Category Archives: Generation Procurement

5 Must-Have Attributes of Successful Procurement Leaders

Not all successful procurement leaders have the heady designation of Chief Procurement Officer (CPO). Forget the title, it is just a label. What is important is that for any person to lead a procurement organisation, he or she requires a basketful of skills and abilities.    

leaders

The good news is that no one person in a leadership position in procurement is in possession of all these skills. Most technical skills, such as strategic sourcing and contracts management, can be learned over time through training and experience. The jury is still out on whether behavioural traits, like the ability to lead teams and communicate effectively, can be developed.

Many recruitment advertisements ask for attributes using undefined phrases such as “good communicator”, “visionary”, “innovative”, “collaborative”, without knowing what they really mean. Here are five main attributes that procurement leaders need:

1. Ability to Drive Change

Many mid-sized organisations are grappling with the transition from a tactical function within the Finance Department, to a strategic function within the supply chain. The main objective will continue to be cost reduction, sometimes combined with or expressed alternatively as value creation.

Managing change is difficult. It needs a firm hand and a strong will, while being calm under pressure. The ideal person to manage the transformation may be a new hire from another industry, or a seasoned executive from another function in the business. What is important is that he/she has a track record of influencing top management and internal stakeholders across all functions.

Dapo-Ajayi

Dapo Ajayi, CPO at AstraZeneca, came into procurement management from the sell-side of the business. She has paid her dues, having worked in a variety of senior marketing and branding roles in multiple countries over a period of 10 years.

2. An Affinity for Leading People

It is generally accepted that a collaborative and participative style is a preferred trait. Although traditionally successful, an autocratic approach now doesn’t work, particularly with the under 30’s. Retaining top performers is a constant battle.

Leaders will spend a fair portion of their time on competency development and building teams, as well as understanding what subordinates want and need from their managers to perform well. Because cross-functional teams are established features of best-in-class procurement organisations, leaders also need to nurture non-procurement members and earn their trust.

3. Talk Less, Listen More

For many CPOs, one of their goals is to gain the trust and support of their main internal customers or stakeholders. The key to understanding their problems is to listen intently and absorb their concerns without making knee-jerk assumptions and providing instant solutions. The desired result is to develop open relationships with peers and provide workable solutions for their users in line with corporate objectives.

The successful leader will develop a high level of skill in influencing the more difficult stakeholders and persuading them of the value that professional procurement adds.

Opening two-way communications, across all available channels, can increase cooperation and support from peers in other functions or divisions.

4. Global View, Local Focus

It is becoming increasingly important for procurement leaders to have had global business exposure. This can either be from working in virtual teams or preferably by having completed international assignments. Progressive firms are looking for those with process-driven experience, often in similar sized companies from other countries.

When recruiting from outside, people from management consulting firms, and those with re-engineering experience within the supply chain, are regarded as attractive candidates. Know global, think local.

5. Expertise in Procurement

Last, but not least. To have any credibility with top management, internal and external stakeholders and subordinates, leaders need to have some or all of the following knowledge and experience:

  • Category Management – By understanding the concept of leveraging spend across multiple commodities to deliver cost savings and create value, the leader who has shown results this way will be ahead of the competition.
  • Problem solving – Our prospective leader needs to be able to focus on the root cause of an issue and devise and test various possible solutions.
  • Procurement technology – A familiarity with the relevant available systems and tools will provide opportunities for speeding up and automating some routine functions or even outsourcing them.
  • Negotiation skills – Everyone has some experience of negotiation in their everyday lives. Upgrade those skills and get as much practice as possible.

What is likely is that you did not make the decision to become a leader in the procurement function, but guess what? Here you are, ready to launch! Opportunities are emerging for new types of leadership roles that did not exist a decade ago. Find one that suits you.

Is Procurement Ready for the Mobile Revolution?

The Mobile Revolution is firmly upon us, but procurement seems to be behind the curve when it comes to adapting. Why is this?

Mobile Revolution

Download GEP’s white paper on the role of procurement in the mobile revolution here.

“In all my time in procurement I have never seen a procurement person using an app.”

This was a quote passed to me by a colleague who was discussing our mobile procurement software strategy with the prospective customer.

You might be forgiven for thinking that this was some sort of dismissive statement, indicating perhaps an underlying Luddite tendency, “We’ve never used procurement software like that before so don’t see why we should start now”.

But, as it turns out, quite the reverse was true. This particular comment was made by someone enthusiastic about the prospect of a different way of employing technology, and the subtext was really, why is procurement so far behind the mobile revolution curve?

Procurement Inertia

This is a fair point. Human Resources and Sales Operations have been blessed with state-of-the-art technology solutions for some time. SaaS, and now Cloud, are de rigueur for our colleagues elsewhere in the business. But procurement still largely lumbers along with an online/offline hybrid of on-premise systems, spreadsheets and email.

As the quote implies, the inertia in procurement is not a result of lack of innovation or drive amongst the community. There is certainly a desire for a better, more efficient means to execute many of the processes and tasks encountered on a daily basis by the procurement professional.

