Apollo Solutions drtombooks.com blog: How Can a Purchasing Professional Get “Street Cred...

Apollo Solutions drtombooks.com blog: How Can a Purchasing Professional Get “Street Cred...: How Can a Purchasing Professional Get “Street Cred” in Their Company? By Dr. Tom DePaoli Most purchasing professionals h...












































































Contact Dr. Tom = thomasdepaoli@yahoo.com

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Strong Supplier Expectations Work Use Them

Here is a good example of a supplier expectation: We seek suppliers that can help us continuously improve. In order to encourage this behavior, we are willing to split hard improvement savings with you 50-50 for the first year of these savings. We need your help in educating end-users, designing manuals, working with cross-functional teams, and introducing new products. We want to take advantage of your technical expertise. We value suppli­ers with good technical services and those who can keep us informed of leading edge technologies that we can employ.

Link to my book Common Sense Supply Management http://amzn.to/RCvfPF

The Complexities of Global Sourcing

It’s impossible to cover all the differences and complexities for every country. Some of them include currency issues, political stability, infrastructure issues, contract-law differ­ences, high logistics costs, protectionism, and lack of managerial talent. However, there are methodologies available to help you at least have a checklist for such a global-sourcing challenge. Make sure you do a current “as-is” of your supply chain and a future “to-be.” It’s critical to develop delivered or all in costs.

http://amzn.to/RCvfPF

Some Suggested Kaizen Ground Rules

Here are the ground rules that I used in my kaizens: Team is 100% committed. No interruptions. Stick to an agenda. Use a “Parking Lot”. An open mind is the key to change. Positive attitudes are essential. Resolve all disagreements. No one is to blame. Practice mutual trust and respect. One person has one vote. Everyone is equal; no position or rank. No such thing as a dumb question.

Become a kaizen expert. Read my book on the link.

Link to my book Common Sense Supply Management http://amzn.to/RCvfPF

Mastering Information Based Negotiations Dr Tom DePaoli

Information-Based Negotiations - A Different Approach to Negotiations in Purchasing

An information-based negotiation is a radically different approach to negotiations. It emphasizes deep knowledge of the supplier and their industry. It transgresses from some traditional approaches to negotiations.  It is not the adversarial win-lose negotiation style with the emphasis on game playing, theatrics and taking full advantage of a supplier’s weaknesses. An information-based negotiation is not the win-win model either. Information or knowledge is power, but in information-based negotiations the purchasing professional gains a deep understanding of the supplier’s industry, their margins and their culture. In essence this is an immersion or empathy with the supplier and their competitive landscape. The best way to describe it is that the purchasing professional knows as much or more about the supplier and their industry as they do!

In my recent book Common Sense Supply Management I state, “The very best piece of negotiations advice I ever received was to know the capabilities of your supplier, their industry, their competitors, their cost drivers, their margins and their capabilities better than they do. It requires a lot of homework, digging and flat out work. You obviously cannot do this with every supplier only the most important and most strategic ones. It is a powerful negotiation tactic based on knowledge not histrionics. There is no glamour in the information-based approach it requires immense research about the industry, the suppliers financial condition and competitive forces. Understanding their culture and their organization is critical. You are in essence trying your best to put yourself in their shoes, and mimic as best as possible their anxieties and fears about the whole process. The information-based approach is not for the faint hearted or those who do not want to persevere. It should only be exercised for critical materials or services. It requires ongoing market research and it will work better when executives are actually exchanged with the supplier on their site. The resources and commitment to pull off such an information based approach are significant.”

With the Internet the gathering of information for the information based negotiations approach has been greatly facilitated. There are numerous industry reports, websites and search engines that can help the purchasing professional. Nothing beats personal face-to-face contact and dialogue with numerous suppliers in a particular industry.  They all have a fairly keen knowledge of their competitors which can rapidly improve your overall knowledge.  Since many industries are oligarchic in nature, once you understand the top three or four players in the industry you have a real good foundation from which to start partnerships with your chosen supplier.

I suggest the purchasing professional consider using the Porter Five Forces analysis. Although this used extensively in marketing and marketing analysis, it can be invaluable to the purchasing professional. This will provide a good start for industry understanding.  Another good source for information about suppliers and particular industries are distributors. Often they are glad to provide information about suppliers and especially their customer service. Here is a general diagram of the approach to information based negotiations that I have used:

 One additional tactic I have successfully used during the initial trust building phase is to mutually do supply chain process mapping of internal processes but with a twist. The supplier comes to your site and maps your processes, then presents it to your cross functional team to check their understanding. Then the purchasing professional ventures to the supplier’s site and performs a similar mapping. Often this sparks a new creative exchange of ideas. The information-based approach has tremendous flexibility to cope with market and industry changes.  Information drives decisions not emotions or one-upmanship. It requires the purchasing professional to become the resident expert on a market and an industry. It yields much more significant long term gains than traditional or even win-win approaches. Using this approach is one of the best methodologies for transforming your supply chain and developing true breakthroughs with your supplier.

