Category Archives: Life & Style

What is ‘keiretsu’ and why does it matter for supply chains?

Japanese business practices

There are numerous Japanese business terms that have made their way into the common English business lexicon. Kaizen and the 5S’s (seiton, seiri, seisou, seiketsu and shitsuke) are just a few. One that you may not be completely familiar with is ‘keiretsu’. While it doesn’t receive the same coverage as Kaizen, this practice carries significant supply chain implications.

Keiretsu occurs when a set of businesses with interlocking interests take a financial share in one another.

This practice, which is akin to a large buying organisation owning significant shares in one of its suppliers (and vice versa), is very common throughout the Japanese economy (particularly in the automotive industry). As multinational firms continue to drive towards vertical integration, we are starting to see more it in the West as well.

The successes

The interlocking structure of keiretsu is held up as one of the key factors that contributed to the immense success of Japanese carmakers through the 90’s. It was thought that by taking a financial interest in their suppliers (and by offering suppliers shares in their own business), Japanese car makers were able to diffuse the traditionally antagonistic nature of buyers/supplier relationships, allowing the two organisations to more readily reach mutually beneficial outcomes.

Acceptance in the West

Broadly speaking, the idea of keiretsu hasn’t sat well in American business circles. This is due in some part to the sense of xenophobia the term instils. Keiretsu was perceived by many in the US as a ploy by the Japanese to protect their own business interests from American competition, by only doing business with people they know.

Despite this reluctance, as western business leaders saw keiretsu succeed, they started to emulate it. In a 1997 article in The New Yorker magazine, Ken Auletta went to great lengths to point out how keiretsu practices had become common at many of the worlds leading media organisations (including Disney, Time Warner, Microsoft, NBC and News Corp).

Undoing keiretsu

Like many business mantras it appears that while keiretsu helped to solve a great number of business problems, the business practice is also responsible for creating its fair share of issues.

Concerned with some of the inefficiencies that accompany the keiretsu business practice, Toyota this year elected to unwind some of these entangled business relationships.

In April, the automaker took the bold step of instilling a former Toyota executive, Yasumori Ihara, as the CEO of one of one of its leading suppliers (and keiretsu partner) Aisin Seiki Co.

Ihara’s job… To undo some of the keiretsu practices that had formed between the two organisations.

It was feared that the close relationship that had formed between the two businesses had created lethargy in the supply market meaning that neither business was functioning optimally. Toyota was not driving the most out its supply base and Aisin’s overly comfortable relationship with the automaker meant the firm was not pursuing contracts with other car manufacturers as actively as it might.

Ihara was put in charge of the supplier and told to make the business more competitive or face losing Toyota’s business. The new CEO has also been challenged with selling Aisin’s parts into other automakers.

No silver bullet

This isn’t the first time procurement teams have reached a similar stalemate. The keiretsu vs. traditional supplier relationship discussion sounds a lot like the cost vs. value or innovation vs. price debates we often hear.

Perhaps what is most important to take away from these issues and debates is the fact that there is no silver bullet for managing a supply chain. The issues are layered; to think that a single business methodology can solve all procurement challenges is to grossly underestimate the complexities that lie with modern day supply chains. The challenge is to find a balance between co-operation, innovation and cost.

So the next time you hear of a new business methodology that’s set to change procurement for ever, I would suggest you take it with a grain of salt (or perhaps a sip of sake…)

How To Quit Your Job In Style

Breakin’ up is hard to do…

How to quit your job in style

The crooning Neil Sedaka lyric rings in my ears as I think of the last time someone gave me the news of their resignation.

Let’s face it – it’s never a pleasant situation, and it can, in the worst case, literally end in tears for the employee or the employer – or both.

But that doesn’t need to be the case if you, the employee, take a measured approach to resigning.

Just like an employer generally has to give two or three formal warnings before they can fire someone, I think it’s good practice for an employee to also give two or three warnings on their journey to resignation.

Following a structured process could increase your chance of turning around your existing job situation, perhaps even leading you to stay put. It could also maximise your chance of a civilised and potentially positive departure from your employer, with a glowing reference in hand.

OK, so you’ve decided to quit your job. That’s it, you’re out of there. Now what?

Wait two weeks.

You are probably thinking, ‘what do you mean? I want to go straight in and tell them what I think of them!’ That might be the case, but that wouldn’t be very strategic, would it?

