Category Archives: Generation Procurement

What’s procurement like in Wales? Helen Rees answers

Procurious members and networker extraordinaire – Helen Rees, fills us in on what procurement is like in Wales. Helen, over to you!

The Welsh Dragon - what's procurement like in Wales?

How do you think procurement differs in your country, as opposed to elsewhere in the world?

Personally I think that the Welsh approach to encouraging Small to medium enterprises (SME’s) to tender for public sector work is commendable and something that makes us stand out from other countries. As a consequence of recommendations from the Welsh Government led Barriers to Procurement Opportunity Report in 2009 (which investigated what SME’s perceived were the barriers to them tendering for public sector work) the Welsh Government have developed an unique qualification questionnaire that replaces the various lengthy Pre-Qualification Questionnaires (PQQ’s) that were previously used by organisations across the public sector.

This document is called the Supplier Qualification Information Database (fondly known as SQuID!) and it adopts a more risk based approach to tender qualification, based on the value of the contract you are tendering and the risk to the organisation if it failed. Using what is known as the Squizzard you answer a few basic questions about the procurement which results in a suggested list of questions being produced which you can then customise as appropriate.

This enables a more sensible and proportionate approach to each individual procurement exercise thus reducing the amount of work having to be undertaken by tenderers. As an example, our previous PQQ was 23 pages long whilst the majority of SQuID’s now range from between a page or two for a simple procurement exercise to no more than 5 or 6 pages long for more complex projects. This has had a significant positive impact on SME’s who have limited resources to complete reams of tendering documentation.

Another huge benefit is that all supplier responses are banked within the Welsh electronic tendering portal, meaning that if they are asked the same questions again by another buyer they are banked from the previous time so they can either use the same responses if they are still relevant, thus saving them time, or they can make amendments if necessary.

The Welsh Government has also set up the National Procurement Service (NPS) which is a new approach to collaborative procurement in Wales whereby they will set up National Frameworks for common and repetitive spend commodities for use by the public sector. Buyers from organisations within the public sector are able to influence the way the frameworks look by participating in category stakeholder groups, and as such are more likely to get frameworks that are more likely to meet their requirements.

Do you know how many other procurement professionals are in your country?

There are currently 558 CIPS (Chartered Institute of Procurement and Supply) procurement professionals within Wales.

How did you get started in procurement?

I fell into procurement by accident more than design after securing a post as Stores assistant in my existing organisation some 13 years ago! The Stores was overseen by our then Procurement Manager who must have seen some potential for me as I was moved into the Procurement department a couple of years later as an administrative assistant. It was at that time I decided I quite enjoyed procurement work and would like to progress in this area.

I was very fortunate as my employer paid for my studies and I became MCIPS qualified in 2008 after leading on the implementation of an electronic purchase-to-pay system within the organisation. It just proves that you don’t always have to have a career in mind when you leave school as sometimes these things happen by chance and you can study later on in life to become professionally qualified after having valuable experience within the workplace.

What do you see in procurement’s future in your country and how can social media play a role?

I can see procurement in Wales going on to even bigger and better things once the National Procurement Service is more well established. Social media could have a valuable role in terms of improving communication and expanding procurement networks globally rather than just across our own country.

Why did you join Procurious?

I joined Procurious right at the start after reading an article about it in Supply Management. I’m an avid Social Media user and was already on LinkedIn but I felt that Procurious was just what I was looking for in terms of networking with like-minded professionals who specialise in procurement rather than business in general and being able to learn from others’ experiences via the Blogs and articles that are posted on the site.

What are you hoping to get out of the network?

I am hoping to make a lot of new procurement contacts (I’ve already connected with well over 1900 members so I think I’m already progressing well on that point!) *We think you are too Helen!

I’m a firm believer in not reinventing the wheel and if someone has done something before then what better way to learn than from that person’s experiences and lessons learnt. As well as learning from others across the World via the blogs and articles that they post I also aim to share my experiences if I see any questions submitted that are relevant to things I have been involved in myself.

My motto has always been “Share the learning!”

How are you going to get your peers involved?

I promote Procurious at every opportunity and tell all my peers what a valuable tool it is for networking and knowledge sharing. I am also in the process of arranging a Procurious workshop with Euan Granger for colleagues both within my organisation and within a neighbouring Fire and Rescue Service. It’s all about spreading the good word!

Spend Under Management – What does that even mean?

When CEOs and CFOs look at procurement metrics, one figure stands out: savings.

Spend Under Management - What does that even mean?

However, when we as procurement people look internally and attempt to analyse the performance and effectiveness of our own function – ‘spend under management’ is normally the metric we turn to and I’m not convinced this is a smart move.

