Wednesday, June 29, 2011

Procurement Parable - Execute, Da**it, Execute!


Because my previous procurement parables about Ryan (the recently graduated buyer who sabotaged his own pending promotion) and Luke (the Chief Procurement Officer who figured out why his procurement department had such a bad turnover problem) were among the most widely read blog posts I’ve created, I’ll share another procurement parable with you today.

The setting for today’s parable is Milky Way University, MWU for short. From an academic standpoint, MWU is a progressive school with its name associated with the most prestigious degrees in biotechnology, systems design, and mechanical engineering.

However, from a procurement standpoint, MWU is by no means associated with anything the least bit progressive. Whether it be their paper-intensive processes, staff who could barely qualify to be janitors at other places of employment, or the fact that the school was recently under investigation for suspected bid rigging in a project that involved a federal grant, MWU’s procurement department was an embarrassment to its leadership.

That had to change. So, MWU’s Chancellor replaced the incumbent Procurement Director with the then-current Internal Audit Director, Mark D’Eagle. Mark was charged with transforming the procurement department into one that at least had it together as much as the other colleges and universities in town. Those other colleges and universities didn’t exactly have world-class procurement organizations, but at least they weren’t the veritable circus that MWU’s procurement department was.

Mark was up for the task. He loved challenges. Plus, he got a $10,000 raise by taking the job, so “What the heck – why not?” he thought when making his decision to accept the position.

Mark did worry that he knew absolutely nothing about procurement, but the Chancellor gave him the green light to bring in one additional procurement manager this year and another one next year while also adding some buyer positions. He could build a team that knew about procurement and he could direct his attention to staffing, leadership, and organizational transformation.

As Mark strategized on how to lead this transformation, he had one predominant thought: the procurement manager he hired in the first year would be the key component in this transformation. Having someone who knows exactly the best practices that high-performing procurement departments use would be exactly what the proverbial doctor ordered for taking MWU’s procurement function from embarrassment to valued service.

Mark scoured resume after resume and interviewed candidate after candidate. Finally, he came to the conclusion that a candidate named Lauren Conwitt was the perfect choice.

Lauren had held purchasing jobs with three different Fortune 500 companies. Currently, Lauren was the purchasing manager for a well-known consumer goods manufacturer, but she was leaving her job which was being relocated due to a merger.

Lauren’s resume showcased her involvement in many impressive purchasing projects. For her last employer alone, Lauren was a key member of teams that successfully implemented supply risk mitigation strategies, sourcing optimization technology, and a supplier consolidation project that saved her employer $100 million. Lauren certainly knew how world-class procurement worked. Heck, if MWU did 10% of what Lauren’s current employer did, the procurement department would be heroic in the Chancellor’s eyes!

So, Mark hired Lauren and the transformation was under way. Right out of the gate, Lauren impressed not only Mark but the Chancellor himself with all of her ideas. Not only did Lauren have suggestions for fixing all of MWU’s procurement problems, but she was introducing valuable-sounding concepts that Mark and the Chancellor had never even heard of before. Lauren was viewed as the type of executive that magazines write about.

The acquisition of Lauren’s brilliant mind and professional demeanor could only spell success for MWU procurement. Mark thought that getting out of the mess MWU’s procurement department was in was virtually guaranteed.

But was it?

It seemed that way at first when Lauren suggested her first three initiatives: implementing a spend analysis system to learn where MWU is spending its money, internally training the procurement staff in order to give the capabilities necessary for better performance, and issuing requests for proposal (RFP’s) for the top five spend categories in order to drive cost savings. But, as things played out over the next six months, the “guarantee” of improvement started to seem more like a “probability” before starting to seem like a mere “possibility.”

So, what happened over those six months?

The spend analysis project? Lauren’s previous company had used and been happy with one of the most well-known spend analysis software providers out there after doing a thorough evaluation of all six best-of-breed vendors competing at that time. But that was a year-and-a-half ago. Since then, two new vendors entered the marketplace and Lauren insisted on getting to know them before making a decision. She interviewed them, participated in online demos they did, and read blog posts about them but said that she still needed more time to think about the vendors in the marketplace before deciding who could bid on MWU’s project.

