Monthly Archives: August 2011

An Idea for Aligning the Non-Competing Finance and Procurement Agendas

About two weeks ago, in What Competing Agendas, SI pointed out that, where Finance and Procurement are concerned, there are no competing agendas. Furthermore, as far as the doctor is concerned, whomever said that the dynamics and sometimes competing agendas between finance and procurement are widely known doesn’t get it. At all. Remembering that the ultimate goal of any organization is to derive value for the stakeholders — employees, customers, and shareholders alike — both organizations are trying to find the right balance between cost cutting and value generation to meet the company’s goals and shareholder return. Just because Procurement is always spending while Finance is always trying to cut spend doesn’t mean that the departments are in opposition. Finance knows better than any other department that companies have to spend money to make money, as long as the money is being spent wisely, and a good Procurement organization has better spending as its ultimate goal. There is no competing agenda.

However, since Finance and Procurement sometimes speak a different language, because Procurement hasn’t learned to Speak the Language of the CFO, the agendas aren’t always aligned. And while they both plot a route to the same goal, the routes barely intersect. And any good financier as well as any good sourcerer knows that taking two planes from New York, New York to Mumbai, India with one routed through Frankfurt, Germany and the other routed through Sydney, Australia, is wasteful. Thus, the agendas have to be closely aligned for optimal performance.

But how do you align the agendas?

One idea could be to use balanced scorecards as a shared framework. Back in the early days, SI ran a post that asked if you need a Chief Strategy Management Officer. Back in 2006, CFO Research Services published a short paper that summarized the highlights of their annual executive conference in New York, New York. Part of that report was a mini-paper on aligning the finance function to strategy execution based on a presentation by Robert S. Kaplan, co-developer of the balanced scorecard and co-author of Alignment: Using the Balanced Scorecard to Create Corporate Synergies with David P. Norton.

At the conference, Kaplan discussed various approaches for aligning the finance function more strategically with the goals of business units and corporate leaders, including:

  • the use of balanced scorecards as a shared framework to run the business, guide the operating agenda, and evaluate progress against strategy
  • the use of activity-based budgeting to link the strategic planning capability of Balanced Scorecards with the operational budgeting mechanism of a time-driven ABC (activity-based costing) model

And, as I suggested in my original post, I think it’s a great idea. And I still see no idea why it can’t work for Procurement. In the process of creating a balanced scorecard, Procurement and Finance will have to agree on budgets and savings / avoidance targets, payment terms, working capital objectives, inventory turnover, and a host of other supply management issues. And by scoring themselves on the same metrics, they will have to stick to the plan to collectively succeed. Now, getting the right scorecard might not be easy, but the exercise will get the organizations to a deep alignment that will pay off in the long run if each goes in to the discussions with an open mind and a true desire to work together.

Perfect Procurement Processes Will Not Save the Public Sector

There’s lots of hmming and hawing on both sides of the Atlantic about how the Public Sector has to reduce spend to help get deficits under control and how it needs better procurement processes to achieve this goal. Why, I don’t know, because even perfect procurement processes won’t save the public sector. I could write a treatise, but until the following fundamental problems are solved, there’s no point.

  • Past Performance Does Not Affect Current Awards
    This is so ridiculous its absurd. No private company in their right mind would say “you just screwed up this 500 Million system overhaul, but here, please bid on this other 500 Million system overhaul”. None. Nada. Zip. Zilch. (At least not if they wanted to stay in business.)
  • X% Must Go to Minority/Domestic/Preferred Suppliers
    And while we’re at it, let’s just tag on 10% for the United Way. After all, they claim their overhead is now under 15%. (FYI: The overhead of a best-in-class, private, Supply Management Organization is a fraction of that.) Supply Management is about the best buy. Period. Diversity/Domestic/Preferred should only come into account when all other factors are equal or if they bring value that outweighs additional costs.
  • Salary is based on pay scales out of touch with reality
    Supply Management success requires top talent. And if you’re only going to offer 50% of the going market rate, you’re not going to attract anyone who’s any good. While there should be pay scales to insure fairness, they should be adjusted annually based on regional averages and existing employees making less than the minimum when the pay scale is adjusted should automatically be adjusted to the minimum before the annual raise and/or bonus is calculated.