I’m not going to argue that a procurement team that actively manages a large part of its spend is not positioning itself for success, that logic is sound. But, I do feel the spend under management metric (in its current interpretation) is a little misleading.

We’ve all read the procurement research papers that tell us what ‘top performing procurement teams’ do in relation to talent, supplier management, technology etc. More often than not, the determinant for what constitutes a top performing procurement team is tied to the amount of spend that organisation has under management.

Generally speaking, the performance bands look something like this:

  • Top performers – 75-85 per cent of spend under management
  • Average performers – 55-65 per cent of spend under management
  • Poor performers – 35 per cent or less of spend under management

When is a rose not a rose?

The issue I have with this metric is its definition, or rather, its lack of definition.

Despite the fact that the term is used extensively across our profession, the CIPS glossary doesn’t actually contain a definition for spend under management. This may go someway to explaining the variation we see when this metric is reported.

When I broke down the term for myself, the first part (spend) made sense. It’s the second part of the definition (under management) that is open to debate, interpretation and conjecture. What does ‘under management’ actually mean?

To help explain the vagueness of this term, lets look at what could potentially constitute ‘spend under management’:

  • Spend that passes through a procurement system (source to pay)
  • Spend that is covered under a contract
  • Spend that falls under a sourcing plan
  • Spend that is strategically and actively reviewed
  • Spend that is actively reviewed and managed internally by procurement to ensure that employees are utilising the contracted rates, terms SLAs and benefits.

I’m going to show you how great I am

The lack of a formal definition for the term has led to a scenario where procurement teams themselves are determining how much spend they have under management.

Essentially, the metric we are using to define the effectiveness or maturity of a procurement team is being generated, through the interpretation of an ill-defined term, by the very procurement team being analysed.

I’m not here to throw stones at how procurement teams use the term, but until we as a function can come up with a less subjective definition of what constitutes spend under management. Don’t you think it seems redundant to hold this metric up as means to compare the maturity or performance of different procurement teams?

Nevertheless, I do believe that spend under management, regardless of how your organisation choses to define it, can be used as an effective tool to track procurement performance and progress within the four walls of your organisation. If, and only if, it is presented to senior management along with your procurement team’s definition of the term. Something along the lines of:

“This is how we define spend under management… As a procurement team we’ve increased the amount of spend we are managing. Last year we had 60 per cent of our spend under management. This year we have 75 per cent.”

What do you think? How does your firm define spend under management? Should we continue to use spend under management (in its current interpretation) to compare procurement teams? Is it even possible to come up with a standard industry-wide definition?

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What’s procurement like in your part of the world? – South Africa (Elaine Porteous)

Cape Town - Pixabay

Procurious showed you its map of the world last week, marked with where all our members come from, and asked what procurement was like in your part of the world.

Following on from looking at Scotland, Italy and the USA, Elaine Porteous tells us what procurement is like in her home country – South Africa.

Elaine is a freelance consultant, published writer and editor of business articles for various on-line and print media, specialising in Supply Chain, Procurement, Logistics and Career Management.

She has previously shared her knowledge on a number of these topics in guest blogs for Procurious.

Read her full story here.

How do you think procurement differs in South Africa, as opposed to elsewhere in the world?

I think we have a unique situation and a lot of challenges. Firstly, we have an historical situation that is being addressed partly through Broad Based Black Economic Empowerment (BBBEE). The aim is to redress some of the imbalances of the past and broaden the base of suppliers through preferential procurement and sourcing locally for defined commodities.

Skills are scarce, particularly in the public sector where there is a lack of capacity and inadequate planning and budgeting. We are struggling with managing conflict of interest, limiting fraud and tackling corruption. The good news is that there are government initiatives afoot to improve risk management and make substantial improvements to their processes. Our Government CPO is implementing an e-tender portal shortly to tighten up tender processes.

Procurement in the private sector is alive and well; there are many organisations that are developing their staff and applying best practice, not only in the multi-nationals.

Do you know how many other procurement professionals are in South Africa?

I would estimate more than 10,000. CIPS has 2295 members in South Africa and more than 16,000 members across Sub-Saharan Africa.

How did you get started in procurement?

Like most people, by accident! I was cruising along as an HR business partner in a big multinational when the HR Director was tasked with launching a procurement function.  He nominated me to come along for the ride and the rest is history.

What do you see in procurement’s future in South Africa and how can social media play a role?

The procurement function is growing in stature and slowly getting more traction and visibility in organisations.

There is a very active community of procurement people, from both the public and private sectors, who engage extensively on LinkedIn.  Also, there is a small band of enthusiastic specialist recruiters that ply their trade there and on Twitter.

