Monday, June 30, 2008

Cost Savings Potential

I hope that you have enjoyed the article "Cost Savings: From Potential To Actual."

In my years in the field, I've definitely seen an evolution of purchasing-driven cost savings. Cost savings are often recorded when a contract is signed and, as such, are only estimates. The evolution has followed this path:

1. Purchasing department doesn't achieve cost savings

2. Purchasing department implements a contract poised to produce cost savings, management is surprised, but nothing is formally recorded

3. Purchasing department implements a contract poised to produce cost savings and records cost savings, but definitions of cost savings are not formal or defensible

4. Purchasing department implements a contract poised to produce cost savings and tries to apply strict standards to the recording thereof

5. Purchasing department implements a contract poised to produce cost savings, applies strict standards to the recording thereof, and compares estimated cost savings with actual cost savings at the end of a period

6. Purchasing department implements a contract poised to produce cost savings, applies strict standards to the recording thereof, and tracks the actual vs. estimated cost savings often throughout the life of the contract

7. Purchasing department implements a contract poised to produce cost savings, applies strict standards to the recording thereof, tracks the actual vs. estimated cost savings often throughout the life of the contract, and takes all actions necessary to ensure that actual cost savings equal estimated cost savings.

This article and the accompanying podcast, featuring Paladin Associates' VP Barbara Ardell, provide strategies to enable you to reach this latest stage in the cost savings evolution. The profession needs you get there!

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

Saturday, June 28, 2008

New SPSM Logo Launches on Tuesday!

Tuesday is the four-year anniversary of the SPSM® Certification. One of the ways that we'll be commemorating the occasion is by launching the new SPSM® Certification logo.

The logo, which was just finished yesterday, is pretty darn sweet looking and was created to further increase the sense of pride that purchasing professionals can have by earning the SPSM®. And, in procuring the design services, we applied many principles from our PurchTips articles as well as some purchasing principles that we have yet to share.

Needless to say, they worked perfectly.

Keep watching this blog for the official launch!

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, June 27, 2008

Differences In Certifications

When you put your certification credentials (e.g., SPSM) on your resume, an employer will likely make a judgement about what that means about you as a candidate.

Are you skilled? Or did you just simply pass a test? The employer's perception of the certification may influence how many points having that certification scores for you in his/her evaluation.

There are certifications where you must complete training and pass a test. These certifications should be more valuable than others that simply require passing a test.

If you've earned a certification requiring training, you should use this as a selling point in your interview. You should stress how that certification can give the employer the confidence that you have the skills to successfully deliver results, as opposed to simply the knowledge required to pass an exam (which you have as well).

Food for thought if you encounter an employer who isn't sure about the value of a certification...

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, June 25, 2008

Tough Negotiating: What's The Worst That Can Happen?

I've been going through some old notes on negotiation and came across some materials from a negotiation retreat that a former employer sent me and many of my co-workers to in the '90's.

At that time, I was working for an employer that had an alliance with a British company. So our Head of Purchasing and our top Purchasing Director were actually employees of the British company.

They liked to preach the "British style" of negotiating. And the culture dictated that Brits negotiate with a lot of emotion.

They sent us to the aforementioned negotiation retreat where the training was being conducted by a couple of British consultants. One of the acronyms that was introduced during this session was NIGYYSOB.

NIGYYSOB?

Yeah, they said it stood for "Now I've got you, you son of a b**ch." You gotta love the Brits, huh?

OK, I know, it's weird.

But the concept was that you should be careful not to have your supplier hate you too much when a negotiation concludes - along the same lines as the "be hard on the problem, not the person" and "help your counterpart save face" tactics mentioned in the book "Getting To Yes" (or was it "Getting Past No?" Anyway...). Inspiring too much hate, they posited, would manifest itself in some way of your counterpart getting back at you (either personally or in business dealings) when it's an opportune time.

