Friday, November 30, 2007

New Mini-Course Feature

When you complete our full-length classes, we send to you, by postal mail, a beautiful Certificate of Completion.

Due to the cost, that's not possible with our mini-courses "Managing Supplier Performance" and "Negotiation No-No's." But we've just added a new capability!

Now, you can generate and print your own PDF certificate when you complete these mini-courses!

We know that not everyone can afford enrollment in our full-length classes or the SPSM Certification Program. So we try to still deliver value to people of all financial situations through these mini-courses and the FREE Purchasing Resources Program.

I hope that you enjoy this new feature! We're making lots of investments in improvements going into 2008, so watch this space for announcment and updates!

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

For SPSM's Seeking Jobs

Our "Jobs For SPSM's" page is a good indicator of how widely recognized the SPSM Certification has become. As I write this, there are jobs posted there by prestigious companies like Siemens, United Airlines, Mitsubishi, Amtrak, Pfizer, and many more who are indicating a preference for candidates with the SPSM Certification.

But...

Nearly every purchaser finds that, in his or her organization, there is an internal customer who does certain things because "we've always done it this way," even when it no longer makes sense to "do it that way." These situations require you to educate the internal customer on why more modern approaches make more sense.

The same is true with some companies who recruit purchasers.

I occasionally run into people who say that they see job postings that still mention the C.P.M. certification. I think that this is a "we've always done it this way" type of situation.

If you see a job posting that mentions the C.P.M. certification and not the SPSM Certification, that doesn't mean that you shouldn't apply. You just may need to educate the employer.

Here's what I recommend.

Borrow a copy of the C.P.M. Study Guide and take it into your interview. If the topic of C.P.M. certification vs. SPSM Certification comes up, open up the index of the C.P.M. Study Guide.

Together with the interviewer, look through the index to find these terms:
  • eProcurement (not there)
  • Reverse auctions (not there)
  • Spend analysis (not there)
  • Strategic sourcing (yep, you guessed, it - not there!)

What? Four of the most powerful practices of the modern purchasing and supply manager not even included in the material?

That's right. Well, the C.P.M. certification was launched in 1974 after all.

A few things have changed in the business world since then, huh?

(Note, this is not intended to offend anyone with the C.P.M. certification. I earned mine in the '90's when its value peaked, too. But times do change and we all need to keep up.)

Then, share that you've learned all of these things and much more (negotiation, project management, supplier management, purchasing performance measurement, and on and on and on) in the SPSM Certification Program. Chances are that the employer will see the light and will agree that the SPSM Certification is the far superior certification.

I think you'll have a good chance of getting past the old C.P.M. certification job requirement.

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

Thursday, November 29, 2007

Sourcing In Africa

Jason over at Spend Matters yesterday posted a thought-provoking blurb entitled "Africa is Not the New Asia (When it Comes to Global Sourcing)."

I agree with Jason that Africa is not going to be a global sourcing hot spot in the immediate future. Some of these reasons I've already addressed in the comments to an earlier post of mine.

But another issue is the electricity crisis in Africa that not even Jason's astute commenters have addressed to this point. I've heard quite a bit about the electricity situation there from our students as well as one of Next Level Purchasing's employees, whose brother was recently in Africa.

According to this article on Yahoo! News:
  • Fewer than 25 percent of Africans have access to electricity
  • In Nigeria, the energy demands are nearly twice what the country's creaking power plants can produce
  • Insufficient power is one of the continent's biggest obstacles to development and a big turnoff for foreign investors
  • Building enough hydropower dams to meet the need would take decades
  • Power cuts are quite common and even colder temperatures that cause people to use electric heaters can exacerbate the power cuts significantly
  • There doesn't seem to be any one interested in investing in building more power plants

And who knows if suppliers in Africa use lead paint...LOL.

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

Wednesday, November 28, 2007

Dell Case Study Has A Happy Ending

A few weeks ago, I started off my series of supplier case studies examining the effect of supplier size on performance with a post about an experience we had with Dell.

Well, someone from Dell commented on that post and said that he would forward my story within Dell so that they could use the story to make improvements.

While I was pleasantly surprised at the comment, in the back of my mind, I thought: "Yeah, right."

A few days later, I was further surprised to receive an email from Rachel Halls, an individual who supports Dell's global customer contact centers. Honestly, it was the classiest communication I've ever received from a supplier.

The email: acknowledged problems, demonstrated a commitment to listening to the customer, and expressed an interest in improvements. It reminded me of something from the book, "How To Win Customers & Keep Them For Life."

The email offered a very small concession on a future Dell purchase, not unlike the Dell Dollars I was supposed to receive in January.

Now, I did have problems claiming the concession (coupon code not working online, calling the customer service number only to be routed to a non-Dell number, etc.). But I had the Single Point of Contact that I described as so essential when dealing with large suppliers in the article "Are Big Suppliers A Big Supply Risk?"

And that made all the difference in the world.

When things didn't go right, I contacted Rachel (who gave me both her email address and cell phone number). And she knew exactly the person by name, email address, and phone number that I needed to speak with to get things worked out.

