Monthly Archives: April 2014

The (Board) Gamer’s Guide to Supply Management Part XVII: The Village

Life is tough in Competitive Co. Global growth is slowing with the economy. Your products are no longer the most wanted in the marketplace. And at the end of every quarter, the employees who fall in the bottom 10% of their performance reviews get axed. Plus, you just found out that the CPO has been lured away to Big Money Co., one of the Directors is getting promoted, and it’s likely that the next Director will be promoted from within. You want that job, because it significantly decreases the chance that you will be cut when your next annual performance review comes up.

But how do you progress up the corporate ladder? Where do you focus your efforts? Even though you’re required to be a jack of all trades as a Category Manager, you can’t focus on everything, and if you’ll try, you’ll be a master of none and one of your category management rivals will be picked instead of you. Looking around, you see that people who get promoted to Senior Management positions tend to be those who either excel in timing the market and locking in contracts and/or spot buys at the perfect time, forging new markets, managing supplier relationships to optimize production, embedding themselves in standards organizations, or mastering the politics of the workplace to advance despite their lack of skills.

It’s not much different than trying to progress up the social ladder in the typical medieval village. If you were unhappy with the simple life of a farmer (like in Agricola) or a fisherman (like in Le Havre or Rouen Upon a Salty Ocean), then you either have to make your life as a merchant in the market and learn how to profit on every trade, travel to strange new lands to find new and valuable goods for trade, become a master craftsman and produce the ploughs and carriages needed by the farmers and traders, take the religious path and join the church and try to become a monk and work your way up the pecking order, or, if you were lucky to be living in one of the early commonwealths or states, where leaders were elected, become a politician and try to work your way up the ranks in the city council to eventually become elected (or appointed) as the representative of your city.

In other words, things haven’t changed much in 300 years. If you want to get ahead in the world, you either master trade, travel, craft, religion*, or politics. And that’s what you have to do in The Village.
In The Village, you win by controlling the family that achieves the most prestige by the end of the game. Prestige is gained by traveling to new cities, occupying the council chamber(s), progressing through the ranks in the church, succeeding in trade at the market, amassing wealth (in the form of gold coins), and getting your family members recorded in the village chronicle (for their deeds) on their demise. (Unlike the other worker-based games we have covered so far in this Board Gamer’s Guide to Supply Management, where you either have a constant number of workers, or a slowly increasing number of workers as the game progresses, in this game, you lose workers as the game progresses as actions have a time element, and you only get so much time per worker. This adds a new dimension of complexity as you have to be balance worker acquisition with worker loss, just like in the real world where workers retire, defect, or, occasionally, drop dead at their desks.)

As with most worker placement games, the game is round-based and each round consists of a number of actions. In each round, there are a fixed number of birthing, grain harvest, craft, market, travel, council, church, and well actions and players take turns until all the actions have been taken or the end-game has been triggered (in which case each player takes one more action). The birthing action adds one family member (worker) to your family; the grain harvest allows you to take 2 (3, or 4) bags of grain (if you have a plow and a orse or an ox); the craft action allows you to either produce or trade for a scroll, plow, or wagon, mill grain and sell it for gold, or work or trade for a horse or ox; the market action allows you to trade goods (and acquire prestige for your trading skills); the travel action allows you to visit a new city if you have a wagon and the resources to do so; the council action allows you to place a member in the council if you have a scroll or the influence (resources) to do so or, if you have a member in the council, advance him through the ranks if you have the scroll and/or influence (resources) to do so and gain rewards for doing so; the church allows you to enroll one of your family members in the clergy in the hopes that they will be selected for advancement at the end of the round (which will give you prestige if you have the most family members in the clergy); and the well action allows you to acquire a resource (needed for travelling, council advancement, goods, etc.).

The difficulty is in balancing your actions so that you always have the resources and time to advance. For instance, you can’t take too many time-based actions until you have expanded your family as you lose one family member after you have taken actions that require 10 time units in total, and, because this game takes place during the time of the plague, you cannot add more than 7 family members over the duration of the game. Many of the actions, such as travel, advancing through the council chamber, trading in the market, milling grain for gold, and working for scrolls, ploughs, wagons, horses, and oxen, require time. Depending on the action, it can require anywhere from one time unit (to enter the council chambers for the first time) to six time units to produce your first plough (as it takes 3 time units to learn the trade and 3 time units to build a plough). Just like in the real world, it takes time for your workers to learn their jobs and then time to produce results. That’s why you often buy or outsource, trading money and material (in The Village, resources) for goods and services you need instead of trying to acquire the talent and build the product yourself. Some competencies (like category management) you invest in and others (like production) you outsource. Sometimes you keep a superstar on your team, and advance them through the ranks (like you advance them through the council or the church in The Village) and sometimes you let them go (or, in The Village, let them expire to be recorded in the Chronicle for prestige).

