Best Practices in Supply Management Journal

58th Edition, January - February 2013

Articles In This Issue
"Proposal Evaluations - Reference Pin Ball"
"Equipping Outstanding Procurement Talent"

 

Upcoming Founder Articles & Appearances:

Mark Trowbridge  wrote an article for ISM eSide Supply Management's June Edition titled "Negotiate Like a Master".  Click here to visit that ISM article site.

Mark Trowbridge will be the featured presenter on Advanced Procurement Negotiations & Contracting at the Kuala Lampur Marriott Resort on March 20 - 22th.  Click Here For Malaysia Conference Details

Mark will also be a presenter at the ISM 98th International Conference in Dallas Texas April 28th - May 1st (Please also visit the SPS booth in the Exhibit Hall)

Job Opportunities:  We are currently helping clients fill the following SCM career opportunities.  Contact Strategic Procurement Solutions through our website if interested...

-  Sr. Sourcing Leader (spend categories Information Technology, Financial Services, Administrative Services), Financial Services Firm, Southern Wisconsin.  Base Salary Between $85K and $110K USD, Excellent Bonus and Benefits Package.  Relocation Negotiable.

- Sourcing Leader, Houston, Texas. Global Oil/Gas Company. Must have upstream sourcing category experience. Base Salary Between $125K and $149K, Excellent Bonus and Benefits Package. Relocation Negotiable.

 

 

- Sourcing Leader, Greater Sacramento Area, California, Financial Services Company.  Base Salary between $75K and $100K USD.  Excellent Bonus and Benefits Package.  Relocation Negotiable. 

 

Strategic Procurement Solutions now has two additional spend categories where a FREE cost saving evaluation can be performed...Telecomnications and Parcel Freight. If you wish to determine (for free) whether you have optimal pricing in these spend categories, email us at

Info@StrategicProcureme
ntSolutions.com

 

   

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

This electronic journal is now distributed bi-monthly to nearly 11,000 Supply Management Professionals around the globe. We hope you enjoy this edition. Feel free to forward to your SCM colleagues!  And keep SPS in mind if your organization ever needs top quality Supply Management Consulting, Employee Skills Testing, Training, P2P Efficiency Reviews, Cost Reduction or SCM Staff Augmentation Services.

 

 

"Proposal Evaluations...Reference Pin Ball" - by Mark Trowbridge - Principal, CPSM, C.P.M., MCIPS 

 

Let's face it...any sales executive with great creative writing skills can usually put together a good-looking proposal. So sourcing professionals need an analytical process (which goes beyond reading the words on the page) to choose the best supplier. Billionaire Aristotle Onassis once observed that, "The secret of business is to know something that nobody else knows."

 

In the next few editions of this journal, I'll write a few articles about evaluation techniques we can use to learn more than the suppliers may desire us to understand about their capabilities. The first of these techniques is...

 

Reference Pin Ball: Just about every RFx documents ask the suppliers to provide several customer references. But it's important for us to realize that the customers listed by each supplier will undoubtedly be hand-selected because their firm did a good job for them. In fact, the customer references have probably been "coached" by the supplier on how to respond to our evaluation team.

 

Reference Pin Ball uses a cleverly-designed reference process to gain additional information the supplier may not wish us to have. First, we begin by requesting customer references who can share meaningful information about the supplier (pro and con). Rather than just asking for "three references" though, we should limit the types of referrals to the supplier's customers who are "similar in industry, number of employees, and nature of product/services" to the buying firm or governmental agency.

 

Second, we ask for at least one reference who "used to be a customer of supplier, but is no longer" (these will provide helpful information about how the firm performed at the end of an engagement...and if the supplier refuses to provide this type of referral, that tells us something too).

 

For anyone who has frustratingly-tried to chase down a supplier's customer references to even conduct the phone interview; it's important to ask for the right contact information in our RFx. At a minimum, we should require the supplier to provide the Customer Company/Agency Name, Contact Person Name, Contact Person Title, Telephone Number with Country and Area Code, Cell Phone Number, and Email Address. A short description of what the supplier did for the customer reference is also helpful.

 

In the reference check process itself, begin with typical questions about what the supplier has done well. Tighten down your seat belt, and just listen...asking clarifying questions to keep the customer representative on track. Consider having the customer rate the supplier on a scale (perhaps 1 to 10).  

 

After a good amount of time listening to the "pros" which the person will undoubtedly feed to you, gently begin to inquire about "cons"...like:

 

"Thanks for sharing these good things about XYZ Company. It's clear they've done a nice job for your firm. Would you be willing to share some details about two or three performance areas they can still improve in?"

 

"What was the worst thing that has happened in your relationship with XYZ Company? How might that have been prevented?"

 

"When you made your selection of XYZ Company, who were two or three other suppliers that you also seriously considered?"

