The Era of Disruption

I had the pleasure of attending and speaking at ISM Tech 2017 this past week.  It was one of the most forward thinking conferences I have attended in awhile.  From discussions on 3D printing, to drones that help with inventory management, my mind was blown with all of the innovation and advancements that are poised to completely change how we think of supply chains and deliver on customized solutions for the customer base.

Much like how Amazon disrupted the retail world and how Uber changed the game in delivery (people and product), we are at the cusp of some major advancements in Supply Chain and Procurement.   Let's take 3D Printing, as an example.  Rick Smith, CEO, from FastRadius described how 3D Printing IS changing how we think of inventory.  Inventory is no longer physical, it is digital.  It is changing the design cycle.  No longer do you need to have lengthly designs and protoyping and all the costs associated.  With 3D printing, you are designing as you are producing.  It changes where you produce, as you can produce close to customers than ever before.  It also changes how much you produce at one time, as everything can be on demand.  Therefore, the cost model is completely different.  No longer are we looking at larger purchases to drive down costs or MOQ discussions.  Lastly, and might be the most important, 3D Printing allows for customization based on specific customer needs or requests.  A current example is 3D printed knee replacements.  Due to the technology, the knee replacement can be customized to the individual receiving the replacement and it also can have pain relieving drugs inside the replacement itself.  My mind starts wondering about all the possibilities this could have.  Gone are the days of mass production to an average requirement.

Another topic was on robotics.  I spoke on RPA, which is already changing the way we look at end to end integration and process automation.  However, there was also a great conversation on physical robots, in this case drones, that are helping with asset management and inventory outside and inside buildings.  The thought process here is to have a drone count assets/inventory for you.  They can perform it so rapidly that gone could be the days of cycle counting, as they can count the entire warehouse/DC daily if you wanted.  PINC, known for their yard management expertise and software, is driving this innovation.

A couple of items that were not talked about at length, but are relevant none the less, are how these changes impact human capital/how we can start planning for it now and how we are living also in a unstable geo-political atmosphere. After reading several overviews of the Procurement environment in 2017, tit was clear that there is a high level of uncertainty around populism, trade changes, and how this could impact global markets.   There is also a general lag in human capital capability building, within businesses and within our schooling systems, to get ready for such a disruptive change.

So, the question is with the state of the Procurement functions today, are we ready for such an Era of Disruption?  Who will see this as a large opportunity to leap frog the competition?  Or will Procurement be overrun by such changes?   The amazing thing to me is that if you are not having conversations now about these changes, you are already behind.  These changes are already occurring and they are not waiting for anyone.   It is time now to be a disruptor!  

Next Gen of Procurement Talent

When is the last time you took a serious look at your Procurement job descriptions?  I would take a calculated wager that it reads something like this:

"Come join our team at Acme. We are the best in the industry and have top notch benefits.  We are seeking a candidate who has 10+ years of X commodity experience and can negotiate better than most. This candidate must be able to drive TCO and know Y Procurement system. Must have good communication skills and know MS Office."

Ok, maybe it is not that bad....but might be close.  After wiping off the figurative dust from the job descriptions - do they actually reflect the type of talent we need NOW and years into the future?  To get Procurement unstuck, we must (yes - it is imperative) seek new skills, new thought, new talent.

Change Makers:
If you have not noticed yet, the world is changing at a rapid pace. In fact, society in general is looking for new vs established.  Think about it - business that once touted established in 1910 aren't doing so well anymore. Some no longer exist. Those that are still here are changing their business models to compete with what is new.  Beyond that, there are new technologies, new business methods, new...new...new.

When looking for talent, are you looking for those leading that change or for people that have change done to them?  It would be great if instead of looking for min. years of experience, to seek how the candidates have changed the "world" around them for the better.  The internal stakeholders and your customers are expecting change and are in some ways driving change. To build those robust stakeholder relationships, to drive innovation, to solve business issues, Procurement needs those who are proven change makers.

