Category Archives: Talent

Purchasing Certification as a Savings Strategy

One of the presenters at this year’s reSource 2008, Iasta’s (acquired by Selectica, merged with b-Pack, rebranded Determine, acquired by Corcentric) user conference, was Charles Dominick of Next Level Purchasing (now the Certitrek NLPA). In his presentation on Purchasing Team Skill Building and Certification, Charles suggest that one of the best strategies available to a CPO (Chief Purchasing Officer) or CSCO (Chief Supply Chain Officer) trying to deal with today’s challenges of increased competition, price pressure, supplier savvy, new technology, and expectations from the CEO might be to get their entire department certified – and initial results appear to be proving him right.

Last year, Next Level Purchasing started stepping up their efforts to sell training and certification programs on a department level, and the first few departments to obtain the SPSM certification on a department level quickly recouped their investment, and one of the first companies to complete certification on a department level – a 1 Billion plus furniture manufacturer – doubled their annual savings one year after completing the certification! That’s an astronomical ROI! An average 1 Billion company these days is probably spending 600M to 800M and capable of sourcing at least half that – 300M to 400M. If it was saving 10% on average using basic e-Sourcing technologies and techniques, it would be saving 30M or 40M. If it doubled that, through better processes and use of technology, that would be an additional 30M to 40M. For a certification program that would cost less than 100K to 200K for a department of 20 to 40 people, that would be an ROI of over 20 to 30! (Certification is less than 1500 per person, plus the cost of department-wide training courses to accelerate the process and learnings.)

So how can certification alone achieve such impressive results? It has to do with the fact that the average purchasing team today is a mish-mash of employees that range from Generation Y’ers to imminent retirees, high school graduates (and, in some cases, that’s if you’re lucky) to recently minted MBAs, career purchasers to other departments’ cast-offs, and tactical grunts to strategic thinkers. As a result, you have a team that generates inconsistent results across unevenly distributed workloads, a lack of independence, a lack of unity, and a consistent communication breakdown, often due to a lack of understanding of current tools, processes, and terminology.

However, with a department wide certification, where everyone has the same understanding of modern processes, tools, techniques, and, most importantly, terminology, you begin to see more consistent results across the board as all of your buyers, who are now on the “same page”, are not only appropriately trained for their jobs, but are able to build a “true team” where they are able to learn from and leverage each other’s successes. And when you consider the potential that exists in a well-trained team, it’s definitely worth some serious consideration.

For more information on NLP’s certification offering, you can check out my reviews of some of their standard courses:

Mastering Purchasing Fundamentals, A Review Part I
Mastering Purchasing Fundamentals, A Review Part II
Savings Strategy Development, A Review Part I
Savings Strategy Development, A Review Part II
14 Purchasing Best Practices, A Review Part I
14 Purchasing Best Practices, A Review Part II
Supply Management Contract Writing, A Review Part I
Supply Management Contract Writing, A Review Part II

As well as my review of their advanced course:

Expert Purchasing Management, A Review, Part I
Expert Purchasing Management, A Review, Part II

Success Breeds Failure (Unless You Are Constantly Re-inventing Yourself)

As I indicated last week, the best presenter at this year’s 41st Annual Supply Chain & Logistics Canada Conference on Creating a Resilient Supply Chain was Jim Tompkins’ (CEO of Tompkins’ Associates) who gave the keynote and a presentation on Bold Leadership for Organizational Acceleration.

In addition to his great advice to Kill the Left-Suckers, he also made another great point – that success breeds failure. Peak-to-valley is the natural order in business, and if you think you’re going to stay at the top by doing what you did to get there, you’ve got another thing coming. If you want to stay at the top, you have to re-invent yourself the minute you get there – and not one minute later.

