The Emerging Focus on Talent, Part III

The first post of the series discussed the emerging focus on talent, why top talent, and, more importantly, engaged talent, is important and why an average organization can’t find top talent. The second post discussed some of the insights on the talent topic that were put forth by Cummins, Disney, and Pitney Bowes at the recent Best Practices Conference put on by the Hackett Group. This post will cover some additional insights from HP and the Hackett Group and the final post of the series will outline some key first steps to help an organization start on its talent management journey.

When HP realized it needed to undergo a Finance transformation to become a world-class financial organization, it also realized that a critical component of migration would be its people and that a highly engaged, globally deployed workforce would be a critical success factor. It instituted a people development culture that focussed on reaching out with the current team (through an ambassador program), hiring the best (through a unified on-boarding process), developing its talent (through a centralized people development portal), mentoring its talent (through a high potential program), and effectively managing its talent (across groups within finance and the company as a whole). This helped it to create centers of excellence for high-value work delivery.

The Hackett Group, both in their presentations and in my private conversations, emphasized not only the critical nature of top talent in the Procurement / Supply Management organization, but the importance of understanding the nature of the talent market. What many companies don’t realize is that talent is a market, like IT, but unlike IT, where you have new vendors with new technology popping up every day, in Procurement, you don’t have newly trained professionals entering the talent pool every day because the vast majority of colleges and universities do not produce talent with the education and expertise necessary to succeed in today’s next generation supply management organization. This means that the organization has to have a game plan to recruit and retain raw talent that can be taught the skills, and a methodology program in place to teach the talent the skills, which should include (virtual) “classroom”, on-the-job, peer-group, and mentorship components to get the talent up to speed. It also means that it has to market Procurement as an attractive career opportunity and have a corporate succession path that allows supply management personnel to move out and about in the company. If business grads still think, like the older generation, that Supply Management is where you go to retire, it will be very hard to recruit raw talent with a high EQ.

So how does an organization begin a talent management journey? That’s the subject of tomorrow’s post.

Lessons Learned from Best-in-Class, Part VII

The following are some more of the lessons learned shared by some of the participants at this year’s Hackett Best Practices conference in no particular order.

30. Procurement must be run like a business
Just like a business is profitable, Procurement must be profitable and must be seen as a profit-generator, not a sunk cost. If Procurement is being run as a services organization and has to charge the other organizational units internally for its services, it must insure that the charges cover its costs. Furthermore, it must reduce it’s cost per dollar of value generated year over year just like it reduces the costs of product or service acquisition on the projects it participates in. If it is not profitable, it will not have the respect of the C-suite.

And if it doesn’t have to charge the other business units to cover its costs, it should find a way to directly contribute to revenue generation to such an extent that it not only shows savings, but profit for the organizational unit for the balance sheet. Even if it can’t roll up its expertise and sell outsourced Procurement functions to smaller businesses like IBM, maybe it can still package some market expertise in a market intelligence service or offer NPD consulting to Engineering or manage the SRM projects internally to deliver even greater value to the organization.

31. Show sensitivity and respect for existing external relationships
Just because the current provider for a certain component required in production of the flagship product is the most expensive on the market doesn’t mean that Engineering will think that Procurement has the right to replace a vendor they’ve been working with for 10 years, even if the proposed vendor can deliver a higher quality product at a lower cost. Depending on the nature of the relationship, Procurement will have to either accept that this supplier is going to get some categories no matter what and will have to focus either on introducing a new supplier as a back-up, secondary source, that can also be used by Engineering to secure non-critical parts of the business or on working with the supplier on a lean initiative to take costs out over time.

32. Simplify and standardize
This may be among the most challenging initiatives the Procurement department ever takes, but it is one of the most essential. First of all, the last thing the organization wants to do is automate a broken process. Secondly, it can’t just throw a broken or inefficient process over the wall to a BPO or outsourcer and expect efficiency and costs savings. Thirdly, the organization will never achieve economies of scale if it uses three different systems for completing organizational transactions (such as a P2P e-invoicing system, a p-card system, and an accounting-based AP system where paper invoices are manually entered and paid) or for conducting e-Negotiation projects.

