Thursday, March 31, 2011

Where Do Procurement Professionals Go On The Web?

It's been nearly a year since Purchasing Magazine and its site, purchasing.com, went away. While I miss some of the content, that site's demise certainly hasn't left the web void of sources of news, views, and education for the procurement professional.

I've compiled a list of 20 top sites in the procurement space. These are sorted by their Alexa traffic rank, which is designed to rank sites from most to least traffic (by Alexa's measurements).

The lower the number, the more traffic the site gets. Traffic rank changes regularly, so these are the numbers extracted today. By the way, the #1 site among all sites - not just procurement sites - is google.com, followed by facebook.com at #2.

OK...onto those procurement sites...

1. scmr.com - 268,950

2. supplymanagement.com - 304,775

3. spendmatters.com - 310,865

4. nextlevelpurchasing.com - 335,969

5. cporising.com - 362,372

6. procurementleaders.com - 363,205

7. sdcexec.com - 451,686

8. agmetalminer.com - 478,525

9. sourcinginnovation.com - 745,030

10. theferrarigroup.com - 842,732

11. spendmatters.co.uk - 966,611

12. strategicsourceror.com - 1,751,907

13. cpoagenda.com - 1,833,581

14. purchasinginsight.com - 1,938,216

15. vmo-blog.com - 2,051,482

16. atrisk.net - 2,230,426

17. esourcingforum.com - 2,443,306

18. supplyexcellence.com - 2,494,630

19. 2sustain.com - 3,291,172

20. mypurchasingcenter.com - 4,502,076

In addition to this list being a good resource for procurement professionals to use for their research, I think that marketers can benefit from this list as well. Many of these sites offer advertising or sponsorship opportunities where marketers can directly reach procurement decision-makers and it's not always clear how much bang a company is getting for its marketing buck. This list shows who has the traffic, relatively speaking.

If you are a marketer and interested in getting a copy of the media kit for sponsorship opportunities on nextlevelpurchasing.com, please send an email to mmccollum [at] nextlevelpurchasing [dot] com.

To Your Career,
Charles Dominick, SPSM, SPSM2
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, March 30, 2011

FTC Spanks Toys 'R' Us For Violation of Mandated Supplier Communication Practices


In 1998, the US Federal Trade Commission (FTC) issued an order against Toys 'R' Us for the retailer's anti-competitive behavior. According to the FTC, the retailer used the leverage associated with its size to force their suppliers into agreements that would keep those suppliers from "selling certain toys to warehouse clubs, or to put the toys into more expensive combination packages, so consumers could not obtain lower-priced toys from the clubs or compare prices easily."

As part of the order, Toys 'R' Us was prohibited "from urging any supplier to limit supply of products or refuse to sell to discounters...bars Toys “R” Us from asking any supplier about its sales to any toy discounter, and requires the company to preserve and maintain records of communications with its suppliers related to its sales and distribution." Yesterday, the FTC announced a civil penalty of $1.3 million to be paid by Toys 'R' Us for violating the order.

What got Toys 'R' Us sent to the principal's office this time?

Three things, actually. But one of them really kinda bugs me.

That transgression was that Toys 'R' Us apparently was "complaining" to its suppliers about their discounting. The FTC claims that "these complaints could lead those suppliers to limit supply or refuse to sell their products to toy discounters."

Whoa!

Now, I understand that Toys 'R' Us lost some privileges for its past misbehavior. And the other two violations of the order, which you can read about on the above-linked FTC announcement, I can understand.

But not being able to complain about discounts to suppliers?

It's business. In procurement, complaining about discounts is a big part of what we do and one way we contribute to improved profits.

But, then again, corporal punishment never feels good now, does it?

To Your Career,
Charles Dominick, SPSM, SPSM2
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

Tuesday, March 29, 2011

March 2011's Dedicated Purchasing Student of the Month Is...

Every month, Next Level Purchasing recognizes a purchasing professional who has made impressive progress in learning more about his/her field. We are excited to announce that the Dedicated Purchasing Student of the Month for March 2011 is...

Inna Nirenburg, SPSM, a purchasing professional from Pittsburgh, Pennsylvania, USA. Inna completed all six Senior Professional in Supply Management® Program classes and passed the SPSM® Certification Exam during the month of February!

