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Posted 04-28-2010 at 07:11 PM Comments 0
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In her session this morning, “Leadership Characteristics,” Lara Nichols, senior director at Tyco International, asserted that strong leaders — whether they’re positive or negative influences — share common characteristics in two realms: practical skills and inner convictions. For example, she cited some contentious examplesof leaders, including Jim Jones and Hitler. “They were influential, regardless of whether we agree with their positions or not,” she said. “We can’t argue that.”

To this end, Nichols asserted that practical skills are simple to spot, measure and discuss. Among these are focus (including listening and being present); diligence (asking questions, always following through, being responsive); and openness (asking for favors, forming bonds, being adequate versus greater or less than, initiating relationships and practicing self-disclosure – in other words, being a person as much as you are a professional).

Inner convictions, on the other hand, are more difficult to discern, but they are what noticeably sets apart the most effective leaders, she continued. “Many people think leaders are born,” she told attendees. “But, just like athletes, the world’s best leaders perfect their practical skills and inner convictions to improve their leadership ability.

Several common inner convictions of effective leaders cited by Nichols were: engaged listening, empathy, self-control (of body language, especially), integrity, vision, solid judgment, investing in others, respect and time management skills.

“But, the best leaders have something more,” she added. “It’s something intangible – something that draws in others.”

To this end, Nichols asserted that leaders and managers are two different things. Whereas managers focus on delivery, maintenance, acceptance, perfection and controlling the outcome, leaders will focus on people, development, challenges, innovation and motivation. “Leadership is kind of a natural relationship,” she explained. “It’s human nature to want to follow them.”

Personifying leadership requires us to exemplify unfailing integrity, create positive change, allow the change to belong to others and create excitement in advance of change. It also involves ensuring comfort (understanding what’s important to people and making it important to you, too) and shaping the experiences of others.

“The biggest question is, ‘Can you develop others to lead?’” Nichols told attendees. “You can avoid rookie mistakes by finding common ground, giving AND receiving and engaging fully. What you don’t want to do is pass the buck, forget your friends and family, betray anyone's trust or give up.”

Posted 04-27-2010 at 11:08 PM Comments 0
Posted in Uncategorized
In his afternoon session (“Selling Procurement to Sales Personnel in a Project Business Environment”), Michael G. Haynes CPSM, C.P.M. MBA, head of procurement for Siemens Building Technologies Ltd. (and the first-ever CPSM recipient), asserted that sales and procurement personnel must work together during the design and development stage to guarantee success in a project business environment.

His session used a firsthand experience — a Siemens regional procurement team which increased the percentage of cost reduction dollars to total direct project spend from 5 percent to 17 percent over a four-year period — to demonstrate successful and early collaboration.

A key piece of this achievement was the appointment of a Siemens procurement project manager, or PPM. As Haynes explained, salespeople previously considered this individual a roadblock — someone who would drive down the sales price and, in turn, the salesperson’s commission on that sale.

“They had no idea the value internal strategic procurement resources could bring to the sales effort,” he recalled for attendees. “These resources were new to the organization, and salespeople were being asked to relinquish some level of control and leadership over developing costs for a project.”

As evidence of this ambivalence, Haynes cited a review of the organization’s Western region’s 2006 savings documentation wherein 30 percent of these savings were contributed to value engineering and 70 percent to final negotiation savings. “Procurement integration was at procurement touch-point six rather than in the sales phase of the project workflow,” Haynes said. “As such, the procurement team had to ensure the solution answered the ‘What’s in it for me?’ question for [the sales staff].

“The bottom line was that the procurement team had to become as good as — or better — at selling their procurement value solutions than the district sales teams,” Haynes added. Part of the solution, then, was to establish credibility and confidence in the PPM as a member of the district management team.

To do this, opportunities were developed for procurement’s value to be demonstrated and relationships with the sales team built and nurtured. This included ensuring both factions shared the same key performance indicators (KPIs) and goals. Additionally, PPMs were provided desks in the sales areas of their district offices; access was provided to district sales funnels; salary incentives were provided to PPMs based on the attainment of their districts’ financial goals; and procurement was allowed input on go/no-go decisions in the sales phase of the project workflow.

Moreover, internal skills development and training for PPMs focused on sales training, which helped early integration, and a lot of effort was devoted to marketing and selling the PPM solution. Haynes put together a regional procurement newsletter, The Hot Sheet, to market successful sales and procurement collaboration outcomes to associates in sales, service and operations.

In the end, Haynes said, he gained a handful of key sales lessons: find, fix and sell your solution to the CEO (or uppermost decision-maker in your business unit); sell solutions, not products, policies or procedures; listen to your customer (i.e., the salesperson); let the customer think it was his/her idea; and ensure your solutions answers one vital question: What’s in it for me?

