The Procurement Unplugged podcast offers in-depth discussions tailored to procurement professionals. In this episode, host Fabian interviews Mike Leuger, a seasoned procurement expert with over 20 years of experience. Leuger shares insights from his career, starting from his early days in procurement by coincidence to becoming a partner at major consulting firms like KPMG and Roland Berger, before transitioning into entrepreneurship. The conversation explores the evolution of procurement, from manual processes and inefficiencies to today's highly digitalized and strategic role within organizations.
Leuger emphasizes the growing importance of procurement's shift from operational efficiency to strategic collaboration. He discusses how modern procurement tools have matured, but there remain challenges, such as adapting to rapid organizational changes and fully integrating procurement with core business strategies. The episode also covers the future of procurement, touching on potential innovations like autonomous procurement and the need for adaptability in a constantly changing business environment. Leuger leaves listeners with a call to embrace vision, leadership, and collaboration as key drivers for future success.
Intro | 00:03.27
Welcome to the Procurement Unplugged podcast. The podcast for procurement professionals. Great to have you with us today.
Fabian | 00:13.38
Hello, everyone. Welcome to another episode of Procurement Unplugged. Today, we have a very special guest, Mike Leuger. Mike is a German procurement veteran. He has been in the procurement world for the last 20-25 years, partnered with KPMG and Roland Berger, and now is a procurement entrepreneur. Very welcome.
Michael | 00:37.43
Thank you very much, Fabian. Thank you for your kind invitation.
Fabian | 00:42.11
So maybe it's interesting for our audience how you ended up in procurement and how you became a partner there. I mean, like most young people today, you might want to become a partner in a strategy consortium, but maybe you can elaborate a bit more on how you made your path with a topic like procurement.
Michael | 01:07.62
Yeah, certainly. 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 MDX company. They hired me because they had a capacity constraint, a headcount bottleneck. So I was writing purchase orders and chasing deliveries.
After a couple of days, I ran into the head of supply chain in the corridor, and he said, "Hey, young man, how do you like it?" I said, "I like it, but you don't have a capacity constraint. You have an organizational problem." So he stopped smiling, invited me into his office for a coffee, and I shared my observations. Then he asked me, "Can you fix it?" and I said, "Yeah, I can certainly try." And I guess that's when the consultant in me was born.
I continued in that role for a couple of years, and when I worked with consultants, they convinced me that the consulting business would be interesting. So I joined E&Y in their strategic sourcing and e-procurement practice. While everyone wanted to do strategic sourcing, I struggled to understand what was so strategic about bundling demand and consolidating a supply base. I found the e-procurement space much more interesting because I could see how it all connected — how things flow from demand to procurement to suppliers to finance and back to demand.
I did that for a couple of years, and at some stage, I was managing one of the largest SAP SRM programs globally for Deutsche Post DHL. From there, I was headhunted into Vodafone. I joined Vodafone’s corporate procurement in Newbury as an e-supply chain manager, developing their digital procurement strategy and roadmap.
I stayed for three and a half years and helped launch the Vodafone Procurement Company in Luxembourg. After that, I returned to Berlin, back to consulting for personal reasons, joined KPMG, became a senior partner, and then moved to Roland Berger.
You asked how you become a partner? Selling, selling, selling. Ultimately, it’s a numbers game. But I keep telling consultants: they need to have a focus and develop a core capability. That capability is needed at every stage of your career. It helps gain the trust of your team when you're a project manager, and the trust of clients by delivering the concepts and change they need. And it helps with selling. Specializing in a specific piece of content is key — in my case, it was procurement.
We delivered award-winning innovations, but at the same time, we got frustrated because corporate governance often slowed down innovation. Eventually, I left corporate life and became an entrepreneur, launching KeroLabs with Detlef, Tim, and Christoph.
Fabian | 04:57.92
Super interesting journey. I mean, how did procurement in your opinion change over the last 20 years from when you first started to now when you started AcuroLabs? How has the landscape and the procurement industry changed?
Michael | 05:14.76
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. working seamlessly you have different specialized solutions for different buying channels you have all these specialized solutions on top of the Peter P and s2c suites 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 the ivory tower. Procurement needs to work collaboratively with all the stakeholders in the organization. That is very often still missing, and leveraging the data and insights that are available for procurement is crucial. Procurement is the function with the most interfaces in the organization—the spider in the web. If we manage to leverage this position, we can be the primary provider of business insight and business foresight. I guess recent Black Swan events like COVID-19, the Ukraine war, the 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 | 08:09.47
So, on one side, the processes have digitized, and on the other, there's a shift from operations to strategic thinking?
Michael | 08:21.57
Absolutely. And I think what procurement needs to appreciate as well, 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. Think of a Siemens. A 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 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 | 09:40.04
In procurement functions as a value orchestrator between the stakeholders, the suppliers and procurement itself basically.
