Hey, farewell Twitter – it’s not me, it’s you

I think the ‘#snowflake’ pejorative term tipped me over the edge and liberated me to say goodbye to Twitter. The term has neither been aimed at me or issued by me, but it’s illustrative of the change in the tone of the conversation – the whole character of the platform feels darker, more combative, less… nurturing.

It’s a one-sided break-up…it’s been good while it’s lasted but good things just don’t last forever.

The initial attraction was the flow of opinions and viewpoints and that allure was maintained since back in ’09.

And now? 

Well, I’m turned off by the flow of polarised opinions and the vehement political/social hashtags summation of complex, “important” matters.

And I’m weary of keeping up with Twitter’s need for constant attention.

Industry perspectives will continue to be via LinkedIn and blogs I subscribe to – full disclosure – I found many of the blogs through Twitter 🙂

Will I miss out on updates from my Twitter connections in the world of Procurement?… that would be a loss– I’ve had great interactions with many people. Actually I don’t think that’s an issue – or at least big enough an issue for me to keep Twitter in my life.

The connections I’ve made and value, and continue to make, have migrated (like me?) to other social media platforms such as Medium, Art of Procurement, Spend Matters, LinkedIn. 

Just not gonna connect with you on Twitter anymore.

Hey, let’s keep in touch tho, right? LinkedIn or via ThinkProcure

Till next time

Steve

Image source

Procurement Transformation re-loaded.

Here’s an actionable message from André Le Lerre,(https://www.linkedin.com/in/andré-le-lerre-7112261) a management consultant specialising in converting strategic insight into enduring business performance. As an ex-Regional CPO with more than 30 years of industry experience he has in-depth first-hand knowledge of leading change in complex international business environments.

 Is procurement transformation still relevant as it passes what must be by now its 15th anniversary?

I’d argue that there’s still a lot of life in this old-timer despite having been on corporate agendas for well over a decade. One reason for this is that procurement transformation hasn’t been a straight-forward process.  What seemed to be the obvious approaches and popular best practices when many of us set out on this journey have often proven to be ineffective and sometimes even value destroying boomerangs.

Learning from these mistakes now enables us to re-calibrate the transformation focus and avoid the pitfalls of those early pioneering years.

One obvious learning is that you can’t run before you can walk. Like many disciplines, procurement excellence must be built up in successive capability/maturity layers.  Missing elements of lower layers seriously invalidates deployment of higher layers.  When taking management responsibility over new geographical or business areas, I’ve learnt to always loop back to basics to ensure that the procurement foundations of governance, transparency and visibility are securely in place before considering the roll-out of the next layer capabilities such as category and supplier management or e-procurement and e-sourcing technologies.

The other main pitfall of the early years was getting caught up in the enthusiasm that comes from the gains in procurement performance from deploying new techniques and technologies without checking that this is generating corresponding overall business performance.

An excessive inward focus on procurement KPIs such as compliance and savings taken to the limit builds a new wall between procurement and other business functions. For example supporting the logic of overly centralised organisations which can lose touch with business priorities and needs.

Procurement transformation is all about working in collaboration with the rest of the company and can only be effective by driving joint performance with joint business targets. The simple learning is that purely procurement KPIs are only important internally within the procurement organisation as hygiene factors.  As a procurement leader I learnt to always “talk business to the business”.

The other main reason procurement transformation remains highly relevant arises from a re-definition of the overall goal.

Faced with the success and failure of implementation of various recipes for procurement excellence I don’t believe we should see this process as a finite change program to roll out a specific organisation, process or tool. Instead I’d define it as the creation of an ongoing and evolving enterprise capability to extract maximum business value from working with procurement stakeholders, spend, risk and suppliers.  With this definition and recognising the power of disruptive innovation to re-shape any technology enabled process I believe we can be sure that procurement transformation will be alive and kicking for another 15 years.

How will you start driving Strategic Value?

Here’s  a thought-provoking guest post from Amber Christian, Founder of ConsultAce. on approaches to changing the conversation in driving strategic value. 

 

The final day of educational sessions dawns clear and cool in Orlando, Florida. Its day 3 of the always intense Association for Finance Professionals conference.  Jam packed with education, networking, and socializing, my schedule is crammed from breakfast to nightcaps.  The final morning is different- much calmer and quieter than the frenetic early pace of the conference.  Today are the last education sessions before we all board our airplanes and go back to our day to day jobs, projects, and lives.  Focused, and ready to hear from our final speakers, I’m loaded for bear.

