UPS: Shifting From "Brown" to "Green?"

UPS (United Parcel Service) is probably best known for it's iconic Brown color and former marketing slogan, "What can Brown do for you?" Yesterday, however, UPS made an announcement that indicates a shifting company focus on being more green. The company has entered into a deal with Electric Vehicles International to purchase 100 electric trucks to be used on routes in California, USA.

The new electric vans will be painted the iconic brown that is used for the rest UPS' fleet of over 70,000 vehicles. Estimated to run 90 miles on a single charge, the vehicles should have more than enough power to complete a daily route in California. Drivers will return the vehicles to UPS' facilities each evening for recharging. UPS has a history of the length of each route and thereby no concerns for loss of power during a driver's shift.

Despite taking advantage of financial incentives for green initiatives totaling over $7 million, each van will cost "north of $100,000." UPS admits that the vehicles are not "cost effective" at this point in time, but they hope to pave the way for more electric vehicle usage. The company has been testing the use of alternate energy vehicles over the last three years; some electric vehicles are already in use for UPS operations in New York, USA and parts of Europe.

So, what do you think? Will more companies follow the path of UPS and begin to add electric-powdered vehicles to their fleets? Or, is the cost of being "green" still too high?


To your career,

Megan Tyrseck, SPSM
Manager of Marketing, Communications & Operations
Next Level Purchasing, Inc.

Who's Going To ProcureCon USA Next Month?

An exciting procurement conference opportunity is coming up! ProcureCon 2011 will be held September 12-14, 2011 at the JW Marriott Buckhead in Atlanta, GA. Conference organizers tout ProcureCon as being "...designed to meet all your current concerns and challenges in relation to manufacturing material management & professional services spend. Key topics include driving savings, risk mitigation & supply continuity, talent & team development, spend analysis & management, and supplier innovation & incremental value. No other procurement conference brings together so many CPOs for intensive networking, learning, and strategizing."

Confirmed speakers for the event include:

• Pete Connolly, CPO, Leggett & Platt
• Jason Busch - Editor, SpendMatters.com
• Marcos Sairava, CPO, Vale S.A.
• Manoj Mehta, GM Global Sourcing, Goodyear China
• John Inabnit, VP Global Sourcing and Procurement, Newell Rubbermaid
• View the full list at www.procureconusa.com

ProcureCon USA 2011 is sizzling with innovative angles and interactive sessions. You won’t be at the receiving end of a traditional presentation; there are 15 interactive sessions on the program, translating to 13 hours of your active participation.

• Featuring 36 Procurement Practitioners
• Share Insights with 180+ Experienced Procurement Executives
• 15 Interactive sessions included on the program – 13 hours of your active participation
• Earn up to 18 ISM Re-Accreditation Credits
• Fresh, relevant topics and perspectives galore

Register online for ProcureCon 2011 or call 646-200-7530! Mention priority code 10412XA420CL and receive 15% off! (Offer is for qualified procurement executives only).

To your career,
Megan Tyrseck, SPSM
Manager of Marketing, Communications & Operations

What's The "Key" to Supplier Management Strategy Success?

I hope that you enjoyed the article "The Complete Supplier Management Strategy."

Ask yourself these questions:

• Is the rest of my company as well-versed about our supplier mangement strategy as our procurement department? What about other departments that may be involved?
• Do other departments know what we're trying to accomplish and why?
• When the strategy results in success, is the procurement department advertising it to the rest of the company?

The article stress that communication is a necessary ingredient to improve success with a supplier management strategy. As with any strategy your procurement department employs, you should first communicate what you are trying to accomplish and why and then follow-up with the results. You'll find that other departments within your organization are more likely to support your strategy and help you to achieve even greater results in the future. Communication is the key here.


And if you want to learn more advanced supplier management strategies don't forget to check out the free podcast at the end of the article.


To your career,

Megan Tyrseck, SPSM
Manager of Marketing, Communications and Operations
Next Level Purchasing, Inc.

Time Is Scarce, But What Career-Oriented Stuff Do You Always Find Time For?

It's everyone's excuse for everything: "I don't have time."

And my lips are tempted to spit that excuse today as I will be out of the office next week and my to-do list is certainly longer than a to-do list that I can complete in one day. So, today, the emails I usually quickly peruse (e.g., press releases from vendors in the supply chain space, LinkedIn Group updates, etc.) are instead getting jettisoned to my Deleted folder in the blink of an eye...or faster.

However, when I came to the weekly email newsletter article from The American Entrepreneur, I stopped and started reading it. This newsletter has so much sage advice for the seasoned entrepreneur, I consider it a veritable sin to overlook it. Even on a busy day like today, somehow I "find the time" to read it when I can't "find the time" to complete other things.

