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3 Ways To Make It Big In Procurement and Supply Chain

Tom Derry, CEO – ISM shares his three top tips for early-career professionals who aspire to be a CPO or Head of Supply Chain in a leading organisation.

The next generation of CPOs and Heads of Supply Chain will need to be “next-level” talent.

“It’s easy to point out a few critical success factors for people who have risen to the very top of the profession,” explains ISM CEO – Tom Derry.

In this article Tom shares his three top tips for early-career professionals who aspire to be a CPO or Head of Supply Chain in a leading organisation.

1. Align yourself with the best in the business

One of most important things to do during the early years of your career is to align yourself with the best talent out there. “If you’re just getting into the field or are early on in the field discover who has the best reputation, who’s the best leader and who’s regarded as being leading-edge and running a great organisation” Tom suggests. It’s also advisable look at the company’s reputation. “It’s clear that certain companies have created an awful lot of talent in our profession, disproportionately more talent to other companies.” So find those great leaders, at those great companies and that’s going to be a launching pad for you.”

2. Be courageous

“There are a lot of metrics of dubious value that we often pay attention to in the profession that have outlived their usefulness.” Tom says. He advises professionals to try and link what they’re doing day-to-day with what’s driving value for the firm – whether it’s bringing new products online, introducing new features to new products, driving top line revenue growth or increasing earnings per share by reducing cost. “Speak the language of the business and link explicitly what you’re doing to driving those kinds of outcomes.” This will help you to gain respect because that’s how we keep score in business and those are the measures that matter the most.”

3. Be competitive

“Businesses are about competition,” asserts Tom. “It’s about competition between firms but, frankly, it’s also about competition within the firm to gain resources to win the opportunities for promotion and advancement.” Tom believes it’s important to understand that you are competing, you’re being regarded by your superiors in the firm in terms of your output and your productivity. “You’re in a competition for advancement – maybe it’s advancement within the firm, maybe it’s advancement in another firm but you have to recognise that and put your game face on every day. As they say in sport: leave everything on the field. At the end of the day someone may outcompete you if you’re not taking that approach.”

Part Five of Tuesdays with Tom is available now. Click here to sign up and hear ISM CEO Tom Derry discuss top tips for aspirational early-career professionals, how high profile leaders can become talent magnets in supply management and the latest data on salaries.

Risky Business in Procurement and Supply Management

What sort of fallout can you expect to see from a supply chain scandal? What should you do when a risky event takes place? Tune in to today’s podcast on risk in procurement and supply chain, featuring ISM CEO Tom Derry and Procurious Founder Tania Seary.

Today we’re faced with complex supply chain challenges. In fact, it’s hard to think of an area of the business that modern procurement doesn’t touch, ranging from employment law, to climate change, to human rights.

As the complexity of supply chains continues to increase, so too does the number of issues we need to deal with, which is why supply chain disruption is often quoted as the number one concern of CEOs. They know that supply chain failures can have a dramatic impact on their public reputation – and their company share price.

ISM CEO Tom Derry joined Procurious to discuss how a supply chain disruption can damage an organisation, and what can be done to mitigate the risk.

What kind of fallout is a company likely to see as a result of a supply chain scandal?

Tom: From a Board and CEO point of view, there was an academic study written by a professor out of Georgia Tech a few years back that revealed that if there’s a publicly announced supply chain disruption, that company will experience a lower stock price for at least five years after the event. We’re talking about a catastrophic destruction of market cap and value for companies that experience disruption.

The other fallout is a permanent loss of sales. My 21-year-old daughter makes decisions about the products she buys based on what she knows about the company’s social and sustainability practices. If she hears something about a company that she doesn’t agree with, that company has lost her business for the rest of her life – that could be as much as 80 years of lost sales!

On the other hand, companies that have built up good social equity because of their CSR and sustainability practices don’t tend to suffer the same kind of heavy damage.

What are the common-sense steps to take to ensure your risk management is in order?

Tom: The first thing to understand is this doesn’t require an expensive consultant to run 10,000 Monte-Carlo simulations, give you a probability assessment or sell you a 2×2 matrix.