We have an on-line marketplace that is hosting a Procurement Africa e-Conference, in association with CIPS, shortly.  This may be a first for Africa. Many procurement professionals are avid networkers and attend the various conferences and events in the procurement field.

Why did you join Procurious?

It was refreshing to find a platform for us to interact on a wide range of subjects without having to belong to a formal organisation or have to put up with lots of advertising and sales pitches.

What are you hoping to get out of the network?

I like to keep up with global trends in supply chain and to hear other’s opinions on the topics of the day in the procurement field.

I’m really interested in helping young procurement people advance their careers and advising them on what the options are and importantly, how to get there.

How are you going to get your peers involved?

I see Procurious going from strength to strength.  I will use my networks to introduce others to this great resource.

More on the South African CPO Tender portal here.

Read more of Elaine’s writing for Procurious by following these links:

https://www.procurious.com/blog/life-style/your-job-role-might-be-obsolete-by-2020-will-you-be-sustainable

https://www.procurious.com/blog/life-style/influencing-skills-can-be-learnt-start-now

https://www.procurious.com/blog/life-style/should-you-ever-rehire-an-ex-employee

7 ways to inject love back into your supplier relationship

As part of a Valentine’s Day special, our founder, Tania Seary (who has a long-standing love affair with all things procurement), is exploring ways that procurement professionals can ensure everyone they touch can “feel the love”. So far we’ve covered community and stakeholders…. now to focus our attentions on our favourite audience of all – our suppliers.

7 ways to inject love back into your supplier relationship

Given that Valentine’s Day is only hours away (and I’m encouraging procurement professionals around the world to make sure everyone they touch “feels the love”), I thought you might like some tips to inject the love back into your supplier relationships.

In supplier relationships, as with romantic relationships, there unfortunately comes a time when the romance fades away…

While the relationship with your beloved strategic supplier may have grown stronger (and more co-dependent each year spent contracted to each other), the romance, the sparkle, the mojo, that desire to impress, often dissipates into a very boring business-as-usual patter.

As leading best-practice procurement practitioners, we all know this is a bad thing – because theoretically we need to be continually improving the value delivered from our strategic suppliers. And unfortunately when the sparkle starts to disappear, or one partner starts to feel neglected, then the cracks start to appear. The bond may break and you are in the law courts with your separation clauses under the microscope. On the other hand, a healthy supplier relationship is productive – it drives out costs, inefficiencies and spawns love children in the form of innovation.

Let’s face it; maintaining a strong working relationship (whatever the setting) requires effort. As we say at Procurious, you have to give to receive.

While researching (well, let’s face it, Googling) this topic, I stumbled across a very practical set of advice from one Ms Monika Mundell: 7 ways to inject romance back into your relationship.

I realised that there were some amazingly scary parallels for we procurement folk. So, I’ve reworked Ms Mundell’s 7 tips to provide you with some shine to put sparkle back into those all-important strategic supply relationships.

  • Eye gazing: Even though I’m obviously a true-believer in social media, I am also a true-believer in the good old face-to-face meeting and telephone call to build understanding relationships. Too much gets lost in translation when we are emailing, texting and tweeting. If we are to keep the relationship alive, we must meet with our strategic suppliers regularly to ensure we fully understand the status and nuances of the relationship.
  • Book a romantic surprise getaway: OK… not really appropriate – but think about it… When was the last time you and your supplier got your leadership teams together to think of ways of both getting more value out of the relationship? You could have a “staycation” and have a one or two-day conference in your offices, or book a mutually convenient off-site location to help facilitate bonding at all levels. A getaway could really identify some fresh ways to invigorate the relationship and add more bottom line value for your shareholders.
  • Touch your partner more often: OK, now you’ll be thinking I’ve really crossed the line here… but think about it. How many touch points do you have with your supplier, and are you using all the different communication mediums available to connect with them at all the appropriate levels in their organization?
  • Write a love letter: Seriously, when was the last time you wrote an email, a letter, a card, showing appreciation for something your supplier did for you? In a day and age where people are running around crazily ticking items off their to do list, a considered, well-penned note means a lot more than it ever did. Take some time out – formally thank your supplier – and I am sure you will feel the love reciprocated in some way or form into the future.
  • Surprise your partner with a romantic dinner: I was really touched when a long-term client and his wife took me to a five star restaurant last year – and paid on their personal credit card. As my clients know, I am very dedicated to them all and I was really touched that this couple took time out of their busy diary and budget to treat me to a special meal. Think about it…
  • Spend more time together: According to Ms Mundell, a common cause for drudgery in a relationship is the fact that we disconnect. All of the points above provide you with opportunities to spend more time with your suppliers. But remember, it doesn’t always have to be elaborate, or premeditated, just spending simple time together on-site, on the job, in the warehouse or with your joint customers is all very important time invested in building that all-important relationship.
  • See a counsellor – OK there’s a reason why this is obviously my last point – because it’s kind of a last resort if all else is failing. At my procurement management consultancy, The Faculty, we’ve often considered developing a “strategic alliance counselling” service… not unlike a marriage counsellor! When thinking about how to re-ignite the spark in your supplier relationship, don’t underestimate the value of getting a third party involved to take an objective view of how your partnership is performing. While you probably won’t need to recline on the chaise lounge, a healthy review could offer some fresh insights into how both sides of the partnership could potentially change their behaviours for the greater good.