The most important thing to remember is that you’re trying to build your career, not stick it to your boss. People often quit in anger as a result of something their boss or company has (or has not) done.

A dramatic departure typically ends up causing more trouble for the employee than the employer. It may sound harsh, but your company will replace you faster than you think. As one of my mentors says: “Leaving a company is like taking your hand out of a bucket of water … it may make a small ripple, but within seconds it’s like you were never there.” So don’t think ‘I’m going to show them’, because your departure won’t make a huge difference to the company, but it will make a huge difference to you. That’s why you need to be strategic in resigning.

If your career is important to you, take control and manage the outcomes. That same wise mentor of mine says: “The only common denominator in your career is you.” So ensure every boss you have had, no matter how bad you think they are, is an advocate of yours in some way. To be successful, you need as many people as possible in your corner, promoting you and your skills.

That’s why I recommend resigning in five smooth, strategic and stylish steps:

1.   The ‘I need more’ meeting

This is the first shot across the bow, where you put forward your personal business case for change. This is where you highlight the skills you have that you feel should be further leveraged by the company, or the experience you need the company to provide you with, in order to advance your career. You and your manager should agree on goals and a timeframe for this to happen. This is more than likely part of your regular performance review.

Now … this is where it’s important that you really reconsider whether you still want to resign. One of the big mistakes many employees make is that they assume just because their boss isn’t talking specifically about their development, that they aren’t thinking about it. There are often discussions and planning taking place behind the scenes about high potential talent – your employer may not make it obvious. Give your boss and employer the benefit of the doubt. Give them the opportunity to share their thoughts, or at least get motivated on an action plan for your development.

2.   The ‘it’s not happening’ meeting

This is when you meet with your boss to explain that the support or guidance offered in the ‘I need more’ review meeting is insufficient. This should spell out what you need, and by when. You should also ask what else you could or should be doing to help the company help you. There is a fine line you need to walk here … you need to be the squeaky wheel who needs growth, not the high-maintenance employee who needs to be placated.

3.   The ‘you need to know I’m looking’ meeting

This is the reciprocal to what an employer would call a final warning meeting. This is when you explain that you appreciate the efforts the company is making to help facilitate your professional growth, but the efforts are not hitting the mark. Importantly, your language should not be threatening and should focus on the facts about what was agreed and delivered or not delivered following previous meetings.

4.   The ‘I’ve accepted another offer’ meeting

This is the big one – the meeting when you resign. If you have done your job well in the first three meetings, this meeting will be relatively painless. You have been really open with your boss and given them every opportunity to respond to your professional development needs, so the resignation should come as no surprise. You may need to be prepared for a less-than-professional response. Hold your own and take the high ground. Remember, your goal is to be the most professional person in the room. You have followed a really transparent, structured process and given the company every opportunity to retain you. Now’s the time to stand proud.

5.   The ‘Let’s shake hands and be friends’ moment

I might be slightly optimistic about this one, but at least you should finish this meeting on the grounds of mutual respect. In the weeks that follow you will have numerous opportunities to do the right thing – getting your handover notes in order, briefing others in your team, sending the right messages to external and internal audiences about the reasons you are leaving, and the list goes on. This is your opportunity to ensure you leave on good terms, and you and your boss could be either advocates, or at least referees for each other.

In my experience, my worst bosses have been the ones that I have learnt the most from. So, if your boss was Mr Last Minute and his tardiness drove you clinically insane, you will be able to say: “In this job I learnt the importance of punctuality.” If your boss never met, called or emailed his team, you could say: “In this job I learnt the importance of communication in building employee engagement.”

Do these five steps all sound tedious and time consuming? They should, because if you do this properly, it could take up to six months. The reality is that you probably started applying for jobs at meeting number two, and even if you were outrageously lucky and expedient in the job application process, filling the role from start to finish will be three months anyway.

By following these five steps, you will have provided your employer with every opportunity to compel you to stay so you can feel comfortable that you’re making your next career move for all the right reasons.

Hold On To Your Glass Balls

Hold On To Your Glass Balls #inspiration

I used to flake off and daydream in most corporate training programs, but I’ve never forgotten the lesson I learnt from one speaker who likened life to juggling balls.

