This week’s featured webinar was sponsored by Coupa with main speaker Constantine Limberakis, Senior Market Researcher at Aberdeen Group. The slides from the event are available on Coupa’s website as a download. The event replay is also available here. You can also follow Constantine on Twitter: @ABG_SpendMngmt
This week’s trip to The Flip Side is based on a post written by Reed Holden on his blog Pricing With Confidence: ‘Procurement: Kings or Jokers’. Holden has written a number of books on pricing and negotiation. His primary focus is helping Fortune 1000 B2B companies in a number of industries maximize their growth through setting optimal go-to-market strategies.
This week’s featured webinar was hosted by ISM with contributions from Constantine Limberakis, Senior Analyst in the Global Supply Management practice at Aberdeen Group, and John Lark, Director of Solutions Marketing at Ariba. If you are interested in the subject but didn’t make it to the webinar, you can download a related Aberdeen Group report on ISM’s site. You can also follow Constantine @ABG_SpendMngmt or John @AribaProcure on Twitter.
This week’s featured webinar was hosted by Sourcing Interests Group and sponsored by Ariba. The ‘industry veteran’ referred to in the title was Lamar Chesney, former EVP and CPO of SunTrust Bank. His four-decade career in finance and supply chain spanned eight industries and eleven companies including Marsh McLennan, Coca-Cola, and Delta Airlines. He was joined by John Lark, Senior Product Marketing Manager at Ariba.
This week’s eSourcing Wiki-Wednesday topic is discontinuous innovation, and it is included as one of twenty-one Next Generation Sourcing Strategies that can help revolutionize the role of procurement in the organization.
A cardinal principle of Total Quality escapes too many managers: you cannot continuously improve interdependent systems and processes until you progressively perfect interdependent, interpersonal relationships.
– Stephen Covey (1932 – 2012)
On July 16th, the world lost one of its most recognized self-improvement writers and speakers in Stephen Covey. His books, speeches and projects were aimed at improving and empowering individuals and the organizations and networks they belong to. His most well-known publication is ‘The Seven Habits of Highly Effective People’, written in 1989, which has sold 15 million copies and been translated into 32 languages.
This week’s Flip Side coverage comes from last week’s webinar on negotiation hosted by Think! Inc. The primary speaker was Brian Dietmeyer, CEO and President of Think! Inc and author of several books on negotiation including Strategic Negotiation. Although this event was predominantly geared to a sales audience, negotiation is negotiation. If you aren’t sold on the connection to procurement performance, read on to learn more about the ‘moment of truth’: when a sales person is facing their procurement counterpart across the negotiating table.
This week’s featured webinar was hosted by Supply & Demand Chain Executive and sponsored by C.H. Robinson, a global leader in third party logistics. The speakers were from Nature’s Path Foods and the Sustainable Food Trade Organization. Twitter #ShipGreen for more information or to join the conversation.
The Sustainable Food Trade Organization shared the structure that Nature’s Path was able to leverage for their sustainable logistics program. Most members of the SFTO see both consumer demand and regulatory pressure as drivers for their sustainability programs. As with other change management efforts, companies find it difficult to get started on being more resource efficient and strategic about their sustainability.
The SFTO also recognizes the common wisdom that you can’t manage what you don’t measure. They had identified the need for appropriate metrics to help guide businesses through the implementation of sustainability programs. It took years to collect the member feedback and research required to put together a list of eleven metrics specific to the organic food industry: organic, energy, climate change, distribution, water use, packaging, waste, animal care, labor, education, governance. These metrics are used for reporting, accountability and continuous improvement, and are available on their website.
Nature’s Path is a member of the SFTO, and they used the sustainability metrics to drive cost reductions and environmental impact reductions through their third party logistics program. Key among the measurable goals of their program was to reduce waste, defined as contributions to landfills and their CO2 footprint including supplies coming into their facilities as well as consumer-ready product going out. 78% of their ingredients are sourced in North America, production takes place in Canada, Washington and Wisconsin, and their product is shipped to 42 countries. They share their annual sustainability report on their website.
Nature’s Path Sustainable Logistics Case Study
With the support of the SFTO measurement framework, Nature’s Path began working with C.H. Robinson on improving the sustainability of their logistics needs. From the beginning this was a collaborative effort between the organizations, and they co-created the program based on shared goals. Nature’s Path wanted to be involved with the direction of the process but not the details of how to make it happen because the logistics piece is not their focus.
They were able to take advantage of a number of opportunities to improve both environmental impact and also cost effectiveness by strategically locating distribution facilities as they expanded and taking advantage of intermodal optimization: blending the use of rail, ship and truck to manage both costs and emissions.
