Daily Archives: May 18, 2011

How Do I Find Top Supply Management Talent?

So, after reading yesterday’s post, you now know that if you can’t find* top supply management talent, it’s because you’re looking for a mythical resource that doesn’t exist. In fact, you have a better chance of finding a chimera. Wish all you want, but a senior buyer with a PhD and ten years of experience who speaks three languages, has expertise in multiple e-Sourcing and e-Procurement processes and applications, has bought twelve different categories, has sourced from multiple countries in Europe and Asia, has led global cross-functional teams, has participated in NPD, has financial chops and can help the CFO optimize working capital, is an SRM expert, has a high CQ, is an expert in global negotiations, is a master of spend analysis, can manage multiple projects simultaneously, and lead global services team is not someone out there waiting to be hired. You’d have a better chance finding a CEO for a Fortune 500 than finding a buyer with these skill sets.

So what do you do? You stop focussing on the super-resource and start focussing on the team. Yes you need all the skills, but you don’t need them all in the same person. Break the “super” buyer role into an analyst role, a global trade role, an engineering management role, a contracts role, and a set of buyer roles organized around compatible categories. Then, instead of looking for 7 – 10 “super” buyers, you’re looking for five different roles that will be much easier to fill. For example, the job description from the previous post would break down into the following descriptions:

Supply Management Analyst

  • expert in should cost models, TCO models, and global logistics models
  • experienced user of e-Sourcing and e-Procurement applications and expert in e-Negotiations and award optimization
  • expert in spend analysis
  • working capital management skills
  • financial reporting experience
  • expert at market intelligence

Global Trade Specialist

  • expert in negotiations with a global supply base
  • buying experience in Europe and Asia
  • speaks two or more languages
  • expertise in import/export requirements of the US, the EU, India, and China
  • in-depth knowledge of REACH, WEEE, RoHS, and similar regulations
  • high CQ

Innovation Engineer

  • great project management skills
  • risk management skills
  • innovative and capable of leading cross-functional innovation teams
  • NPD experience
  • experience with CSR and sustainability initiatives

Contract Specialist

  • excellent communication skills
  • excellent writing skills
  • experienced in contract drafting
  • familiar with regulatory requirements
  • experienced with compliance programs

Senior Buyer

  • great communication skills
  • bachelor’s degree with 5 years of experience, master’s preferred
  • buying experience in one or more of manufactured goods, services, IT & Telecommunications, legal, marketing, and temporary labour
  • supervisory experience of global business teams and outsourced services preferred
  • implemented multiple successful SRM initiatives
  • great leadership skills

And your chances of filling these positions are much better than finding a mythical chimera.

* Again, only referring to “find”. There are a number of reasons that you might not be able to “hire” such talent if you can find it, but they are not the subject of this post.

Straight to the Bottom Line: Part II – Selected Insights from Best in Class

In Part I.i we reviewed the introduction to Bob & Doug’s (& Michael & Shelley’s) classic Straight to the Bottom Line: An Executive’s Roadmap to World Class Supply Management in anticipation of Bob and Bob’s new text on Next Level Supply Management Excellence: Your Straight to the Bottom Line Roadmap which is coming out next month on June 28. Then in Part I.ii we reviewed the seven-step process that an organization could follow to get from where it is to where it needs to be. This post will discuss two of the three detailed case studies presented in the book that illustrate why an organization wants to transform itself into a best in class organization.

In 2003/2004, when Colgate-Palmolive’s stock dropped 25% on an earnings warning (per share) that was 10 cents less than what the analysts expected and when Unilever’s net income was only half that of some of its peers, Proctor & Gamble’s (P&G) stock price had double its 2000 value and cumulative sales over the past three years had increased 30%. P&G was the quiet giant that could, and did.

How did P&G succeed in a market when so many of its peers where struggling? A major component was an important, but low key, story of supply chain creativity that not only lowered costs but dramatically increased access to external technology.

P&G built a Global Product Supply organization in the late 1980s that included purchasing, manufacturing, engineering, and logistics and organized its purchases on a global basis in 1992 — before its giant business units were organized globally. Purchasing staff members were embedded in the global business units to insure a close alignment with corporate goals. Supply Management was a corporate priority because it impacted 55% of the company’s revenue stream and up to 70% of product costs in some business units. A 5% improvement in costs translated to a 20% improvement in process.

P&G cautiously implemented electronic technology solutions in the dot-com era and today is a leader in optimization and innovation. It built 20 communities of practice internally to make sure technology ideas were shared internally. It launched the Connect-and-Develop program to boost access to innovation from outside sources. P&G scientists and commercial professionals work as equals on product development teams. And it has a tool called Navigator that allows it to view and manage all of its interactions. (Think of it as a drill-down dashboard on steroids.)

P&G was an early adopter of e-auction and strategic sourcing decision optimization and saved over 300 Million with expressive bidding and optimization back in 2003-2004. And, due to its advanced supply management capability, P&G estimated that its acquisition of Gillette would generate 14B to 16B in incremental shareholder value, with 10B to 11B, or 63% to 79%, coming from cost structure improvements alone.

The next case study that we will review is that of United Technologies Corp. (UTC) In 1994, the new CEO saw the need for improved perfomance in UTC. A believer in the power of cost-driven enterprises, the new CEO hired a new VP of Supply Management in 1996 to define the future of purchasing at UTC.

In the beginning, the new VP was focussed on cost reduction. He appointed a director of worldwide sourcing, embraced internet auctions, and outsourced tactical functions of general procurement. From 1996 through 2001, UTC sourced more than 2.5B of goods and services through FreeMarkets and achieved savings in excess of 18% on this spend alone.

UTC was the first customer of IBMs new procurement services offering that included strategic sourcing consulting, purchasing services, and IT systems support. Experienced IBM buyers became consultants on UTC supply teams and helped them build data warehouses, identify suppliers, study markets, and develop processes for continual improvement. Then IBM installed an automated purchasing system, req-to-check, that allowed requisitioners to order approved goods (such as desktop computers) on their own, subject to approval rules based on level of authority. Purchased orders went through the system and were automatically dispatched to suppliers who issued electronic invoices upon shipment. The new system was capable of generating detailed spending reports by group and requisitioner and helped UTC stop maverick buying in its tracks. Soon inventory levels were reduced as users found faith in the process. Not only did compliance create savings, but the speed of transactions improved cycle time.

After delivering significant savings in the first five years of its focus on supply management, in 2001 UTC embarked on phase 2 of its supply management transformation which takes a more strategic approach to cost reduction and value creation. Whereas phase 1 focussed on automation, phase 2 focussed on rethinking the business rules and processes to find greater savings. The goal of phase 2, called UT500, is to orchestrate cross-functional groups to cut inventory, standardize, and save money through a combination of big and small ideas, including lean. The program reached its 500M savings goal in just two years, one year ahead of schedule and in 2004 was on track to save 1B in just four years. In other words, your organization has 1 Billion reasons to embark on a supply management transformation, all of which will make your CFO, CEO, and shareholders very happy.

For deeper insights into how P&G and UTC achieved their supply management transformation and, collectively, saved billions of dollars, as well as how Chrysler succeeded while GM failed, I strongly urge you to (re)read the brilliant case studies in Bob & Doug’s (& Michael & Shelley’s) classic Straight to the Bottom Line: An Executive’s Roadmap to World Class Supply Management. It’s worth a review while we wait for Bob and Bob’s new text on Next Level Supply Management Excellence: Your Straight to the Bottom Line Roadmap which is coming out next month on June 28.