The Point

You are creating a supplier scorecard. Where do you get the data from and what questions do you ask?

Eighty percent of your business is done with twenty percent of your suppliers. Pareto's rule in action.

The world is changing.

Today’s eSourcing Wiki-Wednesday topic is Aligning SPM to your Firm's Goals.

The esourcing wiki articles are focusing on Supplier Management. With good reason – it is becoming more and more important to make sure this activity is part of the process with your procurement team.

This article from HRteam.com makes the point of how things have changed. Individuals are no longer just managing an internal team but often very complex external team members as well. They could be suppliers or outsourced functions being performed by service providers.

This discussion focuses on FAQ’s but more importantly what skills do your associates need in order to perform this function well. Do they need training and how do they get that? Here are some common concerns for your team:

• How do I get share of mind? We are not their only customers.
• How do I make sure that they deliver against the standards that are agreed?
• What happens if they do not perform against the KPIs? How do I escalate the issue?
• We do not want to get to the point of waving a piece of paper, shouting "breach of contract"
• How much time do I need to spend measuring their performance?
• How do I make supplier reviews an effective forum?
• How much time do I invest in developing the relationship?
• Do I want a supplier or a partner relationship?
• They are critical to our business, who has got the greatest leverage?

The message here is to make sure your staff has the proper tools in the toolkit to build the relationship to become a true collaborative partnership.

Have you found any training materials that are helpful for Supplier Management? What was the most useful tool and what would you recommend?  

A journey of a thousand miles begins with a single step.   Lao-tzu

The reality of today’s 24/7 highly interconnected professional environment is that work follows us home whether we like it or not. We get emails during dinner, invites at the grocery store, phone calls during our kids’ hockey practice and text messages while we’re trying to get from one place to the next. Even when we are successful in the effort to have some kind of personal life away from the pressures of the office, we know they are waiting for us, just across the room, on that addictive little device.

The idea of being green is certainly not new to corporations or to purchasing professionals for that matter. That does not mean that the effort is easy, or that the path to sustainable purchasing is clear. ‘Green Purchasing & Sustainability’, written by purchasing professional, author, speaker, trainer and consultant Robert Menard, is a practical book that will help you get started down that road.

I’ve reviewed quite a few books – most of which are on spend management or negotiation. Some have made me laugh, like Negotiation Mastery and Profitable Buying Strategies. A few have made me cry, and those will remain unnamed here. But I don’t think I’ve ever felt compelled to review a single chapter from a book until now.

When you walk into a place - school, restaurant, office - there is a certain 'vibe' that you can pick up on instantly. It is a product of the culture and the management that is there. 

Two years ago, we posted our review of ‘Common Sense Purchasing’ by Dr. Tom DePaoli. In September 2012 he published a new book that reflects a broader perspective on his experience and our profession. By taking a step up – or back – however you chose to see the difference between purchasing and supply management, Dr. Tom takes a new look at the challenges and opportunities in supply management and presents them by sharing many of his own experiences as an independent management consultant in 'Common Sense Supply Management'.

Earlier this year, we reviewed ‘Vested Outsourcing’, the first book in what has become a series of publications by Kate Vitasek and her colleagues on the evolving potential of mutually beneficial relationships between companies and their suppliers. ‘Vested Outsourcing’ was followed by ‘The Vested Way’, and ‘The Vested Outsourcing Manual’. Kate’s latest publication is ‘Vested: How P&G, McDonald's, and Microsoft are Redefining Winning in Business Relationships.’ I’ll include some background as well as an overview of the Vested philosophy at the end of this review. I encourage you to read my review of ‘Vested Outsourcing’ and to purchase one or all of the books in the series.

“The skills for becoming a champion caliber negotiator are acquired skills. Nobody is born with great negotiating skills. You are born with the skills of crying and breathing, all other skills you acquire throughout your life.” – Soheila Lunney

“The skills for becoming a champion caliber negotiator are acquired skills. Nobody is born with great negotiating skills. You are born with the skills of crying and breathing, all other skills you acquire throughout your life.” – Soheila Lunney

Good old Kenny Rogers, he gave us some great advice through the lyrics of the ‘The Gambler’: advice that stands true beyond the gaming table. Sometimes the best advice comes from the least expected place, and I have some advice for procurement professionals – from sales(*).

