All posts by Elaine Porteous

Making Supply Chain Your Organisation’s Competitive Advantage

In order to succeed, a business must be able to deliver more value to customers than its competitors. How do you make supply chain your organisation’s competitive advantage?

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In order to succeed, a business must be able to deliver more value to customers than its competitors. It is becoming more difficult to find, develop and sustain these opportunities in the rapidly evolving business landscape.  The free movement of people across borders, developments in technology and real-time communications add complexity to global supply chain management.   World trade is highly competitive, constantly changing and volatile.

As a result, supply chains today need to become more strategic. They are multi-layered, integrated manufacturing and distribution systems that, to work efficiently, need to be optimised on a continuous basis.

Technology

Automation of manufacturing using robotics and self-driving equipment in factories is now commonplace.  Software solutions and telematics improve information sharing, processing, and analysis of data which is converted into usable information to inform policy and operational decisions. However, it’s important to ensure that technology investments are based upon business needs – and not just the newest tech available.

Areas of competitive advantage

Many global businesses now compete on the basis of their supply chain capabilities rather than only on their product lines.  Leaders with efficient supply chains such as Wal-Mart, Proctor and Gamble, Tata Motors, and Unilever focus on rationalizing each activity in their supply chains. They constantly monitor costs, demand patterns, lead limes and administrative processes to achieve competitive advantage while applying relevant technologies.  

Cost of goods sold (COGS)

Reducing the cost of goods sold can be achieved through a more focused approach to procurement including price negotiation and strategic sourcing.  Inventory, distribution and freight costs are specific target areas where the potential to save can be found.  Walmart runs a retail compliance program that defines when, how and where their supplier must deliver. This helps the company reduce its costs by adjusting its storage and distribution needs in line with customer demand. This means lower prices for the customer.    

Freight costs can be managed down by outsourcing delivery logistics where there are potential economies of scale.  Telematics is used extensively by third-party-logistics providers (3PLs) to provide visibility into the movement of goods, both in the warehouse and in transit, and ensure their safety.   

Shorter lead times

There are many delays experienced in supply chains.  Some of these are because of slow processing of orders due to cash flow challenges, batching of orders, organizing shipping and freight and slow communication processes.

One of the main methods by which a business can drive increased value is by decreasing these lead times. Both business- and consumer-facing companies are experiencing increased demand for faster shipments. Speedy deliveries can have a significant impact on sales. Amazon Prime customers will often pay more for guaranteed next day delivery.

Flexible demand management

Technology now provides us with forecasts of future customer demand using artificial intelligence tools. Predictive analytics are extremely useful in determining the optimum seasonal stockholdings and allows us to prepare suppliers for increases in demand. 

A flexible supply chain can quickly adjust to fluctuations in supply and demand keeping inventory down when interest is buying is low but being agile enough to respond to spikes in demand.

Documentation and administration

Streamlined and slick documentation and administrative processes in the supply chain are a great competitive advantage.  Reducing re-work and duplication, increasing visibility and smoothing communication channels are real advantages.  Supply contracts and service level agreements are often neglected areas that create hold-ups and expensive errors.  Some progressive organizations are using blockchain technology for maximum visibility and security.      

Insource or outsource?

The decision of whether to outsource manufacturing and/or services depends on in-house capabilities. Ideally, areas where competency or capacity are lacking are prime candidates for outsourcing.   Some larger organizations have the capital and resources to manufacture their own products, others will typically outsource their manufacturing to white-label providers.   Building internal warehousing, logistics and distribution facilities is a major undertaking and capital intensive. Successful outsourcing contracts in this category have robust service level agreements and detailed contingency plans. 

Supplier relationship management (SRM)

SRM is a huge topic and ranges from simple tasks such as paying suppliers on time to developing long-term collaborative partnerships with suppliers for mutual benefit and to promote innovation.  Leading companies in SRM such as Nestle, Toyota and Coca-Cola treat key suppliers like collaborators to get them integrated and prepared to take extra steps to ensure quality and speed.

Sustainability

A sustainable supply chain makes long term business sense.  Consumer awareness of environmental and social issues is growing around the world. IKEA is one of many companies that work with suppliers on a variety of challenges, from energy efficiency to sourcing materials responsibly.  Ignoring this trend may create reputational damage that takes years to restore.  

Conclusion

Effectively making use of rapidly advancing technology could be the key to leveraging your supply chain to get ahead of the competition. Difficulties in supply chain management occur due to evolving complexities and interdependencies. Companies that work on achieving continuous improvement through consistently and persistently working on strengthening linkages will drive competitive advantage.  

If you’d like to read additional related content or get involved with thought provoking discussions check out the Supply Chain Pros group – a one stop shop for all your supply chain need


The 6 Stages Of Your Procurement Job Interview

How to you prepare for (and ace!) your procurement or supply chain job interview?

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There is no shortage of general advice available online on how to prepare for and behave in an interview situation, and it’s free. That’s all very helpful, but what about preparing for an interview in supply chain or in a procurement role, how is it different?

1. Before the interview

The basics are the same whatever the role, preparation is vital.  Do research the following:

  • The background of the company, its culture and the industry it is in.  The more information you gather before the interview, the better prepared you will be to answer leading questions during the interview. Be fully prepared to answer the questions “How much do you know about our company?” or “Why do you want to work here?” 
  • The interviewer (or hiring manager).  Who is he or she?  What is their work background and experience?  This will help you find some common ground. 
  • Know your TCO, RFI, P2P, SRM and the rest of the acronyms. Interviewers may use these in conversation. It may unsettle you if you don’t know what they mean.   
  • Make sure you really understand the skills that are required and how much experience is expected. If you don’t quite fit their view of a dream candidate, motivate how you will grow into the role quickly. Think about the types of questions that you can expect and prepare your answers in advance. 

