Tuesday, August 31, 2010

US Government B*tch Slaps HP, Sends Tough Procurement Message

Late yesterday, the New York Times reported that the venerable computer maker Hewlett Packard settled a case with the US Government over two procurement-related ethics matters. The settlement involved a payment of $55 million from HP to the government.

The first matter involves an accusation that HP paid "kickbacks to other companies that recommended federal agencies buy its products." The second matter involves a situation where HP "might have failed to provide complete pricing information during contract negotiations."

At a quick glance, I couldn't find too much detail about either of these cases. But it seems to me that the Federal Government's procurement teams did too little to keep themselves on guard against suppliers' common "dirty tricks."

Hopefully, the government will use some of that $55 million on some procurement training for their people. When everyday procurement situations end up with the threat of litigation and eight-figure settlements, it's pretty obvious that they need 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
Next Level Purchasing . com

Monday, August 30, 2010

Predictions For The Economy & Offshoring, Part II

In my last blog post, I wrote about how legislation may be the most likely thing to result in a short-term reduction of the unemployment rate in the USA. Today, I’ll talk about two things that are likely to be key elements of the long-term reduction in unemployment.

The first element of restoring previous employment levels is the government putting an end to the endless handouts. With the US government giving 99 weeks of unemployment compensation, it has sapped a lot of ambition from our country. I’ve heard too many people say things like “Why work when I can do nothing and get money for free?” Cutting off the lifeline may propel these individuals into action and give them the ambition to, if not get a job, start a business and return the entrepreneurial spirit back into our country. Our country is falling behind the growth rate of places like China due in part to this lack of ambition.

The second element of restoring previous employment levels is a reduction in the standard of living. Look around. Despite what is supposed to be the worst economic climate since the Great Depression, you’ll see people with iPhones, iPads, hundreds of channels with their cable television subscriptions, new cars, big houses, cell phone plans for very young children, and other things that they don’t consider luxuries but really are. I sometimes get shocked going to kids’ birthday parties and seeing a child receive dozens of $25 toys that everyone knows the child cannot possibly play with and will end up in the trash.

But I think we may be in our last days of this prosperity. We are a global economy. We have come to a point where we are competing with people in multiple countries around the world for scarce jobs. In order to have jobs, we are going to have to be cost-competitive. This means lower wages across the board. And when we work for amounts that have to match those of developing nations, our standard of living will end up matching theirs as well.

Or, perhaps a rapidly declining standard of living will be what it takes to motivate Americans to have the ambition to restore and protect prosperity before it's too late.

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
Next Level Purchasing . com

Thursday, August 26, 2010

Predictions For The Economy & Offshoring, Part I

According to a recent article in the Pittsburgh Post-Gazette, a Pennsylvania State Senator is preparing legislation that would “prevent large, nonprofit institutions from outsourcing work to foreign countries” with offenders being stripped of their non-profit status. Though this legislation is in its early stages, aimed at non-profits, and isolated to Pennsylvania, I predict that legislating “hiring American” for for-profit companies is going to be an emerging political theme in the months ahead.

Sure, there was opposition to offshoring over the past few years. But when the unemployment rate in the USA is 4% and American consumers are enjoying low prices on the products they buy, the opposition doesn’t have much force. However, in today’s economy, when the unemployment rate has been flirting with double digits for an extended period of time, the argument for bringing millions of offshored jobs back is starting to look more persuasive.


As I see it, there are only a few things that can bring jobs back:

  • Legislating more taxes for organizations that offshore
  • Legislating tax relief for organizations that bring offshored jobs back to the USA
  • An economic recovery where the unemployment rate will drop to historically normal levels
  • Voluntary efforts on the part of American employers to restructure their workforces to be composed of a greater percentage of US citizens


Let’s discuss the likelihood of these things happening in reverse order:

  • Employers volunteering to hire more Americans? At higher wages? As great as a branding strategy this may be, I don’t foresee employers doing this in today’s uber-cost-competitive environment.
  • An economic recovery? What is going to spur that? What is that magic industry that is going to emerge that will suddenly create demand for all of these workers? I don’t see one without some really bad problem to solve (e.g., a terrorist attack, a cyber-crime outbreak, etc.) which would likely kill more jobs than it would create.
  • Legislating tax relief? I believe that labor cost arbitrage would still offer more margin than the government would have available to reimburse.
  • Legislating more taxes? As unpleasant as that sounds to me as a business owner, it seems the easiest way to make a difference. And politicians seem to prefer things being easy rather than fair.


There are some other implications of the economic situation that I’ll cover tomorrow.


