Category Archives: Robert Rudzki

Speaking Like a CFO, Part I

Today’s guest post is from Robert A. Rudzki, President of Greybeard Advisors LLC, who has (co-) authored a number of acclaimed business books, including Beat the Odds: Avoid Corporate Death and Build a Resilient Enterprise, On-Demand Supply Management, and the supply management best seller Straight to the Bottom Line.

In my experience, those procurement and SCM (Supply Chain Management) departments who invest the time and effort to develop and master the skill and perspective of “speaking like a CFO” are the departments heading to the top of the profession. On the other hand, those departments who don’t – or won’t – master this skill seem to be perpetually stuck on the tactical hamster wheel.

I’ve touched on this subject during numerous conference presentations, but it’s important enough that I will risk repeating myself in order to reinforce a few key themes:

  1. You need to adopt and speak the language of the executive suite (the “financial language” of the CFO) in order to be effective in your communications with senior management.
  2. Develop a vision with BOLD objectives that tie directly to senior management’s interests and objectives (EPS, ROIC, cash flow, risk management, etc.).
  3. Lay out your transformation plan and detailed roadmap (note: this starts with a comprehensive “current state assessment”, compares the current state to best practices, and then uses the gap analysis as input to a well-constructed transformation roadmap).
  4. View technology as an enabler of your transformation plan and stretch objectives, not an end to itself.
  5. Build your business case (what you expect to deliver, in exchange for resources and budget).
  6. Be willing to make a commitment (of new $ results) in order to gain top management’s commitment and support.
  7. Finally, lead and make it happen.

You can find out more about this subject by downloading the following free white-papers on the Greybeard Advisors website:

Thanks, Bob!

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Robert Rudzki on “Procurement and Supply Chain Transformation: How Fast?”

Today’s guest post is from Robert A. Rudzki, a former Fortune 500 senior executive of supply management who now advises other companies as President of Greybeard Advisors LLC, a strategic management advisory firm. Bob has authored several business books including Beat the Odds: Avoid Corporate Death and Build a Resilient Enterprise and Straight to the Bottom Line. Bob also writes the Transformation Leadership blog for the Supply Chain Management Review. (e-mail Bob at rudzki <at> greybeardadvisors <dot> com.)

How fast can a company transform itself to world-class supply management?

One of the most interesting conversations I participated in recently centered around the subject of how long it takes to transform procurement to become world-class at a large (or medium sized) company. The conversation started with this comment:

“We benchmarked Company X, and learned that it took them 7 years to transform their indirect procurement activities to become world-class.”

That’s a quote from a recent meeting I attended, and the speaker was interested in my reaction. Company X was identified, and is a well-known company in its industry.

My reaction to this statement was, and is, straightforward: lacking an assessment process and a transformation roadmap, it can take a long time to achieve successful transformation of your procurement activities (direct or indirect spend). In fact, without a roadmap and the associated business case, the goal is probably not achievable in any reasonable amount of time.

On the other hand, with a well-constructed roadmap, it is possible to achieve a great deal within 18 to 36 months.

What’s involved in creating a good transformation roadmap? It starts with an independent, candid and comprehensive comparison of the “current state” at your company versus appropriately identified “best practices” in supply management (for your company). That provides input to an opportunity assessment, as well as input to constructing a roadmap that is tailored to your company’s situation — and to your desired speed of progression. In our experience, I can tell you that sequencing the roadmap elements is part art, and part science*. Finally, a credible business case is developed which wraps it all together: what you are proposing to do, the expected $ results over the next few years, and the requested internal and external resources to accomplish the plan.

Done well, this Assessment and Roadmap process creates executive understanding, excitement, and support (budget and otherwise). Believe me, this works. I say that as a former corporate finance guy who became a successful CPO (and obtained all the executive support you could wish for) and as an advisor to clients who I’ve guided in their transformations. (I’ve even helped clients obtain approval to expand their strategic resources while the recession was gaining speed.)

That’s the real litmus test — senior management committed to creating world-class supply management regardless of the economy. That’s an indicator of what is possible if you approach this subject properly.

To read more about building a transformation roadmap, you can download A Leader’s Guide to Supply Management Transformation , which was featured in the Supply Chain Management Review.

Thanks, Bob!

*Editor’s Note: For a discussion of Supply Chain Process: Art or Science, see the linked post.

