Category Archives: Career Management

Best of the Procurious Blog – 3 Ways To Increase Your Procurement Salary

Another day in your procurement job, another day moaning about your unsatisfactory salary… If you want things to change here’s how you take control!

I’ve always said that I’m extremely happy working in Procurement, and there’s no question that it’s great to be doing a job that I’m passionate about.

But no matter how much enjoyment we get from our work – money is always important and a key contributor to our chosen career path.

Of course, you and I would both be happy to double our monthly income; so I thought I’d outline three pieces of advice to help you get there!

  1. Get paid for your value, not your time

Do you have a clear understanding of how your current salary was calculated? Is your employer buying your time or buying your skills?

Many procurement professionals make the mistake of thinking they are paid per working hour. But the main consideration for your employer shouldn’t be  “how hard is this person working?” but rather  “how much value is the person generating for the company?”

So my first piece of advice to you is this: Start thinking about what value you are creating for the company – start measuring it! If you measure your results and your ambitions you have a much stronger argument when it comes to salary negotiations.

Take a look at these two scenarios. If you were to approach your manager to discuss a pay increase, which one sounds more authoritative?

A) I have worked overtime and several weekends during the past six months. I don’t give enough attention to my partner and family. So I think I deserve a salary increase of +20 per cent.

B) I have finalised three major RFQ’s within our category during the past 6 months and  I have reduced prices by 12 per cent per year for our company! I think this performance justifies a salary increase of 20 per cent.

Try to use the employer’s language as in scenario B. Find the arguments and KPI’s which you know they will value the most and think about how you can add influence in these areas. Then all you have to do is impress them with your results!

2. Take more responsibility

Do you enjoy responsibility  or do you avoid it at all costs – letting others make key business decisions for you?

Both behaviors are quite natural. After all, people are different. But ask yourself, what is the main difference between you and your manager at work? Why do they earn a significantly higher salary than you? Many managers have less knowledge and skills than their co-workers and employees, but they are still respected more by the top-executives. How does that always happen?!

The simple answer is that your manager has the responsibility for a much bigger area of the work.

The rule:  greater responsibility = greater salary.

So don’t allow yourself to hesitate when it comes to taking on responsibility. Don’t just wait to be asked, be proactive.

“I heard that our Procurement department plans to run the value stream mapping for Category XYZ. Can I lead this project as I know the processes and steps for VSM?”

“Can I take the responsibility for mapping new suppliers in South Asia, as I already have many business connections there?”

This approach to your work will stand you in good stead to get a significant salary increase when the time comes to negotiate.

Generate profit  for the company

In my experience most organisations consider their procurement department to be the cost centre of the business. Others regard it as a support or service function and,  in the worst cases, they dismiss procurement pros simply as buyers.

But you and I both know that procurement  has an enormous impact on an organisation’s profit.

Whatever your savings are – they contribute to the gross profits of the company. As we say at Future Procurement organisations: “one dollar saved is one dollar earned!”

So how can this knowledge help your salary?

Senior management in your organisation may not understand the value procurement brings to the business and they certainly won’t be familiar with your individual responsibilities and deliverables. They even may not understand the role of Procurement organisation…

But top management of any company cares about profit, this is the language they understand.  So modify your messaging and communicate the extra business profits that are connected to your procurement role.

To sum up; if you want your salary to increase you need to add value to the company, take more responsibility and concentrate on proving the profit you contribute to the company.

Remember; your employer will never care about you more than you care about yourself – it’s sad but it’s true!  Throughout my corporate career, the  biggest salary increases were never initiated by my boss.

Your salary is your own responsibility and if you don’t like it – it’s your problem to fix.

So get out there and fix it!

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.

Best of the Procurious Blog – Five Best Negotiation Scenes In Film And TV

How much can you learn about negotiation by sitting on the couch watching movies? Plenty.

Shutterstock/ Fer Gregory

Want to become a better negotiator? You could diligently read up on the subject or attend some negotiation training courses, but for the couch potatoes amongst us, you might just learn more by watching some of your favourite films.

Negotiation scenes come in many varieties in film. Often they’re in the form of a hard sell (think Leonardo DiCaprio selling dodgy stocks in The Wolf of Wall Street), or a hostage situation (Tom Hanks negotiating for his freedom in Captain Phillips) or other life-threatening situations such as Mel Gibson trying to talk a suicidal man down from a ledge in Lethal Weapon.

But when it comes down to the nuts and bolts of haggling, the following five scenes give illuminating examples of how to win – or lose – in a high-stakes negotiation.