“If the sales staff invites you to meet with the external customer or comes to your office for support, you’ll know you’re gaining traction,” he concluded.

Posted 04-27-2010 at 10:02 PM Comments 0
Posted in Uncategorized
Jami Coop, CPSM, C.P.M., procurement manager for ConAgra Foods, Inc. and 2004 Richter Scholar, and Lisa Martin, C.P.M., senior vice president of Worldwide Procurement at Pfizer, Inc. know firsthand how fierce the competition can be for high-talent college students and young supply management professionals — especially as time passes and the demand for such candidates increasingly outweighs the supply.

As they explained in their session this afternoon — “On ‘Hire’ Ground: Recruiting and Retaining High-Talent Young Professionals” — such candidates typically have many options. Coop referred to a survey of current and 2004-2009 R. Gene Richter Scholars, their mentors and hiring managers, which shows these talented individuals typically receive four offers for full-time employment upon graduation.

As such, Coop and Martin emphasized, companies must find a way to differentiate themselves if they hope to get their attention. “Offering competitive salaries is no longer sufficient,” they warned. “After recruiting, on-boarding and retention also present challenges.”

So, what actually gets these sought-after candidate’ attention? According to the presenters, their top three characteristics for employer selection are:

1) The desire for challenging work assignments — clarity and specificity around the roles they will play within their organizations, as well as their ability to contribute in a meaningful way. “This means you can really increase employees’ job satisfaction levels if you’re talking to them about how they affect the bottom line,” Coop told attendees.

2) Salary – On average, the high-talent young professionals surveyed attracted average starting salaries of $58,000. Although salary was high on the list of selection criteria, however, Coop pointed out that it’s not just about money for them. “In fact, more than half of the people we surveyed did NOT accept the highest salary offer,” she said. “They were more concerned with the no. 1 criterion and settled on jobs that were within a competitive pay range.”

(For her part, Martin pointed out that supply management new hires at Pfizer do try to negotiate salary at the time of their hire – something she considers a GOOD sign for future procurement professionals.)

3) Perceived fit of company culture — working with people they enjoy being around or who have similar interests; positive company reputation (especially in the supply management profession); corporate commitment to community and the environment; flexibility and opportunity for work/life balance. “They want to work for a company they can be proud of,” Coop asserted.

“Once you’ve figured out your ‘sell’ package, you can figure out your ‘retain’ package,” Coop said. “Usually, it’s the same things that attracted them to the company in the first place that will help you keep them.”

To identify these high-talent young professionals requires deliberate, specific plans of action, both Coop and Martin agreed. At ConAgra, a core group of schools is selected, campus leaders and teams are assigned, recruiting plans are developed, and strategic campus relationships are built to sustain the company’s presence on campus – often times with academics in supply management. “I turned down interviews with certain companies because my professors didn’t give them good reviews,” Coop – a 2004 Richter Scholar – recalled.

Also, because attrition rates can be high among this group (62 percent with three or more years work experience are no longer with their first full-time employer, and 50 of the others intend to leave their first employer in the next year), they thrive in roles that challenge them to solve difficult problems or complete challenging assignments. In fact, hitting a wall with regard to development opportunities was the most often-cited reason for attrition of high talent young professionals, according to the survey.

To remedy this, Coop and Martin recommended building individual development plans, with the support of coaches or mentors. “Providing a list of classes to attend, or a checklist to follow, isn’t enough,” Coop warned. Instead, she emphasized the importance of onboarding, goal alignment, success maps and individual development plans.

“If an organization can show high-talent young professionals that it’s willing to invest in their success, it will, in turn, have great success in hiring and retaining these individuals,” the presenters concluded.

Posted 04-27-2010 at 08:26 PM Comments 2
Posted in Uncategorized
This morning, Norbert J. Ore, CPSM, C.P.M., chair of the ISM Manufacturing Business Survey Committee; Anthony S. Nieves, C.P.M., CFPM, chair of the ISM Non-Manufacturing Business Survey Committee; and Jason Cummins, partner and head of economic research at Brevan Howard Asset Management, delivered mixed messages in their Economic Outlook Presentation.

“All I can say is, what a different a year makes!” Ore began. “The recovery, as it turns out, is a very sharp ‘V.’”

As evidence, Ore presented some telling findings about the manufacturing sector:

• Operating rate is currently 72.8 percent of normal capacity.

• Production capacity is expected to increase 6.4% in 2010.

• Capital expenditures are expected to increase 2%in 2010.

• Prices paid increased 2.7% through the end of April 2010.

• Prices are expected to increase a total of 3.8% for all of 2010 – a 1.1-percent increase for the remainder of 2010.

