Category Archives: Procurement News

Unlocking the Hearts and Minds of Millennials

A Millennial warned a room full of procurement leaders that they need to rethink their mindset if they’re ever going to win the hearts and minds of Millennials.

Hearts and Minds MIllennials

Too many Australian leaders overlook the fact that 50 per cent of the world’s population is aged under 30, and have no idea how to effectively communicate with them.

Holly Ransom is the CEO of Emergent Solutions, which works with leaders, organisations, and governments, globally to set the benchmark, and be frontiers of change and innovation.

It helps challenge their thinking, evolve their strategy and build their capability to engage with market disruptions head-on, unlocking new opportunities, outcomes and value.

Trusted Sources

The room full of procurement leaders collectively leaned in while Ransom spoke, captivated by her high energy talk despite it being the last session of the 9th Asia-Pacific CPO Forum, held in Melbourne last week.

Ransom outlined some research around purchasing decisions among Millennials that found that 1 per cent of Millennials trust advertising, 30 per cent trust blogs, while the majority are looking for some sort of online reference before making a purchase. And 65 per cent of Millennials are judging companies and businesses based entirely on their digital presence.

“Sometimes we seem to forget that half of the world’s population is under 30; probably because we spend so much time talking about the other end of the spectrum – the elderly.”

She urged the room to bear in mind that the average American male has spent 10,000 hours gaming by the time they reach of the age 18, which is exactly the same amount of time they’ve spent in school.

“It’s about thinking about how you can leverage that to your benefit,” she says.

Feel Connected

The procurement sector needs to understand that trust is manifesting in new ways, citing the fact that people are prepared to jump into a car with an Uber driver they’ve never met, and appear to feel safe.

“This younger generation wants to see, connect and feel. They want authenticity from our brands and businesses, and they want to see that footprint extending to something far more than just shareholder returns.”

Ransom also touched on the changing face of the workforce, explaining that Millennials with a laptop and a few clients much prefer to work from anywhere.

“Freelancing is a reality and it unlocks the global human capital pipeline, which presents huge opportunities for businesses. You can hire someone to handle a project for you, rather than having to hire a new employee.”

The benefits of being able to outsource to a freelancer includes allowing leaders to think more laterally, and spend more time on their leadership approach, she says.

“Through leadership when dealing with consumers and suppliers, we need to make sure that Millennials can see, touch and feel what we’re trying to get across to them. They want to come on the journey with you.”

The ‘Why’ in Communications

Ransom also spoke about her initial cynicism toward Rotary International when invited along to a meeting, but the statistics prompted her to get involved to bring about change.

“When I thought about Rotary, I thought of pale, stale and male. I couldn’t believe it when I was told that there were 1.2 million members, and yet only 12 per cent of that were women, and 2 per cent of that were under 30. Hearing that was enough for me to want to get involved.”

Ransom has helped Rotary lead with the ‘why’ in their communications to help build engagement, and better explain what they’re about.

“We realised that Rotary focused too much on the youth message. It’s a classic example of how easy it is to assume that our why, is someone else’s why. And that wasn’t the case here.”

Ransom ended by giving an example of innovation that involved a young girl who was given $10. She used the cash to hire two DVDs, which she played them in two halls, and charged everyone a few dollars to come and watch the movie. She turned that $10 into more than $300, in a clear demonstration that innovation doesn’t have to be expensive.

“I challenge you to think about what that $10 could do to build engagement in your business in the next two weeks. We need leaders to stop thinking that innovation needs to be hugely expensive, and that you need entire teams to drive innovation. That’s just simply not the case.”

Why Is a Project Procurement Strategy Absolutely Necessary?

An effective project procurement strategy is based upon a shared understanding of the role and purpose for the procurement process.

Project Procurement

Frequently, there are different perceptions of this at senior management, project management, end-user, and supplier levels.

A shared focus needs to be built upon an alignment of perceptions and understanding around what the project requires from a well performing procurement process, which is consistent with the agreed aims and objectives.

A procurement strategy that is successfully integrated, and implemented, within the Project’s cascade of objectives and performance measures, is recognisable by the following five characteristics:

  1. Clear “buy-in” from senior and broader project stakeholders to the benefits of embracing an agreed role and purpose for the procurement process, and how people need to interact to ensure that outcomes are achieved in a satisfactory manner.
  2. Competent, professional commercial people playing a key role in the process, at the right interaction points, to ensure delivery of clear solutions from supply markets that meet project needs.
  3. Key suppliers and contractors who treat the project as genuine ‘preferred customers’.
  4. Processes, systems, measures and enabling structures that support delivery capability along the entire procurement process cycle.
  5. Capacity and capability that’s available at the right pressure points.

Setting out the Objectives, Goals and Guiding Principles

Strategy documents need to outline two key facets — the objectives of the strategy, and the goals which are necessary to achieve these objectives.

