Five Things to Do to Delight, Keep Happy And Not To Annoy Your Stakeholders

The ultimate measure of what we do is the stakeholder satisfaction. The subject is much wider and more complex than you could think. And very frequently it is underestimated in importance. Try to think about aligning your demanding boss’s expectations to devote as many hours for work per week as possible to the expectations from your partner to spend more time at home. Difficult, right? Now multiply that several times to reflect every day business situations. It starts looking like one of the Fermi questions: divide the price of a Nike men’s Dual Fusion sneaker by the price of Burj Khalifa, for instance. Don’t worry, you are not alone – I do not know the answer, either.

Delighting, Performing, Fulfilling basic needs

Searching for ways to evaluate and prioritize areas of focus, I came across Kano model. You can find detailed explanations about it here. To sum up, Mr. Noriaki Kano was studying customer satisfaction and realized, that the features (of a system, a product, or a solution – any deliverable you are working on) have different reactions from the customers (or stakeholders, in our case). Some of them deserved bland “meh” reactions, while the others got stakeholders excited.  Kano model divides all factors into “basic needs”, “delighters” and “performance needs”. It is relatively self explanatory, as per the picture below.

report kano

Think about all of the reports and slide decks you are preparing. What do you think your manager and other people around you think about quality and the quantity of the report slides? If you report nothing at all, most likely people will not be happy. But when it comes to the question of how many slides you prepare – do you really think, that getting a deck with 64 slides instead of 5, will make your manager much more satisfied? Think again. However, if we are talking about the quality (yes, I know, a very subjective topic), it works slightly differently. All the things you can improve, will add to the end result – satisfaction. And, any level of over delivery, which is perceived as adding value, will have much bigger impact on satisfaction.

So what do you do to delight the stakeholders, keep them happy and make sure you are not messing up by forgetting the simple things? Continue reading…

1.    Understand the needs. I mean real needs. Ask “why?” several times. Do not settle for mere “because” or more sophisticated “because I said so”. “We need to increase compliance to Preferred Supplier List”. Why? “Because it increases benefits to our company”. How? “Because we get rebates from companies on our PSL.” (my personal opinion about rebates is here). So is the main purpose to get benefits for the company, right? Would it be OK to get them in other ways? “No.” Why? “Because then those benefits would not be allocated to our department and our performance is measured on that”. What if the goals and objectives were reviewed to represent proper focus and motivation? “Then I agree with everything you are proposing.” This was a real conversation. Two conclusions can be made. One – the system of setting company and personal goals and objectives needs to be reviewed. Two – the real need is to deliver benefits to the company, and not to comply to PSL whatever the cost.

2.    Understand the type of the need. Once the needs are identified, you need to understand how they will influence stakeholder satisfaction. The example with report slides is mentioned in the text above. It is important to understand the business you are in. Consider savings. In many occasions, you would think, that it is a linear progression. The more you deliver, the happier the stakeholders. Not always. Think about long term contracts where you have to deliver a certain percentage of savings year-on-year. This will motivate procurement managers not to do their best in year one – because they will under-perform during all further years. And if you add gain-share / pain-share models, it gets even more complicated. Imagine your savings target is £1m and if you do not deliver it, you get penalties of the size of annual management fee. That becomes your “basic needs” curve. You have to deliver one million – whatever it takes. But you can’t really care less about everything over it. If you are using gain share model with a cut-off line at the same £1m, after which you get 50% of savings, you will do your best to hit your maximum best, but everything above the threshold will make your CFO your best mate.

3.    Make sure you deal with basic needs consistently. Deal with those tasks quickly to remove them out of your way to focus on really important things. Do not waste additional effort on them – they do not bring additional satisfaction. However, you cannot leave them to be finished last – because not delivering on them will mean failure overall. Are you a contractor? Do you need to submit time sheets and invoices weekly? It’s thirty minutes and a bit of discipline to do it on time every time. Or else – payments will not be made, they will be delayed or / and you will have additional headaches to bring everything back in order.

4.    Work hard on performance needs. This is the part which earns your bread and butter. This is where you know that everything you put in, will come back to you.

5.    Always find some time for tasks that are not on your job description. Study. Improve. Do a favor for a colleague in need. Speak up during the meeting, if you think (or even have evidence) your opinion would make the difference. Those are your real investments into your future. Everything you do, you do it for yourself. Remember this and those few extra hours a week trying to learn endless boring 6sigma formulas will no longer seem wasted. Ehrm… I am just trying to convince myself here. But you get the point.