Are you making sure your suppliers “feel the love”?

Hey! Procurement – make your customers “feel the love”!

Important lessons from Gustave H and the Grand Budapest Hotel

What can we learn from The Grand Budapest Hotel?

A quick office survey revealed that no matter how much the boss likes it, ‘The Grand Budapest Hotel’ is not exactly everyone’s idea of a great movie.

However, the adventures of Gustave H; a legendary concierge at a famous hotel from the fictional Republic of Zubrowka between the first and second World Wars – provides a lot of great (quirky, yes) insights into what constitutes exceptional customer service.

In the procurement world we often refer to those we serve to please as ‘stakeholders’… but let’s face it, they are our customers and all the old-fashioned principles such as “the customer is always right” apply.

Of course we want to do more than serve – we want to become a trusted advisor. But time and time again, ‘stakeholder engagement’ and the ‘soft skills’ re-appear as the number one skill that CPOs need their team to develop, in order to achieve that ‘trusted advisor’ status.

So in the spirit of ‘sharing the love’ this Valentine’s Day, here are some of my customer service learnings from working with clients, customers, stakeholders and alike during the last two and a half decades.

5 ways for procurement to make sure communities “feel the love”

Know your RFQs from your Ps and Qs

Nothing sells like credibility.  If you are going to put yourself forward as an advisor, you need to know about both about the professional service you are offering (procurement) and your customer’s business.  Knowing neither or only one or the other, is not going to build enough confidence for your customer to engage with you.  You need to ensure you have adequate procurement skills, as well as understand the business you are in to make the grade.

Make sure you get through to the second round

The analogy here to a boxing match is not accidental.  I have had some very tough first meetings with my customers. Let’s face it, not everyone always wants procurement’s ‘help’. A large part of our profession’s heritage has been about convincing our stakeholders about the value we can deliver.

From my chilly desk in Pittsburgh over a decade ago, I can still clearly remember being yelled at down the phone from my business unit customers in Iowa and Texas.  One CPO screamed, “If you want my team to spend their precious time on some corporate scorekeeping folly, then get your a** down here on a plane and explain it.”

Gustave H provided a light bulb moment for me about these aggressive experiences:

“Rudeness is merely an expression of fear. People fear they won’t get what they want. The most dreadful and unattractive person only needs to be loved, and they will open up like a flower.”

I can’t say that any of my customers have ever “opened up like a flower”, but they have definitely mellowed from their initial opposition.  Once you prove you can deliver, they’re putty in your hands.  But you have to be resilient and work through this initial push back – get them to the point where they really start to engage and invest in you as a professional who can help them on their journey.

Know what they want; know what they don’t want

When my best practice procurement company, The Faculty, is helping procurement teams to become more customer-focused, we talk about the five false assumptions about customers:

  1. Customers know exactly what they need
  2. Customers will tell you what they need without being asked
  3. If you ask, customers will tell you everything they need
  4. If customers tell you everything they need, you will understand completely
  5. Just because you know what your customer needs, doesn’t mean you’ll be able to convince others in your team

Procurious blogger, Jordan Early, shared with me some really interesting research from Deloitte’s Ajit Kambil, who researched how new finance chiefs often undertake listening tours to understand what their key stakeholders want.

He observed that what stakeholders say they want “may not express their entire universe of so-called wants”. For example in our world, a business-unit leader may say he needs better information and support from procurement. But his true want may be “to be really listened to” by the procurement organization; or he may want procurement to “help support the personal initiatives he believes will advance his career.”

Kambil also suggested that knowing what key stakeholders do not want is as important as knowing what they want. When I was working in procurement within a large organisation, I used to present three potential contract award scenarios before we kicked off a sourcing project. This quickly revealed how the customer would react to different award decisions and helped bring on the conversation about what they didn’t want early on in the process.  It saved a few (but not all) tears at the end of the project.

Knowing what customers truly do or do not want begins by asking questions. However, it is often difficult for stakeholders to clearly articulate what they do and do not want. This is where you really need to call on all your business experience (and hopefully your supportive boss and/or mentor) to help you truly understand your customers’ needs.

