Category Archives: Guest Author

Give Your Procurement Practice Some Backbone! Part I

Today’s guest post is from Torey Guingrich, a Project Manager at Source One Management Services, who focuses on helping global companies drive greater value from their Procurement expenditures.

As an organization moves from decentralized/departmental procurement decisions to a centralized procurement and strategic sourcing department, there are bound to be some growing pains when it comes to working with departmental stakeholders.

Two of the main drivers for this are that:

  • Stakeholders are used to making decisions.

    End users and department personnel feel they know what is best to support their needs and may have had free reign in the past to make purchasing decisions for department-specific needs as well as more general categories (e.g. office suppliers, laptops and desktops, IT accessories, etc.).

  • Stakeholders are used to managing relationships with the suppliers with whom they work.

    Because stakeholders are making their own purchasing decisions, they are also typically managing the negotiation, contracting, and ongoing relationship with the supplier.

To transition to an effective central procurement and sourcing model, changes will be necessary within the organization to support the new structure. As someone who has helped clients transform (or build) their procurement operations, I have some seen some preventable gaps that undermine the transformation process and cause frustration for Procurement and the business units they support.

  • No standard procurement process.

    One of the first steps for establishing a central procurement department in an organization is to ensure that those in Procurement are singing from the same sheet when it comes to process. If you have a mix of past (or no) experience, each person is likely to come to their role in Procurement based on their past processes (or lack of processes) in mind. Begin by defining what the standard sourcing process looks like for your company and communicate that process to the organization as a whole. Reiterate Procurement’s role and the stakeholders’ role within that process; the goal is ensure end users are familiar with and are able to embrace the process, not to cut them out of it. Certainly not every project and/or purchase may follow the same process, but having a standard and communicating this to end users provides a familiarity with how procurement works and what the stakeholders can expect. Having a standard process allows stakeholders to feel comfortable working alongside Procurement and not feel as if decision-making is being stripped.

  • No defined (or enforced) Procurement and Contracting policies.

    Many times I have seen organizations start pushing centralized purchasing decisions and procurement support without any organizational policies that establish this new standard within the company. Without clear organization policies (and management support of those policies) for where, when, and how Procurement should be involved in departmental purchasing decisions, stakeholders are bound to continue to work in a vacuum.Any policies put in place should cover at a minimum the procurement process, how and when procurement needs to be notified of a purchasing need, and authorization levels (e.g. who can sign for what, spend levels that require certain level of sign off). Many times, part of that process includes a legal component in terms of who is actually authorized to sign agreements, purchase orders, etc. Many companies employ a checklist or agreement cover sheet that requires multiple sign-offs that may include review by the stakeholder, legal, procurement, and others before the final signature on the agreement is completed by the authorized party. Without a clear and communicated (and backed by management) policy, contracts typically continue to be signed by business units without any Procurement knowledge or oversight. While this may threaten the autonomy of some stakeholders, Procurement and management should be explaining the benefits of this oversight, especially for high value agreements or purchases, and the pitfalls these policies help prevent.

If only these were all of the gaps. These are just the beginning, In part II, we will discuss two more gaps that need to be prevented.

Thanks Torey!

How to Keep Print Costs Manageable — or Find a New Printer if Your Old One Can’t Part II

Today’s guest post is from Brian Seipel, a marking project expert at Source One focussed on helping corporations achieve both marketing and procurement objectives in their strategic sourcing projects.

In Part I, we noted that the printed materials that accompany products are an important part of any business. Yet, despite the slipping quality or rising prices, it is all too easy to stick with the same print shops year after year to fulfill this need, never pushing back, even when the cost savings can be substantial. In our last post, we addressed some ways to control costs without changing suppliers. Sometimes they are enough, but if they are not, then you go back to market.

Taking a Look at New Suppliers

For every good relationship between a printer and customer, there are plenty of bad ones as well. With a long-term relationship, it is easy to hold a supplier less and less accountable — Quality issues may arise more often, SLAs may be ignored more frequently, and pricing could easily become less competitive if you aren’t challenging your incumbent. For any of these reasons, it may be time to start looking for a new supplier.

So, what are the most important factors when searching for viable alternates? See the list below for just a few key criteria:

  • Start your search with shops that specialize in your specific type of job.
    Would a digital print shop be more viable than an offset printer? Are you looking for single pages of print or full color, bound product manuals? Do you have a need for variable-data printing for labels?
  • Evaluate shops in terms of their capacity.
    Is there facility and staff large enough to complete your jobs? Is there enough storage space to handle the capacity you are bringing to them?
  • Keep an eye on deadlines.
    Make sure all shops can describe their turnaround time and on-time delivery rate guarantees.
  • Quality control is key.
    You’ll want to be sure to learn not just about QC programs in place, but how the shop responds to drops in quality and the escalation procedures they follow to get things back on track.
  • Identify distribution centers and map them against your final destination points.
    Other logistics concerns, like multi-point shipping, inventory management, warehousing, and kitting services may also be key to your relationship.

