Monday, March 30, 2015

Use Storyboards in Purchasing

Market Your Purchasing Successes with the Use of Storyboards
Purchasing professionals need to realize that they must not only market their purchasing strategies but their successes. Many purchasing professionals neglect to create a marketing plan for their organization. I use the term marketing plan synonymously with communication plan.
Some of the goals and techniques of your marketing-communication plan should be to educate top management on your strategic plans, publish results of supplier performance and surveys, publish internal customer survey results, educate personnel on purchasing and supply chain principles, emails, hold roundtables, hold town meetings, use social media, utilize newsletters, use a supply chain specific web pages, monthly letters, and announcement of successes.
Storyboards are a great way to market your successes.  Storyboards require you to be disciplined in your message and fully understand your results and assertions. You must limit your words and concentrate on the essentials. Thus you must communicate explicitly and right to the point for your audience. You need to strip away the technical argot and make sure the audience can easily grasp what you have accomplished, even with a very limited knowledge of purchasing. Storyboards should adhere to a lean principle of visibility. Storyboards must be understood quickly with the maximum use of graphics, not words, spreadsheets or numbers. This is not an easy task, as a consultant we would often spent hours and days trying to accomplish this with a storyboard. Obviously purchasing often does not have the talent (full time illustrator) or resources to do this meticulously, but this is intended to be a guide.
There is no one catch all formula or template for storyboards. Often how you employ them and your particular style depends on the culture and communication norms of your organization. The important aspect is to make sure that you communicate your successes in a manner that can be readily understood by both purchasing and non-purchasing personnel. Think of storyboards as intelligent commercials that must be brief, easily remembered and upbeat.
I have provided an example of a storyboard that we used to communicate a purchase order success story. The organization that it was used in was very heavily into Lean Six Sigma, Kaizens and the DMAIC methodology (Define-Measure-Analyze-Improve-Control). We used this familiar DMAIC format to help people understand and follow what we did.  It still has too many words and numbers but we needed to insure people realized the scope of what we had accomplished. The storyboard was well received and readily understood by employees. I highly recommend purchasing and supply chain professionals consider using storyboards to communicate your successes.
Purchasing has continuously demonstrated their impact to the bottom line of an organization. It has been well documented and universality recognized. Then why do many companies refuse to take advantage of this cost-saving resource? Why do executives still remain skeptical of purchasing’s value? In many organizations purchased materials and services account for over 50% of the cost of goods sold; yet purchasing is often relegated to a bureaucratic mundane dungeon of clerical functions.
Some of the fault lies in purchasing itself. Purchasing personnel are notoriously inept at marketing and selling their ideas and suggestions. They are often a harried bunch running around from firefight to firefight. Most do not even have a good or comprehensive communication plan. They fail to “toot their horn” or market their successes. Purchasing fails to tell their story compellingly and neglects to sell their importance. Other departments either ignore or politely humor purchasing. Purchasing remains the chief cost driver or cost saver for many companies, yet often purchasing is remarkably under-resourced and underappreciated.
One-way to sell purchasing’s importance is to empower as many other employees as possible to participate in purchasing especially on cross-functional sourcing teams. Involving as many personnel in constructive purchasing activities educates them on the value and importance of purchasing. This is a bottom-up approach to educating employees on the value of purchasing. It encourages them to contribute their ideas about improving services and products. Purchasing needs to strongly persuade other departments to participate in purchasing processes and decisions. Purchasing all too often fails at what I call the empowerment of employees and internal public relations.
But what can purchasing do about the top executives or top-down? Many executives have stereotype views of purchasing. One of our most successful methods to convince top executives of the value of executives is to encourage direct one-on-one collaboration with executives of your suppliers; especially ones who you are partnering with who realize the relationship is long-term. Exchanging ideas at this level not only yields great results, but also expedites decisions and removes bureaucratic barriers to success.
The fact is that purchasing also runs its own Research and Development (R&D) department. Suppliers, in collaboration with purchasing, are perhaps the most cost effective R&D function in a company. Jointly they often come up with leaps in technology and transformations in products. When they cooperate they can transform a company and its products. Breakthroughs that occur via this method should receive as much publicity if not more than those developed internally!
In summary, getting purchasing valued for its great contribution to revenue requires both a bottom-up and top-down approach. Empower as many employees as possible to participate in purchasing and solicit their ideas and suggestions. Set up one-on-one executive exchanges with your supplier executives. Finally, systematically create a strong marketing plan to communicate your successes.

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Sunday, March 29, 2015

Mega Negotiations Story
Here is a story about a strategy we used which I called mega-negotiations. We were very lucky that all the elements fell in place and we had hungry suppliers. The size of the negotiations gave us strong leverage.
These were the ground rules we established for a $5 billion dollar bid of supplier work for major expansion of chemical plants.
1.   There would be only one round of bids. We urged the suppliers to give the bid their best shot. We didn’t have the time to manage multiple bids.
2.   We announced that we would, in many cases, narrow down the areas where we had two preferred suppliers to one, unless we had a good business reason for keeping two.
3.   Although we had negotiated some significant total-cost-of-ownership savings in the current contracts, we were open to enhancements from the suppliers and distributors.
4.   We told the suppliers that we would not accept their standard spare parts packages as we had in the past. We would challenge their typical spares packages, but would be especially open to creative ways of them controlling and managing the spares at minimal or no cost to us.
5.   OEMs (Original Equipment Manufacturers) could work with distributors to propose any addi­tional creative services to provide us.
Believe it or not we saved over $1 billion with this approach. We were stunned.
       Dr. Tom DePaoli

Use the Storytelling Method to Train Supply Chain Professionals
One of the oldest methods of passing down knowledge was by oral storytelling. Usually an ancient sage would be the keeper of the stories and pass them down to other tribe members. I highly recommend this method for supply chain professionals.
Here are some advantages of storytelling:
·       The brain stores information by stories.
·       Stories are humanizing and stimulate creativity.
·       Storytelling improves listening skills.
·       Storytelling builds a team culture.
·       It encourages collaboration.

