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Posts Tagged ‘strategic procurement’

I really don’t know why people are STILL complaining about their jobs being outsourced.  Yes, the obvious drawbacks are possibilities of wage deflation, losses of luxurious corporate benefits, absence of job security, and absolute increase in work pressure and workplace efficiencies.  Plus, most of us complain about the degradation of service levels as well as increased costs in inter-partner bureaucracies and training.

I wrote last year about the irreversible trends of corporate outsourcing, and they are only getting more popular.  My arguments are that even if you are fortunate enough to still be employed by the big corporates, none of the so-called solid benefits are going to last forever.  You don’t have job security, your bonuses are increasingly tied to the ever-rising or unattainable goals.  The company is talking about a “review” of your pension plan, and human resources just broke the news that rising health care premiums are driving their need to reduce medical coverage gradually over the next few years.

Unless you are at the so-called top of the food chain, and making huge revenue for the company directly, chances are, no one is immune.  The world is a flat economy, and cheaper labor around us are certainly going to “steal” our jobs, whether we like it or not.  Instead of complaining, we really need to step up our game by finding out what makes us either irreplaceable, or what’s unique in our problem solving approaches.

If you are real worried about your life at an outsourced company, hear it from me, your days are already numbered at your current one.

Life is hard, and people pay you because you have the ability to handle head-scratching problems, and very often ahead of its time.  Money is not going to fall from the skies and working models are evolving every second.  So get over it, stop reminiscing, and grow a pair.

 

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6 more days and we will enter into a new era under a brand new Chief Executive of the HK SAR. All we are bombarded by the news these days are the various scandals going on with the two transitioning heads of state. For months, the incumbent Donald was caught repeatedly by the press in reckless spending on business trips, accepting lavish traveling and even residential favors by local tycoons, and very much to our horror, smuggling truckloads of liquor from the chief executive’s mansion to his home. On the other hand, CY, the CE-elect, was wildly skinned by the public for lying blatantly about his illegal building works at his home – an offense which he harshly accused of his rival Henry only a few months ago. These scandals have hardly anything to do with public policies or the welfare of our fellow citizens. Worse yet, they speak about our leaders’ character and integrity. Or, the lack of it.

There is a saying that our souls can be corrupted by power, and don’t act all naive and shocked when you turn on the TV news. This happens everyday at the work place and in your households. The difference is only in terms of the level of misuse for personal gains. I am never saying that any of this can be condoned. I’m just saying that while we point our fingers at those around us, we should at the same time have the decency to look at how we conduct ourselves.

In my profession I always look into areas to minimize wastage and inefficiencies. I agree, these are only fancy and politically correct words. My company charges me to make sure we tighten up our expense control measures so that no one is stealing corporate resources. That’s why I am in one of the most hated professions on the planet.

Corporate resources can be traveling guidelines so that the junior marketing manager won’t be checking in to the presidential suite like our Donald did. They can also be how the heads of departments spend our money on unnecessary external consulting firms so as to “pass on the blame” for below-par business results. Talking about how it is best to spend company’s money is challenging and confrontational alone from a third-party point of view, but nothing is even remotely comparable to the landmines of employee benefits. You can imagine the extent of it by looking at the public riots you see in the cash-trapped countries of Greece and Spain.

What are these so-called employee benefits? Alright, we have hotel categories, hotel breakfasts, hotel locations, serviced apartments, daily spending limits, flight classes, lowest cost airlines, airline lounge access, airport limousines, club memberships, blackberry models, cell phone packages, laptops, flat screen monitors, office furniture, name cards, stationery, pens, folders, giveaways, and the list goes on.

Don’t get me wrong. I LOVE nice things. I love to be pampered, and I like to think that I have earned my ranks enough to be treated nicely by my boss. However, I know what the reality is, and I know how to draw the line. I come in to work and deliver and get my pay check. Then I can spend it on nice things. I’d rather see my employer make money and then reward me with a bigger pay check. Then no one owes anyone anything. What strikes me hard is that I often see many well-off senior staff thinking very much like Donald and CY – let’s get as much out of the company/government as possible.

