Category Archives: Trending

Has Procurement Dehumanised The Sourcing Process?

It’s only a matter of time before the procurement profession realises that it’s dehumanised the sourcing process, a move that will negatively impact the industry.

Sourcing Process Relationships

Procurement needs a new measure of success that reflects its impact, not its output. This is according to a Melbourne-based procurement coach, and self-proclaimed procurement disrupter, Matt Perfect.

Procurement with Purpose

Just as conscious businesses are learning that profit is a by-product of business with purpose, so too savings will be a by-product of procurement with purpose.

Perfect argues, “What have we really ‘saved’ if we drive down our suppliers’ pricing to unsustainable levels?

“Levels where they are forced to compromise on service and quality, or worse, safety and ethics? Procurement needs a metric that reflects the exponential impact of its decisions throughout the supply chain.

“The impact on suppliers and their employees…and suppliers’ suppliers and so on. This metric must measure real human value. Not just economic value,” Perfect says.

Cost at Any Cost

The Melburnian has carved an enviable niche in the Australian procurement landscape. Perfect has worked in numerous procurement roles, including for FreeMarkets, National Australia Bank, Toll and The Faculty.

Now as an independent coach and facilitator, he advocates the importance of supplier relations, and feels that major disruptive change within the procurement industry is only a matter of time.

Perfect writes about the disruption of the procurement sector in white papers. One, titled Supplier Love and Why You Need More of It, published in July last year, explains that as much as 70 per cent of revenue now goes to third parties (according to Proxima Group). Never before have suppliers been more important stakeholders in an organisation’s success.

Yet, despite significant investment in procurement capability and strategic focus over the last few decades, many supplier relationships remain transactional at best and at worst, adversarial.

Businesses continue to prioritise shareholder value above all else, sometimes even at the expense of customers, employees and the environment, but almost always ahead of suppliers’ interests.

One might be forgiven for thinking that ‘cost at any cost’ is the primary operating model for these businesses.

Conscious Business

Conscious businesses understand that this is not sustainable. Fortunately, there is a better way, but it requires a fundamental shift in the way we define stakeholders and value.

“We need to be looking at ways to win the hearts and minds of suppliers, rather than purely relying on negotiation tactics. When you look at the mindsets of procurement professionals, relationships just aren’t playing a big enough part at the moment,” Perfect says.

“You need to look at supplier relationships and help improve those relationships to get better outcomes. I work to improve that level of trust in a relationship, with the view of generating greater impact. I also look at the broader impact of relationships, which comes down to how it affects the lives of people.”

Perfect says that procurement is ripe for disruption, and is in fact on the cusp of a major shift. Part of this shift should include the consideration of whether procurement accurately sums up the role – supplier relations could be closer.

“There will be a shift to a new age. A human age, which is a process that procurement doesn’t have its head around yet as a profession. We need to be more engaged with vision and purpose moving forward as a profession.”

Perfect believes the younger generation will drive the changes as they strive for a more human-centred career.

Remembering the Human Element in Sourcing Process

A focus on supply chain issues, and the human elements within supply chains, is another driver for change.

Other industries embrace change more readily than procurement has to date. Marketing, for example, understands that to be really effective and cut-through, it has to touch the lives of people.

The human relations industry has also moved away from seeing staff as a number and has improved the way it operates within the business environment by focusing on the people. Procurement hasn’t made this leap yet, he says.

“We’ve also got to be thinking about how to appeal to the hearts and minds of consumers. We need to head into this space as a broader industry if we’re ever going to survive. I urge my clients to be the change they want to see in the world.”

At the moment, the industry is narrowly focused on shareholder value, rather than a broader stakeholder orientation, which is drawn from the realm of conscious capitalism.

“There needs to be an interdependence that creates value without trading off one another,” he says.

People Over Process

Matt Perfect
Matt Perfect

Perfect has an undergraduate degree in economics from Cardiff in the UK, and pursued a consulting career before landing an analyst position, specialising in e-sourcing and online technology. This kick-started a procurement career spanning multiple consulting and management roles in a variety of industries.

He left The Faculty a couple of years ago to focus on coaching. He works to help his clients create better and more conscious relationships with their internal and external stakeholders.

“This is where I focus my energy now. Looking at all spending in procurement and how that impacts on people. I believe we all need to have a greater focus on people than process.

Since working as a procurement coach, Perfect has worked with Social Traders, CPA Australia and The Trusted Negotiator, among others.

You can follow Matt at mattperfect.com or on Twitter at @m8ttperfect.

Indirect & Direct Procurement: Right Tool for the Right Job!

Too often organisations use the same tools for direct procurement as they do for indirect. It’s time to start using the right tool for the right job.

Direct Procurement

This post was first published on POOL4TOOL.

Let me start by saying what this post is not about.

