Friday, October 31, 2014

Risk Mitigation In Any Industry

The Next Level Purchasing Association welcomes this guest post from Heather Grossmuller from Source One Management Services.



When it comes to third-party vendors, there is no one-stop solution to mitigating risks. However, there are some key elements that could play a vital role in managing risks more effectively. Take for example Target and Lowes. Both are reeling from data breaches due to a lack of third party security protocols. These breaches did immeasurable damage, yet could have avoided by integrating two very import risk mitigating tactics -- a comprehensive Service-Level Agreement (SLA) and SRM (supplier relationship management) Program. 

According to TechTarget.com, SLAs are negotiable instruments that reflect the company’s appetite or tolerance for risk; its size and complexity, geographic distribution, type of information managed, as well as the ability to effectively monitor the third-party management program. In the case of Sony’s PlayStation Network producing one of the worst data breaches of the 21st century in April 2011, a thorough SLA could have included a third-party data breach violation penalty which could have offset the millions lost while the site was down for a month. In order to most completely address risk in an SLA, the following should be considered: security and privacy of information, safety and risk analysis, compliance obligation scope, enforcement structure, internal audit accessibility and disclosure requirements, and corrupt practices management.

Since trust in suppliers alone cannot prevent scandal or potential risk, an in-depth SLA is a critical component to risk mitigation along with an all-encompassing supplier relationship management program. Through monitoring a supplier’s operations, a company has the potential to be confronted of compliance issues early on, before a widespread scandal can occur. In this sort of relationship, although a supplier may not be a direct component of a company, an organization would be held accountable as though a third-party association was a direct employee in certain industries. To prevent an outside party from causing widespread scandal and damaging brand reputation, it is crucial to have control mechanisms in place. 

Through establishing a common set of procedures for interacting with suppliers, an SRM program opens communications and enhances the way companies work together. With this enhanced visibility into supplier operations, there is less threat of an incident causing lost sales or hardship because the company would institute structure to their roles that would be continually monitored and assumingly accident-proof. 

Whichever the method of risk mitigation, it is essential to prepare for any disturbance to business whether through proper SLA preparation or an in-depth SRM program. The consequences of negligence can be ground-breaking and are—in many industry leaders’ opinions—worth the investment. 


Heather Grossmuller is a Marketing Manager at Source One Management Services, LLC, a Philadelphia Business Journal “People on the Move” Recognition Recipient, an advisory board representative of La Salle University’s Association of Women MBAs, and all-around marketing enthusiast. As Marketing Manager, she oversees Source One’s efforts in internal/external communications ranging from social media management to recruitment.



Sources Referenced:
http://searchsecurity.techtarget.com/feature/Third-party-risk-management-Horror-stories-You-are-not-alone

Monday, October 27, 2014

Supply Chain Social Responsibility Webinar This Wednesday!

Supply chain social responsibility is an area that is evolving and expanding quickly. It is placing new and complex demands on today's procurement professionals who are struggling to keep their supply chain social responsibility programs up-to-speed with the business world.

Unfortunately, some procurement professionals haven't even gotten started with implementing a supply chain social responsibility program. They have little understanding of concepts like conflict minerals, supply chain transparency legislation, and carbon footprint reduction.

The good news is that the NLPA will be presenting a webinar entitled "Introduction to Supply Chain Social Responsibility" to help procurement professionals catch up on several of today's top supply chain social responsibility issues. This webinar will be led by Mr. Dick Locke, former HP procurement executive and author of "Global Supply Management: A Guide to International Purchasing."

This webinar will be held on Wednesday October 29, 2014 at 11:30AM Eastern US time. This webinar is open to all members of the NLPA and a Basic Membership in the NLPA is instant and doesn't cost a cent! Here's how to secure your attendance for the webinar: 


If you're already an NLPA member: Head over to http://www.NextLevelPurchasing.com/login.html, log into the members' area, and navigate to the "Webinars" tab. There you'll find a registration link, be sure to enter a valid email address as attendance details will be sent to you by email.

If you're not yet an NLPA member: Register for your complimentary Basic Membership in the Next Level Purchasing Association at http://www.NextLevelPurchasing.com/procurement-association.php?pcb. After doing so, you'll receive an email with information about how to log in. After logging in, navigate to the "Webinars" tab. There you'll find a registration link, be sure to enter a valid email address as attendance details will be sent to you by email.


Registration may be limited, so sign up soon to ensure access to this event. I hope that you will join me for this exciting webinar!

