Wednesday 27 June 2012

The recent issue at RBS isn’t their fault it’s ours

Everyone is very quick to point the finger at others, as I wrote in a blog some time ago when we had the last media witch hunt. It’s IT’s fault, it’s the decision to outsource, it’s outsourcing, it’s the CEO, it’s all banks, it’s India etc etc. I’m sure the analysis of all the contributory factors will take some time to come out.

The fact remains it is likely there will have been hundreds of different points along the way where someone raised an issue with what was happening. Someone said:
  • This won’t work
  • There’s a problem
  • Slow down
  • We’re not ready
  • We need to do something different
  • There are risks
  • If we do that this will happen
  • We don’t have the right skills
The biggest problem is that these statements weren’t taken seriously. They weren’t taken seriously and action wasn't taken by:
  • The person thinking the thoughts and not articulating them
  • The person saying them
  • The team hearing them
  • The project manager
  • The manager
  • The auditor
  • The risk manager
  • The executive
  • The CEO
Why, of course, is the million dollar, or in this case the multimillion dollar, question. I'm sure we’ll all have different answers – mine to add to the mix would include:
  • The speed we’re all working
  • Ego’s needing to be heard and not listening – see previous blog
  • Culture of “Yes” and not “No”
  • Lack of taking responsibility
  • Unrealistic expectations – within and out with the company
  • Lack of effective communication
  • Fear of repercussions
  • Ineffective management of the process, people and suppliers
And these are certainly not only happening just in RBS.

What behaviours in business do you think are contributing to these types of issues and what can you change to ensure you’re part of the solution not the problem? Because if we've ever kept quiet when we knew we needed to say something we're no different than all those within RBS who contributed to this latest fiasco.

Alison Smith
The Purchasing Coach
Sowing the seeds for effective communication in procurement

It's your fault picture source: via Alison on Pinterest

Tuesday 26 June 2012

Are your suppliers servicing the Olympics

There's been a lot in the media about minimising the disruption of the Olympics to your business by encouraging staff to work from home etc. There's even a 'planning information for businesses' document that helps identify some of the possible impacts to your business. The emphasis, however, has been on the disruption to transport impacting staff and deliveries. Unless I've missed it there's one potential impact that seems to have been missed:

Are your suppliers providing goods or services to the Olympics?

If they are then I would suggest you may be negatively impacted unless you've taken steps and been given assurances you won't be.

One supplier I was talking to has a significant number of their senior management involved in providing services to the Olympics. This means they won't be available to do the work they normally do - supporting customers, completing tenders, resolving staffing issues etc.

It won't, of course, just be the supplier I was speaking who's involved in the Olympics but a whole range of suppliers, that I can't even begin to understand the breadth of, but is likely to cover the supply of:

Catering, Transport, Security, Maintenance, Food and Drink, Printing, Uniforms, ATM's, Cleaning, Media, PR, Hospitality, FM, Temporary labour etc

And don't just think that because your suppliers aren't based in London you're off the hook - many who rely on temporary labour may find their supply significantly reduced across the country as labour is bused into the capital. In addition there are venues holding Olympic events from Weymouth to Glasgow.

It's important to understand what plans your suppliers have in place to minimise the disruption to your business and ensure your contingency plans are updated to include the higher risks over the coming months.

Here's to many records broken, anthems sung and tears shed and an event everyone in the UK can be proud of with minimal disruption to normal service.

Alison Smith
The Purchasing Coach
Sowing the seeds for an undisrupted business during the Olympics

Olympic picture source: via Alison on Pinterest

Monday 25 June 2012

Aim for what you want

Aim for what you want and don't leave it to chance!

I didn't watch much of the football last night (England vs Italy) nor had I paid much attention to any of the commentary prior to the game. One conversation that did make an impression, and I had a chat with my dad about before the game, was the England goalie taking about the discussions they'd had about who would take the penalties.

I appreciate they do need to have explored all potential outcomes and practised and prepared for these. Yet it's no surprise that all this effort, discussion and attention prior to the game on penalties, seemingly to the exclusion of other possible outcomes, led them to one outcome - PENALTIES.

The problem with this attention is penalties, to me anyway, seem to be more about luck than skill and judgement. Those able to hold their nerve and remain confident are likely to be more successful than those that don't but luck does seem to be a main contributory factor. I wonder what outcome aiming to win the game would have delivered?

I'm off to look at how many areas in my life I'm aiming for suboptimal outcomes that rely on luck rather than aiming higher for outcomes that I really want and have the skills to deliver.