As I listened in on the first session, Beyond Operational: How Treasury drives value, I found myself struck by the parallels between Treasury and Procurement.  Wait, what was that?  Yes, the parallels between us.  Not the us versus them, but what we are all universally struggling with, and how to move forward.

Treasury, like Procurement, was often the wizard behind the curtain. And others in the organization have a distinct view that goes something like: We know they are back there doing stuff, but nobody knows quite what that is. Gosh they seem really busy, but all we know is that we have to deal with them.  They’ll grumble when we don’t follow processes, but ultimately will manage to get things done.

Sound familiar? But how to we get out of being this creature locked in a cage that is fed and watered occasionally (i.e. dealt with) and instead have a seat at the table to drive change for our organizations?

The company case study presented was by Dealer Tire. The organization was struggling to transform from a tactical focus to a more strategic approach.  They needed to move from transactions to Analytics of their data.  But where to begin?

Starting with senior leadership support, they built a new organization called “CAP”. It was the Corporate Strategy, Analytics, and Planning team. Here is a brief graphic showing how they set up their organization:

amber-1

Image courtesy of AFP annual conference in Orlando, Florida

The partnership orientation was a key takeaway I heard. In one of their success stories, they highlighted how the team took on getting a new payroll provider. They didn’t just focus on the lowest cost payroll provider- they looked at the entire process, such as how they manage exceptions, how many days in advance the funding is required, and reducing manual entry.  By strategically partnering with all the participants in the value chain, they procured a new payroll provider that simplified exception management, automated process, and reduced the number of days in advance they had to fund the payroll.

A key takeaway for this new organization is the value of metrics- you can’t manage what you don’t measure. It strikes me that our organizations need to measure more than just costs.  In procurement, we often talk about the 500 pound gorilla beating its fists on the table or breaking through walls for cost savings.

amber-2

Whether we would like to admit it or not, we all know the price initially paid for something doesn’t cover the entire “cost” of something. We need to be more creative to understand the total cost of ownership of the decisions we are making, and be brave enough to make different decisions. Then as we look at decisions, we can assess the overall value proposition of a decision, not simple the cost associated with it.  This is a different conversation.  This is a more strategic conversation.

I’ve been thinking more lately about what our processes “cost” us. Sometimes tangible, sometimes intangible. As a systems implementer, I often talk about the costs associated with process decisions.  An example I use for Treasury is the “cost” associated with issuing payments once per week.  When this is done, payments are all issued for the past due invoices, currently due, and payments due for the next 6 days.  This means we prepay many invoices, some of them up to 6 days.  If the company is in a borrowing position, this may mean they borrow money to pay invoices early.  Wait, what?  Why would that happen?  Usually, our processes were designed to be run manually and have some automation.  Once a week seems more efficient under our old paradigms.  Of course I could go into more details about fees and other things that influence the decision as well, but the key theme is there- what factors are we considering when we make our decisions?  What factors should we be considering for our new reality?

Think about the value as a procurement professional if you were to expand what you asked to be a stronger partner. We commonly ask the who’s buying, what are you trying to buy, and when do you need it by?  What if you were brave enough to ask how and why more often?  As a project stakeholder, what if you allowed yourself to be challenged to be sure the best possible decision was being made?

Why something is needed should be a clear answer. If it’s not, then back to the drawing board as a decision shouldn’t even be discussed without this information.

The second question to drive more value is how. How can these new vendors really deliver us more value? How will the technology generally shorten our processes or streamline them? How gets you past the pie in the sky strategy to the reality of implementation and process change.  Allowing ourselves to all discuss how things will really be accomplished will bring a much deeper, more meaningful conversation. Procurement can be the objective party helping us ensure our organizational decisions are thoughtfully made, and not just the mad rush of “I need it now!”

The addition of these questions will change the conversation for procurement. Are you willing to change the conversation to be a stronger partner?

“What you have to do and the way you have to do it is incredibly simple. Whether you are willing to do it, that’s another matter”.- Peter Drucker

 

Amber Christian is Founder of ConsultAce. She’s an SAP implementation consultant specialising in Treasury, Cash Management, and working capital.  Amber’s a frequent writer, speaker, and podcast host of Thriving at the Crossroads.  Follower her on LinkedIn, or see her company page at http://www.consultace.biz

Thanks Amber!