2. At the interview

Job interview formats go in and out of fashion:  you can be asked to do a video or panel interview or even one that includes end-users or stakeholders.  Whatever the format, you need to demonstrate your suitability for the role on offer and how your skills and background will provide tangible benefits for them.  

3. Functional skills

You will probably be asked about your experience and skills in relevant supply chain technology and related tools, e.g. SAP, Oracle, Ariba or other e-sourcing software. You may be asked about direct and indirect categories that you have worked in (make sure you understand the difference) and about your particular expertise in certain commodities or services.  In both these areas be careful not to embellish or over-represent your knowledge or achievements as your interviewer may know a lot more than you do. If you claim that you saved your organization £5 million in spend last year you will need to be able to substantiate it.  Currently, employers are looking for people with specific experience in complex procurement categories. In these types of role they expect candidates to be already familiar with the external marketplace and key suppliers. 

Questions sometimes start with “Tell me about a time when…”, where the interviewer will work through the STAR technique:  

  • The SITUATION 
  • The TASK or problem that arose
  • The ACTION you took
  • What was the RESULT

Prepare multiple examples in advance and rehearse them well so that they tell a story. Be ready for “tell me more”.  Make sure that you demonstrate that you have good critical and analytical thinking skills, are a good communicator, have time management skills, and are flexible, i.e. show that your expertise is transferable to them. 

4. Behavioural skills

Behavioural interview questions are very common in supply chain and are designed to elicit specific and detailed responses about inter-personal and conflict situations which you have been exposed to. How did you handle the issue, what actions did you take and what was the outcome?  Your answers will show that you understand effective ways to deal with suppliers and internal clients.  Listen carefully to any clues the interviewer gives you on what’s important to them so that you can respond by giving your own examples. You need to be able to articulate how you would be able to bring about change and implement improvements seamlessly, where required.

5. Do you have any questions?

An interviewee will almost always be asked this. Understanding how to communicate your interest is very important so have your questions ready.  This is not the time to discuss the remuneration package or benefits that may be offered. Genuine questions about how the company manages its procurement function and how the different elements of their supply chain operate will be welcomed.  If the interviewer is interested in you they will demonstrate it by asking a variation of the following, ‘why our company, why this position and why you?’  This often is your most critical response during the interview process.

6. Where it can go wrong:

Feedback from senior managers and top recruiters says that where candidates fail most is in:

  • Not being fully prepared and having to refer to their CV for details
  • Did not know enough about the company and its operations
  • Did not have the right attitude/did not demonstrate any energy for or interest in the role offered.
  • Could not provide examples or explain how they are suitably qualified
  • And arrived late for the interview!

Displaying a positive attitude and expressing a sense of enthusiasm for the company and the role is an excellent starting point for landing that job. Cultural fit and good inter-personal skills may be the clincher; processes and applications can be taught over time to fulfil gaps in experience. 

Related articles

Is Category Management Still A Career Choice?

Far from the predictions of many, category management is alive and well, but it is changing. Elaine Porteous explores how…

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Contrary to some predictions in the last decade about the demise and imminent death of category management in procurement, it is alive and well, but evolving.  In truth, it is becoming more complicated as third-party spend in the 21st century does not easily fit into historical categories.  There is more overlap and intersection in I.T. services as it merges with telecommunications, marketing services now include internet and social media and packaging is concerned with sustainability.     

Category management’s aim is to segment its spending on third-party goods and services into groups depending on function and end use.  The difficulty in defining category groups has increased due to the overlap between commodities and the rapid innovation in technologies.  Category managers handle more than strategic sourcing. Their role includes creating a category plan, handling supplier relationships and providing continual oversight in the category. 

Specialise in your niche and own the category

It is generally understood that difficult and complex indirect categories pay more.  Indirect spend refers to goods or services that are not directly incorporated into a product or service delivered to a customer, e.g.  I.T., marketing, facilities and professional services.  Experienced category managers can earn £75 000 per annum.    

Why are some categories difficult?  Partly because stakeholders in these categories resist procurement efforts to influence their spend and are protective of their incumbent suppliers.  It can also be because procurement people may be seen to be lacking in the knowledge needed to lead the supplier selection and contracting process.  

Professional services can be a bit of a minefield. Marketing, management consulting, legal and insurance are commodities that have unclear and convoluted pricing structures which take time to understand fully.   

Managing indirect categories requires behavioural skills as well as deep technical knowledge of the category. Aspiring category managers need persuasive skills, empathy and the ability to listen as well as to be decisive when the need arises.  They also need to act as change agents and diplomats.

Don’t try and change the supplier of food catering services without engaging with the users or there may be a riot.   

Information Technology

Sourcing and contracting I.T services is different from any other category. Without extensive experience or formal training, this category is going to be an uphill struggle. The advancements in artificial intelligence (AI), SaaS and blockchain will require constant study and awareness of how to apply new types of applications. Where the I.T. function is mission critical to the company operations, e.g. in banks and insurance companies, procurement and sourcing professionals need to be totally immersed in the category and its commodities which can include: software licences, hardware, peripherals, servers, data and telephony, 3D printing, warranties and maintenance.  Category managers are increasingly being hired from internal and external I.T. departments.

