Jan-Henner Theißen on the emancipation of procurement

Intro | 00:02.46
Welcome to Procurement Unplugged, the podcast with procurement experts for the procurement world. Thank you for tuning in.

‍Fabian | 00:13.39
Welcome to another episode of Procurement Unplugged. Today with a new guest, Jan-Henna Theissen. I am very pleased to welcome you. Jan Henner has also been in procurement for 20 years now, has accompanied the digital transformation at the global corporation Akko in recent years, especially in the transformation of medium-sized companies with his own consulting firm Target P. Jan Henner, I am delighted to meet you here in the studio.

‍Jan Henner | 00:48.24
Yes, thank you very much, Fabian. Nice to meet you.

Fabian | 00:51.00
Yes, it's always exciting. I've outlined your career a little bit, how different personalities get into procurement. That's not usually the standard career path. What was it like for you?

How Jan Accidentally Landed in Procurement

Jan Henner | 01:05.38
Yes, it definitely wasn't standard for me either. It was actually more of an accident. I did a vocational training programme many, many years ago. And when I finished, I realised that I wanted to go to university at some point, but before that happened, I joined the company and was really looking forward to the subject of controlling and ended up in some form of purchasing.

I wasn't that enthusiastic at first, but that changed abruptly within a few weeks and one of my colleagues at the time, a classic purchasing veteran, once said purchasing, always purchasing. That was still a threat to me at the time, but it turned out to be true. I've now been with the company for 26 years. So my career in purchasing wasn't necessarily planned, but it fascinated me all the more.

Fabian | 01:50.21
Yes, perhaps you could tell us a little bit more about your career, from controlling and starting out to your own consulting firm, which you have been running very successfully for several years now.

Jan Henner | 02:04.541
Yes, I was allowed to do pretty much everything in purchasing that you were allowed to do or that you can do in purchasing. I started out in the classic way as a buyer, still with typical operational activities in the 90s. So I still got to experience a bit of purchasing as it might have been in the good old days. Over the last 22 or 23 years, I have been able to witness the transformation and further development of purchasing from a former to a modern function in many respects.

At some point after my studies, I started working in the automotive industry, where I spent ten years as a strategic buyer, project buyer, and then also took over a large procurement project as purchasing manager for the company Benteler in a kind of joint venture with BMW. It was about the chassis for the BMW X5, which was a huge project at the time, with a purchasing volume of almost five billion euros, and in the course of that I also went abroad. And 2007 was actually a year in which my procurement career changed a bit, because I made a conscious decision to move away from the topic of a procurement career and to focus more on the organisational level, transformation and further development of procurement. Today, many people also talk about procurement excellence. And for 15 years now, I have been involved in rebuilding and restructuring procurement organisations. I reorganised purchasing worldwide for Bentola, across all business areas.

Then I went to the USA, again to the company Akko. I also reorganised the purchasing department there for the first time in the company's history, forming a powerful purchasing department for Akko across brands, countries and regions. And of course I also did a lot of digital projects in this regard. Ultimately, this has been with me since 2000, 2001, and I completed my first major platform implementation in 2002. And because of all this mixed situation, these topics that I was allowed to do, also in terms of risk management etc., I decided to make my own decision in 2017.

In 2017, I decided to start my own business and founded Target P. We are now five people and we advise companies in the areas of organisational development, transformation of purchasing organisations, digitalisation of purchasing organisations, from platforms and individual solutions to digital ecosystems. But the whole issue of supplier management and risk management is also an important topic for us.

Shifting from Procurement Career to Organisational Transformation

Fabian | 04:26.50
That was quite a journey over two decades. What has changed the most? You mentioned it at the beginning, the good old purchasing back then. What would you say has changed the most in the last 20 years in terms of transformation?