Alison Smith
The Purchasing Coach
Sowing the seeds for effective goal setting in purchasing   

England football team picture source: via Alison on Pinterest

Thursday 21 June 2012

Reducing your costs isn’t just about negotiating lower prices!

If I ask business owners and managers about their purchasing they normally reply by proudly telling me that they always get 3 quotes and then negotiate down to the lowest price. This process is likely to have involved some banging of fists on desks and exclamations of “HOW MUCH?” & “Lower Lower.”

Perhaps a little stereotypical but that’s certainly what most people think procurement/purchasing/buying is all about. Yet if it’s the only thing you do then I can assure you “your total costs could be lower.”

Why - because negotiating the price only takes place about 90% of the way into the buying process! It’s the 90% before the negotiation takes place where you will have been adding cost into the provision of the goods or services. It’s no use thinking you’ve done a good job in negotiating a 5% reduction when the real costs savings could be 30% if you’d only taken the time to fully and rigorously apply best purchasing practice to the item or service.

The 30% cost reduction might come from:

• Revisiting the specification – is it over specified, can it be standardised or redesigned
• Understanding and consolidating or even reducing your volumes
• Better forecasting
• Reducing your supplier base
• Process reengineering – taking wasted time and material out
• Reducing stock holding
• Moving to more efficient suppliers
• Finding more financially secure suppliers
• Understanding the needs of your suppliers
• Understanding the cost breakdown for the item – materials, overheads, profit etc
• Negotiating with others within the supply chain
• Improved payment terms
• Improving delivery times
• Reducing quality issues
• Improving customer service – theirs and yours

And that’s just a list for illustration purposes.

Next time you ask for 3 quotes I’d suggest you check you’ve done the work before hand to ensure that what you’re asking for, and from whom, has been adequately investigated. Otherwise you might as well be pouring your cash down the drain!

Alison Smith
The Purchasing Coach
Sowing the seeds for cost reduction in your business
+44 (0)7770 538159

Money down drain picture source: via Alison on Pinterest

Tuesday 19 June 2012

Young people are part of the solution

"Young people are part of the solution and not the problem - they are ESSENTIAL to growth of the economy and our nation" Angela Constance MSP at last week's Young Enterprise Scotland awards. 

I was there in my capacity as business adviser for a team of 17/18 year olds from Balwearie High School, Kirkcaldy who were there representing Fife having won the local finals. 15 other teams from across Scotland where there all hoping to win and move forward to represent Scotland in the UK Young Enterprise Finals.

Since August 2011 these teams had all set up a company and done what we all have to do - choose an MD and allocate other senior roles within the business, issue shares, think of a product or service, decide on a company name, develop branding & pricing, do some market research, undertake marketing, get their product into production, sell it and then provide customer service and handle complaints. In addition they also had to write a report and present in front of other YE teams.

Their learning journey covered many essential behaviours needed for business today:
  • Team development, building and working
  • Communication
  • Influencing
  • Conflict resolution - they certainly weren't slow to change or even sack the MD if things weren't progressing to plan
added to which functional skills for:
  • HR
  • Purchasing
  • Production
  • PR
  • Market Research
  • Marketing
  • Merchandising
  • Sales
  • Finance
I particularly loved the issues the eventual winners shared, and had to overcome, around purchasing the cup - dealing with overseas, minimum order sizes, quality control, change of branding to reduce number of colours used in order to reduce costs etc. 

Every young person there said they'd learnt much from the experience and many intend to set up their own companies once they leave university.

They and their link teachers can't do it alone - every school needs a business adviser. And that's where you come in - can you offer your support to your local school? You can provide as little or as much support as you are able. One year I was able to visit weekly - this year I only managed once or twice a month. What I do know is the support from business advisers, even if simply just believing in them, makes such a huge difference.

If you agree with Angela Constance that young people are part of the solution what are you doing to support them now so they make the decisions in the future that we can all be proud of?
I'm sure you all join me in wishing the Scottish winners Innovation (pictured above) with their measure up cup (ditto) all the very best for July and all the other finalists from across the UK who will be joining them.

Alison Smith
The Purchasing Coach
Sowing the seeds to young people wanting a career in business and particularly Purchasing

What do you put your heart and soul into?