Your Job Advertisement Actually Attracted a Good Candidate – Now What?

Unemployment may be approaching a long-term high, but in some sectors, including supply chain, we’re still in a major talent crunch because of the lack of appropriate skilled resources while the need for those skilled resources is still rising. That’s why, if you’re lucky enough to attract an application from a good candidate, you have to make sure you keep their attention. But how do you do that?

SI would recommend you start by writing a grateful acknowledgement of their application with a request to promptly schedule an initial call, at their convenience (within reason — either within your normal operating hours or at times you can guarantee availability). The focus of the call should be on selling your company and position to them, not on them selling themselves to you. Once you have verified that they are who they say they are and a real candidate (and not a placement form pushing a stretched resume of a junior resource at you), it’s time to explain why they want to work for you. This should involve a discussion of:

  • a day in the life in the role
    and a no holds barred discussion of the good, the bad, and the ugly and how you hope they can help you improve the role (and not just put another coat of lipstick on the pig)
  • the stakeholders they will be interacting with
    and how they fit into the organizational structure
  • the corporate culture
    and why it really is a great place to work, even with its beauty marks
  • the commitment to employees
    with a focus on the training and personal development options available to employees
  • the decision making processes
    in terms of selecting the new hire and executing the role
  • the goals for the role
    and what will be expected of the successful candidate in the first 30, 90, 360 days

However, be very careful to:

  • manage expectations
    Do not oversell the role, the culture, or the benefits. If the offer is more than fair, the benefits will sell themselves. If you are sincerely happy in your role, convey that, and if you click with the candidate, a soft sell will sell the culture. And any talented resource knows that every role has an interesting side and a boring side. It’s what you do to minimize the boredom that counts.
  • not throw money around
    If you offer too much money, a smart candidate will suspect something is up. If the role has a market value of approximately 125, and you’re offering 195 as a base, they’re going to wonder if you’re a bad place to work (and have to bribe people), dumb (and unaware of true market rates), or wasteful (and running out of rope as a result). While top talent wants to be paid well, they understand fiscal responsibility (as that’s their job) and will happily work for the high-end of market average with a good bonus structure, that should be performance based and unlimited.
  • get too personal
    While talent wants to feel like they will be able to communicate and work with you and other employees comfortably and productively, they other expect an air of professionalism on the job and know that there’s a time for work and a time for play.

It’s a Knowledge Economy – Are You Ready?

Today’s economy is a knowledge (driven) economy, “one in which the generation and the exploitation of knowledge has come to play the predominant part in the creation of wealth. It is not simply about pushing back the frontiers of knowledge; it is also about the more effective use and exploitation of all types of knowledge in all manner of economic activity“. Very little has changed since the Department of Trade and Industry of Great Britain penned these words in 1998.

In fact, the importance of knowledge in wealth creation is accelerating by the day now that global trade, information technology, new media, and, in particular, the social web is increasing in innovation, size, and market penetration on an exponential basis. Leading organizations now “follow the sun” and operate core business processes 24/7/365 on a global basis. Product and service pricing are increasingly being driven by value first and cost second. Organizations have to either accept the new economic reality created by the knowledge economy or fall further behind their peers in sales and market size.

From a supply chain vantage point, not only have the last twenty-five years produced an explosion in the application and availability of computing and communications technology in all aspects of life and business, which was only hastened by the wide-spread adoption of the internet, but they have also produced a revolution in supply chain theory and best practices. In lockstep we’ve gone from MRP to MRP II to ERP to a mix of Best-of-Breed Supply Chain and Global Trade solutions on the technology side to decentralized tactical buys based on hardball price negotiation to centralized global strategic supply negotiations on the process side.

In today’s fast-paced knowledge economy, only the strong survive, where the strong are those organizations with modern processes and technology and the wherewithal to use them. The question is, does your organization belong to this group?

To find out more, download the latest white paper by the doctor of Sourcing Innovation, sponsored by BravoSolution.

So, What Might a Good Job Advertisement Look Like?