To Your Career Success,
Charles Dominick, SPSM, SPSM2, SPSM3
President & Chief Procurement Officer - Next Level Purchasing Association
Co-Author - The Procurement Game Plan
Struggling To Have A Rewarding Purchasing Career?
Earn Your SPSM® Certification Online At
www.NextLevelPurchasing.com

Friday, October 17, 2014

What is the Best Procurement Software System?

Recently, the Next Level Purchasing Association has been reviewing some of the available procurement software systems in the market.  This has really been due to the fact that we have read and heard (loudly, I might add!) numerous questions from our students and their executive leaders concerning, “what is the best procurement software system you have ever seen?” 

Face it, in my position that is a rather loaded question!  The beauty of a particular procurement software system is in the eyes of the beholder so to speak.  But much further beyond that clich├ęd statement lays a more important answer, which I will give towards the end of this post.

At the recent 2014 NLPA Conference, one of our speakers, Ron Nawojczyk from Oracle, brought up some interesting statistics about failed software ERP implementations during his presentation “Coaching to Win: How to Get Your Users to Drive Your Procurement System to Victory”. In his presentation, according to Panorama Consulting, 66% of ERP project implementations fail and, according to AMR Research, end-user adoption is the #1 reason for failed implementations.

Now while I was listening to Mr.Nawojczyk presentation, I started thinking about how many failed ERP project implementations I had witnessed in my previous career in IT.  The number caught me quite by surprise; 5 in the past 15 years, which includes 2 failed ERP initiatives at one company!

In the 5 cases I witnessed firsthand, there were other significant issues that contributed to the failures besides end-user adoption, but these other issues eventually circled right back to end-user adoption. 

So what allowed these failures to occur?  From my perspective there were two main issues.

The first issue that stood out was that organizations were ill-prepared to purchase the right system.  In defense of the vendors, they highlighted the features of their systems and those who were involved in the discovery process did not always communicate their specific needs (or were unaware of their specific needs).  In 2 cases, I saw modules purchased and installed that were never going to be used anyway.  So to this statement you ask, “where was procurement”?  My reply is simply, “good question”.  For some reason, in these 2 cases, procurement wasn't invited to the table for discussions and negotiations with these vendors!

When you fail to appropriately address the needs of the front-line user, it is exceptionally hard to get buy-in on an ERP system, procurement system or any other system for that matter.  Change within an organization is difficult enough to implement without apathy immediately creeping in because you are making the users' lives harder, at least through their eyes.

The second issue was an apparent lack of leadership championing the systems.  Whether you call it “sticking your neck out”, “putting your reputation on line”, etc., nobody was willing be a true leader and take responsibility for implementing the system.

Alright, so you've read this far because I promised you at the beginning that I would tell you the best procurement software I have ever seen, right?  So here it goes, it is hands down by far the following:  It is the one that has 100% buy-in and commitment from C-level executive management as well as end-users.

While 100% buy-in may be an unrealistic expectation, executives need to market and sell the procurement system to their team.  They absolutely must share their vision with their organization as to why the system has been selected and as to when they will be expected to start using it with no exceptions. 

Now, while this may sound like a harsh, “our way or the highway” type of attitude, it really isn’t if sold properly. The end-users need to have their say at the table as well, so why not task your front-line users to participate on discovery teams alongside more senior members of the organization?

In the vendor selection process, a cross-functional team can review vendors and weed out systems by vendors that potentially over-promise and under-deliver.  IT can offer their knowledge as to the ability to integrate the new procurement system with current ERP, AP and other legacy computer systems.  The procurement department can perform a total cost of ownership (TCO) analysis and negotiate appropriate Service Level Agreement’s (SLA’s) to mitigate risk.  Dedicated super users can receive extensive training and become the subject matter experts of the procurement system and go-to person(s) for others within the organization who do not use the system on a more frequent basis.


When senior leadership takes the ball and champions the cause, there is far greater likelihood the procurement software implementation project will be a success.  While you may lose some non-adopters along the way, your business will be far better off when a successful plan is drafted, reviewed and implemented with a leadership champion at the helm.

So, in your opinion, what is the best procurement software system you have encountered?



Greg Uhrlen
Marketing Manager
Next Level Purchasing Association
1315 Coraopolis Heights Rd, Suite 1001
Moon Township, PA 15108
Phone: 1-412-262-1334



Thursday, October 16, 2014

The NLPA Partners With SourceOne To Launch Groundbreaking Marketing Procurement Course

In organizations, there are some departments that just refuse to cooperate with Procurement.  Some departments are harder to crack than others.  And Marketing is perhaps the hardest.