Influencers:
When I first started in Procurement, I spent many a night learning negotiation techniques. Things like the best negotiation technique is silence. Or, stratify your concessions, thereby never giving in to your must haves. However, with the opportunities before Procurement these days, I firmly believe that we do not need more negotiators; we need influencers. The key difference is that negotiations seem to have a finite end in mind while influencing requires an ongoing relationship. It required a deep understanding of the people you are working with, an understanding of their goals and what drives them. Notice - I am not only talking about suppliers here, but also stakeholders, c-suite executives, and matrixed counterparts.  Great influencers have great relationships internal and external to the company. They also make tremendous progress against their goals.

Those with Grit:
We have so much to do in Procurement to take it to the next level. And, it is going to be hard. It will require paradigm shifts and tough situations. Therefore, we are going to need team members who will prevail through  it all. We need those who will not give up or give in easily. We should be looking for those who have experience going after a goal and pushing through even when it seemed impossible.  Gritty people are always looking to their goal(s), always looking for ways to improve and for feedback. They are purposeful in why they are seeking a spot on your team and how it helps them attain their goals.  And, when those intersect, they will be a force to be reckoned with.

Techies:
To keep pace with technology is an endless pursuit. However, it can, when implemented properly, be a game changer. Those who have specialized tech skills focused on automation, AI, big data analytics are and will be tremendously valuable to Procurement. When applied correctly these technologies will enable rapid sourcing, predictive analytics, and will automate most transactional purchasing processes. If you want to keep pace, hire talent now that can manage and deploy such solutions well into the future.

You might be thinking that these attributes just described are hard to identify on a resume. That is 100% true. Some of these are even hard to identify successfully in a traditional interview.  That is alright. Once you are done rewriting the job descriptions, then next up will be changing the interview format!  Get those creative juices going and go hire someone great for now and for years to come!

How Often Do Your Dams Break?

Lake Oroville, the poster child for the California drought, is now literally bursting at the seams.   The spillways failing,  people being pulled out of their homes, the beautiful Feather river being damaged, and more rain on the way.

Some facts are jumping out at me related to the situation.  There was a knowledge of the issues with the spillway and the repairs needed.  The capital request was $6M that was submitted and rejected years ago.  Now, just to repair the spillways, it is estimated to cost $200M.  This is not including the costs associated to the evacuations, or the lost of business in the area, or the repairs to the downstream impacts.

Beyond feeling horrible for the people living through this, I can't help but think about how this is an example of what occurs so often in businesses.  So often, we op't to be reactive.

Think about the Procurement professionals dealing with the contracting for the repairs of the dam.  Do they have any leverage at this point?  Nope.  Do they really care about the value of the services, the quality of product, or are the rightly focusing on just getting the repair done as quickly as possible?  Contractors working rain or shine, through the night, to get out of a dire situation.

How often are we in these situations?  Back up against the wall and money and quality going out the window.  We try to make the best of it, but it still really stinks.

So, you could learn from the apparent moral of the story about preventative maintenance and the real importance such programs.  But, there is another lesson here.  Within Procurement, we are always talking about adding value to the companies we support.  Not just saving money but adding real value.

One way to add such value is to help your customers focus on being proactive.   If you can help your companies avoid the dire, back up against the wall situations, we can drive a ton of incremental value.

My questions for you.  How much time are you planning with your customers about how to make small investments now to prevent larger investments later?  Do your goals support or incentivize your teams to take this approach?  Are you having conversations about items that are going to be end of life soon and what to do now?  Do you know the mix of new spend in their budgets vs maintenance/refresh costs?  Do you strategize, consult your stakeholders on how to maximize their budgets now?

I have heard that the best way for Procurement really thrive in organizations is to be great problem solvers.  I 100% agree as long as we are proactively solving problems vs being reactive.  Think about if we can prevent 3-4 of these aggravating situations each year.  We could possibly avoid accidents with our employees and customer complaints.  We could negotiate holistic contracts and make our stakeholders be superstars. How satisfying would that be?

