Monthly Archives: May 2011

The Emerging Focus on Talent, Part II

This post is going to review some selected insights on the talent topic that emerged during the recent Best Practices Conference put on by the Hackett Group. In particular, it is going to focus in on some of the key points made by Disney, Pitney Bowes, HP, Cummins, and The Hackett Group.

At Cummins, which has more employees outside the US, diversity is a core value. The importance of diversity in a global supply management and / or services operation cannot be understated. A diverse team is able to understand and interact with top talent from different cultures across the globe, which allows the organization to draw from the global talent pool, and not just the local talent pool in its home country or the country of its outsourced service center. And a diverse team is a powerful team. Cummins Global Business Services, which manages IT, HR, Finance, & Customer Care, and which is in the process of adding Procurement, hass less than 950 employees but manages 670 Million in Global spend. That’s more than 670K of spend per Cummins FTE. Now, the number drops to about 270K when you include the resources utilized in partner and supplier organizations for local support, but considering the wide umbrella of services support, that’s still quite impressive. Especially when you consider that more employees are outside the US than in the US and many are in low cost locales (like India).

Disney is a global operation, it needs to be global, and it understands that it needs to be global. As a result, Disney puts a great emphasis on staffing its international sourcing offices with local talent. Disney knows that the best way to identify talent is to have talent in the first place and only people who speak the same language (and understand the culture) are going to truly know the difference between who looks good on paper and who will work good in the organization. There is a strong cultural component to EQ.

At Pitney Bowes, employee engagement is one of the four key metrics that are used to measure organizational performance (with the other three being customer service, financial performance, and innovation). Furthermore, it is one of the four key components that must be mastered to be best-in-class (with the other three being structure, performance, and technology). As a result, they put a lot of effort into defining roles and responsibilities with a clear career path that not only made it easier for HR to find, and hire, raw talent, as they made Supply Management an attractive career option, but made it easier for them to identify what the organization needed to do in terms of training and knowledge management to improve its talent pool.

Tomorrow’s post will address some selected insights from HP and the Hackett Group and then Part IV, the final post in the series, will address some of the first steps an organization will need to take on its talent management journey.

Lessons Learned from Best-in-Class, Part VI

The following are some more of the lessons learned shared by some of the participants at this year’s Hackett Best Practices conference in no particular order.

26. Operational transparency is a must
This is especially true if the Procurement organization is based in a (global) shared services organization and is forced to charge-back the organizational units for its services. Keep open books where the other organizational unit excutives are involved and be prepared to show how the value generated per Procurement dollar increases with time, otherwise the Procurement organization might be accused of attempting to make a power grab.

27. Perception always trumps reality
This is why the Procurement organization has to communicate, communicate, communicate, and communicate again. In the executive offices. In the hallways. With the line managers. Through the corporate newsletters. At the training sessions. If the rest of the organization does not have the true picture regarding Procurement and the value it contributes, the old-school perceptions of Procurement being non-value add tactical paper-pushers and process enforcers will persist and Procurement will risk losing its seat at the kiddie table.

This is also true when current processes and supplier relationships are on the table. If the organizational personnel perceive them as effective and efficient and the “right way to do things”, even if all three perceptions are false, it will be almost impossible to get the personnel to change the processes until they see the limitations and weaknesses and see that the proposed processes are better and come with additional benefits. The same holds for supplier relationships.

28. Procurement can never be satisfied with the status quo
Since the value delivered is never enough, and the cost of delivering that value is never low enough, no matter how good Procurement is, it still has to improve — even if it is world class (as this is a moving target that moves as soon as a competitor passes an organization that has stopped to take a breather). The reality is that no one cares about what Procurement did yesterday, they are only concerned about the value Procurement is going to bring tomorrow and how they are going to make their numbers.

29. Procurement needs to be an enablement function
It needs to go beyond cost reduction and avoidance and consider the end-to-end financial implications for working capital management, the risks associated with the supply plan and appropriate mitigations, and the innovation it can bring to the table. Procurement has the greatest impact when it is consulted early on in new projects, not after almost all of the designs have been completed and decisions have been made and the only cost left to take out are in the transaction. If Procurement is involved in NPD, it can take cost out before 80% of the costs are locked in.

If Procurement is involved in Marketing vendor selection, it can make sure that contracts disassociate creative from copy and bid out commodity print or production jobs to the lowest bidder. If Procurement is involved in law firm selection, it can help steer Legal to those that are capable of doing the work and willing to do AFAs (Alternate Fee Arrangements) on a project or task basis and steer the business away from the costly unlimited billable hour. And if it is seen as an enablement function that can help in project definition as well as project implementation, it can not only play a larger role in the business, but secure better results in the long run

Our next post will continue our overview of the lessons learned that were shared by some of the participants at this year’s Hackett Best Practices conference.

The Emerging Focus on Talent (Part I)

Although it was not a major theme of this year’s Best Practices Conference by the Hackett Group, it was nice to see that a recurring theme in many of the presentations was the importance of top talent in the successful execution of strategy and growth. As you may recall, last month SI put out an open call for thought leadership on three issues and one of them was supply chain education as there is a lack of talent in supply chain (relative to the need). Furthermore, the problem is only going to exacerbate as time goes on if it is not effectively addressed.

