20 Questions for Senior Purchasing Managers

1. 1 20 Questions for Senior Purchasing Managers www.neilfuller.com

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3. 3 20 Questions for Purchasing Managers Do you know exactly how much your organisation is spending externally each year? Do you know how much is spent on each category of spend and with which supplier? (a category is a range of purchases � e.g.. energy, raw materials. IT)

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5. 5 Supplier Perception Matrix

6. 6 20 Questions for Purchasing Managers Do you know the total cost of the purchases you make, rather than just their price? i.e. the total acquisition cost (TAC) and the life cycle cost of capital purchases? Do you know how much value your suppliers provide and create for your organisation�s success and reputation?

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10. 10 20 Questions for Purchasing Managers Do you know who your key suppliers are? Do you have pro-active, close relationships with your key suppliers? Do you understand the risks inherent in the purchases you make and are you managing risk effectively?

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12. 12 20 Questions for Purchasing Managers Do you know what you should outsource and what you should not outsource? Are you outsourcing services successfully? Are you managing suppliers of outsourced services successfully? Do you know what your purchasing strategies are and are they aligned to your business strategies? 

13. 13 The Matrix

14. 14 The implication of make or buy for supply management expertise

15. 15 Maintaining Performance Adequate Terms and Conditions are essential The management of the contract requires: Key Performance Indicators (KPI�s) Service Level Agreement (SLA�s) Liquidated Damages for poor performance Termination (Escape) clauses Clear communicated specifications Feedback and review on a regular basis A key issue has been the placing of contracts by non procurement specialists (HRM, Catering)

16. 16 20 Questions for Purchasing Managers Do you have appropriately skilled people developing and managing your purchasing strategies? CIPS CPD What proportion of your external spend is managed by your purchasing professionals? If the answer to the last question is not 100 per cent, why not? What are you doing about it?

17. 17 20 Questions for Purchasing Managers How do you support your purchasing people to ensure they achieve appropriate business benefits? Do you direct your purchasing people to limit their focus to reducing prices by x per cent each year or do you direct them to achieve cost-effective, risk-controlled added value?

18. 18 20 Questions for Purchasing Managers Do you maximise the use of IT and ensure that you receive the maximum benefits from its application? Reduce transactions costs Integrate databases Stimulate competition in market (e-auctions) Reduce the burden of low-value work Low value ordering systems

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20. 20 20 Questions for Purchasing Managers Do you plan effectively for major negotiations? Do you assess the outcome of your negotiations? How effective have you been? Do you try to improve your own skills and techniques? Do you ensure that all your people receive adequate training in negotiation skills? Do you encourage team negotiation where appropriate?

21. 21 Negotiation Always prepare and remember your BATNA It makes you stronger Always prepare you MIL�s Must Intend Like Prepare the team

22. 22 The best negotiators Seeking information Spend 20% of the time asking questions Average negotiators spend 10% Gives control An alternative to disagreement Reduces the other parties thinking time Testing understanding and summarising Ensures clarity They spend twice as long as average negotiators Consequently the implementation is more successful

23. 23 The best negotiators Behaviour labelling E.g., �I am going to ask you a question on your quality� Applies social pressure and slows things down The best negotiators are five time more likely to do this

24. 24 Things the best negotiators avoid Irritatators Five times less likely to use them This is a very fair offer To be perfectly honest/quite frank You wont get a better deal anywhere else Defend attack spirals Argument dilution Inappropriate questions

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27. 27 Successful negotiators �personality traits Strong ego and self confidence Intelligent and seek information Conceptualise Set targets which they relentlessly pursue Try to understand others and build relationships Are high on trust and integrity

28. 28 The right questions Good negotiators use the right sort of questions What criterion are you using? What are your priorities? How did you calculate those numbers? How do you feel about these issues? Can you explain that to me?

29. 29 The wrong questions Good negotiators avoid the wrong sort of questions Are you listening Do you think I am stupid Is that your final offer Is that the best price you can do?

30. 30 Tough negotiators Not intimidated Stick to their goals Trade few, small concessions Concessions tend to become smaller Don�t fear deadlock

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