Monthly Archives: September 2011

How to Deliver Superior Customer Service

A recent article over on Chief Executive had some great tips on How to Deliver Superior Customer Service that apply equally well to Supply Management as Service Delivery. These tips are important because if you figure out what your customers want and how you can adapt your offerings to best serve their needs, you will raise your profile in their eyes. Since the lifetime value of their support is much more than that of your average supplier, this is a good thing. So what was their advice?

  1. Always Ask What You Can Do Better
    More feedback means more opportunities for improvement, from the first consultation to the final delivery of product. Remembering that the best way to reduce spend and increase value is to be involved from the time of product or service design, and not after the requirements have been locked in leaving you nothing to do but run a bid between the only two suppliers who can meet the demand, you need to figure out how you can provide value as early as possible — just like a consultant trying to maximize an engagement who knows that a smart customer only keeps her around as long as she provides value. For some customers who understand your value, it might be introducing them to multi-round bids and optimization as an alternative to auctions. For those new to Supply Management, it might be showing them how to speed up information gathering with RFIs. And for those who think Supply Management only comes into play when the need is met, it might be educating them on cost and how you can take cost out. And for those who need to work with a preferred supplier (do to long term contracts or very special needs), it might be teaching them the basics of SRM so they can get more out of the relationship.
  2. Bottoms Up
    Customer driven organizations understand and embrace the idea that their success depends solely on the customer’s satisfaction and must be willing to do whatever it takes to deliver on the promise. This means listening, and responding, to the needs of the client organization. If a certain organization makes a request for help on an RFx every six months, have it at the ready when they come back to you at the expected time.
  3. Win Back At-Risk Customers
    Sometimes a business unit is going to have a “bad experience” no matter how much good effort you put into helping them. They might come to you with expectations of double digit cost savings in a market where commodity costs are skyrocketing and suppliers hold all the power. They might get the rug yanked out from under them because the new supplier you helped them find suddenly goes out of business when a natural disaster wipes out their primary plant. And so on. Even if this only happens one in one hundred events, these internal customers are at risk because the bad experience will be ten times as memorable as the best experience to date. So even if the overall value the business unit gets is high, there’ll still be some animosity due to the failure if you don’t go the extra mile to make them extra happy on another equally important project. As long as there is lingering animosity, you risk resistance on any future project that brings back memory of the failure. This could hinder your success in the future.
  4. Make Your Intentions Clear
    Let them know that even though corporate has given you a mandate to cut cost, your number one concern is to provide them with value, and that since you understand total cost and total value models, you know that if you don’t at least maintain quality and service, overall costs will go up year-over-year even though unit costs go down. As a result, you are there to get them value first and any actions you take or requests you make will be to help the organization get that value, even if sounds like you may be putting your organization or goals first.

It’s great advice, and it only missed one important point (which is as true from a Supply Management perspective as it is from a Customer Service perspective), and that’s:

  • Your definition of value is not necessarily your [internal] customer’s definition of value.
    As Lamar Chesney, CPO of SunTrust pointed out in his presentation on Value Perspectives at the Next Practices Xchange* this spring (as summarized in SI’s post that wanted to know whether you are really focussed on value), what often takes place is an exchange, but never an interchange, of words [that] is fragmented and restricted [in] expression because both sides talk past each other because our view of value (as Supply Management Professionals) is not their view of value (as Finance, Manufacturing, Logistics, Marketing, etc. Professionals). Make sure you understand their definition of value before promising that you can help.

* The Fall Next Practices Xchange takes place at the Oak Brook HIlls Marriott, in Oak Brook, Illinois on Friday, November 4, 2011.

