Category Archives: Uncategorized

5 Ways to Deal with Emotion in Negotiation

emotion

Many times we enter negotiation with detailed plans, strategies, positions and a BATNA, but, sometimes, we forget that people on the other side have goals, objectives, needs, wants and strategies, too. When both sides are passionate about meeting their objectives, emotions, planned and unplanned, become part of the interaction. When dealing with emotion in negotiation, the one thing that that works for me is to be tough on the problem and soft on the people.

I have participated and observed several thousand negotiators across the globe and have found there are four skills separating the effective negotiators from poor negotiators:

  • Listening. Effective negotiators do more listening than talking.
  • Questioning. Question effectively and use questions to your advantage.
  • Communicating. Be clear, unambiguous and to the point.
  • Relationship. Separate the problem from the people

Effective negotiators learn how to recognize and deal with emotional people, challenging tactics and maintaining focus on the key issues.

Dealing with emotional opponents can be challenging, but here are 5 tips for managing emotional players in negotiations.

  1. Anger – find out why they are angry
  2. Insulted – address the feeling and move on to key issues
  3. Guilt – move away from the guilt and focus on the key issues
  4. Exasperation – empathize and understand
  5. False flattery – refocus the discussion

It’s important that you do not make substantive concessions in hope of deescalating the tension or sustaining the relationship. Always focus your points on the fact that you want an agreement that is fair to all parties. Avoid assigning blame or pointing out deficiencies and help them save face, it’s essential that you build and sustain trust by always separating people from the problem.

How do you diffuse emotion in negotiation?

Rethinking Supplier Performance Metrics: value-based intangibles matter

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Working with procurement teams over the years, I am still amazed at the lack of focus in the area of supplier performance metrics. Many of the mid-cap and small businesses fail to manage suppliers at all and have limited key performance indicators (KPIs). When pushed to discuss supplier metrics, the response is normally “we measure cost, delivery and quality.” Further investigation almost always reveals vague, inconsistent and inaccurate measurement processes.

When developing KPIs, you must assure the metrics are consistent, meaningful and focused on performance improvement. Cost, quality and on-time in-full delivery performance are critical and must be specific and accurately measured, but these metrics are equally important and often over looked:

  1. Speed of response
  2. Disaster recovery plans and risk management processes
  3. Innovation delivery and capture
  4. Supply chain mapping and integration
  5. Business plan alignment
  6. Continuous process, cost and business improvement

Key Performance Indicators are:

  • Quantifiable/measureable and actionable
  • Measurements critical to the success of the organization
  • Tied to business goals and targets
  • Applied consistently throughout the company

Key Performance Indicators are not:

  • Metrics that are vague or unclear
  • “Nice-to-knows” or metrics that are not actionable
  • Reports (e.g., top search engines, top keywords)
  • Exhaustive set of metrics
  • Refutable

Driving metrics that enhance performance is the responsibility and accountability of the sourcing and procurement professional. As we have evolved our profession, it’s now necessary to evolve our metrics to enhance relationships, improve supplier and add value metrics to our businesses.

Are you measuring value delivery?

Five Key Personality Traits of Successful Procurement Leaders

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It goes without saying that technical procurement skills and business acumen (listen to Jim Barnes on the Art of Procurement podcast) are the prerequisites to be successful in procurement. While these skills will take you far, they may not be enough. From studying procurement and supply chain professionals across the globe, I have noticed five personality traits that separate mediocre from highly successful leaders. I love it when data backs up observation, especially since these observations aligned with a SpendMatters and ISM procurement personality survey in 2015, which found that Myers-Briggs personality types ENTJ and ESTP were the top personality types for CPOs.

