Tuesday, May 31, 2011

Supplier Management Metrics: Don't Let Lack of Automation Make You Subservient to the End User

I hope that you have enjoyed the article "'Impossible' Supplier Management Metrics?"

One of the core themes in this article is to work with stakeholders, such as end users, to determine supplier performance when you lack the automation to access metrics. There are some challenges with this.

In my purchasing career, I have had many instances where end users complain about the performance of certain suppliers. But, upon investigation, found that the suppliers' performance wasn't so bad.

This type of discrepancy often comes down to the fact that we, in procurement, like to think in terms of metrics and other people don't have that mindset. For example, I recall one situation where an internal customer of mine suggested to me that we do not invite a certain supplier to bid on a RFP because he "heard" that they were having financial troubles.

Me, I'm thinking "OK, what is their Altman Z Score? What have their losses been the past three years? What's their Current Ratio?"

Of course, my end user wasn't thinking those things. But our job, as procurement professionals, is not to simply take end user input like that and base decisions on it. It is to help them verify and quantify what the problems actually are.

I hope that the article inspires you to do just that.

And, speaking of inspiration...this article plus "Supplier Management: Make It Strategic" from a few weeks ago and a couple more forthcoming articles are based on a phenomenal podcast I did with Sherry Gordon, author of Supplier Evaluation and Performance Excellence: A Guide to Meaningful Metrics and Successful Results. If you want to learn more advanced concepts about supplier management, this podcast is mandatory listening. Click here to check it out.

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, May 26, 2011

World's Largest Purchasing Association Tops 200K Members



The Next Level Purchasing Association, already the world’s largest professional purchasing association, continues to dominate the purchasing association space by welcoming its 200,000th member this week.

The Next Level Purchasing Association was officially launched on April 4, 2011 with over 187,000 members representing over 200 countries. As an evolution of the former Free Purchasing Resources Program, the association continues to grow in size; over 13,000 new members have joined in less than two months.

Members are attracted to the Next Level Purchasing Association due to its revolutionary free online structure. All of the same benefits of traditional associations are offered to members of the Next Level Purchasing Association, including a monthly magazine, free educational webinars and reports, and a networking feature which many have already taken advantage of to elicit advice from their purchasing peers on various procurement topics.

Purchasing professionals wishing to learn more about the Next Level Purchasing Association or to join, can visit: http://www.nextlevelpurchasing.com/association

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, May 24, 2011

Why Your Suppliers Don't Want You To Think It Over

Long time readers of my blog know that I love to study sales strategies and determine how procurement professionals should deal with them. So, when I received the below-linked sales training video clip in my very overloaded inbox today, I couldn't save it for later. I had to watch it right away!

One part of the video - around the 2:00 mark - teaches how a salesperson should react when a buyer says "This looks good...I'd like to think this over. Why don't you call me in a couple of weeks?" The trainer instructs salespeople to try to convince the buyer to make a decision right there or at least to uncover any potential obstacles by asking "What is there to think about?" After all, as the instructor points out, "The longer we go through that think-it-over process, the less likely they are to buy."

So how should we, as procurement professionals, answer this question?

Well, there are a few angles to consider. A couple of those will be addressed in an upcoming PurchTips article of mine. But here is one additional tidbit that's worth thinking about...

If you "think it over" before starting a true negotiation, when you do finally show more of an interest in formalizing a commitment, the supplier will feel more certain of getting your business and will be less willing to make concessions to earn your business. It can be to your biggest advantage to create the perception that it's the supplier's job to make you decide by giving you the right concession sooner rather than later.

Now for that video...

http://youtu.be/0mosynS5L2Q

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, May 23, 2011

Explosion in the iPad Supply Chain: Will Lack of Supply Diversification Hurt Apple?

According to an article on Comcast.net, there was an explosion this past Friday at the Chengdu, China factory of Foxconn Technology Group - Apple's contract manufacturer of the iPad. The blast killed three employees and injured another 15.