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Service Leaders Speak: Robert Rudzki of Greybeard Advisors on “Consultants: Use Them Intelligently”

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Today’s guest post is from Robert A. Rudzki, a former Fortune 500 senior executive of supply management who now advises other companies as President of Greybeard Advisors LLC, a strategic management advisory firm. Bob has authored several business books including Beat the Odds: Avoid Corporate Death and Build a Resilient Enterprise and Straight to the Bottom Line. Bob also writes the Transformation Leadership blog for the Supply Chain Management Review. (e-mail Bob at rudzki <at> greybeardadvisors <dot> com.)

Chapter 22 of the book Straight to the Bottom Line has an intriguing title: “Consultants: To Use or Not to Use — That is the Question“.

When my co-authors and I wrote the book a few years ago, we were speaking as corporate practitioners, having led successful procurement transformations in a variety of industries.

Today, I’d like to build on that corporate perspective (in my case almost 30 years at Fortune 500 companies), to share some additional observations that emerge from my experiences working with clients as their advisor.

First of all, let me say that I reread Chapter 22 before writing this post, and found its advice sound and very timely. If you haven’t read the book, or the chapter on consultants, you really ought to.

In fact, a table that appears in the chapter is worth repeating here:

Unnecessary to Use Consultants Consider Using Consultants
Benchmarks confirm that your internal processes/results are best-in-class You lack benchmarks and are uncertain how good your processes and staff are
Company is able to make ongoing investments (people, systems) to achieve and remain best-in-class Not able to invest as needed
Best-in-Class Category/Market Expertise No particular internal strength
No urgency to achieving significant cost reductions Time is of the essence for achieving improvements
Best-in-class already, and still reaping new benefits each year Not generating significant new benefits each year
Internal staff able to effectively deal with internal politics Internal politics constrain achievement of cost reduction objectives; a “third party” might have credibility
Your organization lacks a leader, and you hope that the consulting firm can fill that gap You want to supplement your internal talent for a defined time period

Source: Straight to the Bottom LineNote: Straight to the Bottom Line is a registered trademark of Greybeard Advisors

Since Greybeard Advisors was formed five years ago, my colleagues and I have had the pleasure of working with large and medium size companies in most industry segments (including manufacturing, process, health care, services, retail). We’ve seen some excellent practices relating to using consultants (or advisors) intelligently.

We’ve also seen some poor practices that are all-too-common. In one case, we were invited in to do a “post mortem” on a consulting project by a large firm, and saw examples of fundamental errors by both the client and the consulting firm.

As I reflect on what I have seen and heard, some of the key learnings can be boiled down to the following chart. Take a minute or two to carefully review it. You should notice that using consultants intelligently requires mindset and behavior changes by both the client company as well as the consulting firm.

What Typically Happens Leading Edge Practice
Top-down directive that the procurement department will work with a specific consulting firm Procurement leader takes the initiative and sends an RFI to a broad range of potential service providers (large and small firms; consulting vs. advisory firms); short list invited to respond to an RFP
Selection criteria unknown, beyond assumed personal relationships at the executive level Selection criteria established as part of the RFP process, and are consistent with the needs/desires of the procurement organization and the company
Consulting firm uses “A” team to manage the executive relationship, but sends the “B” team of inexperienced junior consultants to learn on the job and “do the project” Firm is selected only after ironclad assurances that the “A” team of experienced advisors will be assigned; resumes of advisors are provided; and the client is encouraged to interview each advisor.
Consulting agreement is rigid and aggressive, requiring a hard commitment to a large number of full-time consultants for a defined timeframe (often 6 to 12 months, or more). Agreement is flexible, reflecting the client’s workplace realities, needs and timing
Consulting firm disrupts everyone’s “regular job” in bid to ensure that its project is everyone’s priority and is a success Firm works with the reality of client’s workplace and schedule, and is careful not to be a disruptive force
After consulting firm leaves, reported “savings” start to evaporate or can’t be found Firm has embedded processes and capabilities into the client organization, which now can create more successes on its own

(c) Greybeard Advisor LLC, All Rights Reserved

One of the fundamental choices you need to consider is whether you want to employ a “consultant” or an “advisor”. The distinction is not just semantics, it is core to what you are trying to achieve.

Do you want a hired gun to knock out some work and then depart? Or do you want an advisory approach in which process knowledge (e.g. specific best practices such as strategic sourcing and negotiations management) and commodity knowledge are transferred to your team?

To use a familiar analogy: Do you want someone to hand your team a fish dinner, or do you want your team to learn how to be successful fishermen themselves while they catch their first few fish?

