Thursday, May 29, 2008

Purchasing Principles From The Stanley Cup Finals?

One of my favorite pasttimes is coaching purchasing teams.

Another is coaching hockey teams.

The first I've done successfully in the real-world.

The second...well, not so much. Unless you count coaching from my game room couch.

But I still couldn't help seeing parallel principles between purchasing and hockey as I watched and analyzed the first three games of the Stanley Cup Finals this year.

My hometown team, the Pittsburgh Penguins, lost the first two games of the series but rebounded last night to make it a 2 games to 1 series. The first two losses were frustrating to watch, but did inspire many principles from the aforementioned game room couch. Here are a few of them that apply to both hockey and purchasing...

Principle #1: There are times to experiment and times not to experiment

The Penguins were 12-2 in the playoffs going into the finals. In amassing this impressive record, they were consistent in that: (a) they played four lines and (b) those lines were kept intact with the first line being Crosby-Hossa-Dupuis and the second line being Malkin-Sykora-Malone.

Well, what does Michel Therrien do in Game 1? Change the formula with which they have been so successful.

Aside from the first shift or two, the lines were all mixed up. Players playing with players that they had not played with before. They had no chemistry and couldn't penetrate Detroit's defense nor, in some cases, even complete a pass. In addition, Therrien kept the fourth line on the bench for the most part.

The result? An embarrassing 4-0 loss.

So what does Therrien do for Game 2? Mix the lines up even more and give even less playing time to the fourth line.

The result? Another shutout loss - 3-0.

The Pens returned home last night. What did Therrien do? Go back to four lines and reunite the top two lines.

The result? A stunning 3-2 win that included a goal from fourth liner Adam Hall. Still, the Penguins are behind in the series and the best they can hope for is a tied series going back to the challenging-place-to-play, Joe Louis Arena in Detroit.

There are times to experiment and times not to experiment. The first two games of the Stanley Cup Final is not the time to experiment.

This principle applies to purchasing as well. If you've never implemented a certain advanced purchasing technique - like JIT inventory - don't start with your most critical, challenging category that can bring your company to financial ruin if your efforts don't get off to a good start. Prove the concept on less risky categories, work out the wrinkles, and then evaluate the use for more critical categories.

Principle #2 - Even when things are going smoothly, look for small opportunities to improve

After reading Principle #1, you may think that I am a "if it ain't broke, don't fix it" type of guy. That's not the case. Principle #1 applies to big changes in risky situations.

But there is always an opportunity to make a good thing better. Though the Pens won last night - and traditional wisdom is to not change anything when you're winning - I think that there is an important change that can be made to get an even better result.

Jarko Ruutu, who I am generally a fan of, seems to be on the ice every time the Red Wings score a big goal. Though he is a good agitator that can help get Detroit off their game, I view him as a defensive liability who hasn't positively contributed at all in this series.

George Laraque has been scratched the last two games. He is great at cycling down low in the offensive zone. The Pens did a good bit of this last night and had great results with wearing down the Detroit defense. Laraque can help in this type of game.

So I say scratch Ruutu and play Laraque.

This principle can also apply to purchasing. Even if you are doing well, hitting your savings targets, there is likely a small thing you can do better - like source a previously ignored simple category - that can make a difference.

Principle #3 - Use different tactics for different situations

The Pens have had a pretty effective penalty kill in this series. Last night, when they were leading, Adam Hall and Max Talbot did a great job of getting to loose pucks and firing them down the ice to take time off the penalty clock.

They also did this effectively in the late stages of Games 1 and 2.

But the problem was that they weren't leading in the late stages of Games 1 and 2. They were losing. And by playing fourth liners at that stage of the game made the Penguins anything but a threat to score a short-handed goal and get back in the game.

What I would do in those situations is play Crosby or Malkin on the penalty kill, even if just for a 30-second shift each. Penalty killing with the lead or early in a game is a different situation than penalty killing late in a game when you are losing so I believe you need different tactics.

