Decideware

In an excellent newsletter that I subscribe to, "Propulsion" by Tim Williams describes a great research technique to "look backwards" from failure in order to identify the issues that currently face a business.

"Account planners have an innovative research technique they call "The Obituary."

In individual interviews or small groups, planners ask consumers, "Let's say this brand just died. Write an obituary for the brand. What did it die of? Who will miss it? Who will come to the funeral?

Respondents are asked to put the brand's obituary in writing. Out of these responses come some fascinating insights about how consumers really feel about brands."

Tim goes on to describe how he applies the technique in his work consulting to agency executives - with a similar objective to help identify issues which can be addressed to help manage better client relationships.

We're familiar with the types of issues I'm sure Tim generates in his work.

Here are some examples of Relationship Obituaries we hear (and you may well have heard these as well)....

From a client:

"The relationship started out with the best of intentions but over time it grew stale. Vendor senior management never attended meetings and we felt isolated and under appreciated. At the end of the contract the business went to out to tender, much to the surprise of the vendor."

...and...

From an agency:

"The client never treated the us as a partner, they failed to share critical brand strategy and as a result the creative was never quite what it should have been."

I think this Obituary technique could be a great way to identify assessment criteria to apply in a formal supplier evaluation process and in particular, it could be focussed to reveal behavioral-based issues.

Behavioral based criteria, for example "information was not shared", and "management did not attend meetings" are much more easily actioned by supplier managers than non-specific issues, for example "there is no trust" or "they don't care about us".

I'm sure skilled researchers could guide respondents to go beyond top-line, non-specific concerns to verbalize specific, behavioral issues which can then be applied in formal evaluation programs.

The benefit of this whole approach is that by projecting into the future to look back to a terminal event (e.g. the death of a client-agency relationship) respondents have an opportunity to raise concerns in a low risk forum (the research setting) in advance of serious problems actually occurring.

So managers then have time to consider the issues, to perhaps gather further information to supplement the qual' work, and then to act to manage risk.

Author: Richard Benyon (Decideware)

With Thanks: "What if the advertising agency died tomorrow? By Tim Williams"

Purchasing.com offers a profile of successful efforts by Hewlett-Packard to improve their Supplier Management Process.

The article features comments by Operations Director at the Houston based Personal Systems Group, Tom Adams on how he focussed on a key objective of the program "to build partnerships with suppliers"

Critical to the program are two scorecards

Adams explains how the High Performance Supplier Scorecard enables HP to measure supplier performance and encourage positive behaviors, such as continuous improvement.

And, the Supplier Reverse Scorecard aims to ensure suppliers want to do business with HP by gathering honest feedback which is used in continually developing HP's supplier management business practices.

HP offer 10 Tips to 'Getting Useful Supplier Feedback':

1. Agree to formal and informal feedback from suppliers

2. Formal feedback can occur meeting with suppliers - such as monthly with strategic suppliers, quarterly with partnership suppliers and annually or semi-annually with transactional suppliers

3. Informal feedback can take place on a much more regular basis (even daily), via phone calls, emails and personal interaction

4. Consider designating an executive sponsor/champion to each strategic supplier, who talks with suppliers frequently and provides opportunities to share informal feedback

5. Create a formal process to assess supplier feedback. The first step should be to determine if the idea is worth pursuing. If so, come up with appropriate actions, and arrange for a team to work on those actions

6. Change may involve not much more than tweaking an existing process, not completely restructuring it

7. Respond to the supplier to let them know you are working on their idea

8. Implement the actions. Then provide the supplier with a way to provide feedback on the change

9. Be sure to get back to suppliers if you decide not to take any action on their recommendations

10. Finally, keep the whole process in perspective, remembering that it is designed to continue building stronger supplier relationships

Source: Purchasing.com & Hewlett-Packard

From Adversarial to Co-operative - How to Improve Supplier Relationship Management Practices

A recent article in SupplyManagement.com, 8 May 2008 highlights the supplier management journey of UK infrastructure provider Network Rail and makes the point that change is achievable with good leadership.

Following criticism of its previous supplier management policy, characterised as adversarial in nature and failing to properly address a balance between risk and reward, the head of contracts and procurement, Ian Ballentine committed to change in the organisation and said he wanted the group to improve the company's approach towards suppliers.