Hope this helps to understand why the same effort you put into different things is perceived differently. It’s Friday (as usual; I like posting on Fridays). And today’s list is simple: A. as a minimum, not to forget to collect my kid from the school (I will surely be in trouble if I do not do that); B. Cook Friday dinner for the family (it’s what we do); C. Open cold beer and switch on (and…leave it on) football match for my partner. That should guarantee some brownie points 🙂 Thank you for reading!


Five Things to Do to Delight, Keep Happy And Not To Annoy Your Stakeholders

Conference calls: cost saving or addiction?


I looked at my calendar some time ago. Did some maths and was slightly shocked. More than 75% of my week was various conference calls. Then I picked up my head, had a good look around the office and realised, that I am not the only one. Welcome to the conference-call-mad-world.

How did it happen?

I wish I could say procurement had nothing to do with it. Maybe it did; maybe it did not. Time and technology progress brought innovations for the business and the way how people communicate. And, surely, there must have been a smart indirect procurement manager who picked it up as a savings opportunity. A lot of travel policies these days have instructions to think before travelling if the face to face meeting could be replaced by a virtual one. Everyone understands how to estimate the cost of face to face meetings – or, at least, the part of the costs which show up later on invoices. Therefore, being able to swap it for a solution which, at the first look, costs only a fraction of all previous costs, seemed like an amazing idea.

The side effects

Everything in life is relative. On one hand – high costs of the meetings are not desirable for businesses. On the other hand – it had a very big advantage: realising the price of the meetings, people were preparing for them much better, they used the meeting time much more productively and they used to appoint them much more responsibly. Removing this “cost barrier” brought a whole bunch of side effects:

  • People started having virtual calls right, left and centre, without any good reason or purpose – “it does not cost anything” …
  • People started inviting whoever they can remember into the calls – “it does not cost anything” …
  • People “forgot” or ran out of time to prepare for the calls: “we will work it out during the call – it does not cost anything” …
  • People do not follow up on action plans after calls – “we can always arrange next call to discuss what were the outcomes supposed to be from the previous call… it does not cost anything” …
  • Not to mention “pre-call calls”. You know, when you need to agree what you will be talking during the actual call…
  • People stopped doing actual work, because they are… busy with calls…

People got addicted. And when it comes to conference calling, there is no such a thing as “light drug”.

The outcomes

Meetings with no decisions or action points. No decisions or deliverables or actions outside of the calls, because there is no more “outside of the calls” time left… Next level multitasking work, while being on mute. The whole generation of office staff, addicted to conference calls. It sometimes really feels like there are many people, who crave for conference calls just like for a dose of drugs… Oh, and most importantly – costs. That not-so-smart indirect procurement manager, who claimed savings some time ago, did not think about everything. Now the costs of inefficiently used (or, as you might say, efficiently wasted) time are tens, if not hundreds, of times bigger than travel costs were in the first place.


  • Put down the phone. Seriously. You are reading an article while “listening” to the conference call. It means the call is not that important. Put down the phone.
  • Cancel a call, if it does not have any agenda attached to it. Or if the objective is not clear.
  • Cancel a call, if you were not given the contents or material in advance of the call. Everyone should know the subject before the call. The call is to discuss the subject – not to read the slides.
  • Reduce the frequency of all regular calls twice.
  • Review the list of invitees. Remove people, who only need to be informed of the outcomes – they can read 5 sentences summary on an email.
  • If people are not participating – they should not be on the call.
  • Consider all other work efficiency tools: task management systems, document management systems, team cooperation tools. Meetings and calls have to be there to discuss issues, alternative options (which are analysed in advance) and make decisions.
  • Consider meeting efficiency KPIs. I am not joking – a company I used to work for, had a tool to monitor how many action points were agreed during the meeting and what kind of decicions were made. Big deviations from “norm” were questioned.

Has your calendar turned manic with conference calls? Are you in a closed circuit and do not have any ideas how to get out of it? Share your questions in the comments below and I think our colleagues on social networks will be able to help! Thanks for reading. Even if you did it while listening to someone boring speaking on the other end of another conference call…

Conference calls: cost saving or addiction?

Get the basics right. Or else – life will play bowling with you and you are not going to win

Julie Andrews in The sound of music was singing that “a very good place to start / when you read you begin with ABC…” In our jobs, we begin with basics. Or, at least, we should. Many of us (of course, NOT (!!!) you and me. The Others) get distracted and attracted by smart sounding words, strategically filling gaps with meaningless sentences, Important Projects, executive slides populating, you-name-it-things. All supercalifragilisticexpialidocious things. Because simple is no longer in fashion. Because simple is not executive enough. Because simple does not make you look “high society”.

