Category Archives: Blogologue

Why Can’t I Find Top Supply Management Talent?

The simple answer: you’re looking for a resource that is so rare it may not even exist! And I’m not the only one who thinks so. After talking with a number of thought leaders at the Hackett Best Practices conference, it’s become clear that this is the most common reason Supply Management organizations can’t find talent. (Note that this is only the case with respect to “find”. There are a number of reasons a Supply Management organization can’t hire talent.)

As Supply Management has become more and more challenging, the average reaction of a supply management organization has been to continually augment the job description of a supply manager to the point where the individual is expected to not only be a jack of all trades but master of all. This has resulted in a search for senior buyers with an eclectic collection of skills and experience so rare that you can probably count the number of global supply professionals around the globe that make the grade. For example, whereas the average job description for a senior buyer ten years ago might have looked like:

  • good communication skills
  • college degree
  • negotiation experience
  • buying experience in chemicals, pharmaceuticals, and energy
  • some supervisory experience

Today’s average job description for a senior buyer looks like:

  • great communication skills
  • excellent writing skills
  • master’s degree with 10 years experience, PhD preferred
  • expert in negotiations with a global supply base
  • buying experience in manufactured goods, services, IT & Telecommunications, legal, marketing, and temporary labour
  • supervisory experience of global business teams and outsourced services
  • buying experience in Europe and Asia
  • speaks English, Hindi, and Mandarin fluently
  • experienced in contract drafting
  • expertise in import/export requirements of the US, the EU,
    India, and China
  • in-depth knowledge of REACH, WEEE, RoHS, and similar regulations
  • expert in should cost models, TCO models, and global logistics models
  • experienced user of e-Sourcing and e-Procurement applications and expert in e-Negotiations and award optimization
  • expert in spend analysis
  • great project management skills
  • risk management skills
  • working capital management skills
  • financial reporting experience
  • innovative and capable of leading cross-functional innovation teams
  • NPD experience
  • implemented multiple successful SRM initiatives
  • experience with CSR and sustainability initiatives
  • expert at market intelligence
  • high CQ
  • great leadership skills

See the problem?

You Know Your Procurement Rules Are Onerous When

Even your public sector organizations are saying the rules are inflexible, complex, and onerous! Seems that the NHS, who need to find 50% more savings and make up to twenty billion pounds of efficiency savings by 2015, are heeding my advice that they need to stop buying like a government agency and have made a submission to the European Commision’s consultation stating that EU public procurement law should be amended to allow for greater negotiation with bidders during the selection and award process.

According to a recent article over on SupplyManagement.com, the NHS Confederation has called for a significant increase of the threshold at which organisations are obliged to follow EU rules. The current level applies to many relatively small contracts, putting them through the same onerous tendering processes as ones worth many millions which, as I pointed out in my post on how the NHS can find 50% more savings, is moronic. When the bid is too low, you get organizations bidding that have mastered the art of the “change order”. They agree to do “X” where “X” sounds like it is what you want, but really isn’t, and then to get what you really want, because of the tight contract, you’ll have to pay a ridiculous amount in change order fees, and the result is that the net cost will be more than the highest bid, and significantly more than the lowest bid from a competent, honest, vendor.

Hopefully when the EU revises the regulations this summer, they’ll listen to the NHS request. Otherwise, there’s no way the NHS is going to find the savings it needs to continually reinvest in patient care, wait times are going to continue to go up, and quality of service is going to continue to go down.

We Need a “Loser Pays” Bill for Patent Lawsuits

If we can’t follow Europe’s lead and abolish software patents and get rid of the patent pirates once and for all, we should at least consider a loser-pays bill to prevent superfluous patent lawsuits which seem to litter the space every few years. Forget about the attempt to bring the English Rule to Texas, bring the patent pirate rule! And then, to make it really interesting, if the plaintiff loses, it pays double!

It’s time we got back to competing on service and value.

Is That US MBA Really Worth 80,000?