First, creating the right atmosphere and teamwork is essential in order to establish the validity of this method. The trust of all members of the team and non-attribution is essential.  The leader of the team should leadoff and share personal supply chain stories of success and failures.  There should be a general framework for the stories. In our framework, we structured the stories to first give a background of the situation or issue, then tell how resources were gathered to address the issue (approach), and finally reveal the results. Often the approach to solving the problem is more important that the actual results. Colleagues would be encouraged to ask questions and to suggest more appropriate approaches. Supply chain professionals have many touch points or people involved throughout the supply chain. Stories should not be limited to paying customers but include suppliers, colleagues, competition, other departments etc.
Here is an example:
Background: We went through comprehensive sourcing selection process with a cross-functional team. We involved all the key stakeholders and were very meticulous in our research and selection. We were highly confident that we had selected the right water pump supplier and were expecting significant hard and soft savings. The supplier had prior experience with partnerships and alliances.
Approach: Much to my surprise after two weeks I discovered that the process was not going well. Maintenance personnel were complaining about the new supplier so I decided to investigate. I walked around the plant and talked to maintenance personnel and their department heads. I soon discovered that the issue was not the quality of the pumps. The issue was the representative that the supplier had assigned to our account. The rep just could not adjust to our people or culture. The personality was not a fit.
Results: I approached the supplier and requested that a new representative be assigned to out plant. The new representative got along well with everyone and we made great progress in savings and innovation. The lesson that I learned, is that the selection team should interview the potential supplier’s representative during the selection process and insure that they are a fit. We thus added “chemistry” to our selection process.
We used this same storytelling method after every sourcing event and continued to discover issues that we had missed. We then added them to our overall sourcing methodology or checklist. Storytelling is a powerful collaborative learning tool, I recommend taking full advantage of it.

Tom DePaoli

Dr. Tom DePaoli is the Management Program Director at Marian University in Fond du Lac, Wisconsin, and the Principal (CEO) of Apollo Solutions ( which does general business consulting in the supply chain, Lean Six Sigma and human resources areas. Recently he retired from the Navy Reserve after over 30 years of service. In other civilian careers, he was a supply chain and human resources executive with corporate purchasing turnaround experience and Lean Six Sigma deployments. He is the author of: Kaizen Kreativity (Oops!)Common Sense Purchasing,  Common Sense Supply Management and Growing up Italian in the 50s.  His Amazon author’s page is

Purchasing Leaders Need a Combination of Exceptional One-Off Leadership Traits

By Dr. Tom DePaoli
Running a purchasing or supply chain organization poses unique challenges to a leader. Purchasing organizations are constantly “fighting fires”, handling unique crises and influencing a broad network of people internally and externally. The range of personal contacts, cultural differences, emotions and challenges is global. In two of my books I have used poetic license and characterized the so called normal purchasing day as “zoo-ee”. Although many of the skills that I discuss are also required by other leaders, the sheer nature of the purchasing beast demands a special combination of these skills.
One of the most valued characteristics of a leader is integrity. A purchasing leader needs to never waiver in being honest to everyone in all their relationships. The quickest way to demoralize your team is to not keep your word. There can be no compromise on this trait.
One of the first things a purchasing leader must make clear is what is acceptable ethical behavior. Publish and conduct classes on purchasing ethical standards. I have been fortunate to work for companies that have clear standards and strong ethics.  I personally condone a zero tolerance of any gifts or gratuities including lunches or dinners from a supplier or anyone. I recommend purchasing actually budget dollars for these events and strive to not even give a semblance of any favoritism.
Because of the frenetic atmosphere; a purchasing leader must be a working leader or “hands on” resource especially when a crisis develops. Leading from the front is a requirement.
Clear goal setting and the flexibility to constantly adjust goals is a skill that must be repeatedly practiced and communicated. This goes hand in hand with the ability to provide come discipline and structure to the team in light of all the pressures and deadlines. Along with this, the talent to delegate and not to micromanage is essential. This encourages team members to take risks and grow. Purchasing leaders need to show that they truly care for their team by personally conducting training in many areas.
Curiosity and the drive to wander around and find out what is really happening, especially in other departments and with suppliers, often yields useful knowledge and actionable projects.  Getting visible and being approachable cements relationship building which is the linchpin of the art of purchasing.
Sheer drive and the perseverance to not quit seizes the imagination of team members and other employees as well. I call this “indomitable spirit” and it is contagious. Below is my list of one-off purchasing leadership traits along with additional complimentary traits that develop from them. Finally never lose sight of the fact that leading by example is not working, unless your team is following and exceeding your example.
One-Off Purchasing Leadership Traits
Complimentary Leadership Traits
Admitting mistakes
Clear goal setting
Strong and visible metrics
Relationship building
Flexibility in priorities
Providing discipline and structure
Strength during crisis
Delegation skills
Trusting your employees
Training ability
Indomitable spirit
Celebrating successes