Though the Chengdu factory is one of two Chinese plants that manufacture the iPad, the article notes that production was suspended both at that Foxconn facility as well as "in workshops that do similar work at its other factories in China." At this point, the length or consequences of the shutdown are not clear, with industry analysts estimating the effect of the blast ranging "from minimal to up to 2.8 million units in lost output."

Though the iPad is the leader in the newly mainstreamed tablet computer market, a significant supply chain disruption could help competitors such as Blackberry close the gap. Apple is already struggling through what it called "the mother of all backlogs" in trying to keep up with high demand for the iPads. It is not clear whether that backlog is due to delays of Apple suppliers or an inaccurate forecast from Apple, but it will be interesting to see if Apple's leading brand cachet will overcome consumers' love of instant gratification and immediate availability.

Though the article discusses the pros of a diversified supply base, I reject any notion that Apple wasn't smart enough to know these. The benefits of single sourcing, such as leveraged volume for minimized cost plus "quality and consistency," were likely considered worth the risk for supply continuity. It's a gamble. So far, it is paid off handsomely for Apple.

Time will tell if last week's explosion changes Apple's philosophy. 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

Thursday, May 19, 2011

My Choice for Highlight of the International Supply Management Conference

In a blog post from earlier this week, I shared some constructive criticism of one of the workshops at this year's International Supply Management Conference. Fortunately, the entire conference was not like that particular workshop.

To be fair and balanced, I will dedicate this post to discussing what I felt was the best part of the conference. On Monday, I attended a workshop entitled "Strengthening Your Supply Chain Through Risk Management Processes," presented by Cathy Herr, the Senior Director of Global Strategic Sourcing for Eli Lilly & Company, and Richard Rich, the Senior Administrator of Enterprise Risk Management for Seminole Electric Coop, Inc.

Their workshop started with descriptions of how to identify, prioritize, and plan for risk events in the supply chain. This material was similar to what Next Level Purchasing teaches in our online classes "14 Purchasing Best Practices" and "Professional Purchasing Project Management."

What I found most interesting, however, is a lesson learned shared by Ms. Herr. She said that, after the earthquake and tsunami that hit Japan, her company allowed some space to its suppliers instead of reaching out and contacting them right away. They took this approach to respect the human side of their suppliers' people, who would certainly have higher priorities concerning the safety and well-being of their families.

But Ms. Herr admitted, in retrospect, that this was the wrong approach. Japanese cultural differences dictate that it would have been more appropriate to reach out sooner to check on the suppliers' personnel. Not to discuss business, just to show human concern.

I think that this was a profound point. Factoring cultural differences into a response plan is not usually part of the traditional contingency planning process. But Ms. Herr illuminated the fact that it should be.

With the sharing of this real-life learning experience and Ms. Herr's exemplary presentation skills, this workshop was my choice for the highlight of the conference.

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, May 17, 2011

Pssst...Procurement Skills Assessments Don't Need To Take Four Years!


Wow.

The last workshop I attended at the ISM conference today blew my mind. And not in a good way.

This workshop was put on by a supply chain director and supply chain manager. It was all about how they built and implemented a competency model for their supply chain team.

I had assumed that it was supposed to be about a success story. The presenters did indeed seem proud of what they did, but it sure didn't exactly sound like anything in the same zip code as success.

This implementation of a competency model involved assessing the skills of the supply chain team, evaluating options for filling gaps between capabilities needed and capabilities possessed, and implementing improvements and training. Sounds like a logical progression, right?

How long do you think this took this company to accomplish that?

If you said several months, you'd be wrong.

If you said a year, you'd be wrong.

If you said two years, you'd be wrong.

How long did it take?

Three-and-a-half to four freakin' years!

"Well," you may say, "I bet with that investment of time and resources, they did things so perfectly that the business got tremendous value as a result."