Jan Henner | 04:46.87
Certainly, on the one hand, the importance of purchasing within companies. Even if this is still a point where we are struggling and where, especially in medium-sized companies, organisations are still fighting for their role in the company and trying to qualify themselves, it has already been recognised that purchasing is no longer this classic stepchild, this ordering office that is only supposed to process orders, but has already emancipated itself. Are we where we want to be in many respects? We are probably not. And we probably aren't where we would like to be either. These days we talk a lot about value contribution, away from cost management, away from cost reduction. I believe that many purchasing organisations are still not there, but we are at least on the right track.

The other issue is clearly e-procurement, digital procurement, whatever the term is. I started in purchasing back then, when the first PCs were being installed in companies and there were things like Excel and Access and e-mail. We can now manage complex issues in procurement with the support of digital solutions, be it procurement projects, processes, supplier management activities or even risk management. I now have things like artificial intelligence etc. at my disposal. That is certainly a dramatic change. But also the qualifications. I think I've had the feeling twice now that I've been able to experience generational changes in purchasing.

From the typical buyer of the 80s and 90s, where many things were perhaps still done with a handshake, where many things were not necessarily documented, where many things were done through personal relationships, to more formal purchasing, to more binding purchasing, to more documented purchasing. But of course this is also associated with... and considerably higher qualifications for employees in purchasing. So nowadays, I think you don't even need to apply without a degree, without multilingualism and certain backgrounds, at least in some companies. It was certainly different in the past. As a trained industrial clerk, I was able to switch to a purchasing department without any problems and take on responsible tasks. That's difficult today. So you can already see this general build-up of skills and competencies in the organisation, as well as among employees.

Fabian | 07:05.53
If you can summarise it like this, the importance of purchasing has actually changed over the last two decades. Of course, it could still be better, but of course it's now on a completely different pedestal than it was 20 years ago. But what's exciting, I mean, many people are always talking about digitalisation and digital transformation. But you also say that the requirements profile for buyers has changed. Maybe that again for our listeners... To emphasise that, of course, the buyer of today can no longer be compared with the requirements of 20 years ago. What I also find very exciting, I mean, you were with global corporations like Benteler and Akko.

Now, of course, you have to say that the requirements and budgets and the skills of such global corporations are enormous. And up to now you've been travelling with Tage P in the SME sector. So A, why the change from enterprise, corporate to midmarket, so to speak? And what are the big differences here in procurement?

The Impact of Digitalisation on Procurement

Jan Henner | 08:14.94
Yes, we ultimately serve both fields. We now have a large number of customers with purchasing volumes in the billions. These include Autoliv from Sweden, for example, and we have also worked very closely with the Swiss railway company in the past. Of course, these are companies with significant purchasing volumes. At the same time, however, it is also important to me personally to have a strong presence in the SME sector, because there is still a lot of catching up to do in many companies, regardless of the field of activity.

I don't think we should make the mistake of making too much of a distinction between companies or large corporations and SMEs. This is a trend that I have also seen very strongly in Germany in recent years, including at purchasing events, and it worries me a little because the challenges that we as companies have had to overcome, especially in the last two or three years, be it the pandemic, inflation or supply disruptions, are all the same. They influence our day-to-day activities, regardless of whether I am a medium-sized company or a large corporation, so I also... I have relatively comparable requirements and have to find solutions.

Fabian | 09:29.83
I think I agree, and I think you're absolutely right. Many SMEs are probably asking themselves how they can solve these challenges and requirements in the same way as large corporations, because the budgets and the people involved are of course different to what you would find at a valve manufacturer or a battery manufacturer.

Jan Henner | 09:56.37
That is certainly the case. We see that again and again, whether it's staffing or the budget in general. The good thing is that I can still do a lot in procurement without necessarily needing budgets. So if I take the topic of risk management, for example, I can also... I can take the first steps without a large budget and without additional resources by analysing, for example, what are the risks that affect me, how can I counteract these risks, which suppliers may have the greatest influence on my... on my company's results.