The internal training project? Instead of considering existing procurement training and certifications that were already available, Lauren convinced MWU to develop its own certification program based upon material that she would develop. Unfortunately, Lauren only developed about two pages of written content and five PowerPoint slides before she “hit the wall” and couldn’t come up with anything until “she had a little more quiet time” to concentrate on creating the material.

And the RFP’s for the top five spend categories? Lauren hadn’t even started work on this project yet. She initially mapped out a plan where she would create RFP and contract templates, create a flow chart for a standardized sourcing process, and introduce a total cost of ownership-based supplier comparison process, but the ball was rolling on exactly none of those things.

As more tension was building in MWU about the procurement problems that continued to persist, Mark was worried. By now, he expected to see some turnaround. After all, with as bad as MWU procurement was, it should be pretty easy to fix something, right?

The Chancellor was able to settle Mark’s nerves a bit. He cautioned Mark not to panic, reminding him that Lauren had only been on board six months and that “Rome wasn’t built in a day.” Mark was happy to have management support. But his fears only grew in the next few months.

By the nine-month mark of Lauren’s tenure with MWU, not much had changed. Sure, she finished researching the two new entrants in the spend analysis technology space. But she still hadn’t obtained pricing from any vendors. The internal training project still had gone nowhere. Three more months had passed and only one more PowerPoint slide was added to Lauren’s presentation. And the project involving RFP’s for the top five spend categories still hadn’t had a single task started.

Oh, it wasn’t as if Lauren was twiddling her thumbs or heading home early. She spent 55 hours in the office each week. And she had developed proposals – and received permission – for initiating two more projects, one involving reorganization of the procurement department into tactical and strategic teams and one that would have MWU using a group purchasing organization for office supplies and janitorial products. Yet, despite the great ideas and the well-written project proposals Lauren wrote, no tangible progress was being made.

Mark tried to stay patient. But his desire to stay patient fell victim to his desire to actually accomplish something one day when Lauren dropped by his office.

After knocking on his door, Lauren said “Hi, Mark. Hey, I wanted to see what you thought about this idea. If we do reverse auctions for one-time buys like we did at my old company, we could probably save about 12% on each purchase compared to traditional bidding and negotiation. I could get the top reverse auction providers to come in and give us demos of their solutions and then we could try to decide what features were most important to us and then we can figure out which providers offer those features and then…”

Mark interrupted with perhaps the most epic of tirades ever witnessed in a procurement department.

“Lauren! Can you please just stop? Stop! You know, I brought you in because you were involved with some major process improvements in your career. Those were real changes that happened. But here? You come up with all of these great ideas. But nothing ever gets done! Hell, some things don’t even get started! I give you lots of say into what you have the opportunity to work on. But, instead of running with those projects, you over-analyze and procrastinate and get distracted. We are no better off than we were nine months ago. You don’t execute! You. Don’t. Execute. And that’s a big-time problem! We need results, not plans.”

Lauren disagreed, saying “OK, Mark. I can tell you’re mad. Why don’t we spend the rest of this week listing all of the issues we both have? Then, late next week, we can have a meeting and flesh out all of the issues. By Monday of the following week, we’ll have a plan and…”

“Lauren, I’ve heard enough!” Mark yelled, practically spitting the words from his lips. “I’ve watched you every day. And your heart is in the right place. You’re a smart person. But when it comes to actually making things happen, you don’t make things happen. This is obviously how you are as a human being. Nothing is going to change overnight. I ran into a former coworker of yours at the Chamber of Commerce luncheon last week. We started talking about you and he volunteered that all of those things your former employer accomplished was because other people did the work. You came up with ideas, but other people actually turned ideas into reality. Lauren, I need more than that. I need execution. I need results. Lauren, you’re fired.”