The goals describe what will actually happen, and objectives describe what will be achieved as a result. The guiding principles reflect the core values on which the strategy is based, and which will inform all the actions which are planned as a result.

Procurement will:

  • be transparent;
  • be driven by desired results;
  • create the most economically advantageous balance of quality and cost;
  • reduce the burden on administrative and monitoring resources;
  • lead to simplified or routine transactions;
  • encourage open and fair competition; and
  • follow all appropriate regulations and legislation.

These values in turn translate into key performance indicators that can be used to assess the quality of results.

Setting the Objectives 

There’s no short, definitive list of subjects to include in procurement strategy objectives. Priorities change over time – strategies need to be reviewed and revised to reflect changes in circumstance and focus.

Subjects to consider include:

  • Operating Structure – is it fit for role and purpose, influencing where it should and as it should in a devolved environment? Do end users know what’s available to them by way of contract access and the procedures that they must follow, and are these procedures benchmarked against best practice, reviewed and updated as required? Is there clear project leadership of the procurement process?
  • Expenditure Analysis – is project expenditure on bought-in goods and services analysed in such a way that amounts spent, with whom, on what, and by whom, are understood, under control and spent optimally?
  • Maximising Value – how is it intended to maximise value through procurement activity, the use of competitive tendering and established collaborative contracts, and the deployment of procurement professionals?
  • Supplier Strategy – does the project have a strategy for dealing with suppliers and markets, such as buying local and compliance with relevant Regulations? Is there available guidance to suppliers on elements of the procurement policies (sustainability, SMEs etc, key contacts and signposts), and core values?
  • Social Responsibility – how does the project plan to take account of its social, economic and environmental responsibilities through procurement e.g. sustainability, health, safety and welfare, environmental management, equality, ethical procurement, working with the local business and social communities?
  • The Use of Procurement Tools – is there a strategy for operating the most appropriate, efficient and effective Purchase to Pay systems and procedures including use of procurement cards, e-tendering, e-auctions and an e-procurement platform and are the benefits of such use – reporting, planning, measurement and cost control – clearly explained and understood?
  • Supplier/Contract Management – are key suppliers identified and, if so, who are they and why are they key? What is the Project approach to supplier and contract management and what are the plans for monitoring supplier performance and managing improvements?
  • Performance Reporting – are there mechanisms/indicators in place whereby performance monitoring within the procurement process is routinely reported to senior management? Do such mechanisms include benefits and savings reports, customer and supplier feedback on the effectiveness of procurement performance?
  • Risk Management – are key risks and dependencies relating to procurement process, legislative and regulatory non-compliance identified, understood, monitored and appropriately communicated across the Project?

ACTION: develop and adopt a clearly documented procurement strategy in terms of measurable and managed contributions to the achievement of procurement, and ultimately Project, objectives.

Stephen Ashcroft BEng MSc MCIPS is a procurement learner stuck in the body of a procurement veteran, and with over 20 years’ experience still sees the glass as half full. Check out this article, and more, on ThinkProcure.

Should We Stop Using the Term ‘Strategic’ in Procurement?

No other profession puts the word ‘strategic’ on their business cards. Why do we do so in procurement?

Strategic

A high-powered panel at ISM2016 drove a spirited debate about the use of the term ‘strategic’ in the profession. Chaired by Joe Sandor (Professor of Purchasing and Supply Management, Michigan State University), the panel included:

  • Hans Melotte (ISM Board Chairman, Senior Vice-President and CPO, Johnson & Johnson);
  • R. David Nelson (procurement veteran and Chairman, Dave Nelson Group);
  • Jeff Smith (Global Sourcing Director – Indirect at DuPont); and
  • Beverly Gaskin (Executive Director Global Purchasing, General Motors).

Actions Not Words

Actions speak louder than words. That’s the message from Hans Melotte, who argued that it’s unhelpful for the profession to continually emphasise how ‘strategic’ we want to be.

Overuse of the term dilutes the concept, especially when having a conversation with sceptical stakeholders. “Procurement needs to be strategic”, says Melotte, “rather than just talk strategic.”

Being strategic comes down to having the right people in procurement, who can talk the language of the business, define their value contributions in a way that resonates with stakeholders, are forward thinking, proactive, and focused on the future.

Historical Overuse

When did procurement start to use (and overuse) this term?

R. David Nelson, who started out in an enormously different procurement landscape in 1957, has watched the profession grow from a back-office function to a highly-influential business partner.

As any modern professional knows, there are plenty of stakeholders who still remain unconvinced, and it’s very possible that our constant repetition of the term ‘strategic’ was a somewhat ham-fisted attempt to convince these sceptics that we do indeed deserve a seat at the table.

Interestingly, none of the major organisations represented on the panel use the term any more. Hans Melotte explains: “At Johnson and Johnson we abandoned the use of the word strategic, because you shouldn’t label yourself who you want to be – you should be who you are. The whole notion has passed its expiry date”.