He also exposed some of the great myths of leadership – of which there are quite a few. These myths include:

  • Leaders create organizations that run like clock-work
    Only old analog clocks run like clockwork – and how many of those do you see these days?
  • Leaders are renegades that do things differently from others.
    Renegades tend to be loners – kind of contradictory when you think about what a leader is supposed to do.
  • Leaders are interested in immediate results and not the long term.
    No, that would be short-sighted wall street.
  • Leaders can predict the future.
    Not even futurists can predict the future on a small scale.
  • Leaders are machines that process and analyze spreadsheets.
    No, that would be misfit managers.
  • Leaders don’t rock the boat.
    Uhmm … have you ever been on a boat?
  • Leaders are compelling and fascinating people who can charm people into doing anything and everything.
    Just because some of our leaders today are sleazier than con-men doesn’t mean that they’re all grifters.
  • Leaders are into command and control.
    Leaders are into success … and that doesn’t come from hoarding.
  • Leaders lead from ivory towers.
    No, that would be academics … and considering no one in industry tends to listen to them anyway, are they really leading?
  • Leaders are among the few.
    Maybe, but it doesn’t have to be that way.

Although it’s hard to define a true leader, you can define what leaders do, and they:

  • challenge the process
  • inspire a shared vision
  • enable others to act
  • model the way
  • encourage the heart as well as the head

Kill the Left-Suckers! (Bold Leadership for Organizational Acceleration)

By far the best presentation at this year’s 41st Annual Supply Chain & Logistics Canada Conference on Creating a Resilient Supply Chain was Jim Tompkins’ (CEO of Tompkins’ Associates) presentation on Bold Leadership for Organizational Acceleration. (He also gave the keynote, which was a great presentation as well, but this was one of the best presentations I’ve been to in years.)

Not only is Jim a great speaker, and if you haven’t heard him, I encourage you to attend his session the next time you’re at a conference where he is speaking, but he’s also really good at telling it like it is. And in this presentation, where he gave his top three tips to bold leadership success, he didn’t pull any punches. In reverse order, his tips were:

  • Don’t Do Anything Stupid,
  • Focus, and
  • Kill the Left-Suckers.

And I couldn’t agree more! What’s a left-sucker you ask? It’s someone who can’t do his (or her) job, and pulls his (or her) manager away from doing what the manager is supposed to be doing to help the individual who can’t do his (or her) job. Why is this so bad? Isn’t that what managers are for? Well, they are there to help, to teach, and to guide – but they’re not there to do their subordinates’ jobs. When managers are consistently pulled away from their jobs, they don’t get their work done and then their directors have to step in to pick up the slack. When the directors get consistently pulled away from their jobs, they don’t get their work done and then the C-Suite has to pick up the slack. When the C-Suite has to pick up the slack, they aren’t getting their work done, and then the CEO gets pulled into fire-fighting on a daily basis – and instead of the CEO leading the C-Suite in setting strategic direction, he’s bogged down in tactical execution while the company starts burning down around him.

As Jim says, a CEO should have three hours a day to do nothing but focus on the strategic. He needs to think about what the company is doing, what they should be doing in the short and long term, and how they are going to get there over the required time period to either reach the top or maintain their place on the top. If he’s consistently being pulled in half-a-dozen directions, that’s not going to happen. So you need to make sure that it does – by identifying, and eliminating, the source of the problem – the left-suckers!

If you can train them – great! If you can find them another role that they can do – that’s good too. But if you can’t train them, or find a role that they can do without constant supervision and hand-holding, then you have no choice … you have to terminate them. Or they’ll terminate your company. Bravo, Jim. Bravo!

Talent is the Key to Post M&A Success

Late last year, Chief Executive ran a great article entitled “Stars and Keepers” that noted that about half of all mergers and acquisitions fail to deliver value. Although the usual suspects of poor synergy and incompatible cultures are usually blamed, much of the blame should be placed on lack of an appropriate talent identification and requisition strategy.

As the article points out, the real expertise about innovative products, services or processes tends to be carried around by employees in their heads and unlike an assembly line, such employees are portable. They can walk out the door and never return, especially if they’ve already sent their resumes, which is likely since most people get nervous when M&A discussions are in the air and start looking for new work, in case they are the ones to get the shaft. And once talent is gone, it can’t be called back. And if enough talent leaves, there goes the value you spent so many millions of dollars on acquiring. The merger is considered a failure.

