Supply Chain Now Radio Episode 247
The Procurement Pros Series featuring Rod Sherkin of ProPurchaser.com
Exclusively on Supply Chain Now Radio
“Supply chain professionals know they should collaborate with their suppliers, but they don’t know how common it isn’t. I would estimate that fewer than a third of the companies we deal with actually have active embedded supplier projects as part of their culture. It’s an opportunity to thrive in an ever more competitive environment.”
– Rod Sherkin, President of ProPurchaser
Most companies recognize the importance of collaborating with suppliers. Collaboration can open the door to increased market share through innovation and reduced risk. But valuing collaboration and making it happen with the right suppliers are two very different things.
In his usual practical application-driven style, ProPurchaser President Rod Sherkin takes Supply Chain Now Radio host Scott Luton through three recommended steps for improving supplier collaboration. They include finding the right kind of suppliers, choosing appropriate projects and successfully carrying them out.
In addition to describing the three steps in further detail, Rod Sherkin provides advice such as:
- It is rare that procurement knows as much about a supplier’s materials as the supplier themselves.
- When selecting supplier collaboration partners, use this rule of thumb: select a supplier for whom your company represents at least 5% of revenue
- Ask yourself whether each possible supplier collaboration partner is open to enough transparency to share information – and potentially savings
[00:00:05] It’s time for Supply Chain Now Radio. Broadcasting live from the Supply chain capital of the country. Atlanta, Georgia. Supply Chain Now Radio spotlights the best in all things supply chain the people. The technology’s the best practices and the critical issues of the day. And now here are your hosts.
[00:00:29] Hey, good afternoon. Scott Luton here with you libeled Supply Chain Now Radio. Welcome back to the show. We’re excited to be continuing our Procurement Pros. series here today where we’re offering Supply chain leaders several new ideas and best practices. And today on today’s episode, we’re really talking about a proven three step process for stronger and more successful collaboration and innovation with your suppliers. And more on that in just a moment. Quick programing note, like all of our series on Supply Chain Now Radio, you can find our replays on a variety of channels Apple podcast, SoundCloud, YouTube, where we help you get podcasts from. As always, we’d love to have you subscribe to your messy thing. Let’s think a few of our sponsors that allow us to bring best practices and innovative ideas to you. Our audience. The Effective syndicate Verusen Supply chain Real Estate, dot com Ipix Atlanta and many more. You can check out each of our sponsors on the show notes of this episode, special guests here today. Let’s welcome in Rod Sherkin, president of ProPurchaser.com Rod. How are you doing?
[00:01:32] Fine, Scott. How are you doing?
[00:01:34] Fantastic. Great to have you back. I had such a great time. Well, throughout the series, but in particular on that on the last episode. And we’re going to steal a best practice from the last episode. Are you ready?
[00:01:47] I sure am.
[00:01:50] Brooklyn. You know, there’s so much work and stress that goes on in Supply chain. It’s really important. Every once in a while, I kind of make it lighter or make it and enjoy ourselves. Right. So that’s where we’re gonna start today’s episode. We’re gonna continue what we called last time our Lightning Round. So in the last episode of this procurement pro series, we kind of went off topic a bit and posed some questions to you, our subject matter expert, that that gave our audience an opportunity to really get those Rod Sherkin better and Rod, as you might expect or maybe didn’t expect. We’ve gotten a ton of feedback around that, especially on your affinity for The Matrix.
[00:02:31] Really? I didn’t know that. No. Well, there must be some other Matrix fans out there that.
[00:02:38] Yes, you’re the super fan. You’re now the super fan of The Matrix. So we’re gonna continue with The Lightning Round on today’s episode. Now, to be fair, this may be the non lightning round. These aren’t quite as open as shut questions as we did last time. But but there’s some of my favorites. What I’ve gathered, we’ve done our intel on you in your background. So I’m looking forward to posing these to you. Sir, are you ready? OK. I sure am. All right. So first up, you hail from the beautiful city of Toronto. And I know you’re a passionate sports fan. So question for you. Toronto Blue Jays or Toronto Raptors?
[00:03:14] Well, the Raptors have certainly been more successful lately, but that shouldn’t be the criteria. It you know, in this camp, right? Yeah, they do. Yeah. It’s they’re not doing quite as well this year, but they still have a shot at it.
[00:03:30] You know, it’s you know, I’m going to say it’s a beautiful summer’s afternoon on a Sunday.
[00:03:35] I think I prefer the Blue Jays. I prefer baseball. It’s fun. And you know, on a cold fall night, like like winter’s night like we have tonight is probably a basketball game is a lot more fun to watch. I like them both. And I guess it’s slightly seasonal. So I don’t have a favorite. It just depends on the time of year.
[00:03:55] You’re flexible and nimble, but you’ve got a quick anecdote about the Blue Jays that no one else may know.
[00:04:03] Well, it’s kind of a riddle that’s great for cocktail parties.
[00:04:07] You say to someone you’re a sports aficionado, it the only major league team to ever be World Series champs three years in a row. And then everybody stretches you something because you get to watch your words. You can’t say who won the World Series. You just say who where. The World Series champs. And that’s the clue, because there was a strike in 94 and the Blue Jays, it won 92, 93. And by default, they were the World Series champs in 94. So they did not have that title for three years.
