Friday, April 28, 2006

Negotiation Strategy Articles

I hope that you have enjoyed the article "Negotiation Questions That Surprise Buyers."

It's clear from the site hits and response that PurchTips articles about negotiation strategies are very popular. So I am going to make negotiation strategy a more frequent PurchTip topic.

It's one of the most beautiful days of the year in Pittsburgh today, so I'm going to cut this blog post short and enjoy this all-too-rare-in-Pittsburgh weather!

Respectfully,
Charles Dominick, SPSM
President
Next Level Purchasing, Inc.
Struggling To Have A Rewarding Purchasing Career?
Earn Your SPSM Certification Online At
http://www.NextLevelPurchasing.com

Thursday, April 27, 2006

Purchasing And Supply Management Service

Most of our historical appeal seems to be to the individual purchasing and supply management professional seeking improvements to their career. But lately, we've had some success with a new service geared towards the management of the purchasing function.

We now compliment our online purchasing training with a service that allows management to:
  • Assess the current skill levels of their purchasing and supply management staff
  • Benchmark against other purchasing and supply management departments
  • Develop a return-on-investment for training their purchasing and supply management staff
  • Collaborate on a performance improvement plan that is customized to the needs and limitations of the purchasing and supply management department
  • Provide training to their purchasing and supply management staff
  • Measure the results of our training
  • Implement a plan to maintain high purchasing and supply management performance

You can read more about it at http://www.NextLevelPurchasing.com/purchasing-training.html

Of course, if you have any questions about how this may work for your purchasing and supply management department, you can feel free to contact me.

Respectfully,
Charles Dominick, SPSM
President
Next Level Purchasing, Inc.
Struggling To Have A Rewarding Purchasing Career?
Earn Your SPSM Certification Online At
http://www.NextLevelPurchasing.com

Wednesday, April 26, 2006

Finished The Book

As reported in an earlier post, one aspect of my current supply chain research is reviewing sales materials. And I've specifically been reading "Selling To Big Companies" by Jill Konrath.

Well, aside from the nuggets I've shared earlier, there wasn't much to learn from a "mechanics of supply chain" perspective from this book. It actually seems to be geared towards selling products and services that are "under the radar" of a big company's sourcing strategy like one-time consulting services.

But what I really liked about the book was the last chapter: "The Mindset of Success." Personally, I think us purchasers could use more of this type of inspirational material.

So why doesn't PurchTips focus on inspirational material?

Well, my audience tells me, in direct and indirect ways, that they prefer more step-by-step, technical educational purchasing articles. The unsubscribe rate tends to be higher when I deviate from those type of articles and share a more inspirational article.

Sometimes it is tough to balance leadership with giving people what they want. But I believe in pleasing the customer, even if the customer is a free subscriber.

One point that Jill makes in that last chapter is the process of turning painful mistakes into valuable learning experiences. Many editions of PurchTips are inspired by situations where I personally made a mistake, learned from it, and used a replacement approach successfully. We can certainly apply this in supply chain.

Another point of Jill's is holding yourself accountable, even if it is painful to do so. Displacing blame prevents you from making the changes necessary to succeed. Again, a brilliant point that we can apply in supply chain.

So, while I'll probably steer clear of including inspirational/motivational articles in PurchTips, perhaps I'll save these types of rants for this blog.

Now, if you'll excuse me, I'm onto a different aspect of my supply chain research...

Respectfully,
Charles Dominick, SPSM
President
Next Level Purchasing, Inc.
Struggling To Have A Rewarding Purchasing Career?
Earn Your SPSM Certification Online At
http://www.NextLevelPurchasing.com

Tuesday, April 25, 2006

eSourcing: Solutions With Problems?

I was asked by a visitor to www.NextLevelPurchasing.com: "How can an eSourcing services solution can help mitigate a buyer’s concern on quality from vendors they haven’t worked with before?"

The key to mitigating a buyer's concern about ending up with a poor quality vendor after an eSourcing event is simple: rely on good purchasing practice, not just the technology. Pre-qualify all bidders and don't invite any bidder that fails to meet your pre-qualification standards.

Purchasers often make the mistake of not doing offline pre-qualification because they are so enamored with the online aspect of sourcing. Just because you are using new technology (which I strongly advocate) doesn't mean that you should abandon more traditional best practices that still apply today.