Steve

 

The challenge for Procurement: become – or remain – relevant to our organisations.

Procurement can deliver value.

Unfortunately, our stakeholders and executives don’t always agree.  They may have had bad experiences in the past, or believe that they can buy better.  As a result, procurement professionals are often in the position of convincing others of our value.

I recently attended one of Peter Smith’s Tejari events* and he said something that really resonated with me.  There are three reasons why users will engage with procurement: expertise, resource and compliance.

So true!

Capability, capacity and the big stick of corporate governance.

Our greatest challenge is to become – or remain – relevant to our organisations.

Relevancy gives us the platform we need to show that there’s far more to our profession than sending out RFP’s or squeezing the last margin point out of our suppliers.

However our path to relevancy isn’t an easy one.  It requires an ever changing skill set to support an evolving value proposition. New delivery models are changing the face of how organisations are accessing procurement people, services and technology.  The future of procurement is upon us, and it’ll look very different from what we’re used to.

We can grow the procurement team – so that we have the resources available for our stakeholders’ needs – and we can audit and impose authority through compliance frameworks.

Nothing wrong with that.

And still the stakeholders will need convincing that ‘good procurement’ is something that can help them achieve their goals.  They have to be persuaded that it’s the Procurement function or individual who’s best placed to help them.

And that means starting with you; with your capabilities.

Ø Why would someone want to involve you in a procurement?

Ø How can you improve your procurement performance?

Ø What are the important things you need to do to be relevant to your organisation?

For successful learning, there are four main factors in play. They’re as follows:

  1. Wanting to learn is important When people really want something, they usually get it sooner or later (whether or not it’s good for them!).
  2. Learning by doing. Learning by doing is how most people learn, including by trial and error, practice, and learning from mistakes. Academics refer to this as ‘experiential learning’.
  3. Learning through feedback ‘other people’s reactions’ is the most frequent reply about how people account for having developed positive feelings. Ignore our feelings about learning at our peril! Feedback comes from all directions including  stakeholders, learning resources, expert witnesses such as tutors.
  4. ‘Making sense’ of what’s been learned. I often say that the important step in this area is ‘getting my head round it’. It’s tempting to use the word ‘understanding’ for this, but it’s not the best word. The problem with ‘understanding’ is lack of a shared view of what the word really means. More appropriate is the word digesting for the ‘making sense of it’ dimension of learning.

The Procurement Revolution

Here’s a resource for your procurement learning you should consider exploring (and yes I am involved, in a small way – and no, I’ve no commercial benefits from this).

For the procurement world this’s really quite a nifty approach to learning – video and podcasting.

There’s a range of leading procurement types giving their perspectives and sharing their insights including Kate Vitasek, Mark Perera, Gordon Donovan, Ed Cross and Stephany Lapierre.  You’ve probably come across their insights on social media.

The Procurement Revolution is from September 26th to September 30th 2016.

It’s free! and 100% online. The majority of the content will be made available to watch or listen to on-demand, during the course of the week.  There’ll also be a series of live events for enlisted members to participate in.  On-demand content will typically run from 5 – 15 minutes, and live events will be 30 – 60 minutes long.

 

Sign up on here http://theprocurementrevolution.com/ to register, and you’ll receive log in details for The Procurement Revolution site.

Till next time,

 

Steve

 

4 facets of FIDIC that kinda blow me away

Model forms of contract are used on major projects – think JCT, DEFCONS, FARs, NEC3 – but the daddy of them all is FIDIC, the International Federation of Consulting Engineers, set up way back in 1913 and reflecting the global application typically referred to by its French acronym – naturellement 🙂

Rather grandly, FIDIC has a ‘rainbow suite’ of model forms of contract – different colours for different types of contracts.

I’m gonna focus here on the Yellow Book – Conditions of Contract for Plant and Design-Build.

This is the basis of a Contract between the Employer and the Contractor and is used on projects where the contractor carries out the majority of the design i.e. the Contractor carries out the detailed design of the project so that it meets the outline or performance specification prepared by the Employer.

The Yellow Book is a lump sum price contract with payments made according to achieved milestones on the basis of certification by a third party appointed by the Employer and referred to in the Yellow Book as the Engineer.

Before I go on, can you imagine the risks involved in the process, detail, timing and consequences of the Engineer giving ‘certification’?

Meantime, who am I tell you anything about the yellow book?

