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Archive for November, 2010

Ambushed!

Today is the first time I have heard of ambush marketing.  Guilty.  Chinese gymnasts at the Asian Games are accused of making hand gestures during competition and medals ceremonies promoting their main sportswear sponsor Li Ning brand.   Apparently this is not uncommon and event organizers have been trying hard to stop all this ambush marketing to protect their official sponsors.   Because of the new terminology learned, I have now also discovered Predatory Ambushing, Coattail Ambushing, Property Infringement, Self Ambushing, Associative Ambushing, Distractive Ambushing, Values Ambushing, Insurgent Ambushing, Parallel Property Ambushing, Unintentional Ambushing, and Saturation Ambushing.  I have to give it to the marketers nowadays for all of their innovative means of getting their messages across.

As a sports event spectator, I really wasn’t expecting to be “ambushed” by product placements through athletes’ hand gestures. What’s next?  Athletes peeling off their uniform on stage to show us their sponsored ointment patch?

Well this reminds me of a project last year when my boss and I were invited to sit in to a series of meetings between our sales team and an Indian film academy, who was looking for sponsorship by our company for hosting their annual award ceremony, which would be televised around the globe to over 450 million viewers via Star TV.   Our company was attracted by the media value of the event, and it hits our key demographics.  However, sponsorship covers everything from local transportation to lodging to meals to production to security and so much more, and we were invited to join the negotiation team to ensure the company’s rights and interests were protected.

There wasn’t really too much to negotiate monetary wise since the sponsorship definition has been set from day one.  We knew what we were getting into, but we needed to have a good idea as to where the limit would be.  Normal lodging and meals are fine.  What if the stars and celebrities decide to throw a big private party and order 2 tons of spirit?  Will that be included?  Who calls the shots?  Who provide bodyguards?  What can they do and not do?  When do we turn over the responsibility to the local law enforcement? 

You get the idea.

The biggest concern, however, was marketing and sponsorship rights.  The counterpart clearly has a lot of experience producing the event around the world, and they fund it entirely through sponsorship deals.  Ours was the biggest piece that more or less dictates which country/location the event would eventually land.  We were looking for opportunities to get ourselves some funding but we could not get the event brand anywhere close to our campaigns.  Fine.  What we were most concerned of, however, was whether we would be “ambushed” (now I finally have the word for it) by their other sponsors.  That would seriously undermine our return-on-investment if we did not have exclusivity. 

It was a very interesting project for me and it had nothing to do with cost savings or even purchases.  The cultural differences at play is also remarkably classroom material.  When there is a chance later on, I will write something about cultural aspects at the negotiation table.

Hmm….in the meantime let me think of ways to make “ambush purchasing” up…

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I can certainly sympathize with people in my profession who think they are in dead-end jobs.  However it does not have to be this way.  It depends on what you are specialized in or which end of the spectrum you are located.  If you are more of an operations professional, the work is definitely going to be a bit more repetitive.  Yet for those who go for stability and domain excellence, they are in no better place.

With all due respect to my colleagues, I prefer to meet new people and lead new projects.  That keeps me on a constant learning mode.  Some headhunters questioned whether I would run out of “excitement” after the variety of projects, commodities, companies and industries I have been working in, and I told them not to worry.  We are living in an ever-changing global economy where the products and services we buy and sell are evolving.  Who would have thought that companies can now advertise in digital media and social networks like Facebook 10 years ago?   It’s never more fulfilling working with your colleagues on brand new ideas and challenges which is very much what a management consultant would do on a daily basis.

Therefore whenever I am asked what kind of career future there is for a strategic procurement professional (note that I have added “strategic” to mark the difference), I usually paint the following possible scenarios:

1. Climb the corporate ladder.  Easiest and most natural thing to do is to excel and position yourself in your bosses’ jobs.  Make sure you acquire broader domain knowledge by rotating yourself across different teams before you can become leadership material.

2. Go into the businesses.  Only if you have built up your credibility within the procurement arena and you have been regarded as a trusted partner by your internal customers.  Check the internal job posting site for roles that could leverage your existing skills and expertise.  If there is a role that needs constant dealings with external business partners, or daily management of outsourced providers, you could be a good fit.  Although it may be a bit risky for the businesses, it is still probably better to pick someone who have been with the company for a while who understands the company culture and already liked by the teammates.  This is not easy of course, but being considered or shortlisted is already a huge honor to the procurement team.  If you feel that you are already in a respected company that you can see yourself staying for a much longer time of your career life, don’t rule this possibility out.  Start knowing more people and build a network not only professionally but socially.