I am fully aware that there are blood-sucking corporations out there who take advantage of innocent workers like running a sweat shop. That’s why we protect our employees with well written policies – something which our Chief Executives conveniently omitted for themselves. We know what we are entitled to when we sign on to a job offer. From time to time, companies will want to revisit those policies due to flagging business results or other priorities, and this often creates an outroar of frustrations and resistance from everyone. In my years of experience, I often find the biggest resistance actually comes from the highest ranking staff and often the most wealthy ones. They work their way around with smart excuses, threats and pressure through their poor secretaries. The only thing they almost never do, is walk away. No, it’s not worth losing those high paying jobs, they admitted.

That to me is a complete revelation of their character, and it is eye-opening. I believe it is a competitive market out there, and every one of us should know how much bargaining power we have in all circumstances. If you truly believe you are being ill-treated by not getting the true rewards of your deliverables, walk away. There must be tons of other companies who want to grab you. You have suffered enough. Don’t bully your way through the innocent policy enforcers. Negotiate a bigger package and then take 150 days of leave a year to indulge. Don’t spend your precious time haggling over the next hotel tier or that first class window seat on your next business trip. The reality is, a business trip is a business trip. Even if you have Donald’s presidential suite, you can still hate it because your diamond shoes are too tight.

That’s why, if I am charged with attacking “greed” as one of my buying commodities, I will happily and politely defer to my fellow human resources colleagues for their professional enjoyment.

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I love a good meaningful conversation.  If you give me a choice of ten casual acquaintances versus one single dinner companion with an open heart and soul, I would pick the latter, any time of the day.

You may find it as an obvious fact, but in a heavily condensed urban city where physical proximity does not equal to emotional availability, we should count our blessings whenever we have the opportunity to enjoy a nice, candid, no-agenda exchange.

Those of you who have read my earliest posts would remember how difficult it is to explain my profession.  It’s not in one’s normal vocabulary, and it’s not something that you can describe in one sentence before you completely bore your partner to death.  Yet if someone is curious enough to probe, I am more than happy to act as an ambassador for my professional community, or more selfishly, for my own reputation.

I’m always happy to reciprocate, of course.  Last night I was introduced to a field called Occupational Therapy.  I have heard of Physiotherapy, or Vocational Training, but shamefully not the former.   As my friend explained, the Chinese translation of the field is more than misleading, and I conveniently blamed it on the same.  After hearing his line of work, and learning about the lack of professional resources particularly in the mental practice area in this city, I find his profession fascinating both in terms of technical knowhow, and of its limitless possibility.

I can’t help but compare what we do as a living, as I always strive to keep myself grounded by not taking myself too seriously.  The following conversation never happened last night, but in my imagination, part of which could go something like this:

What are you most proud of with the work that you do?

My friend:  The ability to see my patients recover and adapt to the desired state according to prescribed progress.

Me:  My stakeholders giving me 30 minutes to convince them that I’m not wasting their time to help them save half a million dollars.  Oh, also, to finally get my stakeholders know what it is that they truly want to buy.

Who do you constantly work with in your everyday work life?

My friend:  Patients who have a certain disability to achieve the daily “occupations” of life, and their loved ones who see the need to seek professional help for subject’s adaptation and recovery.

Me:  People who hate me, underestimate me, abuse me, and set me up as scapegoats for one or more of their supply chain problems.

What is the demand like for your profession?

My friend:  There is a growing lack of professionals in our field.  The demand is constantly surging and we find it difficult to keep up with the relatively long accreditation process.

Me:  Demand? What?

What is the one biggest challenge that you see in your profession?

My friend:  The lack of awareness of what Occupational Therapy is.  We hope the Health Department could educate the public more so that patients can seek treatment earlier on, and more resources can be injected for those who are very much in need.

Me:  To make the case for department heads that the half million dollar savings we achieved for their business equate to jobs saved for their employees.

