Talented New Mothers – Please Don’t Quit!

Are you a new mum? Thinking about starting your own business? Tania Seary lays out the benefits for new mothers of staying employed in the corporate world when children arrive.

New Mothers

The wait leading up to our launch of Procurious was killing me.

It was like re-living those last few weeks waiting for a baby to be born. There’s not much I could do other than hope and pray for a safe delivery. Fortunately we launched successfully and have had some great traction so far.

This waiting period, in conjunction with my eldest son’s 9th birthday (yikes!), and the daily juggle between work and family, gave me cause for some reflection on the whole topic of motherhood and career.

Australian procurement superstar Georgia Brandi recently posted this very thought-provoking article on LinkedIn written by Sramana Mitra. Dramatic opening paragraph aside, the rest of the story covers just about every tricky point of this highly political debate. To stay at home, or not? To work for someone else, or yourself?

Career Super Women to Working New Mothers

I’ve had some flashbacks of those awkward first days transitioning from career super woman to working mummy. Highlights of which mainly focus around breastfeeding, but, given we have a mixed audience here, I’ll save some of those stories for another forum.

I could write a book about my journey as a working mother. But in the interest of brevity, I would like to put forward my thoughts on the benefits of staying employed by a company, vs. opening your own business, when women become new mothers.

Now, don’t get me wrong. I love owning my own business, I have had a fantastic time, working with, and for, some great people. But it hasn’t been easy. Also, my business was a few years old when I had my first child, so I wasn’t exactly starting from scratch when I first “went on maternity leave”.

Employee vs. Mumpreneur

I had a lot of reasons for wanting to start my own business. Primarily I had a strong vision of what I wanted to create – I wanted to create a specific workplace culture, more than a specific company. And twelve years on, I’m happy to say that culture is alive and well.

I also wanted to do my own thing, be free of the corporate hierarchy which I found very frustrating. I was tired of being judged by peers and leaders I didn’t always respect. This of course was a very naïve reason, as you will always be judged – when you’re in your own business, your clients/customers are the ultimate judge!

I also wanted to have children and travel with my busy husband. So there were lots of forces driving me to do my own thing.

But of course, the path I chose took a lot of hard work and perseverance. It took a year before we won our first big client, so I had to fund the business (and myself) during that period.

And then we needed to (and still do!) keep proving ourselves and winning new business, while we’re working on producing quality outcomes. When I had my children, I asked different people to help run the business, with varying degrees of success.

But in the end, it has all worked out. And if you’re feeling an affinity with all the above, I fully encourage you to pursue your dream.

However, I can also see many benefits in remaining employed by someone else during your child-bearing years.

Here’s my top 5 reasons to work for an employer when having children:-

  • Do it for the Sisterhood

Australia (and the wider world) still has an appalling lack of female representation at the highest levels of business. The more women that actually stay in the workforce will provide us with the greatest chances of increasing the number of women in the senior ranks.

  • Do it for the Money

How much money you generate from your own business in the early days totally depends on the business model. However, in my case, I had to fund the business for at least the first 12 months of operation. You need to be prepared for this loss of income.

On the flipside, if you stay with a corporate employer today there is more financial support than ever before. When you return to work, you will continue earning at the same rate as previously, and hopefully continue on your career trajectory, which will be compensated with salary increases.

  • Do it for the Recognition

I am going to make a broad assumption that most corporate women have reached their late 20’s, mid ‘30s when deciding to have children. This means you have reached a certain level of success and have built a reputation within your internal stakeholders, suppliers and other third parties.

Starting a new business is very humbling (I’m trying to be positive here). You will have many setbacks on your journey to success..and when you do achieve success, it will be only you and your team there to recognise you.

In a corporation, you will be recognised and rewarded (well, not always, but more so than working for yourself!).

  • Do it for your Development

There’s no doubt that you learn a great deal running your own business, but nothing as formal (unless you organise and pay for it yourself!) as the quality and frequency of training you receive in a large organisation.

Think about it. Companies train you on everything – from Microsoft office, to the latest legals, compliance and your professional training. And there’s maybe even the odd corporate off-site or incentive travel.

  • Do it for your Sanity and Self-Esteem

Really, this is a point in favour of either working for yourself or someone else.

If you’re the kind of gal that finds domestic life a struggle, just knows she needs to work, or has the all-important financial imperative – then you will no doubt need to get back into the workforce in some capacity.

I’ll never forget those early days going back to work. Buying a cup of coffee from my favourite barista, then sitting at my desk in a zen-like state for at least five minutes soaking up the serenity.

That was heaven. It saved my sanity and definitely kept my struggling self-esteem somewhat in tact.

What are your thoughts on this topic? Have I been too harsh on the entrepreneurial option? We’d love to hear from all the new mothers (and any career super women who are also supermums) on how you made the choice.

Is Hybrid Best? The Centralised vs Decentralised Debate

Centralised, decentralised and hybrid models – is there actually a ‘best’ way to organise procurement departments. The debate rages on.

Hybrid Model

Recent studies, and accepted wisdom, have continued to confirm the trend towards a centre-led procurement model. Both fully centralised or decentralised procurement operating models have their downsides, and that a middle (or hybrid) road is preferable.

Centralised organisations unfortunately:

  • do not always understand regional and local supply markets and consumption patterns.
  • run the risk of maverick buying outside contracts.
  • are not suited to managing some indirect commodities.