Needless to say, it is all wrong to me. Most important part is to get the basics right. My only sin, I have to admit, that sometimes I want it done fast. Really fast. Almost to skip it and jump to those other – “important” – things. The other day, I was reminded the lesson, that it takes time to get things done right. And if you rush through, you have very high chances of getting things wrong. Really wrong.

It was 7.56 pm. I was running to catch the train in Euston to go home. Did not have pre-booked tickets. The day started just before 4 am, the last meal I had was 9 hours ago and I was exhausted. On the way up from the tube I quickly opened train ticket app, found a train at 8 pm. I picked my eyes onto the screens in the station – 8 pm train is on platform 15! You can imagine there was some running involved. There were no ticket inspectors – everyone was already on-board. I get onto the train, put the earphones in and dive into the virtual world on the screen of my phone. Train starts moving and I send a text to my family with estimated time of arrival.

10 minutes in, conductor comes over and asks to show the ticket. He takes the phone. Silence begins. Then I realise, that something is not right. Pick up my eyes and see the conductor. His face does not promise anything good. That’s right, I am on the wrong train. I started laughing. Because “it never happens to me” myth is shattered into pieces so quickly and harshly, that I do not even bother picking up the pieces. Strike #1.

I got out of the train 100 miles away from my home, on completely other side. 21.35. Only to hear the announcement, that there has been a fatality and there will be no more trains coming in or out of that station that day anymore. Strike #2.

Little chaos in the station, bigger chaos in the head, trying to figure out what to do next. “Get a snack!” – my brain screamed – “you are not you, when you are hungry!”. Easier said than done: everything is closed by this time. I find a snack machine. With my luck that day, it steals two pounds before giving me the so much needed piece of chocolate. Strike #3.

I like Virgin. Their customer service is great – they got a taxi for me to take me home. I get into the car, tell the driver where to go. We start moving when he informs me, that he desperately needs fuel and he will stop at the first station. Which he does. Except that the station is not serving any fuel. Closed. At this point I burst into laughter. Somehow the driver did not think it was funny. I told him about my luck that day and he then decided it was even less funny. Strike #4.

There was enough fuel to reach the next station. What else could go wrong? Well, just when we were to join back the highway, we saw nice yellow signs “ROAD WORKS”… By now the driver was looking suspiciously at me. He said “if something more happens, you can take the car and go”… We did 15 miles de-tour. Strike #5.

5 hours late, after midnight, I was home. Having revised the lesson of getting the basics right the hard way. The lessons I had to repeat that day:

  • Exhaustion and overworking only lead to mistakes.
  • If you get the basics wrong, the chance of further failures only increases. Never ever underestimate the importance not to only properly do basic things, but also the quality level of it.
  • Do not give up. Never give up. Things can and will go wrong. As long as you have more persistence than Mr. Murphy and his laws, you will win.

Happy Friday Everyone! Let’s finish the work week properly as basics, so that next Monday does not turn into chaos!


Get the basics right. Or else – life will play bowling with you and you are not going to win

Make Procurement Great Again

Does it not frustrate you, when you think you are doing everything that’s best out there, and you still end up in conflict situations with other business stakeholders?

You implement best tools – you hear noise, until people stop using them.

You write best-in-class policies – and the Pareto works against you: 80% of time people do not comply (versus anticipated 20%).

You achieve “improvement” in processes, that procurement controls – but overall business results are worsening.

You hire best negotiators – and they leave the business faster than you manage to pay recruitment bills.

Again and again, you find ways how to “make procurement great again”, but nothing seems to satisfy the business… I was talking about ways to assess the situation and adapt procurement strategy to meet the business needs in a conference and am sharing the material here.

I would gladly share working files and templates to those willing to use them. Thank you for reading, commenting and sharing.

Make Procurement Great Again

Procurement Is More Than Just Buying

Negotiations or digital buying tools? Ups and downs of linking achieved savings to salary size. Importance of different experiences and learning. Similarity to other functions.Those were the questions I shortly (I promise, I tried!) answered to Procurement Network (interview).

“Procurement Network interviewed Vaida Maksims, a qualified member of CIPS (MCIPS) and PMI (Project Management Professional). Vaida holds a bachelor’s degree in International business management and EMBA qualification in Applied Organizational Psychology. Vaida held many different roles in procurement (from buyer to Chief Procurement Officer), in project and in supply chain management. She had the opportunity to lead teams and businesses in different countries and now enjoys the opportunity to share her knowledge and experience speaking in conferences, teaching CIPS evening classes and writing her blog (

These are Vaida’s thoughts about procurement’s role: “The best buyer is the one that does not like buying for the sake of buying – like me. I am known for being able to first question everything on demand side: types of spend, quantities, processes and buy only what is really needed. And once you buy it – it has to serve the purpose and meet all current and potential future business purposes. Procurement is not only about buying. Proper buying means you need to know your customer, sales and marketing, technical capabilities to manufacture and definitely logistics – the whole supply chain. That is how procurement can bring benefits to the business: by giving insights of proper buying.”