[00:04:43] So clearly they didn’t win it three times. So that’s how you can win a drink or two at a cocktail. That’s right.
[00:04:51] I do. Rod Sherkin had little marketing bone in his body. I like that. And of course, in 92, they beat our beloved Atlanta Braves. In heartbreaking fashion, but nevertheless, the great Blue Jays teams, well, we wished it didn’t have to do it, but somebody had to win.
[00:05:08] You understand it couldn’t be win, win. We tried for a win win, but sometimes it’s not.
[00:05:16] All right, though. You know, in our warm up session, I think our sports pre-thought went on about two hours. But for our listeners say we’re gonna move on from sports to music. So continuing are our lightning round or maybe our non-Latin around with Rod Sherkin. So now I understand that not only are you a big fan of music, but you’re a big believer that pianos and piano music have the ability to aid in the development of cognitive abilities. So you got to tell us more about that.
[00:05:45] Well, Stumm, a theory vote. My wife is an artist, and so she’s certainly a big on creativity and stimulating the right brain.
[00:05:58] And she did some research and she found that. I guess found a teacher. And the teacher’s theory and I think it’s true, is that if children learn to play piano young enough, say, 5, 6, 7, 8 years old, they learn to read both. Both clefts, the treble clef and the bass clef. Simultaneously, they actually the blade. The brain is plastic enough that they can parallel process the information and they’re actually taking it in at the same time. And that’s why adults who take up piano say once, you know, they’re over 18 or 19. They can still play piano and play quite well, but they can’t parallel process. So they because the brain stopped being plastic enough to do that. So the point was that whether your child winds up carrying on with piano or not, it it doesn’t matter as much as what’s happened to the brain, because once the brain can parallel process, it learns to do that. It can apply to other fields and it makes it easier for them to. It gives them advantage in some ways when they’re older, too. To be able to simultaneously take in parallel process other things. And we you know, everybody I mean, to almost tune to a fault. Now people are multi-tasking. Why people who play piano when they were young can have an advantage when it comes to multi-tasking and receiving information that way.
[00:07:26] Well, if you heard that Rod. That was the sound of seventeen thousand two hundred fifty four families across North America, simultaneously picking up the phone and scheduling piano lessons next.
[00:07:38] So based on lies, there it is. It’s fascinating. It really is. And I think it’s true, too. I don’t know if there are any definitive studies, but it certainly makes sense.
[00:07:49] And we’ve we’ve always felt it was a way to help help your your children develop their potential.
[00:07:57] All right. So moving from music and cognitive abilities development, let’s talk about a really neat little anecdote that I gleaned from some folks in your network. So I know that effectively tracking commodity pricing, of course, a big part of your product, the ProPurchaser platform. However, I understand that based on your research, that aluminum once upon a time was more valuable than gold. So you gonna tell us more about that?
[00:08:27] Well, you know, 200 years ago, before the advent of electricity and electrolysis, it was almost it was making aluminum was almost impossible.
[00:08:38] Only a few alchemists, you know, would know how to do it. Was that kind of an oak cult thing. And, you know, they’d worked for weeks and months and make a few ounces of aluminum and in only the very rich kings and kings or others. Noble people could even afford it. So having an aluminum spoon or fork or cutlery was considered the you know, the the ultimate status symbol, much more so than a gold or gold alloy. So it wasn’t until the ilic the modern methods were developed for making alumina, which is basically using a lot of electricity and an electrolysis.
[00:09:20] So you can strip away the the oxygen from the aluminum oxide and create the pure metal. So, yeah, aluminum at one time was rarer and more difficult and much more expensive than gold.
[00:09:32] And now as we use aluminum, it is a for too many folks. It is use one time and throw in a recycling bin or even worse, thought of garbage. Garbage can, right.
[00:09:44] It is almost disposable, certainly in use to me. It’s ubiquitous, used in car bodies and used wherever you need a strong, lightweight, non corroding metal that I can’t imagine. It’s hard to imagine not having aluminum in today’s economy.
[00:10:06] But their paths, aluminum, a gold path, certainly have to have inversed these days and we’ll see. One hundred years. Now, who knows? Maybe plastic grocery bags will be worth it.
[00:10:20] This rare? It’s very rare. Yeah.
[00:10:23] Okay. So we’ll appreciate you being a good sport and playing along with us on our lightning or as it were, our non lightning round, but really appreciate learning more and providing our audience a chance to learn more about you. Rod.
[00:10:38] So now we want to dove into the main topic. So today, as we’ve mentioned on our Procurement Pros series here on Supply Chain Now Radio, it’s going to be all about how to effectively collaborate and innovate with your suppliers. It’s it’s like looking for the lost fountain of youth. It’s a never ending quest for. For many companies, especially with just how fast the global market and the industries are changing. Right. We’re digesting change. At times it can seem minute by minute. So finding ways to really effectively collaborate to makes things easier.
[00:11:13] And of course, innovating new products, new ideas, a new improvement, ideas on current processes, new markets, you name it, are really important. So.
[00:11:21] So it’s Rod Rod, for starters. Do you believe that successful collaboration and innovation, especially innovation, I guess between buyers and suppliers are more important than ever before? And based on your answer, tell us why.
