Policy vs. Shared Values

I got an email tonight from a team mate traveling in Korea. He is there to do some customer training for our representatives there as well as to suss out some new business. Among the routine administrivia of the message, he mentioned that the hotel our rep put him in was too expensive, and that he was moving to a less expensive one.
There is not a lot of news (or blog) worthy information in this mail, except that is shows something about the culture we try to build at SABIA.
First, he is in Korea of his own accord. He had an opportunity to find a cheap flight to Seoul during a break from visiting customers in Beijing and spend 3 days there doing training and working relationships with our reps there. Though he works for me, I found out about it after arrangements were made through some routine communication. We do not have a travel authorization policy. Second, we do not have a policy that specifies what sort of hotel employees can use. We have zero travel forms, beyond an expense report used to document expenses for reimbursement.
What we do have is a set of shared values. One of them are that we value service to our customers and reps, and we do everything humanly possible to give them the best service we can. We are also very responsible with the company's money, treating it as our own.
There are nothing inherently wrong with policies and procedures. There are some areas of the business like manufacturing processes, where they are critical. SABIA has these where appropriate. What we do not try to do is to try to use policies and procedures to legislate company values.
Shared values, with training and talent, allow for employees to make the right decision without lots of expensive paperwork to slow down our response to our customers. it allows us to move faster that our competitors and provide a better solution for our customers
Insuring that employees share our values is critical to SABIA's success. We have shown over years that values trump policy every time

In Defense of Being Irrational

I am watching some of my friends go through times of transition, loss of job, loss of key relationships, loss of residence, sometimes all of the above. Their allowing me to share in their journey is inspiring to me. Sometimes I like to think that I am further along this road of transition than they are.  Sometimes I’m not so sure. 

Recently Donna and I went to visit the Sagrata Familia in Barcelona. We were completely taken by the incredible environment created by Antoni Gaudi. To be inside it is to know that this building was this man’s act of worship. As with many great places in the world, pictures do not do it justice. I could go on for pages describing it, but this is not what this is about.

As I walked through the building I learned about the man. I tried to picture myself in his shoes. Having spent a lot of time managing projects, I know it is important to focus on budgets, and politics, and constraints and control. I learned quickly how little Mr. Gaudi and I have in common. I thanked God that he put Gaudi in charge instead of me.

He started the project when he was 30 years old and worked on it until his death at age 72, while knowing the whole time that…

• ·      It would not finish until long after he was dead.
• ·      He did not have the money for the project, indeed he could not even calculate how much was needed because
• ·      The building he wanted to build was impossible using technology available at the time.

This was a man who was not limited anyone’s idea of what was possible. He was a man who stepped out in faith to meet his destiny. Certainly his destiny must have seemed ridiculous at the time. Still he dreamed big; big like his Creator.

He had an innumerable number of technical problems, a lot of them seemingly unsolvable. He failed…. countless times and in so many ways. Still he dreamed big; big like his Creator.

He was at the mercy of donors, and was harassed on all sides by his many detractors, including is ostensible client, the Catholic Church. Still he dreamed big; big like his Creator.

In his later years he lost virtually everyone who meant anything to him in less than 10 years. He was broke, had no clients, and lived and looked like a pauper. His reaction to his misfortune is shown below.

My good friends are dead; I have no family and no clients, no fortune nor anything. Now I can dedicate myself entirely to the Church.

He was a man who understood opportunity. He was dreaming big; big like his Creator.

In the last few years God has seen fit to take me from that transitional place of no job no money no relationship to a place of success in all those areas. I am grateful, for sure, but now I wonder, am I thinking big enough? big like my Creator?

Are you?

The Curse of the Fixed Workday. Wasting Time is a Global Phenomenon

I was traveling in Delhi this week and and I had an afternoon free. I decided to drop by a customer to see Mr. Singh. Mr. Singh is a colorful character and I always enjoy spending time with him.

I arrived at about 3:00 PM and the place was buzzing with activity. We got caught up with details of our business. I discussed a few new product ideas with him as well. It was a good, productive meeting. It was now 4:00, and things had slowed down measurably in the office but no one was going home. Work hours are from 9:00 to 6:00, if you need them or not.