"There are elements of adversarial behaviour," he said. "You do see aggressive behaviour arise when things are not going well.

"Where we see it we will use training to get people to understand there are other ways of delivering a project rather than banging on the table and saying, 'I need my project today'."

Graham Coombs, communications director at supplier membership organisation the Railway Industry Association, said it was a positive step for the sector. "There is no doubt in the days of Railtrack [Network Rail's predecessor] that it was highly adversarial. It has been changing ever since. We are not quite in a fully co-operative environment, but we are moving in the right direction," he said.

Source: SupplyManagement .com

This is part 3 in the series of key points that I picked up on at the eyeforprocurement 2nd Supplier Management Conference at the Flamingo in Las Vegas.

CPO vs Buyer

A third area of discussion was from the supplier perspective, about whether noble ideas for strategic supplier relationships that the CPO desires could be at odds with the behavior of Buyers operating "at the coal face".

To expand, Buyers working at operational levels are typically using leverage techniques to force down costs, sometimes in competition with other desired outcomes, such as improved quality.

It is possible for Suppliers to receive mixed messages from Buying organizations lacking a supplier management technique which clarifies each suppliers' performance objectives with a meaningful and well constructed scorecard, which allows all the key people working on the business to contribute to the performance evaluation process.

We were invited to think carefully about the alignment of scorecards developed to support the business objectives of the relatively few, high value suppliers and how that needs to be managed very differently to the relationships with the much larger group of transactionally focussed suppliers.

Conference Summary

All in all it was a terrific conference for professionals interested in techniques and tools to manage high value strategic suppliers. All the speakers were on message and there was plenty of time for discussion and networking. I will be sure to attend next years conference!!!

Author: Richard Benyon (Decideware)

This is part 2 in the series of the series "What happens in Vegas ..." where I highlight some of the key points I picked up on at the eyeforprocurement 2nd Supplier Management Conference at the Flamingo in Las Vegas earlier this month.

Collaborative Practices vs. Collaborative Relationship

We heard an interesting discussion around the buzz word "collaboration".

The audience was challenged to think about whether their relationships with suppliers merely had "collaborative practices", ie processes that simply interfaced with each other.

Or, whether we engineered truly "collaborative relationships" featuring shared goals and joint strategies built in partnership to achieve those goals.

A truly collaborative relationship obviously requires a deeper level of commitment and trust by both parties.

And this lead to an interesting discussion around trust.

• A critical point was made that "The biggest impediment to trust is time"
• A trusting client/supplier relationship requires an investment in time

Accordingly, because time is a precious and costly resource it's best to only build high trust collaborative relationships with a relatively select group of high value, strategic suppliers.

A leading technology organization, by way of example mentioned that they only apply a collaborative approach to 6 key Strategic Suppliers - and the return from investment is substantial.

Author: Richard Benyon (Decideware)

Last week I attended the eyeforprocurement 2nd Supplier Management Conference at the Flamingo in Las Vegas.

With a high powered team of client-side Supplier Management experts both presenting and participating, there was a wealth of content to absorb.

Day 1 was worth it's weight in gold with a great deal of discussion around the value of Supplier Scorecards, and specifically the role of the "people aspects" of managing strategic relationships.

Here are some key points that I thought would be of interest to our Blog audience. Each point will be covered in this and the next 2 posts.

Value Driven Scorecards

Do the questions you're asking on your supplier scorecards drive extra value from the relationship - beyond those basic benefits that you expect to achieve?

One question that all the participants agreed was of terrific value was essentially this:

"Does this supplier demonstrate a commitment to continuous improvement?"

This single, important question has the effect of "Raising the Bar" from each assessment period to the next and is particularly useful for mature relationships where most of the easy wins have already been achieved e.g. direct cost reduction, simple process improvement, financial management, etc.

Some Comments

I would like to add to this discussion the point that Value-driven scorecards need to have criteria in them that are future-focussed.

In contrast, many of the criteria in non-strategically oriented scorecards tend to be historically focused.

By this I mean that criteria such as "Innovation", "Continuous improvement" and "Strategic alignment" are strategically oriented, future-focussed criteria linked to what WILL happen, not what HAS happened.