The organisational culture and landscape on the indirect side has many nuances that do not exist on the direct side. The procurement executive will therefore need to traverse the waters of indirect spend with unique strategies to ensure success.

Marketing services

This category requires focus, stamina and a long line in patience. The relationship between marketing and procurement works best when they meet to discuss and agree on sourcing and contracting strategy and when procurement takes over the pesky administrative details.   Traditionally advertising agencies have been the major recipients of marketing spend, some providing a one-stop service, maybe with no contract or service level agreement (SLA).  This is changing; the use of printed matter is diminishing, digital agencies are taking over so there is healthy competition for the overall spend.

See also  Is Marketing Procurement’s Blind Spot?

Legal services

Even though the legal services area is complex and services are expensive, it is possible to build credibility with the in-house legal team by finding out

  1. and understanding what their needs and issues are
  2. which areas have the potential for savings
  3. where better value can be achieved from external legal firms. 

The low-end, routine or commoditized legal services are the easiest to address. By learning the language of solicitors and attorneys you can express your sourcing ideas in words they can understand. Managing supplier relationships with law firms need to be focused on minimising bad behaviours and rewarding and incentivising those who provide accurate, transparent pricing and deliver excellent service and good advice.

Human Resources

HR has a wide remit in many large organizations with the main focus being on people management. Most HR professionals would agree that they don’t have an in-depth understanding of their suppliers’ cost drivers such as profit, overheads, risk and how these impact on return on investment (ROI).  They are beginning to realise the benefits of having their procurement counterparts with them around the negotiating table.  Procurement’s selling proposition to HR is to demonstrate its ability to deliver value by being a source of market intelligence and a guide to best practice. 

Depending on the industry sector you work in, some categories can take on greater or lesser importance. In fast-moving-consumer-goods, packaging, logistics and transport are vital to the success of all food, drink and healthcare companies. In insurance and banking, reliable technology is the key.  

Tips to help you succeed in difficult categories

  • Research the market by benchmarking the pricing of services to  establish the competitiveness of current suppliers
  • Develop a database for each type of service by evaluating current suppliers, their pricing structures and capabilities
  • Re-negotiate and improve the contractual terms and conditions, pricing models and rates on current agreements and/or go to market with a well-thought outsourcing strategy.  
  • Establish what deliverables and technical skills are needed for each type of service so that you can determine which suppliers can provide them
  • Identify incentives to improve relationships with your incumbent suppliers and aim to consolidate your base

There is a growing awareness of corporate social responsibility across most categories. Sustainability is becoming more than a consideration in categories that have the potential to have a detrimental impact on society and the environment. Job descriptions for category managers are already including responsibility for sustainability strategies. 

See also  Where Are All The Great Procurement Jobs?

Procurement Outsourcing – What To Watch Out For

The advantages of procurement outsourcing have been well-documented, the disadvantages – less so. In this article Elaine Porteous outlines how the trend has evolved and minimising the risks associated.

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The outsourcing of procurement tasks started off a couple of decades ago when companies found ways to process orders and invoices more efficiently. It grew and got labelled as procure-to-pay (P2P) and is still a popular solution for managing volumes of repetitive transactions. Tactical procurement, where low-cost/high volume commodities are being sourced is the next favourite area for outsourcing. Lately, procurement outsourcing has expanded into a wider range of activities, even moving into areas such as strategic category management, supplier selection and contract negotiation. Non-core services are the most likely candidates for outsourcing:  HR services, I.T. support, facilities management and logistics. 

According to CIPS’ definition of procurement outsourcing, it can also include “the provision of procurement services and processes within an operation which may involve the transfer of people and/or assets to another company.  Procurement service providers (PSPs) may have a full-service offering taking over the entire procurement function of an organisation.  Other smaller PSPs may manage only one element of a procurement function such as spend analysis or contract management.

According to McKinsey, to make strategic procurement outsourcing a success, companies need to take a highly systematic approach with three basic steps:

  1. They outsource strategic buying only in categories where doing so offers clear value.
  2. They have a precise understanding of the sources of that value and how to unlock it.  
  3. They choose outsourcing partners that have the capabilities to address those sources of value, then define and implement agreements that maximise the chance of capturing potential savings

The choice of a PSP depends on its capabilities, the size and complexity of the supply market and the buying organisation’s relative influence in that market; the expertise and availability of resources will affect the decision.   Outsourcing works best when the ability to manage a strategic category in-house is low.

Trends in outsourcing

There is a growing interest within procurement about outsourcing data-heavy activities such as spend analysis, supplier performance management and tender evaluations.  Tracking of realised savings has always been a headache and a topic of disagreement due to varying methods of calculation – by outsourcing this to specialists there is less room for debate. 

Governance, regulation and compliance is an area that is increasingly becoming onerous for companies, especially in the banking and healthcare sectors and is, therefore, a candidate for outsourcing.  

The outsourcing agreement 

When a decision has been made on what can be successfully outsourced a PSP must be selected in line with in-house procurement policy. This should include normal supplier due diligence to establish the company’s capabilities, including reviewing the supplier’s financial statements to ensure that the business is profitable and the supplier is not at risk of failure.  Next, the basis on which the partnership will work must be negotiated and confirmed.  The relationship needs to be formalised in a comprehensive contract with an enforceable service level agreement (SLA) that defines the rules of the game. Key performance indicators (KPIs) need to be clearly defined. These are the metrics used to measure performance and the calculation of bonuses.   

