From CPO to CEO of Spend – In Conversation with Jan-Henner Theissen from targetP on the Future of Procurement

Fabian Heinrich (00:00)

Welcome to another episode of Procurement Unplugged. Today with a welcome guest Jan Henna-Thyssen from TargetP Founding partner of TargetP and also an absolute procurement expert for almost several decades now. Welcome Jan.

Jan Theissen (00:17)

Thank you Fabian, I'm delighted.

Fabian Heinrich (00:19)

Yes Jan, since you've been in procurement for quite a while, maybe you can tell us a bit about your journey, how you got into procurement and what has moved you over the last almost two decades in procurement.

Jan Theissen (00:35)

Yes, what moved me? That's a good question. I've been relatively closely involved in purchasing for 28 years now, I ended up in purchasing more or less by chance at some point after my vocational training, I didn't really want to go there, but they needed someone and I started there. And relatively quickly, although I was only partially motivated to work in purchasing at the time, it turned from a perhaps annoying duty into a very exciting topic that has stayed with me to this day.

I've been in procurement for 28 years and have held many different roles in that time. I've also taken the classic path of a buyer, worked my way up through various functions and have therefore also gained a good perspective. What does the classic tactical operational buyer do, what does strategic purchasing do, right up to the opportunity I had in the last two stages of my industrial career to set up new global purchasing organizations.

To build, to restructure, to bring together people from different backgrounds and regions. And that is ultimately what has fascinated me about purchasing ever since. It's the interaction with people, it's the interaction between cultures, it's working together on challenging topics, as I said, across countries or cultures. It is always challenging, time and time again.

I don't think we know such stagnation in purchasing. Whenever we think things have calmed down or settled down a bit, we can actually expect that there will be a new crisis that will keep us busy, a new challenge that will ultimately become a mental or intellectual challenge to deal with new topics, be it organizational or procedural.

Substantive topics such as risk management or digital procurement. In recent years, of course, there have also been major discussions about artificial intelligence in procurement. And that's ultimately what fascinates me again and again. It never gets boring. There are always new challenges, whether through technology or the environment. Accordingly, after 20 years in the industry, I've been self-employed for eight years now, so I'm ultimately able to

I have also had the opportunity to look into many other companies during this time, get to know new challenges and tackle new topics, and I think this will keep me busy for the next few years and continue to inspire me to continue working in this field.

Fabian Heinrich (03:13)

Yes, 28 years, almost three decades of purchasing. I mean, if you look back to when you started, how has the job of purchasing or the purchasing department changed over these 28 years? You'always talking about new challenges, of course, but if you look back now, more than two decades ago, how has it fundamentally changed now?

Jan Theissen (03:38)

Yes, I always look at it from two different angles. On the one hand, I don't think the change was as big as we sometimes think. I think we could innovate much better on the purchasing side and, I would say, face up to the challenges even faster. I think we are still a bit slower in this respect compared to other functional areas in the company. So that's a bit of a critical eye, where I say, change in those almost 30 years is perhaps too marginal. on the other hand, you can of course see that there has been further development.

When I started, there was still a lot of joking at conferences or among colleagues that if you can't do anything, you go into purchasing. As a result, Purchasing was of course always very operational. So you didn't really need to talk about strategic issues because people weren't often aware, especially in SMEs, of what else you could do as a buyer.

I would have to be able to do more than send out an inquiry, renegotiate, place an order. I would say that classic topics that are already standard nowadays, such as distinct supplier management, distinct product group management and strategic purchasing decisions, were certainly not as pronounced in many companies 20 or 30 years ago as they are today. On the other hand, I would of course also say, especially if you're talking about SMEs, and I'm not talking about small and medium-sized enterprises of small companies, but also companies with billions in turnover. Here, too, there are often still gaps in precisely these core topics.

Such as strategic purchasing in the direction of product groups or suppliers, but also, of course, digital topics. Digital has certainly been one of the drivers in the last 20 years, starting in the late 90s and early 2000s with the emergence of procurement platforms.

