The news about the University of Wisconsin-Green Bay changing the default font in their e-mails has become the viral news of choice this past week – at least in the marketing world. And reactions range from the amused to the amazed. But font substitution and development is nothing new to old media; they’ve all been doing it since the days of Johannes Gutenberg, because in the print business – print efficiency is big business. Many news publications use specially designed versions of classic fonts that enable the companies to fit more print onto a single page.

The Guardian quotes the institution saying that it has “reported that the new font requires about 30% less ink, which costs up to $10,000 per gallon”.

Now that’s something to think about for all marketing and commercial print buyers out there. It also makes one muse over the balance of power between stakeholder and procurement when it comes to really saving money.

With many car manufacturers struggling with recalls and pointing the blame at their ailing supply chains this recent piece by Peter Hunter of HumanResourcesIQ (Root Cause of Toyota’s Failure: Employee Engagement) opened up the matter from a completely different perspective.  Hunter argues that engagement is the real differentiator between East and West Toyota production lines.

Is it possible that the faults that caused the recalls did not occur in vehicles produced in the East because they were spotted and rectified by an “engaged” workforce, while in the West the “disengaged” workforce knew of the problems but never reported them to Toyota because Western managers do not know how to engage their workforces.

I shared similar sentiments in a post relating to Bianchi bicycles a while back (One Supplier Audit Question You Probably Never Asked); “…In a world where cost and volume seem to be the rule of the day; passionate businesses can surely find a niche market and exploit it to the fullest, but it also means that the business must share the same passion as the consumers…”. Passion and engagement are related emotions. And both have been out of focus in sourcing recently.

Understanding why an end-customer buys the product should be essential for procurement.

If you’re solely focused on up-stream cost reduction, chances are that you are missing the real reasons why your product is unique and why customers are attracted. In many cases it’s more than just marketing gimmicks that have driven them to the stores. It’s the pride of owning something that they can identify themselves with.

I had the chance of meeting one of the marketing and sales executives of Scania last year, and during our discussion we touched upon the subject of events where she mentioned that Scania once had put a tattoo artist in their exhibition booth. And people were queuing to have the Scania logo permanently fixated on their skin.

With that amount of customer dedication to your brand, can procurement afford to chose suppliers who are not as – or more – engaged/passionate about their job.   I would say no.

Just a quick heads-up for those – like me – who can’t attend the now ongoing Procurement Leaders Forum in Chicago. It’s got a quite stunning line-up of procurement executives who are sharing best practice but the best of all is that Procurement Leaders David Rae and Mark Perera are live-tweeting about the action on Twitter as well as posting great write-ups of the presentations on the Procurement Leaders blog.

A recent IDC survey regarding the state of IT (in Sweden) in 2010 really did it’s best to expose the difference between buying and selling organizations. When asked about how they expect the IT market to develop in 2010 diametric answers were provided making one wonder where the two parties can actually meet.

The only area with a near resemblance of likeminded views was cloud computing:

• 46 percent of the suppliers believed that cloud computing would grow in 2010…
• …as opposed to 30 percent of the buyers

But from that point on, the gap grew larger with each asked question.

• 57 percent of the suppliers expected that sales would grow in 2010…
• …where-as only 27 percent of the buyers indicated that their IT budgets were growing

And when it came to outsourcing, the gap between seller and buyer expectations had grown to 37 percent as:

• 53 percent of the suppliers expected the outsourcing market would grow…
• …as opposed to a meager 16 percent of the buyers

Now there are probably numerous reasons that explain these variations but I dare say that sales and marketing almost by default are opportunistic by nature and set goals that are hard to reach yet in return yield great rewards. Buyers on the other hand are perceived as nay-sayers, and do their best to live up to that reputation.

So what can one learn from a quick exercise in sales to purchasing comparison.

As in real life, understanding the other side will be of great benefit to all parties.

Procurement Leaders big tweet chat debate on Friday focused on how procurement must change in order to attract talent got me thinking about the key traits that will define purchasing executives in the future. What we need to know, how will we conduct our work, what traits we need to pay attention to when hiring and promoting the profession. When looking at my list I admit that it is rather generic – the traits are essential for anyone in business these days and not just limited to procurement.

