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Archive for the ‘Frown’ Category

I’m Lovin’ It

Posted in Frown, Sick, tagged , , on December 8, 2010| 2 Comments »

Some of us may remember a former Managing Director of McDonald’s Hong Kong was jailed for 4 years and 5 months last year, who was tried for bribery charges 3 years ago.  The 47-year old MD accepted bribes for recommending and approving a Thai food company to become the corn supplier of McDonald’s.   The bribe is said to be 10% commission of total corn sales, amounting to around 330 thousand US dollars.   To cover up for the bribe, the MD advised the corn supplier to answer law enforcement officers that the money was used for a joint venture property investment in China.  The city’s Independent Commission Against Corruption, for all the right reasons and evidence, did not buy the cover up.  The MD was head of McDonald’s Philippines for 3 years before taking up the top post in Hong Kong in May 2004.  According to reports, he spent 10 years expanding McDonald’s business in mainland China.

I have no idea why senior executives would throw away their hard-earned career, naive enough to hope that their illegal acts would not be uncovered.   However I am now told that such dealings are not at all rare in the food industry.  I admit that all I am hearing are rumors with absolutely no proof whatsoever, but I am amazed as to how short-sighted these supposedly professionals are.  Is it all about the money?  Is it about the perceived power as well?  I guess it probably feels great to have potential suppliers begging for your business and even offering to provide certain concessions.  Earlier I wrote about what a fine line procurement professionals could walk while accepting gifts, and here I would like to share a question which a former boss of mine used to raise in an internal training session which I co-hosted.

For the immense support you generated to their business over the past years, your supplier delivered a gift to you during a year-end business function.  You opened it and it was an expensive Swiss branded watch – the kind that you would only reward yourself after getting a sizable bonus at work.  Since the value is way above the company’s gift policy guideline, you reported it to your boss, company management and compliance.  Now suppose that everyone has cleared you of any illicit under-the-table insinuations, your boss told you that the decision is up to you.   Nothing is illegal, and the company has endorsed it as a genuine personal gift.

Would you take the watch?

 

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Company Travel 101

Posted in Frown, Grin, tagged on December 2, 2010| Leave a Comment »

For almost any regional corporate employee one of the first things they ask is the company’s travel policy.  To many executives who are in the air over 30% of their time, this policy directly affects their very well-being.   Some even ask about it during job interviews so that they can size up the opportunities as part of their consideration.  Again, may I remind everyone that the travel policy is the collective work of company’s top management, human resources, finance and security.  Procurement is only asked to come in afterwards to negotiate the best travel deals for the company, based on set upon travel policy guidelines, and available budget.   We always get blamed or bombarded with complaints and questions from everyone, from secretaries to heads of businesses.

Am I entitled to fly business?

Don’t we just hate rubbing shoulders and elbows with strangers in coach?  The funny thing is that we can accept it when we fly for leisure ourselves, but somehow enduring coach travel for business is simply unimaginable.  Some argue that it’s for safety.  Some says it’s important to get on board and off the plane first.  “Since we need to catch business meetings immediately after landing, we need to arrive in our best physical and mental condition”.  What a load.  Everyone wants to get an exception because they are just too important for the company.  Yes, the company will cripple if they cannot fly business.

What routes can I fly business?

“Only flights over 8 hours are entitled for business class? Ok, Ms Secretary, please book me a trip to fly to Australia onward to Japan then to Manila over to Shanghai before heading home.  Then I can travel business the whole way through right?”  “Why is China no longer a “hardship” country?”  “Have you flown to Delhi before?  Do you know how awful the airport it is?”  Why this, not that, is the most common question we get and we normally politely direct them to talk to either HR, finance, or security.

 What are our preferred airlines?

 In fact this is now relatively less common in this part of the region.  It is easier to identify, say, United for the States, but it is a lot harder to identify one or two preferred airlines that fly to most cities of the region. Having  too many preferred airlines just simply does not make sense.  Instead, companies nowadays adopt the lowest carrier/airfare concept.

What are lowest airfares?