It’s another great game for testing your Supply Management muster, with the unique twist that you not only have to balance resources with growth, but you also have to balance trade with workforce output, because, just like in real life, if you burn out your workforce, they expire. Do you have what it takes to be master of The Village. Why don’t you find out? Maybe you’ll even figure out where to focus your efforts to advance your own Supply Management Career!

* Some standards have as many zealots as recognized religions!

Too Many Marketing Fingers in the Procurement Pie? And if You Need Help, Get It.

Let’s face it. If Marketing hasn’t let you put your fingers in the Marketing Procurement Pie, then you don’t have any experience executing and managing Marketing and Agency projects in your organization. Furthermore, given the more traditional role of Procurement and Supply Management, all of the training and expertise that has been imparted to you has probably focussed on direct and indirect materials management, and not ephemeral creative services.

If you want to be taken seriously, you have to not only be an expert in your function, but very knowledgeable in the Marketing function as well. You have to know their process, KPIs, and lingo and speak it like a pro. Otherwise, you look like a n00b in a l33tsp34k forum, and you won’t be taken seriously.

If you don’t make the cut, then you better bring in help, get up to snuff, and make sure you are putting your best foot forward before taking on your first Marketing Procurement project. As per our previous post in this series, you will be put on probation and likely only get one chance to succeed. Fail on even one task, and you’ll be blamed for everything and not allowed back in until there is a change in leadership. (It’s harsh, but you need to remember where the biggest concentration of egos typically are outside of the C-Suite.)

A third-party experienced in marketing procurement can not only help you understand the lingo, the relevant KPIs from a Marketing viewpoint, and the process customizations that are likely to get Marketing’s attention, but can also help you with:

  • Analysis & Benchmarking
    Chances are you are struggling getting enough clean and current data just to analyze and breakdown Marketing’s current spending — how are you going to benchmark the industry when Marketing never bothered to save bids and quotes from agencies that didn’t win the bid?
  • Subject Matter Expertise
    In addition to helping you with lingo, KPI definition, and process customization, they can also help you prepare the SoWs (Statements of Work), MSAs (Master Services Agreements), and Rate Card templates that make sense for your organization.
  • Time Bank
    Chances are that your team is already “time bankrupt” and barely has the time to do it’s job, yet alone learn another function. Bringing in the appropriate expertise not only minimizes the amount of time you need to identify the relevant subject matter, but to run the first project successfully as you will have an expert guiding you each step along the way. In addition, an outside third party can help you with the time-intensive data collection, cleansing, and benchmarking, freeing your team up to focus on what is important.

For more information on what a third party can bring to the table, check out Source One Management Services’ new white-paper on “Fueling Effective Collaboration: How Strategic Sourcing Delivers Results for Marketing Groups”. There aren’t many resources out there on Strategic Sourcing for Procurement (and SI knows this as it’s been talking about the importance thereof since it started back in 2006), so take advantage of what there is when something comes your way.

Too Many Marketing Fingers in the Procurement Pie? Then You Need To Run a Successful Event.

Once you get Marketing’s attention, you’ll probably be put on probation. Just because the CFO views you positively because you are helping the organization identify 5% to 20% savings annually in every category you touch, this doesn’t mean Marketing does — even if Marketing acknowledges that they need to get their spend under control and deliver more value. So you’ll be given permission to help with one or two “pilot” projects, and if you want to get on Marketing’s good side and take back the Procurement Pie, you will have to succeed and impress. This sounds easy enough, since you already have a standard five/six/seven step sourcing process which is generic enough to be applied everywhere, but, as always, the devil is in the details! Unlike most indirect purchases, it’s not as easy as searching a database or sending out a Request for Interest. Different agencies have different strengths, and different capabilities. Some can manage third party production houses, some can’t, for example. You need to have a firm understanding of what Marketing needs to help identify the right agencies. Second, evaluating an agency pitch is not like evaluating a physical product or manufacturing plant. What are you looking for, and what aren’t you looking for. Again, you need to have a firm understanding of what Marketing needs and a solid understanding of the lingo used by the Agencies as well as Marketing.

And you need to present Marketing with a clear picture of the process you are going to follow up-front and make sure that Marketing understands the process you are using and the critical importance of not circumventing the process, no matter how many times the incumbent Agency representative uses his direct-dial rolodex and asks someone in Marketing to let a requirement slide or just skip straight to the pitch. To get Marketing’s commitment, the process should look like it has been customized to them and use terminology they understand. If you need a good starting point, a recent paper by Source One Management Services, LLC. has a great process graphic you can use in their recent Marketing Insight Report on “Fueling Effective Collaboration: How Strategic Sourcing Delivers Results for Marketing Groups”.