Talk then shifted to Mr. Sing and his work life. He took great pride in telling me that his desk phone never goes unanswered and that he is always there when his boss calls. He also told me of his wife's complaints that he is never home. As an overachiever, Mr. Singh never leaves on time but always works late as a matter of course to show his dedication. These long hours have resulted in Mr. Singh being promoted ahead of his cohort at the company, a fact he is not shy about pointing out.

By 5:00, the person at the next desk was reading a newspaper. (Yes they still do such things in India) As this was the last day of the week, there was no longer any semblance of work being done in the office, but not one person was leaving for the day. They all own cell phones and can be contacted if needed, but they were all glued to their chairs.  

I was ready to get back to my hotel. The gym awaited and I had work to catch up on. My leaving, of course would require Mr. Singh to find something else to do, so my fate was sealed. We talked of the Indian economy and politics. His wife called a few times asking when he will be home. He took another personal call.

6:00PM provoked a stampede for the exits by most employees, but not Mr. Singh, who as a dedicated employee, stays late. He waxed eloquent on how the grind of his job and commute was ruining the quality of his life.

Finally at 6:30 he abruptly wrapped up the conversation and hurried me toward the exit. He had apparently shown enough dedication for one day, though I saw other more "dedicated" employees reading or gossiping as we left.

I left the site grateful to work for a company that values the results I achieve over the number of hours that I work and holds me accountable for what value a bring vs within what hours I bring it.
Apparently the USA is not the only country that is enslaved by the clock in managing its employees.

Defining Mediocrity

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Buying services requires a different skill set than buying products. This is particularly true when contracting for an outsourced service, or outsourcing a function currently done in house. Products can be specified using very concrete terms. Things can be seen, touched and measured. Services are a little harder to describe, and outsourced business processes even more so. This is particularly true when the outsourced service actually touches your end customer. Outsourced payroll is easy. Outsourced order fulfillment, not so much.

Instead of a product spec, we have a Statement of Work or SOW. Those initials often can be descriptive of the document in multiple ways. Anyone who has spent time on a farm or at the county fair knows that a sow (female pig) can be bloated, slow moving, destructive and hard to deal with. In the worst case a SOW makes your supplier like a sow.

Most of the time, there is a contingent of folks inside the company who have a proprietary interest in how the process to be outsourced is done, usually because they currently do it or used to. They see their expertise as a part of their value to the company. The hard part there is that usually a key reason companies outsource is to get more value or better performance from that process. Hopefully, companies are hiring a service provider because of their state of the art processes and equipment. By definition, superior methods imply different methods.

Human nature works against us here. The people we use to negotiate the spec are the subject matter experts, i.e. the people who defined how it is done now, and the procurement person, who's success criteria is tied to having a problem free start up. This produces a very strong bias to create a process at the supplier that reproduces exactly what is done in house.

Here of course is where most companies hit a stumbling block. They are contracting with a world class provider of a service, but their SOW defines the process as exactly what has been done in the past. This is like recruiting Lebron James to play basketball for you and then insisting he only use plays from his high school team. Opportunities to reduce cost and to improve service levels get negotiated away in defining the SOW.

So what to do?

Know what you want

You are outsourcing for a reason. Are you looking for improved service levels? Lower cost? Improved reliability? These things are what your agreement should be based upon, as opposed how many steps or moves are listed in a process. Hold the supplier accountable for what you are really looking for. The agreement needs to show hard target, with incentives for the supplier to meet targets. Let your supplier make money for making you money.

Let Lebron be Lebron

Here's an idea. Let the supplier write the SOW. Let them use their expertise to transform your process to gain some real efficiencies. When you own the details you hamstring your supplier. If your contract is tied to real outcomes, you don't need to worry about steps. If they cant improve your process, you probably picked the wrong people anyway.

Stuck in the Last Century?

Let's take a trip down memory lane. Lets go back to supply chain operations in the pre internet age. Yes I am old enough to remember back in the olden days, when we spent our time poring over greenbar paper reports, sent memo's, had secretaries. Faxes were new technology. The MRP arrived on our desk vs. on our screens. Everyone came to work at 8 and left at 5 and the hierarchy ruled. We had rooms full of data entry clerks who fed the beast of the mainframe. Telephones had wires and we were actually out of communication when we went home. Heck, on weekends, whole days would go by without any thought or intrusion from work.

Most of your suppliers were in town. Worst case your stuff was coming from across the country. Only the most exotic unobtainium was brought n from overseas. If you had a problem you could drive over to the supplier and fix it. Jobs were clearly defined and many times there were many people to do the same job, as many "labor saving" technologies were still a gleam in someone's eye.