  1. Flexibility and Agility – procurement leaders operate in a highly dynamic environment where acquisitions, mergers, bankruptcies, economic changes, risk and regulation can change both the daily routine and strategy for procurement. The ability to move with the dynamic world is one of the differentiators between successful and run-of-the-mill procurement practitioners.
  2. Communication and Relationship – building stakeholder and supplier relationships based on trust, mutual benefits, innovation and that delivers value is a core requirement for procurement leaders today. To develop these skills, a leader must be an expert listener and an even better communicator. The ability to communicate, listen and build strong relationships can make a difference in a corporation’s success or failure in the marketplace.
  3. Objectivity – many procurement professionals are solely focused on cost. Their relentless drive for cost without understanding the suppliers’ financial makeup can be a disaster. All suppliers have to make a sufficient margin to reinvest, satisfy shareholders, and innovate. Successful leaders maintain objectivity and understand the drivers behind the suppliers cost and typically receive more value than their competition. Maintaining this objectivity enables them to keep things in perspective, balancing cost and value opportunities.
  4. Learning by Experience – in organizations where procurement professionals have developed and changed strategies frequently not allowing the strategy time to embed always fail. Consequently, it is not uncommon for these organizations to make mistakes and continue to make mistakes without learning from the previous strategy. The most successful procurement leaders learn from experience and drive continuous improvement.
  5. Confidence to Acquire Top Talent – professionals who are reluctant to bring in high-level talent for fear that they will be overshadowed and potentially displaced achieve suboptimal results. The best leaders bring in the best talent and lead that talent to deliver high levels of performance. The confidence to on-board, coach, mentor and execute strategies is a valuable asset to any organization.

Perhaps the most important skill of a leader is giving back to the profession and having time for everyone.

How does your personality match up?

Are you prepared for a labor increase?

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How the new overtime laws impact your organization

On May 18, 2016 the U.S. Department of Labor released the update to the Fair Labor Standards Act overtime rules. Simply put, starting December 1 2016, the classification for employees exempt from overtime will be raised from $23,660 to $47,476. This change makes millions of workers eligible for overtime when they work more than 40 hours.

For many procurement and supply chain leaders, this should be a consideration as we rapidly approach the budgeting season, not only for increased fee rates from service suppliers, but also for your department salaries. Many times to meet RFP, RFQ and project deadlines, staff will work into the night to get it done. While you may have had a comp time policy for exempt employees, now you could be paying time and a half or double time to get projects completed. There will be implications if junior staff travels for conferences, supplier visits or training and across a wide spectrum of work. You will need to think of the impact of all of these scenarios on your cost.

It is good to prepare now for this change. Here are some thoughts that may be useful in planning:

  1. If you have not automated the P2P systems and processes, this change could provide the economic justification that has not been available in the past.
  2. Review the exempt status of all employees.
  3. Analyze the current hours worked and salary implications of this change.
  4. Review the salary ranges for all job roles. Decide if some salaries should be raised, if job descriptions accurately describe the job role and if the compensation matches the responsibilities. I know, this is a HUGE task. If staff is consistently working more than 40 hours per week, is the headcount right?
  5. Look for opportunities to automate, reduce unnecessary work and increase productivity.

While these are some initial thoughts, I suggest you have a strategy session with your HR group to understand the company policy on the changing position for the cost of labor. If you haven’t done the analysis or the company does not yet have a position, the time to act is now.

Don’t let December arrive before you’re ready.

Winter is coming.

Five skills for effective change management leadership

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Everyone thinks of changing the world, but no one thinks of changing himself. – Leo Tolstoy

It’s tough working in today’s manufacturing environment with automation, mergers and acquisitions, demand for value, ever-increasing drives to increase quality, productivity and, innovation, innovation, innovation. Organizations launch programs like ISO, lean manufacturing, cost and value improvement, technology and process change initiatives to drive improvement and competitive advantage. So many times initiatives like these fail because the leaders and line managers do not understand nor lead change. Some leaders take the approach to change the people or CHANGE THE PEOPLE. Yes, if your team doesn’t embrace change, you can change them for new hires (if you have time), but, if you don’t have good change management competencies and tools, you’ll find that you are the one changed out.

Leaders must build a vision. The vision statement is simply a contrast of the current state and a view of how the future state will transform the company, daily work routines and provide the opportunity for the company to become more competitive and increase the value delivered to customers. The leader must lead the change and create the vision. The line managers in the firm have the difficult job of planning the change, implementing the changes and overcoming skepticism and managing resistance. If done well, the change and change process will embed itself in the organization’s value and culture. People who are not in line with the change will soon fall out of favor with the organization, colleagues and, eventually, the company as the change becomes the cultural norm.

5 steps to improve your ability to drive and manage change:

  1. Create a clear vision and communicate it to everyone
  2. Create quick and short-term wins and publicize them when achieved
  3. Build on the successes always showing progress
  4. Make the change fit the company values and culture
  5. Reward and publicize success

If you can break down change programs and follow these key steps, there is little doubt that people will want to be associated with the successful programs, part of a winning culture and get rewarded for their effort.

