In his series of posts on The Spend Management Talent Game (Part I , Part II, and Part III) over on Spend Matters, Jason Busch discussed some of the issues that affect an organizations suffering from a talent shortage and offered some advice for identifying talent.
Organizations that lack the necessary talent to compete at the top level in today’s environment often are able to identify results, but have a hard time translating paper-based savings from screen-shot trophies to those that drop to the bottom line. And as we know, opportunities and well negotiated contracts alone do not generate savings, a good follow-through led by a skilled individual is required. And, more significantly, Organizations suffering from talent deficiencies place too much emphasis on checking boxes for boxes sake. As Jason points out, your tools should not drive your processes, your holistic strategic sourcing model compliant with your overall supply chain model should.
So what kind of talent do you need to transform your ogranization from a reactionary technology-driven tactically-focussed organization to a proactive strategic sourcing organization? According to Jason, you should focus on talent with generalist skill sets, raw intellect and EQ (emotional intelligence) over industry and domain knowledge in new hires. It’s essential that they have general problem solving skills that go beyond functional — or even technology — knowledge. According to Jason, a database whiz that can fly through twenty thousand data cells is certainly valuable, but those sets of skills can be taught.
Jason also points out that this talent will need new approaches — and new skills — to thrive in the current market. Gone are the days where you can save money simply by hammering your suppliers, using reverse auctions when market conditions change, and/or passing your increased costs onto your customers. It’s an open market – the best suppliers will go elsewhere, reverse auctions only work, at most, a few times, and customers expect commodity prices to drop, not increase. Today’s procurement professionals need to be able to hedge commodity prices in the supply chain through exchange traded instruments and aggregate and understand commodity risk exposure across operating units to forward buy commodity contracts for strategic suppliers to ensure rupply and reduce maximum risk exposure.
So where do you find this talent?
One option is to look externally – consultants, contractors, and outsourcers. However, in this case, one of the keys to great results becomes management. In Part III, Jason offers some advice. If you are using an outsourcer, look for one that will balance fixed fee and contingency pricing. If they are willing to take a bit of risk, you know they are confident that they can achieve the expected results.
Be sure to understand market pricing and when it makes sense to pay top dollor. For example, Jason indicates that sometimes it really does make sense to pay thousands of dollars per day – in some cases, above the market – for true experts in targetted processes or specific categories as they amount you pay will pale in comparison to the value and savings they can generate for you. After all, a couple of extra points on a nine figure category is very, very significant.
Furthermore, bigger is not always better. Many boutique consultancies (such as Aptium Global) can bring true expertise and analytical skills – and even top tier academic qualifications – for less than the cost of a “first tier” strategy and operational firms, and with significantly less chance of generalist MBAs with little spend or supply management experience being assigned to your project.