Services Procurement

How to Build Heart Equity and Become the Business MVP

I had lunch with colleague who retired from P&G about 18 months ago. I was interviewing him for my book and planned to focus on his leadership in the early days of P&G’s relationship with HP.

Back in 2003, P&G outsourced IT, HR and Facility Services to HP, IBM and JLL. My friend took the helm of IT Purchases during the honeymoon phase of the relationship. But as anyone who has survived the first year of a committed partnership knows, the honeymoon only lasts at most 2 weeks; after that brief time in paradise, you are back to the reality of daily life.

And, the first year is pretty rocky!

Since our IT strategy has changed dramatically in the past 2 years, I was looking forward to going back to the beginning and understanding the business landscape and choices that caused P&G and HP to make what was then, the largest outsourcing deal, ever.

But, our conversation took a turn I didn’t expect. It revealed more to me than the secrets behind P&G’s IT outsourcing to HP.

Those secrets make a really interesting story and I’ll save that for another time!

In this post, I want to share with you some tips and techniques to be indespensible to your business team. To be a problem solving MVP.

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I stumbled down the path of serendipity when I asked this wise man to tell me about his most memorable role or experience crafting successful business deals or supplier relationships at P&G.

I expected him to talk about how he established a foundation of partnership with HP. Or, even about the Global Asset Recovery Program (GARP) he created to deliver P&G’s sustainability goals.

Instead, Scott Burns told me about a time he sourced P&G’s non-wovens – the materials used in baby care and feminine care products.

There is this stereotype about European buyers. That they are hard core and aggressive negotiators who play ‘winner take all’. After working in Germany for a couple years, Scott had a different view. He saw aggressive buyers who knew knew their business and market as well as how to take care of their suppliers.

Scott calls it “Building Heart Equity”. 

Scott told me about a particular German supplier coming to P&G with a problem – their lines were not running at capacity due to softness in the market, partly caused by softness in P&G’s volume at the time.

Scott and his supply chain colleagues knew that this supplier had supported P&G for many years; they had acted as a partner and built capability and capacity to grow alongside P&G. So P&G got to work finding opportunities to consolidate some volume from other smaller vendors to help shore up this supplier partner until the business rebounded. The supplier kept the doors open and P&G even saved a little money in the process. It was a win for both companies.

When Scott came back to the US, he saved the NA Diaper business about 30% on their non-woven material costs. And he did it by applying what he learned in Europe – know all you can about the market and build heart equity with your supply base – establish solid relationships but accept nothing less than the best.

And, as Scott told me this story in a noisy restaurant, I realized something.

While I focus on crafting deals and establishing strong relationships with Services Partners, Scott had approached his work in Direct Purchases using the same strategies and tactics. No doubt, he is as successful as he is because he practices these lessons with consistency, they work no matter the application.

When I moved from Direct to Indirect/Services procurement back in 2005, the difference was instantly apparent to me. I was no longer on the edge of every new Beauty Care product P&G was putting on the shelves.

And, while I really missed that, I realized that my new focus was no longer P&G consumers but rather P&G employees. I was helping my colleagues find the Service Partners they needed to solve business problems.

And, this is the essence of Services Procurement – solving challenging problems by finding new ways to do business with innovative and progressive Service Partners.

Scott and I are pretty fortunate to work for P&G, where Procurement is not an afterthought. General Managers and Vice Presidents know a good buyer can help them GROW their business as well as save them a buck when the budget needs a haircut to support a soft volume quarter. A buyer who doesn’t wait to be asked but acts like an owner, someone who takes on problems and finds ways to solve them.

I know not everyone works for a company that views Procurement as strategic. So, here are some tips on how we make ourselves indispensable at P&G that you can try:

  1. Realize your responsibility as a leader: don’t just focus on savings but feel accountable for all aspects of total shareholder return – increase profit and sales while maximizing asset efficiency. Leverage the full capabilities of your suppliers to bring bigger value to your business.
  2. Understanding key unmet needs of your business or region and engage your suppliers to help you innovate to realize these opportunities. A good partner will surprise you in ways you never expected.
  3. Jump in and help resolve supply problems, even if the crisis is not caused by your supplier. Anything that gets in the way of your products getting to market is your problem too. Who do you know, what do you know that can help?
  4. Be a part of the business today and tomorrow. Check sufficiency of supply, value, innovation and internal capacity. Forecast what is needed and offer creative solutions. Redirect attention or resourcing to an area of greatest significance or importance to your business.
  5. Communicate – within, outside and across your business. Make sure the priorities, the progress and the needs of your business are clear to everyone who should know, needs to know or could benefit from knowing.

And, while you are at it, make sure others know what you are doing. Talking about what you do is really important – just don’t make yourself out to be the hero, that’s the job of the GM and others on the team when they realize they can’t live without you.

Here is a bonus – Scott Burns’ top 3 ways to be a successful Deal Maker and Relationship Builder:

  1. Know your stuff! Do your homework, study the industry – both the history and the current market dynamics. Don’t walk into a meeting until you understand the foundation.
  2. Make sure the deal has something in it for everyone. Give your business partner something to take home and talk about. It might be a small win – but an 85/15 split is still a good win, 100/0 is not sustainable.
  3. Know how to market your results and your contribution to the business. If the business does not understand what you are doing or the value of your contribution they won’t need you anymore.

Check back soon to learn about the secrets behind P&G’s IT outsourcing to HP.

Now go out there and be indespensible. I’m rooting for you!

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Have a story or tip from an MVP you know?

Please share it below.

 

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