Corporate travel desks are required by management to quote lowest fare options to business travelers with the idea to make sure all staff takes these options automatically.  Yet I still see a lot of cases where travelers still insist to fly their own preferred airlines because of either better timing, better alternation flexibilities, or simply, a much more attractive mileage program that benefits the travelers personally.  I am seeing some global companies requesting travelers to fork over their mileage, or ask airlines to enroll ONE corporate mileage account for all business travels, so that all awards can be used for business, instead of some executives’  lavish first class vacation to Hawaii with their wife and kids.

What are our preferred hotels?

This always strikes up quite a controversy.  You can get consensus easier with the best airline for each country (which usually is the flag carrier because of the best timing and most frequent schedules), but it is almost impossible for everyone to agree with what hotels are the best for each city.  Some insists on 5-star ratings.  Some focuses on their proximity to offices.  Some  wants to stay away from American properties due to recent terrorist attacks.  Some require lavish conferencing and banquet facilities.   Of course, with corporate’s continuous strive to cut costs, maximum city overnight rates have been decreasing year after year, and it just requires procurement’s super powers to conduct regional RFPs for preferred hotels hopefully to please everyone.  At the end of the day, you always end up with a few travelers who make it an effort to scream at you every time they see you.  Very rewarding job it is.

I myself, am just another ordinary traveler.  I want the best for myself and I always dream to stay in the best places, fly business with the best airlines, be picked up by stretched limos, and have unlimited per diem.  However I am also realistic, and I know what the real priorities are.  Those reckless spending days are over.  Instead, I’d rather focus on negotiating a higher paycheck for myself.  Business trip is a business trip.  Admit it, no matter how pampered you are being treated, you will still whine and bitch about it no matter what!

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So Long, Insecurity (Part Two)

Posted in Frown, Hope, tagged , on December 1, 2010| Leave a Comment »

As leaders, arriving at a changing or even turmoil environment can be a daunting reality.  There is a lack of trust in the air from the people left behind.  You can hardly find anyone with enough facts to put the puzzle together.  Everyone is saying what you can and cannot do.  Neighboring departments all seem to be using the chance to grab a piece of your empire.  Your comrades are all skeptic.  You don’t know who to trust.  Your boss hired you into the situation and expects you to turn things around, fast. 

This sounds very common to all professions of all industries.  Those days of hiring you into an established post already with good processes and good people are long gone.  We are all expected to improve, land better results, and accomplish the so-called impossibilities.  If not with the latter, your subordinates would have already been qualified for your job.   From day one, you should have already set your expectations right.

I am still surprised to see how many new leaders performing below expectations, not only in the first quarter, but for the first full year.  Yes I know how challenging any new environment is, and how insecure we can all become, at least secretly, from all the observations and disasters landing our way right from the start.  However, there is just no way to look back and ponder.  In my opinion, they have nothing much to lose if they are hired to turn things around in the first place.  Things cannot get any worse, and timing cannot be any better, in reality.

Speed is critical.  People need to see actions, attitudes, opinions, and bold drives.  Employees need to see hope and change.  Though there is no guarantee (is there any, ever?) of the outcome, new leaders need to be able to articulate his or her vision and couple with a few tangible action plans quickly, usually no later than the first quarter assuming office. 

Doing nothing, hiding in his or her comfort zone and let the whole situation plays itself out is by far the worst thing any new leaders can do.

Insecurity?  Please, no time for that.  Don’t start putting the blame on people and the predecessors.  Yeah yeah, that’s why new leadership is sought.   I have seen new leaders complaining about how they are left with no alliances, soldiers and culture.  Yet they always fail to realize that they are the leaders of change as well.  They have way more ammunition than they thought.  They can hire and fire.  They can instill new thoughts and culture.  They can set examples by getting their butts off meeting internal customers, stakeholders and senior executives to remove obstacles and attain buy-in.  Without that,  they can hardly expect their subordinates to change, just like that.

We all need a large mirror to reflect on what we do, behave and run away from.  It is particularly difficult to see the truth when you are a leader because there are very few who would dare to hold up the mirror against you.  Needless to say, knowing how to pick and utilize your talent pool is probably the most critical and very first thing any new leader should master.  Identify the good people, know what their strengths and weaknesses are, and spot the ones who are marginally effective.   Only then would you be able to take in the right advice and recommendations, from the right people.

