When I mean lazy, I borrow from the quote, "Whenever there is a hard job to be done I assign it to a lazy man; he is sure to find an easy way of doing it."

It helps us to answer many questions such as the one below.

When 100 people are doing some work process in 1 day, how will we be able to increase the work done to twice the amount in a day?

Now, what is the first thing that comes to mind?

We use the old math problem we solved in 5th standard to say that it will take twice (i.e. 200 people) the amount of people to do the work.

If that were the case always, Infosys or any other company will never be able to achieve the non-linear growth model.

To answer the above question better, let's take another example of 10 people going for lunch. What is the speed of the entire group in reaching the lunch place? If we think it is the average speed of the whole group, it is a common but wrong assumption. It is the speed of the slowest member of the group. (i.e.) Everyone reduces their speed to match the slowest member of the group. In other words, a chain is only as strong as its weakest link.
This weakest link or the slowest member is known as a constraint.

Hence in order to speed up the whole process or to increase the work done in the same amount of time, there is absolutely no use of making everyone to work faster.

Many people in the process do not work simply because they do not have any work! This may be surprising to many managers because they can see a lot of work pending and if one says that there is no work, the manager will simply laugh it off.

To explain this, I have put in a simple process flow. The below figure shows the capabilities (Shown as number of work units performed in some time) of the people (Marked as circles) in a process.

Here, it is seen that the first person can do 10 units of work in the time that the second person can do 5 units of work and so on (15 for third person and 20 for the fourth person)

But when the work starts, the manager sees only the following happening below.

As seen here, the third and the fourth person inspite of being able to do much more, work only for 5 units of work and (depending on the manager) start idling or act as if they are busy.

Not only that, as the first person is sending 10 units of work to the second person, the work gets piled up in the middle leading to delays and worse, work units getting misplaced.

There are many ways of increasing the speed of the flow of work (No...This does not include firing the person in the middle) such as reducing the load of the person who is the constraint (2nd circle), increasing the number of people doing that one piece of work (thus enhancing the flow of work for the entire line) or even changing the form of work itself.

Hence coming back to the first question on how to increase the amount of work performed by 100 people, often there is no requirement of a proportional increase of personnel. A rearrangement of people can work wonders in increasing the output even to 50 - 100% of the current output.

This is only one part of the vast topic of TOC. More parts on the same topic should come soon.

SG - What is SG? I am sure this is an obvious first question in every reader's mind. SG's expanded form is Services Guarantee.

Traditionally, getting the price reduction from suppliers was the only objective of the procurement organizations. Hence measuring Procurement Value was only based on material cost reduction. The most basic method is to use the difference between the current price and last year's price and multiply it with quantity received. Simple as it may sound, things get complicated in case of non-repeated buy items or items which are not comparable to items bought last year.

RM - What is RM? I am sure this is an obvious first question in every reader's mind. RM's expanded form is RETURNS MANAGEMENT/REVERSE LOGISTICS. In other simple words, it is about goods and services that are not accepted by buyer post in-warding them into stores/acknowledging work done by services providers. The reasons for this could be multiple. For example, a material/service gets rejected by buyer and returned to supplier for replacement or repair or rework. As per contract, the product might be returned to supplier at the end of life or end of use. Such scenarios occur in each and every industry. Familiar & common commodities that are prone for returns are -- and I'm sure that every reader here would relate to these -- containers, pallets, packaging materials, used clothes, outdated spares, above shelf life items/equipment and vehicles etc. But is this area really uncommon and can it provide breakthrough purchasing savings? Let me investigate that for you. Keep in mind that we are discussing returns management in B2B context and not B2C.

Let's start with a couple of benchmarks and high points that I have collated for you. Sabri and Gupta report in their famous book Purchase Order Management that on an average, 20% of all goods procured are returned for any firm! Obviously in-warding and resending and re-inwarding cycles can have inventory levels inflate/deflate. This is ditto for the firm's profits and demand management sides. Imagine the complexity of a returns management procurement cycle if the suppliers to manage are also international (any one from Automotive firms reading this?)! IPQC reported in 2008 that associated costs of returns can run as much as 10-20% of operational costs of a supply function and that even 1% savings in that could be a huge $ benefit/profit - straight to the bottom line.

