Procurement organizations will evolve from cost centers or even shared services centers to be measured as true "profit centers" that are accountable to executive management and shareholders to deliver specific, measurable ROI targets - or risk being outsourced to more efficient third parties. Procurement organizations will continue to be challenged with finding new savings opportunities – a Capgemini Consulting survey of over 1,000 CPOs indicates that 39% say their organizations expect procurement to increase savings, with 35% of respondents expected to generate savings in excess of 6% and 5% targeting better than 10%. However, many organizations may be reaching a point of diminishing returns as evidenced by Hackett Group Benchmarks that point towards a leveling-off of savings achieved by World-Class performers, whose Total Spend Cost Savings as a percentage of Annual Spend (Cost Reduction and Avoidance), are forecast to decline by more than a full percentage point (7.56% to 6.46%) from 2012 to 2013, but are still posting better than 2X greater savings than those achieved by the non-world class peer group (2.93%). In this climate, where savings expectations are increasing while savings opportunities are increasingly hard to come by, procurement organizations will be under the microscope to demonstrate their ability to contribute to corporate profitability by achieving world-class ROI from their procurement operations – 10.72 in 2013 as compared to just 3.89 for the Peer Group – as calculated by dividing spend savings by the cost of procurement. Those procurement organizations that are unable to demonstrate world class Procurement ROI, risk being outsourced. Already, the Capgemini survey indicates about 10% of organizations have chosen to outsource some form of their procurement operations and another 25% are considering that option. Procurement organizations have a real opportunity to be seen as a profit center.
Richard Waugh, Vice President, Corporate Development, Zycus Inc.
Are you having trouble attracting and retaining talent? If so, have you considered your social media presence as part of the issue? People post about your company on Twitter, Facebook, LinkedIn and Glass Door and all over the world of social media. Do you Google/Bing/Yahoo your own company and see what people are saying? Do you search your own name to see what people are saying about you as an employer? Have you searched for pictures of your work and worksite that show your company in a bad light? Within the SIG membership, we have many of "the best places to work" in the USA, so we know good employer brands well. Can you imagine if you work in sourcing for Dish Network and the top searches about your company are about how you are the meanest employer in the United States? How about if you work for Radio Shack and the complaints are mostly about middle and upper-level management and the lack of a consistent turnaround plan? While these reviews may not be focused on sourcing management, a potential employee might make an incorrect inference based on what they see on social media. I have a few suggestions you might consider:
"I've noticed that when I'm selling a lot of records, certain things become easier. I'm not talking about getting a table in a restaurant." - David Byrne How does YOUR sourcing or procurement team sell themself to internal stakeholders? The concept of "partnering" or "selling" internally to raise awareness of Procurement's value is becoming a conversation at higher levels. Marketing and Legal are two of the more challenging departments to convince that Procurement can help. Whether your story is providing more money in the budget because of savings or weeding the budget down, both these departments are substantial expense line items in a corporate P&L and Procurement can provide value on either front. The marketing department may well be your best bet at front-line partnership in lieu of creating a case study to sell corporate-wide. Why not leverage a strong relationship with them, and then have them "market" Procurement internally with case studies that prove value-add? Being able to provide the marketing department with well-qualified procurement professionals who have marketing category experience may be key. A marketing category manager will understand the necessary relationships between people involved in agency selection and negotiation versus the contract itself. This professional will also understand that cost, while critical in the equation, is not the only driver. The intricacies of strategic marketing partnerships can be a gray area, and the Marketing Department will be more apt to give up their contract-side negotiations to someone who understands this and can align priorities instead of using typical procurement tactics. 'Tis the season to take your CMO or Vice President of marketing out for a peppermint mocha...and align your strategy with theirs. In turn, you may end up finding your best advocate to internal stakeholders.