A broad business understanding, the ability to manage relationships, communication and using potential networks to affect and react to changes defines the modern business professional in my eyes. And it is as such that we need to look at purchasing; one of the modern business professionals.

Understanding the big picture
Purchasing is not an island unto itself. It never has been and it never will be. In our ever changing world purchasing managers must be able to understand what makes the business evolve. Business development skills should be on top of all lists.

In most cases, purchasing is the center of gravity in the full supply chain and as such it owns many of a company’s most crucial relationships. This should not be treated unlightly.

Managing relationships
As the center of gravity in the supply chain, understanding how to manage and affect all types of relationships is crucial; be it supplier-, end-user customer- or sales/marketing relationships. Purchasing managers must be able to – much like a chess player – be able to analyze the implications that may arise if and when relationships change.

Using networks
Some argue that as the internet evolves – and the power of Google increases – that using social networks will in some ways replace traditional web searching as a way to gather information. Nielsen released their findings on the subject a few months ago and found that 18 percent of all respondents used social networks as a starting point when searching for content.

Communication
As relationships evolve a multitude of grey scales replace the black and white rendering of the first impression. This stresses the importance of communication – especially across borders and when using emotion unfriendly tools such as e-mail (and in some cases social networks). Being able to speak to suppliers, c-level executives, stakeholders and end-customers alike to get their attention requires a deep understanding of the perceived value of purchasing.

When looking at the traits that define these four areas – the big picture, relationships, networks, communication – I’d argue that they are areas in which more women than men that would excel in. Yet the tradition of the profession is so male centric it is scary at times, I’ve been at purchasing events where less than five (5!!!) percent of the attendees have been female. Procurement is unfortunately – as is sales and marketing – a rather male arena.

So will the next wave of CPO:s be female?

I surely hope so.

If we manage to raise the status of procurement through whatever means – it is a fantastic opportunity for female professionals. Looking at the amount of talent that is out there (below the c-level) and the skill sets necessary for procurement excellence I’m hope that we will see a paradigm shift in the near future; off the top of my head I recall Sandra Petersen of Skanska and Christina Di Luca of BP spearheading the male confines of procurement and remember that Barbara Kux of Siemens recently made Fortunes 10 Global leaders list.

Dogged by the downturn, the pulp and paper industry has slowly recovered over the past months to the extent that it has been flagging for price increases to boost profitability. Now for the affected categories purchasers this was old news, but no-one was counting on the perfect storm that hit the industry in the last week.

1. The earthquate in Chile
   News reports indicate that 7 percent of global pulp capacity is shut down.
2. Severe weather conditions in Scandinavia
   Rail transport has been at a standstill and is still not at 100 percent capacity interrupting many supply chains. Hallsberg, the main rail hub in Sweden has been at a standstill for 12 days and Green Cargo estimates losses of 30-40 million SEK according to Dagens Nyheter.
3. Transport workers strike in Finland
   While road transport is back to normal, dock workers went on strike this thursday effectively shutting down all finnish ports. Both Stora Enso and UPM-Kymmene has flagged for mill closure due to the strike.

With pulp costs rising higher than expected, purchasers are in a tough spot. I wonder if any risk management initiative could have seen all of this coming in a once. It also makes one wonder which category will be the next in line.

In an analysis by Svenska Dagbladet they go as far as to say that “in the future, it will be impossible for companies to ignore CSR-related issues”. The question is how this will work out in the future.

When looking through the latest reports on CSR/sustainability one can quickly become overwhelmed by the gap between the ambitions of the producers and their supply chains. There are many aspects of CSR that needs to be accounted for but take this snapshot as an example of the state of CSR in many supply chains.

Carbon reduction ambition
Only 38% of Suppliers currently have carbon reduction targets in place compared to 82% of the Members. The success of long-term global carbon reduction among Suppliers will now depend on two main factors.

