Tag Archives: supply chain skills

Value swapping or value creation?

Over the past two decades procurement teams have focused on price and cost reductions leading to improvement in their company’s shareholder value. We’ve done a good job perfecting our cost models and developing our skills to zero-in on should cost and have been successful using these models to strip supplier margins and lean out the supply chain. To combat the drive on price and cost, many industries have consolidated, matching capacity against demand. Are these price reduction and cost modelling efforts creating value?

We’re now in a new digital revolution; the world is changing rapidly with unlimited data, speed and computing capacity resulting in dynamic pricing models developed by bots and computers using artificial intelligence. These models can assess global capacity, demand, pricing and competition in fractions of a second. The old procurement tools need to be sharpened and greatly enhanced. The days of swapping value from supplier to customer, then back again are gone. Customers and suppliers will be required to create optimal value. Speed, velocity, shortened lifecycles, innovation, revenue generation and other value creation activity will need to be in the core skillset of the future buyer.

Savvy procurement professionals are working on value creation models and educating their corporate management teams that there’s a major shift from price reduction to value creation. One example of the principle of value creation is in homebuilding where labor is the critical resource. Homebuider Procurement must select the best crews and manage the relationship since it is critical to complete the unit on-time to get a return on capital. Another example is in industries using refractory bricks: the buyers are working with suppliers to extend the life of the bricks in furnaces to delay costly shutdowns when bricks need to be replaced.

How will you support value creation?

I’m presenting a webinar May 31, 2017 at 1:00 PM Eastern time
Webinar: Building a Strategy for Tomorrow- 10 Megatrends that will shape Procurement’s future
Registration Link: http://tiny.cc/billmichelswebinar
Please Join me!

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The Missing Link: Why Procurement Competency Assessments Alone Fail to Make the Grade

Don’t get me wrong–as one of the original developers of the on-line procurement competency assessment in 2004, I am still a strong advocate of the process because it provides a directional compass indicating where a team’s skill should be developed. The problem is that many companies offering training and development have limited knowledge concerning team dynamics, industry specialization and capability of the team to deliver on the mission and vision of the procurement leader.

High performing teams are comprised of individuals that have the technical procurement competency combined with these attributes:

  1. The ability to influence
  2. Effective communication skills (oral and written)
  3. Collaboration and relationship skills
  4. Intellectual comprehension
  5. Process skills
  6. Creativity and Innovation
  7. Drive and energy
  8. Curiosity and ability to test the boundaries
  9. Planning skills including ability to correct the course of action when necessary
  10. Financial thinking

In the past 25 years of coaching, mentoring and training thousands of procurement leaders, I’ve learned a few things. Personality is a key driver in performance. For example, to be effective, procurement folks should be curious and a little like the Columbo character–always questioning. The best procurement people question specifications, cost, process, geography, business requirements, supplier selections, performance and everything in-between. If you’re naturally curious, this comes easy; if you accept information as facts, questioning is a learned skill.

I have conducted face-to-face assessment centers to test for overall competence and it has been effective in recruiting. I am now working on a new model that combines technical skills with personality attributes online to help leaders build high performing teams.

Are you content with your assessment?

Three Hours of Power

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The Secret to Achieving Strategic Procurement and Supply Chain Goals

As I watched the Olympics last night, I saw the thrill of swimmers and gymnasts achieving their strategic goals and became even more excited about this blog. This week I’m honored to have guest blogger Chris Brogan. Those of you who know me understand that I’m all about implementable solutions and Chris’s tools and suggestions work. He’s had a huge positive impact on Linda, me and our business and he’ll help you win, too.

Three Hours of Power
By Chris Brogan

I’m writing to you within the three hours I’ve allotted each day to reaching my goals for myself and my business. It’s part of something I sell called the 20 Minute Plan JUMPSTART but it’s something that I work from daily. Remember the old ad? “I’m not just the president. I’m also a client.” True of me.

Three Hours of Power

The basic concept of the 20 Minute Plan is that you take 10 minutes in the morning and 10 minutes in the evening to set up your days for success. The mantra behind this is simple: your day is your week is your month is your year.

Your day is your week is your month is your year.