This, of course, applies to purchasing as well. If you're negotiating with a sole source supplier, using the negotiating tactics you use with a commodity supplier will not get you to your goal. I discuss this topic in the PurchTips articles "Adjust Your Negotiation Approach" and "Good Negotiation Tactics That Can Backfire" as well as in the online class "Powerful Negotiation For Successful Buying."

So there you have three principles that you can use in purchasing, in hockey, or in life. Now, if you'll excuse me, I have to get back to my day job (which is definitely not being an NHL coach)...

To Your Career,
Charles Dominick, SPSM
President & 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, May 28, 2008

Buyers' Big Frustration: Hidden Fees

Today, the Pittsburgh Post-Gazette reported that the Pennsylvania Attorney General Tom Corbett is fighting to require businesses to include fuel charges in their advertised prices.

"The total price of a product or service is a key factor in any purchase, and is something that needs to be disclosed to consumers upfront," Mr. Corbett said. "Any business intending to collect an added fee for fuel or energy must disclose those charges when they advertise their prices."

Amen.

Consumers and businesses base their purchase decisions on the price information at hand. Finding out later that you chose the wrong supplier, store, etc. because the one you chose charges hidden fees is an unfair situation to be in.

One of my biggest frustrations in the early part of my purchasing career was dealing with those "over-and-above charges" that somehow never were mentioned in a response to an RFP, but seemed to show up in an invoice as if they were quite expected and common.

I learned to minimize these occurrences through RFP language, negotiation questions, and contracts. In one crazy situation when I was buying aircraft component maintainence outsourcing services, there was an unbelievable amount of discussion between myself and a prospective supplier over the contractual definition of "severe damage."

Basically, if a component qualified as having "severe damage," the supplier had the right to charge more than its contractually-agreed fixed cost for the repair to that component. Well, obviously, my company wanted the frequency of severe damage diagnosis to be rare. The supplier wanted it to be applicable on seemingly every occasion.

We decided to do a pilot program with the supplier and that really exposed the differences in opinion on what severe damage was. We ended up actually choosing another supplier after it became clear that the first supplier had its eyes on frequent "over and above charges."

The contractual relationship with the second supplier went great. Perfect quality, 100% on-time delivery, and never an over-and-above charge.

I'm glad that the government is coming to the aid of consumers to protect them from over-and-above charges.

But for us B2B buyers...we're on our own to a certain extent. We have to be smart about really capturing total cost when we get proposals from suppliers. A "No Fuel Surcharge" clause in your RFP templates and contract templates may not be a bad idea.

To Your Career,
Charles Dominick, SPSM
President & 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, May 23, 2008

Purchasing Tidbits For The Holiday Weekend

  • Yesterday, I reported the latest ethical brouhaha in Pittsburgh that involves lessons in purchasing as well as politics. Well, it seems like our mayor Luke Ravenstahl has seen the light. The Pittsburgh Post-Gazette today reported that Ravenstahl has decided to pay for his own tickets to see the Penguins play in Detroit: "After initially asking the city Law Department for a ruling on whether he could accept free tickets as part of the trip, Mr. Ravenstahl decided yesterday to pay for all expenses out of his own pocket, spokeswoman Joanna Doven said. Tickets to the first two games will cost him $350 each. 'He's pretty sure it's legal to pay for it himself so he preferred to go that route,' Ms. Doven said." He's pretty sure it's legal to pay for his own hockey tickets? Pretty sure, Ms. Doven? This makes me laugh. There was no mention of whether the Purchasing Certification Blog had any impact on Ravenstahl's decision.

  • There was a provocative post on Supply Excellence yesterday entitled "Sustainability: Throw Out Everything You Know." It's a must read because it highlights how the blind rush to be/appear green can be counterproductive and uses a real-life example of university green purchasing gone awry. But do read it carefully - I almost thought that Tim Minahan was condoning animal cruelty until I realized that he was using some examples to illustrate how short-sighted some sustainability tactics are. And you know how I feel about animal friendly purchasing.