Next Level Purchasing and the procurement community around the world congratulate Inna and her dedication to having a more successful purchasing career!

To Your Career,
Charles Dominick, SPSM, SPSM2
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, March 28, 2011

One Week Until Purchasing Professionals Get What They Deserve

Next Monday - April 4, 2011 - Next Level Purchasing will be making an announcement that will rock the purchasing community. Some hints have been - and will continue to be - posted on the Next Level Purchasing Facebook page at http://www.facebook.com/NextLevelPurchasing.

Do you have a guess? Feel free to post it!

To Your Career,

Charles Dominick, SPSM, SPSM2
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, March 24, 2011

Corporate United Continues To Grow Its GPO Footprint

Lots of procurement-related organizations send me press releases touting what's going on in their business. Some are easy to ignore. But I'd have to be a real idiot to overlook what's going on with Corporate United.

Corporate United is a group purchasing organization that gives access to preferred-pricing supply contracts to its members, which are mid- to large-sized organizations. While its perennial inclusion on the Inc. 5000 list of the fastest growing privately held companies in America alone is a testament to its growth, some other recent developments helped solidify in my mind how impressive Corporate United's trajectory is.

First of all, I watch their number of members. It seems like just a couple of years ago, it hovered around 100. According to recent Corporate United press releases, their membership has grown to over 180.

Second, with the addition of several new employees over the past year, Corporate United is moving to a more spacious office. I can't think of a stronger tangible indicator of financial strength than more customers, more employees, and more office space!

The press releases touting their growth are certainly noteworthy. However, the Corporate United press release that I couldn't help but dig into was one in which they touted a partnership with the Pro Football Hall of Fame. Part of this partnership involves Hall of Famer Anthony Muñoz delivering a keynote presentation at Corporate United's annual SYNERGY conference this May.

This partnership seemed a little unusual to me. So I reached out to Corporate United's Vice President David Clevenger for some insight into this partnership. I'll share the details of our exchange with you here...

Charles Dominick: "What does this 'partnership' involve beyond just having Anthony Muñoz speak at the conference? Why does this partnership make sense?"

David Clevenger: "The overriding themes of the Corporate United partnership with Pro Football Hall of Fame Enterprises are achieving excellence and collaboration. The Hall of Fame’s members are the greatest players to ever step onto the football field and, as a group purchasing organization and the leader in corporate collaboration, we feel that Corporate United’s members demonstrate some of the nation’s leading organizations. In our eyes, it’s a perfect match between two Northeast Ohio organizations looking to increase awareness and provide more opportunities for their members through collaboration.

"In addition to the keynote speaking engagement at SYNERGY, the Corporate United/Pro Football Hall of Fame Enterprises partnership also includes a marketing and sponsorship program that will be available to Corporate United’s 180+ members. It will allow our member companies to take advantage of the Hall of Fame’s extensive sponsorship program, which includes the creation of commercial ventures featuring Hall of Famers, including television shows, social media outreach, merchandise, and events, using Hall of Famers and the marks and logos of the Pro Football Hall of Fame."

Dominick: "So, essentially, does Corporate United see this partnership as a way of giving its members access to yet another valuable business relationship?”

Clevenger: "Yes."

Dominick: "What can SYNERGY attendees expect to learn from Muñoz that they can apply to their purchasing jobs?"

Clevenger: "Anthony Muñoz, an eleven-time NFL Pro Bowl selection, is considered by many to be the greatest offensive lineman in NFL history with a record of excellence that is unrivaled in professional football.

"In addition to being a great leader and team player on the field, Muñoz also demonstrates these attributes in his day-to-day life. In fact, in 2002, he established the Anthony Muñoz Foundation, a non-profit organization that engages the Tri-State region to impact area youth mentally, physically and spiritually. Since its inception, the foundation has impacted thousands of children and raised more than $5,000,000 for foundation programs and select charities.

"Besides devoting a great deal of time and energy to his Foundation, Anthony continues to be involved with several community initiatives. He was the chairman of the Billy Graham Mission in 2002 and has spoken to over 150 High School assemblies discouraging the use of drugs and alcohol.

"Muñoz will be presenting teamwork and leadership-related best practices and sharing what he’s learned throughout his career on and off the field. Exhibiting teamwork and leadership is as relevant to SYNERGY attendees as any other group looking to collaborate. And who knows more about this than the greatest offensive lineman to ever play the game of football?"