In the SLA, risks can be minimised by defining:  

  • Minimum acceptable service levels with penalties/incentives  
  • What happens when the PSP fails to deliver? Contingency plans
  • Who owns the data?
  • The PSPs responsibility for data security and confidentiality
  • Who owns the work developed during the contract?
  • What happens when there is a change in ownership of the PSP?

Managing the outsource partner

You have a contract in place and an SLA, what next?   The PSP is like all other key suppliers, it needs to be managed through the entire contract period.  Implementation is often the stage at which the outsourcing project fails. Stakeholders, if not consulted, can be obstructive and delay the process.  The manager’s role is to deliver the service to users, monitor the PSP’s performance, ensuring delivery against the pre-set KPIs.

Advantages and disadvantages of outsourcing

The advantages have been well-documented by the PSPs themselves, the disadvantages, less so.  Among the leading full-service PSPs are Accenture, Capgemini, Infosys and IBM.  The advantages are

  • Lower costs due to PSPs’ economies of scale by aggregating customers’ requirements  
  • Outsourcing low value/high volume purchases frees up internal expensive resources
  • Access to global expertise and market knowledge in categories where there is little in-house capacity or experience
  • Time-consuming negotiations and contracting are managed by specialists

Because outsourcing involves handing over direct control to a third-party it comes with challenges.  These may be service delivery issues, a lack of flexibility and unforeseen management crises at the PSP.  Open lines of communication at all levels are vital to the success of the contract.  Whatever the function being outsourced, the aim is to create a long term partnership that is designed to achieve more than just cost-cutting.  

Cybersecurity – What Does It Mean For Procurement In 2019?

How should procurement professionals be addressing cybersecurity within their organisations and addressing the weak links?

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Google and McAfee estimate there are 2,000 cyber- attacks every day around the world, costing the global economy about £300bn a year.  The widespread adoption of digital solutions for the management of big data is a threat that is making organizations vulnerable to security breaches.   The proliferation of new SaaS products on the market and the use of cloud-based solutions are focusing our minds on how to protect our data and intellectual property.  The growing use of bring-your-own-device (BYOD) is adding to the complexity of defending organizations from attacks. 

Protection from data hackers has traditionally been the responsibility of the I.T. department where it should be taken seriously, although some companies have been inclined to put the issue on the back-burner.  Procurement’s interest in cyber-security is two-fold: 

a) it has to manage the myriad of potential security issues within the supplier community

and

b) it has to concern itself with data security issues within its own operations

Cybersecurity at suppliers  

Cyber-attacks do not always come in through the front door.  Many breaches come through weaknesses in the lower layers of the supply chain:   e.g. importers, agents and other service providers. Hackers, whose main objective seems to be to hold organisations to ransom, can infiltrate any of these layers. 

The weak links

  • Your suppliers’ suppliers are often targeted because they are more vulnerable.   They may have access to important information of yours and only have a very immature approach to data security.  It is estimated that over a third of corporate IT breaches are via third-party suppliers.
  • A lack of awareness among employees about how hackers gain access to systems.  The act of “phishing” which attempts to acquire usernames, passwords and credit card details via email for fraudulent purposes is a widespread activity that preys on peoples trust.   
  • The lax use of BYOD at suppliers can cause major security issues as malware protection and detection on these devices is often inadequate. 

 “Cybersecurity is never just a technology problem; it’s a people, processes and knowledge problem.”

US National Institute of Standards and Technology (NIST)

How to tackle the weak links

  • Due diligence.  Conducting risk assessments on each supplier before contracting will allow you to identify any areas of concern.  Firstly, potential suppliers should be vetted to ensure that they are not on any denied party or watch lists. On-boarding of new suppliers should include asking leading questions about their approach to data security and which protective systems they are using.  Many large organizations are adopting ISO 27001 which accredits them through an auditable security management system.               
  • Access control.   The level of access of each approved user to information needs to be monitored especially when there is any change in the relationship with a supplier.  This could be an organisational restructure or a takeover at the supplier which affects access to a shared system.  The aim is to prevent unauthorised access to data and procedures.
  • Education and training of staff Awareness programs and training staff about their responsibility for data security should be standard practice, both in-house and at suppliers.  Advice such as don’t click on unknown attachments, always use strong and unique passwords, and keep an up-to-date backup is a start. 
  • Notification about breaches   A contract clause that requires a supplier to inform the organisation regarding any security breach that may impact either business should be included in any supply agreement.

Cybersecurity within procurement

Large warehouses  of data are used by procurement professionals to identify cost-saving opportunities through spend analysis within their organisations.  Other files include supplier contracts, financial information and many P2P transactions.  We need to protect the confidentiality, availability and integrity of our information.   Cyber-attacks can be delivered through counterfeit hardware or software that is embedded with malware.  Outsourcing procurement functions with no due diligence or using unreliable and untested software packages can open the door to hackers.  Security gaps can arise due to the incompatibility of legacy systems with the outsourced solutions.  

Remember the data breach at TalkTalk in 2017?  The then CEO, Baroness Dido Harding said,

“There was the IT equivalent of an old shed in a field that was covered in brambles, all we saw was the brambles and not the open window.”

 She was referring to the weakness in their legacy systems.  The firm was fined £400 000 by the Information Commissioner’s Office.

What can we do today?

  • Collaborate with our IT department to regularly monitor systems, frequently update internal policies to create a security fence for the organization
  • Assist suppliers to build a robust cybersecurity plan to strengthen their IT infrastructure and cyber resilience
  • Stay updated on the latest innovations in data protection  
  • Work with suppliers to ensure that their IT systems and infrastructure are regularly updated. Ongoing reviews at regular intervals will help to identify emerging concerns
  • Develop a contingency disaster recovery and continuity plan to accommodate any potential supplier failure, including alternative suppliers. Always have a plan B.