Pinterest introduced me to The Piano Guys - there I was mooching around repinning some dance videos and then BAM I saw this. Words cannot fully express what happened next. I'm not a great listener to of music but there I was searching for every Piano Guys video I could find on YouTube following them on Twitter and Facebook :-)

I think their vision explains why this non musical girl was moved:

"Our vision is to create music and videos that inspire & uplift. We want to take that music to the world and make a difference. We like to put a new spin on classic stuff and a classic spin on new stuff. Whatever we do, we put our heart and souls into every note and frame."

because this vision is definitely in every note they play and every frame they shoot.

Goosebumps, tears, smiles, inspiration and a great reminder that we should all be doing what we can to put our heart and soul into making a difference in what ever area we can make the most difference.

I might not give people goosebumps or make them cry when I talk about purchasing but I do have a desire to 'take purchasing to businesses and make a difference - to put a new spin on theoretical stuff and a theoretical spin on new stuff.'

How can you put your heart and soul into everything you do every day?

Alison Smith
The Purchasing Coach
Sowing the seeds for putting heart and soul into purchasing +44 (0)7770 538159

PS I even thought this piece by The Piano Guys expresses how buyer/supplier relationships should be - although entitled 'A thousand years' I do hope it doesn't take that long to change these relationships for the better

Monday 18 June 2012

Are you suppliers without ego? Are you?

I wasn't able to get a ticket to see the Dalai Lama speak in Manchester this weekend but I did mange to watch the live webcast. I could blog about many aspects of what his Holiness had to say about non violence and dialogue in conflict situations. Yet it's the insights from watching his translator that I'd like to share with you today.

The Dalai Lama does have an excellent understanding of English but has a translator on hand on the stage. From observation it would seem this is done to assist with conveying the subtleties of what he's trying to say and checking understanding of questions asked.

As the translator stands only feet away, and at times interjects rephrasing something his holiness has just said, he's not invisible. Yet what I took away from him was his lack of EGO. I have no idea who he is, what his thoughts or beliefs are about what was being said. It seems clear to me that his intention is to simply be of service to help the Dalai Lama convey his message.

Without that ego he:
  • already knew ahead of time the message being conveyed
  • listened intently to what was being said
  • only offered alternate words when he felt the underlying message might be missed otherwise
  • faded into the background the rest of the time
With ego I'm sure we'd have had a much different experience.

Yes it's his job - but mine, yours and our suppliers jobs all require the same behaviours and yet often the ego and its need to be seen, heard and acknowledged gets in the way of service being delivered.

How will you aim to silence your ego today?

Alison Smith
The Purchasing Coach
Sowing the seeds of ego less service from suppliers  

Source of Dalai Lama Picture: via Alison on Pinterest

Friday 15 June 2012

How to get your invoices paid

Over the last 27 years as a procurement professional I've negotiated many different payment terms with suppliers. This blog isn't about the validity of those payment terms whether: in advance, on delivery, 14 days, 30 days, 60 days and beyond. It's about the things you can do as a supplier to maximise the likelihood of you being paid in line with the terms agreed.

I have to admit there will always be companies with cash flow problems. There will also always be dishonest companies wanting to find ways to not pay what they owe. I can't offer much advice on those companies other than say do please ensure you undertake due diligence ahead of accepting orders from anyone. In addition most late payers have a history of such and with social media it wont take too much investigation to find out if your new potential client is one of these.

I do however have advice on how to facilitate getting invoices paid by companies wanting to pay invoices in line with terms agreed:

