Tuesday, March 31, 2009
Office Supply Vendors' Dirty Tricks, Part I
Of course, we like to think of ourselves as experts at sourcing due to the fact that we teach purchasing professionals in over 100 countries how to conduct sourcing. But we don't tell our competing vendors that - we play more of a "mystery shopper" role.
During this particular sourcing process, we uncovered some interesting things that we'll be addressing in a multi-part series here on the Purchasing Certification Blog. Today, we'll focus on one "dirty trick." For lack of an existing phrase, I'll call this the "Phantom Leverage" technique.
The Phantom Leverage technique is when an office supply vendor establishes a relationship with an organization that has customers or members of its own. The organization then offers its customers or members a "special discount" with the office supply vendor.
The intended perception this creates is that each customer or member is getting a better deal that it would be able to get on its own. After all, if you have the buying power of, say, 1,000 companies, it's only natural that you'll get a better deal, right?
Not necessarily.
Just like we found when sourcing health care benefits, it was relatively easy to get a better deal on our own. Actually, the office supply vendor who had this deal with a chamber of commerce that we belong to charged more than we were currently paying for our supplies!
So beware of the Phantom Leverage trick. From what we've seen, you rarely do better than what you'd do on your own.
Is there time savings? Sure, but unless you work for the smallest of small companies, the time spent will have a return on investment.
While we'll be publishing Whitepaper Wednesday tomorrow, check back Thursday for the next installment in this series.
To Your Career,
Charles Dominick, SPSM
President & Chief Procurement Officer
Next Level Purchasing, Inc.
Struggling To Have A Rewarding Purchasing Career?
Earn Your SPSM® Certification Online At
http://www.NextLevelPurchasing.com
Monday, March 30, 2009
Sourcing Non-Traditional Areas: When Are They Ripe?
I've posted some guidelines to help you approach the sourcing of non-traditional categories over on eSourcing Forum. Check them out!
To Your Career,
Charles Dominick, SPSM
President & Chief Procurement Officer
Next Level Purchasing, Inc.
Struggling To Have A Rewarding Purchasing Career?
Earn Your SPSM® Certification Online At
http://www.NextLevelPurchasing.com
Friday, March 27, 2009
Who Cares About Charities In A Recession? (Off-Topic)
A reduction in revenue is even more harmful to a nonprofit than a for-profit if you think about it. For-profit organizations can cut "luxury" spending on things like glitzy conferences, pet project R&D, and so forth. Nonprofits usually operate pretty conservatively, so there is less "fat" to cut.
When belts are tightened, charitable donations are often viewed as a discretionary expense which can be immediately eliminated. In some cases, that is a matter of survival, which is understandable. In other cases, it is a matter of selfishness, which is sad.
I have come across many articles - such as this one in the March 19, 2009 edition of Time - that have said that despite decreased donations, charitable volunteering is up. This makes some sense, given that there are so many unemployed people with relatively few job opportunities. They have the time to spend.
But it bothers me that I know many successful people who are giving both less money and less time to charity. I even recently tried to organize a charity event where 10 individuals could "win" up to $2,500 for their favorite charities with a modest investment of their time. Plus, the event would give them targeted recognition for their philanthropy (thus building their personal brand) and the time would be spent in an intelluctually stimulating way.
Despite these benefits, I didn't get enough "takers," so I am forced to cancel the event. We'll use the funds to support the charities of our choice, but am disappointed in some of the excuses I've heard. Sure, the idea wasn't perfect, but I didn't exactly get any suggestions for how to make it work, either. Now, most of the invitees were gainfully employed and some may be affected by President Obama's threatened tax hike on those earning above a certain threshold. But, hey, good causes are hurting. I just wish that those who are able to support charity would do so out of choice, rather than having the government do it for them via taxes. That applies to successful folks in general, not necessarily just those I invited for the charity event, some of whom I know to be generally charitable people.