It is not about Direct vs. Indirect. It is also not about what is more critical and strategic between Direct and Indirect.

Things are more complex than a Manichean division of Procurement into two categories. If category management was just about that split, we would know it. Wouldn’t we?

This post is simply about common sense!

Serving Different Markets

All the above does not conflict with saying that there are specificities to both components of the Purchase spend. Especially when looking at industrial companies.

One area of differentiation between Direct and Indirect Procurement is related to the market they serve.

  • Indirect serves mostly internal needs, a.k.a. the employee
  • Direct serves external needs, a.k.a. the customer or the consumer. Though, of course, the difference between B2B and B2C is becoming increasingly blurred.

Both markets have their own challenges.

In indirect, the diversity of internal customers is quite important (travel is an example) and that makes stakeholder management quite difficult.

In Direct, stakeholders are more easily identifiable as they revolve around the product (this would typically be R&D and manufacturing). But consumers are more diverse and volatile, which requires special attention as, in the words of Peter Drucker, “the purpose of business is to create and keep a customer”.

Product Lifecycle

Another difference is the  relationship to the product lifecycle.

R&D and New Product Development (NPD) are intrinsic to Direct Procurement. This is a bit less of a reality in Indirect, even if some indirect parts of the spend are related to complex projects very similar to NPD, for example, real estate and facility management.

Some companies like Apple have very complex projects to manage in that area, for example their new headquarters or their retail spaces. As retail spaces contribute to the overall customer experience, is that Direct Procurement or Indirect Procurement?

Supply chain management and execution is also an area of differentiation, as direct supply chains tend to be more global and complex.

Right Tool for the Right Job

This post is about using the right tool for the right job!

Each area has specificities, so you have to use specific tools and processes for the job. In terms of Direct Materials Procurement, some of the specificities translate into specific capabilities that modern platforms should have, as Michael Lamoureux from Sourcing Innovation explained in a recent post.

The thing is that none of the Indirect tools have all these capabilities. And neither they should, as most of them are irrelevant for a great part of indirect spend. As Lamoureux puts it in the conclusion of his white paper available for download here.

“The fact of the matter is that you wouldn’t use a Chihuahua to herd sheep, so why are you trying to use a mouse to herd cats (which is mission improbable anyway)?”

Can We Agree to Stop Calling Them “Soft Skills”?

How did soft skills become to be known as this? And does calling them this underplay their importance in the modern procurement world?

House - Soft Skills

The English language is full of misnomers. Just ask the killer whale (actually a dolphin), or the horny toad (actually a lizard). Once a word or phrase has entered common usage, it’s near-impossible to change it, even if the population generally understands that the term is misleading.

Which brings me to “soft skills”. I work for an organisation that provides training for procurement and supply chain professionals. As such this is one of the terms that I hear bandied about many times a week.

My argument is that defining this skill-set as “soft” actually devalues an essential part of every procurement professional’s toolkit.

To quickly summarise, soft skills are those used in dealing with other people. These include skills such as communication abilities, language skills, influencing skills, emotional empathy, and leadership traits. In contrast, “hard” skills – such as tendering or IT competencies – are readily measurable and (importantly) easier to train.

How Did They Come to be Called Soft Skills?

I’d be interested to hear if anyone has been able to pinpoint the first usage of this term.

The concept has been applied to business environments since at least 1936, when Dale Carnegie’s famous self-help book ‘How to Win Friends and Influence People was published. Carnegie’s work, which has sold a phenomenal 30 million copies to date, is essentially the definitive guide to soft skills. However, it stops short of actually using these words.

Recently, there seems to have been an explosion of articles and training courses focusing on soft skills, particularly in procurement. My theory is that procurement – having moved from back-office to business-partnership status only a decade or so ago – is, in effect, late to the soft skills party, and is currently playing catch-up.

It’s possible that the term “soft skills” simply came about as an antonym to hard skills. Perhaps it reflects the “softly-softly” approach, where managers choose to influence, rather than confront, and to make suggestions, rather than issuing orders. Whatever the reason, I believe it’s a misleading term due to the other connotations of “soft”.

These Skills are Anything But Soft

To my ear, “soft” means easy, pliable, or yielding readily to pressure. Yet a procurement professional with excellent communication abilities, who is adept at reading people, will be a “harder” opponent in negotiations, than a colleague lacking these skills.

Similarly, the connotation with “ease” is deceptive when it comes to trying to train for skills like change management or leadership. And quantifying the results of that training is more difficult still. Hence we’re hearing more and more that employers are hiring people based on their attributes (cultural fit, communication skills, willingness to change), recognising that hard skills can be easily picked up later on.

This has changed the approach recruiters are taking in job interviews. There is now less emphasis on hard skills, and more behavioural questions about how you would react in certain situations.