[00:11:36] I do. I think so, because it’s sticky to a competitive advantage to be able to go shehade a fair deal with the supplier. It’s kind of like let’s use the baseball analogy. You know, you’re at home plate, you’ve got the bat and that’s it. It doesn’t get you to first base if you actually want to hit a home run.
[00:11:54] If you want to be better than your competition, you’ve got to do more than just, you know, be a good bread and butter negotiator. He’s got to figure out how to make the pie bigger for both parties, how to how to embrace your suppliers knowledge and their enthusiasm and find better ways to consume what they make. And they can find better ways to supply you what you need. So that, again, both parties are better off. And it’s if you think about it, it’s almost you know, it’s very rare that you would know as much about the suppliers materials and the supplier. Would they would they have much more technical knowledge? They they get to see other materials or use other places. And so by not tapping into their knowledge, you’re you’re leaving a huge opportunity behind. And if your competitors are not leaving the opportunity behind to say, are tapping into their suppliers knowledge, figuring out how to work together, then they’re going to have the advantage. And in the end, you know, it could be as could be pretty dire. If they’re they’re more competitive than you are, then you may not be around. I think it’s it’s very, very important.
[00:13:09] Absolutely. Darwinian, almost. So, you know, the good news. So as we as you know, both know and our audience knows that the words collaboration or effective collaboration, in particular, an innovation which is unfortunately off overused, you know, that’s not something where you can buy off a shelf at your local Home Depot and implement into the organization.
[00:13:30] And then you got it. It’s a it’s a it’s a very deliberate, long standing journey.
[00:13:35] It is not easy to do is not hammer meets nail. But the good news is that you have a proven three step approach that really at least makes the path forward easier. Right.
[00:13:47] It structures it. And you’re right. If once you have structure, at least you can, you know, if you’re making progress. So it does make it easier that way. You can measure progress and hopefully succeed more often than you would without a structure.
[00:14:00] And we are if if we’re fans of anything beyond the Matrix, we’re big fans of structure, structure, birds and structure does in this day and age, whether you’re talking about innovation in collaboration with suppliers or or other continuous improvement projects or in a structure just provides these guideposts and it’s easier to break through even the hardest of challenges. A big fans of what you’re going to be sharing with the audience here today. So with structure in mind. Let’s talk about step 1 of this, this process Rod.
[00:14:33] Well, it’s a three step process. And the first step is to find the right kinds of suppliers. Then that’s probably at least half the work. And then once you’ve identified the right kinds of suppliers, then you need to find at least an initial project for each supplier that you’ve chosen to work with. You can have several in your pocket, but you you kind of homing on on one just to, you know, nothing succeeds like success. We’ll talk about that in a minute. And then once you’ve got the project. You’ve got to execute it. And that’s where Supply chain people are in a wonderful position because they’re the bridge between there. There were organizations and the suppliers organizations. So there’s some tricks, project management type tricks to make sure the project gets executed as well as you can with with the time you have. You may remember, but you know, everyone has a full time job. So whether you’re the supply chain professional or whether you’re the supplier, you worked for the supplier. Everyone on your team of the teams you’re going to form also have full time job. So there’s a bit of an art in this. You’ve got to kind of extract a little extra work from people. And the way to do that we’ll talk about is to make you a find the right kinds of suppliers and B, choose the right kinds of projects and then execute them in a way that everybody feels that they’re contributing and everybody feels satisfaction in the fact that you’re making progress.
[00:16:03] And you gave everyone kind of a foreshadowing of the three steps there. So let’s dove a little bit deeper. Ω know how to find the right kind of supplier. Step one.
[00:16:13] Well, the first thing you do is you create a long list of suppliers that’s a wheezed to do you.
[00:16:20] Clearly, you can go to your accounts payable department and find out, you know, where you’re spending all your money. You probably know it, but you know, you enlisted, solicit a little bit of help and list a little bit of help from finance and say you don’t get your top 10 suppliers from a financial point of view. The other thing you should consider are suppliers that are operationally import. They may not may not spent that much money with them, but they may have parts that are absolutely essential to keeping the line running or parts that maybe come from a long distance where we’re maybe you’ve got some supply chain issues. Maybe short shipping has been an issue and and they’re critical you they can shut the line down. So it’s a combination of financially important suppliers and operationally important suppliers. And so you you create a long list because you’re not really sure if they’re the kinds you wanted to do a project with. But there certainly if you could do a project, there would be either financial or operational benefit. And then. So once you’ve got that list, you need to pare it down. And there’s a few ways do that. One is you ask yourself, is your business financially important to them? In a rule of thumb, is are you 5 percent or more of their revenue? And sometimes it’s hard to know.
[00:17:36] But if they’re publicly traded, then you would that wouldn’t be hard to do. You can find it with the revenues. And you know what? You spend it. Even if they aren’t publicly traded, you can get a feel for, you know, their hundred million dollar company or their, you know, five hundred million dollar company. So, you know, if you’re half of 1 percent, it’s not too financially important. But once you’re up to two, three, four, five and certainly more than five, then you’re going to be in there, you know, in their top 20. So that’s the first thing you check to see if your business is important to them. The second thing is find out if affair with how they feel about working together on share the savings projects. Just ask sales rep. Hey, do you have any other customers where you do projects together, try to save money and share the savings and that if they are if if that’s part of their culture to work with their their customers and do these kinds of things, then that that means that that’s a good sign. If they’re not, then well, they may not be a good, good project partner. And most importantly, is does their pricing behavior or do they treat you fairly or do they embrace cost transparency? And that’s something that, you know, we’ve talked about before. You a nice.