Interesting enough! If you're interested in learning more about SYNERGY, go to http://www.corporateunited.com/synergy.aspx.

Disclosure: Corporate United is a sponsor of the Purchasing Certification Blog.

To Your Career,
Charles Dominick, SPSM, SPSM2
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, March 23, 2011

Whitepaper Wednesday - Purchasing's Role In S&OP

Today's installment of Whitepaper Wednesday is written by Erick Opdenbosch, SPSM. Please help me welcome back Erick for his fourth contribution to the Purchasing Certification Blog!

Welcome to another installment of Whitepaper Wednesday here on the Purchasing Certification Blog. Today, I will be reviewing a whitepaper entitled “Game Plan for Business Success: Ensuring Effective Sales and Operations Planning” from Supply Chain Digest.

Some indexes are showing that the U.S. has recovered from the financial crisis of 2007-2009. For example, The New York Times indicated that unemployment has dropped notably. Although there is still some skepticism about it, there is a clear trend that shows that the economy is recovering. Now, it is time to evaluate if we are ready for the future. Have our companies dedicated time and efforts to have better operations? Have purchasing agents developed better ways to evaluate suppliers? The whitepaper I chose goes into evaluating the way fluctuating demand is confronted by implementing a Sales and Operations Planning strategy – a supply chain concept that touches purchasing at some level.

The crisis has brought the opportunity to evaluate how companies operate. The whitepaper states that “while the primary objective during these troubled times has been to contain cost and ensure survival, organizations are also looking for revenue-generation opportunities while keeping costs/inventories low.” Purchasing is one of the main players here since minimizing cost is one of our main goals, perhaps the most important. Also by applying strategic sourcing approaches, the company can gain competitive advantage.

The whitepaper also talks about supplier diversification and supplier dependence. It is not new to talk about multiple, dual, or single sources and which one is more convenient. The whitepaper argues that it is difficult for companies to meet demand when the same vendor that supplies critical elements, also delivers to competitors. Purchasing agents have to evaluate suppliers and do everything possible to identify future problems, even with sole sources.

The whitepaper goes into defining Sales and Operations Planning (S&OP), and how it is important to implement it in order to answer to today's “volatile demand signals.” S&OP is “a set of decision-making processes with three main objectives:
1) To balance demand and supply,
2) To align volume and mix, and
3) To integrate operational plans with financial plans.”

It is basically a model that goes far beyond the purchasing arena and touches other areas in the company. Among its major benefits are the anticipation of problems and quick execution plans. This is the outcome from the collaboration of all functional areas, which I believe is the main conclusion from this white paper.

The white paper proposes that in order to be effective, “an organization needs to include certain capabilities such as maturity model, Integrated Business Planning, the role of leadership, intra-organizational integration, cross-functional cooperation, and exception management.”

Purchasing has the advantage of being linked to all areas in the company. Hence, Purchasing can lead the integration and cooperation within the company.

The white paper may not be a purchasing topic per se, but it sure highlights that purchasing is an important part of business. In order to have access to the whitepaper go to Supply Chain Digest at http://www.scdigest.com/TypeList.php?colid=InternalWhitePaper (registration required).

Monday, March 21, 2011

Your Supplier Insurance Clause: What Do You Do When A Supplier Negotiates It?

I hope that you have enjoyed the article "Supplier Insurance Best Practices, Part II."

My goal with this article, as well as Part I and the accompanying podcast, is to give you the tools to effectively select and negotiate supplier insurance clauses independently. If I asked 100 procurement professionals "What do you do when a supplier negotiates the terms of your supplier insurance clause?" I bet I'd get 99 that would say something like "I just turn it over to the legal department because I don't understand that stuff."

Not the answer I'd like to see.

As the article points out, "carefully crafted supplier insurance clauses can provide more risk protection to your organization, keep your organization's insurance claim history cleaner, and make collecting on claims less cumbersome." Therefore, you should know what you are negotiating!

I believe that the podcast and the two articles can help you get a handle on what the terms mean, when they are and aren't necessary, and how to handle supplier insurance situations in the real world. If you're not well-versed in supplier insurance clauses but deal with them routinely, get on it!