The lag in evolution of the use of procurement software is largely a result of the legacy of direct materials management and ERP systems. Direct categories are so mission-critical that the systems used to handle planning, inventory and production are fine-tuned and locked-down to make them robust. But this in turn makes them inflexible, and the business becomes totally dependent on them.

When indirect categories are procured using the same systems, this intractability becomes a hindrance to progress and innovation. However, the ERP companies have no real interest in breaking the mould.

Technological Change

Expecting a sea-change for indirect procurement to come from that direction is probably in vain.

Decoupling the indirect categories to take advantage of up-to-date procurement technology solutions is a start. Inevitably, this requires deep thought and the investment of considerable brain power, but the results can speak for themselves.

New levels of efficiency, innovation, opportunity realisation and, of course, savings can result directly from the adoption of a new way of working with procurement software.

In a sense, that quantum jump of improvement can result solely from a procurement software system being simply better than the legacy system. Certainly, smart, professional individuals are able to force old-fashioned and outdated processes into something workable. But unleashed from such restrictions, those same people can really start to motor.

The Mobile Revolution

Mobile, app-based technology is a part of that picture. The only reason our guest has never seen a procurement person using an app is because the procurement software industry itself has been mired in the same inertia and legacy of on-premise solutions.  Well, most of the procurement software industry.

Mobile technology is going to have a huge impact on business-to-business operations and procurement is a key part of that. To find out more about state-of-the-art procurement software visit www.smartbygep.com.

GEP have shared a white paper on procurement’s readiness for the mobile revolution with the Procurious community. Download it at gep.procurious.com.

The Power of Networking

Networking is a breeze thanks to the proliferation of social media platforms out there, but when it comes to networking in the flesh, some of us freeze. Here’s how to handle it like a pro and make the most out of the opportunity. 

Networking-Event

Depending on your point of view, networking events can either be viewed as a waste of time, or present a huge opportunity for procurement professionals. While you may not always be in the mood for heading out to a networking event, there’s no denying that a good reliable network of contacts is various industry groups is paramount.

Sydney PR professional Catriona Pollard says some people are a little nervous about networking because they’re not entirely sure what is expected of them.

“Bear in mind that networking isn’t about going in to the centre of a room armed with a megaphone and blindly talking about yourself. Networking is about building relationships, not just promoting what you do. Remember, people are more likely to do business with people they trust.”

Facilitate the Introductions

Focus on building relationships and think about how you might be able to help others. For instance, if someone you’re talking to is struggling with AdWords and you know a great contact, you can introduce them. This will pay back in kind, Pollard says.

“It’s as simple as asking a series of open questions so that people talk about themselves, she says. Get the ball rolling by asking how their week has been and what they’re doing on the weekend, and go from there,” Pollard says.

Also be sure you’re turning up to an event that will provide you with maximum networking opportunities.

Think about it from a marketing perspective to consider who your audience is and whether you want to align with peers or potential business targets. If you’re more likely to pull out at the last minute, set yourself some networking intentions to get along to one event a week, or month. Also set some intentions about the event, such as having five good conversations and exchanging business cards, or meeting at least one person you want to have a follow-up coffee with, Pollard says.

“You need to apply some strategic thinking to find the events that will best meet your own business targets. Look up the website and look at their past events, the type of audience the event usually attracts, how many people usually attend, the style of the event and who’s hosting it, Pollard says.

Importance of Networking Diversity

Janine Garner, CEO of The Little Black Dress Group agrees.

A like-minded networking event limits the breadth of conversation, she points out. Ideally, you want to be in a room with a diverse network that consists of people with differing levels of expertise, age, gender and experience, she says.

“Lawyers sit in a room with lawyers sharing their legal experience from the industry of law. CEOs play golf with CEOs, fashion industry PR experts mingle with other fashion industry PR experts.

“Imagine instead, the colour of the conversation if instead you had lawyers, accountants, creatives, athletes, marketers and business owners discussing the various solutions to a problem. Imagine the different perspectives shared, the varying insights, the depth of conversation that would stretch thinking and push perspective wider,” Garner says.

Meanwhile, remember that going along with a friend isn’t a good idea, because you’re more likely to spend the entire event catching up rather than networking.

Leave Your Comfort Zone

People are very open to approaches when you’re alone, because everyone is generally in the same boat at a networking event. This can play to your advantage, points out the managing partner of Brown & Chase Talent Acquisition & Advisory in Australia, Nerissa Chaux.

“Attending events alone also pushes you out of your comfort zone and you don’t waste the opportunity by spending the entire event chatting to your friends,” Chaux says.

She’s attended hundreds of events, and says you can get the best out of networking by making sure that you’re attending events where people will generally be similarly-minded and your interests align, she adds.

“Also, arrive on time. It’s always great to be the first one at an event, as you have the best opportunity of meeting everyone who comes through the door.”