That has certainly also contributed to the change, but then I also play the ball back to my first statement, we could have been faster, we could have developed more seriously, yes, certainly in individual cases.

Fabian Heinrich (05:54)

I mean, you probably introduced yourself to one or two solutions in your job at industrial companies. In recent years, as a consultancy, you've probably gained a much broader perspective across many industries. What were the big learnings there?

Jan Theissen (06:14)

Yes, I think I counted up a few days ago with my colleague. I think we have done over 30 digital projects, from e-sourcing platforms to supplier management platforms, framework topics such as ESG, supply chain law, requirements. We have established quite a lot in the area of risk management. SAP, system migrations or new setups or setups in this area.

What are the lessons learned? On the one hand, you have to - I'll start with the critical side again - we were always told 25 years ago by the

IT companies. You now have the opportunity to work more strategically, as digital solutions will relieve you of operational, tactical activities. You are now focusing more on strategic purchasing. You still hear that 25 years later. That actually shows me that there is still a lot of potential and that a lot has not yet been implemented. Another classic learning is that, in comparison.

In addition to the classic procurement platforms, digital procurement is certainly more difficult to understand today, even for employees in procurement. In the past, purchasing platforms were ultimately nothing more than us transporting what we have on Word or in the email into an online platform and then you basically just need to enter your request there and then it goes out. Now, of course, we talk about topics such as blockchain, we talk about topics such as AI, we talk about Big

Fabian Heinrich (07:51)

Mh.

Jan Theissen (07:56)

Data, we talk a lot about algorithms. In other words, this topic of change management and taking people along on the journey is even more important today than it was 25 years ago or 20 years ago, because there is now of course also a fear of not understanding exactly what you are actually dealing with, what these famous black boxes are doing, these algorithms and this artificial intelligence. It has simply become more abstract and this

Of course, abstractness means that I have to put a lot more effort into explaining to people what's in store for them, how to use it and also to take away the fear of working with it and, especially in the age of AI, the fear that this strange tool in the background will take away your job at some point, and these are the classic learnings.

Fabian Heinrich (08:50)

Yes, only that goes even further. I used to have maybe one solution as a buyer until five years ago. And today there are statistics, seven or eight solutions per buyer that you have to use. That means I already have tool fatigue. Now another tool and so on. In other words, change management is even more important.

Jan Theissen (09:14)

I can confirm that and I know that back then, when I was still working for an American company, we did quite a lot in the area of digital procurement, because we needed these structures to enable global procurement in the first place. It wasn't about digitalization for the sake of digitalization, but about enabling the global procurement teams to work together and make sensible decisions. And at some point, we made a very strong transition to this.

We need to better time the roll-out of solutions, because we can't do everything at once and we can't make the cycles too short, because then the teams' ability to really absorb, process and, above all, use it is simply overwhelmed. After all, we still have a day-to-day business, we still have projects that we have to manage, we still have series that we have to manage and, of course, for many of us the topic of digital procurement comes up.

And of course this has to be interwoven in such a way that it can also be implemented and that is certainly something that unfortunately we still see some people doing wrong or perhaps not doing perfectly.

Fabian Heinrich (10:20)

Mh.

Jan Theissen (10:29)

I understand that too, because when you tackle the topic, you naturally want to get a lot done quickly, but you also have the chance to quickly overwhelm many people and a certain sensitivity is certainly necessary.

Fabian Heinrich (10:41)

Yes. You've just mentioned a few topics, 30 topics, that you've dealt with in recent years.

If you look at it this way, we first, I'll say, this risk management trend wave in purchasing, then there was, so there was also a Scout Bee and a Risk Methods, which were often introduced. Then came this, let's say, ISG wave, where it's all about regulatory. I mean, can you, what were your experiences from these two waves? And which wave do you see now?

Or what is currently the new trend wave, as the next question.