 

- "Looking back upon the selection process now, would you make the same decision again? (Why/Why Not?)"

 

"I'm sure it took some time to negotiate the final arrangement with XYZ Company. If you could go back in time, is there anything you might have negotiated differently?"

 

"I'm sure you have a strong written contract in place with XYZ Company. In retrospect, is there anything you would like to add to that contract?"

 

The trick in Reference Pin Ball is to use the reference checks to point us to other information sources which can be used to better-understand each supplier's capabilities! In the next edition of this journal, we'll share some other evaluation techniques to dig below the words in the supplier's proposal.

 

In Strategic Procurement Solutions' three-day Expert Strategic Sourcing™ training program, we teach many other sourcing techniques like Reference Pin Ball. Strategic Procurement Solutions presents some great onsite training programs to company and governmental groups, with recent presentations in North America, Europe, Asia, and the Middle East. We also perform Online Skills Testing and even preparatory training for CPSM and CSM certification exams. We've been privileged to have been selected to train clients like Apple, LG Electronics, Nationwide, Bristol-Myers Squibb, Coca-Cola, Intermountain Healthcare, State of Colorado, RH Donnelley, Canadian Government, State of Oregon, Colgate-Palmolive, Limited Brands, Blue Cross/Shield, and many others... More information can be requested at Info@StrategicProcurementSolutions.com

 

Strategic Procurement Solutions also evaluates companies' sourcing practices as part of our 360 Degree Supply Management Efficiency Reviews.  Readers may contact us for more information about this too.

 

About the Author - Mark Trowbridge, CPSM, C.P.M., MCIPS is one of Strategic Procurement Solutions founders. His 28 years in procurement leadership began in the Manufacturing, Airline, and Financial Services sectors...culminating in a role leading three-quarters of the strategic sourcing activities, and all of the contracts management responsibilities, of Bank of America (then, the USA's third most-profitable company). During his last two years with Bank of America, Mark's areas of responsiblities delivered a Quarter Billion Dollars in cost reductions. During the last dozen years, Mr. Trowbridge has worked in the consulting field with many leading corporate and governmental clients. His business travels have taken him throughout North America, Europe, the Middle East, Asia, and Malaysia. He is a frequent author on supply management topcs, with articles appearing in publications like Supply Chain Management Review, Inside Supply Management, eSide Supply Management, and Strategic Procurement Solutions' own Best Practices in Supply Management Journal. 

 

 

"Building Procurement Superheroes"- by Robert Dunn, MBA, C.P.M. (updated from a previous article in this Journal)

In this updated article we will explore some thoughts regarding what is expected of today's supply management professionals, and share with you some ideas regarding how your team can, with limited investment, be transformed into Procurement Superheroes.

 

Today's successful supply organization is a far cry from those of a decade ago. Not only must the team be able to achieve standard goals of... 

 

- Acquiring products and services with needed quality at the lowest total cost;

 

- Developing strong working relationships with internal business unit customers and suppliers;

 

- Delivering demonstrated and measurable operational value to their business unit customers; and

 

- Creating year-over-year financial savings for stakeholders

 

But given the realities of today's "jobless economic recovery", procurement groups must now do this while... (i) Operating with just two-thirds to three-quarters of historical staff; and (ii) Simultaneously managing more-aggressive annual savings targets, increased corporate visibility, increased internal customer demands, shorter product life cycles, global supply markets, outsource service providers, and new e-sourcing technologies.

 

So the challenge is to 'do more with less'. Strategic sourcing, incorporation of "best practices", and eProcurement tools may help to shift resources towards strategic initiatives, but in the end, the capabilities of the individual procurement professional will drive productivity improvement.

 

So what we need are professionals who know the business, are recognized direct contributors to business success, know how to employ procurement best practices and technologies, are adept at building interpersonal relationships and high-performance teams, can effectively manage change, and can continuously 'transform' themselves as advances in procurement practices require. Wow...this is definitely a job for today's Procurement Superhero!

 

At this point you may say, "That's great, I'll take a dozen to go..." You know these Superheroes because you have one or two on your staff. They are your "go-to" players when the game is on the line and they are the main reason you get any sleep at night. You also know that these Superheroes are rare, expensive and hard to find. So how does a company or governmental agency get a team of procurement superheroes if you can't recruit them "ready-made" from the market? The key is to build your own Procurement Superheroes.

 

Leading organizations are meeting the 'do more with less' challenge by putting new teeth in their annual individual & team development programs. They have come to realize that by continually investing over time in a concerted and measurable development program, they can build their own procurement superheroes at a fraction of the cost of trying to hire them elsewhere and integrating them into their business.

 

So what are some of the key steps to "putting teeth" in your professional development programs?   Here are three strategies which you can employ...