They proceeded to tell a true story of how a buyer was always tough in a personal way with a certain supplier's salesperson over a period of years. Then, one day during a tough negotiation, the salesperson stands up and punches the buyer in the face, breaking his jaw.

As the buyer slouches in his chair with blood pouring from his mouth, the salesperson smiles and says "I've wanted to do that for 10 years." The salesperson then exited the building and retired that same day.

Fortunately, that's never happened to me. I did think it was going to happen to a boss of mine one time, though...

My boss had responsibility for some categories and the folks at my level had responsibility for others. One day, my boss (let's call him Rajeev) was complaining about there being a lot of maverick buying for one of his categories and said that he was going to ask our contracted supplier's president to remove the rep (let's call him Jody) from our account.

Jody had been working our account for something like 10 years. Rajeev told me that he thought that Jody "intimidated" the admins because he was a "big guy" and they didn't like him for that reason.

So Rajeev told Jody's company's president. I'm not sure what he told the president (probably not the "intimidating big guy" rationale), but Jody was not only removed from the account - he was fired completely (we were a pretty big customer)!

Jody was crushed and ended up being admitted into a mental institution due to his self-destructive devastation. I'm not sure if he became suicidal or not, but it wouldn't surprise me. Sadly, I don't think that Rajeev felt one bit of regret.

I kept fearing Jody coming into our offices and going postal or one day finding my boss in a nearby dumpster. There was an aura of wrongness in our department for some time after that.

There is a line in being a tough negotiator. When you cross that line, it's good for no one.

Ever heard the expression "It's nothing personal, it's just business?"

It's wrong.

It's all personal when someone's career and future can be affected by the outcome.

Just ask Jody or the broken-jawed buyer's salesperson.

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, June 24, 2008

Guest Blogging, Anyone?

In my recent "LinkedIn-related" post, I offered a commenter the opportunity to submit a guest blog on a purchasing and supply management topic. And that got me thinking...

Maybe it would be a good thing to open up this forum to other voices in the field on occasion.

So, if you're interested, leave a comment below with an email address and a topic that you may have some insight on. To avoid your address being automatically harvested by spam, replace your @ with [at] and the . with [dot].

I'm looking forward to welcoming your voice to the Purchasing Certification Blog.

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

Sunday, June 22, 2008

The Spend Fool Unmasked? An Ulterior Motive Behind False Accusations?

Watch this blog this week for more. That's all I'll say for now.

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, June 19, 2008

LinkedIn Can Hurt Your Career, Too

Maybe the title of this post is misleading. It's really the misuse of LinkedIn that can hurt your career, not LinkedIn itself.

Everyone is touting LinkedIn as the best professional thing since sliced bread. But there is a such thing as too much information. And LinkedIn can allow you to provide too much information.

Here's a real life situation...

A few months ago, I was recruiting for our Business Development Manager position here at Next Level Purchasing. After an excruciating round of phone interviews, I had narrowed it down to two top candidates and a dark horse candidate.

I conducted an in-person interview with one of the top two, who had previously provided me with a link to his LinkedIn profile. I was kind of impressed by his LinkedIn profile. He had a lot of information on there - including lots of recommendations - and his usage of it made me feel like he was technologically savvy which I liked being that our purchasing training is all technologically delivered.

He continued to impress me in his in-person interview. I was seriously considering him.

The next day - a day on which I had an interview scheduled with the other top candidate - the first candidate sent me a follow up email. In this email, he really tried to "close the deal."

He wrote: "I'd like to take a moment to point out that I have 34 professional references from clients, partners, colleagues and managers. Every client that I have landed in my current position has taken the time [on LinkedIn] to recommend doing business with me. That's something to be proud of."

"Wow," I thought. "That is something to be proud of."

Then, I thought, "Wait. I'm not so sure about that."

In my head, I pictured this guy working for Next Level Purchasing and harassing all of our customers for references that they don't really have time to write. I thought that this guy may use his job opportunities selfishly for personal gain.

