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Posts Tagged ‘strategic procurement’

I was reading the Executive Coach section of CPO Agenda when I came across a very interesting question for coach Dr Richard Russill, who is a business coach and author, specializing in supply, cost and relationship management.   The question is: “People are debating whether “procurement” is the right name for … procurement.  What do you think?”

Dr Russill replies are: “Despite its dodgy connotations the ‘P’ word is too well embedded in the business vocabulary for it to change. Where Google, even recently, suggested ‘Community Post Office’ or ‘Chief Petty Officer’ for CPO, it now comes up with what this journal stands for. Besides, it is perceptions within companies that matter. It is great if your CEO understands procurement as a key business driver. But re-badging procurement is a waste of time if company colleagues still see it as a function in which they are not involved.

Yesterday I was folding village newsletters into envelopes. Recalling Adam Smith’s pins, I found that it was faster to do all the folding, then the insertions, then the stamping, as separate activities. It was also totally mindless. That’s the problem with functions in business. Despite being functionally excellent they can seem mindless if the job is to follow instructions set by others, as distinct from influencing the process which creates instructions. Procurement is not a function but a cross-business team activity with purchasing and supply operating as a sub plot. The CPO’s dual role is to inspire intelligent commercially-aware decision-making as well as minding the supply task. Making this a reality requires story-telling and tangible supply successes…not a new label on the bottle.”

Well I can’t agree more.  Over the years I have personally lived through many names of our profession such as strategic procurement, operations procurement, procurement and supply chain, purchasing services, enterprise supply chain services, global procurement, and global real estate and purchasing services.  Every two or three years all companies are itching to do some rebranding, but the only thing that matters is how top management engages procurement and the rest of the business teams together.  When I used to be the head of procurement for Greater China in American Express,  I found myself in front of my senior business leaders and stakeholders every 8 months or so, reinforcing everyone that regardless of how our names changed, I would still be there to take care of the same duties.  Yes that is exactly how frequent our restructuring took place.

And this restructuring also means that our titles, levels, geographic and commodity responsibilities keep getting reshuffled.  New organization charts were drawn, and everyone needed to re-apply for the new posts, or even the same posts that they were assuming.  The job applications needed to go through the routine interviewing and grading process.  Some posts were added, and some were eliminated.  Such process lasted at least 3 or 4 months after it was publicized, and I had experienced it more than once druing my tenure.

At the end of the day, my core responsibilities were exactly the same.  The number of my superiors had expanded, and my local stakeholders simply could not care less.  The management consultancy engaged made a buckload of money.

And the world turns.

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Self-Mockery (Part Two)

There are definitely monkeys in my workplaces over my many years in the profession.   The worst thing is not with the monkeys who may be genuinely inexperienced, but with their lazy bosses who won’t move out of their desks and offices to face the customers.

So, maybe I should label them as zookeepers from now on?

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Self-Mockery (Part One)

If the above is what you are witnessing in your work place, call me, and send your colleagues the link of this blog. 

I will surely enjoy my chats with them.

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I think I am cursed.  Just two days ago I had to go to a new hair salon because my regular stylist was sick at home.  Aside from the obvious dialogue on styling preferences, the new guy asked me the one question which I dreaded the most.  You will know what that is from my very first blog post here.  “Sir, what do you do?”

This question is one of the very fundamental reasons why I themed this blog around my work.  Since I am not the type of person who will just mumble some ambiguous crap to dismiss such questions, watching other people’s blank stares has always been my biggest fear.  I therefore tried my best to describe my work in the most conceptual manner.

It seemed to be working.  My new stylist seemed to be genuinely interested and kept asking me follow-up questions (or maybe he was way too courteous to yawn in front of me).  Soon enough I found the other stylists as well as assistants eyeing our way.  I think they were just puzzled to hear some weird chap babbling about his career at a high decibel.  Also, you can clearly see from their eyes that they have never heard of such profession in their lives. 