If you wish to learn more about eSourcing, you may want to consider the online mini-course eSourcing 101.

If you wish to learn more about supplier qualification methods, you may want to consider the online class 14 Purchasing Best Practices.

Respectfully,
Charles Dominick, SPSM
President
Next Level Purchasing, Inc.
Struggling To Have A Rewarding Purchasing Career?
Earn Your SPSM Online At
http://www.NextLevelPurchasing.com

Friday, April 21, 2006

Interesting New Search Engine

In the course of my seemingly continuous supply chain research, I found this new search engine, RedZee.

Search engines don't generally excite me. I mean, there's Google and is there room for anyone else?

But this one has some neat features: a thumbnail of the site you're about to visit, capability to search for MP3's and videos, and, my favorite, a small banner that has scrollable, encyclopedia-like information about your search words before the site results.

For example, I did a search on "supply chain metrics" and the encylopedia portion gave some interesting, albeit non-supply chain specific, definitions and links related to metrics.

Can a search engine like this last or gain prominence? That's debatable. But I'll continue to check it out as it relates to doing supply chain research.

Respectfully,
Charles Dominick, SPSM
President
Next Level Purchasing, Inc.
Struggling To Have A Rewarding Purchasing Career?
Earn Your SPSM Certification Online At
http://www.NextLevelPurchasing.com

Thursday, April 13, 2006

Supplier Scorecard Formula

I hope that you have enjoyed the article "Supplier Scorecard Price Comparison Formula."

I recently made a major, MAJOR supplier selection using the supplier scorecard approach. What was atypical about it was that price was only weighted at 10%.

In my experience, most sourcing initiatives that use a supplier scorecard as a guide for supplier selection weigh price much higher. Like 60% at a minimum. Often higher.

But this project was a little bit different. I'll elaborate more later. I'd prefer to discuss it in the context of a completed project.

It's definitely been an intereting project and I'm looking forward to sharing the details with you. So hang tight.

Respectfully,
Charles Dominick, SPSM
President
Next Level Purchasing, Inc.
Struggling To Have A Rewarding Purchasing Career?
Earn Your SPSM Certification Online At
http://www.NextLevelPurchasing.com

Wednesday, April 12, 2006

Total Cost of Ownership

Total Cost of Ownership can be an overwhelming topic. In many cases, it is extremely challenging to calculate Total Cost of Ownership.

Now, you can start trying to understand Total Cost of Ownership for the first time when you are in a complex situation in your work. But I think it helps to take a basic example and learn from it first. You can always build your knowledge from there, applying what you already know to a more challenging purchase.

We recently did some printer purchasing here at Next Level Purchasing headquarters. Total Cost of Ownership was at the forefront of our decision making. Check out this article on Total Cost of Ownership as it relates to printers. It's basic stuff, but the principles can be expanded upon for higher-level procurements.

One aspect of Total Cost of Ownership that we considered that the article didn't cover was the cost of labor. Changing printer cartridges, dealing with printer performance problems, and waiting for documents to print all requires someone's time. That time is a resource that is being paid for, so minimizing wasted time further reduces Total Cost of Ownership.

I hope that you find this helpful.

Respectfully,
Charles Dominick, SPSM
President
Next Level Purchasing, Inc.
Struggling To Have A Rewarding Purchasing Career?
Earn Your SPSM Certification Online At
http://www.NextLevelPurchasing.com

Tuesday, April 11, 2006

Vendor Relationship Management

As anyone who reads my purchasing articles knows, I am very big on good vendor relationship management. For the long-term success of an organization, you must have a focus on vendor relationship management with your key vendors.

But sometimes the connotation of vendor relationship management doesn't sit well with me.

The way "vendor relationship management" is used by some people, it connotes that 100% of the health of the relationship is dependent on the buyer. I disagree.

As a result of this perception of vendor relationship management, buyers often waste time developing relationships with substandard vendors. In a lot of these cases, those buyers need to spend time finding a vendor that can perform. Managing a relationship with a more competent vendor is ultimately more productive.

Here are a couple of signs that attempting to manage a vendor relationship may be less desirable than sourcing for a new vendor:

1. The vendor calls you way too often during the sales process, but after you give that vendor the order, you can't get anyone to deliver what was promised or communicate progress.

2. The vendor places you on less of a priority than its other customers. Look, if you're going to give me less responsive service than your other customers, you should be charging me a "lower priority rate."