[00:18:53] Yes. We’re going to circle back control, cost transparency, you’ve got some additional thoughts there, but that’s a really important component of this. The ideal supplier pricing behavior, right?
[00:19:05] Right. Do they do they play cost transparency all about playing fair? And, you know, are they the kind of supplier that will, in fact, share costs and be transparent about it so that you can, in fact, do share the savings projects? Few if you don’t know what the costs are, how it’s impossible to know what the savings are. So, yes, if they aren’t open to cost transparency, they’re it’s kind of a knockout punch. They’re probably not going to be a good, good partner. Then once you’ve pared down the long list, you don’t quite have the short list yet. Really important to a plant tour. Now, you know, you’ve made a start. You might have had 20 year long list and now you’re down to maybe eight and you maybe you want to wind up with Sheer for a kid, you know, can’t stretch your resources too much. So a plant tour, we’ve talked about plant tours before, you and I, with the idea of finding a good fit supplier. Well, part of that good fit. When you’re talking about touring projects would be are they the kind of supplier who you know, who wants who has the kind of culture? Not only are they efficient and are they a good fit for you? That’s what you’re gonna look for. But you can also look at whether or not there’s the kind of supplier who you think you can do a share of the savings project with. And when you meet their people and talk with their UPS production planners of under control people. You’ll you’ll get a really good feel of it, whether or not they’re the kind of people like to share ideas and they work in a culture that that would be open to this kind of these kinds of projects. And that’s how you get shortlist after you’ve done the tours. So that’s how you find the right kind of suppliers.
[00:20:41] I want to go back to our listeners. You Rod did a great podcast episode with us on this parliament about a month and some change the Rod. Well, we’ll put the link in the show notes. But you ran through the best seven or eight steps for conducting a successful plant tour into our listeners. That was that was episode number one, 72. And you can find that on our laboratory page. Supply Chain Now Radio.
[00:21:05] And we’ll also include it on the show notes. OK, so step one is you got to find the right kind of suppliers, which is really important these days. And then what does that lead to? For step 2, Otha, what we will write and get ahead of myself. You mentioned cost transparency and how important that was. And I know that you’ve got you. Over time, you’ve kind of proven out four big cornerstones for what makes up cost transparency, right?
[00:21:32] You know, we we could spend an hour talking about it, but quickly, a Reader’s Digest Birgit, no, we want to.
[00:21:40] I think that part of it is that the onus is on this supply chain professional procurement professional to to do what we call follow the golden rule of negotiations. And the golden rule of negotiations is you never enter a negotiation without first researching what’s happened to your suppliers costs. So, you know, you bubi bolt steel bolts just to make it simple and you pay a dollar, a bolt and the price of steels dropped 10 percent. So you go to your supplier and say, hey, last year the price was a hundred dollars a tonne. Now it’s only 720 a tonne. I going to pay a dollar anymore is fair. I think I pay you ninety five cents or ninety six or ninety four. And if supplier says you’re absolutely right, our costs are down, you know, we we can afford to reduce the price will still make our normal margins. Then you’ve got a customer who responds to cost transparency. That’s what the transparency is. You’re making the suppliers cost transparent and you’re then presenting this to them and their do they respond or not? I mean, some suppliers will say, hey, we were market based pricing. It doesn’t matter what our raw materials do. We’re still charging a buck for the bolt fact recharging. Go back three. We’ve taken a three percent increase. So if they’re intransigent and they don’t respond and they’re certainly not going to be the kind of supplier that you want to do to save a joint savings project with, because they’re they’re not they’re not playing fair.
[00:23:08] So that that’s kind of why this cost transparency acid test is so important, because you you can you can see very quickly whether or not they’re the kinds of suppliers who who will play fair and and are interested in finding deals that work for both parties. And then once you’ve been so you there were four cornerstones. The first one was this golden rule where you research the costs of an extension of that it should cost modeling the second rule. Sometimes it’s not as simple as just, you know, following steel and you buy corrugated packaging. All you need to really follow is paper. But if you buy something a little more complicated, like an electric motor, for example, then you need to track several different inputs, copper and steel and things like that. So you need to. The second cornerstone is to be able to do some simple shoot costs. Modeling it again. Does your supplier respond to it? The model says the price should be down 4 percent, you know. Are they willing to discuss it? The third thing you do, the four cornerstones is you work closely with your sales reps. If your sales reps will take this information that you’re showing, hey, the price of steel is down or the model shows the the electric motors down, will your sales rep kind of work with you almost become a champion for your cause? Will they take this information and explain to their management, hey, you know, I you know, I see their point.