  • If you haven't already, be sure to get a copy of "The e-Sourcing Handbook" over at iasta.com. This book is packed with a lot of killer supply chain technology content. It's not something most people will read cover-to-cover (even me), but I think it is a very valuable reference for any purchasing professional - even if you're not personally involved in selecting or implementing technology solutions. It even mentions the SPSM®. Maybe I'll do a more formal review of it on this blog at some point.

For those of you in the USA, I wish you a wonderful, long holiday weekend!

To Your Career,
Charles Dominick, SPSM
President & 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, May 22, 2008

Ethics: If You Have To Ask...

I blogged this past August about an ethics dispute involving Pittsburgh mayor Luke Ravenstahl.

Well, it seems that Mayor Luke likes the perks of being a mayor. Likes 'em a little too much in my opinion.

Now that the Pittsburgh Penguins are in the NHL's Stanley Cup Finals, Ravenstahl is apparently trying to score some free tickets to watch a game or two in Detroit. Oh, but unlike the time when he accepted $9,000 in golf from city suppliers, he has asked for an official legal opinion from the city on whether or not he can accept those tickets, according to this article from the Pittsburgh Tribune-Review.

Last night on the local news, I saw a member of Pittsburgh City Council saying that the mayor makes $100,000 per year. The council member said he makes half of that and pays for his hockey tickets out of his own pocket and the mayor should do the same.

I wholeheartedly agree.

My feeling when it comes to ethics - both in politics as well as purchasing - is that if you feel that you have to ask whether something is ethical...DON'T DO IT!

It reminds me of a saying that the teacher used in my sophomore driver's education class: "When in doubt, don't!"

Because even if something is "technically within ethical guidelines," your opponents will still have the opportunity to find fault with you and question your integrity.

In true spirit, ethics is not about being within guidelines. It's about demonstrating integrity above-and-beyond what is expected.

But Mayor Luke obviously doesn't get that.

I hope he has a successful political career. Because his ethical profile doesn't bode well for a purchasing career. He wouldn't even be a junior buyer in any purchasing department that I managed.

To Your Career,
Charles Dominick, SPSM
President & 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, May 21, 2008

The SPSM Certification & Cost Savings

One of the attendees at my presentation at Iasta's reSource conference last week was Sourcing Innovation's blogmaster Michael Lamoureux (a.k.a., the doctor). the doctor must have taken copious notes because he did a fine job of summarizing my presentation in his blog post entitled "Purchasing Certification as a Savings Strategy," which he posted today.

Check it out!

To Your Career,
Charles Dominick, SPSM
President & 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, May 16, 2008

Managing Supplier Relationships

I hope that you have enjoyed the article "Skillfully Managing Supplier Relationships."

This article, like several that I've done over the past two years, was based on an accompanying podcast from the Purchasing & Supply Management Podcast SeriesSM. So let me ask you about that...

Personally, I enjoy doing the podcasts and want to do more and more. I feel like the value of the articles rises when there is an additional audio resource to go to for more information. And, with 15 podcasts as of right now, there are hours upon hours of educational material available...for free!

But, with about 75,000 PurchTips subscribers, there hasn't been much feedback despite lots of downloads. Are you listening to the podcasts? If so, are you finding value in them? Should I do more? Do you have any suggestions for future podcasts?

If you haven't checked out any of the podcasts yet, definitely check out the latest one. I've probed a senior purchasing executive for some tips to help you - it's hard to get that type of advice for free and so easily accessible!

To Your Career,
Charles Dominick, SPSM
President & 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, May 15, 2008

Leadership & Micro-Management

A week or so ago, I posted a short blog about leadership. In it, I encouraged aspiring leaders to become more comfortable with delegating.

In some situations, however, a leader does need to roll up his or her sleeves to ensure that s/he gets the deliverable s/he wants. Most leaders would love it if they gave general (read: cryptic) instructions and got the results that they wanted every time. In reality, there is bound to be a miscommunication from time-to-time where it takes more time to give instructions on how to fix the deliverable than it would have taken to just be explicitly clear at the outset.