Marketing departments are driven by creative thinkers.  People who aren't concerned with cost savings as much as they are concerned about ROI or, even moreso, enhancing the brand of the company.  If you think that winning support from Marketing can be done the same way that you win support from Legal or Finance, you are going to have a hard time ever getting the opportunity to manage Marketing spend.

It takes a creative approach.  So, the Next Level Purchasing Association (NLPA) has taken a creative approach to teaching you how to work with Marketing.

Today, we have launched a new online course that we've developed in partnership with SourceOne Management Services.  SourceOne is a sourcing consultancy with deep expertise in many categories, including Marketing.

What we've put together for you is an online Express Course entitled "Adding Procurement Value To Marketing Spend," available exclusively through the NLPA's website.  Through this course, you and/or your procurement team will learn:
  • Why the Marketing environment is ripe for Strategic Sourcing
  • 3 valuable processes that Strategic Sourcing can bring to Marketing
  • Initial Marketing categories for Strategic Sourcing to consider addressing
  • How Strategic Sourcing should establish a relationship with Marketing
  • 5 phases of Strategic Sourcing for Marketing
  • 5 best practices of Sourcing Marketing
  • When it makes sense to collaborate with consultants when sourcing Marketing
To learn more about this online Express Course or to sign up, please visit http://nextlevelpurchasing.com/marketing-procurement.php.

To Your Career Success,
Charles Dominick, SPSM, SPSM2, SPSM3
President & Chief Procurement Officer - Next Level Purchasing Association
Co-Author - The Procurement Game Plan
Struggling To Have A Rewarding Purchasing Career?
Earn Your SPSM® Certification Online At
www.NextLevelPurchasing.com


Wednesday, October 15, 2014

Minor Changes to What's Included in the NLPA's Course & Certification Offerings Are Coming

Here at the NLPA, we are always trying to tweak things to give our students, members and clients the most positive purchasing education and certification experience possible.

For example, this year, we've supplemented our physical mailing of beautiful parchment certificates with an immediate, print-your-own-certificate option for individuals who complete our online procurement courses.  And we've decided that, next year, we will NOT increase our prices!

We do have a couple of changes that some people may love and others won't.  You can read more about them at the link at the end of this post.  But the good news is that, if you don't like the changes, there is a way to avoid them.

For example, one of those changes is that the duration of access to the Senior Professional in Supply Management® Program (which is what candidates complete to earn their SPSM® Certifications) is being shortened to one year.  After more than a decade of offering this certification, we've found that a shorter time frame is more effective at motivating individuals to "get 'er done."  The average SPSM completes the program in seven months, so two years is too much.

However, if you feel you need two years instead of one, you can secure that benefit for yourself simply by signing up for the program on or before December 31, 2014 and you'll have two years!

To learn more about both changes and how you can avoid them if you'd like, please visit http://nextlevelpurchasing.com/changes2014.

To Your Career Success,
Charles Dominick, SPSM, SPSM2, SPSM3
President & Chief Procurement Officer - Next Level Purchasing Association
Co-Author - The Procurement Game Plan
Struggling To Have A Rewarding Purchasing Career?
Earn Your SPSM® Certification Online At
www.NextLevelPurchasing.com

Tuesday, October 14, 2014

Supply Chain Social Responsibility Laws: Which Apply To You?

I hope that you have enjoyed the article, "A 12-Point Supplier Responsibility Checklist."
In the article, I referenced two supply chain social responsibility-related laws:  the California Transparency in Supply Chains Act and the Dodd-Frank Act.  If you are just starting a supply chain social responsibility program, one of the first things you need to do is to figure which of these Acts applies to your organization.  It could be that neither, only one, or both apply.  So, let me give you a quick reference to applicability in this post.
  • The California Transparency in Supply Chains Act applies to your organization if it "does business" in California and has annual sales of $100 million or more
  • The Dodd-Frank Act applies to your organization if it is a publicly-held US company
As you saw in the checklist, there are many areas of social responsibility for a supply chain professional like yourself to focus on.  However, complying with the law should probably take priority over some of the voluntary issues if you don't have the resources to work on everything at once.

To Your Career Success,
Charles Dominick, SPSM, SPSM2, SPSM3
President & Chief Procurement Officer - Next Level Purchasing Association
Co-Author - The Procurement Game Plan
Struggling To Have A Rewarding Purchasing Career?
Earn Your SPSM® Certification Online At
www.NextLevelPurchasing.com


Friday, October 10, 2014

A Speaker's Recap: Feeling like a Winner at the 2014 NLPA Conference


The following is an unsolicited guest post from Brad Carlson, Director of Supplier Relationship Management at Source One Management Services.  Mr. Carlson was a panelist at last month's NLPA Conference.