It’s worth considering whether, in the future, soft skills will become so vital, they’ll become a requirement for procurement roles. That situation already exists in some professions. Look at Medicine, where aspiring doctors are interviewed for qualities including maturity, communication, the ability to empathise and collaborate. Hugh Laurie’s Dr House, with his acerbic bed-side manner, would in reality never have gained entry into medical school, no matter how brilliant he was.

There’s a school of thought that when it comes to soft skills, you’ve either got it, or you don’t. Soft-skills training, therefore, is ineffective because you can’t change someone’s personality. Personally, I disagree because I’ve witnessed colleagues who have worked hard to develop skills like effective listening. There’ll always be hard cases, but the days of people dismissing these skills as “fluffy” or otherwise useless are over.

Three Alternative Names for Soft Skills

As I wrote at the beginning of this article, it’s nigh-impossible to change a term once it’s in common usage. However, if professional organisations, training providers, and the like, were to phase out the words “soft skills”, and call them something more accurate instead, we might see this phrase begin to disappear.

Here are three suggestions for a more accurate description of “soft” skills.

1. Essential skills: I’ve borrowed this one from ISM CEO Tom Derry, who also isn’t a fan of the term “soft skills”. Tom used the term “essential skills” when launching ISM’s Mastery Model to describe the many interpersonal attributes required on the journey to achieving accreditation.

2. EQ: “Emotional intelligence quotient” is the technical term for soft skills. I like this term simply because it contains the word “emotional”, which pretty much sums up what soft skills entail. Calling it a “quotient”, however, raises the argument that EQ, like IQ, is something you’re born with, and can’t be improved upon.

3. People skills: The simplest, and possibly the most accurate alternative for soft skills is “people skills”. After all, every one of these skills involves dealing with people, while hard skills can generally be put to use sitting alone at your computer.

If you have other suggestions, or already use a different terminology in your workplace, please add a comment below!

Need help with your people skills or EQ? Want to get your procurement career in shape? Stay tuned on Procurious in September for our Career Bootcamp. More information coming soon!

Procurement Turns to Supplier Relationships for Innovation

As procurement seeks to increased its involvement in innovation, it’s turning to its supplier relationships to drive change.

Supplier Relationships

This article was written by Daniel Ball, Director at Wax Digital.

Wax Digital’s Procurement Innovation Pathway research is based on 100 interviews with the UK’s senior procurement professionals, to canvass their opinions of the key topics in the profession.

Previously, we highlighted that procurement wants to be more involved in innovation. However it is the risk averse nature of procurement that appears to be holding it back.

In this article, we assess the importance of good supplier relationships.

Mutually Beneficial Relationships

Achieving effective, mutually beneficial relationships with suppliers can be a great way for procurement to drive positive change. That’s just one reason, according to new research, why procurement professionals are prioritising suppliers in their quest to innovate.

In fact, Wax Digital’s research showed that procurement’s top two innovation areas relate to working with suppliers.

In first place, 57 per cent cited supplier relationship management as an area that can aid innovation. Sourcing suppliers for product innovation came in second, with 49 per cent. Reducing supply-chain risks also scored highly.

Turning to Supplier Relationships

Compared to lower scoring areas, like automating processes to save time/resource, and improving spend management by empowering people, the supplier is clearly where procurement is turning its attention to innovate.

New ways of engaging with suppliers, through self-service portals for instance, and ensuring supplier compliance through automated contract management, are key priorities.

But it’s equally about what suppliers can do for procurement. There’s a desire to find partners who can be a catalyst for innovation at the core of the organisation’s products and delivery.

Technological Investment

These priorities remain the focus into 2017 too. This means the future could see an even more supplier-focused innovation mind-set in the procurement function.

Adding weight to this, the two most commonly used procurement technologies are also heavily supplier-focused. 51 per cent of organisations favour supplier information management, while 49 er cent are looking to contract management systems.

And the most common technology investment planned for the coming 12 months is supplier relationship management (SRM) tools. Procurement is clearly doing more than talking the talk on supplier innovation.

Challenge of Involvement

The future looks promising in this regard but there are challenges ahead. Procurement sees the value of supplier focused innovation but it is not always in control of it.

84 per cent of respondents said they were currently involved in innovations around supply chain collaboration. However, less than half of these, 40 per cent, said that they were leading it. Although this figure rises to 50 per cent in the future, there’s still some way to go before procurement fully takes the reins of innovation.

Now that many procurement professionals have already achieved some of the more transactional and process based quick wins, it’s natural that we see more and more looking to strategic supplier management as the next frontier to conquer.

Building better relationships with the right suppliers, whether existing or new, is clearly uppermost in their thinking.

The Innovation 2016 research was conducted by Morar Consulting. The research involved 100 interviews to canvass the opinions of UK senior procurement professionals, working in small to large UK enterprises.