These are all excellent points to cover when vetting potential partnerships, but it isn’t enough to take their word for it. The proof is in the pudding, and you’ll want any shops on your list to back up their claims:

    • Bake key promises into SLAs.
      When shops make promises around any of the points above, be sure to get them in writing. Codify not just the promises made, but also any related KPIs, penalties for not living up to expectations, and a clear plan for escalating and rectifying problems should they arise.
    • Schedule facility tours.
      Take a look around the shops, themselves, and consider whether the capabilities and capacity visible match the company’s claims.
    • Ask for references, and follow up.
      Tours provide a snapshot of what a shop can do for you, but you will need some history to understand if a prospective alternate is a viable long-term partner. Ask about consistency in quality and ability to hit deadlines. Find out how shops perform when something goes awry, and how they managed to fix the issue.

Push Your Suppliers to Do Better

Some printers, recognizing their role as a partner and not just a supplier, will approach clients with ideas for process or product improvements, and recommend cost savings strategies that alleviate budget pressure without reducing quality. Many other printers — don’t.

When was the last time your printer came to you with a great idea to achieve any of these goals? If it’s been too long, or never happened in the first place, now is the time to push them to prove why they’re the best shop for the job. If they can’t, it may be time to see what else the market has to offer.

Thanks, Brian.

How to Keep Print Costs Manageable — or Find a New Printer if Your Old One Can’t Part I

Today’s guest post is from Brian Seipel, a marking project expert at Source One focussed on helping corporations achieve both marketing and procurement objectives in their strategic sourcing projects.

The printed materials that accompany products are an important part of any business. Yet it is all too easy to stick with the same print shops year after year to fulfill this need, never pushing back against slipping quality or rising prices.

This is a mistake — Reexamining these relationships offers a great opportunity to identify best-in-class suppliers, learn about innovations that could better serve your needs, and ensure market competitive pricing.

Too often, however, organizations go to market with a sole focus on just that last point: price. This is a common strategy when searching for printers, and is just as much a mistake as not going to market in the first place (if not more so)… You don’t have to look far for horror stories about the bargain basement print supplier who held up a new product launch because they couldn’t keep up in terms of quality, capacity, or both.

So, how should Procurement proceed? What can we do to ensure our incumbent suppliers are pushing themselves to remain competitive and, if they aren’t, what is the best strategy for identifying a new supplier that can meet our needs?

Cost savings without changing suppliers

First and foremost, let’s discuss incumbent suppliers and what we can do to determine if any production improvements or cost savings can be found in these current relationships.

Review what your current supplier offers, and compare to what your needs are today — things might not align as well as they once did. A shop may have been brought onboard to fulfill a printing need that no longer exists in your organization; newer jobs could be getting shoehorned into presses that aren’t really suitable for your current-day needs. Ask your supplier what their forward-looking plans are for business — what is changing in the world of print, and how are they seeking to adapt? What new technologies may address quality or process problems that they have, and how can they use them to improve the relationship?

As long as you’re still happy with your incumbent, and aren’t at a point where you need to jump ship due to quality problems, a few methods can be used to achieve savings:

  • Drive savings by streamlining business processes.
    This tends to be a soft dollar savings, but can easily add up. Step back and consider how much time is spent on managing print on your end — from placing an order to handling the PO process to delivering files and finally reporting. An inefficient process can drain hours out of your week. Review each of these steps with your supplier — What steps can be automated? If a step cannot be automated, can it be streamlined by removing excess information collection? Can templating be put in place? Can the supplier provide data back in a way that is more conducive to your reporting needs?
  • Consider the impact of larger print runs.
    The cost savings impact of larger print runs is immediate. Larger run jobs are cheaper, because the setup costs are spread over a larger number of prints. However, it would be short-sighted to leave it at that. If you aren’t able to make use of a larger run quickly, storage costs come into play. Worse, a larger run of product manuals relegated to a warehouse may be made obsolete by a new job, or if the associated product is discontinued. Examining inventory levels and turnover is key to achieving savings here.
  • Cut costs by reexamining your specifications.
    A word of warning: Changing up specs won’t lead to an apples-to-apples cost savings over your current print spend, and making a move based solely on price can be a disaster in terms of quality. However, analyzing the materials used can easily cut costs dramatically. Paper weight, for example, can easily be over-specified compared to need.

Unfortunately, there could be a quality problem or a lack of effort on your supplier’s part to help you reduce costs. If this is the case, it would serve you well to look into the market for either negotiation leverage with your incumbent or to identify a suitable replacement.

