Category Archives: Miscellaneous

A Public Nomination (for Jason Busch)

Those of you in the know will know that Supply & Demand Chain Executive‘s annual Pro’s to Know list is coming up and that it’s now nomination time. Nominations are due in two weeks, so please make sure to do yours ASAP. (I’ve made mine!)

In hopes that you would join me in not overlooking one individual who has made a significant contribution to the space over the last two years, I’ve decided to make one of my nominations public, exactly as I submitted it, here on this blog. If you agree with me, please join me in my nomination. Although it is Supply & Demand Chain‘s prerogative to choose whomever they want to, I’m sure it would be very hard for them to overlook an individual who received hundreds (or thousands!) of nominations.


Name    of nominee: Jason Busch
Title   of nominee: Editor
Company of nominee: Spend Matters

In 250 words or less, please describe how the nominee has personally helped raise the profile of Supply Chain and increase the recognition of the importance of Supply Chain as a strategic function within the enterprise; why the nominee personally believes that it is important for Supply Chain to be recognized today as a strategic function within the enterprise; and what, in the nominee’s opinion, technology’s role is in enabling Supply Chain to achieve a more strategic role within the enterprise.


For over two years, Jason Busch has been diligently blogging multiple times a day on issues, events, and best practices in the sourcing, procurement, and supply chain space and working hard to raise the profile of the space as a whole.

 

 

Jason Busch personally believes that it is important for Supply Chain to be recognized as a strategic function within the enterprise because he has spent over ten years working in the space, first as a service provider (at FreeMarkets, a pioneer e-auction powerhouse) and then as an independent consultant and analyst (at Azul Partners), and has seen first hand the transformative effects that good supply chain management best practices can have on an organization.

 


Having worked for a technology provider, Jason Busch knows first-hand what enabling supply and spend management technology can do for the enterprise – that’s why he spends time on a weekly basis talking to people at major software companies in the supply chain space and posting their solution profiles on his blog so that everyone can be informed of the latest technology offerings and how it can help them transform their operations. Jason Busch’s opinion is that technology will continue to help business transform their supply chain operations and become more efficient and more productive as time goes on.

For our selection committee to better evaluate each candidate, we ask that you please cut and paste below a current bio for the nominee.


Jason Busch is Founder and Managing Director of Azul Partners, a marketing consultancy that advises software and services companies. Prior to launching Azul Partners, Jason spent five years at FreeMarkets (acquired by Ariba) leading a range of efforts and initiatives. Jason has also served as a consultant with Northeast Consulting (acquired by Nervewire) where he helped clients with technology and strategic planning decisions.

 

 

Jason has authored over one hundred columns and whitepapers on technology and economics. His work has appeared in leading trade and business publications in the US, Europe, and Asia. Regarded for his forward thinking opinions, Jason has been quoted in numerous articles, books, and academic papers and is a frequent speaker and panelist at industry conferences. He has also served as a guest lecturer at US and European universities.

 


Jason holds an MA in history from the University of Pennsylvania. He also completed his undergraduate studies at the University of Pennsylvania, receiving a BA, cum laude, with departmental honors, in history and English literature. In addition, Jason has completed coursework in the Wharton School.

The Talent Series IX: You Will Lose Your Top Talent

In my last update, I told you how Aberdeen had raised the alarm and that rumblings were starting to appear over on Supply Excellence [WayBackMachine] and the Purchasing Certification Blog [WayBackMachine].

Now that a new year is upon us, it appears my fellow bloggers have finally accepted that a Talent Crunch is upon us and that an all-out Talent War is about to break out.  Just in time too.  Even CNN is reporting that employers cannot find the skilled workers they need.  (The article quotes Jeff Summer of Deloitte Consulting who says “I’m hearing across the board, across industries, companies indicating they can’t exploit market opportunity because they can’t find people with the right skills” and Mark Vitner of Wachovia who says “With this level of unemployment, the only way they [companies] can find the workers they need is to hire them away from someone else“.)