What you do today influences your weekly goals, and impacts your monthly progress and ultimately shows up in what you get for the year.

The three hours part is what I call the 9box. It’s for a simple reason. Take three hours and split them into 20 minute blocks. That’s 9 blocks of 20 minutes each. On my little sheet I work from, it looks like one side of a stretched out Rubik’s Cube.

In those three hours go ONLY that which moves me closer to my goals for me and my business. No client work. No honey do list stuff. Only priority work. Grade A top shelf stuff that will move the needle.

The To Do List is the Enemy

You’re so busy that you’re not doing anything. Let THAT sink in a moment. Are you one of those people who answers “How are you doing?” with a deep sigh and says, “Oh, busy!” And then you open your mouth to draw in air and your eyes are a bit wide, like, whew the exhilaration.

Guess what? 1.) No one cares that you’re busy. 2.) How successful is that busy making you?

People love their to-do lists. They feel excited when all the boxes are checked off. I call to-do lists noble masturbation. It feels good, but it’s not the real thing.

Sure, you have work to do. Whatever. We all do. But if you don’t dedicate some time to the actual priorities and efforts that will move your business forward, you’re just eating up hours on tasks.

The to do list is the enemy. Make it a third class citizen in your life.

Work Inside Three Hours

You’re awake roughly 16 hours each day, if you get 8 hours of sleep. I get 8 or more. You’re probably too busy to sleep as much as me.

Of those 16 hours, people speak for a lot of your hours: family, friends, work, clients, whatever. Find three. You can find 3 out of 16. And make those about your priorities. This isn’t piano lessons. This is “this will make me more successful because I’m investing time and focus in it” type stuff.

You can find it. And your success will start giving you proof that it’s working. And then you’ll defend it. I promise. It’s how I’ve written ten books and counting, while still traveling to consult, speak, and spend as much time as I can with my kids and my fiancé. Join me in taking some of this power for yourself.

Chris Brogan is a business advisor and New York Times Bestselling author. Learn more about him at http://chrisbrogan.com

Donald Trump or Hillary Clinton: How much personal risk are you willing to take?

Ten tips for managing risk in uncertain times

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This is personal; especially in procurement and supply chain, our career and our lifestyle depend on how we manage risk. Procurement and supply chain executives are seeing volatility in 2016 with unstable markets, mergers and acquisitions, increased regulations and slow growth in the global economy. All bets are off for 2017, when a new administration will be in place whose policies are unclear at this time. There is little doubt that procurement and supply chain leaders will be forced to build strategies, plans and processes in uncertain times. To survive, we must welcome and embrace uncertainty.

No one can predict what the level of uncertainty will be, but with digital disruption, artificial intelligence, unstable markets and supply-chain integration, it is only natural that procurement and supply chain leaders build flexible strategies, be prepared to take risks and calculate the impact of risk-based decisions. Politicians are proposing many activities that could have a drastic effect on sourcing and supply chain operations. The thought of UK pulling out of the EU, the US pulling out of its trade deals, pressure on offshore headquarters, increasing wages and support for reshoring will all impact procurement and supply chain operations.

Taking the right risks and making early decisions will make or break a career. Here are 10 tips for managing personal risk:

  1. Continuous review of the strategy and the horizon will keep you and your team aligned to necessary changes
  2. When change is evident, build a clear business case and act decisively
  3. Be proactive and engage management early
  4. Quickly build a fact-based analysis and use influence to align top management to the strategy
  5. Assure that you have an effective change process
  6. Put your top people on executing the necessary changes
  7. Prepare for cynics and challenges to the plan
  8. Build communication and preparation for a crisis mode
  9. Lead with confidence and bring your team along
  10. Keep on top of the business news and use the analysts on your team to brief you daily of changes that are occurring

No one can predict the future, but the signs of significant change are in the wind. In preparing for battle General Dwight Eisenhower said “In preparing for the battle, I’ve always found that plans are useless, but planning is indispensable.”

What is your proactive strategy? How much risk will you accept?

Are you sabotaging your procurement or supply chain career?