So, for those of you who aren't in a desperate financial situation, I'd like to urge you to consider giving a little more support to your favorite charities. The increase in volunteerism will subside as the recession lightens and people get back to work. The 20%+ drop in donations will take longer to correct itself without people like you.
I won't endorse any particular charity here but, rather, encourage you to identify one that is close to heart of the issues that you feel strongly about. They probably need your support now more than ever.
Don't be selfish. I won't.
To Your Career,
Charles Dominick, SPSM
President & Chief Procurement Officer
Next Level Purchasing, Inc.
Struggling To Have A Rewarding Purchasing Career?
Earn Your SPSM® Certification Online At
http://www.NextLevelPurchasing.com
Thursday, March 26, 2009
New Tool For Identifying The Right Purchasing Training
As a profession, we are gradually overcoming that legacy belief. But, still, it leaves some purchasing professionals and leaders confused. They ask "Well, what training do I need then?" or "What training does my staff need?"
While we do offer a free purchasing skills assessment service to qualifying organizations, we also recently launched a simple tool for the rest of the world. It is a basic online questionnaire that makes recommendations for the purchasing training that will help you accomplish your goals.
Click here to use the new tool.
To Your Career,
Charles Dominick, SPSM
President & Chief Procurement Officer
Next Level Purchasing, Inc.
Struggling To Have A Rewarding Purchasing Career?
Earn Your SPSM® Certification Online At
http://www.NextLevelPurchasing.com
Wednesday, March 25, 2009
Whitepaper Wednesday - Supply Chain Simplification
While the whitepaper serves somewhat as a marketing piece for UPS - and I typically do not review marketing-style whitepapers - I thought that this whitepaper had a few good nuggets of advice and UPS' value proposition actually sounds quite good (at least on paper or pixels).
The entire focus of this whitepaper is on eliminating the points at which inventory is stopped to be stored or redirected. While UPS uses the terminology "direct-to-store" to describe the perfect path for goods, it could have easily been described as "direct-to-final-destination" as the methods do not have to be restricted to just the retail supply chain. I see many supply chain leaders struggling with initiatives to reduce the number of distribution centers and simplify their distribution networks, so any advice on this topic is welcome.
As is commonly noted in the field and is noted in this whitepaper, leveraging supply chain technology to identify and react to demand patterns in real-time is critical. Visibility into what-is-needed-where is a prerequisite to moving towards a direct-to-final-destination goods movement model - a model that is being driven by an increase in global sourcing (at least in total over the past decade and not so much in the past year) and the fact that "powerful retailers and other end customers with clout are starting to push value-added supply chain responsibilities further up the supply chain. More customers are asking manufacturers or third-party logistics providers to label and prepare individual items so the products are ready to go straight to store shelves."
One thing in particular that I really liked about this whitepaper was that it gave criteria for identifying the most appropriate goods to move to a direct-to-final-destination model. These criteria included:
- "Products whose value expires or diminishes past a certain date"
- "Products tied to specific holidays or seasons"
- Products with "allocation predictability"
- "Higher-value goods"
- "Emergency/back orders"
- Products provided by "high-growth companies" who "might be unable to build additional distribution centers but still prefer to reduce strain on existing infrastructure"
- "Custom-manufactured products"
The whitepaper goes on to cover the risks and rewards of implementing a direct-to-final-destination approach before ending with UPS' sales pitch. However, these excerpts from the sales pitch make me feel that UPS' services are worth considering alongside your other alternatives, such as doing everything in-house:
- The entire shipping cycle is under the management of one logistics provider—one point of
contact and one bill. UPS picks up the packages and freight from the manufacturer or supplier and delivers the products to multiple destination addresses. - UPS can apply storeready labeling, provide special packaging, kit—even perform light assembly between pickup and delivery.
- Customers can track the movement of shipments down to the item/SKU level with a UPS software visibility tool called Flex® Global View. The tool provides 24x7 visibility across borders, across third-party transportation providers and across transport modes—even providing proactive alerts if there are unexpected delays in the shipment.