  1. Sticking to your final offer – Nightcrawler (2014)

Jake Gyllenhaal’s character Lou is trying to sell a video of a crime scene to Nina, a TV news manager. Watch for:

  • Lou being willing to haggle down to a certain level, after which he refuses to budge.
  • The power shift in the negotiation from Nina to Lou (aided in part by Lou’s creepy intensity).
  • Lou throwing in a number of extra conditions when he knows he has Nina beaten.
  • Best line: “When I say that a particular number is my lowest price, that’s my lowest price, and you can be assured that I arrived at whatever that number is very carefully.”

  1. Doing your homework before a negotiation: True Grit (2010)

In this Coen Brothers film, 14-year-old Mattie Ross (played by Hailee Steinfeld) shows what horse-trading is all about – literally. In order to raise money to hire a Deputy U.S. Marshal to help her track down her father’s killer, she approaches an auctioneer named Stonehill with two demands – that he buys back the ponies he sold he father, and that he pays her $300 for a horse stolen from his stable. At first, Stonehill laughs in dismissal, but Ross’s perseverance and detailed knowledge of the relevant law wears him down until he yields to her demands – plus a little bit more. Watch for:

  • The moment Stonehill mentions the valuation of the horse and hence kicks off the haggling process.
  • Mattie’s threatening to walk out on the negotiation and go to the law, causing Stonehill to adjust his offer in panic.
  • Best line: “I do not entertain hypotheticals – the world as it is is vexing enough.”

  1. Negotiating across cultures – Snatch (2000)

Warning: strong language.

When boxing promoter “Turkish” and his partner Tommy approach Irish Traveller “One Punch” Mickey O’Neil to ask him to participate in a fight, the prospect seems simple enough. The only problem is, Mickey (played by Brad Pitt) has an almost unintelligible accent. His price is the purchase of a fancy caravan “for me Ma”, and then proceeds to list off all the features he wants included in the deal … while Turkish and Tommy can’t understand a thing. Watch for:

  • Mickey’s impossible-to-understand list of caravan features. The video clip below includes subtitles, but cinema audiences had no such assistance when this film was released.
  • The bewilderment on Turkish and Tommy’s faces as they realise they don’t know what they’ve actually agreed to. The cultural barrier between the Irish Travellers and the other characters in the film is a running theme that goes far beyond the tricky accent.
  • Best line: “Did you understand a single word of what he just said?”

  1. Coercion – Ocean’s 11 (2001)

“Frank”, played by the late Bernie Mac, has been tasked with sourcing the transport needed for the team to undertake the crime of the century. The dealer names his best offer, and Frank appears to accept. So far, everything seems to be going smoothly … until the handshake. Frank extends the grip to a full 60 seconds, apparently crushing the car dealer’s hand while chatting amiably the whole time. The car dealer, desperately uncomfortable and in pain, abruptly drops his price before freeing his hand. Watch for:

  • The range of emotions playing over the car dealer’s face as he realises he can’t free his hand.
  • Frank’s feigned surprise and gratitude when the dealer drops his price.
  • Best line: “If you were willing to pay cash, I’d be willing to drop that down to seven-SIX-teen each.”

  1. The power of silence: 30 Rock (TV series 2006-13)

By simply sitting in near-silence and looking stern, grumpy babysitter (Sherri) is able to make Jack Donaghy so nervous that he doubles her pay for working half the time. Donaghy (Alec Baldwin) comes into the negotiation with his usual swagger, but Sherri’s silence causes him to blabber and rapidly cave. Appalled at his own performance, he confronts Sherri a second time. Watch for:

  • Sherri’s tactical silence when Jack pauses to let her speak.
  • Jack rolling his eyes when he realises how badly he came out of the negotiation.
  • Best line: “I made every mistake you can in a negotiation. I spoke first, I smiled … I negotiated with myself!”

Want to suggest some other films or TV shows with great negotiation scenes? Leave a comment below!

Best Of The Procurious Blog – How To Tell You’re Working For A Psychopath

Psychopaths are present in every workplace. And the higher you go in the organisation, the more likely you are to encounter one.

Working for a psychopath is no holiday. Here’s how to tell if your boss is one, or just a garden variety bully.

A human resources manager is more likely to know them as sociopaths, micromanagers or workplace bullies. I call them psychopaths, not to insult them or even to suggest that they might be chopping people up for fun, but because they share a common set of character traits with all those personality types and also with criminal psychopaths.

1. They are two-faced

A workplace psychopath has a two-faced nature. One face oozes charm and charisma, while the other is viciously mean. They work very hard at flattering those that have power over them, but present a very different face to the people that work for them. To most of their team they are manipulative and controlling. People who work for a psychopath see this face most of the time.

