Jeff Dickerson, C.P.M.
January/February 2012, eSide Supply Management Vol. 5, No. 1
As supply management professionals, it's critical that we deliver and document results, and then use these to "sell" our services within the organization. None of this is possible without influence.
In our profession, we're constantly analyzing competencies which add value to the procurement process. Executives in our organizations have identified the supply chain and called on us to reduce costs, improve supplier performance, find new solutions and generate revenue. We're expected to effectively support the goals of the enterprise.
Are there gaps in our competencies that need to be addressed to make us more successful in these matters?
One of the most important competencies in our toolbox is the ability to influence. We must influence others to understand and use our services, as well as involve us to not only buy, but to act as partners at the design, development and decision stages of a service or product procurement. This is where the greatest benefits are achieved.
Delivering results through the entire supply life cycle is critical. This requires us to work expertly — and diligently — to influence cost saving designs and offer a decision-making process to identify the best suppliers.
Influence isn't instantly achieved; it's developed over time through various channels and methods. The challenge is to approach every interaction as an opportunity to deliver results and build trust. I build trust as I perform with integrity, and trust leads to influence.
For instance, one of our internal departments here within State Farm had sourced its own publication, but the Purchasing group was able to purchase a similar publication at a significantly lower cost. This internal business partner had never been interested in our department's offer to "just let us quote" their publication until a leadership change occurred in their department. At that point, we approached the new manager with our history of sourcing a publication that was very similar — both in quality and delivery — at a lower cost. Our offer to prepare an RFP was finally accepted.
The internal business partner's original publication supplier was included on the RFP and immediately reduced its price by 20 percent. Even so, when the RFP was evaluated, their chosen supplier was still the most costly of the options. So, we set up a trial production with the low-cost provider we'd used before, who performed better than the internal business partner's original supplier. As a result, we were able to save more than US$250,000 in the first year. Six years and two more RFPs later, we continue to source to this low-cost provider — and now we're also involved in several other sourcing projects for that department.
Because many organizations have no mandate that requires supply chain's involvement when dealing with suppliers or procuring goods or services, it's up to each buyer to maximize his or her unique skills, abilities and talents to produce results — in other words, to become a person of influence. Doing so requires following a handful of universal principles.
1) Delivering results to executives. An influential supply chain organization is capably staffed, vigorously supports company goals and consistently delivers positive results. To gain approval and support, we must quantify and present these results to executives — to sell our results to leadership and promise defined benefits to gain commitments from business areas that value our partnership.
If we consistently perform and provide quantifiably productive results, internal partners will be influenced to trust us and rely on us to manage the spend aspects of their projects. We don't need a mandate to "use purchasing" if, through observation or experience, other departments voluntarily prefer to engage us in projects.
For example, I recently negotiated a change to an internal item that significantly reduced cost. I first identified the outdated item, researched all alternatives for the change, and then presented the change and cost reduction to the authorizing department. They accepted the change, and we use this as an example of supply chain value.
To this end, we also need to master sales techniques so we can promote our results to areas that haven't yet discovered our value. At State Farm, for instance, we use a performance tracking tool that includes who we engage, as well as results and processes we use to achieve those results. This information is consolidated, reported and verified by our executives. The senior staff then become allies as we approach areas that have identifiable spend opportunities.
Moreover, as executives present our results to other departments, we gain credibility with them. This lends itself to increased influence.
At my organization, we're conducting spend analysis with departments we've never interacted with before. The directive to work with supply chain is coming from our CFO. The results of the spend analysis are reported to our CFO and each department's supplier management office. If the cost benefit is great enough, we then proceed with a sourcing strategy involving a cross-functional team, which includes Purchasing.
As we continue to deliver results, we build relationships with partners. They, in turn, sell our benefits to others in the organization.
2) Knowing when to listen — and when to talk. Our business partners are more likely to say yes to someone they know and like. To this end, every interaction must be positive. Experience has taught me the importance of learning, listening and understanding the challenge before presenting solutions to potential internal clients.
Another value-add opportunity presented itself when our organization's internal creative group needed to update its media equipment. This isn't my area of expertise; but, because I do work with individuals from this group on other projects, they had asked for guidance regarding their equipment purchase. I was able to engage another area of Purchasing to help them with their project. Now, they know who to enlist for their equipment purchases and are able to involve the right buyers early in their decision process.
I've also learned that people respect honesty, loyalty and accountability. And, if I fail to perform, I must accept responsibility for my actions and quickly correct the problem.
We must consistently deliver and document results, and then sell our services within our organizations. Consistent, verifiable results become our brand and replace any concerns people have about our ability to perform.
Using this approach, what we accomplish is documented. What we're doing now is observable. All this builds our influence and establishes procurement as a valued partner.
Jeff Dickerson, C.P.M., is a procurement specialist (print) for State Farm Insurance Companies in Bloomington, Illinois and former president of the NAPM—Central Illinois affiliate. To reach this author, please send an email to email@example.com.
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