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
Next Level Purchasing . com

Wednesday, August 25, 2010

Whitepaper Wednesday - Inventory Optimization

Welcome back to another installment of Whitepaper Wednesday here on the Purchasing Certification Blog. This week, I’ll be reviewing a whitepaper entitled “Five Inventory Core Competencies That Can Make or Break Your Competitive Advantage” from Logility.

I hadn’t heard much about Logility before, but I was impressed with this whitepaper. I found that it shared a lot of great ideas. The only downside was that – at a mere nine pages – it was too short to go into the “nuts and bolts” of how to implement those ideas.

At the core of the whitepaper, as you may imagine judging by the title, are five techniques for more profitably managing inventory. A brief description of each of those techniques is as follows...

1. Multi-level Inventory Optimization: Different stakeholders within a manufacturing company have different interests with regard to how much inventory to keep on hand, causing a situation where inventory is managed by “separate silos in which one team may be motivated to buy in bulk, another to minimize the number of production set-ups and a third to hold enough [finished goods] to ensure 98% customer service at all costs.” The whitepaper insists that “inventory policy for all three must be coordinated” and explains how strategically increasing raw materials and work in process inventory can decrease finished goods inventory needed and produce significant savings.

2. Synchronize Time-phased Business Cycles: This technique indicates that “inventory optimization should focus on setting the best possible targets for every individual time period of the business cycle, taking into account the change in demand as well as the change in demand uncertainty over the course of the cycle.”

3. SKU Proliferation and Postponement: Changes to products and how they are packaged and promoted often result in many new, discrete items (referred to as stock keeping units, or SKU’s) being added to inventory. According to the whitepaper, the “Postponement” process aggregates inventory and delays the use of some SKU’s to increase flexibility and reduce cost. I would have loved some more detailed explanation of this particular technique.

4. Strategic Outsourcing: As taught in the Next Level Purchasing online class, Executing A Global Sourcing Strategy, it is important to focus on total landed cost when making an offshoring decision. The whitepaper points out that not every supply chain manager does so: “The most difficult part of an outsourcing evaluation is accurately assessing the impact of increased time in the supply chain. When manufacturing shifts to Asia, how does the impact of eight additional weeks of shipping compare to the material cost and production savings?” Not every destination requires eight weeks to ship from Asia, but the point is well-taken. This section also includes some guidance on how to decide which items to offshore and which to keep local.

5. Position Capital for Customer Service: This final section encourages readers to use a different inventory strategy for each “class” of customers. Some customer types are more demanding, but that doesn’t mean that you have to apply the same costly strategies to all of your inventory.

For me, this whitepaper represented a pleasant introduction to Logility. If you would like to get your own copy of this whitepaper to read the additional words of wisdom, you can get one from Logility’s website (registration required).

To Your Career,
Charles Dominick, SPSM
President & Chief Procurement Officer
Next Level Purchasing, Inc.
Struggling To Find More Good Resources For Procurement Leaders?
Check Out Our Web Site's New Whitepaper Section At
http://www.NextLevelPurchasing.com/WPcharles

Monday, August 23, 2010

Ethical Procurement: How Is Everyone Supposed To Know The Rules?

I hope that you have enjoyed the article "5 Components of Ethical Procurement."

What I am hoping is not done with this article is for a procurement director out there to say "Oh, we have three of those in place. We're good."

It is important to have all of those components in place if you really want anything close to a bulletproof culture of ethics. However, I will admit that one of these components is probably more important than all of the others.

What is that one super-important component of ethical procurement?

The ethics policy.

Without the ethics policy, the utility of all of the other components is lessened. That's because the ethics policy defines the rules. Without well-defined rules, ethics training will be vague, an ombudsman won't have any clear answers, a process with checks and balances won't know what to check for, and audits will only reveal something that "might" be unethical.

The ethics policy provides the standard against which actual behavior is measured. Imagine if this situation happened in your organization...

A manager of an internal customer department wants to purchase consulting services to help his department. This manager has access to the pricing of all consultants used by the organization in the past. The manager suggests getting a quote from his wife's consulting firm, saying that his wife's firm can do the work a lot cheaper. Of course, this departmental manager will have to be the one OK'ing the decision because it's his department that is affected.

There is no ethics policy outlining whether or not doing business with a spouse is acceptable.

The manager has never been told - via training or otherwise - that he cannot buy from his spouse.

There is no ombudsman to turn to for advice.

You are able to place orders or contracts independently, without the requirement of management or supervisory approval.

There have never been audits, so no one in the organization knows if this type of situation has happened before and, if it has, if it was problematic or not.

