Category Archives: Miscellaneous

The Talent Series VIII: Talent Acquisition Strategies

Back in June, Aberdeen Group released The “Talent Acquisition Strategies” Benchmark Report: Sourcing and Assessing the Best of the Best that address the criticality of investing in a talent acquisition strategy as a way to identify, attract, and engage high performers given that today’s organizations are facing a market with not enough qualified employees to fill necessary job roles, i.e. The Talent Crunch.

According to Aberdeen, talent acquisition involves the planning, sourcing, assessing, hiring and on-boarding of top talent. Sourcing candidates is a way to identify and attract qualified individuals whether they are actively looking or not and assessment involves the skills tests and behavioral assessments necessary to evaluate the ability of the candidate in a given role.

As usual, Aberdeen found that there is a sharp distinction between best performing companies who are tackling the talent crunch and average players who have done little more than adopt a talent mindset. Best performing companies distinguish themselves by leveraging technology to manage the sourcing, assessment, and hiring process and creating long-term strategic plans for talent acquisition that:

  • improve their corporate brand
  • create a pool of qualified candidates
  • improve their strategic workforce planning
  • utilize technology

As proof that a talent acquisition strategy works, Aberdeen offers us the following statistic: 59% of high performing companies have increased their overall workforce performance after implementation of a talent acquisition strategy compared to 41% of industry average and 33% of laggard companies.

The report found that Job Boards and Employment Websites are number one – with companies spending over 80% of their talent acquisition budget on job boards and company employment websites (according to the “Enterprise Talent Management” study), which is probably due to the fact that job boards have an increase in the quality of hire (48%), a decrease in the cost per hire (38%), and time per hire (44%).

Furthermore, the report found that 90% of Best in Class companies have aligned talent acquisition to their company’s overall strategic plan. Furthermore, best-in-class companies have a yearly hiring management plan that covers all hiring levels and includes contingent plans for unanticipated hiring needs.

The Aberdeen report offers the following recommendations for action:

  • align talent acquisition strategy with the overall corporate strategic plan
  • measure workforce performance based on quality of hire over cost per hire and time per hire
  • recognize that “one size does not fit all”: what works for talent acquisition in one company might not work for every company
  • eliminate paper and spreadsheet based processes and use technology solutions
  • focus on a long-term plan for talent acquisition
  • manage the whole workforce

These are all good recommendations, but you should also note the following:

  • job boards and employment sites are great, but with their increasing popularity you need to remember that the same candidates they deliver to you will also be delivered to dozens of your peers, so make sure you have a compelling brand to fall back on
  • your best channel will always be referrals from your own top employees, make sure to track each and every one – even if a candidate referred to you is not available now, or not the right candidate for the position you need to fill today, it does not mean that she will not be available tomorrow or the best fit for the next position that opens up
  • metrics are good, but positions filled with highly capable individuals are better – and it’s really hard to measure “quality” (on the other hand, productivity is often more easily captured if you make a product or bill a service)
  • although spreadsheets are not the best solution, don’t throw away Excel just yet – a good product will integrate with Excel and save your staff from having to learn a new interface (and save you training time and dollars)
  • one size may not fit all, but that doesn’t mean you shouldn’t at least explore ideas that have worked for other firms – sometimes only a few small tweaks are required

The Dismal State of US Health Care

One of the things that I learned at both the Fourth Annual International Symposium on Supply Chain Management and the 2006 Informs Annual Meeting is that the current state of US Health Care is dismal. I’ve been tempted to avoid the topic since most of the problems, and solutions, are plain ol’ Operations Research (OR) problems, and not sourcing (or even supply chain) problems per se, but I think it’s one’s duty as a good citizen to point out potential solutions if ever given the opportunity, and with the significant OR skills we need to succeed as Supply Chain Professionals, I feel that we could make significant contributions just by pointing out the basics of non-discipline dependent processes and best practices we use everyday and opening up medical practitioner’s and administrator’s minds to new possibilities.

Many of you are probably thinking US healthcare is probably better than the rest of the world – after all, as one of the most prosperous countries in the world you attract all the best doctors, right? Moreover, it should be.  But it is not. What really drove the point home for me were the following statistics:

  • approx. 16,500 Americans die each year from AIDS
  • approx. 42,200 Americans die each hear from Breast Cancer
  • approx. 43,500 Americans die each year in motor vehicle accidents
  • approx. 44,000 Americans die each year as a result of medical errors

In other words, your chances of dying from a medical error are almost three times worse than dying from AIDS. And if you think that’s bad, you’re only three times more likely to die from an overdose as a heroin addict than you are to die from a central line infection you develop in ICU. (On average, over 2% of patients in an ICU will get a central line infection and over 1% will die. Your chances of overdosing as a heroine addict are roughly 3%.) In other words, your chances of dying from medical error are worse than dying from an epidemic and almost as bad as dying from an overdose as a drug addict.

The worst part about it is that there is absolutely no reason (well there is, but it’s not a good reason*) why American healthcare cannot be the best in the world. For example, Paul H. O’Neill, in his INFORMS plenary, described a study where an ICU that served 1750 patients a year, of which 37 contracted central line infections and 19 died, took a page from an OR handbook and adopted standardized best practices and trained everyone involved on those best practices. (In medicine, every school trains their medical professionals differently, which often means that different doctors and nurses will perform different procedures differently. One example is that some schools tell you to scrub while others swab. Although scrubbing is good at removing macro level particles and loosening them, it tends to spread certain micro level virii and bacteria around. Thus, sometimes you should swab, possibly in addition to scrubbing.) After adopting standardized procedures and optimizing the treatment rooms and contents for those processes, in the second year, there were only 6 infections and 1 death, and 4 infections were identified as the result of a breach in standard process. In the third year, there were only 3 infections and 0 deaths. (And each year added about a hundred patients). In other words, although medicine is not a perfect science, and sometimes a patient will develop infections or die for reasons beyond your control, it can be a lot better than it is. Six sigma may not be possible, but with good six sigma processes, five sigma should be attainable. And since that would be ten times better than it is on average today, I could live with that.