Divisive Term

The other problem with the term is that it’s divisive. By calling half the population “strategic”, you’re implying the other half of the function is non-strategic. This sends a negative signal throughout the organisation, and breeds resentment around job titles.

Beverley Gaskin agreed: “Strategic buying is like an oxymoron. If you’re doing anything in the buying field that isn’t strategic, you shouldn’t be doing it.”

Even the term “purchasing strategy”, says Gaskin, is misleading. “There’s no such thing as a purchasing strategy. There’s a company strategy and you have to understand your role in getting that done.”

The same concept appliers to how we talk about strategic and non-strategic suppliers. Again, it’s our responsibility to move away from divisive language. After all, you’re never going to tell a supplier that they’re ‘non-strategic’.

Definitions are important. Melotte reasons that if you define ‘strategic’ as something that serves the strategy – a choice wisely made, based on facts and intelligence – does that mean ‘non-strategic’ is defined as the opposite of this? No CPO would want any resources who are not aligned with the company strategy or value mission.

This isn’t to say that the term ‘tactical’ is the opposite of strategic. Professor Joe Sandor provided a valuable reminder that the word ‘strategy’ comes from the military, and simply means planning. ‘Tactic’ means execution, and a plan must be executed. Tactics, therefore, are strategy in action.

Jeff Smith of DuPont summed up the sentiment of the panel: “It’s time the profession moved away from the term”, he said. “If you behave strategically, you’ll always be invited back”.

Stay tuned for more from ISM2016 in the coming weeks. You can find out more about the event on the ISM website.

Risk Mitigation – Hope Like Hell It Doesn’t Happen to You

Organisations can plan and strategise for risk mitigation in their supply chain, but ultimately a lot of it comes down to luck.

Risk mitigation

In the words of one member of The Faculty’s Melbourne Roundtable, “There’s a lot of risk out there – you can mitigate all you like but in the end, you just hope like hell it doesn’t happen to you.”

Risk-experts Aaron Cleavely-Millwood (Market Development Manager – Regulatory, Market and Operational Risk) and Nathan Lynch (Head Regulatory Analyst) of Thomson Reuters, visited the Melbourne and Perth Roundtables to take members through their organisation’s global research findings on risk and disruption.

While the Thomson Reuters research focused on disruption to financial services, Roundtable CPOs drew some key learnings from shared challenges around governance, risk, compliance and regulatory drivers.

The Faculty ran its own snapshot survey among its Roundtable members, providing some interesting comparisons between Thomson Reuters’ global, cross-industry study and our local, procurement-focused findings.

Supply Chain Risks

Thomson Reuters’ top four disruption risks revolved predominantly around price:

  1. Raw material price fluctuation
  2. Currency fluctuation
  3. Market changes
  4. Energy fuel price volatility

The Faculty’s findings revealed that CPOs have a slightly different set of concerns:

  1. Supplier monopolies
  2. Market changes
  3. Climatic or natural disasters
  4. Emerging technologies

Risks and Impacts

Price risk is an obvious and ever-present danger and a key part of strategic planning. Cleavely-Millwood gave the example of the 2015 drought in Russia, which saw the price of wheat rise by 41 per cent, and create a huge impact throughout Europe. Spikes such as this (and of course the drop in oil price) cannot necessarily be forecast, but it is possible to plan for and hedge against these events.

Interestingly, social activism was placed at the bottom of both lists. This is surprising given some of the recent disruptions driven by environmental activism in the Australian coal and coal seam gas industries.

The Thomson Reuters presentation focused on fraud risk. This has been identified as a high area of concern for Australian organisations despite increasing regulation. CPOs have to be continually aware of the risks around supplier, contractor and employee fraud, and have plans in place to minimise the damage when fraud takes place.

Increased regulation is a double-edged sword. It will effectively lower the chance of fraud risk and other potentially damaging issues, but will mean CPOs need to spend more time and resources ensuring compliance.

Roundtable delegates were taken through various major pieces of regulation including the UK Bribery Act, the Australian Senate Review of Bribery Laws, the Dodd-Frank Act, and the upcoming Unfair Contracts Act.

The key takeaway – communicate regularly with your internal legal counsel to ensure you keep track of regulatory change.

Effective Risk Mitigation

Our snapshot survey asked members to nominate the most effective risk mitigation measures, with the following results (1 being the most effective):

  1. Building strong supplier relationships
  2. Creating a risk-aware culture
  3. Improving market intelligence
  4. Improving IT and data analytics
  5. Increased sharing of information

The Faculty’s advice for managing risk:

Due diligence can take place through three levels of risk assessment:

  • Ensure you thoroughly investigate new vendors.
  • Regularly perform risk assessments of existing vendors to check if anything has changed.
  • Ensure you have visibility of your suppliers’ suppliers, and their suppliers, and so on, until you’re confident that there are no major risks several layers down the supply chain.