 

First, begin by defining in detail (with quantifiable measures and goals) what a superhero in each position should look like and be able to accomplish: What must this team and/or position be able to do better than anyone else? What are their core mission and work activities? What are the resulting critical skills and capabilities that each position/team must have to excel at their core mission and work activities?

 

What are the baseline skills that all positions need to perform effectively? (The table below illustrates three categories for skill development and is based on research Strategic Procurement Solutions performed using data from our client engagements and two marketplace studies)

 

Procurement Functional Skills

Demand Management

Spend Analysis

Specification Management

Cost modeling

Market Analysis

Sourcing Strategy Development

Supplier Evaluation

Negotiations

Contracting

Supply Chain Integration

Supplier Relationship Management

Customer Relationship Management

Contract Management

 

Core Business Skills

Business process knowledge

External customer and market knowledge

Product and service knowledge

Supplier and supply market knowledge

Technology and system knowledge

Business financial knowledge

 

Interpersonal Skills

Team building

Group problem solving

Managing resistance to change

Communications

Change management

Coaching and feedback

Project management

Effective meeting management

 

Next, you need to determine where each of your team members is in their individual superhero transformation journeys: A foundational step is to conduct formal skills and capabilities testing (such as Strategic Procurement Solutions' own Online Supply Management Skills Diagnostic assessment).  

 

It is important to qualify the subjective test results by interviewing personnel to determine subjective performance factors. Once staff strengths (both group, role, and individual) strengths and weaknesses are identified, we then prioritize individual and group development needs.

 

Subsequently, we must use the foregoing information to create individual development plans "with teeth". These plans will need to balance long-term goals (3-5 years) with near-term (semiannual) action and measurement. There are many unique, effective and low cost ways to put real teeth into a development program. Strategic Procurement Solutions often helps our clients leverage internal, pre-existing procurement and materials management staff strengths and best practice capabilities by: (i) Partnering personnel with skilled peers for project-specific on-the-job training; and (ii) Establishing internal "Centers of Excellence" or "University" sources of current literature on "best practices" and industry trends.

 

Our client organizations also utilize Strategic Procurement Solutions by:

 

(i) Establishing a baseline skill development training program for new staff (such as our three day Strategic Procurement Management Training™ workshop);

 

(ii) Making available more advanced training in specialty skills;

 

(iii) Supporting purposeful participation in external associations like ISM, NCMA, SIG, IACCM, APICS...;

 

(iv) Tapping into the capabilities and training programs of key suppliers (like 20 different onsite or online training programs from Strategic Procurement Solutions);

 

(v) Establishing a formal job rotation program and career development path for business unit and procurement staff; and

 

(vi) Supporting professional certifications like CPSM, MCIPS, CSM, CPIM, LEAN Six Sigma, etc.

 

The impact of training can be assessed by measuring the value and effectiveness of each development technique & continually improving. Methods Strategic Procurement Solutions uses to evaluate training effectiveness for our clients can include:

 

Level 1 Validation - Following each training event an in-class participant survey can be performed and the results analyzed.

 

Level 2 Validation - Pre and Post-Training testing of participants can validate the actual knowledge transfer which occurs through the training episode.

 

Level 3 Validation - Approximately six months after a training event, some groups like to conduct a survey to determine which of the learned skills are being used in each participant's work life. Surveys can be performed through an interview process or via on online survey tool (Strategic Procurement Solutions can do either).

 

Finally, it is important to tie staff development back to improvements in core departmental success measurements such as (i) Internal customer and supplier satisfaction; (ii) Supplier performance; (iii) Cost savings; or (iv) Spend under strategic management.

 

Building a Procurement Superhero does not happen by accident. It requires a commitment to professional development and a concerted investment over time. But, when combined with best practices, professional development is the key to meet the 'do more with less' challenge.

 

For more ways to Build Procurement Superheroes, readers may email us at Info@StrategicProcurementSolutions.com  We're happy to provide information about our Supply Management Training Workshops or Online Employee Skills Testing services. We've recently added CPSM/CSM exam preparation workshops to our offerings too. And our firm also provides companies and governmental agencies with skilled procurement staff in a project/temp mode or a direct hire recruiting mode.

 

About the Author:  Robert Dunn, MBA, C.P.M. is one of Strategic Procurement Solutions' founders.  His 37 years in procurement leadership covered management positions in the Government, Technology and Financial Services sectors; culminating in a role directing all of BankAmerica Corporation's procurement operations.  He has served as President of two ISM/NAPM affiliates, and taught supply chain management at the post-graduate level for California State University - Hayward and St. Mary's College - San Francisco.  He has worked with major corporate and governmental clients in the consulting industry for the past 18 years.  Robert has worked on major procurement initiatives in North America, Latin America, Europe, and Asia.  

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Strategic Procurement Solutions, LLC - All Rights Reserved