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Archive for November, 2010

“You don’t look like a procurement person!” is what I hear time and time again from my clients and end users.  Since I am shameless I usually take it as a compliment.  Tell me the truth, if you are one of the rare few who actually know what procurement is, ninety percent of the time you would be expecting to run into a dull, stone-faced, old-fashioned man or woman in his/her 40s or 50s.  Quite honestly, this fits most of the physical characteristics of professionals I have seen in this circle across the globe, except perhaps in Mainland China.  In China, the average age is a lot younger since the number of low-cost sourcing positions is the fastest growing in the world.

Don’t tell me dressing the part makes no difference.  Don’t tell me you never judge the book by its covers, or publishers won’t spend millions of dollars researching for the right design, illustrations, fonts, colors and catchy titles for their books.  Don’t tell me you give people more than 5 minutes to make a first impression. 

The same goes for my profession. 

Just because we work behind the scenes with spreadsheets and calculators and putting our noses to the 68-page contract and request for proposal drafts 13 hours a day, there should never be an excuse dressing like a 60 year-old history professor.  If you are indeed a strategic procurement professional, you are likely to spend plenty of time in front of suppliers, departmental users, CFOs, CIOs, lawyers, auditors and regulatory officials.   You need to represent, negotiate, convince and argue all at the same time.  We need to armor up with facts, strategies, baits and bullets.  Dressing the part is increasingly a make-or-break situation.

 I dress to meet with the savvy senior business development teams from IBM, Accenture and WPP.  I dress for site inspection trips to China Mobile and China Netcom in Beijing meeting state officials.  I dress to go over the new year’s budget plans with the SVP of marketing operations.  I dress when I meet the lawyers.  I dress when I conduct trainings.  Hey, do I need any reasons not to dress for the part?

It’s not only the dress as well.  I also care about posture.  I know, this is no America’s Next Top Model contest, but we need to project professionalism and confidence – all the time.  Otherwise, no one is going to entrust you with the millions of dollars worth buying decisions.  No one is going to take you seriously at the negotiation table.  No one is going to give you a raise (though we all sadly know this is out of our hands most of the time).   No one is going to believe that you take the laws and regulations seriously.  Have eye contact at all time.  Speak clearly and decisively.  Use the right gestures to project approval or doubtfulness.  Head up, shoulders back and walk straight ahead.  Be fierce and let people know you mean business.  Gosh, this does sound like something Tara Banks would say.

Dressing well and projecting confidence sends a clear silent signal before I even start to speak up:  I respect what I do.  I respect you and your time.  I am above the topic at hand and I focus on the long-term objective.  I don’t have time to waste.  I am not the type that would take bribes.  I am not going to take no as an answer.  I am not to be fooled.  I am secure enough to say what’s right without worrying over repercussions from my boss, colleagues or people with devious motives.  Most of all, I am a brand of my ownand I will bring credibility and efficiency to the company.  So, listen up!

Sounds narcissistic?   No, if you want to send at least one of the above signals across.

Time to start thinking about what your personal brand is, stand up, refine your speaking techniques, check your posture and switch on Tara!

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It cannot get any more disillusioned when you find out your leaders are insecure.  Leaders are there to provide vision, boost morale, remove obstacles and I believe most importantly, identify and groom talent. 

How do leaders get to be insecure?  Well to be fair, it applies to everyone including you and me, but we naturally hold higher standards for our bosses.  We all just got to watch it and not fall into the same trap.

1. Lack of confidence.  It happens to all of us.  We know we aren’t good with everything and sometimes it’s simply because we are less than enthusiastic with certain parts of our work.  We all know that if our hearts aren’t there, there is just no way we can deliver a satisfactory job.  In addition, it just sounds like everyone else is so much smarter than us, and we seem to be the only ones who have no idea what everyone else is talking about. 

The truth is, yes we are not good with everything and no one really is.  There should however at least be a few things that you do well for others to remember you by.  Capitalize on that, know what your weaknesses are and work on them.  There is just nothing more attractive than people who are confident and positive.  Needless to say, watch the line between confidence and cockiness.  I have seen so many people on far ends of this spectrum and too few can balance it well.

2. Threat.  Afraid of overshadowed by colleagues or subordinates?  Think that they may get noticed more and take your position away?  Same case with leaders.  Insecure leaders get so paranoid about the possibilities and make every effort to control information, stir up arguments, micro-manage, set up bureaucracies to make sure they themselves are useful, rather than thinking for the company’s interest.   Unfortunately they seldom know how naked they are.  If I can see it, everyone else can too.