Digital Economy, Disruption and the Future of the Payments Industry

Faster payments and customer demand is disrupting the payments industry, but PayPal say that the future is bright.

Digital Payments Industry

It may have been a boring space 20 years ago, but now the payments industry is undergoing major disruption and innovation, Libby Roy, Managing Director of PayPal, told the 9th Asia-Pacific CPO Forum in Melbourne.

The payments industry covers everything in to the end-to-end process that powers commerce, and is involved in all aspects of our lives. PayPay is involved primarily in the B2C space, which moves incredibly fast due to the proliferation of new players, and the integration of new technology powering our payments.

The innovations unfolding in the payments space is being driven by increasingly demanding consumers wanting the ability to make quicker payments.

Please the Consumer

Roy used an analogy to explain that everyone in the room was the consumer that PayPal was working to please.

“Think about it. Do you wait for your favourite television show to be scheduled and aired on television, or do you download the entire series, or live stream, because you can’t bear to wait? That desire to have access to thing immediately is higher than ever before, and we are leading the way in beautiful, frictionless payments,” Roy says.

Australia is fast becoming a cashless society in the consumer space, with the vast majority of payments using cards or contactless technology.

PayPal is continuously working toward new innovations to solve the pain points of consumers in a more seamless way, with new payment gateways and partnerships being constantly explored. This will result in a number of flow-on effects that will impact upon various industries, including procurement.

Social Payments

“Payments in the near future will become social, which lets you buy something at the moment of discovery. Consumers will be able to decide whether the good or service will work for them, and then be able to transact that very moment. Payments will be attached to any device, which will add billions if not trillions into the economy.”

For example, payment options will be attached to the household fridge, and connected to the local supermarket for re-orders.

“These innovations are being driven by the tremendous amount of investment occurring in the fintech space, though not all of the startups in this space are successful. It’s not surprising, it’s a complex space.

“Meanwhile, we’re seeing a number of new payment players aside from the banks and financial services companies entering the payments space, including Apple, Facebook, Amazon, Google and Microsoft,” Roy says.

Roy also told the audience that PayPal has started lending limited funds to small businesses to help them grow.

Why the Entire Procurement Profession Needs to Get Social

Tania Seary tells delegates at the Asia-Pacific CPO Forum that procurement needs to get social to drive the profession forward. 

Tania Seary - Get Social

Procurement professionals need to claim their rightful place on the Internet, and get social, by actively participating in social media and blogs for the benefit of the broader industry, the founder of Procurious told a conference in Melbourne yesterday.

Tania Seary, who founded Procurious to connect, promote and support procurement professionals across the globe, told the 9th Asia-Pacific CPO Forum that online visibility has several benefits, but that it’s everyone’s responsibility.

Large portions of the procurement profession are working in isolation, unaware that there is a whole universe of knowledge available to help them do their jobs better and learn, Seary told the audience.

In fact, there are more than 2.5 million procurement professionals in the world, but probably less than 500,000 that the industry can readily connect with, she says.

Share, Share, Share

Procurious was launched two years ago as the world’s first online business community dedicated to procurement and supply chain professionals.

“The procurement profession must share, share and share online to build our collective muscle, amplify attention to our impact, and tackle our thorniest issues together,” Seary says.

This can start by simply sharing your social media profile, your business photo, and by broadcasting your everyday successes.

“Think about what it would mean if a newly-minted company CEO who wants to understand what we do, takes the time to Google ‘procurement’ and sees overwhelmingly positive language in their search results. That CEO can’t help but be inspired and energised by the hype and positivity around procurement,” Seary says.

She also urged all procurement professionals to ask questions and share what they don’t know, saying that without sharing the things you’re concerned about, no action can be built, and there can be no moving forward. Giving back to enrich the wider community, by understanding that everyone has something valuable to share is important too, she says.

Big Ideas 2016

The highlights of Procurious’ Big Ideas Summit, held last month in London, were also shared to the 50-strong audience of procurement leaders. Keynote speakers included IBM, Coupa, ISM, Facebook and The Economist.

“What happened in the conference in London was only a small part of the story. What makes Big Ideas truly unique is that it is a digital conference that is amplified to procurement professionals around the globe.”

For example, the #BigIdeas2016 hashtag was tweeted 1,500 times, reaching a potential audience of 4.3 million individuals, all around the world, in just over 24 hours.

“Let me tell you that the message in the room was clear. Procurement needs to think the unthinkable and certainly rethink the possible,” she told the audience.

The UK is now auditing Supply Chain Purity in the fight against slavery, while Social Procurement is on the agenda in Australia.

Get Social Enterprises on Board

Social Enterprise UK CEO, Peter Holbrook, announced at the Big Ideas Summit the ‘Buy Social Corporate Challenge‘, which will see a group of high profile businesses aim to spent £1 billion with social enterprises by 2020.

