Upcoming Founder Articles & Appearances:

Mark Trowbridge will present our two day Supplier Performance Management seminar at the Kuala Lampur Marriott Resort on April 22 - 23rd.  Click Here for Malaysia Conference Link

Mark will also be a presenter at the ISM 98th International Conference in Dallas Texas at 3:00 p.m. on Tuesday April 30th - May 1st (Please also visit the SPS booth in the Exhibit Hall).  His topic will be Innovative Practices in Technology Procurement

Our company's founders often partner with ISM, NCMA, APICS, and NIGP affiliates to present day seminars and dinner event keynote addresses.  More than 100 presentations have been made to local affiliates during our history.  Please Click Here to arrange a presentation for your chapter's 2013/2014 fiscal year.

The last few weeks have been a blur of travels for me. Last week I was flown to a Florida (USA) resort location by a multi-billion dollar consumer goods company to train 15 of their global procurement leaders who had been brought together to learn about "best practices" in strategic procurement. Right now, I'm flying back from a week spent with a large financial services company which Strategic Procurement Solutions has helped through a procurement transformation designed to add millions in additional financial value to their profitability. And next week, I'm flying to Asia to train procurement directors and managers from multiple corporations on leading practices in negotiations and contracting management. I'll certainly be happy to get back to the home office following this group of trips...

The more SPS works with procurement leaders from various industries and cultures around the world, the more it's clear they face similar challenges. What differentiates the most successful leaders from the others?   It is whether they are willing to pursue excellence rather than existing with the "status quo".

Creative genius Walt Disney once said, "It's kind of fun to do the impossible."   This article will outline five characteristics of top-performing procurement leaders which enable them to deliver seemingly-impossible results:

First Characteristic - A Willingness to Take Intelligent Risks - As I shared in a previous article by this name, some procurement executives seem afraid to take any risks.   But top-performing CPOs are typified by a willingness to take "intelligent risks", i.e. those which are well-planned and have a fallback plan in place. I'll admit it, few people like change. But if we aren't willing to try new things...we'll be in the same place several years from now. Theologian William Shedd once said, "A ship is safe in harbor, but that's not what ships are for."

Second Characteristic - Refusal to Accept the Status Quo - It's amazing how often Strategic Procurement Solutions identifies "diamonds" of cost savings and efficiency improvements for clients. This frequently occurs during our 360^o Supply Management Efficiency Reviews, where we perform a multi-week evaluation of an organization's Procure-to-Pay (P2P) process, staffing, technology tools, sourcing techniques, supply chain security, internal customer service, and supplier management...and write a report identifying opportunities for improvement.

In more than a decade of performing these evaluations, we've always found improvement opportunities valued at many times our client fee base (once, more than 166 times the base)... but those client leaders who love improvement are the ones who have benefitted even more. They've taken the baton and run with it...achieving even more benefits than SPS originally targeted for their organizations.

Third Characteristic - A Nose for Savings - The best procurement practitioners seem to be built like a bloodhound. They instinctively know when something doesn't "smell" quite right, and they won't let go of a potential saving opportunity until it has yielded results. Some of this comes through training and experience, but the top performing procurement professionals seem to have an instinctual ability to identify cost reduction opportunities. This week, I was impressed by one of a client group's sourcing professionals who had recently been asked to manage companywide travel expenditures. Without being asked, he went through every line item of the company's pCard transactions and found six digit expenditures which had bypassed the firm's travel agency and policy.

Fourth Characteristic - The Ability to Prioritize - In supply management, there are many things which compete for our time. Meetings with Accounts Payable to resolve invoice matching problems... Staffing challenges...Purchase order expirations... Senior executive meetings...Emergency contract requests which are merely documenting a standard transaction....But the top-performing SCM leaders seem to have an innate ability to protect time so as to focus on strategic initiatives which result in remarkable change.

Organizational expert Stephen Covey once said, "Most of us spend too much time on what is urgent and not enough time on what is important." Years ago in a corporate position, my boss asked me to chair a committee which would have given me quite a bit of visibility. But it would also have required me to spend many days away from my areas of responsibility. The executive was somewhat surprised when I politely declined to accept the chairmanship. But at the end of the year, when my departments had delivered over $150 Million (USD) in new savings, my boss took me aside and told me I'd "absolutely" made the right decision in turning down the committee chairmanship.

Fifth Characteristic - Lead by Building Up Others - I've worked in corporate circles for more years than I'd care to admit, first in career SCM roles and for the last 13 years in consultative roles.   During my 28 years in supply management, I've seen many leadership styles. Quite a few times, I've seen fast-rising leaders who receive accolades because they promote themselves at the expense of others. Like a shooting star, they get a lot of attention...but often disappear quite quickly.

A different style of leadership is far more impressive -- that which builds up others. Over the long-term, the most-successful procurement leaders seem to be those who make other people successful. Rather than placing themselves in the spotlight, they take time to mentor their staff-members so that those people can shine with success. These leaders also credit their Line-of-Business (LOB) customers for supply management accomplishments...so those groups look great to executive management.  

True "leaders" always leave behind skilled employees who also progress to great heights. Look at the great supply chain groups, and see what leadership emerges after the top person retires. The great ones always leave a legacy which continues to excel...