Oh, and then you need to deliver. That’s the easy part… right?

5 ways for procurement to make sure communities “feel the love”

5 ways for procurement to make sure communities “feel the love”

The words “love” + “procurement” aren’t often seen together, but here at Procurious we’re hard at work changing the face of procurement.

As part of a Valentine’s Day special, our founder, Tania Seary (who has a long-standing love affair with all things procurement), is exploring ways that procurement professionals can ensure everyone they touch can “feel the love”.

5 ways for procurement to make sure communities “feel the love”

At Procurious, we’re very social (both on and off the field). You usually hear us talking about the benefits of social media, but this time we’re talking about the benefits of getting involved in social procurement… that is – using your corporate spend power to award contracts, to social enterprises and local businesses to generate social benefits beyond the products and services required.

Feel the power

There is enormous untapped potential for social procurement to act an agent for social change – our profession can make a huge impact!

Social procurement creates jobs and opportunities for people who may have struggled to find work and can also reinvigorate depressed or marginalised communities.

Not only are we helping our communities “feel the love”- but we’re also helping our own company. Spending money with community groups and social enterprises improves our own company’s staff engagement, brand equity and enables us to do something that is truly socially good without compromising financial return to shareholders.

So now it’s not only the corporate sponsorships and social responsibility teams who get to help those in need – procurement can also make a huge contribution to the community.

Choose your weapon

Embedding social procurement into your existing procurement framework will require some changes.  And, as we know, change isn’t always easy, so you’ll need to be both creative and patient. According to Dr Ingrid Burkett from the Centre for Social Impact in Sydney, you have four options (“weapons”) for initiating social procurement within your organisation:

    1. Contract – The most obvious approach is to incorporate social impact requirements into tenders, new or existing contracts, or evaluation criteria.
    2. Policy – You may choose to use policy to ensure you meet your social procurement objectives – these can include requirements such as percentage of spend for social impact, meeting statutory or regulatory requirements and local supplier spend commitments.  For example, many mining companies use a policy approach that mandates each of its mines must have a documented strategy for local procurement that is endorsed by the senior leadership team.
    3. Supplier – Directly engaging with suppliers who have a mission to deliver social value is one of the most common approaches to social procurement.  Many social enterprises have independently integrated themselves into corporate supply chains by winning tenders without specific consideration to social value.  In fact, without being deliberate about it – you are probably already procuring from social enterprises.
    4. Market (supplier) development – If you want to work with social enterprises but there are none operating in the category required, you will need to innovate.  For example, in planning the establishment of the Diavik Mine in Canada, Rio Tinto developed local suppliers capable of meeting their expected future business requirements through training, local employment initiatives and by stimulating contracts for these businesses.

Be credible and creative

Once you have worked out the “how”, the next step is obviously to choose the most credible social procurement options to suit your company’s business objectives, profile and culture.  Try to be creative about the “best fit” for your organization.  The best example I have heard of was a major retailer, who sponsored a bike maintenance service at their national headquarters.  Unemployed youths were engaged to learn how to fix bikes and earned their way to a trade certificate, while employees were encouraged to get fit and ride to work and help reduce carbon emissions!  How many boxes can be ticked with one initiative?

Get your CEO into the picture

Literally… if the category and social enterprise you have selected ticks all the boxes for your organization (strategy, mission, other initiatives etc.), then use your marketing nous to convince your corporate affairs and media executives that the CEO should do a site visit and understand the company’s commitment to the selected social enterprise.  Make sure there’s a photographer there (mind you, I’m sure your company’s PR gurus will have this covered) as this is exactly the type of material that gets featured in annual reports.  Perfect.

Persevere

Social procurement is not “business as usual” – it presents unique challenges and opportunities for both the buyer and the seller.  Successfully introducing anything new into a large organization is difficult.  The greatest challenges to introducing social procurement is having enough people and time, identifying appropriate categories of spend and gaining organizational commitment.

For social procurement to be effective there needs to be a truly enabling environment:  this includes senior management support, the right tools and infrastructure to support it, establishment of effective supplier networks and increased community and government recognition of its importance.

So, do you know how to “show the love” to your communities?  What’s your story?

5 disruptive forces that will keep CPOs awake at night in 2015

CPOs around the world may have some sleepless nights in 2015 as they defend themselves and their companies against powerful disruptive forces.

5 things to keep you awake at night

In the true spirit of social media, I’ll highlight just five of these disruptive forces and have created the convenient “METOO” acronym to cover – Markets, Ethics, Transparency, Optionality and Organisational alignment.