Traditionally, procurement-specific risks just meant price fluctuations, delivery disruptions, supplier failure, fraud and non-compliance but no longer.   

Besides the reputational risks such as environmental crises, unfair treatment of staff and safety issues, the loss or corruption of corporate information can severely disadvantage a business.  The extent of the financial and reputational damage depends on the size of the breach, number and type of stakeholders affected and how quickly and effectively the company acted. 

Stakeholders Are Your Customers. Ignore Them At Your Peril

If you fail to meet the expectations of key influencers, projects will be delayed, will only be partially workable or at worst, doomed.

Stakeholders can and will influence the outcome of your project, especially if they are likely to be directly affected by it. If we fail to meet the expectations of key influencers, projects will be delayed, will only be partially workable or at worst, doomed.  

Who are your stakeholders?

Stakeholders are any of those individuals that can impact your activities by:

  • removing obstacles and championing  your goals
  • by slowing down or blocking your activities  
  • influencing others about your project –positively or negatively

Many of your stakeholders may not initially be obvious.   They can be:

  • End-users of the product or service
  • Line managers, executives and support staff
  • Procurement team members and co-opted subject matter experts 
  • Suppliers and their subcontractors
  • Government agencies and the media
  • Customers and society at large

Why is stakeholder management so difficult?

Stakeholders have conflicting priorities and often are not working towards the same goal. Personal ambitions may trump the company vision.  You may be the messenger bearing bad news or saying no to their proposals. Seasoned procurement people use their persuasive skills to win support from stakeholders.  This can be the difference between success and failure.

Because stakeholders will change over time, we need a systematic approach to identify and prioritize those influencers.  A stakeholder map is a simple analysis tool we can use to identify which key people have to be won over.

A simple shareholder map

This map provides a guideline on how to manage stakeholders based on their interest and their influence:

Figure 1   The stakeholder analysis grid

The Greens

Stakeholders with a high level of influence in your specific project and who also have a high level of commitment and support must attract the most focus.   They are usually easily identified and are easy to engage. They usually include line managers and end-users.  Ensure you continue to maintain their support through good communication and monitoring their needs. These people can be used to influence others.

The Oranges

This is an important group to manage and may include senior management, e.g. CEO or GM. Keep them satisfied.   Increasing their interest or commitment to your project through regular updates can be very helpful.

The Browns

These customers are your supporters. Keep them informed, their enthusiasm may be infectious and they may have more influence in the future.  Less time is needed to maintain this group. 

The Purples

External stakeholders such as the media and government may fall into this group so it is not necessary to spend too much time there. But keep them in the loop and monitor them as they may move into another group!

Identify all key stakeholders and plot them in the grid in Figure 1. 

Steps to follow to ensure success of any initiative:

  • Concentrate your time on working with key stakeholders who can make or break the initiative. Make sure every stakeholder has an appropriate way to participate and offer input.
  • Understand and manage their expectations. Identify any potential adversaries early in the process and manage them directly by allocating key tasks to them. Persuade those people who may not be immediately supportive. 
  • Under-promise and over-deliver.  Think like a salesperson.
  • Keep everyone well-informed and build strong relationships with the people who support the project.  Recognise and reward positive behaviours to preserve the relationship and buy continued support. 

Dealing with difficult stakeholders

The first step is to clearly identify those stakeholders and work out what motivates them and what is causing their resistance. Ignoring difficult stakeholder behaviour is not recommended; take time to immediately identify the cause of their objections and the underlying issues. People want to feel understood and feel that their opinions matter.

Engage directly with the person directly without others present. This leads to more clear and calm conversations. Actively listen to what they have to say and don’t close communication channels because you don’t like what you hear.   Remain fair, objective, and professional, and remember to keep the project objectives within focus. Try to find common ground by asking open-ended questions.  

Why projects fail: communication is the key

Lack of frequent and accurate communication to and from stakeholders is probably one of the main reasons for the failure of projects.   Another is not listening to the needs and concerns of the key stakeholders, both internal and external. 

When to communicate with stakeholders

  • before the launch of a project to get buy-in. Early engagement is important.
  • at regular progress meetings held to keep everyone updated. Report back on progress (or lack of it) and milestones achieved.
  • before implementation to ensure alignment with the process and the proposed solution
  • at the end of a project to establish lessons learned

Stakeholder management is the process that we use to identify key stakeholders and win their support.  We use the analysis grid to prioritize them by influence and commitment. Understanding what motivates them is the first step to getting them on board.    

Best Of The Procurious Blog – Is It Time To Make A Career Move? Mind the gap

When things get bad at work do you find a way to fix it or consider a career move?

The bad days are becoming more frequent, the work is no longer challenging and your procurement career seems to be floundering.   The question arises: what must you do to kick your work life into action?   If you have a general feeling of being undervalued or not being fairly recognised for your achievements, now is the time to take stock. Work takes up at least 40 hours of your week.  Life’s too short to be miserable, this is decision time.

It is unlikely that your current situation will improve much unless there is a radical change in management or strategy.  The options are:

  • Move into a new role at your current employer or
  • Move on to a different employer in a similar or different role 

Assuming that procurement is still the place you want to be, there are some steps you need to take whether you plan to stay with your current employer in another role or move on to new adventures.