Of course, nothing in a whitepaper can ever replace solid due diligence on your part. So whether or not you're looking to outsource part of the logistics, you should be thinking about ways to simplify the path of goods through your supply chain. This whitepaper can help you get in this mindset. And there is no registration required, so I recommend that you download it from UPS Supply Chain Solutions' Web site.
To Your Career,
Charles Dominick, SPSM
President & Chief Procurement Officer
Next Level Purchasing, Inc.
Struggling To Have A Rewarding Purchasing Career?
Earn Your SPSM® Certification Online At
http://www.NextLevelPurchasing.com
Friday, March 20, 2009
Supplier Solvency: Has The Auto Industry Finally Recognized Its Importance?
The Supplier Support Program involves the US government guaranteeing payment for parts that participating suppliers ship to participating US automakers, General Motors and Chrysler. The participating suppliers can even get their owed money right away from the government by allowing the government to retain 1%. The government, then, would presumably seek reimbursement from the automakers.
This program recognizes the fact that I blogged about before: the collapse of a few key suppliers could result in the collapse of automakers.
The amount of money that the government is committing to this program is $5 billion. Not exactly chump change.
For years, the automotive industry has treated suppliers like the skinny, freckled kid on the playground. The supply base has been a veritable punching bag.
Does the Supplier Support Program - and the automakers' declared recognition of the need for a healthy supply chain - mean that finally, FINALLY automotive suppliers will be treated with more respect?
Should we all take another look at our supply bases and reevaluate how important they are to us (albeit never showing that during a procurement negotiation)?
To Your Career,
Charles Dominick, SPSM
President & Chief Procurement Officer
Next Level Purchasing, Inc.
Struggling To Have A Rewarding Purchasing Career?
Earn Your SPSM® Certification Online At
http://www.NextLevelPurchasing.com
Thursday, March 19, 2009
What Every Professional Should Know (But Apparently Doesn't)
I thought that this same emphatic message would have resonated with every single human being on the planet. But...apparently not.
This week, we have found some pathetic examples of plagiarism and copyright infringement. One of them was a training provider in Malaysia who dedicated its entire blog to reposting our PurchTips articles so that they would appear as if they wrote them. Another was an ISM affiliate whose president, in his "President's Pen" section of that affiliate's newsletter, inserted an entire PurchTips article after his introductory blurb and signed his name to it!
Are people stupid?
Do they not realize that using someone else's work is not only morally wrong but illegal and subject to extremely high penalties? As an example, the case Lowry’s Reports, Inc. v. Legg Mason Inc., 271 F. Supp. 2d 737 (D. Md. 2003) involved a company found guilty of reproducing the content of a newsletter that it subscribed to and, as a result, having to pay $20 million in damages!
Are you willing to risk being penalized $20 million?
If not, then do not republish anyone's content without permission.
If you think that giving the author credit will give you a free pass to reproduce their work, you're wrong. According to plagiarismchecker.com, "It is illegal to copy large sections of someone else's copyrighted work without permission, even if you give the original author credit."
In very limited cases, we do grant permission to reproduce our PurchTips articles in other organization's newsletters. But we must give our express written consent in writing to the specific organization that wants to publish it. Absent this approval given specifically to you, any reproduction of PurchTips is copyright infringement.
If you would like us to consider giving you permission to republish PurchTips, contact us with your request. But if we find you stealing our content, we have 20 million reasons to come after 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
http://www.NextLevelPurchasing.com
Wednesday, March 18, 2009
Whitepaper Wednesday - Project Risks & Assumptions
Many times, when projects fail, it is because an assumption held by the project team turned out to be false. Unfortunately, I learned this the hard way early in my career. So, in the purchasing training that I deliver and other resources like my video "The Purchasing Negotiator's Worst Enemy" on the Purchasing Certification Channel, I stress that everyone should challenge all assumptions.