33. Sometimes its easier if services precedes manufacturing when expanding into new markets
As stated above, Procurement needs to be an enablement function. One of the ways it can do that is to use its knowledge of emerging economies where it sources from to help Sales and Marketing or Engineering expand into those economies. When expanding into new markets, its often easier if services are introduced before new plants are built or new products are introduced. Services provide “a personal touch” and can help the local talent pool (which will be needed to staff a new plant) and early adopter consumers (who will be counted on to buy the new products being introduced) get comfortable with the company.

34. Strong leadership is a must
It take more than the right people, processes, and technology for a Procurment organization to become world class. It takes strong leadership that will rally the troops to advance to the next level of performance, that will speak up and get the organization a seat at the big-boys table, and that will go out and make the case for Procurement involvement in each organizational unit of the business — sacred cows be damned. Without strong leadership, the talent, who will need to be critcal parts of cross-functional teams, will never advance beyond the status quo; the CPO will never graduate from the kiddie table (and that’s if she even makes it that far); and the


Our next post will continue our overview of the lessons learned that were shared by some of the participants at this year’s Hackett Best Practices conference.

The Emerging Focus on Talent, Part II

This post is going to review some selected insights on the talent topic that emerged during the recent Best Practices Conference put on by the Hackett Group. In particular, it is going to focus in on some of the key points made by Disney, Pitney Bowes, HP, Cummins, and The Hackett Group.

At Cummins, which has more employees outside the US, diversity is a core value. The importance of diversity in a global supply management and / or services operation cannot be understated. A diverse team is able to understand and interact with top talent from different cultures across the globe, which allows the organization to draw from the global talent pool, and not just the local talent pool in its home country or the country of its outsourced service center. And a diverse team is a powerful team. Cummins Global Business Services, which manages IT, HR, Finance, & Customer Care, and which is in the process of adding Procurement, hass less than 950 employees but manages 670 Million in Global spend. That’s more than 670K of spend per Cummins FTE. Now, the number drops to about 270K when you include the resources utilized in partner and supplier organizations for local support, but considering the wide umbrella of services support, that’s still quite impressive. Especially when you consider that more employees are outside the US than in the US and many are in low cost locales (like India).

Disney is a global operation, it needs to be global, and it understands that it needs to be global. As a result, Disney puts a great emphasis on staffing its international sourcing offices with local talent. Disney knows that the best way to identify talent is to have talent in the first place and only people who speak the same language (and understand the culture) are going to truly know the difference between who looks good on paper and who will work good in the organization. There is a strong cultural component to EQ.

At Pitney Bowes, employee engagement is one of the four key metrics that are used to measure organizational performance (with the other three being customer service, financial performance, and innovation). Furthermore, it is one of the four key components that must be mastered to be best-in-class (with the other three being structure, performance, and technology). As a result, they put a lot of effort into defining roles and responsibilities with a clear career path that not only made it easier for HR to find, and hire, raw talent, as they made Supply Management an attractive career option, but made it easier for them to identify what the organization needed to do in terms of training and knowledge management to improve its talent pool.

Tomorrow’s post will address some selected insights from HP and the Hackett Group and then Part IV, the final post in the series, will address some of the first steps an organization will need to take on its talent management journey.

Lessons Learned from Best-in-Class, Part VI

The following are some more of the lessons learned shared by some of the participants at this year’s Hackett Best Practices conference in no particular order.

26. Operational transparency is a must
This is especially true if the Procurement organization is based in a (global) shared services organization and is forced to charge-back the organizational units for its services. Keep open books where the other organizational unit excutives are involved and be prepared to show how the value generated per Procurement dollar increases with time, otherwise the Procurement organization might be accused of attempting to make a power grab.