Do a personal gap analysis

Take a deep, introspective look into yourself. The aim is to identify the knowledge gaps between the skills you need for your chosen direction and those that you currently have.  What changes should you begin making to prepare yourself for the kind of job you want? As Abraham Lincoln said, “The best way to predict the future is to create it.”   Be realistic about your current capabilities.  Then go and fill the gaps.

Consider further education   

There’s no doubt that further education and continued professional development play a part in opening up opportunities. The reality is that most the attractive roles require some tertiary education or certification, especially in a tight job market. If you are lagging in this area it may be an opportune time to upgrade.   If your current employer can subsidise your work-related studies, take advantage.    No funds?  There are lots of free training available, there’s no excuse.  What about a Massive Open Online Course (MOOC)?

 Learn the new skills

There are roles that didn’t exist ten years ago and those are where experience is in short supply.  The application of I.T. technologies to procurement problems is growing fast:  consider data analysis and warehousing, supplier relationship management (SRM), and procure-to-pay (P2P).   Also, both the public and private sectors struggle with issues of fraud, corruption and conflict of interest. Companies need people who can exercise constant vigilance over supplier risk, governance and contract compliance.

Sustainability issues are placing new demands on procurement leaders and their teams.  “Green” procurement is a growth niche where there is a limited number of experienced applicants and pressure is building on companies to limit their negative impact on the environment.  Focusing on fields that concern you (and the consumer) and those that play to your strengths will deliver the most work satisfaction.

Get a grip on the numbers

Whatever direction you choose, advanced analytical abilities are becoming mandatory.  An in-depth understanding of financial ratios and the triple bottom line can give you the edge over others competing for similar roles.  If you don’t know what macros or what a cash flow crisis is, now is the time to find out. If your current company offers in-house courses that can enhance your computer skills, sign up.

Influence and persuasion

A survey conducted recently by Accenture amongst global CPOs noted that traditional areas of knowledge and experience are less important to success than the ability to develop and sustain high quality internal and external relationships.  Stakeholders can influence your project’s success or failure.  Good stakeholder management just means being able to win support from any and all interested and affected parties such as end-users, subject matter experts and key suppliers.

Attitude is important, that much is clear.  It seems behaviour and demeanour can impact on career progression as much as technical know-how.  Always do what you promise to do.  To paraphrase  J.F.Kennedy,  don’t think about what your stakeholders can do for you, think what you could do for them.

Communicate your successes

Keep an on-going record of what you have done well, e.g. reported cost savings, accolades you have been given, and positive feedback received from internal customers.  This information can be used to enhance your CV.  Don’t be shy to share your successes; it’s a good confidence booster.

Moving employers   

Moving on to another employer or launching yourself as a consultant or contractor may be a choice, or it may be thrust upon you.  Protecting yourself fully from downsizing and “restructuring of the workforce” is pretty much impossible.  Don’t despair. Review your achievements to date, fire up your CV and take yourself to the market.    Sometimes you have to take a step backwards to move forwards.

The best a person can do to rise above the mainstream is to have a good attitude, stay relevant, keep up with trends, communicate well and keep the networks alive.  Sometimes the current environment is not going to deliver the options you need. Then it is time to move on.

Is It Time To Make A Career Move? Mind the gap

When things get bad at work do you find a way to fix it or consider a career move?

The bad days are becoming more frequent, the work is no longer challenging and your procurement career seems to be floundering.   The question arises: what must you do to kick your work life into action?   If you have a general feeling of being undervalued or not being fairly recognised for your achievements, now is the time to take stock. Work takes up at least 40 hours of your week.  Life’s too short to be miserable, this is decision time.

It is unlikely that your current situation will improve much unless there is a radical change in management or strategy.  The options are:

  • Move into a new role at your current employer or
  • Move on to a different employer in a similar or different role 

Assuming that procurement is still the place you want to be, there are some steps you need to take whether you plan to stay with your current employer in another role or move on to new adventures.

Do a personal gap analysis

Take a deep, introspective look into yourself. The aim is to identify the knowledge gaps between the skills you need for your chosen direction and those that you currently have.  What changes should you begin making to prepare yourself for the kind of job you want? As Abraham Lincoln said, “The best way to predict the future is to create it.”   Be realistic about your current capabilities.  Then go and fill the gaps.

Consider further education   

There’s no doubt that further education and continued professional development play a part in opening up opportunities. The reality is that most the attractive roles require some tertiary education or certification, especially in a tight job market. If you are lagging in this area it may be an opportune time to upgrade.   If your current employer can subsidise your work-related studies, take advantage.    No funds?  There are lots of free training available, there’s no excuse.  What about a Massive Open Online Course (MOOC)?

 Learn the new skills

There are roles that didn’t exist ten years ago and those are where experience is in short supply.  The application of I.T. technologies to procurement problems is growing fast:  consider data analysis and warehousing, supplier relationship management (SRM), and procure-to-pay (P2P).   Also, both the public and private sectors struggle with issues of fraud, corruption and conflict of interest. Companies need people who can exercise constant vigilance over supplier risk, governance and contract compliance.

Sustainability issues are placing new demands on procurement leaders and their teams.  “Green” procurement is a growth niche where there is a limited number of experienced applicants and pressure is building on companies to limit their negative impact on the environment.  Focusing on fields that concern you (and the consumer) and those that play to your strengths will deliver the most work satisfaction.

Get a grip on the numbers

Whatever direction you choose, advanced analytical abilities are becoming mandatory.  An in-depth understanding of financial ratios and the triple bottom line can give you the edge over others competing for similar roles.  If you don’t know what macros or what a cash flow crisis is, now is the time to find out. If your current company offers in-house courses that can enhance your computer skills, sign up.