Jan Theissen (11:30)

I always find it very difficult to keep up with trends. Anyone who is active online, for example on LinkedIn, can check the clock there. By October or November at the latest, every consultancy, every university, every IT software company comes along and defines the latest trends or the next trends for the following year. I really struggle with that. Sure, we always have trends, which of course are often influenced by the environment.

If I have a lot of supply disruptions, a lot of geopolitical uncertainties, then of course there will be a certain trend towards risk management. No question about it. And if I have legislation, as I have had in recent years with the Supply Chain Act, CBAM and what they are all called, then of course I also have a trend somewhere that I have to adapt to, because the challenges simply affect me too. Apart from that, my recommendation is always to say,

Fabian Heinrich (12:10)

In

Jan Theissen (12:29)

Observing trends or simply looking at them, but not necessarily chasing after them. It is much more important for me as a purchasing organization to know where I stand and where I want to go.

And above all, how do I get to where I want to go? And that ultimately defines my own personal trend. There is no question that the topic of risk management, the topic of sourcing, global sourcing with the help of digital solutions, has been very dominant in recent years. It will continue to be dominant somewhere, because I believe that volatility will not decrease in the coming years. The geopolitical risks will not diminish. In other words, this topic will always be with us.

It can no longer be a trend, but must be and remain a classic shopping tool. And the same applies to the current trend in quotation marks. Everyone is talking about AI, go to a procurement conference wherever you want. I've attended a few in the last few years, whether in Germany or abroad. Everyone is talking about AI. And that brings us back to the next topic. Of course, AI has many use cases, be it in demand management, in

There is no question that product group management also has great potential in the automation of processes, from scheduling to order creation and contract review. At the same time, however, AI is not a trend, but must become an important building block in the overall purchasing concept. And the overall concept of procurement means both the analog part of procurement and the digital part of procurement.

Fabian Heinrich (14:08)

Yes, that makes perfect sense. I think what you can take away here for all the purchasing managers is to listen, not to be guided by supposed trends on perhaps measuring or consulting or solution providers, but to define your own trends , which then contribute to your own CPO roadmap somewhere and, above all, to see the whole thing somewhere in the overall construct, quasi

How is it interwoven, analog, digital and then implementing that for yourself, so to speak, putting the horsepower on the road and then creating added value for yourself, I would say, right?

Jan Theissen (14:56)

Yes, ultimately, I have a responsibility to the company as Purchasing. I make a significant contribution to the company's results, so as a purchasing manager, as a CPO, I also have to position myself appropriately. That means I am

I am more or less like a CEO for the company's expenditure and therefore I also have to develop a corresponding business plan, a purchasing strategy. And this purchasing strategy must of course include how I want to position purchasing within the organization, how I want to be seen and I must of course think about how I want to create this value contribution, the added value for the company and how I as a purchasing department can perhaps also gain a certain competitive advantage over and above this for the organization. That is my obligation as a purchasing manager in today's world. And of course I define the tasks and my own trends from this.

Fabian Heinrich (15:54)

I find that very exciting, because when I talk to many purchasing managers in the market, I believe that the perception is not always as you are portraying it. I don't think every procurement manager feels like the CEO of spend and a strategic value driver. I mean, until a few years ago, people often said that we were the ordering office.

That's why I think we're seeing more and more that the trend is towards half the daily value, but I think CEO spending is somehow, let's say, a step higher. How do you see that in the market? Do most purchasing managers now tend to do this or is it still a way off?

Jan Theissen (16:33)

Well, what you always see in the market, for example again on virtual platforms, the eternal discussion, the purchase, does a seat at the board table or in the management need.

Fabian Heinrich (16:43)

Yes.

Jan Theissen (16:44)

He doesn't necessarily need it. Having him would certainly be an advantage for many things. But above all, the first step is to define and position yourself as a purchasing department and then deliver accordingly, to earn your seat at the board table. And I think we still don't do that enough, at least in Germany, compared to what I know from my eight years in the USA. We often still see ourselves very much as a processor.