Also, don’t wait for others to introduce themselves, Brent Duffy, director of Sydney leadership consulting firm, Maximus International.

“Be genuinely interested in others. It should be an equal 50/50 conversation. Treat the event as if your CEO was in the room, and see it as an opportunity to learn and hear about different perspectives rather than trying to gain quick wins for yourself, Duffy says.

“People love to share their learnings. Asking for advice demonstrates humility, your ability to listen and be open minded,” Duffy says.

“It’s more important to be an attentive listener who comes across as authentic and trustworthy, rather than someone who speaks candidly or excessively about themselves or their business. True listeners are rare, and people will remember you for this,” he says.

Remember the Follow-Up

The follow-up is crucial to ensure actually attending the event was worthwhile. This can take many forms, depending on the connection that you’ve had.

Janet Culpitt has been networking as a small business owner of www.focusonwealth.com.au for 16 years, and now teaches others how to get the most out of networking.

She recommends connecting on social media the same day of the networking event. Also check out any other social media groups they’re involved with, and request to join those if they’re relevant to you.

Culpitt will choose to send an ecard, a handwritten note, send a text message or sometimes she will make a phone call to their office to leave a message of thanks for talking the other day with their receptionist.

“Emails are fine, but they’re so common these days that I like to mix it up with other communication tools.”

Stop…Millennial Time!

The Millennials are here and there is nothing you can do to stop them. Those born between 1982 and 2000 have surpassed the Baby Boomers in sheer numbers and are now the top consumers globally.

citizenM-Hotel-Millennials

Hospitality is one of the most challenged industries when it comes to ‘Keeping up with the Millennials’, as it is typically a very traditional industry and change isn’t exactly its favourite word. Hotels in particular have been doing the same things, in the same way, for years now. They know change has to happen but more often than not they are quite uncertain as to what that change might be.

Marriott International for instance has gone from producing high-thread-count bedsheets to a YouTube Web series aimed at entertaining younger travellers. They also went on to buy Starwood Hotels & Resorts in a $12.2 billion deal because of its strong presence in the lifestyle brand category. W Hotels (part of Starwood) is all about edgy design, gourmet food and trendy public spaces — all features appealing to the Millennial traveller.

Redesigning for Millennials

A keen focus and demand for the latest technology, public areas with high speed WiFi for both work and play, as well as clever loyalty programs offering instant gratification, are all key to the millennial consumer.

“Millennials aren’t so interested in staying in their room, but congregating in compelling spaces with great design, music and a unique point of view,” says Jason Pomeranc, CEO of SIXTY Hotels. It’s why hotels like ACE and CitizenM are doing so incredibly well. They are first and foremost utilising their non-room space and creating inviting, cutting edge design hubs of interaction.

From major chains to small independent businesses, hospitality companies across the world are redesigning properties, spending a fortune on new technologies and even using Facebook Messenger for their Customer Service communications. It’s what Hyatt Hotels have done recently. In fact, there is a lot you can do from the app if you plan a stay at the Hyatt: check availability, make reservations, enquire about the view and even order room service.

How the Major Players Take Action

The reason for all this commotion – in the USA alone, more than 1 in 3 workers are Millennials, which amounts to some 83.5 million people. “They are becoming the earners, the spenders, the travellers, and importantly, the workers,” remarks Tina Edmundson, Marriott’s global officer for luxury and lifestyle brands.

Here is how a few major players are taking action based on this research:

  • Marriott launched Moxy and AC Hotels specifically with Millennials in mind
  • Best Western unveiled Vib, a chic urban boutique hotel
  • Hyatt premiered Hyatt Centric, an affordable lifestyle hotel
  • Hilton will open Canopy next year in Iceland. Each subsequent hotel will be inspired by the local community in everything from design to food and drinks

“By 2025, these guys are going to make up three-quarters of the workforce,” says Guy Langford, vice chairman and U.S. leader of travel, hospitality and leisure at Deloitte. And this is the one aspect the industry still isn’t facing. Most of the back office operations have not changed in the past 10–15 years. For Millennials, each day at work is like going Back to the Past…The heavy use of paper, spreadsheets and antiquated software makes adoption within the Millennial workforce sector very low.

This in turn affects staff retention and therefore drives staff costs ever upwards. Offering Millennial staff the opportunity to continue their digital, one-click habits at work by implementing technology heavily focused on User Experience (UX), is an absolute must for productivity.

“We have to understand what impact they’re going to have in 10 years’ time,” says Langford, “so changes made now, for both the Millennial consumer and the Millennial employee, will see huge ROI.”

Smart Cities – Revolutionising Public Procurement in Barcelona

Barcelona – a city of churches, tapas and endless Gaudi landmarks – boasts an intriguing procurement initiative that is fundamentally changing public procurement methodology. 

Sagrada-Familia-1100x688

The concept is new and the way changes are being made is a stroke of genius. Traditionally, public procurement initiatives have looked something like this:

  1. Determine the problem
  2. Determine a solution
  3. Develop a scope of work containing detailed specifications as to how the problem should be solved
  4. Go to market to see who can meet your specification.

