Exceptional Leadership Traits for Procurement and Supply Chain

By Dr. Tom DePaoli

Running a procurement or supply chain organization poses unique leadership challenges. These 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 supply chain/procurement day as frenzied or “zoo-ee”. Although some of the skills that I discuss are also required by other leaders, the sheer nature of the procurement/supply chain beast demands a special combination of these skills. They are one-off and distinct.

One of the most valued characteristics of a leader is integrity. A procurement/supply chain leader can never waiver in being honest to everyone in all their relationships. It is the foundation of establishing trust. 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 leader must make clear is what acceptable ethical behavior is. 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 turning the tables around and actually budgeting your dollars for these events to avoid giving even a semblance of favoritism.

Because of today’s hectic atmosphere; procurement/supply chain leaders must be “hands on” - especially when a crisis develops. Leading from the front is a requirement; remaining detached in a crisis will not endear a leader to his or her fellow professionals.

Visible goal setting and the flexibility to constantly adjust those goals is a skill that must be repeatedly practiced and communicated. This goes hand in hand with the ability to provide discipline and structure for the team in light of all daily pressures and deadlines. Along with this, the talent to delegate - but not micromanage - is essential. This encourages team members to take risks and grow. 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. Being visible and remaining approachable cements relationship building, the linchpin of the art of procurement/supply chain.

I also recommend using Leadership by Storytelling. The leader must tell stories that happened and share the lessons of the stories with the team and others. There must be an open willingness to admit mistakes.

Sheer drive and perseverance captures 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 procurement/supply chain leadership traits along with additional complimentary traits that develop from them.

Never lose sight of the fact that leading by example only works if your team is following and exceeding your example.

Here is a list of traits.

One-Off Procurement/ Supply Chain Leadership Traits	Complimentary Leadership Traits
Integrity	Admitting mistakes
Clear goal setting	Strong and visible metrics
Relationship building	Empathy
Flexibility in priorities	Adaptability
Providing discipline and structure	Strength during crisis
Delegation skills	Trusting your employees
Training ability	Expertise
Indomitable spirit	Celebrating successes
Storytelling	Sharing lessons learned

 

Dr. Tom DePaoli

 

Dr. Tom DePaoli, (Dr. Tom or Captain Tom), is currently an independent management consultant, the CEO of Apollo Solutions, which does general business consulting in the human resources, supply chain and lean six sigma areas. His organization was self-founded in 1995. He retired as a Captain from the Navy Reserve. In other civilian careers, he was a supply chain and human resources executive with corporate purchasing turnaround experience and lean six sigma deployments. He has worked for over ten major companies and consulted for over fifty organizations throughout his career. Some of his consulting projects include: information systems projects, re-engineering organizations, organizational transformation, e-procurement, e-commerce, change management, leadership training, creativity improvement, global sourcing and negotiating, especially information based negotiations. His industry experience is in the chemical, paper, DOD, pharmaceutical, IT, startup, automotive, government, consumer, equipment, business services and consulting industries. He has been published extensively in journals, magazines and books. He is the author of eleven books all available on Amazon.  He has instructed at six education facilities in numerous roles. He is active in supporting the YMCA, Wounded Warrior, and the prevention of the bullying of children.

 

https://www.amazon.com/author/tomdepaoli    = Dr. Tom’s Amazon author’s page

http://www.apollosolutions.us  = Website of Apollo Solutions his business

drtombooks.com  = More information on Dr. Tom’s books and writings

http://www.linkedin.com/pub/dr-thomas-depaoli/0/736/6b3/  = LinkedIn home page

https://apollosolutionsbooksandconsulting.blogspot.com/   = Dr. Tom’s blog

@DrTomDePaoli = Twitter    https://twitter.com/DrTomDePaoli

https://www.facebook.com/ApolloSolutionsConsulting = Facebook of Apollo Solutions

 

 

 

 

Contact Dr. Tom = thomasdepaoli@yahoo.com drtombooks.com for newsletter sign up https://drtombooks.com/contact/ My Books link: https://www.amazon.com/Tom-DePaoli/e/B003XSV1IQ

Why Procurement Savings are Especially Valuable in Capital Intensive Industries

 

 

 

Why Procurement Savings are Especially Valuable in Capital Intensive Industries

We all know the value of procurement savings both hard and soft to many organizations. They are often recoverable immediately with little or no capital investment. Often a cross-functional team comes together and develops the savings which does take time but usually very little if any capital expenditures.

The paper industry is very capital intensive. A new paper machine can cost over one billion dollars to install. This does not include the costs of warehousing, logistics, and other costs. Environmental permitting is long and costly.

One paper company that I worked for sold a popular roll of toilet paper for $.50. It was so popular that they could not make enough of the product. They made approximately $.05 profit on each roll. In order to make a million dollars profit they would have to make and sell 20,000,000 rolls of this brand. The company was currently stretched to its maximum capacity for this brand roll. In order to make more of the paper rolls the company would need more capacity or specifically a brand new paper machine costing approximately one billion dollars in capital minimum. There were other options, like buying another paper company for additional capacity, dropping other brands and reducing their production etc.