Tomorrow, in Part II, we will address the issue of the best way to go to market.

Thanks, Brian!

What is ARM, and why should I care?

Today’s guest post is from Peter Portanova, a Senior Project Analyst for Source One Management Services that specializes in the marketing spend category decision support for clients seeking to enhance their strategic marketing efforts and drive valuable agency relationships.

Relationships. Is there any institution more complex known to humanity? Whether between a group of people, or between a group of businesses, relationships are complex, messy, and often times, toxic. As businesses struggle to remain relevant in a volatile and fast-moving environment, the push to do more with less has never been so evident. In a well-circulated and often-rebuffed article from 2015 titled “Your Agency Hates You and You Don’t Even Know It“, the author attempts to identify the reasons relationships seem to fail (that is, if you are an agency and you are comfortable placing the majority of the blame on your client).

Consider the state of the marketing and advertising industry in 2015. Buzzwords like “Reviewmaggedon” and “Mediapalooza” dominated headlines, and the year ended with marketers parading through the streets when Pepsi decentralized their marketing procurement team. Fortunately, Pepsi’s decision does not indicate a trend, and an ANA survey to marketers reaffirms the value of procurement in the marketing process. To summarize the findings, many executives see value in procurements process, as long as it does not hinder the fluidity marketers require. However, the overarching question remains: How does procurement adapt their process to become more accepted by marketing stakeholders?

Enter, Agency Relationship Management, or ARM for short. Like Supplier Relationship Management (“SRM”) ARM works on the client’s behalf to ensure a fair and equitable relationship. There are many processes and services that fall under the umbrella of ARM, and procurement is well tooled to operate simply as a mediator, or as the manager of a full sourcing event. The ultimate goal of an ARM program is to enhance the relationship between a client and agency, and to ensure that expectations are clearly communicated and campaigns are integrated and executed seamlessly. Whether working with an internal team or an external third party, ARM programs ensure a best-in-class contract, and enable the client and agency to react swiftly when the market shifts.

“My relationship is great!” “My agency does everything for me!” “My agency does nothing!” “My agency is terrible!” Relationships between clients and agencies exist on a spectrum from love to hate, and require regular maintenance to remain viable. Consider a married couple in their “honeymoon phase,” believing all is well and that the relationship will last forever, or consider the alternate feelings of disappointment and anger. ARM exists as the marriage counselor during rough patches, OR as the open lines of communication and responsiveness when everyone is happy. Simply believing your relationship is successful now, and therefore does not require proactive measures can be detrimental over time, and may lead to the ultimate dissolution of the union (which is expensive, time consuming, and disruptive).

Aside from mediating and working as the communicator, ARM is hugely useful is evaluating current relationships, identifying future opportunities, ensuring competitive rates, and developing a scope of work that is fair and equitable. While relationship management might connote issues, the beauty of ARM is that is works to ensure issues seldom arise due preventative and proactive measures undertaken to ensure the constant delivery of value. Whether there is concern over scope, rates, or capabilities, the objectivity of a third-party outside of marketing works to alleviate to concerns. Furthermore, as noted by the ANA, having a separate business unit working on negotiations is hugely beneficial, and allows those engaging in tactical work to remain focused.

Always remember that relationships are mendable. Unless seriously damaged with fundamental issues, replacing an agency partnership should be a last resort. While there are certainly benefits in doing so, alternative solutions should be the first consideration. A full search is time and labor intensive, and hugely disruptive to current operations. Typically, issues can be resolved through the rotation of resources, or the assignment of new teams to provide additional benefits. Similar drawbacks exist for agencies, which are forced to dedicate additional resources, which may distract from the execution of tactical work. By having an ARM team and process in place, the process is far more manageable, and can begin with simply evaluating the relationship and identifying both positive and negative aspects. After such an evaluation, a process for resolution can be created, ranging in both complexity and extensiveness.

An internal department is a viable solution is for managing relationships, but additional benefit is available through the utilization of a third party. Market data concerning rates and contract terms allow for a greater advantage in negotiations, and flexibility in resources ensures clear communication leading to a rapid resolution. Whether establishing an internal department, or looking for a wholly-outsourced solution Source One’s expertise and experience are ready to assist you in the implementation of your ARM program.

Thanks, Peter.

How to Screw Up a Procurement Job Interview

Recently we published two guest posts from Charles Dominick of Next Level Purchasing on Assessing a Procurement Team’s Skills and Training a Procurement Team, but these were not his first. Nor his only good work. Five years ago we ran this post targetted not at procurement organizations, but procurement professionals who want a better job based on a great post on 5 [Common] Ways to Screw Up a Purchasing Job Interview that he published over on his Purchasing Blog.

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.