All posts by Hugo Britt

Paul Dobing of NSW Procurement – Moving The Profession Into A Complex Future

Paul Dobing NSW

One of the highlights of last week’s CIPS Australasia conference was, without doubt, Paul Dobing. The Executive Director of NSW Procurement at the Office of Finance & Services is a familiar figure to those of us involved with The Faculty Roundtable Program, of which he’s a very active member.

Paul’s bursting with energy, and strides up and down the stage rather than standing behind the podium to deliver his insights. He has recently been motivated and inspired (and tanned) by a trip to the Garma Festival in far north-east Arnhem Land and is passionate about Indigenous constitutional recognition.

Paul’s on stage to talk about the future of the profession. He takes the audience through a list of CSIRO’s “Global Megatrends”, including planetary pushback, the pivot to Asia, longer life expectancy and digital immersion. Each of these topics could generate enough material for a conference in themselves, but Paul is making the point that to create competitive advantage for your procurement organisation, these are the sorts of longer-term “horizon themes” you’ll need to be engaged with to support your push into the future. CPOs need to think about what these Megatrends mean for procurement, how we can redesign our models for the future and importantly, what capabilities we’ll need to meet these challenges. Paul points out that just about every audience member is in the midst of some kind of change/transformation program, and asks how we can operate in an increasingly “VUCA” world (volatile, uncertain, complex and ambiguous).

On his own journey to bring his procurement function into the future, Paul has:

  • created a consulting advisory practice for the wider sector
  • created a data and analytics team.
  • introduced a research capability for longer-term thinking, and

None of these reflect “traditional’ procurement functions, but Paul believes they’ll be integral to providing ongoing support to the public sector into the future.

Emerging models:

Rather they viewing change with suspicion, Paul’s enthusiastic about emerging organisations that are disrupting traditional business practises. CPOs, he says for example should be embracing the sharing/collaborative economy and seizing upon the opportunities it creates in this space he has recently been working with Tu Share and Sendle CEO James Chin Moody to identify new models of service a delivery supporting government. We should keep ourselves informed of future trends, work out how we can start to engage with them and make sure we’re well-positioned in that conversation to drive competitive advantage. His advice:

  • Think ahead to the next wave of disruption.
  • Think about how procurement can tap into disruptive models of supply.
  • Build the capability required to embrace change.
  • Shift the risk-averse, rules-based culture traditionally found in procurement teams to a flexible, interpretive culture that can engage with new opportunities.

Hiring the next generation of procurement professionals:

Hiring is increasingly about the values and behaviour rather than technical skills. Members of Generation Procurement, as we like to call Gen-Y here on Procurious, and going to be:

  • Purpose driven
  • Values aligned
  • Diverse
  • Connected
  • Agile
  • Disruptive, and
  • Adaptive

What are you doing to move your procurement function into the complex future?

What Can Art History Teach Procurement Pros About Executive Presence?

Power poses and swagger portraits…

Louis_XIV_of_France

After Karen Morley’s great presentation at last week’s CIPS Australasia conference, I was inspired by her words on how “power poses” can be used to increase your executive presence. Investigation into the topic led me to the authority on this topic, social psychologist Amy Cuddy, whose 2012 Ted Talk entitled “Your Body Language Shapes Who You Are” launched awareness of the importance of power poses onto the world stage.

Cuddy talks about how body language, or “non-verbals” govern not only how other people feel about us, but can affect how we think and feel about ourselves. Mirroring behaviour seen in the animal kingdom, humans make themselves bigger and stretch out when they feel powerful, and make themselves smaller by closing up when they feel powerless. Cuddy takes the audience through a range of high-power and low-power poses, including this great pose dubbed “The Wonder Woman”.

amy-cuddy-high-power-pose

Body language is inextricably linked to power dynamics (or power dominance) and is, unsurprisingly, an important part of gender dynamics. Unconfident, shy, “powerless” people can practice high-power poses until they feel more powerful, with the ultimate goal of faking it until you become it.

A Google Image search of “power poses” makes for entertaining viewing. Alongside Lynda Carter’s Wonder Woman, there’s Frank Underwood from House of Cards leaning forwards with both palms flat on a table, IMF’s Christine Lagarde physically dominating ex-Greek PM Lucas Papademos at a Euro Conference in Brussels, and Beyonce striking a high-power pose on stage.

Power posing isn’t new. As an art history buff, the concept immediately brought to mind the “swagger portrait”, an artwork commissioned by powerful patrons to emphasis their status and dominance. I wanted to share a few of these historic power poses with you on Procurious so you can learn from some of the greatest swaggerers in history, who were predominantly clustered in the flamboyant 16th century. At the top of this article we have King Louis XIV of France (a la “The Sun King”) who isn’t afraid to awe his detractors into submission with the cut of his stockings. He’s joined by…

Henry VIII (1491 – 1547)

Check out that swagger:

Henry_VIII_Ditchley_Portrait_after_Holbein

Elizabeth I (1533 – 1603)

Emulating her father’s swagger with an enormous neck ruff and none-too-subtly dominating the entire globe with her right hand:

800px-Elizabeth_I_(Armada_Portrait)

Richard Sackville, 3rd Earl of Dorset (1589 – 1624)

Proving that shoe pom-poms were back in fashion…

800px-Richard_Sackville_Earl_of_Dorset

George Clifford, 3rd Earl of Cumberland (1558 – 1605)

His lance is longer than yours…

418px-Nicholas_Hilliard_-_Portrait_of_George_Clifford_Earl_of_Cumberland_-_WGA11421

So, if you’re feeling powerless or need a bit of confidence before an important meeting, why not take some inspiration from the 16th century and add a bit of swagger to your power pose.