These are topics that I don't necessarily need budgets or personnel for. Of course, if I go into the area of digital procurement, the world looks a little different when it comes to driving these topics forward. But here too, we keep telling our customers, including SMEs, that there are now so many digital solutions on the market that make your work easier, that make your procurement more effective and that you can also afford as an SME.

So you don't always have to plan or calculate with six-figure budgets here if you want to launch an initiative, but there are now very mature solutions that are also used very intensively by SMEs, where you can take a huge step forward with four- or five-figure budgets... ...you can take a huge step forward, be it in your eSourcing or eProcurement activities, be it in the area of supplier management, keyword supplier database, supplier onboarding solutions, supplier management solutions.

We still have a bit of a problem with this in Germany because investments in purchasing are always associated with investments that only large corporations can afford, but this is no longer the case. For at least ten years, we have had strong digital solutions for pretty much every topic in procurement that are also suitable for SMEs, whether in terms of implementation, the effort involved or the costs involved. And that's why I no longer necessarily see it as an obstacle or excuse for not doing anything now, even as a medium-sized company.

Fabian | 12:13.90
Okay. So that's very exciting, because that means there are virtually no more excuses in the SME sector to just get started, to start digitising, because it's similar to the big players. Of course, there's always the debate with the big players, full sweet or best of breed, where you sort of, you laugh at this, where you hear at every conference, how is something like this even possible for SMEs, because for full suite I need these big six-figure budgets that you're talking about.

For best of pre, perhaps not quite such high budgets or perhaps, depending on how much best of pre that finally amounts to. At the very least, I need good IT and API teams to network everything seamlessly. Otherwise, of course, I'll bring all the chaos into my home. What's your opinion on this?

Jan Henner | 13:04.26
Yes, I have to answer like a lawyer. That depends. Personally, I'm honestly... A big advocate of a best-of-breed architecture or a best-of-breed ecosystem, especially when it comes to SMEs. Simply for cost reasons, as experience has shown me. Then, of course, in the second step, also for reasons of time. I also want to finalise projects and be quick, especially in this day and age. Of course, small solutions are often much quicker to realise and implement.

Of course, I always have the discussion about how this fits into the company's general IT strategy. Is IT, or whoever, prepared to go down this route? But in our book, which we wrote on the subject of digital procurement, we also explicitly address the topic of best-of-breed. And from my own experience, having set up best-of-breed ecosystems for large corporations myself, I now consider this to be essential... more cost-efficient and faster to implement. And that's why we have a slight tendency towards this best-of-breed story. Of course, I also understand when there are companies that say, for example, we have a standard ERP system, SAP or Oracle or whatever, and we want to use it to implement everything as far as possible.

But then, of course, how the purchasing department is structured also comes into play. very much in the direction of strategic purchasing, it becomes relatively difficult to implement one or two things with this ERP system. If I say that I am more in the transactional area, i.e. I want to process orders and handle things that can be catalogued, then of course I now also have good approaches in the conventional ERP solutions. But I personally know of virtually no company that is active in the production environment, for example, or in the development of components, such as in strategic purchasing, that does not use alternative products to their ERP system.

ERP Systems and Procurement

Fabian | 15:01.43
Yes, because that is of course also a topic that we hear more and more often and say, yes, wait a minute, I have an ERP system that has a procurement module. I can actually use it to handle analytics, supplier management, related party enquiries, sourcing, everything. So you're basically saying, yes, for operational processing, everything that's a bit more strategic. No.

Jan Henner | 15:26.98
As I said, it depends a bit on the purchasing function, how mature it is and what it expects. But my experience tells me, from my own projects that I have done in the industry, as a responsible person, as well as now as a consultant or supporter. Most companies are better off developing and putting together this ecosystem with specific solutions.

This may certainly cause one or two interfaces, but this is no longer such a problem nowadays compared to the early 2010s due to interface harmonisation and the performance of the interfaces, so this should no longer be a killer argument in today's world. And anyone who really attaches great importance to making a procurement process as flexible and agile as possible, who attaches great importance to managing a supplier holistically or the supplier base holistically, to managing the entire supplier cycle holistically, is certainly better off with alternative solutions than with conventional ERP solutions.