[00:24:35] You know, what am I supposed to say to the customer? He has a point here or she has a point that the you know, it’s not fair for us to be charging this much. So if if they if they were are willing to take that that to the position and work with you and they become kind of advocates, if no champions for your cause internally, then that’s a really good sign for a culture that will work closely with you, because that kind of sharing, that kind of reasonableness is what’s important in joint projects. And then I was the fourth cornerstone is is kind of what we’re talking about now is once you’ve got us a situation where costs are transparent, your suppliers are responding fairly to the two, your requests, and you’re, of course, responding fairly their requests as well. You’ve got a relationship with a sales rep where they’re they’re kind of on your side, you know, everybody’s side. The fourth step is to make this supply chain enduring competitive advantage, which is really working together on collaborative projects, because you just take that relationship you’ve had with the sales rep and expand it. It’s not just buyer seller. You start bringing your engineers talking to talk to their engineers, Sheer operations, people talking to their Sheer production planners talking to theirs. And you you you’re actually putting in what we’re really talking about is entrenching the fourth cornerstone or laying the fourth cornerstone, which can happen after you’ve, you know, lead the first three first.
[00:26:11] So cost transparency and as you mentioned, that could be episodes and episodes all of its own. That’s really important stuff. But that’s a big part of finding the right kind suppliers, which is step one of this of this framework. OK, so moving from step one, then we’re moving to step two, which is what?
[00:26:30] Then we are going to select an initial project for each shortlisted supplier. So let’s say we’ve got four suppliers. You know, we’ve gone through it. We’ve done our homework and we’ve done the plant tours. And we found people with the oak cultures are thinking you can work with. So you select an initial project for each shortlisted supplier and you write down project objectives and deliverables.
[00:26:55] For example, here’s some examples. You know, reduce resin in part number one, two, three, four by 10 percent. So that’s the objective. And the deliverable could be achieve one hundred thousand dollar annual share savings that could you know, that would be something you would do with injection molded plastic partner. Or you might say another project might be increase on time shipping for the injection molded parts. You know, right now it’s 83 percent. We need it to be 98. And so that’s the objective. The deliverable could be to reduce the capital tied up in finished goods by 20 percent. Because if you have less short shipping, you don’t need as much safety stock. And maybe that’s for the kind of supplier who’s operationally important. That would be a better project than one is financially important, which might be the the risk and reduction. You could talk about reducing setup costs. It’s a game with objectional, the plastic supplier. Maybe there’s a way. It usually takes a lot of time and effort to change over unobjectionable to plastic machine, especially in masks. You know, the big the big, the big ones. So maybe there’s a way you can work together to reduce the number of setup. So you have kind of. This is the kind of work you’re doing yourself. You say, well, these are three projects. You probably pick these ideas up when you did your plant tour or you’re looking at, you know, you spend a million dollars on on these parts and, you know, a hundred thousand. This is not absurd if we can reduce the resin by 10 percent.
[00:28:31] But what you do is you choose one of them. Because remember, we were gonna choose an initial project. So you’ve got your list of projects, you choose one. And we’ll talk about how to choose that in a minute. But let’s say in this case, you will use the first one. We’ll Dewsbury the resin used by 10 percent and achieve a hundred thousand dollar annual savings. So the next thing you do is you frame each project as a draft for discussion proposal. So you break the project down into tasks. You you assign people to each task and you prepare a draft schedule. Now, this doesn’t have to be complicated and a lot of people think of Gantt charts and project management. But really, you just say, OK, I want to save 10 percent on these parts. I’m going to create some drawings. And I think Bob and Sander would do that. Takes two weeks. Again, this is draft for discussion. So, you know, you may take three weeks, but Bob and Sandra are the two people who know how to do it. And so you you write it all out. You then you would build prototypes, you would test prototypes, it you’d rework the prototype. So you the work you’re doing. And you know that if you’ve selected your suppliers and you’ve got a few projects for each one, then you select one of these projects that you you just you write down what you think needs to be done and then you call a meeting with your peers and you show it to them.
[00:29:54] You say, hey, here’s the seven steps and this is what I think it is. And Sandra says it doesn’t take two weeks to create drawings. It takes at least three. And oh, by the way, you forgot the last step, which is the final approval. So you want that to happen. You want your peers involved and you want to you know, the has a hundred thousand dollars we can share. You know, we can save here, celebrate. And they. Yeah. So everybody is going to be keen on it. They should be anyway. And so call the meeting and then you adjust it. Next thing you do is you call a joint meeting with both teams now and you show them the same the same list. And now because Bob worked for your company and Sander worked for theirs, and now you’ve got everybody in there saying this is pretty it or wait a second. And then you want them to change it. It sounds like this is a lot of work. It really isn’t. A lot of fun because you’ve got people, you know, sparking off each other and ideas. Now, what’s going to happen if you do this right, is that you’re going to wind up with a project you’re going to wind up with. You know, the people agreeing to it, that they’ve agreed to the time and then everybody’s kind of in it together.
[00:31:02] We’re gonna save a hundred thousand dollars. And you say, okay, let’s go. And then the next step is you personally manages project and you don’t really need a project. Management diploma to do this. You check with everyone regularly. You say, you know, once a week you phone them up. Hey, how’s it going? Even if you know everything’s fine? You still find out how it’s going because for two reasons. First of all, people know that the oh, your. You’re kind of watching. And if they’re kind of falling behind because remember, everybody has another job. They’re falling behind the Gates t0 Scott’s voting on Monday. He better get something out of this. And of course, you can. You know, you offer encouragement and help you remove obstacles. That’s a big thing. And project manager, you’ll find that people say, oh, I never got around to my boss. May be, you know, stay over time. And I had this other project. And so maybe there’s something you can do to remove an obstacle or maybe they’re waiting for information from a supplier. And so you’re you’ll find that you’ll spend a lot of time kind of greasing the skids and helping people get the information they need. And you’re juvera basically making sure the project stays on track and sometimes they don’t maybe have to back it off a week or two.