Every week, I take a break from supply management topics to learn about sales through webinars, white papers and blogs. Officially, I do it for ‘The Flip Side’, a Buyers Meeting Point resource that helps procurement professionals better understand their sales counterparts. Unofficially, I do it because creativity and objectivity can be elusive, and listening to sales’ perspective helps.

This perspective has changed the way I see the role of the individual procurement professional, the role of the department, and how we should leverage non-traditional approaches in search of better than usual results.

We are all in sales.

I used to see sales people as professionals compensated for closing deals. But contracts are a side effect of an effective sales process. The core of the sales process is quickly and accurately diagnosing opportunities for improvement and then winning over prospects to the recommended solution.

Procurement does this all the time – or at least we should. We ‘sell’ finance on a new opportunity to drive efficiency. We ‘sell’ the executive team on the strategic advantage we represent as an in-house dedicated function. We ‘sell’ internal stakeholders on the merits of a new supplier or a standardized specification that will save money.

The key is to be a quick study, sometimes adapting mid-meeting, in response to organizational requirements. We must prove we understand the challenges at hand, sometimes to colleagues that don’t have a clear perspective themselves. Once you accurately articulate a problem, brainstorming can begin on solutions to be ‘sold’ to internal customers.

Sales people believe buyers have the advantage.

I benefit the most from the Q&A that takes place during sales webinars. What do sales people really think of procurement? What kind of advice do they get from their mentors?

I’ll over-generalize to make a point: sales people see procurement professionals as a steely cold bunch. (One webinar participant commented that procurement conference rooms and offices are the coldest places on earth…) Our poker faces have apparently done the trick, because many sales people would like to check our backs for control panels to make sure we are human.

Sales believes procurement holds all the cards in the negotiation process. I have heard our advantages repeated multiple times from different sources: “Procurement already has access to so much information that we struggle to appear well-informed about our own market.” “We can’t enter the sales/buying process until they decide it is time for us to start participating.” “Procurement is so active in their use of social networking during the purchasing process that we are outpaced by our customers.”

Sales can compete on value creation.

We know that negotiating cost savings is no longer enough. We need to create value for the organization. We hear it from executives, associations, publications, and thought-leaders. Knowing how to get started is a challenge because every situation and opportunity is different.

Successful sales organizations evolved in response to the need for value creation a long time ago. With strategic sourcing came apples to apples comparisons on price alone. Suppliers couldn’t refuse to provide pricing, so they tried to influence the decision-making process by proving themselves of such value that they broke the mold.

The time has come to recognize supplier innovation. The increased focus on value by our corporate leadership, and the ability of sales to speak their language, will either open a door for procurement or clear a path right past us. If a sales person sees an opportunity to bypass procurement and reach the right execs, they will take it. Capturing value does not mean surrendering in the battle over price, just balancing costs and benefits. In that scenario, I want to be the one holding the scale.

Looking back and ahead.

The big-picture realization from my year of visits to The Flip Side is that the procurement/sales relationship is not about us v. them but about all of us. They feel the same stresses we do, and often see us in the driver’s seat when we think they are driving. They aren’t terrible people (mostly) any more than we are bloodless cost reduction zombies.

We can’t fully collaborate with sales in every category, but when the conditions are right, partnering with a supplier is the only way to a better solution. It goes against most of what we know about creating competition and harnessing the forces of the market, but recognizing opportunities for collaboration can be the difference between tactical and strategic category management. After all, ‘Every hand’s a winner, and every hand’s a loser … the secret to surviving is knowing what to throw away and knowing what to keep.’

(*) Note: This post originally appeared as a guest post by Kelly Barner on Procurement Inisghts.

If you watched Peter Faulk play the character Lieutenant Columbo in the thirty years ‘Columbo’ was on television, you undoubtedly saw him break a case by turning back at the last moment and asking, “Just one more thing…”, a question which always ended up breaking the case.

Maybe procurement need to stop and ask another question or two as well. In a recent blog post, ‘What Questions Should Your Clients be Asking’, sales blogger S. Anthony Iannarino talked about the challenges sales people face when they are not able to communicate the value of their solution because the buyers they work with are not asking the right questions. His advice provides some techniques for redirecting the conversation or asking the missing questions so that the necessary information gets across.

