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.
I was shopping with my daughter last week and we purchased 2 dresses for her using my coupons and credit card to get the discounts. We took about 10 steps from the register and she had already transferred the money to my bank from her bank, using her smart phone.
This week’s featured webinar was presented by My Purchasing Center featuring speakers from the American Purchasing Society. You can listen to the event on demand.
There were two parts to the event, as suggested by the title. The first part of the event was a review of the preliminary findings of the Annual American Purchasing Society salary survey. The final report will be out in December and is available free of charge to society members. They have been running this salary survey since 1974 and provide the data they collect to the U.S. Department of Labor.
The second part of the event was presented by Robert Menard (CPP) and gave us some advice and rules of thumb on negotiating our own salaries – something you would think a bunch of professional negotiators would be very good at, but could use some brushing up on. One of the reasons we may falter in this very personal negotiation is that it requires as much skill in selling as negotiating: whether we are selling ourselves to a new organization or selling our contributions and capabilities to our current employer. In addition to my notes below, you can learn more about Robert Menard and his purchasing negotiation seminars and consulting on his website.
When negotiating a salary, in purchasing or otherwise, start by getting a clear understanding of what they market will bear and how you compare to the other available candidates. The salary should be the final part of the interview process because you can not properly determine an appropriate salary without fully understanding the requirements of the role.
Leave the salary space on an employment application form blank. If you are completing an online application where the salary is required to move forward on the form, enter an average and then bring it up in the interview process as the role is further clarified.
Always remember to take into account what you know about Total Cost of Ownership when negotiating a salary – annual compensation is not the entire goal. The other pieces of the package include benefits, vacation time, travel requirements, corporate culture, advancement potential.
If procurement professionals are considered to be good negotiators, why do we need help preparing for a salary negotiation? In a salary negotiation, the candidate is in the ‘supplier’ role and therefore needs to take a more sales-based approach. This role reversal requires the candidate to take a sales mindset – focusing on communicating the value proposition to their prospective employer before addressing exact salary.
Since there is an expectation that procurement professionals will be proficient negotiators, the salary negotiation is also an opportunity for the employer to see what the candidate’s skills are like. It is not necessary to be an aggressive negotiator to be an effective negotiator, but there is likely to be an expectation that the candidate will be familiar with how to behave once the negotiation begins – thoroughly understanding the connections between performance, responsibility and salary, asking questions as needed, looking to maximize the potential benefit for both parties.
For bonus compensation above and beyond the base salary, Robert advised against savings driven bonuses. Although it may seem to reward skilled purchasing professionals, too much of the control leaves his/her hands. Stakeholders may refuse to leave incumbent suppliers, despite potential savings, and markets may turn so that savings over historical prices are impossible to achieve.
The Seven Habits of Highly Effective People, first published in 1989, is a self-help book written by Stephen R. Covey. It has sold more than 25 million copies in 38 languages worldwide, and the audio version has sold 1.5 million copies, and remains one of the best selling nonfiction business books.
The approach continues to be pertinent in every day life at work and at home. Buyers Meeting Point will be reviewing each of the Seven Habits over the next few months.
Today’s eSourcing Wiki-Wednesday topic is The Basics and Advantages of Procurement Outsourcing. This is something that has been reviewed and utilized for several decades at this point.
Many organizations realized they should outsource administrative functions such as payroll and accounting and IT/Telecom. This allows the key resources to focus on the core business strategy and really drive them to the next level. The same can be said of the procurement function, either in part or as a whole.
If a company is going to do that, they must be careful to arrange it properly to truly take advantage of the benefits and not to get bogged down with inefficiencies. this article offers Six Top Tips and is focusing on IT outsourcing. However, I feel it can be utilized for any business function.
When done correctly, the various individuals truly work as a team. If you look at the picture above, you can not tell who is an internal associate and who is an 'outsourced' resource.
Top tip #1: Define SLAs and OLAs
A service level agreement (SLA) is the foundation of any outsource contract and provides the standard for expected service levels. This must be agreed on between both the outsourcer and client, and once established, will outline the requirements such as time-to-respond and mean-time-to-repair.
Top tip #2: Communication – a two-way street
Communication is an important component of a successful outsource contract and should be a ‘two-way street’ whereby feedback is given from both the outsource provider and the client. If communication is not clear and well-structured from all sides, issues and problems may ‘slip through the cracks’ and impact the business. This in turn will impact service delivery, which may fall below expected levels, resulting in poor outcomes.
Top tip #3: Appropriate skills levels
It is vital for the outsource consultant to have the appropriate skills when engaging with a client. If consultants are not equipped with the required skills to match the needs of the client, they will not deliver the required services efficiently or effectively.