3. Be a consultant.  Academic background and soft skills are vital.  The assets of a consultant is his brain, and his problem solving skills.  You need to be very independent.  You may not have anyone report into you meaning you need to roll up your sleeves to lead a project from start to finish.  You need extremely high EQ.  You need to work extremely long hours and may hardly see your wife and kids.  Sorry I don’t mean to scare you off, but those who make fun of consultants should re-assess what they have to work with in the first place.

There are spend management or corporate turnaround consultancies which smart aggressive strategic procurement professionals could consider.  It is a very rewarding experience.

4. Sales.  In my previous post I mentioned that all of us are very good salesmen or we won’t be successful in negotiating or securing that last production quota.  Companies like to know how procurement think so that they can adjust their selling strategies ahead of time.  I have seen time and time again where procurement professionals joined the sales force because of the wealth of experience they carry.  You just have to figure out what kind of companies you want to get into.

5. Public Sector.  Well, this is not exactly a different category, but with increasing scrutiny over how our government is spending and the pressure from public policy watch dogs, this is an area worth investigating.  Not everyone has the stomach for opportunities like this.  Nevertheless, the screening criteria is fierce.

Obviously there are other possibilities out there.  If you know of any, do share!

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While there is no one perfect sure-fire secret to conducting trainings, I have always been holding on to two main principles in my heart.  Namely, make it fun, and be as humble as I can be.

How many times have you attended training seminars and got totally annoyed by how boring or pretentious the speakers are?  Again, in Part One of this series, I am speaking about grown educated audiences and not school children.  We all have our opinions, and we all have different expectations why we are there.  Some want to learn, some want to challenge, so are curious, and so are just forced by their bosses to be there.  The last thing I can do is to bore the hell out of these people and be condescending.  After all, I have no grounds at all since usually my audience is way more experienced than I am in their lines of work.  Who am I to speak and for them to be chained to a classroom for 3 straight days?

Some readers shared with me their answers to the few scenarios I put forth in Part One, and I really appreciate your feedback.  Here I am going to share mine.

1. Dozing Off

You don’t need me to tell you that this is a really bad sign.  Something is seriously wrong, so I better take it as a cue to adjust my pace.  In many cases this is not really linked to the class but with the individual’s sleep-deprived work and social life.   Yet, don’t fool yourself.  If my class is captivating enough, I would wish that even the dead would jump up for joy.  I better do something quick, or it will be very infectious.   Usually, I will start asking questions.  Once the folks around the poor soul start to speak and I can successfully stir up a headed debate, they may hear all this commotion and realize they are missing out.  I then ask for his/her opinions.  Hearing one’s voice is the best way of coming out from any dream – hopefully.

2. Seemingly bored and kicking himself thinking why he was forced to come in the first place

This is not easy.  There is no way to really turn someone around if they are already fixated of the outcome of the training.  Again, I don’t mind having a few stubborn people around but they cannot be in the way of other more eager students.  The best way is for me to identify who they are BEFORE I even begin the training.  I can then deploy tactics to split them up and mingle them with other participating students so as to make the discussions more heated.  Most trainers ask their students to tell everyone what their expectations are of the training course, one by one, and have the key points drawn up on boards across the classroom.   This works.  I can tell whether they actually mean it, and I can usually assess their levels of experience by that exercise, so use it wisely.

3. Extremely argumentative and outspoken which is interrupting the progress of the class

They are the necessary evil.  I love them since they bring opinions and viewpoints which make the class so much more fun and exciting.  Everybody laughs and claps and boos and roll their eyes.  When I see people rolling up their sleeves and sometimes even walk around in the room, I sense energy, passion and frankly a side which they seldom present themselves in day-to-day office routines.   However, note the second part of this scenario.  If one or two are overshadowing the others and hindering the progress of the content of my class, I need to do something quick or I will lose everyone.  When people see me as weak and that I fail to contain the situation, I would have lost my credibility and the whole training. 

Tactic?  Easy – I just apologize and tell them the way it is.  “We need to move on”.  “I want to hear more differing views”.  “I feel that some students are not getting enough air time.”  “If we have time at the end of the training we can come back to these interesting topics”.  It’s always more respectful for adults to hear the true reasons rather than ignoring them.  Show them my job is not easy and that we have so much to cover in so little time.  They will usually be sympathetic and won’t be that hard on you.