Then, I interviewed the other top candidate. Yes, the guy impressed me on the phone previously. But in person, he blew me away!

So as this second candidate incredibly enhanced my perception of him, all I could think about the first guy was his addiction to LinkedIn and the potential of him making the acquisition of LinkedIn references a higher priority than actually doing his job. Linked In, LinkedIn, LinkedIn.

Who did I hire? Not "The LinkedIn Guy."

And it has worked out extremely well.

As I was writing this, I thought about going to The LinkedIn Guy's profile to see if he found a new job but then I remembered him telling me he knew when I was looking at his profile and how much time I spent on it. That's creepy.

No, I don't hate LinkedIn. I'm on there myself. But, like a lot of things, things can be used and things can be misused. The results will tell the story.

Use LinkedIn wisely, my friends.

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, June 18, 2008

It's Never The Vendor's Fault

Here's a piece of advice that, if followed, will make you a better purchasing professional: adopt the philosophy "If it's the vendor's fault, it's really my fault."

You pick your vendors. You manage your vendors. So you need to be responsible for your vendors.

It is a pet peeve of mine when companies blame their vendors when they fail to fulfill their obligations to their customers. As if they totally absolve themselves of responsibility.

In the last 10 days, I've had two experiences like this that I thought were interesting and/or funny enough to share.

First, I decided to take my kids to a Pittsburgh Pirates' baseball game. One of the factors in choosing the day that they went was their promotion for that day: a slick looking Freddy Sanchez jersey for kids 12 and under.

When we got to the game, a Pirates representative handed my kids a cheap looking Freddy Sanchez t-shirt along with this card:



Note the first line: "Due to a delay on the part of our vendor..." Finger-pointing at its finest. Or worst.

Then, today...I was planning on working through lunch. Walking distance from our office is a Unimart that serves surprisingly good pizza. So I decided to go there.

I walk up to the counter where their pizza display is and...no pizza. I ask if they have pizza and they tell me there will be no pizza today.

OK, I'll get one of their cheeseburgers instead. There are mustard packets but no ketchup. I'll ask about that later.

Then I go to their beverage coolers. Not a single bottle of water.

OK, Sprite will work.

So I go to check out. I ask about the ketchup. The cashier says that they have ketchup packets and excuses herself to go find them. She returns and says they have no ketchup.

I start a joking rant about them having nothing. The cashier interrupts me to say "We don't have any bags, is that OK?"

At this point, I am laughing quite hysterically. The manager comes out and says "We don't have anything, but it's not our fault." I ask what he means and he says "Such-and-Such Company (I don't recall the name) hasn't delivered in four weeks. I have their customer service number, do you want to call them?"

I said that that's his problem, not mine, but he may want to talk to the people across the street (Next Level Purchasing) about getting some training about how to manage their vendors...

Again, if it's the vendor's fault, it's really your fault.

Treat your work like this and your vendors will perform better. You will be inspired to defend your pride to yourself.

Don't take the "Unimart Manager" approach to vendor management.

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, June 16, 2008

Services Procurement

I hope that you have enjoyed the article "Purchasing Services: The Pitfalls, Part II." If you haven't been a PurchTips subscriber for that long, you can find Part I (from 2006) here.

For many purchasers, buying services after a career of buying goods can be nervewracking. Maybe it's just me, but I've always found that managing a services procurement requires much deeper analysis to feel confident that your selected service provider will perform as needed.

So that's what these two articles are about: reducing risk and disappointments in service procurements.

As I alluded to in Part II, I recommend lenghty discussions between yourself and the service provider's top management before making your final decision. In addition to the questions included in Part II, I like to ask about how things are handled when things go off track to get management talking.

What will it be like if I don't hear from the key person by the time a deliverable is due?

Will I have to be the "squeaky wheel" to get things done?

After how many occurrences of late deliverables do you think that we should treat the engagement as having problems?

What type of situations would make you want to assign a new key person to our account?