2. They have a pawn

Psychopaths will also recruit a pawn or two. These are people who the psychopath won’t attack, so long as they do their bidding. Frequently it is the pawn delivering the latest piece of manipulation rather than the psychopath themselves. This allows them to put distance between them and their victims and build in automatic plausible deniability if it goes pear-shaped. “No, Terry-The-Pawn was acting on his own initiative, it was nothing to do with me.”

3. They are excellent liars

They are convincing liars and they lie compulsively, often for no apparent reason. The truth to them is whatever needs to be said at that moment. It is whatever they judge their audience wants to hear. And they will have no compunction aggressively assuring you something happened which you know didn’t, often to the point where you will doubt your own memory.

4. They treat employees as dispensable livestock

They treat most people who work for them as dispensable livestock. And this usually causes the cattle (that would be you) unprecedented levels of stress, frustration and fear. When one victim burns out or leaves, they just move on to the next. They damage the health of individuals and the reputation of the organisation without any regret or shame. The workplace under a psychopath is in constant turmoil. Factions are rife, sick leave sky-rockets, staff turnover becomes endemic and productivity drops like a stone.

5. They can’t take criticism

They react to any criticism with aggressive denial or retaliation. If those aren’t options, usually because the critic has more power than them, they will feign victimhood or blame the victims of their actions. Punishment and threats have absolutely no effect on them. They will keep doing things their way, regardless.

In short, they are the classic malevolent workplace bully. This is not to say that all bullying in the workplace is done by psychopaths. Bosses can be mean but it is the frequency of bullying-type behavior that sets psychopaths apart from an everyday horrible boss.
In 2008, UK researcher Clive Boddy from Middlesex University set out to determine exactly how much workplace bullying was caused by psychopaths.

Boddy took a psychopathic checklist and embedded it in a management survey of Australian middle and senior managers. Almost six per cent of the respondents were working with a corporate psychopath as their current manager and thirty-two percent had worked for a psychopath at some time.

A further eleven per cent of respondents were working with managers who showed some psychopathic traits but were not rated at maximum in all categories.

The respondents also revealed how many times they had experienced bullying. Under normal managers, employees encountered bullying less than once a month (nine times a year), but the moderately psychopathic managers bullied employees more than twice a month (on average twenty-nine times a year), accounting for a twenty-one percent of all bullying. If that manager was a psychopath, the employee experienced bullying more than five times a month on average (64.4 times a year) and this accounted for twenty-six percent of all reported cases of bullying.

This means that, as an employee, you can, and probably will, be bullied in the workplace. If your boss is normal, bullying will happen once every six weeks or so. If you are working for a psychopath it will happen once or twice a week, or more. If the behavior described above is happening all the time then your boss is a psychopath. The bad news is that there are not many good options for solving it.

The exit beckons, but while you wait for the right opportunity, there are a number of things you can do to protect yourself and improve your position. Those strategies are the subject of the next part of this series.

Best Of The Procurious Blog – “Hey, Procurement…” The Rise of Chatbots in Supply Management

Procurement tech guru Bertrand Maltaverne explores the benefits, limitations and pitfalls of chatbots in procurement – with some animated examples!

“Hey, Siri,…”

“Alexa,…”

“OK Google,..”

Digital assistants are ubiquitous. We talk to them (Siri, Alexa, Cortana, etc.). We chat with them (Twitter, Facebook Messenger, Skype, WeChat, etc.). They are in our phones, in our computers, and even in our homes. Now they are also making their way into our offices!

Procurement professionals need to start taking notice, because chatbots present a valuable and unique opportunity to provide better services and experiences for internal customers and suppliers. They can also support and assist procurement professionals with their daily activities, becoming virtual colleagues or consultants.

Of course, as with any new piece of technology, it is important not to succumb to the hype and to be aware of the technology’s limitations and constraints before deploying bots everywhere.

Value = Outcomes AND Experiences

The term “Conversational Commerce” was coined by Chris Messina in 2015. In his article, he focused on how messaging apps bring the point of sale to you. He first introduced the idea of assistants that people could interact with to buy things from a company. This is precisely what Amazon did and has popularized with Echo (the hardware) and Alexa (the AI-based assistant that “lives” inside Echo).

The idea of voice or text-based interactions with a bot can be extended to much more than B2C and to “buying things”. The value proposition of such technology is to digitise interactions and conversations while also making technology more accessible.