A cross functional team was formed, which included some suppliers, employees from other departments, additional stakeholders and procurement. The team came up with a list of paper machine process speedup ideas and waste reductions that saved one million dollars directly attributable to this brand. In essence the savings were equivalent to the profit of selling 20,000,000 additional rolls of this brand.

The issue is how do you count, justify or take credit for all the savings? I am not a financial or accounting expert I am just raising some questions. Most folks would agree that the $1,000,000 savings are hard savings and could be readily verified. It will definitely improve cash flow. Here are some other possibilities. What about much of the cost of goods sold avoided for not making 20,000,000 additional rolls? Is it a true cost avoidance? What about opportunity cost? By not spending the money making the additional 20,000,000 rolls the company avoided most of the costs of making them and thus could have created more options at investing in more profitable brands.  The assumption is that the company will use the cash to make a more profitable decision. This does not always happen, as indicated by many stock buyback efforts. What about the sustainability aspects? By not making the rolls how much carbon footprint was avoided? Can this be quantified monetarily?

Many including me would probably not include the complete capital avoidance of a new one billion dollar plus paper machine. But what if the demand for the rolls were so strong that the company could literally sell as many rolls as they could make? I recently wrote an article on that illustrates some other positive aspects and savings that procurement provides the organization.Take the time to review my recent article for more creative savings ideas.  I am sure the reader can infer many additional savings both direct and indirect.

Dr. Tom DePaoli, (Dr. Tom) is currently an independent management consultant, the Principal of Apollo Solutions, which does general business consulting in the human resources, supply chain and lean six sigma areas. His organization was self-founded in 1995. He retired as a Captain from the Navy Reserve. In other civilian careers, he was a supply chain and human resources executive with corporate purchasing turnaround experience and lean six sigma deployments. He has worked for over ten major companies and consulted for over fifty organizations throughout his career. Some of his consulting projects include: information systems projects, re-engineering organizations, transformation, e-procurement, e-commerce, change management, global sourcing and negotiating. His industry experience is in the chemical, paper, pharmaceutical, IT, automotive, government, consumer, equipment, services and consulting industries. He has been published extensively in journals, magazines and books. He is the author of eleven books all available on Amazon.  He has instructed at six education facilities in numerous roles. He is active in supporting the YMCA, Wounded Warrior, and the prevention of the bullying of children.

 

 

 

 

Contact Dr. Tom = thomasdepaoli@yahoo.com drtombooks.com for newsletter sign up https://drtombooks.com/contact/ My Books link: https://www.amazon.com/Tom-DePaoli/e/B003XSV1IQ

Office Supplies Best Practices and Dense-Pack Sourcing

 

 

 

Office Supplies Best Practices and Dense-Pack Sourcing

By Tom DePaoli

Best practices for Office Supplies are many and varied. They greatly depend on what the customer wants or the Voice of the Customer (VOC). Once I was tasked with completing an office-supplies sourcing search for a client in a major western state city at their headquarters, which housed approximately 5,000 employees downtown. I had much previous experience completing four strategic sources of office supplies, so I had a fairly good idea of the competency of the suppliers and their pricing structures.  I knew which additional total-cost-of-ownership practices to ask for, such as desktop delivery, consolidated billing, and electronic catalogues. It was an exceptional situation for a supplier, because it was one delivery spot for major sales volume. Composing the request for a quote was straightforward, and I used many of the requirements that I had previously used in sourcing requests. My client was eager to get the sourcing process underway and completed quickly.

However, I soon discovered that there were three other large companies in the same city block housing an additional 15, 000 employees (20,000 total). I saw an opportunity to pool our volumes and presented a proposal to my client. I had shared our expected price reduction and other savings with them prior to the engagement. Now I proposed to the client to construct a request for quote for all of us for office supplies, thus providing even more leverage. I named it the “dense-pack” approach because, once again, the winning supplier would have concentrated deliveries in a close area, which would significantly reduce the winning supplier’s transportation costs. The purchasing managers were skeptical at first, but luckily none of the other companies were direct competitors.

The hardest part of this approach was next: convincing the other three companies of the merits of this approach. I recommended that they each set up steering committees to choose what services they desired. We sort of used a cafeteria approach where each company selected the service they desired. Fortunately, all of them were familiar with supply management and strategic sourcing. I had to show the expected savings and get them to agree to at least some common total-cost-of-ownership reduction items. Gathering the usage data was another challenge, but we believed that we had fairly accurate volume data when we went out with the request for a quote. Getting agreement to go with the winning quote was not as difficult as I had anticipated, and all four companies had two representatives on the sourcing team. Each company agreed to select their specific supplier services that they valued and asked the suppliers to demonstrate their capability and client references.