Insecure leaders, on the other hand, tend to be skeptic of competent staff members due to reasons listed in Part One.  To me, these are just signs that they are still acting as managers, and clearly not yet leadership material. 

This, is where executive coaches come in.   One coach used to say “Getting past your insecurity and embracing contributions from talented staff is the best starting point of becoming a new leader.”

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Reciprocal Trading (Part One)

Posted in Frown, tagged , on November 24, 2010| Leave a Comment »

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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Ambushed!

Posted in Frown, Grin, tagged , on November 19, 2010| Leave a Comment »

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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No Way Out

Posted in Frown, Hope, tagged , on November 18, 2010| Leave a Comment »

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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Measure Me This

Posted in Frown, tagged , on November 12, 2010| Leave a Comment »

It’s not like we are devious.  Yes we get measured by how much cost savings we achieve for the company, and that’s what the company hired us for in the first place.  Some people, however, are just plain reckless.  Just because it does not come out of their own pockets, they would just spend it out on anything imaginable, perhaps as compensation to their perceivable below market pay or uncalled-for bullying by their bosses.  If only everyone treat the company’s money like their own, we would be jobless.  Oh yes, thank goodness we have you guys around.

So if you come to me complaining about worsening business traveling perks, I hate to break it to you, you are just so behind the times.  In this day and age of diminishing revenue and profits, top management has already been cutting traveling and operating expenses long before any procurement people was born.  It’s all top down.  It’s all policies.  They want to take away your printers.  I don’t even give a damn.  We are just so lucky to be the ones executing the policies to keep our jobs, and so stop complaining about how underprivileged you are.  Grow a pair and stop whining.  At least you get paid.

Those who protest against procurement people having special treatments and getting themselves upgrades or even freebies, get proof and report them to management.  Don’t let them get away with it.  They are the ones who hurt our brand and community and I don’t want any of them smearing my name.  Procurement people should assume the highest ethical standards because aside from technical skills and subject matter expertise, credibility, impartiality and ethics are the only pillars of who we are.  I fight for my company and my users / stakeholders.  Despite drastic budget cuts by top management, I strive to get the best value for the diminishing dollar.  If I am not doing my job right, the matter could be a lot worse.  In today’s markets of ever-increasing inflation, avoiding price increases or maintaining buying power is as important as getting discounts.

I hate to break it to you, these are challenges of procurement perhaps 10 years ago.  Every major company is done with cuts in traveling expenses, IT budgets, or office equipment spend.   In order to keep meeting ongoing cost savings targets summing up to millions of dollars per year, we have to continue looking for new and un-ventured areas for cost savings opportunities.  Business process outsourcing, recycling, above-the-line marketing buy, consulting, transportation, training, headhunting, health coverage, energy and utilities, professional memberships, private clubs, event planning, leases, corporate cards, and the list goes on.  I even once led a project in India selling company owned condos using reverse auction tools, for cash.  In another scenario I sold off tens of millions of dollars worth written-off customer debts to investors for immediate cash benefiting the company.  I go where the money is, period.

So you now get a better picture of how I am measured.  Like any salesmen, I need to deliver a set upon ROI (Return of Investment) to my employer.  Hypothetically, if I am paid a million dollars, my job is to help the company save at least 7 million.  In this case, the ROI is 7 fold.  Of course, there are procurement colleagues whose jobs are to process purchase orders and ensure timely receipt of goods and services.  They are equally important and they shall be measured a bit differently.  I am, however, more specialized in running projects that require more strategic planning and the collaboration of multiple stakeholders, and more often than not, extremely powerful suppliers.  I need to make sure my project outcomes are implementable across the region, but I am expected to keep building a cost savings pipeline to meet my targeted ROI.  That means I also need to convince my fellow procurement colleagues to support my initiatives and in turn help me implement the change in respective local markets.

If you look at it this way, I am very much a sales person as well.  I need to be humble, open, a good listener, resourceful, efficient, a good communicator, and entrepreneurial.  Better yet, my results are completely measurable.  In my opinion, these skills and attitudes will soon become the pre-requisites of strategic procurement professionals everywhere.

Next time when you have the honor to run into a procurement person, try to see which breed they are. 

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