So instead of 5 months to receive and claim a coupon, this event only took 18 days. Again, the Single Point of Contact in a large supplier was the key.

This sequence of events restored my faith in Dell. Perhaps they see value in Seth Godin's philosophies expressed in "Small Is The New Big" (both a book and blog post).

I'll buy from Dell again.

They have a long way to go to change the culture of an organization with over 90,000 employees. But at least they are trying, showing personal care for their customers, and, in this case, impressing one of their critics.

Which is more than I've ever heard or had to say about Yahoo Web Hosting.

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

Monday, November 26, 2007

Negotiation Approaches

I hope that you have enjoyed the article "Adjust Your Negotiation Approach."

I know that I have at least one negotiation book in my collection that offers dozens of isolated negotiation tactics. That's scary, because I believe that any tactic will only work effectively when used in the proper context.

So choosing from a menu of tactics isn't smart. You have to know when, why, and how to use the tactics to have success.

Unfortunately, the book that I am referring to doesn't help you with the context at all. So hopefully the article will inspire you to always assess the context of the negotiation before deciding on your tactics.

To Your Career,
Charles Dominick, SPSM
President and Chief Procurement Officer
Next Level Purchasing, Inc.
Struggling To Have A Rewarding Purchasing Career?
Earn Your SPSM Certification Online At

http://www.NextLevelPurchasing.com

Friday, November 23, 2007

China Sourcing & A Birthday Party

Last week, we had a little fourth birthday party for my son. I just couldn't turn off my sourcing curiosity and decided to compile some statistics on the origin of his new gifts.

Out of the 26 packages he received, 19 bore the label "Made In China." That's 73 percent!

And these items weren't just typical molded plastic toys. There were puzzles and books with the China label, too.

Not included in the calculation was a $5 bill.

I did some more lead testing, including on some of his new Hot Wheels cars made in China (some of his new Hot Wheels were made in Malaysia, too). After this additional testing, I felt better that there actually is lead-free paint on China-made toys.

But, from what I understand, Santa is still contemplating avoiding gift makers who outsource manufacturing to China.

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

Thursday, November 22, 2007

Benefits of Single Sourcing

Yes, I'm working on Thanksgiving - one of the biggest holidays here in the USA. I'm serious about serving our students!

In our online class "Mastering Purchasing Fundamentals," we cover types of suppliers and supplier choice methodologies. Today, a student asked for more reasons why an organization may consider single sourcing beyond what is already covered in the class and/or in a more summarized format.

Here are the summarized top reasons for single sourcing that I shared with him:

1. Lower pricing due to consolidation of all requirements with one supplier

2. More consistent quality

3. Lower purchasing workload due to communication with fewer suppliers

4. Easier to manage supplier performance because you are tracking fewer suppliers

5. Easier to track down the source of problems as well as affected products in the event of a quality investigation/recall

I hope this helps you, too.

But you should know that there are also downsides to single sourcing. I recommend that you also read our article "Dual Source vs. Single Source."

Now I gotta go cook a Thanksgiving meal for the first time...

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

Tuesday, November 20, 2007

Healthcare Purchasing In The News Again?

With things at Next Level Purchasing getting busier than ever, it feels like I am trying to become a self-trained speed reader. It seems like I plow through the trade pubs and newspapers at an ever increasing pace and I probably miss some important things here and there.

But I couldn't help but notice an article in the current Pittsburgh Business Times that covers the story of Excela Health and Heritage Valley Health System combining their purchasing departments to theoretically "double their buying power." I find this story interesting for a number of reasons.

1. I've found that healthcare organizations are a little lazy when it comes to their purchasing. Many of them say, "We've just joined a GPO, we don't need strategic sourcing." But this combination of smaller healthcare players I think sends a different message. Healthcare GPO's tout the ability to give one hospital the buying power of hospitals hundreds of times the size. But do they really? If they did, this combination would not make sense. After all, what is doubling your buying power when you could increase it by many times over through a GPO? This may be a message that some healthcare GPO's don't live up to the promise and that healthcare organizations can get better deals by doing it themselves (which I personally believe).

2. I hope that Excela and Heritage Valley have a comprehensive plan for truly leveraging this combination. Simply teaming up isn't enough. To maximize the benefit, they will have to implement sourcing principles and purchasing best practices. To simplify, their strategy will have to include a thorough combined spend analysis, opportunity identification, sourcing cycle, masterful negotiations, supplier management, and more.

3. The article says that "no staffing changes are planned." I don't know what kind of teams that they have, but I hope that they don't expect people who have made their living for years doing tactical purchasing to execute everything described in #2 above without any purchasing training or influx of new talent.

4. Both organizations' CEO's were quoted in the article. It's nice to see a purchasing program get C-level attention.

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, November 19, 2007

Animal-Friendly Purchasing In Action

Most of the purchasing articles I write are based on success experiences in my purchasing career. However, last month's article entitled "Purchasing, Social Responsibility & Animals" was based on what I viewed as an emerging trend.

I have to say, the research that I did in writing this article really affected me. And I have taken personal small steps to embrace the guidelines covered in the article.

