Friday, March 30, 2007

Inventory Purchasing

I hope that you have enjoyed the article "Inventory Purchasing Terms You Must Know."

I am getting asked more and more about inventory issues related to purchasing. As organizations are merging various operations functions under the supply chain management umbrella, purchasing professionals are often taken out of their element when given responsibility for inventory.

I've done several articles related to inventory purchasing and you can find them linked from http://del.icio.us/supply_chain_articles/inventory

For those of you transitioning into a role that includes inventory management, I hope that these articles ease your transition.

To Your Career,
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, March 29, 2007

A Premium on Category-Specific Skills

In a conversation with a procurement research firm today, we talked about my observations in the recruiting of category managers - those purchasing leaders who are responsible for the procurement of a specific category as opposed to general goods and services. Categories may include any specialized product or service from electronics to marketing/media buying to metals to travel services.

Based on some research I've done, the importance of industry/category-specific skills is reflected in the salaries offered to category managers. Generally, a qualified category manager can expect to pull in between $85,000 and $100,000 as a starting annual salary. An otherwise equally qualified general purchasing manager makes less according to recent studies.

But it is important to dig deeper than just the category expertise. You'll note my prominent use of the word "qualified" in the foregoing paragraph.

Qualified means having the requisite experience and credentials such as the SPSM Certification. As indicated in the 2007 Purchasing & Supply Management Career & Skills Report, purchasing professionals with the SPSM make over $13,000 a year more than those without it.

So I think it's smart to first focus on getting a qualification such as the SPSM so as to give yourself a earning potential boost without pigeonholing yourself into more limited opportunities. Then, after getting such a qualification, if you can find a niche in a specific category, you really can increase your earning potential more.

To Your Career,
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, March 25, 2007

The Untrue Advantage of Classroom Training

I recently exchanged emails with a student who said that her boss prefers classroom training to online training. The reason was that there are too many distractions in the workplace to effectively participate in online training.

Uh, wait a second here.

If the boss is OK with allowing an employee to leave the office to go to a classroom for training, why couldn't the employee be allowed to take the online class from home or a public library?

That would produce exactly the same effect as classroom training with even more benefits (learning at the best pace for the student, the morale boost employees get when trusted to work from home for a day, etc.). Just because training is online doesn't mean that you have to do it from your desk during the workday!

To Your Career,
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, March 22, 2007

Government or Private Sector Procurement Certification?

Another question I get asked once in a while is whether one should pursue a government purchasing certification or a procurement certification more geared toward the private-sector.

I always personally recommend a procurement certification that is geared toward the private sector.

The trend is for today's government agencies to attempt to apply purchasing best practices from the private sector in the government. Generally, the government is about 10 - 15 years behind the private sector in purchasing. A private sector purchasing certification would be valuable in government, but a government purchasing certification is practically useless in the private sector.

To Your Career,
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, March 21, 2007

SPSM Certification vs CPIM Certification

I receive questions once in a while asking about the difference between the SPSM Certification and the CPIM certification.

The comparison is actually pretty simple.

The SPSM stands for "Senior Professional in Supply Management" and it is awarded by Next Level Purchasing. So it is an appropriate certification for individuals in the field of purchasing and supply management: purchasing managers, buyers, procurement specialists, supply chain managers, contracting agents, sourcing representatives, etc.

The CPIM stands for "Certified in Production and Inventory Management" and it is awarded by the American Production and Inventory Control Society. So it is an appropriate certification for individuals in the field of production and inventory management: production schedulers, inventory analysts, etc.

These are two very different certifications for two different types of jobs.

Still not sure what certification is right for you? Contact us with your job title, job duties, and professional goals and we'll help you.

To Your Career,
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, March 20, 2007

2007 S&DCE Pros To Know

I'm a little later than the other bloggers in the sector in announcing the news, but I was selected as one of Supply & Demand Chain Executive Magazine's 2007 "Pros To Know" in the Sourcing & Procurement/Spend Management category. You can check out the article and the list of all Pros To Know at

http://www.sdcexec.com/publication/article.jsp?id=9287&pubId=1

To Your Career,
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, March 15, 2007

Purchasing Vlog (Video Blog)

I hope that you have enjoyed the article "What Your Negotiation Power Depends On."

Here's the first vlog (video blog) on the Purchasing Certification Blog to expand on the topics.



If you like the vlog format, please leave me some comments!