 

Member Exclusive – Make Your Savings Stick

The Faculty’s Research Consultant, Hugo Britt, announces the release of ground-breaking procurement research exclusively to Procurious members.  

Download the exclusive report on Procurious

Astoundingly, more than 50 per cent of contracted savings are not making their way to the bottom line of Australia’s leading organisations. This troubling disconnect between contracted and realised savings has the potential to undermine the very credibility of the procurement function.

The Faculty’s latest research paper ‘Making it Stick’, is a call to action for procurement teams, CEOs and CFOs to address the fundamental shortfalls that are costing organisations hundreds of millions in unrealised savings.

You can access ‘Making it Stick’ from the  Procurious community feed.

Our report highlights exactly where organisations are coming unstuck in the process of realising savings and provides actionable pragmatic steps that can be followed to ensure contracted savings hit the bottom line.

What we uncovered

Our research, currently available exclusively on Procurious, identified that:

  • 29 per cent of organisations have no defined benefits realisation program for tracking savings
  • 58 per cent of interviewees were unable to estimate the precent of negotiated savings that actually reached the businesses bottom line
  • Only 20 per cent of organisations incentivise their staff on savings delivery beyond contract execution
  • Weaknesses in benefits tracking programs are shared across public and private organisations
  • Significant change management needs to occur before organisations can fully realise the savings they have negotiated
  • There is a lack of definitions and measurements around savings tracking and benefits realisation that undermines procurements efforts in this area

Why you should download “Making it Stick”

This timely and practical research report will enable you to:

  • Understand why organisations fail to deliver on contracted savings
  • Access a roadmap to ensure that your contracted savings hit the bottom line
  • Hear from industry-leading organisations that have got it right
  • Access checklists, tools and measurements in order to define and validate your success in this area

Download our latest research from the Procurious Community feed www.procurious.com/community and make your savings stick.

30 Under 30 Supply Chain Stars

Roundtable photo

This year marks a historic tipping point in US demographics. The Baby Boomers will be overtaken by the Millennials (18-32 year-olds) as the largest living generation, and nowhere will this be felt more than in the workforce. In fact, Millennials will comprise about 75 per cent of the workforce within 10 years. Research by ThomasNet suggests that employers’ perceptions of Millennials need to shift – most manufacturers (62 per cent) say Millennials represent a “small fraction” of their workforce, while eight out of 10 (81 per cent) say they have “no explicit plans” to increase these numbers. At the same time, 38 per cent of manufactures report that they plan to retire in one to ten years. 

So, the answer seems obvious – businesses need to move fast to attract and retain Millennials before they find themselves in the midst of a major talent crisis. ISM and ThomasNet have joined forces to strike a major blow in procurement’s “war for talent” with the 30 Under 30 Supply Chain Stars initiative.

I’m sitting at a press conference with five of last year’s 30 Under 30 winners lined up in front an enthusiastic group containing many of their fellow winners –  in fact, you could say that the future of US procurement is concentrated right here in this room. Today is all about putting a spotlight on the best young talent working in the supply chain to encourage more Millennials to enter the profession, excel like the panellists lined up before us, and tackle the looming demographic crisis head-on.  

What’s more important, in my view, is that the professionals in front of me really buck the trend of negative stereotypes of “brattish” millennials. They’ve all climbed to impressive levels of responsibility for their age bracket and are poised to fill the void as Baby Boomers retire. We have Amy Alpren, Manager of Strategic Sourcing at CBS Corporation; Nick Ammaturo, Director of Profit Improvement and Procurement at Hudson’s Bay Company; Matt Bauer, Procurement Administrator at City of Mesa Arizona; Katy Conrad Maynor, Category Manager, Finished Lubricants/B2B, Shell Oil, and Weslet Whitney, Sourcing Specialist at Enterprise Products. They’re joined by Jami Bliss, Director of Global Procurement Program Management at Teva Pharmaceuticals, who was a nominator for the competition. Each one of the panellists shares with us the impact they’ve already made upon the profession, reeling off a list of combined achievement that would silence even the most vocal critic of their generation.

Following the event I catch up with another 30 Under 30 winner in the exhibition hall. Leah Halvorson is ‎Director of Procurement & Supply Chain Development at Minneapolis Public Schools and very enthusiastic about the award. She tells me that she and the other winners have seen some amazing benefits flowing from 30 Under 30 – her peers have been offered job opportunities, scholarships and celebrity status at ISM and ThomasNet, but most importantly, they’ve had the opportunity to network with each other. Leah herself has had some fantastic recognition at her organisation, with senior executives congratulating her personally and career-boosting recognition in the company newsletter.

ISM and ThomasNet are already looking ahead to the next batch of 30 Under 30 Supply Chain Stars and expect to double the number of nominations this time around. This initiative has won the approval of businesses large and small across the US because it celebrates young talent, attracts more Millennials into the profession and, like the 30 Under 30 winners themselves, it has a bright future.

