Intro 
Welcome to the procurement unplugged Podcast, the podcast for procurement professionals. Great to have you with us today.

Fabian Heinrich 
Hello, everyone, welcome to another episode of Procurement Unplugged today we have a very special guest, Michael Pleuger. Michael is German procurement veteran. He has been in the procurement world for the last 20 or 25 years as a partner with KPMG and Roland Berger and now as a procurement entrepreneur. Very welcome.

Michael Pleuger
Thank you very much, Fabian. Thank you for your kind invitation.

Fabian Heinrich  
So maybe it's interesting for our audience, how did you end up in procurement? And how did you become a partner there? I mean, like most of the young people today, they all wonna be a partner in strategy consulting. But maybe you can elaborate a bit more how you made your partner with a topic like procurement?

Michael Pleuger  
Yeah, certainly. I mean, I think like many of us, I ended up in procurement more as a coincidence. In parallel to studying business, I had a job in a procurement department in an MDAX company. They had hired me because they said there's a capacity constraint a headcount bottleneck. So I was writing projects, I wasn't chasing deliveries. After a couple of days, I ran into the head of supply chain in the on the corridor, and he said, Hey, young man, how do you like it? And I said, I like it. But you don't have a capacity constraint. You have an organisational problem, stopped smiling, invited me into his office for a coffee, and I shared my observations. And he asked me, Can you fix it? And I said, I can certainly try it. And I guess this is when my, when the consultant in me was born. I continued in that role for a couple of years. And then when I've been working with consultants, they convinced me that the other side of the fence, the consulting business would also be nice. So I joined E&Y in their strategic sourcing and e-procurement practice. And while everybody wanted to do strategic sourcing, I was struggling to understand what is so strategic about bundling demand and consolidating a supply base. I found the procurement space much more interesting because I could see how it's all connected how things flow from demand, to procurement, to suppliers, to finance, back to demand. And I did that for a couple of years. And at some stage, I was managing one of the largest SAP SRM programmes globally for Deutsche Post DHL. And from there, I was headhunted into Vodafone. So I joined Vodafone's corporate procurements in Newbury. I was and e-supply chain manager. So it was my job to develop the e-procurement, the digital procurement strategy and roadmap for Vodafone, stayed on for three and a half years, and had to launch the Vodafone form procurement company in Luxembourg. But after that, I went back to Berlin, back to consulting primarily for personal reasons, joined KPMG, became a partner, a senior partner, joined Roland Berger. And you asked how do you become a partner? Selling, selling, selling. So ultimately, it's a numbers game. But I but I keep telling consultants, they really need to need to have a focus, and they need to develop a core capability because the core capability is needed at every stage of your career. It helps you getting trust of your team members, when you are a project manager, it helps you getting trust of a client being able to deliver the concepts and the change that you need. And ultimately it helps you selling so I think it's really for was specialising on a specific piece of content. And that can be anything that can be procurement as in my case. So nonetheless, we delivered award winning innovation. And we got really excited about it. But at the same time we also got frustrated because corporate governance is slowing down innovation at times. So and ultimately, I left my corporate life behind and I'm a procure tech startup entrepreneur, myself now having launched Akirolabs together with Detlef and Christoph.

Fabian Heinrich
Super interesting journey. I mean, how did procurement in your opinion change over the last 20 years from when we first started to now when you started a Akirolabs. How has the landscape in the procurement industry changed?

Michael Pleuger    
I think in the very early days when I got involved, it was a completely different game. I mean, when trying to implement e-procurement, e-sourcing solutions, you struggled with master data, you struggled to get a purchase order out, you struggled to get a three-way matching, right, you struggled to pay invoices. So it was really, really, really basics. And many years later now, I think what we've seen in recent years is e-procurement is working seamlessly. You have different specialised solutions for different buying channels. You have all these specialised solutions on top of the P2P and S2C suite. So I'm thinking of negotiation capabilities, I'm thinking of sustainability solutions, I'm thinking of contract management solutions, so it's much more mature. What hasn't changed, I guess, is the ambition. Even in the early days, the story was always: procurement is not an efficiency game per se, it is an effectiveness game which basically means once you drive efficiency in procurement, you don't lay off people, but you dedicate the free capacity towards strategic tasks. Because this is where the majority of the value contribution sits. But now just having the capacity isn't helping, either. What we see today is a capability gap in terms of strategic processes, methodologies and toolkits. Procurement cannot achieve strategic benefits in isolation from their ivory tower, procurement needs to work collaboratively with all the stakeholders in the organisation that is very often still missing, and leveraging the data and insights that is available for procurement. Procurement is the function with the most interfaces in the organisation, the spider in the web. If we manage to leverage this position, we can be the primary provider of business insight and business foresight. And I guess recent Black Swan events like Corona like the Ukraine war, like semiconductor shortage and all the rest of it have really accelerated that procurement has been firefighting for the last couple of months. At the same time, people start appreciating that the answers to all these challenges is not continuous firefighting, it is much more strategic answers. And I guess that's how the procurement practice and the challenges have evolved over the last 20 years.