I thought that may be the case, too. Or maybe not. So, I had to to ask the presenters.

I said "This was a four-year process. So, what were your business results before this initiative, what are your business results now, and what's the ROI on everything you've done?"

The director's response? Well, it wasn't we saved "x" dollars in 2006 and we saved "x+y" dollars in 2010. Far from it. The director stumbled through a response that went like this...

"Uh, good question...Our business is different...We just spun off, uh, the shipbuilding, uh, part. So we just peeled off, uh, 50,000 people and we no longer, uh, you know, we no longer build the submarines and the aircraft carriers, you know, they spun off into a, a, uh, a separate business. So, that's not directly tied to this...So, has it had a direct, uh, ROI over that? No, maybe not. Uh, are we seeing ourselves, uh, out in, um, in industry, uh, you know, doing better things? Uh, yes."

Four years. No measurable ROI.

I didn't think companies let people get away with shenanigans like that anymore.

If clowning around with well-paid resources like that isn't enough to get someone fired, what about the fact that procurement teams do not need to reinvent the wheel to assess the skills of the members nor pay any money to do so? Next Level Purchasing offers a free skills assessment to qualified companies. And this company would certainly have qualified.

Bizarrely, this director continued his circus of a presentation by advocating ISM as a single source of training and appeared to take a shot at other providers in general and Accenture in particular with his emphasis on the words "consultant" and "academy" in this borderline incoherent diatribe: "One problem that we have, uh, today is that, uh, the training, talent and development is, is a crowded market space. And so you have people showing up every day that can solve your problems. And, and some of them will claim to be 'I'm, I'm, I will train and teach you development. I'm an academy and I'm a' And you feel bad, you ask 'You sound like a consultant.' Any consultants in here? Good people, but...(laughs). But they're creating noise. You know, they're creating noise in a space that is well-served by ISM."

OK. So this guy spent four years leading a project with no measurable benefit. And he is predisposed against all non-ISM training providers who may have actually helped him deliver business results and deliver them in weeks not years.

Do the letters B-O-Z-O come to your mind, too?

NOTE: Not all workshops at the conference were like this (i.e., bad). I hate to make my first post about the conference be a negative one, but this particular workshop was just so profoundly terrible that I would not be able to rest until I got these thoughts into writing.

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, May 16, 2011

Time To Chat With Your Marketing VP: Supply Chain Leadership Requires Branding

I hope that you have enjoyed the article "Priorities In Supply Chain Leadership."

In the article, I write that "Having a priority-based culture means making the top priority apparent to all who interact with and within the supply chain team." This requires some work that is the core competency of marketing departments: branding.

A definition of brand that I like a lot comes from an article on about.com. It says that "your brand is the source of a promise to your consumer." So what are you promising your consumer (i.e., your internal customer or your organization)? Or, said differently, what is the one thing, above all, that etches into the minds of your internal customer or senior management what they can expect when dealing with your supply chain team?

I like to think of these marketing slogans when showing how developing a simple, yet brilliant, sets the customer's expectation for good performance for these companies:

"Built Ford tough"

"Save money. Live better."

"That was easy"

Are you ready for an assignment? Without spending too much time to think about it, post a comment with a slogan that you think would reflect what you want to deliver to your organization or internal customer.

Go!

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, May 13, 2011

Entrepreneurs Need To Learn The Supply Side, Too

Yesterday, I attended the annual Entrepreneur’s Growth Conference at my alma mater, Duquesne University. I always feel inspired by the advice doled out to both new and long-time entrepreneurs. Yesterday, though, I was inspired for a different reason.

The reason for my inspiration was that several of the workshop speakers discussed vendor relationships and outsourcing amidst the usual fare of getting new customers and building your brand. Here are some specific excerpts from the workshops that I thought that you may enjoy…

Ron Morris, founder of 12 businesses, Duquesne University professor of entrepreneurship, and host of The American Entrepreneur radio show talked about how it can be easier to work with (and switch) vendors than with employees, saying “You have infinite flexibility when you have an outsourced workforce…You can constantly trade up and improve your workforce without all the crap.”

