Tag Archives: procurement leaders

Five Key Personality Traits of Successful Procurement Leaders

personality

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?

Establishing the Right Business Culture for Procurement

Four tips to change and develop the right procurement culture

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It is the responsibility of the CPO to create the right culture for procurement. While there is a culture within the organization that reflects the overall values of the company, it is extremely important that a culture is built for the procurement team. A dedicated, hardworking, entrepreneurial, collaborative culture will support the CPO’s success in the business.

To be effective, procurement leadership must dedicate themselves to the culture and lead by example. Some cultures are focused on achieving cost reductions at the expense of anything that gets in the way. This is a challenging environment and costs the company in the long run. I always wanted my team to be very analytical with a total cost of ownership mentality, but I also expected that they would be open to ideas, suggestions and innovative ideas that would be of extreme value to the organization, while keeping the correct perspective on supplier relationships. When involved in a relationship for a category driven by competition and market share, they needed an arms-length relationship. In these markets where the balance, cost or opportunities could shift quickly, the sourcing manager must be flexible to shift with the marketplace. In more strategic situations with a sole source of supply for specification or technical reasons, where price is non-negotiable, it’s critical to build an organization-to-organization business relationship that will provide competitive advantage. The culture must also drive sourcing managers to build strong personal relationships, but at the end of the day, the business relationship always comes first.

In top class cultures, the procurement team should view every stakeholder as a customer who needs to be treated with an attitude of customer first. This requires the ability to sell the value of procurement and the ability to build fact-based presentations that influence, suppliers, management and stakeholders. It’s important to recognize that, in many cases, procurement does not own the expenditure, but it does own the procurement process.

On the outset, it seems difficult to instill these values in the culture. I’ve found these 4 actions are effective in cultivating a strong, value delivering environment.

  1. Engage, expect and prioritize the desired culture in your key managers and set the example at the top.
  2. Make the workplace great and when recruiting, keep the culture as a key attribute of your talent management profile.
  3. Where employees demonstrate the ability to meet the cultural norms reward them and the team on their adoption of the values.
  4. Develop a culture of respectful individuals, enabling them to respect ideas, challenges, internal customers and external suppliers.

Are you up for the challenge?

Where have all the ethics gone?

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From time to time I write on procurement ethics, but today I question where the business ethics have gone. In the past two weeks, we’ve seen:

  • Volkswagen’s Chief Executive Martin Winterkorn resigns after it was disclosed that Volkswagen will repair up to 11 million vehicles and overhaul its namesake brand following the scandal over its rigging of emissions tests.
  • Martin Shkreli, CEO of Turing Pharmaceuticals, acquired the rights to Daraprim, which was developed in the 1950s. The drug is the best treatment for a relatively rare parasitic infection. People with weakened immune systems, such as Aids patients, have come to rely on the drug, which, until recently, cost about $13.50 a dose. But when the price was raised to $750 a pill, a more than 5,000% increase, Mr. Shkreli’s brash defense of the decision has made him a pariah among patients-rights groups, industry spokespersons and politicians, making him one of the most disliked CEOs in America.
  • Stewart Parnell, the former CEO of Peanut Corporation of America, was sentenced to 28 years in prison. He had a role in concealing a 2008 and 2009 salmonella outbreak that sickened more than 700 people and killed nine.

It seems that we are seeing integrity breaches in business every day. There is a code of ethics for all business that true procurement leaders have always followed. I believe this is an area that sets apart leaders from the crowd; it’s obvious that these three CEOs lacked the integrity and leadership to do the right thing.

On a personal note, I had a mentor and boss in the early 1980s who gave me some advice and coaching that set a standard for how I operate. When I made a decision in the best interest of my company, several corporate executives wanted me to compromise my ethics and give an unfair advantage to a business owned by someone with political influence. I held my ground and my mentor said “I can’t help you and you may get fired, but there are worse things than getting fired for having integrity.” He also said “Remember, you can never put a price on integrity.” These were wise words and some advice that these three executives either never received or chose to ignore when faced with the choice between profit and principles.

I must not be alone in questioning ethics; this morning’s HBR Management Tip of the Day is Know When to Speak Up About an Ethical Issue. Is it time for your firm to think about reinforcing the company ethics standards and conducting an integrity audit?

Does your reputation have a price?

Managing Procurement in a Digital World

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5 tips for operating in a digital world

Many of you may find this hard to believe, but years ago the buyer’s best resource was the green, multi-volume set of the Thomas Register of American Manufacturers that was proudly displayed on the credenza. This was THE way to search for new suppliers. Today, you recognize ThomasNet.com and their web-based platform for supplier discovery. Things have come a long way since the hardcover green volumes, but I see many companies who, while using web-based searches, are still basically operating in the same way as the “look up a supplier for my item” process. Procurement exists in a world where social media, cloud computing, transition to mobile devices and the internet of things can simplify processes and free up valuable time to focus on more strategic, value adding work.

E&Y in its analysis of Megatrends 2015 reports that “Digital disruption is taking place across all industries and in all geographies. Enormous opportunities exist for enterprises to take advantage of connected devices enabled by the “Internet of Things” to capture vast amounts of information, enter new markets, transform existing products, and introduce new business and delivery models. However, the evolution of the digital enterprise also presents significant challenges, including new competition, changing customer engagement and business models.”

While the E&Y report highlights many megatrends, I want to focus on the digital impact on the procurement leader of the future. It’s obvious that the future for procurement will include connectivity from customer through to the lowest level supplier. It’s also not hard to envision models where computers on routine purchases have the ability to solicit quotes for business, analyze the quotes with decision-support artificial intelligence, place the order based on key rules and complete the transaction when goods and services are received. It’s also not hard to envision the costs and benefits of such systems, leaving procurement to develop longer-term strategies, supplier relationships, new products and work across the supply chain to deliver increased levels of value.

Here are five tips for managing procurement in a digital world:

  1. Align all low spend, low value categories so that they can be managed automatically.
  2. Develop order points, Kanban, blanket order releases, etc., so that they can be automated.
  3. Think about developing intelligence for timing, decision-support and rules for automating the RFX process.
  4. Automate supplier performance reporting and analysis.
  5. Reduce complexity of low spend, low value expenditure by establishing controls and removing human touch points.

These tips are just some of the things that procurement leaders should be thinking about as more and more human work is being transferred to machines and software. Automation of purchasing should be no exception!

Are you automating processes?