Sourcing Accelerated

Let's talk about Sourcing being stuck.  Being stuck in the mid 1990s.  Being stuck in the same 6, 7, or 8 step sourcing process that was designed before there were concepts like category management or supplier relationship management.  It was designed before technologies like Ariba even existed.  The Sourcing process was designed when Full House, 90210, and Clueless were the rage.

Now, I loved the 1990s - I got jiggy with it for sure.  But, it is 2017!  It is time to fast forward, literally.  Many other areas in business have been focused on speed to value where we have been focusing on periphery, needed, improvements like P2P solutions, CLM, Spend Analysis, outsourcing, cost savings through FTE reductions in source through pay.  We have also done brilliant things like integrated supplier management and proving that we can add more value than cost savings.

However, there are few that are focusing on the core, sourcing process.  This is our achilles heal.  How often do you experience this:

• Hey Procurement, we have already negotiated this agreement, but can you sign the contract?
• Sure Procurement, you can help us, but you only have 3 days to get this agreement signed?
• We are trying to get this new product to market ASAP and we do not have time to take it to bid.
• Ummm...yeah...your goal is $25M more than last year.
• Or - my favorite - How long will this RFP take?  Procurement professional - well, our average SLA is anything between 4 to 6 months.

What in business today takes 4 to 6 months???  Really?  No wonder stakeholders do not want to use Procurement.  

What if we accelerated the sourcing process?  What if we reduced the cycle time dramatically?   Think about this.  If we were able to accelerate the sourcing process, we would be able to get more spend under management.  We would be able to offer faster solutions to meet business needs.  We would be able to drive compliance by taking away a large excuse.  It would be speed to value.  (By the way, I am not talking about e-auctions.  They have a time and place, but in a different article.)

There are technologies out there that somewhat help with this need.  They help with complex scenario analysis and provide templates that can be used to reduce development time of the RFP itself.  If deployed correctly, they can help create this acceleration.  

However, there still could be so much more with the technologies that are emerging in the market.  There could also be so much more if we, as Procurement professionals, actually focused on this.  

It could make your 2017 more like 2017 vs 1994.  Are you all in?

Calling All Unicorns - Help Needed

For those you have been following and those who are new to this blog, it is focused on getting Procurement Unstuck.  For us to progress forward, we need to think differently, challenge status quo, be disruptive, and take action.  There are some out there that are actively doing this and you, my friends, are unicorns.  Mythical creatures, who are becoming legends.

Thus far, this blog has been focused on sharing my point of view, but now we need yours, too.

First question up for debate - and an egg that I have not been crack, yet -

How have you successfully been able to get end users to complete their goods receipts in a consistent and timely manner?

The Perplexity of No PO, No Pay

Here is a common conversation I have had with companies.
"We have a No PO, No Pay policy," Jane from Acme said with confidence.
Me, "Really, do you? What is your compliance to No PO, No Pay?"
Jane, "Well, about 20%."
Me, "Does that exclude your documented exceptions?"
Jane, "Yes."
Me, doing the math in my head, "What is on is your exception list?"
Jane, "Well, legal, marketing, utilities, ...."
Me, I have now stop listening and ponder to myself that the "policy" is more like a guideline.  And Jane is still listing her exceptions.

I feel for Jane.  I have been Jane.  I think if we reflect back and really challenge ourselves, that we have all been Jane or still are.

So, why is this so hard?  Why do we talk about having No Po, No Pay policies when we really don't?  It is such a simple concept, but so complicated to truly achieve.

Executive Sponsorship
This is one of the main reasons that these policies fail.  Often the executive sponsors are a name on a back of a tee ball shirt vs being an active sponsor.  A sponsor who will hold other executives feet to the fire when they ask for an exception because they are unique.  This sponsor also needs to clearly understand the value of such policy and promote it across the company.  A sponsor who does not ask for exceptions him or herself.  Unless you have a sponsor like this, your policy is at risk.

