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Q&A: CPO Insight w/ W. Lamar Chesney (pt 2)

Below is part 2 of our Q&A session with W. Lamar Chesney (click here for part 1).

As a reminder of Lamar’s background and experience…

Lamar Chesney is a respected leader in procurement and business transformations. He is a seasoned financial, supply chain, strategy and operations professional with over four decades of diversified business experience as a senior executive in the consumer products, financial services, manufacturing, audit services, educational, healthcare, transportation, pofessional services and energy industries. His expertise encompasses numerous functional and diverse business leadership aspects, including (i) strategic sourcing and procurement; (ii) supplier relationship management; (iii) supply chain organizational design and change management; (iv) strategic and operations planning; (v) mergers, acquisitions and corporate restructurings; and (vi) governance and regulatory oversight. He has been a senior financial or procurement leader at numerous public and private, small and large, regional and global corporations, including senior executive positions with well-known entities such as Delta Air Lines, Coca-Cola Enterprises, The Coca-Cola Company, Marsh & McLennan Companies and SunTrust Banks.

Doug Markle: Research suggests cross-functional coordination is critical in trying to establish an effective supplier management program.  In this regard, how did you collaborate with your peers as it relates to supplier management?

Lamar Chesney: This is a great question. But before specifically addressing the topic of supplier management, I would like to step back and address the broader aspect of effective collaboration.

My view is that if we want to change and improve the relationships we have, we must first fix ourselves. To support how best to accomplish this, I postulate two hypotheses. First, the effectiveness of communications is judged solely by the recipient. If we do not match our content, structure, pace and concentration of dialogue to that of the recipient’s receptivity and readiness, then we have failed to truly communicate. Marrying the two is vital to establishing a foundation for further interaction. Why is such a foundation important?   Like many other professions, exerting personal influence has become a critical capability in procurement leaders. And one cannot exert influence without such a foundation of trust, reliance and connectivity. I would characterize the art of exerting personal influence as persuading others to support or agree with an idea, issue or position. Some of the ways it is evidenced include: (i) using a logical argument to shift another person’s position or action; (ii) accounting for a person or a group’s unique interests or characteristics when seeking to influence that person or group; (iii) asking open-ended questions that cause others to rethink their position and move toward one’s own; and (iv) using indirect methods (e.g., processes or third parties) to encourage others to think differently. Many confuse the application of this skill with the intent to alter someone’s actions or behavior. In fact, the sole objective of its application should be to alter someone’s thinking and allowing them the freedom to act in the manner and at the pace they are comfortable with to attain a common objective that was derived from this new way of thinking.

My second hypothesis to help all of us improve ourselves (and thereby improve our interaction with others and the environment in which we operate) would be not to confuse communication with collaboration. Especially in this age of social media and connective technology, we often do confuse the two. But we should stop and reflect on the differences between the three distinct, natural levels of exchange: (i) communication; (ii) conversation and (iii) collaboration. To me, communication is merely the process of using words, sounds, signs or behaviors to convey ideas, thoughts or feelings. On the other hand, conversation is an interactive, spontaneous exchange of thoughts, opinions and feelings between two or more people. This is good but it is not to be confused with the highest level of oneness. Successful interaction is only obtained through collaboration, which is a cooperative interaction with others sharing knowledge, learnings and building consensus to achieve shared goals. We must always test ourselves to see where we are on the spectrum of interaction. Otherwise we will kid ourselves that an email sent to a party actually achieved collaborative status, when in fact it didn’t even achieve conversation status.

I spent time discussing these two perspectives to lay the foundation for what I believe is essential in building any successful program requiring intense partnering between parties. Like many other such situations, this is especially important in creating an effective supplier management program. In such, all parties have a specific, interdependent role contributing to its overall success. Whether one is a business colleague, supplier or a procurement professional, each party brings a unique perspective and contribution in the delivery of satisfactory results to the company’s customers. Supplier metrics are important but they are ultimately designed to enrich the experience of the company’s customers. In this respect, I would suggest that a company’s customers are only touched by two sources: the company (and its employees) or a third-party provider on the company’s behalf (its suppliers). In both cases, the company owns the deliverable and resulting satisfaction levels of its customers. Apart from the contractual nature of the relationship, I believe there is little difference between managing an internal employee and managing an external provider. Certainly setting and monitoring performance goals and standards is important in either situation, but so are encouragement, fostering an open and trusting relationship and collaborating (as oppose to merely communicating). These are vital to satisfying a company’s customers in a dynamic, challenging environment. This is in large part why supplier management has and continues to evolve from a performance management platform to one more focused on relationship management. The key to this change is perspective and allowing it to drive expectations and behaviors differently.

All parties are vital to a successful supplier management program: the business, the supplier and procurement. Each brings a unique contribution that cannot be replicated.   As long as that is valued … as long as each contributes to its collective success … as long as each party maintains alignment on where “they” are in satisfying expectations, the supplier management program will be successful. This alignment can only be achieved by mutual respect, clarity of context (obtained by garnering all perspectives), maintaining a collective eye on desired outcomes, unambiguous accountability and (yes) true collaboration.

Doug Markle: If you had to pinpoint one area in supplier management that can benefit most by an investment in technology, what would that be and why?

Lamar Chesney: I will go out on the limb here and suggest that the greatest transformational benefit technology can provide to enhancing the supplier management space is in the area of predictive modeling.   From my perspective, predictive modeling is the process by which a model is created to best predict the probability of an outcome. I came up the finance and accounting ranks so my view is skewed by the traditional reliance on reports and analytics. But I have come to believe that while still important; looking at historical data and results is akin to looking at an autopsy report. Not much can be done at that stage other to impart learnings for future use.

I have often said that the most significant value procurement brings to the business is knowledge. Whether it is knowledge of the supply base marketplace and its impact of the company’s competitiveness, knowledge of the interrelationships of the company’s various projects on supply and delivery, or knowledge of the certainty of delivery by the company’s outside providers against established expectations, all are grounded in providing greater clarity and certainty to the future.

We value leaders who demonstrate vision and seemingly can “see” around corners. We are drawn to leaders who move organizations to avoid inhibitors to success while seizing contributors to success. These traits are valued in supplier management programs as well. Seeing patterns and trends from supply management performance and converting such into meaningful anticipatory inhibitors and contributors is invaluable. Systemic awareness and predictive capabilities are essential to achieving this state.

We can never move away from SLA management, metric management and performance management. But in a time of Big Data and increased technology capabilities, it is time to move to enhancing the knowledge that procurement brings by interjecting predictive modeling into our toolbox.