To Your Career,
Charles Dominick, SPSM, SPSM2
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, March 18, 2011

Japan's Supply Chain Recovery: Interpreting The Estimates


A headline in yesterday's Pittsburgh Post-Gazette read "Radiation spread raises new concern: U.S. fearing nuclear reactor emergency is greater than what Japanese officials are portraying."

Sandisk issued a statement saying that their "current assessment is that there has been minimal immediate impact on wafer output due to the earthquake. SanDisk continues to assess the situation for any potential future impact that may arise from issues related to Japanese infrastructure and the supply chain."

Is the earthquake/tsunami/nuclear meltdown triple-whammy that happened in Japan an apocalyptic crisis? Or is it a slight interruption in business as usual? Who do you believe?

Well, as a procurement guy schooled in understanding cultural differences between countries, I came to my own conclusions. But I wanted to tap my colleague, international procurement guru, and primary author of the online courses "Basics of Smart International Procurement" and "Executing A Global Sourcing Strategy," Dick Locke, for a response to a question I had.

Dick was more than gracious in giving me a response that can help frame the Japan situation - and all of the seemingly conflicting accounts of the impact - in a way that can help procurement professionals understand and work through the risks that lie ahead. Here's Dick's response to my request...



I've been watching and reading the various information coming out of Japan and trying to interpret it after filtering it through the cultural differences that can impede communication and sometimes action. I see one apparent difference and am concerned about another potential difference.


One consistent complaint is that the various spokespeople in Japan seem to be
understating the seriousness of the radiation hazards. It's very likely that this is due to a cultural difference that strongly affects communication. The difference goes by various names, and I call it a "need for harmony." It could also be called a "low score on a frankness scale." A strong cultural need for harmony can make it difficult for people in that culture to deliver bad news directly. They will often resort to various expressions such as the Japanese "honto ni muzukashii" which literally means "truly difficult" in English.
However, people in Japan will correctly take it to be a very frank statement that something will not happen.


A classic example is in the Japanese Emperor's speech to the nation announcing the surrender at the end of World War II. It included "the war situation has developed not necessarily to Japan's advantage." This was after two nuclear bombs and a total collapse of manufacturing and logistics.


While Japan is especially strong in this need for harmony, it's a fairly widespread characteristic among Asian and some Latin American cultures. Keep in mind that Japanese may be perceiving the messages differently than Westerners.


The second difference is just a concern at this point. There's a well known cultural difference called "Uncertainty Avoidance." It influences the willingness of people to make decisions without being sure of the outcome. It makes people much more comfortable with routine situations and incremental improvements than they are with dealing with the unexpected. While Japan is extremely high on the "Uncertainty Avoidance" scale, I really haven't seen any indication of lack of creativity in solving the problems.


Let me also add that while the radiation hazard is getting so much attention, both the earthquake and tsunami are terrible tragedies that shouldn't be overlooked.


Now, to bring this around to Charles' question: "What cultural considerations should supply chain leaders take into account when receiving Japanese suppliers' feedback on the expected impact of the natural disaster on future supply?" Be sure to probe assurances of continuing supply more deeply than you would with people from a frank culture such as Germany or the US. It's best to ask open ended questions such as "how are the roads to the airport" or "how are your suppliers in the affected area" than questions that can be answered with a simple yes or no. You should also keep in mind that Japanese communicators are usually not being
dishonest when they seem overly reassuring. It's just that their culture makes
it difficult to say some things too directly.


I'd like to thank Dick for sharing his insights. I highly recommend heeding his advice as the world works to recover from this terrible disaster.

To Your Career,
Charles Dominick, SPSM, SPSM2
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, March 17, 2011

Japan's Earthquake & Tsunami: The First Supply Chain Impact Assessments


With the magnitude of devastation in Japan as a result of last week's earthquake and tsunami, it is no surprise that it has taken a while for an assessment of the impact on the supply chains in the various industries affected. But news has begun trickling in, though analysts have "cautioned that the disaster’s impact may hinge on how long it takes to bring Japan’s manufacturing sector back to life" according to the Washington Post.

The above-linked article cites the four US industries most likely to be affected by the disaster in Japan: autos; nuclear reactors, boilers and parts; audio and televisions; and cameras and medical equipment. Here are highlights from the Washington Post's analysis on each industry...