Obviously, the trick is to keep all the balls in the air at one time – work, family, health etc. But the important point he made was that some balls were rubber, but others were glass. Work is a rubber ball, if you drop it, it will bounce back, but others – like your health and family – are glass. If you drop them, they are difficult to recover.

This week I have to drop the work ball – and I hope it will bounce back.

I am writing this en-route to London from Melbourne. I have called short a three-week business trip to go home to my Mum. No, not because I needed a cuddle, but because she has been hospitalised. I won’t share too much here, but it’s her heart, and it’s not good.

With three businesses (two of which are on the other side of the planet), two beautiful sons and a busy husband, my scheduling capability and mental bandwidth do get stretched… but I like it that way. The only catch is – when things come unstuck – they really come unstuck – and have a big ripple effect across my family and business – such is the case this week where I have to cancel and re-schedule around 15 meetings and presentations with some of Australia’s best and brightest procurement professionals.

Before I even left for this trip, I was fretting about leaving my already-sick mother and two boys for three weeks (especially during the school holidays). My husband went into coaching mode and basically told me to “man-up” and commit myself to the business trip. He would be fine. The boys would be fine. Mum would be fine. Just go.

So let me tell you how good things were going before they came unstuck.

I hit Singapore with a bang and was thoroughly inspired and energised by the debate around the first CPO Asia Roundtable. I had some great discussions with some long-term clients and Austrade. Unfortunately, meanwhile at home my husband inadvertently gave the whole family food poisoning by cooking some out-of-date sausages. Everyone was down for the count, including the babysitter, which meant that my husband had to take his first-ever sick day off work. Not good… but, then again, nobody was seriously injured.

Next stop was Brisbane – I met with some of our long-term clients, had dinner with the Brisbane Roundtable. Sydney was next – presentations to two procurement teams, fruitful discussions with clients. Tick. Meanwhile at home, a whole series of appointments (that had dutifully been put in my husband’s outlook calendar) had been missed… maths tutoring, dinner with friends, the list went on. Once again, not good, but, once again – nobody was seriously injured.

By now you’ve probably worked out that my husband is an absolute gem. And although I’ve just teased him here, and in my speeches on social media where I refer to him as the “pale stale male who doesn’t want to be poked or linked and doesn’t give a Tweet”, he is, in fact, the epitome of the ideal modern man.

He helps carry the domestic load and he is actively involved in our son’s lives.

Let’s face it – managing work-life balance is not an exact science – it’s a daily, weekly, monthly pursuit of excellence… well maybe in my case… definitely a case of juggling balls. And my husband is right there beside me.

So when the phone rang at the end of The Faculty’s two day strategy session and it was my husband telling me how he’d helped my mother when she thought she was having a heart attack and they were on their way to the hospital with my two boys in tow… I knew that I had to be with them.

I want to thank everyone who made time in his or her diaries to meet with me this week, quickly followed by an apology for any inconvenience I have caused by heading home to London.

I also want to thank Euan and Jordan in the Procurious team in Europe for their mastery in speech and PowerPoint, not to mention Marisa and Max for co-ordinating the visit. All your work will not be in vain!

It’s about an hour until we land at Heathrow. I can’t wait to see Mum. I want to be there to catch the glass ball before it hits the ground. I know I will.

Post-script – I’m home, she’s fine, procedure on Tuesday and hopefully she’ll be as good as new.

Watch Tania deliver the workshop she took to Australia on using Social Media to win the War on Talent:

How To Get Ahead: 5 Key Skills For Generation Y

Five skills to give you a head-start  in your procurement career

5 skills to give millennials the edge in the procurement profession

If you are one of the Generation Y (born between the mid-1980s and 2000) and have ambitions to get ahead in procurement, you can expect great opportunities ahead due to the retirement of the Baby Boomers.

There’s a lot of criticism – much of it unfounded – about young professionals having a sense of entitlement, being inwardly focused and having a preference for job-hopping. Procurement people, however, mostly don’t behave like that.

Generation Y, also called “Millennials”, have the advantage of immersion in new technologies from an early age, and exposure to rapid change has made them fast learners. The challenge is to put these skills to work.

Success in procurement is not only about systems and processes; it’s about how we handle people. The so-called “soft skills” are more critical than ever.

Here are five of our suggested success criteria. They are skills you can acquire through training and experience. Some may require you to re-train or adjust your approach and attitude to your job.