A few examples (albeit small) include:
  • We recently rearranged our offices here at Next Level Purchasing headquarters and had to purchase a new office chair. Instead of buying a leather chair, we bought an upholstered one.
  • My old wallet had gotten pretty beat up. So instead of buying a new leather wallet, I bought one made from synthetic materials.
  • At home, we switched from Suave conditioner to White Rain because the packaging of the latter specifically says that the product was not tested on animals.

These were simple decisions. But it honestly gave me something to feel good about.

If all of us committed to these simple types of lifestyle changes, I think it could make a difference in our world.

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

Saturday, November 17, 2007

Vendor Performance Guarantees

I had to chuckle when I read today's Pittsburgh Post-Gazette article entitled "If you promise the moon, you might deliver green cheese."

The article starts off by saying: "There is no such thing as perfection -- and it would be nice if vendors admit it. No matter how good a job they do, something, sometime will go wrong. They can do everything under their control to mitigate problems, but something not under their control will crop up to cause a problem they might not have anticipated."

For those of you who are new to purchasing, you need to read these words carefully. Us long-timers know all too well that these words are so true.

Purchasing has its triumphant moments, but also its frustrating ones. The article provides a good case study of a frustrating situation despite a vendor's performance guarantee.

In situations like the one described, the vendor usually is excused from the performance failure due to a Force Majeure clause. If you're not familiar with Force Majeure, you may want to consider enrolling in our online class "Supply Management Contract Writing."

I hope that you're enjoying your weekend.

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

Friday, November 16, 2007

Economy Statistics Fans Will Like This...

YourBuyer - a USA-based BPO and client of Next Level Purchasing - recently came out with a video that shares some fun and interesting statistics about the global economy. I haven't independently verified the stats, but it was an interesting video to watch nonetheless.

Check it out here.

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

Thursday, November 15, 2007

Healthcare Purchasing Ethics

Earlier this week, the Pittsburgh Post-Gazette featured an interesting article about UPMC implementing a new stance on how their physicians can deal with suppliers. Basically, UPMC is taking a hard look at the influence (or perceived influence) there is on doctors who accept consulting engagements, samples, gifts, and the like from medical suppliers.

So, you say: "What's the big deal? Implement a conflict of interest policy. This is basic purchasing 101."

Yes. And no.

I've worked in purchasing for a medical university. I've done on-site purchasing training in a hospital. And I know many people who work in purchasing in the health care industry.

One of the biggest challenges in healthcare purchasing is getting physicians to change buying habits. They play the "but this affects the quality of patient care!" card so knee-jerkishly (do they teach that in med school?).

And, politically, physicians are strong in their organizations. Even stronger than airline engineers that play the "but this affects aircraft safety!" card.

So it is interesting to see UPMC making some headway on the issue. Specifically, the article says that UPMC physicians:
  • Will be prohibited from accepting gifts and tickets, regardless of their value, and most food
  • Will require advance approval for any consulting relationships between themselves and manufacturers
  • Cannot have their travel and meeting fees picked up by industry representatives
  • Will have limits on expenses and compensation when they are hired as speakers at industry events

This new conflict of interest policy is obviously driven from the top, which it must be to have any chance of success. I personally like it because, if it works out, it will help other healthcare supply chain organizations demonstrate that it is reasonable to have such a policy in place.

Anything that can help make a healthcare purchaser's job easier is more than welcome, in my book!

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

Wednesday, November 14, 2007

Are The China Sourcing Problems Isolated?

Two questions recently came to mind amid the controversy over China sourcing, specifically the toy recalls. First, is the lead paint issue new or just newly discovered? And, second, is the lead paint issue more widespread than just in China?

I decided to do a little experiment just for fun. And I decided to video record it for you in case you found such stuff interesting.

So here is the latest vlog (video blog) on the Purchasing Certification Blog:



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

Monday, November 12, 2007

Supply Risk With Big Suppliers

I hope that you have enjoyed the article "Are Big Suppliers A Big Supply Risk?" This article was based on the series of case studies that I just finished posting here on this blog.

The article gave some guidelines for dealing with big suppliers. Let's further explore the case studies to see how those guidelines could have applied.

There were case studies involving four big suppliers: Dell, Yahoo Web Hosting, Kelly Services, and Office Depot. The Dell and Yahoo Web Hosting case studies were bad and the Kelly Services and Office Depot case studies were good.

All big suppliers - what was the difference?

A big factor differentiating the good from the bad (and the high supply risk vs. the low supply risk) came down to people. At Kelly Services and Office Depot, we had an internal advocate or Single Point of Contact (SPoC).

These internal advocates (Cari and Kelly and Gerry at Office Depot) didn't simply throw a challenge over the proverbial wall and let another department worry about fulfilling an obligation to a customer. They took personal responsibility for seeing things through.

Big suppliers tend to have lots of internal controls. When dealing with them, you need an internal advocate that knows how to pass through the internal controls quickly. They need to specifically know who can solve a problem, how it will be solved, when it can be solved, what potential obstacles to a solution there might be, and how to overcome or avoid those obstacles.