The founding partners include heavy hitters like Johnson & Johnson, PwC and Zurich.

J&J are taking action and supporting people often termed ‘furthest from employment’, with the ‘Social Impact through Procurement‘ initiative aiming to create at least 150 jobs for these people by 2020.

“Here in Australia, Social Procurement has been a concept we have been talking about, trialling, but the big ideas summit confirmed that this is now firmly on all major corporation’s agenda.

“Not only is this the right thing to do, but this is the sort of thing that the C-level, annual reports and what Procurement could be famous for. So where are we with Social Procurement in Australia? I will be interested to hear.”

Leading Australian Political Journalist Unravels Political Landscape

Australia’s political landscape is a complex beast. We ask senior Fairfax political editor Laura Tingle to unravel these complexities for procurement professionals.

Political Landscape - Laura Tingle

No matter which political party you back, there’s no doubt that the political landscape can have major ramifications on the procurement function within your business.

So, we asked Fairfax Media‘s Political Editor, Laura Tingle, to unravel the elements of politics, as Australia wades through this longest of all election campaigns, and try to understand what sort of government it faces after July 2.

“It’s Complicated”

Laura explains that Australia heads into the upcoming election with Labor currently holding a ‘notional’ 57 seats and the Coalition – after Tony Abbott’s big victory – holding a ‘notional’ 89 seats.

“The national polls currently suggest – on a swing of about 2.5 per cent against the Coalition since the last election – that we have started the election campaign in the realms of an outcome where the government would just get back into office, or where there might be a hung parliament.

“That is, there are 13 Coalition seats held with a margin of less than 2.5 per cent, just one seat less than would need to change hands for the Coalition to lose its absolute majority,” Tingle says.

But, as the saying goes, ‘it’s always complicated’, and in fact, at this election it is particularly complicated, she says.

“And I can’t think of an election where there are so many unknown factors at play, which could create some quite wild outcomes.”

Election Zeitgeist

Speaking at the 2016 9th Asia-Pacific CPO Forum in Melbourne to an audience of about 50 leading procurement professionals, Tingle spoke swiftly, explaining how she saw things.

Another complication, on both sides of the political fence, is the unprecedented number of retirements of sitting members (21), meaning the loss of personal margins of longstanding MPs.

Laura explains, “My apologies for bombarding you with numbers. But they all play in to the zeitgeist of the current election campaign, and the unprecedented uncertainty around the likely outcome.

“When you say ‘uncertainty’ in politics, people think that that is, by definition, a very bad thing – that the country is heading in to some unknown period of terrible instability in the political landscape.

“When I say uncertainty, I mean it in the sense that, more than is usually the case, we really don’t know what the election outcome will be if we judge it purely by the numbers. If we judge it by gut instinct – do voters think one leader has nicer teeth – and other less scientific outcomes, there actually seems a little bit more certainty.”

“The questions comes down to whether the electorate really wants yet another change in prime minister? And whether Bill Shorten created – or can create in the next two months – a sense of momentum for change, as well as a strong relationship with voters who, until very recently, utterly dismissed him?

“And has the electorate’s view of the Coalition become so firmly entrenched in the negative that it just wants to get rid of the government?” she says.

“Think about the election result in those terms and your gut says – well at least my gut says – ‘no’ to all three questions.”

Policy Towards Business

Bill Shorten deserves full credit for leading a team that has gone on the front foot on policy and who has managed to bury the perceptions of disunity within the Labor Caucus, Tingle told the audience.

He’s a good campaigner and has started the formal campaign well. The more voters have seen of him in the past couple of weeks, in particular, the more they have liked him, she says.

Tingle told the audience that the Coalition has been thrown off course in the past couple of years, first by its utter political incompetence and lack of policy savvy. The 2014 budget has become the byword for this, but there was much that proceeded it in terms of policy towards business even before the budget was brought down.

“Having made such a mess of things, and then under intense political pressure, the government – still under Tony Abbott – tried to clean up, for which you could use the 2015 budget as the guide.

“But there was still a lot of mess, a lot of conflicting signals, and a lot of policy that is still on the books which is bad or politically untenable,” she says.

“Issues like health funding, schools funding, universities funding are massively complicated now for both sides of politics. They involve the goodwill and assistance of the states in all cases.

“And I have to say that, while I perhaps have more reason to be cynical than a lot of you, having spent 30 years to close to the political action, I actually think we have got a better bunch of competent people – professional politicians who are actually interested in policy as much as just winning – than we have had for a very long time.”

Tingle finished by warning that a number of things could go pear shaped in the world’s political landscape in the next three years.

“I would like to leave you today with the optimistic message that I believe both candidates for the prime ministership are capable people, with capable teams, not driven by ideology but by pragmatism,” she says.

