Purchasing Training ~ Are You Managing Your Manager?

by Omid Ghamami

Purchasing Training ~ Are You Managing Your Manager? (Part I)

micromanager

You’ve heard me say it before.  All of us in this profession landed in this profession, and we report to someone who landed in purchasing by accident, and eventually, purchasing reports into someone who doesn’t understand purchasing.

If this was the recipe for a cake, even death row prisoners wouldn’t eat it.

It’s not all doom and despair though.  It just means purchasing is the easiest profession of all to become a hero in.  The problem is that sometimes your boss gets in the way.  More specifically though, I would say that you LET your boss get in the way.

You have to manage your manager, more so in this profession than any other.

I’m going to do a multi-part blog series on this.   This first one is focused on recognition of savings.

My motivation for this topic is that I meet hundreds of buyers every year who tell me their boss doesn’t recognize indirect/soft or avoidance savings – just direct savings only.

Even so, by the time just the direct cost savings rollup for purchasing reaches that organizational level where purchasing is no longer understood, the question gets asked “if purchasing is saving me all this money, how come I don’t have that much more left over in my budget?”

It’s really simple.  If your manager tells you that they will only recognize direct cost savings then your absolute best response should be the following:

“OK, what that tells me then is that the biggest motivator in our department is price. I’m going to stop selecting suppliers based on ‘best value’ and I’m going to start selecting them based on low bidder, because I can report a lot more direct cost savings that way.”

Then continue:

“It seems to me that this would take us straight back to the 1980’s though, is that really what we want to do?  If we want to make ‘best value’ decisions, then we need to have metrics that reflect total cost savings, right?”

Continue on:

“So you tell me which way you want to go.  We can go best value and report the total cost savings that go into that, or we can go back to a low bidder model, and just report direct cost savings…… like we are doing today.  But it doesn’t make sense to have a best value model with low bidder success metrics, because people will only do what their metrics tell them to do.”

And then close:

“So if you want to go back to a low bidder model, let’s stick with direct cost savings only.  Even if a low bidder model is not your intent, that’s the behavior it encourages, so why not simply adjust our metrics to reflect our intent of selecting best value suppliers?  That’s not really a shift in approach, right?  We are just better measuring our intentions.”

By going through this thought process, you are pointing out that reporting indirect and avoidance savings is not really a shift away from current practice, but actually rather a shift *towards* current practice of best value supplier selections.

The logic above is pretty hard to argue with.

Now, if your manager still disagrees, then what you need to do is start tracking and reporting this information anyways.   Forget the fact that your manager isn’t rolling it up, you still need to do your job.

Eventually, the tide WILL change on all of this.  And when it does, you will have a mountain of trend data to show your total cost value add, while all of your peers will just be getting started on theirs.  By the time they figured it out, it was already too late.  Don’t let that happen to you.

Next time we will talk about managing your manager with respect with how they use your time as a procurement professional.

Be your best!
Omid G

 

 

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