 In our digital era, how important are negotiation skills in procurement?

I think these two things are not alternatives – as in, you cannot have one or the other. No matter how many pencils, canvases, frames or types of colors the artist has – they are only tools. The most important things for the artist are brain, imagination, emotions, and creativeness – everything that constitutes the art itself.

In procurement you will have a lot of different strategies, which can be implemented using many different tools. Digital tools and digital information are a part of procurement’s toolset. Do not get me wrong – a very big and important tool, but still – only a tool.

When it comes to comparing negotiations as a tool and digital tools, I consider the question in a wider perspective. Negotiation skills is something people can apply every day in every aspect of their life – personal as well as professional. Negotiation skills is a part of communication skills (a big one!). I am a strong believer that good communication is 80% of your success – whatever it is that you do. After all, you will need negotiation skills to agree on what kind of tools and how to use them!

How would you react to the idea of linking savings to actual salaries of procurement experts?

 Depends – that is the shortest answer that I could come up with. Just like everything in life and business – it is relative. Depending on the arrangement, it can have positive and negative sides. Positive:

·        Better reward (% of savings) would motive procurement specialists better;

·        Better rewards would attract better specialists to the field;

·        Clear cost structure would motivate business to use the specialists and implement their proposals better;

·        Good TCO and business needs understanding would help making better business decisions.

However, if the reward system design is poor, you might get the opposite:

·        Buying only “like for like” – to get comparable “price savings”;

·        Short term savings which might affect long term business results negatively;

·        Reduced quality and service levels;

·        If a company does not embrace change and does not support procurement specialists, they run into the risk of “underachieving”. Then all the motivation system will start working against them (and against the company).


The best short word I can think of to describe how it should be done – balance. Proper balance in setting goals, rewarding achievements, supporting actions would be the best outcome for everyone.

How important is it to have procurement experience in different industries and/or countries?

 It is important (I would even say crucial) to have different experience. Full stop. The more different it is, the better. 

Firstly – to be able to analyse anything, you need to understand background (benchmark). Various philosophers and anthropologists call it relativism, and there are various forms of it. There is no such thing as completely only “good” or “bad”. It is more about perceptions and what is suitable for the situation (business, including) at the moment in time and space you are in. How do you know if administration costs of £300 per PO is good or bad? How do you know, if route-to-market of 12 months in food manufacturing is competitive? How do you know, if £50/hour for data entry is a reasonable amount? The answer is – only by comparing it. Comparing with something: other companies, other industries, other countries.

Another aspect to the question is learning. Procurement is not a rocket science. I know, it might sound cheap, but it is the truth. It is pure classic in management and most of the models, tools, templates or processes have been invented. You always have a choice to try creating something by yourself – but most likely, it will be highly time consuming and costly, unreliable at the beginning. While if you find a working model, you just need to adapt it to your needs.

Knowledge of other industries, other functions, other countries, other roles – everything contributes to a person being (becoming) a better professional. That is a rule and it applies not only for procurement.

What profession is the closest to procurement?

All functions (or professions, if you like) in business are very close. Procurement in one company is not the same as procurement in another, therefore, it is not that straightforward. Also, depending on a company size and industry, you will see different functions existing (or not) within the company.

Procurement can be close to an internal auditing. It can form a part of a finance department. Sometimes, it will be a part of the operations. Some companies have “commercial” departments and procurement sits within them. It is not uncommon, that procurement manages the whole supply chain. In cases of outsourcing, procurement specialists become business managers (consider outsourcing full packing services – part of production, for example).

What would you advise to junior procurement professionals?

 If there would be only one advice I could give, it would be: do not stop learning. Learn from mistakes you make – that means, you have to make them! Learn from colleagues within the company – that will teach you to cooperate and be more than just a procurement specialist. Learn from recognized industry or profession leaders – you will find lessons, which were not in your school books. Learn from politicians… or not – that is the expert judgement lesson that life will teach you. Sometimes in a really tough way. Learn from children – simplicity and unrestricted thinking comes from minds, which are not yet damaged by stereotypes. Learn from fighters – determination, persistence, focus is a very big part of success.

And, if you are still reading these lines – you are on the right path! Congrats!

Thank you!”

Procurement Is More Than Just Buying

Strategy Map for Procurement


The Reality of Strategic Planning

I wish I could say Dilbert is completely wrong (I had the best time ever trying to choose illustration for this post, I must admit). I wonder – if anyone was to carry out an anonymous survey of what people REALLY think about strategic planning process in THEIR companies (not OURS, please note), what would they find? (And, let’s assume, respondents would be on honesty and anti-political-correctness pills – not to distort the reality with interpretations)? I think that would be a wake-up call for many.

