The Procurement Chronicles is on hiatus

We plan to return with regularly scheduled snarky Procurement goodness soon!

Thanks for your patience!

Easily the best title EVER for a whitepaper

Oh sure, in my profession, I see a lot of whitepapers cross my desk.

The titles are usually yawn inspiring, not to mention the content.

But not this one…no. This one made me sit up and take notice.

“E-ZPass: The Making of a Procurement Disaster“

Wow. I’m only a third of the way in, but it reads like a really great procurement novel.

Good stuff.

Source.

Global Sourcing

In my internet wanderings today, I came across this blog post from Smartblogs.com.

The focus of the post is on global sourcing, an inevitable step in the expansion of just about any sized business. We’ve truly become a global economy, and it’s vital for the procurement department to figure out how they can get the most out of their global sourcing arrangements.

The authors, both esteemed employees at the University of Michigan, put forward five distinct skill sets that are necessary (and should be nurtured) in order to thrive in a global sourcing economy.

I may not hold a degree from a venerated University with a profoundly successful procurement education program, I’ve only been doing the actual job of global sourcing for a few (*cough*fifteen*cough*) years, and I have to say, while I think their list of five skills is pretty good, they widely missed the boat in a couple cases.

From the article:

1. “Analytics competency. The old model was based on deep domain knowledge and management by walking around. The new model relies on daily reports, statistical analysis, and adherence to performance levels specified in service level agreements.”

Ok. Sure. I’m onboard with this one. My only problem is that an over reliance on numbers, statistics and service level agreements shows a HUGE weakness on the part of the sourcing manager. If you look at numbers and fail to use your procurement intuition, you are doomed to fail. Always.

In fact, I believe that an OVER reliance on data is driving my profession into the ground. Sure, numbers and charts looks good when projected on the wall, but if you can’t explain WHERE you got the numbers and you can’t define WHY they numbers trend as they do, you just look buffoonish.

If you can tell a good story, numbers or no, and draw your suppliers, managers, key stakeholders, etc into your same line of thought, you’ll win hearts and minds every. single. time.

2. “Systems thinking. The old model emphasizes fixing errors and moving on. Global sourcing managers must work with vendors to identify the root cause of errors, jointly redesign workflows and controls, and negotiate how to share the costs and benefits of such continuous improvements.”

I am totally on board with this one. But this isn’t new thinking. This is what sourcing managers should have been doing all along. This isn’t impacted by global sourcing, this is just good business.

3. “Negotiation and soft skills. Global sourcing managers do not directly control workers, so they must influence them via incentives, well-designed contracts, and other soft influence methods.”

Yes, yes, yes. The lack of ability to negotiate, influence and be willing to stand up for what you know is right/wrong is an epidemic in the sourcing world. For some reason, the concept of “negotiation” has taken on a distasteful connotation. Like it’s a curse word.

It’s not.

Negotiating like a used car salesman with only an eye on the bottom line *is* passé. Negotiating for the greater good of both organizations (a “good deal” is one where both sides are mildly unhappy…a paraphrase from a from a really, really good lawyer) is how you continue to advance your business and meet your corporate goals.

4. “Cross cultural comfort. Front-line workers now reside in far away places, with very different work styles and cultural backgrounds. Global sourcing managers must thrive in this environment, but many can not make the transition. My research shows that 50-70% of middle managers cannot make this transition – primarily for cultural reasons.”

50% to 70%? Really? That’s a mind-boggling number to me. I may be fortunate in that I live in a highly diversified geographic area, because I don’t see numbers anywhere near this. If this is true, then I suggest some Chief Procurement Officers take a good hard look at themselves, because they set the pace for this sort of thing.

There are no lack of services and products out there to help workers over the hump. There is no excuse for this, honestly.

5. “24/7 work cycles with constant travel. Global sourcing managers are constantly on call, and many are abroad at least one week a month. Again, some managers thrive on such challenges. Others wilt.”

This is one where I have to disagree. Because given current economic conditions, this point is out of date. Yes, there is still a lot of global travel, but any company worth anything these days have SERIOUSLY curtailed international travel. The travel costs kill us. The exchange rates kill us. So what does that mean?

Global sourcing managers need to figure out how to be savvy about communicating with their international counterparts. Ask me the time difference to London. Mumbai. Singapore. I can answer immediately. I know when are the best times to call, email, text, video conference, iChat conference, etc, etc, etc.

I agree with the line, “…some managers thrive on such challenges. Others wilt.”

It’s not easy working in an international stage. Especially if you are a direct side sourcing manager and you’re getting parts for overseas manufacturing. Those 2:00am conference calls are deadly. It’s all part of the game.

So fair enough…this has given me much to think about and even some ideas I need to bring forward to my own organization.

