Daily Archives: June 1, 2011

The Emerging Focus on Talent, Part III

The first post of the series discussed the emerging focus on talent, why top talent, and, more importantly, engaged talent, is important and why an average organization can’t find top talent. The second post discussed some of the insights on the talent topic that were put forth by Cummins, Disney, and Pitney Bowes at the recent Best Practices Conference put on by the Hackett Group. This post will cover some additional insights from HP and the Hackett Group and the final post of the series will outline some key first steps to help an organization start on its talent management journey.

When HP realized it needed to undergo a Finance transformation to become a world-class financial organization, it also realized that a critical component of migration would be its people and that a highly engaged, globally deployed workforce would be a critical success factor. It instituted a people development culture that focussed on reaching out with the current team (through an ambassador program), hiring the best (through a unified on-boarding process), developing its talent (through a centralized people development portal), mentoring its talent (through a high potential program), and effectively managing its talent (across groups within finance and the company as a whole). This helped it to create centers of excellence for high-value work delivery.

The Hackett Group, both in their presentations and in my private conversations, emphasized not only the critical nature of top talent in the Procurement / Supply Management organization, but the importance of understanding the nature of the talent market. What many companies don’t realize is that talent is a market, like IT, but unlike IT, where you have new vendors with new technology popping up every day, in Procurement, you don’t have newly trained professionals entering the talent pool every day because the vast majority of colleges and universities do not produce talent with the education and expertise necessary to succeed in today’s next generation supply management organization. This means that the organization has to have a game plan to recruit and retain raw talent that can be taught the skills, and a methodology program in place to teach the talent the skills, which should include (virtual) “classroom”, on-the-job, peer-group, and mentorship components to get the talent up to speed. It also means that it has to market Procurement as an attractive career opportunity and have a corporate succession path that allows supply management personnel to move out and about in the company. If business grads still think, like the older generation, that Supply Management is where you go to retire, it will be very hard to recruit raw talent with a high EQ.

So how does an organization begin a talent management journey? That’s the subject of tomorrow’s post.

Lessons Learned from Best-in-Class, Part VII

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.

30. Procurement must be run like a business
Just like a business is profitable, Procurement must be profitable and must be seen as a profit-generator, not a sunk cost. If Procurement is being run as a services organization and has to charge the other organizational units internally for its services, it must insure that the charges cover its costs. Furthermore, it must reduce it’s cost per dollar of value generated year over year just like it reduces the costs of product or service acquisition on the projects it participates in. If it is not profitable, it will not have the respect of the C-suite.

And if it doesn’t have to charge the other business units to cover its costs, it should find a way to directly contribute to revenue generation to such an extent that it not only shows savings, but profit for the organizational unit for the balance sheet. Even if it can’t roll up its expertise and sell outsourced Procurement functions to smaller businesses like IBM, maybe it can still package some market expertise in a market intelligence service or offer NPD consulting to Engineering or manage the SRM projects internally to deliver even greater value to the organization.

31. Show sensitivity and respect for existing external relationships
Just because the current provider for a certain component required in production of the flagship product is the most expensive on the market doesn’t mean that Engineering will think that Procurement has the right to replace a vendor they’ve been working with for 10 years, even if the proposed vendor can deliver a higher quality product at a lower cost. Depending on the nature of the relationship, Procurement will have to either accept that this supplier is going to get some categories no matter what and will have to focus either on introducing a new supplier as a back-up, secondary source, that can also be used by Engineering to secure non-critical parts of the business or on working with the supplier on a lean initiative to take costs out over time.

32. Simplify and standardize
This may be among the most challenging initiatives the Procurement department ever takes, but it is one of the most essential. First of all, the last thing the organization wants to do is automate a broken process. Secondly, it can’t just throw a broken or inefficient process over the wall to a BPO or outsourcer and expect efficiency and costs savings. Thirdly, the organization will never achieve economies of scale if it uses three different systems for completing organizational transactions (such as a P2P e-invoicing system, a p-card system, and an accounting-based AP system where paper invoices are manually entered and paid) or for conducting e-Negotiation projects.

33. Sometimes its easier if services precedes manufacturing when expanding into new markets
As stated above, Procurement needs to be an enablement function. One of the ways it can do that is to use its knowledge of emerging economies where it sources from to help Sales and Marketing or Engineering expand into those economies. When expanding into new markets, its often easier if services are introduced before new plants are built or new products are introduced. Services provide “a personal touch” and can help the local talent pool (which will be needed to staff a new plant) and early adopter consumers (who will be counted on to buy the new products being introduced) get comfortable with the company.

34. Strong leadership is a must
It take more than the right people, processes, and technology for a Procurment organization to become world class. It takes strong leadership that will rally the troops to advance to the next level of performance, that will speak up and get the organization a seat at the big-boys table, and that will go out and make the case for Procurement involvement in each organizational unit of the business — sacred cows be damned. Without strong leadership, the talent, who will need to be critcal parts of cross-functional teams, will never advance beyond the status quo; the CPO will never graduate from the kiddie table (and that’s if she even makes it that far); and the

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.