Autos: Automakers are expecting minimal disruption in the US. Honda's popular models are supported by North American suppliers and Nissan has a 50-day inventory on-hand or in-transit.

Nuclear Reactors, Boilers and Parts: It is still too early to tell.

Audio and Televisions: The potential for disruption in this industry is probably going to depend on the contingency plans of the manufacturers, namely shifting production elsewhere. Sony had to suspend operations at seven plants and SanDisk admitted to "minimal" impact, which is still impact. Analysts are expecting chip prices to increase.

Cameras and Medical Equipment: Canon and Nikon had employees injured in the disaster. The degree of devastation is apparently giving Canon no choice but to shift production with some plants (note the plural) estimated to be down for more than a month.

Why might the true impact end up being worse than currently predicted? I'm planning a follow up to lend some insight.

Stay tuned.

To Your Career,
Charles Dominick, SPSM, SPSM2
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, March 16, 2011

How To Stop Suppliers From Taking Liberties With Your Terms & Conditions


As we teach in our online class, "Savings Strategy Development," a best practice is to include your contract terms and conditions with your RFP/tender. This prevents delays later in the process and difficult negotiations with suppliers who feel they have already won your business.

However, some suppliers may see this as an invitation to take exception to your terms as part of their proposal. How can you avoid this becoming a mess?

Simple.

Just build in degree of acceptance of your terms and conditions as one of the criteria for award, right alongside price, lead time, etc. If you use a “risk” criterion as part of a weighted average supplier scorecard in ranking suppliers, acceptance of your terms and conditions could be factored into that risk score.

Let’s face it. Negotiating terms and conditions rather than using your standard terms takes time, costs your organization money, and can expose your organization to more risk. The more willing a supplier is to work with your standard terms and conditions, the more favorably evaluated they should be.

To Your Career,
Charles Dominick, SPSM, SPSM2
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

Tuesday, March 15, 2011

Leadership is (And Isn't) a Lot of Things


Today, I had the pleasure of attending an excellent leadership seminar led by former Purchasing.com blogger extraordinaire and current Tyco procurement executive, Lara Nichols. Through her well-structured presentation, Ms. Nichols did a fantastic job of helping the attendees to gain a better understanding of what is - and what isn't - leadership.

However, it was during one of the breakout activities that Ms. Nichols built into the agenda that I gained an interesting perspective into some additional characteristics that are and are not leadership. Let me explain...

The attendees were split into groups of about 8-10 people each. Each group was tasked to create a skit to demonstrate a leadership quality.

I obviously have a leadership role here at Next Level Purchasing. Being a father, I naturally have leadership responsibilities when I leave the office. And even my recreational activities are organized types of activities that need a leader, so guess who that is? Yep - me!

Therefore, when I attend leadership seminars, I like to sit back and give leadership opportunities to those who may not have current leadership responsibilities in their work. It helps me learn when I use this type of opportunity for "observing leadership" moreso than "practicing leadership."

So, I sat back while my group mates started throwing around ideas. One of the characteristics of a leader is stepping up and taking charge. And one of the members of the group did step up.

With all of the characteristics of leadership that Ms. Nichols covered, it was clear that, theoretically, leadership is not the presence of a single trait. And this was certainly obvious as this group member tried to lead us to a complete skit. He had the presence that communicated leadership, but couldn't really crystalize a plan that persuaded others to "get on board."

As Ms. Nichols gave warnings about the time remaining for our breakout, we weren't close to a solution. While I would have preferred to be in a group where someone else could pull everyone together, I couldn't sit back any longer and watch a disaster happen.

I decided to step up after all. I diplomatically suggested a skit and everyone in the group expressed buy-in and excitement. We went with the plan.

The takeaways I got from this exercise, which I now share with you, are:



  • Leadership is actually a combination of traits, not just one thing. One can have one great leadership trait, but be an ineffective leader overall.

  • Leaders don't have to come up with the plan. Sometimes, leadership is sitting back and letting others come up with the perfect plan.

  • However, when others can't develop a plan, a true leader will feel an insatiable desire to spring into action.

What is leadership to you?


