How can we help?

Given the nausea inducing roller coaster economy that ended 2008, and an outlook that isn’t much better, I will hazard to say that 2009 might just be the year of the Procurement Professional.

Why might I say that? Well, a graphic is worth a thousand words.

I found the below in Supply Chain Digest, who got it from CPO Agenda Magazine. The magazine is a European publication, but I would venture that the findings reflect the world.

(click graphic for larger view)

I know that the top procurement person at my own company has tasked us with assessing the financial stability of our suppliers. Especially those identified as Tier 1 and mission critical suppliers.

This graphic goes hand in hand with the article I posted on Wednesday. Yes, we need to be cautious about paying our suppliers on time, but we also need to try to keep our own money in our own pockets.

This year, it is time to look at sole source (and single source) situations and find alternatives. Because you never know from one day to the next who will be in business.

At the very least, we need to ask ourselves, “What if…” What if the company that provides the key component for our product went out of business? What if they delayed supply due to our lack of payment. What if they can’t keep the inventory levels we need?

I’m not just talking manufacturing side, either. What if the company that provides all our contingent labor goes out of business? How about the companies that provide power, network, and environmental controls? How about janitorial? If your main provider ceases to be, could you quickly switch to another supplier? I know we couldn’t. That’s a huge RFP.

With all these questions up in the air, who better to help with answers, or at least a game plan, but your trusty procurement and sourcing professional?

These are tricky waters we are navigating this year.

I notice on the list is also “get more spend under management”. In financially tough times, working with procurement starts looking pretty good.

We have the opportunity in our hands. It’s up to us, the people who know their way around a negotiation table, to take it and make it work.

The War for Cash

A must read for procurement and sourcing professionals. It affects how you manage every deal and every supplier.

Tactics that Deliver in a ‘war for cash’

Source: Financial Times

The more things change…

…the more they really don’t.

As mentioned, I’ve become the new Procurement Sarbanes Oxley Czar here at my place of employ.

Today, we had a very lengthy and exhausting meeting with internal auditing (a humorless bunch) about our current SOX policies, how they are written, and how they can be 1) reduced and 2) written more clearly.

It was a good working session. At the end, one of my counterparts from another organization asked the auditing folks, “So, with Obama now in office, do you think we’ll see some relief from all of this SOX stuff?”

Ok, fair question, right?

Well, no. The internal auditing team looked at him like he’d sprouted a second noggin.

“Uh,” lead auditor said, “given the demise of all of those banks and financial institutions at the end of 2008, I think it’s highly unlikely we’ll see any slack in the restrictions any time soon.”

“Oh, that’s a good point,” my counterpart said with a sigh of resignation.

Yup. The more the bad people do bad business, the more the reasonable businesses must get pulled through the knothole to prove they are on the up and up.

It’s going to be a long year for this SOX Czar.

Are we global?

This is this question my management and my team are contemplating these days.

Seeing as how we do truly live in a global economy, our company has begun to make some small advances into other countries. A couple hundred in EMEA. A couple thousand in AsiaPac. Nothing huge but lots of plans to grow.

What does that mean for a procurement organization?

Well, that means we have a whole lot of layers of complication to our PO’s. And must contemplate thoughts of taxation (VAT, ouch), delivery, customs, incoterms, company codes, cost centers, and who buys what for whom on any given day?

And let’s talk SOX. Well, it applies to US based companies, but doesn’t apply to other countries.

So how does a US based company with a subsidiary in another country apply the rules? And who enforces?

If each entity has their own P&L, their own board, their own budgets, who is the arbiter of issues gone wrong?

In what language do we write the contracts?

And what terms are in our boilerplate that are illegal in other countries (Ireland has very strict laws about limitation of liability).

Do we have people onsite who report to US managers? Or do we form a separate organization in country?

And that’s just a start to all of the questions we must contemplate for our tiny few thousand employees in another country.

Whew. Dizzy.

It ALL matters

So, if I may be so hamfisted as to boil down the much vaunted Procurement Cycle, the song goes a little something like this.

1. Request something.

2. Buy something.

3. Receive something.

4. Pay for something.

Cool.

Me, as a procurement manager, I tend to live right there in the second item on the list. But 1, 3 and 4 are VERY important to me and the entire process.

Today, let’s chat about the third item on that list, receiving.

When a receiving group works right, they are tied into procurement and finance and are a vital part of the process. The item is bought, it is properly received and accounted for which kicks off payment. It just flows.

When it isn’t working right, it can be the source of much misery and pain for all parties, supplier and client team alike.

In my long career, I’ve seen two receiving teams that were all over their role. One that was only so-so, and now, I get to see a receiving organization that really can’t be bothered to care about the needs of procurement.