For procurement and supply management professionals, it’s important to look beyond the first tier of suppliers to where your organisation is really vulnerable – three or four levels down.

You should know every single-source supplier in your supply base, and you should have plans in place for immediately dealing with an issue with one of those sources.

You need to beware of geopolitical risk. If something changes – if an industry gets nationalised or if someone unexpectedly wins an election or referendum – what will your answer be if a scenario like that develops?

Look at the other side of the company. What are the products and services you’re selling, and what in your supply base could put that at risk? We should understand how the activities we are performing help support the business in making its money, and look there for risks that could really disrupt the business. 

How do you minimise fallout from a risk event taking place?

Tom: Wait. In the heat of the moment, it’s a natural human feeling to get defensive when you’re being criticised. An immediate instinct might be to get out there and say that the fault lies with someone else, but that would be a mistake. Don’t give into that instinct to blame, deny and defend. Instead, take a measured view of what’s going on, then accept ownership and responsibility. People will give you a lot of credit for being open, straightforward and transparent about a mistake. If you try to dodge it, it’s going to get worse before it gets better.

Part Five of Tuesdays with Tom is available now. Click here to sign up and hear ISM CEO Tom Derry discuss what sort of fallout you can expect to see from a supply chain scandal and what should you do when a risky event takes place? 

As You Sip Your Delicious Morning Cup Of Suppliers’ Blood…

Is supply management really full of psychopaths? Why do members of Gen Next want to change jobs so frequently? How can managers retain top procurement talent? We put all these questions and more to ISM CEO Tom Derry.

Psychopaths in the profession?

A few years back, a researcher approached ISM CEO Tom Derry and wanted to survey the ISM membership to build a psychological profile of people who go into supply management. A few months later, Tom opened the newspaper and was appalled to find a headline stating “The majority of procurement professionals are psychopaths!”

“That was then,” says Tom. “In those days, there was an expectation that your job was to sit across the negotiating table from your supplier, have zero empathy with that person, demand cost reductions, and extract the pound of flesh. Sure, I can see how those could be seen as psychopathic tendencies. But you’re never going to succeed in supply management [these days] with that kind of approach. The emphasis on supplier relationship management in particular is so critical. That [old] profile is never going to be successful in the profession today.”

The days of the blood-sucking, empathy lacking hardball negotiator are over, but we still have work to do to reinvent the profession’s image – and that’s where fresh, new talent is going to help.

Time to Jump?

Last year, Procurious’ “Gen Next” survey revealed that just under 50% of supply management professionals intend to change roles within the next two years, and 34% intend to leave their current organisation entirely within the next 2 – 5 years. We asked Tom if it’s unrealistic these days for employers to expect their employees to stay anywhere for more than five years.

“Not at all. I think it’s realistic for them to expect longer tenure, but there are a few key things that matter”, says Tom. These include:

  • Training on the job – people really value skill acquisition.
  • Challenging and new assignments giving people a chance to grow.
  • Giving them exposure to other functions in the business via a rotation program.

Retaining Top Talent

But how can a head of supply management retain their top talent? In Tom’s view, we need to be realistic. “Don’t be too defensive about talent”, he says. “It’s a wonderful thing for a leader to be known as a discoverer and developer of great talent, which inevitably means that some people are going to move on, but that’s attractive. If I’m looking for a place to work and I know someone who has a reputation for identifying and developing people who want great new opportunities, I’m going to want to work there. Develop a reputation that will work to your advantage.”

Tom also stresses the importance of making people feel valued. “You can’t overvalue how important it is for a manager to just walk around and talk to people. Take an active interest in what they’re doing. They’ll be happy to know that you know what they’re working on, and that you find it exciting and interesting, and that means a hell of a lot to anybody when a leader comes around and shows interest. It drives results for the company.”

“As a leader, you have to be aware of the profile and external reputation of your team, within the company and externally in the industry. You need to be forward-looking as a leader in creating an environment that’s always compelling and interesting. The best CPOs that I know are focused on where the business is headed in the next 3-5 years, and what kind of team they need to build to optimise the business that we’re going to become. If you’re looking backwards and focused on efficiency, you’re missing the point. You need to be thinking about where you need to take the procurement team to deliver on the future vision – and that is what will make you an attractive leader to any talent.”

