Identifying a Gap in Procurement Performance
ValueSource got its spark when Nokia, in the spring of 2009, offered some of its employees a voluntary severance package, with 1,000 packages on offer. Since both Alve and Nieminen had expertise in both procurement and outsourcing, it felt natural to set up a company that would serve as an outsourced procurement partner for businesses.
- In my earlier roles, I noticed that a great many large companies had very little, if any, dedicated resourcing or expertise in indirect procurement. Procurement was often treated as a support activity, without clear ownership or measurable targets. Those were the factors when Timo and I started thinking that there could be a gap here for a company of our own. At the same time, we wanted to take a more active role in our own work and lives," Alve recalls.
Another supporting wake-up call came from the MBA degrees both completed after their initial studies. Through them, Alve and Nieminen gained a broader understanding of business and the confidence to start thinking concretely about entrepreneurship, the business plan, and everything that goes with it. After some out-of-the-box thinking, both ended up choosing the severance package from Nokia, which also provided the starting capital for the the early days of the business.
- Becoming entrepreneurs was certainly also driven by that existential question of what to do when we 'grew up'. A big inspiration was that, at the time, we had just enough courage, and not yet too many years behind us, to set off looking for our own path in the world of entrepreneurship and build something new," Nieminen says.
Alve and Nieminen thought about a name for their new company, but in the end they didn't have to look far. As they tossed around ideas, the words procurement, value creation, and partnership came up, and after playing with their English equivalents, the founders reached a consensus: the procurement company would be called ValueSource Partners. The only disappointing thing at the time was that the vsp.fi domain had already gone to a regional Finnish phone operator from the Vakka-Suomi area, so they ended up with the domain values.fi, which in the end turned out to be a pretty good choice.
Starting in a Challenging Market 2009
In 2008–2009, the world economy was going through significant turmoil, albeit for different reasons than today. According to Alve, the recession and downturn triggered by the housing market collapse was not exactly the best time to start a company.
- There were times, of course, when we wondered what we had got ourselves into, and we were especially a bit worried about which way the broader economy would go. But what was uppermost was the feeling that we were on to something new and exciting. We feel we were quite the trailblazers with this model, where the idea was strategic procurement work rather than pure consulting, a service model no one else in Finland had at the time."
In its early days, ValueSource focused on indirect procurement, current-state analysis, and tendering i.e. providing cost savings for the clients. The timing was favourable for finding cost efficiency and savings. ValueSource won its first client engagement in the autumn of 2009, and the first new employee was hired in early 2010. The first invoice from December 2009 hangs framed on the wall of the Turku office nowadays.
From 2012 onwards, headcount started growing steadily: in 2013 the organisation had just over ten employees, by 2015 just over twenty, and by 2022 the team of procurement professionals had grown to more than 50. The pandemic and the war in Ukraine took a slight toll on numbers temporarily, but those figures have since been restored.
A Culture Built on People and Results
According to Alve and Nieminen, one of ValueSource's best strategic decisions has been the courage to recruit talent right from the company's earliest years. When the service is delivered not by computers (naturally using maximized automation and AI), but by the expertise and effort of the professionals - their combined impact sits at the heart of the business.
From the beginning, the company has invested in its people. Procurement is a people-driven function, and the combined expertise of the team is the foundation of ValueSource’s success.
- We invest continuously in our people by training our staff, making use of networking opportunities, and supporting wellbeing in many different ways. At the end of the day, valuing expertise and valuing our people are what our whole organisational culture is built on, Alve says.
Alve and Nieminen estimate that ValueSource has considerably more expertise today than it did at the time of founding. Beyond the growth in headcount, the quality of services has also improved: what today's clients get out of those services is more genuinely business-developing and creates more lasting value than in the company's early days.
- What sets us apart from, for example, temporary staffing firms is that every one of our specialists has the support of the entire ValueSource network and a broad range of capabilities behind them. Each client engagement is supported not only by an individual expert, but by the collective knowledge of the ValueSource team. This model ensures both depth of expertise and continuity in delivery, Alve says.
Naturally, staying on top of trends and keeping the focus on what truly matters are also essential to business development. In addition to recruiting professionals and learning to use tools such as AI, HR systems, and finance systems, Nieminen believes it is important to draw on external expertise as well, even for a company that offers procurement outsourcing itself.
