The Negotiation Before the Negotiation!

When preparing for a negotiation, it is common to identify the issues to be negotiated, decide on negotiating tactics to use on your supplier, think through what your supplier may say and practice saying the words you’ll use during the negotiation.

Those are all necessary components of negotiation preparation.

But, they are not enough. To truly reach your potential in a negotiation you need to understand some key things about your supplier. This article will focus on three major things you need to know about your supplier before beginning a negotiation.

How do you get to know them? You can research your supplier and/or you could – get this – ask your supplier contact!

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Procurement: With Great Power Comes Great Responsibility!

There is a great line in one of the Spider-man movies, “With great power comes great responsibility!”

Procurement organizations can have the power to spend and control as much as 75-80% of a company’s revenue. Now that is power! And with that power comes a huge responsibility.

Less enlightened organizations still think of Procurement as a back office function processing transactional purchase orders and standard contracts. But better informed and leading organizations see and recognize Procurement for its strategic value.

What actually is the power that is within Procurement’s mandate? And what responsibility does Procurement have commensurate with that power?

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Drop Shipping Teddy Bears!

SC Viral The Pandemic Diaries

The company was new to the general merchandising business. As such the Category Managers were going wild with ideas on how to expand their product assortments and procuring new and interesting products to sell.

But unfortunately their zeal did not come with a thorough understanding of the Supply Chain implications of their decisions.

This all came to a head when they had placed orders for a large number of oversized items, including those giant stuffed teddy bears. You know the kind. The giant stuffed animals that are anywhere from 5 feet to 8 feet tall, like you find at Costco.

What followed was a disaster in terms of cost and customer satisfaction.

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What is Supplier Relationship Management (SRM)?

Regardless of what industry your company is in you are dependent on suppliers to operate your company. Thus it makes sense to have a Supplier Relationship Management program.

Suppliers provide components for products you manufacture and sell. Suppliers provide services for products or services you take to market. Suppliers move your goods from one point to another. And suppliers provide the goods, supplies, software and other items required by every function in your company to conduct day to day business.

Without suppliers no company could survive, let alone thrive.

Yet historically too many people have treated suppliers transactionally with no to little regard for fostering mutually beneficial relationships.

Going forward it will no longer be sufficient to just have passive supplier relationships. Companies must have a formal, strategic Supplier Relationship Management (SRM) program!

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Create Collaborative Innovation with Suppliers!

Previous CIO of General Motors (GM), Tony Scott, was once quoted saying,“GM is a highly collaborative organization; we rely on a whole tier of suppliers for everything that we do.” They rely on collaborative innovation.

Our organization’s products, customers, and profit, are ultimately a byproduct of the global supply chain networks that operate on a daily basis to add value through collaboration. The complexity of global supply chains – especially in organizations like GM, often the elephant in the room – require hands-on relationship management of suppliers to ensure that supplier collaboration will lead to added value, and innovation.

It’s nice to see that their previous Chief Information Officer had enough perspective to recognize their suppliers’ importance.

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Supplier Collaboration is a Win-Win Strategy!

Suppliers are an intrinsic part of the Supply Chain.  It does not matter what business you are in, what products you make, distribute and sell, or what part of the world you are in.  And it doesn’t matter where in the Supply Chain you are.  You can not accomplish anything without collaboration with your Suppliers.

Yet I have seen, like many of you, Suppliers treated in many different ways.  No matter what the circumstances are poor treatment of Suppliers is never appropriate.  Given that Customers fundamentally need their Suppliers to be successful why do people treat them badly?  And how do we ensure there is a healthy and productive relationship between Suppliers and Customers?

Working together with your Suppliers is always a formula for success!

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Why Procurement Transformation Can Fail!

Over these past 28 years of my career in Procurement (yes I started when I was 12), I’ve had the privilege and pain of seeing, not just procurement, but many different types of Transformation initiatives succeed and, unfortunately, fail. Let’s discuss why procurement transformation can fail.