You can find out more about the research, and download the report, by visiting the Wax Digital website.

Is Hybrid Best? The Centralised vs Decentralised Debate

Centralised, decentralised and hybrid models – is there actually a ‘best’ way to organise procurement departments. The debate rages on.

Hybrid Model

Recent studies, and accepted wisdom, have continued to confirm the trend towards a centre-led procurement model. Both fully centralised or decentralised procurement operating models have their downsides, and that a middle (or hybrid) road is preferable.

Centralised organisations unfortunately:

  • do not always understand regional and local supply markets and consumption patterns.
  • run the risk of maverick buying outside contracts.
  • are not suited to managing some indirect commodities.

In decentralised organisations, there is often:

  • inability to leverage corporate spend.
  • poor coordination of information and best practice sharing.
  • uneven supplier performance.
  • higher procurement operating costs.

The Centre-Led Model

The best centre-led procurement organisations concentrate on defining strategy and policy, as well as applying best practices to both direct and indirect procurement. They mostly employ a category management structure, which supports the roll out of their directives to business unit and regional level.

In the Aberdeen Group’s recent report, they noted that centre-led companies reported more spend under management than others. This was twice more than companies with a decentralised structure, and nearly 20 per cent more spend under management than companies with a centralised structure.

“Organisations with centre-led procurement considerably outperform their non-centre led counterparts, in both spend under management and supply cost reductions” (Aberdeen Group 2015).  

Leading from the Centre – Levi Strauss  

The Director of global indirect procurement at Levi Strauss, Celeste Smith, said recently that the while the company wants to create a centre-led global function, there should be good regional support.

“Success for me looks like centre-led, a global approach to managing indirect – not necessarily with global suppliers – but that we have a very consistent and disciplined approach to procurement globally.

“Centre-led means that everyone is on the same page in terms of methodology and approach. But I think it’s very important to have the same regional support.”

Levi Strauss has a global spend of around $1.8 billion (£1.09 billion), of which it wants to manage $1.2 billion (£723 million).

Leverage Central Knowledge – Fluor

Fluor is a world-leading engineering and construction firm. It also offer clients procurement and project management services for capital projects.

Fluor uses a centre-led procurement model, leveraging international procurement expertise and market knowledge, with the aim of providing the best value for their clients’ capital projects.

Their procurement organisation manages an annual global spend of more than $16 billion. This is done through consistent execution strategies across their worldwide network of 1,900 procurement professionals.

For example, Fluor’s local operation in South Africa uses a global logistics planning strategy to help clients overcome procurement execution challenges unique to operating in Africa.

Stakeholder Challenges for Hybrid

A hybrid model seems to combine the advantages of a centralised structure and decentralised execution with minimal downside. So why isn’t everyone doing it?

It’s not that easy. Whatever the model, the satisfaction of stakeholders and end users is paramount. The best model seems to be one that delivers results through open lines of two-way communication, and processes that are flexible enough to take into account regional and cultural differences.

One way to generate higher levels of stakeholder support is to ensure that the global category management structure is replicated in decentralised business units or regions, probably on a more limited scale.

It has been suggested that this type of structure encourages agility and innovation, as well as better compliance to contracts.

The Wheel Turns     

Procurement Leaders’ recent survey on procurement operating models found that no one single model can sustain the expected benefits indefinitely.

They report that savings delivered from a given procurement operating model can erode over time as behaviours become ossified. Incremental savings thus become more and more difficult to achieve. The model just gets tired.

A structural change may be needed to allow procurement to deliver value in new ways, and enable benefits to be sustained or even improved.

Procurement Leaders say that procurement organisations must tackle a wide range of hindrances that arise from change, in order to maximise the benefits from a change in operating model.

Their research also found that the greatest factor preventing transition in procurement is its own lack of change management capabilities.

As a procurement organisation matures, it is likely that it will revise and adjust its hybrid or centre-led structure, in order to stay aligned to corporate objectives and continues to deliver value.

Emotional Intelligence in the Supply Chain

Emotional Intelligence can be a powerful tool for procurement in dealing with both internal customers and external suppliers.

Emotional Intelligence

There has been a lot of talk recently about the concept of emotional intelligence.

According to Wikipedia, it is defined as “the capacity of individuals to recognise their own, and other people’s emotions, to discriminate between different feelings, and label them appropriately, and to use emotional information to guide thinking and behaviour.”

The concept was pioneered in the middle of the 20th Century, but only popularised in the late 1990s. Following an increase in popularity, Emotional Intelligence was quickly moved across into the business world.

Developing Internal Relationships

Although they may not have known it as Emotional Intelligence, most procurement and supply chain professionals will have used its facets. This may have been fairly common, and both with internal customers, as well as with suppliers.