• Manufacturing employment is expected to increase 5.2% during the remainder of 2010.

• Manufacturing revenues are expected to increase 6.3% in 2010.

• Overall, manufacturing is expected to grow significantly in 2010.

Next, Nieves offered some mostly positive findings for the non-manufacturing sector:

• Operating capacity is currently 83.6% of normal capacity.

• Production capacity is expected to increase 2.3% in 2010.

• Capital expenditures are expected to increase 1.9% in 2010.

• Prices paid are expected to increase 0.7% through the end of April 2010. Also, prices are expected to increase a total of 1.7% for all of 2010 – a 1% increase for the remainder of the year. “Price changes are still very demand-driven,” Nieves told attendees. “Prices won’t be increased until the economy provides to be more stable in the long-term.”

• Non-manufacturing employment is expected to decrease 0.1% during the balance of 2010. “In 2010, I see manufacturers selectively replacing positions,” Nieves said. “But, sadly, as we all know, it’s easier to lose 1,000 manufacturing jobs than to replace them.”

• Non-manufacturing revenues are expected to increase 0.3% in 2010.

• Overall, non-manufacturing is expected to grow slightly in 2010.

Cummins, on the other hand, had what he called a “pretty dark presentation” to deliver: “Longer-term trends have a darker cast than short-term ones we’re enjoying now.”

His contention was based on four basic points:

1) The recovery will be relatively weak, compared to previous recoveries. As Cummins said, economists predict nominal (4% - 5%) growth, which is weak by historical standards.

2) It’s the end of the great moderation. Cummins contended that slower growth and volatility signify the new normal, or – as he prefers to call it – the new ABnormal.

3) Structural drags must be factored in. These include:

a. Homeowner vacancy rate – “Before the recession, we were building so much that the vacation rate made sense,” he said. “But, it remains high, and we’re five years into the recession.”

b. Household balance sheets – These are still highly leveraged, according to Cummins. As a result, consumers are under a lot of pressure from mortgage companies, credit card issuers and the like.

c. Wealth stagnation – “We’re back to the trough between the dot-com bubble and the housing bubble,” Cummins told attendees.

d. Damaged labor market – Whereas employers used to be able to match a vacancy with a well-matched candidate, now it is difficult for these job-seekers to sell their homes and move elsewhere for new opportunities, he explained. And, obviously, there are fewer vacancies being filled right now.

e. Unfavorable demographics – “The past two years have undone two decades’ worth of demographic growth,” Cummins said.

4) Is there another bubble coming? Yes, according to Cummins – two of them, in fact: government debt and the Fed balance. “The amount of support the government has provided toward the recovery is absolutely unprecedented,” he explained. “Also, the Fed has put all these assets on its balance sheet at the highest prices. The only way that can end is to sell them off for less.”

In the end, Cummins said, the recession might actually be preferable to today’s outlook. “At least then we knew what we had to do: put down a safety net,” he explained. “But, now that that net is in place, it’s unfamiliar territory. We’re feeling out the consequences of what was laid down.”

Posted 04-27-2010 at 07:54 PM Comments 0
Posted in Uncategorized
Four CPOs at the top of their profession participated in today’s panel discussion, “CPOs Speak: Earn and Keep a Seat at the Table.” Many attendees gathered to gain insights on developing and sustaining internal client relationships from Lisa Martin, C.P.M., senior vice president of worldwide procurement at Pfizer Inc.; Dave Nelson, C.P.M., A.P.P, senior partner at Fenix Group International, L.L.C.; Shelley Stewart, Jr., MBA, senior vice president of operational excellence and CPO at Tyco International and chair of the ISM Board of Directors; Sid Johnson, vice president of global supply management at Delphi Corporation; and moderator Nancy Q. Smith, M.A., director of strategic partnering at Exemplary Performance.

The lively discussion began with overviews by each CPO detailing his or her career path in supply management.

Nelson began his career in 1957. “Purchasing then, versus now, is day-and-night,” he said, because best practices are available for implementation today. “And now, you have to get a seat at the table – even if it’s sometimes a hot seat,” he added, laughing.

Martin joined the supply management profession in the 1980s with no intention of it being a career. At the time, she wanted to do public relations in Hollywood; however, an actor’s strike made that a difficult move. Instead, she was hired by a post-production facility to help build a procurement department from the ground up. “Anyone who knows me knows I love to shop!” she joked. Soon after, Martin met the then-president of her local ISM affiliate, and her career path became more solidified.

Today, she has been with Pfizer for 12 years. “When I got there, I’d say we had a stool at the table, not a seat,” she told attendees. “Today, though, we definitely do.” The most critical aspect of keeping that seat, she added, is the realization that although processes and practices are critical, supply management must also deliver the results the stakeholders want.