In our 10-part “Tuesdays With Tom” podcast series, Tom Derry discusses a broad range of critically important topics that every supply management professional should be across.

Listen to the full podcast here.

Tuesdays With Tom: Trump, Trade and Turning Disruption into Opportunity

Institute for Supply Management CEO Tom Derry compares the Trump administration’s trade policies to “self-inflicted friendly fire” in the first of our 10-part Tuesdays with Tom podcast series.

“In military conflicts, one of the outcomes we most dread are instances of ‘friendly fire’, when you mistakenly fire on your own troops. I think the current [trade] policy is almost an instance of self-inflicted friendly fire, from an economic perspective. We might be helping domestic industries like steel and aluminum (although even that’s arguable), but we’re actually damaging the far bigger industries that are consumers of those products; who make household appliances, yellow goods for construction, or automobiles. All of our exports in those areas will suffer with this trade policy.”

In the first of our Tuesdays with Tom podcast series, ISM CEO Tom Derry talks with Procurious Founder Tania Seary about the current raft of trade wars and tariffs that have come about as a result of US policy shift.

Supply management professionals do NOT like trade wars

“ISM publishes economic reports every month for the manufacturing and services sector. Comments have been very consistent: we’re seeing suppliers trying to impose price increases on buyers as they’re buying metals (such as steel and aluminum)”, says Tom. “We’re seeing people anticipating the tariffs, looking to end sourcing from China and look for suppliers elsewhere, and we’re seeing people postpone investments.

“The two most important economic factors in deciding where to locate a manufacturing facility are local taxes and tariffs. If tariffs are uncertain, [companies are] going to postpone decisions about building that next facility, which is not good for the economy in the long run.”

NAFTA renegotiations having an impact

“What’s so interesting about these policy changes”, says Tom, “is that even mere discussion has a real economic impact and causes real dislocation of supply chains. Even before the steel tariffs were imposed, people reacted to the idea of tariffs, and that caused businesses to have to change their plans.”

Historically, NAFTA has resulted in incredibly tightly integrated supply chains in certain industries, particularly the automotive industry. “We do a lot of assembly of automotive in northern Mexico for final sales here in the United States or in Canada, but before you get to that final assembly in those plants, you’ve got components for parts that move across the Mexican/US border four or five times before we get to the final vehicle”, says Tom.

“Imagine what it would be like to impose tariffs in both directions four or five times, and the inspections that would have to go with it, and the country of origin verification that would have to be performed. If NAFTA [fails], it’ll be incredibly disruptive in terms of the auto industry here in North America.” 

Two tips for turning disruption into opportunity

  1. Have a Plan B: “Every good category manger has a Strategy A for expected economic conditions, and Strategy B if there’s an economic downturn or something happens in the commodity markets. You have to have those playbooks thought through and scripted … if you haven’t done that, get to work on that immediately.”
  2. Be prepared to react fast: “If you see a dramatic change, you need to be able to respond to it in the moment. The advantage goes to the company, the organisation, or the individual who can react fastest during times of great change. If you’re late in moving, any potential benefit to be realised will be captured by someone else. Make sure you’ve got that playbook well defined.”

“The advantage goes to the company, the organisation, or the individual who can react fastest during times of great change.”

Tom tells the story of a CPO working at LG Electronics during the 2008-9 recession, who was concerned about securing semiconductors. They were aware that a recession would lead to a drop in consumer demand for electronics and hence a demand for semiconductor chips, so he visited his suppliers in Asia, then managed to convince his executive committee to buy $9 billion worth of semiconductors because the price would never be as low again. LG subsequently posted record profits for 2009 due to that CPO’s business acumen, his understanding of the spot market for semiconductors, and doing his homework. This is how you respond to disruptive events.

“[Procurement needs to] see through the common perception, recognise market opportunities and the dislocation between price and demand, and seize opportunities to turn a perceived threat into a great opportunity for a huge bottom line impact.”


Tuesdays with Tom is a 10-part podcast series featuring exclusive insights from ISM CEO, Tom Derry. Register now to receive an alert whenever a new podcast is released.