Decision-making is generally carried out within the four walls of a government building and leads to nothing more than a race to the lowest price point between two or three large suppliers.

Turning Public Procurement on its Head

Barcelona has completely flipped this process. Rather than telling suppliers what they want, they are simply outlining problems that are present within the city (like bicycle theft or potholes in the road) and asking the public to come up with innovative ways to solve them.

By opening civic problems up to the cities entrepreneurs, Barcelona is leveraging a vast pool of innovation and creativity that resides within its city. The following quote by CityMart‘s (the organisation behind this initiative) CEO, Sascha Haselmayer, sums up the approach brilliantly.

“City governments need to get out of procuring by specifying the solution they want. They can’t possibly have enough knowledge to do that well. What they should do is specify the problem they want to solve and show metrics on what success looks like. And then allow the market to inspire them to find the best solutions.”

As well as suggesting product solutions, applicants to the BCN Open Challenge are encouraged to challenge current city regulations and services in order to address six of the city’s key civic problems. Essentially, the canvas is blank and creativity, freethinking and innovation are encouraged.

The response to this initiative has been astonishing. Since Barcelona published its six city challenges online, the initiative has received over 50,000 views and more than 100 official submissions. CityMart stated that a benchmark number of views for public procurement contracts of this nature would normally be around 7,000.

Boost for Small Business    

In a country whose economic woes are well documented, this initiative provides a vital lifeline to Barcelona’s small and medium sized organisations. CityMart claim that 98 per cent of all ‘open procurement’ projects listed on it’s website are awarded to small and medium sized organisations.

This is a significant contrast to traditional public procurement tendering practices; where long lists of specifications and pre-requisites along with protracted contract award cycles, rule out all but the largest and most established suppliers from winning public contracts.

When you consider that city and community spending globally accounts for $45 USD trillion a year (yes that’s right…TRILLION!), you begin to get an understanding of the impact this sort of initiative could have for small businesses across the world.

An Engaged Community

It’s not just small business that benefits from the new model Barcelona has implemented. The project is making huge progress in improving community engagement. The city defines its problems in conjunction with its citizens, encourages these citizens to suggest solutions, and then uses tax payer funds to provide a work space from where these problems can be solved.

If that’s not effective community engagement, we don’t know what is. The project’s tagline is ‘Open for business. Open for innovation’ and it certainly holds true.

While opening a city’s problems up to the public certainly encourages innovation, community engagement, and supports small business, it’s important not to overlook the financial benefits these projects can create.

Global consultancy firm McKinsey has estimated that city governments can reap savings of up to 10 per cent by opening up procurement contracts and leveraging innovative community based problems solving.

Don’t tell your suppliers specifications…ask them for solutions

All procurement teams can learn something from the work that is happening in Barcelona. Procurement professionals could all benefit from being a little less prescriptive in telling suppliers what it is they want. The power is in admitting that these teams alone can’t possibly come up with the best solution to every business problem they face.

But how can professionals possibly know what they want when they don’t know what’s out there? By admitting their ignorance and opening up problems to more people, it is possible to leverage the vast creativity and innovative power that lies within communities.

So move your discussions away from specifications and prescriptive statements of work, be more creative and stop telling people what you want and start asking for solutions.

Passion from the Podium – 7 Speaking Tips for Procurement Pros

Apparently, the old underwear trick doesn’t work anymore.

Tania-CPO-Forum-14May14

Last year my son confided in me his nervousness about making a speech at his school assembly. I shared the old tip “pretend they’re all wearing just their underwear”. He replied, “Mum, that’s even scarier!”

And he’s probably right!

Public speaking is one of the most terrifying prospects we mortals face.

In my experience, there are just a few essential ingredients to becoming a screaming success on the stage. Here are my top public speaking tips for procurement professionals.

1. Talk about what you love – A lesson I learnt very early in my career was to only talk on topics you really know well, are comfortable with, and – ideally -passionate about.

Let me return to my (then) 8-year-old son’s school assembly presentation. He insisted that his topic was “Piranhaconda” (which, in case you missed it, is the sequel to the much better known “Sharktopus”). Both are B-grade (at best) movies that involve a lot of terribly clichéd, semi-clad, screaming women and tough guys with guns/missiles. Get the picture?

At the risk of being personally embarrassed at his selected topic for this highly competitive, academic audience, I encouraged him to talk about what he loved…(a movie about crazy hybrid animals) and he did a sterling job. Barely referring to his notes, he spoke with passion and was rewarded with a glowing review in the weekly newsletter (phew!).

My point here is, that no matter what your topic, if you talk about something you know and love, you are going to do a much better job. Your audience will be so much more appreciative if they feel passion coming from the podium.

So, spare the time to really think about your topic. Uncover and share where your real enjoyment is generated from. It may not be the technical details of your new eProcurement system or contract management process, but more about how you managed your team, and managed the change.