Fabian Heinrich
So basically on the one side from the processes to the digitization of processes and on the other side, from the operation to strategic thinking, kind of.

Michael Pleuger
Absolutely. And I think what procurement needs to appreciate as well. When it when it wants to become more strategic, it needs to move more closely to the core business. And what procurement is all about is categories, right? Think of Siemens, Siemens has an infrastructure business, they have healthcare, they have energy, they have I don't know, in each of those businesses, they need steel. Now flipping that around into steel from a procurement perspective is only giving you one thing, economies of scale and savings. But that's not necessarily what the business wants the business wants in one business unit they want to drive efficiency and procurement needs to help drive efficiency in another business unit they want faster time to market they want to launch a new product. So procurement needs to enable this and by thinking and acting in supply market dimensions like a category procurement is putting itself into into an ivory tower and is speaking a language that nobody else in the business is interested in. So we need to move beyond that category and start talking and acting in core business dimensions.

Fabian Heinrich  
Then procurement functions as a value orchestrator between the stakeholders, the suppliers and procurement itself basically.

Michael Pleuger
That could be an ambition, yes, by leveraging this unique positioning as the spider in the web, nobody else has better access to stakeholders. Nobody has better access to data and information than procurement. And as such, we are the powerhouse of information and can truly orchestrate the entire value chain.

Fabian Heinrich 
Yeah, I mean, we've talked now briefly about the development of procurement over the last 20 years and how it has evolved. What do you think are the biggest challenges within procurement teams you've seen in your customer projects in the last 10 years?

Michael Pleuger    
What I'd say what I've seen in my project, but also when you go back to the various white papers and studies that are out there from the different consulting companies, when you ask procurement professionals, what is stopping you from delivering the full value potential, you very often hear early and continuous involvement with the stakeholders. So procurement is only involved once the technical specification has been finalised once all the requirements have been determined, and sometimes even the suppliers have been selected by engineering or by production. And then procurement is only there to negotiate a couple of percentage savings. As a result of the late involvement, procurement is very often working with poorly specified demand, which is again, impacting their ability to fully leverage the supply market. So the challenge and I think I kind of said that with my previous answer is to move closer to the core business to be involved earlier to bring in information about the supply market opportunities if there's an emerging technology, how can that help us create more competition? If there are geopolitical events? How can procurement facilitate a trade-off decision making that is benefiting the entire organisation. And with that, I'll give you an example. If there's a lockdown in China, a corporate procurement guy in Europe or in the US might consider that as a risk. A local procurement person in Asia might think fabulous, the global demand is gone more for me and better prices. Or if a new technology emerges, procurement might consider that as an opportunity to drive more intense competition while engineering and sales say oh my god, that's risky. So procurement really needs to be the facilitator of all of this and enable the best possible trade-off decisions. So for example, balancing profitability versus sustainability. Do we buy for product that is highly profitable? Can we afford to pay into ESG targets? Or the other way around? Do we have a reputational risk due to the supplier not fulfilling the standards? And no matter what it costs? This is what we have to fix first. And procurement can't do that on their own. So we need to orchestrate the entire organisation to drive the best benefit from a total enterprise perspective.

Fabian Heinrich
And how can procurement be best equipped? Or what's the what's the solution or the toolkit to to achieve that and to to overcome those challenges?

Michael Pleuger
I think the strategic procurement process or even the category management process, if you will, is a nice vehicle to do so. I said we need to think beyond categories. So we don't focus on the actual supply market dimension. But the process remains relevant because the process is analysing demand. So you come across all the internal stakeholders understanding what are their requirements? What are the technical specifications? How is our cash position? Should we rather buy or should we better lease stuff? We need to understand what is it that we're selling in the first place? Are we still selling machine when you think of machinery companies in the past they sold machines today they don't sell machines. So machine uptime guaranteed outputs, service level agreements. So procurement needs to cater for services and spare parts along the components in order to really support the business model. So, first process step is understanding demand. Then it's understanding supply. So doing market research and making sense all of the information that we find. Then we move into strategize. Strategize means we understand the strategic implications and we pull the most relevant value creation levers, and ultimately translating this into initiatives to realise the benefit. So the process is analyze, strategize, realise, with respective toolkits and supportive collaboration workflows that involve all the stakeholders in this process.

Fabian Heinrich 
In with regards to toolkit, is it fair to say that, from the kind of now-process mindset, procurement really has to move towards digitization and digitise that process you've just outlined?