The moral of the story: Execution isn’t necessarily the most important thing but, without execution, you have absolutely nothing.

Do you execute? Or do you just come up with good ideas that go nowhere? It doesn’t matter how many hours you work, what great ideas you have, or how smart and professional you are. If you can’t bring a project to its successful completion and you spend more time talking about things you will do than actually doing things, you can be perceived as a failure.

I hope that this parable inspires you to action, results, and success!

To Your Career,
Charles Dominick, SPSM, SPSM2
President & Chief Procurement Officer
Next Level Purchasing, Inc.
Struggling To Have A Rewarding Purchasing Career?
Earn Your SPSM® Certification Online At
Next Level Purchasing . com

Monday, June 27, 2011

Procurement Ethics Checklist

I hope that you have enjoyed the article "A 13-Point Procurement Ethics Checklist."

When it comes to certain topics that I write about, I know that some of them are bound to incite disagreement. This article is one of those topics.

I know that even some of my best educated, most ethically-respected colleagues will disagree with a point or two on this list. For example, some may think that it is fine to solicit donations from suppliers.

But here's the thing with me: if an activity is questionable ethically, I have the tendency to recommend avoiding that activity as a rule. Yes, even if it can be proven to be above-board.

So, there is no doubt that someone, somewhere will argue that at least one of the checklist items is "wrong." That's fine. But, I look at it this way: if you adopt the checklist items as your personal rules, it can only help you to stay out of trouble.

What's so bad about that?

To Your Career,
Charles Dominick, SPSM, SPSM2
President & Chief Procurement Officer
Next Level Purchasing, Inc.
Struggling To Have A Rewarding Purchasing Career?
Earn Your SPSM® Certification Online At
Next Level Purchasing . com

Thursday, June 23, 2011

Not Procurement-Specific, But A Cool MS Word Trick I Learned Today


I had prepared a formal document for a top-secret procurement education-related project I have in the works. One of the individuals reviewing this document told me that a table that was in it was not acceptable and that all of the text had to be in the body of the document, not in the 500-or-so-cell table that it was currently in.

I had visions of delegating this to someone on my team who would not be happy about having to do the brainless task of copying each cell entry and pasting it elsewhere in the document, being sure to keep everything in the proper order with the proper indentation, all while under a tight deadline. "There has to be an easy way to do this," I thought.

Fortunately, one Google search later, I had my solution!

To remove a table in Word (2007 or later, I believe) while leaving the text behind, you just have to do this:
  • Select the table
  • Go to the Layout tab in the "Table Tools" section that appears
  • Click on the Convert to Text button, and
BOOM!

Done.

Sweet!

I hope this little tip helps someone out there! You never know when you may need it.

To Your Career,
Charles Dominick, SPSM, SPSM2
President & Chief Procurement Officer
Next Level Purchasing, Inc.
Struggling To Have A Rewarding Purchasing Career?
Earn Your SPSM® Certification Online At
Next Level Purchasing . com

Wednesday, June 22, 2011

Free Procurement Ethics Webinar This Thursday!

This Thursday - June 23, 2011 - at 11:30AM Eastern US time, I will be leading a webinar entitled "Procurement Ethics: The Obvious & Not So Obvious Challenges." This webinar is free to all members of the Next Level Purchasing Association (NLPA) and membership in the NLPA itself is free and instant.

Here's how to register for the webinar:

If you're already an NLPA member: Log in to the association at
http://www.NextLevelPurchasing.com/login.html and navigate to the "Webinars" tab. There you'll find a registration link, be sure to enter a valid email address as attendance details will be sent to you by email.

If you're not yet an NLPA member: Sign up for your free membership in the Next Level Purchasing Association at http://www.NextLevelPurchasing.com/free.html. After doing so, you'll receive an email with information about how to log in. After logging in, navigate to the "Webinars" tab. There you'll find a registration link, be sure to enter a valid email address as attendance details will be sent to you by email.

Registration is free but may be limited, so sign up soon to ensure access to this event. I hope that you will join me in this exciting webinar!