Michael | 09:51.93
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 | 10:19.25
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 | 10:38.62
Well, 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 them from delivering the full value potential, you very often hear that it’s early and continuous involvement with the stakeholders. Procurement is only involved once the technical specification has been finalized, once all the requirements have been determined, and sometimes even after the suppliers have been selected by engineering or production. 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 process that benefits the entire organization? Let me give you an example: if there's a lockdown in China, a corporate procurement person in Europe or the U.S. might see it as a risk, while a local procurement person in Asia might think, "Fabulous, the global demand is gone; it's more for me at better prices." Or, if a new technology emerges, procurement might see it as an opportunity to drive more intense competition, while engineering and sales might view it as 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 a product that is highly profitable, even if it means we can't afford to meet ESG targets? Or do we prioritize sustainability and address reputational risks due to the supplier not fulfilling the standards, no matter what it costs? This is what we have to fix first, and procurement can’t do that on their own. We need to orchestrate the entire organization to drive the best benefit from a total enterprise perspective.
Fabian | 13:47.89
And how can procurement be best equipped or what's the solution or the toolkit to achieve that and to overcome those challenges?
Michael | 14:01.30
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 the category, so we don't just focus on the actual supply market dimension. But the process remains relevant because it involves analyzing demand. You come across all the internal stakeholders, understanding their requirements, technical specifications, and our cash position. Should we rather buy, or is it better to lease items?
We need to understand what it is that we're selling in the first place. Are we still selling machines? When you think of machinery companies in the past, they sold machines. Today, they don’t just sell machines; they sell machine uptime, guaranteed outputs, and service level agreements. So, procurement needs to cater to services and spare parts, along with the components, in order to really support the business model. The first process step is understanding demand, then it's understanding supply.
So, doing market research and making sense 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, ultimately translating this into initiatives to realize the benefit. So, the process is: analyze, strategize, realize, with the respective toolkits and supportive collaboration workflows that involve all the stakeholders in this process.
Fabian | 15:42.43
In this regard, the toolkit, is it fair to say that from the kind of now closest mindset, the procurement really has to move towards digitization and digitize that process with just Outlander?
Michael | 16:00.90
Yes, I guess that's the next step. As mentioned in the past, we have digitized 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 realized 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 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, he 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. a 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 a BCG matrix, you're on the sales 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.
Fabian | 18:38.57
The 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.
Michael | 18:51.56
consultant to the 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 disrupt yourself somebody else will yeah
Fabian | 19:10.91
from that aspect I'm had from the system in the strategic space what do you think is the biggest space to be innovative with the human.
Michael | 19:29.25
I think the digitalization is still relevant across operational, tactical and strategic. And there's room for innovation throughout. Different customers require different. solutions. So large corporates very often super fragmented in this dynamic world.
Today they divest a business unit they buy two new business units i think the biggest challenge is how quickly organizations change and no i.t solution can be configured at the speed the organization changes and i think this is where innovation needs to take place to make the whole game much more adaptive through open interfaces through more standards.
Fabian | 20:31.63
Very interesting. So, on one side, the strategic aspect, you outlined very detailed, and on the other side, to the ever-changing business environment, flexibility, adaptability, and therefore systems which can be implemented extremely fast and can be configured.
Michael | 20:53.93
very customizable it's going to be fast 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 a process so you didn't get a purchase order out this has been fixed but then when organizational 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, 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 | 21:56.00
Yeah. So then I come to my last question for you. What's your vision for the future? Future, I mean like maybe five, ten 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 ESG and scope 3 improvement. What's your kind of...
Michael | 22:22.05
The idea of the future... Well, I was asked that question some five years ago. I was asked whether I could help digitalize the Vodafone procurement company. In my humble opinion, by then, the procurement company was already fully digitalized — e-procurement, e-sourcing, e-invoicing, e-contracting, even the first very promising instance of process mining. So, I was a little bit overwhelmed with the question.
I did my research, and I couldn't find anything. The only thing that held me back in those days was a quote I found by David Ben-Gurion, who said, "All experts are experts in what was. There are no experts in what will be." Which was great, because it was a justification for not knowing anything!
But the conclusion was even better. The conclusion was: if you want to be an expert in future topics, three things must replace experience, namely vision, leadership, and collaboration.
And now, once again, I'm overwhelmed by your question. So, the only thing I can offer is that we find out together — in the very spirit of vision, leadership, and collaboration.
Fabian | 23:44.63
I think that's a very great answer. No one can always predict the future, but with that tool kit, I think we can be better equipped to conquer the future. So I think that's a closing statement. So thanks a lot for your time, Michael. It was a true pleasure having you.
Michael | 24:06.02
Thank you very much for having me. Great pleasure here as well. Thank you very much, Fabio.
Final | 24:15.56
This was the Procurement Unplugged podcast. Thanks for tuning in today. For more podcasts and expert content, visit us at procurementunplugged.com