You need a plan: managing risk in the supply chain

hand_over_the_dice_by_andepangeran-d46c1zy

Increased complexity in supply chains means increased risk, coupled with unprecedented visibility from social media and a lowered public tolerance for disruption – in other words, a perfect storm. For my last session of ISM2015 day two, I’ve come to find out about what supply chain professionals can do to weather the storm and become their organisations’ risk-management experts.

Hannah Kain speaks earnestly and authoritatively, with a dry sense of humour. She’s the president and CEO of ALOM, a global supply chain services provider that has been operating for almost 20 years primarily in the electronic and technology space. It’s headquartered in the Silicon Valley and works with tech, automotive and medical companies – in short, cutting edge players that use Kain to solve their complex supply-chain challenges. Kain’s here today not just to lay out the challenges involved in operating supply chains in the age of social media, but to give the audience some solid and invaluable advice on minimising risk.

The context

Procurement professionals have to navigate more layers, more partners and more regulations than ever before. They’re dealing with globalisation, compressed timelines and increased customer expectations around speeds, prices and visibility. Corporate boards and the public are no longer just interested in what supply chain professionals are doing, but how we are doing it. The reason behind this is that procurement is moving from the back to the front of organisations. Visibility has changed, expectations have changed, along with the nature of communications and global immediacy. We’re not used to this level of scrutiny, but it isn’t going to go away.

Brand risk factors include social responsibility, cultural sensitivity, cybersecurity (40 per cent of data breaches happen through the supply chain), personal conduct, customer service, ethics, regulatory compliance, sustainability and, of course, quality. It’s important to understand that we’re all stakeholders in our organisations’ brand, from the board of directors through to shareholders, customers, suppliers, the community and employees.

Social reputation

Millennials are very concerned about the social reputation you have as a company. Kain’s blunt observation that “if you have a poor brand reputation, you have a hiring problem”, made me think of the NSA and its recruitment woes after Edward Snowden.

An example of a well-executed risk strategy was Adidas’ enforcement of its workplace safety policy in 2014. The company drove standards aggressively amongst its Asian suppliers, issuing 66 warning letters, dumping 13 suppliers for non-compliance and rejecting 104 new suppliers over safety concerns. No doubt this was a costly and difficult process but the flow-on effect is a greatly improved public perception of Adidas’ social responsibility, and of course a lessened risk of supply chain disruption through accidents in the supply chain.

Ensuring regulatory compliance is now a significant part of a procurement professional’s role. Kain praises some of the laws that have been passed recently in the US, making the point that rather than seeing regulations as a headache, CPOs should embrace them as a well-structured way to minimise risk. The Conflict Minerals law, for example, exists to ensure raw materials are not sourced from the Democratic Republic of Congo, where rebels are using indentured labour and channelling the revenue to fight a brutal war. US public companies are required to trace the origins of their metals all the way back to the smelter level – in practise this means auditing as many as six levels back down the supply chain.

Similarly, if you sell over $100 million of product in California, you have to certify that no child labour has been used in your supply chain – a very high standard to meet. As with Conflict Minerals, it’s a huge but worthwhile task to audit an entire supply chain. The real headaches start, however, when your company has two suppliers of a product to avoid disruption, or even three – this means the size of the auditing task is doubled or even tripled. In consequence, CPOs are now concentrating their supply base, often to a single trusted supplier. These regulations really delve into the “how” rather than the “what” of supply chains and illustrate Kain’s point about unprecedented transparency.

Retouch-ce_HannahKain277-hi

Kain divides risk-management strategies into two categories; preventative and reactive. Both are equally important and I soon learn that risk-management is a lot more complex than I’d thought.

Preventative risk-management strategies

  • Preventative strategies are best for stable industries, public companies and high-profile organisations with good alignment, a culture of planning, strong conceptual corporate supply chain staff and reward planning.
  • Put in place a SCOR (Supply Chain Operations Reference) model: create objectives, KPIs, measures, targets, KRIs, loss tracking initiatives. Assign numeric value to disruptions.
  • FMEA (Failure Mode Effect Analysis) method: identify failure points and causes, predict the potential frequency of failure, assign numerical probability and severity factors resulting in a Risk Priority Number (RPN), document your mitigation strategy and response actions.
  • Manage based on data: establish a dashboard and a supply chain event management system with alerts and pre-alerts on the state of your suppliers.

Reactive risk-management strategies

  • Reactive strategies are best for fast-moving, smaller and innovative companies with a culture of agility, resourcefulness, entrepreneurship. These organisations reward resourceful fire-fighting and focus on minimising disruptions that have occurred.
  • Have a communication plan on social media: the response should come from senior management level. Acknowledge the problem, know the facts, be truthful initiate a solution and define escalation actions.
  • Poor reaction: Lululemon’s reaction to customer complaints on social media about transparent fabric was to blame the issue on customers’ weight, rather than taking responsibility for the quality. The result? A social media storm, sending the stock price tumbling 15 per cent in one day, followed by a two-year recovery process.
  • Good reaction: In response to reports on unsatisfactory working conditions, Apple’s CEO regularly visits Chinese iPhone suppliers to meet with employees, management and government officials.