A few things to remember ahead of time, because whilst you might be dealing with people once it gets to payment you're often dealing with systems and you need to know how to make the system support what has been agreed, :
  • the person placing the order should have authority to do so within their company,
  • the person placing the order may see responsibility for paying as the role of another department and not even think about it,
  • the person paying the invoice is very unlikely to be the person who placed the order and often knows nothing about what was agreed,
  • your invoice may need to be allocated to an appropriate budget heading before being paid,
  • someone will need to authorise the invoice and that may not be the person who placed the order or who actually pays it,
  • many larger organisations have '000s of invoices arriving daily which is why they rely on a system to pay them - or have set times in the month when all payments are processed, 
  • payment of invoices is always set up to default to the buyers terms unless agreed, communicated to the appropriate department and amended on the system otherwise. Saying it's been agreed on your invoice won't often be enough to override this default as they will get many many invoices all stating supplier standard terms despite the buyers terms being agreed,
  • even if someone agrees different payment terms to the organisational standard they may not have permission to do so.
With that in mind here's what I do:
  • Along with price, and other terms, agree payment terms.
  • Understand what their normal payment terms are.
  • If payment terms agreed are different from their standard terms you need to find out if they have authority to agree them. and then ask how that will be handled (does someone else need to know ahead of time, do systems needs to be changed, when would they need the invoice, will it be cheque or BACS etc).
  • Ask for an order number - for most organisations this is essential. Without an order how can you know that the person placing the order is authorised to do so. In a systemised business without an order number how can accounts payable know who needs to authorise it and/or be able to track it back to the budget it needs to be allocated to?
  • Find out what details they need on the invoice - the type of info I would suggest needs including covers: order number, person who placed the order, full details of service/products supplied and when, payment terms agreed and with whom and of course price. 
  • Find out who to send the invoice to - often this may not be the person who placed the order and could be in a different office, town, country.
  • Raise invoice in line with payment terms - if you've agreed payment on delivery or, I'd suggest, within 21 days of such, you may need to raise the invoice some weeks ahead to be able to allow their system to process it and still pay you to the terms agreed.
  • If the payment terms agreed are not their standard you may want to add an additional covering note as a means of highlighting they need to treat this invoice differently to others - just saying I know your standard terms are x but Mr z agreed you'd pay me in y - please contact me if you have any problems 
  • Send it to the person/department you were told to.
One word of caution the more your payment relies on manual intervention (ie it sits outside their normal terms) the more likely it is to fail - because people have other work to do, take holidays, are ill or absent from work. They might have thought they could pay you 14 days from delivery but if it sits unopened in someones in tray for 2 weeks you're the person who suffers.

I'm afraid it's up to you to make sure you understand the system for payment within the company and make sure you use it to get your invoice paid. Payment is often the last thing the person placing the order thinks about and yet is the only thing the person in Accounts Payable wants to do - and can with a little help from you.

Alison Smith
The Purchasing Coach
Sowing the seeds for effective working relationships with suppliers

Paid stamp picture Source: via Alison on Pinterest

Sowing the Seeds to Cost reduction in your business

How much do you know about purchasing - and I don't just mean the banging your hand on the table shouting "Lower Lower". I mean the 90% of the work that was undertaken before that discussion with a supplier took place.

Unless you've had some purchasing training or read purchasing books I assume you may know more about gardening than you do about purchasing. Why - because whilst you may not be a professional gardener most of us at some point or other have had a garden, visited gardens, watched the multitude of gardening programmes, read gardening books, visited garden centres (if only for a cuppa) or simply sat in someone elses garden. That's a whole lot more exposure to effective gardening than purchasing.

That is, we all understand that plants in a garden need pruning, cutting, mowing, feeding, planting, composting, moving. Yet we forget to do any of these with suppliers and just expect them to grow where they're planted and look after themselves - and hope the weather gives them what they need as we certainly won't be!

Here's why I think we can learn a lot about purchasing from gardening:

Why do you want a garden?
Just as a garden might be low or high maintenance, for children or adults, for BBQ's, games or for lounging then purchasing has the same considerations. No use putting in place a garden that’s high maintenance if you’ve not got enough gardeners.

It's the same for procurement - what do you want it to deliver?

It’s nothing without design
Once you know why you want a garden you still need to consider the design and management of the garden. Will you have one gardener or a number and who’s in charge. Will you be needing a greenhouse and who will have keys for the tool shed? What type of plant will you be putting in that shaded area at the end of the garden under the trees unseen from the house - it had better be a plant that doesn't need much care and attention.

In procurement the problem faced is we've often got all the managers in the organisation thinking they can help with the gardening too. Capability Brown who designed Chatsworth Gardens was a professional gardener, and just like Chatsworth's garden doesn't let it's visitors do its gardening for it - organisations should leave procurement to the professionals.

What’s in your tool shed?
It’s not only about the number and types of tools in the tool shed but maintenance and replacement of them too. In some smaller gardens it might be ok to use the spade for many different uses but once the garden gets bigger and certainly once the garden is open to the public then the maintenance of the garden will become more important and more specialised tools are needed. You don't have to look far to see all the multitude of new tools available and realise that whilst many might be more for show many can and do save time and your plants. See this blog with visual representation of the different tools needed for buying, purchasing and procurement gardens.

Many managers and leaders in organisations assume there's only one tool to use in procurement, and they just want to use that, all the time. Our job is to ensure they understand the full breadth of tools in the procurement toolkit, and that their effective use is in the hands of the professional. You can't just let anyone loose with a chain saw!

