July/August 2012, eSide Supply Management Vol. 5, No. 4
Although category managers/sourcing specialists remain sought-after in most supply chains, generalists are a better fit for one major global engineering, construction and project management organization. This Q&A explores why.
Given today's complex supply chains, category managers and sourcing specialists are certainly sought-after. If they do their jobs efficiently, they can leverage their purchasing power with deep knowledge of the lowest-all-in-cost suppliers.
But, is there an emerging case for hiring (and training) generalists instead — those unique individuals who can source entire supply chains and understand the risk from a broader perspective?
The answer is yes for Bechtel Corporation, a global engineering, construction and project management organization based in Houston. With nearly 53,000 employees and end-to-end projects all over the world, the company recently posted revenues of nearly US$33 billion and booked new work valued at more than $53 billion.
eSide Supply Management interviewed David Hammerle, Bechtel's corporate manager of procurement and contracts, to find out why generalist supply management professionals are a good fit for his particular business model.
eSide Supply Management: When you say that your organization looks for "generalists, not specialists," what does that mean?
Corporate Manager of
Procurement and Contracts,
David Hammerle: When I say 'generalists,' you need to understand our business [to understand what I mean]. First, we do have specialists. By that, I mean commodity specialists — experts on sourcing specific products such as valves, pipe and fittings, which fall into one commodity category for us.
I don't have commodity teams — better known as category teams — like a lot of companies do. At a company that manufactures specific components, where a great deal of plate is purchased, they've got teams or commodity experts who just buy steel. I don't have teams like that because I don't always have steel to procure.
Instead, we rely on our procurement professionals and procurement managers to execute projects and manage the entire supply chain on the project, which includes acquiring steel. We have our sources identified before the project starts, but one supply chain professional procures that steel on a project. Then, when he or she finishes doing that — requesting bids, negotiating and so on — they have to manage that steel order. An order for steel for one project (fabricated structural steel for the buildings, pipe racks and other miscellaneous) will be purchased to project-specific requirements under one major purchase order agreement, and it will take a well-skilled professional significant time to manage. Even so, that procurement professional must be able to do many other supply chain-related procurements to fill his or her time efficiently and effectively.
What works best for our organization is to have a procurement professional on a project who has the skills and knowledge to manage a major steel order, which comes with experience working with Engineering, Supplier Quality and Construction. This person must also understand the specialty key risk areas in design, plus critical aspects and complexities in the supply chain (what the key processes are to succeed), and then be able to see it through to installation.
But, while they are purchasing the steel, they'll be working on other components and commodities for purchase. After awarding the steel order, this individual might need to purchase mechanical equipment, such as pumps and compressors — and maybe electrical equipment, such as transformers, switch gears and motors — which might not have much to do with the steel order he or she just placed. But, there is information required from mechanical and electrical equipment suppliers that impact the steel purchase, so a supply chain professional that recognizes that has a broader view of what makes the entire project a success.
So, when I say 'generalists,' that's what I mean. Our business tends to lend itself to generalists. I'm not out looking for 20 valve specialists who'll spend their careers doing only that. But, I'll need a few spread out through the organization.
My generalists are supply chain professionals who understand manufacturing and can translate it to our industry well. It doesn't matter if we're having suppliers fabricate anchor bolts, structural steel, turbine generators or pumps. I need skilled, versatile professionals who understand the entire supply chain, from the deal-making piece, to legal aspects behind the terms and conditions, to how to engage engineering, to understanding form, fit and function of the product being purchased.
eSide: Tell me more about what makes this type of candidate — the generalist — so appealing for your organization in particular.
Hammerle: Let's take one of our projects as an example. If we're building a $4 billion plant, $2 billion of that might run through my supply chain. So, every project gets organized like a company. I might have 50 supply chain professionals on one project, from buyers, to expediters, to supplier quality personnel and logistics professionals, with a procurement project manager overseeing it all.
Again, I do have specialists on staff. In a lot of cases, they possess more process knowledge along our core competencies versus commodity knowledge. I'll hire someone who has supply chain logistics process knowledge and who specializes in moving freight. And maybe that's all they'll do: charter ships, work with freight forwarding companies, ship our materials and equipment. So, I focus more on process specialists.