This whitepaper emphasizes this point and introduces a method for rating assumptions based on confidence, lead time, and impact. The whitepaper indicates that rating assumptions is a critical step in risk mitigation planning and that they "should drive the priority rating for the risk."
The whitepaper suggests going beyond the basics of just identifying assumptions (which some project teams don't even do) and continually managing assumptions throughout the project: "There is a tendency to let Assumptions ‘morph’ into accepted fact. A key part of project management is to monitor Assumptions. Action items should be created to follow up Assumptions and either validate or disprove."
I highly agree that identifying, rating, and monitoring assumptions are a critical piece of procurement project management. I believe that this whitepaper can give both good tips and inspiration to those who want their procurement projects to succeed. There's no registration required, so you can go here to download your own copy of the whitepaper now.
To Your Career,
Charles Dominick, SPSM
President & Chief Procurement Officer
Next Level Purchasing, Inc.
Struggling To Have A Rewarding Purchasing Career?
Earn Your SPSM® Certification Online At
http://www.NextLevelPurchasing.com
Tuesday, March 17, 2009
What Good Procurement Training Is NOT
That is not good procurement training.
Perhaps sufficient training at a fast food restaurant is a one-time event. Learn how to greet the customer, which buttons to push on a cash register, and where to put the money and you're done.
But good procurement training is something that is done continuously. Think about it: if you just get trained for part of one week, can you possibly know how to achieve maximum cost savings? Minimize risk? Negotiate better than the best supplier negotiators? Get internal operations to function more efficiently? Develop successful relationships with both internal customers and suppliers?
I could go on and on.
One can never stop learning all there is to learn about procurement. The more a procurement professional learns, the greater the positive financial impact s/he can have on the organization.
If your organization provides would-you-like-fries-with-that-style, one-time procurement training, it is a clear signal that your organization is not maximizing the contribution that procurement can offer.
To Your Career,
Charles Dominick, SPSM
President & Chief Procurement Officer
Next Level Purchasing, Inc.
Struggling To Have A Rewarding Purchasing Career?
Earn Your SPSM® Certification Online At
http://www.NextLevelPurchasing.com
Monday, March 16, 2009
Why A Bad Economy Is Good For Sourcing Professionals
Check it out.
To Your Career,
Charles Dominick, SPSM
President & Chief Procurement Officer
Next Level Purchasing, Inc.
Struggling To Have A Rewarding Purchasing Career?
Earn Your SPSM® Certification Online At
http://www.NextLevelPurchasing.com
Friday, March 13, 2009
A Real Procurement Controversy...Or Did Someone Have One Too Many?
You see, the Pennsylvania Liquor Control Board (LCB), which operates all of the wine and spirits shops in the state, was seeking to improve its customer service. So it requested bids from consulting firms to provide customer service training to its 3,000 employees.
It awarded the bid to the low bidder. The owner of the winning firm is the husband of a regional manager and that has gotten political opponents of Governor Rendell, the losing bidders, and other the-government-is-corrupt types in a tizzy.
Now, let's make something explicity clear here for the sake of eternal clarity...
It is generally OK for a company or government agency to purchase goods or services from a company owned by the spouse of any employee.
It is. It really is.
It becomes un-OK (i.e., of questionable ethics) when that employee is a decision-maker or influencer of the decision to award the business. It also is unacceptable for the employee to have access to any "inside" information about the bids that could be shared with the spouse.
The LCB contends that the employee in question, Susanne Hobart, was not involved in the procurement process. And, despite the public outrage, none of the politicians or other critics have shared one bit of evidence that Mrs. Hobart was involved, had any influence, or had access to inside information.
They are complaining just because of the relationship. And, in my opinion, that's wrong. It is certainly possible that this procurement was done cleanly and responsibly. But the inevitable investigation by Governor Rendell will reveal the truth.
I have many conflicting emotions about this situation:
- People need to understand that these types of buyer-supplier can exist and everything can indeed be above board. The relationship alone does not make it wrong. Involvement, influence, and information access are things that can make this type of procurement cross the ethical line.