Kain’s eight tips for putting out fires on social media

  • Prepare for the worst – have a plan
  • Take responsibility
  • Put consumer and work safety first
  • Respond quickly, sincerely and truthfully
  • Be real – personally respond and take it offline if possible
  • Respond privately to personal inquiries
  • Fix mistakes expediently
  • Arguing with social media users is always a bad idea.

Kain concludes with a reminder that your supply chain and brand are intertwined. Risk is always present and disruptions are inevitable – you need to be both proactive and reactive to minimise and deal with events as they happen.

Founded in 1915, the Institute for Supply Management (ISM) is the first and largest supply management association in the world. A not-for-profit association with 47,000+ members and 140+ affiliated organizations around the globe.

The ISM Mastery Model: what is it and how does it work?

A bold move to standardise roles on behalf of the profession.

The ISM Mastery Model

Standardisation. The supply chain profession is crying out for it, but it’s very difficult to achieve. If you’ve ever worked with procurement teams from more than a handful of organisations, you’ll have seen that people don’t speak the same language when it comes role titles and the competencies they entail. It’s day two of ISM2015 and I’m attending a press conference with some of ISM’s top brass – Thomas Derry (CEO), M.L. Peck (Senior VP Programs and Product Development), Cecilia Mendoza (Director Education and Training) and Tony Conant (COO). As the cameras zoom and flash, Derry clears his throat and announces his organisation’s biggest initiative of the year so far: the ISM Mastery Model.

This year ISM celebrates its 100th birthday and is using this milestone to create a model that will drive standards into the next millennium. ISM has plenty of experience in this area – they’ve been the hand at the tiller of the US supply chain profession since 1915, setting the standards and moving the professional boundaries as the responsibilities and expectations of procurement professionals grow at an incredible pace. As Derry says, “Procurement has moved so fast we’ve almost outstripped the ability to have formalised career structures.”

So, what is it?

The ISM Mastery model represents ISM’s bold move to standardise roles on behalf of the profession, with the goal that the model will become an integral part of the hiring process and career development for supply chain professionals. The model was built by drawing on ISM’s own experience over 100 years in the sector, including 50 years as the USA’s leading provider of supply chain certification. Two dozen supply chain professionals took part in validating the thinking behind the model. It creates a crystal-clear career path for young people, or rather a number of possible career paths by detailing the competencies required and how they can be achieved. The model is scalable and configurable to different companies’ needs, and surprisingly, it’s free.

Here’s how it works: the model is organised into 16 major competencies; namely business acumen, category management, corporate social responsibility, cost & price management, financial analysis, legal, logistics management, negotiation, project management, quality management, risk, sales & operations management, sourcing, supplier relationship management, supply chain planning, and systems capabilities & technology. There’s a mix here of core or “hard” competencies, and what we traditionally call “soft” skills, such as negotiation. Derry comments that it’s time to change this label to “critical skills” to reflect the importance of hard-to-learn competencies, as you’ll absolutely need these skills to advance in modern-day procurement.

The major competencies are then broken down into highly detailed sub-categories, in what Derry proudly calls “the world’s greatest collection of job descriptions”. The detail is superb, laying down in the plainest language what is required to master that competency. Take business acumen as an example – ISM has determined that procurement professionals will need to come to grips with no fewer than 10 sub-categories, ranging from business intelligence to strategy development. The model then lays out the expectations for these sub-categories at four different career levels – essentials, experienced, leadership and executive leadership. That’s 40 detailed competency descriptions under business acumen alone. The final piece of the puzzle is found on the website – I click on the competency “business acumen”, the sub-category “change management” and the “essential” experience level, and I’m directed to the ISM certification programs (online courses, podcasts, articles, seminars and more) that will equip me with this skill.

Who will the Mastery Model benefit?

  • Individuals – build your career path, identify the gaps in your knowledge and create a business-case to request training or personal development.
  • Managers – map out the skill-set of your team and pinpoint the exact training required to fill gaps. Create a clear roadmap for ongoing investment in training. Lock in key checkpoints for career advancement using this model.
  • Global organisations – use the ISM Mastery Model to raise your decentralised team to common levels of proficiency.
  • Private equity firms – use this model to assess the procurement functions of your portfolio of companies.
  • Recruitment organisations – use the Model to help identify the right candidates and speak the same language across every procurement organisation.

The Mastery Model is impressive, and my only concern is its sheer size seems overwhelming. Derry points out, however, that although a huge amount is expected of the modern procurement professional, we can only do so much. People can use this model to create a career path into an area of specialisation – for example, I might want to begin my career with a generalised “essential-level” skill-set, but concentrate on specialising in legal as I gain the upper reaches of the model.

The launch of the model has some interesting implications for ISM. Derry talks about the data they’ll be able collect, such as tracking a surge in interest in a particular competency in a particular industry. ISM can then research the reasons why and adjust their training programs accordingly. Derry also stresses that the model is adaptable and is expected to change over time – if procurement has altered so much between 1985 and 2015, just imagine how different the roles will be by 2030.

This model makes personalised growth possible. Having a clear roadmap and standardisation will help accelerate the development of younger teams and will be of immense benefit in attracting and retaining talent. Check it out at www.instituteforsupplymanagement.org.