In decentralised organisations, there is often:

  • inability to leverage corporate spend.
  • poor coordination of information and best practice sharing.
  • uneven supplier performance.
  • higher procurement operating costs.

The Centre-Led Model

The best centre-led procurement organisations concentrate on defining strategy and policy, as well as applying best practices to both direct and indirect procurement. They mostly employ a category management structure, which supports the roll out of their directives to business unit and regional level.

In the Aberdeen Group’s recent report, they noted that centre-led companies reported more spend under management than others. This was twice more than companies with a decentralised structure, and nearly 20 per cent more spend under management than companies with a centralised structure.

“Organisations with centre-led procurement considerably outperform their non-centre led counterparts, in both spend under management and supply cost reductions” (Aberdeen Group 2015).  

Leading from the Centre – Levi Strauss  

The Director of global indirect procurement at Levi Strauss, Celeste Smith, said recently that the while the company wants to create a centre-led global function, there should be good regional support.

“Success for me looks like centre-led, a global approach to managing indirect – not necessarily with global suppliers – but that we have a very consistent and disciplined approach to procurement globally.

“Centre-led means that everyone is on the same page in terms of methodology and approach. But I think it’s very important to have the same regional support.”

Levi Strauss has a global spend of around $1.8 billion (£1.09 billion), of which it wants to manage $1.2 billion (£723 million).

Leverage Central Knowledge – Fluor

Fluor is a world-leading engineering and construction firm. It also offer clients procurement and project management services for capital projects.

Fluor uses a centre-led procurement model, leveraging international procurement expertise and market knowledge, with the aim of providing the best value for their clients’ capital projects.

Their procurement organisation manages an annual global spend of more than $16 billion. This is done through consistent execution strategies across their worldwide network of 1,900 procurement professionals.

For example, Fluor’s local operation in South Africa uses a global logistics planning strategy to help clients overcome procurement execution challenges unique to operating in Africa.

Stakeholder Challenges for Hybrid

A hybrid model seems to combine the advantages of a centralised structure and decentralised execution with minimal downside. So why isn’t everyone doing it?

It’s not that easy. Whatever the model, the satisfaction of stakeholders and end users is paramount. The best model seems to be one that delivers results through open lines of two-way communication, and processes that are flexible enough to take into account regional and cultural differences.

One way to generate higher levels of stakeholder support is to ensure that the global category management structure is replicated in decentralised business units or regions, probably on a more limited scale.

It has been suggested that this type of structure encourages agility and innovation, as well as better compliance to contracts.

The Wheel Turns     

Procurement Leaders’ recent survey on procurement operating models found that no one single model can sustain the expected benefits indefinitely.

They report that savings delivered from a given procurement operating model can erode over time as behaviours become ossified. Incremental savings thus become more and more difficult to achieve. The model just gets tired.

A structural change may be needed to allow procurement to deliver value in new ways, and enable benefits to be sustained or even improved.

Procurement Leaders say that procurement organisations must tackle a wide range of hindrances that arise from change, in order to maximise the benefits from a change in operating model.

Their research also found that the greatest factor preventing transition in procurement is its own lack of change management capabilities.

As a procurement organisation matures, it is likely that it will revise and adjust its hybrid or centre-led structure, in order to stay aligned to corporate objectives and continues to deliver value.

What Can Procurement Professionals Learn From Young Professionals?

Generational stereotypes are frequently unfair and unkind. From traditionalists to young professionals, there is much to learn from each other.

Young Professionals

This article was written by Dee Clarke, Davidson Projects & Operations.

With people living and working longer, the days of two to three generations making up a workforce will soon be a thing of the past. For the first time, we will start seeing workplaces with around five generations working side-by-side.

Loosely, Forbes Magazine defines the five generations that will soon be working together as:

  • The Traditionalists (born prior to 1946);
  • Baby Boomers (1946-1964);
  • Gen X (1965-1980);
  • Gen Y (now referred to as Millennials); and
  • The iGeneration (born after 1997).
Generation Stereotypes

Interestingly, Millennials, Gen. Y, Digital Natives (whatever you want to call the generation born between 1980 and 2004), represent almost a third of the global population today. They will comprise 75 per cent of the global workforce by 2025.

There are plenty of stereotypes about each group. The Baby Boomers who scorn social media, the Gen. X who don’t like authority, the Millennials who are impatient about promotions and getting ahead, and the iGeneration who are attached to their smartphones.

While there are some consistency in these traits, Jeanne Meister, co-author of ‘The 2020 workplace’ says that it is important as managers to move beyond the stereotypes, and get to know each person as an individual.

Mindful of Millennials

This could not be truer than within the procurement sector. As someone who specialises in sourcing talent in this sector, I have lost count of how many conversations I have had of late with clients and candidates regarding the hot topic of age.

And millennials are the hot topic of the moment.

There seems to be a general consensus in the media and public that Millennials are lazy, entitled, self-absorbed and will unlikely stay in any job for long. Personally, I believe there are many great exceptions to this mass generalisation, and hiring managers within procurement need to be mindful of this.

I recently had the pleasure of meeting two young professionals who were exceptions to the rule. I met Sandra Silva at a CIPS networking event. As I’m sure you would know, these events are normally attended by procurement professionals, currently working in the industry, to network and discuss market challenges, and perhaps learn something from a key presenter.