4. Stone faced and authoritarian, maybe even feeling insulted from listening to a younger trainer

You will be lucky to have them in the class.  Seriously.  It can actually help you take a bit of the pressure off.  Why?  Although he seems serious and cynical, there may be questions from the floor that sometimes you just have no clues what the answers are.  If you can sense that there are a few senior members in the class, try forwarding the questions to them.  Of course, do not embarrass them.  If they see that I am respecting them and actually keen on hearing their advice and feedback, they feel dignified and will be a lot more engaged in the rest of the class.  I try this again and again even in answers I already know in order to give recognition and status to the ones who are so in need of it.

5. Fiddling with his blackberry or laptop the whole way through; and 6. Receiving and making calls as pleased

Every trainer starts off with house rules at the beginning of the training.  No phone calls, no computers or blackberries.  If you have to do it, do it out of everyone’s sight by leaving the classroom.  The fact that you can afford to miss the class does not give you the warrant of interrupting others who cannot.

I however cannot yell at them like some 4 year olds.  If I see people still doing that, I will continue speaking while slowly walking behind them as if nothing has happened.  Everyone’s eyes will follow me and naturally onto the naughty soul in front of me.  They will usually get the cue and stop.  If not, I will pull them aside quietly during break times and break the news to them.  Mobile calls however, need to be taken care of right away by me pointing them to the direction to the exiting door.

Sorry.  I need to protect the rights of the rest of the class, and I am paid to do just that.

There you have it.   Until next time, I need to doze off for a few minutes from all that typing. Whew.

Feel Safe Personal Trainer Button

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On Measure Me This, one of the many measurements of procurement people is how much cost savings we can bring to the company.  Another common scorecard item is how much of the overall spend we get ourselves involved in.  It would make us redundant if we deliver fantastic results but over a very small fraction of the entire spend is unaddressed.   There  is of course a distinction of in-scope or out-scope spend as identified in almost every procurement policy in most established global companies, but we as strategic procurement professionals always strive to push that boundary further.

The key is whether we can add value.  There is no point of getting involved in things that we will only drag down the process.

If we are convinced there are value-adds to bring to the table, we need to bring our strategies, similar successful case studies, potential solutions as well as our execution plans and knock on our internal customers’ doors.  That is very much like a salesperson. 

I recently came across an article on CPO Agenda (CPO stands for Chief Procurement Officers, an executive role that is gaining prominence over the last decade), “Face it, we are salespeople” by Paul Snell, which includes a quote from Roy Anderson, CPO of financial services firm State Street.

“… the ability to implement change was primarily down to the staff you employed.  Do you have people in your organization who are intelligent enough and confident enough to drive change and can be the authority in that category?…”

“… do your staff have the skills to explain change and innovation throughout the business?  They might be a great negotiator or market analyst, but for this, they needed to communicate and sell.  Face it, we are salespeople.  Procurement is definitely long gone.  We sell concepts to internal customers, we sell to our supplier base to be more innovative in their solution set and we sell to the internal customers to explain what the changes need to be…”

Personally and especially in this part of the region, I am seeing very few procurement professionals who do this well.  They are either too boxed-in to their comfort zones of negotiating and bidding, or way too customer oriented that they end up being “corporate servants” which they do not deserve to be.  Striking the balance is a lot harder than it looks, and therefore whenever I hire in my specific area of strategic procurement, I look for these soft skills which are much harder to be groomed comparing to product knowledge or negotiation techniques.

If you are interested, more of Paul Snell’s articles can be found on his blog

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Thou Shalt Not Kill

In my earlier post Thou Shalt Not Covet, there is a cliffhanger about times when I thought my own security was at stake.  No I am not exaggerating, and I do not need to make this up to make myself look important.  Now that I am in a secure location and with critical names masked, it shall be presented in the spirit of how our decisions could alter people’s livelihoods – and vice versa. 

“Slumdog Millionaire”

First a case I wasn’t directly involved until the incident occurred.  The company was looking to entirely revamp the employee shuttle arrangements in New Delhi India.  There had been numerous incidents and complaints about the below-par performance of a few service providers and the company was determined to make some changes. Millions, if not billions had been invested in the Delhi operation with thousands of employees hired in the region.  Since the transportation infrastructure was far from developed, the company has an obligation to take care of its employees in terms of daily commute between their homes and our offices.

New service providers and management need to be brought in from abroad to break the local cartel.  A few of the incumbents are managed by the triads and they refuse to oblige to American ways of bidding and negotiations.  Of course, the dollar amount involved is in the millions so it is money not to be missed.  Any change from status quo is a permanent livelihood shift for anyone.