2. Also talk about the BAD stuff – A stalwart of my inner-circle procurement community is Santos’ CPO, David Henchliffe. He’s always encouraging The Faculty’s Roundtable members to share “when things go wrong”.

The quote “we learn from our mistakes” could not be truer. A mistake shared is a community lesson learnt. Everyone benefits. Sharing your failures also supports your authenticity as a leader. If you can show your vulnerability and humility you become a lot more accessible to people. Plus, let’s face it – nobody’s ever going to believe that your project/learning process was as perfect as some presenter would have us believe.

Tell your audience you overcame adversity – tell them how your number one supporter stabbed you in the back, tell them how your funding floundered, complain about moving goal posts, how your supplier stalled at the gate – your audience will love it! Why? Because (of course) this is their world too!

3. Write it down. That’s right – commit the whole darn thing to paper or screen! Why? Because it’s the only way you can guarantee you have really worked through your thinking. Many years ago, I remember hopping onto the stage with my dot points, confident in my subject matter, only to make a less than optimum impression when I ‘um-ed’ and ‘ah-ed’, circled back on previous points, and then took 200 words to say what I could have said in 20.

Writing out your whole speech gives you the opportunity to really think through your structure and how you want to effectively make your points. You can make your dot points from there and throw all the detail away once you’re clear about your speech.

Of course, the other MAJOR advantage of committing your thoughts to paper is that you can then fashion it into a blog, post it immediately on the day of your speech (ideally – exclusively on Procurious!), and encourage people who connect with or follow you to read and reflect on your thoughts. In this way, not only are you communicating to those in the audience, but you are also ‘amplifying’ your views through social media. A very nice ROI on your time!

4. Jettison the Jargon – Like you, I have sat through way too many procurement presentations that are strikingly similar in both their content and delivery. If we are going to individually and collectively ‘spice it up’ and enthuse our profession, we need to create a bit of a stir with our language and choice of vocabulary.

Why?

Because people stop listening when they hear repetition. You need to keep them listening by using different words and terms that make them think about what you are saying.

5. Make it Visual – Story-telling is now a well-accepted formula for successfully communicating a message. Use it! Kill the PowerPoint – it sends your audience into a semi-comatose state where they are more focussed on the timing of your next slide change, than what you’re actually saying. Use emotive and unusual photographs and infographics (that people can read from the back of the room).

6. Practice, Practice, Practice – I was surprised to read in the book “Talk like Ted” that the best Ted Talkers have rehearsed their speeches up to 200 times. They practise with friends, colleagues, anyone who will listen. And it’s not just about delivery, it’s about fine-tuning the words they use and simplifying them as much as possible to gain clarity. They write and re-write their presentations to ensure they are communicating what they really mean.

7. Make it quick – “Talk like Ted” also insists that speeches should be specifically 18 minutes only! Apparently that’s the magic number for giving your audience enough, but not too much, information! Audiences today are growing more and more used to the sound bite. Leave your audience wanting more, rather than being bored and switching off.

So there it is! Good luck with your next speaking engagement – I look forward to feeling the passion coming from the podium!

5 Things You Need to Know About Working in Germany

When you think of Germany, pretzels, beer and BMWs are common stereotypes that come to mind. But there is much more to Deutschland than that – especially if you are planning to work.

Reichstag

A country built on research, innovation and its ability to attract foreign direct investment (FDI), with the biggest economy in Europe and the fourth largest in the world – who wouldn’t want the opportunity to work in Germany?

Not only home to many of the European and Worldwide market leaders, recent figures show more than 45,000 foreign companies are also conducting business there. Although many more factors have helped shape German industry, this structure has consequently had deep impacts on the Procurement (Beschaffung) role.

The Need to Know

Procurious founder, Tania Seary, recently had the opportunity to meet the leadership team from the German Association of Materials Management, Purchasing and Logistics (BME) in Frankfurt. BME have established themselves as a professional association for buyers and logistics, supporting members in developing new markets and the configuration of economic processes.

According to BME, there are more than 100,000 procurement professionals working in Germany, so here’s what you need to know if you’re looking to join them:

  1. Germans can be considered the masters of planning

Doing business in Germany without adequate cross-cultural awareness is a risky proposition, and businesses should ensure they carry with them an appreciation of both the business landscape and the culture. Hierarchy is highly valued in Germany, and there are often myriad procedures and policies which can slow things down, so having a bit of patience is crucial to the success of business negotiations.

The desire for orderliness spills over into the business life of Germans – surprises and humour are not welcome! According to the German Business Culture Guide, everything is carefully planned out and decided upon, with changes rarely occurring after an agreement is made.

  1. Get used to some straight talking

There are cultural differences at play. The German business culture is perhaps less instantaneous than in countries like the UK, and personal relationships that are developed slowly over time are seen as a more desirable way to do business. Don’t be surprised if you jump straight into business talk, as there is little time for small talk.

