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.
Buyers Meeting Point attends many sales AND procurement webinars/webcasts. One of the interesting things about consistently reading content from quality sources is that you start to notice trends. It is amazing how often the same topics arise at the same time in different places. We use this blog as a way to help you stay on top of the major themes in procurement and supply chain management.
Often in our daily life we are negotiating. Many times my children would want more than the two cookies I was offering. I would offer two , they would want three or four. After a few times back and forth, I would change my offer to ZERO cookies. Then all of a sudden they felt that two cookies was a great option!
In procurement, we are sometimes in situations where we want more cookies than are being offered. Or we want to include cold milk at the same time but that is not available at the price point we are interested in.
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.
The week's eSourcing wiki article is about Center Led Purchasing. There are many benefits to having a central procurement team focusing on strategic sourcing practices, tools and efficiencies. A few days ago we discussed the Greening of the Olympics. With that in mind, I was reading about utilization of the Center Led Procurement and the Olympics.
The magic of the Olympics is moving into the second week in London. As we watch all the events and cheer on the athletes, it occurred to me that the Olympics is a HUGE procurement engine. There are many people to feed and services to provide in order to make this world event come off smoothly. And if done right, it can help contain costs and also keep the environment from getting crushed with waste and pollutants. We are all responsible and working increasing towards sustainable sourcing results.
I read this article in the New York Times and it shared some interesting insights. Keeping the environment in mind has been evolving since the 1994 Games in Norway.
The largest carbon footprint is from the construction materials themselves, not the food, travel or waste. London has put together a long term vision of how to utilize the permanent structures after the Games have concluded. The remaining temporary structures were constructed carefully to be able to reuse or recycle the materials.
Of course all of this has economic and social factors to consider. And when it really comes down to it, the athletes must come first. Quality of the product or service is still a high expectation.
Have you had the opportunity to procure for a large event such as the Olympics? What factors did you need to consider for sustainability? Any tips or tricks you can share?
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.
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.
London is center stage for the next few weeks as the 2012 Summer Olympics take place. There are so many inspirational and feel good moments during the Olympics. I was reading the blog from Leadership Freak about an interview with the team leader of the US Olympic Sailing team. In addition to sailing, Dean Brenner is the President of the Latimer Group and has written several books, one of which is called Sharing the Sandbox. The book is promoted to help you become a better leader but also more productive in a team environment. In the blog, there are 6 areas that Dean outlines that have helped people that are working as a team.
One of them is "Ask Simple Questions" and LISTEN - how often do we speak more than we listen and that can lead to misunderstanding of goals and requirements for a product or service.
I would expect as part of the sailing team, it would be a survival skill to listen and understand. Of course if they are going to win a medal in London, they have to be really in tune and streamlined in all their activities and be ready to react to the unexpected. We all know that Mother Nature can be quite unpredictable!
As a procurement professional, what leadership tricks and tools have you used? Have you read Sharing the Sandbox? Or do you have another resource to recommend?
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
In procurement, we are often the last to learn of a new product design. If that happens, the requirements are often locked down and we can not impact the cost of the new product. This week's eSourcing Wiki post discusses Next Generation Sourcing - Design to Sourcing. It recommends including sourcing in the design process so that some of that can be included in the decisions and options considering for the new product.
LSG Sky Chef is the company that supplies snacks and meals to the airlines. They use the Design for Sourcing approach with the airlines. They understand what is needed and include a variety of roles on the design team. All in all, this results in a better product at a more reasonable cost.
Some organizations are frustrated by this approach as it may take longer. Over the long run, the cost reduction and the efficiencies produced make it worthwhile.
Has your organization been able to utilize the design to sourcing approach? What have you learned? Are there any success stories or learning to share with others?
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…
Mother Nature impacts our supply chain in so many ways that are not under our control. The drought in the U.S. this summer is impacting the farmers, and especially the corn supply. That will have an effect on many things such as the price of food and fuel. The law of supply and demand comes into play just as in the textbooks.
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.
This past week, the world lost one of the inspirational leaders and mentors when Steven Covey passed away. There are quite a few blogs and articles posted that are asking how did Steven Covey’s books and seminars impact you. For me, I was first exposed to his teachings in a course I took called “What Matters Most” It was a phenomenal time management class that helped identify priorities and the way we spend our time in our WHOLE life – both work and personal . I particularly remember the exercise to write the speech that someone would give about you on your 80th birthday. I was in my 30’s at the time so of course that seemed like so far away. But it certainly made everyone pause to reflect on what was really important.
I was so moved by the tools and the class, I recommended everyone on my staff attend the class over the next year as part of their performance objectives. Pretty soon, it was a class required for all management in our organization.
I then read the “7 Habits” book that of course millions of others have as well. I use his phrasing in my every day speech such as “First things first” and “Sharpen the Saw”. I had the opportunity to hear Steven Covey speak during one of his seminars. He was so approachable and normal. I was impressed that he could be a father of nine and balance that with his speaking schedule and writing books too.
I remember the week after I heard his lecture, I was in a parking lot and witnessed a confrontation between a truck driver and a passenger car. I utilized the "Seek first to understand and then to be understood" approach and it worked like magic. It was beautiful and amazing all at the same time.
What I find most refreshing is that nothing of this is too complicated and very easy for all of us to understand and implement. Of course that is what differentiates one from another. Do they apply these simple principles? Some days yes, and other days not so much.
I have found a great deal of value out of Steven Covey's books and philosophies. It is very fitting that Steven Covey's organization merged with Franklin (of Benjamin Franklin of course!). I am sure if they lived in the same era, they would have had some very interesting conversations.
The "7 Habits" has been out for over 15 years. If for some reason you have not read it or you are new in your professional life, I would highly recommend it. The book is entertaining, thought provoking and easy to read.
Steven Covey will be missed. His legacy will impact many for years to come.
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.