Category Archives: Miscellaneous

Procurement Has a Long Way To Go if Being a Doorstop is a Measure of Success

A few months ago, the CPO Agenda published the transcript for its roundtable in London in May 2010 on “budgeting for a wider influence”. While this post is not going to summarize the transcript as it really doesn’t say anything that this blog hasn’t been telling you for years, buried within the transcript is a very interesting quote by David Noble, the Chief Executive of CIPS.

If we do not have the ability to get in there and hold the door, we will lose it and be back to where we were 10 years ago.

In other words, a current measure of success is your ability to hold a door, i.e. your ability to act as a doorstop!

It’s sad, but at many companies, it’s still true. Just like there are at least five companies that haven’t tried e-Sourcing or e-Procurement for every one that has, for every best-in-class company where Supply Management has influence and/or control over the majority of the organizational spend, there are five companies where Supply Management doesn’t have influence or control over the majority of organizational spend.

So how do you get more spend under your control and move up from door-stop to door-person? You kick-ass on some major projects and get more and more support from the C-Suite. So how do you get those big projects? You start by speaking the language of finance, because once you get the CFO on your side, the CEO will follow and then you’ll have the credibility you’ll need. Start with Bob’s great posts on Speaking Like a CFO (Part I and Part II). Then review the quick introduction to finance posts (Part I, Part II, and Part III). Make sure you understand what the Z-Score really is. Then bookmark Investopedia. It will be your best friend. Its dictionary on finance more than rivals Wikipedia’s.

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Where is Your Company on the Transformation Curve?

A recent article over on strategy+business on why it makes sense to adjust did a great job of outlining why business transformation needs to be a continuous process. Now that operating in a more volatile, less predictable environment has become a way of life, companies must be ready to repeatedly transform themselves. If the company can not respond to new challenges with a broad-based, enduring plan , it may soon be left in the dust by its competitors.

But most companies can’t do this, because they don’t have an adequately proactive road map for transformation. Instead, they attempt change on the fly, reacting to business disruption with equally explosive responses that may not be useful six months down the road or even sooner. On the transformation curve, they are stuck at the bottom in the reactive stage, when they need to be at the top of the curve in the sense-and-adjust stage.

A company that is reactive employs minimal seat-of-the-pants transformation strategies with little cross-company coordination or follow-up. Such strategies are not only limited, but unsustainable.

A company that moves up the curve becomes programmatic and takes more comprehensive approaches when major changes are required and the company has sufficient lead time. These approaches include thought-out widespread change initiatives across the lines of business that are most affected. Such programs — that include tactics, milestones, and executive assignments — can be quite effective in dealing with contained threats, such as new competitors or new rival products, but fall apart when the threats are not contained and well understood in advance.

But a company that reaches the top of the curve is able to sense-and-adjust. This continuous long-term strategy allows a company to constantly and consistently smooth out volatility in areas of business subject to swift and dramatic change. This is important in turbulent times.

And very important if a company is to have a successful supply chain, which not only has to deal with a tumultuous and unpredictable market, but also has to deal with risks of every colour and flavour, which pop into existence when and where they are least expected. Does your company sense and adjust? Is your supply chain ready?

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No Wonder Procurement Has No Credibility at Some Companies: Squillion is Not a Number

I was astounded to find that a Chief Procurement Officer of a major electrical retailer used the word “squillion” in the CPO Agenda Executive Roundtable this past May in London on “budgeting for a wider influence”. In order for Procurement to get a seat at the table, it has to first impress the CFO. To do that, it not only has to speak the language of finance, but use real numbers!

In North America, and in the general scientific community, these are the units of the Base 10 number system. Note that squillion is NOT on the list!

Unit Term
1 One
10 Ten
100 Hundred
1,000 Thousand
1,000,000 Million
1,000,000,000 Billion
1,000,000,000,000 Trillion
1,000,000,000,000,000 Quadrillion
1,000,000,000,000,000,000 Quintillion
1,000,000,000,000,000,000,000 Sextillion
1,000,000,000,000,000,000,000,000 Septillion
1,000,000,000,000,000,000,000,000,000 Octillion
1,000,000,000,000,000,000,000,000,000,000 Nonillion
1,000,000,000,000,000,000,000,000,000,000,000 Decillion
1,000,000,000,000,000,000,000,000,000,000,000,000 Undecillion
1,000,000,000,000,000,000,000,000,000,000,000,000,000 Duodecillion
1,000,000,000,000,000,000,000,000,000,000,000,000,000,000 Tredecillion
etc. etc.

Now you know. (And don’t make me tell you again! Or I might give Wacko back his industrial strength mallet.)