A young Sandra was studying her Masters in Supply Chain Management at Queensland’s Griffith University. She had relocated here from Colombia after completing her engineering degree.

What caught my attention was how committed Sandra was to start her career in procurement, and most importantly how determined she was to take the reins when it came to her career planning and progression. She was leaving nothing to chance.

Sandra attends regular industry networking events. She had sought out an industry mentor and was applying for internships, while continuing her studies. A few months later when I met her, she showed her determination and dedication to her career when she told me she had taken on an internship and a part-time entry level procurement position.

Diversifying Talent

The next example was when a colleague asked me to meet with a young man, James Young, who was seeking career advice in my area.

James simply defied every stereotype millennials face. James came to meet me on his lunch break. He presented well and, although he had already secured a contract position with another firm, he was looking at his long term career and direction.

Before finishing high school, James had completed a couple of short internships. While attending university, he attended networking events and connected with people within many different industries to identify the right one for him. On completion of his degree he applied for graduate programs with the big four consultancies.

Through our meeting he listed his plans, and how he was going to diversify himself so he was a valuable asset to any future employers. Most of all he talked about what he planned to do to consistently upskill and further develop his knowledge.

Learning from Young Professionals

Both Sandra and James showed determination, drive and willingness to go above and beyond the normal approach to secure the right career for them.

I believe this determination will not just stop there but will lead their careers to the top, these were not the actions of ‘lazy’ millennials, but two future CEOs.

So what can we all learn from these two young professionals?

Generally speaking, in the past most people ‘fell’ into procurement, starting with backgrounds in engineering, law or accounting to name a few. They then somehow became involved in projects, or saw the opportunity to add value with cost savings in better buying strategies.

While the industry has become more professional, and there are now specific qualifications and university courses, many have just moved from one role to another, letting opportunities dictate their next career move.

Bringing New Ideas

Just like these two young Millennials, we need, as an industry, to take charge of our career, and continue to develop our skills. We need to expand our networks, and not be afraid to take on an ‘internship’ or mentor, to ensure we not only survive, but thrive the future world of work.

Furthermore, we have to stop letting age stereotypes dictate how we approach work, or manage the growing number of generations we will work with.

FCIPS accredited Alan Robertson, who has more than 20 years procurement experience across private and public sectors, said Millennials will bring new ideas to organisations. And we need to listen.

“Otherwise we won’t take advantage of their skills such as online networking/blogging and asking plenty of questions,” Mr Robertson said.

He also added that “a ‘general’ trait of Millennials is that they like to try new ways of working and improvements, so don’t leave them to get bored. Companies will lose them if they don’t let them be free to use their adventurous spirit.”

Dee Clarke has more than 10 years’ experience in recruitment across the Australian and Irish markets. During this time, Dee has forged a strong expertise in Procurement and Contracts and is an Affiliate Member of CIPSA.

Dee is a Senior Consultant within the Projects & Operations team, which delivers the right technical and project expertise for any stage of a project or asset’s life cycle.

Corruption & Slavery Threaten to Overshadow Olympics

As the 2016 Olympics kick off in Rio, ongoing corruption and slavery scandals threaten to overshadow the event.

Brazil Corruption Slavery

The 2016 Rio Olympics opened on Friday evening with a lavish opening ceremony, watched by a global audience of billions. Over the next two and a half weeks, 10,500 athletes from 207 countries will compete for medals in 28 sports.

However, the Olympics could be overshadowed by corruption and slavery scandals currently engulfing Brazil.

Corruption Scandal Widens

There has been widespread criticism of the money being spent to hold the Olympics in Rio. Much has focused on where money could have been spent to tackle poverty and social issues present in the city.

However, one scandal that has rolled on for over a year relates to massive corruption in the awarding of contracts. Petrobras, Brazil’s national oil company, and it’s ruling Workers’ Party (PT), are at the centre of allegations of one of the largest corporate frauds in history.

Petrobras was nationalised between 2002 and 2010, with the PT appointing its own candidates to high-level executive positions. These executives secretly diverted funds, valued at up to 3 per cent of all new oil contracts, to the PT and its coalition partners.

Senior Politicians Implicated

The corruption probe, nicknamed “Operation Carwash“, continues to widen. Plea deals have now implicated more than 480 politicians and executives.

It is alleged that these individuals received over $6 billion in bribes from a cartel of Brazil’s biggest builders. The money was traded in exchange for at least $50 billion in Petrobras contracts.

Suspended President Dilma Rousseff has been found guilty of budget fraud by a senate committee. Her predecessor, former President Lula da Silva, has been ordered to stand trial by a federal judge for money laundering and hiding assets.

Rousseff’s campaign strategist, Joao Santana, was also arrested for allegedly receiving $7.5 million in bribes from Petrobras. However, due to delays in Brazil’s legislature system, it could be a while before these cases are heard.

Slavery Rife in Brazilian Cities

Alongside the corruption and fraud in Brazil, new figures released this week suggests that slavery is still a major issue in the country.

The Walk Free Foundation has reported that there are an estimated 161,000 people working in slavery conditions in Brazil. This figure is up nearly 4 per cent from 2014.