To Your Career,
Charles Dominick, SPSM, SPSM2
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, March 14, 2011

What NOT Having A Certification Says About Mid-Career Procurement Professionals

I had an interesting exchange with a colleague on LinkedIn recently. He was a mid-level procurement professional and was unsure if a certification would help him at his age (mid-40's) or if he was just relegated to plodding along at the mid-level for the rest of his career.

To me, a procurement certification matters just as much (and possibly more) when you're in your mid-career compared to when you're early in your career. A procurement certification shows that you've met a standard for excellence in your profession and that you have a qualification that other, less capable candidates do not.

But, at the mid-career point, not having a procurement certification says something that is perhaps even more powerful.

It says that you may not be all that serious about your career. It can communicate that there is a chance that you are not competent enough to earn a procurement certification. It may cause someone to question whether you have updated your skill set at all since you started in the profession or if you still think what you were doing in the early 1990's is all that needs to be done today.

Maybe you can overcome these obstacles. That is, if someone important would even give you the time of day to discuss them...

To Your Career,
Charles Dominick, SPSM, SPSM2
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, March 11, 2011

How Strategic Is Training?

Some managers view training as a "nice to have." Others view it as an essential component of improving performance within a department.

But would a CEO ever consider training to be a requirement for accomplishing the strategic mission of his or her entire organization?

Well, I'll let an excerpt of an article from Training & Development Magazine answer that question. The article, entitled "M'm M'm Good. Learning and Performance at Campbell's," features an extensive interview with Campbell Soup Company CEO Doug Conant.

In this interview, Conant shares how training has been important in his turnaround of the company. I found most of his most profound insights in his reponse to the question "Campbell struggled during the Great Recession. How did that affect the training and development budget?" Here is an excerpt from his response:

"All of our employees still have a training agenda. Our goal is that together we will build the world’s most extraordinary food company by nourishing people’s lives everywhere, every day. That means nourishing our employees’ lives, too. One way we tangibly demonstrate the Campbell promise of valuing people is through training and development. We’ve been working to raise our game in training and development for a whole decade, and we’ll continue to do it. It’s a small price to pay.


"We find that the more we provide employees in terms of training and development opportunities, the more engaged they become. And the more engaged they become, the better they perform in their roles and the better the company performs in the marketplace. There’s this wonderful flywheel effect. The more we help them with their training and their development, the better they perform, the more fulfilled they are, and the better we get at delivering training and development.

"You can’t grow if you don’t continuously raise the game there. If you’re cutting the training budget, you don’t have much to work with as a company. You’ve got to question your viability. We’ve got to invest to help people be their very best.

"Becoming the world’s most extraordinary food company requires that we attract, retain, and develop the best talent in the food industry. There’s just no other way to do it. It has to start with the people."


Words from an iconic executive from an iconic company. Not exactly the type of person you'd want to disagree with.

To Your Career,
Charles Dominick, SPSM, SPSM2
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, March 10, 2011

A Revolutionary Change Is Coming To Purchasing 4/4/2011!

On April 4th, Next Level Purchasing will be making an announcement that will rock the purchasing community. Any idea what it might be? Post your guess here or on our Facebook page at www.facebook.com/NextLevelPurchasing

To Your Career,
Charles Dominick, SPSM, SPSM2
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, March 09, 2011

Fraud in the Navy Supply Chain Results In Supplier Exec Sentenced To Jail

According to an article on military.com (hat tip to Jeff Dean, SPSM), the president of a supplier in the US Navy's supply chain has been sentenced to 41 months in prison. The article says that the offense of the supplier, Bristol Alloys Inc., was supplying a Navy subcontractor with metal that had not been heat-treated to meet contractual requirements for use in the building of submarines.

The consequences of this breach are extensive: the article says that it "could eventually cost the government more than $30 million to find and replace the metal parts used in the construction of submarines." The executive and his company were ordered to pay $1.35 million in restitution, but the likelihood of the government even seeing that relatively paltry sum is debatable given that "neither one of the defendants has any assets of any significance" and the company "has done no business since the fall of 2009."

It would normally be easy to point the finger at the government for failure to monitor its suppliers' performance, but it isn't so easy in this case. The submarines are built by a two-prime-contractor team of Electric Boat and Northrop Grumman Shipbuilding. Northrop Grumman bought various metal components from one of its suppliers which had, in turn, purchased metals and other parts from Bristol Alloys.