It is also interesting to note that criteria that focus on previous performance also tend to address governance issues, such contract compliance. Future focussed criteria "go beyond the SLA".

Author: Richard Benyon (Decideware)

In a recent Blog entry entitled "The Marketing Organization – Can we manage it?" in ANA Marketing Musings, Bob Liodice (President and CEO of the ANA) made the following comments on Marketing Accountability.

"CMO’s have to seriously upgrade their credibility. As a function, marketing must continue to push for increasing levels of accountability across the entire marketing supply chain. Marketers are often disappointed due to a lack of credible metrics and measurements throughout the entire chain. A well-oiled accountability machine – that includes partnerships with Finance and an Analytics group – can provide increasing confidence that marketing does what it says it will do."

Blunt Tools

This concept of the "marketing supply chain" and its measurement is obviously very close to my heart. It is not surprising that CMOs do not have access to credible measurement and visibility. Most CMO's only have access to rudimentary tools used to monitor and measure agencies and these have been sadly lacking in bringing anything of great use to the CMO at a strategic level.

Fight the Good Fight

Your typical CFO has access to a wealth of information about their business processes. Comparisons of business units, benchmarking sales, budget trends, exception reports, global averages, normalized scores, capability assessments etc. They enjoy a very strong voice at the management table - armed with data to back-up their arguments and requests.

Why not your CMO?

Why then would each and every CMO not invest in exactly the same tool-set? Surely that would allow them access to the same armory of data that his or her peers have? And one of the cornerstones of marketing accountability should be the evaluation and rating of the performance of the company's key marketing agencies.

Now here is the provocative question - is your CMO being led to your company's management table without the appropriate tools to do his or her job?

Author: Richard Benyon (Decideware)

What is feedback success???

I was recently researching the "people-centric" aspects of Supplier Relationship Management, especially focusing in on how and why to collect feedback. I found a great definition for success ...

"Creates and/or reinforces focused, sustained behavior change and/or skill development in a sufficient number of individuals so as to result in increased organizational effectiveness."

Here are some tips that were elicited from research performed by the Multisource Feedback Forum. Carol Timmreck and David Braken created 11 guidelines for initiating and sustaining 360 feedback in performance reviews.

How many do you think have direct usage in delivering critical feedback to strategic suppliers and marketing agencies???

11 Tips to get there

1) Make sure the program sponsors within the organization have clear expectations for the process

2) Make sure the program sponsors understand the implications of their process-design decisions

3) Use pilot groups

4) Train both Evaluators (those who fill out feedback) and Owners (those who deliver the reports)

5) Train the managers who will use the data for decisions

6) Communicate progress frequently and thoroughly

7) Hold evaluators responsible for their input

8) Involve evaluators in feedback and action planning

9) Hold Owners accountable for de-briefing suppliers and action planning

10) Implement follow-up processes to ensure compliance

11) Provide adequate resources for coaching, counseling and skill development

Author: Richard Benyon (Decideware)

Reference: Harvard Business School Press, Managing Performance to Maximize Results

(Note, I have taken the liberty of changing some of the terms above to make them more appropriate for the management of suppliers or agencies)

A recent supplymanagement.com survey of 100 buyers revealed "83% in favour of longer-term relationships, while 17% preferred shorter deals".

The respondents believe longer-term contracts deliver benefits to both parties, including:

* price and supply stability

* suppliers better aligned to buyer needs

* buyers better understanding supplier strengths

* opportunities to develop new products, services and systems

* opportunities for suppliers to deliver value-added initiatives leading to greater cost reductions rather than focussing on short-term price reductions

* buyers can incentivise suppliers and share cost reductions

However, respondents recognise that long-term supplier arrangements:

* best suit key suppliers

* need to be maintained and managed properly

* require that performance is properly monitored, managed and leveraged

We concur with the views of the respondents!

While it's sometimes tempting to look to apply high-value assessment techniques and tools to the more transactional segment of the supplier base - because it's the typically the largest segment by number of suppliers, we firmly believe high value assessment tools & techniques are best applied to high-value supplier relationships where the opportunities to extract greater value from relationships (however value is defined) are available. Those opportunities simply often don't exist in transaction relationships and accordingly the investment in seeking to secure greater value is uneconomic.

Source: Supplymanagement.com

17 January 2008 

Author: Derek Groom