Procurement 2020: Qualifications needed in tomorrow’s team

The field of procurement has evolved from tactical to strategic, and the skill sets required in the workforce have also changed.  Rapid change and evolution have become the norm.  Ever-shorter product life cycles and the constantly changing economic and political landscape, mean that supply management professionals must be able to respond effectively and adapt to meet this new reality.

This level of responsiveness and flexibility are important characteristics that will need to be sought out and cultivated in the supply chain work force. The ideal team member of this new nimble procurement team will have a wide array of talents, interests, and skills, along with flexibility and inquisitiveness, a desire for continuous learning, and a willingness to do things in new ways. 

The three characteristics needed in supply chain professionals are:

1. Entrepreneurial thinking

2. Ability to manage relationships and work in teams

3. Ability to understand and do complex financial analyses

Also important is a broad base of business knowledge.

Employees who have long focused on the transactional side of purchasing may find this new normal to be a real challenge. Education and training that supports these individuals will be critical to ensure their continued effectiveness.

Fortunately, the younger generation now entering the workforce is accustomed to rapidly evolving technology, and they are very comfortable with dynamic change. For them, a new version is anticipated and welcomed. It will be important to give these employees opportunities to do many different things, and have them thinking creatively right from the start. Procurement leaders will need to focus on building collaborative, integrated and forward thinking teams, that make people enthusiastic to contribute, and this giving the company a competitive edge.

Adapted from “The Agile Individual”, Inside Supply Management, May 2011, http://bit.ly/k9C8, and  “The Agile Supply Chain”, American Executive, 1 January 2006, http://bit.ly/kMY65x

Procurement Best Practices

Companies are spending more than ever on products and services to keep their business running. As a result, the strategies chosen by the procurement group will have a more profound impact on the bottom line of the business, both positive and negative.

It’s important for companies to understand the forces and components that determine the total cost of their business processes. Understanding these cost drivers is an important first step that must take place before new best practices can be developed and implemented.

There are four procurement best practices:

A Better Approach to Vendor Evaluation

Vendor evaluation is often inadequate. Typically, pricing and systems criteria are given greater weight in the decision versus people and performance management.  In some cases, vendor selection is based on past business relationships rather than a pragmatic evaluation of capabilities. 

The following vendor evaluation protocol provides guidance regarding the key areas to consider in vendor evaluation and a point scale for weighing each component of a vendor’s capabilities. Companies can compare vendors objectively by rating each vendor’s capability in each area and weighting according to the percentages and then adding up the total.

How Can You Avoid a Sole Source Situation?

Negotiating with a sole source supplier can be one of the most disadvantaged negotiation situations for a procurement professional. It's important to know how to prevent sole source situations from occurring.

Sole source situations can occur when an engineer or end user writes a new specification that calls for the use of goods or services from a specific supplier. Once the specified item is launched, the specification and suppliers can be very difficult to change.

Strategic Category Management - The Next Step after Strategic Sourcing

Management of indirect spend through strategic sourcing has lead to dramatic cost savings. But, opportunities to cut costs have diminished as the remaining low hanging fruit has been harvested. Strategic Category Management (SCM) is the next evolution that procurement organizations need to undergo in order to continue to positively impact their companies’ bottom lines.

Top-Down versus Bottom-Up Change Management

Top-down change management is the traditional management strategy in which all decision-making, guidance, and authority flows from top management down to everyone else. It is typically the only methodology used to manage change in organizations. This approach often fails due to low employee buy-in and lack of flexibility and empowerment of line management and front line employees. An even bigger problem with this methodology occurs when top-management doesn't understand the work processes of their own company, and so they are unable to make good decisions about how things will get done in the new system. This dissonance will lower productivity and ultimately damage employee morale.

Experienced project managers understand that employee buy-in is the most important variable in the success of any change management process. The most successful outcomes are achieved when supervisors actively engage employees in the change management process using bottom-up management techniques. This is the most effective method for managing employee expectations and securing end-user commitment.

Supervisors have the most direct line of communication with employees, and they have the greatest influence on employees' perception of change and of new systems. Each employee's attitude to the project needs to be assessed, and individual concerns addressed one-on-one. This should be treated as an educational process, with a goal of dispelling negative attitudes through increased understanding of the process, and the sharing of a clearly articulated common goal.

Change can be challenging, but handled correctly, it need not pose an insurmountable obstacle to achieving an organization's goals.

Why Emotional Intelligence Matters more than IQ in Business

IQ has long been considered the key measure of a person's ability.  However, studies have shown that having a high IQ is not a good predictor of success in life or in the business world.  It is thought that IQ contributes about 20 percent to life success leaving 80 percent attributable to other factors such as emotional intelligence.

Emotional intelligence includes abilities such as being able to motivate oneself; to persist in the face of difficulties; to control impulsiveness and delay gratification; to regulate one's mood so as to keep emotions from blocking the ability to think; and to be able to empathize and to hope.

There is a cost to the corporate bottom line from low levels of emotional intelligence on the job. The consequences for a work group can be severe if a member or leader keeps exploding in anger, or has no sensitivity to the feelings of others.  Emotionally upset people cannot remember, attend, learn, or make decisions clearly.

On the flip side, there are clear benefits to working in a group whose members are skilled in emotional intelligence.  They would be attuned to the feelings of others, able to handle disagreements so they do not escalate, and have the ability to get into flow states while working.