Again, asking these types questions in person will go a long way towards truly understanding how much of a priority you will be to your new service provider. You can't distill this stuff onto a spreadsheet. But with experience, you will be able to identify red flags that can help you identify service providers that may pose more risk than their competitors.

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, June 12, 2008

Purchasing Podcasts on Foneshow.com

At Next Level Purchasing, one of our goals is to make it as easy as possible for purchasing professionals like you to learn. And I'd like to introduce our newest way of helping you learn easily...

You may know that we've been publishing free purchasing podcasts for about two years now. A podcast is a digital audio file that you can listen to on your computer, download to your iPod or MP3 player, or burn to a CD.

Those are convenient options for learning for many people. However, if you're not one of those people who it is convenient for, you don't have to miss out any more!

We now have our podcasts available on Foneshow.com. Foneshow allows you to:
  1. Subscribe to a podcast series
  2. Be notified by text message whenever there is a new podcast added to the series you've subscribed to
  3. Dial in and listen to the podcast right from your cell phone!

So, if you don't have an iPod or MP3 player but you do have a cell phone with cheap/free text messaging and plenty of (long distance) minutes and your only available time is while you're on the go (e.g., waiting for your kid to be done with ballet lessons, baseball practice, etc.), then using Foneshow to listen to the Purchasing & Supply Management Podcast Series might be the right option for you!

Here's a link to the Purchasing & Supply Management Podcast Series on Foneshow. And here's a link to the series on our site.

Regardless of the method of delivery, I hope that you find value for your purchasing career in these podcasts.

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, June 10, 2008

A Great Purchasing Question

On his purchasing.com blog, Richard Weissman asked a question that was so simple and direct yet so thought provoking that I had to repost the question and my response here.

Richard writes "Imagine that you found a magic lamp and a genie appeared. Rather than Barbara Eden, it was a supply chain genie. (You can pick your own image at this point.) Anyway, this genie gives you one wish: 'If you could select the trait of the perfect supplier, what would it be?'"

I replied that "[t]here's so much we all expect from our suppliers that it is hard to distill it to one wish. So to overgeneralize, my response is... A commitment to keep its promises."

And, if you think about it, without broken supplier promises, purchasing jobs would be much easier. Because we can be skilled at gathering market intelligence, sourcing, qualifying suppliers, negotiating a great deal, writing an iron-clad contract, and measuring supplier performance but, if our suppliers fail to keep their promises, then we can still be pulling our hair out at the end of the day.

Yes, it's up to us to use our skills to identify and predict the suppliers most likely to keep their promises. But there's never truly 100% certainty that there won't be a hiccup.

When you think about how important the keeping of promises is, I think that our side (purchasing and supply management) needs to keep our promises as well. This may mean forgoing that reverse auction after the second year of a three-year contract.

Because if we can't keep our promises, we're going to have a harder time attracting a supply base that always will.

And, for the sake of both our blood pressure and the success of our companies, we need a supply base that keeps its promises!

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, June 09, 2008

SPSM Exam Sets New Integrity Standard

Here at Next Level Purchasing today, we launched a new approach to administering the SPSM® Exam that will serve to further strengthen the SPSM® Certification's already strong reputation as a challenging measurement of purchasing proficiency.

Internationally, a standard practice for certification providers is to have multiple versions of certification exams in order to maintain the integrity of the testing process. Since Day 1 of the SPSM® Exam, we had that.

But today we implemented some new programming that randomizes the order of the questions on each version of the SPSM® Exam. Therefore, no two exams will realistically ever have the same combination of questions in the same order.

This is consistent with our founding philosophy with the SPSM® Certification: to give employers the assurance that those who have earned the SPSM® are truly the "cream of the crop" - professionals who have truly earned their certification without taking any shortcuts or receiving any special accommodations. Employers value SPSM's and SPSM's benefit from that fact.