  1. A series of villages, not really a country

Germany is a country with a long history and vast cultural differences throughout. For a country of its size (only 357,000km² – Australia is 21 times bigger), it has 16 states and over 400 districts.

This means you’re going to need to recognise the contrasts across the country, especially as industry is fragmented and big companies operate often in small villages. Although complex, this presents a fantastic opportunity to learn how to work with, and understand, different cultures – a brilliant training ground for future leaders.

  1. If you’re a social media nut – this is a different landscape

By sheer numbers, social media is as popular here as the rest of the world. According to the EU’s “Passport to Trade” more than 75 per cent of all Germans over 14 years of age use the Internet in some way, and 90 per cent of 14 to 29 year olds are on social media.

What is different about social media in Germany is the popularity of the local, German-only networks, in addition to the global players. The most popular networks listed according to their number of users are (get ready – you may not have even heard of some of these):

  • Facebook
  • Google+
  • Xing
  • Wer-kennt-wen
  • MeinVZ/StudyVZ
  • LinkedIn
  • MySpace
  • Lokalisten.

Up until 2009, there were up to 15 million German-speaking users on a German language network resembling Facebook called StudiVZ. But Facebook eventually conquered Germany (as it has for most of the world), as it enabled users to socialise and interact with people outside Germany too.

There is a Russian joke that says:  “Twitter can’t be popular in Germany, because 140 characters are basically two words in German.”  There are certainly enough short words to compose tweets in German, but when you read that only 10 per cent of Germans use Twitter, it makes you think there might be some truth to that joke.

With words like “kraftfahrzeughaftpflichtversicherung” meaning ‘car liability insurance’, and “donaudampfschifffahrtsgesellschaftskapitaenswitwe” meaning ‘widow of a Danube steamboat company captain’, let’s hope Twitter changes to a 15,000-character limit soon!

  1. And your role in procurement…

Procurement is not the only function of choice – it’s one of hundreds – and, if you’re coming from a large multinational corporation, a word you need to understand and add to your vocabulary is “Mittelstand”.

We often throw in terms like MNCs and SMEs (small and medium-sized enterprises) around when asked who your employer is, but statistically what is the real difference?

Statistically, any business with fewer than 500 employees is classed as an SME. However, in Germany this would mean that 99 per cent of businesses would fall into this category.

So the Germans created the world “Mittelstand”, which can refers to both SMEs and much larger companies, if they are run in the same spirit. This typically means the owner or owners take business decisions largely on their own, but retain close ties with both the business and the employees.

This involvement with the business applies to over 3.6 million “Mittelstand” companies, providing more than 60 per cent of all jobs in Germany, and making up 53 per cent of the country’s GDP. So the chances are you’ve already conducted business with a potential employer.

There you have it – some top tips for working and doing business in Germany. And if you’re looking for a job there, or plan on working there in the future, good luck (or as the Germans say…viel Glück!)

How Generation X Managers Can Help Generation Y Succeed

Hundreds of column inches and pixels have been dedicated to the challenges of managing Generation Y, that group of upwardly mobile professionals that are currently in their twenties or early thirties.

Generation-X-Vs-Generation-Y

Also called millennials, they have had a lot of bad press, not all of it deserved. Generation X managers, born somewhere between 1965 and 1980, and now with their youth behind them, have inherited Generation Y, and are grappling with both age and cultural differences in their teams.

Generation Y employees need flexibility, interesting team-based work, and freedom to work with new technologies. The over 50s may work independently, prefer to be office-based and are often reluctant to embrace new ways of communicating.

The key is to be able to align the two without providing any special treatment to the newcomers, which can have its own pitfalls, legal and otherwise.

What Does Generation Y Want?

Human resource managers and recruiters tell us, in no particular order, that they want:

  • Interesting and challenging project-based, non-routine, exciting work
  • Career growth opportunities and active mentoring
  • Inspiring and enabling leadership including regular feedback.
  • Flexibility – telecommuting, working remotely and time for their other life
  • Access to key decision makers. They need to know about strategy and how their job fits into the organisation’s goals
  • Community-centric and supportive working environment
  • Access to data and information. They want to see the full picture.

This shopping list may look impossible at first glance but some organisations are making strides to adjust their HR policies and operational guidelines to accommodate at least some of the requirements.

Retention of key staff in procurement needs a new approach. Some US companies that are leading the way with Generation Y are Shell, Boeing, Caterpillar and Cisco. They must be doing something right as they have some star employees under 30 years old who love their jobs.