We often resign ourselves a bit to our fate - we are only the implementers, we are involved too late, but have I really taken all the measures to reverse this - to really take the lead on certain topics - my internal customers really know what I do as a purchasing department - my internal customers know what added value I can bring, so that I would be involved at an early stage - it's a give and take and I think that's where we are often

We are still too passive and prefer to withdraw into such a victim role and say we don't want to and they don't want to I have the chance to turn this around and there are also some nice examples that I was allowed to get to know where a purchasing manager clearly said for himself that this is our role

And that's how I want to interact with my internal partners and that's how I want to be perceived within the company. And I believe that this process has unfortunately not yet arrived everywhere. Ultimately, it's in our hands. So every purchasing department that complains that it is too much in the NEMA or implementer role should better check whether it has been involved in other ways so that it is perceived differently.

Fabian Heinrich (18:31)

Yes, of course, when you say it like that, it sounds relatively simple and logical. But if I'm now in more of a passive role and am perhaps more of an executor here, what would be your recipe or your recommendations for action so that I can now take on an active creative role, I would call it, as a purchasing manager? So what would be the steps or recommendations for action?

Jan Theissen (19:02)

To put it simply, at the end of the day I need a clear idea, a clear vision, clear goals of where I want to go, I need good communication to coordinate internally and to make it clear internally what I am doing, and the third step is of course to deliver performance and to communicate this performance.

Fabian Heinrich (19:26)

And if I may interject here Performance

So does that just mean, hey, I'm the biggest here, I've brought in X-Savings again, so it's basically only happening on Savings or do you still see the performance delivery in other layers?

Jan Theissen (19:40)

That's exactly what I was getting at,

When we talk about purchasing performance or, as I like to call it, the favorite word of many, value contribution, we are talking about more than just costs. Purchasing is certainly a cost manager, but not only that. Purchasing is a risk manager, it is a demand manager, it has multi-layered tasks and ...

Fabian Heinrich (19:48)

Yes.

Jan Theissen (20:00)

Accordingly, his performance as a whole must also be communicated. And that's what I just wanted to give as an example a few weeks ago. A purchasing department really achieved a great deal, but actually only focused on the topic of costs in its internal communication and internal reporting. And if, of course, I only do that and then perhaps don't achieve the cost targets or don't overfulfill them to any great extent, then of course I stand to lose.

I am also very quickly criticized. However, if I have managed the bundle of services, for example by preventing delivery disruptions or managing insolvencies perfectly or at least well, if I have conducted good contract negotiations and avoided or cushioned cost increases, for example, all of this can be criticized is an achievement of the individual and the department.

And I'm sure many people still have to go there and say, watch out, I'm going to do some kind of monthly purchasing reporting, where I not only report my figures, but also on initiatives that I've taught the company. I have optimized processes. I may have introduced a digital platform and become faster as a result. I have optimized my internal customer relationships by introducing certain committees.

Or I may have dissolved them. I may have introduced Guided Buying, which makes ordering or requisitioning easier for the requisitioner. All of these are services that Purchasing provides. And I believe that many people still need to come out of their shell a little and say that I am now a little more broadly positioned in terms of what I communicate internally and will certainly gain a certain standing as a result.

Fabian Heinrich (21:51)

I think these are great recommendations for action. I mean, in many companies, purchasing doesn't have a seat at the board table. I think the main thing I take away from this is the marketing of purchasing within the company and that the successes that are achieved on a daily basis and the things that are achieved as a team on a daily basis should be clearly communicated communicates and identifies us as successes.

So where marketing and sales are always very good, they are always very quickly seen as heroes in the company, I think purchasing in general still has some catching up to do.

Jan Theissen (22:27)

Exactly.