Strategy for Our Companies

Anyway, this post is about the strategy for OUR companies and OUR procurement departments, which have nothing to do with Dilbert.

treasure huntStrategy is about knowing where you are now, defining, where you want to get to (by the way, according to the definition of the strategy, it really has to be a better place) and deciding how you will achieve it. As you can see per the very informative map to the right of the text, there are a lot of things to think about when you are planning your journey. Thankfully, in business, there still are things you can plan. Procurement is no exception.

Classic Factors to Consider

There are quite a few classical models to analyse strategy for businesses and I would not want to re-write Wikipedia or Google. To understand your business (or department), you would be looking at marketplace, industry, your companies strengths and weaknesses (products, teams, organization structure and culture). The same is applicable for individual departments, including, but not limited, procurement. McKinsey’s 7s is very simple and clear tool to use. Combine them with generic business strategies (customer intimacy, cost leadership and differentiation), and you will have decent evaluation of where you are in comparison where you would like to be.

Strategy Map for Procurement

I wrote before about the importance of aligning Procurement’s strategy to company’s strategy. This time I would like to share a fuller version of checklist points that I use and a visual communication tool. I call it P4S – Procurement for Success.  Whenever I plan procurement’s, I think about these factors: p4s strategy wheel

  1. People. McKinsey calls them “staff”, but, to me, it is much more than just staff. You should also consider suppliers, environment – people, who are not yet staff, but might potentially become one day. Also, most important part, before becoming role players and employees, they are people. Things to analyse: attitude, engagement, involvement, capabilities.
  2. Systems. What tools does the company use to run business? That includes everything: HR, P2P, ERP, project management, task management, document and knowledge management. I bet many CEOs would be surprised after a thorough system audit: about the quantity of different systems and the data quality within the systems, about how far from reality are the decision paths, designed on the system.
  3. Process. The way HOW company lives and breathes. Mapping out value chains, work streams will help to understand and improve – if needed – the ways of working. I consider various KPIs (efficiency, accuracy, discipline) and, also, the results. Not only hard results, but also, softer ones – like customer satisfaction. The company might be interested in Net Promoter’s Score, while procurement might focus on the internal stakeholder satisfaction and relationships with suppliers.
  4. Structure. You might want to examine structure of supply chain, structure of the wider organization, structure of procurement department. The smaller parts have to support the bigger picture and fit into the puzzle. AND!!! – they have to work well together! I would consider also the scope – area of responsibility and authority for procurement (directs / indirects / full cycle vs maybe only internal auditor’s function); empowerment – decision making points within management structure (usually, business decisions, based on financial threshold). Communication methods and channels (tools) are another important part of the structure.
  5. Strategy. The WHAT part of the organization’s existence. What is the strategy? What is the success? What is our unique selling point / differentiation? What is the message to the outside world? What is procurement’s role in all that?
  6. Values. Another important part to focus on, which will also influence procurement. Company’s core values might go into the supplier selection criteria. Team and corporate culture will define the way how procurement will work. It would be funny to observe a CPO trying to implement OJEU or legal company’s procurement policy in creative agency’s life. Possible, but highly unlikely.

Those are my main points I study to work out strategy. Companies are different and expert judgement is vital. In case you consider to run similar exercise at your department, I am adding a Procurement strategy map 2017 03 10 to make your work easier. I would welcome any different thoughts and opinions in comments!

Strategy Map for Procurement

Make Budgeting “Logic Friendly (-ier)”


Another routine task that we go through every year. Some more than others – but, admit, once a year a time comes when everyone starts looking into ceilings. Well, you know, for numbers. However you call it – budget plan, benefit plan, delivery plan, opportunity analysis, business plan, zero base budgeting – we all live and breathe numbers. Procurement HAS to deliver. But how do you decide what to promise?

Whatever your category / buying / supplier management plan is, once a year you will sit down to review what has been done, how successful it was and, most importantly – WHAT’S NEXT? I’ve had that question more than once and, to help me and others save time, came up with a small grid of assumptions and recommendations. It looks like this:


Looks scary? Actually, it is quite simple. Please read on for further explanation which criteria is being taken into account when deciding the numbers. Opportunity analysis should reply two questions: WHAT to target (to prioritize bigger opportunities) and HOW to do it. This time it will be more about the first question.