What would you do?

Would you worry about awarding the contract and, later, being suspected of being "in on the scheme" where others thought that you may have gotten paid off for keeping quiet about it?

Would you confront the manager and risk having a politically powerful employee as an enemy?

It is a tough situation without an ethics policy to support you, isn't 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
Next Level Purchasing . com

Friday, August 20, 2010

Caveman Purchasing: Fighting Suppliers Over Old Invoices

Having worked for an organization that received government grant money for projects - and had strict accounting controls for charging purchases against those funds - I can understand the inconvenience caused when a supplier submits an invoice extremely late. However, I respectfully disagree with some of the advice in the blogosphere on how to handle late invoices.

This advice started with a post on the Vendor Management Office blog. The blog began with a very thoughtful citation of a Virginia state law that considers invoices submitted up to five years late to be legally enforceable for payment. Good stuff to know!

Notwithstanding this law, the blog then goes on to provide tactics for purchasing professionals to weasel out of their legal payment obligations. I was a little surprised by some components of this advice, which included threatening to cease doing business with the supplier and taunting the supplier to file a lawsuit, as I consider myself a fan of the author - one of the few individuals in the world I would consider for Next Level Purchasing's open Director of Education position.

Then, Spend Matters dedicated a post of its own to sharing highlights from the Vendor Management Office post, calling the tactics "sage advice." But is it sage advice?

Maybe in the "caveman days of purchasing," where the only performance indicator was cost savings and a forgiven invoice could add a couple hundred bucks to your cost savings total, it was sage advice. The "caveman buyers" of years gone by would wait for a supplier to falter just so they could screw them out of a few pennies to add to that cost savings tally.

But, in today's world where collaborative supplier relationships are more important than ever, is it sage advice to refuse to pay for goods or services that you've received and are legally obligated to pay for?

I think not - unless you want "caveman suppliers" who wait for you to mess up so they can stick it to you.

As a very frank side note, I don’t really think that Jason from Spend Matters considers these tactics to be “sage advice.” Otherwise, he wouldn’t have ended his post by writing “Just please be sure to don't use any of these techniques against any business I'm a part of, now will you!”

Jason doesn’t want or deserve to be cheated out of money he is legally owed and neither do the suppliers who you will certainly someday call at 4:30PM on a Friday afternoon with an emergency order or expediting request. Plus, those of you whose finance departments have recently forced you to unpopularly extend payment terms with your suppliers from a standard of net 30 days to net 60 days or net 90 days or more know that a supplier that submits an invoice late is kind of doing you a favor!

Despite my disagreement with most of the tactics in the Vendor Management Office post, there was actually one brilliant piece of advice saved for the end. It stated:

“As a preventative measure, you can contract around your state laws by including something similar to the following in your contracts with suppliers:

‘Supplier acknowledges that it must submit invoices on a timely basis to Customer so as to avoid any unnecessary business hardship on Customer. Notwithstanding the laws of the state of [insert state here] and Supplier’s rights to collect on debts, Supplier hereby agrees that Customer shall not be required to pay any invoices submitted by Supplier that are submitted by Supplier more than twelve (12) months following the date that the goods or services, as the case may be, were provided by Supplier.’”

This I agree with wholeheartedly and think that you should include this clause in your contract templates and purchase order terms and conditions!

Because, as I alluded to at the beginning of this article, it IS a problem for some organizations to be billed after grants, budgets, etc. have been closed. If a supplier agrees to a prompt billing obligation, agrees to the consequences in advance, and fails, then you aren’t screwing them out of anything because you are not legally obligated to pay them.

If circumstances permit, you should still try to be reasonable and pay them. But, if you can’t, then you know that you are not thumbing your nose at a legal obligation.

Leave the nose-thumbing to the caveman buyers.

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
Next Level Purchasing . com

Thursday, August 19, 2010

The Real Reason Buyers Don't Want To Give Suppliers Feedback

Several months back, a member of the Strategic Sourcing & Procurement Group on LinkedIn posted a question on the discussion area of that group that has inspired a whopping 72 comments to date. The question was "What is the major reason as to why Procurement Managers are reluctant to provide feedback or feedback is minimal after a bid process?"

Most of those responses (including mine) were formal in nature, professional, and restrained. Now is the time to get real.

Before I tell you what the real reason is, let me share an email exchange I had with a sales representative of a potential supplier after I informed her that we were leaning towards another supplier. I've replaced some words to protect the identity of the supplier and the sales rep.

Supplier: "Thanks for the update. May I ask why you are leaning towards another [supplier]?"

