This article was originally published in Procurement Heads.
In our latest Big Interview, Jack Birch discusses all things Procurement – and the post that went viral – with Anders Lillevik.
Anders, you are founder and CEO of Focal Point, a business platform built to help innovate, modernise and streamline Procurement processes. What inspired you to set up the business, and how has your career to date helped lead you here?
Thanks for having me, it is a pleasure to be here. It was actually my career in Procurement that led me to build this solution.
I have been a Chief Procurement Officer for a number of years in big companies, and I have been in Procurement for almost 25 years, starting in the late 90s in Procurement analytics.
As a CPO managing large global Procurement organisations, we spent millions of dollars per year on Procurement tech, but most of our strategic work was done in Excel and email. That makes it hard for management to see what is going on, and for us to see how things were put together – was the process actually followed?
Then it becomes challenging to do all the things Procurement needs to do today, like ESG, diversity and inclusion, and risk mitigation. All of those things end up being done in separate, vertical solutions. That is the challenge we are trying to solve.
With Focal Point, we have a solution that sits on top of the existing infrastructure and creates a workflow solution that pulls data in and out of the systems, so you can go from intake to invoice. Everything is on the system, integrating with contract management solutions and invoking those processes as part of the project, rather than having them live separately in the vertical.
That allows organisations to see who is working on what and what projects are coming down the pipe, and to make sure you can reach your goals and track cycle times and customer satisfaction. It really was my career in Procurement that led me to the idea of having a focal point in Procurement, where you can see all the work that needs to be done in a solution that is horizontally focused, rather than a bunch of vertically focused tools for things like paying an invoice.
We can see that you are active on LinkedIn, and a recent post of yours touching on Procurement teams often not getting the recognition they deserve went viral. Why do you think this resonated so widely, and what can be done to make sure this isn’t such a common experience for those working in Procurement in the future?
It is interesting – I have been quite active on LinkedIn for about six months now, and you never know what is going to be a hit and what is not.
This particular post had a picture of a couple of cheerleaders, one on top of the other. The top cheerleader was taking a picture with somebody above them, and we branded the bottom person as Procurement and the top person as Finance. Finance was getting the credit, and Procurement was holding them up.
I think Procurement does a lot of the background work while other parts of the organisation get the stuff they’re acquiring, or get the kudos for what is being done. Number one, the picture of the cheerleaders helped stimulate the responses. Number two, the message behind it was simple – yes, we do work too, but it often goes unrecognised.
That post had over 750k views across various dynamic backgrounds. It really resonated with people.
Procurement is used to being in the background, and we often like being in the background, but we also like people to give us credit for the work we have done. Part of the problem is people’s perception of Procurement, and the other part is that we haven’t done enough as Procurement professionals to change that.
We need to come to the table and celebrate our successes, and that starts internally. When I was a CPO, I really enjoyed bragging to my team members about other team members and their achievements. If we don’t know what we do well ourselves, it is hard for others to.
So, number one is to celebrate wins. Number two is to tell people about the value we bring to the table, and that is often hard because we don’t know it well enough, or we don’t track it well enough. We tend to track only one metric – savings – and that is how we are measured.
For example, I had a supplier management programme set up, and we were able to determine ahead of time that a supplier was likely to have financial stability problems. We were able to say, “We need to find a second source for this before they go belly up,” and then switch over as and when we could.
We used that as a springboard to say: not only can we save a bunch of money, but we can also prevent disaster – in this case, all of our statements not being mailed out. Being able to document true wins, and then telling people about them, is very important. I think that will help us move from the back end of the back office to the middle office.
Ultimately, we need ways and solutions to communicate more than just savings: ESG numbers, diversity and inclusion numbers, and cycle times. These are all things we should be tracking and communicating to stakeholders so they know we are not just about savings. We are not just a speed bump on the way for people to get their stuff. As long as we communicate those things clearly, that will change over time.
You talk about the issue of Procurement fraud and what can be done to help mitigate it. What are the key things to be aware of here?
Having been in Procurement for a minute, I have experienced fraud within the Procurement process a few times. It normally comes down to people not having a clear process, or finding ways not to follow that process – that is typically when things break down.
I was working for a very large multinational company, and the accounts payable function, which reported to me, was based in a low-cost country. I found out that somebody had reached out to that team directly the day before, pretending to be the CEO of the company and saying, “I need this invoice paid stat.” The person who received it bypassed all the control processes to get a $400k wire done, because she believed she was doing God’s work – the CEO had reached out to her directly.
Of course, she thought she was doing the right thing. It turned out to be fraudulent. We had a process established, but it could be bypassed, and fraud happened.
Having documented processes, and the ability to follow them, is crucial. Fraud can happen, and sometimes you need more than one person to sign things off, so that people would have to collude in order to make it happen.
There are lots of ways we can strengthen the process and make it more foolproof. For example, every time a supplier record gets changed – whether it is the account number or the address – validate it against a third-party source.
