Industry Veteran Michael Shields Joins To Shape Tropic's Vision Of Procurement Paradise

In a smooth economy, procurement can help companies turn good deals into great ones.

But in a wobbly economy, procurement is even more important. Strong procurement processes let companies control their spend, avoid layoffs, and pull ahead of competitors.

No one knows this better than Michael Shields, a procurement leader and supply chain expert who joins Tropic this quarter as Head of Procurement Strategy. In his new role, Shields will play a key part in scaling Tropic’s commercial executive team, coaching customers with best practices, and introducing futuristic ideas to our product roadmap.

Below, the former Global Head of Procurement at Qualtrics and BYU professor discusses why procurement is having a moment—and why it can make the difference between companies that falter and those that thrive.

Why are companies—especially tech companies—suddenly so interested in procurement?

Until just a couple years ago, revenue dollars were so much more important than spend dollars. In other words, generating money was more important than saving it. Now that has absolutely changed.

Why? Wasn’t saving money always important?

It was, but certain sectors, like tech, had the luxury of ignoring it. Tech investors now demand strong financials. And they’re taking drastic measures to make that happen. Procurement helps them structure stronger deals and source the best options out there.

Doesn’t a procurement layer slow down the buying process inside a company?

It’s true that business leaders have sometimes perceived procurement as slowing a company down. They’ve seen it as process-heavy or being overly focused on price at the expense of relationships.

But they were wrong about the value procurements strategy brings over the long haul.

Think about the complexities of buying anything, especially a piece of software. There are implications for your legal team, information security, and IT, at the least. If you don’t manage the buying process correctly, you’re exposing your company to a lot of risk.

Still, this doesn’t mean procurement has to take forever. I’m a firm believer in creating a thorough process that’s also a great user experience for stakeholders and suppliers alike.

Is there a dollar amount on deals where procurement is most helpful? Larger deals instead of smaller ones?

There’s no threshold that really makes sense as a place to cut it off.

Getting a good deal is certainly a part of procurement, but having a good company-wide procurement process in place means your information won’t get hacked, employees can’t steal your data, and you won’t be buying redundant hardware or software that duplicates what you already have in place.

I’ll get involved in zero-dollar transactions. Every single one is important.

What’s the simplest thing a company can do to take the reins of their purchasing process?

Understand your spend. Do you know all the terms of your contracts and when they renew? Probably not. And this can be very problematic. If you understand where your money is flowing, then you can begin to control it.

So many companies don’t understand who their suppliers are, the renewal terms, or how to manage those relationships. Their spend is controlling them, not the other way around.

Why was this such a blind spot for tech companies?

In the past, tech companies had money but they didn’t have data or time. So they kept paying high prices for things like software. Now, a platform like Tropic gives tech companies options. It helps them engage early and decide: Who’s the best in the business for what my company needs?

When they have options about which supplier to choose, they can control the situation. We put them in the driver’s seat. We help them stand their ground when they’re negotiating contracts, in many cases for the first time.

What’s a mistake you still see tech companies making in their purchasing?

First off, there are a LOT of software options out there. Don’t self-limit. We’ve come so far in technology that you probably don’t have to choose any particular software solution, ever.

What is spend management?

It’s how much of your money—the money you’re using to make purchases—flows through a controlled process. If that’s a high percentage, you’re doing a good job managing your spend. If that’s a low percentage, you might be in trouble.

What keeps you awake at night, in the realm of procurement and supply chain?

Right now, procurement and managing spend resonates with a lot of people because they’re interested in saving money. But procurement really goes beyond that. You can free up time for employees who should be involved in the spend process but not focused on it.

Think about it: your VP of Sales, who’s responsible for hitting a quota, shouldn’t be spending 10 hours negotiating a new sales intelligence tool.

Good procurement means you can be more strategic about who you align with. It’s a good investment no matter what the macroeconomic conditions. In this economy, the savings generated can be redeployed to payroll and reduce or eliminate the need for layoffs. Effective procurement can literally save jobs.

Why did you want to join Tropic?

The easy answer is the people and culture. Those are certainly qualifiers for me and are incredible aspects of life here at Tropic.

The true differentiator is the mission of Tropic. I’m a procurement enthusiast who has tried to champion the value effective procurement can bring and the good it can do. Tropic is taking this message to the world and thus gives me a bigger stage and the ability to broaden my impact. For me, that translates into excitement and fulfillment.

We happen to know you appreciate old cars. Why are they special?

I have a ’65 Mustang GT, one of America’s original muscle cars. This particular vehicle sat in a garage for 30 years. Then someone took the time to invest in it, shine it up and restore it to its former glory…with some modern touches. While there are many cool cars on the road, my car gets a lot of attention.

Procurement is similar. It grew up in old-school industries like manufacturing, and for years, tech didn’t really pay attention. But now, all of a sudden, companies need more than top-line growth. They need old-fashioned strong unit economics. Procurement can absolutely help “drive” the results you need. Pun intended.