What are you most frustrated about your work life?

My friend:  Below-par recovery progress due to resources insufficiency or uncontrollable physical complications.

Me:  Incredibly idiotic, egoistic and insecure morons.  And they’re not even mentally handicapped.

What is the one question that you get the most from people about your profession?

My friend:  What’s the difference between Occupational Therapy and Physical Therapy, or Vocational Training?

Me:  Why are we stuck with this crappy ball point pen at the office?

 What is the outlook of your profession?

My friend:  Instead of containing within the public healthcare sector at present, we see the growing need of increased specialized care that warrants investments from the private sector.  Wages and recognition will be on the rise.

Me:  Ultimately, we will be helping our companies achieve more cost savings by outsourcing our own jobs. 

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Vault.com has a recent blog article titled “How Not To Sound Like A Liar At Work“, describing how people generally are put off with hollow business jargons.  Not only that, most of us actually think whoever using those phrases are lying to our faces.  The article includes a few commonly used business jargons and their respective underlying meanings.  Here are a few examples:

Business-speak: “Deep dive

What people who aren’t liars say: “Instead of doing our usual half-assed job, we took the time to investigate properly.”

Business-speak: “Circle back

What people who aren’t liars say: “We’ll discuss this again – ideally when we actually know something about it.”

Business-speak: “Deliverables

What people who aren’t liars say: “Mundane tasks I am responsible for completing.”

Business-speak: “Let’s take this offline

What people who aren’t liars say: “Let’s talk about this after the meeting, so we don’t embarrass ourselves in front of the boss/waste everyone else’s time.”

I bet none of the above business talks are new to you, regardless of what you do.  You see it at work, and you hear about it all the time in politics and virtually any news outbreak on TV.

What I find hilarious and fascinating is the website “Unsuck It“, dedicated to “unsuck” the terrible business jargons you come across with.  Basically, you type in the jargon and you are presented with the unsucked version.  Brilliant.  Here are a few of my best finds.

Innovative

Unsucked: New, Slightly improved, Shiny

All-hands

Unsucked: Staff meeting

As soon as possible

Unsucked: In an unreasonable amount of time.  Quickly

Challenge

Unsucked: Problem

Elevator pitch

Unsucked: Brief, persuasive summary. Particularly one tailored to an influential audience trapped with the speaker in a small, windowless box suspended from a cable with no obvious escape route  (p.s. check out my post on Elevator Speech)

Empower

Unsucked:   Assign a menial or unpleasant responsibility to someone, particularly to a low-status individual or group  (Ouch…)

Paradigm shift

Unsucked:  A new, crappy reality to which employees or customers must accommodate themselves. Change in basic assumptions or a profound shift in perception. Possibly the most overused, diluted, otherwise useful and descriptive phrase

I hear what you’re saying

Unsucked:  LA LA LA LA LA I can’t hear you

Interject

Unsucked: Interrupt whatever you’re saying to show you I was raised by wolves

Knowledge transfer

Unsucked:  Sharing relevant experience throughout an organization. Bitching about office politics over drinks. Getting old-timers to divulge useful information before you lay them off for being too expensive

Outside the box

Unsucked:  Unconventional.  But in a way that won’t challenge anyone or get me fired.  Also, I’m too lazy to think of useful descriptors

Pencil in

Unsucked:  Schedule, with the understanding that you are going to flake at the last minute in favor of someone more important

Rightsizing

Unsucked:  Chicken shit for firing

Wow factor

Uncuked:  I don’t know what I want, but it’s not what I’m looking at.  Tart it up!

If you can think of more, send them to me as I can use a laugh every now and then, especially at work! 

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Dealing with suppliers that are not in any way smaller than your employers is one of the trickiest negotiation scenarios to master.  I cannot believe I still come across senior procurement executives who continue to believe that they are given almighty powers just because they are in the seats of making multi million deals.   More often than not, they are the ones who constantly get themselves hit with never-ending surprises.  I pay no sympathy for them, not even a tiny bit.

