Do Fixed Price Contracts Endorse Embezzlement?

For many years Buyers have used ‘fixed price’ contracts – a contract that stipulates the final price regardless of the outcome.

Embezzlement

There are a couple of common reasons why buyers use them. The first is to move the risk of the contract going over budget to the supplier. The second is to encourage the supplier to act appropriately and encourage them to complete the work under budget if possible.

While the buyer might think this represents smart procurement, this might not be the reality.

Unwelcome Contingencies

Suppliers are very familiar with fixed price contracts and recognise the risk being moved onto them. Their response is to modify their submitted price to include a contingency fund (price + contingency = submitted price).

In moving to a fixed price commercial model, the buyer is making a statement that they believe the contract has a high probability of going over the initial estimates and hence want to move the risk of this occurring onto the supplier. It is the act of pre-empting risk which pushes the supplier to include a contingency in the price.

Horror stories abound about suppliers under-estimating requirements and ending up absorbing much higher costs than expected when delivering the contract. While these stories are used as the justification for fixed price contracts, in reality this occurs less often than most believe.

If it was a common occurrence, suppliers would either go out of business due to additional losses, or refuse to accept a fixed price contract. The reality is that to deliver the requirement, the supplier generally gets their initial estimates correct or consumes a small percent of their contingency fund.

Here’s the issue…

From the suppliers’ perspective, a fixed price contract is a risk/reward model, and regardless if they deliver the contract for the stated cost or less, they invoice for the full amount. Here is where we hit an issue – assuming that in delivering the requirement the supplier has not consumed all of their contingency fund how does the supplier invoice for the full amount?

There are a couple of options here.

  1. Invoice based on Stated Costs: The buyer and supplier agree to invoice based on stated costs i.e. phase 1 will be invoiced for X, phase 2 for Y, etc. This will enable the supplier to invoice for the agreed amount. The issue for the buyer is lack of detail behind the invoice and being unable to quantify what has been purchased if challenge
  2. Itemised Invoices: The supplier provides itemised invoices, enabling the buyer to assure the business of what has been procured. The fixed price was justified based on the contract requiring a certain number of assets to deliver it (an asset could be Personnel, Resources, Time or Goods).

Yet in delivering the contract, the supplier has not utilised their full contingency fund and therefore not required all the assets predicted. This results in the supplier submitting invoices that include assets that were not actually required by the buyer, but that the supplier has to include in order to ensure numbers add up to the full amount. This could be interpreted as an act of embezzlement.

Wait…what?

Embezzlement is an act of dishonestly withholding assets for the purpose of conversion (theft) of such assets, by one or more persons to whom the assets were entrusted”

Either the buyer naively expects that the contract requires the supplier to utilise their full contingency fund, or is endorsing the ’embezzlement’ by paying for assets they know have never been delivered!

Assuming the buyer knows a contingency has been added, when they agree the fixed price, not only were they agreeing to the predicted costs but agreeing to pay the contingency fund too. In effect they have guaranteed to pay more than is required – a great way to reduce procurement savings.

Any Alternatives?

We are not actually stating fixed price contracts are embezzlement but it makes one wonder. Fixed price contracts introduce supplier risk, more often than not to the detriment of the buyer. If buyers could encourage suppliers to collaborate and deliver the contract under budget for mutual financial benefit, it might be a better solution.

A nice theory, but up until now, a fixed price contract has really been the only viable option. However, there is a new option for both parties to use – The POD Model for Supplier Innovation. The model enables a buyer to revert back to a standard price based contract, the supplier is only paid for what it takes to deliver the contract and the supplier is incentivised to deliver the contract for less to achieve higher profits. This approach results in higher procurement savings, the right supplier attitude and clarity on invoicing.

So, it is maybe now time to review the use of Fixed Price Contracts?

POD Procurement created The POD Model and provides consulting and training on its implementation. The POD Model is free to use and can be found on the CIPS knowledge website. For additional information please contact info@podprocurement.com

Suppliers Are Key to Disruptive Innovation

A new study shows there is increasing focus on Supplier-Enabled Innovation (SEI) among global sourcing and procurement executives.