Are you up to leading a change program?

Making a Difference through Mentoring

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5 tips to be a better mentor

Many people have asked me what one thing has made a difference in my career and what can they do to help their careers. The answer is always the same; I was fortunate to have a couple of great mentors to lead me through political landmines, point me in the right direction and provide helpful hints to keep me on track. I was reminded of this last week at the ISM Conference when I met the 2016 R. Gene Richter Scholarship Program recipients. I’ve been fortunate to meet every Scholar since 2004 and see the Scholars and their mentors grow from their mentor/mentee relationships.

Like many who are fortunate to have great mentors, I have also developed mentoring skills over the years. Through paying it forward by mentoring, plus building and delivering training for over 10,000 students, I’m very proud to have played a part for those who have gone on to fill executive procurement and supply chain positions in some very large organizations.

To be a good mentor, it is really important that you feel a need to give back and that you are willing to make yourself available to the mentee. It goes without saying that the mentee must be someone worthy of the guidance and direction and someone who will carefully consider the message and value that you bring to the table. It’s important that mentees realize that they must make their own way in the world with the advantage of having a sounding board and someone to help them understand the political and market dynamics.

Mentoring is not for everyone, but, if you want to give back, here are some tips:

  1. Be positive in attitude and keep things in perspective. It’s important that the mentor keep the big picture in mind for the mentee. Sometimes the complexities of business keep our orientation tactical, so remember to step back for the broader view.
  2. Pick a few mentees. It’s easy to get caught up in the process, but it takes time, energy and planning. Be sure your mentee will respect your time and is worthy of it.
  3. Set out some rules and expectations at the onset of the relationship.
  4. If you make a commitment, stick to it.
  5. Be open, listen and don’t over commit.

Mentoring has been a rewarding and meaningful experience and I would encourage everyone to try it. These 5 tips will help you keep the process going and assure success.

Who mentored you?

The Economics of Cheese

cheese

What every sourcing professional should know

When you read this week’s Wall Street Journal story A Cheese Glut is Overtaking America, after thinking about doing your part to assist with the report that every American would have to eat three extra pounds of cheese this year to work it off, did you think about the economic impact and why this story matters to sourcing, procurement and supply chain? There are many lessons that can be learned from agricultural commodities and understanding the economics, especially in strategy development and managing volatility and risk.

During my career I have managed agricultural commodities and I understand the value and role that economics plays in sourcing. Let’s look at a commodity cycle we’ve experienced in recent years. It’s not difficult understand that after a period of drought, many crops fail and grain prices increase significantly. Farmers then look ahead to a tough winter of feeding cattle with the high cost grain, which will have a negative impact on profitability. As a result, farmers send their cattle to the slaughterhouses and cut their losses. As consumer demand remains steady and exports continue to rise, there is little doubt that the limited supply will force prices to rise. As the weather becomes more stable and grain prices fall, it’s natural for farmers to increase their herds of cattle, production of milk (and cheese!), flocks of poultry and grains. This is the easy to understand supply and demand economic cycle.

In this recent cycle, the opportunity to capitalize on the high prices became apparent to many farmers, however, the failure to understand the impact of the high US dollar on exports and the collapse of the export market, has caused increasing inventory levels, plus the time requirements to flex the size of herds and flocks has built up to the glut of some commodities. Gluts, shortages, currencies, pandemics, weather, labor, regulation and government stability all contribute to agricultural commodity economics and add financial and capacity complexity across supply chains, requiring an increased understanding of the economics to gain control. Today, I’m wondering how many Midwest farmers will switch from planting corn to soybeans, since the USDA projects that soybean production in the US and South America will be tight over the next two years while global demand continues to rise. How much corn is planted, of course, will impact the economics of food supply chains, but it also will impact ethanol, alcohols, building products, plastics and even tires.

Sourcing professionals involved in commodities of any kind can make or break their company’s profitability. The skills required to manage the complexities of commodity sourcing are understanding economics, extensive research of the market, having the right tolerance for risk and volatility, maintaining a calm demeanor and building extremely strong supplier relationships at both the farm (producer) and broker levels. They also need an analytical approach combined with communication and quick decision-making skills to be effective in commodities. We can all learn much from understanding the economics of commodities.

Have you thought about the economics of low-priced Cheddar?