To Your Career,
Charles Dominick, SPSM, SPSM2
President & Chief Procurement Officer
Next Level Purchasing, Inc.
Struggling To Have A Rewarding Purchasing Career?
Earn Your SPSM® Certification Online At
Next Level Purchasing . com

Thursday, June 16, 2011

Off Topic: Bizarre Cultural Predictions For The Next 10 Years & Beyond!


I am taking a four-day weekend starting tomorrow. With that and the fact that I just finished a top secret, gargantuan procurement education-related project on Tuesday, I have to admit: for once, procurement is not on the top of my mind.

Therefore, I am going to dedicate today’s post to something totally off-topic. If you only want to read what I write about procurement, you can stop reading now because you’ll only post nasty comments later. But, for those of you who enjoy what I write day-in-and-day-out and don’t mind reading something a little bizarre, feel free to stick with me.

I like to ponder the future in this exciting world. Someone, somewhere must have foreseen the cultural shift caused by the everyone-is-using-the-Internet age from 1995 – 2010. Someone, somewhere must have foreseen the next cultural shift that we’re in today where phones are being used for everything from texting to paying for goods at the store to enabling your home security system to even being used to – get this – call people!

So, what’s next?

I am guessing that we’ll see three things happen in the next ten years or so. Here they are:

1. An “Amazon-for-services” model will emerge as one of the top Internet sites. I love getting gift certificates for Amazon.com. Wow – you can buy such a wide variety of competitively priced things there ranging from books (of course) to musical instruments to furniture and more. But it’s mostly products. If I want a custom-designed t-shirt, I gotta go elsewhere. Web hosting services? Gotta go elsewhere. Concert tickets? Gotta go elsewhere. While consumers buy a lot of products, they buy a lot of services, too. And, currently, there is no “one-stop shop” for services. I predict that there will be and that site – whether it’s Amazon or another company – will be as much of a household name in 10 years as Amazon is today. OK, that’s not too bizarre, right? Well, let’s move on to the next prediction and see if it is a little more “out there.”

2. Everyone’s life, as seen through their eyes, will be streamed and recorded. With today’s social media tools like Facebook and Twitter, we get to learn about what someone else is doing and has done. But these nuggets of information are static and not truly in real-time. That will change. I believe that everyone will be wearing – or will have implanted – a camera between or above their eyes. This camera will stream live video of the wearer’s life – as seen through their eyes – onto a social media site where anyone can watch what anyone else is doing at any point in time. This camera will not only broadcast the video, it will record the video thereby enabling someone to return to any point in their life and watch that moment exactly as they saw it. You think today’s generation has a disregard for privacy? Just wait – today’s little-privacy behavior will look modest by comparison with what’s coming.

3. Bald will be hot for teen and 20-something girls/women for a short time. Throughout the years, hair removal for women has been a cultural part of being feminine with shaved armpits, legs, etc. the norm. This tendency towards increased epilation will extend to hair on the head as well. Each generation breaks down the limits, taboos, and standards of previous generations. A society full of bald young women would be perhaps the most marked fashion departure imaginable. But fashion changes constantly and what is hot one moment is cold the next. So, this is a trend that won’t last long. But I think we’ll see it for a short time.

OK. That’s all the non-procurement stuff I’ll torture you with for now. Time for that four-day weekend to recharge the batteries. I’ll get back to normal programming next week, I promise!

To Your Career,
Charles Dominick, SPSM, SPSM2
President & Chief Procurement Officer
Next Level Purchasing, Inc.
Struggling To Have A Rewarding Purchasing Career?
Earn Your SPSM® Certification Online At
Next Level Purchasing . com

Wednesday, June 15, 2011

The Top Secret Reason I Haven't Been Blogging As Regularly Lately













Exciting thing coming this Fall...

