course, the stakeholder.

And I, I think that one of the big lessons that we've learned—and it's one of the things that I'm seeing from some of my consulting clients—is that, if you don't have good systems with a reasonable and adequate amount of integration between them, that you aren't going to really be successful in this remote environment.

Think back, pre-pandemic. If you had a question about how a supplier was performing, or if your key stakeholder had an issue, what would they do? in many companies, they'd walk up and knock on your door. They'd lean over your cube wall. They'd call you and say, "Let's go, let's go meet up and have a cup of coffee," and you'd talk about it. If you really couldn't find the contract, not to fear. Go down to the legal department, go in somebody's office, and say, "Hey, I need your help to find this." And, you might be sifting through some boxes, but you were in proximity to the information. Whether it was the contract, whether it was the supplier performance, description, you had people near you that you could just go and try to work this out.

I know we've all gotten very comfortable with and very used to working remotely with things like video sharing and Zoom and Teams and the other platforms, but I suspect that many people would acknowledge that, “yes, we couldn't have gotten through the pandemic without those,” but they don't solve what we really need from business collaboration. And I think what we have seen is the best way to really solve and enable that business collaboration is with systems----and with transparency and access to data and data that has been aligned between the various systems and the various stakeholders.

Guernsey: I think you make a really important point. There's this, you know, connection between technology and the truly human element of procurement, right? When you're going in and knocking on doors, and you're making friends with your legal department and things like that, that is still so, so important to what procurement is.

And I think technology, it can certainly be this great tool to help teams manage those stakeholder and supplier relationships, but it's just that. Right? It's a tool. To really get the most out of your tech, you need to do the groundwork and make sure those relationships are solid. Which is why emotional intelligence and empathy are such huge parts of being in sourcing and procurement. And when people think about technology and all these new systems, I think sometimes that human piece can get lost. But it's, it's so necessary, and it really needs to be there before you even start digitizing.

Rozier: You're absolutely right. And you summed it up really well. Technology is a tool. It's an enabler, but it's simply a piece of the puzzle. And without that empathetic relationship, without knowing somebody well enough to be able to admit you don't have an answer, but you have a problem, and you need your colleague to help you with something. Having a relationship that lets you do that is critical.

I think that companies sometimes look at technology solutions as a panacea–as the silver bullet. It's going to solve everything. And it usually, in my experience, doesn't take too long before they realize that not only do they need this organizational alignment, but they also need to go back and look at their underlying processes and policies. If you take a tool, you take a system, and you implement it, and you implement, based on whatever your, probably, longstanding legacy policies and procedures are —there's an expression that I've heard since I was a kid, and it was “if you always do what you've always done, you'll always get what you've always gotten.

And I think that is one of the things that I see as being one of the biggest challenges to technology implementation and also perhaps the single biggest differentiator between success and, I'm not going to say failure, but less-than-desired success. And so, you can't just say, "Oh, we got a solution. This is great," tick the box, tell management “All’s good." Because that usually will come back and bite you in a not terribly distant future

Guernsey: Yes, definitely. So, when we're thinking about implementing these systems, we really have to go back to, really, the fundamentals of the process and understand what needs to be improved there before we can, we can move on.

So I want to move on to my next question. And I'm going to put you on the spot just a little bit, but I'm very curious, and I'm sure our listeners are as well. What is one thing that procurement teams can do right now to improve their contract management processes and ultimately elevate sourcing to a more strategic role in the business?

Rozier: Wow. That's a tough question. I think that if you're really saying what is something that is within procurement's purview and that procurement leadership can say, "I'm going to take this upon myself, and I'm going to go do it," I think that thing is raise the issue within your company.

A lot of companies I have seen don’t actually think they've got a problem with contracts. They say, "We've got a great legal department." “Yeah, they've got the contracts. They've got them all archived. Don't worry. We've got them." And I think what procurement leaders can do is start the dialogue as a multidisciplinary discussion that involves whoever the key stakeholders are in the legal department and in the governance, risk and control department, and then possibly within operations or product development, depending on what kind of company it, to say, "We need to look at this." Maybe we've begun the journey, but to really look at it from a journey along a maturity model, and to get that discussion going within your company.

Because procurement can't drive it alone. And I've seen procurement leaders who have tried, where they've said, "here's what we need to do," and it falls on deaf ears because they don't have the buy-in. They don't have that business stakeholder collaboration. So, I think the single thing that a procurement leader has within their power to do is to get the dialogue going----to raise it to the right group of people within the company's leadership.

And I think very quickly, you would see that the risk management organization, the internal audit department, very probably your operations, whoever's engaged with overseeing, the use of the supplier for whatever the goods or services are being used for. I think you'd see those people go, "Yeah, I'll be part of this discussion." And then, collectively, that group is in a much better position to start to present to the C-suite, and start to get the CFO's, buy-in that this needs to be something we need to look at.

And this is not, it's not like you're looking at a three-year life cycle, right? You're not trying to say I need to go reinvent the world here. It's a discrete enough problem that you can get your arms around it in a pretty reasonable amount of time, and show the payback, the ROI, both in terms of real dollars and risk mitigation and risk management.

Guernsey: Thank you for that. I, I really hope our listeners will take that advice and run with it. I think you bring up such an excellent point, where procurement leaders are uniquely positioned in that they have all of these cross-functional relationships that they can leverage to get that stakeholder buy-in and, and really affect change within the business. So, I have one last question here before we part ways. I'm going to ask you to look into the future for us. So I want to know what, what do you see on the horizon for sourcing leaders?

Rozier:我认为你将会看到的是采购ment having to go through a lot of change over the next couple years. As we continue our emergence from the pandemic, and, and deal with the long-lasting ramifications in terms of economic impacts, supply chain disruption. Procurement's going to have to take a real proactive role within companies to say from a sourcing, supply chain, vendor management perspective, we have learned a lot over the last several years. Now, what do we need to do from that?

Again, I'm really big on expressions, and there's that expression: those that don't learn from history are doomed to repeat it. Procurement needs to really recognize the role that they have in helping the companies and their organizations and from a functional perspective, learn from the history, learn from these last few years. As I look into the future, I see a huge opportunity for procurement leaders and procurement teams to help drive real lasting organizational transformation, but also a challenge for procurement. Because I think procurement's going to have to pick up the ball on, on some of this and carry it and be willing to take a lead in helping with that transformation. And ultimately, where I see that going is that the role and the scope of procurement has a huge opportunity to expand both in terms of breadth, but more importantly, in terms of depth and importance within, within a company.

Guernsey: Thank you for that. It seems like it's going to be a very exciting time for procurement in these next few years, and I think even beyond that. I really love that procurement is now taking this more active leadership role, and I just can't wait to see where it goes.

Rozier: Yeah, me too.

Guernsey: Thank you so much for joining us today, Canda. I so appreciate your insights into how we can use technology to develop stronger relationships, how we can mitigate risk, with contract management, and ultimately, how we can up-level sourcing in the business.

Rozier: Well, thank you for having me on the podcast. I love being a part of discussions like this because it, it is such an exciting time. So, thanks again for letting me share some of my thoughts.

Guernsey: We've been talking about strategic contract management with Canda Rozier from Collabra Consulting. Don't forget to follow us wherever you listen to your favorite podcasts, and remember, you can find our entire catalog at workday.com/podcasts. I'm your host, Danyelle Guernsey, and I hope you have a great workday.