2015 is the time to make sure you have your bases covered in these areas:

Markets – We would be naive if we didn’t expect more market volatility in the coming year.  In 2014 we saw interest rates remain low, the Rouble depreciate 50 per cent, the Australian dollar depreciate 20 per cent, oil prices drop 50 per cent, iron ore prices drop 40 per cent and Chinese growth at its lowest since 2009.

As we are all exposed to the instability of global markets, CPOs will need to decide how to either protect or profit from this volatility.

Ethics – Some leading global retailers had their public reputations shattered last year with revelations about unscrupulous and bullying behaviour towards their suppliers. CPOs will need to have a clear conscience that they are using squeaky clean negotiation techniques and are taking demonstrative actions to ensure their team, and the entire organisation, has a healthy and ethical approach to managing suppliers.

Transparency  – Discovering that one of your third or fourth tier suppliers is involved in corruption, using child labour, unsafe work practices, or substituting lower quality ingredients or parts will be the stuff of nightmares for CPOs in 2015.

A focus on supply chain transparency will see a whole lot of quality assurance consultancies, and other intermediaries, busy in this booming sector of the services economy.  As one of my mentors has always said, “better to know you’re right, rather than hope you’re not wrong”.

Optionality – Talking recently with a federal government defence advisor and the CPO of a leading European telecommunications company, really brought home to me the dilemma of developing and managing suppliers as we move to operating in an era of the “Internet of Things”.

More than ever, we are actually buying technology more so than the actual product or service (think driverless mining trucks – we’re really buying the technology to manage and maintain these vehicles, more so than the trucks themselves).

As technology increasingly becomes the product, we need to keep our options open in order to take advantage of the frenetic pace of change. Our tenders and contracts will need to more broadly define the functionality and utility we require of a product or service, rather than the exacting specifications we know today.

We will also need to ensure we keep our minds, doors and sourcing processes open to engage new suppliers with break-through technologies.  With most contracts being around 3-5 years long, CPOs will need to build optionality into their contracts to ensure they have the agility and can be opportunistic in adapting and adopting new technologies.

Organisational alignment – Procurement teams today are well-versed at “finding the money” and negotiating great deals that should result in bottom line savings.  That’s 101 stuff – our traditional raison d’etre .The trickier challenge has always been to “keep the money” and make sure that contracted savings actually make their way to the bottom line.

Today’s CPO has to work harder than ever to make sure “everyone is on the bus”, utilising negotiated contracts and treating every dollar as if it were their own.

Creating cost-conscious cultures is a huge change management exercise that requires a vastly different skill-set from the CPO’s traditional tool kit.  This challenge, teamed with frequency and voracity of carpet-pulling and direction-changing that will go on in the boardroom and C-suite this year, will require a lot of creative thinking and schmoozing by leading CPOs.

Anyone need a Xanex? (Is that a sleeping tablet?)

If you agree with my thoughts or have want to comment on the forces impacting procurement in 2015 – please Tweet #metoo #bigideas @taniaseary or just respond “me too” on LinkedIn or Procurious.

How to break out of the mould and become an entrepreneur

We’re kicking off our #procuriousactive profile series with David Lawrence from Sydney. We’re profiling (and celebrating) some of our most-active members – Procurious thanks David for all of his support to-date! 

Want to see your name in lights like David? New members should follow our primer to get more out of the site, while existing users can extend their enjoyment with these tips.

Procurious member David Lawrence

Having taken a much-needed career break in June 2014, David looks back to his time at Sensis where he was responsible for National Logistics, Distribution, Publishing & Print.

Procurious asks: What excited you most about your role?

David answers: A number of things to come to mind. Firstly, getting a great result for the business (not always the lowest price) is always satisfying after a long process. In addition, working with and developing suppliers to improve their business to benefit the entire supply chain and by providing leadership through working with the team to develop “our” skills and competencies are also rewarding.

I say “our” as I am continually amazed at what I learn from those around me. I don’t pretend to know it all and enjoy learning from others, even if they are a new starter straight out of university. In summary, it is the people side that excites me, as without relationships, the business world would stop. 

Procurious: When did you decide on procurement as a profession, and what attracted you to it?

David: Around 10 years ago, I was working as an operations manager with FedEx. Well known for their training and development of people, which is based on a People, Service, Profit philosophy, I felt that at the end of my tenure I was hamstrung to a certain degree, more number cruncher than entrepreneur. I felt that I was missing the interaction with suppliers and the ability to run my own process from start to end. I probably wanted to break out of the mould that FedEx developed and become more of an “entrepreneur” in my career.

While the Procurement profession still offered me the opportunity to build on my people skills it also allowed me to develop a more strategic approach to business. Within the procurement cycle I was afforded the opportunity to build business cases, to develop strategic plans and to make my own mark on business success. With cost of goods and general expenses being a significant percentage of business spend, what better way to contribute to business success than getting your hands dirty in influencing these areas.