A good Supply Chain Manager must not only understand the motivation and needs of customers and suppliers. They must also develop strong and lasting relationships, based on mutual respect and trust.

With these relationships, over time (and assuming a good job is being done), internal customers will respect the manager’s role, relying on their decisions, and their judgement, in day-to-day work.

Gradually, the lines of thought from both sides will become aligned, potentially reaching a perfect strategic synchrony. If this happens, fewer explanations will be required for procurement to understand, and satisfy, internal customers’ needs.

Such coordination is the best example of the optimisation between these areas, resulting in great efficiency for a company.

Good Listeners

In addition to this, similar relationships should also be developed with suppliers. While keeping the primary company goals in minds, procurement should be able to guide the supplier approach in line with their organisation’s, and get them working in the same direction.

As Artur Osipyan explains in his excellent article, when dealing with suppliers, “you need to be a good listener to ensure you capture opportunities of doing things better and can connect the dots together.”

Companies must not impose their conditions, but look to build a partnership with the vendor, for both parties’ benefit (the famous win-win).

Perhaps the most critical use of Emotional Intelligence is where the internal customer demands and supplier offer fail to match up. It presents a situation where procurement needs to play ‘Good Cop-Bad Cop’ with both sides.

Using diplomacy and Emotional Intelligence will help create common ground for both parties, and transform this into a mutually beneficial relationship. This will also enable the parties to work together in the future.

Creating Mutual Wins

There are few things that create a stronger partnership than working together to overcome issues, and finding a satisfactory, and mutually acceptable, solution.

There are advantages to the so-called ‘cold negotiations’, where hardly any contact is made with suppliers prior to, and during, the process. However, any effective medium- to long-term strategy will need a foundation of common agreement, and understanding of mutual professional development.

To achieve this foundation, procurement and supply chain managers will not use negotiation skills, but Emotional Intelligence. This can then create the first pillar of a professional relationship between the two companies that could produce plenty success in the future.

What Price Inequality? What Should We Make of Opposition to Equality?

Not all bias is unconscious. Recent derogatory comments by high-profile public figures has drawn attention back to the equality debate.

Gender Equality

How should we understand the spate of recent derogatory comments by high profile figures such as Steve Price and Eddie Maguire about women? And by Sonia Kruger and Pauline Hansen with their anti-Muslim comments?

How do we understand this increasingly public declamation occurring alongside a growing recognition that greater innovation and financial prosperity are achieved through diversity, and that inclusion makes for a better society?

Disproportionate Power

High profile public figures wield a disproportionate amount of power in our society. Steve Price’s labelling of Van Badham as ‘hysterical’ was bad enough (although deftly handled by Badham).

Price’s use of hysterical drew a huge outcry from the audience at the time. However, he seemed perplexed as to why. He then went on to repeatedly talk over Badham. What did he believe was happening, and how did he feel justified to respond as he did in those circumstances?

The social response in the following days was more concerning. There were multiple threats of violence to Badham via her Twitter account, and similarly in public comments to press coverage of the event. What it is that unleashes such harsh and violent responses; why do some people feel justified making nasty, public threats?

Social Dominance Theory

These events serve as a powerful reminder that not all bias is unconscious, and not everyone is interested in being fairer to those around them. Power and dominance have been concepts receiving too little attention lately, but are fundamental for developing a deeper understanding of this behaviour.

Social Dominance theory provides some clues. It suggests that people differ in their level of the two elements of Social Dominance Orientation (SDO): Opposition to Equality, and Support for Social Hierarchy and Dominance.

Support for Social Dominance

People with a high level of group-based Dominance value safety, stability, conformity, obedience and rule-following. They prefer greater levels of hierarchy and power distance in relationships and in society.

High levels of Dominance are associated with active oppression of subordinate groups, justification of oppression, and a strong focus on group competition and threat.

Support for social Dominance means support for active, and sometimes violent, maintenance of hierarchies, predicated on domination by high status members and the subordination of low status members.

Opposition to Equality

Opposition to equality involves support for the legitimacy of the current system including its inequalities. Those at the top of the system tend to believe that the existing system is fair; their position is justified and appropriate to their achievements.

Opposition to equality is associated with political conservatism, support for concepts like ‘work ethic’ as a way of justifying inequality, and with opposition to policies such as equal opportunity or affirmative action.

Opposition to equality is more subtle than Dominance, and is supportive of differential access to power and resources, but not through oppressive means.

(A low Opposition to equality is associated with a high level of empathy, tolerance, compassion and humanitarianism.)

Gender Differences

Individuals who have a high Social Dominance Orientation overall desire to maintain and, in many cases, increase the differences in social status of particular groups. Typically, they are dominant, driven, tough and seek power. Often, people who score high in SDO  strongly believe that we live in a “dog-eat-dog” world.