Brazil has seen an influx of immigrants over the past decade from other Latin American, and African, countries. The issue is most prevalent in rural areas, but instances are occurring in major cities too. There have been more slavery cases reported in urban areas than countryside since 2014.

Official statistics show the mining sector accounts for 31 per cent of slavery cases discovered in Brazil, followed by construction (18 per cent) and agriculture (15 per cent).

“Blackballing” Companies

However, the Brazilian Government has earned some positive press in the way it is tackling slavery. They have created a “dirty list” of 300 companies who could lose access to public contracts as forced labour has been found in their supply chains.

The list was briefly suspended in March this year, although it was reinstated in May. The dirty list, and strategies that go along with it, have helped to free over 50,000 people from slavery conditions between 1996 and 2013.

At a time when the eyes of the world are on Brazil, and Rio, the ongoing work to free workers caught in forced labour conditions represents a glimmer of hope in an otherwise bleak political climate.

Are you in Rio for the Olympics? Or have you been involved in procurement or supply chain for the Games? We’d love to hear your experiences and showcase them on the Blog.

We’ve been collating all the major headlines from the past week to keep you up to date…

UK Interest Rate Cut Bad For Savers & Pensions

  • The Bank of England announced a decrease in UK interest rates to 0.25 per cent, the lowest rate ever.
  • It comes at a time of lower than expected growth in the UK economy.
  • The cut heaps further pressure on pension schemes already facing huge deficits from the shrinking economy.
  • It also means that a greater number of accounts, including business accounts, are expected to not see any form of interest on savings.

Read more on The BBC

Mercedes-Benz Vans to Open New South Carolina Plant

  • Construction on a new plant began last week in North Charleston, South Carolina, to produce Mercedes-Benz’s iconic Sprinter Vans locally.
  • The move will significantly cut lead-times for the German automotive giant. Previously US-based plants only assembled vehicles from ‘kits’ sent over from Germany.
  • Parts suppliers including the Auto Truck Group and the Knapheide Manufacturing Company, are expected to establish production sites in the region.
  • Mercedes-Benz reported delivery of approximately 28,600 vans to US customers last year.

Read more at Automotive Logistics

Brexit Leads UK Retailers to Source More Home-Grown Products

  • Fashion industry publication Just-Style reported that one-third of British retailers predict they will source more from domestic suppliers following the Brexit vote.
  • Research published by Barclays has found that 52 per cent of retailers also expect to increase supply chain activity in India.
  • 43 per cent of British retailers have indicated they anticipate a reduction in goods sourced from the EU.  
  • Despite the Brexit vote, European manufacturing actually improved over July. According to data firm IHS Markit’s Purchasing Managers Index, figures rose to 53.2 in July from 53.1 in June.

Read more at Just Style

Phone Battery Life Could Be Used to Track Users

  • The battery status API, introduced in August 2015, has been found to be capable of tracking individual users online.
  • API allows site owners to see the percentage of battery life left in a device, as well as the time it will take to discharge or recharge.
  • Although currently being used to enable low-power versions of websites, researchers have proved that it could be used to spy on users.
  • Privacy campaigners have argued that companies could use this data to also monetise battery levels, with users making different decisions when faced with a low battery.

Read more at The Guardian

Management of a Global Supply Chain in Emerging Markets

Managing a global supply chain is complex, and fraught with risk. So what tactics can you use to minimise this risk?

Global Supply Chain

This article was written by Rob Barnes, Founder at PrimeRevenue.

In many ways, sourcing goods and services internationally is easier than ever, with the internet making it possible to research, source and communicate with global suppliers from the comfort of your desk.

But in reality it isn’t always that simple. Setting up and managing an global supply chain is a complex, and often risky, business. Without careful planning, local expertise and meticulous management, there’s a lot that can go wrong.

Not only are you dealing with numerous rules, regulations, taxes and constantly fluctuating currencies – all of which have the potential to significantly impact your bottom line. You also have cultural and language differences to contend with, which, in the world of business, can be daunting and confusing to say the least.

On the other hand, getting it right can give you a huge competitive advantage, with cost savings and higher quality or unusual products just a couple of the potential benefits.

So how can you make sure your global supply chain works effectively, while minimising the risks to your business? Here’s a few pointers:

Strategic Planning  

Planning and management of a global supply chain affects the whole organisation, not just certain departments. That means ownership must come from the top, and involve all areas of the business, from procurement and finance, operations and logistics, to sales and marketing.

Don’t allow teams and decisions to become siloed. Make sure there is transparency across the business. Otherwise you’ll be missing important pieces of the puzzle, and find that your supply chain isn’t delivering the value you need, either for the customer or the bottom line.

Local Expertise

Knowledge of the local market is crucial to ensure you understand what to look for in a supplier and how to handle local business practices, from taxes and duties, to employment law and health and safety regulations.

If you don’t have this local expertise internally, consider hiring somebody who does. Or look to bring on a consultant who can guide you through what, and who, you need to know.

Prioritise Relationships  

The foundation of a successful supply chain is building strong relationships with as many elements of the chain as possible. While the internet can help you at the research stage, it’s crucial to visit suppliers regularly, to make those personal connections, scope out their operations in person, and discuss ways of maximising efficiency and collaboration.

In many countries, personal relationships and networks are even more important than in the UK, so it’s in your interest to prioritise this valuable bonding time.