Me: "Sure: lower cost, higher quality, faster production, and a more attractive royalty structure were a few of our selection criteria in which our preferred provider had an advantage over [your company's] proposal. I hope this helps. Thanks again."

Supplier: "Thanks for the update. Typically when a cost is lower than the quality suffers. I find it interesting that you found a company that can produce the same quality for a lower cost. [My company] is aware of our competition and has yet to find a company that offers the same standards of quality. And, our working days for the contract are 180, which is the latest the [item] will be produced. This includes the times that we send [samples] back to you for your review. If the [item] can be produced faster than is work being cut out, are you reviewing any of the [samples], does this mean the company does not have a lot of activity? And, if cost is an issue than I would be willing to discuss this with you. What is your budget?"

Me: (No response)

Supplier: "I didn't hear back from you after my last email and I wanted to inform you that [my company] is still interested in [earning your business]. We offer an excellent marketing program, superior customer service and a professional program. Not many companies can compete with the service we offer. Our reputation and company is well known throughout the...industry and has been a steady force since 1920. Your [business] would make a beautiful additional to our [client list] so please consider using [my company] as your [supplier].
We would love the chance to work with you to [accomplish your goal]. I look forward to hearing from you."

OK. Now for the real reason that "Procurement Managers are reluctant to provide feedback or feedback is minimal after a bid process"...

BECAUSE WE DON'T WANT TO PUT UP WITH THIS CRAP!

This email exchange was almost as if the sales rep was telling me "You are stupid. You don't know how to make a good decision and you don't know how to evaluate prospective suppliers."

I was recently at a conference where I came across a brochure for a sales consulting firm that said "Prospect, prospect, prospect until you have a purchase order or a restraining order."

Seriously!

Who wants to be harrassed over their decision?

Can't suppliers just bow out gracefully when they are told "Great try, but you just came up short?"

On the flip side, I love when my sales team is aggressive and doesn't give up easily. So maybe I'm a hypocrite.

But that's the unvarnished truth for whoever wants 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
Next Level Purchasing . com

Wednesday, August 18, 2010

Whitepaper Wednesday - The Future of Procurement

Welcome back to another installment of Whitepaper Wednesday here on the Purchasing Certification Blog. Today, I’ll be reviewing a whitepaper entitled “Procurement Innovation Part I: What’s Next on the CPO’s Agenda?” from Denali.

The insights in this whitepaper are based on Denali’s interviews with a few dozen chief procurement officers. According to the whitepaper, these interviews set out to identify:
· Where CPOs will shift their focus during the next one to five years
· What external factors will impact the CPO’s agenda, and how
· Procurement’s most significant future challenges
· The CPO “wish list” for innovation in Procurement
· Likely Procurement innovations for the next three to five years

I was a little disappointed that the findings on these topics didn’t begin to get addressed until the next-to-last page of this 7-page whitepaper. And, then, was disappointed that not all of these points were addressed in this whitepaper. However, I did have to remind myself that it is Part I of a series, so that put things into perspective.

The meat of this whitepaper comes in the form of three “Major Procurement Innovation Themes.” The most powerful of these themes is the first one: “Expanding Procurement’s Value.”

The whitepaper reports that their panel of CPO’s feel that “Procurement is constrained by a singular focus on savings, and that their organizations can add much more value in other strategic areas to the business.” The whitepaper cites time to market, brand management, revenue generation, and product innovation as four examples of strategic areas where procurement can add more value and explains each.

While the whitepaper didn’t dive too deep on the future of procurement, it definitely got me eagerly anticipating Part II of this series which will go into more detail on expanding procurement’s value. If you’d like to get your own copy of this whitepaper – and get primed for what sounds like an exciting series – you can download a copy from Denali’s website.

To Your Career,
Charles Dominick, SPSM
President & Chief Procurement Officer
Next Level Purchasing, Inc.
Struggling To Find More Good Resources For Procurement Leaders?
Check Out Our Web Site's New Whitepaper Section At
http://www.NextLevelPurchasing.com/WPcharles

Tuesday, August 17, 2010

Apple Global Supply Manager Pleads Not Guilty

As I reported yesterday, Apple global supply manager, Paul Shin Devine, appeared in court yesterday after being "accused of accepting more than $1 million in kickbacks from half a dozen Asian suppliers of iPhone and iPod accessories." According to an article in today's Financial Times, Devine pleaded not guilty to the charges, but was returned to jail due to being considered a flight risk.