With Yahoo and Dell, I just don't think that anyone with whom the client has contact actually knows these things. There are too many channels to go through to get a simple problem solved (e.g., like having a server rebooted or emailing a coupon code).

For any purchase where there is elevated supply risk and you are doing business with a big supplier, you absolutely need an internal advocate. The case studies demonstrated the difference in supply risk when you don't have one.

So apply the guidelines from the article and insist on having the SPoC when doing business with a big supplier. You'll need one when things go wrong - and many times, they will.

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

Saturday, November 10, 2007

Supplier Case Study Index

I hope that you have enjoyed my series of supplier case studies. I'll use this blog post to index them and provide links to each. Just click on the company name to go to the applicable case study...

Dell Inc.

Yahoo Web Hosting

Kelly Services

Office Depot

Karen Oakley Designs

Cherry Communications


The November 13 edition of PurchTips will feature some guidelines for dealing with large suppliers that were tested through these case studies. I'll also have a future edition of PurchTips dedicated to guidelines for dealing with small suppliers that were tested through these case studies.

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

Friday, November 09, 2007

Cherry Communications Supplier Case Study

Welcome back to the sixth and final installment in a series of case studies designed to test hypotheses I have regarding how supplier size needs to be factored into sourcing and supplier management approaches.

I've saved this case study for last because it is my favorite. This experiment is one more element of proof that what we at Next Level Purchasing teach is not just theory. If you don't avoid the mistakes that we teach you to avoid, the results are predictably poor.

So this summer, we put the finishing touches on the new SPSM Certification & Enhanced Results Program. This program was an additional alternative to the standard SPSM Certification Program that we introduced on July 1, 2004.

The cornerstone of the SPSM Certification & Enhanced Results Program is the SPSM Multimedia Study & Implementation Guide. Unlike old-school certification study guides which are boring 400-page manuals, the SPSM Multimedia Study & Implementation Guide is an iPod filled with over 50 video and audio clips designed to help students pass the SPSM Exam and implement what they've learned in the workplace for better results.

We decided to launch the program on October 1, 2007. The primary way we would communicate this launch was via the list for our email newsletter, which is comprised of over 60,000 opt-in subscribers.

We also thought that it might be fun to do a little PR, though we had low expectations for getting any type of coverage. That presented itself as good opportunity to continue our supplier case study experiment.

I had met an independent PR person with her own firm - Cherry Communications - through an online marketing forum. We had exchanged emails in the past and I had been a subscriber to her PR newsletter and she seemed knowledgeable about the field.

Shannon Cherry presented a standard scope of work and a price. The scope was:

Days 1-7: Craft first draft of press release
Days 8-13: Discuss release
Days 14-15: Revise release, if needed
Days 16-28: Distribute release starting with bloggers, then magazines, then newspapers
Day 20 til launch: Follow up phone calls (3 hours worth)

The price was 3 monthly payments of $300 each or $799 up front.

OK. So let's treat this like the typical tactical purchasing department. Small dollar purchases don't require competitive bidding, so let's not evaluate any other options in the market. Hey, if I pay up front, I'll save over $100. This is easy, right?

So we selected Cherry Communications for this project and paid up front.

The project actually started well. Cherry Communications worked with us on a fine press release.

But that is where the good work ended. My gut instinct was right on the money.

I don't know if Shannon Cherry thought that I didn't have contacts in the media or what, but as I contacted some of my blogger, journalist, and editor friends, I found that none of them - NOT ONE - had as much as received a press release from Cherry Communications much less a phone call. I confronted Shannon Cherry about this and she said she was behind but all of the media contacts we agreed to would be contacted within days.

Again, none of them had heard from Cherry Communications. And I started having trouble reaching Shannon Cherry.

Interestingly, Shannon Cherry writes a blog called Mommy, Inc. I thought that I'd check on it during this time. Maybe she was ill or injured and couldn't work.

But, sure enough, the blog was being updated just about daily. Sadly, those posts were about things that, to me, were far less important than Next Level Purchasing's paid project: a jambalaya recipe and Britney Spears' performance at the VMA's.

So October 1, 2007 arrived. Thanks only to my own conversations with Michael over at the Sourcing Innovation blog, he posted a last-minute blurb about the launch. But in terms of PR, that was about it.

Of course, I confronted Shannon Cherry about this to see what she would say. She offered to refund $300 and would provide records of the phone calls she made.

I didn't necessarily think that this was a sufficient percentage of the total - especially because I expect to pay for results, not a supplier's time - but for the sake of this experiment, I accepted the offer. Shannon Cherry said that she would apply a credit to my credit card.

Yet, I never had a refund posted to my card. Nor did I receive any phone records.

With credit cards, getting your money back from ripoff artists is pretty easy. You just file a dispute with your credit card company.

But that doesn't really help others avoid getting snookered. The Better Business Bureau is a great free service that purchasers (both C2B and B2B) can use to learn about shady businesses and to mediate disputes.