Sales Forecasting

Forecasting is crucial when sourcing products globally, to avoid ending up with too much or too little inventory to deliver on what you need.

This is partly due to timing – your goods are going to take longer to arrive from far flung locations – but there is also a cost element, with taxes and duties to pay every time you move your goods.

Accurate forecasting means that you’ll be transporting the right quantity to arrive at the right time, to deliver on projected demand. You’ll also avoid wasting money on warehouse space by over-ordering.

Technology

Technology is your friend when managing a global supply chain, helping you to streamline processes and minimise unnecessary administration.

Look for a supply chain management solution that works across the different markets you’re operating in, so you don’t need to work with numerous systems.

You can also streamline your invoicing and payment terms using a supply chain finance platform, avoiding the need to negotiate these on a case by case basis, and improving consistency and transparency across suppliers.

Performance Tracking

Just one disruptive link in the chain can impact your whole operations. Make sure you implement a system to measure the success and efficiency of each supplier regularly – delivery times or product quality for example.

By doing this, you can spot any warning signs early on and be ready to replace an underperforming supplier if necessary.

Have a Plan B

Even with top notch processes, you can never be sure what’s going to happen, so have back-up suppliers ready to go in case of any unexpected disasters. This will keep your supply chain running smoothly and avoid lots of unhappy customers.

Focus on Long-Term Sustainability

To minimise risk in the chain, look for ways that you can support your suppliers both financially and logistically. Make sure your lines of communication are always open, so any potential issues can be aired quickly and easily.

You can also help your partners manage their cash flow through supply chain finance, allowing them to choose to be paid more promptly if and when they need. This is particularly useful for suppliers in emerging markets.

This reduces the need for them to take out expensive bank funding or overdraft extensions, minimising costs and risk in the long-term.

Supply Chain Finance from PrimeRevenue and AIG caters to thousands of mid-market, non-investment grade companies, by providing financing, with the credit risk insured by AIG’s market-leading trade credit insurance. It enables suppliers to take early payment less a small discount, while enabling buyers to standardise and potentially lengthen their payment terms.

Big Ideas Summit 2016: Big Idea #8 – Manufacturing’s Next Generation

Paul Markillie believes a change of image is necessary for manufacturing in order to attract the next generation of talent.

At the Big Ideas Summit 2016, we challenged our thought leaders to share their Big Ideas for the future of procurement.

From ideas that have the potential to change the very nature of the procurement profession, to ones that got the assembled minds thinking about the profession’s impact outside of the organisation, the response we received was amazing.

The Next Generation

Paul Markillie, Innovation Editor at the Economist, shares his big idea to change the out-dated, and incorrect, image of manufacturing to attract the next generation of professionals into it.

Paul believes that one way to get new professionals interested in manufacturing-related jobs, such as procurement and supply chain, is to add it to the school curriculum. This gives students access to modern design software to make them aware of the possibilities in manufacturing as a career.

Catch up with all the delegates’ Big Ideas from the 2016 Summit at the Procurious Learning Hub.

Want to find out more about Big Ideas 2016? And maybe what we have planned for 2017? You can visit our dedicated website!

If you like this (and you haven’t done so already) join Procurious for free today. Get connected with over 16,000 like-minded procurement professionals from across the world.

Emotional Intelligence in the Supply Chain

Emotional Intelligence can be a powerful tool for procurement in dealing with both internal customers and external suppliers.

Emotional Intelligence

There has been a lot of talk recently about the concept of emotional intelligence.

According to Wikipedia, it is defined as “the capacity of individuals to recognise their own, and other people’s emotions, to discriminate between different feelings, and label them appropriately, and to use emotional information to guide thinking and behaviour.”

The concept was pioneered in the middle of the 20th Century, but only popularised in the late 1990s. Following an increase in popularity, Emotional Intelligence was quickly moved across into the business world.

Developing Internal Relationships

Although they may not have known it as Emotional Intelligence, most procurement and supply chain professionals will have used its facets. This may have been fairly common, and both with internal customers, as well as with suppliers.

A good Supply Chain Manager must not only understand the motivation and needs of customers and suppliers. They must also develop strong and lasting relationships, based on mutual respect and trust.

With these relationships, over time (and assuming a good job is being done), internal customers will respect the manager’s role, relying on their decisions, and their judgement, in day-to-day work.

Gradually, the lines of thought from both sides will become aligned, potentially reaching a perfect strategic synchrony. If this happens, fewer explanations will be required for procurement to understand, and satisfy, internal customers’ needs.

Such coordination is the best example of the optimisation between these areas, resulting in great efficiency for a company.

Good Listeners

In addition to this, similar relationships should also be developed with suppliers. While keeping the primary company goals in minds, procurement should be able to guide the supplier approach in line with their organisation’s, and get them working in the same direction.

As Artur Osipyan explains in his excellent article, when dealing with suppliers, “you need to be a good listener to ensure you capture opportunities of doing things better and can connect the dots together.”

Companies must not impose their conditions, but look to build a partnership with the vendor, for both parties’ benefit (the famous win-win).

Perhaps the most critical use of Emotional Intelligence is where the internal customer demands and supplier offer fail to match up. It presents a situation where procurement needs to play ‘Good Cop-Bad Cop’ with both sides.

