Monthly Archives: May 2009

Ensuring Executive Support in Your Quest for Purchasing Fire

Share This on Linked In

Last year, over on the e-Sourcing Wiki, I brought you The Quest for Purchasing Fire, a twelve step guide to selling sourcing and procurement initiatives internally in your organization. Last month, the SSON published the top ten tips for ensuring buy-in from the top, which complements the wiki-paper nicely. Because you have to:

  • Have a Compelling Business Case
    Anything less than a complete, finely detailed, business case with backed-up ROI calculations and you’re just asking for rejection from an executive with too many time requests and a need to kill some as quickly as possible.
  • Create a Sense of Urgency
    If you can’t demonstrate why the organization can’t wait to take advantage of your cost saving initiative, it will likely get put on the back burner
  • Understand Your Organization’s Internal Processes
    Go through the channels and make sure not to offend anyone who could cause trouble if not included.
  • Be Open and Honest About Endeavors
    Be honest about past mistakes and any shortcomings you may have and how you plan to correct them with this initiative.
  • Keep Company Staff in the Project
    Not only do many organizations still distrust consultants, but getting company staff involved early is key to obtaining buy in.
  • Maintain a Tight Focus
    You’re not trying to save the world … so don’t tackle everything at once.
  • Be Bold Where it Counts
    Even though you’re not trying to save the world, be sure to have a plan that aims high with respect to the problems you are tackling.
  • Give Examples from Beyond the Organization
    Demonstrating how similar projects have helped your competitors will go a long way towards alleviating fears of the unknown.
  • Demonstrate Your Risk Awareness
    Every project involves risk … be sure to address all of the likely, and unlikely risks to let management know that you’re aware of the risks and actively taking steps to mitigate them.
  • Highlight the Compliance Benefits
    As the article says, pull up your SOX.

Purchasing’s Best Practice Tips for Buying in a Recession

Share This on Linked In

Purchasing recently ran an article on best practices for buying in a recession that contained five tips for buying in these troubled times. While most of the tips were pretty basic, sometimes the basics are best, and they are worth repeating.

The tips were:

  • Put the pressure on business stakeholders
    Put the onus for achieving defined savings goals on the business unit executives (with backing from senior management).
  • Give your suppliers a check-up
    Make sure your suppliers are healthy and not on the verge of bankruptcy. Do this by insuring your suppliers are paying their suppliers on time, aren’t burning through too much cash too fast, and have the resources to weather the storm.
  • Help key suppliers
    Start by paying promptly. Delaying payments for ridiculously long timeframes will just cost you more in the long run (since suppliers will likely not be able to get financing as cheaply as you and, at contract renewal time, will have to up their prices to cover the loss).
  • Don’t forget the fundamentals
    Consolidate buying, extend contracts with preferred suppliers, and continually monitor your suppliers’ health.
  • Get Lean
    Control inventory, control commodity costs, and minimize waste.

Retailers Have a Thing or Two to Teach Wall Street

Share This on Linked In

A recent articles in Stores on six lessons Wall Street could learn from retailers caught my eye because I just couldn’t fathom how, out of all the lessons Wall Street needs to learn (again and again) you could limit the number of lessons to just six, but since I’m a big believer in lean, and fundamentals, I decided I’d give the article a shot. After all, a blogger can never have too much material to write about. It was, at least, an interesting article and I would recommend you read it all the way through if you have the time.

So what were the lessons?