I wonder how all of this might change as the cost and tax advantages for doing business overseas start to dwindle. The current Presidential Administration has been vocal about “buy American” and cutting some advantageous reasons to do business outside of our borders.

I don’t know what that means, yet. I don’t think the focus on international business changes, but it will change how each Procurement professional approaches their deals.

Thoughts? I’d love to hear them.

Practicing what I preach

I had a chance to sit next to my very busy manager (a Director) today in a staff meeting. We both arrived early and had some time to chat, along with a coworker.

She told us that a pretty well known company’s CPO will be in next week, and we’re to meet with his team and do benchmarking on procurement processes.

At which my coworker snorted and said, “Why would they benchmark us? Our processes show we aren’t really a procurement organization.”

And we laughed. Because it’s true.

My coworker then pressed on and said, “So why is that? You’d think our CPO would push to make this a more robust procurement organization since we are growing so fast.”

My director replied, “Because the CPO doesn’t think our end users are ready for it.”

To which I pulled out all of the good knowledge I’ve been sharing with my readers here. I told her of the variety of articles about both government and private sector and how they are starting to recognize the value of procurement. That these lean economic times call for a reassessment of how the procurement organization shows up in our company. I said that maybe now is the best time ever to impress upon people that we’re not here to be a foot in the aisle or a project killer. That we do add value.

My Director listened to me thoughtfully, nodded, and said, “You know, I have noticed that our end users are more conscious about their budgets than ever before….”

So, ok, I didn’t change the world today or even my little corner of it. But I got my boss to think. And if she thinks on it enough, she’ll take it to her boss (the CPO) and get them to think on it.

Change like this doesn’t happen overnight, but it takes a single spark like that to begin to get the tide to turn.

Not bad for a day’s work!

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!

‘Tis the season to take kickbacks, Fa la la la la

So let’s say a vendor sent in a really spectacular box of chocolates. To someone who is not you and is not in your organization.

And let’s say the whole box was placed in a public area and you had to walk by said chocolates several times. Before finally succumbing.

Does that make you complicit in receiving the kickback? Even though you would have NO impact on the supplier or the people who make decisions regarding the supplier?

And does one two three four pieces of high-end chocolate from a well known and quite fancy chocolatier bring one over the threshold for such accepting gifts from a vendor?

Ah, these are the moral dilemmas one must wrestle with during the holidays.

Lightbulb moment

I was at the pump today filling up my car on the way to work.

I was pleased to see the cost of fuel is now well below $2 a gallon. Very nice on my already strained pocket book.

So as I drove along, I got to thinking about this new low cost gas and…a lightbulb went on.

I remembered all of those deals I’d negotiated with vendors where I allowed them to raise shipping rates for “fuel surcharge” when gas was tap dancing around the $5 mark.

My phone was ringing off the hook then. Wailing and gnashing of teeth about the costs, oh the costs, and I had to grant them relief.

Funny. My phone’s not ringing now. People aren’t begging me to let them lift the surcharge. Nope. They’ll gladly continue to charge me extra on every order for fuel that’s now quite low cost.

This ticked me off. So now I’m going to hit all of those people back for the money. Yes, it’s extra work on me, but they shoved me, threatened me and cajoled me to get the raise in price. They’ll get nothing less from me in return.

grr!

Movin’ on up

These Procurement Chronicles have been in hiatus because our intrepid Procurement Hero has been off landing a new job sweetened with a promotion.

I have a new organization from which to report the “You Can’t Make This Up” stories from the front lines.

I may have a new title, but I still have the sense sense of being a long time Procurement person with the desire to do the right thing by The Company, despite their continued resistance.

Stick with me, more to come on these very pages.

Godzilla vs King Kong

Today the CEO of a respectably large company came to meet with the CIO of The Company.

The Purpose? To negotiate a fairly tricky and highly visible deal.

My CIO is no slouch. He’s hard to beat at the negotiation table.

The CEO of the supplier, I don’t know him, but I suspect he didn’t get to be CEO by being a pushover.

My role in this? Spectator.

Is it wrong to bring popcorn?

Ok, more than spectator, I get to write up the contract to reflect whatever they negotiate.

I’m kind of looking forward to the show.

How does a manager…

…Properly thank a rock star team of Procurement Professionals who day over day make said manager look *real* good and who charged through the rigors of Fiscal Year End like an unstoppable force, making their manager so, so proud?

With cupcakes.

Man, do they love me today.

I also told ‘em to go home early to watch the VP debate. THAT will be worth talking about tomorrow.

To me a debate is no less than a negotiation, so I watched the first Presidential debate closely and was *highly* unimpressed.

I’m looking to see what Palin and Biden bring tonight. Should be fascinating.