Over on Spend Matters, in “Assessing and Building Spend Management Talent”*, Jason lets us know that the talent question is popping up first and foremost in every discussion he has these days and that Supply & Demand Chain Executive just ran a piece bylined by Anne Kohler (The Mpower Group) on talent development, which includes a tactical approach you can use to develop and manage talent within your procurement and supply chain organizations.

Over on Supply Excellence, Tim outlines his five top challenges that supply managers will face in 2007 and one of these challenges is that you will lose your top talent. According to Tim, his personal interactions with supply management executives validates Aberdeen’s finding that recruiting and keeping top talent is the top risk facing CPO’s (Chief Procurement Officers) today.

And over on Eric Jackon’s Breakout Performance blog, he tells us that even highly successful companies are realizing that their continued success depends on being able to select, retain, and motivate great people, but that these companies acknowledge that they don’t really know what to do.

So what can you do? Eric tells us that you that you have to develop sophisticated programs that actually address the problem of keeping your best people and finding more to further accelerate your growth. Tim gets more to the point when he tells you that you have to pay competitively, provide a clear career path, provide ongoing training, and invest in technology and my previous posts in the talent series compile a host of recommendations for you to chew on.

However, by now you’re probably so overwhelmed that you’re wondering Where do I begin?. The first step is keeping your best people. Improving your chances of holding on to your top talent is really a lot easier than you might think. In many cases it comes down to simply ensuring the following three conditions hold true.

  • Your pay scales are *very* competitive.Today’s surveys that tell you that money is not the most important consideration in the minds of today’s top talent are a double edged sword. They are good in that they open your eyes to the fact that money alone will not solve your problems and that having deep pockets no longer guarantees success, but they are bad (very, very, bad) in that they lead executives into a false sense of security that “paying market average” is enough to keep your top talent. They’re right in that if you are paying market average, it’s not likely to be the number one source of disgruntlement (or the problem you need to fix to keep your top people), but they overlook the fact that it is still, more often than not, the top reason your people will go somewhere else. Let’s say market average is believed to be 70K – 80K for a commodities purchasing manager, you’re paying Bob 70K, and Bob’s not complaining (or even asking for a raise). You might think Bob is happy with his salary, Bob, who sees the survey, might think he is relatively happy with his salary, but then Joe comes along from your competition and says “Bob: we desperately need you. We’re prepared to pay you 82K a year.” Do you really think Bob’s going to say “Sorry, I’m happy with my 70K a year” and turn down a 15% raise, especially if his perception of the job offer and overall benefits package is roughly equivalent to what he’s getting now? I don’t think so. Since today’s talent wants more than just money, the surveys are right in that its true that your failure to pay more than your competition is not going to be in your employees top “pet peeves” with their current job, but ultimately wrong in that an offer for significantly more money will not lure them away. (“For 20% more a year, I can buy my own health club membership and add a golf club membership on top.”)
  • Every employee has a rewarding job.This will mean different things to different employees. Some employees will want to be challenged daily. Others will want to feel a continual sense of accomplishment. Some will want a detailed career path. Others will just want security. Make sure every manager in your organization spends time listening to each of his or her reports and working on ways to increase their job satisfaction. Too much paperwork? Invite them to brainstorming sessions. Too many long term projects with no chance to feel a sense of accomplishment on a regular basis? Let them substitute for your resources that normally work on “the little things” when they go on vacation. They don’t feel challenged? Brainstorm a new initiative and let them devote one day a week to it (like Google) and see if it pays off. Get creative. Let’s face it – most surveys agree that the number one factor that keeps an employee on the job is “they like it”. If they like the job, and your pay is ultra-competive, it will be very, very hard for your competition to lure them away. That being said, there’s still one more quality you should have.
  • You are generous and creative with benefits.Let’s face it – everyone wants perks, and many perks are a lot cheaper for you to buy than the employee (especially group plans). The key here is to not offer what you think the employees want, but what they tell you they want (so don’t be afraid to ask!). Of course you need to have the basics covered (health, disability, and life), since it is still the case that most of your employees will want or need these, but beyond that, understand that there might not be an across the board solution. Just because the sales guys want a club membership doesn’t mean engineering will. Just because your your purchasing guys like the gym doesn’t mean finance will.