In Search of Influence – What the Literature Says

Searching for the true meaning of influence, and how procurement professionals can, and need to, become better doing it.

Influence

I have recently completed my masters, and my dissertation looked at influencing within procurement and how to develop these skills.

This article looks at the published literature around influencing. The next article will review the opinions of top influencers and consider what their key traits are, and how these skills can be developed.

Much has been written about the need for the professional skill sets required by procurement professionals to change. According to CIPS over the last 5 years, the skills required have changed as the table below: [i]

Skills Table - GD

For Procurement to achieve its goals, more work needs to be done to align to key stakeholders and understand the business operations, in order to become a true strategic partner.

This means moving up the value chain to ensure that the function is involved much earlier in the decision-making processes and clearly demonstrating how active involvement adds tangible value to both the bottom and the top lines.

In order to do this, Procurement as a function needs to expand its ability to influence, and procurement practitioners need to expand their own personal influencing skills (along with other soft skills).

So what do we mean by influencing and what are the different ways we can influence?

What is Influence?

Influencing skills, have been defined as the ability to get people to do what you want[ii], or changing people’s behaviour to act in your favour through the use of persuasion[iii], or wielding effective tactics of persuasion[iv].

How can we Influence

We all have differing influencing styles which generally will fall into any of the following:

  • Asserting – where you insist on your ideas being heard, and you challenge the ideas of others.
  • Convincing – where you put forward ideas and offer logical reasoning, which convinces others of your point of view.
  • Negotiating – where you look for compromises and make concessions, in order that you can reach an outcome that satisfies your greater interest.
  • Bridging – where you build relationships and connect with others, using listening and understanding to build coalitions.
  • Inspiring – where you advocate a position and then encourages others to come round to the idea by sharing a sense of purpose.

Dale Carnegie[v] wrote, that in order to become effective influencers, we need to influence people at an individual level. He also argued that the steps for effective influencing are:

  • If you want to make a good first impression, smile.
  • If you want others to like you, don’t criticise them.
  • If you want others to gladly do you favours, show your appreciation frequently.
  • If you want to be interesting yourself, be interested in others.
  • Show your appreciation for others by talking about what’s important to them.
  • We like people who show their appreciation and remember things about us, like our names.
  • Avoid all arguments – they cannot be won.
  • Never tell others they are wrong, they will only resent you.
  • Whenever you are wrong, admit it immediately and clearly.
  • To be convincing, get others to say “yes” as often as possible.

Emotional Intelligence

Emotional intelligence is the capacity of people’s ability to recognise their own, and to understand and recognise others’, emotions, and use that information to guide behaviour and therefore influence.

Daniel Goleman argues that just having one persuasion skill alone, and deploying just one, may not be good enough to gain influence. He argues that being influential is having the ability to sense what other kinds of appeals will persuade key decision makers.

Critically, Goleman argues, it is noticing when one tactic isn’t working and when to switch to a different one which adds impact to an individual.

So what are the persuasion skills?

Persuasion

Manningham and Robertson[vi] identified 6 persuasion strategies from their research:

  • Reason – the use of logic or facts to justify a request
  • Assertion – making a direct request and using emotion to underline our need
  • Exchange – the trading of one thing for another
  • Courting favour – being friendly or positive with people
  • Coercion – the implication of negative outcomes on not agreeing
  • Partnership – gaining the support of people both within and outside the organisation.

In developing this research on persuasion tools, Reynolds developed the Persuasion Tools Model[vii], based on work by the psychologist Kenneth Berrien. It links negotiation and persuasion style, to emotional intelligence (EI), and in some ways echoes the work of Manning and Robertson

The Persuasion Tools Model
The Persuasion Tools Model

In this model, the horizontal axis represents influencing, which Reynolds states is a measure of your overall persuasion capability. The vertical axis represents the level of intuition required.

Summary

Two main thoughts are drawn from this research:

  1. That deploying one persuasion tactic as part of a plan is not enough; and
  2. Influencing, when it happens, happens with one person at a time.

In the next article, we will identify the traits of top influencers and how we may develop these skills.

[i] CIPS (2015) Advanced Diploma in Procurement and Supply; Chapter 4 Skills for Category Management

[ii] Mullins, L. (1996). Management and organization. 4th ed.  Pitman

[iii] Manning T; Robertson B; (2003),”Influencing and negotiating skills: Part I: influencing strategies and styles”, Industrial and Commercial Training, Vol. 35 Iss 1 pp. 11 – 15;

[iv] Goleman D (1998) Emotional Intelligence: Why It Can Matter More Than IQ; Bloomsbury Publishing

[v] Carnegie D; (1937) How to win friends and influence people: Simon and Schuster

[vi] Manning T; Robertson B; (2003),”Influencing and negotiating skills; Part II: influencing styles and negotiating skills”, Industrial and Commercial Training, Vol. 35 Iss 2 pp. 60 – 66;

[vii] Reynolds, A. (2003) ‘Emotional Intelligence and Negotiation,’ Hampshire: Tommo Press

Less is More – The Power of a Good KPI

It is not every day that procurement can learn from a fashion icon, but in my (and Coco Chanel’s) view – “less is definitely more” when it comes to a good KPI for procurement.