[00:32:10] But at least it’s structured. And you’ll you know, you can inform everyone and then, you know, you hold a joint meeting. When the project’s finished, you persent the draft report to the participants. Again, you don’t do anything without everybody kind of holding hands. Ask for feedback. You gain consensus on, you know, what the final version should be. Maybe you only saved 80000 or maybe save 120. But everybody kind of buys into the savings and buys into the conclusions and findings. You also conduct a short pause postmortem. We call them, you know, reduce successes and especially the lessons learned. You know, hey, next time we’re how can over promise and under deliver. Let’s say you only saves eighty thousand. We should be a bit more conservative on the next project. And then once that kind opens the door to having an open discussion about the next project. Well, let’s do that project on short shipping now. Let’s get that short shipping down to 2 percent instead of 15 where it is now. And the idea that everybody in the room, it’s both both teams. And if things have worked well and you’ve done your job, they’re going to be keen to do that. And of course, you publicly and generously share the credit and you thank everyone.
[00:33:22] So I know this is a very dense as I have been talking a lot here and reading it clearly from a from some slide, actually. But it’s not as difficult as it sounds.
[00:33:36] I know it works. And it is a lot of work. But if a hundred thousand dollars and what you’re really doing is you’re creating a mindset that this isn’t something we should shy away from. We can this is just the first of a continuous improvement culture we’re going to create between, you know, with both our companies participating. And it’s it’s a lot of fun, actually. It’s it’s very satisfying professionally.
[00:34:00] I’ve found any way to do this kind of blended step 2 and step three Rod that. And that’s fine. So I want to recap for our audience.
[00:34:10] Step one, finding the right kind of suppliers and Rod walk through. It’s one of best practices that will help any company find that and would touch on on cost transparency.
[00:34:21] An Rod touched on some of the four cornerstones that make beat up because it’s such an important component of a of the right type of supplier step to choosing that initial project for each short listed supplier and that Enron. I think that’s a really important step because the initial product you want to you don’t want to try to boil the ocean. Right. You want to you want to find a project that isn’t like Tom, your shoes. There’s a little bit of a stretch goal, but still you want to set up the team for a series of successes. So so choosing the right product in my life that you shared there is just because Gantt charts and project charters and all these are the tools which which, hey, look, they work well. But you don’t want. You don’t want overkill. You won’t. You want results. So keeping it simple, I think is what I heard you say is a really important, important component of step to choosing that initial project. And then step three that you just concluded, all is execute and, you know, don’t just lay the best plans, you know, execute and make sure where we’re monitoring, you know, we can work out the progress, holding folks accountable and then as a success is made. I think something that Hurley Sheer Rod that was really important because there’s often not enough of it, especially in production vernment does recognition, celebrate the wins, recognize the folks that really contributed, made it happen and and celebrate that prior to just simply moving to the next project, right?
[00:35:53] Absolutely. Make make it funny. You’re almost a little bit like a cheerleader. That I mean that the best way possible that you’re your job is to make sure everybody’s feeling a sense of pride and accomplishment and that everybody’s input was important.
[00:36:10] Created great framework, I believe, for really driving an effective collaboration and an especially innovation, because if you’re if you’re collaborating at a very high level, I would submit that it’s that innovation is easier to reach in practical, meaningful innovation is easier reach it. It almost comes with the territory.
[00:36:30] Now, I would think in many ways, at least in my experience, Rod. OK, so we’ve got three three steps, three frameworks. Next question is we kind of wrap up this this conversation here on this episode as we’re talking with Rod Sherkin on the proper procurement pro series right here own Supply Chain Now Radio sarod.
[00:36:48] If we had assembled these supply chain Jenny counsels sticking with that matrix theme that you the sage advisors, if we assembled them for this episode, they would be for tips that they would share with our listeners. Right. For advice for for driving these projects.
[00:37:06] What would those be well heeled saw? The old adage is nothing succeeds like success. So the trick is to start with you later to this cut in Europe to Leeroy, you start with a project that’s very likely to succeed even if it’s enough, you know, not the biggest dollar savings, even if it’s a modest project because you want the first one. That’s why you the initial project so important. You want it to to succeed because it’s a catalyst. It’ll kind of ignite a flame. We get everybody enthusiastic. What you’ve done one, hey, let’s do two or three. So choose something that is the most likely to succeed, even if it’s a modest project. Then once you’ve done that, this is a huge issue in a lot of supply chain people. You’re going to be out of your comfort zones. You’re just going to have to jump in. I mean, just jump in. You can learn something by reading about it or listening to podcasts, but you can only master something by actually doing it. And nothing substitutes for experience. So you’re gonna be nervous, especially the first time. But don’t worry about you’ll get over it.