Here are some of the benefits:

  • Gains in efficiency and effectiveness because of tailored and context-aware interactions. Chatbots remember everything, they know where you are, and can tap into data from all your other applications.
  • Less time and effort needed to learn how to use Procurement technology: conversations replace graphical user interfaces (everybody knows how to type or speak; no need to use explicit and codified instructions).
  • Interoperability and accessibility: users chat in the application or channel they prefer (SMS, Instant Messaging, Skype, Facebook Messenger, Alexa, Twitter, etc.). All bots leverage one common robust back-end system that processes and interprets natural language.

All in all, chatbots contribute to the creation of omni-channel and replicable but unique user experiences for stakeholders, suppliers, and for the Procurement teams themselves. Improving experiences is one of the pillars of the digital transformation of Procurement. In addition to delivering business benefits (savings, risk reduction, innovation, growth, etc.), it contributes to making procurement a supplier/customer/function of choice.

“Every time [customers] interact with a product, a service, a person, or an automated system, they judge how well the interaction helped them achieve their goals, how much effort they had to invest in the interaction, and how much they enjoyed the interaction.” Outside In: The Power of Putting Customers at the Center of Your Business by Harley Manning, Josh Bernoff, and Kerry Bodine

Use Case 1: Guided Buying (Chatbot as an Admin.)

This is a use case that is very close to B2C: a Procurement assistant is deployed to handle demands from the rest of the organisation in order to replace or “augment” traditional eProcurement solutions. Requesters interact with a bot that proposes solutions based on:

  • the needs identified during the conversation,
  • the Procurement strategy (preferred suppliers, preferred items, contracts in place),
  • other factors (purchasing history, real-time availability of products, context, etc.).

The approval process also happens via chat. If available, the chatbot adds the approver to the conversation, creating a group chat. Or, the Procurement Assistant opens a new one-to-one conversation with the relevant approver. Approvers can then ask the chatbot how much of the budget is left and then immediately approve/decline the request without leaving the chat. The same can happen for other process steps (order confirmations, goods receipts,etc.). The assistant initiates discussions to ensure the process is compliant and efficient.

Use Case 2: Operational Support (Chatbot As a Colleague/Consultant)

Chatbots can also be invaluable assistants in operational support. The most straightforward and immediate application: query management. A chatbot can become the single point of contact for internal and external queries about purchase orders, invoices, and much more. Several companies are already successfully using such capabilities in their Procurement portals to provide quick answers to a vast amount of queries, which leaves their teams with time to focus on  more complex requests and value-adding tasks.

It can even go further as the following scenario demonstrates:

Now, let’s compare what happened above with a scenario in the context of siloed organisations and where such technology wasn’t used. The purchaser would probably have learned about the earthquake on his way to work while checking the news on his smartphone. He would only have been able to assess the situation and prepare contingency plans once he arrived at work, losing valuable time. In may organisations this would take hours or even days because access to information is spread across multiple systems. This would result in a very different reaction time compared to the example above, where the cognitive agent reacted almost immediately after the event and prepared recommendations during the night.

Pitfalls and limitations

Relying on conversations instead of graphical  user interfaces has many benefits, especially for the mobile worker or casual user. However, there are limitations and challenges.

Voice-based conversations are the most natural ones and are also the most challenging from a technological perspective, especially in a B2B context. This is due, in part, to the international nature of business. For example, names of people or companies are not familiar words that a chatbot can quickly recognise, and to make things worse, they are often not in the same language as the one used to converse with the bot.

In addition to technical challenges like these that will likely be solved someday, there is a more human challenge: the conversational paradox. It explains why chatbots are still not widely used.  The paradox is that something very natural (a conversation) is done with another unusual counterpart (a machine), which turns the experience into a very unnatural one. So, when asking a chatbot something, the first questions people are confronted with are:

  • what instructions can “it” understand?
  • what words should I use to make sure I will be understood?

This represents  both a significant barrier to usage and a risk for adoption. It is therefore important to design and deploy chatbots with that in mind and:

  • not to use them as the only communication channel (it should be one among many others),
  • not to oversell the technology as being human-like (it inflates expectations and is a guarantee for failure),
  • to provide cues and guidance (like the menus/lists in the examples above)
  • to have a smooth and almost transparent hand-over to a real person if the machine fails to understand a user.

Conclusion

“By 2020, 30% of web browsing sessions will be done without a screen.” –Gartner

Conversational user interfaces are still a novelty, especially in B2B. However, they will become more widely used as technology makes further progress and people get more used to it. So, for Procurement, now is the time to investigate their potential as an additional way to provide a streamlined and personalized user experience both inside and outside of the function.

In addition to  delivering the right outcomes, experiences are also a crucial component of the value that the rest of the organisation gets from Procurement. Customer satisfaction is at stake.