Category maturity

First criteria – category maturity. Basically, you have to consider, how well you know the category. It does not have to be copied word by word, but you will get the meaning. Category maturity abbreviations in the grid above are given in the first column. Here is what I use:

  • NA: Never addressed. And it means straightforwardly that – never addressed. Maybe you are trying to address your tail spend for the first time. Maybe, finally, you got the support and courage to address “we have always done it that way” spend and suppliers. Maybe it was never managed by procurement. Whatever the case – it should, as a rule, allow you to expect bigger opportunities. Signs: very big number of suppliers; or on the contrary – only one supplier who has been there for ages. Contracts, signed long ago (ten, fifteen years or more). Lack of internal processes in buying administration, big number or buyers. You might not be even aware that the category exists.
  • I: Immature. Categories, that were on someone’s radar, but still having some “grey” areas. Categories, where, if asked suddenly, you would not be able to remember contract start and ending dates or even contact people at supplier’s side. Or even – what is the full list of suppliers in the category. You know, that spend is there and someone some time somehow did something, but what exactly that was…? Well – potentially a nice opportunity.
  • SM: Somewhat managed. Here you might even know suppliers and their representatives! And the contract duration. But, most likely, procurement’s efforts to deal with prices were limited to pretty much one or two challenging questions about the price over the phone.
  • MTE: Managed to an extent. You know the items, services, SLA’s, specifications. You have been having tenders and negotiations. You have been buying “like for like”.
  • M: Mature. You know ins and outs: if needed, you could set up a business to become your own supplier. That is how well you know it. Demand management? Been there. Make or buy? Solved that. Outsource? You have outsourced, re-insourced and re-outsourced again. Face it – you’ve done it all.

A good tool to check how well you know your category – check how many of the 64 methods, proposed by A.T. Kearney, you have applied to the category. That should also give a good indication on how much is still out there to be done.

Price / Market / Source flexibility

Another criteria to consider, while evaluating opportunity – how flexible are you to challenge the supplier, the product, market, and ways of buying? After all, it is not only about you and your wishes. There is a thing, called market outside of your office walls.

In the grid above, abbreviations are on the lowest line. My categorization is provided below:

  • SS: Single sourced. Wider explanation is in another blog post. Link here.
  • LS: Limited sources. In this case, you will be able not to only imitate negotiations, but actually have one. Surely, those two or three suppliers will know everything about each other and you will have a very slippery road to go, but, still, better than nothing. Right?
  • FCEC: Flexible, change with effort and cost. In these situations you might have more than three suppliers out there in the market, but any change will cost money and will require effort. In other words – no restrictions for “procurement show”, but quite a few restraining factors for real change.
  • FCE: Flexible, change with effort. There will be occasions, where market / prices / specification will be flexible. But you will still have to think about effort and resources that it will require. When prioritizing your activity plan for the upcoming year, proper planning is important. All in all – it is not just about identifying the opportunity – it is also about implementing it.
  • VFEC: Very flexible, easy change. Not much to comment. You will not find this very frequently, but if you do – it is all of your “quick hits”. If you have any of them, you should be hunting them right now – instead of reading this post. Seriously!

Ready, Steady, Go!

The process of budgeting will be exactly that: preparing data, analyzing it; making assumptions and decisions, which will, hopefully, lead to implementing them.

This time around, making logic assumptions, I hope, will be easier. Look at the maturity of the category and flexibility of the market (and some other factors) – and suggested savings’ number is just there. I am adding template with the grid in excel. The file also contains some more suggestions and formulas to make your budgeting process faster (opportunity-analysis-template). Numbers and category names are just suggestions – feel free to adjust according to your expert judgement.

Then choose methods of working and administration: simple tasks, project teams. Choose strategies and action plans (the HOW bit) – tenders / e-auctions / partnerships, outsourcing, etc. And go after the numbers! Happy hunting!


Make Budgeting “Logic Friendly (-ier)”

What Comes First: The Egg Or The Chicken?


Money. Fine, I am joking. Customer first. Then – money. And then – either egg or chicken. Or both. But ultimately it is all about money. In medicine, though, it can be a question of life or death. Sounds very cheap. Sounds like an attempt to scare. However, that is just a simple reality. Thankfully, only the brightest of us get to be doctors with knifes. Coming back to the life of “simple” people… how do you ask the wrong question and what might be the consequences?

5 Why’s many How’s

Sakichi Takoda was a very curious man. He wanted to find out all root causes of processes he was dealing with in Toyota. And yes, he is the man behind “5 Why” methodology to explore cause-and-effect relationships. There were other smart people, who developed the model (or, let’s say, adjusted) and made it only “3 why’s”. Some other models added the next steps: once you know what is wrong, you should be trying to figure out “How” to fix it.