3. The vendor responds only when you get tough. When something isn't going right with a vendor, I always communicate cordially at first. If that doesn't work, then I get tough. Unfortunately, especially during a healthy economic time, vendors are busy and service levels decline. But it drives me crazy when the only thing that vendors will respond to is tough talk. But you gotta do what works. If nice, polite requests don't get the job done, you have to remember your obligation to your company and do whatever works.

Don't get me wrong. I don't advocate always being tough. And I don't dismiss the notion that vendor relationship management should be a part of every purchasing department's repertoire. But sometimes, it makes sense to source old-school style.

Respectfully,
Charles Dominick, SPSM
President
Next Level Purchasing, Inc.
Struggling To Have A Rewarding Purchasing Career?
Earn Your SPSM Certification Online At
http://www.NextLevelPurchasing.com

Wednesday, April 05, 2006

New Purchasing Certificate!

We've recently redesigned the purchasing certificate that we award to individuals who complete one of our full-length supply chain online classes.

We want our students to get a high-quality reward for their excellent work and diligence, so we have really upgraded the certificate's appearance. Check out the new purchasing certificate at:

http://www.NextLevelPurchasing.com/purchasing-certificate.html

And without a price increase in the short term, I am hoping that this demonstrates our commitment to the satisfaction of our purchasing students. We really want you to be thrilled with your learning experience.

Respectfully,
Charles Dominick, SPSM
President
Next Level Purchasing, Inc.
Struggling To Have A Rewarding Purchasing Career?
Earn Your SPSM Certification Online At
http://www.NextLevelPurchasing.com

Sunday, April 02, 2006

Supplier Code of Conduct

I hope that you have enjoyed the article "Trend Alert: The Supplier Code of Conduct."

As an extra bonus, here are some other things that you can address in your supplier code of conduct:

1. The supplier must require its suppliers to abide by a supplier code of conduct acceptable to your organization

2. The supplier must comply with ethical guidelines regarding treatment of animals

3. The supplier must not place advertisements in media where violence, irresponsible sex, racial intolerance, and profanity is promoted

4. The supplier must have a written plan for pollution reduction

5. The supplier must have a supplier diversity program in place or have a plan for starting a supplier diversity program

I hope that these additional suggestions are helpful to you.

Respectfully,
Charles Dominick, SPSM
President
Next Level Purchasing, Inc.
Struggling To Have A Rewarding Purchasing Career?
Earn Your SPSM Certification Online At
http://www.NextLevelPurchasing.com

Saturday, April 01, 2006

Back Door Selling

OK. I have another comment about the book, "Selling To Big Companies."

On page 100, Jill Konrath writes, "With so many possible entry points into a big company, many sellers make the mistake of going to the purchasing or human resources (HR) departments first. This is a fatal error. Let me repeat that. This is a fatal error. The purchasing folks are looking for the best possible pricing for a very specific solution. Despite all your best efforts to bring value and be consultative, they will force you into competing on price alone."

Wow.

I have several thoughts about this excerpt, in no particular order.

1. Circumventing the purchasing department or a standard purchasing process is called "back door selling." Purchasing departments and companies hate back door selling. In fact, some corporate policies prohibit back door selling and may ban suppliers that engage in back door selling.

2. At first, I was offended. Professional purchasers consider more than just price. Of course, I help teach that, so maybe not all purchasers have previously learned world-class supplier selection criteria and practices. So I'm not offended.

3. Yes, professional purchasers do select suppliers based on price alone. But this isn't necessarily because they are uneducated or that they have some fault. A lot of suppliers just cannot communicate how the non-price variables of their offering can contribute to the success of our organizations. So you have better quality? What does that mean to me in terms of profit per year? What financial advantage in terms of my company's profit does your better quality mean? If you, as a seller, cannot communicate the measurable financial benefits of your offering, don't expect it to be the buyer's job to figure it out on your behalf.

So, I'm not upset about the characterization of purchasers. But teaching back door selling as the best approach?

I'm not sure that's the best idea with the amount of control (i.e., ability to ban a supplier from future business) that purchasing departments have.

Respectfully,
Charles Dominick, SPSM
President
Next Level Purchasing, Inc.
Struggling To Have A Rewarding Purchasing Career?
Earn Your SPSM Certification Online At
http://www.NextLevelPurchasing.com

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