So I filed a complaint with the BBB. Interestingly, Cherry Communications was already listed in their database with an unsatisfactory record due to not responding to complaints!

Of course, if Cherry Communications doesn't respond to the complaint (which I don't expect them to do), I'll have the credit card dispute option.

One of the most hilarious aspects of this experience was Shannon Cherry's October 9, 2007 newsletter. She always starts out her newsletters with a blurb about her personal life.

She talked about being how she recently started a (free) podcast and she was transferring her (free) blog to a new server and she became a contributor to b5media's (free) blog, etc. Should a company really be investing their resources in free offerings when they can't serve their paying clients? Perhaps Cherry Communications is more of a hobby than a business.

So Next Level Purchasing students: did you see the purchasing principles that were violated in this experiment?

OK. So that concludes the series of case studies. In the near future on this blog and in PurchTips, I'll be summarizing the guidelines that these case studies demonstrated/violated.

Stay tuned!

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

Thursday, November 08, 2007

Karen Oakley Designs Supplier Case Study

Welcome back to the fifth installment in a series of case studies designed to test hypotheses I have regarding how supplier size needs to be factored into sourcing and supplier management approaches.

While the first four posts have focused on big suppliers, today's will discuss our experiences with a small supplier - Karen Oakley Designs. Karen Oakley Designs is a one-person firm specializing in graphic design for projects like print advertisements, marketing collateral, and the like.

Let's begin by considering the four primary dimensions of supplier performance: cost, quality, delivery, and service.

First of all, in the graphic design industry - specifically graphic design for print ads - quality and delivery are probably the two most important dimensions. Quality is important because, without an attractive design, no one will notice or be attracted to the ad that you just paid big money to place in a magazine. Delivery is important because publishers have firm deadlines by which they have to receive artwork (and most clients like Next Level Purchasing are always deciding to advertise at the last minute).

Second of all, the graphic design industry is full of firms that nearly rip off their clients with their pricing. The "creative process" is one that can't be timed like creating a widget to a standard specification, they argue. And no two designers will create the same ad, so it is unfair to compare them based on cost.

Hogwash.

When you find a designer that is tuned into your brand and can produce work that delights you at a reasonable cost, you've been successful in your sourcing. Karen Oakley Designs does just that.

But perhaps Karen proved her value the most when we were creating the SPSM certificate in 2004. We wanted a beautiful, full-bleed, heavyweight certificate that could be personalized quickly with minimum printing costs. That sounds easy but, specifics aside, it wasn't. Even though it wasn't really part of Karen's scope of work, she brainstormed and suggested a brilliant solution that was everything we needed but couldn't figure out on our own.

There is a danger of getting comfortable with a supplier and, before you know it, end up paying way too much. Every purchasing professional who has been around a while finds him or herself trying to convince an internal customer that an incumbent supplier is taking advantage of them.

So, no matter who your supplier is, it doesn't hurt to benchmark pricing as the relationship continues along.

We've done that with our design work and Karen Oakley Designs is always competitive with similar one-person design firms. I'm not saying that Karen Oakley Designs is the least expensive 100% of the time, but Karen Oakley Designs is never grossly overpriced compared to other reputable one-person design firms.

And those one-person design firms are always more competitively priced than big design firms. Just for kicks and giggles, we got benchmark pricing from a big design firm for a piece that Karen Oakley Designs charged us $175 for. The big design firm quoted us $2,000.

Do I feel that the quality would have been better by going with the big design firm? Heck no!

And, in deadline constrained procurements, it is important to have a relationship with supplier personnel that can control the outcome. We've always had that with Karen Oakley Designs. I can't say that would be the case with a big design firm.

Oh, so how did we find Karen Oakley Designs? Through the referral of someone who had been a client of Karen's.

So there are many good reasons to use a small supplier when you can. Can there be disadvantages and big risks, too? You know it!

So there is one more case study coming in this series before I tie all of the case studies together and begin distilling them into lessons and guidelines. Stay tuned!

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

Wednesday, November 07, 2007

Office Depot Supplier Case Study

Welcome back to the fourth installment in a series of case studies designed to test hypotheses I have regarding how supplier size needs to be factored into sourcing and supplier management approaches. In today's case study, we'll be exploring some work we've done with Office Depot.


The background of this case study goes back to early 2004. At that time, we were preparing for the July 1, 2004 launch of the SPSM Certification.


Because of the challenge and prestige of the SPSM Certification, we wanted to award our successful candidates with something more than just a paper certificate. Part of becoming certified would involve candidates receiving a beautiful glass engraved award:



Honestly, before we launched the SPSM Certification, we didn't know how successful it would be. We didn't know if we would even have to order one of these awards.

Now, we wanted a really nice award to recognize a really nice achievement. But most of the suppliers we talked to said "just go look at our Web site."

I love Internet shopping. But, when buying "luxury" items, it really helps to see things at a higher than 72 dpi resolution and to speak with someone who knows the product.

Fortunately, Gerry Wallace - a manager of promotional products for Allied Office Products (which has since been acquired by Office Depot) - was willing to spend time with us. In fact, I visited his office for over an hour during which he made sure to ask the right questions and to discuss all of the options so that we got it right.