Nothing for Nothing

After reading this recent article over on Chief Executive on how 66% of CEOs Plan to Freeze or Downsize Workforce Size which also pointed out how the majority of CEOs expect capital expenditures to remain flat, as per Chief Executive’s monthly survey of CEOs’ perception of overall business conditions (that garnered 247 responses), I can’t help but think of No Sale, No Store by the Arrogant Worms:

…
This week!
This week only!
We pay the GST!
We pay the PST!
We pay for delivery!
We pay for everything!
How do we do it?
How do we offer these fabulous deals?
Volume!
We got the most!
The best!
The worst!
We've got it all!
We’ve got everything!
Except one thing...
What’s that?
We've got no store!
No products!
So come on down!
This week!
…
Every week!
Every year!
No money down!
No payment ever!
That’s nothing for nothing!

Simply put, no new investments into new technology to increase productivity to give current staff time to create new products and services and no new staff to create new products and services creates an innovation free company. An innovation free company has nothing to offer. And you get nothing for nothing. It’s a lose-lose all the way around (as new technologies sit on the shelf and talent sits on the couch.) There’s no sale, as there’s no store.

You Don’t Need to Fish to Identify Savings Opportunities in Indirect Procurement

A recent article in the SIG Newsletter on “How to Identify Savings Opportunities in Indirect Procurement” gave a fisherman’s perspective on how to identify savings. It wasn’t bad, and went something like this:

  • The “big catch” comes from understanding the entomology
    Just as an angler must understand the feeding opportunities created by a trout’s main source of food – bugs – a Procurement Professional must understand the current business climate and the opportunities provided that, when intersected with the right plan at the right time, will create success.
  • Match the Hatch
    Trout opportunistically feed at the time of the hatch (when fly larva emerge and float to the water’s surface to dry their wings). A skilled angler will know when a bug hatch is occurring and match the fly to the hatching bugs to increase the catch. Similarly, a skilled procurement professional will identify which business trends are hatching and what elements need to be considered to create a category “catching” opportunity. She will start by prioritizing categories by ROI, developing a change management strategy, and focussing on internal and external adoption requirements.
  • Fish With a Guide
    There’s a big difference between traditional spincasting rods and fly rods and moving from one to another can be intimidating even for an experienced angler. The best way to move from one to the other is through a guide — an expert who already made the transition, learned from past mistakes, and who can help you overcome your fears and take you forward. In Procurement, a good guide will help your company create a strong indirect program through:

    • Analysis (Opportunity Evaluation)
    • Strategy (Best Practices)
    • Implementation (Adoption)
    • Management (Sustainability)
  • Approaching Indirect Procurement Services is Just About “Getting it Done”
    Intimidation and uncertainty can create a paralytic environment. Be empowered. If fish are analogous to categories, then plan where you want to fish and what kind of fish you want to catch. Determine where the fish are and if you can access them. Then, set out with clear goals and enlist the help of a good guide. The results can be that “big catch” or a series of smaller fish that add up to a great day or quarter.

And it overviewed some of the more common reasons why companies are not taking a more aggressive approach to indirect services expenditures, which include:

  • Fragmented buyer base
  • Difficult to transactionally manage (no comprehensive systems — too many point/niche solutions)
  • No detailed, real time visibility
  • Big change management issues
  • Not properly staffed to ensure adoption & sustainability post sourcing
  • Focused on direct materials & services
  • No internal expertise
  • No executive sponsorship

And it even indicated the most common indirect categories organizations were going after.

So it wasn’t bad. But it wasn’t that good either. It didn’t dive into how to detect a business climate that was prime for “a big catch”, how to detect “hatching” trends early in the game to be ready for an opportunity that is about to become prime, how to identify the right “guide” for your business, or the best way to “Get it Done”. As we indicated in a recent post, this will require stakeholder involvement across the board — and this is where the fly fishing analogy breaks down. You fly fish alone. You need to source indirect categories in a team. Furthermore, the right “guide” might be category dependent (as IT [targeted by 76% of businesses surveyed] and Travel [targeted by 84% of business surveyed] require very different knowledge bases and skill sets), trends are often very dependent on a sector, and a “big catch” will vary depending on business spend patterns, industry, and the overall economic climate (and the supply / demand [im]balance). And while these answers may be organization specific, they need to be answered to insure success.