3. Inexperienced to lead.  Leading talent is no easy matter.  Every one of us are different entities and we are motivated by different means.  Some want stability, some want power and some want money.  Bad leaders do not take the time to get to know their team and lead by cookie-cutter techniques – yes, very old-school techniques.  Some leaders do not pay attention even after you honestly share with them what you want.  In my opinion, I know I will probably never be able to provide all that my staff wanted, but I would remember it by heart, check-in with them constantly, and explain to them what I can or cannot do, with a timeline whenever possible.   Leading is very much a tailor-made approach, and I always believe staff responds to honesty and feeling recognized as a distinct individual instead of a generic “team member”.

4. Unable to scout talents.  Admit it, we all get frustrated when we see bad sheep in the department.  It’s bad enough that our leaders fail to notice it, but there is nothing worse or demoralizing than seeing the wrong people get rewarded, or good people go unappreciated.   Leaders need to set good examples by recognizing and reinforcing talented individuals and behavior, so that whatever competition there is within the organization,  it’s a healthy one.  Good leaders attract good people, and I follow many good mentors because they are passionate, charismatic and down to earth.  I believe with year 2011 just around the corner, retaining and attracting new talent is only getting more and more critical and challenging.  But hey, that’s what we expect of good leaders!

 I don’t need my leaders to have super powers.  I am very realistic.  I also don’t expect them to know more than me in everything, and that’s why I am hired to work for them and contribute what’s needed of me.  I however want to see my leaders to be trusting, confident and have a stand.  We may disagree on things but I want to be able to respect them, because it says something.  If I have lost respect for my leaders because of one or more of the above reasons, I know it’s probably time to pull the plug.  Yes dear, we as subordinates have choices as well. 

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Professionals Anyone?

Every Tuesday, Thursday and Saturday I have my routine workout at the gym, for the past 7 or 8 years.  My friends are always astonished to see me working out with a personal trainer and they all think that it’s an utter waste of money.  Well, I won’t exactly say it is affordable and all but it adds discipline to an otherwise lazy soul.  Besides, I am leaving it for the pros so I can concentrate on pulling, pushing, lifting and breathing without counting the laps or remembering what weights I lifted the last time.  Is it worth the extra hourly rate I pay?  For me yes, but for many others, it seems not.

Fine, but I believe in professionals.  Of course they have to be true professionals to earn my respect.  A personal trainer better knows all there is about the physical body, nutrition, sports injuries, and human biology.  I expect the sweet lady who sells me fruits at the local hawker stand to know all there is about seasonal fruits and how to pick them.  I expect the butcher to recommend me cuts of meat which I like, and the seafood vendor to teach me how to cook the fresh shrimps that I am about to buy.  I trust my tailor to give me advice on what fabric to pick that does not wrinkle as easily, and I always leave it to the sommelier to recommend me the best wine to pair with my entrée selection.

Yes when it comes to topics that I am not as knowledgeable of, I trust the professionals.  Or I should say I expect them to behave and treat themselves like professionals in their field.  The same goes for all service people at all levels.  I will never look down upon other people’s professions because I swear I will never be able to do their jobs at their proficiency or efficiency levels. 

There is so much knowledge around us that no matter how smart we think we are, we should always be humble enough to consult the professionals simply because we don’t know it all.  I do not feel insecure asking for help.  Time and time again it proves that if I respect people around me as professionals, they feel respected and dignified and will become extra accountable in whatever they do.

On the other hand, if I see below-par service performance bad enough for me as a novice to voice out, I protest but I will not do so in a condescending way.  Instead, I question their professionalism.  If you are not committed or passionate to what you do, no one deserve to be ill-treated by you.

That is exactly the same level of standards I am holding on to myself.  I do not think that procurement is trivial, as some customers or executives choose to believe.  I don’t think anyone can do my job in sleep, although sometimes I echo we are not rocket scientists.   I hold on to high moral and ethical standards to help the company gain efficiencies, cut down on wasteful spending, and improve profitability.  Well not everyone may see that right away, but my results will become proof soon enough.  You may not agree with my priorities, objectives or sometimes even the tactics I play, but I am asking you to at least respect me and let me work together with you.  Of course, I need to earn that trust and make sure I will not mess up any of your valuable relationships with internal partners, management and outside vendors.

Whenever I see fellow strategic procurement colleagues struggling to get a seat at the decision table, I usually advise them not to see themselves as only support people.  Speak up, build a case with evidence, have an opinion, and be humble but strong.  Even if your suggestions are going to be turned down anyway, make it a point to speak out and have yourself heard.  Give your stakeholders some credit.  They may not always agree with you, but at least they should respect you.  The pre-requisite of course is that every point and suggestion should be fact-based and consistent.  People are going to remember what you said earlier.  If you have been yelling compliance on the top of your lungs all along and this time you are proposing flexibility, you may lose your credibility as a professional, unless you have a really good case for it.