ISM2015: 3D Printing and what it means for procurement

This article is part of a series about Hugo’s visit to ISM2015 in Phoenix, Arizona.

3dprinting

3D printing has been around for 35 years – that’s a lot longer than I’d realised. I was a bit puzzled by this, as to my knowledge people have only been talking about the technology for five years or so. Eric Miller of Phoenix Analysis and Design Technologies tells me that he’d been trying to get the press to pay attention to 3D printing for 20 years, but it wasn’t until “some idiot in Texas printed a 3D plastic gun that blew up in his face” that people finally started paying attention.

I’ve chosen this session to get myself up to speed about the technology basics and try to understand what it’s going to mean for the procurement profession. Miller talks about a “revolution” in prototyping and manufacturing. He says a lot of people are excited by 3D printing but warns against regarding it as a magic box. These printers aren’t the transporter from Star Trek made real, they’re not going to bring every off-shored job back to the US, and they’re not simply about pushing “print” and getting a part – there’s a lot of work that goes on before and after the print. What they are good for, Miller says, is making prototypes, low-volume and custom parts, and tooling creation. They’re a fantastic way to enable low-volume distributed manufacturing – for example, if I create a prototype plastic toy in Australia, I can simply send the computer model to my company’s multiple plants all over the world so they can print exactly the same product.

Why is 3D printing such a big deal?

  • It’s equivalent to the leap from the printing press to desktop printing. A 3D printer means we no longer need tooling or specialised machines to create things.
  • You no longer need to be a manufacturing expert or own lots of equipment to create an object.
  • The industry is growing fast: there’s been 27.3% compound annual growth in the industry over 26 years, 33.8% from 2012–14. This is counting industrial systems only and doesn’t take into account hobby printers (yes, people have hobby 3D printers in their homes).

How does it work?

First of all, you create a mathematical representation of a solid object (a computer model). Miller shows us a mathematical model of a teapot in a CAD or “faceted” (triangle graphics) file. These models can be created by the user or downloaded, then you send it to the printer to make a solid “printout” of that object. The layered manufacturing process begins – the printer takes the mathematical model, its computer slices it into multiple thin layers and the “hand” builds up the object one layer at a time. It can cut the layer, deposit the layer, glue the layer, harden the layer, fuse the layer and more. Miller encourages us to think of this in contrast to the usual way of manufacturing – forging, extruding, machining, moulding and casting.

Different technologies

This was the cool part of Miller’s presentation. In my ignorance I thought there was only one type of 3D printer, but he rapidly ran through no fewer than eight different technologies, namely:

  • Layered Object Manufacturing (LOM) – described above. This was the printer type on display at the ISM2015 exhibition hall.
  • Stereolithography (SLA) – the first commercially successful technology, involving a fairly nasty chemical that hardens when exposed to an ultraviolet laser.
  • Fused Deposition Modelling (FDM) – plastic is extruded through a heated nozzle like a glue gun.
  • Binding: clear or coloured glue is printed onto a bed of powder – powder types include plastic, sand, gypsum, metal and ceramic.
  • Polyjet: prints layers of liquid photopolymer which is then cured with a UV light. Can jet multiple materials in a single print but requires constant upkeep or clogs after every use.
  • Selective Laser Sintering (SLS): uses a laser to sinter particles together and uses powder to support. Great for large, durable parts.
  • Direct Laser Melting (DLM): like sintering, but more powerful. Uses laser to melt particles together and can use an electron beam (ARCAM). Very high uptake in the aerospace industry.
  • Direct Energy Deposition: blows powder into the focal point of multiple laser beams (very cool).

Miller notes that many executives are pushing their engineers and supply chain experts into 3D printing, and advises that you don’t just rush out and buy a printer. Do your research, get advice and find out which printer is right for your organisation.

What’s the future hold for 3D printing?

This is where it gets really exciting. Miller pictures large-scale 3D printers that could create on-demand emergency housing in developing countries or disaster relief, body parts (scaffolding for stem cells and laying down tissue) and personalised medicine such as printing orthopaedics (this could happen today but insurance companies won’t pay for it). He imagines a 3D printer in every school and one at every neighbourhood copy centre. We’ll have 3D printed clothing, 3D printed food, nano-scale devices, and more.

Advice for supply chain professionals dealing with 3D printers

Miller stresses that the first thing to remember is that it’s really no different from any other manufacturing process, with the same rules and requirements applying. This means that supply chain professionals need to establish quality and traceability standards, which can be difficult without understanding the 3D process, planning for it and controlling it. He advises that engineers may try to use this technology to bypass procurement, as parts will be made at the point of use rather than in a distant factory. Scheduling is a big issue, with time needed before the print to prepare the mathematical model and ensure the product has a professional finish afterwards. To be cost-effective, 3D printers need to be run near full-utilisation (i.e. continuously), which will need careful planning.

One foreseeable problem caused by 3D printing is the theft of intellectual property. If a company was able to steal a mathematical model of a branded product such as a Disney toy, this would be a major IP breach. You’d no longer have cheap copies of branded products on the market, but the exact same product printed identically. Miller talks about a Phoenix golf-club manufacturer who hired PADT to create the mathematical representation of a new golf club design, and sent along a security guard to watch the entire process and ensure the file wasn’t copied or leaked. Miller feels that firearms printing isn’t really an issue – it means there will be more unregistered and untraceable firearms on the market, but it’s not as if this isn’t already a problem in the US.