Fabian | 16:33.66
So complementary to the ERP solution, everything that is a bit more strategic in terms of data, so to speak, for SRM, for sourcing and the sub-areas then improve accordingly with best-of-breed solutions. Yes, what is it, we've already talked a lot about SMEs, what do you think? The status quo in the German SME sector, if you look at it all now, digitalisation and so on, there are more and more initiatives. You said at the beginning that you shouldn't separate the SME forum, procurement in the SME sector and so on. In your opinion, what is the status quo there?

Jan Henner | 17:16.09
Yes, to be honest, I'm still a bit disappointed, I have to admit, when I see how little... has happened in the companies. And when we talk about SMEs, we're not just talking about companies with a purchasing volume of perhaps 50 or 100 million, we're also talking about companies that are in the high nine-figure range according to the German definition, or even have a purchasing volume in the billions.

And I had a very interesting experience two years ago where the purchasing department urgently wanted to do something in the area of digitalisation, to tackle a specific problem that they had on the agenda every day and then the management said, wait a minute, do we really need this? We've always managed without it until now and you have Excel, you can use it, can't you? And that's a bit of the mindset that I unfortunately still see. Even though there are now some great flagship initiatives. Another one was presented at the BME Symposium this year. A medium-sized company was honoured for its digital initiatives. That was certainly another good example.

But at the same time, I have to say that there is still a lack of strategy across the board. How do we actually want to position ourselves digitally as a procurement organisation? And above all with the big question, why do we want to do this? What do we want to achieve with it? And because these questions are often not answered, the second step is also missing a little, namely taking action. What solutions do we start with? What do we want to achieve with them? And what I unfortunately always see - and I'm certainly not making any friends here - is that even in the SME sector, it is still very often the case that this topic is not driven forward enough within purchasing or within the company.

There are ideas, there are concepts. And then it may fail at the first hurdle at the first budget meeting and then it is put back in the drawer relatively quickly instead of people saying, I'm going to fight for it now because it's important to me personally. And that always makes me wonder a bit as a buyer, because my mindset is that I have to push things through, I have to fight for something.

And sometimes I still lack the initiative for purchasing to fight for itself. You can basically see what's happening in other departments. Investments are being made on the sales side, investments are being made on the production side with new solutions and technologies, and we sometimes forget ourselves and that's why I wouldn't rate the status quo low, but it's certainly not where it could be right now, now that a wide variety of digital technologies have been around for 20 years.

Advice for SME Procurement Leaders

Fabian | 19:51.20
Yes, I mean, maybe to make friends again, maybe it would be important, I mean, if I now imagine that there are thousands of companies in Germany with a turnover of 100 million, 300 million in the sector, what should I consider as head of purchasing, or how should I get started? As you say, the issue for many is that perhaps the will is there after all, the budget is perhaps a little lacking, you should fight for it. But what are the first three, four, five points, how can I get started and say, okay, I can now harvest the first low-hanging fruits, as they say?

Jan Henner | 20:27.56
Also auch wenn wir in Deutschland uns ja manchmal mit dem Begriff Strategie oder Vision oder Mission schwer tun, ich sollte mir auf jeden Fall Gedanken So even if we in Germany sometimes struggle with the term strategy or vision or mission, I should definitely think about why I want to tackle the topic of digital at all and what do I want to achieve with it? That sounds a bit like consultant blah-blah, but if I don't know myself what I want to achieve and can achieve with it, it will be difficult to sell this topic with the necessary enthusiasm to my budget providers or sponsors, for example.

So that's at least the first step. Even small purchasing organisations need something like a purchasing strategy. Or at least a roadmap: where do I want to go as an organisation and how do I get there? That is at least the first step. The second step is that nowadays I can also develop business cases relatively easily, which can at least support the solution I favour. For example, if I say I want to become active in the area of risk management, I have enough... current situations that I can also use for such a business case, which can explain why I want to do this and what the added value is for my company.