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, June 06, 2008

SPSM Certification Reaches 3 New Countries

At the beginning of each new month, I dedicate a post to updating you on the new countries where a purchasing professional has become the first in his/her country to earn the SPSM® Certification. So here are the three new countries from May...

1. England
2. Colombia
3. Ecuador

One surprise is England. Though we have many purchasers from England enrolled in the Senior Professional in Supply Management® Program, it has taken our friends from across the pond a little longer to get through the program and earn their SPSM's. Of course, the program is a self-paced one, so purchasing professionals are welcome to complete the requirements as quickly or as deliberately as they would like.

One item of note: I only started posting these updates recently. So you won't be able to find all countries where their are SPSM-certified purchasers on this blog. I'm saving that for a big milestone we have coming up...

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, June 04, 2008

Analysts Value in Purchasing & Supply Management?

As a purchasing practitioner, I never gave much credibility to analyst reports. They always seemed like a thinly-veiled pay-to-play thing where the vendor shells out some money and the analyst report is supposed to lead you to believe that they are a valuable vendor.

About a decade ago, when I was responsible for selecting an eProcurement system for the company I worked for, vendors would present their analyst reports as if that was the last piece of the puzzle needed to seal the deal. To me, those reports were worthless.

In the past several weeks, I've come across several situations where I've really scratched my head about the analyst world. Perhaps I'll blog about these stories at some point.

But today on Sourcing Innovation, Michael launched a post that generated a little discussion about analysts. The discussion really went off the beaten path from Michael's original post. So I figured that I'd invite some of the respondents over here to discuss the issue further.

Here's what I'd like to know...

From vendors (answer as many or as few questions as you would like):

Is the analyst world pay-to-play?

If so, do you end up paying for 100% of the time that you get mentioned? 75%? 50%?

What motivates you to do business with an analyst firm?

What value does being an analyst firm's customer bring to your company?

What are the differences you see between the analyst firms and what made you choose to do business with one analyst firm vs. another?

Have you been mentioned in analyst firm's reports WITHOUT paying?

If so, how do you think the analyst firm heard of your company?

From practitioners:

Has an analyst firm ever influenced a buying decision in your company?

If so, how?

From analysts:

What's your story? How do you learn about the companies that you cover?

I'm looking forward to hearing what everyone has to say!

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, June 03, 2008

Next Level Purchasing Expands!

Officials from the Pittsburgh Airport Area Chamber of Commerce were on hand today to perform an official "ribbon cutting" at Next Level Purchasing's new headquarters office at 1315 Coraopolis Heights Road, Suite 1001 in Moon Township, Pennsylvania.

Next Level Purchasing had been occupying Suite 2002 but we seized the opportunity to move in to the more spacious Suite 1001 when its availability just happened to coincide with our staff increases. We are still leasing Suite 2002, will continue to get mail sent there, and may use the office space again soon as our aggressive growth is expected to accelerate.

I am really fortunate to have such a great team working for me. It is a team that welcomes an ever-increasing workload and is talented enough to thrive in conditions where we are always improving processes and introducing new and better ways of doing things in order to grow rapidly without bursting at the seams.

Here are some photos from the event...





And, in closing, I'd like to thank our thousands of students from around the world. Obviously, your faith in our ability to deliver is what is driving the growth of Next Level Purchasing.

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, June 02, 2008

Buyer Performance Measurement

I hope that you have enjoyed the article "Buyer Performance Measurement Mistakes."

If you've been a long-time subscriber to PurchTips - Next Level Purchasing's free educational email newsletter - it's probably clear to you that cost savings reporting is one of my favorite topics. So it should be no surprise that I have cost savings reporting and measuring buyer performance tied so closely together in this article.

If you've just recently learned about Next Level Purchasing, here are links to some of my other articles discussing the intricacies of cost savings reporting:

Cost Savings Reporting: Dot The I's!

Cost Savings: Tips For Recording Them

Cost Savings Reports: Why Some Are Weak

Calculating Cost Savings In Multiple Years

Enjoy!

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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