According to ans article over on MBAPrograms.org, the average cost of a two year MBA is $80,000, which is more than the average annual salary of a graduate. But is it worth it? Especially when this recent article by Robert Kaplan on “The Hollow Science” (on the HBR blogs) points out that US MBAs have too much training on the coastline of business and not enough on the mainland. Too much discussion, and analysis, on the capital markets where companies and investors meet (and on the associations between the prices of traded equities, debt, and financial instruments and the information in company disclosures, corporate governance practices, and financial analysts’ reports and not enough on emerging best practices in asset valuation and risk management in well-managed financial institutions.

And if this isn’t enough to deter you, some US companies (and one US bank in particular) have already stopped hiring U.S. business school graduates because, in Kaplan’s words, they don’t have the requisite skills to value and assess the risks of complex, infrequently traded assets, for staters.

So is that US MBA, which might get you black-balled, really worth $80,000?

It’s Sourcing, Procurement, and Global Trade

A few years ago, I took the time to remind you that it’s Sourcing and Procurement because it appeared that some vendors wanted you to believe that it’s e-Sourcing or e-Procurement, or some fractured combination of both, because that’s what they have and they want all of your business.

As I said before, e-Procurement and e-Sourcing are not the same thing. From a supply management perspective, they’re two halves of a whole, one tactical and one strategic. And while they bring value alone, combined they bring much greater value. Sourcing leads into Procurement, usually off of a contract, but sometimes after e-Negotiation or decision optimization alone, and Procurement leads back into Sourcing, through the analysis step. Without Procurement, the organization wouldn’t have a large transaction database and extensive visibility into spend, and without Sourcing, there would be no strategically negotiated contracts to buy against, leaving procurement managers the freedom to spend willy nilly.

But when it comes to supply management, Sourcing and Procurement are still not the full picture. While they are the full picture from the viewpoint of the buyer / analyst in a mid-sized or larger supply management organization, they do not address the supply side, or the fact that goods need to come from a supplier, sometimes by way of a distributor, and end up in the buyer’s warehouses for shipment to stores and/or end consumers.

The goods have to be packed, shipped, exported, imported, and, sometimes, financed. And the settlement function has to take into account invoice discounting and chargebacks, at a minimum. This doesn’t sound too bad until you realize that the average international shipment requires twenty or more documents for export and import, especially when the US or the EU is involved. Ever since the introduction of 10+2 and new advance cargo declarations in the EU, it seems that documentation requirements have been compounding ever since.

And while this functionality does not necessarily have to be in the e-Sourcing or e-Procurement system, it is needed by any company doing international business and it should be easy for a company to push data out from the e-Sourcing/e-Procurement system into the appropriate Global Trade Management system and pull the necessary data back in for analysis.

Because, when you consider the average transaction in today’s global supply chain end to end, this is what you usually end up with.

Sourcing – Spend Analysis (what needs to be sourced)
Sourcing – e-Negotiation (RFX, Auction – who will it be sourced from)
Sourcing – Decision Optimization (optional, to analyze the bids)
Sourcing – Contract Management (to store the awards)
Procurement – Requisition (for a Bill of Materials)
Procurement – Approval (for the requisition)
Procurement – Purchase Order (for the supplier)
Global Trade – Financing (can be pre or post invoice)
Global Trade – Packing (goods have to be properly packed and labelled)
Global Trade – Shipping (goods have to be shipped)
Freight Forwarder (if a third party handles the shipping)
Export Documentation (for the supplier’s home country)
Import Documentation (for the buyer’s home country)
Procurement – Good Receipt
Procurement – Invoice
Global Trade – Invoice Discounting (if the buyer pays early)
Procurement – Reconcilation
Procurement – Payment
Global Trade – Settlement (the purchase has to be settled in the source accounting system)
Global Trade – Chargebacks (chargebacks for penalties or returned goods have to be accounted for)
Procurement – Tax Reclamation
Sourcing – Spend Analysis (what needs to be sourced)