To Your Career,
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, March 13, 2007

Pittsburgh Penguins Arena Negotiations Complete!

Well, according to this article, the negotiations between the Pittsburgh Penguins and Pittsburgh/Pennsylvania government officials has reached a happy ending.

This after the greedy Pens owners Mario Lemieux and Ron Buerkle publicly and insultingly declared an impasse mere days ago.

I'm concerned about the negotiation lessons that people will try to draw from Lemieux and Buerkle's adversarial approach to the negotiation. At a glance, it appears that bullying and threats was the way to go.

I disagree.

I believe that same urgent meeting in Philadelphia could have been held and produced the same results without the tough-guy tactics that are akin to Chris Simon's recent stick attack on a New York Ranger.

So why did Lemieux and Buerkle resort to these tactics?

One reason may be that it was a good opportunity to Buerkle to establish himself as a feared negotiator for future business deals. He probably wants others to think "Don't tick this guy off - he's a loose cannon."

Another interesting thing I want to point out about the negotiations is that, in the "impasse" letter, Lemieux and Buerkle cited the $3.6 million in annual rent and $400,000 in annual capital improvement payments and claimed that "We can do no more." However, according to the article linked at the beginning of this post, the Pens agreed to pay $3.8 million in rent, $400,000 in capital improvement payments, and $500,000 for a parking garage.

So when suppliers say "We can do no more," take it with a grain of salt. Because if that [sarcasm]esteemed negotiator[/sarcasm] Governor Rendell can get a better deal from a supposedly tough negotiator like Buerkle, you can too.

One last complaint: I despise how the politicians are saying no taxpayer money is being used for this arena. $15 million per year is coming from funds generated by State requirements that allowed gaming in our state. That money could have been used for other taxpayer-benefitting programs, so arena funds are essentially funds out of our pockets. It also could be used to reduce the PA income tax that Rendell raised early in his first term.

Is having this particular team - as opposed to an expansion or relocated team - playing in Pittsburgh really the highest priority for the people of Pennsylvania? A higher priority than education, helping other businesses that can create jobs, or even having safer roadways?

There should be a T-shirt that says "I let gambling and all of its baggage into my hometown and all I got was this lousy arena."

To Your Career,
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

Monday, March 12, 2007

Assistance For Academic Projects

We get a lot of requests by email asking us to answer anywhere from one to 20 questions.

When we receive requests to answer questions that seem to be related to academic projects for other institutions, we have a standard response.

We believe that integrity and ethics are of utmost importance in purchasing and supply management. Therefore, we decline any requests to provide answers for academic projects that are intended to be completed by the student of the other institution.

Providing such answers verbatim is not only unethical, but it also deprives the student of the rich experience of discovery through hard work and diligent research.

If we can refer you to one of our purchasing articles that may address the topic you're researching, we'll refer you. Otherwise, we do not do research on behalf of students of other institutions.

If you ask us for assistance and we have mischaracterized your request as related to an academic assignment, please accept my apologies and realize that we are only trying to promote honesty in academics.

Of course, we will always respond favorably to the students who have enrolled in our purchasing classes.

To Your Career,
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, March 11, 2007

New Week's Penguins Arena Negotiation Post

OK. You're right. I'm totally obsessed about the Pittsburgh Penguins' negotiations for a new arena.

Here are a few new thoughts for the new week based on negotiation principles that can be applied to purchasing.

1. Have A BATNA. I think that the first use of "BATNA" (short for best alternative to a negotiated agreement) came from the legendary negotiation book, "Getting To Yes." Having a BATNA strengthens your negotiation position and helps ensure continuity in the event that negotiations don't conclude positively. The Penguins clearly have a BATNA - move to Kansas City and get to play in a new facility without paying rent.

But what is Governor Rendell's BATNA? He has alluded to the possibility of asking Gary Bettman and the NHL to block the move. And that's not a totally bad idea. After all, the governor has indeed put a great offer on the table for the Pens. I think that it would be easy to demonstrate that the Penguins were given a great offer and are simply being greedy and unreasonable by continuing to make threats to leave.

But the NHL has more of a vested interest in keeping the Pens happy than keeping the governor happy. So that makes that BATNA not necessarily the best one.