To Your Career,
Charles Dominick, SPSM, SPSM2
President & Chief Procurement Officer
Next Level Purchasing, Inc.
Struggling To Have A Rewarding Purchasing Career?
Earn Your SPSM® Certification Online At
Next Level Purchasing . com

Monday, June 13, 2011

You Do Have A Late-Stage Negotiation Strategy, Don't You?

I hope that you have enjoyed the article "Here Is Your End-of-Negotiation Strategy."

You know, I just love to hear salespeoples' thoughts on negotiating with procurement professionals and sourcing teams. A few conversations I've had with salespeople throughout my recent career came to mind when writing this article. They included the following...

  • One executive, who oversaw a salesforce in the hundreds of people, told me that they try to find an executive contact outside of the procurement department as a rule. He claimed that his organization rarely won business without doing so and had never been penalized for doing so. Therefore, it is critical to have all of the decision-making authority placed in your hands prior to your prospective supplier tracking down an executive within your organization.
  • A sales trainer said that the longer a sales process goes on, the less likely salespeople feel that the deal will happen. Therefore, it is critical not to tip your hand to reveal that you've selected a supplier and your just negotiating the details. You have to create the perception that the competition is continuing and you are evaluating multiple options. That way, your sales counterpart will feel that its the sales process dragging on and not the negotiation dragging on. The latter will give them a sense of power, especially if they know you have a deadline to get a deal done.
Have you ever learned a sales secret that you've used in your negotiation strategy? I - and all of the readers of this blog - would love to hear about it. Post a comment!

To Your Career,
Charles Dominick, SPSM, SPSM2
President & Chief Procurement Officer
Next Level Purchasing, Inc.
Struggling To Have A Rewarding Purchasing Career?
Earn Your SPSM® Certification Online At
Next Level Purchasing . com

Friday, June 10, 2011

The NLPA Dedicated Member of the Month for June 2011 Is...

Every month, the Next Level Purchasing Association (NLPA) recognizes a purchasing professional who has made impressive progress in learning more about his/her field. We are excited to announce that the NLPA Dedicated Member of the Month for June 2011 is...



Rayghana Natheem Oka, a Purchasing Professional from South Africa. During the month of May, Rayghana completed all six Senior Professional in Supply Management® Program classes!

"I thoroughly enjoyed the course. The material was easy to assimilate and the more I learned the more eager I became to learn and improve. Depending on my previous experience on the topics, I managed to complete and revise the topics 3-5 times prior to taking the final exam.

"I would say be positive, invest a little time in yourself and enjoy the learning experience. Remember as you grow from strength to strength you have the power to make a constructive difference in your environment and add meaning not only to your life, but to all those you come into contact with."
Next Level Purchasing and the procurement community around the world congratulate Rayghana and her dedication to having a more successful purchasing career!

To Your Career,
Charles Dominick, SPSM, SPSM2
President & Chief Procurement Officer
Next Level Purchasing, Inc.
Struggling To Have A Rewarding Purchasing Career?
Earn Your SPSM® Certification Online At
Next Level Purchasing . com


Tuesday, June 07, 2011

Pondering Perk & Premium Procurement


Last month, I completed a productive business trip to Orlando, Florida. I’ve been there a few times but one of the events I remember most about any of my trips to Orlando happened the first time I visited that fine city.

During that first trip in, oh, about 1996, I remember waiting in line for two hours at the rental car counter. There was just a crazy crowd of people there, all waiting to get their rental cars. The agency had even hired a Mariachi band to keep the people in line distracted from the agony of their insane wait.

BTW, hint to businesses: If you have to hire a Mariachi band to entertain people waiting in line, you may want to improve your processes so that your lines are shorter. Just a thought.

Anyway, with my 2011 trip to Orlando, I was hoping that I wouldn’t have to endure such a nightmarish wait. After googling “car rental in Orlando,” I saw that little had changed. People all over the Internet were ranting about waiting 45 minutes, an hour, two hours, etc. for their rental cars. This was not how I wanted my trip to start. Like any busy CEO, I feel that my time is too valuable to waste standing in line.