Procurement Leaders new study sheds light on disruptive innovation

New research by Procurement Leaders has detailed that procurement is a key enabler of corporate innovation thanks to the connectivity it enjoys with suppliers and key business stakeholders.

According to the Chief Procurement Officers polled, procurement is engaged in a new role that takes responsibility for connecting capability in the supply base with stakeholder and consumer need. In doing so – it opens the doors to the benefits of Supplier-Enabled Innovation (SEI).

“Tapping into the enormous capability of the thousands of suppliers with whom we do business is perhaps the single largest opportunity procurement has,” said John Paterson, Chairman of the Procurement Leaders Advisory Board and the former Chief Procurement Officer of IBM.

The Procurement Leaders Supplier-Enabled Innovation Compass explores 22 different activities that can be used to unlock innovation from suppliers; and found that connectivity with suppliers and consumers and the use of technology are key enablers to success.

Key findings include:

  • Trail-blazers in SEI put a large emphasis on the time procurement spends with its key suppliers.
  • Procurement must better understand consumer needs and aspirations if it is to successfully deliver results through SEI.

Procurement must see innovation as a formal, disciplined process if it is to achieve success, yet only 34 per cent do.

Jonathan Webb, Head of Strategy Research at Procurement Leaders and the report’s author, said: “We knew procurement had a significant role to play in helping to build the future product pipelines of their companies. Now we know how they should go about it, and the future potential is huge when you understand that some of our members expect more than a third of their product pipelines to come from SEI.”

The research involved quantitative research and in-depth interviews among members of the Procurement Leaders community.

Do you count yourself as a member of Procurement Leaders? Procurious has just added functionality that allows you to display a Badge on your profile page. Click here to add your Procurement Leaders Badge now.

Can Coffee Pods Ever Be Considered Sustainable?

Are coffee capsules sustainable?

Call me cynical, but am I alone in not buying into Nespresso’s sustainability spin? This article posted on Procurious highlights the great work that the coffee pod producer is doing to develop a sustainable supply base by investing in infrastructure and capability in war torn South Sudan. Those efforts are worthy of praise, no question about it, but I can’t help but feel we’re having the wool pulled over our eyes by Clooney and co.

You see, a implementing a sustainable supply chain initiative or marketing your sustainability policy does not a make a business sustainable and I’d argue that Nespresso’s core business is not in the slightest way sustainable.

Nespresso (and it’s competitors) pods have boomed in popularity in recent years. It was estimated that in 2013 Nesspresso sold 28 billion coffee pods to consumers. Annual sales figures have surely climbed further in the proceeding two years.

What’s in your morning coffee? 

But lets focus on the 2013 figures. An article on the theconversation.com suggests that producing 28 billion coffee pods would require 28 million kilograms of Aluminium. Given that most local recycling facilities are not yet able to process aluminium coffee pods, I’m willing to bet that a huge percentage of these caffeinated containers have found their way into landfill.

It’s not only bulging landfills that raise sustainability concerns around aluminium coffee pod industry. While marketing from Aluminium producers focuses on the metals’ ‘infinite recycling potential’, it fails to mention that mining, refining and smelting the metal is one of the most energy and water intensive industrial processes that humankind undertakes. Also, if we don’t recycle the Aluminium, which in Nespresso’s case, we don’t, the recyclability of the metal is inconsequential.

The fact of the matter is that a decade ago, our morning cup of coffee required no aluminium and produced next to no personal waste. Today our collective morning cuppa requires 28 million kilograms of Aluminium per year and results in us throwing something in the rubbish bin everyday. Even if the coffee is produced ethically and the farmer is receiving a fair wage, can this behaviour really be called sustainable?