So, the offending supplier was three tiers removed from the government. But shouldn't the government be looking further down the supply chain?

Apparently not. The article notes that the Navy "has not changed the way it accepts materials from a supplier based on this incident."

Makes you wonder when something like this will happen again, doesn't it?

To Your Career,
Charles Dominick, SPSM, SPSM2
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, March 07, 2011

Early Purchasing Involvement Is Often Determined By Who Fights For It

I hope that you have enjoyed the article "How To Justify Early Purchasing Involvement."

In the article, I believe that I've provided some excellent tips for getting top management to ensure that the purchasing department is involved during the design or specification phases of a future purchase. But early purchasing involvement sometimes can be determined not so much by what benefits are presented, but moreso by who presents them.

If the person petitioning top management is a buyer that has five layers of management separating her/him from the CEO, the case is not likely to be strong. In contrast, if the Vice President of Procurement is fighting for early purchasing involvement, there is a greater likelihood of success.

That's not to say that lower-level buyers should give up fighting for early purchasing involvement or that it would be an exercise in futility. But buyers need to garner the support of their direct managers, then those managers need to garner the support of their managers, and so on until the individual making the case is as senior an executive as you can get to support the early purchasing involvement cause. Facts, charisma, and "leadership from a non-leadership position" are all important ingredients of taking your plea through the chain of command.

To Your Career,
Charles Dominick, SPSM, SPSM2
President & Chief Procurement Officer
Next Level Purchasing, Inc.
Struggling To Have A Rewarding Purchasing Career?
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Friday, March 04, 2011

Is Now A Better Time Than Ever To Take Early Payment Discounts?

There are several things to be considered when deciding whether to take vendor discounts for paying early as opposed to paying the full amount on time. One of the major drivers of whether or not to take early payment discounts is the set of alternatives that your organization has for using the cash and whether those alternatives would provide a better rate of return than you would get by taking the discount.

As we teach in our online course, "Finance For Strategic Procurement, Part II," the rate against which cash usage and investing is evaluated usually is the organization's weighted average cost of capital. It's a pretty complex topic too extensive to discuss on this blog. But it takes into account various uses of the organization's money, from paying down debt, to reinvesting in a growing part of the business, to investing the cash in bank accounts or securities.

Let's focus on "investing the cash" for a moment.

If an organization's only benefit to holding the cash longer was the fact that it could earn interest during that time, accepting most suppliers' early payment discounts will beat that alternative in today's environment. Handly.

Interest rates for bank investments are ridiculously low at the moment. I've seen one bank's savings rate for a million dollar balance be less than a half-a-percent! And their certificate of deposit rates were not much better, requiring a commitment of at least 48 months just to hit 1%!
Hopefully, your organization has other areas in the business that it can invest in for a greater return. But, if earning interest was the main reason your organization liked to forgo those early payment discounts in the past, the 1 or 2% your suppliers are offering to shave off your price in exchange for paying 20 or so days early looks mighty good right now, doesn't it?

To Your Career,
Charles Dominick, SPSM, SPSM2
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, March 03, 2011

The Litmus Test For Spotting Old-School Government Procurement

As you may have guessed from previous posts, one of my biggest pet peeves is hearing procurement professionals say things like "That doesn't apply to us" or "We don't do that here" when discussing procurement best practices. My response is always something like "How could you adapt it to make it work for your situation?" or "It's not a matter of whether you do it, it's a matter of whether you should be doing it."

One area that I hear a lot of those "doesn't apply" or "don't do that here" statements is government procurement. While there are certainly some progressive government organizations out there, there are many that are still in the Dark Ages when it comes to modern procurement.

I was pleased to read an article in the New York Times (hat tip to Dick Locke) where the former deputy secretary of the Pennsylvania Department of General Services called out other states for their poor procurement practices and cited the examples of how Pennsylvania was light years ahead of them in terms of procurement.

How did Pennsylvania surge ahead?

They "borrowed an approach used by businesses."

What was that approach?

Strategic sourcing.