Thanks, Bob!

The Value of Proactivity in the Current Business Environment

Today’s guest post is from Robert Rudzki, a former Fortune 500 senior executive of supply management who now runs Greybeard Advisors, a strategic management consulting firm.

Bob has authored several business books including Beat the Odds: Avoid Corporate Death and Build a Resilient Enterprise and Straight to the Bottom Line.

He can be reached at rudzki <at> greybeardadvisors <dot> com and found on the Transformation Leadership blog.

Now is the time NOT to hunker down in a fox hole; rather, this is the time to be pro-active. One idea: take the opportunity to perform a candid assessment of your supply management and procurement practices. More companies are doing just that. In fact, in the past few months, my firm, Greybeard Advisors, has experienced an increase in requests for proposals to perform such assessments.

Proactive companies of all sizes seem to have renewed interest and seriousness about a number of critical topics:

  • understanding – candidly – how their current practices compare to “best practices”
  • identifying the specific financial opportunities, and quantifying them
  • developing a prioritized plan of action that creates near-term wins
  • using those near-term wins to help fund true strategic transformation along numerous dimensions required for achieving world-class status

Clearly, some of this renewed interest can be attributed to concerns about the economic downturn. But, what really excites us as practitioner-advisors: some of these companies are approaching it for other reasons; namely, wanting to be the premier firm in their industry, and realizing that procurement and supply management is a way to get there. Done well, procurement and supply management can impact not just total costs, but also revenues, and working capital. And that can have a powerful effect on total financial performance (ROIC, ROE, EPS).

These are very difficult and challenging times – all the more reason to approach your job with creativity, resolve and leadership.

Having been through a number of business cycles as a Fortune 500 corporate officer, I can attest to the challenge – and the opportunity – of being proactive in this environment. Companies that maintain their strategic focus and work to create their future will be well prepared to reap the benefits when the economy improves.

Thanks, Bob!

Don’t Wait for the Burning Platform (Start Your Procurement Transformation Now)

Today’s guest post is from Robert A. Rudzki, a former Fortune 500 senior executive of supply management who now advises other companies through Greybeard Advisors LLC, a strategic management consulting firm. Bob has authored several business books including the critically acclaimed Beat the Odds: Avoid Corporate Death and Build a Resilient Enterprise and Straight to the Bottom Line. Bob also writes the Transformation Leadership blog for the Supply Chain Management Review. Bob can be reached at rudzki <at> greybeardadvisors <dot> com.

A few years ago, US financial institutions were making so much money that their procurement departments were having great difficulty. They could not get any serious time commitment from their executive staff to discuss procurement and supply management opportunities.

I know that’s true, because I heard it directly from several chief procurement officers at insurance companies and banks, who approached me after I made a presentation on the West Coast. These CPOs were, to state it mildly, very frustrated in their jobs and with their senior management. They had a sense that there was real opportunity, but couldn’t get their senior management’s attention.

Today, the executives of many of those same companies probably wished that they had started paying attention to procurement and supply management back when they did not NEED to. In fact, the best advice for senior management, including senior supply management, is this: don’t wait until you are standing on a “burning platform”. Start the procurement transformation process now.

It may be easier, in some corporate cultures, to tee up a business case for change when things are going poorly; for example, when your company is on a “burning platform”. It’s a real sign of good leadership, and forward-thinking management, however, to decide to transform when you have no immediate urgency to do so.

One of the implicit challenges in building a case for procurement transformation in financial services is the atypical cost structure. Where are the direct materials (other than people) – that typically occupy center-stage in strategic sourcing? To a manufacturing eye, the banking industry cost structure appears strange – essentially all people and the so-called indirect spend. But, as some of you may know, indirect spend offers a larger percentage cost reduction opportunity – often well above 15% – when addressed with a robust strategic sourcing and negotiations management process (“SSNM” in Greybeard Advisors’ parlance).

Several of my colleagues at Greybeard Advisors have deep experience applying strategic sourcing in the financial services industry. The benchmarks from their experiences confirm the enormous potential to impact the bottom line at financial services companies.

Similarly, we have applied strategic sourcing in numerous “non-traditional” areas of spend at manufacturing companies, including spend for financial and marketing services. There are sizeable percent cost reduction opportunities – again, if approached with a genuine SSNM process.

Opportunities abound – but they don’t just happen by putting numbers and analyses on a PowerPoint chart. It takes real leadership, and a carefully thought-out transformation roadmap.

Thanks, Bob!