Another example is my expediting core process. The supply chain professional will be skilled primarily at expediting, but he or she isn't an expert on expediting just one commodity, such as steel or vessels. This individual needs a broader understanding of everything we procure for our projects and must have the knowledge to expedite pretty much anything well.
While there are logistics professionals who charter ocean vessels who work for our chartering specialist, those logistics professionals probably won't just charter ocean vessels their entire careers. We'll move them on to perform traffic and logistics operations more as generalists, moving freight in all modes — land, rail, air and sea — including other tasks related to shipping. This will ensure they're exposed to a much broader piece of those processes and are prepared to run the full scope of our project logistics.
eSide: Tell me about the proactive, purposeful training you use to "build" the generalists your supply chains require.
Hammerle: We strategically invest to broaden and grow our supply chain managers quickly so they can manage a complete supply chain: purchasing, contracts, expediting, supplier quality, traffic and logistics, materials management, receipt, inventory control. We put them through a four-month program.
In general, we might hire somebody for a procurement position and make them a buyer — responsible for multimillion-dollar orders. Then, they might rotate through expediting. We think strategically as we move our people from job to job. In time — when they've bought just about everything you can buy on a project — they're in a position to become a supervisor. From there, we want them to be able to function as a supply chain manager and be responsible for $1 billion to $2 billion worth of spend from 'cradle to grave,' so to speak.
This requires the right leadership skills. A big part of the training is teaching them to build a high-performance team by exhibiting good behavior and learning to motivate.
Also, with nearly 100 projects across every continent (except Antarctica) and tens of thousands of suppliers — far more than in a typical manufacturing environment — our supply chain professionals must be skilled at working with different cultures.
eSide: How difficult is/was it to secure the funds to provide this type of training?
Hammerle: It's almost a demand-pull situation. The only way we can get more work is to be able to supply more leadership teams. The only way you can do that is with skilled leaders; therefore, the only way to win more work is to make sure we have capable leaders ready for assignment.
Right now, as all industries are experiencing, our baby boomers are reaching retirement years, which is creating a gap between senior leaders with extensive experience and our less-experienced 'middle-career' colleagues. Filling that gap requires us to develop some of our less experienced leaders, whom we've identified as having good potential to be effective supply chain managers — and to do it fast.
When we look at taking on a new project, we know we need a whole project team ready to staff. That makes it easy for me to say, 'We have five more jobs in the queue, but I don't have five more supply chain managers. What's more, I have five people retiring! So, I actually need 10 — and I don't have them right now. I've got people who are close, but they're going to need to know how to go run a job.' That's a pretty easy sell.
eSide: Outside of your organization, where do you have the most luck finding generalist candidates?
Hammerle: We look across our industry and other industries for all levels of professionals who are either generalists or early-career hires, whose skills we can broaden.
Also, military job fairs are a good source; I find both generalists and the specialists there. I can find a person who's moved freight and materials all over the world. Usually, they know logistics; they've just never worked on a construction project. But, they're often really good candidates because they understand the importance of following procedures, ethics, and they're trained in leadership very, very well.
So, the military is a good place to go to find some of these candidates. In fact, we sometimes invite military organizations that want to place their veteran colleagues to come to our organization and present about hiring veterans.
eSide: Do you see hiring — and training — generalists as a trend in the supply management profession right now?
Hammerle: Our customers tend to go the category manager route, as they have a lot of maintenance and repair that supports such specific skills. My experience has been that a supply chain professional leans more toward the generalist as an exciting career interest. At Bechtel, if I tell someone they'll be buying cable for a long period of time, it doesn't peak their interest the way discussions of being a generalist do.
Additionally, I might hire a lot of procurement people for a big job. But, when that job comes to an end, there is a good chance I won't have a job for each of them if they're all category experts.
So, it's beneficial to us and to our colleagues to move our supply chain professionals around and broaden/train them as generalists.
RaeAnn Slaybaugh is a writer for the Institute for Supply Management™. To contact this author, please send an email to email@example.com.
For more career management resources, visit the ISM database.
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