Category Archives: NPX

CBTM #2: Our People Are Our Key Asset

Today’s guest post is from Dalip Raheja of The MPower Group, who declared that Strategic Sourcing is Dead last year, and who has returned to stir up a new hornet’s nest.

Our people are our key asset! How many times have you seen this on the walls of major corporations? If this is true, then should we be applying some sort of asset maximization strategy to this key asset? I would assume that any expenses (training, coaching, recruiting, etc.) associated with maximizing this key asset have a very high priority and are one of the last items cut from budgets? By the way, how much of your capital dollars are you allocating to this asset? To truly embrace this thinking, you have to adopt a mental model of viewing your organization as a consulting company whose only value producing assets are the employees. In our last post, we laid out the case for Talent Management. In this post, we will address Competency Based Talent Management (“CBTM”) and then talk about some of the key issues in developing and executing a CBTM strategy.

The first step is determining the Intended Consequences (“IC”) of your Sourcing/Supply Chain organization. These ICs need to be directly derived from, and tied to, the overall corporate objectives and strategy of the company. Are you an organization measured by the year-over-year price savings that you get from your supply base while reducing lead time and improving quality? Or are you an organization that is measured by the impact you have in reducing sales cycles, increasing margins on existing deals, and streamlining the time to market of new product introductions? Think of this as defining the market you are trying to serve as a consulting company. Are you aspiring to impact tactical and operational Value Drivers or are you also looking to directly impact the overall corporate goals and strategy and therefore be a direct part of the elusive CEO’s agenda? That will help you determine the required characteristics of the asset base you will need to deliver on the Intended Consequences. This role definition then becomes the foundation for your desired competency model. From there, it’s on to determining where you are today, the gaps between where you are today and where you need to be, and then making sure that you have an asset maximization strategy in place that is funded for the next 3-5 years to close the gaps. Voila! All done! Obviously it’s a bit more complicated than that and we will be happy to share a very detailed model and an approach to getting it done. Here are a number of challenges that you should be aware of:

  • Commit only when you can deliver to expectations.
    CBTM will raise the expectations of the employees so make sure you are ready to launch and deliver.
  • Designing the solution is only a start.
    Focus on the adoption issues and invest as much in them as in solution design, if not more.
  • Competencies are applied skill and knowledge towards the Intended Consequences.
    The focus has to be on demonstrated application whether you are recruiting or promoting.
  • Shortage of talent is a symptom, not a cause.
    Apply systems thinking to the entire life cycle of Talent Management (recruiting, training/development, performance evaluation, career development and succession planning). Otherwise, you will always be recruiting.
  • Hold your direct reports accountable for success of CBTM.
    Ensure it’s in their goal sheets in a meaningful way.
  • It’s not a tactic — it’s a strategy.
    Account for appropriate time for the strategy.
  • Think asset portfolio maximization.

In our upcoming posts we will address some of the Next Practices associated with each of the five phases in the Competency Based Talent Management life cycle.

If you are interested in getting involved or would like to follow this topic further, here are a series of critical activities coming up:

  • Release of the results of the Executive Forum we just facilitated at the IACCM Global Forum for Contracting & Commercial Excellence on Talent Management.
  • A major research project to not identify the problem one more time but to identify Next Practices to solve the problems.
  • A webinar with IACCM on CBTM.
  • A White Paper to focus on Next Practices in CBTM.

Please contact Crystal Jones at crystalj <at> thempowergroup <dot> com for more information.

CBTM #1: The Difficulty of Finding Qualified Supply Management Candidates

Today’s guest post is from Dalip Raheja of The MPower Group, who declared that Strategic Sourcing is Dead last year, and who has returned to stir up a new hornet’s nest.

Difficulty of Finding Qualified Supply Management Candidates is the headline of a major research project by CAPS Research. I am glad that they are bringing renewed attention to this issue. My problem is that if you go back in the history of our profession, this issue has been in the top three issues of EVERY poll, research, think tank pronouncement, conference, etc. for close to two decades! My history goes back over three decades in the world of Supply Chain and I can remember in the early 90’s when this started to become a critical issue. And yet, here we are gathering insight yet again. We started this conversation by first defining who YOU are. Clearly not a scientific analysis but close enough for government work. We then drew some insights from the profile that was created.

Let me take the liberty of using the title to develop my call to action. Let’s start with DIFFICULTY. The question we need to ask ourselves is why are we dealing with difficulty? Clearly we are facing difficulty as a result of whatever we did or more importantly did not do in the past. We have never identified talent as a top priority in our organizations. And before you quickly pull out your strategic presentation to point to the slides, my first question will be to ask for a history of your training investment over the last five years. In fact, take a look at your total investment over the last five years in supporting your Talent strategy and compare it to other investments that your corporation has made. I bet it is nowhere close!!! How does your new hire program fare under that scrutiny? Has it been increasing over the last five years? Is the leadership in your Supply Chain organization specifically measured AND incented on the maximization of Talent? Are your people specifically measured AND incented on acquiring new competencies (not skills, not training . . . . . more on that later)? These are but some of the things that would explain the inclusion of the word DIFFICULTY in the research. At our last NPX conference and a recent Gartner event, numbers like 50, 100, 200, and 400 were being tossed as the current need of some major Global corporations in their Supply Chain organizations. I will let you digest those numbers for now and we will come back to them later. By the way, once you decide to invest in your Talent, there is an incredible amount of lead time that is required to make that happen. Those companies that are looking to hire 50 to 400 new people should have started 12 to 18 months ago.