While we want to have a complete picture of each solution so that we can accurately compare our options, we’ve all made the mistake of asking questions that are so open ended that sales people talk ad nauseam about something we can't compare across the suppliers in contention. But that doesn’t mean there aren’t pieces of information we are missing out on.

Buyers Meeting Point’s long time advisor The Sales Guy has always advocated asking sales people something about their compensation package or their company's business development priorities so those factors can be brought into a thorough evaluation. What else should we ask?

Here are a few questions that The Sales Guy suggests working into your face-to face supplier meetings. Some are relevant for incumbents and some for new companies you are evaluating, but all of them will allow you to put together a better category management strategy and contract.

1. “If you are selling to my competitors what products and services are they buying more of and what is the value provided?”  “What are they buying less of?”
2. “We are spending $XXXK dollars with your company on an annual basis.  If I was to spend that same amount differently what changes would you recommend and why?” 
3. “What can our companies collaborate on that would help your company bring new products to market and provide competitive advantages for my company?”
4. “What business model changes is your company introducing and how might they be advantageous to my company?”

If you have a question for The Sales Guy, click here to submit it and we will get you an answer!

“Reverse auctions are loved by corporate purchasing managers, loathed by suppliers, and rarely discussed publicly by anyone involved.”

– Max Chafkin, Inc. Magazine

Last Saturday, Cindy highlighted a blog post by John Maxwell, a leadership coach, on how to fail successfully. There is much to be learned from our failures, and in many cases they are the price of admission to the victory celebration at the end of the journey. Thomas Edison is a fantastic, if complicated, example of success despite setbacks. We all know how many tries to took to make the light bulb a reality, especially because of the quote Cindy used to open her post:

In order to help procurement better position ourselves and communicate through all of the channels available to us, Buyers Meeting Point reached out to a colleague with a background in marketing and experience in the procurement space. Sheryl Johnson is the founder of BD-PRo Marketing Solutions and focuses on implementing creative marketing and business networking strategies for small and medium sized businesses, as well as a professor of marketing at the Community College of Allegheny County in Pennsylvania.

Click here to read more about the 'Marketing of Procurement' series of posts on Buyers Meeting Point.

Click here to read our last post in the series, Why Having a LinkedIn Account is Critical in Today's Business Environment.

In order to help procurement better position ourselves and communicate through all of the channels available to us, Buyers Meeting Point reached out to a colleague with a background in marketing and experience in the procurement space. Sheryl Johnson is the founder of BD-PRo Marketing Solutions and focuses on implementing creative marketing and business networking strategies for small and medium sized businesses, as well as a professor of marketing at the Community College of Allegheny County in Pennsylvania.

Click here to read more about the 'Marketing of Procurement' series of posts on Buyers Meeting Point.

Today’s eSourcing Wiki-Wednesday topic is How to Find a Good PSP.

When we have had to hire someone to do work on our house, we got references, interviewed multiple contractors and of course reviewed their proposals. While it is not just about the money, that is clearly a key factor. I am sure that drill sounds familiar to many of you.

Today’s eSourcing Wiki-Wednesday topic is Managed Services is not Tradtional Outsourcing.

Managed Services works with the client on strategic areas that the client can not do for themselves either from an expertise or resource perspective. There are also areas that are high volume and transactional in nature which is another strong candidate for Managed Services.

I came across this article from a few years ago but it does still hold true today. ISM has published a short article, When Procurement Outsourcing Fails: How to Sidestep Easily Avoidable Blunders.   

Authored by J. V. Kelly, he spends some time looking at the evolution of the procurement role and how that has played into the outsourcing trend. In most organizations, purchasing is no longer just a transactional function but takes a more strategic approach to the process and the results. Like any other relationship, setting the appropriate expectations is key. Here are some unrealistic ones that Kelly mentions:

Unrealistic Expectations

• 50% cost savings in the first year? Highly unlikely.
• Reduction in cycle time to 1 month on all sourcing engagements? Not realistic.
• Expertise in every category of spend? Many outsourcing firms do not offer this.
• Complete demand management with no maverick spend? Mandates don’t work, buy-in is more effective.