The same applies to sourcing solutions, of course. I should be clear about why I actually want this sourcing solution, what do I want to achieve with it? Is it simply to optimise the process or do I also want to structure the procurement process within the company so that I have more leverage in terms of bundling etc.? Because in SMEs in particular, a lot of things still bypass the purchasing department. And that would also give me a basis for calculation so that I don't have to make this solution look good, but can at least show that short-term value can be added there. That should definitely be the case. And thirdly, we also recommend the topic of... competitiveness of the company and the attractiveness of the company. In procurement in particular, we are still struggling with the issue of talent and the interest of young people in procurement.

Of course, if I don't play on this digital and global playing field or whatever, it will always be difficult for me to find talented people who will help my procurement department move forward and who... also have the right skills. In other words, I may have to think outside of the traditional business case and the traditional figures, keyword ROI, and consider what I can do to make the job in procurement, my department, my functional area simply more interesting and exciting, apart from the successes, in order to then indirectly increase the value contribution at a later point in time through additional, better, better trained personnel.

Vision for the Future of Procurement

Fabian | 23:21.12
Yes, I think these are very clear and pragmatic recommendations for action, where I could imagine that it might still be a bit difficult to implement the vision, especially here in Germany. I mean, what would be your vision for procurement? If, let's say, you were now head of procurement, what would be your vision for procurement in the future over the next three to five years?

Jan Henner | 23:47.89
My vision, my plan in this case, would be to at least always think on two levels. So never just thinking in terms of costs, but if I say I want to increase the value contribution, I always have to increase the competencies or capabilities of an organisation at the same time. In other words, I always have two paths that I have to take, which are mutually dependent, but which I have to take into account. On the one hand, for me this means investing a lot of time, thought and perhaps also a bit of money in the whole area of what I can do to minimise risks.

For me, this also includes topics such as sustainability, which still has a bit of a flavour, i.e. this famous ESG environment, that I look at in order to ultimately position the company... to position the company in such a way that the money that I might bring in on one side is not thrown out on the other. And the second arm is, of course, the whole issue of automating procurement, because we've been talking about it for many, many years and, incidentally, that was also a selling point that SAP brought up in every conversation back in the late 1990s. You have to free up time for strategic work. And I heard this again purely by chance last year in a conversation with a software provider. I thought to myself, okay, so far in the time warp, you're hearing the same argument 20 years later.

But that's exactly the point. If we want to work better, we have to start freeing people from certain tasks. Of course, this also means that it could become uncomfortable for one or two purchasing employees, because there are enough people who feel very comfortable in this environment. Operational purchasing, handling purchasing processes. But for me, that would be one of the main issues that I would try to eliminate in order to do what I want to do as a purchasing employee. I want to work strategically, I want to give something back to the company in terms of value contribution and, above all, I don't want to get stuck as a cost-cutter, because you do that for a few years and then, at least for me, you lose the desire to keep doing the same cost loops every year with new arguments that are then old again. Expanding skills on the one hand and automation and digitalisation on the other.

Fabian | 26:06.87
Yes, I think these are very important ideas that you can take with you in terms of developing skills, especially when it comes to minimising risk. Of course, we have risks everywhere at the moment. Supply chain law, ESG, supply chain risks in the global world that affect everyone. I think the topic of automation is now more topical than ever in the remote post-Covid world, even if it was already a claim 20 years ago. And I think that brings us full circle to your opening statement that the demands on individual buyers will change dramatically.

I mean, they will be more orchestrators, more strategists. Very exciting thoughts that we can take with us here. Many, many thanks for the open and sometimes provocative discussion. I think it was very refreshing and thank you very much for your time.

Jan Henner | 27:10.25
Gladly, it was fun, Fabian. Thank you for the opportunity.

Final | 27:15.30
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