The implementation of chatbots, like any other technology, has to be pragmatic, defined by clear use cases, and should not be viewed as a solution in itself. Chatbots will not solve all of an organisation’s problems, , but they can be used as a means to an end!

Time to learn how to say: “Hey, Procurement…”

Best of the Procurious Blog – Procurement In 7 Memes

They say a picture tells a thousand words. How about a procurement meme?

Okay, millennials. Strap yourselves in, because I’m going to attempt to meme. Is meme even a verb? Perhaps not, but that isn’t going to stop me.

For older readers who don’t really know (or care) what memes are, don’t worry – I’ve got you covered. Whether it’s Bad Luck Brian, Kermit Sipping Tea, or King Leonidas screaming “SPARTA”, I’ll attempt to add a bit of context around the meme before applying a Procurement gripe to each.

1. Boromir Demurs

Rivendell; Middle Earth. The mood is tense. Gandalf has brought together a motley crew of humans, elves, dwarves and hobbits to discuss how best to destroy the One Ring, which has to that point proven impervious to both magical and physical force. A solution is put forward – take the ring to the enemy realm of Mordor and throw it into the volcanic fires of Mount Doom. At this point, the human warrior Boromir makes his most famous speech of the film, beginning with the words “One does not simply walk into Mordor…”

Since The Fellowship of the Ring, Boromir (Sean Bean) has become a meme, trotted out as a retort whenever someone suggests something that’s impractical, unrealistic, or simply a bad idea.

Here’s my procurement take:

Amirite? (Am I right?) This is Procurement 101 stuff – a company that selects its suppliers based solely on the cheapest quote will inevitably run into risk and quality issues. And besides, if that’s the strategy, then you might as well set up an e-auction system that automatically selects the cheapest bidder, then dispense with the procurement function altogether. Which brings us to…

2. Bad Luck Brian

Poor Brian. This high-schooler in his plaid vest and braces never gets a break. The meme generally follows the formula “[Brian does something positive … something terrible happens”]. For example:

“Spends all night studying … sleeps through exam”

“Only Facebook friend is mum …. cyberbullied”

“Wins a free cruise … on the Titanic”

From a procurement viewpoint:

Procurement professionals LOVE robotic process automation. Think of all those humans doing repetitive tasks at your organisation that could just as well be done by a robot. It’s a cost-saving no-brainer, right? Bring in the bots! Great idea – until it happens to you.

3. American Chopper Argument

Stills of row between father and son from the reality show American Chopper have recently become internet hits. The meme format lends itself well to any internet argument – whether it’s a discussion about the best pizza toppings, or a protracted “debate” in an academic journal.

For my text, I’ve taken an excellent debate from the Procurious Discussion section about reporting on Cost Avoidance. Check it out:


4. More American Chopper

I could do this all day … here’s another debate from the Discussion section, this time on Decentralised vs Centre-Led Procurement:


5. Distracted Boyfriend

This has to be my favourite meme of all due to its simplicity. A man walking down the street turns to leer after a woman walking past while his girlfriend stares at him with an appalled look on her face.

In procurement land:

We’re about more than cost savings!! Really!

I’ve heard this sad story again and again. Procurement professionals are eager to show their organisations that they’re more than a one-trick pony. We talk about how we can improve operational efficiency, bring in CSR & social procurement initiatives such as fighting modern slavery, and even generate top-line growth, but it’s incredibly disheartening when the boss (usually a CFO) only cares about one thing… cost savings.

6. Leonidas Goes Nuts

The film 300, a retelling of the Battle of Thermopylae in the Persian Wars, contains a gem of a scene where the Spartan King Leonidas loses his patience after being threatened and insulted by a Persian envoy. The envoy, suddenly in fear of his life, says “This is madness” before Leonidas responds with: “This is SPARTA” – and kicks him down a well. It’s an intense moment, as the Spartans know that the murder of the envoy makes war inevitable.

I’m really not advocating the murder of suppliers, but there are moments when you do have to remind them of the terms of a contract.

 

7. Kermit The Frog looks smug

This meme is particularly useful if you want to be facetious. Kermit the frog, calmly sipping a glass of Lipton tea, has lent himself to many a captioned meme ending with the phrase “… but that’s none of my business”.

As procurement professionals continue to wage their endless struggle against maverick spend, we inevitably have a lot of “I told you so” moments when an unapproved supplier turns out to be a disaster. Along comes Kermit…

Risky Business in Procurement and Supply Management

What sort of fallout can you expect to see from a supply chain scandal? What should you do when a risky event takes place? Tune in to today’s podcast on risk in procurement and supply chain, featuring ISM CEO Tom Derry and Procurious Founder Tania Seary.

