How to perform a mid-year Procurement review!

Constant reviews are part of every effective system. As Peter Drucker mentioned, every so often, it is crucial to do the “Feedback Analysis” in three steps:

1. Whenever you take a key decision or action, write down what you expect to happen.
2. Review results at regular intervals and compare them with expectations.
3. Use this feedback as a guide and road to reinforce strengths and eliminate weaknesses.

                                                                                                                         Peter Drucker

The end of the Financial year (in Australia) and reaching the mid-calendar year point in other parts of the world, makes for a great opportunity to review the progress made so far, look afresh at your personal, team and/or departmental KPIs and goals for the year and review any new opportunities that may have come up.

Having an appraisal review once a year may have been effective in previous generations but not in the modern post-GFC fast paced marketspace.

Read on if you want to learn about a scheme for performing a General review and a comprehensive checklist to go through during a Procurement specific one.

 

Alexander Knight

GENERAL REVIEW

So, utilise the One-on-One meetings (or other frameworks, some of which I mentioned here and here) sit down with your staff and/or book a meeting room for a space free of distractions and revisit:

  1. Your KPIs
  2. Your team’s or department’s KPIs
  3. Opportunities that may have come up
  4. Challenges that have occurred
  5. Projects in development that may need your contribution or that you can contribute to.

 

PROCUREMENT REVIEW

Especially, for Procurement, there is a more specific list of things to do.

As Richard Waugh, VP of Corporate Development at Zycus, mentioned in his recent post titled “Spring Cleaning time in the Procurement household:A Checklist” in spendmatters.com below are some key areas every Procurement professional should look into.

Based on the article I put together a checklist which I thought I’d share. For more information please refer to Richard’s article which makes a compelling read:

CHECKLIST for EFFECTIVE PROCUREMENT REVIEWS:

Contracts

  1. Look for contracts that have expired or are due to do so soon. Update your Contract calendar.
  2. Review at least one auto-renewal of an evergreen agreement.
  3. Look for maintenance agreements on long discarded assets or not used software licenses. 
  4. Review that rebate provisions are up to date.

Spend Analysis

  1. Refresh your spend data to evaluate changes in spending patterns.
  2. Analyze for purchase price variance i.e. paying different prices for the same item.
  3. Analyze for Payment Term Rationalization – standardizing on contracted payment terms with preferred vendors.
  4. Look for Supplier Rationalization opportunities i.e. root out “supplier creep”

Supplier Management

  1. Look for duplicate and inactive vendors in your vendor database.
  2. Ensure that insurance, quality, diversity, or other certifications are up-to-date.
  3. Update the Supplier segmentation matrix (categories: strategic, critical, important or tactical).
  4. Ensure Supplier Managers are allocated to strategic, critical and important suppliers.

Category Management/Sourcing

  1. Review category strategies taking into account commodity price trends and forecasts.
  2. Look for opportunities of hedging through longer term contracts where price increases are projected.

Performance Management

  1. Refresh your scorecard including value offered by Procurement and Contract Management in recent gains in “spend under management, realized cost savings, increased user adoption, cycle time reduction, contract compliance, supplier enablement” etc.
  2. Benchmark your performance against the market. 

 

Image courtesy of Alexander Kaiser, pooliestudios.com / www.flickr.com

How can World Soccer and the art of Procurement be connected?

I love soccer and so, like every passionate soccer fan this much awaited month-long of world soccer excellence is a pleasure and a delight.

On the other hand, I am passionate about Procurement.

So, when this article from known procurement thought leader Ron Larimer got into my inbox I could not resist.

Screen Shot 2014-06-29 at 12.43.18 am

Ron used a soccer metaphor to highlight the practice of not taking risks, despite good statistical evidence, because of certain biases that govern human behaviour.

I have written before about how negotiations are effected by certain errors in reasoning (here) and I am currently working on an article on cognitive biases so, I thought this article was very timely and provided good food for thought on a number of levels.

Hope you find it useful as well as entertaining. You can find the link to the article below:

Ron Larimer on “The biggest lie Procurement has ever told itself”.

 

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Image courtesy of wikipedia

How to make stress your friend?

“Choosing meaning in οne’s life is much better than avoiding discomfort”

                                                                                         Kelly McGonical

I was inspired to see this great video from Kelly McGonigal at TED.com.

Focusing on stress mainly, Kelly made a compelling case for the benefits of  choosing the right attitude towards what are perceived stressful situations, providing very tangible study results.

Kelly McGonical

Kelly McGonical

Moreover, she also highlighted the importance of “Caring”  in the overall equation as a mechanism to handle the negative effects of stress.