Men are generally higher than women in SDO. Recent studies have found that high SDO has a strong positive relationship with authoritarian, sexist, homophobic and racist beliefs.

Changing the Landscape

For those of us who do value the increased power and visibility of diversity in all its forms and who aspire to an inclusive society, how do we effectively navigate this landscape?

We can’t necessarily change the beliefs of others. But we should not let them deter us from pursuing a more equal, inclusive world. So what should we do?

  1. Avoid giving those promoting inequality more airtime than they already have (they’re pretty capable of handling this part themselves!).
  2. Tell more stories about positive change.

Even small signs of progress towards equality and inclusion are highly motivating. Psychology expert Professor Teresa Amabile says, “Progress motivates people to accept difficult challenges more readily and to persist longer.”

When people make progress toward, and meet, meaningful goals, the match between the expectations and the reality allows them to feel good, to grow, and be even more motivated to tackle the next challenge. (We can apply some of the same principles as Pokémon Go is using so effectively!)

If we notice the small gains regularly, and publicly, our motivation will increase. And then we will more readily move onto the next step in the equality journey.

Got a story to tell about positive change? Get in touch with Karen on her website.

Power Dynamics: Emotional Conflict in Indirect Procurement

Indirect procurement implementations are tricky. Take into account power dynamics, and there’s an emotional conflict that needs to be overcome too.

Power Dynamics

At a recent CIPS event in Zurich, the topic was disruption in indirect procurement. There were some excellent presentations and lively discussions afterwards on working with business functions.

But when I raised the fact that, in fact, successful indirect procurement implementations take away power from functional heads, the reaction was raised eyebrows.

While leading the build up of a global indirect procurement business partner organisation, I was sure that the hardest part would be getting the right talent to face off to the business. And if this match up were done correctly, all would take care of itself.

This formula worked well at first, and the team was making inroads with the business and delivering real savings.

But as we got into more controversial categories, the team started talking more and more about how difficult some business people were, especially senior ones.

Targets pressure was high, and the tension mounted both from the team and from executive management. My thinking that things would smooth out on their own over time was dead wrong!

Addressing Power Dynamics

Then I realised we were actually in the midst of three power dynamics that were holding us back. These had to be addressed.

Buyer & Supplier

The first power dynamic is the obvious one that happens when you cut across existing relationships between the business and the suppliers. It’s not just about interrupting nice lunches, but also touching the egos of the functional colleagues because procurement was:

  • Saying the business were not expert negotiators, which some colleagues took very personally.
  • Interfering with relationships where the business colleague had been the centre of attention and they now had to share airspace.

We were still at the beginning, so some good stakeholder management allowed us to work through this power dynamic by:

  • Putting in highly qualified and business knowledgeable procurement managers with great business partnering skills.
  • ‘Love and Care’ – taking time to listen and understand their concerns, which lead to better understanding but also assuaged egos.
Loss of Power

The second power dynamic was harder. The reality was that as spend came under control and savings were embedded in budgets up front:

  • Budget holders were losing decision making power over ‘their’ savings that could no longer be used to fill gaps.
  • There was more scrutiny, and decisions on re-investment were being taken at a more senior and cross-functional level.

Needless to say, they didn’t like it!

At this point, even the most fearless and confident team members were getting stressed. We needed to find a way to reduce the tension. We did it with:

  • ‘Tough Love’ management engagement – being very transparent that, yes, it was a shift of decision making, and not pretending that it wasn’t (supported by ‘Love and Care’).
  • Support and coaching of the procurement teams, so they could talk openly about difficult clients, and then work up solutions to solve it.
Senior Management Power

The third power dynamic is the trickiest. This was about very senior management and their personal skin in the game for the indirect procurement program:

  • The easy blanket ‘we support you’ was not giving enough air cover for the complex and more controversial projects.
  • We had specific blockers in the system at very senior levels that needed to be overcome to move forward.

The indirect procurement leadership discussed the issue intensely and decided to try a new direction:

  • For each of the controversial projects we presented to the senior committee, we asked for an individual sponsor from them
  • We also asked each sponsor to not only enable cut through with their own organisations, but also those of their peers

They said yes and volunteered specific sponsors right then and there.

This created space for the team and also created a peer pressure dynamic among the executives. We reported regularly, and no one wanted to be behind.

The team then took forward a series of projects closely aligned with the business functions, including transforming legal services, establishing consulting preferred suppliers, and changing the business model with marketing agencies.

Changing Relationships

In addition to delivering significant savings, there was a deep change in the relationship between indirect procurement, their functional colleagues, and the senior management, as a climate of respect and common purpose took shape.