What about pursuing other teams as a backup plan? There is likely someone that wants to create an expansion team. And what better market to introduce an expansion team into than a market where hockey has been strong for decades and there have been dozens of sellouts this year? Maybe one of the struggling Canadian franchises may be ready to move like what happened when the Quebec Nordiques became the Colorado Avalanche?

In my opinion, the governor should have a team investigating the possibility of getting another team in case the deal falls through. This would give the politicians' team more leverage and a great BATNA that, if the Lemieux deal falls through, could even save their political careers.

Do your suppliers know that you have a BATNA?

2. Set Deadlines. Did you ever notice that things seem to get done at the last minute? Deadlines are effective negotiation tools. And this is where Kansas City is bumbling.

They've offered the Pens a sweet offer. But, all Lemieux and company are doing are using that as leverage in their negotiations with Rendell and co. By the way, using one supplier's proposal just to get a better deal from a second supplier when you have no intention of making an award to the first supplier is called a "sharp practice" and is generally considered unethical.

If Kansas City was smart, they'd say "Enough is enough. We've made you a great offer. Don't just use it against us. Decide by March 17th or the offer is off the table." If the Penguins stay in Pittsburgh, I'm sure Kansas City will regret not setting such a deadline, which could have helped them land the team.

Are you using deadlines to motivate your suppliers to move?

Thank God I can relate this obsession to purchasing, huh?

To Your Career,
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

Friday, March 09, 2007

Last Pittsburgh Penguins Arena Negotiation Post Of The Week

Well, last night's big meeting between the Pittsburgh Penguins and Pittsburgh/Pennsylvania government officials ended without a deal on a new arena. The agreed-upon next step was for the parties to meet again Wednesday.

So all that Mario Lemieux and Ron Buerkle's incendiary letter seemed to do was to get government officials back to the negotiation table. Personally, I think that could have been done less adversarily (and without damaging the loyalty of even die-hard Penguins fans like me).

So I'm done blogging about these negotiations (and greedy Mr. Lemieux) for a while.

Back to purchasing...

Response to Tuesday's article, "7 Supplier Diversity Challenges, Part I," was interesting. Some people are really passionate about supplier diversity. Some people just plain don't care. And others emailed me asking what the heck supplier diversity is anyway.

Supplier diversity is more clearly defined in this earlier article:

http://www.nextlevelpurchasing.com/articles/starting-supplier-diversity-program.html

Supplier diversity isn't practiced in all countries. It is practiced mainly in countries like the USA, where certain ethnic groups were discriminated against in the past.

Based on the mixed reaction, I've decided to postpone Part II of this series from its originally scheduled date of April 3. I'm thinking more like May 15. I don't mind writing articles about a diverse array of topics, but I'd rather not space ones on a topic of mixed interest together too closely.

To Your Career,
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, March 07, 2007

Negotiation Lessons From The Pittsburgh Penguins

Sorry to blog again about the Penguins/Pittsburgh/Pennsylvania arena negotiations, but there are so many interesting tactics to look at from a purchasing perspective.

Today's Pittsburgh Post-Gazette featured, not one, but two articles about how the politicians involved face personal risk over the outcome of this situation. You can check out those articles here and here.

The Penguins' negotiation tactic here is to create a situation where the politicians have "skin in the game." Incurring a loss to your organization is a motivator to perform well in negotiations. But incurring a personal loss is a much stronger motivator, not just to perform well but to "not lose."

In purchasing, this tactic is used when you subtlely get the salesperson to start thinking "I don't wanna be known as the guy who lost the Wal-Mart (or ExxonMobil or any other big customer) account." It's effective, but I don't recommend such a kick-you-in-the-teeth approach when dealing with suppliers with whom you will have an enduring relationship.

And that brings up a point about relationships and hardball negotiation.

Simplified, the degree to which you employ adversarial negotiation tactics depends on the closeness of the subsequent relationship. The closer the relationship, the more collaborative you need to be. The more arms-length the relationship, the more adversarial you can be.

Because of the Penguins' extremely adversarial approach, it is clear that they just want to maximize the saleability of the team and sell it as I mentioned in my previous post. No intelligent human would use such public insults in its negotiation repertoire if an enduring relationship was going to exist.

Now, onto the politicians' responses...

Last week, Governor Rendell made a point in the papers about Ron Burkle being one of the top businessmen and not getting there due to being an easy negotiator. So I sarcastically thought to myself, "One of the country's top negotiators going against Governor Rendell. Now that's a fair matchup." I'm not one of the Governor's fans as all of the impact we've seen since he's been governor has been negative, such as income tax increases with no benefit, talk of an increased sales tax, etc. But I digress...