The results were fairly astounding, and we doubled the expected price savings. The winning supplier then offered a cafeteria menu of total-cost-of-ownership savings and enhancements that each customer could select. In addition most of the companies “piggybacked” with the office supplies supplier on other services like document management (copiers), personal computer supplies etc. It also led to standardization of the office supplies used which further reduced prices.

In summary, we clearly understood the market, the pricing structure and the services offered. The biggest challenge, as usual, was getting customer buy-in and consensus.

 

 

 

 

Contact Dr. Tom = thomasdepaoli@yahoo.com drtombooks.com for newsletter sign up https://drtombooks.com/contact/ My Books link: https://www.amazon.com/Tom-DePaoli/e/B003XSV1IQ

Avoiding a Supply Chain Apocalypse: The Best of Dr. Tom’s Advice

 

 

 

 

Avoiding a Supply Chain Apocalypse: The Best of Dr. Tom’s Advice

Dr. Tom DePaoli

In his creative guide Avoiding a Supply Chain Apocalypse, Dr. Tom DePaoli offers practical strategies and tactics, learned and tested from his purchasing and supply chain career.

Available on Amazon.

DePaoli recommends a multi-faceted, diverse approach to avoiding supply chain meltdowns. He challenges readers to survey his best writings and to select what fits their particular organizational cultures. There is no one-size-fits all in the supply chain. As the importance of supply chain management grows leaps and bounds, the supply chain professional must develop multiple options and proficient tactics to ensure the continuity of the supply chain.

Overview

Avoid a Supply Chain Apocalypse Purchasing and Supply Chain professionals!  Here is an alternative approach to becoming a Supply Chain Doomsday Prepper for a Supply Chain Apocalypse.  In his creative guide Avoiding a Supply Chain Apocalypse - the Best of Dr. Tom, Dr. Tom DePaoli offers practical strategies and tactics, learned and tested from his purchasing and supply chain career. He does not recommend a single silver bullet or quick fix, but suggests a multi-faceted diverse approach to avoiding supply chain meltdowns. Dr. DePaoli challenges the reader to survey his best writings and to select what fits their particular organizational cultures. There is no one size fits all in the supply chain. As the importance of supply chain management grows leaps and bounds; the supply chain professional must develop multiple options and proficient tactics to ensure the continuity of the supply chain. Of particular importance is "Purchasing is the art of building relationships. It is not about negotiations, transactions, industry knowledge, market knowledge, know-how or technology. It is all about building strong relationships and gaining the trust of suppliers, customers, and colleagues. There is no easy way to get employees to trust you. One of things that I've always done is to make sure that I do what I told them I was going to do. Nothing impresses employees more than keeping your word. Another good tactic to use is to always admit your mistakes and do not try to cover them up. Employees appreciate when you invest the time and effort to train them. Make sure you have a training plan for all of your employees. Try to behave ethically, employees expect you to lead by example and to live by your word. Communicate to them daily if possible, in use as many different channels of communication as you can." 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.

“The book serves as a guide for the purchasing or supply chain professional to optimize their supply chain and avoid disaster.

 

https://www.fronetics.com/5-must-read-books-supply-chain-leaders/

 

Five must read books for supply chain leaders.

 

 

Dr. Tom DePaoli, (Dr. Tom) is currently an independent management consultant, the Principal of Apollo Solutions, which does general business consulting in the human resources, supply chain and lean six sigma areas. His organization was self-founded in 1995. He retired as a Captain from the Navy Reserve. In other civilian careers, he was a supply chain and human resources executive with corporate purchasing turnaround experience and lean six sigma deployments. He has worked for over ten major companies and consulted for over fifty organizations throughout his career. Some of his consulting projects include: information systems projects, re-engineering organizations, transformation, e-procurement, e-commerce, change management, global sourcing and negotiating. His industry experience is in the chemical, paper, pharmaceutical, IT, automotive, government, consumer, equipment, services and consulting industries. He has been published extensively in journals, magazines and books. He is the author of eleven books all available on Amazon.  He has instructed at six education facilities in numerous roles. He is active in supporting the YMCA, Wounded Warrior, and the prevention of the bullying of children.

https://www.amazon.com/author/tomdepaoli    = Dr. Tom’s Amazon author’s page

http://www.apollosolutions.us  = website of Apollo Solutions his business

drtombooks.com  = more information on Dr. Tom’s books

http://www.linkedin.com/pub/dr-thomas-depaoli/0/736/6b3/  = LinkedIn home page

 

https://www.linkedin.com/pulse/avoiding-supply-chain-apocalypse-best-dr-toms-advice-depaoli-1f

 

https://www.linkedin.com/pulse/avoiding-supply-chain-apocalypse-best-dr-toms-advice-depaoli-2e

 

 

 

 

 

 

 

 

Contact Dr. Tom = thomasdepaoli@yahoo.com drtombooks.com for newsletter sign up https://drtombooks.com/contact/ My Books link: https://www.amazon.com/Tom-DePaoli/e/B003XSV1IQ