The key is to be able to identify those situations where step-by-step specific instructions up front are warranted. This requires knowledge of the skills of your team members as well as your track record in delegating to them. But Kelly Services' SmartManager newsletter has a few additional useful tips in their article entitled "When Micro Managing Is A Good Idea."

BTW, SmartManager is a pretty good newsletter. I get it by email as a client of Kelly Services. Nice, concise, useful tips for managers. Where I see relevant articles that can be applied to the purchasing profession, I'll link them here.

To Your Career,
Charles Dominick, SPSM
President & 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, May 13, 2008

Returning From Iasta reSource 2008

Well, I'm sitting in the Indianapolis airport waiting for my flight back to Pittsburgh and hoping that I'll get home in time to see at least the 3rd period of Game 3 of the NHL Eastern Confererence final (go Pens!).

Though my presence at Iasta's reSource conference was limited to the time allotted to my presentation, I did get to stick around to attend one breakout session. It was on the topic of multi-round eSourcing negotiations. I'm glad I attended that one.

It seems that there is a lot of struggle around the ethics and effectiveness of multi-round eSourcing negotiations vs. pure reverse auctions. I personally know that multi-round eSourcing negotiations can be both ethical and effective, but there have to be guidelines. I feel a new PurchTips topic coming on...

All in all, reSource was a very classy event. I admire the management team's entrepreneurship as well as their accessibility to their customers. I've been at events where the C-levels are almost "protected" from their customers. That wasn't the case with Iasta. A very personable, easy-going group with a lot of pride and passion.

Unfortunately, I missed some presentations regarding Iasta's optimization capabilities. Optimization is such a cool topic in my book. It is one that had a lot of buzz in the early 2000's, kind of lost that buzz when people realized it wasn't for your every day, mainstream type of purchase, then seems to be regaining a buzz as more uses are found for it.

To Your Career,
Charles Dominick, SPSM
President & 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, May 09, 2008

Iasta Recognized Again

I just received a press release yesterday noting that Iasta was named to Entrepreneur Magazine's Hot 100 list. You may recall that I recently did an interview with the CEO of Iasta for this blog just a few weeks ago.

This is impressive. Not just the honor, but the fact that Iasta has the PR people keeping tabs of all of the honors that they can apply for. We need to do more of that here at Next Level Purchasing.

Speaking of Iasta, I will be speaking at their reSource Conference on Tuesday. If you're going, contact me at cdominick [at] nextlevelpurchasing [dot] com ahead of time and maybe we could meet face to face there. I'm flying in that morning and flying out immediately after my presentation, but I'd still like to try to meet you if you'll be there.

Have a good weekend, everyone!

To Your Career,
Charles Dominick, SPSM
President & 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, May 07, 2008

Online Classroom Will Be Down On May 8

We will be upgrading and testing our database on May 8, 2008 between 8:00AM and 5:00PM Eastern US time. The online classroom will be down during this time.

NOTE: An incorrect starting time for the outage was posted earlier. The official start time for the outage is at 8:00AM Eastern US time.

The new database will give us a lot more scalability for adding new features for you. As they say: "Temporary inconvenience, permanent improvement!"

I apologize for any inconvenience and appreciate your patience.

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

Green Marketing Is A Pet Peeve Of Mine

I am a big supporter of environmental responsibility in business. I love the fact that, today, more businesses are environmentally conscious than ever.

Having said that, I believe that businesses should be environmentally responsible because it is the right thing to do, NOT to be able to use their thinly-veiled environmental efforts as a marketing scheme.

It seems that everyone is trying to market themselves through claims of environmental responsibility to the point that it is getting unclear what some of them are selling. Some organizations are actually embarrassing themselves through their attempts at green marketing.

Take ISM, for example. They issued a release touting the "green-ness" of their International Supply Management Conference and, for one of the examples, said that "temporary tattoos celebrating ISM's new...qualification — are printed with vegetable oil ink on recycled paper."

To me, that is environmental waste, not environmental responsibility. Who are they marketing this qualification to? Four-year olds?