If you are still defining FINDING as developing a job description and handing it off to your HR rep and waiting for the candidates to roll in … good luck! You need to step back and understand what your real needs are in terms of competencies for the roles that you are looking to fill. Because FINDING is also a function of what you define as QUALIFIED. You then need to develop an aggressive, comprehensive approach to attract and retain the right candidates. And unless you have thought your way through that entire life cycle, you will never resolve the issue. Let me illustrate with an actual case study. We were asked by the CFO of a major bank to help figure out why they were not able to attract any candidates to even show up at the campus job fairs for their New Hire program. We helped them realize that their brand name was not enough to attract candidates anymore. The real issues were that the prospects did not know what they wanted to do in banking yet and did not want to commit so early in their life. We redesigned the entire New Hire program to include structured six month rotations for the 1st two years (and their selections would be considered), a leadership member assigned as a formal mentor (and feedback provided by mentored to CFO on mentoring), internal job fairs by senior executives of various organizations in the bank, a “friend” assigned from the previous rotation “class”, formal group meetings where the entire “class” would get together to provide feedback, etc. And then we redesigned their marketing strategy (yes, you need to have a marketing strategy!). They had lines forming up at the campus job fairs!

As I mentioned in the last paragraph, ALL of these issues are intertwined and tied together (but I’m jumping ahead of myself). For example, if your definition of QUALIFIED does not really match your needs, you will always have DIFFICULTY FINDING candidates. The definition of QUALIFIED has to be based on the real needs of your “clients”. One of the constructs that has proven very powerful as an image that we use with our clients is to think of your organization as a consulting company. You would quickly realize that your ONLY asset that delivers value to your clients is your organizational competency and talent. Therefore, you must match your competencies to the needs of your clients, both for today and tomorrow. Otherwise, you will always be FINDING because developing organizational competency has a significant lead time.

Case in point: We just had a conversation with the CIO of a Fortune 20 client leading to the conclusion that his organizational competency was geared towards new solutions that his group had been rolling out very successfully. His problem was that his clients had not yet “adopted” the solutions yet … meaning that they had not been fully deployed. The Intended Consequences of the clients had not yet been realized. What he quickly realized was that he needed to immediately develop significant deployment competencies. Think of it as surveying your market to understand what their needs are going to be so that you can ensure that you have the right organizational competencies to deliver the value when your clients need it. Ideally, you should be a step ahead.

Finally, what do you define as a SUPPLY MANAGEMENT CANDIDATE? I guess we first need to decide what Supply Management is. Because if your definition is focused on the Supply Base and managing costs and lead times and someone else is looking at the entire value conversion process, then your SUPPLY MANAGEMENT CANDIDATE is going to look rather different from your competitor. If you think the role of Supply Management is to run an efficient process to ensure lowest cost, then you are probably not looking for candidates who can look upstream and downstream and start maximizing the entire system as opposed to the tail of the dog (supply base). If you think that Supply Management is all about the process of defining requirements and negotiating contracts, then you are probably don’t want candidates with all those so called soft skills (collaboration, teams, problem solving, etc.). Now you can see why we seem to have DIFFICULTY FINDING QUALIFIED SUPPLY MANAGEMENT CANDIDATES.

Stay tuned for our next post where we discuss Competency Based Talent Management (CBTM) as a platform for solving some of the issues we have raised here. If you are interested in getting involved or would like to follow this topic further, here are a series of critical activities coming up:

  • Release of the results of the Executive Forum we just facilitated at the IACCM Global Forum for Contracting & Commercial Excellence on Talent Management.
  • A major research project to not identify the problem one more time but to identify Next Practices to solve the problems.
  • A webinar with IACCM on CBTM.
  • A White Paper to focus on Next Practices in CBTM.

Please contact Crystal Jones at crystalj <at> thempowergroup <dot> com for more information.

Talent Really Can Transform Your Organization

In yesterday’s post, we discussed the NPX keynote by Don Wirth, VP Global Operations Supply Chain and Excellence of DuPont, on DuPont’s Journey to Supply Chain Excellence and how a key to success was DuPont talent. We also said that DuPont is a company that did more than just give their talent lip service and put their corporate money where their corporate mouth was and this is a key to their recent success (which saw a year over year EPS growth of 32% last quarter) and their plans to cut 3.7 Billion in cost from their supply chain.