- This goes to show that even when there is the perception of a conflict of interest, the situation is often treated like a real conflict of interest. This contract was valued at $173,000. It will probably cost more than that to investigate it. Therefore, the total cost of ownership (TCO) of a procurement where there is the chance of a perception of a conflict of interest is potentially much higher than one without. Therefore, it almost seems like when you evaluate suppliers, you should factor potential investigations into TCO calculations to arrive at your final supplier selection.
- If a company or government agency runs around and blindly bans purchasing from suppliers who have employees who have relationship with company/agency employees, the company or agency could very well be preventing itself from accessing the best suppliers which, in the end, cheats shareholders and taxpayers.
Considering that disputes like this happen all the time in government procurement, does it scare you that the stimulus of our economy is depending on government procurement processes?
To Your Career,
Charles Dominick, SPSM
President & Chief Procurement Officer
Next Level Purchasing, Inc.
Struggling To Have A Rewarding Purchasing Career?
Earn Your SPSM® Certification Online At
http://www.NextLevelPurchasing.com
Wednesday, March 11, 2009
How To Show Dedication To The Purchasing Profession
We have recently introduced our "Dedicated Purchasing Student of the Month" initiative. Here's how it works...
For every full-length online purchasing class on our site that you complete during a month, you receive one entry into that month's drawing. We randomly select one entry and that student becomes our "Dedicated Purchasing Student of the Month."
As Dedicated Purchasing Student of the Month, you will receive a $20 Amazon.com gift card and will be featured on our Dedicated Purchasing Student of the Month Web page. It's a great way to show your management that you are, well, dedicated to success in purchasing!
We see this as just one more way we can help purchasing professionals get more respect in their workplaces and in the field.
To Your Career,
Charles Dominick, SPSM
President & Chief Procurement Officer
Next Level Purchasing, Inc.
Struggling To Have A Rewarding Purchasing Career?
Earn Your SPSM® Certification Online At
http://www.NextLevelPurchasing.com
Monday, March 09, 2009
Negotiation Influence Starts When???
In teaching our online purchasing classes, I often get questions like "How do you negotiate differently in a really tough negotiation situation?" And I often answer with a question like "What makes a negotiation tough?"
I particularly enjoy when this type of exchange goes back and forth several times and the student becomes aware of a fact: it is not always the negotiation that is tough, it can be the situation that is tough. And the purchasing professional does have influence over the situation, but that influence may need to start days, weeks, months, even years before the actual negotiation does.
With policies in place that constrict backdoor selling (or backdoor buying, really) and facilitate Purchasing's involvement in the design phase, "tough" negotiations can become less frequent. But, make no mistake, putting policies in place can be a lot of work - a lot of time consuming work.
That's why there's no better time than now to start influencing future negotiations - even if they are months down the road.
To Your Career,
Charles Dominick, SPSM
President & Chief Procurement Officer
Next Level Purchasing, Inc.
Struggling To Have A Rewarding Purchasing Career?
Earn Your SPSM® Certification Online At
http://www.NextLevelPurchasing.com
Friday, March 06, 2009
Now That Commodities Prices Have Fallen...
To Your Career,
Charles Dominick, SPSM
President & Chief Procurement Officer
Next Level Purchasing, Inc.
Struggling To Have A Rewarding Purchasing Career?
Earn Your SPSM® Certification Online At
http://www.NextLevelPurchasing.com
Thursday, March 05, 2009
Economic Recovery: The Speed Depends On Government Procurement Efficiency
Though I've not seen it discussed, in my mind the #1 factor in determining the speed of economic recovery is government procurement efficiency. What is the value of the stimulus package? $787 billion? That's a lot of government contracts to award, don't you think - even if a portion of that total is tax cut and not spending related?
Is that additional workload going to be handled by existing government procurement professionals who are already working their existing projects? Or are new government procurement positions going to be created?