Today we’re faced with complex supply chain challenges. In fact, it’s hard to think of an area of the business that modern procurement doesn’t touch, ranging from employment law, to climate change, to human rights.

As the complexity of supply chains continues to increase, so too does the number of issues we need to deal with, which is why supply chain disruption is often quoted as the number one concern of CEOs. They know that supply chain failures can have a dramatic impact on their public reputation – and their company share price.

ISM CEO Tom Derry joined Procurious to discuss how a supply chain disruption can damage an organisation, and what can be done to mitigate the risk.

What kind of fallout is a company likely to see as a result of a supply chain scandal?

Tom: From a Board and CEO point of view, there was an academic study written by a professor out of Georgia Tech a few years back that revealed that if there’s a publicly announced supply chain disruption, that company will experience a lower stock price for at least five years after the event. We’re talking about a catastrophic destruction of market cap and value for companies that experience disruption.

The other fallout is a permanent loss of sales. My 21-year-old daughter makes decisions about the products she buys based on what she knows about the company’s social and sustainability practices. If she hears something about a company that she doesn’t agree with, that company has lost her business for the rest of her life – that could be as much as 80 years of lost sales!

On the other hand, companies that have built up good social equity because of their CSR and sustainability practices don’t tend to suffer the same kind of heavy damage.

What are the common-sense steps to take to ensure your risk management is in order?

Tom: The first thing to understand is this doesn’t require an expensive consultant to run 10,000 Monte-Carlo simulations, give you a probability assessment or sell you a 2×2 matrix.

For procurement and supply management professionals, it’s important to look beyond the first tier of suppliers to where your organisation is really vulnerable – three or four levels down.

You should know every single-source supplier in your supply base, and you should have plans in place for immediately dealing with an issue with one of those sources.

You need to beware of geopolitical risk. If something changes – if an industry gets nationalised or if someone unexpectedly wins an election or referendum – what will your answer be if a scenario like that develops?

Look at the other side of the company. What are the products and services you’re selling, and what in your supply base could put that at risk? We should understand how the activities we are performing help support the business in making its money, and look there for risks that could really disrupt the business. 

How do you minimise fallout from a risk event taking place?

Tom: Wait. In the heat of the moment, it’s a natural human feeling to get defensive when you’re being criticised. An immediate instinct might be to get out there and say that the fault lies with someone else, but that would be a mistake. Don’t give into that instinct to blame, deny and defend. Instead, take a measured view of what’s going on, then accept ownership and responsibility. People will give you a lot of credit for being open, straightforward and transparent about a mistake. If you try to dodge it, it’s going to get worse before it gets better.

Part Five of Tuesdays with Tom is available now. Click here to sign up and hear ISM CEO Tom Derry discuss what sort of fallout you can expect to see from a supply chain scandal and what should you do when a risky event takes place? 

3 Steps To Building A Future-Proof Organisation

Automation, artificial intelligence and emerging technologies are changing our world and redefining the future of work. Organisations need to gear up to manage this transition wisely and understand the new rules of the game.

This article was written by Kumeshnee West

The fourth industrial revolution has the potential to disrupt every industry in every country through large-scale automation, adoption of emergent technologies, big data and artificial intelligence. There are many predictions and estimates on how this will affect labour markets, but one thing is certain – the jobs we do, and the skills we need to perform them, will change, and rapidly.

A McKinsey report estimated that by 2030 at least one-third of the activities of 60 per cent of occupations could be automated. This means that globally up to 375 million people may need to change jobs or learn new skills. A World Economic Forum report predicted that current trends in a disruptive labour market could lead to a loss of 7.1 million jobs, two thirds of which are in administrative roles. And a study by Oxford Universityestimated that 47 per cent of total employment in the United States is at risk due to computerisation, given that automation and computerisation are no longer confined to routine manufacturing tasks. Big data and artificial intelligence are allowing a wide range of non-routine cognitive tasks to be performed by machines.

While this may sound catastrophic, the good news is that while large-scale automation may redefine the workplace it does not necessarily mean we will all be out of a job. Changes in technology also create new jobs and spawn new industries. The challenge is going to be ensuring that workers have the skills they need to transition to different jobs. The fourth industrial revolution poses a risk to job security only in the sense that not managing this transition can lead to greater unemployment and social inequality.

In approaching what lies ahead, managers and leaders should consider the following three truths.