27. Perception always trumps reality
This is why the Procurement organization has to communicate, communicate, communicate, and communicate again. In the executive offices. In the hallways. With the line managers. Through the corporate newsletters. At the training sessions. If the rest of the organization does not have the true picture regarding Procurement and the value it contributes, the old-school perceptions of Procurement being non-value add tactical paper-pushers and process enforcers will persist and Procurement will risk losing its seat at the kiddie table.

This is also true when current processes and supplier relationships are on the table. If the organizational personnel perceive them as effective and efficient and the “right way to do things”, even if all three perceptions are false, it will be almost impossible to get the personnel to change the processes until they see the limitations and weaknesses and see that the proposed processes are better and come with additional benefits. The same holds for supplier relationships.

28. Procurement can never be satisfied with the status quo
Since the value delivered is never enough, and the cost of delivering that value is never low enough, no matter how good Procurement is, it still has to improve — even if it is world class (as this is a moving target that moves as soon as a competitor passes an organization that has stopped to take a breather). The reality is that no one cares about what Procurement did yesterday, they are only concerned about the value Procurement is going to bring tomorrow and how they are going to make their numbers.

29. Procurement needs to be an enablement function
It needs to go beyond cost reduction and avoidance and consider the end-to-end financial implications for working capital management, the risks associated with the supply plan and appropriate mitigations, and the innovation it can bring to the table. Procurement has the greatest impact when it is consulted early on in new projects, not after almost all of the designs have been completed and decisions have been made and the only cost left to take out are in the transaction. If Procurement is involved in NPD, it can take cost out before 80% of the costs are locked in.

If Procurement is involved in Marketing vendor selection, it can make sure that contracts disassociate creative from copy and bid out commodity print or production jobs to the lowest bidder. If Procurement is involved in law firm selection, it can help steer Legal to those that are capable of doing the work and willing to do AFAs (Alternate Fee Arrangements) on a project or task basis and steer the business away from the costly unlimited billable hour. And if it is seen as an enablement function that can help in project definition as well as project implementation, it can not only play a larger role in the business, but secure better results in the long run


Our next post will continue our overview of the lessons learned that were shared by some of the participants at this year’s Hackett Best Practices conference.

The Emerging Focus on Talent (Part I)

Although it was not a major theme of this year’s Best Practices Conference by the Hackett Group, it was nice to see that a recurring theme in many of the presentations was the importance of top talent in the successful execution of strategy and growth. As you may recall, last month SI put out an open call for thought leadership on three issues and one of them was supply chain education as there is a lack of talent in supply chain (relative to the need). Furthermore, the problem is only going to exacerbate as time goes on if it is not effectively addressed.

In particular, the importance of top talent was mentioned as critical in presentations by Disney, Pitney Bowes, HP, Cummins, and The Hackett Group and emphasized in private discussions I had with Pierre Mitchell and Bob Derocher. What’s really interesting to note is that while not every company that presented was World Class, Disney, Pitney Bowles, HP, and Cummins, in at least one organization, are world class by Hackett Group metrics — which only serves to drive home the reality that employee engagement is a critical part of organizational growth. As per Hackett’s Myths and Realities of Global Growth, not only are talent management leaders 16X more likely to link employee engagement to business impact, but there is 21% higher employee engagement in double-digit growth companies when compared to single-digit growth companies.

However, as pointed out in Sourcing Innovation’s recent posts on why you can’t find top supply management talent and how you find top supply management talent, talent management is more than cobbling a wish-list of desired experience, education, and expertise and throwing it over the wall to HR. It’s a well thought out strategy to identify, hire, retain, and retire that includes careful consideration of growth, career path, and training to insure that you get the most out of each employee from the time they step in the door until the time they step out for the final time after their retirement party. This requires a well thought out strategy that should incorporate some of the lessons learned from your peer group. Parts II and III will discuss some of the key points raised by the presenters and why they are important and the final Part will discuss how a Procurement Organization goes about getting started on its talent management journey.