Coco Chanel - Good KPI

Think about your role in procurement. Think about the huge number of outcomes you work hard to deliver every day, from the repetitive (but necessary) daily tasks, to the huge projects with looming deadlines. Now, I want you to distil your entire, complex, multi-faceted role into just five KPIs.

That’s right – five KPIs only.

Passion for KPIs

I didn’t realise how passionate I was about KPIs until the conversation came up on the agenda at The Beyond Group’s “Productivity in Pharma” (PiP) Think Tank in Basel last month.

The room was full of heavy-hitters from the big pharmaceutical houses, including Novartis, Roche and Bristol Myers Squibb. Not necessarily CPOs, but heads of indirects, clinical research and engineering procurement. The facilitator, Sammy Rashed, led a spirited debate on what a good KPI should look like, how KPIs should work, and how they can benefit a business.

Wow! As the conversation evolved, I realised I had some strong views on how my beloved profession should be measured.

I shouldn’t have been surprised. Just after I finished my MBA, I spent a couple of years working with Alcoa’s corporate finance team on how we should measure procurement’s value, and then educating the procurement team globally about how to report the calculations. I’m also married to the global CFO of a FTSE 10 company, so I know the kind of metrics that he deems as solid, and those that are “fluff”.

What Gets Measured…

On that point, let me tell you a little bit about what I know about the mind of a Finance Director. It goes without saying that they are absolute geniuses: kind, considerate, and definitely make the very best life partners.

BUT, as I am sure you have witnessed in your own organisations, the mind of a CFO is fairly mono-dimensional. Value has to be defined and quantified in hard terms.

I put in a quick trans-Atlantic call to my husband to ask his opinion on KPIs, and was rewarded with this gem: “You can’t improve what you can’t measure”. It’s actually a variation on a common saying of his, which is “what gets measured, gets done” – but there you go. CFOs are full of surprises.

KPIs can be lagging, leading, soft, or hard – but whatever you do (according to this CFO) they must be linked to the corporate objectives, which is where I will start with my five rules of thumb for a good KPI.

1. Each KPI needs to be clearly linked to an overall business objective.

This is one of the most important issues for procurement to consider. You see, if procurement KPIs aren’t linked to the business strategy, then your team’s activities will not be seen as relevant to getting the business to where it wants to go.

I think this is why I get fired up on this topic. We talk about a ‘seat at the table’ and ‘speaking the language of the business’ – well, in the c-suite, KPIs are the language of the business. As a procurement professional, the KPIs you choose actually define your role in the business. Don’t underestimate the power of a good KPI to secure your seat at the table.

We were all in agreement at the PiP Think Tank that for procurement to be relevant and valued, it must be aligned with the business strategy. Your KPIs are the ultimate reinforcement to senior management that your team “get it” and understand how they can contribute to the overall business success.

KPIs that deliver profit (through cost-downs), free up cash, contribute to top-line growth through innovation and protect the corporate reputation will resonate strongly with your senior leadership team.

There is another important reason for linking your KPIs to the corporate objectives. Shared objectives help create teamwork and a sense of connection for everybody and the greater organisation.

2. Your KPIs need to be uncomplicated and measurable (ideally in hard dollar terms)

Procurement receives a lot of “constructive feedback” (I’m trying to be positive here) for using too many unique terms and not speaking the language of the business. Make sure your KPIs can’t be criticised for the same reasons!

A good KPI can be measured relatively easily and understood by the business. There’s no problem with spending some time with Finance to make sure you are a little creative in defining how value is being delivered, but the end result must be something that is widely understood and helps build credibility rather than undermine it.

You will also open yourself up to criticism if your team, or other parts of the business, need to spend a lot of time on calculating KPIs, so be careful and keep it simple.

3. KPIs should measure outcomes, not inputs or internal processes

Number of meetings, number of ideas, strategies being developed – none of these count in my book. They are all measurements of the inputs your team will make with the objective of achieving an outcome.

Your KPIs should capture the value this type of activity will actually deliver to the business. They have to resonate with the senior level by measuring outcomes rather than cataloguing your own activity.

4. Don’t have too many KPIs

Going back to what I said at the beginning, this should be a maximum of 5 KPIs. It takes courage, real discipline (and a lot of debate), but try to get your KPIs down to a small handful of measurable outcomes. It will give everyone clarity and focus.

5. KPIs must be achievable

More than anything, your team will need to believe that they can actually deliver on their KPIs. In a way, they need to be inspirational. They should engage the team to focus on the results that will make their function truly valued!