I knew things had moved on, when at a regular update, the CFO made a classic comment that ‘his wife found a cheaper plane ticket on the internet’, and his peers looked at him and we moved on as if it hadn’t been said.

Implementing indirect programs involves strong emotions and power dynamics which need both active upward selling and strong change management. This might involve simply getting the right people together to make a fit for purpose plan for formal executive presentations and stakeholder management.

Solving the underlying emotional conflicts creates trust and delivers results.

Pauline King is the CEO of Heykins GmbH, Rapid Results Procurement, focused on working with clients’ existing teams to deliver tangible financial results.

She is a recognised expert in indirect procurement with deep operational experience in procurement transformation. Pauline also works closely with The Beyond Group AG where she heads up the Indirect Procurement Practice.

Beware the Scary Old-World CPO

Is your career in the grips of a scary, old-world CPO? How do you recognise if your boss is one, and what can you do about it?

Scary old-world CPO

Beware the Jabberwock, my son!

The jaws that bite, the claws that catch!

– Lewis Carroll, 1871

You’ll know a scary, old-world CPO when you see one.

I had almost forgotten about them until I found myself in a meeting with one last week. Somehow in recent times I have escaped the horror of hearing such old-world, closed network thinking like:

  • “I don’t want my team on social media, someone may poach them”
  • “We’re too busy working to be looking at what’s happening in the rest of the world”
  • “We know our business best”
  • “What if my team spends all day on social media?”

To the team at Procurious, these comments are like blasphemy. We’re on a mission to change the face of procurement, and give the images associated with the profession a makeover. We want to replace the old brown cardigan-clad stereotype, with fresh images of procurement as the “smartest guys in the room”.

My meeting with this archetypal nemesis reminded me of all the reasons why we founded Procurious. It gave me increased motivation to continue our mission, and gave rise to an overwhelming urge to protect all the amazing rising stars in procurement from the soul-crushing dictatorship of a scary, old-world CPO.

The Old-World CPO

Let’s face it, if your personal characteristics and actions portray an image that you’re living in the past, the chances are good you are. People don’t leave companies, they leave bosses.

As such, we want to reward the great bosses, those leading by example, keeping their teams energised, investing in individuals’ careers, and continuously pushing procurement to excel.

What are the tell-tale signs of a scary, old-world CPO? The next time you’re going for an interview, or looking at your current boss, don’t fall for the flashy suit, big title, or even the big brand name they represent.

If the person opposite you falls into one of these categories, the chances are your career development will come to a screeching halt under such a draconian regime.  

The (Digitally) Invisible Man…or Woman

Check whether this CPO has any sort of online presence. Tell-tale signs of invisibility include profiles with no photos, or inappropriate photos, scant, or no, information, and no visible mentions in a Google search.

There may have been a freak internet-cleansing event, wiping out all references to this person, but the reality is that they probably haven’t spoken at any events, written anything interesting, taken the time or effort to understand social media, or understand the fact that you will be researching them online.

Also, beware those CPOs who have fewer than 500 connections in their network. Some CPOs do make the case of quality vs quantity. But, if you’re working in a large company, have a large team, and work with an extensive supply base, shouldn’t 500 quality connections be expected?

You (and the majority of your peers) want to work for someone who is an influencer. You want a leader with a wide range of connection they can introduce you to, and broaden your horizons. Working with someone with a limited network can be a road to nowhere for your career prospects.

Robinson Crusoe – the Loner 

This CPO really is an island.

They don’t believe in networking, collaborating, or outside knowledge flow, and believe information is for their own personal advantage to build their power base. The Robinson Crusoe profile can physically manifest itself as an executive sitting in a corner by themselves, with their back to the team.

This information block exists not only within their psyche, but extends to the procurement team itself. This old-world CPO has particularly old-world views, and creates a knowledge hierarchy, where they take all the great (and politically advantageous) ideas as their own.

Another problem with this approach is that it encourages working in a closed network as part of the norm. These scary old world CPOs end up staying in the same profession, peer group, company, or industry, invariably associating with people they already know. This peer group continues to reinforce their outdated approach to management, and their thinking is never challenged.

The new world CPO is collaborative, a “true influencer” and shares their knowledge freely and widely.

My view is that a CPO’s main job is to not only drive change and innovation (and make a couple of deals on the side), but to give their team the opportunity to access tools and discuss ideas with other professionals, thought leaders and experts from around the globe.

Yet I still see CPOs encouraging teams to work in isolation, unaware that there is whole universe of knowledge to help them grow and excel in their jobs.

The Devil Wears Prada – The Career Crusher

Their desk calendar reads 2016, but their attitude towards employees is stuck in the 1950s.

Yes, your boss should have an overall plan for how their team is delivering against the overall business strategy. But they should also have a plan for you – both for what you need to deliver, and how you need to develop in the future.