Before you start M&A activity, it’s important not only to have an integration strategy, but a specific strategy for talent retention. One framework for creating a talent retention strategy is outlined in the referenced article. It starts with the creation of a simple 2*2 grid for sorting employees in the merged company along the axes of “criticality” and “future fit”. This allows you to segment employees into transition, integration keys, keepers, and long-term stars.

  • Transition
    Even if these employees are star performers, they won’t be needed because they fill redundant support roles. A plan will be needed to assist them in finding a new job and transitioning out of their current role.
  • Integration Keys
    Although they have the critical skills required for the transition, these employees don’t have a long-term future in the organization. The plan will have to include offers with appropriate incentives that will entice them to stay on during the integration, as well as a plan for helping them transition out of the organization after the integration is complete.
  • Keepers
    Although these strong performers are not yet stars, they have the potential to be stars in the future. The talent retention plan will have to include a communication strategy to convince them to stick around, outlining their potential role in the company of the future.
  • Long-Term Stars
    These are the people central to the synergies identified as key to a successful M&A transaction. They are the ones that possess the unique skills or intellectual capital required to continue to grow the business. It’s critical that the plan not only includes an outline of their future role in the company, but a personalized communication plan and offer for each star that you want to retain. Because if they leave, the M&A will be a failure.

After you’ve identified the stars and keepers, the next thing to do is flush out the plan. The article provides the following outline, which is a good start:

  • Flesh out the retention plan and stick to it
    Don’t say one thing and do another. All employees have to trust you.
  • Focus on best-of-breed, not just home-grown talent
    The goal is to protect the value of the merger, not to favor existing employees.
  • Adapt the offers to the employees
    Every employee is unique. Don’t take a one-size-fits-all approach.
  • Communicate early and often
    People get very, very nervous through a merger. Be sure to quell their fears on a daily basis.

Can China Be Innovative? IBM Says “YES”

Can China be Innovative? I asked this question here on this blog about a year and a half ago after doing a fair bit of reading and research on the subject – which led me to the conclusion reached by Denis Simon of New York’s Levin Institute, that China risks becoming a good 20th-century industrial economy just when it needs to figure out how to be a 21st-century knowledge-based economy if it doesn’t move in the right direction.

The reason for this is that it takes more than a new science policy (as mentioned in the Economist article Something New: Getting Serious About Innovation, registration and subscription required), additional funding, a stemming of the “brain drain”, and a protection of intellectual property rights to build a knowledge-based economy – it takes a culture, and more specifically, a culture that fosters innovation, not conformity.

But it seems like IBM, who moved it’s global procurement headquarters to Shenzhen, China back in the fall of 2006, thinks that China is far enough down the road to open its first supply chain innovation center in Beijing. Dedicated to helping companies worldwide integrate and transform their global supply chain capabilities, the center will leverage the company’s expertise in supply chain research, business consulting services, software capabilities, and it’s own Integrated Supply Chain experience (which brought the company from the brink of bankruptcy in 1993 to a company that saved 6.2B in 2006) to create new solutions for companies around the world.

According to the press release, the Beijing Supply Chain Innovation Center will collaborate with companies to develop innovative solutions that include:

  • Virtual Command Center
    a SOA (Service Oriented Architecture) supply chain visibility solution that integrates and synchronizes supply, demand, and logistics information
  • Carbon Tradeoff Modeler
    that helps companies include carbon output foot-printing in their supply chain optimization efforts
  • Supply Chain Optimization
    tools and modelers that enable companies to design and operate agile and adaptable supply chain processes and networks

… and is available to be leveraged by any IBM client world-wide — immediately.

It’s a very interesting development. It means that the pockets of innovation are becoming larger and that China might be capable of accelerating down the innovation highway faster than one would expect. However, given that China, like India, contains a great disparity between its urban centers, which are rapidly giving rise to a new middle class, and rural areas, which are only beginning to taste the “new” China, it also means that China might be exacerbating some problems as it solves others. I don’t think we’re far enough down the road to make any calls yet, and this leaves me with my initial thoughts: it will be very interesting to see how this plays out over the next few years.