Examples of questions

Let’s start with explanation, what I mean by “question”. It does not need to have a question mark at the end of the sentence. There can be a lot of situations in business daily life:

  1. I have production process wastage. How do I dispose of it in the most profitable way?
  2. Personal development plans, goals, objectives. A goal to “leverage benefits from different areas”, “use data proactively”, “strengthen resilience and realize potential”.
  3. Procurement KPIs: we need to achieve 100% process compliance. Or, another example, £1 million of price reduction savings. How are we going to do it?

Expert judgement – it’s what managers get paid for. You do not need to see a question mark at the end of a sentence to trigger the smart questioning process in the brain. Recognizing the situations and questions is a skill!


Why are the questions “poor”?


I know, first of all – “are they poor?” and only then – “why?”. Let me answer the second one first:

  • Because some questions do not encourage you to think.
  • Some questions are very strongly leading and restricting.
  • Some questions, on the other hand, can motivate someone to become extremely inventive. There are serious books which call some forms of extreme inventiveness criminal activity.

Let’s analyse the examples given above. A mind-set like in the first example can lead to the whole team wasting time, resources and effort looking for an answer. The team might come up with something. BUT! You know what is the secret? Maybe the focus should have been elsewhere? Maybe, first of all, we should have analysed the reasons of having the waste and addressed them?

Second example describes very restrictive thinking. Especially, when the goals are given from the “top” (management of the company). People get goals, that they do not believe, that do not motivate them (you know, objectives, which are not SMART), and ask a question: “so what do I do now?” And, as you can imagine, there are many alternatives:

  • Not even attempting to achieve what they are asked;
  • Cover up in excuses “I tried”;
  • Leave the company…

And the last example given above… A very smart CPO draws up best-in-class procurement processes. Implements them. And, to his (her) surprise, starts getting reports, which show big non-compliance. Let’s call the person Ryan. Ryan spends few sleepless nights and comes up with policy enforcement tools: reporting, grievance and all the rest of it. The KPI improves. Furthermore, Ryan implemented interesting price reduction targets. Now his team members are whispering. They know, that bringing the function in-house (making vs. buying) would cost less overall. But if they do that, they will not achieve their targets – price savings. Therefore, they keep on buying the same things over and over again. BUT! Every story has a “but”, right? At the same time, the CEO notices sharply increased spend in other areas, lost clients and, overall, reduced business results… What happened? Ryan asked “How?” before asking “Why?”…

What came first – the egg or the chicken?

Not sure if that question is “the right” one, but it makes you think. And that is the main purpose here: right questions make you think. I think biggest issues are not with the questions themselves. All questions are good. It is much worse when you do not have questions. Most important thing is – sequence (or timing, if you like). To first of all understand the causes and only then address them. Whether it’s procurement or anything else.

The main goal of the business is to satisfy customers and stakeholders. For customers – it is the right products, the right services. For stakeholders (shareholders) – it is about profit, and sustainability. As a part of that comes cost control, cost reduction, best items (services) to be bought. Well, simple (???) procurement’s job.

So, to sum up, what can you do better?

  • Recognize (identify) questions.
  • Take time to think about the real needs and root causes.
  • Speak up.
  • Ask questions about the questions themselves (challenge them).
  • Use expert judgement and critical thinking.
  • Resist to prioritize small and urgent tasks over long-term, strategic work.
  • Know the rules, but improvise.
  • Make decisions and fix the wrong ones.
  • Try. Again and again.

And yes, it is valid to procurement (because, as the t-shirt sellers say: Procurement manager – because a miracle worker is not a profession). Cheers to us!

What Comes First: The Egg Or The Chicken?

New Year’s (fine, Chinese New Year’s) resolutions


Guilt is a bit like emotional hangover. New Year’s euphoria is fading and you are left with the scraps of yesterday’s overstated intentions.

I came to the office today and realized, that it is almost the last day of January. And the online radio DJ’s just won’t stop reminding that, too. Feels like they are doing it on purpose. And that does not help with not feeling guilty.

Why is it bad? Because one of my promises to myself was to write more. One month is gone and I did not write anything. Outrageous! But hey… I am ready and willing to rehabilitate and get back to the rhythm of keeping my promises.

There are loads of “Tips how to…” out there on the vastness of the internet. One of them suggests to announce publicly about your intentions. Then the pressure of peers, expectations from others will motivate to stick to the promises just a little bit more.