Stewart was the first child in his family to attend college. After graduating with a few degrees, he moved back to New York and went to work at an aerospace company. In the three years he spent there, Stewart recalled, he learned a lot – but, he’s constantly amazed at how prepared today’s young graduates are to function in the supply management role. Even so, he had a few words of advice for them: “You’d better not get the seat until you’re ready for it.”

Although Stewart now sits at a table with the CEO and all the presidents at Tyco, he reminded attendees that he “has to earn his keep” to keep that seat. This requires understanding the business strategy of the organization, as well as what other stakeholders in the company want from procurement. “You have to be an influencer,” he emphasized, referencing a key message from Angel Mendez’s opening keynote session ([url][/url]) on Sunday.

For Johnson’s part, the trait that has helped him the most in getting to his professional level is the ability to work across the organization. “Everyone in [this room] gets things done through others,” he said.

When asked when each panelist realized the importance of getting a seat at the table, the answers varied. For Johnson, it was the realization that more is spent on materials – in some cases, double the amount – than on manufacturing. “Why WOULDN’T we be at the table?” he asked.

For Stewart, it was when his department delivered their first $1 billion over three years. “That’s when we got their attention,” he recalled. “And you do need to have a few successes first.” In Stewart’s case, his CEO gives constant feedback on the dollar impact of procurement on the bottom line, which indicates the function is very much on executive leadership’s radar.

Martin said that her boss at Pfizer expects procurement to be front-and-center, and – like Stewart’s boss – regularly calculates and communicates the function’s earnings-per-share (EPS) contribution. “At the senior levels of the organization, we’re blessed,” she said. “But, we’ve earned it.” True to form, ever since Martin and her team achieved their first $1 billion goal, the bar has consistently been raised.

In 1994, Nelson was called by the board at Honda to establish supplier study groups to help remove 30 percent of the cost of the ’98 Honda Accord. It was a new concept for him at the time; yet, when he gathered the suppliers together, they responded with around-the-clock cost-reduction ideas presented to Honda engineers. “I learned that suppliers are eager to help if you ask them,” he advised.

At this point in the session, the esteemed panelists fielded questions from attendees.

Q: Has your seat at the table ever been taken away? If so, how did you get it back?

STEWART: You have to live in your internal customers’ shoes. You’ve got to stay in their faces. Be proactive so that your value is constantly demonstrated. Don’t create the gap for them to walk away.

JOHNSON: You’ll make some significant structures during a crisis. Don’t lose those once the crisis is over.

MARTIN: I can’t tell you how many brick walls I’ve hit in my career [regarding executive hold-outs]. You have to be resilient, back up and try another part of the wall.

NELSON: Become their boss! [laughs] Things get a whole lot more simple after that.

Q: How are you recognizing internal partners’ successes?

STEWART: Nobody wants you to show up in their office with your target, so I think rewards and recognitions are really critical.

JOHNSON: I spend one hour with my CEO very month, and I always take a team with me to give them some high-level visibility.

MARTIN: Don’t forget to just say thank-you. Also, on a quarterly basis, I used to go to the top 40 people in the organization with a slide deck about procurement. I’d customize that deck for each person.

Q: What are some of your most crucial leadership lessons?

MARTIN: Resist the urge to swoop in and fix things, because people aren’t learning when you do that.

JOHNSON: I agree. Let people do their jobs.

Q: How can people at the middle-management level exert influence?

MARTIN: Have someone at a higher level to talk to. Also, try to practice your influence in a safe environment. For me, that was managing volunteers within ISM.

NELSON: Don’t try to fix it all. Delegate, delegate, delegate – and do it with expectations. If people have a chance to make a name for themselves, they’ll take it.

Q: Are any of you worried about talent retention?

MARTIN: I actually like it when people leave supply management to work in other parts of the business.

STEWART: I do, too. Then, they become disciples.

Q: How likely is it that more CPOs will be CEOs 10 years from now?

STEWART: There’s a whole evolution toward that happening right now. Our operational skill sets mean the sky’s the limit.

NELSON: We’ve already seen instances of this. There are lots of examples already.

Q: How do you know you’re sitting in the RIGHT seat versus being seen primarily as “the cost guys” by senior management?

JOHNSON: As Shelley said, you’ve got to be ready for that seat. Once you get it, everything you do must be focused on growing the business. For me, it is.

NELSON: Be replaceable; you can’t be promoted if you can’t be replaced. Also, be open to relocation and a wide variety of opportunities.

MARTIN: Your question shows how we’re evolving as a profession. My advice is to talk about things in terms of the business as a whole.

STEWART: You don’t have to always lead with cost reduction. Focus on process improvement and agility.
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