As the session ends I pull out my phone. One of the nifty ideas in play at ISM2015 is the use of QR code feedback cards that you can scan with your QR reader and rate the session. Miller gets top marks.

Founded in 1915, the Institute for Supply Management (ISM) is the first and largest supply management association in the world. A not-for-profit association with 47,000+ members and 140+ affiliated organizations around the globe.

An action-packed week ahead at The Faculty

It’s grand-final week at The Faculty. The team has been working towards this week for months – there are whiteboards all over the office covered in scribbled plans and brainstorming, the printer has been running almost continuously and the atmosphere here is at fever-pitch. It’s the week of the 8th Annual Asia-Pacific CPO Forum, a 2-day event where we’ll be hosting no fewer than 56 of the region’s top CPOs, with a collective influence over $180 billion spend.

How to be a great boss

But that’s not all. This week will see no fewer than six major events, namely the Future Leaders in Procurement Forum (FLiP) followed by the Future Leaders’ Dinner, the National CPO Roundtable Meeting, the CPO Forum itself, an executive breakfast with The Hon. Jeff Kennett, and the CPO Forum Gala Dinner – the networking event of the year if you want to mix with the who’s who of procurement in the Asia Pacific.

The events run over the next three days, and attendees have been arriving at Melbourne Airport to be greeted by typical May gloom – overcast with a threat of rain, and temperatures dropping as low as six degrees tonight. No matter, though – we’re prepared for the usual witty comments about our weather from Sydneysiders and other delegates from the sunny north, and we have such an action-packed program lined up that there’ll be no thought of stepping outside the event venues until the end of each day.

I’m going to cover the events through a series of blogs, bringing you the big ideas, themes, news and surprises from the next three days. There’s so much happening that it’ll be impossible to cover it all, so I’ll be sending you the highlights, along with the key take-outs from my colleagues and the attendees. Lisa Malone is here representing the team at Procurious, and she tells me to keep an eye on the hashtags #CPOforum15 and #FLiP15 @TheFacultyHQ.

So, what’s happening today?

There are two major events happening concurrently today, catering to two sets of attendees in very different stages of their careers. At Melbourne’s Park Hyatt Hotel, 32 delegates are gathering for the Future Leaders in Procurement (FLiP) forum. Who are they? They’re category managers, procurement analysts, sourcing specialists and other role-holders from organisations all over the region, and as the name of the event suggests, they’re the region’s future leaders of the procurement profession. Nurturing these top-performers and giving them every opportunity to develop their leadership capabilities, define their career paths and expand their professional networks is an absolutely key part of the much-discussed “war for talent”. The very fact that these 32 rising stars are in attendance today is a fantastic reflection on the organisations they represent – these companies have recognised and rewarded their most talented individuals by making the time and resources available for them to attend. That’s a big deal, when you consider the frenetic pace of modern procurement careers and the rare chances we get to come up for air, focus on ourselves and consider what’s ahead.

The FLiP delegates have a huge day ahead. They’ll be learning from some of the nation’s leading CPOs including Keith Bird (QLD Rail), Andrew Ordish (AMP) and Cindy Dunham (Fortescue), along with experts on the human side of being a leader (team-building, trust-building and understanding customer mindsets) – Dave Lourdes (Evolving Human Potential) and Dan Gregory (CEO of The Impossible Institute and a regular on ABC’s Gruen Transfer). Other big names include Holly Ransom (Chief of Staff to the NAB Wealth Chief Executive and one of Financial Review’s 100 Most Influential Women), who will challenge delegates to smash through their comfort zones and practice big-picture thinking. Laurel Papworth (Forbes Top 50 Social Media Influencers and Educator, UNSW) will guide the attendees through the critical role of social media and its power to drive deeper market insights and foster supplier innovation.

Meanwhile, here at The Faculty headquarters, the biggest players in the business are arriving for the National CPO Roundtable Meeting. The Roundtables for Melbourne, Sydney, Brisbane and Perth meet on a quarterly basis, but this gathering is the only opportunity in the year for all 26 attendees to meet as a group. They’re here today because they recognise the immense opportunities offered by networking with their cross-sector peers, the benefits gained from procurement market intelligence and the unparalleled power of collaborative learning. I’m privileged to be sitting in on their meeting today and I’m aware that up-and-coming procurement professionals such as those gathering at the FLiP forum would give anything to be a fly on the wall in this room. In fact, we’re confident that when the time comes, a number of the FLiP attendees will one day take their own places at this meeting, and that’s very exciting.

The CPOs will be sharing their challenges for the financial year ahead and exploring the critical issues facing them individually and collectively. They’ll be hearing from The Faculty’s Founding Chairman Tania Seary on The Big Ideas Summit that was recently such a success in London, and from Braam Uys (Rio Tinto) on his “Iron Fist in a Velvet Glove” approach to supplier relationship management. We’re expecting some provocative ideas to come out of the group discussions, and looking forward to those “a-ha!” moments where one CPO is able to provide a solution to another’s challenge.