Using diplomacy and Emotional Intelligence will help create common ground for both parties, and transform this into a mutually beneficial relationship. This will also enable the parties to work together in the future.

Creating Mutual Wins

There are few things that create a stronger partnership than working together to overcome issues, and finding a satisfactory, and mutually acceptable, solution.

There are advantages to the so-called ‘cold negotiations’, where hardly any contact is made with suppliers prior to, and during, the process. However, any effective medium- to long-term strategy will need a foundation of common agreement, and understanding of mutual professional development.

To achieve this foundation, procurement and supply chain managers will not use negotiation skills, but Emotional Intelligence. This can then create the first pillar of a professional relationship between the two companies that could produce plenty success in the future.

The Pareto Principle Has An Expiry Date

Has the Pareto Principle finally reached its expiration date after 110 years? Why the tail wagging the dog heralds the end of the 80-20 rule in procurement.

Pareto Expiry Date

This article was first published on EBN Online.

When Vilfredo Pareto observed in 1906 that 80 per cent of the land in Italy was owned by 20 per cent of the population, little did he know that this 80-20 rule (or Pareto Principle) would be enthusiastically embraced by the procurement profession and still be applicable 110 years later.

The term was popularised in the 1940s by the engineer Joseph M. Juran, who famously wrote of “the vital few and the trivial many”.

In procurement terms, the Pareto Principle means that 20 per cent of the average organisation’s suppliers account for 80 per cent of spend, and vice-versa. I’m a big fan of explaining procurement concepts with relatable imagery, so let’s picture your supplier base as something that we’re all familiar with – a dog.

The Tail Will Soon Be Wagging The Dog

Picture a Labrador. Or an Alsatian, or a Sheep Dog if you prefer – whatever takes your fancy. The head of the dog could be said to represent your top 1 per cent strategic suppliers. This is where you commit most of your time and energy.

Your procurement systems are optimised to work with the head of the dog. You make a significant effort to communicate face-to-face, and you spend a large amount of time worrying about what’s going on inside that head.

Let’s move down the neck to the dog’s body. Think of this as the next 19 per cent of your strategic suppliers. While the body isn’t nearly so important as the head, you recognise that this group accounts for the majority of your spend and deserves almost as much attention. As such, you dedicate time and resources to ensuring the body is in optimal health, and these “vital few” are being properly looked after.

Finally, the tail. Depending on the amount of suppliers you have, this could be a short stubby tail, or an extremely long one that tapers to a tip. Into this tail you’ve crammed 80 per cent of your suppliers – Juran’s “trivial many” who represent only 20 per cent of your spend.

You’re so busy looking after the dog’s body (and especially its head), that you’ve adopted a set-and-forget approach to the spend tail. You automate what you can, and call upon the smallest suppliers only when you need them.

And that’s a mistake, because in terms of innovation potential and risk profiles, the tail will soon be wagging the dog.

Procurement Systems Optimised For Large Suppliers

At ProcuriousBig Ideas Summit in May this year, Coupa Software’s Gabe Perez told the assembled group of Procurement thought-leaders that there are untold millions of suppliers in the world.

And yet most of our systems, or proprietary networks, only give us visibility of a few hundred thousand. We need to develop open networks to give unhindered access to all these suppliers who could potentially be the source of game-changing innovation.

The problem is that our processes and systems are set up to work with the big players at the expense of SMEs. “We can’t have our bureaucracy, our complexity, our layers of organisation impact suppliers’ businesses,” says Perez. “The cost of business goes up”.

Yet, that’s classic procurement, and it takes a culture shift to change the way we do business and encourage a truly open network. Think about the hurdles your organisation is putting in place for SMEs; whether they’re prohibitive insurance requirements, or crippling contractual terms that could bankrupt a small player.

Are they really necessary? Are you closing the door on opportunity because you see yourself as too big to play in the small supplier space?

Building Culture Of Agility And Innovation

Have you ever requested a last-minute change from a large supplier and watched in frustration as the creaky wheels slowly begin to turn? By the time the suppliers’ emails have bounced around to tick all the bureaucratic boxes, a smaller supplier may have found and implemented a solution.

What you want is agility. And small suppliers will expect you to be agile in return.

In her workshop on innovation in procurement, former Deutsche Telekom CPO, Eva Wimmers, stressed the need for nimbleness when working with SMEs. She discovered that the existing processes at her organisation were skewed towards the largest suppliers. 

Processes were changed to encourage innovation through diversifying the supply base to include more SMEs and start-ups, cutting new contracts down to a maximum of five pages, and holding supplier meetings exclusively around innovation.

Eva also implemented what she called “dialogue-rich procurement”. This encouraged her team to greatly increase their communication with both internal stakeholders and with suppliers. Her team discovered that SMEs, in particular, were very eager to share their ideas when they found that procurement was willing to listen and learn.

In Eva’s words, “We do not care how big an organisation is, as long as both the solution and the organisation are scalable and financially solid.”

She used Dropbox.com as an example of a small organisation with fewer than 50 staff that wouldn’t even have shown up on many organisations’ radar. And yet now it has world-wide take-up.

Compression Of The Supply Chain

Paul Markillie, Innovation Editor at The Economist, talked at the Big Ideas Summit about the compression of the supply chain driven by recent technological megatrends.

