Reporting from The Mpower Group’s Next Practices Xchange . . . . . From Cost to Value

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Last week Sourcing and Supply Chain executives from a group of Fortune 500 companies from around the world gathered for The Mpower Group’s Next Practices Xchange (“NPX”) to share ideas and challenge one another on the move “From Cost to Value” within their organizations.   This has been one of the hottest topics in our discipline which made this meeting so timely.   The day long forum combined thought provoking speakers with workshops and good old fashioned peer networking.   Many great ideas were exchanged and challenges were raised.  We will be sharing some of those ideas with you over the coming weeks.

We were fortunate to have Lamar Chesney, EVP & CPO from Sun Trust Banks, start the day with his provocative presentation Perspectives on Value – What is Said and What is Read.    Lamar’s style is to take the position of provocateur which always provides an interesting dialogue.  Lamar’s central theme was that Supply Chain professionals and their customers (internal business partners) talk past each other and not TO each other.   He began by defining Value as having several characteristics:

  • must be understood as to the benefits
  • must be cherished by the recipient
  • must be worth the “investment” to obtain
  • must be appreciated from a relative perspective
  • must transcend the moment and attain lasting worth
  • must possess some degree of specialness
  • must be missed when absent

Both parties define VALUE very differently which results in both parties consistently walking away unsatisfied.  Since Supply Chain professionals have historically been measured on cost savings,  that is how they define VALUE.  Since most people would not argue about saving money then obviously both parties are talking the same language?  Right?  Wrong!  Michael Lamereaux from Sourcing Innovation, an NPX attendee,  summed it up in his blog post, Are you Really Focused on Value? (Key NPX Take Away 1) where he articulated the differences in both parties’ view of Value.

There are two issues associated with talking past each other.  First, are we talking to the right “customer” within our organization (are we going beyond our most obvious stakeholder)?  Second, are we ASKING AND LISTENING FOR what they “Value” in the context of their business drivers?   As Supply Chain professionals we tend to think that we know what our “customer”  VALUES without even asking, because, of course, everyone values money.  As a result, VALUE from our customer’s perspective is not incorporated into our thinking OR process, leaving everyone dissatisfied.

Lamar had these suggestions for aligning Supply Chain’s perspective with their “customers” on VALUE:

  • To Create Value, You MUST FIRST BE VALUED
  • Understanding One’s View of Value Does Not Constitute Embracing Such View ( especially at the expense of the another’s perspective)
  • Another’s Perspective of Value that is MORE Cherished; Worthy of the Required Investment; Appreciated from a Relative Standpoint; Perceived to be Lasting in DurationViewed as Unique and Believed to be Missed if Absent Always Represent Essential Value Elements to That Party
  • Genuinely Exploring Another’s Essentials of Value Conveys a more Balanced, Open & Communicative Alignment Approach
  • Effective Communication is About Interchange and Not Exchange
  • Rational Business Partners With Shared Goals Usually Achieve Common Ground (especially after effective communications on their respective perspectives)

Lamar’s perspective was actively discussed and unanimously supported.  In addition, The Mpower Group recently partnered with IACCM to survey their membership on “Are We Leaving Value in the Supply Chain?”

The results support what Lamar and others we saying and experiencing in their own organizations.

Stay tuned for more on the move “From Cost to Value” as we continue to share more from the Next Practices Xchange forum.  Please give us your perspective on this very important issue.  Please join the conversation . . . . . . . .

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Anne Kohler
Anne has been leading consulting and financial management organizations for over 25 years. She has extensive expertise in Strategic Sourcing, change management, contracting & contract management (both the buy side and sell side) organizational design and supply chain management. Anne has a passion for collaborating and educating her clients while helping them to uncover hidden value in their organizations. In addition, Anne has been named by Supply & Demand Chain Executive as a “Top 100 Provider Pro to Know” every year since 2007 and a 2013 Top Female Supply Chain executive.
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