Top tip #4: Culture fit
If the culture fit between the client and outsource provider is not aligned, it can lead to poor service delivery. Outsource providers should also be flexible and sensitive around the issue of culture fit, and if there is a potential problem, to proactively remedy.
Top tip #5: Measurement of service
All aspects of the contract, including the SLA and OLA, should be monitored on a regular basis to ensure the highest levels of overall satisfaction.
Top tip #6: Maintain the management of the contract
Customers who maintain control and incorporate regular communication around this will typically receive higher levels of service and greater value than organisations that don’t.
Each Monday, Buyers Meeting Point covers the coming week in Supply Management for the PI Window on Business Blog Talk Radio Program, with host Jon Hansen. We cover the coming conferences and webinars and help you decide how to allocate your professional development time for the coming week.
Many cultures celebrate the harvest and offer thanks for a bountiful season. As the United States enjoys their Thanksgiving, we felt it was appropriate to thank those who walked along with us this year on our journey. No one succeeds alone and we are certainly aware of that!
Today’s eSourcing Wiki-Wednesday topic is Harnessing the Power of Community. This is the last of 21 strategies for innovation in procurement through next generation sourcing. If you are interested in the rest of the series, you can read them on our Wiki-Wednesday news page.
This topic is well timed, as the United States plans to take a short break for the Thanksgiving holiday – we stop and take a moment to realize just how many people are critical to our successes. While it has always ‘taken a village’ and there has never been an ‘I in team’ these days our communities are increasingly virtual. Associations that were previously regular meeting spots have moved online. Our personal and professional networks are larger, but we bear responsibility for making sure they run just as deep. It means very little to have 500+ connections if you don’t know who any of them are well enough to leverage their knowledge and experience.
Since Buyers Meeting Point is a virtual entity, we’ve gotten pretty good at building and maintaining productive relationships with people we will probably never meet. Here are a few of our tips for virtual collaboration:
Each Monday, Buyers Meeting Point covers the coming week in Supply Management for the PI Window on Business Blog Talk Radio Program, with host Jon Hansen. We cover the coming conferences and webinars and help you decide how to allocate your professional development time for the coming week.
Every day is full of interactions of all sorts. People at work, at home and total strangers. I would wager that we are in disagreement over something several times a day. Something as simple as what to watch on TV can cause an energetic conversation!
This week’s featured webinar was hosted by Sourcing Interests Group and was a special offering based on what they learned this fall by hosting a series of executive roundtables. This week’s ‘Special Report Webinar’ gave four round table facilitators an opportunity to share what they heard CPOs discussing on a number of current topics including talent retention, sourcing pressure points, risk and sustainability. I encourage you to read the highlights below and to view the event on demand on SIG’s site, as well as to read my own editorializing at the end of this post.
Collaboration will take the place of negotiation as procurement looks to fully leverage the capabilities of the supply chain. Building relationships with suppliers and further integrating networks will move us away from a focus on component cost and towards outcome based compensation models. Be sure to question and restate the true purpose of procurement in the organization, adjusting the model and goals of the group as needed.
The items on the forward-looking CPO’s agenda include supplier relationship management, reassessing skills requirements and finding new ways to add value for the business. From a talent management standpoint, many CPOs are starting to embrace the skills traditionally found in sales or business development professionals. This strengthens the relationship building capabilities of the organization but introduces challenges around compensation levels and models.
In order to build reputations, respect and recognition within the organization, many procurement teams have found that the best approach is to do a favor – managing “The Big Ugly” as she called it. The Big Ugly is any project or problem facing the organization that procurement can address, in many cases because no other group wants to make the attempt. The effort to influence business units is most effective when played as a long term strategy: “relentless pressure, gently applied.” Her take on the talent challenge required creativity and flexibility as professionals are moved in and out of the organization. Look for skills sets in unexpected places and be open to moving team members to other functions in the organization.
My own read on the roundtable findings…
When I think about the observations of each facilitator, the point that is clear to me is that procurement is changing. This is not a new idea by any means. Outsourcing of the function is gaining increased acceptance across industries and companies. While some CPOs still hold significance within their organization, many others find their positions downgraded or merged into the responsibilities of others. Procurement ACTIVITY is alive and well, and will be as long as companies remain in business.
But… as tactical purchasing work is outsourced, the use of automation becomes more widespread, skill sets in procurement become more broad, and organizations prepare to handle the increased turnover of Millenial employees, the future of the procurement DEPARTMENT is coming into question. Many of the discussions that took place at the roundtables seem to indicate that procurement is looking to evolve for defensive reasons rather than to increase our influence from a position of strength.
The Seven Habits of Highly Effective People, first published in 1989, is a self-help book written by Stephen R. Covey. It has sold more than 25 million copies in 38 languages worldwide, and the audio version has sold 1.5 million copies, and remains one of the best selling nonfiction business books.