How Corrupt is Your Country?

Transparency.org recently released the results of its 2010 Corruptions Perception Index, that ranks countries according to perception of corruption in the public sector, on a scale from 10 (very clean) to 0 (highly corrupt). I’m pleased to say that Canada is 6th at an 8.9, outranked only by New Zealand and Singapore (tied for 1st at a 9.3) in the Commonwealth.

The ten most corrupt countries, in order, are:

  • Somalia
  • Myanmar
  • Afghanistan
  • Iraq
  • Uzbekistan
  • Turkmenistan
  • Sudan
  • Chad
  • Burundi
  • Equatorial Guinea

But more interesting is where the BRIC, and the US and UK, fall in the list. The UK and US are 20th (with a 7.6) and 22nd (with a 7.1) respectively. South Korea pegs in at 39 (with a 5.4) and Mexico at 98 (with a 3.1).

  • 069th: Brazil
  • 078th: China
  • 097th: India
  • 154th Russia

As Abdul Khadar commented on SI’s recent post on Buy India, Sell China, maybe you should also consider the level of corruption when making investment decisions. If things go bad, and you want local help, you may need a fair amount of bribe money set aside to get it.

Not All Best Practices are Created Equal

A recent article in Apparel outlined the responses from Sourcing Execs [Who] Reveal[ed] Best Practices which clearly demonstrated that not all best practices are created equal. Of the twelve (12) best practices outlined in the article, three (3) were good, six (6) were okay, and three (3) were out of left field and about as useful as < insert favorite euphemism here >.

Good:

  • Look at what is behind the costs. What influences can you have on each cost?
    Understanding what drives costs is the key to understanding what you may be able to do to reduce costs and/or increase value.
  • Innovate in product, technology, finishes.
    Innovation is not restricted to one area — products, services, and technology employed, are all valid areas where innovation can add value to you and your customer.
  • We’re trying to push a total cost of ownership.
    Always look at the big picture. A decision should not be made on one or two cost components or contributions to value.

Okay:

  • The reasons why we source in China remain valid and China will still be a huge part of our sourcing going forward.
    You should double check your decisions against your reasons and assumptions on a regular basis. Sometimes they will still be right, sometimes market conditions will have changed.
  • Vietnam and Bangladesh can be used for key items. But China will not be going away.
    Yes, these are two other sourcing destinations, but they are not the first destination for most companies for a reason. They are smaller, and there are only so many high quality products that can be sourced from these countries.
  • Use technology to mitigate risk.
    Technology can only mitigate certain types of risk. Certain political, natural, and societal risks cannot be predicted with any degree of accuracy.
  • We need to focus our human capital on the things that matter.
    Of course you have to focus on the right things, but how do you identify what those right things are?
  • The real question is who is the next best guy.
    Locale is only one component of outsourcing / best cost country sourcing. The supplier is the other component.
  • We feel strongly about Vietnam, and Colombia is of great interest. Pakistan will straighten itself out and come back.
    There is definitely a lot of interest in Columbia, Vietnam remains a strong contender in Asia, and Pakistan may be a good future option.

Out of Left Field:

  • We are also working with our suppliers in China to share the joy of sewing the company way. We are working with these suppliers to help promote the idea to their employees that sewing is cool.
    What does a job being cool have to do with sourcing?
  • Avoid interfaces and legacies.
    Legacies, yes. But interfaces? Your software needs to interface not only with what you have today, but what your suppliers and customers have today if you are to have visibility up and down the value chain. Interfaces are critical. While the software should not be restricted to interfaces to legacy technology, they must be supported — your suppliers and customers may not be as innovative as you!
  • I remain very interested in the Western Hemisphere, particularly on our intimates side.
    Uh, ok, why?