Yes, and that's also what I always like to recommend to purchasing managers. Why don't you sit down with your colleagues from Marketing or Sales and learn or hear from each other? We always talk a lot about supplier relationship management in purchasing. How can I improve and optimize this supplier relationship, perhaps even make it more digital? Colleagues in sales often have

In marketing, we have long had something like this on the customer side, this classic CRM. There are so many things we can learn from each other. Why shouldn't I use my supplier or certain methods that I use on the customer side on the supplier side as well? Why does sales have a CRM, but purchasing does its supplier management with Excel or nothing at all?

Fabian Heinrich (23:22)

More beautiful place, yes.

Jan Theissen (23:22)

And The same applies to marketing and internal communication. Just sit down with people, exchange ideas, learn from each other. It costs nothing, I don't need a consultant for that. It might take an hour or two, but it can have incredible potential.

Fabian Heinrich (23:42)

Yes, I think that brings me to my last question for you. You've been in purchasing for 28 years now, a lot has changed. We've already discussed some of the changes. Where do you see Purchasing in the next five to ten years? Where will the whole thing develop? Where will the role of the purchasing manager develop?

Jan Theissen (24:06)

I remain firmly convinced that people will continue to be the critical success factor in procurement over the next 5-10 years. Despite all the discussions about digital and AI and so on and so forth. On the contrary, I...

In fact, I believe that the human role is even more important than in the past. Because if I already use digital solutions at certain levels, bots, robotics of some kind, this issue of interaction between people is actually even more important. Someone has to create trust, someone has to develop these relationships, someone will have to make the decision at the end of the day and that is certainly the well-trained employee, has even more skills, has even more capabilities than it has today, certainly even more important than it already is.

So purchasing is disappearing and being replaced by technology. I don't see it that way. It will be individual processes, it will be individual tasks, but with the speed at which we have adapted in procurement in recent years I think it will take a little longer than some people would perhaps like or assume. And accordingly, I am also of the opinion that Purchasing will become even more of a crisis manager within the company, because I personally am not so positive about the future. If you look at the development over the last few years, I think we are

I think we are becoming a little disillusioned about how geopolitical stability and global sourcing are coming under increasing pressure. We are currently experiencing the issue of sea shoring in many projects, i.e. back from certain countries. Of course, this is also associated with a certain loss of trust, with a certain fear. This will certainly make purchasing even more important. We are certainly also seeing a much stronger focus on procurement in other industries.

Melting also between classic purchasing and classic supply chain functions there is still a relatively harsh separation in many companies according to the motto I do purchasing and you do logistics or maybe supply chain even that this will have to grow even closer together just as internally the cooperation with, for example, the product managers or the developers because we increasingly have to work out emergency scenarios.

That means materials that can be substituted, designs that can be quickly adapted to react to these changed framework conditions and I believe that the purchasing department now has it in its own hands to decide where it wants to go.

Digital solution still necessary. am still shocked to see how many companies still consider risk management as a nice to have. I am still shocked to see how many companies still consider risk management a nice to have.

I do my tenders with Excel or Word or e-mail, without giving myself transparency, especially when it comes to global teams, if I have a central point where everyone can access it, where the category manager, who may be based in Germany, can see what his colleague in Brazil can do. There is certainly still a lot that can be done and ...

Fabian Heinrich (27:31)

Yes.

Jan Theissen (27:45)

I think the topic of cost management will also become more professional in the next few years, moving away from the classic 3% down or negotiation and towards more cost and value analysis and then deriving possible developments towards cost optimization.

Fabian Heinrich (28:06)

Yes, I think there's a whole range of topics that you can take away here for the next few years. But I think the key issue, what you said, the human being as the most important and critical factor, the human being as a risk manager, so I think...

I think everyone can take away that the buyer as a person really will be incredibly important here in the coming years and of course should perhaps market themselves a little better within the company. I think it was a super exciting program with you for everyone. I think you gave great examples and anecdotes.

From the industry and from the practical experience of your customers, and I think there were a lot of recommendations for action that people in the field as purchasing managers can also use. Many thanks for the time and the very exciting, entertaining conversation with Henna and, as always, it was a pleasure. Thank you very much.

Jan Theissen (29:11)

Thank you for the opportunity.