There are many other elements of great leaders in the supply management profession. But these five are important ones shared by the top performers. If you would like additional information about Strategic Procurement Solutions' training programs or 360^o Supply Management Efficiency Reviews, please contact us at Info@StrategicProcurementSolutions.com

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, IFPSM's eZine, eSide Supply Management, and Strategic Procurement Solutions' own Best Practices in Supply Management Journal. 

During nearly four decades in sourcing and procurement leadership, I've watched leading supply management groups enhance their ability to negotiate with key suppliers. This article will describe seven changes which have occurred in the practice of "world class" negotiations:

Trend One - Preparation Wins the Negotiation: In the old days (and unfortunately too much still today), many negotiations occurred with casual preparation. The procurement person might ask a supplier to come to their office to present a proposal, and then try to review and negotiate off the cuff. But today's professional negotiators are all about preparation. In Strategic Procurement Solutions' two day Advanced Procurement Negotiation™ training program, we teach procurement groups ways that 75% of the total negotiation process should be spent in preparation. This includes proposal analysis, strategy development, and roles rehearsal...as discussed more below.

Trend Two - Well Researched Targets: When negotiations were more "seat of the pants", negotiators would set their own targets. Today, however, top negotiators use market intelligence to build fact-based negotiation ranges. This may also include development of "should be" costs through cost modeling.

Trend Three - Cross-Functional Teams for Complex Negotiations: Although I and my colleagues do teach creative techniques for solo negotiations, telephone negotiations, and email negotiations...high value complex negotiations are best-conducted in a team format, face-to-face with a supplier's senior representatives. In the old days though, the "purchasing" person would often meet alone with a large supplier's representatives. Those days are gone. There are important reasons that large suppliers bring multiple sales leaders to key negotiations...because a team is more effective than any Lone Ranger. The key to success is to have a cross-functional team, prepared to speak with one voice in the negotiation. In the history of negotiations, this is not new. Geopolitical negotiations conducted by state departments from different countries have long recognized that team negotiations are more-effective than mano-v-mano.

Trend Four - Well -Researched Boundaries for All Negotiable Elements: In past years, procurement negotiators would negotiate many elements by "feel". Sometimes they would agree to terms which hurt their position greatly, but which their organization did not discover until much later in the supplier relationship. Top negotiators today identify in advance acceptable ranges for every negotiable element they will address, using three principles from the Harvard Negotiation Project (Ury and Fisher):

Most Desired Outcome (MDO)

Least Acceptable Agreement (LAA)

Best Alternative To Negotiated Agreement (BATNA)

Trend Five - Multi-Level Negotiations: It used to be that many procurement negotiations occurred in one round. But today's key negotiations begin with the first supplier communication, and continue in multiple formal rounds until our predetermined targets are achieved. Every interaction is planned and scripted in advance, with face-to-face negotiations being only part of the overall process.

Trend Six - Role Scripting and Rehearsal: Today's suppliers prepare extensively for negotiations with us. A study done by Salesforce.com in 2007 found that the average Fortune 100 salesperson attended more than $10 Thousand (USD) in training every year. One of the key things they are taught is how to negotiate as a team. Top procurement groups are also learning how to negotiate as teams, using role scripting and rehearsal. Key messages and actions are planned and acted out. Non-verbal cues are practiced so that the procurement leader can guide the team through complex interactions.

Trend Seven - Win/Win focus: Top procurement groups can't afford to invest time in unfruitful negotiations which don't result in productive results. In the old days, weeks or months might be spent on non-successful negotiations. But today's top negotiators have a high degree of success in delivering win-win solutions which work. This comes from a willingness to push the other party to a point of discomfort before compromise is reached.

With the advent of eSourcing technology tools, some procurement leaders improperly de-emphasized negotiations as a core element in their tool kit. My colleagues at Strategic Procurement Solutions felt the pendulum swung too far in the past, and are happy that (again) leading supply management groups are recognizing the superior value negotiations can play in key sourcing activities. In commenting on an article Mark Trowbridge wrote last year for Supply Chain Management Review Journal, supply chain leader Jason Busch (Spend Matters) commented, "In many cases, a multi-round RFP coupled with negotiations, can yield better results than an auction event".

A careful re-examination of the stages in the strategic sourcing process should clarify that negotiations are the primary approach to be used in "strategic" and "alliance" supplier relationships which often represent 20% - 45% of the typical organization's enterprise-wide spending. So let's make sure we invest time into doing negotiations correctly...

In our firm's two day Advanced Procurement Negotiation™ training program, we teach and role-play many other critical negotiation strategies and techniques. Strategic Procurement Solutions also presents many great onsite training programs to company and governmental groups, with recent presentations in North America, Europe, Asia, and the Middle East. We can perform Online Skills Testing of negotiation skills, training in all aspects of procurement management, and even preparatory training for CPSM/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, Constellation Energy, RH Donnelley, Canadian Government, State of Oregon, Colgate-Palmolive, Limited Brands, Blue Cross/Shield, Tupperware International, and many others... More information can be requested at Info@StrategicProcurementSolutions.com

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.