  1. Data Analysis

Being able to slice-and-dice spend data will not be enough. Your manager will expect you to have well-developed financial analysis skills. You could be asked to do a should-cost-analysis, explain the implications of fixed and variable costing, and analyse financial ratios, so just be ready. There is also much talk of “Big Data”. The sheer volume and complexity of available data will require new skills. It has the potential to assist procurement professionals to make better, more informed decisions if properly understood and managed well. Advanced MS Excel skills may be required, so get up to speed by taking a course and practicing the techniques.

  1. Researching the market

A natural curiosity helps here. Supply market analysis and gathering intelligence may be hard for some, but it can be learnt. Start with an overview of the global market and industry indicators, and then consider how this applies to your category plan or sourcing event. Get to know the market leaders in depth. This includes evaluating the financial health of the main players, studying their results and their profitability. Keep updating your knowledge of the global and local market as it pertains to your job role.

  1. Negotiation skills

This is definitely a learned skill; everyone uses some type of negotiation in their everyday life. In procurement, negotiation is a process in which you and your supplier attempt to reach an agreement on a matter of mutual interest, despite conflicting objectives.

Traditionally the goal is to:

  • source the right product or service
  • at the right price,
  • at the right time,
  • in the right location, and
  • in the right quantity

Negotiation is all about compromising, on both sides, to meet somewhere that is acceptable to both parties. There are many learning resources available to ambitious young people on how to develop negotiation skills, but don’t discount practical experience. Ask to sit in or take notes in meetings to have the chance to observe seasoned professionals in a real life negotiation situation.

  1. Understand Total Cost of Ownership (TCO)

TCO is a concept widely applied in procurement and strategic sourcing. It is often illustrated with an Iceberg metaphor, like in the image below. Make sure you understand the model and can communicate its importance to your internal customers and users. In its simplest form, it is “an estimate of all direct and indirect costs associated with an asset or acquisition over its entire life cycle”.

 

  1. Using social media

Be aware of your organisation’s policy on social media platforms, such as Twitter and LinkedIn. The Internet is a powerful tool when used in the right way, but fraught with pitfalls. A word of caution: manage your personal on-line behaviour as if your boss is always watching, no matter your privacy settings.

Many companies support the use of social media in procurement within certain limitations. Work out how to apply the technologies for best practice in your job, while staying within the parameters outlined in any company policies. You could look for vendors, gauge how active and knowledgeable they are, see what issues they discuss and what value-added information they offer. Through social media, you can get insights into a supplier’s capabilities and his approach to innovation.

Your confidence, ability to process and apply new ideas, and your understanding of new technologies can help revitalise an otherwise pedestrian procurement function.

If you were offered unlimited leave would you take it?

If you were offered unlimited leave would you take it?

It seems like a stupid question. You would no longer miss friends’ weddings. You could spend more time sailing, skiing, singing or whatever it is that makes you happy. Maybe you could even take that trip to Japan you promised your partner all those years ago…

On the surface, unlimited leave sounds a like a no-brainer for employees, but in recent years a number of companies have implemented these schemes and, perhaps surprisingly, they’ve tended not to work out.

Most people, myself included, would assume that an unlimited leave policy would result in workers taking more days off. However, the opposite is true. Firms with unlimited leave schemes in place have found that their employees are in fact taking less time off.

This is a worrying finding, as studies show that employees who take time off from their jobs return to work happier and more productive.

The fact is that our brains need breaks. The National University of Singapore found that “those who spent less than 20 per cent of their time perusing the Internet’s silly offerings were 9 per cent more productive than those who resisted going online.”

In the same way that watching the occasional cat video can improve concentration, taking a longer break improves people’s performance when back at work. A CCH Human Resources Management study showed that over 50 per cent of employees felt more “rested, rejuvenated and reconnected to their personal life” and that almost 40 per cent of workers “felt more productive and better about their job” after returning from time off.

So what is wrong with people?

Why don’t we take advantage of unlimited leave? The problem seems to be a matter of human psychology. Rather than seeing the opportunities and benefits that can come from the increased flexibility of unlimited leave, workers tend to focus on the negative aspects that might accompany the program.

No one wants to be seen as ‘the guy who takes the most leave’ as being thought of as ‘that guy’ can be linked to laziness or worse still worthlessness.

Mathias Meyer, of the firm Travis CI, provided the following insight into his organisation’s experiment with unlimited leave.

