Category Archives: Best Practices

Great Advice on Career ROI Can Be Found on the E-Side

Yes, on the E-Side. ISM’s eSide Supply Management to be precise. Earlier this year, it published “Career ROI: Advice From the C-Suite” which offered 10 great suggestions to get, and keep, your career on a successful career path. These were offered by a career procurement professional with over two decades of experience and were right on the money. These five in particular were on the money.

  • Own Your Career Plan
    Actively take charge of your career growth and the opportunities that come your way. This includes educational opportunities, professional opportunities, and networking opportunities — whatever and wherever they may be. And be sure to check out the talent management resources popping up from the leading consultancies (Greybeard Advisors, The MPower Group, etc.) and professional organizations (ISM, Next Level Purchasing, etc.). Start with the presentations from the recent ISM conference which had a track on talent management.
  • Develop a Personal Brand
    Figure out who you are, how you are different from everyone else, and what it is that you bring to the table. Then work the brand online and offline. Start by establishing a great electronic image, that has clout (with or without Klout), and advertises who you are, and then live it when you network and interact with people. And be sure to constantly maintain and build your networks as this will help demonstrate the success of your personal brand.
  • Work Hard on Your Soft Skills
    If you look at a top 10 skills list for Supply Management today, you are just as likely to find team management, change management, negotiation management, supplier (relationship) management, CSR (Corporate Social Responsibility) management, leadership, communication, cultural sensitivity, and professional development as key requirements as you are e-Sourcing/e-Procurement technology experience, data analysis, risk management, financial management, innovation management, or working capital management.
  • Be a Strategic Thinker
    Supply Management is about the long term. It’s not about reducing costs today just to inflate them tomorrow (by cutting too deep into a supplier’s cost margins, selecting components of inferior quality, or hanging on to last generation technology too long and avoiding investment in next generation technology that can greatly reduce costs and increase sustainability in the long term). It’s about finding ways to increase the pace of innovation, assist the organization in NPD (new product development), and assist the organization in new market entry. It’s about finding new opportunities for value generation, and not chasing the same cost reductions year over year. At some point, 2% just doesn’t make a difference.
  • Don’t Be Afraid to Take Risks, or Fail
    If you aren’t willing to take risks, you’ll never push the envelope and see what you are, and are not, capable of. If you don’t figure this out, you won’t make much progress in developing your personal brand, and won’t really stand out form the crowd. So take a few risks, fail once or twice, learn from your mistakes, and exceed expectations the next go around.

For five more great tips, see the original article on Career ROI: Advice From the C-Suite.

Bravo to CPO Agenda for Pointing Out That Charging Suppliers to Bid is a Really Bad Idea!

As I’ve told everyone who has ever asked, charging suppliers to bid is a really bad idea. Not only does it generate ill-will, but as this recent article over on the CPO Agenda that gave “tips for understanding why charging suppliers to tender is a bad idea” noted, it could even be illegal. But let’s take the tips one-by-one because it seems that this practice, which started rearing its ugly head at the start of the recession, is still trying to push through.

  • It is Counter-Productive
    It reduces the expressions of interest from time-wasters and quality suppliers alike. This is what goes through the head of a serious bidder with a quality product: “I know my product is quality, and so do my happy customers, so why should I pay $1,000 just for the opportunity to submit a bid? I’m not even guaranteed my product will be evaluated. I’m going to bid on these four other RFxs instead.” So, what you’ll end up with is a set of suppliers who are desparate for your business. But why are they desperate? Maybe their sales team can’t sell worth a damn, or, maybe (and the doctor leans this way) their products just aren’t as good as their competitors, or if they are, they are not able to produce them as cost effectively. Do you really want inferior products or unnecessary premiums for quality?
  • Suppliers with No-Pay-To-Play Policies are Out
    Not only will you likely knock out most of the quality suppliers in your potential supply base who, while quite willing to bear the costs of providing you with product samples, etc, are not willing to pay just to bid, but you will definitely knock out any supplier with a no-pay-to-play policy that prohibits them from bidding on any contract that requires a bid fee. These could be the best suppliers in the world.
  • There’s no Rationale for it
    The logic is that it takes time to collect, verify, and analyze a bid, and while this is true, with modern e-RFx / e-Auction software, you can collect, verify the completeness of, and compare a bid to a benchmark in less than a second. You will likely only need to analyze the Top 5, accoring to your weighted metric, in detail at the end of the day. And, since you can now buy unlimited use of these systems for less than what a single project used to cost, it doesn’t cost any more to collect fifteen bids than five bids.
  • It is Unethical
    There is way too much opportunity for corruption or the perception of favouritism. (In simple terms, you are sending this message: We value suppliers who bribe us for our business.) Plus, there is always a chance that this restriction could be illegal, in breach of fair competitive practices, or public procurement law. Oops! Can you say “class action lawsuit”?
  • It Says Your Company Is An Ass
    Okay, so the original article said it sends a strong message to the supply base you need to connect with that you are actually uncooperative and uninterested in building a relationship that will benefit both parties, but this sums it up nicely. Unless your organization has a monopoly, and can get away with being a self-centered smug corporate ass, just don’t do it.

