How to build the procurement Dream Team
From developing interns to training veterans, building the right procurement organization is a lot like managing a sports team.
By David Hannon -- Purchasing, 2/14/2008 2:00:00 AM
"If they want you to cook the dinner, at least they ought to let you shop for some of the groceries."
The words football coaching legend Bill Parcels used to sum up his reasons for leaving the New England Patriots after a dispute with management may also ring familiar to the average CPO today. With procurement's value in the organization being recognized more and competition for top procurement talent at an all-time high, many leading-edge firms are taking a much more strategic approach to building their procurement "Dream Team."
But building the procurement Dream Team doesn't happen overnight. It starts in the minor leagues by recruiting the best interns—ones that may make the jump to the big leagues—and ensuring they have meaningful experiences to encourage the next crop of top interns to come to your company. It means taking a good hard look at where you are at now with your organization and filling the holes you see with the right new-hires. It means training veterans as well as rookies to ensure all team members know the latest tricks of the trade.
The farm system
One of the keys to establishing a strong procurement organization for the long-term is to ensure a steady supply of new talent. The good news is there are more colleges and universities offering undergraduate and graduate programs in supply chain and procurement. And the links between corporate procurement organizations and those universities are getting stronger through well-developed and effective internship programs.
Perhaps no one is more familiar with this all-important link than Shelley Stewart, senior vice president of operational excellence and CPO at Tyco International in Princeton, N.J. On the academic side, Stewart played a major role in the development of the first supply chain MBA program at a historically black college, Howard University, using his professional ties to create a board of advisors comprised of top procurement and supply chain executives. Stewart has also advised other schools on their supply chain programs including Northeastern University, Rutgers and Arizona State University.
But it's the internship process, Stewart points out, that gives MBA students the full exposure to a functioning supply chain organization—something that simply can't be learned in the classroom. And just as importantly, internship programs give the company exposure to a new crop of eager future professionals.
Tyco has a two-month summer internship program where students are given exposure to various aspects of the company's supply chain and procurement activities. And despite the vast responsibilities he holds, Stewart takes the internship program very seriously.
"It's not easy to make sure [interns] have rewarding experiences while interning at your company and we put a lot of effort into it," he says. Each intern is assigned a mentor within Tyco, not necessarily an executive. In fact, sometimes a newly hired professional can offer an intern more guidance and advice than a longtime veteran.
At AMR Corp., parent company of American Airlines, a procurement internship program was started in 2005, according to John Boettcher, managing director of purchasing. Interns at Dallas-based AMR are typically selected from Texas Christian University, Arizona State University, Oklahoma State or North Carolina State. Boettcher says each intern is given a specific commodity that they own while shadowing a commodity manager in another area to broaden their knowledge base.
Interns at both firms are assigned a project to complete by the end of their internship. "We try to give them realistic projects which can be completed in their time here because we don't want students completing half a project," Stewart says. "The days of putting interns in the corner to do filing all summer are long gone."
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"The key to all of this is to have the intern learn, provide them a realistic overview of the department and senior level visibility while doing 'real work' which provides value to both the company and to the intern," says Boettcher.
Measuring the effectiveness of an internship program should be a two-way affair. Stewart says at the end of their internship, each Tyco intern provides their feedback on the program and what improvements they think could be made.
AMR interns are also debriefed at the end of their internship. If it goes well, Boettcher says, the intern is often offered a job. One of the benefits of having a successful internship program, Boettcher points out, is that "the interns are excellent ambassadors for American Airlines on their college campuses."
The scouting report
Moving from an average-level procurement organization to a world-class Dream Team in today's market requires a close review of what competencies are already in-house and what skills need to be brought in. It means benchmarking and it means knowing what new skills and specialties will fit best on your team.
Currently high on the "wish list" for many strategic sourcing organizations are commodity managers with services and indirect procurement experience, says Safia Ahsan, an executive recruiter with FPC of Raleigh, N.C. As more sourcing organizations expand the breadth of their coverage into new areas—think legal, travel and temp labor—they are looking for sourcing professionals with that experience.
Kevin Rohan at New York-based recruiting firm JP Canon and Associates agrees, saying that the majority of new-hires he's seen lately have been for indirect spend areas including professional services, marketing, and IT, both hardware and software/offshoring. "These are commodity areas that need greater sourcing penetration in most companies," Rohan says. He adds there is definitely more demand for experience in operations improvement such as Lean, Six Sigma and project management.
Also in big demand today are the "soft skills" that were often overlooked in building a strategic procurement organization, says Marika Lindstrom, director of global business services in charge of indirect spend at chipmaker AMD in Sunnyvale, Calif. "Certainly, they need the technical skills for strategic sourcing of commodities, but at the same time there are some soft skills that are more in demand today," she says. "Things like presentation skills, persuasion skills, influencing and internal selling skills—they are harder to teach and are skills that procurement has not traditionally emphasized much."
Another one of the "soft skills" in high demand today is cultural awareness. As procurement organizations continue to expand their supply bases and procurement work in new regions (see sidebar on IPOs), buyers need a keen sensitivity to the business culture in a given region. Joanna Martinez, CPO at New York-based financial services firm Alliance Bernstein, says in 2007 she required every one of her senior procurement staffers to travel outside the U.S. for a supplier-related activity. And it took more coercing than expected, as some longtime staffers were not as used to overseas business dealings as she expected.
John Dischinger, program director of the Integrated Supply Chain organization at Armonk, N.Y.-based IBM agrees that cultural skills are in big demand in today's global procurement organizations and adds "being able to work in virtual teams" to the list as well. "Potential new-hires need to understand that they may never see their team members around the world and they might be on conference calls at all hours," he says.