But Governor Rendell has actually made a few smart moves here.

First, he stated that the Penguins have been offered a better deal than any of the other Pennsylvania sports teams that got corporate welfare, uh, I mean "public assistance," when constructing their facilities. Nice use of objective criteria to further demonstrate how unreasonable Lemieux and company are being.

Second, he "called a ploy a ploy." This is an effective negotiation technique. In purchasing, telling your supplier that you recognize that their tactics are just that, you can regain power over the negotiation. This doesn't always work, though. Sometimes it inspires the other party to say "You think I'm bluffing? Fine. I'll follow through just to show you."

Since this is a blog, I'm going to once again reiterate my opinion here.

Mario, go.

Please go.

You're a greedy son-of-a-gun who wants to line his pocketbook with money that would otherwise go to struggling Pennsylvanians. You should be ashamed to show your face around here. I can't believe that a legend would let a small percentage increase in his personal net worth destroy his legacy. The only thing you can do to save your legacy is to immediately sell your remaining stake in the team to your partners and announce that you've done so because you disapprove of the approach that the owners are taking in negotiating with the individuals who are safeguarding the money of Pennsylvanians.

I don't know if Kansas City loves greedy jerks, but we don't like 'em in Pittsburgh. They can have you.

To Your Career,
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

Monday, March 05, 2007

You CAN Negotiate Too Hard (Penguins)

In the online class "Powerful Negotiation For Successful Buying," I teach my students how to negotiate hard.

But I also point out that hardball negotiation isn't appropriate in every situation. There is a fine line between negotiating hard and negotiating too hard.

Mario Lemieux has crossed the line.

Late this afternoon, he and his fellow Pittsburgh Penguins co-owner Ron Burkle sent a letter to the local government officials with whom the team has been working on a deal to construct a new arena in Pittsburgh. The scathing letter declared an impasse in their negotiations and criticized (and in my opinion, insulted) the government officials.

For those readers outside of Pittsburgh just tuning in to this issue, the Penguins and state, county, and city officials have been negotiating a deal to secure a brand-spanking new arena in Pittsburgh. The officials had put together a plan to get a massive amount of money together for the team so that its investment in the arena would be minimal.

That wasn't good enough for Lemieux and the Penguins.

So the officials kept going back into the government coffers to find more money for the team. They found more ways to "sweeten" the deal.

Still not good enough for Lemieux and company.

Then today they play the good-old "Armageddon" negotiation tactic and say that they are going to "aggressively explore relocation" to Kansas City or any other city where they can get a deal that's a little better.

Being a hockey fan, I was originally on the Penguins' side.

After today's letter, I'm not. And here is a totally "stream of consciousness" rant on why I now despise the once iconic Mario Lemieux and his ownership team.

1. Does Mario Need Our Money?

First of all, I have a real problem with Lemieux and company demanding a handout, getting millions handed to them on a silver platter, and then WHINING about not getting enough.

This is government money they are after. The money of the people. And while Mr. Lemieux is living it up in his $2 million mansion in Sewickley (a posh suburb of Pittsburgh), he is trying to make it seem like the tax dollars of the state's poor should be used to make him richer.

It's well known that Lemieux wants to sell the team. He wants the best facility arrangement possible for one simple reason - he'll make MORE money when he sells his shares of the team.

So today's letter was meant to compel Governor Rendell et al to try to figure out how to take more money from the pockets of our supermarket workers, trash collectors, day care teachers, and other working-class Pennsylvanians to make Mario richer. It was meant to have money earmarked for education and environmental improvements redirected to Mr. Lemieux's already massive bank account.

I remember seeing a tour of Mario's home on TV. He has waterfalls in his home and a 3,000 square foot wine cellar that could probably fit the apartment space of dozens of the tax payers that he wants to take from.

There are thousands, if not tens of thousands, of Pennsylvania businesses who can figure out how to have a facility to operate in and be profitable. Why should Mario get a handout when the rest of Pennsylvania's business owners have the pride to make their businesses successful without resorting to begging and bullying?

Mario's rich enough. He doesn't need the whole state to suffer to make him richer.

He'd like you to think it is about keeping the team here for the fans. It's not. It is about getting more money in his pocket. Period.