Robotics, 3D printing and computer-aided design are demolishing the old economies of scale, and separating a big supplier from an SME. This is ushering in no less than a “Fourth Industrial Revolution”. What this means for procurement is that third or fourth-tier suppliers can find themselves rapidly rising to first-tier producers of end-products.

“There will be huge opportunities for companies further down the supply chain to innovate,” Markillie said. “Second-generation robots are more affordable for medium and small companies; 3D printing processes are less wasteful of raw materials and allow greater production flexibility at lower volumes.

“I think we will see some companies grasp these opportunities, which could re-order supply chains, and lead to some companies that were previously suppliers of components making the leap to become producers of final products.”

Lots Of Risk In That Spend Tail

The dilemma many procurement professionals face is that although you can’t afford to spend much time with suppliers beyond your top 20 per cent, every single vendor in your supply chain presents a significant risk to your brand, reputation and bottom line.

Think about a small supplier that you only use sporadically. Have you investigated their suppliers to ensure compliance to standards? What are their second-tier suppliers up to? What about the third, fourth and fifth tier?

Even though your spend with this supplier may be minimal, it can cause just as much damage to your organisation as the top 20 per cent. Child labor, slavery, cyber security, unsafe practices – the list is endless, and frightening.

My point – apart from trying to scare you – is that your risk mitigation and audit processes that are in place for the top 20 per cent, should be extended to the remaining 80 per cent.

End Of The Pareto Principle?

So, does this mean that the Pareto Principle has finally reached its expiration date after 110 years? In my opinion, yes it does.

If you measure the importance of suppliers purely by spend (and that’s very old-fashioned thinking), then you should indeed spend the majority of your time with the 20 per cent.

But modern CPOs know how badly a bottom line can be hurt by a risk event, and the huge potential of disruptive innovation to grow a business. And both of these factors reside in suppliers of every size, including those in the tip of the tail.

Throwback Thursday – Why Are CPOs Scared of Social Media?

Face your fears! Although procurement is getting the social media message, there is still plenty scope for CPOs to be doing more.

CPOs Scared of Social Media

It’s Thursday, so it’s time for a trip down the Procurious content memory lane! Procurious has been going for over 2 years, and we feel like we’re making headway with social media in procurement.

However, sometimes it feels like we’re Sisyphus, pushing the (social media) boulder up the hill, only for it to roll down again. That’s why, although this is a year old, we could still easily ask why CPOs are scared of social media.

Running Scared

Noel Gallagher, he of Oasis fame, said earlier this year that musicians are “scared of social media”. We think CPOs are too.

We carried out some rudimentary research into the Twitter presence of the CPOs of the world’s “market leading” brands. The results were telling.

We searched Twitter for the CPOs (or equivalent) at Apple, P&G, Unilever, Coca Cola, GlaxoSmithKline, LG, Reed Elsevier and Shell. We couldn’t find a Twitter account for any of them.

Its not just CPOs either, it seems the whole C-suite really don’t care for social media. Research conducted by CEO.com and DOMO suggests that only 8 per cent of CEOs have a Twitter account and that a staggering 68 per cent of CEOs have no social media presence at all! A CEO without so much as a LinkedIn account? Are you kidding?

Interestingly, Mark Zuckerberg is the only CEO in the Fortune 500 who is present across the five leading social media platforms, Twitter, LinkedIn, Google+, Facebook and Instagram (given he owns the last two, I guess he had a head start).

Why are CPOs so anti-social (media)?

Sure, social media is a generational thing. Younger people ‘get it’ because they grew up with it and older people tend to struggle to understand it. Now let’s be honest, most CPOs fall on the older end of the youth spectrum and hence are operating from a disadvantaged position. This however, is no excuse to ignore social media.

Like it or lump it, social media has become a critical part of our social fabric. It’s where we go to interact with people, inform ourselves and most importantly for businesses, it’s where we go to make our judgements and voice our opinions on brands.

We’re Judging You

While a traditional procurement leader may not see it, people are forming opinions based on their social media activity (or rather, lack thereof).

Recruiters will look at a candidate’s Facebook page to get an understanding of who they are. Employees, suppliers, customers and shareholders are also researching corporate executives to determine if they’ll make a good boss, business partner or are worthy of investment. Those that are not present on social media, miss the opportunity to put their best foot forward.

In the case of the companies I listed above, I’ve already established an opinion (a negative one) about them based on the fact that they don’t have a socially active CPO.

In all likelihood, the opinion I have formed is incorrect and uninformed. However, the lack of social presence has led me to subconsciously make certain assumptions about those businesses.

Socially Connected Leaders

To state the obvious, the business world has changed. Gone are the days of unknown senior executives ‘connecting’ with people through ads in local newspapers. The modern business environment is hyper-connected and driven by information.

The advent of social media has led people to expect access to celebrities. And business executives are now seen as celebrities. Richard Branson, Tim Cook and Mark Zuckerberg are the faces of their brands. The fact that their celebrity shines so bright also means they are incredibly effective marketing vehicles.

A company’s brand, as well as its understanding of its customer base and the market it operates in, now depend on its social presence. Put bluntly, there is an expectation, from customers, shareholders and the press that leaders will be active and accessible on social media.

Socially Active Leaders

Not only is there an expectation that leaders will be active on social media, there is strong research to suggest that socially active leaders are better at their jobs.