Next we heard that the head of procurement of India got personal life threats to him and his family.  The company was genuinely shocked because no one in their right minds had expected such barbaric acts to take place in this day and age.  The company also did not want to back down as a sign of weakness. 

Finally after consulting with security, legal and senior management, it was decided that the project would continue but the project leads had to be reassigned to ensure safety of the individual.  It was eventually assigned to my team in Hong Kong.  It was believed that moving the project offshore and leading it virtually would create the least amount of risks to everyone.  We were doing the negotiations via phone calls, and all e-mails exchanges were conducted via a generic, un-named, e-mail account and distribution list.

I didn’t see it coming: India outsourcing to Hong Kong.   Yet we were glad to be part of a team!

“Titanic”

 

My client buys quite a lot of marine fuel for  its passenger liner operation, a figure close to US$70M a year.  The supply market is extremely limited and to make matters worse, harbor regulations and tight scheduling makes it very difficult to switch suppliers due to the huge investment they have put in especially for us.  The supplier naturally needs a longer contract to make up with their return on investment. 

My client for all the right reasons wants to make sure our rates are the most competitive in the market.  I am asked to run extensive studies of market pricing as well as to see whether it can be derived from process improvements.  After a couple of months of meetings and conversations it was time to physically inspect the current operation.  From my line of work, we need to be very astute of the surroundings in order to negotiate well by adapting to our counterparts.  In this case, I immediately felt that there was a strong sense of hostility upon us.

Remember we are talking about US$70M and above.  They also have other tying deals with us.  Me and my colleague needed to ride the water taxis to the fueling berth in the middle of the harbor to inspect the fueling process, and we had no protective gear.  Oh, I forgot to add that this all took place after midnight.

My colleague and I decided to make a full report to our boss prior to the inspection.  I told my boss if I am found missing or in the water, it will be no accident.  We really thought there could be this possibility.  Of course, I am still here writing this blog, but it was the first time I felt my job could risk my very wellbeing – a bizarre concept to me.

“The Break-Up”

I participated in a business meeting with an incumbent service provider who was about to receive bad news of not getting the new business volumes that we put out for bid.  The head of the user department was there in the meeting and did most of the talking.  Being procurement lead for the project, I had to be there to witness the conversation from start to finish, and it was me who controlled the entire bidding process in the first place with key requirements downloaded from the user representatives.

The service provider came prepared and later I found out that they were actually worried about losing the current share of their business which was neither our intention nor within the scope of our bid.  They sat down and took out a mobile recorder asking to record the entire conversation.  There you could see that there was absolutely no trust between both sides, due to a range of incidents that took place for years between the two companies.  After a few candid exchanges, the service provider got less nervous (since they knew their current business stayed intact) and became a lot more outspoken.  They decided to point the fingers at me and put the blame on us bothering only on dollars and cents.  The business head explained to them that it was senior corporate management who had changed views.  The service provider continued to mock me saying that he wanted to throw up every time he sees me, and almost refused to shake my hands when we met that day.

The business team was actually apologetic to me and pulled me aside assuring me that it was only business and I should not take it personally.  I never did.  I knew perfectly the tactics we played and more often than not procurement is labeled as the bad guys anyway.  I actually think it is fine as I always use this as bait to look for new businesses and projects from first-time business partners, so that they can act as the good guys – which is welcoming to them since they are the ones who end up working with the supplier on a daily basis.

After the meeting ended out of professional courtesy I escorted the service provider to the parking lot.  I saw a long stretched black limo with an uniformed driver opening the limo door awaiting his master.  “Do you go to the gym?”, he asked.  “Hell I might not be able to beat you if I get into a fight with you!”

And the limo with the tinted windows sped away.

That evening, I worked out for a straight 3 hours at the gym.

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The American dollar is so weak right now that it makes me think twice about traveling abroad.  Hong Kong dollar is pegged to the USD meaning that as long as I stay in between these 2 places, I shouldn’t be too less well off.  Wrong.  The recent quantitative easing round 2 by the Fed is pumping $600 billion artificial money into the US economy to stimulate business and creating jobs.  It however has a gigantic ripple effect to the global economies and I can already see huge inflation in this region ranging from grocery to property prices.  With all these uncertainties in personal purchasing power and a could-be volatile stock market, I better be more cautious about my vacation traveling plans.

