Monthly Archives: May 2009

The New Role of the Global Sourcing Manager

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A recent article in Global Services had an interesting article on the roles sourcing managers play in today’s global sourcing organizations. Whereas traditional managers were more focussed on:

  • setting directions and goals,
  • communicating policies,
  • motivating the team,
  • monitoring and analyzing progress,
  • rewarding and punishing, and
  • reporting up the chain;

today’s global sourcing managers need to focus on:

  • a goal-orientation,

    that navigates the political currents and allows sourcing relationships to thrive,
  • process & domain expertise,

    that is backed up with hands-on operational experience,
  • entrepreneurialism,

    that perceives risk, understands the different functional areas, and builds cross-functional teams to help mitigate that risk,
  • global strategy,

    that takes into account cultural nuances, regulatory requirements around the globe, and the macro-economic factors that impact the supply chain,
  • integrity,

    that imparts credibility inside and outside of the organization,
  • negotiations,

    that lead to win-win relationships for long term success,
  • and the future,
    that allows the sourcing manager to adapt and respond to the dynamically changing global environment.

This is because, as outlined in the article, the responsibilities of today’s global sourcing manager transcend different functional areas beyond sourcing, procurement, logistics, and supply management, which include:

  • governance methodology
  • forecasting & resource deployment
  • contract review & change management
  • technology environment & improvement
  • reward and recognition programs
  • transition management
  • production planning
  • reporting & communication
  • disaster recovery & business continuity
  • financial performance

And to wear all of these hats, today’s sourcing managers have to be:

  • flexible,
  • contract oriented, and
  • governance aware.

Buying Time!

Originally aired December 1, 2007..

To the tune of Closing Time by Semisonic.

Buying time – time for you to go out, go out and meet the day
Buying time – turn the lights on your suppliers near and far away

Buying time – one month left on the contract, so finish your auction or quote

Buying time – you don’t have to decide if you call a vote

You know who you want to win the bid
You know who you want to win the bid
You know who you want to win the bid
win the bid …

Buying time – time for you to rank the responses you get from the crowd

Buying time – your work won’t be finished ’til your team-mates and bosses

are cowed

So gather up your courage, and move it to completion – I hope you still have a friend

Buying time – every new beginning comes from some other beginning’s end

Yeah, You know who you want to win the bid

You know who you want to win the bid

You know who you want to win the bid

win the bid…

Buying time – time for you to go back to the market your goods come from…

You know who you want to win the bid

You know who you want to win the bid

You know who you want to win the bid

win the bid…

Buying time – every new beginning comes from some other beginning’s end…

Be sure to check out the Top Categories to Source Now Webinar coming up this Tuesday (June 2) at 1:00 pm ET and Pat Furey’s post on Supply Excellence yesterday, because the good deals you can get now might not last much longer!

Are Today’s Global Sourcing Objectives Really Disparate?

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A recent article in Industry Week asked if today’s five disparate global sourcing objectives present a conundrum. These days, global sourcing organizations need to:

  • be efficient and innovative,
  • master balancing insourcing, outsourcing and captive offshoring,
  • minimize risk while maximizing savings,
  • transition quickly with minimum disruption, and
  • accelerate results without a learning curve.

And some people might be tempted to argue that you can’t be efficient and innovative, that you can’t minimize risk while maximizing savings, that you can’t transition quickly without causing disruption, that there’s always a learning curve, and that you can’t insource and outsource and get results.

But one can also argue that true innovation increases efficiency, that true long term savings come from good risk mitigation, that good planning allows a quick transition with minimum disruption, that a learning curve can be minimized with a good training plan, and that you can insource and outsource by looking at functions, and not business departments.

In other words, it’s only a conundrum if you make it one.

Dick Locke On The Yin-Yang of the Business Universe

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Editor’s Note: This is Dick Locke‘s first post as a regular contributor on Sourcing Innovation. (His previous guest posts are still archived.) Dick, who has delivered seminars to over 100 companies across the globe, is a seasoned expert on International Sourcing and Procurement who wrote the book.

Steven Guth proposes that “Procurement pros should be in sales“. He
implies, but never quite says, that procurement pros should have sales
skills. That’s right on. I’ve been there, done that and even got a
tee-shirt. Sales skills are essential, especially if you are in a
corporate central group that is outside of any profit centers.

Here’s the situation. I won’t mention the company name, but I hope
people will figure out who it is. They had a Corporate Procurement group
of which I was a part. I received an assignment to start up International
Purchasing Offices (IPOs) in Asia back in the mid 1980s. Funding those
offices quickly became an issue. It had been an issue all along for the
Corporate Procurement Group, with big annual negotiations and
discussions about how much each profit center would pay to fund the
corporate group. Now we wanted to add more people and expense for an
unproven new function. They might as well have painted a big target on
our backs.

The funding solution we came up with was that we had to generate our own
funding and using us had to be voluntary. That meant we had to charge
our users a fee and that we were in competition with two other groups.
One was reps and subsidiaries of (largely) Japanese and European
companies who had set up a sales subsidiary structure in the US. The
second group was our own company’s buyers and purchasing managers in
profit centers who felt they could source, purchase from, and manage
overseas suppliers themselves.

We realized we had to not only charge less than what sales subsidiaries
charged but also less than our profit centers felt it would cost to do
it themselves. We came up with essentially a sliding scale of markups on
purchase orders. Small users might pay as much as 5%. Large users might
pay less than half a percent.

I’m glad to say it worked. The operation was handling more than a
half-billion dollars per year in orders when I left. That’s not to say
there weren’t, err, “learning experiences.” One of our big issues is
that we had selected employees for their purchasing and engineering
skills, and not for their marketing skills. It required a tune up for
several of our people, not excluding me. It took about three years to
become fully self funded. If we had avoided some mistakes we could have
shaved about a year off that time.

It had some very pleasant side effects. We essentially were running a
small business within a big corporation. Our people got lean,
entrepreneurial and very customer-oriented. We quickly developed an
antipathy to bureaucracy. We became really efficient. It also took us out
of the annual budget battle and the annual exercise to calculate what we
were saving. (I refer to that as “lies, damn lies, and purchasing
statisitics.”) We merely had to state that we received x number of
purchase orders per day from people who didn’t have to use us and were
paying us for our services. That kept management happy nearly all the time.

Where is this model applicable? In companies where there is a lot of
independence on the part of profit centers, a center-led purchasing
effort, issues with funding the central department and finally where an
internal department can develop and market an advantage over their
competitors. Check it out, it may be right for you.

Dick Locke, Global Procurement Group.

Welcome to Sourcing Innovation, Dick.

Metrics for the Restaurant Industry

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A recent article in CIO Insight on Ruby Tuesday: Feasting on IT Metrics outlined some metrics that could be very useful to the restaurant industry at large. In brief, they were:

  • Capital Expenditure as a Percentage of ROI
    Is it worth even starting the project?
  • Voided Orders
    This is a good loss performance metric.
  • Number of credit card transactions
    This is simultaneously a performance metric and a loss prevention metric, since credit card payments not only constitute a percentage of business, but potential chargebacks.
  • Tip Percentages
    As well as an indicator of customer service, this can be a leading indicator of customer financial health. (Customers who feel financially secure are more likely to leave a healthy tip.)
  • Coupon Redemption Rates
    An indicator of profitability, it’s also a leading indicator of customer financial health.

While a short article, it is an interesting one.