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As a consultant, I get to observe procurement and supply chain professionals in almost every situation. It is always rewarding to see bright stars move through their organizations to the C-Suite. On the other hand, it is tragic to see bright stars burn out and get stuck on their career path. You may wonder, what’s the difference between success and failure in people with similar ambitions and skill sets?

In my career, I had several strong, ethical mentors who disciplined me in critical soft skills that make the difference between success and failure. Technology changes, digital disruption, social media and email are all changing the way we do business, but successful businesses have the best people who communicate and collaborate effectively.

Here are a few soft skills that can take you far:

  1. Business etiquette is one of the essential skills that shows that you are thoughtful, polite, professional, engaged and and respectful person. How you treat people says a lot about you. Do you take the time to send a thank you note? If you’re visiting suppliers or meeting new business partners take the time to write a note. You will create a great impression of you and your company.
  2. Always learn names and learn them quickly. This immediately shows interest and respect in the new people you meet. There are a lot of techniques for learning names and they will help you gain this skill
  3. Don’t make value judgments on people’s importance in the workplace. People deserve respect and others in your firm will be observing your behavior and will ultimately judge you. It is critical that you build strong relationships and self assess how you might be viewed.
  4. Be careful about your personal life. What you put on social media and what you share can come back to reflect on you in the future when being considered for promotion or elimination.
  5. Communication is a core skill. It’s sometimes not what you say, but how you say it that counts! Always return phone calls and emails promptly. You should make it a practice to promptly return all calls within 24 hours. Personalize your voicemail greeting so the caller doesn’t just get a cold system generic voice with a number.
  6. When writing emails, be sure they are professional and courteous with a bit of humanity so they are not seen as cold and manipulative. Make sure that the communication you send is grammatically correct with no spelling errors. Judith Kallos has an excellent resource on her business communication website.
  7. Just because you have a mobile phone number doesn’t mean you should text without asking permission. Even with permission, be respectful of the time of day you’re texting.
  8. There are few things that irk me more than someone arriving late to meetings or scheduling a meeting with no agenda, resulting in unprepared attendees and wasting time. Always be prepared, have an agenda and have a professional presence.
  9. Create the right image with your work space. Keep the space professional and neat with appropriate personal touches. Those who see the space consider it a reflection of you. Always respect the space of others. Even in casual business cultures, it is very important to dress for success. You may stand out, but in an impressive way.

Every procurement and supply chain professional with a desire to advance and make a great impression should take inventory of these skills. These skills are common sense, but at times we all need to review the skills, make adjustments and control the way we are perceived.

The things your mother taught you can serve you well.

 

photo: Olu Eletu

 

Leading Procurement and Supply Chain Transformational Change – Do you have the right stuff?

astronaut photo: NASA

Never content with status quo, companies that excel want to be the very best. They constantly drive continuous improvement, yet many procurement and supply chain professionals lack the confidence and capability to assess, build a business case for change and manage change across the business. How can companies and individuals get “the right stuff” to get to best in class?

The process starts at the assessment of the current state of the organization. Typically, it reveals an inefficient organizational alignment, gaps in the processes, competency issues in the team and systems which may or may not support the procurement and supply chain mission. I have seen leaders shy away from and resist change, while defending the current ways of doing business. Over time, the resistors of change are displaced by more progressive individuals. Those who stand before the management highlighting the issues and delivering a plan for change always accelerate their careers in the business.

Early in my career I worked with a purchasing leader that attended a seminar at Penn State. He approached the CEO and Chairman of the company, detailed that his team was tactical and influenced the senior management team to let him to build a change program. The change was painful and difficult, but resulted in over 40 million dollars in savings, streamlined the organization structure and the company achieved a leadership position in their sector. He moved on to different positions in the company, eventually ending up as CEO of one of the major divisions.

What made this individual a success? He created the assessment of the current state of the business by looking at the core competencies required to be successful in the food business and measuring the gap to achieve the best organization, processes and people to reach world class in his industry. He looked at benchmarks with the understanding that they are merely data points. To make benchmarking successful, one must understand both the process implemented to achieve them and the business cultural adjustments required to make them work. Too many times, the focus is on the size of the gap, which can cause some to think “we can never get there.” The focus should be on taking the first step, then the momentum to keep the team moving. Whether it’s a meter or a marathon, some will run, some will walk and some will do both to reach the finish line, so a plan should be developed that considers the company culture and the speed that the team can practically achieve.