In the final installment of this series, I have the honor of covering our closing keynote speaker, Brian Biro, who delivered an interactive session on leading with passion. I might add that he spoke passionately about the subject too. I have to say, I was a twittering (tweeting?) fool when Brian spoke. He had so many little snippets of wisdom, it was hard to keep up. In our final lunch session, Brian had the entire crowd on our feet and gathered around the stage cheering together as two women in the audience (one, our very own tiny Mary Zampino) broke through a board with a single (well, in one case a double) punch. It was awe-inspiring to watch. In both this session as well as an invitation-only event with an intimate group of CPOs, I took away the following insightful anecdotes:
Breakthrough experiences are always a matter of choice. There's always a way to do something if you are committed to it...but you have to follow through. If you do not follow-through, you will not breakthrough.
If you want to change your life, change your energy. Be fully present in each moment. It is the secret to life balance, not to mention that it will make those around you a lot happier.
The most destructive word in people-building is "blame." Blame kills teams. It is always in the past, not in the present. You must be in the "NOW" not stuck on the road of "AS SOON AS."
With many of the world's leaders gathered in South Africa to honor Nobel Prize winner and anti-apartheid leader Nelson Mandela, it seemed only apropos to acknowledge the many leadership lessons that he imparted. To say he was a great man would be an understatement. How he spent 27 years in prison and walked away with an attitude and spirit that allowed him to rise above the experience and become one of the names most associated with peace and forgiveness is beyond understanding. When he spoke, many listened. Below are a few of his words of wisdom, and my take on how we can use them wisely.
"It always seems impossible until it's done." How many times have you looked at a project — either business or personal — and thought you could never get it done? Not enough time, not enough resources, not enough support...and yet somehow you find a way to do it. Most people celebrate the big successes but overlook the little ones. Yet sometimes breaking big projects into little steps is exactly what you or your team needs to make the impossible possible. Don't wait until you cross the chasm to enjoy your successes. Celebrate the little victories too.
"Do not judge me by my successes, judge me by how many times I fell down and got back up again." It's a little hard to imagine judging Nelson Mandela given the magnitude of what he was able to overcome and accomplish, but the message is a good one. You can't succeed if you don't try...and the fact is that many of us are afraid to try because we are afraid to fail. Failing isn't a requisite for succeeding...but it sure can be helpful you when you're trying to anticipate all the things that could go wrong in any given situation. Think back to some of the greatest innovators of our generation. Take Steve Jobs, for example. He left Apple in the '80s because of a series of failures, only to come back and create some of the most revolutionary technologies our world has ever seen.
"To improve is to change; to be perfect is to change often." Winston Churchill's concept of perfection is easier said than done. Bringing change to a large organization takes more than philosophy. It demands buy-in from the top down, and an organization's willingness to be nimble. Large organizations enjoy longevity because they remain nimble and open to change. Take telecom companies, for example: in the last 20 to 30 years there have been multiple iterations of technologies implemented – and not necessarily by telecoms themselves. Change is rampant and necessary to stay in business, and nowhere has change been more evident than in the Procurement group. Although Procurement has always had a mission of controlling costs, partnering with other business units, such as Marketing, provides many opportunities for improved category management. The relationship between Marketing and Procurement has been proven to work best when each of the respective departments collaborate on budgetary and contractual needs. Procurement can provide Marketing with excellent support and take the negotiation and legal handshake over so Marketing can focus on their mission: to brand the company to the consumer and support product sales. Granted, it is easier to "perfect and change often" when all consumer-facing campaigns are under Corporate Marketing and one Vice President. Procurement can readily support Marketing's needs by creating a Marketing Category and dedicating a Strategic Procurement Manager and team to handle RFPs, contracts, renegotiation, score carding and vendor management for media buys, print buys, public relations and advertising agencies. The Procurement department can show Marketing how they can manage the spend and bring savings against the marketing P&L, as well as save time. The relationship between the two departments should be very collaborative, for example:
In the final part of this series, I have a few tips on what to do after a SIG event…and specifically after the SIG Summit…is over.
