Education: The Key to Continuity and Cohesion in Sourcing and Procurement
By Bill McBeath
on Aug 17, 2010
P&G's sourcing and procurement training program is a great example for other companies. It builds a common foundation and continuity across a very large, very global organization.
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As we discussed in Part One of this article, a solid education program is a key strategy to sustain supplier relationships and maintain human expertise through periods of organizational flux. Here we explore how one world class organization does it.
P&G’S APPROACH—GLOBAL TRAINING
P&G’s training is standard across the world, but tailored according to the culture and commodity. They maintain a database of skills that employees can qualify in by learning and using the skills. P&G focuses training around a number of competencies and practices.
Some examples include:
Sourcing Strategies (for various circumstances, materials, and goods)
The courses are designed by people across the enterprise, not just the corporate group. For a particular subject, developing hedging strategies (for example), there might be five people around the world—say, from Belgium, China, Brazil, Canada, and Israel—who have shown an interest and have the expertise. They get together to develop the training on essential knowledge and practice. Training is thus created, coordinated, and conducted by a core group of people who have volunteered across the business units, scattered around the world near buying centers. This helps to ensure that a variety of needs and perspectives are included.
COMPETITIVE BIDDING TRAINING
Training on running competitive bidding events further illustrates the idea of giving choices rather than rules to sourcing people. At the high level, there are three approaches:
Traditional Bids—RFI or RFP
Expressive Bidding—a less prescriptive approach, allowing the supplier to give several alternative buying options for evaluation.
It is not always only about pitting suppliers against each other to beat down price, although there is a time and place for that. In addition to what type of auction will be used, there are other decisions that must be made, such as how to conduct the bidding and negotiations. For example, will they collect bids and then negotiate, or just award the winning bid without negotiation.
The curriculum also covers key principles, such as clearly communicating to all suppliers all of the ground rules for a bidding event, and not arbitrarily changing the rules mid-stream. If it is necessary to change the rules, they should be changed the same way for everyone, and this often requires starting the bidding process over again.
A FOUNDATION FOR GLOBAL SUCCESS
These kinds of classes generate a flow of technique and mastery of skills from experienced sourcing and procurement personnel across the company. This helps to keep valuable knowledge within the organization and provides a common foundation worldwide. In the early 1990s, the buying techniques and philosophies were different across the various geographies and business units of P&G. Requiring a level of training for all new hires or transfers into purchasing has created a base of people who speak the same language and have a common set of proficiencies. This has been one of the keys to P&G’s ability to achieve broad global success, and has helped to enable their 'local focus and global scale.' Keep in mind that they’ve been at it for over 15 years. This type of training program and the results gained from it are not something that can be accomplished in a year or two.
A long term investment is required for an education program that is designed and developed by the sourcing professionals on the ground, and that encapsulates the flexibility needed for the wide range of situations confronting a global organization. This investment has a manifold payoff, creating a more effective and resilient sourcing and procurement capability.