Wednesday, March 28, 2012

Musings on Procurement 2008-2012


Years ago, procurement was all about cost performance. Back then, procurement departments had one metric and one metric alone: cost savings. Actually, quite a large number of procurement departments still only have this one key performance indicator. Sadly, there are even quite a few procurement departments out there that don't use ANY metrics...but I digress.

Today's advanced procurement departments have a more holistic view of their role. They focus not only on cost performance, but also on supply risk, bringing in innovation from the supply base, partnering for competitive advantage, DFx, and other aspects of an ever-expanding role.

If this evolution wasn't enough to make procurement professionals uncomfortable, certainly what has happened in our world has.
The last few years have been very challenging for procurement professionals because so many external forces have converged to create obstacles to success. The economic crash whose effects are still being felt to this day...the natural disasters such as the Japanese earthquake/tsunami/nuclear meltdown that have strained supply chains...the rapid advancements in technologies that are turning certain industries into veritable fossilized dinosaurs...these and other forces all have made the procurement role one that is not for the faint of heart. Many procurement professionals have seen suppliers go out of business, or be forced to rapidly change their business models or products, or struggle to maintain continuity of supply, or "over-downsize" as I call it. These events have, in turn, made it more difficult for companies and their procurement departments to keep operations running.

Focusing just on cost, as the profession had before, has not been enough for a procurement department to be deemed to perform well in the environment we've faced in the past few years. Procurement departments and their team members have needed to have a broad focus beyond just "reduce cost, reduce cost, reduce cost."

Actually, when it has come to (a) "keeping the company running" or (b) achieving the absolute, verifiable, lowest possible cost of ownership in this challenging environment, I think that a lot of procurement professionals have had the proverbial gun to their heads to keep their companies running, which isn't as easy as it was before this storm of simultaneous challenges hit.

The external environment of the past few years has caused many procurement professionals and executives to hear a voice in their heads that whispers "get the right suppliers on board...OR ELSE!" moreso than ever.

Does that mean that classic skills like negotiation are not valuable or in danger of becoming obsolete?

No way!

Why is negotiation so strongly valued?

My mind goes straight to corporate measurements. While procurement departments need to have a holistic focus in order to maximize their organizations' success, I would also bet that there are more companies that measure their procurement departments and team members by cost savings alone compared to those that measure how holistic they are.

Cost performance always will (and should) be a key component of the procurement role. And, despite the e-Negotiation technologies that have emerged and - to a degree - matured, personal negotiation continues to be a key way to improve cost performance. And as supply chain partnerships are likely to become key to paving new paths to corporate growth, the aspects personal negotiation will evolve and become more important in new ways.

Will things settle down in the next four years?

I wouldn't bet on it.

Be prepared for an interesting ride.

To Your Career,
Charles Dominick, SPSM, SPSM2
President & Chief Procurement Officer - Next Level Purchasing Association
Author - The Procurement Game Plan
Struggling To Have A Rewarding Purchasing Career?
Earn Your SPSM® Certification Online At
www.NextLevelPurchasing.com

Monday, March 26, 2012

3 Procurement Strategy Components

I hope that you have enjoyed the article "Procurement Strategy Do's & Don'ts, Part II."

This article was the second article based on my podcast with Coupa's Ravi Thakur. That podcast was so packed with good information, not even two articles and a separate blog post could cover it all in writing. In this blog post, I'll share another excerpt from the podcast but, to get the rest of the good content that I won't be writing about, you're just going to have to listen to the information-packed podcast itself!

So, without further ado, here are three components of a successful procurement strategy according to Mr. Thakur:


Silent enforcement – This is really where employees of today’s generation, they don’t expect to see procurement policies per se. They just want these policies to be there as they’re going through creating requisitions or as they are going through buying the goods and services that they need in order to do their job.
Leveraging smart strategies – One of the things that we always focus on with our clients is enforcing and making sure that they have smart procurement strategies as it relates to allowing their employees to do their job as quickly as they can without being hindered with the process.
Technologies that people are not trying to avoid – If you go and you look at what an employee does when they go home at night, they’re on Facebook, they’re on Google. But they’re using consumer technologies. They expect to use the same thing within their day-to-day job. And once they don’t see that, or if they’re working on tools or systems that don’t offer the same types of flexibility or usability, they’re going to start avoiding using those tools. And what happens when you avoid those tools, is those procurement policies that you worked so hard to put into place, they just go away. Companies aren’t able to sustain those procurement policies and the value that you provide as a CPO, as an example, goes down because you’re not able to enforce anything through your organization.

I would sum it all up with this bottom line: People will seek out the path of least resistance so, as a procurement leader, you want the path of least resistance to also be the path of most compliance.

To Your Career,
Charles Dominick, SPSM, SPSM2
President & Chief Procurement Officer - Next Level Purchasing Association
Author - The Procurement Game Plan
Struggling To Have A Rewarding Purchasing Career?
Earn Your SPSM® Certification Online At
www.NextLevelPurchasing.com

Tuesday, March 20, 2012

Free Future Trends in Procurement Webinar This Thursday!

This Thursday - March 22, 2012 - at 11:30AM Eastern US time, Next Level Purchasing and Coupa will be leading a webinar entitled "Future Trends in Procurement." 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 members' area 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/procurement-association.php. 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 for this exciting webinar!