What Generation X Managers Need to Provide 

  1. Leadership and guidance.
  • Don’t try to manage Generation Y, just lead them
  • Provide guidance and direction while giving consideration to their input; they don’t take kindly to direct instructions
  • Facilitate mentoring between different levels of employees, not only top down
  • Focus on the results employees produce rather than on how they get it done
  • Set aside time to provide honest feedback – feedback is coaching
  1. Provide flexibility in their work life
  • Consider offering partial telecommuting and/or working offsite
  • Build in some scheduling flexibility to allow management of their personal time. It doesn’t matter as long as the work gets done.
  • Review conventional approaches to face-to-face meetings – use available technology
  1. Career development and training
  • Keep employees engaged by providing inter-active and technology-based educational and training opportunities as well as career growth advice.
  • Make small promotions regularly – don’t make them wait for a year.
  • Regular performance management systems won’t work – more regular and constructive one-on-ones are needed
  1. Team-based projects
  • Take advantage of Generation Y’s preference for teamwork
  • Fulfil their high expectations with special assignments.
  • Give them full responsibility for a sub-project or make them a “champion”
  • Consider putting them on a task force to solve an outstanding problem.
  1. Open communication channels
  • Let everybody to contribute to decision-making through sharing of information and collaboration.
  • Allow multiple communication methods depending on preferences.
  • Use available electronic tools to speed up project delivery

What Does Generation Y Need to Do to Succeed? 

Generation Y individuals need to show a willingness to learn more and feel free to ask for help. The internal culture must support this approach, if it doesn’t, find out what the problem is and fix it. My advice to young procurement professionals is:

  • Build your technical skills and get qualified to give you a head start on the competition
  • Take ownership of your job by taking pride in your work and assuming responsibility for your results and outcomes. Go beyond the job description to do whatever it takes to get a task done.
  • Grow your job by making it your own and taking on any challenges that are offered. The expression “it’s not my job” is not in your vocabulary.
  • Ask for technical guidance and advice when needed from subject matter experts. Most successful people are keen to share their knowledge.
  • Read widely on your chosen field and make it your mission to learn about best practice and apply it in your own environment.

3 Final Tips for Managing Generation Y

  • Understand and accommodate different learning styles.
  • Consider personal employee needs, such as flexibility with scheduling.
  • Be careful not to follow blanket age stereotypes.

Is ‘Free’ a Dirty Word in Procurement?

How can you resist something that is free? Even when something is genuinely free, there’s still that voice at the back of your mind that sounds a warning. 

free-stuff_0

If someone offers you something for free do you automatically say no? Do you sometimes get curious and wonder why it is free? If you ask more questions and find out that it is truly free, do you still say no? Or do you wait until you find out that there aren’t any strings attached either before you take a chance and say yes?

It doesn’t matter what walk of life you are from, or which profession you work in, there is something that has changed in the human psyche that has made us all inherently suspicious of the word ‘free’. And in procurement, this suspiciousness only appears to get worse.

Something for Nothing?

We now live in a very skeptical society. Long gone are the days where you took someone at their word, without question. Now, recommendations and references are gladly accepted, but further research and checking is carried out before anything is done with them.

It’s probably true to say that there are few things that can be offered that are truly free or come with no strings attached. Entering a competition or signing up to a ‘free’ service online puts your e-mail address on a mailing list, to allow you to be sent future opportunities. Even ‘free’ products are likely to be being used as a loss leader to make you think about spending real money.

Perhaps the reality of it is that we are no long as trusting in nature as we once were, and trust has to be earned, rather than being given until proven otherwise.

Trust me, I’m a Procurement Professional

Trust comes in a variety of guises in procurement and supply chain, two of which we can look at here. First there is the trust between the buyer and supplier, the buyer and end user, or between any two links in the supply chain. This trust is based on the idea that what has been ordered or requested is what is delivered, at the right time.

This is trust that needs to be earned, and is a particularly fragile form of trust, which can be shattered by one missed delivery, one failed quality inspection, one wrong phrase in a negotiation. What is key though, is that this trust is crucial to the smooth operation of a supply chain.

Trust can be built in the supply chain through providing great, consistent service, and delivering on promises. Transparency in operations is a good tool to build trust – many organisations are building consumer trust in this way by making their supply chain operations transparent to the public.

 Everyone Likes a Freebie

The second type of trust is between the procurement or supply chain professional and their stakeholders, such as their employer, shareholders or the public. The trust in this case is based on the professional doing their job in an ethical fashion, and not being in receipt of ‘free’ things in return for contracts and business.

The ‘free’ items on offer could range from being taken out for dinner or being taken for hospitality to a sporting event, to kick-backs and bribes. There have been numerous reports of bribery and unethical behaviour in procurement, all of which have succeeded in eroding trust in the profession, as well as giving the word ‘free’ negative connotations.

However, it could be argued that not every ‘freebie’ is given with strings attached or with ulterior motives. In fact, giving and acceptance of gifts can help to create goodwill in the supply chain, or show appreciation for a job well done, or a successful relationship.

While strong governance regulations help to ensure transparency and ethical behaviour, requiring endless forms and registers to be filled in for low value gifts is potentially punishing the honest many, for the actions for the dishonest few. Now that procurement has begun to earn that trust again, maybe it’s time for the profession to be trusted more.

After all, free isn’t such a bad word, is it?

We would be interested to know what you think? Have regulations gone too far? Or are they entirely justified in light of past events? Is there such a thing as a ‘free lunch’ in procurement?

Zero savings? Thanks, that’s perfect!