What is your criteria for a good KPI?

The Productivity in Pharma Think Tank brings together a conclave of senior procurement leaders from the Pharmaceutical industry, creating a unique, mini-MBA style environment, where the most pressing issues facing the function are explored in detail and, from which, key insights and applicable takeaways are derived.

You can find out more about this event at The Beyond Group website, and connect with the event hosts and facilitators Giles Breault (@GilesBreault) and Sammy Rashed (@RashedSammy) on social media.

Supply Chain Sustainability: A Strategic Responsibility

Supply Chain Sustainability is in the spotlight, thanks to the influence of social media. Companies realise that they must lead the way in this area.

supply chain sustainability

The supply chain function has evolved significantly over the past decade, becoming a key strategic pillar of business. Going beyond its core role
 of delivering goods on time, in full, it has a vital role to play in customer experience and brand perception.

Supply chain now has a seat in the boardroom in many organisations. Barely a week goes by without a supply chain issue – be it supplier failure or reputational risk – hitting the headlines and the share price.

The proliferation and influence of social media has put supply chain sustainability and risk firmly in the spotlight. Companies are publicly held to account for the actions of all tiers of their supply chain. This is why companies must lead the way on sustainability issues.

Supply Chain Sustainability

The sustainability discussion evolved from companies purely focusing on taking from society and wanting to give back, to realising there are risks to reputation from non-compliance.

Sustainability issues are often supply chain issues. For example, the introduction of the Modern Slavery Act aims to ensure that slavery and human trafficking is not taking place in businesses or supply chains.

Today, however, organisations are now seeing supply chain sustainability as a strategic opportunity that can increase competitive advantage.

Two main streams have emerged:

  • The risk dimension: what do companies have to do to avoid risk of brand damage?
  • The aspiration dimension: what is the strategy for the long-term survival of the  business?

Creating a Positive Impact

Supply chain sustainability is increasingly seen among senior executives as essential to delivering long-term profitability. A sustainable supply chain captures value creation opportunities and offers significant competitive advantages for early adopters and process innovators.

At the same time, supply chain is one of the key components for organisations 
to create a positive impact in the world, with an estimated 80 per cent of global trade passing through supply chains. Many large corporations, such as Nestlé and Nike, want to do good business and do the right thing.

A recent study on the global supply chain community saw three current trends emerging on supply chain sustainability in 2015/2016:

  • Industry collaboration is the biggest opportunity
  • Eliminating supply chain risks is the main driver
  • Traceability and environmental concerns are the biggest risks to watch out for

Industry Collaboration

Starting with ethical and responsible sourcing, supply chain professionals have begun to understand the importance of building long term relationships with suppliers. Having a win-win partnership is crucial. Companies who are a valuable customer to their vendors will have a considerable competitive advantage.

Organisations are demanding more 
from their suppliers. Traceability and transparency are key requirements. Companies sharing their big picture vision with their suppliers, and their role in the long-term strategy, will get more from their partners. Too many businesses are still failing to achieve this. Partnering with suppliers empowers them to unlock innovation quickly.

Working on more collaborative partnerships helps to minimise the risk factors too. Companies are liable for all tiers of their supply chains. Increased collaboration with others is vital to be
 able to efficiently assess all layers of the supply base.

Organisations can never 
be too informed if they want to prevent risk. They also need to demonstrate they have acted responsibly when risks are exposed. Companies must start with themselves, and build open and transparent relationships with their suppliers.

Codes of Conduct and Audits

Some pharmaceutical organisations,
 like Takeda, have recently established
 a supplier code of conduct in line with
 their international business ethics. They proactively audit and monitor their vendors to review performance in line with this code. It helps Takeda to have a much stronger supplier selection process, as they are able to build stronger relationships and reduce risk exposure.

Collaboration with other industry leaders can be very valuable in sharing information when it comes to supplier audits. Takeda recently joined the Pharma Supply Chain Initiative, composed of 20 companies. It has a supplier audit program and engages with the suppliers on behalf the member companies to make sure they comply. It also raises awareness from an environmental and ethical point of view.

Collaborative Platforms and NGOs

However, collaboration between businesses from the same industry is not widespread. Many companies fear a loss of commercial control and competitive advantage by working closely with others. As a result, there is an emergence of collaborative platforms. One of these is EcoVadis, which works with many global brands to provide supplier sustainability ratings for global supply chains.

Collaboration can also take the form of partnering with NGOs. They can help and guide organisations on environmental
 or ethical issues. Greenpeace is one such organisation. In the past they have worked with Kimberly-Clark to practice responsible forestry management, as well as Unilever and others on palm-oil sourcing. In building those partnerships, the willingness to talk is key, particularly when there is a history of conflict.

Supply Chain Sustainability can also be a source of competitive advantage for organisations. Stay tuned for the second part of this article to find out more.