“How can one enter this profession?”

“What are the qualifications for your job?”

“I have never met any client who do what you do!”

It’s exhausting to answer these questions as I never want to misrepresent my profession, if the other party is genuinely interested.  After hearing my elaborate answers, my new stylist jokingly said that I should start a teaching career.  I told him that was partly what I did on a corporate level instead of a commercial one. 

“So what is your title?” I think he was asking for what my company put on my name card.

When I answered “procurement” both in English and in Chinese, he confessed that he had never heard of it in his entire life.

Alright there is just something seriously wrong here.  I am not trying to glorify what we do here, but when there is this low level of general awareness around us, we need to take responsibility.  Perhaps we have been doing a sucky job in the past that makes us so redundant.  Maybe the results and deliverables we generated can’t really be traced back to our efforts.  Maybe we were never good at advocating our value in front of clients, and perhaps even chose to stay in the comfort zone of assuming tactical purchasing roles that is increasingly commoditized. 

I can’t depend on the others, and so I will try my best to continue doing my part to help elevate such awareness, especially when I know there is immense value we provide to our employers.  I won’t be an obnoxious geek when I hang out with my friends and peers, but I surely won’t be shy in front of business clients and partners. 

There I said it.  Let’s see if I will get killed one way or another.  If you don’t know what I mean, read this!

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You see them staring at you on 5-storey high billboards.  You see their dashing smiles and authoritative poses on the city’s buses.  You see them on full-page newspaper ads where they are pictured with hundreds of students holding up their straight-A report cards.  Yes, they are the city’s star tutors, though they dress and behave like your TV and movie idols.  This, is a multi-billion dollar industry.

When I grew up there were a few tutor schools where we got ourselves enrolled to brush up for upcoming public exams.  Those were usually a few sessions only for each subject and the fees as I recall were nothing like what students today are paying.  The star tutors today have evolved to almost replace the normal daytime schools that students go to.  Their curriculum is tailor-made to survive public examinations, and hence the star tutors spend a considerable amount of time researching the latest examination trends and marking schemes.  Many of them possess enough star qualities to lure aspiring students.  They are well-groomed, articulate, and hardly much older than the kids themselves, making them extremely relatable and approachable – comparing to the day school teachers.  They hire assistants to help them prepare fancy notes and even run errands because their tutoring schedules are so hectic from running around several tutor centers in the city, usually on a daily basis.  They hire image consultants together with professional make-up artists, photographers and designers to make sure they are marketable in this lucrative business. 

I am not here to criticize whether these star tutors have twisted the idea of education, or whether it is unethical to make money out of young kids.  In fact, this is a common trend of fast food mentality of Hong Kong where everyone focus on only the results rather than the means.  The blame is with everyone.  I just see this as a classic example why training and teaching techniques need to be evolved according to times.  Everyone can find subject literature in books and over the internet, and they need no one to simply read to them and repeat case studies from textbooks. 

Students want to hear relatable material so that it helps with digesting and understanding the subject at hand.  In my field of strategic procurement training, we always make use of real life case studies to illustrate the theories we advocate.    Public sector case studies are often popular due to their wide coverage over TV and newspapers.   On the other hand, the trainees also don’t want to be preached  like young school kids.  They want to feel that they are also contributing to the class and hence we are often moderators instead of trainers.   I like the idea that the star tutors are organizing social activities to help bond with the students.  I know, you may argue that they are in fact sucking up to their paying customers, but if the students do not feel that the classes are enjoyable and effective, there are tons of other tutors out there.

I dream of the day that there will be similarly inspired tutor centers some day where we can offer consulting advice to working procurement professionals, whether it is in terms of career progression advice or anonymous yet real life work issues.  As the next generation of public-exam-tutors, will there also be star tutors for new career professionals?  Come to think of it, the “rules at work” are even less scripted and way more challenging.