A good advertisement is very job specific, but as per yesterday’s post on how you have to start with a good advertisement if you want to attract talent because carbon-copy blah-blah-blah indicates you have a talent management problem. In this post, we’ll give you a sample job advertisement that is much better than the carbon-copy blah-blah-blah referenced in last Friday’s post. The advertisement is in italics. For a comparison, we include the carbon-copy blah-blah-blah in code font. While this advertisement is not perfect in any aspect, it does illustrate some of the concepts outlined in yesterday’s post.


Senior Technology Sourcing Manager


Here’s an exciting opportunity for an experienced sourcing manager or CTO in the technology domain to join ABC Bank in its downtown Manhattan (New York) location in a permanent role. The successful candidate will enjoy a base salary of up to 200K, which will be augmented by an uncapped performance-based bonus (using our corporate cost reduction and avoidance formula), a first-rate health plan, 401K matching, gym membership, and an annual training allowance.

Here's a superb opportunity for an experienced sourcing manager within the hardware and software domains looking to join a top tier investment bank. This is a permanent position based out of New York City that will pay a base salary of 150K plus a competitive bonus and benefits package.


The Senior Technology Sourcing manager will be responsible for all hardware and software buys and leases, corporate data centers, application hosting, and shared sourcing initiatives. In addition to negotiating favourable awards that benefit the company and the stakeholders, the successful candidate will be responsible for supplier relationship management and development initiatives. Our company is planning to transition from multiple discrete data centers that host its different divisions to a small number of data centers that will support our entire global operation in a shared infrastructure setup. One of your first tasks will be to manage the sourcing of our service provider and the multi-year, eight-figure outsourcing contract that will result. This is a challenge worthy of a superstar.


In this role you will manage Hardware and Shared Infrastructure Software sourcing initiatives, support the post contract supplier management of critical suppliers, and liaise with the legal department to ensure favourable commercial terms. In addition you will constantly interact with senior management to relay critical information about vendor relations and contracts. This is an excellent opportunity for a qualified candidate who has had strategic sourcing experience looking to manage a high visibility, multi-million dollar project for a leading investment bank.


This is a Senior position and we expect that successful candidates will have 10 years of combined experience, with at least 3 in a technology sourcing or CTO role, and either experience in, or considerable exposure or education in finance and financial services. A Bachelor’s degree is preferred, but candidates with equivalent experience and an ISM CPSM or equivalent certification will be considered.

In order to be considered for this position, you must have worked as a hardware and software sourcing manager on a global scale within the financial services industry for several years.


ABC Bank is top-tier international investment bank that is in the Fortune 500 in the US and the Global 1000. ABC encourages a culture of open communication, teamwork, and innovation and believes its results, and not hours, location, or overtime that counts. Employees can work flex hours and telecommute when needed, and take advantage of leading processes and tools to get results. Each sourcing manager is given access to a complete sourcing suite that includes an analysis engine, an optimization engine, and an end-to-end negotiation and contract management engine to make the sourcing process as smooth and efficient as possible.

A top tier investment bank.

Complete information on the role, our company, and our culture can be found on our corporate website, www.abcbank.com. The corporate job ID is 647862, and the complete description can be used by searching for this job ID in the careers portal. Applications can be submitted on our site, e-mailed to career-647862@abcbank.com, or faxed to 866 555 5555. If you have any questions, you can e-mail questions-647862@abcbank.com, speak to one of our HR professionals in an on-line chat between 9 and 5 ET, Monday to Friday, by way of the career chat feature in the careers portal, or call 888 555 5555. If no one is available to take your call, leave a voice mail and we will get back to you within 1 business day. All applications will be acknowledged when received, and all applicants who apply by the closing date of August 31, 2011 will be notified of whether or not they were selected for an interview by September 15, 2011. Those candidates selected for an interview will be contacted within one week of notification to set up a time. ABC Bank appreciates your interest and hopes we can exceed your expectations.

E-mail careers@recruiter.com

Unlike the carbon-copy blah-blah-blah, this advertisement is specific, focussed on the role, educationally and experientially defined, clear on corporate culture and benefit information, and complete in contact information. It could use some work, but considering the doctor banged it out in 30 minutes, it’s not bad. And it makes a point. It’s not hard to write a good job advertisement if you want to. So if you really want talent, you’ll do it.