While the Financial Times article did not have any quotes from Devine, it did contain a quote from one of the suppliers accused of providing the alleged kickbacks. This quote disturbed me more than a little.

The article cites a statement from the supplier, Cresyn: “An Apple manager offered to provide us with business consulting to help us advance into the US market. So we signed a normal consulting contract, which was not illegal. We received general information about the US market but did not receive any technology-related information.”

A supplier hiring its customer's procurement employee for consulting? Nothing seems wrong with that?

Hogwash.

Procurement people: If you want to get a consulting contract, be a consultant! Quit your job and be a darn consultant!

You can fight all you want and say that there was nothing improper about a consulting relationship you have with a supplier to your company. But is it worth the consequences - not just losing your job, but ending up in jail - to make some extra money on the side? Or, if you make multiple times your salary doing "consulting" like Devine did, is it worth keeping the "day job" and possibly ending up behind bars?

Want to be a consultant? Leave your procurement post and hang out your consulting shingle.

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
Next Level Purchasing . com

Monday, August 16, 2010

Breaking News: Apple Global Supply Manager To Appear In Court Today

Esteemed SPSM and one-time Dedicated Purchasing Student of the Month, Paul Salisbury, tipped me off to some breaking news on the procurement ethics front. According to an article in the San Jose Mercury News, Apple global supply manager, Paul Shin Devine, is due to appear in U.S. Northern District Court in San Jose at 1:30PM today.

What was Devine's offense?

According to the article, Devine is "accused of accepting more than $1 million in kickbacks from half a dozen Asian suppliers of iPhone and iPod accessories." Allegedly, Devine obtained and transmitted some of Apple's confidential information to those suppliers in exchange for money deposited into Devine's personal bank accounts. The information shared allegedly enabled the suppliers to negotiate favorable contracts with Apple.

News like this equally disgusts and surprises me. It surprises me because the people who do this type of stuff always get caught. It appears that these people get so overcome with greed that they trick themselves into thinking they will never get caught. But they always do.

I hope that every procurement professional who reads my blog has strict ethical standards and would never accept money from suppliers. But if you have done so, I urge you to stop immediately. You will get caught. And I'm sure that the consequences will not be worth it.

You don't want me to be blogging about your day in court, do you?

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
Next Level Purchasing . com

Friday, August 13, 2010

August 2010's Dedicated Purchasing Student of the Month Is...

Every month, Next Level Purchasing recognizes a student who has made impressive progress in learning more about the field of purchasing and supply management. We are proud to announce that the Dedicated Purchasing Student of the Month for August 2010 is...




Connie Nesbitt, a Purchasing Manager for the Jotto Desk Division of Assembled Products Corporation in Rogers, Arkansas, USA. Connie completed all six Senior Professional in Supply Management® Program classes during the month of July! Connie also passed the SPSM® Certification exam!

Connie says: "I chose to address this on-line certification course 'the old fashion way.' Although the information was right at my fingertips, I completed all lesson exams as well as the final certification exam, closed book, no peeking. I wanted to test myself on what I knew and what I had learned through the course work. My course exams averaged 90% and my final exam average was 85.6%.

"This course was challenging, insightful and thought provoking. There was not a lesson, in any course, that I didn't learn something new or learn an alternative method for processes currently in use in our office setting."

Next Level Purchasing and the procurement community around the world congratulate Connie and her dedication to improving her purchasing career!

If you are an ambitious purchasing professional and want the chance to become one of the next Dedicated Purchasing Students of the Month, considering signing up for one of our purchasing classes today!

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
Next Level Purchasing . com

Thursday, August 12, 2010

Laid Off From A Procurement Position? Something To Ponder...

It was about this time yesterday that I received a call from a friend. His job had just been eliminated and he was looking for help finding work.

Unfortunately, this is not an uncommon occurrence these days. In the past month or so, I know of four colleagues that lost their jobs.

And this is supposed to be a time of economic recovery? It really got me thinking about the employment situation in the USA in general and the procurement job market in particular.

The employment situation in the USA has been rough since December of 2007 – widely acknowledged as the month “The Great Recession” began. I know some people who have been out of work for over a year.

And the scary part? There really is no imminent end in sight to the tight job market.

What will change that will suddenly create the millions of jobs needed to bring the unemployment rate down to a more historically normal level? I don’t know about you, but I can’t think of anything that is about to happen that will have any significant effect.

According to a recent release from the United States’ Bureau of Labor Statistics, ”the number of long-term unemployed (those jobless for 27 weeks and over) was little changed at 6.6 million” in July 2010 compared to June 2010. So, considering these numbers and the absence of any light at the end of the proverbial tunnel, if you’re unemployed, you may be unemployed for a long, long period of time.