Brandfrog, a professional branding company, released a study in 2014 highlighting the importance of social media in the perception of company leaders. Below are some of the high level findings.

  • 75 per cent of US respondents agreed that CEO participation in social media leads to better leadership. This figure is up from only 45 per cent in the previous year.
  • 77 per cent of US respondents agreed that C-Suite executives that actively engage on social media create more transparency for the brand.
  • 83 per cent of US respondents agreed that leaders who actively participate in social media build better connections with customers, employees and investors.
  • 82 per cent of US respondents agreed that executive use of social media establishes brand awareness.
  • 77 per cent of US respondents believe social media is a powerful tool for building thought leadership and enhancing the credibility of C-Suite executives with stakeholders.

The report lists many more stats, similar to these, that clearly spell out the case for CPOs and others in the C-suite to start interacting on social media.

Get Involved Already!

Social Media won’t be optional in the near future – it’s not a passing trend. CPOs need to understand that in order to gain the respect of their clients, their industry and their staff, they simply must be present and active on social media.

The good news is that the bar for CPO social media participation has been set so low that there is a huge opportunity to get in early and capitalise!

So here is our call out to CPOs – sign up! It can be Procurious,  Twitter, LinkedIn, Google+, Facebook, or Instagram. Who knows, you might even enjoy it, everyone else does!

What Price Inequality? What Should We Make of Opposition to Equality?

Not all bias is unconscious. Recent derogatory comments by high-profile public figures has drawn attention back to the equality debate.

Gender Equality

How should we understand the spate of recent derogatory comments by high profile figures such as Steve Price and Eddie Maguire about women? And by Sonia Kruger and Pauline Hansen with their anti-Muslim comments?

How do we understand this increasingly public declamation occurring alongside a growing recognition that greater innovation and financial prosperity are achieved through diversity, and that inclusion makes for a better society?

Disproportionate Power

High profile public figures wield a disproportionate amount of power in our society. Steve Price’s labelling of Van Badham as ‘hysterical’ was bad enough (although deftly handled by Badham).

Price’s use of hysterical drew a huge outcry from the audience at the time. However, he seemed perplexed as to why. He then went on to repeatedly talk over Badham. What did he believe was happening, and how did he feel justified to respond as he did in those circumstances?

The social response in the following days was more concerning. There were multiple threats of violence to Badham via her Twitter account, and similarly in public comments to press coverage of the event. What it is that unleashes such harsh and violent responses; why do some people feel justified making nasty, public threats?

Social Dominance Theory

These events serve as a powerful reminder that not all bias is unconscious, and not everyone is interested in being fairer to those around them. Power and dominance have been concepts receiving too little attention lately, but are fundamental for developing a deeper understanding of this behaviour.

Social Dominance theory provides some clues. It suggests that people differ in their level of the two elements of Social Dominance Orientation (SDO): Opposition to Equality, and Support for Social Hierarchy and Dominance.

Support for Social Dominance

People with a high level of group-based Dominance value safety, stability, conformity, obedience and rule-following. They prefer greater levels of hierarchy and power distance in relationships and in society.

High levels of Dominance are associated with active oppression of subordinate groups, justification of oppression, and a strong focus on group competition and threat.

Support for social Dominance means support for active, and sometimes violent, maintenance of hierarchies, predicated on domination by high status members and the subordination of low status members.

Opposition to Equality

Opposition to equality involves support for the legitimacy of the current system including its inequalities. Those at the top of the system tend to believe that the existing system is fair; their position is justified and appropriate to their achievements.

Opposition to equality is associated with political conservatism, support for concepts like ‘work ethic’ as a way of justifying inequality, and with opposition to policies such as equal opportunity or affirmative action.

Opposition to equality is more subtle than Dominance, and is supportive of differential access to power and resources, but not through oppressive means.

(A low Opposition to equality is associated with a high level of empathy, tolerance, compassion and humanitarianism.)

Gender Differences

Individuals who have a high Social Dominance Orientation overall desire to maintain and, in many cases, increase the differences in social status of particular groups. Typically, they are dominant, driven, tough and seek power. Often, people who score high in SDO  strongly believe that we live in a “dog-eat-dog” world.

Men are generally higher than women in SDO. Recent studies have found that high SDO has a strong positive relationship with authoritarian, sexist, homophobic and racist beliefs.

Changing the Landscape

For those of us who do value the increased power and visibility of diversity in all its forms and who aspire to an inclusive society, how do we effectively navigate this landscape?

We can’t necessarily change the beliefs of others. But we should not let them deter us from pursuing a more equal, inclusive world. So what should we do?

  1. Avoid giving those promoting inequality more airtime than they already have (they’re pretty capable of handling this part themselves!).
  2. Tell more stories about positive change.

Even small signs of progress towards equality and inclusion are highly motivating. Psychology expert Professor Teresa Amabile says, “Progress motivates people to accept difficult challenges more readily and to persist longer.”

When people make progress toward, and meet, meaningful goals, the match between the expectations and the reality allows them to feel good, to grow, and be even more motivated to tackle the next challenge. (We can apply some of the same principles as Pokémon Go is using so effectively!)

If we notice the small gains regularly, and publicly, our motivation will increase. And then we will more readily move onto the next step in the equality journey.

Got a story to tell about positive change? Get in touch with Karen on her website.