    Create a benefits fund and be prepared to sponsor those activities that significant groups of employees want, and make sure that every time you add a benefit for one group, you add a benefit for another group. Create categories, and let employees manage them. For example, a professional development category and a health category would be a great start. Developers can go to tech conferences, sales and marketing can go to seminars, and your purchasing managers can take training courses and have them partially sponsored by the professional development fund. Some employees can get gym memberships others can get massages and have it sponsored by the health category. Also, be sure to work out corporate discounts for any activity that a significant portion of your employee base wants (if a lot of people want a gym membership, arrange with the local gym for a corporate rate). Help your employees with their personal needs that affect their work life and, in addition, if you are a mid-size company, consider hiring a concierge in HR to do just that. If you are a large company, then you could have a significant number of employees with children who often need help finding daycare. You could maintain a register of local day cares, and if you are large enough, reserve a certain number of slots at the local day care for your employees.

    Let’s face it, paying top dollar and making each and every employee’s job rewarding is a great hook and line – since it will be tough for many of your competitors to beat that – but flexible and personalized benefits is the sinker, since this is usually the trio that attracts someone to a job, or causes them to leave it.

    * All posts prior to 2012 were removed in the Spend Matters site refresh in June, 2023.

Great Scott’s Business Advice (Scott Adams, the Supply Management Guru)

Back in November, when I was smelling that sweet, sweet Bay Area air, I told you that Scott Adams, also recognized as a genius by the SpendFool (in comments on Spend Matters), was a Supply Management Guru and pointed out numerous examples of the great advice that he’s been giving away for free every day on his blog.

As you may have guessed, the advice just keeps on flowing. Sometimes you have to read between the lines, but it is there, and the effort is worth the reward. For those of you who may have missed it, here’s a small sampling of the great advice he’s given us all since my blog entry in November.

November 27, 2006 The One Problem with the World
“Genius looks just like stupidity to the observer.”

Is the last recommendation from your underling really the dumbest idea you’ve ever heard, or has your oyster coughed up a pearl? Sometimes a radical idea may sound moronic on the surface, but actually be a damn good business idea when explored in depth. Remember, once- upon-a-time outsourcing to China, Software as a Service, and long-term hedge contracts were all considered idiotic by big business who had always not done business that way.

“My magical solution is to give humans the power to tell the difference between a super genius and a moron. I think this would solve every problem in the world because chances are that the smartest super genius in each field has a good idea how to fix that field. But the only solutions being considered are the ones coming from tall guys with good hair.”

It’s not the cover … but the contents … of the book that count.

November 30, 2006 Bill Gates for President
“In an earlier post I said Bill Gates would make an excellent president because he’s a successful businessman, makes decisions based on reason instead of superstition, and has a track record of trying to help the poor through his foundation.”

In other words, it’s not cool to shoot from the hip, do it the way you’ve always done it, use hearsay, or pluck the petals from a flower when making a multi-million or multi-billion dollar decision – every decision you make should be be based on a rational analysis of the situation, using logic and whatever mathematical or scientifically based decision support tools are at your disposal. Don’t blindly compare bids just on quoted unit costs, put them through an apples-to-apples comparison in a cost modeling tool to find out what the overall cost is.

“I’ve always felt that you should pick a president the same way you’d pick an attorney to help you out of a dangerous legal problem. Do you want the attorney who dresses nicely and belongs to your church? Or do you want the attorney who can rip out your opponent’s heart and put it on the hibachi before he dies? Maybe it’s just me, but I want an attorney who is part demon. And I want a president who isn’t afraid to make rational decisions.”

Don’t just hire someone who can talk the talk when hiring your leader, hire someone who can walk the walk and get down and dirty in the details when the need arises. Make sure the person is confident, able to hold her own, and not afraid to back away from a fight when it’s the right thing to do.