Tom DePaoli

Dr. Tom DePaoli is the Management Program Director at Marian University in Fond du Lac, Wisconsin, and the Principal (CEO) of Apollo Solutions (www.apollosolutions.us) which does general business consulting in the supply chain, Lean Six Sigma and human resources areas. Recently he retired from the Navy Reserve after over 30 years of service. In other civilian careers, he was a supply chain and human resources executive with corporate purchasing turnaround experience and Lean Six Sigma deployments. He is the author of: Common Sense Purchasing,  Common Sense Supply Management and Growing up Italian in the 50s.

Preparation Before the Kaizen Is Crucial

Preparation Before the Kaizen Is Crucial

Two to four weeks of hard preparation work by the Green Belt or Black Belt and team or kaizen leader is required for a kaizen. The kaizen leader should be a Green Belt or Black Belt. Essentially the first six kaizen tools (there are eleven) are com­pleted or very nearly roughed out before the kaizen event.  The champion (the sponsor who wants the kaizen done) and kaizen leader must identify necessary subject-matter experts (team members) required for the kaizen. The champion and kaizen leader should author a draft kaizen charter. Hold initial planning meetings with affected stakeholders to communicate the kaizen’s schedule, metrics, targets, and Lean tools to be applied. Most kaizen teams hold three-to-five working meetings before the actual kaizen event.

Link to my book Common Sense Supply Management http://amzn.to/RCvfPF

A New Way to Look at Paying Procurement by Dr Tom DePaoli

A New Way to Look at Paying Procurement

By Tom DePaoli

March 04, 2013 at 5:26 AM

Most supply chain professionals are familiar with the best practices of a supply chain organization and how to transform purchasing into a lead strategic partner in a company. These usually include a thorough spend analysis to focus on the major areas of materials and services. Another aspect includes the rationalization of suppliers and the formation of a few key partnerships with important suppliers. The institutionalization of a comprehensive sourcing methodology is also crucial. The area that is often overlooked or neglected is the investment in people!
Many purchasing professionals have been rewarded for bureaucratic and tactical behaviors for many years. The culture of risk aversion is prevalent and roles are particularly well-defined and limited. They focus on a particular material or service and become “experts” on these items. Often they work in silos and have no real connection with operations. It is usually not their choice but the expectations of the culture or of their organization.
The retraining of supply chain professionals begins with developing the capability to lead cross-functional teams not only in sourcing, but in process improvement activities such as Lean and Lean Six Sigma. Most need to reach the level of at least a green belt in a process improvement approach, and to reinvent themselves to be total product experts not just a particular material expert. You have to be a product expert to understand the Voice of the Customer (VOC) or what is really important to them. This requires striving to become an expert in an entire industry not just a narrow material. It also requires a dedication to understanding and working with operations. Performance reviews need to be tied into how well they do in predicting the market trends of their particular industry and meeting or exceeding the VOC.
All too often this training is piecemeal, unorganized and uncoordinated. Fortunately there is a comprehensive approach that has been around for 40 years that works in many industries particularly ones where employee knowledge is highly valued like the chemical, oil and process industries. The approach has been called pay-for-skill or pay-for-knowledge. Employees are paid more for each skill or knowledge area that they develop, and demonstrate their proficiency in by job performance. It does require a significant monetary investment by the organization in training employees and the organization evolves to a continuous learning campus. The word campus is critical because many organizations partner with local technical schools or

universities

to jointly provide the comprehensive training and

courses

.  Unfortunately many organizations have disinvested in training employees and would rather outsource for many skills or functions. This is deadly to the supply chain concept and process improvement, which must strive to constantly improve the entire supply chain from start to finish without breaks which may or may not be performed better by an outsourced entity.
The major objection to the pay-for-skill approach is the cost and the length of time for payback from the employees' improved knowledge. Once in place, however; the power of this employee intellectual capital, and the momentum of continuous improvement, establishes a supply chain centric organization that is nearly impossible to beat competitively. 
People transform supply chains and organizations not technology or best practices. 

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Tags: purchasing Supply management Procurement Salary sourcing training

Category: Blog Post

Tom DePaoli

Dr. Tom DePaoli is the Management Program Director at Marian University in Fond du Lac, Wisconsin, and the Principal (CEO) of Apollo Solutions (www.apollosolutions.us) which does general business consulting in the supply chain, Lean Six Sigma and human resources areas. Recently he retired from the Navy Reserve after over 30 years of service. In other civilian

careers

, he was a supply chain and human resources executive with corporate purchasing turnaround experience and Lean Six Sigma deployments. He is the author of: Common Sense Purchasing,  Common Sense Supply Management and Growing up Italian in the 50s.