I wrote about reciprocal trading last year and that existence is plentiful with large multinational suppliers.  What I encountered recently is the classic example of negotiation leverages – the battle between the lawyers.

A big technology supplier is insisting to use a brand new contract template on a renewal deal, while we believe that it is just going to be a tremendous time drain to review all the terms and conditions again from scratch.  Lawyers of mutual parties refuse to give in, and as in every negotiation, essentially it’s the deal itself that is going to matter.  As long as I gather the bottom line position of my stakeholders (i.e. users), it is now up to me to lay it out on the table by keeping it simple.  Do we need this deal or not?

The answer is always yes, or we won’t get ourselves into this situation in the first place.  If this is a deal not worth remembering, no one would have been bothered by it this much.  As long as the intention is mutual, there is ought to be some common ground that we can all work with.  I usually don’t dwell on matters that are already handled by the lawyers to avoid redundancy.  I focus on the logic portion and point out the inconsistencies I see of the other party’s arguments.  Why is a new template needed?  What’s changed?  What does it have to do with our other similar agreements in other markets?  Why wasn’t this mentioned during bid phase?  Why are we discovering this only now?

In short, don’t take us for a ride.  Our company’s time is worth much more.  I reserve no time for last-minute rip-offs.  Even if we really rely on you, we deserve some professionalism instead of some third grade sleeky salesmanship.

Obviously, I sugar-coat such messages.    Though every seasoned salesperson, or in many cases the Managing Directors, would have gotten my messages.  When I make it a point as to question someone’s professional credibility or even integrity, coupled with logical reasoning and facts, there is no way the other party won’t budge.

Does it work on people on the same side as I do?  You bet.  Did they inspect all the fine prints when they received the quote?  Did they sound way too eager when they approached the supplier?  Did they not make it clear as to what’s important to the company aside from the service only?

I have to say again and again that none of this is rocket science, and those of you reading this must also agree that this is just common sense.  However, you may be surprised just how much time and effort continues to be wasted on such power play.

Perhaps, that equates to job security to many.

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What is outsourcing?  Many are familiar with the term, but few can cite specific examples in their space.  In fact, it is much closer at home than you think.  There is outsourcing in your office, your own business, and more often than not, your home.

Technically speaking, whenever you are paying for an external party to help you with a task, service or process that you would normally do by yourself, you are outsourcing.  Hiring someone on your payroll is not, since you are still owning the responsibility.  So when corporations are trying to concentrate more on their core business of making money, every one of them are outsourcing their support functions, or, non-core businesses, to external parties.

Some may claim that it’s the capitalist way of cutting jobs and pay.  Though I don’t support allowances of inefficiencies.  If we really have no clue how to design, build, manage and maintain the car park in our office building, what’s the point of painstakingly identifying and hiring experienced personnel, only to fire them after the facility is completed?  Instead of spending unnecessary amount of time researching for the right technology and systems, applying for the right permits, and running into hick-ups and delays of unknown waters, outsourcing the car park design, construction and management services to a professional firm in the industry proves to deliver much more precise results.  We are now outsourcing our non-core requirements or services, to a partner whose services are of their core business proposition.

The only so-called alarming trend nowadays is that more and more of our supposedly core corporate functions are being identified as non-core.  Corporations want to save costs, and they also want to protect their brand image.  Though it doesn’t really work these days as public opinion still goes after the cost bearing parties, corporations still find it better hiding behind the outsourced partner.  Certain obligations can be passed along, financially or legally.  For the last two decades or so, we are seeing payroll, real estate management, mailroom services, logistics, finance & accounting, IT, HR, legal, and of course, procurement, being outsourced.

The way I see this makes sense is that with external parties, we are harsh toward them.  We want accountability, crystal-clear processes and deliverables, and lower costs every year.  If they would have done it in-house, it may take considerably more time and efforts to pitch, convince, and motivate internal staff to “up their game”.  Plus, there is on average 30% additional HR benefits being invested on each employee on top of their salaries.  As long as a reliable partner can be identified, most senior corporate management think it’s just a no-brainer.