Recycled paper is still paper. Paper that can be used more responsibly so that fewer trees have to be cut down and fewer forests have to have their natural habitats destroyed for the sake of creating paper. Even office supply vendors are cutting their ties with paper suppliers because of environmental irresponsibility.

Today's management teams expect us to use environmental responsibility as a factor in our supplier selections. So what can we - as buyers, purchasing managers, procurement executives - do about this green marketing problem?

I say that we challenge our suppliers' claims. Show them that it will take more than just using the word "green" in their marketing collateral to win a higher score on our supplier evaluation sheets. Dismiss their thinly-veiled efforts and explain what real environmental responsibility is. Share your sustainability definitions with your strategic suppliers and, where your firm has sustainability expertise, share that with those suppliers so that they, too, can make a difference for the planet.

By purchasing professionals upping the standards of environmental responsibility claims, we can help the planet and hopefully get rid of the noise that is masquerading as green marketing.

To Your Career,
Charles Dominick, SPSM
President & 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, May 06, 2008

The SPSM Certification Gets Results...Here's More Proof!

As we approach the four year anniversary of the SPSM® Certification, we have been getting call after call and email after email raving about the results that our students are getting in the real world.

If you've been to our site, you know that we like to feature our students who are willing to share their success. And you know that we also like to showcase students from around the world because of the fact that the SPSM Certification is globally recognized.

Today, we added a new testimonial from someone whose accomplishments deserve to be recognized. It is featured on our Web page for the class "14 Purchasing Best Practices," but I'll also post it here.


"After signing up for the Senior Professional in Supply Management® Program, we formed a commodity team following the instructions in 14 Purchasing Best Practices. This commodity team has now ensured that our procurement and supply management plan for Anti-Retroviral and Anti-Malarial Medicines produces savings as well as quality medicines. We have been able to source for products internationally at much reduced prices as compared to earlier purchases. For example, we recently sourced 550,000 USD worth of Anti-Malarials against a forecast of 750,000 USD for that same quantity where the forecast was based on previous pricing. These results have made it easy to justify the investment in my education with Next Level Purchasing."

Patrick W. Githendu, B. Pharm, MBA, SPSM
Procurement Manager
Namibia Global Fund Programme
Windhoek, Namibia


What can I say? Our purchasing training WORKS!

To Your Career,
Charles Dominick, SPSM
President & 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, May 05, 2008

Negotiation Tactics

I hope that you have enjoyed the article "Good Negotiation Tactics That Can Backfire."

The one thing I hoped that you'd get from this article is that almost every negotiation tactic has appropriate situations for its use and inappropriate situations for its use. Good negotiators aren't just those people who know the most tactics, they are the ones that can assess a situation and know which negotiation tactics to use and which to avoid.

To Your Career,
Charles Dominick, SPSM
President & 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, May 02, 2008

The SPSM Certification Continues To Spread Globally

If you're a regular reader of this blog, you know that I like to dedicate one of the first posts of the month (almost) every month to sharing the names of the countries that have had their first SPSM's certified.

This is getting more difficult every month because, with employers from over 60 countries throughout the world having enrolled their purchasing professionals in the Senior Professional in Supply Management® Program, many of these countries already have SPSM's in them! Looking over the list of SPSM's certified since my last update on this blog, I'm seeing far away places like Namibia, Uganda, the United Arab Emirates, etc. on the list but...there are already (in some cases, many) SPSM's in those countries.

However, we do have a couple of countries to add to the list. Since the last update here, the first SPSM's from Argentina and India have been certified.

This is a dream come true for me. The thought of purchasing certifications being awarded by "national associations" where the recognition of those certifications were limited to the countries of those associations is so outdated.

A globally recognized purchasing certification is so important. Today's purchasing professionals deal with suppliers from around the world. It is obviously critical that those suppliers recognize the caliber of purchasing professional they are dealing with. With the SPSM® Certification, that's happening.

To Your Career,
Charles Dominick, SPSM
President & 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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