Influence and persuasion

A survey conducted recently by Accenture amongst global CPOs noted that traditional areas of knowledge and experience are less important to success than the ability to develop and sustain high quality internal and external relationships.  Stakeholders can influence your project’s success or failure.  Good stakeholder management just means being able to win support from any and all interested and affected parties such as end-users, subject matter experts and key suppliers.

Attitude is important, that much is clear.  It seems behaviour and demeanour can impact on career progression as much as technical know-how.  Always do what you promise to do.  To paraphrase  J.F.Kennedy,  don’t think about what your stakeholders can do for you, think what you could do for them.

Communicate your successes

Keep an on-going record of what you have done well, e.g. reported cost savings, accolades you have been given, and positive feedback received from internal customers.  This information can be used to enhance your CV.  Don’t be shy to share your successes; it’s a good confidence booster.

Moving employers   

Moving on to another employer or launching yourself as a consultant or contractor may be a choice, or it may be thrust upon you.  Protecting yourself fully from downsizing and “restructuring of the workforce” is pretty much impossible.  Don’t despair. Review your achievements to date, fire up your CV and take yourself to the market.    Sometimes you have to take a step backwards to move forwards.

The best a person can do to rise above the mainstream is to have a good attitude, stay relevant, keep up with trends, communicate well and keep the networks alive.  Sometimes the current environment is not going to deliver the options you need. Then it is time to move on.

Understanding The Shape And Cut Of Procurement Organisations

Elaine Porteous clears up some common misconceptions about the ways  procurement  organisations can be structured, and demystifies some of the jargon…

Sergiy Bykhunenko/ Shutterstock

 Starting a new job can be both stressful and exhilarating. The people are different, the location is strange and the way they work is peculiar to that enterprise. There may be a seven-level procurement organisation chart or a loose, undocumented reporting structure to be navigated.  What is also daunting is the “in-speak”, the specific terminology which may be like a foreign language to you.

Let’s clear up some misconceptions about ways that procurement can be organised, and try and demystify some of the jargon.

An operating model is just the way the procurement function is set up to work.  Most companies start up being decentralised, unstructured and even disorganised until the workload grows.  As the functions expand and mature, there needs to be some form of formalising and centralising of the activities to consolidate the spend. Only then can we expect to make savings and reduce our risk exposure.

Centralised or centre-led?

Centralised procurement does have its benefits. It means more control over suppliers and contracts and it helps drive supplier diversity and corporate social responsibility (CSR) initiatives.  The risk is mitigated and skills development is made easier, expanding capabilities.  However, it can become a very bureaucratic and expensive cost centre. Too much data and not enough information can cause loss of focus and poor service to stakeholders.  People at the centre do not always understand regional and local supply markets and consumption patterns.  If “central” means the US and the region is Papua New Guinea, there may be cultural challenges too.   As procurement organizations move on and mature, over time, many of them become centre-led, taking some time to decentralise personnel and day-to-day operations.

Figure 1: The procurement journey

Image:  www.zycus.com

Wherever your organisation is on this curve, it is helpful to know what it means to be where.  There is no one best structure. The way your organisation works is influenced by the external supply market, the end-users needs and the overall company strategy. You just have to ride the wave.

Centre-led procurement organisations concentrate on defining strategy and policy for both their direct and indirect procurement.  Corporate spend can be fully leveraged on strategic commodities and services which are well-suited for centralized sourcing.  Non-strategic categories not suited to centralized sourcing can be handled by the individual business units or regions.

Centre-led procurement uses a category management structure which supports the rollout of sourcing and contracting plans to business unit and regional level.  The type of set-up is often called a hybrid model.

Category management means the bundling of third-party spend into buckets to extract more value.  The main aim behind category management is to aggregate the internal demand and achieve economies of scale by contracting the best suppliers at the lowest price.  In its best form, it involves an active category manager to roll out category plans, strategic sourcing and supplier management initiatives.

In a centre-led organisation, a global category manager would set the strategy for the category group, e.g. transport logistics, and for the sub-categories (also sometimes called commodities) within that group:  road, rail and air transport, freight forwarding, port activities and courier services.  At regional or divisional level, the category plans are followed and executed locally to achieve the best results for the organization.  This is the ideal but it is rarely implemented in full. Some categories are really challenging. Marketing services, technology and professional fees come to mind.

Cross-functional teams (CFTs)

To be effective, a category needs to be managed using one or more cross-functional teams.  A cross-functional team comprises representatives of key divisions and business units that work together, with procurement, to achieve the best results for the organization in that category or commodity. Although extensively used in strategic sourcing, CFTs are being used increasingly and successfully across process improvement, product development, quality assurance and the assessment of suppliers.    

The benefits are well-documented:  a more robust outcome, transfer of skills and learnings, improved internal cooperation and sustainable relationships.

Global organisations that run virtual CFTs have special challenges.  With the application of innovative methods and up-to-date online technology, it is now easier and more effective.

Whatever the operating model or the make-up of the CFT, the satisfaction of stakeholders and end users is paramount.  A stakeholder is anyone that has a vested interest in the outcome of your project or action.  He or she could be any one of these:

  • An internal departmental executives, manager or end-user
  • Another procurement team member
  • A co-opted subject matter expert
  • A supplier or a subcontractor
  • A member of the media or a regulatory body

Stakeholders are capable of influencing the success or failure of a project.