Coming together

So, the two meetings today have different agendas but there are certainly some common themes that will be tackled by the two groups – leadership, embedding change, raising the profile of procurement and, most of all, networking. The most exciting part of the day, for me, will come at 4.00pm when the CPOs wrap up their meeting and walk the two blocks to the Park Hyatt to offer the FLiP delegates a CPO Mentoring Masterclass. By this point of the day, the “FLiPpers” will be bursting with new ideas, inspiration and excitement about taking their learnings back to their organisations. They’ll get the opportunity to bounce these ideas off the CPOs, or perhaps seek advice on their greatest challenges, or simply discuss their vision for a stellar career path in procurement.

As exciting as the day ahead will be, I have to keep reminding myself that it’s only a preliminary to the main event ahead – the CPO Forum. But I’ll save that for another blog. The CPOs are coming through the door, so I’m going to get a coffee and settle in to find out what the future holds in store for procurement in the Asia-Pacific.

 

 

 

 

ISM2015: Somebody brought jazz to an exhibition hall…

This article is part of a series about Hugo’s visit to ISM2015 in Phoenix, Arizona. Today Hugo discovers that Talk Radio and Jazz music have found a home on the exhibition floor…

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So, it turns out that it does rain in Phoenix after all. The storm started while I was trundling through the city on the light rail to my hotel just north of downtown, and was at its heaviest by the time I alighted. I didn’t have a chance of staying dry and was soaked to the skin before I’d made it even half the distance. And I really do mean soaked to the skin – sopping shirt, pants, shoes, socks, even the papers in my pocket turned into a pulpy mess. I hurried on, praying that my bag would keep the water from reaching my laptop (incredibly, it did – thanks Crumpler), and sloshed my way into the hotel foyer to be greeted by gales of laughter from the staff behind the front desk. “Man, I’d hate to feel the way you look,” said one wise-cracking security guard.

Anyway. Dry and warm now, and ready to write. The first thing I noticed when I walked into the conference centre this morning was a jazz band in full swing, just like the conference itself. As expected, the crowd was much thicker than yesterday, the stairways and escalators jammed with a slow-moving mass of people. I visited the press room and met some lovely media experts, namely Mike Scott of MCCI Integrated Marketing, followed by Jennifer Shore of ThomasNet and Erin Vadala, Sadie Smith and Dawn Ringel of Warner Communications. To my foreigner’s ears, I thought Dawn introduced herself as “Don” but it’s just those pesky differences in accent again (I’d pronounce it “Dorn”). Don/Dawn invited me to two exciting press conferences (more information to come soon) and I walked out feeling I now had plenty of support and a home base at the conference.

Walking the exhibit hall floor

Downstairs, the wraps had come off the exhibit hall and delegates were pouring through the doors. I spent every spare minute today wandering around the hall, overwhelmed at first by no fewer than 120 exhibitors showing their products and services. I found my way to the pile of bagels and huge vats of Starbucks coffee at the centre of the floor to fortify myself before making my way through the aisles in a methodical manner.

There is such a wealth of information to be found at these exhibitions and I quickly gave up trying to collect all the documents and samples on offer. Some of these companies are offering similar products and competing for the delegates’ business, but one of the first things I noticed was the huge range of services on offer. From travel management to security services, ERP systems to research offerings, credit and staffing agencies, fleet management, universities, media companies, risk management solutions and more. I came to a stop at the booth belonging to PADT Inc. (Phoenix Analysis and Design Technologies), where I goggled at the 3D printer like a country bumpkin seeing his first escalator. Eric Miller, a 3D printing guru, had a rapidly-growing pile of plastic gizmos sitting on the counter that the machine was churning out – little ISM2015 badges, plastic gears and something that looked a bit like a Rubik’s Cube. I decided then and there that I would attend Eric’s session that morning to try to understand a little more about the technology.

I’d noticed a couple of middle-aged gentlemen wandering around in gaudy yellow jackets, black shirts and yellow ties yesterday, and discovered them sitting under a sign for “Manufacturing Talk Radio” in the middle of a live broadcast. They were interviewing one of the exhibitors who was eager to get the word out about his company, asking him questions in that deep, booming voice you only hear from radio folk who’ve spent decades talking into a microphone.

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As I walked past the displays, the exhibitors would catch my attention and wave me over to tell me about what they do and what’s on offer. There are so many companies here, most of which I’d never heard of back home apart from the very biggest players. I was particularly impressed by a demonstration given by Kristin Carty of ThomasNet, a very famous name in US procurement. ThomasNet is the modern incarnation of Thomas’ Register of American Manufacturers, a 34-volume buying guide offering sourcing information for thousands of products. It was first published in 1898, meaning that my friendly host Kirsty could point with confidence to 117 years of sourcing and supplier discover knowledge passed down through her organisation. It’s lucky they’ve gone digital since the nineteenth century because ThomasNet now has 700,000 US and Canadian suppliers in its database, split into 60,000 categories. The magic is in the search tool, where Kirsty showed me how to qualify suppliers by location, ownership type (diversity) and quality certifications. Each supplier has a detailed information pack available at the click of a button, including product and capability catalogues, line cards, 2D and 3D CAD drawings, case studies, white papers, photos, videos, news releases, key contacts, brands distributed or manufactured, financial information and more. It’s free to use and it’s in suppliers’ best interests to be on the ThomasNet database and to provide as much supplementary information as possible to help buyers make their choice. I’ll be meeting with ThomasNet again tomorrow as they’re one of the sponsors and key drivers of the “30 Under 30 Rising Supply Chain Stars” initiative – but I’ll save that for another blog.