1. Talent will be more important than capital

Klaus Schwab, Chairman of the World Economic Forum believes that “in the future, talent, more than capital, will represent the critical factor of production”. To make sure they are ready for a future that is still emerging, organisations and people need to be adaptable, innovative and responsive. If up to 65 per cent of the jobs of tomorrow don’t exist yet – it is impossible to “train” people in the conventional sense. Rather we need to invest in their essential capabilities.

To ensure we build talent that is capable of mastering change we need to invest in resilient leadership. Leadership skills are not tied to particular jobs or industries and solid leadership development provides the kind of transferable skills likely to be needed in the future. The WEFidentified the top ten skills that will be most needed in 2020 as: complex problem solving; critical thinking; creativity; people management; coordinating with others; emotional intelligence; judgement and decision making; service orientation; negotiation and cognitive flexibility. These essential skills have long been part of most good leadership development, MBA and executive education programmes – and they will need to be scaled up.

2. Education needs to be flexible too

The WEF report recommends that organisations embrace talent diversity, leverage flexible working arrangements and incentivise lifelong learning to best manage the changes ahead. Lifelong learning and executive education certainly have an important role to play in a rapidly changing job market, and these programmes also need to be flexible and adaptable to student’s and organisation’s needs.

Massive Open Online Courses (MOOCs) already offer flexible access to lifelong learning and the number of courses available is rapidly increasing to meet demand. Many perceive the downside of online learning to be the loss of face-to-face interaction, which is still regarded as critical to the quality of education – specifically when it comes to learning and practising the essential skills identified by the WEF. Educational institutions are looking to fix this by offering a mix of traditional and online learning to reskill and prepare for workplace transition. There are opportunities for combinations and blends of one-on-one and group interactions at all levels of learning.

3. The link between education and business is a two-way street

The format of what is being taught needs to be flexible but so does the content.

As the WEF report suggests, education systems need to be re-designed if we are going to tackle the transitions ahead. This entails businesses, governments and educational institutions working together to provide curricula that meet current and future needs. The McKinsey report suggests that governments have a role to play in maintaining economic growth, scaling job retraining and workforce skills development, and providing income and transition support to workers whilst retraining. But they cannot do this on their own.

Educators supply industry with critical skills, and industry has a hand in shaping the talent pool and informing educational institutions of the changes they foresee and the skills they wish to develop. Businesses that invest in long-term partnerships with educational institutions to develop skills and respond to changes in the environment will stand a better chance of building a workforce that is future proof: suitably skilled, adaptable and ready for the challenges that we collectively face. As the African proverb goes: If we want to go far, we need to go together.


Kumeshnee West is Director of Executive Education at the UCT Graduate School of Business. This article was originally published here.

3 Mistakes That Will Destroy Trust Between Procurement And Suppliers

As you’ll  know from your personal life, the most loyal friendships are earned through  experiences, challenges, and good times. So why should be any different with your suppliers?

If you have a vendor who constantly demonstrates great performance and continues to deliver and deliver and deliver…reward them! Give them extra projects or new developments and more business. Don’t continue to pressure them and penalise them, because this relationship might erode over time. Perhaps it could still functional and transactions will happen, but the relationship will be affected as a result.

Here I have collected three typical mistakes that will destroy trust between a procurement organisation and its suppliers.

1. Empty Threats

“Be constructive in your arguments and honest in your feedback…”

This was one of the first lessons I learned from a mentor when I asked about contract negotiations. It’s simple but powerful and it genuinely creates trust.

If you are bluffing –a professional partner will recognise it. And you want to work with professionals, right?

Walk the talk. If you’re claiming that a supplier is offering a better price – be able to prove it.

Making empty threats is either the result of a lack of preparation  or a lack of any decent arguments full stop.

Remember that trust is the base for a good partnership. And fake promises can easily destroy trust.

2.  Continue negotiations after contracts are signed

I have to confess that I’ve done this many times in my procurement career so I understand how harmful it can be.

There is an unwritten rule for sales people that states you should stop selling after the client has agreed to a deal.

The very same  rule should be applied to procurement professionals. We should have the ambition to reach the best deal within our budget and time limits, we should consider risks and potential threats but all of this should happen before we agree the final contract. After the two parties agree prices, terms and conditions of contract, everyone should concentrate on execution.

Normally we set certain deadlines for the supplier selection process and close to these deadlines we can become more and more stressed, losing focus and failing to mention  important details or opportunities. As a result we often finalise the agreement not because we are sure that this is the best deal, but because we are short of time.  And then, after the documents are signed, we attempt to save costs further with the vendor.

Procurement professionals must act professionally in such situations. Simply opening up new negotiations with the vendor will destroy trust, sending the signal that the agreement means nothing to you and that you’ll happily switch to a better alternative whenever you get the chance. As a result, they will also de-prioritise you as a customer and not invest the time and efforts into developing your products.