[00:38:09] People will help you be surprised that everyone’s on your side. Yeah, this is it. You know, it’s not a contest or anything. Everybody wants to win. If you do this right, it’s everybody. Both, not just both companies, but everybody who’s participating will will benefit from it. So they’re gonna help you. So jump in and bump. You’ll screw up a little bit, but don’t worry about it. You’ll you’ll figure it out. You’ll get help. And then once you’ve done it the first time, it’ll be a lot easier the next time. So that’s the second thing. Jump in. The third thing is communicate, you know, communicate, communicate, communicate. You stay in touch with participants. They talked about calling at least once a week. You help and you encourage them. You never criticize. You remove obstacles in your job to be the person who’s exhibits grace under pressure. You know, things will screw up. Things will get. There’ll be pressure points being met because everybody’s doing this on top of their normal job. So there’s gonna be lots of times when people get squeezed. But if you’re the voice of reason and calm and cool, you’re cool.
[00:39:14] Cool hand, Luke all the time, grace under pressure, then then you’re going to go. It’s going to really stand you in good stead. Make sure projects are visible throughout the company. You circulate regular progress reports, you copy receipt, you copy senior management milestone events. And of course, you publicly celebrate the milestone events and you celebrate successes. And the fourth thing is you can’t be too modest. You spread the credit and the kudos around. There’s a saying in project management you can have either credit or results, choose the results of credit. Credit won’t be an issue alone that I think time I’m Hurley. And in the end, if you’re if this works and it should work, then everyone’s feeling a sense of accomplishment and they they’re proud of what they’ve done. You’re going to go a long way towards embedding supplier projects into your companies kind of mentality, into your companies. A continuous improvement efforts make it. You almost make it try to make it a budget item. Hey, we’re going to save a half a million dollars next year. We’ve got six projects all lined up and that that’s down the road a little bit. But imagine a world where, you know, senior management is your budget item. They’re looking at supply chain. They’re looking at you to have you add a you know, significantly to the bottom line. If you want to see that the senior management table, this is the way to do it. You you start saving noticeable money and you do it in a way that everyone participates and feels good about.
[00:40:51] I think that’s one of the common threads through all of these episodes that we’ve collaborated on is just how practical I think the insights that you Sheer are. And in this day and age where everyone wants to latest tool and technology and get in gadget and gizmo on their smartphones or.
[00:41:09] Within their management style, you know, moving something that simple but practical and yield results is arguably more valuable than ever before, right?
[00:41:20] Absolutely. And this is a competitive if you can figure out how to do this and, you know, engender enthusiasm and get everyone having fun and participating, you’re going to create a competitive advantage for your organization.
[00:41:33] You’re going to be the low cost producer out there and in these the global economy that we all live in. There’s the quick and the dead. And this is this is how you succeed. I don’t know.
[00:41:47] I mean, it’s if you don’t do things like this in your competition, to just repeat what I said before and your competitors are doing it and you’re not you’re you’re not going to survive too long. The good news is that this isn’t that common.
[00:42:01] Supply chain professionals know they should do this, but they don’t know how common it isn’t. Common practice, you see it. But I would say fewer than a third of the companies that we deal with are actually have active embedded supplier projects as part of their culture. So it’s an opportunity to an opportunity to not just. Do this but actually thrive in an ever more difficult to competitive environment.
[00:42:31] I like it. And go back to what you Sheer there as you’re wrapping. At long last, evidently a longtime saying they’ve never heard. You can have either credit or results. So keep that in mind as you’re planning your approach and probably more importantly, as you’re sharing the recognition and celebrating their results. So good stuff there.
[00:42:52] Rod really have enjoyed this this conversation here today.
[00:42:57] This episode has been all focused on how to drive effective and successful collaboration and innovation between buyers and suppliers and appreciate the three step framework you’ve shared as well as the sage advice from the Supply chain Jerai counsel. Thanks for sharing that as well. And looking forward to having you back probably in the new year as we get ready to tackle what’s going to be a big year for the global supply chain community as well as the procurement profession, right?
[00:43:28] Absolutely. Yep. Lots more to do.
[00:43:31] Well, we’ve been talking Rod Sherkin president of ProPurchaser.com and a real quick Rod. We should at least make sure folks know, just in small nutshell, what ProPurchaser.com does and where they can learn more information.
[00:43:46] Who will we help procurement professionals prepare for negotiation. So, for example, if you were trying to test your suppliers cost transparency disposition, you could use ProPurchaser to track, for example, the costs that are associated with what your supplier buys to make the products you make. So we a lot of the things we talk about, a lot of things you need to do, take time, take research. So what we try to do is is save time and effort, but making it easier for supply chain professionals to do the kinds of things they need to do to really make a difference to the bottom line. So an example would be we track suppliers costs and we do it easily. We allows our members can easily communicate what they’ve learned about the suppliers cost to their suppliers and Gates to sales reps and makes it easier to turn to sales reps and to advocate for your costs. So a lot of the things that that help grease the skids seem to allow you to be strategic with your suppliers and take advantage of collaboration and the savings that come with it. A lot of the work, the background work is easier to do. We try to make it easier for our members to get that done by doing a lot of the grunt work. They know the research and grunt work. They would have to do two to establish the transparency, for example.
[00:45:18] Absolutely. And as we always say, ProPurchaser.com offers a free trial. I believe in and I heard you say about a dozen times, no one signs up without that, without taking the free jar. Right.
[00:45:30] We’ve never had anyone actually pay us for a membership unless they’ve proven to themselves that it was a good financial investment. And at the risk of sounding immodest of almost everybody, almost everybody pays for it the first time they use it. Either it fits or it doesn’t. If you have a use for it, then it’ll pay for itself very quickly. It’s not expensive. But I guess you need to find out for yourself if you have eas- for it. And that’s what the trials for.