As I hurried off to the 3D printing conference session, I was again struck by the buzz in the hall. All around me, people were networking, chatting and laughing, yet underneath the friendly atmosphere I was aware that the exhibitors were locking in some major agreements worth untold amounts with those delegates who had the authority to make a deal on the spot. For some, the exhibit hall floor is the focal point and the major reason for attending the conference, with all of the educative sessions an added bonus, while others may see things the other way around.

Discover more about the Institute for Supply Management (ISM)
Hugo works for The Faculty in Melbourne

ISM2015: The human factor in Total Cost of Ownership

This article is part of a series about Hugo’s visit to ISM2015 in Phoenix, Arizona. Today Hugo listened to Thomas J. Kull, Associate Professor of Supply Chain Management (Arizona State University) discuss behaviour under uncertainty with the Total Cost of Ownership (TCO) model.

Total cost of ownership

I attended this session for two reasons – a) this talk was marked as “essential” level, and b) I’d pretended to know what TCO was recently in a discussion with a senior consultant at the office, so this was my chance to find out.

Thomas Kull researchers behavioural and risk issues in the supply chain, and has recently turned his attention to minimising uncertainty in the TCO model. In other words, he’s interested in the human side. And there’s a big human side – due to the estimation involved, there are a number of points of subjectivity that are necessarily part of this process.

Kull structured his presentation around a typical TCO model before exploring modes of socio-psychological influences and their implications for practising TCO.

The typical TCO methodology is to try to boil down all the ramifications that go along with a certain spend item to a hard dollar figure. It is then used to determine and compare alternatives. This figure should be captured before you acquire the spend item or venture into a relationship with the supplier. To capture the ramifications of using the item, purchase price, acquisition costs, usage costs and end-of-life costs are estimated using the following steps:

  1. Process mapping and TCO categories
  2. Subcategory elements identification
  3. Cost element measurement
  4. Data gathering and cost estimation
  5. Cost timeline mapping
  6. Present value determination.

There are costs involved before the item is acquired: the costs of the negotiation process, the system necessary to put in place, extensive contract review processes, the management structure needed for managing the relationship. There are a lot of estimates here, and Kull notes that we don’t usually bring crystal balls to the office with us, so judgement, experience and knowledge are essential.

Kull presented a typical TCO Model example for buying computers that has a dollar figure down to a very exact number (two decimal places), and demonstrated how full it is of values and judgements. He advised that CPOs should be suspicious of an exact dollar figure and always ask to be shown where the guesses are. Some systems give ranges because they know there’s a lot of uncertainty. He noted that of all the cost categories, Usage Costs are often the bulk of the pricing and also the bulk of the subjectivity.

Kull then took us through a brief run-down of social psychology at different levels with some fascinating examples for each – person-centric, team-centric, organisation-centric and society-centric. Each level had uncertainty or ambiguity that can potentially result in inaccurate estimates and inappropriate actions. Some of the behaviour included:

  • Evaluability bias – the tendency to weight the importance of an attribute in proportion to its ease of evaluation, meaning people devalue certain elements because they are too hard to evaluate. Also leads to higher risk perception and risk avoidance.
  • Group polarisation. Kull ran through studies that demonstrated the dangers of “group think” – people in a group tend to get carried away and take a decision to the extreme, resulting in a very high or very low cost estimate, but never the middle-ground.
  • Decision norm. Managers will often prefer to use their gut feeling despite evidence presented to them, and 50% of companies are structured to prevent the effective use of analytics to manage this. Decisions can be made on an intuitive versus a rational basis.
  • Dimensions of culture. Some cultures have a high level of assertiveness (take the “just do it” US stereotype) while others have a high tendency towards uncertainty avoidance. High assertiveness has the benefit of giving people greater control over an outcome, while high uncertainty avoidance leads more collective responsibility, system and tools.

Kull also pointed out that while we do a TCO for comparisons’ sake, people often “have a decision made before they have to make a decision”. Perhaps unintentionally, they add bias because they want a certain result.

So, what’s the solution? Kull had some ideas but also put out a call for procurement organisations to help advance his research into this topic. He suggested:

  • When using TCO, be relative and comparative – not absolute.
  • Smart global players adapt to local culture, let their systems adapt and don’t try to take a generic approach.
  • To fix group-think, ensure you have diversity of opinion within your TCO team – this is where a devil’s advocate (contrarian) plays an important role.
  • Use 3rd party or secondary data for triangulation.
  • Get to know the potential biases in your TCO and embrace them.

Kull concluded by stressing the importance of people in the TCO process. By its nature, TCO makes the people who are part of it very valuable. If we were just evaluating quotes, we wouldn’t need supply chain professionals with MBAs – it’s the judgement, experience and knowledge that are critical to making those subjective estimates.

Well, that’s it from me for today. As I mentioned above, tomorrow is looking to be a massive day for ISM2015 – I’ll be meeting my fellow members of the press, joining a media conference, and of course attending some more of the fascinating conference sessions.