In this article, the fourth in a series of five, I consider the level of credit granted to projects which deliver substantial savings, and whether, from the perspective of the business, this is appropriate.

zero-dollars

As procurement professionals our time is often consumed by savings targets. Delivering, seeking approval and recording savings. Big savings are good news. No savings is bad news – really bad news. The type of bad news that gets you sacked.

For those of you who have followed my previous articles you know that I like to turn things around a little – to view things from the perspective of a business owner rather than a procurement professional. This article is no different.

The Savings Process

Let me first paint a picture which represents countless procurement activities around the world, I think it will be familiar to you:

After months, sometimes years, of effort the cross-functional procurement team signs the contract with the new supplier and implementation commences. The business signs off the savings which satisfies the agenda of the procurement leaders. The procurement personnel step back to allow the business to implement the new contract and manage the contract thereafter. “See you in three years” is the agreed message.

The newly contracted supplier, who may be the incumbent working on new contractual terms, sets about a “seamless” implementation (Ever seen one of those? No, nor me). Ever constrained resources of the procurement team and the business mean that effective Supplier Performance Management (SPM), (being very distinct from Supplier Relationship Management (SRM)) becomes a luxury too often performed by personnel unskilled at perpetual jousting with a hardened supplier account executive.

The inappropriate flow of information commences, which, in turn, will detriment the value (cost, service quality, innovation etc) retained by the buyers organisation. Suppliers work hard to find loopholes in the carefully negotiated performance clauses and claim to be meeting their contractual obligations even though the satisfaction levels of the buying organisation may remain low or decreasing with time.

Before we know it, the causes of the dissatisfaction which caused the buying organisation to test the market a few months ago are back on the agenda. Inevitably, at the end of the contract term, perhaps before, the market will be tested again. The result of the repeated procurement activity? Savings. Again, savings.

A Perfect Zero

How about we turn this around? How about we strive for zero savings? That’s right. You heard me correctly. Procurement could strive for zero savings. Before you question the level of my delusion please read the last paragraphs of this article, but first let me paint another picture.

In this picture, the same procurement activity took place as before, but the post-contract SPM was fully executed by adequate and skilled personnel. In this case, the innovation and continuous improvement clauses that were written in to the contract are realised. Suppliers are not able to wriggle out of the spirit of the previous negotiations. An appropriate period ahead of the expiry of the contract – long enough to switch suppliers should the need arise – the buying organisation commences its procurement activity only to find there are zero savings. A disaster? No. Let me tell you why.

We all hear the newsreaders’ tone change if the Dow Jones, FTSE, or Nikkei, or whatever is your favoured index, has fallen that day. Their tone drops portraying a sense of negativity. We are indoctrinated that a falling market index is bad news. Instead, however, what if the event of the indices dropping was accompanied by a cheerily delivered message of “great news folks, tomorrow you’ll be able to buy those blue chip stocks at a price way cheaper than today!”

Such a statement would be true; the stocks would be available at cheaper prices, but we never hear this message, even though we each take advantage of the falling index via our pension funds managers who are continually investing our hard earned cash.

Analogously, with procurement savings on repeated contracts – is a saving, a saving? I contend that those numbers which are repeatedly cited as savings by procurement teams could alternatively be merely a measure of the buying organisations ineffectiveness in managing its suppliers during the last contract term. A high saving means a poorly managed preceding contract.

A robustly managed supply contract, followed by a professionally implemented procurement project which delivers zero savings could be (stress, could be) demonstrative of a very well run contract where value has readily flowed to the buying organisation throughout the contract term, leaving non-incumbent suppliers with nothing further to offer.

Theory and Reality

Do I really believe zero savings are aspirational for most procurement projects? Well, no, actually I don’t. There are always some inefficiencies that can be eliminated, market developments and innovations that can be exploited, and organisations simply do not have the resources to execute the theoretically perfect procurement and contract management that I have set out above.

My message is simply that procurement leaders should carefully consider the causes of significant savings numbers, including the degree, and success, of post-contract supplier management – the news may not all be positive. Offering reactionary congratulations for projects delivering big savings numbers or an automatic chastisement for projects delivering small savings may be ill-advised.

By the way, I also need to be abundantly clear that I am not suggesting managers chastise personnel who report significant savings with a short-sighted, inflammatory question of how their staff previously spent their time. To do so is sure to lessen future efforts.

So, it may then be advantageous to allocate the scarce resources of the organisation toward contract management rather than repetitive RfX-style procurement. Readers of my earlier article “Buyers under the Duvet” may recognise a need to stretch practises outside the normal comfort zones of buyers, with the possible result that effective contract management actually reduces the level of savings from RfX-style negotiation.

In itself, this is not a problem so long as (!) organisations have already secured the value during the contract management phases of the procurement cycle.

Jim WillshawJim Willshaw (MBA, MCIPS, MIIAPS) is an experienced procurement professional acting as a consultant, speaker, coach and trainer to leading organisations all over the globe.