At the end of September, I was lucky enough to attend the Next Level Purchasing Association (NLPA) Conference in Pittsburgh, PA. This year’s theme was sports related, “Where Procurement MVPs Are Made.” This made perfect sense, given our location in ‘Dahntawn’ Pittsburgh in full view of PNC Park and Heinz Field.


I’ve been to many procurement conferences over the years, and this one was unique. Rather than just a trade show where you are herded through a maze of vendor booths, NLPA creates an environment that made it easy to establish real personal connections with others. It was also more educational than any other conference I’ve been to. The speakers were fantastic, engaging, and very approachable. 


NLPA President, Charles Dominick, kicked off the conference with a keynote speech entitled, “Every Team Needs X’s and O’s: The Magic of Using Models in Procurement.”  He reviewed how some jargon can be confusing for internal stakeholders as well as within the procurement profession itself. Charles stressed that you need a playbook and common verbiage to keep everyone aligned when transforming your procurement department and dealing with varying stakeholders and suppliers.


As the Director of Supplier Relationship Management (SRM) at Source One, this hit a chord with me. One of the most efficient instruments for an SRM program is a toolkit. A toolkit outlines the standard methodologies and activities used throughout an organization to monitor program performance, support program objectives, drive executive involvement and ensure ongoing collaboration. One element of a toolkit can be a glossary so that suppliers understand the terminology and can communicate more effectively.


Additionally, there was a session from David Hargraves, Vice President of Clinical Sourcing at the University of Pittsburgh Medical Center. His session was entitled, “Playing To Win vs. Playing Not to Lose: Take the Offensive with Strategic Supplier Relationships.” I learned a lot from David’s session, but most importantly, I was intrigued with his points about flipping the script as a strategic sourcing professional. Many of us may naturally take a reserved approach on projects – not wanting to ‘upset the apple cart’ too much in dealing with suppliers.  Through that approach, we are all selling ourselves short.  So much can be gained by developing a systematic approach to identifying potential suppliers.



I always preach that proactive supplier engagement is a fundamental element of SRM. David Hargraves was able to drive this point home. By challenging and engaging suppliers to think outside of the box, your company can reap greater value from their contracts. In fact, those who do not have an SRM program in place often see one of two scenarios:


1)    Suppliers can be essentially ignored, even after long and timely negotiations


2)    Suppliers are somewhat managed, but not enough to sustain any long-term value


Ultimately, by ‘flipping the script,' your strategic sourcing team is supporting collaboration efforts and processes so that suppliers are engaged and aligned with your business objectives at all times.

Day 2 featured more great workshops including, “Suppliers as Partners:  Why and How Supplier Relationship Management Can Be a Competitive Advantage for Your Company” and “Your Team Needs Fans: How Procurement Can Win Over Hard to Please Stakeholder” by Ron Larimer. Ron took a unique approach – no power point slides. It was purely an interactive working session.

Day 2 sessions wrapped with “Be Prepared for the Game Ahead: A US Economic Outlook,” by Kurt Rankin, AVP Economist from PNC Bank, and “Getting the Lead Right Out of the Gate: The Decisions to Make and Pitfalls to Avoid in the first Six Months of a Procurement Transformation,” by Michael Dewitt from Highmark. Kurt gave great insight into the reasons behind the jobless recovery, while Michael spelled out a premier game plan anyone can use in preparing a procurement transformation.  Day 2 was capped with a perfect evening to take in a ball game at PNC Park.  Pittsburgh defeated Boston 4-0.  LET’S GO BUCS!

We started Day 3 early – on the bus for breakfast at Heinz Field.  Not only did we get a great insider’s tour of Heinz field, but we had two sessions.  First was “From Contender to Champion: Transforming Procurement from Good to Great,” by Dr. Soheila Lunney president of Lunney Advisory Group and co-author of The Procurement Game Plan.  The second was a panel discussion after lunch moderated by Dick Locke, featuring yours truly and Stephen Yuter Deputy Director of Acquisition and Acting Head of the Contracting Activity, US Department of Health and Human Services. 
 

The main points of my presentation surrounded the value achieved through SRM and how its successful practice can lead to increased efficiency, cost savings, revenue growth, risk management, preferred buyer status, and innovation. During my time speaking at the event, I aimed to offer an explanation of how I’ve seen effective supplier management serve as an attribute in any business model.



Hands down this conference was a WINNER!   I can’t wait to see what NLPA has in store for next year...

The NLPA sincerely thanks Mr. Carlson and Source One for such a wonderful recap of an amazing event.

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