Jon Dee, the head of environmental group DoSomething and founder of National Recycling Week weighed into the debate claiming that “George Clooney has almost single-handedly launched an entire new waste stream globally as a result of fronting the Nespresso adverts, it shows the Clooney effect has undoubtedly been enormous in this. But George Clooney – for a guy who is so switched on to civil rights and other issues – to lead the charge in causing such environmental damage and waste and other issues is really disappointing.’’ I’m not sure I’d go as far as holding Mr Clooney responsible for creating the waste, but the company that employ him certainly have some questions to answer.

They’ll never be recyclable

Even John Sylvan, the inventor of the Keurig K-Cup (another brand of coffee pod) has expressed regret about the product, conceding that his brainchild is expensive, addictive “like a cigarette” and will “never be recyclable”. Speaking to The Atlantic he said “I feel bad sometimes that I ever did it”.

Like most matters concerning sustainability, the power lies with the consumer. What we buy will dictate what they produce and how they produce it. At the moment we seem spellbound with convenience (or is it laziness?). Western consumers like to think they are supportive of the environment… so long as it doesn’t impact on an increasingly long list of creature comforts. Large brands are wise to this and have adapted their marketing messages accordingly.

That’s why companies like Nespresso are able to wrap a green ribbon around business that has fundamentally changed the amount of waste we produce and call it sustainable.

Is Your Procurement Technology a Solution or Just an ‘Empty App’?

There are hundreds of procurement technology products in the market today – from standalone tools to end-to-end platforms. But are they really ‘solutions’ or just ’empty apps’?

Let’s look at an example. Satellite navigation was a technology that had to be developed in order to make commercial sense of GPS. Originally developed to guide cruise missiles to their targets, GPS is quite an extraordinary feat of engineering which we now take for granted due to the ubiquity of SatNav devices and apps on smart phones.

Critical to the success of SatNav are the maps. The ‘data’, if you like. The quality and utility of these apps is entirely dependent on the content. Without map data, your SatNav is just a shell, literally an empty app. As I discovered recently landing in the USA with a cool new navigation app on my phone – for which I had completely neglected to download the map dataset for the region I was in. A useless, empty app.

The same is true of procurement technology products.

You may note I have used the terms ‘products’ in place of the more often-used euphemism, ‘solutions’. For a piece of procurement technology to be a solution to anything, its use must deal with existing issues and provide better outcomes than if it were not used at all. My phone app at that point was definitely not a solution.

Heretical as it may sound, in the world of procurement technology there is no guarantee that deployment of expensive, fully-featured software alone will make life better for your organization.

Large-scale implementations of procurement technology systems are always complex and require considerable effort and investment to pull off. Delivering a return on that investment is not a done deal until you can really demonstrate the benefits and savings generated.

Focus on Results, Not Features

Increasingly, then, CPOs and industry professionals are looking closely at procurement technology to see how it will generate the desired results and what is. The focus is more on usability and effectiveness, rather than features and functionality — whether the procurement technology being considered is more than just an ’empty application’.

And that’s the whole point. It’s one thing to have all the functions and features, it’s quite another to be able to use the software to deliver results quickly, efficiently and without months of additional effort.

So What Should Procurement Technology Be Like?

The opposite of ’empty’ procurement technology, then, is that which is packed with valuable data already. Best-practice templates for contracts and sourcing, category taxonomies that match your business needs, market intelligence, category information and industry benchmarks are all examples of how procurement technology can be enriched “out of the box”.

That’s not to say that one size must fit all. Far from it. In fact, it is highly likely that each company’s definition of best-practice data will be unique. Just like the SatNav app, for which, you can choose to download maps based on your needs, smart, intelligent procurement technology should allow you to access best-practice templates, workflows, checklists, among others on demand, as and when you want.

That’s when your procurement technology will do what it’s supposed to do – drive savings and performance across the enterprise, and not become just another empty app.

Paul Blake leads the technology product marketing team at GEP, a leading global provider of procurement technology solutions that help enterprises boost procurement savings and performance.

Introducing Procurious Membership Badges

It’s time to ‘Show Your Colours’ to the world!

