Daily Archives: June 8, 2011

Don’t Overlook the Soft Cost Savings from SOW Management

A recent article in the SIG Newsletter on the best practices for managing and analyzing statement of work spend that described the rapidly maturing market for centralized SOW (Statement of Work) management programs and the usefulness of a modern VMS (Vendor Management System) also described the one-time and continous benefits of managed SOW programs (under the guidance of a PMO – Program Management Office) and the hard and soft cost savings that resulted. While many organizations move to managed SOW programs, often through a MSP (Managed Services Provider), in pursuit of the hard dollar cost savings, that are often in the 10% to 15% range when done properly, the long term soft cost savings will often be more valuable.

In particular, the following benefits are invaluable to an average organization:

  • single point of contact for contingent labor needs
    no need to contact, and manage, multiple providers to fill different labor needs
  • reduced cycle times
    one call and the PMO or MSP uses a process already in place to locate and onboard your contingent labor
  • standardized criteria
    every department uses the same definition, and the company pays one rate for one type of resource
  • increased visibility
    one report shows the total spend on contingent / managed labour by type, department, provider, etc.
  • compliance firewall for classification, tax, and labor law issues
    which significantly decreases the risk of a massive fine when the same contingent workers are repeatedly rehired (and the government decides they are now employees and you owe more taxes and benefits)
  • standardized performance metrics
    and managed suppliers who know what is expected of them
  • better labor needs forecasting
    from complete and accurate contingent workforce data
  • payment management
    no interest from late payments, no overpayments, and, most importantly, no double payments

All of these benefits reduce complexity, increase reliability, and reduce risk — which keeps costs down in the long run as complexity, risk, and uncertainty only serve to drive up cost.

Is Your CPO the Next CEO Candidate?

Supply and Demand Chain Executive recently ran an interesting article on forging a dynamic, enduring and energetic supply chain: developing supply chain-rooted CEOs that outlined 5 attributes of great CEOs, 10 questions to ask about the organization, 10 reasons to invest in internal leadership talent, and 10 areas to develop great leadership skills.

According to the authors, the following 10 areas are key developmental areas for leadership and, thus, critical for the CPO to master if she is to become the company’s next CEO.

  1. Business Acumen
    The CPO must understand the fundamentals of how money is made within the company and industry, the needs and wants of cusotmers and stakeholders, and the competitive and market dynamics that drive change and opportunity.
  2. Work Ethic
    The CPO must put the time in to prepare herself for the next step and stand out.
  3. Networking Skills
    The CPO must build a network of supporters and influencers, give more than she gets, stay connected, and build internal and external advocacy.
  4. Results Oriented
    The CPO must earn her stripes by consistently delivering results that drive the respect and recognition of others.
  5. Permeability
    The CPO must have the ability to collect and synthesize multi-directional data across critical domains and be willing to constantly share knowledge.
  6. People Skills
    The CPO must be able to get the most out of people.
  7. Decision Making
    The CPO must be cool under fire and be able to make critical and controversial decisions when required.
  8. Lateral Development
    The CPO must be open to lateral moves which are stepping stones on the path to the CEO spot, such as CFO or COO.
  9. Continuous Learning
    The CPO must be willing to learn continuously and demonstrate such willingness.
  10. Legacy Building
    The CPO must have built a Supply Management organization that is capable of standing on its own and shining if the CPO moves on.

SI has to agree. A CPO will need to have all of these skills and qualities to take on the CEO role. But is it enough to get her the job? As Bob continually points out, a CPO must speak the language of the CFO. It’s more than just business acumen, it’s talking like you belong in the role. And while work ethic is highly regarded, it’s results that count. If the CPO is constantly putting in 80 hour weeks but not meeting her goals, she will look ill-fit, or slow. And while Networking and People skills are well regarded, the decision ultimately comes down to a small board of directors — if they do not think she’s the right candidate, it doesn’t matter how much internal support she has. And while permeability is admired, it’s seen as tactical as the organization can always hire an analyst to synthesize the data. It’s the ability to make good decisions based on the data and information available that is admired most. And it’s not always the legacy the CPO has built, but the legacy the board thinks the CPO could build as a CEO that ultimately influences the final decisions.

It’s a tough call to say which skill set is the right skill set and what is required to get the CPO into the top spot. Are there any other viewpoints out there that could shed some more light on the subject?