“When people are uncertain about how many days it’s okay to take off, you’ll see curious things happen. People will hesitate to take a vacation day, as they don’t want to seem like that person who’s taking the most vacation days. It’s a race to the bottom instead of a race toward a rested and happy team.”

Some of us want to ‘earn’ our fun

It’s a strange thing, but I think there is a large group of people who want to have worked hard and banked away their annual leave before booking a holiday. These people are looking for the sense that they have ‘earned’ their holidays. They’ve worked hard and the vacation days are a form a currency for this work that they are now entitled to spend.

The future of leave 

According to The Society for Human Resource Management unlimited vacation policies are only offered at 1 per cent of US firms, but a further 2 per cent of firms are said to be considering such programs. Tech and start-up firms like Groupon and Netflix dominate the group that has already adopted unlimited leave programs.

Unlimited leave policies, if implemented properly, certainly seem like an effective way to attract Millennials to your firm, not to mention a great way to remove annual leave accruals from your balance sheet.

I would also dare to suggest that outside of the US, where the majority of research and anecdotal evidence on unlimited leave programs has come from, the figures around staff actually using their leave entitlements under such schemes may be a significantly higher.

US employees across the board tend not to use their leave allocation. Only 51 per cent use their full allocation and 15 per cent use no leave at all. French workers, on average, take twice as many vacation days their American counterparts.

ISM2015: 3D Printing and what it means for procurement

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

3dprinting

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

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

Why is 3D printing such a big deal?

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

How does it work?

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

Different technologies

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

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

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

What’s the future hold for 3D printing?

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

Advice for supply chain professionals dealing with 3D printers

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

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

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

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

ISM2015: Somebody brought jazz to an exhibition hall…

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

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

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

Walking the exhibit hall floor

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

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

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

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

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

Discover more about the Institute for Supply Management (ISM)
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Correct Pronunciation Matters

Correct Pronunciation Matters

How often do you meet a new person and have difficulty remembering their name?

What do you do when you can’t pronounce a name?

How do you ask a person how to pronounce their name without coming across as rude?

These questions came to mind as I was working with a mining organisation last week. I met a South African person who came to Australia a few years ago to work on a Queensland mine.  His name is spelt as ‘Dawid’ and pronounced as ‘Dahwid’.  Shortly after arriving in Australia Dawid realised that his colleagues were referring to him as ‘David’ in their verbal and more formal communications.  Dawid gave his name great thought, questioning whether he should simply change his name to David to make life easier for those around him and to assist him to ‘fit in’ to life in Australia.

As our lives become more globalised we find ourselves encountering people with unfamiliar names more and more.  Correct pronunciation and remembering unfamiliar names can be both challenging and anxiety provoking; it isn’t as though we can turn to a dictionary or ask others for help when we are ‘in the moment’.

Correct pronunciation of names demonstrates respect and cultural awareness, it can guide our first impressions, judgements and biases.  Foreign names, differing order of names, multiple family names, accents and dialects are just some of the name challenges that we need to successfully navigate.

Some name pronunciation tips are:

  • When you are initially introduced, try to use the name within the first few minutes of your meeting.  Ask the person to correct you if you mispronounce their name.
  • Keep your tone casual and friendly if you are making corrections.
  • When you find yourself wanting to correct a mispronunciation, try simply restating your name. It will assist the other party to remember and correct any mistakes on their behalf.
  • Remember that your name is possibly equally as difficult for them to pronounce, so help them. Give your name phonetically, as well as the spelling and remind them that they should feel free to ask you for any help remembering or pronouncing your name.
  • Show curiosity.  Ask people the story of their names.  In many cultures names have a meaningful background and are steeped in tradition. Not only does this create a dialogue but it will also help you to recall their name in the future.
  • Speak up early if you have trouble.  If you can’t pronounce or remember a name don’t let time pass; remember it becomes even more difficult as time goes on.

As Dawid decided to keep his birth name, he highlighted to me the impact that the mispronunciation of his name had for him.  Mispronunciation can appear insignificant on the surface, but can have far reaching consequences that you may never be aware of.  Be mindful that expectations, bias and credibility can all be damaged by name mispronunciation. The reality is that we are never going to pronounce names correctly all of the time, and occasionally we will forget a person’s name; but by demonstrating our efforts through some simple questions and behaviours we have a better chance of succeeding.  This can go a long way to improving first impressions and long-term relations.