I was so impressed that Gerry would spend his time with a client that may only end up spending $70 for a prototype. Fortunately for both of us, the SPSM Certification has become hugely successful and we've purchased an unbelievable amount of awards since then!

The arrangement has worked out great. We and our students are so pleased with the high-quality awards that we have not changed the design in the years since introducing the SPSM Certification.

Sure, there has been a bump in the road along the way. That bump related to how we manage the shipping of the awards.

Basically, we have Office Depot ship the awards directly to our students. This minimizes several things: the cost of shipping, the cost of handling, the risk of the awards being broken due to handling, and the time it takes to get the award in the students' hands.

But as we started to order multiple awards per day, on a few occasions the awards were shipped to the wrong students when we ordered those students' awards on the same day. This was frustrating to me.

We strive to not just provide our students with a certification - we strive to deliver an "experience" filled with joy, pride, and appreciation. Eagerly anticipating your award only to find someone else's name on it is a big disappointment. Then having to send it to someone else isn't much fun.

In my purchasing experience, I've seen problems like this reported to a sales person: the sales person gives lip service about the problem being fixed, the problem is never investigated, and the problem recurs. Fortunately, there was real action and not lip service with Office Depot.

Gerry visited our offices, talked through the problem, and went to work internally. That was about a year ago. We haven't had a similar problem since.

As the SPSM Certification continues to grow, our volume of awards does, too. As a part of the experience that we provide to our students, I actually consider these awards a strategic category for us.

So it's the ultimate situation when sourcing a strategic category to have a supplier spend the time up front to make sure things are perfect despite no guarantee of any type of volume and then effectively and immediately address the invariable problems that arise during a long-term relationship. Office Depot in general and Gerry Wallace in particular have done a great job of supporting us!

OK, so we've covered case studies of four large companies so far in this series. Next up, we'll be exploring supplier management and sourcing strategies with small suppliers. As I've mentioned in previous installments, I'll be holding off on summarizing the lessons and guidelines from these case studies until I've finished the series.

Stay tuned!

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


Tuesday, November 06, 2007

Kelly Services Supplier Case Study

Welcome to the third edition in a series of case studies designed to test hypotheses I have regarding how supplier size needs to be factored into sourcing and supplier management approaches.

If you read the first two posts about Dell and Yahoo Web Hosting, you may think that I have a prejudice against using big suppliers. You'd be wrong. I'll use today's case study to illustrate that big suppliers don't always treat small customers like they are unimportant.

Next Level Purchasing is a growing organization. Year after year, we experience tremendous growth in the number of students we serve. And that, of course, requires that we also grow our employment base.

Earlier this year, we created the position of External Relations Coordinator to handle things from helping the leaders of our larger clients track their team's progress through our purchasing training to interfacing with organizations who grant approval or recognition of our purchasing education to coordinating marketing projects. This is a very important position and, for a small organization, we simply cannot afford to hire the wrong person.

To manage the risk of hiring the wrong person, we decided that we would try working through a temporary labor agency to find someone on a temp-to-hire basis. This was the first time we took such an approach. Now temp labor is often associated with administrative work, but some agencies also provide professional temp labor.

In speaking with temp labor suppliers, it became clear that our request for just one professional person was a pretty small request. After all, here in the Pittsburgh Airport Area, there are some large corporate headquarters and offices for companies like Bayer, GlaxoSmithKline, FedEx Ground, Eaton/Cutler Hammer, Nova Chemicals, ThermoFisher Scientific, and more. The temp agencies in this area can send dozens of temps to these clients.

Because of the "ease of escape" involved in bringing a temp on board, most companies just have the temp agency send someone in. If that person doesn't work out, they send someone else. And that cycle will continue until you find someone you like or simply give up.

But, again, as a smaller organization, we don't want to waste one man-hour. So we wanted to interview candidates. Essentially, we were a high-maintenance customer with the potential of hiring one person. Not exactly the type of engagement that temp agencies dream about.

Despite our small potential revenue and stricter-than-average requirements, the temp agency we ended up choosing - Kelly Services - totally treated us like we were a big customer. After all of the years that I've been in purchasing, it takes a lot for me to be impressed with supplier service, but their performance was excellent. Specifically, the performance of their branch manager, Cari Fessler, was very impressive.

Here are just a few of the ways that Cari and Kelly Services brought value to our engagement:
  • They were willing to allow us to interview candidates in a situation where they would usually just send someone in
  • They were more than accommodating when we asked to interview more candidates than we originally agreed to interview
  • They worked really hard at finding people whose profiles matched exactly what we were looking for, despite the fact that most of their pool of workers were of an administrative background. Everyone they sent for an interview deserved the interview and was a legitimate candidate.
  • They followed up promptly to make sure that we were happy at every step of the process
  • And, most importantly, they found us someone who was the perfect match - we ended up hiring her!

In temp-to-hire situations, the employer has to pay a flat fee when hiring the employee. The amount of that fee depends on the number of hours the employee worked as a temp before officially starting her employment.