They minimized border crossings between Canada and the US to reduce miles as well as customs fees, and looked to find new eastern ingredient sources so they were sourcing where they sold – both supporting local communities and minimizing transportation costs. Another example of benefitting financially while staying true to their core values was in the handling of damaged packages. Nature’s Path and C.H. Robinson would find a way to donate them to local food banks or shelters: saving the cost of return shipping while also supporting local communities.
With the structure of metrics in place from an early point in the process, data management and therefore reporting were a high value outcome. Reporting was key to helping Nature’s Path understand their progress and successes and also to continue to grow the benefits through their customers and stakeholders. The facts allowed Nature’s Path to demonstrate to their customers how they could further reduce costs and environmental impact with their ordering procedures.
- CO2 footprint reduced by 20%
- Customs charges reduced by 60% (less finished goods moved across borders)
- On time delivery over 90%
- Reductions in transport costs through modal conversions, consolidation, fewer miles traveled
- Shortages, damages, returns almost eliminated
- No increase in size of the Nature’s Path internal logistics department
On July 10th, Value Selling Associates hosted their monthly sales training webinar on Deliberately asking good questions. If you are interested, you can listen to the event on demand (without registration) on their site. VSA President and CEO Julie Thomas opened the event by describing the Socratic method, a problem solving approach that involves asking a series of questions to arrive at an answer.
The connection between the Socrates’ philosophy and the modern sales process is the idea that it is possible to be regarded as wise without having all the answers. In other words, you can ask a lot of questions and still be perceived as knowledgeable.
There are obvious benefits to the approach known as ‘Socratic Selling’. The more questions they ask, the more talking we do, the more information they collect – allowing the supplier to craft a proposal that more closely meets the goals and objectives of the buying organization. On the other hand, not all products and services lend themselves to this method. Transactional, price-driven category decisions don’t require a supplier to impress us with their deep thoughts – just to have the information we need to compare options and make an informed choice.
Tim J. Smith, Ph.D., and Chief Editor of the Wigleaf Journal (dedicated to Sales, Marketing, and Entrepreneurship), wrote a piece on this topic called ‘Pedantic or Socratic?’ where he compares two approaches to demonstrating wisdom in sales: one where the sales person effectively ‘tells’ the buyer what they need, and one where the sales person leads the buyer to a desired conclusion with a carefully crafted set of questions. Both can be effective in the right circumstances.
Pedantic selling approaches are easy to recognize: presentations full of details about features and functionality that clearly communicate availability, pricing and benefits.
This approach works perfectly well with traditionally purchased indirect categories like office supplies or janitorial services. There are no deep dynamics to uncover, just an office full of professionals that want to have pens on hand and clean workspaces.
Socratic selling, also called consultative selling, are focused on uncovering information about the buyers motivations and needs, both to inform the sales team and to help the buyer better understand their own position.
When a category is associated with a change in strategy or will enable operational change, deeper probing is in order for both sales and procurement.
Knowing the Difference
Many sales organizations are trying to move to more Socratic or consultative models, because they believe that such an approach will result in increased trust, longer contracts and larger deals. Regardless of the prospective size of your purchase, you are likely to encounter some open-ended questions early in the sales/buying process as the supplier rep works to ‘qualify’ the deal: to figure out if and when it may happen, and how large the opportunity is.
As you get further through the process, however, a Socratic sales approach can actually be a red flag. Is the sales person trying to build a foundation on which they can either up sell you or secure a longer contract? If the questions being asked seem to repeatedly lead you from the product or service you are focused on to a complimentary offering, beware of how it affects your buying intentions. Determine up front whether your category is likely to be relationship-based and don’t let anything short of a full internal team meeting change your course.
But if your purchase is strategic in nature, and if it will require the long-term cooperation of the solution partner you select, learn to appreciate and benefit from a Socratic sales person. Take the opportunity to learn as much as you can about what your organization really needs and what will ultimately motivate an award decision and a solution choice. Just remember that you don’t have to answer all of the questions out loud to benefit from them being asked…
This week’s featured webinar notes are from a My Purchasing Center sponsored event that looked at the evolving role of procurement in today’s organizations. Speakers Barbara Kline (BreakThru Center) and Michael Walters (Transformance Inc) shared their knowledge and experience, predominantly through a case study on the purchasing organization from Honda’s North American operation.
The webinar was recorded and will be available on demand from the My Purchasing Center website.
Today’s eSourcing Wiki-Wednesday topic is on the value of crowdsourcing as a next generation sourcing strategy. The core idea is that if you can harness the collective knowledge of a large group of people to solve problems – often at a lower cost than would be required to fund a project with direct staff or contingent workforce approaches.