So what are the action items/solutions? First of all conduct a root cause analysis to determine the patterns and underlying causal factors due to which returns are created. Then, plan for corrective actions on all fronts - make the processes at supplier's end and the inbound packaging, transportation predictable to six sigma levels. At a category strategy and spend data management level, ensure that each commodity (material or service) in item or service master table is tagged as returnable or non-returnable. The process and technology with procurement should also have traceability and connectivity with AP systems to link PO and Invoice with return and its reason so that debit memo creation can be simultaneous. Items being returned for replacements should also be factored into the procurement and AP applications. Gupta and Sabri recommend that firms should automate processing of the returns upon receipt (including inspection and disposition), speed up the process to reduce risk of obsolescence, and track reverse logistics and net asset recovery to improve effectiveness. If services received are rejected or found to be deficient, the returns management becomes virtual process but should remain same for treatment like products/materials as explained just before. The reconciliation of service return/complaint can be accounted for as a simple apology or monetary compensation - as the contract specifies.

What can you do to have a robust returns management solution? Invite an expert firm to design BIC returns management process, integrated with procurement applications, ERPs and other applications. Choose the firm who can not only recommend (consult) but implement the proposed solution for you and demonstrate benefit. Include them also in returns management spend management plan of yours - for recoveries, repair or replacements!

Found this post useful and refreshing? Want me to write the rest of the 2 posts at least? Then send me your views on this one please. The series has gone well so far in response. Thank you all.

The industry today is plagued with the assembly line approach. Once the HR head of a company remarked that, "95% of the time, things are fine and predictable. It is how well you manage the other 5% that sets you apart from the ordinary".

Most employee helpdesk models (that I have seen) are designed to just address the 95% of the most common queries and end up providing no added value. The real challenge is how well helpdesks manage the other 5%. And, in general, helpdesk models are weak in doing this.

Employee queries often arise during the first few weeks of joining or when they get transferred to a new location or when they move to a new role. Proactively addressing some of the potential issues that a new joinee may have can go a long way in improving employee engagement. Better still, is the idea of assigning a "Helpdesk buddy" for a new joinee that s/he can call for help during the initial days.

The other model is to find out the most annoying moments during the first 90 days of a new job and create simple text messages that can be delivered to the employee's mobile phone. I am sure I would have loved to get them during my initial days.

Another idea is to categorize helpdesk support based on the roles people play in an organization. Many helpdesks designers tend to follow "one-size-fits-all" idiom and lose out on customizing. As a salesman, I would be more worried about the calculation of commission or travel; while as a factory worker, it could be on overtime or safety. A helpdesk that just talks about 'generic' HR policy queries may not find a lot of 'likes'.

In the BG days (Before Google) days, remember the frustration of using the help feature that used to come with software? You needed to remember the exact terms and even the capitalizations words to get to the right kind of information. Today, in the AG (After Google) days, queries are universally accessible through a variety of blogs and social websites which are user-generated. You can now practically get answers to almost any question - a quality that the helpdesk should be heading to. Imagine how helpful that would be.

The online community model -- where users take ownership of the community -- should work its way into the enterprise HR model. Answers to employee queries should be fresh and updated, generated by those working in the company. This will increase employee engagement as well as shift the onus of responsibility solely from the HR leaders to the users themselves - the employees.

To gain a better understanding of the role of BPO in HR, access Maheedharan Thiagarajan's Point of View to 'Transform to the Human Resources Face of Tomorrow'.