Be sure to pay special attention to the following tasks:

  • Scope of Work (SoW) Definition
    This is what the agencies respond to and will determine not only whether or not the right agencies respond but how accurate their responses are.
  • Agency Identification
    You don’t want to send the SoW to an agency that you know is not appropriate or that would present a conflict of interest (especially if they are working with your direct competitor).
  • Market Assessment
    You have the RFI/RFP process down pat, but you are not necessarily experts in the Agency Marketplace or in what the standard rates are (or should be). This is where your benchmarking skills are really going to come into play.
  • Pitch Evaluation
    You have to make evaluations a qualitative and deliberative process on your terms, not a seat-of-the-pants decision in the Agency’s boardroom, which is what The Crazy Ones want you to do. You have to work with Marketing to build a quantitative scorecard that will be consistently applied to all pitches and select your finalist(s) based on the scorecard.
  • Negotiation, SoW, and Contract
    You know better than everyone that the way to avoid a contract dispute is to address and negotiate the issue up front because, as the saying goes, if you have to reach for the contract, then you’ve already lost the argument. This means leaving no “i” undotted, no “t” uncrossed, and no potential risk, no matter how small, unaddressed. This is your forte. You can make sure no stone remains uncovered, which greatly increases the chances of unblemished project success. (Which, to be honest, is often all Marketing really cares about.)You also know that you have to move Marketing away from just handing over the account and letting the agency run with the account to specifying detailed contracts, statement of work, budgets, and rate-cards as well as processes for selecting and managing third party vendors. You have to help Marketing make the agencies understand that while they can run free on creative within the boundaries specified by Marketing, print, production, etc. has to be managed according to guidelines and budgets.

While you won’t be thanked for your many successes, even though proper benchmarking and reporting will have you recognized by the CFO and CEO, you will get all the blame for any and all failures if you screw up just once.

Too Many Marketing Fingers in the Procurement Pie? First You Need To Get Their Attention.

Does this sound familiar? The CFO has mandated a 10% across the board spend reduction, and it’s Supply Management’s time to shine. You want to help, but, as expected, Legal and Marketing are refusing your help because, when it comes to litigation, you need the rain maker and when it comes to creative, you can’t put a process behind it and get results. As a result, Legal and Marketing costs are still spiralling out of control while you watch millions being wasted on e-Discovery, cookie cutter legal services, print, basic media production services, and unmanaged third party spend. Getting this spend under control could save Legal and Marketing so much that they could afford to pay even more for the rain-makers and creative geniuses they so covet, but still deliver savings and ROI to the business. But how do you get your point across?

The process is two-fold. First, find out who in the C-Suite wants you to get your message across and help the Marketing organization save money and have them strong-arm the Marketing leaders into a meeting with you in a wireless-signal free zone where these Marketing leaders will be forced to give you their undivided attention. Second, have a firm grasp of what you can bring to the table to help Marketing enhance their organizational performance and make sure you can convey it to Marketing in a crisp, clean, clear, and concise presentation.

Specifically, make it clear that you don’t just bring cost-cutting to the table — you also bring value generation support services which include, but are not limited to:

  • Decision Support
    Your expertise in supplier identification, profiling, and evaluation can help Marketing evaluate current relationships and identify new agencies that might more closely align with Marketing needs.
  • Benchmarking
    Your expertise in spend analysis and visibility can help Marketing get a grip on what it is spending compared to what it should be spending (according to existing contracts and rate cards) as well as a breakdown on how much is being spent on each category (print, media production, creative, etc.) and what opportunities there are for consolidation and spend reduction by leveraging volume and disassociating physical product-based spend from creative spend. (Since Marketing generates value based upon the power of the campaign they deliver, it makes sense to pay Phillippe or Eduardo the $500 an hour he wants for his creative genius if it generates a campaign that gets you noticed more than the competition. After all, he’s just one guy and even if he works 3 months on the campaign, that’s only $240K on what could be a 10M campaign. However, it doesn’t make sense to pay $50 an hour to a guy running the printer at Kinkos, especially since you probably are producing so much paper over the year that you are paying the equivalent of 5 guys at Kinkos to sit there full time and run printers, who should be paid $15 an hour. Net result, you’re overspending $350,000 for copy services — way more than the $140,000 you might save by hiring a second-rate creative genius who might end up generating a second rate campaign that actually hurts your brand and costs Sales $1,000,000 by cutting the wrong corner.)
  • Contracting
    You deal with negotiations and contracts day-in and day-out. As a result, you have the methodology to keep the process moving nailed down, the knowledge to know what needs to be addressed, the ability to work with Legal to create a standard Master Services Agreement template to streamline every negotiation, and the skills to put together an all inclusive Statement of Work that protects both parties and includes rate cards that are fair and beneficial to both parties.
  • Strategic Focus
    Marketing’s strength is in campaign management and strategic brand and product positioning, not in the tactical Procurement process, contract negotiation pitfalls, or the back-end project management, that is often left up to the agency. Your presence lets Marketing focus on it’s strength and not waste time on areas that don’t increase its value to the organization.

Of course, this is just the first step.