Show your colours on Procurious by adding a membership badge

At Procurious we’ve long been encouraging you to share a profile picture with your network.

Today we’re going one step further by announcing our new ‘Membership’ feature – support your professional membership and demonstrate your qualifications by adding a Badge to your profile.

Why? We want you to be proud of your achievement, promote the association and show your accreditation off to other Procurious members.

Vicki Oliver, Marketing Manager at Chartered Institute of Procurement and Supply, commented on the value of Professional Associations: “Networking is a crucial activity in any professional’s career and being part of a global platform, sharing your knowledge with others and benefitting from the experience of other professionals and business people is immeasurable.

“Display your CIPS credentials with pride to the procurement community and beyond, so key contacts can connect with you and others will join this fast-growing movement.”

If you hold a membership with CIPS, ISM, Procurement Leaders, The Hackett Group or The Faculty Roundtable you can go ahead and add your Badge right away. 

Procurious membership Badges

How to add your Badge

It’s very easy to add a Badge to your Procurious profile. Simply visit your ‘Edit profile’ page and scroll down to the ‘Memberships’ section.

Locate your association from the drop down menu found under the ‘Which memberships do you hold?’ prompt.

All done? Just hit the green ‘Save’ button to make your changes. You’ll be able to see your new Badge in all its glory by visiting your profile page.

New members will also be given the opportunity to complete this step during the registration process.

FAQ

“I’m a member of xxx, can I add a Badge to my profile?”

At the time of writing Badges from the following Associations are available: CIPS, ISM, The Hackett Group, Procurement Leaders and The Faculty Roundtable. We will notify you when more are made available.

“How many Badges can I add?”

We haven’t set a limit, so you are able to make multiple selections. But we encourage you to only add Badges to those associations that are applicable/you belong to.

“Can you add a Badge for my association?”

Of course. We’re always very interested in talking to other associations who show interest in being added to Procurious and having badges developed. To discuss please email: procurious@procurious.com

The War for Talent – Battleground Asia

The Faculty Roundtable lands in Singapore

The Faculty Roundtable lands in Singapore

The Faculty was in Singapore this week for the launch of its Asian Roundtable Meetings. This series of events brings together a carefully selected group of elite procurement leaders to share experiences and insights within the specific context of the Asian procurement environment.

Wednesday’s inaugural event focused primarily on talent attraction and retention, an area of great debate across the region.

Attendees stressed that competition for talent not only occurs between firms but also within the functions of your own business. “Procurement isn’t always the first choice” said one CPO.

Also addressed, was the need for a shift in the competencies of procurement staff. It’s time to move away from traditional purchasing practices and take a more strategic commercial perspective on our business challenges. The assembled procurement leaders agreed that now the function is being seen as a source of ongoing revenue, there is a requirement to shift our competencies in order to fully realise this opportunity.

Attracting top procurement in Asia

One of the key challenges outlined when it comes to attracting top procurement talent in Asia was the need to appeal to a very broad spectrum of employees. One CPO detailed that his team comprised of ten different nationalities, from Chinese Singaporean nationals through to European expats and that each of the groups present in the workplace had a different set of factors that motivated and drove them to succeed at work. There simply isn’t a single management technique that can be effectively applied to all members of such multinational teams.

Another interesting point raised throughout the day was the reluctance of employees to accept failure. One CPO pointed out that “if innovation and growth are the goal, you have to experiment and experimenting involves failing”. This is not something that sits easily within the context of some Asian cultures.

Guest speaker Tom Verghese, who has contributed to the Procurious blog in the past, went into great detail highlighting the importance of cultural sensitivities within the diverse workplaces of Asia.

Tom stressed that procurement bosses need to be cognisant of the affinity bias (selecting employees from a similar background to one’s self) when constructing teams. Operating in a culturally diverse market requires forming opinions based on the inputs of a culturally diverse team.

Mentoring too was highlighted as an area of critical importance for the development of talent within the Asian procurement space. The Faculty has committed to work with the attendees of the Asian Roundtable to establish a mentoring network that will ensure the development of the next generations of Asian procurement leaders.