Hi there. I plan to share some very interesting avenues through an exciting series of at least 5 blog posts (Depending upon the response, I can consider sharing more). In each of the posts, I will share a few of the highly impactful savings levers that generate very high level of annualized savings across many industry verticals but are still not used widely just because these are hardly covered in the common Sourcing & procurement literature or practices. Hope you will find these useful, apply them somewhere and come out with flying colors. Wish you good luck and enjoy the read.

GSP -

What is GSP? I am sure this is the first question that would come to every reader's mind. GSP's expanded form is Generalized System of Preference. It is a system under which EU countries comprising of France, Germany, Belgium, Luxembourg, Netherlands, Italy, UK, Ireland, Denmark and Greece have adopted (driven by GATT and then WTO). Under GSP, manufacturers and semi-manufacturers from developing countries (including India and China) will be entitled to a concessional rate of import duty in these EU countries. Why? Due to something termed in global trade as "Preferential treatment to select WTO members". Such treatments/concessions are the outcome of usual inter-governmental negotiations that take place at WTO meetings (ministerial levels) for e.g. the Doha round.

Not so positive views could be "they are slow, they are impediments, signifying "thou shall not buy" attitude always; they just don't understand what value suppliers can add or what is the importance of what is being bought but seem to be always beating down the prices" etc. Positive and encouraging views could be something like "they are knowledgeable folks always helpful to collaborate for our needs while also making sure that firm gets value on what it spends; they have helped me specify what I need better; they have helped save significant costs when we needed the cash the most, etc.". And then, there could be mixed views like "sometimes they delight me but sometimes they perform in a very disappointing way for a critical project; why do they vary so much?"

Allow me to oversimplify such observations and metrics for a simple, intuitive analysis by rating combined experiences on a "4 point Purchasing Fitness Scale - Run seamlessly (1), Jog comfortably (2), Walk briskly (3) or Walk slowly (4)". If the predominant rating score is 4 (suggest taking the mode and not the average or median here), purchasing department's impression can be termed as equivalent to a BMI 35+ or sick or non-agile human being. On the other extreme, a rating score of 1 will give an image of a person able to run fast and for long distances effortlessly (like Usain Bolt or Belgian Stefan Engels who ran 365 marathons in one year). Imagining the other two rating scores and corresponding fitness conditions should be a mere formality now for the reader of this post.

So what are the mantras to enhance and maintain the fitness of Purchasing departments to be able to run processes equivalent to 1 marathon per day? A simple analogy from life again should help here, which I will describe now (a number of you would have experienced this too I am sure). A sedentary person decides to get active and takes the 1st step. He/she goes for a medical checkup, takes findings from doctor(s), physiotherapists and dieticians to evolve a scientific, practical, diet-fitness-relaxation regime. Firms can do something similar by engaging a specialized procurement consulting, BPO and technology partner firm (specialist doctors, physiotherapists and dietician all available in one hospital). The 2nd step the person takes is to seriously invest time, interest and resources to implement the regime - irrespective of whether he/she has to travel, go to the gym or work out at home, maintain perseverance and discipline whether it rains or partying becomes too much etc. Firms can do the same themselves or take the help again of a partner firm. Invest and implement into best practices based processes, technology solutions, people, information/intelligence etc. Outsource whatever makes you slow / loath and keep in-house whatever makes you faster and better instead. Set targets, measure constantly and report frequently.

So what happens next? Simple and intuitive again. Results start showing up. A person who was barely able to walk, is able to jog and run comfortably over a period of time as a result of following the 1st and 2nd step. Such transformations can be astonishing and are yet very real (I am sure that many of you would have experienced/seen such seminal folks around you). Once again, firms experience the same. The perception of Purchasing department changes along with its overall performance. It starts to be viewed as an agile, fit and ever-energetic department that is always rated 1, as it runs seamlessly to meet the firm's long and short term objectives adding tremendous value.

So get active! Take the 1st and 2nd steps to make your Purchasing department run seamlessly. Good luck to all the readers!