And medical care in the US is bad across the board. One in fourteen individuals who visit a health care facility contract an illness they did not have. Prescription errors injure 1.5 M people and cost billions of dollars (at least three or four by some calculations) annually (and that’s just what we know about). And some estimates state that almost half of the approximately two trillion dollars spent annually on healthcare is wasted. Paul H. O’Neill believes that the proper implementation of good operations research best practices could cut the annual spend almost in half with better outcomes. If you add good supply chain and sourcing best practices on top of that – that’s probably not too far off! I don’t know about 50%, but I’m willing to guess costs could be trimmed by at least a third with center led procurement and simple best practices.

What do you think?

* The implementation of new systems and processes costs money up front, and most hospitals and insurers don’t want to spend money today unless they see an immediate return tomorrow. No long term thinking.

Innovation and Opportunity: What’s Ahead in Supply Management

The ISM just released the seventh edition of the Supply Management Handbook (J. L. Cavinato, A. E. Flynn, and R. G. Kauffman) and my copy arrived late last week.

Chapter three (of the forty-two chapter book) is entitled Innovation and Opportunity: What’s Ahead in Supply Management. The chapter discusses four promising trends in supply chain technology and three other trends that are taking or expected to take the supply management world by storm.

Supply Chain Technology Trends

  • Maturing and Scaling of Procurement Technology
  • More Sophisticated Business Intelligence
  • Integration of Technology Functions with Other Parts of the Business
  • Stronger Influence of Web Services on Supply Management

The maturing and scaling of procurement technology is happening every day, business intelligence technology is also improving at a brisk pace, we’re starting to see new technologies aimed at integrating procurement with the rest of the business, and some of the best solutions out there are on-demand solutions built on or as web-services.

Other Trends

  • Global Sourcing and Supply Management
  • Procurement Outsourcing
  • Supply Management in Government and Financial Services

Global Sourcing is hot and Procurement Outsourcing is on the rise. Even financial services are hearing the call of the supply chain. (After all, Macquarie Bank scooped up one of our best bloggers earlier this year, The Blogging Thunder from Down Under, Doug Hudgeon of Vendor Management [renamed Contract Capital Management, WayBackMachine].) And, finally, some governments are starting to latch onto good supply chain management principles. Hopefully their good example will convince those that aren’t to hear the call of the “spend management party”*.

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

14 Purchasing Best Practices, A Review Part II

To hit home my point that I believe the online course “14 Purchasing Best Practices” from Next Level Purchasing (now the Certitrek NLPA) is worth the time and investment for an average purchasing agent, with kind permission, I am going to dive into a few topics covered in the course that I believe hit home on the importance of best practices and a well-designed course to convey them.

The course starts off by noting that the three main functions of a purchasing department are:

  • managing spend
  • supporting operations
  • risk management

and that the three main benefits of a dedicated purchasing organization are:

  • efficiency
  • effectiveness
  • organizational objective alignment

This conveys the message that purchasing is about more than cutting orders and that good procurement is more than just beating suppliers up for cost concessions (despite what some industries still believe). To this end, the best practices are designed to address the functions and goals, improving your performance and that of your organization overall.

This leads into the first best practice defined in the report, “utilize an annual buying plan”. The course defines in detail, and with examples, what a buying plan actually is and why it is key to success. A buying plan is more than just “I’m going to use competitive bidding through an auction in an attempt to reduce costs” – it’s also why you are employing the tactic, what results you expect to get, and how you quantify those expectations. The course prescribes a step-by-step methodology for the creation of a good buying plan that will assist you in the most effective allocation of your purchasing efforts and offers easy to understand methods and formulas to calculate savings and future spend, which is also important since organizations run on cash flow – a key fact that many resources on savings and buying plans ignore. Executives often assume that “savings” will decrease overall spend, but if demand is increasing rapidly, spend will still go up. But that’s okay, because as long as spend is going down relative to each unit, you are saving money – which means that a future spending increase can be a really good thing – more savings and more profit.

The fifth best practice in the course is “utilize long term contracts”. You’re probably saying “that’s obvious – everyone knows that long term contracts can lock in great volume rates and save you money”, but what’s not always obvious is that a good long-term contract can address many of the six types of risk – supply, price, financial, legal, safety, and PR – that your organization faces on a daily basis, since things can go wrong at any time.

The twelfth best-practice, which might not be as obvious, is “measuring purchasing performance”. Everyone supposedly knows that you can’t manage, and thus improve, what you don’t measure, but I’m sure not everybody knows how important measurement is or how to do it properly in a purchasing organization. The course not only provides you with a straight-forward six-step methodology to properly implement purchasing performance measurement in your organization, but also advises you on what should be measured and what shouldn’t be. The reality is that key metrics will improve performance, but trivial metrics will not.

I hope this gives you some more insight into the importance of continued education and appropriate courses for your development and why I believe “14 Purchasing Best Practices” from Next Level Purchasing is most likely worth your time and investment as a procurement professional.