They should be committed to diversity and promoting young talent, to making sure their team reflects this commitment and is generating opportunities for the next generation of talent.

The best CPOs are obsessed with finding the best people and helping them develop. They send their people out to be trained in the skills they need, expose them to new opportunities, and build peer networks that will develop leadership skills.

The worst CPOs keep their category managers locked away from the rest of the world in fear that their people will be poached. A great CPO doesn’t need to worry about this. They know that they have developed a great employee value proposition that keeps their team engaged and retained.

Reverse Mentoring

Let’s not be too hard on these talented Heads of Procurement. They can’t all be cut from the same cloth.

Why not get on the front foot and try and initiate some reverse mentoring. With a few polite, and well-placed pointers, I am sure you could help turn your scary, old-world CPO into a procurement rock star.

Sharing your skills and knowledge could help your CPO become increasingly tech savvy and an advocate for technology, including social media, for procurement. And just in case you need some more points, you can find a 5-point checklist on being a great procurement boss right here.

We look forward to seeing you both on Procurious soon!

Welcome to the Uncanny Valley

Why are we happy to watch movies with AI and robots, but feel disturbed by near-identical humanoid robots in real-life? Welcome to the Uncanny Valley.

Uncanny Valley

Considering the robot theme of my last two posts, I was somewhat pleased last week to have picked up a radio show from the BBC in their series ‘The Why Factor’ called “Fear of Robots” in which they make some of the same points concerning our assumptions that robots will always be benign.

The presenter found himself somewhat disquieted by a robotic seal pup, and completely disturbed by an almost-human android.

He had, so the saying goes, entered the uncanny valley. Although we humans react (and sometimes over-react) very positively to human-like features – cartoon characters, dolls and the like – we have a generally very bad response to simulations which are very, very nearly, but not completely, life-identical.

The Uncanny Valley

Despite the extraordinary advances in CGI, many filmgoers find greater satisfaction and easier suspension of disbelief in watching old-style animation, than movies which seek to recreate the real world.

The characters just don’t move right, or look right, or something.  The difference is so slight and subtle, yet rings huge alarm bells in our heads.

One contributor to the radio show described very-near-human robots as giving us the same heebie-jeebies as walking corpses might. After all, they are cold, their skin tone is wrong, they don’t move naturally. Of course they freak us out.

Away from the uncanny valley, though, we love the broader approximations to human behaviour.  As we turn away in discomfort from the close-to-real, we delight in the more grotesque caricature.

It seems we’re more comfortable with the messy, chaotic, imperfect real-world, than a more sterile near-perfection.  Perhaps that speaks to a deep aspect of human nature, something that we software developers might do well to pay heed to.

Emotional Reactions

There are clear cases of this emotional reaction to human-like behaviour in the use of software, especially at work.

The response that many, if not all of us, had to that [expletive deleted] animated paper clip when it popped up and said, “I see you’re trying to write a letter, would you like some help with that?” was no different to the reaction we’d have to the co-worker who would keep dropping by to say, “You don’t want to do it like that. Do you?”.

Approximating the real world, including human behaviour, when developing the software that we need to interact with, is thus a complex matter.

Get it right and the user experience is one of delight and sustained engagement. But go too far and users are actively put-off by the feeling that the software itself is somehow working against us.

At GEP we’ve been working on user experience technology that puts the human at the heart of process.  We are, of course, some way from software that has a human personality. And although the possibilities are immense, they are not without risk.

Imagine sitting down at your desk each day to find that overnight everything has been rearranged to make it slightly more convenient for you.  Perhaps so you don’t have to reach so far for the telephone, or your chair is aligned more ergonomically to the monitor.

Such things could dramatically improve our day…or screw it up entirely, leaving us feeling irritated or even violated.  As creatures of habit we naturally reach for the place where the telephone is, which is not always ideal.  It just is.

A Real-Life, Virtual Assistant

But there is another, more subtle, set of possibilities that we might permit to assist us without, to be frank, freaking us out.

You might imagine an assistant who begins by learning how you work, where the shortcuts are that you naturally take, and how other might be offered to speed things along.   Then when the time is right, you assistant might suggest you have some choices, all in good time, no rush.  The assistant makes notes of how they can improve your life and recommends rather than enforces changes.

In time you might start noticing that there is less clutter around and you’re completing tasks faster without having been trained, directed or instructed.  User consent to small changes that help keep things tidy could be far more effective than wholesale re-ordering of menus and icons.

It’s something we have to keep in mind when developing software that should be designed to help you work.  There is a fine but definite line between being helpful and just downright irritating.

It reminds me of the wonderful scene in Father Ted where a sales assistant tries to tempt Mrs. Doyle with an automatic tea-maker.   “It will take the misery out of making tea.”  Her response?  “Maybe I like the misery!”