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What’s the Difference between Procurement and Purchasing? (Infographic)

It’s a good question. We often see these terms used interchangeably, but there are some concrete differences between Procurement and Purchasing such that we think they are two different practices, each with their own set of concerns and skills.

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Supplier Quality Management: Drive Value By Safeguarding Value!

Fall is in the air.

Pumpkins are chunkin’, the leaves are changin’ and Thanksgiving cornucopias are being filled by the second. There’s something about autumns crisp air that makes me romanticize the ‘coziness’ of it all, but can you blame me?

As an ex-pat American, I sometimes forget that my associations with the autumn season don’t align with those of my friends here in Stockholm, Sweden. But, if there’s one thing we’ve all come to an agreement upon, it’s that Thanksgiving dinner is a must.

I introduced the tradition a few years ago and it’s been an annual event since then, hosted at my place- in potluck fashion. I fix the bird, stuffing, and taters, and each attendee stands for their own dish. It is a feast of epic proportions, and there’s a spread of food big enough to feed Coxey’s Army (as my Grandmother always says).

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Procurement Bots – Transformer or Destroyer?

The last few years have seen a lot of real (and over) hype associated with the emergence of Software Robots (called Bots/Bot) and Procurement Bots which are disrupting the legacy procurement processes involving human interface.

This research paper introduces the concept and evolution of the Bots, their characteristics with focus on Procurement processes, the Pros and Cons and debates on the transformation of the procurement function (vs destruction of human interface).

In summary – Bots will have a high appeal on the transactional and digital side of procurement processes and will gain exponential growth in the coming years with the advent of cognitive and machine learning tools.

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Tail Spend: The Hidden Procurement That’s Hurting Your Bottom Line!

In the fast-changing world of strategic Procurement, certain categories of spend get all the thunder: IT Procurement gets to help drive a company’s innovation. Business Services Procurement gets to restructure a company’s operations and drive competitiveness. Travel Procurement gets to look at pictures of exotic destinations all day (just kidding). But what about tail spend?

And most large companies are well aware – by now – of the cost savings and strategic advantages of being more strategic about the way you buy things in an organization. For the most part. For most of the stuff a company buys.

But there’s another sort of spend that never gets any love, a sleeping giant that’s actually costing companies millions of dollars and opening them up to risk: Tail Spend.

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What is Tail Spend and Why Doesn’t it Wag Procurement?

Every Procurement organization is faced with the need to deliver cost savings. But virtually every Procurement organization ignores or gives lip service to an area that promises substantial savings opportunity: Tail spend.

What exactly is Tail spend? Why does it not get the attention that its saving potential promises? And what can companies do to tackle this area without compromising their focus on larger spend areas?

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Procurement Transformation Delays – The Role of Personality!

We’ve all heard of the need for Procurement to embrace the Digital Procurement transformation for many years. 

So why are so many organizations still in the beginning of this process?  

Why are industry projections failing to materialize despite ample technological advancements in Procurement?

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7 Essential Attributes of Strategic Supplier Partnerships!

Though the phrase partnership is often used, what really constitutes a strategic supplier partnership?

In a previous article about supplier management, I suggested that the more a supplier tells you that they are strategic, the less they really are. Strategic is a term that is often overused. Whether the phrase refers to sourcing, procurement, relationships, or other matters, its use is prevalent.

The notion of partnerships is equally ubiquitous and similarly both mis- and over-used. This article will identify a taxonomy for a strategic partnership between two parties.

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The Future of the Chief Procurement Officer … Is Already Here!

Kodiak Rating’s CTO was recently in attendance at a Chief Procurement Officer and Procurement Leaders event held in London, titled DITx — Data Intelligence and Tech Forum.

As written by Procurement Leaders, “DITx is Europe’s ONLY event specifically designed for procurement professionals wanting to capitalize on a whole new set of opportunities that disrupt yet provide new transformative, value adding capabilities” (Procurement Leaders 2017).

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