This week’s featured webinar was hosted by Emptoris and Procurement Leaders, with a supplier lifecycle management (SLM) case study from The ABB Group. You can view an on demand version of the event by clicking here. ABB is a global leader in power and automation technologies that enable utility and industry customers to improve their performance while lowering environmental impact. In 2010 they had $32B in revenue. As a 120 year old organization, they were decentralized with five divisions.
When have you been WOW'd by Customer Service? Why is it so unusual and it often is a simple gesture and something quite small that makes all the difference.
This week I had to call one of the BIG insurance companies about a personnel issue and a claim issue. I thought I was going to have to speak to multiple individuals and tell my story over and over again. That is such a frustrating process.
I can tell you that windsurfing is very easy – except for the wind. The wind makes it tricky, of course. It’s not particularly difficult to find and rent great equipment, and the techniques are fairly straightforward. What messes the whole plan up is that the wind is unpredictable. It’ll change exactly when you don’t want it to. The same thing is true about customer service (it would be a lot easier if it weren’t for the customers). In fact, every single function of an organization has a wind problem.
– Seth Godin, The Dip
Processes will always have some variations in output despite the best controls. Constant measurement is the best approach, tracking variations on a sampling of product. The key measurement technique is sigma, a measurement of standard deviation. A small sigma (or deviation) is most desirable, with the expectation that supplier quality will be within six sigmas (or 2 parts per billion) of the center.
I won’t rehash the full approach here, for that you can read today’s excerpt on our site or on the eSourcing Wiki, but there are three key take-aways worth calling out, and giving more thought to.
1. You can’t solve a problem until you know what it is.
Since TRIZ is a scientific method, the expectation is that all problems will be stated with a very high level of detail and specificity. If you are facing a challenge in a category of spend, being able to drill down to the very smallest and most measurable level best positions you to resolve the issue.
Even if you are facing a tough project objective, this approach may be useful. If you set out with an objective no more specific than to ‘reduce spend’ your actions are likely to miss their mark. How much spend? Over what period? On what categories/items/services? Make sure that whatever project reporting or documentation you put together forces you – and your stakeholders – to clearly articulate challenges and objectives in such a way that everyone will know if goals have been met by the solution put in place.
2. Over 90% of all problems have been solved before.
The ‘father’ of TRIZ, Genrich Altshuller, originally came up with the approach by screening patent applications to see how many were truly innovative. What he found is that only 20% of all patents had somewhat innovative ideas in them. When he took his examination further, ranking the somewhat innovative ideas by just how innovative they were, just 4% contained new concepts and only 1% were truly revolutionary.
As difficult as your particular problem seems, the probability that someone else has already solved it is incredibly high. Start working through ever-widening circles of contacts looking for someone with the information that can at least jump you ahead in your project. Start with procurement team members and then extend your inquiry to suppliers, solution providers, former co-workers, and members of your professional associations. You may even find that it is helpful to post a question on LinkedIn or start a discussion in a relevant forum.
3. Look across multiple disciplines looking for possible solutions.
One of the findings from Altshuller’s work is that the reason solutions are not apparent to us is because the answer best answer comes from another discipline. What we see as a difficult procurement challenge may be easily solved by someone in accounting or AP. Realistically, we may need to look even further than that. Maybe we are looking for a new pricing model and have to jump industries to find one that fits our needs.
Think of the first company to formally market a “software as a service” or SAAS cost and delivery model. They needed a way to communicate that you will not really OWN anything, which means that your cost equation changes and your payment structure is altered, but without really changing the functionality you receive. They needed to position it in such a way that it drew on something familiar – like services pricing – to instill confidence.
What approaches do you find best when facing a difficult challenge? Who in your organization to you go to looking for a solution or a brainstorming partner? Have you been part of a team where a truly new solution was needed – and found?
Stop me if you’ve heard this one… an analyst, a practitioner, and a provider walk into a bar… okay, not exactly…
This week’s featured webinar was hosted by Aravo with speakers from Spend Matters and General Electric. The combination of speakers gave a nice balance of practitioner, analyst and provider perspectives on one central theme: supplier information management, or SIM. All three addressed how to manage incumbent and prospective supplier information to improve decision-making and relationship building.
Last week’s webinar on reading income statements, hosted by The Executive Conversation, provided a great overview of one of the most common financial statements. You can watch an on-demand version of the audio and video without registering by clicking here.
This week’s featured webinar was hosted by BravoSolution with main speaker Andrew Bartolini of Ardent Partners. In addition to being the Managing Partner and Chief Research Officer at Ardent Partners, Andrew also does most of the writing for their blog, CPO Rising. If you are interested in the movement of major corporate CPOs in and out of their roles, that is a great place to track them.