Summarize your notes. Take a few minutes on your plane ride home while it is still fresh in your mind and write one sentence for every breakout and general session you attended. Make sure write down the overall theme and include key takeaways. Identify any action items for you or your team and who might own them, including any speaker follow-ups. If you need a few reminders, look at the SIG twitter feed using the hashtag for that event. In the case of the fall Summit, we used #SIGFall13. Chances are that someone tweeted some of the key thoughts. The Summit is full of tangible and implementable ideas. Use them!
Schedule time to report your experience to your team. When a SIG team member attends a conference, we report back to our team, providing:
Collateral: copies of decks, checklists, takeaways, forms, templates, tools
Summary of lessons learned
5-10 new ideas / innovative approaches / topics for brown bag lunch discussions and strategy meetings
Many members have told us that they have to take turns attending the Summit, so a report-out is a great way to share your learnings and make the whole team feel like they were onsite. If you tweet while you are at the event, they can even follow you live!
Mary Zampino, Senior Director of Global Sourcing Intelligence, SIG
After every Summit we ask the delegates to tell us the two most important factors in contributing to their decision to attend the event. Consistently the delegates cite the Summit program content and the opportunities to network. In the first part of this blog series, I summarized some best practices for networking, specifically for Sourcing professionals. In this part of the series, I will summarize best practices for obtaining the most value from the SIG Summit program content. Keep in mind, most of these also apply to other SIG event program content (like our Symposiums, Regionals, Webinars and Town Hall Teleconferences).
Before the Event:
Make arrangements to arrive early and depart late - for Summits this means come in on Monday night and plan to stay until Friday morning. The event schedule is packed and the attendees are high-level...trust me, you want to get there early and stay late.
Write a list of objectives - include the content you wish to cover. For example, you may own the Legal spend category or you may be in the process of supplier normalization or possibly building a case study for procurement transformation. Consider the industries and organizations you may be interested in hearing from...and understand the expectations of your boss and your team members...do they expect you to report your experiences? If so, how? And when?
Mary Zampino, Senior Director of Global Sourcing Intelligence, SIG
In part 3 of this 4-part series, I am covering some of the insights from a powerhouse panel of CPOs and other procurement leaders we had at the last Summit. Our own Dawn Evans facilitated a fireside chat with a group of sourcing leaders, including Linda Behan, Senior Vice President, Iron Mountain; Clyde Dornier, Head of Global Sourcing and Procurement, Visa; Cory Locke, Vice President, Global Categories, Hewlett-Packard; and Todd Podell, CPO, Alcon, who shared some pearls of wisdom on what keeps them up at night and how they have achieved success in their careers. With all due respect, I can't even begin to capture all the fantastic feedback, insights and advice our panel provided, but in my opinion, these are some of the highlights:
Being uncomfortable teaches you to succeed. This nugget came after a question regarding how the panel overcame challenges at the beginning of their careers. If you think about this one, it makes a lot of sense. Innovation doesn't come from the status quo. It comes when people are shaking things up. If you are comfortable in your job and going with the flow, you may not be looking for ways to make things better. But if you are uncomfortable for any reason — worried that something isn't "quite right," you are probably seeking ways to make things better. Makes sense, doesn't it?
You must have tenacity in procurement. It's safe to say that tenacity is a virtue in just about any career, but in procurement, it may be even more critical. Said one of the panelists, "You need to have the doors slammed in your face to become good (at what you do)." Hopefully there aren't too many slamming doors, but the reality is that talking business units into collaborating with procurement isn't always an easy sell. Tenacity is a must.
The phrase "Spend Management" is heard often today in the world of Sourcing and Procurement. It even has its own Wikipedia entry. It is often used in place of, or in the same context as "Spend Analysis." Some might think that the two are interchangeable. They are not. Each has a distinct and separate meaning. Spend Analysis is a more structured and well-defined phrase. Loosely, Spend Analysis should answer three basic and broad questions:
Patrick Reymann, Director, Strategic Sourcing Operations, Corbus