Recruiting efforts
Once the Dream Team is envisioned and the skill sets required on your team are defined, it's time to recruit the talent to fill out the team. Ahsan says procurement organizations today have a much clearer vision of where they want their procurement organizations to be and what types of staffers they need to get there. And that makes the recruiter's job easier.
"The smoothest relationships [between recruiters and procurement organizations] are those where there is good two-way communication," says Ahsan, who worked in supply chain for more than a decade before becoming a recruiter. "That means not just providing a job description, but clearly outlining the organization's priorities and giving as much feedback about the candidates as possible to help guide the process."
When Martinez took over as CPO at Alliance Bernstein, her goal was to build a strategic sourcing organization from the ground up. Her first move was to review the company's general ledger and define what areas of spend were under procurement's control (or not under anyone's control), which would help direct some of her hiring decisions.
Martinez relied heavily on the help of recruiters to find and hire nearly 25 new procurement staff members and agrees communication is the key to working with recruiters. She says one way to increase the potential pool of candidates is to not focus solely on "commodity experience." Instead, work to define what category of spend the candidate has experience with. Martinez even uses the two-by-two matrix most often used to categorize spend criticality as a way of assessing the buyer's experience—which box are they most adept in? For example, has the candidate worked mostly in sourcing low-priority, highly competitive spend areas or have they led strategic supplier management programs in high-valued, critical spend areas?
"Rather than focusing on how much time a candidate has spent in a particular industry or even with a certain commodity group, the key to success is how well are these people suited to buy things that require similar skills," Martinez points out. "I look for people who dove into a new area and had to enroll people in other organizations to get it done."
She has learned to keep a good relationship with recruiters even when she's not hiring. "I want to make sure they know our company well, so when there is a corporate change that offers new procurement talent, they will think of us," she says. "Occasionally I get a call from a recruiter who knows about something happening at another company, and I want them to make us their first call. I want first crack at an opportunity."
The quality of the candidates a recruiter brings and the number of hires is the best way to evaluate a recruiter's value, according to Martinez. And that is often closely related to how much the recruiter specializes in procurement or supply chain specifically.
Training camp: IBM
Once you develop or recruit the procurement Dream Team, keeping players both educated on the latest best practices and motivated to continually improve their performance requires a host of training options. In addition, a well-developed training program can help attract and keep the top procurement talent. With turnover increasing in most procurement organizations and competition for the best and brightest strong, career development opportunities are increasingly a nonsalary perk that savvy buyers are looking for.
Procurement organization training typically comes from three sources: internal training (mostly at large companies), relationships with academic institutions and outside/hired training firms.
Or a combination of all three, as is the case at high-tech giant IBM. Dischinger says talent planning is a key imperative for IBM and training focuses in both functional areas and those all-important soft skills.
"We have a broad set of programs ranging from online courses to highly interactive classroom-based training," Dischinger says.
The key to establishing an effective training program, Dischinger says, is clearly documenting what skill sets you want the staff to have and then finding or building training opportunities to develop those skills. IBM has a documented taxonomy of skills for its supply chain positions which helps establish a consistency in training across its massive global organization.
From there, it's up to the individual employee and manager to assess the employee's skills and identify gaps between the existing skills and the defined skills for his or her position. "Then you can pick the best way to get to the next level—training courses, rotating into another organization, etc." Dischinger says.
The majority of the training comes via IBM's internal training organization, which includes on its staff a supply chain learning expert responsible for "translating business requirements into training opportunities," according to Dischinger. On the academic front, IBM has advanced partnerships with five schools for supply-chain-related training: Penn State, Michigan State and Arizona State in the U.S., and the National University of Singapore and University College in Dublin internationally. In addition to providing training opportunities, IBM relies on its academic partners to collaborate on research initiatives that help the company define what skills its supply chain will need down the line.
The flip side of academic-business relationships is that the universities involved get a deeper knowledge of what is important to corporate supply chains and can develop a more focused curriculum around that.
For example, all five schools have helped IBM build training curriculum and prepare research in service-based supply chains "because that's where we see our emerging challenge" says Dischinger. "We jointly developed a course and are now working on a full-blown curriculum covering services-based supply chains. We want to make sure the skills we're hiring are the skills we'll need in the future."
Training camp: Kimball
As part of a procurement organization redesign, Jasper, Ind.-based Kimball International recently overhauled its supply chain training program and focused it in three main areas: functional skills, technical skills and leadership. Bob Price, director of global supply chain management at Kimball, says the first step in designing a training program was to do an overall skills assessment of his team to find out where they were strong and where they needed help.
With a small staff of 10, Price's goal was to develop a customized training regimen for each procurement team member. He first looked at the individual's role to determine what functional and technical skills are most important to that job. Then, he compared the individual's skills to that list as well as the individual's career path before targeting training avenues.
The resulting program is a mix of outside online training (Next Level Purchasing) and academic partnerships (University of Louisville). Price says surprisingly, the employees he feared might not adjust well to online courses not only participated in the online sessions, but came away with a more positive attitude toward training in general and applying the skills being taught almost immediately.
With these major strategies in place—internship programs, skills assessments, recruiting practices and professional development programs—a company's procurement organization will not only see short-term improvements, it will be a much stronger and sustainable unit for the long-term.
What it Means to Buyers:
A procurement organization is only as good as the people that staff it. To develop a high-level and sustainable organization, take these steps:
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Build or review your current internship program to get first crack at the new talent in the industry.
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Perform a detailed assessment of the current skills in your organization vs. what skills are needed and run a gap analysis.
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Work with professional recruiters to learn what new skills are available and how best to fill the specific positions you've got.
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Develop a comprehensive professional training program that not only keeps current team members up to speed, but can be used to attract new talent
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