They article warns against outsourcing all procurement functions. They recommend keeping the strategic areas internal.

What has your organization done in this area? What expectations were set and how much of your sourcing is done internally versus externally?

Spend Radar Introduces Advanced Spend Management Blog, SpendZen

The industry experts at Spend Radar introduce SpendZen: a blog covering all things spend-related.

Since our inception, Buyers Meeting Point has always made Corporate Social Responsibility part of our mission. We have always had a selected charity that we donate to at the end of the year – most recently Plan International and Livestrong.

Last year Western Union celebrated their 160th anniversary. As a celebration, they picked the world's most networked person, a 26 year old from Portugal. It was based on the number of face book friends and their locations across 160 countries.

So how does that relate to procurement professionals? This week's esourcing wiki talks about the next generation sourcing. The matrix organization is becoming more the norm. It is highly recommended to put the procurement role in early with engineering and marketing. Waiting too late to pull in procurement limits flexbility and can result in higher costs into the product line.

I know more organizations are putting more emphasis in the role for procurement. They are expected to be commodity experts but also involved in product development and strategy discussions.

The next generation is also very networked and very comfortable with information and quick exchange of ideas.

What does your procurement organization do? Are you matrixed and networked? Have you found it to be more efficient and effective?

We got feedback through our recent survey that you want more category insight from us. We're working on a way to bring you resources on that front, but in the meantime, Cindy and I have a lot of direct experience that we'd like to share. What are your unique category experiences and what did you learn from them? We'd love to hear about it: This email address is being protected from spambots. You need JavaScript enabled to view it. .

We are always modifying our site and content in response to your feedback, so keep it coming!

In this week’s featured event, Bryan Ball and Bob Heaney, Abredeen research analysts, recapped the major findings from the 2013 Supply Chain Management Summit in Chicago. The event is available on demand, as are event highlights and approved presentations.

This week’s featured webinar was hosted by ISM, sponsored by Hubwoo and presented by Spend Matters. ‘Doing More with Less in Procurement: a punch list of 25 items to improve your productivity’ was based on a snap poll taken to help participants benchmark themselves relative to their peers in this area. As you might expect, prioritization is key, and we will hear more in the ongoing discussion of tactical versus strategic efforts and how to keep the machine cranking efficiently.

Each week I attend two or three webinars. Usually, I pick the most interesting event to share in this Friday webinar notes post. This week, there were two events on procurement transformation: one from Procurement Leaders/CombineNet/Kellogg and another from Sourcing Interests Group/Zycus/Capgemini. Both were good events in their own right, but combining what I heard in the two events provides a rich look at one of the hottest trends in procurement today.

This week’s featured event was presented by Supply Chain Insights and marks the official launch of the Supply Chain Index. Here is a brief excerpt from their event description:

‘The [Supply Chain] Index is based upon financial performance of companies from 2006 forward. Using market valuations of publically traded companies, we have built a formulaic representation of supply chain excellence using supply chain ratios (E.g. Ratios like Days of Inventory, Operating Margin, Revenue/Employee). … The Supply Chain Index allows companies to better understand the relationship between supply chain ratios and financial performance.”

This week’s featured webinar was hosted by Sourcing Interests Group and presented by Neo Group, a services firm focused on gaining efficiencies through low-cost country providers and outsourcing in general. The focus of the event was global sourcing governance, and how, when leveraged appropriately, it can help companies go ‘from good to great’.

Graduation season is upon us. For our family, we have 3 high school and 3 graduate degree parties to go to this year. Incredible!

Of course the next step after school is finding a job. That is such a challenge and there is a great deal of competition. Some of the search is a numbers game and some of it is timing. I know some recent graduates have applied to over 100 various organizations. Eventually something breaks through.

This article by OnlineMBA.com discusses the increase in hiring for recent MBA graduates.  There are opportunities in supply chain across all types of industries such as manufacturing and health care. Some of the graduates are getting a specialized MBA. They learn general management principles and focus on unique practices for a specific industry.

MBA’s are in demand for manufacturers. As the OnlineMBA article states:

“Hot jobs for manufacturing MBAs are in the fields of project management, business analysis, and supply chain demand in manufacturing.”