Procurious: Can you recall a moment you’re been especially proud of professionally?

David: In 2013 after a two year process spanning the globe my team delivered significant savings to the business. While the business was extremely overjoyed at this result I was more circumspect. It wasn’t the savings that satisfied me, it was the way in which we worked with the incumbent supplier. A large number of people were made redundant and a plant was shut down, however the professionalism and strong relationship between my team and the supplier was evident in the way they worked with us; to reduce our costs at their own expense. We always treated the relationship on a strategic level and in the end  it led to both of us decoupling that relationship.     

Procurious: How did you first find out about Procurious, and what prompted you to become a member?

David: From memory I think it was the “a new website coming soon” campaign. I became a member as it was another avenue to learn from others. The news articles and questions are a great way to interact and gain knowledge. As I noted above, I don’t pretend to know it all so reading others opinions is enjoyable. 

Procurious: What are you doing to help spread the word?

David: I believe that I have encouraged two people to join up. Discussing the site is easy as it is not a personality contest nor a place for producing the best one liners or clichéd sayings. Getting people interested is easier when the discussions on Procurious are based on fact and real world experience.   

Procurious: Some would argue that procurement suffers from an image problem; do you feel that there needs to be more education around the profession?

David: I believe that it is more the dynamic of the business world rather than procurement itself. Image problems stem from the functional silos that exist. Operations versus Sales, Customer Service versus Logistics, Marketing versus Procurement, (Everyone versus Finance!), are traditional sore points in business relationships.

As Deming noted, silos and management are the biggest inhibitors to improving business performance. To fix the image problem requires fixing the dynamic within your business. Procurement leaders need to build internal relationships, demonstrate what value they add, operate cross functionally and support the business strategy. Image problems will exist if Procurement cant demonstrate how it is contributing to the business.

Procurious: Do you foresee any particular challenges in 2015 for the profession?

David: Making sure that Procurement remains relevant to the business with demonstrable results. With the global economy still stagnating, procurement professionals need to be agile and innovative in their approach to delivering on these results.

Procurious: And finally, if you had to sum procurement up in three phrases – what would they be?

Innovative and Agile

Internal and external Partnership building

Quantifiable and strategic results

Thanks David! We couldn’t have put it better ourselves. 

Tim Cook: From Supply Chain Management to CEO

Is Apple CEO, Tim Cook, procurement’s greatest ambassador?

One of the key goals of Procurious is to improve the image of our function.

Apple CEO Tim Cook, procurement’s greatest ambassador?

It’s fair to say procurement has received a bad wrap over the years. We’ve been dubbed corporate policemen, paper pushers, roadblocks, as well as a raft of other unflattering names we dare not mention.

Thankfully, due to the innovation and hard graft of procurement professionals, the function is shedding this negative image and starting to become recognised as an integral part of any successful business.

Perhaps the greatest exemplar of procurement’s ascendancy to date is Apple CEO Tim Cook.

In 1998 Tim was the vice president of Corporate Materials for the Compaq computer company, a role that that saw him hold responsibility for the organisation’s procurement and inventory operations. Despite having no real intentions of leaving this role, the enigmatic Steve Jobs managed to convince Tim to take on a role at Apple (pre iMac, iPod, iPad, and iPhone).

Tim’s performance at Apple was stellar, particularly from a procurement point of view. In his authorised autobiography of Steve Jobs, Walter Issacson described Cook’s methodical approach to supplier rationalisation and inventory management.

“Cook reduced the number of Apple’s key suppliers from a hundred to twenty-four, forced them to cut better deals to keep the business, convinced many to locate next to Apple’s plants, and closed ten of the company’s nineteen warehouses. By reducing the places where inventory could pile up, he reduced inventory. Jobs had cut inventory from two months’ worth of product down to one by early 1998. By September of that year, Cook had gotten it to six days. By the following September, it was down to an amazing two days’ worth. In addition, he cut the production process for making an Apple computer from four months to two. All of this not only saved money, it also allowed each new computer to have the very latest components available.”

The procurement and supply chain decisions made by Cook highlight the critical importance of procurement to Apple’s success. The strength of the company (and arguably its competitive advantage) has been in building and managing a complex network of suppliers that the company has successfully leveraged to produce ground-breaking technology products. Put simply, without the supply network, there is no product.

Cook’s performance in Apple’s supply chain clearly caught the attention of Steve Jobs who gave the follow recommendation of Cook during his departure from the firm.