To Your Career,
Charles Dominick, SPSM, SPSM2
President & Chief Procurement Officer - Next Level Purchasing Association
Author - The Procurement Game Plan
Struggling To Have A Rewarding Purchasing Career?
Earn Your SPSM® Certification Online At
www.NextLevelPurchasing.com

Monday, March 19, 2012

Purchasing Report Is Out! Negotiation No Longer The Most Important Purchasing Skill!

Negotiation is no longer the most important skill for purchasing professionals, at least not according to an annual survey conducted by the Next Level Purchasing Association (NLPA) of over 2,500 global purchasing professionals. The survey, conducted in January 2012, asked participants to identify the most important skill in purchasing and supply management; Sourcing & Supplier Selection placed first. Negotiation, which held the top spot for the last four years, placed second. This is a strong indicator that today's purchasing professionals realize that the best deal you can negotiate from a supplier is still a bad deal if the supplier cannot perform to expectations.

Recognizing the importance of these and other skill areas, procurement professionals are increasingly engaging in training to improve their skill levels. Online training, often regarded as the most cost-effective approach to education, continues to be popular with this year's survey respondents reporting that they've participated in an average number of 1.8 online classes in the past year. This represents a 12.5% increase over last year's average of 1.6 and over double the average number of online classes taken seven years ago (0.75). Indications are that online training will become even more popular in 2012 as the respondents expect to participate in an average of 4.28 online classes in the 12 months following the survey.

These statistics and many more - such as the average annual cost savings and avoidance of a purchasing professional, the average per-person purchasing training budget, and the difference that a certification makes in cost savings performance and salary, among others - are available in the 2012 Purchasing & Supply Management Career & Skills Report. The Career & Skills Report is free to members of the NLPA, and a NLPA membership is also free and instant.

Here's how to get the report:
If you're already an NLPA member: Log in to the association at
http://www.NextLevelPurchasing.com/login.html and navigate to the "What's New" tab. There you'll find a link to the report.
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/career-report. After doing so, you'll receive an email with a link to the report.


To Your Career,
Charles Dominick, SPSM, SPSM2
President & Chief Procurement Officer - Next Level Purchasing Association
Author - The Procurement Game Plan
Struggling To Have A Rewarding Purchasing Career?
Earn Your SPSM® Certification Online At
www.NextLevelPurchasing.com

Monday, March 12, 2012

Successful Negotiation is All About Words...Well, Mostly About Words

I hope that you enjoyed the article "3 Negotiation 'Bad Words.'"

I've written a lot of articles about negotiation. And because your choice of words in negotiation often determines whether or not you succeed, many of those articles focus on the exact words to use, such as the article "How To Negotiate When 'Time Is Money.'"

So many experts tout preparation as the #1 determinant of whether or not you will negotiate successfully. And much of that preparation involves deciding what words to say.

But while we're so focused on preparing and saying words in a negotiation, let's not forget the non-word aspects of successfully planning and conducting a negotiation. Tips on those aspects of negotiation can be found in my articles such as "Defeating A Supplier's Negotiating Strategy," "Here Is Your End-of-Negotiation Strategy," and "4 Rules For Negotiating By Phone."

So, just with these five linked articles, you have some good study material involving word choice and non-word aspects of negotiation. Review them before going into your next negotiation.

You'll have a better chance of negotiation success. You have my "word" on it.

To Your Career,
Charles Dominick, SPSM, SPSM2
President & Chief Procurement Officer - Next Level Purchasing Association
Author - The Procurement Game Plan
Struggling To Have A Rewarding Purchasing Career?
Earn Your SPSM® Certification Online At
www.NextLevelPurchasing.com

Thursday, March 08, 2012

Coming Next Week: The 2012 Purchasing & Supply Management Career & Skills Report

Every year, the Next Level Purchasing Association issues a report that illuminates career and skill trends in the purchasing and supply management profession as reported by over 2,500 purchasing professionals. The 2012 report will be released next week on March 14, 2012.

Have you ever wondered:
  • What is the most common educational level for purchasing professionals?
  • What percentage of the global purchasing workforce do women comprise?
  • What is the average annual cost savings and avoidance of a purchasing professional, both in terms of monetary value and as a percentage of the employee's salary?
  • What is the most important skill in purchasing?
  • How much training does the average purchasing professional get and how much of that is done online?
  • What is the average per person purchasing training budget?
  • Does certification make a difference in terms of cost savings performance and salary?
If so, the report will give you the answers to these questions and many more.

To be notified as soon as the report goes live, simply sign up for a free membership in the Next Level Purchasing Association at http://nextlevelpurchasing.com/procurement-association.php.

And if you are a vendor and want to advertise in this report and put your brand in front of hundreds of thousands of purchasing professionals and executives, send us an email at help@nextlevelpurchasing.com right away - there's only one sponsorship available, it's affordable, and you only have a few days before our 235,000+ members are advised that it is available for free download.

To Your Career,
Charles Dominick, SPSM, SPSM2
President & Chief Procurement Officer - Next Level Purchasing Association
Author - The Procurement Game Plan
Struggling To Have A Rewarding Purchasing Career?
Earn Your SPSM® Certification Online At
www.NextLevelPurchasing.com

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