Plant selection
Even for each type of plant there are different varieties each with their own unique characteristics – some needing direct sun, other partial shade, some needing nutritious soil and other being happy with their roots in clay! Matching the variety of plant to the characteristics of your garden is essential in ensuring the plants flourish and the time needed to care for them minimised. Of course once you know what variety you want and have decided whether you’ll grow them from seed or not you then need to decide where to source them from.

Suppliers are the same - choosing lowest cost every time, not doing risk assessment, nor understanding the supply market, suppliers, cost breakdowns, business requirements, supply chain analysis etc are just like picking a tree and then being surprised when it grows too big, blocks out the light, and its roots start to impact the house's foundations.

You’ve got to have a Greenhouse
If you live in the UK then there will be seeds and even plants that need some tender loving care (TLC) first. Time in the greenhouse to get more hardy before they’re planted out into the garden. Sometimes when we unexpectedly end up with snow or frost in May, or the west winds threaten a gale force, we may need to bring plants in.

When did you last review the performance of your suppliers and consider how your actions are contributing to how well they are flourishing? What would giving a supplier TLC look like?

You might be lucky and a plant might survive if you just dump it in a corner and forget about it. And whilst that might seem unthinkable in a garden it’s certainly what many businesses do to suppliers – no perfect position, no careful planting out, no watering, no feeding, no staking. Plants will certainly survive and flourish and even multiply if given the right care and attention - suppliers too.

Garden Maintenance
We’ve all heard about jack’s bean stalk or the perils of Japanese knotweed - maintenance is certainly needed to ensure the plants stay within the area originally designed for them. Turn a blind eye and weeds can take hold and smoother or even kill other plants. It’s also useful to have someone with knowledge about plants doing this otherwise it’s easy to uproot a perfectly healthy plant and leave the real weeds behind.

Isn't that the same with suppliers - we need to mow, feed, prune, cut back and compost suppliers. Otherwise one of these horror stories of procurement gone wrong could just be your organisation!

In conclusion
Healthy supplier relationships are no different to healthy plants – next time you start thinking about introducing a new supplier just think about whether you have the skills and environment that will enable them to flourish in your organisation. For more analogies between procurement and gardening see my Pinterest Board on the subject.

Alison Smith
The Purchasing Coach
Sowing the seeds so your purchasing garden wins best in show  +44 (0)7770 538159

Post Script Jan 16:

I'm surprised I didn't mention that I've used this metaphor with a number of organisations, and delivered workshops to over 200 managers using gardening to enable them to understand the benefit procurement can add.

Related posts written since this post was published, that may also help explain more, include (just follow the hypertext link):

Friday 8 June 2012

The Transformation Game

I intend to have life balance
Personal Insights from playing the Transformation Game
This post has now moved to my new website.

Wednesday 6 June 2012

Purchasing - trade, profession, or something anyone can do?

I attended an interesting session on collaboration yesterday run by CLD Standards Council for Scotland at Glasgow's Trades Hall. As I sat there I looked around the room at the list of Conveners since 1604. Trades of those conveners included:
  • Cordiner
  • Cooper
  • Tailor
  • Skinner
  • Maltman
  • Tanner
  • Weaver
  • Hammerman
  • Baker
  • Barber
  • Gardener - first appearing in 1789
Whilst today there are many amateur gardeners, the professional gardener is still an acknowledged and respected tradesman and professional. I'm sure Cleve West, winner of RHS Chelsea's best in show, isn't short of people asking him to design their gardens for them. I'm also sure that whilst many may have opinions on his designs that they certainly listen to his advice.

These thoughts had me recalling a session I facilitated with the Chartered Institute of Purchasing and Supply (CIPS) board of management a few years ago. I asked them to use the surrounding gardens and landscape as a metaphor for their long term strategy. One group returned from the graveyard next door with an interesting insight that many gravestones showed the profession of the deceased - Dr, Lawyer etc. They hoped that purchasing professionals would be proud enough to be a member of the purchasing profession and want to do the same.

I just wonder what has to come first. The professional being proud of the value they deliver or their internal stakeholders appreciating the development undertaken, skills required and the tools & techniques used to be a purchasing professional.

Just like amateur purchasers, amateur gardeners can deliver an acceptable, colourful, weed free and sometimes exciting garden - however it's the professionals who clients trust with their garden, win best in show and bring new techniques and varieties to gardens around the world.

As a procurement professional what's stopping you from being proud of the fact you are. As business managers what's stopping you from using the professionals?

Alison Smith
Sowing the seeds for professional cost reduction in your business +44 (0)7770 538159