I was searching for potential solutions to this dilemma. Then, I found one that I thought just may save me from the fate that I so desperately wanted to avoid.

What I found was a program from National Car Rental called the “Emerald Club.” This program allows customers like me to bypass the counter at the airport, go straight to the garage, and get right into the car of my choice.

Sounds great, right? Is there a downside?

Well, I see vehicles – especially rental vehicles – as tools to simply get from Point A to Point B. I don’t need anything fancy. Or big. So I usually go with the smallest or next smallest (i.e., least expensive) rental car option available.

With the Emerald Club program, you have to reserve a midsize car at the midsize price even though you have the option of selecting a larger vehicle, if available, when you arrive at the garage. Midsize car rental rates are generally $1 to $10 (US) per day more than rates for compact cars.

But when it comes to saving two hours of my time in order to save, say, $10? That’s a no brainer! And my experience with National Car Rental in Orlando was awesome. As a new Emerald Club member, I’m looking forward to continuing to do business with this company who seems to truly understand their customers’ hot buttons. After all, I rent my share of cars.

I’m sure that your company’s executives would feel the same way as I felt about use of their time vs. the company’s money. Which got me thinking about some things.

In procurement, we often look at just cost and not value. We sometimes fail to see the benefits of buying a premium product or service at a higher price. And that’s not totally the fault of procurement professionals – our performance is frequently measured by senior management solely on cost savings. And it is easier to shy away from more expensive alternatives when the differentiating factor – in this example, National’s “bypass the counter” process – is something that is not shared among all suppliers in the marketplace.

Most of the times, we aim to have “apples to apples” comparisons. So, we would compare National’s standard (not Emerald Club) service to other providers’ standard service and the “premium” service – despite its value to internal customers including, possibly, the company president – would be ignored.

Here’s a fact we don’t always recognize in procurement: Some companies actually want to pay more for a product or service because of the emotional effect on its employees, even though it may not seem like a smart decision from a purely financial perspective. For example, companies may want their top performing sales people to enjoy perquisites (perks). For a little insight on this, I’ll share a CEO’s thought process by quoting some excerpts from an article entitled “How to / How NOT to Treat Your Salespeopleby “The American Entrepreneur,” Ron Morris. In this article, Mr. Morris writes:

I think that most business owners would agree with me that the most important people in their organizations are their salespeople. Those of you who have read my columns or listened to my radio show over the years know that, and historically, the people who create an organization’s revenue are also the people whom that organization can least afford to lose.

“Coincidentally, these people are also the highest-paid individuals in the company.

“If you run your own business, you know exactly why this is so. And, if you’re questioning why I’m saying this, you probably have never had to make your own payroll.

“Because it is the sales people who enable you to make that payroll…What would you say is the single most important thing any great salesperson needs? If you guessed ‘strokes’ I congratulate you! In fact, you just earned your sales manager wings.

“Because, that is exactly what salespeople need most. They need attention and they need recognition.

“In fact, and until I came to understand my golden retriever, I didn’t think there was any living thing that required more attention than a high-producing salesperson.

“So, give it to them. Give them recognition…There are many other things you can do to keep your salespeople happy. Included among them are ‘perks,’ such as mini-trips, keys to the company condo in Florida, corner offices, free dry-cleaning, and one of my favorites – a ‘tab’ at the local saloon. Man, do they love showing this kind of power off to their clients.”

In procurement, we may think that choosing a more expensive hotel chain for an enterprise-wide contract, or a crystal vs. glass plaque for a sales award, or a premium car rental service for an executive’s business trip are examples of not managing spend optimally. In truth, they may be very strategic choices.

I think our field has a lot to learn about how to handle perk and premium procurement matters. So how about your organization? Do you give different consideration to these types of procurement situations?

To Your Career,
Charles Dominick, SPSM, SPSM2
President & Chief Procurement Officer
Next Level Purchasing, Inc.
Struggling To Have A Rewarding Purchasing Career?
Earn Your SPSM® Certification Online At
Next Level Purchasing . com

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