I think, maybe, I’ve been spoiled by the receiving teams who scanned, tied to PO, barcoded, tracked, opened boxes and verified and did next day or sooner delivery to the desktop.

This new organization I work with will receive a box (meaning sign a FedEx or other manifest) and deliver it to the desktop. No opening. No scanning. No tying back. There is no correlation to anything. They don’t care. They get a box, they deliver a box and rue the person who doesn’t get the quantity they wanted or the right item or anything else.

This kind of blows my mind. I mean…generally, this process is working. Here, the end user (or requester, in the vernacular) has the complete responsibility for administering whether they got what they wanted in the quantity they wanted.

It feels disconnected to me and ripe for abuse.

Then again, I’m six weeks into this job. Today, I cannot fix the mountain. Heck, I can’t even fix the molehill yet.

So I’ll quietly shake my head and wonder when, exactly, this is going to blow up on us. Because as this company grows and grows, it’s not a matter of if, it is when.

Resource

I’ve gotten a couple comments from the Supply Chain Guru with a link to the webpage Supply Chain Revolution.

I got a chance today to head over there and see what’s doing. That website is packed full of useful information for the Procurement professional.

And so I’ve given some link love, which you’ll see over there on the right hand side.

Thanks Guru!

Master Vendor List

The bane of any procurement organization.

Who do we buy from? Where does the PO go? Where does the check go? Which entity, subsidiary, offshoot, spin off?

This is a problem that plagues any procurement professional who has ever been asked by their Chief Procurement Officer, “So exactly how many approved vendors do we have?”

Because the number of records in the vendor master and the number of vendors we actually do business with do not correlate. Never will.

And here at my new job, it’s no exception.

But there is a project underway to clean this thing up. Contractors have been hired to come in and touch every single dingle record, make it correct, get it in the right supplier family, eliminate duplicates, deactivate unused records and make it tidy and usable.

Wow. I mean really, wow. For a procurement professional, this is hitting the jackpot

For those of us old enough to remember doing research in the library by searching the card catalog, this project is equivalent to pulling each and every card out, reading the content, making sure it is correct, editing it if not, confirming the book is still on the shelf and then properly re-filing the card.

Hopefully at the end of the day, we’ll have a clean, crisp vendor database, a new process in place for keeping it clean and a better way to help our vendors do business with us.

A rare bit of good news for a Thursday.

The question you don’t want to have to answer

“So if you had to reduce your team by say, three people, who would they be?”

I would imagine many managers in many companies are in my shoes. With the economy doing what it is doing, this topic is on a lot of minds.

My boss isn’t saying that anyone is getting laid off, she’s just saying…if it *were* to happen…

This is the kind of stuff that keeps me up at night.

Because a good manager says, “Not a one, they are all valuable, effective and top performers.”

But we all know that’s not true.

Problem is, even a medium performer is getting some work done, and if they leave, then everyone left has to pick up the pieces.

And that’s a blow to morale.

Truth is, I can answer the question easily off the top of my head. But they are words I don’t want to have to say.

At any time, any manger should have an assessment of their team and the ability to say who is at the high end and who is at the low end of the bell curve. If you can’t, then take a look at your roster right now and think about it.

Because if you have to answer the call to reduce headcount, you want to be ready for it.

It’s that “managerial courage” they talk about in all the buzz word laden books.

Gooooooal!

Ok, here we are, first day back at work and staring down the barrel of 2009.

That’s when you, as a Procurement Superhero, gotta ask yourself…do you have goals?

Well, do ya, punk?

Sorry, had a “Dirty Harry” viewing over the hellidays, so I’m all up in my Clint mode right now.

But the point is valid. 2009 promises to be a nutty year, what with how the financial markets closed out 2008.

So what are the things you and your team want to accomplish this year?

Think strategic, but also think personal.

If you are a buyer, do you have a thought about how you might be able to place more purchase orders, or do so quicker? Then tell your boss.

With the economy the way it is, doing more with less or the same amount of resources will be a BIG deal.

If you are a contracts person, is there a long time supplier who is just a little too entrenched who might benefit from a little price negotiation? Or an RFP floating its way out to the street?

If you are a procurement manager, can you devote some of your time to streamlining old processes that just don’t work anymore? (we have one here at The Company. A paper form that has to be printed out, filled out, then hand carried so it can be signed by three different people. Um, no.)

Ask questions, peer into dark corners, take a look at everything.

We’ve all got to batten down the hatches to get through 2009. It just may be the people who can show they understand how to be efficient *and* save money will be the same people who make it through downsizing.

It’s time for Procurement and Sourcing to show just how valuable we can really be.