The Faculty Asian Roundtable will be returning to Singapore in September to kick off its mentoring program and once again connect the region’s brightest procurement minds. To find out how your organisation can get involved get in touch with Max Goonan or Chris Roe at The Faculty.

3D Printing – The End of Outsourcing?

From golf clubs to firearms, pharmaceuticals to trainers, 3D Printing is disrupting the manufacturing process of an increasing number of products. But what are the long-term implications for the supply chain as a whole?

3D Printing - The End of Outsourcing?

It’s a common misconception that 3D printing is something new. Although the processes and thinking for it have been around for a number of years, it’s taken a while for the technology to catch up and allow wider functionality and usage.

As a procurement and supply chain professional, this opens up a world of possibilities – a world of potential cost savings as a result of lower manufacturing costs and a centralised supply chain. Of course this isn’t going to happen overnight, but organisations can start to think differently.

The End Outsourced Manufacturing?

Manufacturing in particular has the potential to see a big change. The advances in 3D Printing can allow certain products to be made in house, instead of being outsourced to ‘low cost’ countries. While good news for organisations bringing more jobs back home, it doesn’t provide a rosy outlook for countries like Mexico and China, traditionally strongholds for low-cost manufacturing.

By bringing manufacturing closer to home, it also gives organisations an opportunity to reduce risk in their logistics, reduce lead-times and make savings on transportation costs. Plus, there’s the lower carbon footprint of global activities as an added bonus. This is all illustrated in this neat infographic.

3d printing supply chain infographic

In the pharmaceutical industry, manufacturers are using 3D Printing to improve medicines delivery systems for patients. Printers are being used to produce pyramid-shaped pills, which provide a more rapid drug release than cylindrical pills, and layered tablets that dissolve quicker and more efficiently.

While these processes are still in their infancy, manufacturers are hopeful that technology and science will work hand in hand, lowering production costs, enabling local production and, in the long run, reducing the end cost for patients.

Changes in the Supply Chain

Beyond enabling organisations to bring manufacturing back to a local setting, lowering logistics and transportation risks and costs and even maybe reducing globalisation as a whole, there are other impacts in the supply chain to think about.

Organisations will be able to produce prototypes of designs much faster than before and facilitate testing by being able to print on site. Organisations will also be able to print packaging materials, more tailored to certain products, as well as tools, jigs and other aids for manufacturing.

Finally, the requirement to hold inventory can be reduced by having designs for applicable products and other parts held on a hard drive, ready to be printed on demand, rather than physically stored in a warehouse.

Beware the Magic Bullet

A word of warning, though. As great as all this sounds, there are still risks and issues that need to be considered with 3D Printing.

Protection of copyright and security of patents is a big deal when all the designs are held on a hard drive that could be hacked from outside the organisation. Some organisations have taken steps to protect their intellectual property, but can you be 100 per cent sure you’re safe from cyber attack?

On the environmental side, although footprints are lowered for transportation, the need for printers to run continuously to be cost-effective means increased energy usage and costs. This would lead also to increased carbon footprints for local factories.

Finally, with greater efficiencies in the supply chain, reduced transportation requirements and potentially fewer warehouses, where does that leave the supply chain manager? If parts are going to be printed on site as required, there isn’t going to be the need for someone to manage an end-to-end process.

Best learn how to use the printers then!

Do you work in an industry that’s seen an increase in 3D Printing? Do you work with printers – have we missed any big benefits? Let us know and get involved in the discussion! 

Meanwhile, we’ve been very good to you again this week and rounded up all the stories you need to be reading in procurement and supply chain.