Chris Allison, former CEO of Tollgrade Communications, also is a fan of outsourcing even if it is more expensive, saying “You’re going to give up a little margin, but why do you need the headcount?” However, he never recommends outsourcing sales activities, noting a lack of loyalty among the outside reps who are happy to sell for anyone for whom they “carry the bag” including your competitors.

Steven Breuner, who built 48 Supercuts hair salons in Pennsylvania and later sold them, stressed the importance of building good vendor relationships. He said “Vendors are partners. Just like employees, if you work with them, they will help you build your business. Treat them like customers because they will tell people about your business, too.”

In the 11 years that I’ve been attending this conference, I welcome the shift. Building a successful business is not all about getting customers. The supply side matters, too. And the fact that experienced business leaders are imparting this message to new entrepreneurs means a lot about the importance of the profession.

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, May 11, 2011

"Trust But Verify"...And Then What?

"Trust but verify" is a phrase associated with the 40th US President, Ronald Reagan. But it is a phrase that I'm sure many Chief Procurement Officers use when directing their procurement teams.

This phrase is most applicable to procurement situations when you are working with a supplier with whom you have a long-term relationship. For certain situations, it's not appropriate to do a formal RFP every two years to ensure fair market pricing.

But if that long-term supplier proposes pricing on a new product or service or needs to revise pricing on currently purchased products and services, how do you know that pricing is fair? Do you just trust them not to inflate their margins because they are a long-term partner? Or do you seek that little bit of assurance that the supplier is "playing nice?"

I believe in trusting but verifying. How to go about that verification process requires a little thought.

Some people believe in doing RFP's solely for the purpose of verifying pricing. While, in some cases, I may get pricing from another supplier where it is easy for that supplier to prepare such pricing, I would not show the incumbent that competitor's pricing. That is unethical. I also consider it unethical to ask a non-incumbent supplier to do a lot of work to prepare pricing for comparison's sake when there is no chance that the supplier would earn your business.

Some of the activities that I do recommend, each of which may be more appropriate than others in certain situations, include:

1. Preparing a should-cost model

2. If it is a previously purchased item, comparing the change in pricing with the change in a recognized, published price index over a matching period of time

3. Making the submissions of cost breakdowns a routine part of doing business with suppliers (if you're interested in exploring this further, this article goes into more detail - http://www.nextlevelpurchasing.com/articles/early-supplier-involvement.html)

So what if you've verified that your supplier's pricing is unreasonable?

Negotiate! Negotiating doesn't mean that you don't trust your supplier - it just means that you are doing your duty as an agent of your organization.

And it doesn't have to be hardball negotiation. In cases where your company's input purchase costs determine whether or not it will win business, there is a lot to be said for managing the supplier relationship so that it feels like your company and the supplier are on the same team. For example, saying something like "Look, if we can keep costs down, we can win this much more business for both of us" is a way of negotiating as a partner, not as an adversary.

While "trust but verify" is associated with Ronald Reagan's legacy, perhaps "trust, verify, then negotiate if your trust was misplaced" will be associated with mine. Check Wikipedia in 30 years.

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, May 10, 2011

The NLPA Dedicated Member of the Month for May 2011 Is...

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



Catherine Shaw, a Purchasing Manager from Simi Valley, California, USA. During the month of April, Catherine completed all six Senior Professional in Supply Management® Program classes! Catherine says:

"I credit my success in completing all six courses in a month to sheer determination. I have worked in the procurement field for almost 30 years and I felt it was time I received some professional training to complement all my years of experience. NLP's Senior Professional in Supply Management® Program was just the program for me. Even with all my experience, I learned something new in every single course. The value this program has brought will benefit both me and my employer for years to come, and for that I will be forever grateful. Thank you NLP!"
Next Level Purchasing and the procurement community around the world congratulate Catherine 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

Thursday, May 05, 2011

The Procurement Promotion That You Lost (But Didn't Even Know That You Were Considered For)


I'm in a parable-writing mood today. I hope that you don't mind. The following is total fiction, but with a real-world message.