Now fast forward to 2010. Today's supply chain would be unrecognizable to the average buyer or purchasing manager in the last century. For one thing most of the work they did has now been automated. Supply chains sprawl all over the globe. Complex logistics methods and multiple sales channels, sometimes shared with competitors, make just getting product from factory to customer a challenge.

With suppliers all over the world and instant communications via the internet and smart phones, work really never stops. The workweek starts Sunday night as the email from Asia starts to come in, and woe to the person who waits till Monday morning to get the lay of the land. Europe conference calls start at 5:00 AM west coast time.

The organization has been downsized and Kaizen'ed and 6 simga'ed to the point where there are very few people left. Repetitive tasks automated; non value added tasks eliminated; small scope jobs combined. Only complex thinking jobs are left here in the US. They are broad in scope and responsibilities change constantly. The line between "manager" and "worker" is blurred, as the level of decision making at the individual contributor level has risen drastically to accommodate the speed of business

Interestingly enough though, the organization and work rules are similar. We are still expected to be in our seats for certain hours each day, Our employee evaluations, though "improved" many times though different fads, still look much the same. Managers pick a ranking, like "meets requirements" and then write an evaluation to support that. Everybody follows that charade knowing it has nothing to do with what they do for a living. Titles and positions on the org chart live on like vestigial organs on an evolved species. Roles and responsibilities are assigned in homage to this obsolete model.

So what can we do? How do we pull the organization into the 21st century?

First we have to look at what we do, what are our key business processes.

Much of what was historically the buyer's job takes up a very small part of the work day. Nearly all of the buys are from a preferred supplier list. Quantities and schedule are set by the planning group through the ERP system. Actual negotiation are largely and annual affair when contracts come due. The part of Purchasing the stays with us is reacting to change and improving processes. Supply chain as little to do with purchasing and lots to do with scheduling – and rescheduling.

Most of the planning/scheduling work of those days is also gone, automated or offshored. The Key activity of the planning group today is to match supply with demand as best as possible, and provide "Purchasing" with the best and most accurate scheduling data possible.

The warehouse, is now the Logistics group, tasked with keeping the sea of product all over the world moving as closely as possible to the demand of these other groups.

Logistics contracts are maintained by purchasing, PO's are placed by purchasing even though they really have nothing to do with their actual content. Planning tries to maintain data element that they have no visibility of. All of these, of course, are operating using many of the same KPI's they used in the last century, and are evaluated using a process developed in the 60's.

Make the change

We need to reorganize, around our key business processes. Move role, responsibilities and resources so that they are aligned around managing a process. Align metrics with those processed and then base performance evaluations on just the same thing the executives use, results. Forget standard work hours and let your people decide when they need to work and when they need to be on the office.

If you really want to do more with less and be more effective take a look at these ideas. This is not a manual of how, but hopefully the start of a discussion. I would love to help you with the how and the what based on your organization.

 

 

 

 

Know When to Walk: and Be Ready

 

Negotiation is about winning. I definitively ascribe to the idea of "win win" in negotiations, but any combination that ends up with your side in the "lose" column needs to be avoided at all cost. In the worst case situation, that means walking away. It is important to remember that the point of negotiations is not to make the deal but the get a deal that works.

The single most important issue in a negotiation on the buy side is the ability to have options. This is what gives you the ability to negotiate from a position of strength; any negotiation where you know you have to make the deal is not a negotiation at all. It is bickering, at worst it is begging. Even if you are dealing with "Supplier of Choice", it is important to be able to talk to them in a competitive environment. So how do you get there?

Do Your Homework

First you must understand your options in the market place. As you come into yearly negotiations for example. Engage a competitor (or 2) in serious discussions. This will give you real data to use in your negotiations to know what really is a competitive position. Your current supplier will no doubt hear about it as well and likely sharpen their pencils. If things don't go well, you have a real back up to bring in.

Look closely at your stock positions on the product. Insure that you can stand a short interruption of supply or a transition in service. This will also help you if you are forced to accept a price hike. Your incumbent will also likely notice this as well.

Notify your Sr. Management of what you are doing. They will then see your actions as a strategic process in the best interests of the company and not ask you why you "blew the deal" in the event that you do have to back out.