Tapping into the ‘big data’ that can help Greek supply chains to be more agile

  • Supply chain platform provider GT Nexus has begun tapping into the big data that has accumulated in its system to help shippers, carriers and forwarders provide “assurance of supply”.
  • In an interview prompted by the possibility of a Greek exit from the Eurozone, GT Nexus’s EMEA director of marketing, Boris Felgendreher, said the Greek crisis bore all the hallmarks of major disruption – the sort that shows the limitations of supply chain planning.
  • “This sort of situation puts a premium on being agile, in respect of companies being able to move from one sourcing location to another, and that is always difficult. This particular disruption has an added element in that it is financial,” said Felgendreher, alluding to the fears of a ‘Grexit’ and the problems Greek companies have with making and receiving payments.
  • And although Greece itself has accepted the terms of its bailout, a number of Eurozone countries have still to ratify the deal, meaning the threat of a Greek exit persists. However, Mr Felgendreher explained that a recent development by GT Nexus could offer firms a way to circumvent these issues through a “fusion of the physical and financial supply chains”, following an agreement between the platform developer and trade finance solutions provider SeaburyTFX.

Read more at The Loadstar

UK food supply chain on the brink

  • Much of the UK’s food supply market is on the brink of collapse as the UK’s largest supermarkets continue to slash prices, according to business recovery specialists Begbies Traynor.
  • The recovery firm said that delaying payments to suppliers means that the food retail industry has never been tougher for the UK’s smallest food suppliers, independent grocers and farmers.
  • According to Begbies Traynor’s Red Flag Alert research for Q2 2015, which monitors the financial health of UK companies, the UK’s food retailers continue to experience rising ‘Significant’ financial distress, increasing 38 per cent to 5,258 struggling businesses over the past year (Q2 2014: 3,804), 97 per cent of which (5092) are SMEs. However in reality the UK’s food supply chain that keeps these stores stocked is by far the biggest loser.
  • During Q2 2015, the UK Food and Beverage Manufacturers, which include many of the food suppliers and farmers that supply the major UK headquartered supermarkets, witnessed the highest year on year increase in ‘Significant’ distress of all sectors monitored by the Red Flag research, rising 54 per cent, with 1,622 companies now struggling to make ends meet; up from 1,052 at the same stage last year.

Read more at Fresh business thinking

Mercedes revamps supply chain, logistics to trim costs

  • Mercedes-Benz aims to reduce logistics costs by about 20 per cent per vehicle as the company invests hundreds of millions of euros in a sweeping global reorganisation of its supply chain network.
  • The automaker has increased production outside of its German home over the past decade but many of the components used in its cars are still sourced from Europe. The shift has increasingly stretched its supply chain because of the distances parts have to travel, placing a bigger strain on a system that is already trying to cope with record demand.
  • Logistics is a “very significant” cost position, according to Mercedes production and supply chain boss Markus Schaefer, who said supply chain costs can exceed manufacturing costs in some of the division’s lower-wage plants.
  • “With more than 30 vehicle derivatives each built from several thousand parts, the complexity is immense,” Schaefer told reporters in Speyer, Germany, where the carmaker last week opened a 90 million-euro consolidation center. Here components from European suppliers will be consolidated and repacked more efficiently for shipping abroad to Mercedes plants in China, the U.S., and South Africa.
  • Mercedes may establish similar centers in growth regions like China and North America, the company said in a statement.

Read more at Automotive News

McDonalds vow to end deforestation in its global supply chain

  • McDonald’s, the world’s largest chain of hamburger restaurants, has recently announced a huge global commitment on deforestation across the company’s expansive global supply chain.
  • The commitment builds upon McDonald’s Framework and longstanding leadership in the area of sustainable sourcing. The pledge encompasses all of the company’s products and focuses on beef, fibre-based packaging, coffee, palm oil, and poultry for which the company will begin developing specific time-bound sourcing targets in 2015.
  • McDonald’s will continue working collaboratively with a broad range of stakeholders, including suppliers, governments and NGO partners, to develop long-term solutions designed to combat deforestation around the world.
  • Francesca DeBiase, Senior Vice President of McDonald’s Worldwide Supply Chain and Sustainability, said: “This commitment to end deforestation demonstrates another major step for McDonald’s as we work to increasingly embed sustainability throughout our global business. Making this pledge is the right thing to do for our company, the planet and the communities in which our supply chain operates. We’re excited to continue collaborating with our supplier partners to achieve our goals.”