Ryan joined ABC Company as a buyer two years ago. Having just graduated with an MBA and no work experience, he was quite satisfied with the $80,000 per year salary he was offered and had accepted.

Ryan sure was sharp. Everyone who met him - coworkers, suppliers, even ABC's CEO - was impressed with his intellectual horsepower. It didn't take much time in speaking with him before one realized he was one of smartest people around.

Ryan's quick thinking and problem solving skills made him the go-to guy in the procurement department. Heck, even procurement directors with a couple of decades of experience sought out his perspective when they ran into challenging situations.

Everyone knew that Ryan was the future of the procurement department. Perhaps even the future of the company.

ABC Company was an evolving enterprise. It was exiting some declining markets and trying to enter growing markets. It was a company in transition. Not necessarily a bad transition, but an uncertain one at the least.

As part of its evolution, ABC Company was planning to increase the headcount of its procurement department. Specifically, management wanted to establish a "Strategic Procurement Programs" (SPP) division of the department. And Ryan was the obvious choice to be the SPP manager.

In March, management debated the timing of the launch of the SPP division and Ryan's promotion. Ryan had joined the company on May 5 - Cinco de Mayo, a day of celebration - and this coming May 5th would be Ryan's two year anniversary with the company. What a way to celebrate a two year anniversary and a quasi-holiday - a promotion!

This promotion would push Ryan's salary into six figures. Not bad for a guy in his mid-20's.

So, management planned to keep their plans secret until May 5. In the mean time, they thought, they would just enjoy watching Ryan continue to work his magic within the department.

But that's when things got a little complicated.

On Valentine's Day, Ryan's girlfriend, who he had dated since his undergrad days, broke up with him. For the first couple of weeks, he was too in shock to really comprehend what had happened. He went about his days in a business-as-usual fashion.

But then, it started to sink in. Ryan was heartbroken. And depressed. And his emotional state started rearing its ugly head in the workplace.

He started thinking about his salary. He hadn't gotten a raise in nearly two years. The company's revenue, with all of the changes in its markets, was stagnant. So Ryan didn't expect a raise any time soon.

He could handle his girlfriend not making him feel appreciated. They had their moments.

But to not feel appreciated at work? Where he contributed so much? And made his value so clear to others?

Ryan would have none of that. He stopped caring about ABC Company the way he used to.

Ryan, who usually had impeccable accuracy in his work, turned in a cost savings report that had an error that overstated his cost savings by $100,000. His to-do list, which never had tasks linger for more than a week, grew longer and longer and he started missing deadlines.

But the big disaster happened in late March. The Director of Global Sourcing, the woman who Ryan would report to when he got promoted, asked Ryan for his advice on handling a merger between two suppliers. Ryan uncharacteristically spit out the words "That's not in my job description!" and walked away.

Uh oh.

That director had an unrelated meeting scheduled with the rest of the leadership team, including the CEO, the next morning. Before the meeting formally started, she shared details about her exchange with Ryan.

The rest of the team were aghast. They discussed whether or not to continue with their plans to promote Ryan. That debate ended with the CEO saying "Promoting Ryan would send a message to everyone else that it's OK to disrespect management."

The management team then posted the job online and hired someone from the outside. Ryan continued to work at his starting salary long after May 5th passed.

Ryan never learned about the plans the management team had for his promotion. He sure would have enjoyed that six figure salary. But it didn't happen. And Ryan didn't get any happier.

The moral of the story: When it comes to your procurement career, the time when it's OK to take your foot off the gas is...NEVER!