I can’t tell you how many times that has saved companies from fraud. You shouldn’t typically send a cheque to a PO box, but it is very easy for that to happen if you don’t have controls in place. Make sure your processes are ironclad and documented, and that people follow them. If people need to go around the process for a good reason, they should be able to – but there need to be controls and sign-offs in place when they do.
You are passionate about the importance of planned Procurement. What are the main benefits you have seen when this is done right?
Planned Procurement is one of the things I am most passionate about in my career. It is really about figuring out which Procurement work we should be doing to make Procurement faster, better, cheaper, more resilient, and so on.
We do that by having category plans in place and deciding what is worth doing outside of the requests coming in from the business.
What I mean is, Procurement needs to sit down and look at what is coming up. It could be renegotiation potential, contracts coming up for renewal, or anything else we already know about – and then look ahead to what we want to achieve based on that known pipeline.
Secondly, it means talking to stakeholders – what do we want to do in IT and HR? – so we can put that on the calendar and plan it out. Basically, filling some of our capacity before we even think about unplanned work, which is what Procurement is typically known for.
Unplanned work is when the business comes to Procurement through whatever mechanism and says, “I need this thing done,” and Procurement just executes on it. It is valuable work, don’t get me wrong, but it doesn’t move the needle for the business. It becomes a transaction rather than a strategy, and that is why it is so important to give visibility to planned work. I bet we get more value out of planned work than unplanned work.
That is why we want to be able to say: “If you come to us at the last minute, this is what we can achieve. If we plan it well in advance, this is what we can achieve.” That can also change the dynamic by moving Procurement further upstream in the value chain. That is why planned work is so important.
In terms of leadership, you have emphasised that emotional intelligence is a crucial trait for a successful leader. Why is EQ particularly significant in Procurement, and what other traits or soft skills would you consider most important?
In Procurement, we are dealing with people. Yes, we deal with companies, but the front end of those companies is people.
Internally, your team members are people and your customers are people, and they all have their own goals and drivers, and their own personal lives. All of these things are intermingled with what we want to achieve.
Your customer wants to achieve their goals and objectives by making an acquisition from a third party. They just want to get their stuff; they don’t necessarily know how to get it in the best way.
Sometimes, when they come to Procurement, they give you half the information, whatever the case may be. You then hand that to someone on your team who has to pick up the pieces. It can be quite emotional, so it is important to understand what is driving people and what is motivating their behaviour.
You have to listen a lot. You have to make sure you understand what is driving suppliers and internal stakeholders, so you can move things forward in a non-combative way. The days of combative Procurement are done.
At this point, it is more about building supply, growing partnerships, mutual gain sharing, and really elevating the brand and the benefits of Procurement. You have to be able to deal with the people in front of you in the best possible way. Often that means asking: how are you being rewarded for this? How is your commission structured?
By having those discussions, you can usually get ahead of the curve without having to negotiate over something you don’t even know exists.
One of the biggest challenges I had as a young executive was understanding that people bring their personal lives to work. I was a very young man when a woman came into my office and told me she had just called the police on her son because he was stealing to fund a heroin addiction. I was not at all prepared for that.
There is often a lot going on that people don’t know about, and giving people space to be themselves is very important. I told her: if you need to stay so you can think about something else, stay. If you need to go home, go. You come first – you’re more important than whatever needs doing today. Make sure you have that kind of relationship with the people around you, and you will all have a better experience for it.
Have you had any experience hiring interim managers in the Procurement space, and how can quality interim managers best help elevate the success of Procurement teams?
I have had the pleasure of working with interim managers quite a bit. As you go into Procurement functions, you have to fill gaps while you transition things over.
A good-quality interim manager is typically what I would call a low-price, high-value consultant. They come in with a lot of skills and know how things should run, which brings a lot of value while you are finding permanent replacements.
Good interim managers can also bring a lot of new thinking into an organisation. If someone leaves and you put an interim in for three to four months, that person will bring in their best practices, and the company will learn from them. Ultimately, bringing in good people with knowledge and skills will not hurt you at all. I like using interim managers – I find a lot of value in it.
You have a young son who you refer to in your posts, and you draw comparisons between parenthood and business. How does fatherhood compare to the challenges of founding and growing a company?
Someone told me that I have two start-ups now: my company, and my son, who is turning one next week!
There are definitely similarities, and the comparisons between business and raising a child are super interesting. We talk about change management a lot, and it is typically one of the most difficult things for Procurement managers.
When you put in a new system, it is not a technical project – it is a change project, and it can impact thousands of people. The change is what is hard for people. You have to tell them what to do, how to do it, and why.
When Oliver started eating solid food, he was perfectly happy with his old way of eating – bottle or breast, no problem, he thought it was awesome! Then all of a sudden, we sat him down and started shovelling things into his mouth, and he thought, “Wait a second, this isn’t cool!” It was a change for him, and we realised we had to help him through that process: try to explain why, but also incentivise it and make it fun.
Whether it is change for a business or on an individual scale, you can draw parallels. Obviously, it is much more complex in an organisation. But as I watch Oliver learning to stand and walk, we have to make sure he is safe and that he learns along the way while feeling supported – and I think all of those things are true in the corporate world as we