Measurement
Do you have a goal that you are striving for with your policy?  Do you have a clear definition around how you will measure that goal?  Please, I beg you, please do not exclude your exceptions from this calculation.  If you exclude your exceptions, you are giving yourself a false warm blanket, cozy feeling versus a health dose of reality.  The definition of your metric should be as simple as invoices paid on PO/total invoices paid.

Enforcement
When I think of enforcement, I think of two areas - what is your control point in the process to actually enforce the policy and what are you doing with the data to provide visibility to your sponsor and other "enforcers" across the company.

Let's start with the control point.  This is simple, but complicated.  The control point must be that if AP receives an invoice that is not referring to a PO, it must be rejected to the supplier.  Then, the supplier must get a PO and resubmit the invoice.  That part is simple.  The complicated part is making that happen.  You have to have a good process and technology that allows you to communicate effectively to suppliers.  There will be a problem if your rejected invoices go into a blackhole.  Also, the suppliers need to be fully aware of this change, as they need to take action vs just resubmitting the non PO invoice over and over again.  (Been there, done that - it is not good.)

If you have the control point activated, then you also have all this lush data that you can use to change behavior within your company.  Using that data is key.  You could have a three strikes and then you are reported to executives in your organization for prompt action.  You could provide dashboards weekly.  The possibilities are endless, so please walk through that door.

Exceptions
This is my nails and chalk board moment.  Exceptions....eekkk.... Exceptions are like the little thread that you pull on and unravel a beautiful shirt.  Once you open the door, it is so hard to control.  Here is a concept for you - do not allow them.  If you receive an invoice, a PO should be referenced or at least in the system.  If there is no invoice, like taxes, dues, etc...then no PO is needed.  You might be thinking that is impossible, but maybe that is a large reason for the lackluster implementations of this policy.  Until we start thinking differently about this, we will continue to struggle.

And, that is why this is a simple, but complicated policy to implement.  At the end of the day, actually tackling No PO, No Pay gives your Procurement teams such an advantage and totally worth the effort.  Good luck all!

That Little Voice in Your Head is Your Anchor

Happy New Year everyone!  I hope 2016 was an amazing year for all of you and 2017 is going to break barriers.

You might be wondering why this blog went silent for over a month.  It was because I was relaxing in a cabana, somewhere warm, sipping on a sugary, rum drink for several weeks.....Ummmm, nope, that is not true.  I was doing something equally amazing, but not as comfortable.

I received a call in mid November to help with a complex, urgent project that was critical to the success of the company - and it was outside of my role description.  It was a crazy, intense, life changing experience since November, and it scared the crap out of me at the same time.

Some might look at those experiences as painful, long, tiring, stressful - complaining the whole way - and never seeing the opportunity.  However, that is such a miss. The mission of this blog is to help Procurement professionals to get unstuck.  There will only be ONE of you in this world in all eternity, ever.  (Think about that for awhile.) You are a unique gift to the world.  You are a unicorn.  It is time to realize that every experience and every call to action is a time to shine and to stretch into something better.

Why was this experience life changing and amazing?  It provided the opportunity to get out of my daily routine, to meet and lead all kinds of super talented people, to learn more about the company, to solve crazy, complicated process issues, to plan for now and the future, to forge relationships that I will have forever.  It also helped me understand that I can successfully step up into a role that scared me.

So often, we seek our routines and rely on our beliefs that we think are true about yourself, your company, your expertise.  You allow the little voice in your head to rule your world.  Opportunities like this allow you to breakthrough and stretch to something better - and make that little voice shut up, at least for awhile.

As we stare 2017 in the eyes, what are your plans to truly get unstuck?  If you feel and know deep down you can be better, what beliefs are keeping you back?  What are you going to do (you must take action) to live your deep down desires?  What opportunities are you going to raise your hand for instead of looking at your shoes when called upon?  Lastly, and MOST importantly, how are you encouraging your teams that you lead to do the same?

Let's make 2017 our year to show the world our best gifts.  Let's set sail - letting no anchors down this year.