December 7, 2006 Acting Smarter Than You Are
“.. you must learn to stop talking so much. Talking is the surest way to inadvertently showcase profound ignorance.”

Don’t speak just to hear the sound of your own voice. Speak when you have something intelligent to say, and make sure what you say is intelligible. Furthermore, make sure you take the culture of your audience into account when speaking. If you’re a Texan talking to a potential outsourcing partner in China, telling them you want to switch suppliers because “your last supplier was greasy as fried lard and you’re just waiting for the day they open up a worm farm” and “you’re hoping that you can get down to the lick-log without burning daylight” will not mean a thing to them and, furthermore, they might think you’re nuts.

“It’s important to agree with people if you want them to think you are a genius.”

Now, you certainly cannot do this if they are irrational, uninformed, or otherwise wrong, but it doesn’t mean you can’t find examples of them being right, point them out, and incorporate their more useful suggestions into your own decisions. After all, if you just tell your people that they’re wrong all the time, they probably won’t stick around very long. And then you’ll have to give Eric Jackson a call, and I’m calculatingly confident that will cost you a pretty penny.

December 9, 2006 Thinking Fast Makes You Happy
“I recommend coffee and exciting books.”

An alert mind is an effective mind. ‘Nuff said.

December 11, 2006 How to Know that Your Presentation isn’t Going Well
” I think you can conclude it’s time to end your presentation if anyone in the audience is:

  1. Giving himself a sponge bath with saliva and a balled-up piece of paper
  2. Turning a long sleeved shirt into a vest by removing the threads that hold the arms on
  3. Pretending to be a mime in a glass box
  4. Engaging in any form of self-gratification
  5. Creating prison themed origami”

A good presentation is important. Really important. Extremely important.

December 14, 2006 Those Darned Voting Machines
“Voters simply aren’t that good at predicting the future. Every bad president we’ve ever had managed to get a majority of the votes. Sometimes twice.”

When it comes to running a company, democracy isn’t always right. The only people voting on an issue should be people who understand the issue, both the pros and cons, are affected by the issue, and are responsible for the issue and the consequences. Bob might want it blue, but if the blue die costs an extra 2M and adds no real marketing value, then he should be forced to accept it metallic. Besides – the MacBooks are metallic, and they’re selling like hot cakes.

December 17, 2006 My Donut Theory of the Universe
“I think the real reason anyone believes anything is because uncertainty hurts. So we pick a side and rationalize it later. … Personally, I’m totally comfortable with a state of eternal confusion. It’s practically a lifestyle.”

We don’t always know all the answers. We’re only human. And that’s okay. It’s much better than making up an answer, which is likely to be wrong, treating it like gospel, and failing miserably in the end.

It's too bad Scott Adams had to take these classic posts down on request of Portfolio Hardcover when they published Stick to Drawing Comics, Monkey Brain that was a collection of his blog posts through part of 2007.

Mastering Purchasing Fundamentals, A Review Part II

To drive home my point that I believe the online course “Mastering Purchasing Fundamentals” from “Next Level Purchasing” (now the Certitrek NLPA) is worth the time and investment for a purchasing professional looking to advance her knowledge and career with a training program that can lead to an industry certification, with kind permission, I am going to dive into a few topics covered in the course that represent some of the basic purchasing fundamentals that every professional buyer needs to master.

In the first lesson, which reviews the nine (tactical) steps of the purchasing process from need determination to closing out of the transaction, the course not only indicates why well written specifications are important, since they can force suppliers to quote in a standardized way that enables apples-to-apples comparisons and maximizes the probability that a product or service will meet organizational needs, but overviews different common types of specification pitfalls that decrease your chances of success. In particular, the course outlines the following six pitfalls:

Absence of Standards
Failure to make use of standard parts whenever possible, which allows for spend leverage and reduced inventory requirements.
Over-Specification
Specifications that are unnecessarily strict add cost. For example, specifying a cord length of 15.5″, which is only supplied by one supplier at a rate higher than the 15″ and 16″ cords supplied by other suppliers. In this case, a small range of 15″ to 17″ could be used.
Under-Specification
This usually results in continual quality problems since the delivered products, although they do meet the specifications, do not work with the products they were intended to be integrated with.
Slanted/slanting specs
Specifications written in such a way that they only allow one supplier, often results when the writer wants a specific supplier to be chosen or product literature from one supplier is heavily relied on in specification construction.
Out of date/obsolete specs
Re-use of old specifications can lead to numerous problems in addition to integration issues if the product has evolved – there could now be new government regulations from an environmental or regulatory perspective that would invalidate the materials or components identified in the old specification.
Standards differences between countries
An American gallon is not the same as a British gallon. Make sure that all measurements are using a well-defined international standard whenever possible.

The fourth lesson on conducting bidding and / or negotiation events describes a number of factors that should be considered when deciding between a bidding event and a negotiation. These include:

Market Competitiveness
Highly competitive markets often lend themselves to successful auctions while restrictive markets are often best served by negotiations.
Time Sensitivity
Bidding only makes sense if you have adequate time to prepare a complete bid package.
Purchase Value
The potential savings has to justify the effort.
Specification Clarity
Bidding requires clear specifications that will permit “apples-to-apples” comparisons of supplier offers.
Contract Type
Bidding is often better suited for fixed price / quantity events.
Selection Procedure Clarity
Bidding often requires supplier pre-qualification, which in turn requires clear criteria for supplier selection.
Ramp-Up Costs
Negotiation can be more successful if the ramp-up or set-up costs for one particular supplier is substantially less than the other suppliers.
Specification Change Likelihood
If there is a strong likelihood that the requirements will change before an event is finished, then negotiation is likely the better option.

In addition, the fifth lesson gives a detailed definition of the three primary methodologies currently used to analyze the financial aspects of a selecting a particular supplier for an award: price analysis, cost analysis, and total cost of ownership. Briefly, price analysis is the simplest methodology which compares the suppliers bids to a set of benchmark prices taken from either other competing bids, published or previously paid prices, and should cost models; cost analysis compares bids by breaking them down into their cost components; and total cost of ownership compares bids by looking at not only all of the required expenditures, but the costs incurred in acquiring, using, and disposing of the product.

Of course, this is only a sampling of the knowledge contained in the course, but I hope that this gives you some more insight into the value of continuing education and why I believe that “Mastering Purchasing Fundamentals” from “Next Level Purchasing” (now the Certitrek NLPA) is certainly worth your consideration if you are going to take the next step and embark upon achieving industry certification.

Brief the Doctor

A new year has begun, which means a new year of traveling (at least for me) is upon us. I will be hitting a number of major US cities again this year, and am always interested in meeting with companies who have new and innovative offerings in the sourcing, procurement, and related supply chain space (especially if your offering includes optimization or sophisticated analytics capabilities).

Therefore, if you are in, or near (< 50 miles), a major US city [and Phoenix, AZ; San Francisco, CA; Los Angeles, CA; Denver, CO; Chicago, IL; Indianapolis, IN; Boston, MA; Las Vegas, NV; Newark, NJ; Pittsburgh, PA; and Dallas, TX; in particular] and would like to brief me, or just talk to me, in person, please reach out and I will add you to my list of companies to reach out to when I know I will be in the area. Please note that I will likely be hitting at least four of the parenthesized cities in the next two months, so the sooner you reach out, the better. Those of you who won the blog lottery (I know who you are and you’ve already peaked my interest) may already have an email from me, with SI or Sourcing Innovation in the subject line. If you do, I’d greatly appreciate a response regarding your interest one way or the other.

Just like Jason “The Prophet” Busch, I don’t believe in “pay-to-play”, so please feel free to contact me if you have a story for me to tell. ([shameless plug alert] You can also contact me if you need consulting advice and think I am the consultant for you using the contact information in the FAQ. )

And for those of you just getting back from vacation (I hope you enjoyed it!), Happy New Year!