For Lasting Results, Follow the Procurement Leaders …

… but be sure to focus on the right characteristics first. Reviewing a recent summary of A.T. Kearney’s 2011 “Assessment of Excellence in Procurement Study” over on the A.T. Kearney site on why you should “Follow the Procurement Leaders” that described seven ways to lasting results, I couldn’t help but notice that they had all the right suggestions, but in reverse order. Starting from the bottom of the list, and working our way up, we see that the suggestions will transform your organization from an average performer to best in class.

  1. Win the “War for Talent”.
    This is the first T necessary for supply chain success and the most critical one. No supply chain function can be happen without someone in place to plan, manage, and execute it — and for any function to be planned, managed, and executed in an optimal manner, you need world-class talent.
  2. Adopt Technology.
    This is the second T necessary for supply chain success and the next most critical one. Once you have found the right talent to take your supply chain to the next level, you need to enable your talent with the right technology to make them as efficient and effective as possible.
  3. Transition to Category Strategies.
    As the article notes leading procurement organizations use more advanced toolkits — systematically employing more than twice as many methods as the followers — to tailor their approaches to each situation. That’s why leading e-Sourcing / e-Procurement providers are now offering platforms with category templates / workflow management capabilities to allow platform customization to each organizational category and support the third T of supply chain success.
  4. Use Supplier Relationship Management.
    Suppliers are key to supply chain success, and leaders manage the relationship to get the most out of it. They use suppliers to improve innovation and growth, monitor compliance and risk management, and improve capabilities across the supply chain.
  5. Manage Risk Systematically.
    Leaders use risk-impact analysis, financial risk management, and disaster planning as ways to protect against, and mitigate the effects, of disruptions — unlike the risk management “followers” that constitute 80% of companies that are a single natural disaster away from a major supply disruption.
  6. Contribute to Top and Bottom Lines.
    It’s not just about cost reduction, but about value generation. Good Supply Management doesn’t just stop at cost reduction, but goes onto demand reduction, component innovation, product innovation, and even market innovation. This is done by managing risks, managing supplier relations, applying category strategies, using technology, and using all of the skills your talent possesses.
  7. Align with the Business.
    Leading supply management organizations support the business strategy. And while this is the most important goal from the viewpoint of Supply Management, as the goal is to increase the image of Supply Management in the organization, this can not be accomplished until all of the pieces of the puzzle, described in the first six steps, are in place.

No Interface, No Delay?

Apparently, according to a recent article in Inbound Logistics that proclaimed All In One, a good reason for buying an integrated ERP / SCM solution is the fact that if the solutions are integrated, then there is no interface between two separate systems that could cause problems or delays. An interface is another piece of software that, like the ERP / SCM solution, could have its own set of issues. And it’s another piece of software that has to be maintained.

However, this applies to integrated systems as well. Most integrated systems are composed of multiple modules, each of which has their own interface. As a result, the no interface, no delay argument doesn’t have a lot of merit. If there’s a bug in the internal API, then there could be a system failure in the sole-source system just as easy as there could be a system failure in an interface or a third party system.

The proper rationale for selecting an integrated solution is because it:

  • has all of the key features that are required,
  • meets the needs of the organizations and the users,
  • and brings the right value to the organization.

You don’t select an integrated solution because it:

  • is cheaper,
  • minimizes the number of suppliers you need to interact with,
  • or minimizes interfaces.

It’s not about cost, it’s about value. It’s not about supplier count, but what the suppliers can bring to the table. And it’s definitely not about the number of interfaces, but about the stability of the interfaces and whether or not they enable access to the right data. The short story is that you can make arguments for and against either solution, but it all comes down to the merits of the solution with respect to your organizational needs, not a generic pro/con checklist.

Time to Take the First Step on Your Next Level Supply Management Journey

And download the new BravoSolution sponsored Sourcing Innovation WhitePaper on Taking the First Step on Your Next Supply Management Journey [registration required] today if you haven’t already.

The acronyms and acclamations are still flying fast and furious in the Supply Management space and phrases like VFS, Hi-Def Sourcing, Next Level Supply Management, and Next Practices aren’t going anywhere — and neither is your organization unless it’s on the road to improving it’s Supply Management practices (unless it’s in the Hackett Group 8% and has a solid plan to stay there).

Chances are that, right now, your organization is somewhere in the standardization and complexity reduction phase of maturity, and if you’re reading SI, approaching the phase of operational excellence. A few of you are in the operational excellence phase, and maybe even approaching the final phase of strategic business enablement, but given that excellence is a moving target, even if you’re lucky enough to be there, it’s going to take work to stay there now that you need to be an expert in QFD, CMM, TVM, KM, SRM, SIM, WM, GSM, NPD, IRR, ROI, ROIC, EBITDA, EV, EVA, NPV, TTM, and TTV! (Don’t know what these are? Read the white-paper!)

In order to advance, a Supply Management organization needs to master the nine axes of excellence, which are:

  • Sourcing Process
  • Organization
  • Finance
  • IT
  • Product Management & Marketing
  • Risk Management
  • Asset Management
  • Relationships
  • Metrics

These axes, along with some key achievements necessary to progress the next level ladder, are defined in SI’s new white-paper, sponsored by BravoSolution, on Taking the First Step on Your Next Supply Management Journey. Download it for FREE now [registration required].