For employees, this is definitely a worrying trend.  None of our jobs are truly secure these days.  Thousands of professional firms are popping up every month around the world looking for services to take up for our employers.  Just knowing what our employers do as a business actually limits our career.  We now need to make sure we are truly functional specialists that are non-industry specific.  What about opportunities?  Yes, consider the option of moving into specialist firms or BPO (business processing outsourcing) firms.  Just google the area you are in and you will find tons of HR services firms, finance & accounting solutions, procurement services BPO centers, and so on.  The field really has changed, and so are the game rules.  Though the experience can be a lot more satisfying depending on the type of person you are.

Still wanting a comfy life with the security of a large corporation?  Make sure you are one of the best within your team, and target for the remaining few positions that are still needed to lead and manage your corresponding outsourced firms.  These positions are still critically needed within the headcount of corporations, because all of them will acknowledge that failing to sufficiently manage an external outsourced partner is always a ticket to disaster.

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Multinational corporations rely quite heavily on external consulting firms for a number of reasons.  They need an outsider’s point of view.  They need experts with specialist knowledge on areas that can’t be found in-house.  They need to strategize privately and confidentially.  They need someone authoritative to back-up and conduct due diligence on something they have already decided to proceed.  They want someone impartial to make difficult and often unpopular decisions within the company.

No matter how many industry jokes there are about consultants (as if any profession is ever immune), one cannot deny the importance of at least one of the above reasons.  Corporations do not need to take time to pitch the change or promote the upcoming initiative the way they would proceed without the appointment of a consultancy firm, at least when the project is barely at its infancy stage.  Engagement is fast, cooperation is usually guaranteed much due to the fear factor, and in my opinion, much of the fees are also paid for the deflection of any future blame, should there be a failure of the deliverables.

So if there is money to spend that is authorized all the way from the top, it does sound like there is nothing to lose.

Well, that is rather a loose pre-requisite here, I admit.  Corporations nowadays do not have that much money to burn anymore, and every cent they spend is under close scrutiny by the shareholders.  Though consulting spend sometimes is considered untouchable or out-of-scope depending on the policies of specific corporations, I do get myself involved from time to time, as a procurement professional.  I am involved in the analysis and souring of consulting firms, through to the finishing touches of negotiating the terms, fees, contracts and team members to be deployed.   Realistically, procurement is only involved on engagements that are relatively less sensitive.  I still look forward to having myself signing a sacred non-disclosure agreement in order to get myself invited to negotiating a top-level super-sensitive consultancy engagement deal.

Why?  Consultancy engagements are lucrative, to say the least.  Engagements I have involved with start from a few million US dollars, easily.  No matter what the proclaimed return on investment is, it still constitutes a big percentage of discretionary spend to be forked out upfront.  We can attempt to build in all the pay-by-performance metrics all we want, but the truth of the matter is, if there is no one involved to conduct at least the minimum due diligence on the costing formula and the engagement brief, the company only has itself to be blamed for being ripped off, big time.

It’s always a sensitive area for procurement to be invited to the table, and that pitch may very well come from the consulting firms themselves.  In order to avoid the risk of conflict of interest, many consultancies could only embrace my presence to prove that they have nothing to hide – and that is the first and smart step.  Internally, when senior stakeholders are adamant about their preferred consultancy partner, I position my value as one who helps build structure, transparency, fairness and accountability to the engagement contract.  In more times than not, that equates to monetary savings, or at least money better spent.

Sam Reynolds wrote an informative article titled “Two Threats Facing The Consulting Industry” on vault.com.  How do MNCs deal with the imminent pressures of cost control in their needs of consulting help?  What is the future of the consulting industry in view of internal consulting units and consultant-managers?  Whether you are a consulting or a strategic procurement professional, Sam’s article is not to be missed.

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