These past two weeks, I've found myself taking a more aggressive stance than ever in discussions with colleagues and friends -- and even in conference presentations and webinars. I'm angry. Not mad, mind you -- at least I hope not. Just plain angry. I've been livid at some things I've observed in both the public and private sectors. On the one hand, we have a government in this country that thinks it is within the power of the Executive and Legislative branch to even consider the question of regulating private-sector pay (and also tying the very notion of it to carefully worded tax policy that discriminates against individuals based on who they work for). Note to self: if I ever become President, make sure that I eliminate all taxes on book advances signed the week before taking the oath of office. I'll be able to tax those sorry-arse executives who work for public companies at higher rates to make up for the fact that I'm giving back to society (and planting a few vegetables while I'm at it) by lending my name to a children's book.
But I digress, at least in part. From a Spend Management perspective, one thing that's really got my goat is how at least some procurement and ops professionals appear to be reacting to the downturn. A colleague of mine said it best in an email he sent me last weekend: "It may be my bias talking but with the need to save money and the spotlight on them, too many procurement professionals are not stepping up and grabbing the opportunities they have right now. If this was people in sales or marketing or operations with the limelight on them, they'd be swaggering around trying new things and lording it over others. But no, we're talking about the home of shrinking violets, procurement, here. Hell, even Finance people have bigger ambitions (way bigger, unfortunately for our economy)."
Without question, I agree in part with my friend who wrote this note. I'd say in both phone and in-person interactions with practitioners this past month, at least 50% of those I've met or spoken to are not only doom and gloom -- they are passive doom and gloom. They are waiting for the world to change rather than seizing the initiative and raising proverbial hell in their organizations for decisive and deliberate action. This makes me angry. Procurement and supply chain practitioners should not only be seizing the spotlight in their companies -- they should be plugging it into an extra generator so it can run continuously at higher voltage, shining it wherever opportunities exist to create savings, transparency and virtual daylight inside their companies regardless of whomever tries to get in their way.
But instead many are rolling over and playing dead, pursuing a business as usual mentality. This behavior is perhaps best manifest in companies that have spent the past few months riding commodity markets down and counting this trend as savings -- rather than trying to cut the value-added cost components of what they're buying (and planning for the inflationary markets that are sure to follow given our newfound love for Treasury's printing press).
Since this is a rant, here's a list, in no particular order, of things I would do inside an organization today that while unpopular, would at least prove potentially tenable in the current climate. First, I'd enlist the help of finance to come down extremely hard on company non-compliance around using non-preferred suppliers or contracts. Setting examples would be key. Roastings, general embarrassment and even firings can and should fly in the current environment. Next, I'd find a few suppliers who are over-invoicing us and attempt to build a legal case against them to set an example for all other suppliers working with my organization about what happens when attempts to make extra margin points gets in the way of fundamental ethics and business practices. It's not just enough to ask for money back (because you'll need to ask for it back repeatedly). Scare them and embarrass them and consider using a legal path to do so.
Next, I'd make it a policy to source everything. Well, maybe not everything, but I'd put a serious extra workload on my team to go back and revisit as many contracts as possible that we had previously negotiated in recent months and years. Even though this might stretch tight resources even further, trial by fire is the best type of job training possible. After this, I'd make a special effort to go back and target all potential set-asides and special spend cases that I could get my hands on.
If some executive has a preference for Hertz over the preferred car rental company (and has gotten away with this in the past), I'd make an example of it. If our diversity contracting arrangements are creating a preferential situation for minority or women owned businesses that are not the most competitive on price and related non-price factors that we can quantify (e.g., performance, quality, local supplier alternatives, etc.), I'd put the kibosh on the deal unless they sharpen their pencils to a point where it makes quantifiable sense to remain with them. I'd also task my supplier diversity team with helping existing suppliers with cost take-out (which I'd offer to share in the form of lower prices) rather than simply looking for other opportunities to bring new suppliers into the fold.
Guys and gals, it's time to channel our anger and disappointment into enthusiastic saving initiatives that would not usually get through under more normal circumstances. We need to get fired up. We need to get passionate. We need to create controversy. We need to rock the spend boat and take actions that under more normal operating circumstances might be dismissed as crazy. So don't just get angry and roll over like Jim Cramer did a few weeks ago. Get passionate, show your teeth, and show your spend bite. You might just find that your enthusiasm is contagious and dispels the blues of the downturn.