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I was looking for salary survey information for some research and just realize that the latest figures won’t be available until first quarter next year.  While surfing the two main industry certification bodies, namely The UK-based Chartered Institute of Purchasing & Supply (CIPS), and US-based Institute for Supply Management (ISM), I come across some interesting facts of the year 2009.

I know and I have been advocating all along that the procurement profession has undergone a major transformation over the last few years.  However I am still quite shocked to read from the CIPS – Croner Reward salary survey (conducted between October and December 2009) that procurement and supply professionals get paid more than peers in marketing, finance, IT and human resources in graduate careers.  Salaries obviously reflect experience, qualifications and ability, so graduates entering the profession need to prove themselves by showing a willingness to learn, independent thinking and determination. 

This is definitely great news for us to recruit graduates into the profession. 

In terms of experienced procurement professionals, the ISM 2010 Salary Survey (covering 2009 data) shows average salaries by titles range from US$50,506 for entry level positions to US$240,408 for chief procurement officers.  Total average annual compensation is US$98,200, and 34% of respondents reported earning a salary of US$100,000 or more.  The reported high salary was US$620,000 for the men and US$690,000 for the women.  Bonuses are already included in these figures.

I know, salaries shouldn’t be the only luring factor for graduates, but I truly believe that it has to be appropriately measured up against the value and results we deliver.  There is never any excuse for corruption or bribery activities, but face it, the likelihood of that happening is higher with underpaid procurement professionals.  As covered in my pervious posts, we should always uphold the highest level of integrity at all times.

On the same CIPS site I discover a fabulous Graduate Guide to Procurement, aimed at introducing what procurement is to graduates.  It provides a wealth of information including industry 101, salaries, environment, industry outlook, job hunting, CV writing, personality tests, and a number of corporate case studies including British Airways, Rolls-Royce, Starbucks and Apple.  Highly recommended even for those who are just interested in knowing what we do for a living!

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U Buy I Buy?

In The United States, there have been over 200 sites, led by Groupon, offering discounted deals to the public over volume buying.  The leader Groupon is rumored to have rejected numerous buyout offers from Yahoo and Google offering as much as 6 billion US dollars.  Now the trend has blown to Hong Kong and China and some of those newly established sites are also rumored to be approached by Groupon itself (the tackily named local site UBuyIBuy).  It all sounds like a promising new shopping phenomenon.

In the States the targeted demographics is supposedly young, educated female customers.  I would say it is probably similar in this neck of the woods.  The deals I hear are largely focused on health, fitness, beauty and dining areas.  There are a lot of vacationers here and so I also see a whole lot of travel and hotel deals as well.

One common sociological drawback of buying coupons is that customers are always tempted to buy without really needing the merchandise.  The deals and coupons are so tempting that it feels stupid not to take advantage of them.  These bargain hunters fall into traps where they are stuck with expiring coupons and unwanted products.  In a highly competitive city like Hong Kong, I see people lining up for sales all the time, and more often than not, the need of not missing out on any opportunities shared or overheard from their friends and colleagues far outweighs the need of buying exactly what’s on offer.

No wonder why merchants see these portals as fantastic business partners to boost sales.

On the corporate side however, suppliers hate to recognize how much collective buying power we have, even within the same group of companies.  They can make more money by selling separately to different business groups, departments or users.  They will also try to differentiate as much as possible the requirements so that every sale appears to be a standalone product or service.  When we come on board, the number one task we perform is to go through the company’s spend records and run a full list of spend by suppliers.  With that we can approach each of them and negotiate the lowest price that benefits all cost centers of the company.  That also explains why we are now sourcing regionally if not globally, so that we can cover the biggest volumes possible.

So when I know my customers do check with their friends and relatives for bulk bargains in their personal lives, I do not understand why they wouldn’t pick up the phone and call us for assistance in the work place.  Well, is it just because it is the company’s money and not theirs?

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