If you see an opportunity to decrease prices after the contract is signed,  be open and transparent to your vendor. Explain your reasons set the arena for a new discussion and listen carefully. With any luck you can find a solution that suits you both.

3.  Focusing only on price reductions

I like to explore competition in Procurement! Preparing a good RFQ/RFP process and making suppliers fight for your business is great isn’t it?

Doing this process a number of times within the same product group will definitely lead you to a dead end. You’ll reach a threshold where quotation will not bring more savings.  It’s a frustrating moment when there is no more low hanging fruit, no more chances to cut the prices by reverse auction or bidding processes. So now what?

In most cases the extra revenue can be gained in more ways than simply cutting your suppliers’ margin or increasing purchase volumes.

Look into the business relationship, the supply stream and the infrastructure of the business and investigate where we can save costs and do things better, faster and smarter. More often than not, if we really find this momentum and use it to reduce costs, we will get bigger volumes into this business. New projects will come and more development will happen if the relationship is strong and there is trust. This will also result in more revenue coming to both sides – it’s a win-win.

Procurement 2030: Time Enough At Last?

With 41 per cent of procurement professionals expecting there to be fewer procurement and supply jobs available in the year 2030, career longevity will be held only by those with the right skills.

Fans of The Twilight Zone will remember the Time Enough At Last episode, where it takes a nuclear apocalypse before a frustrated bank clerk finally has the time to indulge his passion.

For procurementand supply professionals standing on the brink of the robotic era, the coming wave of automation presents an unprecedented opportunity to spend time on strategic and value-adding activities that are often pushed aside in favour of the tactical workload.

Procurious and Michael Page UK’s survey of nearly 600 global procurement professionals revealed the top three activities that people would spend time on if tactical elements of their role were automated:

1. Increasing procurement’s influence in the organisation

2. Developing team and talent

3. Seeking opportunities to contribute to top-linegrowth.

This result begs the question: Why wait? If these are the three key activities that procurement professionals would like to spend more time on, they should be prioritised today.

Time for a brand makeover

As the profession continues to transform and evolve, the procurement ‘brand’ is a recurring topic of debate at conferences around the globe. Is it still relevant today, and does it encompass the many value-adding activitiesundertaken besides sourcing? Results from thissurvey reveal that nearly 72 per cent of professionals believe ‘procurement’ will still be an appropriate term in 2030, despite the expectation that the rate of change will increase over the next decade.

Re-skill to survive

With 41 per cent of surveyed professionals expecting there to be fewer procurement and supply jobs available in the future, career longevity will be held only by those with the right skills.

Critical thinking, problem-solving and relationship-building have been nominated as the key skills for the year 2030.

What would you do with 42 per cent more time?

Level 1 of this four-part series revealed that procurement professionals spend, on average, 49 per cent of their time on tactical tasks. Survey respondents expect 42 per cent of their overall workload to be automated, which raises the question: what will people do with their new-found time by the year 2030?

The top three responses indicate that procurement professionals would spend more time on tasks that generate value for their organisation

.• Increase procurement’s influence through stronger alignment with the business and better communication to enable engagement in strategic decisions.

• Do not rush the development and recruitment of top talent, even if there is a pressing business need to do so. Spending more time (not necessarily more budget) on talent will allow the development of highly-skilled teams that can drive value for the organisation.

• Seek opportunities to contribute to top-line growth. This often requires creative thinking and a thorough review of end-to-end processes, particularly in mature functions where further savings opportunities are becoming difficult to find.

The automation of tactical procurement tasks in your organisation will not take place all at once, but piecemeal automation is already happening. Be ready to seize the opportunity to drive true value as tactical tasks are incrementally automated.

Automate to humanise

Overwhelmingly, procurement professionals believe automation will enable a greater focus on building strategic relationships. While tactical transactions with the bulk of suppliers in the spend tail may well be 100 per cent automated, productive engagement with strategic suppliers will increase with technology.

  • Apps or web-apps will drive collaborative processes through event triggers and notifications.
  • Less time will be spent arguing about data, with trusted data allowing more time to spend on collaboratively finding ways to build value.
  • Expect to see more personal interaction but shorter meetings, as the tactical discussion and low-level relationship management will already have been taken care of.

Interested In Learning More?

This content-packed report also contains links to relevant thought-leadership from Procurious and Michael Page UK, including videos, blog articles, podcasts and webinars.

CLICK HERE TO DOWNLOAD PROCUREMENT 2030: LEVELS 1 to 4