Whenever I make hiring decisions I always ask myself whether I can see the candidate going solo with the President or CEO of the company.  If I can see him or her having the passion and stamina without easily intimidated by seniority or ranks, our procurement organization will be in good hands. 

 

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One other career possibility that I can think of to add to my list in No Way Out, is compliance.  Of all the potential corruption, reciprocal trading, kickbacks, and policy & regulation violations that I have been talking about these days, procurement professionals also need watchdogs to ensure we are conducting our business ethically.  Yes there are also internal and external auditors, but they usually focus on internal company policy adherence.  Compliance however, covers a much broader perspective, in my opinion.

The first generation of compliance covers all government policies’ compliance that the company needs to operate within.  What’s legal in the States is not necessarily legal here, and compliance needs to ensure they are well versed of the latest policies and regulations in order to draft and enforce local company policies for all users to follow.  Procurement also needs to ensure we help advise our users what not to do, and very often we discuss with our suppliers to make sure no one is breaking the law.

Not long afterwards there are different streams of compliance being developed.  Related to my profession, I increasingly see new posts named supply chain compliance and vendor management compliance  popping up everywhere, particularly in financial institutions.  These posts require thorough analysis of the company’s vendor base, identify high risk relationships, determine remedies, and enforce remediation plans.  Candidates of these positions preferably should have a procurement background to add to his or her credibility.  Shortcomings do not only come from the vendors, but very often the users and procurement professionals ourselves.  Without the needed technical and process expertise, compliance will find its job much harder to do, and results far from substantial.

Compliance is generally hated and made fun of by everyone in the company.  What’s better to have procurement people assume the role when they already are so used to the same love-hate reputation all along? 

I know this probably doesn’t sound like the most interesting job in the world, but what really is? 

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Any true strategic procurement professional will realize that today’s sourcing decisions are becoming way more complicated than before.  The supply market is shrinking because of increasing mergers and acquisitions everywhere.  Our requirements and specifications are getting so much more demanding that traditional mom-and-pap vendors are no longer equipped to service us.  To make it worse, I have been encountering pressure from vendors threatening to use their purchasing power on us, in order to gain leverage on securing our business.

How so?  They, or their subsidiary companies or business units, are also buying from my clients.   My neighboring product sales teams are knocking on my door asking me to give concessions in my buying decisions, in order for them to make a sale.  There you have two competing forces on the table, within the same company, and supposedly working for the common good of us all. 

This is where each of us may take a different stand.  I am now put in a difficult position where I am supposed to save costs for user A, while sales team B is putting pressure on me to consider the bigger picture for the company with potential revenue at hand.  Some of my colleagues choose to co-operate as much as possible with sales team B, and I have nothing against that.  What I need to ascertain is that our ethics and code of conduct should never be compromised.

Not every company has a Reciprocal Trading policy.  I personally will not give anyone preferential treatment just because of any potential benefits we can bring back.  It is not something concrete that I can put in the bag, and frankly not something I can control either. Otherwise my procurement recommendation becomes redundant.  I admit that such treatment could be well warranted, which I would recommend senior management to get procurement detached from this decision altogether, and in turn handle the whole matter in a business partnership discussion, instead of complicating a conventional sourcing exercise.

One can easily imagine the amount of sensitivity and scrutiny this could bring if the other vendors discover the reasons why they lose out.  They can sue us and charge the company of suspected corruption.  Whenever I sense potential gray areas, I need to stop and be careful of how to proceed.

The fact of the matter is that this is condoned by even the biggest global corporations that I have worked for, and I have been consulting with compliance and legal all along looking for clear guidance and answers.  There has not been a very clear answer from everyone so far.   

No matter how dignified everyone is trying to label the whole deal of reciprocal trading, the only thing I know is that it leaves a bad taste in my mouth.

I like to go with my first instincts, whenever I am in doubt.  Fingers crossed.

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To make up for not being there for my ex-colleague’s wedding, I thought a bottle of Krug Grande Cuvee would be perfect.  “Make your own special occasion to celebrate”, is what I told the happy couple.   There was actually quite a large selection of champagnes to choose from, but I went for the brand that I trust and, quite honestly, the one with the most handsome promotional discount.

Shopping for wine and spirits is a rather joyful experience here in Hong Kong.  The tax is relatively low, and the selection is quite abundant.  I am not that of a discerning connoisseur when it comes to personal consumption, so I usually go to the nearest wine cellar or even supermarkets whenever the craving arises.  15% off for a total above HK$300, or 15% to 20% off for 6 bottles and up.  Not to say the least, there are usually these happy celebrations or get-togethers as triggers for me to buy wine.  No wonder it is always an enjoyable shopping experience for me. 