In our organization, most of the entry level sourcing positions are MBA graduates. They have developed some skills through their education. While analytical in nature, they also have had opportunity to evaluate the bigger picture.

Do you hire MBA graduates? What did you look for in your most recent hire? What value do you place on that advanced degree?

As we celebrate Mother’s Day this weekend, there are many learnings that are gained in childhood that carry us through to our adult lives – both personal and professional.

This book is Life’s Lessons from Mom by Patrick Flaherty. Looking at this through the eyes of a career for procurement, there are several that hit home for sure.

You’re never too busy or too old to have fun.

• We spend a great deal of time at the office. Are you too busy or do you see humor and laugh? How do you enjoy those you work with?

Never fear your competition.

• Your competition makes you stronger and better. Playing against someone faster or better than you makes you improve your skills too. Also, there will always be someone better, faster, richer than you. The competition is against yourself and to improve YOU.

Take care of your equipment.

• As a child, we were told to put our bikes in the garage at the end of the day. So easy to just leave them out on the grass or in the driveway. Well, we did put them away and they lasted longer and had a better resale value as we outgrew them. Same thing applies with your equipment and tools at the office. It will make a big difference with your effectiveness.

Make your bed and clean your room

• Everyone has heard this one many, many times. Perhaps you have now had the opportunity to use it on YOUR children. It is amazing that we can hear our parent’s words coming out of our mouths about very similar issues. Well, this one is for order and discipline. As you learn those skills, it helps with application in your professional life as well. So much time can be lost looking for the appropriate document or misplacing that phone number. So go ahead and “make your bed and clean your room”!!

There are so many other good reflections. What did you learned that has helped you going forward? Any words of wisdom from Mom to share on this special weekend? If not, how about:

Thanks Mom!

Negotiation is a core skill for procurement professionals. Actually, it is really something everyone does every day. When you really look at it – EVERYTHING IS NEGOTIABLE. Some if it is so minor, you don’t even notice it like where to have dinner tonight.

So you want to run (AKA negotiate) with the big dogs? The ones who have succeeded? What can we learn from them and adopt to our own situations?

This article from CEO.com 9 Negotiation Tactics from Famous CEO’s offers interesting approaches that proved very effective. They may not all fit your style but there are a few here that could be beneficial in your toolbox. Here are a few that were discussed.

Make everyone else look lousy

In other words, make your proposal so compelling, the others fall by the wayside. Steven Jobs bid for the company that was to become iTunes was 8 times more than the next bidder. That got their attention as you can imagine.

If cooperation isn’t on the table, overthrow the whole thing

Teamwork is critical in business today. Individuals have to be bought in to the broader goal, not just their own personal agendas. At Twitter, when the team was not focused, the CEO took action and that behavior changed.

Take a look at the article and see if there is anything that strikes a cord with you. Some of them may not appeal to your style but it is certainly food for thought.

Have you had an opportunity to run with the big dogs? What did you do differently and did you learn how to negotiate in a different manner?

“I have not failed. I’ve just found 10,000 ways that won’t work.” - Thomas A. Edison

Notice I did not title this as do you want to SUCCEED like Thomas Edison. Of course we would like to get to the answer on round 1. Most time that does not happen - ever is more like it. If Edison had not taken a chance, and kept at it , would we still be reading by candlelight?

When I read this blog by John Maxwell, Traits of a Successful Failure, I got thinking about procurement applications. How can I take more risks, fail, learn from it and eventually succeed. Perhaps with a different spec, supplier or process.

Maxwell talks about the four traits of a successful failure. I think we can agree that Edison certainly has those characteristics.

1. Optimism. Find the benefit in every bad experience.

2. Responsibility. Change your response to failure by accepting responsibility.

3. Resilience. Say goodbye to yesterday.

4. Initiative. Take action and face your fear.

We do often fall into patterns of work and comfort with various suppliers. However, taking a chance to try something different or offer a new idea is an opportunity to fail like Thomas Edison. And when you succeed, the value and results to you and your organization can be quite significant.

What have you tried differently this month? Did it work? Have you tried a revision and a new approach? Can you describe what your learned?

One or two days a month I have a day that has 9 meetings. Seriously? How am I supposed to be productive on a day like that? Or even if it is just a few meetings a day, when do we get to do REAL work?