Keith Hartley, LevaData CEO, on Philosophy and Procurement

In the rapidly-evolving procurement landscape, staying ahead of the curve requires innovative thinking and a robust understanding of foundational principles. 

Specialising in this realm is Keith Hartley, CEO at LevaData, which provides an AI supply management programme for direct material sourcing for the likes of Lenovo, Dyson, NVIDA, Bose and Zebra.

Procurement Magazine sat down with Keith to discuss how the first principles philosophy and design thinking – both well-established concepts – can revolutionise procurement processes and create powerful mindset shifts, driving new possibilities and adding significant value to businesses.

What value can the first principles philosophy bring to procurement?

A first principle is a core or foundational element of a system. When you simplify a system down to its foundational elements, you eliminate the dependent parts in the entire process.

This allows you to question how these foundational elements could work in completely new and unique ways. It compels you to think of new ideas, develop a problem-solving attitude and work with the fundamental truths. The first principle can get to the root of what drives the procurement profession.

Procurement professionals should start by questioning the ideas and assumptions customers deal with in day-to-day operations. Show your customers how to consider part alternatives and examine the risks for each part and suppliers using evidence. Finally, challenge original assumptions using questioning frameworks such as the 'five whys', popular in lean root cause analysis.   

If we were to examine the role of a modern sourcing professional using first principles, two primary simultaneous principles stand out: 
1. Are we getting a competitive price at the current market rate right now?  
2. Can we get our product parts in the time required to refine, assemble or manufacture?  

Everything else in direct material sourcing is just a derivation or associative detail related to these two points. Every professional is in the same pursuit for his sourcing process. It could be taking action to roll up data, managing suppliers, analysing scenarios, ingesting newer data or adding datasets. 

How can procurement professionals leverage design thinking to develop people-centric solutions and optimise their processes?

After completing a first principles exercise, the next step is to design new ways of working with these principles. That’s where design thinking comes into play. It is a solution-focused approach to problem solving. It puts people at the centre and identifies how people work within the system to optimise it for their specific needs. 

Start by conducting research to understand procurement needs, ideate on workable options and then craft actionable solutions. Base the solutions to fit the way procurement officials want to work. 

In reality, too many modern procurement professionals are unaware of whether pricing is competitive based on the active market. They base their decisions on the prices paid last year versus this year instead of using a broad industry benchmark.

Similarly, we learned that often, price takes priority over part lead times. When lead times become longer than previously expected as the focus was on price, it causes product delays. 

Modern procurement professionals have the desire and the skills to overcome these challenges. However, they often lack the sophisticated tools needed to compile the insights and information needed for better decision making and incremental improvement.

How can first principles and design thinking address the combined challenges of talent scarcity and the shift to digital transformation?

Organisations are becoming extremely data intensive. AI-powered platforms are swiftly bridging the gap between diverse and complex datasets along with the tools required to derive meaningful insights from them. Digital transformation is a pursuit on everyone's roadmap. Yet, its success hinges on the capacity to hire and retain people with the requisite skillset. 

According to Gartner research, only 14 % of procurement leaders have the talent they need to drive future initiatives. Hence, for instance, AI platforms designed using first principles and design thinking are transforming the way organisations approach work. The first principles approach and design thinking methodology is a strategic and an innovative solution with the ability to reshape – even reverse – this prevailing trend of talent scarcity. 

Begin with thinking about the procurement profession at its core; bring creative solutions to complicated problems; question the design process. Do the new ideas really solve problems for the team? Is there a greater creative potential to potential solutions?

Conduct industry research, interview professionals and subsequently develop the necessary tools and platforms that address the fundamental inquiries of every sourcing professional.

Think carefully about the kind and quality of data you need so teams can instantly understand and trust insights. For a well-informed development process, each step of the process should reason with the first principles and design thinking. 

For example, we found many sourcing professionals struggle to find adequate benchmarks for unique or custom parts. They resolve it by building a custom process for this issue. 

Explore principles, simplify tasks for fresh approaches, enhance efficiencies and provide greater value in direct sourcing.

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