No, I don’t touch alcohol when I am in a foul mood.  It only makes it worse.

In the hospitality industry we make a lot of money from patrons consuming alcohol, to say the least.  We stock all types of alcohol you can think of, as we welcome visitors from around the globe and each expects to receive their own particular cocktail recipe or spirits at banquets or weddings.   This naturally attracts the attention of wine makers and traders.  They want our business, and they want us to help promote their particular brands to our customers.

This is where my job becomes interesting.  Although I am not really responsible for food & beverage procurement which is serviced by my very competent group of colleagues, I get involved in any type of “sponsorship” deals.  The above is a type of sponsorship contract where wine makers offer us a larger discount to have us pick their brand of, say whisky, as our default brand of offering.  Of course, if patrons demand their own particular brands, we will gladly oblige.  Otherwise this is normally a win-win deal for both parties because they get to boost sales through us, and we get to buy whisky at a much larger discount upfront. 

I normally look at deals like this from a variety of angles.  Can we accept the quality of these particular brands?  Check with the experts and the front-line executives.  How much more discount do we have?  Is it worth it?  The consumption is likely to be bigger and we need more inventory; Can we NOT get charged for the inventory until it is consumed?  How do we protect ourselves from any potential damage or loss of inventory?  Can we eliminate exclusivity?   Can we actually have further rebates at the end of the sponsorship period?

There is nothing more exciting for me to actually bring in extra revenue to the company, on top of cost savings.  Sponsorship deals are common in this industry, and barter sponsorship is another type that we can get what we want for free.  Well, as responsible procurement practice we know nothing is free, so we still calculate the opportunity costs of everything we put up for barter.  Free room nights, free breakfasts, free limo pickups etc. all carry a price, and I am responsible to break it all down for my Finance counterparts to verify and determine whether the deal is indeed beneficial to the company.

In the case of alcohol sponsorship above, the deal is approved with flying colors. I get both savings as well as a sizable piece of revenue for the company.

Evidently, alcohol does make me happy… even at work.  Bottoms up!

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Service buying is not at all like product buying.  Users very often just care about the final objective or the result but they don’t care about the fine prints,.   It’s like we subscribe to a mobile service plan for 2 years but we have not expected to wait for 3 hours for the customer service hotline or have to queue up for 45 minutes at the retail branch.  All this is costly to us as consumers.  Furthermore, we get unnecessarily influenced by various “freebies” like movie tickets, supermarket coupons, extra talk time, mobile entertainment channels etc. during our selection process.  Do we really need these perks?  Not really.  All we want is actually a mobile service plan with enough voice, data and test usage we need.

Same sort of mistakes takes place in the corporate buying world.  In order to pad up the prices suppliers often include a variety of value-added components to the original requirements in order to make a higher profit.  Companies are not buying; they are often being sold to.  The solutions are bundled together like the McDonald’s value set meals.  My job, is to tear them apart to the bare essentials, unless my clients do indeed need the other perks, and most importantly, have the extra budget for them.

That is why we often joke about users not knowing what they want in the first place.  They want EVERYTHING, but more often than not they cannot afford it.  I am there to help them break down their requirements into “Must-haves” and “Nice-to-haves”.  Users generally hate to put anything into the latter category, but I am there to break the bad news to them: Everything has a price.  If you want 24 X 7 support, it will cost you.  If you want someone to be personally looking after the project for you 30 hours a week, you have to pay for his or her hourly rate. 

It is indeed harder than it looks since the users are not necessarily too knowledgeable with how the service providers function, and hence feeling uneasy drawing such distinction, and in many cases are in constant fear that they will be taken advantaged of.  So will I.  For new commodities I seldom know any more than the users on the subject but I will be the fact finder for my clients.  I do quick research on the subject, talk to suppliers and get as much market intelligence from them, and most importantly, ask the right questions. 

When users do not know exactly what should be the service levels, I ask them what NOT they want to see or happen.  They don’t know how many hours the customer service hotline should operate, but they know operating for only 6 hours a day is not enough.  They don’t know what the servicing turnaround time should be, but they know their customers cannot wait any longer than 48 hours.  You get the idea.  Through these questions I now have a list.  With all these specifics, I will then be able to lay it out for the bidders and ask them to price exactly according to my “must-haves” list.  Then I can do a fair comparison, and I will NOT be sold to.

 

Pricing is not the only thing that matters.  There are also payment terms, pay-by-performance metrics, reporting, operating cost, manning arrangements, insurance, indemnity, compliance and all other policies and regulations that my clients need to follow according to corporate guidelines.  Every cost component adds up to the total cost, and that’s what we call Total Cost of Ownership (TCO). 

Well, to-date people are still shocked to hear me asking “What do you NOT want?” 

Don’t be naive, folks.

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