How did they do it? When the economy was tanking in late 2008 and early 2009 and everyone was cutting jobs left, right, and center, instead of cutting their global workforce 5% to 10% with all their peers, which was the original gut feel reaction of some executives and board members, they took a step back and said “the market will come back like it always does and the best way to recover is to be ready and more competitive when it does“. And they realized that the best way to be ready was to have people who could capitalize on the opportunity. By capitalizing, they decided that they needed people who could deliver the necessary innovation while keeping supply chain costs down as that is the key to continued success in up or down economies.

So they created a center of supply chain excellence and took people from across the company who would have otherwise been laid off from under-performing divisions and trained them. And trained them. And trained them some more on supply chain best practices — lean, kaizen, negotiation, contract management, and other areas of critical impact. Then they sent them back into the business units with new skills and knowledge to guide unit operations and manage the supply chains with guidance from the center of excellence. And then the cost reductions started to appear from across the board.

From there, they modified their Dupont Production System (DPS) methodology to include best-in-class supply chain operations to provide the highest customer service with the lowest total cost of ownership by increasing overall supply chain resilience. And then they focussed on plant operations, supply chain design, and supply chain optimization and identified almost 3.7 Billion in cost reduction opportunities through improved operations. And now development is a key part of their mandate and a continued focus. And it’s for the best.

Three Keys To Success in Today’s Competitive Supply Chain Landscape

The other keynote at this fall’s NPX was by Don Wirth, VP Global Operations Supply Chain and Excellence of DuPont who did a presentation on DuPont’s Journey to Supply Chain Excellence. Dupont, which expects to save almost 3.7 Billion dollars at the culmination of their journey through improved plant operations, supply chain network design, and supply chain optimization, will slash its overall supply chain costs across the board by about 10%. (And its efforts are making an impact. It just delivered strong EPS growth on 32% higher sales for third quarter 2011.)

How is it going to do it? Innovation, differentiation, productivity, and talent are key success requirements. In particular, it plans to align the following strategic themes:

  • Innovation & Customer Focus,
  • Differential Business Management, and
  • Productivity & Continuous Improvement

with the following growth trends (and the importance of trends was discussed in SI’s posts on minitrends and megatrends):

  • increased need for food production,
  • decreased dependence on fossil fuels,
  • environmental protection, and
  • emerging markets.

This is great strategy for any supply management organization. Align with forthcoming needs and be better prepared for the market shifts that tend to come faster than expected. So how does it plan to align?
By beginning with management practices. Metrics and incentives are revised to be consistent and aligned with goals. Risk management is organization wide. Governance and structure supports center of excellence operations. Then it leverages scale and skill. It starts with standardization and simplification. It puts experts in charge of the supply chain. Best Practices are institutionalized. Finally, it builds culture and capabilities by treating talent as an enterprise asset.

Dupont engages its workforce in its entirety. The collective power is in the group and the team, and getting the most we can out of
our operations
. These words are straight from the mouth of the CEO, who puts the company’s focus where her mouth is. How? That’s the subject of tomorrow’s post.

The Next Practices Xchange Is Only Two Weeks Away!

The Mpower Group‘s next Next Practices Xchange (NPX) is two weeks from tomorrow, Friday, November 4, which means that if you are a Supply Management VP or CPO that wants to discuss pressing issues relating to next practice identification and adoption, you should be on a plane in fourteen days time.

And yes, the doctor will be there. As most of my regular readers know, I’m not that big on conferences. Most of the regular conferences in this space have become, or have always been, fairly mediocre from a Supply Management improvement perspective as they are focussed on appealing to the lowest common denominator to maximize their potential audience, attendance, and $$$’s in their pockets. Just like the now-defunct Purchasing, the content has been watered down like a soda at the KWIK-E-MART to the point where you really don’t want to drink it if your goal is to be a leader in that top 20%, 10%, or 8% (however you want to define it). Given that SI’s goal is education and innovation, they just don’t fit.

However, there are still a few shining lights in the darkness, and the NPX has repeatedly proven itself to be one of those shining lights. In the same league of leading Supply Management consulting firms like Greybeard Advisors (led by Bob Rudzki who recently published Next Level Supply Management Excellence) and Archstone (who were recently acquired by The Hackett Group), The Mpower Group has been trying to take Supply Management into the teens in a big way by defining what the Next Level is and what Supply Management organizations need to do to get there. And while it is a work in progress, a number of the issues they have hit upon in the last couple of years are dead on.

For example, the second last NPX focussed on Training and Transition and the last one focussed on Value. In between, The MPower group has been defining a new methodology for improving performance based on AEIOU: Adoption, Execution, Implementation, Optimization, and Utilization — noting that many of the benefits of new processes and technologies go unrealized because of lack of adoption or proper execution.

For full details, check out the NPX website or contact Theodore Brown at 1-888-5-Mpower or theodoreb <at> thempowergroup <dot> com.

See you there.