Category Archives: Best Practices

Are You a Procurement Master?

Leave it to a Big 5 Player, and Accenture to be particular, to decide we need yet another set of terminology to describe the same old Procurement goal. In their recent piece on “Compulsive Contributors”, they focus on Procurement Masters and Procurement Contenders, differentiated by TCO vs TVO (no, not TiVo, but that was my first take too . Picking up on the Total Value Management (TVM) concept that leading bloggers like yours truly have been preaching for five or so years now, they have decided to embrace it as a cornerstone of Procurement Mastery, but relabel it Total Value of Ownership (TVO). This is good, because TVM is necessary for mastery, while simultaneously annoying, as we don’t need new acronyms for established concepts. (I know, I know. You can’t use someone else’s acronym as then you can’t take credit for the idea.)

However, I must say that I like the fact that they state that masters, who go beyond simple TCO in their award considerations, also take into account the need to:

  • enhance materials sourcing and labor
  • reduce fixed cost structures
  • optimize processes
  • eliminate non-value add activities
  • increase working capital efficiency
  • eliminate unnecessary demand
  • accelerate new product introduction
  • increase revenue
  • reduce risks to supply and brand
  • reduce the carbon footprint

Even if they re-invent the language wheel, it’s important that the big firms (with the big marketing budgets) get the word out that Procurement Mastery is

How to Screw Up a Procurement Job Interview

Last month, Charles Dominick of Next Level Purchasing ran a great post on “5 [Common] Ways to Screw Up a Purchasing Job Interview” that is a must read for anyone looking for a new Supply Management Job (which, if recent satisfaction surveys are to be believed, is the majority of professionals in the space). Charles’ must read advice indicated that the following WILL screw up your interview:

  • taking an interview late in the process
    as all future candidates are compared to the one once that candidate is identified
  • not being prepared for the most common interview question
    which, succinctly, is tell me about yourself
  • not distributing eye contact
    when being interviewed by multiple people
  • saying anything negative
    as you will not be seen as the proactive team player they want to hire and
  • using slang inappropriately
    as there is no guarantee that an interviewer is going to understand what you mean, and if you say you are hotter than a fox in a forest fire for the job, and the interviewer isn’t familiar with that phrase and a strong PETA advocate …

In addition, the following will also screw up the interview:

  • not dressing appropriately
    even if the company has a very laid back atmosphere in the workplace, don’t show up in shorts, a Hawaiian shirt, and sandals (as they need to know that you can make a good impression in front of a supplier)
  • over-stating your skills, experience, or knowledge
    as you will be interviewed by the best and brightest and they will find you out
  • not knowing the market for the common Procurement categories
    if the job is in the electronics component division and you know nothing about the state of the semiconductor market, that’s not going to look good when they ask if you have any ideas to control costs in that market
  • not knowing what the company does
    if they are an engineering company that primarily makes electronic components for personal entertainment and the automotive sector, but you only know them for their video game division, that’s not going to look good when they ask how you plan to reduce costs in the automotive division
  • not knowing the competition
    and this is doubly damaging if you walk into the offices with the product or logo of direct competitor anywhere on your person

Novice Negotiators – Your Counterparts Will Use Your Emotions Against You

As per this recent article over on eSide Supply Management on “Using ‘Micro Expressions’ to Your Negotiation Advantage”, negotiators who can read body language often have an advantage. And if you are emotional, they are sure to pick up on your unfiltered emotional actions and use those against you.

In particular, as per the article, they will be looking for signs of these universal emotions to use to their advantage:

  • Anger
  • Disgust
  • Fear
  • Sadness
  • Happiness
  • Surprise
  • Contempt

In particular, they will be looking for signs of Fear, since that means they can strong-arm you, Surprise, since that means they can pull a fast one while your mind is otherwise occupied, and Happiness, since that means that they don’t have to sweeten the deal any further to get you to sign.

That’s why, no matter what happens, you should always be cool, calm, and collected against an experienced pro. Don’t take it personally. It’s business, and, more importantly, it’s the organization’s business. No matter what happens, look at it from a neutral, outsider’s perspective. Pretend you’re a third party arbitrator and it’s your job to find a fair resolution to an argument. You might still be out-negotiated, but your counterpart will have less of an advantage.

That’s the reason that good negotiators have a Poker Face.

Listen to BrainNet – Invest your Avoidance Savings to Keep Costs Down

In the recent CPO Executive debate on public sector spend and savings measurement, transcribed in “Cuts from the Centre” and previously referenced in our post on how your Organizational Data is Organizational Data — NOT Department Data, Fredrik Henzler, Partner and MD, of BrainNet, made a great point — while there is no incentive for a provider to offer the same product or service at a 10% discount if they can continue to get what you are paying now, if you offer to split the savings and let the provider invest a portion of the savings in long-term operational and infrastructure improvements, then there is incentive. If the provider can reduce the cost of their product or service, then they have money to invest in new technologies to further improve efficiency and reduce cost, which will keep the provider competitive as time goes on.

Furthermore, if you don’t get greedy and allow your provider to keep a larger margin if, and only if, they invest in operational improvements, then you know that costs will continue to drop over time and you have likely bought yourself years of cost “savings” and will be able to acquire new products and services at a lower price point than your competitors. Not only is it a win-win, but it incentivizes your providers to reach new heights of efficiency and effectiveness. So invest your savings, and just like money deposited in a high-yield savings account, watch your savings grow over time.

It’s a Knowledge Economy – Do You Know Where to Turn?

Today’s economy is a knowledge (driven) economy, “one in which the generation and the exploitation of knowledge has come to play the predominant part in the creation of wealth. It is not simply about pushing back the frontiers of knowledge; it is also about the more effective use and exploitation of all types of knowledge in all manner of economic activity“. Very little has changed since the Department of Trade and Industry of Great Britain penned these words in 1998.

In fact, the importance of knowledge in wealth creation is accelerating by the day now that global trade, information technology, new media, and, in particular, the social web is increasing in innovation, size, and market penetration on an exponential basis. Leading organizations now “follow the sun” and operate core business processes 24/7/365 on a global basis. Product and service pricing are increasingly being driven by value first and cost second. Organizations have to either accept the new economic reality created by the knowledge economy or fall further behind their peers in sales and market size.

But over the the past three decades, the knowledge required to compete in today’s global economy has increased exponentially. And, for your organization to survive, it needs people who are up to the challenge. People who need to be well educated, and, for the most part, better educated than they are because the world keeps changing, while the education your people received, 5, 10, and 25 years ago doesn’t.

So how do you go about educating your Supply Management workforce? Especially when there are at least seven different options available to you? You start by asking the right questions. And you find out what those questions are by downloading the latest white paper by the doctor of Sourcing Innovation, sponsored by BravoSolution, on The Knowledge Economy.