By all means, work your tail off to get a job, but be prepared for the very real possibility that it may be a year or more before you’re on anyone’s payroll again. It used to be a rule of thumb that families should keep an amount of money that’s equal to three months’ of their expenses in a “rainy day account” that would be tapped into if one member of the family lost his or her job. In this “new normal” economy, a better number seems to be about 18 months.

In our culture where today’s workforce doesn’t sock away money like their parents did – hey, who can save when there are iPads, sports tickets, and 2010 vehicles to buy? – many people simply won’t have that kind of savings to back them up. The natural effect of this is that people start accepting positions that they are overqualified for – college graduates with 10+ years of experience start accepting entry-level professional positions.

While employers used to shy away from hiring the overqualified because of the fear of losing the person the moment a higher paying job came along, I am seeing employers not care about that so much today. There are so few jobs out there competing for these people.

I believe that the less education one has, the more difficult it will be for one to secure good-paying work soon in this environment. So, I have a recommendation.

I say use the time while unemployed to upgrade your education in some way. You might not get a job for 18 months, during which time you could have finished that degree you started or gotten an advanced degree if you already have a degree. You’ll be able to be more employable when the job market does eventually bounce back.

I can hear the common response now: “But, Charles, if I’m not working, I obviously don’t have the money to pay tuition!”

I totally understand. A year of college can cost, what, $15,000 or $20,000? And that is just at the less expensive schools.

An alternative would be to earn your SPSM® Certification, which would only set you back as little as $1,149. The average person earns the SPSM® Certification in seven months and, if you are unemployed and therefore have much time on your hands, you will probably earn it in much less time.

I think that the important thing is to do something with your education during your period of unemployment. If you go on an interview for a purchasing job 18 months from now and the hiring manager sees that you don’t have a purchasing certification or you never finished that degree despite being idle for such a long time, how ambitious are you going to appear?

Something to ponder…

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
Next Level Purchasing . com

Wednesday, August 11, 2010

Whitepaper Wednesday - Supplier Management Software

Welcome back to another installment of Whitepaper Wednesday here on the Purchasing Certification Blog. Today, I'll be reviewing a whitepaper entitled "Leveraging Supplier Management Platforms for Multiple Goals: Risk Reduction, Supplier Diversity and CSR" from Spend Matters.

This whitepaper provides a relatively quick glimpse into the evolution of how procurement departments have used technology to collect information from and interface with their supply bases. It begins by describing how these departments typically started experimenting with very targeted technologies, such as solutions just to allow suppliers to self-register with the company or software designed only to track the diversity status of suppliers.

The whitepaper reports that the trend is now moving to single solutions combining multiple purposes for supplier information, saying that "companies are now beginning to turn to solution providers to support a range of individual initiatives and are starting to do so as part of a single, more integrated supplier management effort – rather than as silo-driven practices and technology deployments." It then gives examples of specific technology vendors that have broadened their solutions over the years: Aravo Solutions, AECSoft, CVM Solutions, and Open Ratings.

The whitepaper claims that a byproduct of this shift to a more unified approach to managing supplier information is that companies taking this unified approach experience a “shift in overall supplier oversight from a mindset of visibility to one of transparency.” Unfortunately, the whitepaper does not define the difference between visibility and transparency, though the reader can assume that the author means that the procurement organization will have access to a single hub for accurate, up-to-the-minute details on all important supplier data from financial status to performance metrics and more.

The whitepaper concludes with descriptions of three discrete components of today’s modern supplier information management systems: Supplier Diversity, Supplier Risk Reduction and Risk Management, and Corporate Social Responsibility. While the whitepaper itself doesn’t share much about the capabilities the various technology vendors offer, the good news is that the Spend Matters blog does provide detailed coverage of some of the vendor offerings in the market. In particular, you may want to check out Spend Matters’ coverage of Aravo and CVM here (http://www.spendmatters.com/index.cfm/2009/5/7/Aravo-and-CVM-Solutions-Bring-Supply-Risk-Solutions-to-Market) and AECSoft here (http://www.spendmatters.com/index.cfm/2008/10/30/AECSoft--Another-Supplier-Diversity-Vendor-Branches-Out-Part-2).

For the whitepaper itself, you can download your own copy from Spend Matters’ website (registration required).