- We thought, why wouldn't we make use of external expertise when we offer it ourselves? It makes sense for us to bring in outside expertise for business processes that aren't part of our core capabilities and don't directly affect our clients. Examples include IT, routine financial administration, and digital marketing. That way we can create more room for our own growth and an even better client experience."
Success Requires the Ability to Respond to Changes
Today, ValueSource's main client segment has shifted from indirect procurement to procurement in technology and manufacturing industry, namely direct procurement and more on as well on capital investments (CAPEX).
Industrial direct procurement covers things like various materials and components, while capital investment procurement ranges from single machines to entire production or industrial facilities from factories to data centers. Green transition investments are also of particular interest now, along with their landing in Finland and the Nordics – let’s hope this happens in the near future. Indirect procurement and tendering work continue at clients' request and new solutions are also adopted to tendering process – including AI and new tools for even more effective execution from opportunity analysis to contracting and performance measurement.
ValueSource constantly aims to adapt to the times, with the course set by changes in markets and competition. During the Covid pandemic, the focus had to be on securing availability and weighing up suppliers and supply chain alternatives. 2024 onwards, optimisation of the business continues again, within the framework set by the changed global situation and growth ambitions.
In today's challenging economic climate, companies are aiming to streamline and control costs, so ValueSource also helps with this by identifying opportunities to reduce costs in our clients' procurement and processes.
- The world is changing, and we have to be able to change with it. That doesn't mean drifting off our defined path, but rather deliberately deviating from it and thoughtfully expanding our services, Alve says.
Sustainability, both as a topic and as a value, is also becoming ever more relevant in procurement. EU legislation requires large companies to report on sustainable and responsible business, and because large companies also rely on subcontractors, the importance of responsible procurement is constantly growing in smaller companies as well, throughout the entire supply chain.
- Sustainability will also steer our own work, and we're ready for that. So many companies are struggling with this topic when it comes to expertise and capacity gaps, and not all have even woken up to how large that gap is. Changes like these, and keeping them going, always require client commitment all the way from top management; otherwise, the results just won't come.
Next Step: Nordics No.1 Procurement Partner
ValueSource has grown considerably since the Covid year of 2020. Turnover in 2023 was €4.63 million, and in addition to its specialists, the organisation has a register of more than 4,000 suppliers and a talent pool of over 1,000 professionals, providing flexibility and scalability for client needs.
The goal is to become the Nordics' No. 1 procurement partner in the next coming years, although there is, of course, still plenty of room to grow at home market in Finland. About a third of our domestic target group has been reached, so the focus is now on the home market.
- We've been working for a while now on developing our own operations and leadership, clarifying how we run ValueSource as a process and what kinds of factors growth requires. Even when we sometimes feel like pushing harder on the accelerator, we must remember that our capacity and capability aren't unlimited. The strategy is built so that we can move forward on the growth path one step at a time. By 2027, the goal is to be a procurement partner with more than 100 specialists and the No. 1 in our field in the Nordics, Nieminen explains.
A clearly positive sign is that the procurement profession has gained appreciation generally during the recent challenging market conditions. Fixing broken supply chains and finding new channels, for example, are now vital for companies, and it is encouraging that this has already been recognised in many companies at the executive team level.
- Ten years ago, procurement was just some kind of support function, but today this work has really started to be valued. Today there's a better understanding that procurement work isn't just about punching in purchase orders and spending money. Procurement enables growth and profitability; while marketing and sales open up the path, smart procurement delivers the results to the bottom line.
"Change Is a Prerequisite for Growth"
ValueSource's founders say they've come through many challenges and solved even difficult problems by putting their heads together. Sometimes a proper debate has been called for, and it's from those situations that the best ideas have been refined.
- As personalities, we're quite different, but we've always managed to find ways to fix the issues and move forward. There have been some tight situations, but no task has proven impossible, and the most brilliant ideas have come out under pressure, Nieminen says.
Alve is on the same page and offers a closing perspective on how to get past challenges so that real development can happen.
- Insights have often come from the fact that we've done things the same way for, say, a whole year. When you repeat the same patterns, before long boredom usually sets in and nothing changes. Change is a prerequisite for growth and development, and if everyone just went along with things and tiptoed around, we wouldn't develop either. I feel we've had the courage to make the changes that were needed, and the fact that they've also turned out to be worthwhile has been particularly rewarding. Courage will be needed going forward, too, on the way to the top spot as a procurement partner in the Nordics.
