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Learn Procurement Transformation Lessons from a Master: Eric Germa, Ep #88

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In this episode of Negotiations Ninja, I’m chatting with Eric Germa—one of the most interesting and driven procurement professionals I’ve ever spoken to. Eric is the SVP of Strategic Procurement at Macy’s. This conversation is all about procurement transformation. Transformation is an expansive topic, covering everything from change management, upskilling your team, and becoming the leader that takes your procurement department to the next level. Eric’s experience leading transformation speaks for itself.

In the world of procurement transformation, why should procurement professionals think like consultants? How do they continuously create value? How do they drive innovation? Why is engaging stakeholders and driving change by finding new digital disruptions so important? This is a fascinating and comprehensive look at how we can all develop procurement and supply chain programs in a big way by leveraging innovation, design thinking, and a little bit of disruption. Enjoy a fascinating conversation with one of the great procurement professionals.

Outline of This Episode

  • [0:35] Eric Germa on the process of transformation
  • [2:22] Eric’s background and transition into procurement
  • [6:25] The three phases of procurement transformation
  • [11:23] Taking a more consultative approach
  • [15:37] Gain insight about the process from consultants
  • [22:09] Communication required from a leadership perspective
  • [23:30] Three things to consider during the process
  • [27:50] Embrace a continuous improvement mindset
  • [31:06] How you can improve your procurement department
  • [35:36] How to connect with Eric Germa

Three phases of procurement transformation

Eric often looks at procurement transformation as a journey with three different phases:

Phase #1: You have to gain credibility very quickly, establish with the executive team what needs to be done, and then deliver results. In the first 90 days you have to define the purpose of the procurement team: Why do they exist? What is their mission? What does success look like? Then you map the journey from where you are to where you aspire to be. You have to create early wins while managing a product pipeline while simultaneously assessing the talent and bringing in the right talent to fill gaps. It’s an extensive process. Eric says it can often take a year to go through phase one.

Phase #2: The second phase is all about performance. You need to prove you’re transforming into a sustainable organization that can create value. You have to implement foundational technology around technology, spend analytics, sourcing, pipeline management, and contract management. During this phase, you must also develop and coach the talent you have on the team so they can operate in the new operating model that you’re striving for.

Phase #3: The third phase is making sure that what you’re doing is sustainable. Focus on the stakeholder engagement, the correct partnerships with strategic vendors, and on growth and innovation. You train to drive productivity and efficiency through technology. You talk about digital transformation and the next steps in the journey. To hear all of these phases in complete detail, be sure to listen.

Procurement must focus on being consultative

How can we change our own mindsets during the procurement transformation process to become the more consultative procurement department? Eric points out that we are our own worst enemy. Most procurement people succeed by being good negotiators, being very process-driven, and very analytical. But that’s not how you find success with business partners. The key to becoming a strategic advisor is to get involved early, bring insight to the table, and articulate how we can create value. Eric emphasizes that “We need to figure out how to reinvent ourselves and how to create new value.”

If Eric took his entire procurement team and laid out the value each of them needed to create this year, each person had to hit $14,000 of value—a day. We need to think like consultants and keep figuring out how to drive innovation and create value. Eric points out that we don’t have the luxury of being able to establish a long-term strategy. We need to be agile. We need to move quickly—while creating value. It’s important to understand how consultants do their business and provide value.

If you’ve been in procurement your entire career, speak to a consultant about how they deliver value and insight to clients. You have to come in and be able to provide insights and value on a constant basis with each interaction. You have to be a great problem-solver. You need to be able to listen, assess, and get an understanding of pain points. You are trying to provide new approaches and new intellectual capital. You look at competitors. Part of their role is challenging the status quo and coming up with innovative ways to approach and solve a problem

Three things to consider during the procurement transformation process

There’s always going to be things that will go wrong, always be things you have to attend to. But three things are really important during the procurement transformation process:

  1. Firstly, do you have the right talent on your team? Do you have the right skill in the right role to address the right challenges? Do you need to keep investing time in training, coaching, and feedback?
  2. Secondly, you have to spend time analyzing stakeholder engagement. You have to understand who the decision-makers are and map out how you talk to them. How do you have one voice as a procurement team and send out consistent messaging to stakeholders?
  3. Lastly, you must always be future-focused. You have to keep building a pipeline into the future. You need to sell your stakeholders on what you’ll be doing in 6 months. How do we build a business case around initiatives? The way we create value is infinite.

Embrace a continuous improvement mindset

During the procurement transformation—and through your entire career—procurement professionals can’t get comfortable. We need to be constantly evolving, constantly investing in our teams, constantly training, constantly getting better because that’s the only way. Too many procurement professionals achieve a certain level of change and get comfortable. But your work is never done. It’s a journey and the business vision changes over time.

So invest in a course, read a book, go to a conference, network, and learn from the best of the best—and keep pushing forward. There’s always more to learn, improve, tweak, and adjust. You’re never done learning—so don’t stop. We are all change drivers. It has to be at every level, not just leadership. Make your teams better and drive higher performance. Engage with stakeholders and suppliers—and listen to them. They’re there to help you solve problems.

Every team faces challenges—and there will always be too much work to do. The only way we can focus on what matters is by ruthlessly prioritizing. Automate, outsource, and simplify wherever you can and focus on higher-value activities. What else does Eric have to say about the procurement transformation process? Listen to find out!

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