Category Archives: Best Practices

Some Negotiation Best Practices from the IACCM

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An article from a recent edition of IACCM’s Contracting Excellence on applying negotiation best practices and advances in personal productivity technology offered some suggestions for negotiation practitioners and supply management leaders that are worth a refresh.

Noting that the changing scope of business and technological advances dictates a need for new, or at least updated, negotiation skills and that every negotiator needs to

  • know her objectives,
  • know her organization’s requirements,
  • know her, and her organization’s, competencies
  • know the resources she has available, and
  • know the targets she has to meet

the document outlines some best practices that will help her maximize the resources and competencies available to meet performance targets and negotiation objectives.

  • Establish a Replicable Process
    Repeatable processes save time and get better results.
  • Use Collaborative Tools
    These days, supply management professionals need to lead cross-functional teams to insure they will get the best deal for everyone. Collaborative tools will help them work with individuals across the organization who are located in different geographies.
  • Increase Skills and Capabilities
    Giving everyone basic training can significantly increase the benefits realized by the supply management organization. Certifying a department will go even further.
  • Mentor
    Have your “A” Team mentor your “B” team, and keep your “A” team on the leading edge by sending them to seminars with negotiation leaders at least once a year.
  • Rehearse Negotiations
    Get someone from sales with experience in the category you’re sourcing to play the role of vendor. Ask them to give you a rough time. This will not only help you understand how sales people think, and minimize the chance of being surprised in the face-to-face negotiations, but it will help you earn the respect of the sales department who might not value your contribution to the bottom line, which is five to twenty times more powerful than theirs.
  • Use supporting technology
    e-RFX can greatly simplify the initial data collection. Data analysis software can help you analyze market indices and should cost modeling software can use this data to help you understand how much a product or service actually costs. There’s no weapon more powerful than knowing a supplier’s margin before going into a negotiation.

System Implementation Tips from the SSON

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Every technology implementation is a disaster waiting to happen (and many actually end up that way in practice) — and this goes double in supply chain where millions of dollars could be riding on every transaction. Success requires good project management, good change management, and eternal vigilance. And a few tips every now and again don’t hurt. Here are “ten tips for system implementation”, courtesy of the SSON.

  • Keep Focus
    Avoid scope-creep like the plague. While it’s important to keep track of good ideas that arise and, if time permits once the base implementation is complete, implement a few of them, scope-creep can kill a project within weeks of its start.
  • Optimize from the Beginning
    What’s the primary task for the system? And how do you make that task as quick and easy to do as possible?
  • Get Buy-In
    A system that no one uses isn’t useful. Make sure your users are on board with respect to utilization and training.
  • Get the Right Team for the Job
    Would you hire a plumber to wire your house? A lawyer to diagnose a health problem? So why would you hire a consumer Web 2.0 expert to implement your ERP system?
  • Don’t Forget the Users
    Once you’ve got buy in, be sure to keep them informed and involve them in important decisions. Otherwise, that buy in might disappear by the time the system goes live.
  • Beauty is Not Truth
    Usually, you have a choice, due to time and cost constraints, between a system that looks good and a system that works good. Hopefully you know how to choose the right one.
  • Don’t Be Too Rigid in the Schedule
    You never know everything when you start a project. Some phases will take longer, some phases will finish faster. Have the necessary flexibility.
  • The Budget is Golden
    While some flexibility is required where the budget is involved, you have what you have and you need to keep that in mind at all times.
  • Communicate, Communicate, Communicate
    The best way to keep your users excited is to communicate constantly, showing that you’re not forgetting them.
  • Go All the Way
    The implementation is not complete until the goal is accomplished. Which is not a live system, but a live system that does what it was supposed to do.

If It Takes 5 Pages to Explain e-Sourcing Is Easy, You Are Doing It Wrong!

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Last week, SupplyManagement.com published a 5-page article on “E-Sourcing Made Easy”. Done right, e-Sourcing IS Easy, and if it takes 5 pages for you to make that point, you’re doing it wrong. Especially when you spend 5 pages explaining that:

  • among some people, e-Sourcing has a bad rap you’ll need to overcome
  • that you should start small and manageable and work your way up
  • that you should have buy in from key stakeholders before proceeding with an e-Sourcing event
  • that marketing spend is a prime candidate for cost reduction, but that you’ll have a turf war if you don’t approach it carefully and collaboratively
  • that temporary labour is another prime candidate for cost reduction, but that you’ll have to do a lot of preparation to understand the category before you can proceed with an event
  • that health care buying is another prime opportunity, but that you might get push back from professionals worried about quality
  • that many areas of professional services, such as legal, are also ripe

which I just explained in a paragraph, and then proceed to spend no time at all on the actual implementation steps that make it easy. So here is a simple 5-step process to make e-Sourcing easy:

  1. Identify your biggest opportunities.
    Bring in a consultancy that is an expert in spend analysis to help you identify where you have the most cost reduction potential.
  2. Identify the negotiation processes likely to give you the most savings.
    Multi-round sealed bid e-negotiation? Open Auction? Decision Optimization? e-Procurement with price enforcement?
  3. Select a best-of-breed SaaS provider that has those capabilities.
    And insure that it is supported by third party consulting firms with category experts.
  4. Bring in a cost reduction consultancy with category experts.
    Contract them to manage the projects for your top five savings opportunities and have them train you on how to use the system to implement the proper processes as the projects progress.
  5. Retain the consultancy in an advisory role on your next five to ten projects.
    That way you can be sure you learn the system, and processes, right.

That’s it. Then you’ll be ready to run your own projects and save every time.

The SSON’s Top Ten Tips for Talent Development

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The ultimate key to supply chain success is having a great team. More than anything else, supply chain is about people who implement the processes, use the technology, and use the physical assets you have to create value that consumers will buy. That’s why this blog keeps hammering on the importance of talent and why you should at least browse this article on the “top ten tips for talent development” from the SSON because, more than anything else, top talent is what is going to get you through this downturn.

So let’s get to them.

  1. Hire With Development in Mind
    The great thing about top talent is they want to be top talent, and they recognize that this means continued development and proving themselves every day (because Shift Happens). If you show you’re committed to workforce development, you’ll attract a much better pool of candidates from the start.
  2. Observe and Encourage
    Identify the star performers who are already within your organization and offer them the training and opportunities they need to shine.
  3. Provide the Bigger Picture
    Not only is the whole greater than the sum of its parts, but an employee who understands the whole will create a much better part.
  4. Create Uniformity throughout the Organization
    Make talent development an organizational effort, not just a spot-effort by individual managers.
  5. Create Development Centers
    This institutionalizes development in your organization.
  6. Acknowledge the Benefits of External Development
    Not all expertise is within your organization, in fact, most of it is outside the four walls. Taking advantage of external expertise is what really allows your organization to shine.
  7. Encourage Participation in Industry Events
    Not only will your employees learn, but they’ll meet people who can help them keep learning.
  8. Leverage Internal Events
    This gives more junior employees the chance to increase their skills and abilities and eventually take full advantage of the opportunities external events have to offer.
  9. Have the Right Trainers in Place
    The right trainer makes all the difference.
  10. Don’t Forget the Incentives
    That’s what incentivizes your employees to learn as much as they can and excel at their jobs … which is what provides the most value to your organization.

Don’t Get Your Procurement Project Cut — Ask For Help From Your CFO

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A recent article on the “Disciplinarians’ Dilemma” in CFO Magazine noted that nearly all CFOs today have a mandate to conserve cash and that a recent McKinsey study found that 40% of companies surveyed are actively seeking to reduce research-and-development costs as well as the number of research-and-development projects they are funding. This is, of course, quite troubling because, as I have said over and over again (in my “dumb company” and “dead company” series), slashing research-and-development budgets in the near term will place companies in precarious competitive positions when the economy does turnaround. More specifically, they’ll struggle even more to maintain their existing client base while those companies that did innovate and develop more valuable solutions in the downturn will not only get most of the new customers, but lure some of their competition’s customers away.

However, as the article notes, instead of acting as the enemy of innovation, a CFO can play a critical role in fostering research-and-development. Given that the biggest weaknesses most companies have when it comes to innovation revolve around sticking to timelines, earmarking funds, and balancing the innovation portfolio, and that these are the strengths of the finance department, a CFO can play a critical role in the development of innovative new solutions by doing what she does best.

Furthermore, the same logic applies to procurement. While some less-than-visionary CFOs will look upon Procurement as a Cost Center, and try to freeze budgets, delay the acquisition of new technology, and freeze hiring even when you lose your staff due to attrition to more generous competitors, innovative CFOs will instead embrace the value, and substantial savings, Procurement can bring and help them balance their projects, funding, and available resources for maximum return to the company. And the best way to fall into the latter camp is to not only tell them what you can do, but let them know how they can help make your savings plans a reality and ask for their help. After all, which project are they likely to kill first — one they know nothing about or one in which they see, and are contributing to, the value?