In particular, the importance of top talent was mentioned as critical in presentations by Disney, Pitney Bowes, HP, Cummins, and The Hackett Group and emphasized in private discussions I had with Pierre Mitchell and Bob Derocher. What’s really interesting to note is that while not every company that presented was World Class, Disney, Pitney Bowles, HP, and Cummins, in at least one organization, are world class by Hackett Group metrics — which only serves to drive home the reality that employee engagement is a critical part of organizational growth. As per Hackett’s Myths and Realities of Global Growth, not only are talent management leaders 16X more likely to link employee engagement to business impact, but there is 21% higher employee engagement in double-digit growth companies when compared to single-digit growth companies.

However, as pointed out in Sourcing Innovation’s recent posts on why you can’t find top supply management talent and how you find top supply management talent, talent management is more than cobbling a wish-list of desired experience, education, and expertise and throwing it over the wall to HR. It’s a well thought out strategy to identify, hire, retain, and retire that includes careful consideration of growth, career path, and training to insure that you get the most out of each employee from the time they step in the door until the time they step out for the final time after their retirement party. This requires a well thought out strategy that should incorporate some of the lessons learned from your peer group. Parts II and III will discuss some of the key points raised by the presenters and why they are important and the final Part will discuss how a Procurement Organization goes about getting started on its talent management journey.

Lessons Learned from Best-in-Class, Part V

The following are some more of the lessons learned shared by some of the participants at this year’s Hackett Best Practices conference in no particular order.

21. Make people a priority
Sourcing Innovation has already established that talent management is a top priority, and that must start with making people a priority. They must be supported, empowered, recognized, and rewarded appropriately as they are the most vital part of the Procurement organization. After all, results require more than processes and technologies, they require intelligent and creative people driving them.

22. Move to One System
Larry Ellison has always known the power of One. That’s why Oracle was one of the first companies to have the enterprise system vision as it is impossible to get more leveraged than one system across your entire enterprise.

If the organization has one system, then it has one transaction store. If it has one transaction store, then even the most unsophisticated transaction processor can easily do highly accurate and levaregeable spend analysis and spend forecasting at any time.

If the organization has one system, then it has one maintenance contract and one head to roll if something goes wrong. No worries about the endless finger pointing and blame games between two (or more vendors) refusing to admit fault when they should be getting it fixed.

In other words, the fewer systems the organization has, the more the organization can leverage its IT model, which is often a key to success.

23. Never forget the value add
Just like a consumer will always prefer the product from the manufacturer with a great warranty and a great service record if everything else is equal, the internal business partner will always prefer the Procurement organization that goes the extra mile to deliver more value. To insure that the Procurement organization, and not a GPO, outsourced / shared services center, or consulting / vendor organization is seen as the go-to organization when needs and challenges arise, the organization constantly has to add value, otherwise the Marketing department might be swayed the next time a specialist consultancy calls up and explains how they just saved the competition 30% in their advertising budget.

24. No matter the value delivered, it is never enough
It’s a great success that Procurement managed to get the customer free maintenance for two years in their IT buy, or a few weeks of free lean training from the consulting organization that is designing the new plant, or managed logistics for their retail distribution channel, but it’s not enough. The internal customers of the Procurement organization will always expect more, and to continue to be seen as the go-to organization, Procurement will have to find new ways to constantly delier more value every time it re-sources a category or undertakes a major new project for the organization.

25. No matter how small the fee is, it is never small enough
This is especially true if the Procurement organization is based in a (global) shared services organization and is forced to charge-back the organizational units for its services. Even if it saves the Marketing organization 10 Million dollars, they’ll still bicker over the 500 Thousand support bill (that will barely cover the personnel and systems cost) despite the 20:1 ROI. Procurement will have to find ways to constantly lower costs internally or add value externally and raise the ROI, be it hard or soft, over time to maintain credibility and gain influence.

Our next post will continue our overview of the lessons learned that were shared by some of the participants at this year’s Hackett Best Practices conference.

Some Ideas for Reducing Transport Costs from Rising Fuel Prices from Supply Chain Digest

A recent piece over on Supply Chain Digest had some ideas for reducing transport costs given rising fuel prices from strategic, tactical, and operational viewpoints that is worth a review by anyone moving product from point A to point B. While most of the suggestions will be top of mind for most transportation managers, I’m sure there will be a few that are overlooked and worth remembering. Some of the more valuable ideas were:


  • tradeoff inventory for transportation as low cost warehousing at TL (truckload) may be cheaper than JIT (just-in-time) at LTL (less-than-truckload)
  • centralize transportation planning
  • invest in a network optimization tool


  • reduce packaging to minimal levels when shipping air
  • plug in rail/intermodal options into the TMS
  • manage inbound and outbound freight


  • optimize pallets and trailer cubes
  • insure shippers are compliant with the routing guide
  • avoid expedited shipping unless its a true emergency