And the results were impressive:
  • The state saved $19 million annually on computers
  • They saved $4 million dollars by rationalizing their office products supply chain
  • And they "saved Pennsylvania taxpayers $360 million annually across dozens of contracts"

All by borrowing an approach from the private sector. In my opinion, any government that is not looking to the private sector to adopt better procurement practices is doing taxpayers a disservice. Every government procurement department should be open to ideas from the private sector and actively learning what they can about how for-profit businesses succeed in their procurement efforts.

Whether or not a government agency is willing to consider private sector procurement practices is the litmus test for spotting old-school government procurement. And old-school government procurement typically fails the taxpayer.

To Your Career,
Charles Dominick, SPSM, SPSM2
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, March 02, 2011

Procurement Ethics: One Bad Apple Spoils...The Next 20 Years of His Life?

Back in August, I reported that Paul Shin Devine, a global supply manager for Apple, was due in court because he was "accused of accepting more than $1 million in kickbacks from half a dozen Asian suppliers of iPhone and iPod accessories." According to Reuters (with a hat-tip to Paul Salisbury, SPSM), Devine "pleaded guilty on Monday to wire fraud, conspiracy and money laundering," will forfeit "about $2.28 million in money and property," and "faces a maximum prison term of 20 years."

Sentencing is scheduled for June 6, 2011.

While his attorney characterized Devine's criminal behavior as "a mistake," I would have to disagree. Strongly.

A mistake would be something like a new purchasing employee accepting a branded pen from a supplier when the employee's company had a "no gifts from suppliers" policy in its policy manual but failed to advise the employee of the policy or provide any ethics training. Getting millions of dollars in kickbacks isn't a mistake - it is a premeditated crime of greed.

It's pretty simple: if your procurement role results in you getting any benefits beyond those provided by your employer, you may just have crossed the ethical - or criminal - line.

To Your Career,
Charles Dominick, SPSM, SPSM2
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

Tuesday, March 01, 2011

What's The Next Frontier In Supplier Diversity?

Yesterday, I blogged about the premise of determining supplier diversity status on employment base rather than ownership base. I also linked to a 2008 post of mine describing how UPS implemented LGTB-owned businesses as a new category of diverse suppliers.

One thing that I wanted to bring up separately is that UPS has another uncommon supplier diversity classification for "Disabled Business Enterprise." From their website, UPS explains that a Disabled Business Enterprise is a company that is "51 percent owned, controlled and operated by a handicapped individual or service-disabled individual. A handicapped individual is a person who has a physical, mental or emotional impairment, defect, ailment, disease or disability of a permanent nature, which in any way limits the selection of any type employment for which the person would otherwise be qualified or qualifiable. "

This is interesting. I believe that supporting the disabled is a noble social responsibility goal, certainly at least as noble as supporting ethnic groups that had been discriminated against in the past.

To me, it makes sense. So much sense that I think it should be adopted as part of any supplier diversity program.

Again, I feel that it can have broader social impact if it takes into account not just the ownership, but the employment base as well. Could we see more of this?

I think so. And it wouldn't surprise me if we saw subset categories, such as a category for Autism Spectrum Disorders which are becoming more and more of a concern for society.

According to the US Center for Disease Control, Autism Spectrum Disorders are "a group of developmental disabilities that can cause significant social, communication and behavioral challenges." And, according to Reuters (and countless other sources), autism is on the rise, with incidences "before the 1980's...affecting one in every 2,000 children" growing to the latest ratio of 1 in 110 children. The rapid growth of autism is definitely a big-time social concern, making doing business with suppliers who hire those with autism certainly a socially responsible overture.

An interesting excerpt from UPS' definition of Disabled Business Enterprise that ties in with autism is this one: "in any way limits the selection of any type employment for which the person would otherwise be qualified or qualifiable." Some individuals with disorders on the autism spectrum are highly intelligent and capable, but their disorder is evident in social interaction. While someone with autism may be a phenominal accountant, software developer, engineer, etc. - in other words being "qualified or qualifiable" - they may struggle in the interview process and may find getting employment difficult as a result. I think that companies who are aware of autism, and set aside any discrimination towards those with it, should be commended.

Could employment of the disabled be the next frontier in supplier diversity? Aside from autism, what other specific disabilities might be considered for qualifying the diverse supplier of tomorrow?

Disclosure: One of my children has been diagnosed with an Autism Spectrum Disorder.

To Your Career,
Charles Dominick, SPSM, SPSM2
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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