[00:45:58] Terrific. And we’ll of course, we always feature a link to that and to the free trial on the show notes as well. So thank you so much, Rod. Hope you have a wonderful finish. In conclusion, to the year before we went Leibel, today’s episode you heard you were sharing just how busy y’all have been, which is great and to be expected. So I know you all have plans in store for Big 20:20, but thanks so much Rod for spend some time with us.
[00:46:22] My pleasure. Thanks for having me.
[00:46:24] Okay. To our audience we would chat and once again with Rod Sherkin, president of ProPurchaser.com. You can learn more information at that. You are ill or via the link we’ll put on the show notes. And as we wrap up here today, we would want to touch on just a few quick announcements of where we’re gonna be. And we always like to invite our audience to go out and check us out in person before we get to that quick calendar. If you heard anything on one of our past episodes or today’s episode and you can’t find what you’re looking for, be a Google. You can hit up our chief marketing officer at Amanda at Supply Chain Now Radio dot com and we’ll try to serve as a resource for you best as best we can.
[00:47:02] So these events are going to briefly walk through. You can find all the information at our events tab at Supply Chain Now Radio dot com. And things are kind of the weather not quiet. We’re just not on the road through the end of the year, which is a great thing.
[00:47:16] Still churning out a ton of content, especially from some of our previous events. But in January, the CSC MP Atlanta roundtable is getting together on the 15th where they’re going to be bringing in bringing in a representative from NASCAR track or they’re gonna be talking about some of the regulations that took place in twenty nineteen, an impact on your business and certainly on the transportation industry in 2020 and beyond. So that’s an open event. You can learn more at Atlanta CSC MP dot org in February. We’re moving out or we’re driving out to Las Vegas in February 4th to 6th as we attend and cover the reverse Logistics Association conference and expo out there in Vegas open to the public. It covers one of the most important, especially these days, and growing in importance aspects of the Indian supply chain that of the returns and reverse Logistics component. Learn more at our r.l a dot org. Of course, Madox is back in Atlanta in 2020. March 9th through 12th.
[00:48:18] We are gonna be streaming live from the event all four days and it is hosting the 2020 Linna Supply chain Awards on March 10th. The neat thing about mutex not only is it one of the largest. Clutching trade shows and all of North America folks misstates Mexico, Canada. Rod. Who knows? Rod may be in town as well, but it’s free to attend. Modoc Show dot com. MDX show dot com.
[00:48:43] And the Atlanta Supply chain Awards. Google and more there at Atlanta Supply chain Awards dot wsj.com. We’re really pleased to be featuring Christian phisher, President and CEO of Georgia-Pacific as our keynote at the awards program on March 10th. And then one final grant to note. We recently announced we’ll be covered. We’ll be broadcasting live from the first day of the Association for Manufacturing Excellence, also known as Amy, the Atlanta 20:20 Lean Summit on May 4th, 2020. Some mark your calendars for that. As a lot of folks that are very passionate about manufacturing excellence and success and continuous improvement, especially lean. We’ll be in Atlanta that week in May. And you can learn more at A.M.E. dot org or on any of these events. You can learn more on the events tab. Once again at Supply Chain Now Radio dot com. So big thanks to our featured guests here today. Rod. Sherkin present ProPurchaser.com. Really enjoyed his perspective around collaboration and innovation, especially from a practical standpoint to our listeners. Be sure to check out other upcoming events, replays of our interviews, other resources at Supply Chain Now Radio. RT.com. Find us an Apple podcast, SoundCloud, YouTube, all the other leading sites where podcast can be found. Be sure to subscribe to geomancy thing on behalf of the entire team. Scott Luton here wishing you a wonderful week ahead and a very successful close to twenty nineteen. And we’ll see you next time on Supply Chain Now Radio. Thanks.
Rod Sherkin is the founder and president of ProPurchaser.com. Prior to entering cyberspace, he was the senior executive responsible for supply chain for both Pillsbury and Ball Packaging, where, for 15 years, he honed his negotiating skills with suppliers. Rod has spent the last 20 years sharing what he learned with other procurement professionals. Learn more about the company here: www.ProPurchaser.com
Scott W. Luton is the founder & CEO of Supply Chain Now Radio. He has worked extensively in the end-to-end Supply Chain industry for more than 15 years, appearing in publications such as The Wall Street Journal, Dice and Quality Progress Magazine. Scott was named a 2019 Pro to Know in Supply Chain by Supply & Demand Executive and a 2019 “Top 15 Supply Chain & Logistics Experts to Follow” by RateLinx. He founded the 2019 Atlanta Supply Chain Awards and also served on the 2018 Georgia Logistics Summit Executive Committee. He is a certified Lean Six Sigma Green Belt and holds the APICS Certified Supply Chain Professional (CSCP) credential. A Veteran of the United States Air Force, Scott volunteers on the Business Pillar for VETLANTA and has served on the boards for APICS Atlanta and the Georgia Manufacturing Alliance. He also serves as an advisor with TalentStream, a leading recruiting & staffing firm based in the Southeast. Follow Scott Luton on Twitter at @ScottWLuton and learn more about SCNR here: https://supplychainnowradio.com/
Upcoming Events & Resources Mentioned in this Episode
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