  • Times have changed since 1984.
    If bankers and financiers had been applying some of the basic business practices used by the retail industry, they might be doing the hula today instead of trying to undo countless missteps. After all, companies like Best Buy and Wal-mart are doing fine. (Most likely because good retailers don’t sell items [like complex derivatives] they don’t understand or don’t believe consumers will see a need for.)
  • If somebody calls himself a liar, maybe you should believe him.
    The principle of trust, but verify is etched into the way a good retailer does business. Trust without verification is a recipe for disaster. (Just like handing out loans to borrowers without credit checks.)
  • Hold the spaghetti sauce.
    Retailers know that focusing on what you do best yields the greatest returns. (Financial leverage spawns financial ruin.)
  • Don’t take the t-shirt.
    Retailers, like Wal-mart, have gifts and entertainment policies to prevent conflicts of interest. (Wall Street, in comparison, threw lavish multi-million dollar extravaganzas for its clients while Rome was burning. )
  • Give the lady what she wants.
    In retail, serving the customer is a long term strategy. The best retailers refuse to compromise customer service by adopting short term measures. (In comparison, the Wall Street crisis is intrinsically linked to a financial system obsessed with short-term gains.)
  • Keeping a dog around doesn’t change it into a cat.
    Retailers know that if a product isn’t selling after a short period of time, it’s not going to get better with age. (And throwing more money at it isn’t going to help.)

Practical Tips for Reasonable Service Levels when Outsourcing

Share This on Linked In

SourcingMag.com recently ran an article on getting the service levels you expect with outsourcing that resulted from a Gartner interview and contained some good tips that are worth repeating.

  • Define Realistic Expectations
    If you’re an efficient organization, don’t expect 30% savings from outsourcing. It’s going to take time for them to learn your business, and even when they do, the economy of scale they offer will only go so far.
  • Realign Expectations Annually
    Demands change. Markets change. You need to make sure your expectations change accordingly.
  • Define the right measurements and metrics.
    Make sure they measure against your goals.
  • Make sure you have a consensus opinion from senior management.
    This insures you define appropriate goals and relevant measures.
  • Prepare.
    Make sure everyone understands where service is going to be increased, decreased, and what they need to do to support the transition.
  • Outsourcing is not a solution.
    If you have a problem, you have to solve it before you can outsource it … otherwise, you’re outsourcing a failure waiting to happen.
  • Build in Flexibility.
    Long(er) term agreements need to be structured to anticipate the change that’s inevitable in business and technology.
  • Relationship Management, and Respect, is Critical.
    You can’t just hand the process off and expect a miracle.

Share Ideas Through a Center of Supply Chain Excellence and Put Your Own Best Practices to Work

Share This on Linked In

Knowledge drain is simply not acceptable in today’s economy. I couldn’t agree more. The ability to identify, analyze, and quickly adapt to market changes — before your competitors do — can mean the difference between a profitable quarter and Chapter 11. Undoubtedly! Companies fighting for survival need to deploy every asset they have, including a highly valuable but invisible asset — best practices developed by employees. Assuredly. But these best practices are typically not documented, and even when they are, not effectively distributed or consistently implemented. Unfortunately. This means that companies can lose their best ideas. Disaster waiting to happen.

Mergers and acquisitions, cost cutting, and senior employee retirements or resignations (because a bright competitor recognized their talent and offered them a significantly higher compensation package) all result in your hard-won knowledge, ideas, and insights walking out the door if you don’t have good knowledge management processes and systems that capture and share your best practices and knowledge.

That’s why I liked the recent article in the Supply Chain Management Review on how to put your own best practices to work, even though it did mention social networks when all you really need is the useful Web 2.0 tools they are built on (and not all the useless time-wasting add-ons found in the unproductive social networks of today). If you start with wikis and moderated discussion forums, you can build a useful knowledge network that will actually be used in an iterative and evolutionary way without a lot of hassle or up-front investment.

So where do you start? You can:

  • Design Across Internal Boundaries
    Make sure your forums and wikis are silo-free.
  • Recruit the Right People
    Recruiting Supply Chain Subject Matter Experts as content moderators is key to ensuring quality, validity, and program adoption.
  • Think About the Thought Process
    Manage information in a way that reflects a company’s culture and process patterns.
  • Design an Implementation Approach
    Tradeoffs between resource requirements, enterprise constraints, and implementation time are a few of the factors to consider. Make sure the initiative is owned by the business, and not IT. You don’t want the system that is technologically “the coolest”. You want the system that works for the people who need to use it.
  • Set Up for a Successful Launch
    Get buy in from a wide range of business users to use the center of excellence as part of their daily business routine.