“I strongly recommend that we execute our succession plan and name Tim Cook as CEO of Apple.” Steve Jobs

The promotion of Cook to CEO shows that the board of Apple understands the critical importance of external suppliers as a source of innovation for the company. Apple clearly sees the procurement function as the conduit to successfully managing these relationships and ensuring the future success of the business.

Apple is the world’s most valuable brand, has undergone a remarkably successful business transformation and has produced products that have changed the way we interact with each other and the world around us. With so much of this success being attributed to great procurement practices, could there really be a stronger endorsement for our function?

“Tim Cook came out of procurement which is just the right background for what we needed.” Steve Jobs

Do you have the soft skills to deliver on strategies?

Today we’re talking about soft skills.  We are all aware of the need for us all to be technically proficient at what we do, however more and more the drive for us is to drive and build relationships, indeed it’s often cited as one of the most important aspects of what we do.

Do you have the necessary soft skills to succeed?

A recent Deloitte CPO survey identified that globally 57 per cent of CPOs consider that their teams do not have the required skills to deliver on the strategies. Potentially this is because of the lack of the relationship and soft skills that are required to make connections with individuals.

The Faculty’s recent research on procurement capability discusses the increasing need for soft skills within procurement: “As the category management process matures, procurement leaders are shifting their focus from core concerns (cost, delivery, quality and compliance) to supplier relationship management. There is a recognition that effective relationship management has the potential to improve performance in all of these areas and drive supplier innovation and value.” Stay tuned for more articles on The Faculty’s research findings around procurement capability and soft skill development.

Your grandmother may have always told you that you never get a second chance to make a good impression, well the writers at Harvard Business Review beg to differ. BTW the “Gordon” the article refers to is not me!

In this article they suggest that when people view others they do through a series of lenses, these are trust, power, and ego.

  • The trust lens is employed when people want to figure out if you are friend or foe. Perceivers answer that question by tuning in to two particular aspects of your character: your warmth (your expression of friendliness, respect, and empathy), which suggests that you have good intentions, and your competence (evidence that you are intelligent, skilled, and effective), which shows that you can act on your intentions.
  • To get someone to see you accurately through her trust lens, project warmth and competence
  • The power lens comes into play when there is a disparity of power, especially when the perceiver has more than you do. He or she gazes through this lens to assess your instrumentality: “Prove yourself useful to me, or get out of my way.”
  • To create the right impression in your perceiver’s power lens, be sure to demonstrate your instrumentality at every reasonable opportunity.
  • The ego lens gives the perceiver a sense of who’s on top. Subconsciously, people often want confirmation that they, or their group, are superior to other individuals or groups.
  • To be seen positively through the ego lens, be modest and inclusive. Go out of your way to affirm the strengths of others, and try to create a sense of “us,” so that your perceiver can celebrate your achievements rather than feel threatened by them

If you started off on the wrong foot and need to overcome a bad impression, the evidence will have to be plentiful and attention-getting in order to activate phase two thinking. Keep piling it on until your perceiver can no longer tune it out, and make sure that the information you’re presenting is clearly inconsistent with the existing ideas about you.

A common theme we hear is to try and influence senior leaders within the business about the value of procurement or a specific strategy. A recent podcast I was listening to discussed the importance of getting the boss to buy in. There is a written piece to accompany this too.

The piece discusses that most managers struggle to sell their ideas to people at the top. They find it difficult to raise issues to a “strategic” level early in the decision-making process—if they gain entry into such conversations at all. Studies show that senior executives dismiss good ideas from below far too often, largely for this reason: If they don’t already perceive an idea’s relevance to organizational performance, they don’t deem it important enough to merit their attention. Middle managers have to work to alter that perception.

The piece highlights and expands on key tactics, these include tailoring your pitch, framing the issue, managing emotions on both sides, getting the timing right, involving others, adhering to norms, and suggesting solutions.

Let’s take a closer at involving others – while seeking input from multiple individuals can aid decision making, it can also fail as we select the wrong team members. The following piece from Harvard Business Review is all about avoiding this and how to make under-performing teams actually deliver what was desired.

The main issues that go wrong in groups are:

  • Groups do not merely fail to correct the errors of their members; they amplify them.
  • They fall victim to cascade effects, as group members follow the statements and actions of those who spoke or acted first.
  • They become polarised, taking up positions more extreme than those they held before deliberations.
  • They focus on what everybody knows already—and thus don’t take into account critical information that only one or a few people have.

The report goes on to suggest ways to make groups work better:

  • Silence the leader
  • “Prime” critical thinking.
  • Reward group success.
  • Assign roles.
  • Establish contrarian teams.

As ever you can subscribe directly to the sources I have identified here (nothing is my copyright), and if you wanted to discuss please feel free to contact me via Procurious, or follow me on Twitter.