So here it goes… This year main subjects I would like to write about and share with you all are:

  • To consolidate or not to consolidate the supplier base? What is the right answer to this question?
  • How do you switch from supplier-centric to category-centric category management? Sounds quite simple, but it is not always like that.
  • Spend analysis DIY: where do you start and what are you looking for (at)? A list of tips of how not to get lost when you are looking into a spreadsheet with data in 30 000 lines and 50 columns.
  • Once again about rebates, prebates, strike ratios and recovery audit. How much does your money cost you?
  • Procurement project progress monitoring and control: borrowing some indicators from project management. How to apply earned value management to procurement – schedule variance, budget variance, and earned value.
  • Recognizing sales’ BS and not buying things you do not need or do not exist: story about contactless car wash.
  • Strategy evaluation and selection tools.
  • Budgeting and business plan creation for procurement function. Some guidelines and templates to ease up CPO’s and category managers’ life.
  • Cost Of Doing Nothing Different – revisiting the subject of total cost of ownership and it’s hidden factors – processes, procedures. Can you put a price tag on them?
  • A lesson which I learned at school in Year 8: price of money.
  • Critical Success Factors for Procurement. Are they (and how) different from KPI? Which ones are more important?
  • Good quality raw data: you have everything, if you have that!
  • Can lean six sigma be a helpful tool for procurement?
  • Slide deck from a procurement leader’s conference, where I will be talking about strategic procurement management.

The list is not finite, surely. Many of them will come with sample tools and templates. If any of the subjects seems urgent or important – drop me a line – I will prioritize them.

So here it goes… No turning back now, right? February, bring it on!




New Year’s (fine, Chinese New Year’s) resolutions

Procurement Wears Strategy


If you think Procurement is a forgotten orphan in an evil witch tale

Read this article, if you think Procurement (or any other function, for that matter) in your company is not being taken seriously enough and you want to change it. If it is not considered important enough and you would like it to become a strategic function. If you think, that company does not give your department the opportunity to prove it’s worth. If everything you are expected to do is just have one more price negotiation, chase another late delivery, not issued invoice or resolve errors in delivery. Read this, if you feel like other departments have a big dissatisfaction with procurement. If, no matter what is it that you suggest, it causes more resistance than buy-in from people.

Poser Effect

It actually has got a name: the effect is called Poser effect. And you probably have heard about it in few situations. When talking about the clothes, it basically says that you should wear clothes to fit the role you are after, not your current role. It is a fact, that the clothes you wear, change the way other people perceive you. The effect also was observed in experiments, where it showed, that your outfit also changes YOUR perception about yourself. Scientific name to it is enclothed cognition . So what, you are asking?

You will be perceived the way you behave

And that is the answer to anyone saying “I would do more and bring more benefits to the company – but nobody lets me. Nobody thinks of us seriously.” You will be perceived the way you act. A little part of the overall impression will be your clothes, too (especially for the first impression), but I strongly believe that actions speak louder. It is up to you to show initiative and start acting strategic, prove you’re worth the place at the top table – or – “wearing strategy”.

How do you try on strategic outfit? Choose clothes

It’s slightly easier with clothes, right? But how do you check how (and if) procurement is aligned with company’s strategy? My suggestion is to refresh some classic business management concepts and apply to procurement function in your company.

Most important part – company’s vision and strategy. Firstly (and do not be surprised by the question) – do you know the vision and the strategy of the company? Because not all companies communicate it clearly. Some of them don’t even have one. Anyway, do not panic if you do not know it by heart. There might be a lot of variations on a very detailed level, but on a high scale, there are only three main possible strategies:

  • Cost leadership – price strategy;
  • Customer intimacy – service strategy;
  • Technology/innovation – product strategy.

A company can be relatively good in all of them, but one of them must be the most important. Here are the main differences of main strategic directions.


Looking like this, you will agree, that procurement will have to be different in different companies. There is no “one fit for all”. If you are trying to implement extensive processes in a company that needs speed – do expect a lot of resistance and no buy-in.

How do you try on strategic outfit? Wearing it

Once you have established, what the company is trying to achieve, you have to measure it on your department or function. Again, there will always be a lot of aspects, but business classics focus on three main areas:

  • People;
  • Processes;
  • Technology

Here are the main keywords to look for while checking the application of different strategies in different layers of organization using different strategies:

Wrapping up

Knowing the strategy is the key. Checking, how procurement’s work, goals and strategy is aligned to overall company’s strategy is a first step. If you find any gaps – act on them. Most of the time it means simply getting out of the table and start talking to everyone: business users, suppliers, management. You do not need to change organisational chart to be able to talk to people, do you? Listening to people, identifying improvement opportunities. Looking for answers internally and externally – who, if not procurement, has access to suppliers’ sites and to other, non-competing companies? Start noticing solutions and benefits for the business other than price reductions and bringing them to the table.

Start acting strategic

Once you embrace company’s goals and strategy – and start wearing it – everyone in the company will start considering you strategic.


Procurement Wears Strategy