The approach continues to be pertinent in every day life at work and at home. Buyers Meeting Point will be reviewing each of the Seven Habits over the next few months.
This week’s Wiki-Wednesday article is part of the series on Next Generation Sourcing: Empowerment. As a strategy in procurement, empowerment has the potential to change the course of a project at many points:
Which suppliers are invited?
How will we structure the RFP or RFQ?
What negotiation strategy will be the most effective?
But no other decision in a project has more of an impact than the supplier award. Which suppliers will be awarded contracts, for how much, and what will the terms be?
Depending upon the organizational structure in place, and the model of the procurement organization, their role in that decision can vary from decision maker to observer. The model may also vary from project to project, and between direct and indirect spend.
In categories where cost is the primary factor affecting a decision, the project is to get a specified good or service for the total lowest cost, procurement will work the sourcing process and notify the business which supplier(s) offered the lowest pricing. Procurement is positioned to suppliers as the process owner and the ultimate authority for the category. If there is an executive approval process for this award, it is usually an administrative sign off on the decision before a contract is signed.
In direct categories where there is an active business owner, procurement manages the sourcing process (with frequent involvement of the business owner) and then presents all qualified options so the owner can make an award decision. Procurement can present themselves to suppliers as an objective party, open to their ideas, taking care not to appear as though they have no influence and allow suppliers to bypass them. Executive approval for the award will ensure that the business owner does not give inappropriate advantage to the incumbent or miss out on opportunities to innovate based on aversion to change.
In strategic categories of spend, procurement and business owners may take equal roles in the sourcing process. Procurement owns the sourcing process and technology use in the project and the business owner is responsible for category knowledge. Each party is able to leverage their strengths, collaborating on the structure of the RFP, negotiation strategy, and execution. Both will have input on the award decision, with executive approval of the recommended award made by the combined team.
If you are interested in reading more about decision making in procurement, Charles Dominick of the Next Level Purchasing Association published a three part blog series on the topic on the eSourcing Forum in 2008 that still holds true. In these three posts, he looks at basic, advanced, and expert decision making capabilities across cost, support performance, and innovation.
The 2012 election for the President of the United States is over and Barack Obama will be in office for 4 more years. Typically, consumer spending slows leading up to elections based on economic uncertainty.
This week’s featured webinar comes from the Global eProcure webcast library. If you are interested in viewing this or their other webinars, click here to select a webinar and provide some basic registration information to view.
How is your vision? Is it 20-20 or do you need lenses or a magnifying glass? How about your supplier and spend visibility?
Definitions of excellence are constantly changing. A friend of mine is in rehab, gaining strength and learning to walk again. A few years ago, hiking, swimming and running was no big deal. Now it is excellent for them to walk down the hallway without resting.
In the spirit of this week being Halloween, CombineNet hosted an event that absolutely wins the award for creativity so far this year. In “Is Your E-Sourcing Process a Trick or Treat?” they walked through best practices for avoiding “rotten pumpkins” (the feeling you get when using an inefficient approach), “spreadsheet zombies” (created when you spend too much time staring at Excel-based bids), and “pitchfork-wielding mobs” (frustrated stakeholders – need I elaborate further?)
If you found money laying on the sidewalk, would you pick it up? Of course you would!
Hurricane Sandy has just battered the East Coast of the U.S. – millions of people (including the Buyers Meeting Point team) are still without power or starting to assess the damage and begin the cleanup.Our thoughts go out to everyone impacted by this massive and powerful storm.
You can’t always predict how a person or an area will be affected by dangerous conditions, but once you have notice that a storm is coming, any time left before impact should be used to prepare.
We learn a lot about ourselves in how we cope under pressure, and being prepared up front is strategy number one. Just as you have to gather the essentials for extreme weather – like water, flashlights, and non-perishable food – you have to gather the essentials before a negotiation. This is particularly true if you expect the negotiation to be high stakes or particularly challenging.
In the white paper “Implementing Strategies in Extreme Negotiations” (a free download from Harvard Business Review), based on a conversation with Jeff Weiss and Jonathan Hughes, both partners at Vantage Partners, you’ll get an overview of ways to prepare for extreme negotiations. Included in the article are a preparation checklist and recommendations on how to handle threats, how to hone your skills, and how to deal with specific situations that may arise in a negotiation.
Some of their tactics are to be used in advance and some are for while you are in the eye of the storm. All of them are intended to prepare all kinds of negotiators – not just the ones that enjoy the thrill of the storm. Once you have read the graphics and tables in the white paper, there is sure to beat least one that you will print out and hang on your cube wall.
I was at a business dinner this week with some leaders in the grocery industry. I learned that a vast amount of our landfill is from the waste at those organizations. I also learned how many people go to be hungry every night.
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