To Your Career,
Charles Dominick, SPSM
President & Chief Procurement Officer
Next Level Purchasing, Inc.
Struggling To Find More Good Resources For Procurement Leaders?
Check Out Our Web Site's New Whitepaper Section At
http://www.NextLevelPurchasing.com/WPcharles

Monday, August 09, 2010

Bad Negotiation Habit #3

I hope that you have enjoyed the article "Bad Negotiation Habits: Break Them Now!" I have one more bad negotiation habit to add to those mentioned in the article...

Bad Habit #3: Relying On Your Past Performance. If you’ve been in the purchasing profession for a while, you’ve probably been involved in many negotiations and may even feel that you’ve done well. That doesn’t mean that you should stop honing your negotiation skills.

Anyone can – and should - get better at negotiating, irrespective of their experience. In fact, if you haven’t learned anything new in negotiation in the past three or more years, chances are good that your suppliers have learned the techniques you use and have developed a way to counter them.

If you interrupted your reading of the article to learn this third bad habit, you can click here to return to the article for the Spotlight On Professional Development, Latest Purchasing News (including information about the Next Level Purchasing Facebook page), and FREE Offer sections of the article.

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
Next Level Purchasing . com

Friday, August 06, 2010

Is It Time To Diversify Your Low Cost Country Sourcing?

When I saw the headline "The Next China Problem To Freak Out About: A Shrinking Labor Pool" on Yahoo Finance, I had to read the associated article. What was even more insightful than the article was the accompanying video. The video described a couple of demographic changes happening in China that may affect you if you source in that country.

First, Jeff Matthews, a hedge-fund manager at RAM Partners, described the effect on the workforce of China's 1978 law that "restricts the number of children married urban couples can have to one" (Wikipedia). A generation after this law has been enacted, we are now starting to see a significantly smaller number of Chinese individuals entering the workforce compared to years past.

Second, Matthews described infrastructure development in the western part of China that is luring workers away from manufacturing jobs in the "dark, sweaty, noisy, awful [factories] 500 miles from [where workers actually live]" in the southeastern part of China.

Combined, these factors seem to suggest that China is not what it used to be from a sourcing perspective. So, where should one source? Is there another country ready to take China's place as the go-to place for low cost country sourcing?

Matthews says "Vietnam has only 80 million people...Vietnam alone is not the answer. India has a horrible infrastructure, that's not the answer right now...One way [companies will source in the near future] is 'spreading it around': a plant in Vietnam, a plant in, say, Czech Republic...a plant in Latin America...[The macro-economic change that affects global sourcing choices] probably lifts manufacturing worldwide, instead of sucking it all into China."

Interesting food for thought. So, if there is a labor shortage in China, where will you move your orders to?

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
Next Level Purchasing . com

Thursday, August 05, 2010

To Promote Your Supply Chain Performance In A Recovering Economy, Use The News!

Your purchased products and services get delivered on time. Nothing arrives with defects. Your supplier responds appropriately to inquiries. There are no unpleasant invoicing surprises.

Does that make you a supply chain superstar in the eyes of your management?

Probably not. Those results are expected.

Anything less is a disaster, but meeting expectations seems so...unspectacular.

So how do you communicate that meeting supply chain expectations in a recovering economy is worthy of praise?

Use the news.

What do I mean by this?

Well, it's no secret that the economic situation is difficult right now. Some sectors of - and companies within - the economy are recovering faster than others. And that can lead to difficulties getting the right quantities of materials through the supply chain in sufficient time.

A recent article in the Financial Times (hat-tip to Brendan Gibbons) says that "big manufacturers could be held back by their inability to secure vital components from supply chains weakened by the downturn and unable to increase production fast enough to meet demand." The article goes on to cite some statistics that indicate that supply chain disruptions were rampant in the second quarter of this year as the economy grew.

The article also said that Caterpillar, Boeing, and General Electric were three examples of companies who have suppliers that are struggling to keep up with demand. General Electric was even quoted as saying that "around $50m of revenue maybe got hung up at the end of the quarter in the supply chain."

So, if you are achieving perfection in supply chain performance these days, it actually is a spectacular accomplishment. Share these types of articles with your management to show that meeting supply chain expectations is worthy of recognition!

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
Next Level Purchasing . com

Wednesday, August 04, 2010

Whitepaper Wednesday - Where To Source

Welcome back to another installment of Whitepaper Wednesday here on the Purchasing Certification Blog. This week, I'll be reviewing a whitepaper entitled "Competitive Alternatives: KPMG's Guide to International Business Location, 2010 Edition" from KPMG.

I originally thought that this whitepaper may be helpful in locating different countries from which to source. While there are indeed many statistics in the whitepaper that are quite applicable to sourcing opportunities, I think that it is only fair to point out that the whitepaper is primarily intended to help businesses identify in which countries it might be desirable to open a new facility.