Once the change model is identified and a plan developed, it is only the beginning and once started, it is ever evolving. There are lots of drivers of change, like:

  • Technology
  • Economy
  • Competition
  • Innovation
  • Profitability
  • Industry consolidation

It’s important that procurement and supply chain team members understand that each of them has an important role in how these drivers impact the business and in making the changes needed for the business to succeed. For example, similar to, but broader than technology, product and service innovation occurs faster and faster, often making the ‘shelf life’ of current products shorter and shorter. Innovation in new product ideas, product packaging, integrated supply chain operations and distribution channels, customer service, and marketing are all examples of areas that can be market-changing for a business. Clearly suppliers can provide many of these innovations, if managed properly. The procurement and supply chain team is in the middle of the action.

What skills are needed for transformational change? One of the core skills of a leader is the ability to influence. The ability to evaluate your organization, develop a solution and build a business case to get the business to invest are critical skills of leadership.

Since change impacts every aspect of the organization, the change process really needs a good business case including all cost, risks and the measurable return that the company will see at the end of the process. The implications should be clear that the organization will be changed (reflecting the global, regional and local requirements of the business) to simplify the supply chain and increase velocity, flexibility, value and customer needs. As a result of the change, people will need development (some may no longer fit in the business) and processes will surely change.

Its always best to establish a management steering committee to remove roadblocks and select a project leader and a cross business/cross functional team to build stakeholder awareness and engage them. Build Change Champions and willing helpers to support the transformation and have a plan for the opponent and cynic who may work to disrupt the change.

There are many reasons change initiatives fail. Usually, failure is the result of:

  • Lack of management buy-in and commitment
  • Lack of leadership
  • Lack of focus and commitment
  • Resistant too hard to over come
  • Lack of knowledge
  • No process
  • No strategy

Procurement and supply chain transformation is exciting and can create competitive advantage for your company. It takes leadership, focus, influence, management commitment. It is a big task, but those with the confidence and capability will accelerate their careers.

Do you have the right stuff?

The Secret to Capturing a Market—How will you get there?

capture a market

With the PowerBall frenzy of a $1.5+ billion prize, many of us are thinking of what we would do with the winnings. While winning this big prize will certainly give one leverage with the swarms of financial advisors and others seeking investment, even those of us who enjoy planning our investments and playing the market will need to rely on suppliers to manage and meet our goals if we win the big prize. If you want to break into a market or develop that next “can’t live without it” product or make life better for a community, you need to rely on suppliers. The kind of customer you are determines your outcome. For businesses, regardless of size, the value you need to capture a market doesn’t just come from inside the organization.

Many of us have been exposed to a management philosophy that suppliers are a source of incremental profit. Nothing can be further from the truth; a continuous focus on reducing price gives a false sense of security as companies meet short term cost reduction goals. Many buyers are happy that their suppliers are reducing margins, but lose sight of the fact that suppliers need sustainable margins to reinvest in the business, innovate, automate and drive to be the low cost producers. The astute business person knows that the larger opportunity for their company is in the value from the suppliers.

Value can come in many forms and the opportunities that arise truly provide sourcing professionals, and the organizations they represent, competitive advantage. A few examples are:

  • Achieving Speed to Market
  • Supplier investment
  • Product improvement
  • Process improvement
  • Complexity reduction
  • Systems integration
  • Shared risk
  • Shared resources
  • Market intelligence
  • Lowest cost manufacturing
  • Financing Capital
  • Innovation
  • Market exclusivity
  • Joint design

The skillset required to capture the value opportunity goes far beyond the tactical skills required when applying competitive leverage and price pressure. It requires strategic thinking, planning and execution skills. It also requires team members who are trustworthy, reliable and analytical with strong influencing skills.

Whether your organization is first in a market or captures a market with innovation and exclusive rights to technology, these benefits far outweigh the few dollars captured in the short term with price reduction. Steve Jobs understood the value proposition when Apple launched the first smart phone; do you think suppliers viewed Apple as a good customer?

Price or value? How you reach new heights is your choice!