I’m no lawyer!

I’ve been working on the world’s largest public transportation program in Jeddah, Saudi Arabia (which I’ve loved!) and applied the Yellow book to a series of Tender packages. Only 20 conditions (I recall DEFCONS had 118 last time I looked) but by Jove there is some complexity in there.

For the avoidance of misunderstanding (and in case my employer or the client- or the contractors – are looking in) I’ll be making no reference to the program detail or indeed any other projects I’ve worked on.

Here’s my take on 4 facets of FIDIC that kinda blow me away:

  1. It’s full of holes!

Let’s start right off the bat with ‘definitions’.

The contract is silent (as the lawyers would say) on a raft of terms that I really do think would benefit from being defined. For example ‘supplier’ (although to be fair ‘contractor’ and ‘subcontractor’ are defined), ‘stakeholders’, ‘authority’ and ‘neighbours’. I could go on.

When you use FIDIC you need a full set of ‘particular conditions’ to fill the holes – or tailor, I suppose – the contract to meet your specific needs and appetite for risk.

Maybe this is the whole(!) point of model forms of contract…does NEC3 need this level of special terms and conditions? To manage the allocation of risks some real finessing of the FIDIC is needed. This is no off-the shelf solution.

       2. For the Engineer, with great power comes great responsibility.

The Engineer is primarily responsible for contract administration.

Curiously, the Engineer, a third-party, is appointed by the Employer (and acts on behalf of the Employer – FIDIC doesn’t state the need for the Engineer to be impartial – except when fair determinations are required). But under FIDIC the Engineer must act fairly. Of course ‘fairly’ is not defined in the contract (he said, tartly).

When the Engineer issues instructions and notices and acts as certified (I shudder at the implication of ‘approval’) it’s to be in the best interests of the project. Tough gig!

    3. The importance of the Employer’s relationship with the Engineer.

As mentioned in 2., above the Engineer is not ‘impartial’ but is ‘deemed to act for the Employer’.

It’s absolutely key that the Employer designates a staff member, separate from the Engineer, to represent him (the Employer) whenever the Contract requires, notice to, or action by, the Employer.

Why am I making a thing of this?

Well, the Engineer needs the Employer for a whole host of approvals and instructions e.g. determinations, Subcontractors, extension of time, performance certificates, variations. It’s a long list if you check out the detail. The impact is that rather than working in some kind of collaborative spirit of the contract, FIDIC demands utter rigour that each and all contractual obligations are fully met…or there will be consequences.

And this relates very much to the need to create and maintain formal and yet positive relationships between the Engineer and Employer, never mind with the Contractor. A good example is effectively managing contract variation to avoid undermining the negotiated intent.

And not forgetting to maintain an impeccable documented audit trail of key decisions and outputs e.g. in case of dispute.

   4. The Letter of Conditional Acceptance.

Back in the UK, I was taught, nay, ordered, to steer clear of letters of intent or anything that wasn’t the signed, written contract – to mitigate risk of entering into agreement by accident. Ensuring there was no evidence of terms that would supplement or contradict the one and only contract document. Nothing else to be admissible!

And yet there is the Letter of Conditional Acceptance?

Inevitably shortened to LoCA – infrastructure projects love acronym soup. The LoCA is issued to the preferred tenderer and, fingers crossed they sign it with full compliance. Then the one and only contract is issued and signed by both parties.

Did you see what I did there?

I referenced a ‘contractual’ document that is outside the one and only final contract. Risk!  Of course the purpose of the LoCA is to mitigate risk…but still… you can see where issues can arise with (any) conflicting provisions of the final contract taking precedence over the LoCA… as I said, fingers crossed.

That’s it!

4 facets of FIDIC that kinda blow me away.

The takeaway:

Hopefully calling out these 4 facets of FIDIC stimulates your approach to managing projects. As I write them, I’m reminded of their risks (and opportunities) and my aspiration to effectively deploy the whole of FIDIC for my clients.

Does FIDIC stimulate disputes?

Maybe no more than other contracts for high-risk, high-value projects. Although, there appears to be few dispute case reviews related to the Yellow Book, as the majority are conducted through arbitration and are not in the public domain.

Good news then, and fingers crossed…hopefully, all will go well. Such fine words, noting, as a previous colleague (hello Jon!) might add when it comes to FIDIC:

‘hopefully doth butter no parsnips’

 

What lessons have you learned while managing projects? Please share your thoughts in the comments section below as I learn just as much from you as (hopefully) you do from me.