Michael Pleuger  
Yes, I guess that's the next step. As mentioned in the past, we have digitised all the transactional the purchase to pay processes. We have digitalized the source-to-contract and individual process solutions for contracting or negotiation. And now it's time to start digitalizing the strategic procurement process. And going back to the initial discussion we had about consulting. I think at some stage in consulting, we realised that in the future, customers will no longer be willing to pay for busloads full of rookie consultants that analyze and conceptualize stuff for weeks and months, and then produce a pile of paper. We anticipated that we need as consultants, we needed to put our skills our consulting skills, combined with the subject matter skills in this case procurement skills into a system, enabling the customers to self-sufficiently run their strategic procurement process processes and projects. By that the consultants are cannibalizing their core business. But at the same time, they are positioning themselves as the first go to person for the customer. Because if the customer is using their system, you will always have questions along the process. And then the platform provider can deliver specific services if it's a best practice, if it's a benchmark, if it's whatever piece of market intelligence. And so this skills to system approach is really helping to digitalize the strategic process and that's not limited to procurement. It can be likewise, a product development process, it can be a sustainability strategy, it can be a sales and marketing strategy. With the respective tools, you just exchange some of the tools that are used in the sense that for procurement, you need a supplier preferencing analysis, you need a credit matrix. If you replace those with the BCG matrix, you're on the sell side already. So I think the next step in digitalization in general, is moving forward to digitalizing strategy by providing a skills to system approach.

It's a very interesting thesis you kind of disrupt the business model you've been working for for so long. And find kind of the smart AI driven on demand consultant to the space to system approach.

Yeah, disrupt yourself that was what we told ourselves when we did this in our consulting role role. Because if you don't risk disrupt yourself somebody else with

Fabian Heinrich
Yeah from that aspect, apart from the skills to system in the strategic space, what do you think is the biggest space to be innovated within procurement?

Michael Pleuger  
I think the digitalization is still relevant across operational, tactical and strategic and there's room for innovation throughout; different customers require a different set solutions. So large corporates are very often super fragmented. In this dynamic world today, they divest a business unit, they buy to new business units. I think the biggest challenge is how quickly organisations change. And no IT solution can be configured at the speed the organisation changes. And I think this is where innovate innovation needs to take place to make the whole game much more adaptive through open interfaces to more standards.

Fabian Heinrich
Very interesting. So, on one side, the strategic aspect you I outlined is very detailed, and on the other side to the ever changing business environment, flexibility, added adaptability, and therefore, systems, which can be implemented extremely fast and can be configured. very customizable, extremely fast.

Michael Pleuger  
Yeah, exactly. Going back to the initial part of the conversation, when I was referring back to 20 years ago, when master data was stopping a process or broken processes was stopping the process. So you didn't get a purchase order out. This has been fixed. But then when organisational context changes, and you divest the business unit, and you buy two new business units, these two business units bring their own master data, they bring their own systems, they bring their own everything. So we're back at square one. But it cannot take us three, four or five years to fix it. It needs to be much, much faster. And I guess with the new technology that's out there we're well prepared to have a much leaner and faster integration.

Fabian Heinrich   
Yeah. So then I come to my last question for you. What's your vision for the future? Future? I mean, like, maybe 5 to 10 years ahead. I mean, some people speak about autonomous procurement. That there might not be anymore a procurement team. But everything is done through AI, or maybe everything is focused on on ESG and sculptural improvement. What's your kind of idea of the future?

Michael Pleuger  
I was asked that question, some five years ago, I was asked whether I could help digitalizing the border for procurement company. And in my humble opinion, by then the Vodafone procurement company was already fully digitalized. You procurement: e-sourcing e-invoicing, e-contracting even a fast very promising instance of process mining. So I was a little bit overwhelmed with a question. And I did my research and I couldn't find anything. The only thing that held me back these days was a quote that I found by David Gangolion. And this guy had said, all experts are experts in what was, there are no experts in what will be, which was great, because it wasn't justification not to know anything. But the conclusion was even better. The conclusion was, if you want to be an expert in future topics, three things have to replace experience, namely, vision, leadership, and collaboration. And I'm, again, overwhelmed with your question. So the only thing that I can offer is that we find out together in the very spirit of vision, leadership, and collaboration.

Fabian Heinrich  
I think that's, that's a very clear answer. No one can obviously predict the future. But with that toolkit, I think we can be better equipped to conquer the future. So I think that's a great closing statement. So thanks a lot for your time, Michael, and it was a true pleasure having you.

Michael Pleuger 
Thank you very much for having me. Great pleasure here as well. Thank you very much Fabian.

Outro
This was the procurement unplugged podcast. Thanks for tuning in today. For more podcasts and expert content, visit us at procurement unplugged.com.

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