The whitepaper compares 26 cost components of doing business in 10 countries and ranks these countries in order of overall cost competitiveness, with the US being a baseline against which others are compared. So, which country was the most cost competitive?

Mexico was. The whitepaper said that "Mexico's major cities have a business cost advantage of 18.2 percent, on average, relative to the US baseline."

Who were the highest cost countries? There were only two that were higher cost than the US: Germany, with a 2.6% cost disadvantage, and Japan, with a 7.6% cost disadvantage.

The disappointment in this whitepaper was that it was limited to 10 countries. Unfortunately, key sourcing hotspots like China, India, and the Philippines were not included, neither were emerging sourcing markets like Vietnam, Pakistan, and Eastern Europe.

So, if you're looking for a how-to guide for determining the best countries in the world to source goods and services, this whitepaper isn't it. You'd be more likely to get the information and skills you need by taking the online class "Executing A Global Sourcing Strategy."

That being said, I think that this whitepaper is a decent reading for any procurement professional who is responsible for international procurement and interested in staying abreast of global macroeconomic trends. You can download your own copy of this whitepaper from KPMG's Competitive Alternatives website.

To Your Career,
Charles Dominick, SPSM
President & Chief Procurement Officer
Next Level Purchasing, Inc.
Struggling To Find More Good Resources For Procurement Leaders?
Check Out Our Web Site's New Whitepaper Section At
http://www.NextLevelPurchasing.com/WPcharles

Tuesday, August 03, 2010

Cyber Supply Risk Is Everywhere (Even on My Vacation)

Last month, I took a vacation to Myrtle Beach. Now, I'm a guy who insists on staying connected via iPhone, laptop, etc. But, part of me wanted to forget about the procurement world for a while and just enjoy a little "R&R" before returning to the office to continue work on some major projects.

Well, I can't escape reminders of the procurement world no matter how hard I try. And this little five-day vacation was no exception. Specifically, the events that triggered my procurement brain to turn on were related to my recent rants about the supply threat of Internet over-reliance.

First, my iPhone rendered itself useless. I got the "white screen of death" and none of the online remedies solved the problem. It was toast. So, I was less available for work-related stuff.

Second, my family had one of our activities interrupted by a technology meltdown. Let me go into a little more detail on this.

It was a rainy evening, so we weren't able to spend our time at the beach as we did in prior evenings. So, we decided to check out this place called MagiQuest.

MagiQuest describes itself as "an interactive live-action, role playing game where players embark on quests and adventures in an enchanted fantasy world using real magic wands to solve the mysteries of the game." Basically, it's like a technology-dependent scavenger hunt where you are given a wireless magic wand that is assigned to a MagiQuest account. When you point this magic wand at certain objects you are tasked to find, your account is updated and you are closer to accomplishing the objective of the game. I gotta say, it was a quite a cool experience for my kids.

And quite technology-dependent. In fact, as we were waiting to pay for our experience, I noticed an employee walk into a back room where the servers resided and couldn't help but blurt out "wow, what a rack!" in a non-Howard Stern sort of way as I marveled at the rack of computer hardware that was powering this place. So much of this business was driven by computers.

This dependence - and the fragility of technology - became quite apparent about 8PM that night, halfway into our visit. The thunderstorm outside knocked out the power to the building, including the lights.

It was only a couple of minutes before the lights and computer screens were back on. But not everything was working right. Player status couldn't be checked. Scavenger hunts couldn't be completed. Within about 15 minutes, MagiQuest employees rounded up all of the customers and notified us that things weren't working right and they needed to close two hours early to get everything back up and running.

Wow. A little common thunderstorm shut the business down for two hours?

At that point, all my previously expressed concerns about the vulnerability of Internet-dependent supply chains came rushing into my brain. If a small storm could shut down a business for two hours, what could a well-coordinated cyber attack or presidential shutdown of the Internet do to more major suppliers?

With the growth of the Internet into so many aspects of business relationships, we all need to step back and ask our key suppliers: "How would you conduct business if the Internet suddenly was not available for an extended period of time?" Though it sounds like a crazy, unlikely risk, based on my research, I think that Internet business activities are much more vulnerable than the average person thinks.

Here at Next Level Purchasing, we have contingency plans for our business, one of which addresses there not being any Internet availability for a long period of time. But how many of your key suppliers have a plan like this?

If you've answered "none," it may be time to get them to start thinking about it. Cyber supply risk is everywhere.

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
Next Level Purchasing . com

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