As Purchasing professionals we often come across situations where a user has completed his technical evaluation, has performed product demos, has selected the supplier, has had multiple discussions with him, has "negotiated" delivery timelines and has communicated to him that he stands selected. "However, our Purchase guy will negotiate commercials with you", the user has communicated to the supplier. What are the chances that the supplier would offer fair market price to the Buyer, let alone best commercial terms! None.

Users often misunderstand the concept of commercial negotiation. They believe that it is an act performed in one hour, across the table, where the Purchasing Buyer will use his negotiation "tactics" to reduce the prices. However, this is as far from truth as can be. The negotiation meeting is just a culmination of immense ground work and preparation. Commercial Negotiation is all about analysis and research to arrive at a fair price point and then the "act" of negotiation is just an exercise to make the two minds meet. Preparation for negotiation would involve using one or more levers to make a price assessment. This could involve having a commercial comparative in place, a detailed costing exercise, market index evaluation, historical price movements, previous price references etc. clubbed with market analysis, supplier analysis, geo-political situation assessment and other such tools which enable a scientific approach to the process, based on facts and figures. So, while the final act of negotiation may be regarded as an art by some, but the entire preparation that goes behind that art, is all science.

While many organizations mandate that all buying should happen through Procurement, sometimes it ends up becoming a stamping exercise, where the Buyer spends the final 30 minutes with the pre-selected supplier in negotiations and walks away with some discount. Everybody seems happy. But the fact is that the mandate is followed in just words and not spirit, and the organization loses a lot in the bargain. For the Purchasing Buyer too, there is no learning and no satisfaction of adding much of value to the process. For the negotiation process to be effective, involvement of Purchase should be early on in any sourcing exercise and all communications to suppliers, whether technical or commercial, should ideally be routed only through Purchase. Purchase should consciously distance itself from any deals where it was involved at the last minute, more as a stamping body and just to complete the process of "involving" Purchase. Purchase will never get any credit for all such contracts; whereas if anything goes wrong, it stands to be questioned not only by internal stakeholders but also by auditors.

So, while the art of negotiation may be important across the table, it's the entire strategy and science that makes the art effective; without which, the negotiation is nothing but bargaining aimlessly.

Please share your views on the above. I would be eager to know what you feel and what's the experience / beliefs in general.

You will, most probably ask one more question now - "What do you think should be done to get this cadence back?" A plethora of answers will come and most likely in these categories : "Framework and approaches for this category-commodities need to be introduced; Right category managers need to be recruited or capacities augmented; It should be specified clearly that who owns PS spend and supplier management - the stakeholders or purchasing etc."

I am sure that "you" here means someone who is reading this post, could be from a firm that is facing lack of cadence in PS or a procurement consultant and service provider who may have helped a number of firms to provide a solution here. Whosoever you are, you need to know some broad guidelines and that is what I am happy to share through this post.

Unlike standard materials (Direct, Std. MRO, Capital) and usual services (courier, logistics etc.), the degree of complexity of specifications, suppliers buying power and close access to stakeholders are two causal factors that limit the influence/value addition PS category managers can bring in here. When they still want to influence this category under such circumstances, "noise" in the system is created due to resistance from stakeholders-suppliers combine in many forms e.g. "procurement doesn't understand my universe but supplier does so they should leave it to us to directly manage this spend; procurement is good enough to buy standard items/services but not PS; procurement always wants to get lowest prices which is not the case here and value addition is the focus". So one of the best practices could be to clearly identify and list those PS commodities that are best left to stakeholders given their complexity, and if procurement does not have functional experts who have experience similar to comparable stakeholder(s) - within the department (including extended procurement organization of outsourcing partner). The residual PS commodities can be taken as the ones which procurement should influence and with consent of stakeholders.

This simple yet effective approach can bring in the missing cadence and ensure an organization accepted approach to bring PS spend under management to realistic levels. The key here is to identify such have and have-not list of PS commodities for which a one-time project with a capable procurement consultant cum outsourcing firm can be executed.

So what do you think? Look forward to get responses and continue the discussion threads.