Like most people I love to travel.  I particular have a thing for traveling on company trainings.  No I am not attending training seminars, but delivering them.  I never knew I had this passion of being a trainer until I was in consulting and a big part of my job then was to teach corporate clients how our reverse auction applications work.  Usually these are one to two-day workshops with not only technical transfer but also strategic procurement contents.  Then soon after I was asked to deliver purely knowledge courses specifically on the topics of strategic procurement, commodity and supply market positioning, project management and communication planning, negotiation skills, opportunity assessments, and the list goes on.  These trainings are by far the most fun and rewarding because they are highly interactive and engaging.

Conducting trainings is not all about getting messages across.  I see incredibly talented professionals who cannot present themselves or their ideas across precisely, not alone chairing workshops.  Making use of a room full of industry experts with varying levels of expertise and experience is exciting and challenging.  I love the challenge and I love to turn the floor over to get more participation.  It’s the sure-fire way to get everyone in the mood from just another boring seminar to one candid sharing and learning sessions which is about them and not about me.

I travel to many cities of Mainland China, Taiwan, Singapore, Thailand, India, Vietnam, Philippines and Korea to deliver trainings and I get excited every single time.  The people are different every time and if you add-on the different industries and cultures to the equation, I have to constantly adjust myself to make sure the scale is even.  It’s about playing the part well and playing the part based on people and circumstances that you can hardly prepare for until you are at the training hall at 8am.  It’s like waiting for the curtains to open and you have no idea whether the audience is a bunch of 80 year olds or die-hard heavy metal rockers.

Put yourself in my shoes for a moment.  What would you do if you find your training audience:

1. Dozing off

2. Seemingly bored and kicking himself thinking why he was forced to come in the first place

3. Extremely argumentative and outspoken which is interrupting  the progress of the class

4. Stone faced and authoritarian, maybe even feeling insulted from listening to a younger trainer

5. Fiddling with his blackberry or laptop the whole way through

6. Receiving and making calls as he pleases

Sounds fun huh?  Remember these are not school kids.  They are on average in their 30s to 50s and rank high in their organizations.  They usually come together as a team so the leaders may want to exert their authorities throughout the training.  Similarly the subordinates are shy to speak up with their bosses in the room. 

I’ll let you ponder over the above scenarios for a while and please share your comments with me.  I shall continue with my stories of each of these scenarios in my later posts.  So stay tuned…

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Negotiation skills in my opinion are nothing too technical.  Sales people today are already well prepared for intensive bargaining by the buyers and sometimes even the users themselves.  I refuse to believe that we achieve fantastic results because of our expert negotiation skills, unless we are talking about business partnership deals where there are lots of variables to trade mutually.  The latter takes strategic planning, homework and role-playing.

More often than not,  the users or stakeholders do not even know what they want in the first place.  They are confused over why they need what they are buying.  In turn they end up buying things expensively, and sometimes even buying things they don’t need.  It sounds silly, but also ironic that it appears the more “educated” people make more of these mistakes – just because they think these trivial matters are just not worth their valuable time.  Well, that’s why I am paid to help them.  I often spend a considerable amount of time interviewing my users and find out what is the current stage and where they want to go from there.  They will usually have some strong ideas about what they want to buy or may have received proposals already from suppliers.  I help them pin down to what are the necessities and what are the bonuses.  I try to put a limit to customized  requirements in hope to broaden the supply base from a few niche players to a more commoditized market.  This may not be practical at times and I may actually approach it the other way round and look for players that provide me with solutions rather than cookie cutter off-the-shelf products.  This takes experience and I of course need the help and expertise from the users as well.

If you keep asking questions like a 5th grader, you are already half way toward success.

 Pinning down what we want and identifying our true needs is quite a significant milestone.  Sales people love ambiguity because they can pad hidden costs and allowances into their product offering.  I want transparency, accountability and fairness.  With these simple principles, it does not take a genius to drive pricing down.

Some of my colleagues use good old traditional “threat” as their negotiation tactics.  I respect everyone’s individual negotiation styles, but it’s just not my cup of tea.   Today’s suppliers can be larger and more powerful than my employers.  We may actually need to depend on them though we are paying the bill.  When I pick people in my field of strategic procurement, I always go for talents who have expert communication and problem solving skills.  Critical thinking is a must.  The low hanging fruits are long gone, and we are presented with new unprecedented and complex problems.  I need  people who are fast learners, innovative and eloquent.  I used to be told that people who possess these qualities will put procurement jobs as their last resort.  True.  Good people are in demand everywhere.  However, just because such qualities are so rare, they can become truly niche players in the field, and the opportunities are endless.  To raise the bar and professionalism of strategic procurement is partly the objective of me starting this blog.

Cheers!

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