This quote is from the Carbon Disclosure Project Supply Chain Report 2010 (authored by AT Kearney) and although it only focuses on one area of sustainability (by some of the leaders in the field) it shows the abyss between the ambitions and actions of the producers and the focus/motivation of their suppliers.

If the report from Svensk Handel speaks the truth about the future – consumer goods producers need not only get their suppliers on track, they will also need to educate the retailers about what they themselves are doing as well as how their suppliers are perform.

Jason Busch recently posted a note worthy piece on collaboration (Supplier Collaboration – How Sweet It Is) where he recounted how Hershey Foods and Kmart had developed and executed very successful programs for the Kmart chain.

I was further reminded on how these types of relationships work at lunch yesterday when I ran into an old friend and he mentioned that he was waiting for the response from one of his customers to whom he had delivered material earlier that week. My friend is a songwriter and he’s is contracted as a supplier to one of the major record labels. It’s a buyer/supplier relationship built purely on trust (and past performance).

Now I understand that this might seem a bit farfetched for some, but remember that the recording industry is an 18 billion dollar industry that has experienced a nearly 15% drop in sales annually over the past few years. It’s a business that more and more has become dependent on external suppliers to deliver songs, the changes to the industry that were caused by The Beatles in the sixties have become obsolete and they are more and more resembling the industry demography of the fifties with freelancing songwriters providing songs to labels. But in order for this to work:

• The buyer needs to trust the songwriter to be able to deliver what they (and their artists) need in order to become more successful.
• The suppliers need to build a relationship that enabled them to deeply understand what both the record label and the artist was looking for. And unless this is delivered, there is no money coming in. So the depth of the relationship and common understanding is essential.

Now this type of supplier relationship might only be fruitful for a few select categories, but I believe that if we are to be able to exploit the potential for innovation in the supply chain – relationships like this will surely be integral in attaining that goal.

As for my friend in the example mentioned above, I don’t know the outcome yet, but if my friend has understood exactly what the stakeholders were looking for his material will end up on the next Kylie Minogue album.

Now anyone with even the smallest grasp of procurement knows that in most cases standardization is good, but one has to wonder how far this decree should be taken.

This coming Monday, McDonalds will close their three Icelandic restaurants turning Iceland into one of few McDonalds free zones in Europe (the others being Albania and Bosnia and Herzegovina). In a Reuters interview, Jon Ogmundsson, managing director of Lyst, holder of the McDonald’s franchise in Iceland, blame rising cost of supplies as the main reason for the closure. With McDonalds famed for their comparability across the globe – taste wise, if not cost wise – changing the ingredients seemed out of the question.

“For a kilo of onion, imported from Germany, I’m paying the equivalent of a bottle of good whiskey.” Now, the

Icelandic economy is still in a freefall so there are of course other aspects that play into this equation as well, but one might wonder what could have happened if the purchasing professionals at McDonalds in Iceland had stayed a little more on their toes when it came to sourcing their ingredients for 2009.

I recently came face to face with one of the major hurdles (and misunderstandings) of purchasing marketing spend; namely the definition of quality fulfillment.

Now, in most cases, marketers want superior quality – it is one of the real drivers of marketing effect – but when purchasing professionals attempt to support marketing in procuring say photography services the definition of quality fulfillment quickly becomes somewhat blurred.

• The professional purchaser wants to buy images.
• The marketer wants to buy superior images.

The problem is that who is to judge when an image goes from useful (it clearly displays whatever object was photographed) to superior (it displays not only the object, but also projects emotions or feelings).

The images that I purchased definitely passed any criteria set by the purchasing department (great focus, clearly displaying the object) yet I was devastated since the images were unusable due to the lack of correctly projected emotions. So what did I do?

Did I blame purchasing for supplying an inferior photographer? Well, no, on paper he was perfectly capable of doing the job (and he did, only I wasn’t satisfied with the superiority of his work) so I bit the sour apple. But next time, I’m going provide a longer list of suitable suppliers – suppliers that I as stakeholder know can bring me the superior quality I demand – and then purchasing will get to support me in the negotiations.