2. You Don't Think Kansas City Has Risk?

The letter talked about the risk of continuing to pursue an agreement on a Pittsburgh arena. As if Kansas City has no risk.

Yeah, Kansas City will likely have good attendance in an NHL team's first year. But what about after that?

You have historical proof that Pittsburgh will support an NHL team in good times and bad. And, if you're gonna sell the team, those more reliable revenue projections will result in a much bigger sales figure.

3. Is It Smart To Insult Those That Can Help You?

Despite the government officials' massive handouts - and continual sweetening of the deal - Mario finds it necessary to insult them in the letter, saying "This risk has been magnified by what we perceive as a lack of collaboration from the public sector in negotiations." In other words, "Hey, everybody, the people who are representing you aren't doing anything to help the team stay in Pittsburgh."

Not only does this insult the government, this insults Pittsburghers.

Let's face it, this letter was obviously intended to be publicized to put pressure on the elected officials. But we Pittsburghers aren't dumb enough to believe that Governor Rendell et all haven't collaborated. They've bent over backwards for you, Mario. And we now see what you do when someone bends over in front of you, don't we?

4. Who Needs It More?

This is now a win-lose negotiation.

If the Penguins win, it's pretty clear that more public money towards the arena means less money for other interests in Pennsylvania: health care, safe roads, etc.

But what does it mean if the Penguins don't get their way? Maybe a small reduction in their operating margin.

With this in perspective, should we really be rooting for Lemieux and company?

5. Hardball Negotiation vs. Being A Jerk

I believe in negotiating hard. In business, you gotta work for your best interests.

But when you have a sweet offer and you not ask but ASSAULT your counterpart for more, you can become a real jerk that no one wants to do business with. That approach to negotiating with suppliers is why the US auto industry is on the verge of collapse with suppliers going bankrupt and Ford and GM bleeeeeeeeeeding billions.

And the automakers didn't even stoop to negotiating through press releases.

Mario was a local icon. Now, he's just a greedy son-of-a-gun.

In negotiations, there are only so many threats that your counterpart can take before they say "kiss off." I'll gladly back any politician who tells Mario to pucker up.

Mario, Pittsburgh is a hard-working town with people who believe in earning their keep. You're not one of us anymore.

You like Kansas City so much?

Go.

Get your greedy behind out of here.

'Cause even if a miracle keeps the Pens here, we'll be looking at you through different color glasses. Green ones.

If money is truly the root of all evil, your negotiating behavior has got you a one-way ticket to Hell. I hope you'll enjoy the 0.0001% of net worth you'll gain by moving to Kansas City when you're hanging with Satan in the hereafter.

OK, let me get this back to an educational post.

Buyers: now consider the feelings I've just expressed. Are you making your suppliers or third parties feel this way? Are you prepared to be told to "Go to Kansas City?"

Push hard.

But don't publicly insult the counterparts that you'll have to work with in the immediate future.

Appear committed to getting the best deal. But avoid coming off as simply being devilishly greedy for the sake of greed.

The Kansas City threat was always there. It motivated implicitly.

Will the new threat be followed by more movement? Probably.

But I believe that the officials have little room left for improvement and the Penguins would have gotten the same result with less vitriolic rhetoric. And they probably wouldn't have turned off customers like me in the process.

It's a shame that the owners acted so idiotically at a time when the team itself has done well and become so interesting.

To Your Career,
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

Media Contacts: info@nextlevelpurchasing.com

Friday, March 02, 2007

Using Diverse Suppliers

I hope that you have enjoyed the article "7 Supplier Diversity Challenges, Part I."

As the title implies, there is a second part to this. That article is tentatively slated for the April 3 edition of PurchTips.

There are so many little things that need to be considered when putting a program in place to successfully find, utilize, report spend with, and sustain diverse suppliers. Many of those things aren't discovered until after a supplier diversity program is put in place. Hopefully exposing these challenges will accelerate the time-to-perfection for purchasing departments starting a supplier diversity program.

To Your Career,
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, March 01, 2007

R.I.P. A.P.P. Certification

Well, yesterday was the last day that ISM allowed candidates to apply for its "financially infeasible" A.P.P. certification.

So if you were working towards your A.P.P. certification or even thinking about it, I'd like to personally say that Next Level Purchasing will welcome you with open arms into the SPSM Certification Program. We'll be there to support you.

To Your Career,
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

ShareThis