Image: taken with an Iphone 5 by the author when out and about in North London, July 2015  – thought it fitted quite well with the theatrical quotes 🙂

The #1 action of Procurement leaders.

This week, the procurious Big Ideas Summit was played out, and apropos of nothing, survey findings from 500 procurement professionals were published by DeltaBid.  Like many, I followed the Summit online (I’m in Jeddah) and was enthralled, stimulated and impressed.

As I read the survey findings, I’m depressed.

William Gibson, one of my favourite authors said:

The Future Has Arrived — It’s Just Not Evenly Distributed.

That appears to be the case with Procurement.

How do I draw that conclusion via a Summit and a survey?

The top challenge, concludes the survey results – of procurement professionals – is Suppliers; namely finding suppliers, managing relationship with suppliers, evaluating suppliers and selecting the best one.

Imagine, for a minute if a lawyer informed you that their biggest challenge was drafting a contract – or a footballer that their biggest challenge was kicking a ball. You get the idea – you can see why I’m a little bit blue.

But as I reflected on the impassioned, smart Summit insight from Dapo Ajayi at AstraZeneka, Gabe Perez at Coupa, Martin Chilcott at The Economist, Tania Seary from Procurious and the many others it appears pretty obvious what is the number one action of Procurement leaders.

Attracting talent.

Assembling a team of technically smart (by technically, I mean procurement knowledge and skills) committed people, with integrity and then getting rid of barriers to achieve the organisational goals. Give them the tools to do a great job. Set them a course and unify the team around that direction.

As illustrated by the Summit’s speakers and the survey’s findings, Procurement is wholly reliant on the talent to deliver success – and the essence of the issue is attracting, retaining and developing Procurement people.

Procurement leaders, company directors, heck, even bid managers and legal advisers working together understand how people embracing an integrated approach to generating success from the supply chains can have immediate impact, across any business sector.

And technology is a vital platform(s) to equip and enable Procurement to deliver for their organisations and indeed wider, for the modern World – and maybe the DeltaBid tools are what’s needed – (btw I have no commercial links with procurious nor DeltaBid).  And the contract terms and the sustainability policies and, the risk methodologies and the parametric estimating and, and, and – there’s a whole heap of other issues, I realise.

But the starting point, as always, is people.

Why isn’t everyone utilising eSourcing?

Anya Mckenna, from Market Dojo, is our questioner and guest blogger:

 

eSourcing adoption has increased in larger organisations as they implement software to bring eSourcing in-house or use consultants to conduct tenders on their behalf.

We all know eSourcing comes with a huge number of benefits and companies are aware of these, yet it still seems that companies, small and large, are lagging when it comes to adopting the technology.

Recently I started a discussion asking the lovely members of Procurious:

‘What’s the first thing that comes into your head when you hear the word ‘eSourcing?’

They all responded positively with the majority stating ‘efficiency’ as the key factor of eSourcing. Other thoughts that people had around the topic include; “Repeatability”, “a way to engage suppliers”, “Collaboration”, “Centralisation”, “Innovation”, “a means of driving further savings”.

All great reasons to start using eSourcing. However, as noted by one respondent:

Why isn’t everyone utilising eSourcing?

The biggest competitor is not an all bells and whistles ERP system- it is email… still!

What is it about email that keeps procurement professionals tied in? Or is it just a matter of being stuck in their old ways, unable to see the wood for the trees? People are notoriously opposed to change, but it doesn’t mean you can’t teach an old dog new tricks. Is it a matter of ‘if you can’t beat ‘em, join ‘em’? Are eSourcing providers going to have to incorporate email within their technology as the CRMs of today have done?

What ways have you found to promote eSourcing to your fellow procurement professionals, who may still be stuck sourcing goods and services without all the benefits of eSourcing mentioned above?

Thanks Anya, particularly impressed with the discussions you fired up over at Procurious – and, dear Reader, please let us know your thoughts in the comments below.  Always learning! – Steve

About Anya McKenna.

Having joined the team in early 2015, Anya manages marketing and market analysis at Market Dojo. Market Dojo is a e-Sourcing software providing an easy to use, professional solution with completely transparent pricing. From creating content and managing social platforms, to attending networking events and building client relationships, Anya is the first point of call for any questions you may have about Market Dojo.