The model is not cast in stone

As a procurement organisation matures, it is likely that executives will revise and adjust a hybrid or centre-led structure so that it stays aligned to corporate objectives and continues to deliver value.  The best model is always the one that delivers results through open lines of two-way communication and uses processes that are flexible enough to take into account regional and cultural differences.

Where Are All The Great Procurement Jobs? Broaden Your Vision

Looking for a new procurement job? The good news is that there are a whole load available that are yours for the taking… you just need to broaden your vision!

Do you have your eye on an exciting opportunity in international category management, predictive data analytics, or do you have a passion to make sourcing more sustainable?  The good news is that new job roles like these are emerging in procurement and they are waiting for you.  Conventional manual processes are disappearing as we automate routine tasks, even contract management is deemed at risk: artificial intelligence and algorithms are already being used to draw up “smart” contracts.

Where are all the great jobs?

Corporate companies

Traditionally the most desirable careers were to be found in the big multinationals that have mature procurement organizations; this still holds quite true.  Some of the companies in the fast-moving-consumer-goods (FMCG) sector are leading the way in strategic procurement.  Unilever, P&G, Amazon and Coca-Cola are listed in Gartner’s Top 25 companies in supply chain.  Any one of these companies may be a good place to get a foot in the door and gain solid early experience.

Procurement solutions providers and consultancies

With the development of software solutions for procurement functions such as strategic sourcing, contracting and supplier management, many companies are outsourcing some functions to technically proficient service providers.  These problem solvers service a range of industries, locations and functions. Spend Matters publishes a list of the top 50 solutions providers To Know and another top 50 to Watch.   This list includes some consulting firms, both big and small.  Phil Ideson of the Art of Procurement says that this type of experience can be valuable if you want to go back into a corporate leadership role.  He says “I am a believer that procurement is a service provider to our stakeholders and not a function. Being with a solutions provider really helps you experience the need for customer centricity.”

Not-for-profit and Public Procurement 

Public sector procurement is a real job option.  Don’t disregard the experience that you can get from working on big-ticket items and major projects that positively affect your region or your city. It may not seem as cool as working for Apple Inc. but it may be more rewarding.  There is some perception that working for a non-profit organization means a drop in pay, not so.  Love to travel?  Opportunities to work abroad abound in the many divisions of the United Nations, the World Bank and the Red Cross, at market-related salaries.

Should you get certified or get a degree?

Unlike in finance and legal, there isn’t a license to practice in procurement. However, most employers prefer candidates with a least a bachelor’s degree in business or a professional certification in supply chain or procurement. Which one depends on whether your targeted employer has a preference for certification over a formal degree and what your desired end-game is.

1. Getting certified

Many of my colleagues without a professional certification have never felt that that impeded their career growth or work opportunities.  However, in the early stages of a career, it may be useful especially in locations where professional certifications are held in high esteem. CIPS, CAPM, IACCM and ISM are examples of certifications and affiliations that you could follow. In the UK and in Australia the push for certification and affiliation is stronger than in some other parts of the world.

2. Educational qualifications

Formal degrees in procurement are actually quite rare but there are lots of possibilities in supply chain management (SCM), of which procurement is a key element.  Leading employers source their talent from the best-ranked colleges internationally that offer supply chain advanced education and from the top UK universities with registered supply chain degrees.  If you are thinking it is too late to start, it really isn’t.  Many of these degrees are available online. Always take advantage of an offer of financial or other educational assistance from your employer.

Sometimes it’s all about the piece of paper, sometimes it’s about the affiliation.

“If I knew then what I know now”

I asked some mature and experienced colleagues what they would tell their 21-year old self and this is what they said:

  1. Be curious

Soak up everything. Read widely to stay on top of new trends, changes in regulations and advances in technology.   Don’t always accept commonly held positions, beliefs or strategies as absolute truths.  Question what you see and what you hear. You can look at everything with a fresh pair of eyes.

  1. Get wide exposure

Take advantage of any job rotation that you are offered,  opportunities to get exposure to many industries and many categories don’t come along every day.  Be open to change and chances to diversify your skills. Transitioning between functions helps you build your knowledge and helps you to better understand your stakeholders.

  1. Find a mentor

It may be useful to get guidance from someone who has been through a similar experience.  A well-chosen mentor provides advice and helps navigate you through the trials and tribulations of your career.  Gordon Donovan (FCIPS), of Epworth Healthcare, says a mentor can come from anywhere, even another industry.

  1. Ask for feedback (and act on it!)

Actively seek feedback on the things that you do well and things that need improvement. Sometimes it’s hard to take criticism but it can help develop both your technical and behavioural skills.

  1. Network

Networking does not come naturally to everyone but it is worth developing some skills in this area.  Meeting new people is so important because you never know when it’ll be someone who can help you to open doors or change your direction. Tanya Seary is a champion of networking, you can follow her example here. 

6. Job descriptions are not cast in stone

Many advertised jobs that you come across may be cut-and-pasted from descriptions used in previous recruitment activities.  Too many times employers and recruiters look for what they looked for last time, not what they need now.  If you think you would fit their needs, go for it, there’s nothing lost.

What the under 30’s say

Most under 30’s surveyed agreed with the boomers talking to their 21-year-old selves.  They suggested working hard to keep learning and gaining new qualifications and ask lots of questions.  As Christina Gill, one of the “30 under 30” stars with over a decade of experience in supply chain, said, “This is an exciting time in your career. Be open, be adventurous, be a sponge, listen, learn, and take risks in your career.”

A final thought: organisations that focus on supplier collaboration, unlocking innovation and making the best use of their precious data make attractive employers.