If the former, I hope that the various procurement departments have an established sourcing strategy. If the latter, I hope that there are plans for some fast track training of those folks.
After all, only the fate of the global economy depends on them doing a high-quality, high-speed job.
To Your Career,
Charles Dominick, SPSM
President & Chief Procurement Officer
Next Level Purchasing, Inc.
Struggling To Have A Rewarding Purchasing Career?
Earn Your SPSM® Certification Online At
http://www.NextLevelPurchasing.com
Wednesday, March 04, 2009
Whitepaper Wednesday - Travel Procurement
It has become more and more apparent over the years: leading procurement departments have been expanding their influence over spend and earning responsibility for sourcing new services categories like health benefits, fleet management, and travel. However, there is a reason that these categories were previously outside of Procurement's portfolio: they each have specialized nuances. The whitepaper says "[travel and meeting purchasing] uses perplexing vernacular, technology and third-party providers, as well as reams of documentation. And there's no doubt that moving people is vastly more complex than moving goods."
The whitepaper expands on the complexities of travel procurement by saying "...while travel services comprise just one commodity category, it can involve hundreds of contracts. Like other service categories, it is complex in that it is difficult to control, considered personal by employees and can quickly impact sales and productivity. Switching suppliers takes time, pricing can be mysterious, distribution is fragmented and comparisons are tough."
That being said, the whitepaper concludes that "While travel itself has unique characteristics, managing it and buying it are undeniably on a path that adopts strategic procurement methodologies."
While the whitepaper is not a step-by-step guide on how to take over travel procurement and make immediate improvements, it is a decent overview of the trend to place travel management in the procurement organization and addresses issues such as spend visibility, SOX compliance, and the need for procurement to become more service-oriented. No registration is required for this whitepaper, so I recommend that you download it by going to http://thebeat.travel/, then hovering over "Downloads" and selecting "Procurement Convergence" from the menu.
To Your Career,
Charles Dominick, SPSM
President & Chief Procurement Officer
Next Level Purchasing, Inc.
Struggling To Have A Rewarding Purchasing Career?
Earn Your SPSM® Certification Online At
http://www.NextLevelPurchasing.com
Tuesday, March 03, 2009
Earn Continuing Education Hours At Approved Procurement Conferences
The first conference host that we've approved is Corporate United, a leading group purchasing organization and a sponsor of the Purchasing Certification Blog. By attending their Synergy conference May 12 - 14, 2009 in Chicago, you will be given a certificate of attendance granting you 12.5 CEH's, preapproved to count towards the 32 CEH's required for SPSM® recertification.
We are currently working to add more conference providers to our approved list. Approved conference providers will display on their Web sites a logo like the one below linked back to our Web site where you can verify that the event is approved.

To continually check for new approved conferences, bookmark http://www.NextLevelPurchasing.com/procurement-conference.html and visit regularly.
If you're a technology provider, service provider, or other conference host and you would like us to authorize your conference for the award of CEH's that will count towards SPSM® Certification, please contact our External Relations Coordinator, Megan Tyrseck, at megan.tyrseck@nextlevelpurchasing.com or 1-412-294-1990.
To Your Career,
Charles Dominick, SPSM
President & Chief Procurement Officer
Next Level Purchasing, Inc.
Struggling To Have A Rewarding Purchasing Career?
Earn Your SPSM® Certification Online At
http://www.NextLevelPurchasing.com
Monday, March 02, 2009
The SPSM Certification Increases It's Global Lead
In February, the first SPSM's from the Philippines and Kenya were certified. This brings the total number of countries with certified SPSM's to 44 - dozens of countries ahead of lesser, more nationally-oriented certifications.
To Your Career,
Charles Dominick, SPSM
President & Chief Procurement Officer
Next Level Purchasing, Inc.
Struggling To Have A Rewarding Purchasing Career?
Earn Your SPSM Certification Online At
http://www.NextLevelPurchasing.com