Think about your work today. Are you justifying a promotion that the management team secretly has planned for you? Or are you giving them reasons to go with someone else?

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, May 04, 2011

New York City's Taxi Procurement Process: Beyond The Pretty Pictures

Newspapers across the USA today featured pretty pictures of New York City's "Taxi of Tomorrow" unveiled yesterday. While that is cute news, there actually was quite a significant amount of procurement work that led up to NYC's public relations spectacle.

According to a press release on the city's official website, there was a "two-year-long Taxi of Tomorrow procurement process" that eventually resulted in the selection of Nissan North America, Inc. as the supplier of these taxis. The two categories for supplier selection were "the qualifications and ability of the proposer to deliver on the various aspects of the agreement and...how the proposed vehicle interacts with its passengers and operators."

According to the press release, "In the first category, evaluators considered the organizational capability of the proposer and relevant experience of the proposer. In the second category, evaluators reviewed such areas as the proposed vehicles’ safety, ergonomics, average cost to the taxi industry to purchase and total lifecycle costs to operate the vehicle as a taxi, internal air/environmental quality (HVAC), overall ride quality (noise or vibration), the vehicle durability, the design elements, and warranty and service provision, as well as proposers’ plans for stakeholder outreach to help provide input on the final design."

Strangely enough, the criteria for total lifecycle costs did not include fuel efficiency. I don't know how fuel can not be factored into the total lifecycle cost of operating a vehicle - especially this week, when gas prices are expected to crest above $4 per gallon and continue to rise - but, fortunately, the Nissan option offered the best fuel efficiency of all competitors. (I am betting that there is a procurement director breathing a sigh of relief at that fact/coincidence!)

There are a couple of other interesting things about this procurement.

First, the press release states that " the NV200, designed by Nissan North America, Inc., has been chosen as the winner of the Taxi of Tomorrow competition. The City now will enter into final negotiations with Nissan."

Really? It is almost impossible to negotiate with a supplier who thinks that they have the deal in their pocket. NYC didn't just create the perception that Nissan is a front runner. They held a freakin' press conference in which the mayor told the entire country that Nissan won the business!

If NYC expects to have any negotiation leverage, they are sorely mistaken. Nissan will certainly know that it would be incredibly embarrassing for Mayor Bloomberg to publicly change his mind on the supplier selection.

Second, is NYC getting the best deal it can get? An article on Comcast.net says that this procurement is a deal "city officials estimated at around $1 billion." But the article later says that "Nissan officials said they expected to provide up to 26,000 taxi cabs over the lifetime of the contract starting in 2013, with a manufacturer's suggested retail price (MSRP) of about $29,000."

I'm hoping my calculator is on the fritz. But 26,000 x $29,000 = $754 million. I would never pay MSRP for a vehicle. That's way too high. But NYC is paying like 33% more than MSRP?

Hm.

Did Nissan leave the meter running when it prepared its proposal or something?

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, May 02, 2011

Strategic Supplier Management Knows No Shortcuts

I hope that you have enjoyed the article "Supplier Management: Make It Strategic."

It's a busy business world. We all love shortcuts. If we can get things done the easy way, all the better.

We may face certain temptations with supplier evaluation and management programs. Some procurement professionals think: "If someone has launched a supplier management program before, why not just copy what they've done? Why reinvent the wheel?"

Well, the problem is that your organization might not need a "wheel" for its supplier management program. It might need the equivalent of an ice skate or even "magnetic levitation." OK, if you don't get the analogy, then let me say it simply: what's good for another company may not be good for yours.

To make a supplier management program truly strategic, it has to be linked to improvement of the measurable performance of the overall organization - not just the procurement department. That requires that you craft the program very, very specifically to your organization. As simple as this sounds, it is the reason that such little budget is granted to supplier management projects; too few procurement departments ensure that strategic alignment.

The bottom line is that what other companies have done is not the end point for your supplier management program. It is the beginning point if you want to make it strategic.

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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