We weren't watching that number closely and, unfortunately, just barely missed a threshold that would decrease our fee. Kelly Services saw this when preparing our final bill and gave us credit to bring our fee down to the next level. Now this wasn't a big savings for us and certainly not a big revenue loss for Kelly Services, but that move showed real class and care for the customer. A dollar is a dollar, you know. And suppliers that care about adding any amount of money to your bottom line are the type of suppliers that we all need more of.

So despite being a small customer, Kelly Services did not give us "small customer treatment." They delivered above-and-beyond results!

If you've been following along with this series, you know that I'm holding off on the purchasing lessons until I've posted all of the case studies. The next case study with a different supplier will reinforce some of the underlying principles that made our experience with Kelly Services such a success story.

Stay tuned!

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

Monday, November 05, 2007

Yahoo Web Hosting Supplier Case Study

Well, I kicked of the supplier size case study series with a post about a negative experience with a large supplier, Dell. This morning, I'll continue the series with a horror story about another large supplier: Yahoo Web Hosting.

For those of you "tuning in" for the first time, this series is designed to share real-life experiences related to hypotheses that I am testing regarding how supplier size needs to be factored into sourcing and supplier management approaches.

So here goes the Yahoo Web Hosting case study.

Back in 2002, the tech markets were crashing. Dot-coms were going out of business left and right. And Web hosting vendors were no exception.

At the time, Next Level Purchasing had been using a Web hosting vendor called Hypermart. They really had a great service.

But when financial times got tough, they sold out to Endurance International - a holding company that was gobbling up Web hosting providers. And, after this acquisition, things got bad. They offshored all of their customer facing functions and the new people couldn't get anything right. It was an unqualified disaster.

So in those times, the #1 priority for supplier selection in the Web hosting category was financial stability. Because they were a publicly-held and profitable company, we selected Yahoo for our Web hosting to replace Hypermart.

All in all, we were very happy with our relationship with Yahoo Web Hosting for the next few years. The only problem we had was related to our site's capability of sending email via the various forms we used on our site - you know, when you fill out one of those "Contact Us" forms and hit "submit" and it sends an email to the company?

Well, every six months or so, that capability - referred to as "sendmail" functionality - would malfunction. When we reported it to Yahoo's tech support, it was usually fixed within 24 hours.

Now that problem was a pain. We depend a lot on the sendmail functionality for things like sending automatically-generated usernames and passwords, getting questions from our students, and even receiving notifications that a new student has enrolled and must be set up in our system.

But one 24-hour outage every six months was tolerable given that we knew the supplier wasn't going to go belly up without notice.

However, in March of this year, things got really bad.

The sendmail functionality went down five times in a six-week period. The outages were lasting several days. Sure, we had a backup plan, but backup plans are backup plans because they are not as good as primary plans.

But not only was Yahoo Web Hosting's quality a mess, but their service was even worse. I called tech support and the people who answered the phones didn't have responsibility for these types of issues.

And, not only that, but they wouldn't forward us to the people who had responsibility, nor would they personally speak with someone that had responsibility. Their process was simply to enter the problem in their system and wash their hands of the matter.

Escalations to supervisors produced the same response: "we can't do anything other than enter it into our system and let Engineering handle it." And the estimated resolution time was 3-5 business days. No chance for expediting. No chance to speak with anyone who could control the outcome. No empathy for the customer.

I explained to them that the problem had caused us to lose about $22,000 in revenue from the previous month. They didn't care. The process was the process. There was no personal responsibility. No ownership of the problem. Not the slightest recognition of the pain of the customer. No above-and-beyond mentality from Yahoo Web Hosting whatsoever.

I even went as far as trying to record our telephone conversations for this case study but, as soon as I told them I was recording the call (notification is required by law), they would hang up. Funny how they can require that the call would be recorded, but weren't willing to be held accountable themselves.

Anyway, when a supplier doesn't care that you lose $22,000 in revenue, it's obviously time to switch suppliers. So that's what we did.

After five years of reliable business, Yahoo Web Hosting turned its back on us when we needed them the most. So we tossed them to the scrap heap of former suppliers.

Hmmm...so far that's two case studies of two large suppliers. Does that mean that small and mid-sized companies should avoid large suppliers? Does that mean that small suppliers are best?

Be patient. There is still a lot to explore in the coming case studies and many lessons to draw from these experiments!

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

Friday, November 02, 2007

Dell Supplier Case Study

Welcome to the first of a series of case studies designed to demonstrate how supplier size should be factored into sourcing decisions. These experiences were part of an experiment that I documented to test some hypotheses that I've had.

We'll kick off the series by discussing an experience with Dell, Inc.

Let me start off by saying that I absolutely love Dell computers. I've owned and used many computers over my life: IBM, HP, Toshiba, Gateway, etc. But none has been as reliable as the Dell's I've had. All of Next Level Purchasing's computers and servers are Dell.

So I am a big fan of Dell's quality. Now, their service is another issue.