Read more at Supply Chain Digital

6 things you need to know before taking a procurement job in Singapore

6 things you need to know before taking a procurement job in Singapore

The chance to live in Singapore as a CM within an IPO for a MNC (Category Manager in an International Procurement Office for a Multi-National Corporation) is flattering and could be the making of your career, but you need to consider the opportunity with your eyes wide open.

Last week, I had the pleasure of attending The Faculty’s first Asia Roundtable Meeting in Singapore. The event was a huge success and a fantastic step in the development of our business in Asia.

Amongst the knowledge sharing and general camaraderie of the event, I had the opportunity to speak with some of the region’s leading procurement minds and understand what it’s like to work in procurement in this great city.

Here are some thoughts you should consider before taking a role in the Lion City: 

  1. This is where it’s all happening. Singapore has long been dubbed the gateway to Asia and when you’re here, you get the distinct feeling that you are on the frontier of global sourcing. Some of the most exciting and experienced procurement professionals in the world are based here. A lot of the future growth and innovation in our profession will pass through this city. 
  1. You’re going to need cash. This is an expensive city, especially if you are chasing the 5 C’s of Singapore – Cash, Credit Card, Condo, Country Club and Car. Cars are expensive, but what’s more expensive is the license/tax to drive it. All up, a 3 Series BMW with an open market value of $32,000 USD will set you back a cool $160,000 USD in Singapore. If you have children, beware… Tuition fees at private international schools can cost up to $35,000 USD a year. Most CPOs I spoke to were not on “ex-pat” packages so these costs were not included as part their salaries. We were also told on this trip that procurement roles in other countries within the region, such as Indonesia or China, are paying 2 to 3 times what the global companies are paying in Singapore… This is certainly something to be considered and negotiated before accepting your new role.
  1. You’re going to need energy. The old adage of work hard, play hard is alive and kicking in Singapore. These professionals are in truly global roles. Working in a global sourcing hub, you’ll be connecting with colleagues and suppliers in all time zones. This means early mornings and late nights on teleconferences. It also means you will be travelling a lot. Which brings me to my next point…
  1. You’re going to need to understand this isn’t a region. Asia-Pac is a diverse group of countries with more than a dozen different cultures many with their own language, beliefs and practices. When you are being “sold” the job from Global HQ, they probably won’t understand the complexity and geographical spread of this ‘region’ – so make sure you do! One CPO today told me it takes 5 hours for him to fly into China or Japan and 12 hours to get to his team in New Zealand – those flight times are like flying between Greenland, Ghana, and Guatemala for a London based CPO. In fact, it takes less time to fly from London to Beijing than it does to fly from Singapore to Auckland.
  1. You’re going to have to learn to keep quiet. One of the things we learnt in our cultural awareness workshop with Dr Tom Verghese, was how people from some Asian cultures have a tendency to be very quiet in meetings/business interactions. This means, those procurement leaders from western cultures need to ensure they actively create an environment of trust and encourage people into the conversation to share their views. One of our Roundtable members highlighted how this presented a real challenge when trying to foster a culture of innovation and experimentation. It was suggested that certain cultures in the region are hesitant to try something new if it may lead to a loss of face.
  1. Have an open mind and learn! Singapore presents a fantastic opportunity to learn how to work with and manage just about every culture in the world – a brilliant training ground for future leaders. The CPOs at the Asia Roundtable were a truly multinational bunch with representation from France, Canada, Britain, Malaysia, Singapore, Australia and Italy. They had lived in just about every country in the world and had managed people from all over Asia and the around globe. What a great opportunity to learn about the nuances and needs of all these cultures!

If you are interested in learning more about The Faculty Asia Roundtable Meetings held in Singapore, get in touch with Max Goonan at The Faculty. Max.Goonan@thefaculty.com.au