Meet with your team and talk through the issues of what may happen if you do back away from the table and insure that contingencies are in place to deal with other issues.

Set the stage

Relationships are important, you are about to go into a position where you want to appear prepared to walk away from what might be a long term relationship. This can be difficult to do and it can also put unneeded strain on personal relationships that you count on all year. For this you need new hats. What? In a negotiation you need "White Hats" and "Black Hats" (apologies for the cowboy analogy)

A designated Black Hat needs to have approval authority over the deal and be at least somewhat removed from the day to day management of the relationship. This is typically a very highly placed executive in the company who can become involved where needed. He not only serves as a guy who can say no without damaging the personal relationships, but she can also serve as a coach and reviewer of the negotiation. From here the White Hats can conduct the heavy lifting of the discussions. They have the mastery of the details and understand the subtleties of the issues involved and can recommend compromise positions to the Black Hat.

At the same time everyone in the room knows that whatever deal they make has to get past the Black Hat, which keeps both sides aware of the deliverables. To a degree it also puts everyone on the same side, trying to win over the Black Hat, which can result in some very creative solutions to sticky problems.

Taking these actions will position you well to walk away. More importantly, they put you in a very strong position at the table. A good supplier will see that you are well prepared and serious about achieving your goals. Don't be shy about discussing the "homework" you have done. Present this to suppliers as meeting the requirements of an internal process.

Be ready to walk so you really don't have to…

 

Gender Gap in Supply Chain Leadership?

I read a blog the other day by a smart lady named Sarah Lim. It was called "Take the Lead in Fairness". She commented on women in procurement and the lack thereof in the top ranks. She implied a lack of opportunity due to gender bias, and a failure by Corporate America to "keep pace with the changing needs of modern day living". The implication of her point was that most workplaces are not flexible enough to meet the needs of working women, mothers in particular.

She goes on with a list of recommendations for a more flexible workplace, most of which I wholeheartedly agree with, though most of these are not really gender specific. She then implies that somehow if we resolved these workplace issues, we would achieve gender parity in the executive suite. Well… maybe not.

Certainly my experience will support the idea of gender bias in Corporate America. I agree as well that this issue is not as severe as when I started in the workplace, but it is still there for sure. Over the years, I have come to count on finding a group of talented hard working women operating significantly below their talent and earning potential at each new job I have accepted. I have yet to be disappointed.

Given the opportunity, I have found these women were able to move into positions of far greater responsibility (and pay), and achieve great results for the company, and themselves. These women were invariably very hard workers and would readily go above and beyond the call of duty at a moment's notice. Many of my management teams ended up with gender parity earlier than the statistical norm.

I did learn that accommodations had to be made. Yes, these women did take more time off than their male counterparts. A lot of this time was unscheduled as well. I also noticed occasionally, their children occupying their office or cube when child care issues came up. As I tacitly allowed for these, I also noticed them, back in the day, carrying reports home with them, and later, emails at all hours. In nearly every case, I got at least as much as I needed from these women and many times, more than I expected. I learned that, right or wrong, these women were carrying a bigger or at least different burden than their male counterparts, and had different demands on their time. However, if given flexibility, they could produce at least as much

This experience caused me to rethink a lot of my methods. I learned to define and measure job performance by specific deliverables and results, assigning work by ownership of a specific function or process rather than by hours worked or other more conventional measures. I found that these changes were not really an accommodation, but actually a more effective way of getting the job done. This has become even more true as the procurement function really goes global, requiring communication nearly 24/7. If I am on the phone with Asia from 8 to 10 PM, why do I need to be in the office from 8 to 10 AM? This also served me well later when I began to manage people remotely or who worked from home

OK, so why did I say "Maybe not" about these changes affecting the top echelon positions?

In the end the organization is a pyramid. There are a whole lot of lower positions and only a handful of top ones. This means competition, and very tough competition. The folks who win those slots are those willing to do whatever it takes to get them. That includes a near singular focus on the job and that precludes the sort of "flexibility" discussed above. You went to your kid's soccer game and someone else did not. She gets an opportunity you missed. Most really successful women I know who have made it to the higher ranks in procurement, are either single or have a partner who handles a lot of the details of the household, allowing for the sort of focus required.

This may not be fair or pleasant, but until we do away with hierarchical organizations or promotion decisions based on competitive performance, folks who chose for work life balance will lose. As more women than men tend to take this route, I believe that parity is a long way off…