ISM2015: The human factor in Total Cost of Ownership

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

Total cost of ownership

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Robert Gates summarises the state of the world at ISM2015

This article is part of a series about Hugo’s visit to ISM2015 in Phoenix, Arizona. Today he tells the memoirs of a secretary at war…

Robert Gates talked at ISM2015

Robert Gates is undoubtedly the most high-profile speaker I’ve had the chance to listen to in the flesh. Former Director of the CIA and Secretary of Defence under two very different US presidents, George W Bush and Barack Obama, Gates made the point that over his career in Washington he actually worked for no fewer than eight presidents.

He began by putting out a request to the assembled businesspeople to hire some of the million soldiers, sailors and airmen leaving military service over the next few years who will be looking for fulfilling careers, saying that they will be some of the most resourceful candidates available for hire. Gates comes across as somewhat pessimistic throughout most of his speech, except when he touches on the subject of servicemen and servicewomen, speaking optimistically and warmly of the great potential of America’s youth.

He’s scathing about Washington DC, referring to it as the “city of egos” and he is no fan of LBJ, a big fan of Reagan, and speaks of the surprising similarities in the leadership styles and strategic choices made by George Bush and Barack Obama. The continuity of security policy across the last two years of Bush’s presidency and the first two years of Obama’s was in no small part due to Gate’s presence, with fundamental national interests and strategic choices remaining steady. He notes, however, that the current situation in Iraq and Afghanistan is blamed equally on Bush for invading, and Obama for withdrawing too soon.

After this brief introduction including some jokes about stupidity in Washington DC and LBJ’s stupendous ego, Gates launches on an absolutely fascinating summary of the state of the world’s security situation. He begins with the consequences and message sent by Obama’s withdrawal from Iraq and Afghanistan, widens his focus to the whole of the Middle East; ISIS, Syria, Libya, Saudi Arabia, Iran and his grave concerns about the recent nuclear agreement, Yemen, Egypt, Turkey, Jordon, Lebanon – before turning east to the unsustainable growth of China and north to Putin’s Russia, Ukraine and the Crimea before finishing with Cuba. He has an all-encompassing world-view and draws repeatedly on history – WWII, the Cold War and the collapse of the Soviet Union, the hopelessness of artificially created borders drawn up by the victorious powers after WWI. Some notable quotes from this part of his speech include:

  • “If we treat China as an enemy it will very soon become one.”
  • “Nationalism is easily stoked but hard to control.”
  • “We can expect more attempts by Russia to thwart US influence.”
  • “The greatest challenge to national security and the global economy is not an international threat – it can be found in the two square miles around Capitol Hill in Washington.”

Gates then pulled his focus back to the US and told the audience that in his opinion, all of the county’s security woes were self-inflicted. He dwelt on the cuts to defence spending and the instability caused by the withdrawal of US world leadership. He touched on the low rating given to terrorism risk in the audience poll [see previous blog post], agreeing with the 5% figure and noting that terrorist attacks were not an existential threat but rather something that can be managed and suppressed (on American soil, at least) in much the same way as crime. He points out that attacks like Fort Hood, the Boston Bombing and Charlie Hebdo are not disruptive in that they do not affect people’s ability to carry on with their lives and continue to do business.

To summarise the main take-outs for procurement professionals from Gate’s speech:

  • Supply chain disruption from global/cataclysmic conflict has diminished dramatically while the potential for localised conflict is very high.
  • International commerce, energy supplies, freedom of navigation and other factors that affect supply chains depend not on events happening overseas but on decisions made in the US.
  • When doing business with the Middle East and North Africa, most states have a good deal of stability apart from the ones already regarded as “failed” – Syria, Libya, Yemen, potentially Lebanon and Iraq.
  • On negotiation: the worst possible position to be in is an unwillingness to walk away from the negotiation table.
  • Hypocrisy in supply chain ethics: the US sources rare earth minerals from China despite its human rights record, titanium from Russia despite its aggression.
  • Young people he has seen (particularly those in uniform) are of an extraordinary quality – they’re smart, eager and they care about things.
  • The most important trait for a leader is a willingness to surround yourself with smart people and listen to them.

Gates received a standing ovation from an audience that knew how privileged they were to hear from such a great mind. A brilliant opener to ISM2015 that really set the standard for the rest of the conference.