Earlier this year, the service plan on one of our servers was about to expire. Dell sent me several emails promoting the opportunity to renew our service agreement. One of those emails said that if we renewed our service agreement, we would receive 100 "Dell Dollars" - essentially a credit that we could apply to a future Dell purchase.

In business-to-business purchasing - particularly large-business-to-large-business - these types of incentives are often ignored. But Next Level Purchasing is not a billion dollar company (yet), so $100 is "real" to us. It certainly factors into a total cost of ownership equation for the service that we were interested in purchasing.

So we extended our service plan on January 24 by working with our Dell sales rep, Jeremy Swayne in California. Jeremy said that we would receive our Dell Dollars within 4-6 weeks.

They didn't arrive.

So on March 12, I emailed Jeremy. No reply.

I called Jeremy on March 19. However, the voicemail was no longer Jeremy's - it was Terri Frosky's. So I left a message explaining the situation and requesting a return call within 48 hours.

No reply.

I called again on April 6, got voicemail, but instead punched through the prompts in the hopes of speaking with someone live. After punching what seemed like a half-dozen prompts, I reached a woman with a foreign accent who identified herself as "Angela."

Angela said that she couldn't help me but gave me a number to call: 818-705-0000. When I dialed that number, it wasn't even a Dell number!

You can imagine that I'm getting a little upset now, right? Well, the cost of my time spent by this point definitely exceeded the $100 worth of free Dell merchandise. From a total cost of ownership perspective, it didn't make sense to continue.

But I had the idea for this series of supplier case studies and the lessons it could teach purchasing professionals, so I decided that I would commit to following this to completion and documenting every aspect of it in the spirit of purchasing education.

One of my philosophies when dealing with supplier problems is to always be nice first. Some buyers go right into aggressive mode at the slightest sign of a problem. I like to be nice first. But if that doesn't get the job done, you have to change tactics.

So, because Terri Froski didn't return my earlier "nice" voicemail, this time when I went into her voicemail, I was a little more aggressive.

Before I tell you what I said, let me make this clear: I don't recommend the following tactics when you are a buyer for an employer. I can get away with this type of stuff because I'm the president of the organization I work for. Trying this in your job could be disastrous to your career.

So on Terri's voicemail, I said that if I don't get a call by the end of the day, I am going to put a video on YouTube showing how bad Dell's customer service is. Terri called back within an hour!

It's a shame that people respond to threats but not polite requests. In contrast to what the old adage is, you don't always catch more flies with honey than vinegar (or whatever that goofy saying is).

Terri said that Jeremy Swayne had left the company and that the Dell dollars weren't previously applied. She said she applied them and I should get them by email or mail within 6-8 weeks.

Of course, they didn't arrive.

So I tried calling the Terri/Jeremy extension on June 11 and got a voicemail greeting that did not include a name. Someone named Simon called me back and said he was new to Dell and there was no record of me having been sent the Dell Dollars. He gave me another number to call.

Keep in mind, I am only continuing with this ridiculous waste of time to document some things that my hypotheses are proving!

At the new number, I reached a gentleman by the name of Joesam who said that he was in the Philippines. He worked on the issue while I was on the phone. He asked if he could put me on hold for 2-3 minutes. I said yes. He came back, we talked, and he asked if he could put me on hold for 2-3 minutes again. I said yes.

During the phone call, he asked me eight times if he could put me on hold for 2-3 minutes!

Fifty minutes and 14 seconds later, Joesam said I'd receive a $100 coupon by email in 3-5 business days. And - believe it or not - I did!

For all of US residents' complaints about offshoring, it is sad that US people weren't able to accomplish in 5 months what Joesam in the Philippines accomplished in one phone call (even if it was a 50 minute phone call!).

What a horror story, huh?

But this is very typical in small-purchaser-big-supplier relationships. I have another supplier horror story that I'll share in my next post before I get to some some success stories. Then I'll tie all the stories together with a set of guidelines that I've developed from testing my hypotheses.

Stay tuned!

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

Thursday, November 01, 2007

The Chinese Government Creates Toy Supply Shortage?

I just read over on Comcast's site that the Guangdong provincial government has banned exports from nearly half of the province's toy factories due to lead paint concerns.

This just feeds into my belief that there probably is no (or not much) "unleaded" paint in China. US manufacturers, such as Mattel, probably just never paid attention to whether or not the materials used in imported toys complied with US safety laws.

And that's not new - the Mattel toys I had as a child in the '70's were manufactured in China and probably were covered in lead paint.

Now, I have two small children of my own. And I'll be telling those kids to tell Santa that they don't want any toys that his elves outsourced to Chinese subcontractors.

I've tried to watch all the recalls, but there have been soooooo many of them. It is impossible to keep up to be sure that your child doesn't have a tainted toy.

I'm sure that the Chinese government's crackdown is too late to have guaranteed that US store shelves will be lead-free this holiday season. I'm all for free trade, but I think that you're crazy if you don't leave toys marked "Made In China" on the store shelves this holiday season. Maybe next year we can feel more comfortable that all appropriate precautions have been taken, but not this year.

To Your Career,
Charles Dominick, SPSM
President and Chief Procurement Officer
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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