Caring for others, caring for a cause assists us to handle stress in a positive manner. Thus, the Caring and having a Positive Attitude are enablers that assist us to choose meaningful projects despite the difficulties that these may have.

I think this is a inspiring video that reinforces the view that one of the key aspects of a new employee should be to Care. Care about others, care about doing quality work and care about delivering outcomes.

Check out Kelly’s talk here:

 

Therefore, it becomes apparent, that connecting with others, caring and having a positive outlook on life and its challenges has clear health benefits.

So, one of the best investments to your organization’s success and your employees health is if during your next interview you also look for cues that prove that people can i) connect and ii) they have and will care.

If you want to read more regarding what I regard as essential qualities for choosing team members, check out my blog post on this matter The 4 basic qualities of an exceptional team member, Caring is one of these qualities.

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What Aristotle and Plato have to say about Team Development? – Part 2

In the previous blog post I discussed how the Aristotelian/Platonic term Endelexeia can assist us conceptualize and develop our Teams. I also provided some tips on how we could go about achieving this. Let’s now have a look at the second significant term – Methexis.

Read on if you also want to find out more about this concept and also get some tips on how to go about to achieve this within your teams.

Aristotle

Methexis

Methexis is a term we find in both Aristotle and Plato with slightly different connotations. The term effectively means ‘working together’.

However, the interpretation of the term provides for a more esoteric meaning e.g.

“A good way to describe methexis is by considering the circular dance of primitive tribes we sometimes see on the History Channel. The dancers work on an individual plane acting the steps based on the rhythm but also on a collective as the group can also be considered as a separate entity”. – Bolt

Paraphrasing Bolt (found here), Methexis is a way of considering the intermingling of attitudes, expressions and movement and the way in which meaning is enmeshed with the materiality and temporality of processes and practices in which signification is embedded.

So, it becomes clear that “the primitive tribes’ ” dance is not in response to the world, but a means of encountering it, sensing it, and remaking it.

Extending this thought, Carter (found here) describes the indigenous belief in the practices of sand-dance-painting which, he believes, is producing ‘real effects both on the human and the divine plane’.

“In essence, acting within a group has the potentiality of producing real effects on the individual and supporting and guiding his or hers journey towards self-actualization”. -Carter

Thereafter, the key question is this:

‘How is it possible for one form or nature to be present in a plurality of things, and yet to remain one?’. Cornford

To understand this question better, we can think of it in the same sense as  modern physics asks the question for the nature of light:

How can light be considered a particle and a wave at the same time? (you can find a brief description here)

In response to Cornford’s question and for whoever has immersed in dance, the experiential facts provides the answer that:

Yes, we can be present in the plurality of dance and still remain “one”.

Moreover, it is meaningful to do so.

A good start to your team’s journey towards your achieving Methexis is summarized below:

  • Employ each team member wisely taking into account technical skills but also psychological attributes that compliment the team and the team’s mission.
  • Run collective meetings each week/month and promote open discussions about the team’s goals, key performance indicators, and future opportunities.
  • Run a SWOT team analysis every year.
  • Promote a “one in, all in” attitude for your team.
  • Promote and encourage the full understanding of how the team’s efforts affects the organizational success.
  • Create a sense of pride for the work done.
  • Perform a stakeholder bonding exercise e.g. a small interview between team members. The below is an excerpt questionnaire from Schuh et al’s, fabulous book The CPO, reportedly used at a team building exercise:
  • “Why am I at this company? What motivates me to be part if this organization?
  • What do I expect from my colleagues within procurement and/or in different countries and/or in other functions?
  • How do I contribute to this? What am I willing to give?
  • You would never have expected this about me:”

 

CONCLUSION

Thinking about effectiveness and how to build the organizations of tomorrow, it becomes clear that we should focus on removing the organizational barriers that created the silo mentality and thwarted communication, innovation and progress.

Plato and Aristotle when they argued about Endelexeia and Methexis did not have modern organizations in mind. Methexis was a term that was used in the Arts (Theatre) as a way to describe that the audience was fully immersed in the play and so, a measure that the play was successful.

However, both these terms can provide much food for thought in how we organize our teams today. This is because these terms assist us to conceptualize basic human needs i.e. the need to become and the need to connect.

The balance between the individual and the team is very important, i.e. the balance between the need to reach Endelexeia and to feel Methexis and so, making steps towards achieving both these states would ensure that organizations will have happy and engaged employees, well tuned and effective teams in their effort to be successful in this hyper-competitive market-space.

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Image courtesy of Nick Thompson / www.flickr.com