And that got me wondering...what career-oriented stuff do you always make time for, even during those times when you conveniently use the old "I don't have time" excuse?

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
www.NextLevelPurchasing.com

Free Supply Chain Risk Webinar This Friday!

This Friday - August 19, 2011 - at 1:00PM Eastern US time, the Next Level Purchasing Association (NLPA) will be hosting a webinar entitled "8.9 - A Case Study For Proactive Supply Chain Management." This webinar will be presented by the Senior Director of Global Manufacturing Procurement for a Fortune 500 company and will discuss lessons learned from mitigating the supply chain effects of this year's earthquake and tsunami in Japan.

This webinar is free to all members of the NLPA and membership in the NLPA itself is free and instant.

Here's how to register for the webinar:

If you're already an NLPA member: Log in to the association at
http://www.NextLevelPurchasing.com/login.html and navigate to the "Webinars" tab. There you'll find a registration link, be sure to enter a valid email address as attendance details will be sent to you by email.

If you're not yet an NLPA member: Sign up for your free membership in the Next Level Purchasing Association at http://www.NextLevelPurchasing.com/free.html. After doing so, you'll receive an email with information about how to log in. After logging in, navigate to the "Webinars" tab. There you'll find a registration link, be sure to enter a valid email address as attendance details will be sent to you by email.

Registration is free but may be limited, so sign up soon to ensure access to this event. I hope that you will join me in this exciting webinar!

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
www.NextLevelPurchasing.com

The NLPA Dedicated Member of the Month for August 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 August 2011 is...

Ryan Layson, a Technical Procurement Officer working for Aktor SA Qatar, New Doha International Airport Project from Doha, Qatar. During the month of July, Ryan completed all six Senior Professional in Supply Management® Program! "Three years ago when I realized that supply chain is where I really want to be, I told myself that I would do whatever it takes to be great at it. Enrolling in the Senior Professional in Supply Management® Program is one big step towards that goal. It is true when they say that "winging it" could at times bring satisfactory result but it certainly would never deliver excellent output. Having undergone the SPSM training has made me better equipped in performing my daily challenging tasks in many facets of procurement function. It helped a great deal that the complex subjects of supply chain are well-explained and illustrated in the lessons, and that the examples cited are quite practical. Successfully completing the program takes devotion and careful planning of one's time. I spent at least three hours a day reading before and after office hours; I listened to audio lessons in the car and during break time. I even printed some pages of the lessons and posted them on my wall just like the old college days! But the most effective way is by practicing the learning and applying them at the workplace right away. The SPSM Certification Program is indeed an investment that you cannot go wrong with!"

Next Level Purchasing and the procurement community around the world congratulate Ryan 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
www.NextLevelPurchasing.com

Who Owns The Customer-Supplier Relationship?

A few weeks back, the Strategic Sourcing & Procurement Group on LinkedIn held a knowledge-sharing conference call based around the question "Do penalties improve supplier performance?" Shortly after the call, Michael Koploy posted a nice summary on softwareadvice.com. That summary covered these five top takeaways from the call:

1. Incentives Needed to Balance Supplier Penalties
2. Increase Supplier Performance Visibility & Communication
3. Create Escalating Expectations to Avoid the Status Quo
4. Start Incentives & Penalties with High-risk Suppliers
5. Set Unique Goals for Suppliers Across Different Industries

If interested, you can read Michael's complete explanation of each of these five takeaways here. However, I do have a question to add to the discussion: who exactly owns the customer-supplier relationship on both the customer and the supplier sides?

I don't recall ever seeing guidelines for establishing the appropriate contacts. These things tend to just happen. But I often do see customer personnel getting involved in deals that could be delegated southward on the organizational chart. And I also see customer personnel not insisting on having a higher-ranking contact when they should.

So, I prepared the following matrix for who I would consider the typical owners of the customer-supplier relationship based on the relative sizes of the organizations involved. It's not universally applicable, but I think it is representative of how the relationship is handled most smoothly in most situations. But I'd also welcome your thoughts on "who-should-be-dealing-with-whom." Feel free to post your comments and share your experience.



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
www.NextLevelPurchasing.com

What Is eSourcing? What Is A Reverse Auction? What's The Difference?

I hope that you have enjoyed the article "What eSourcing Is & How To Get Started."

This article is based on a 30-minute podcast I did with Jason Busch, Editor of spendmatters.com. That podcast had lots of nuggets of good information and I only had space for a few excerpts in the article. So, I highly suggest that you check out the podcast on the Next Level Purchasing Association Podcast page.

Though the article took a rather basic look at eSourcing, the podcast did include some even more elementary material that I think could help procurement professionals who really haven't yet got started looking into eSourcing or reverse auctions for their organizations. Yes, though eSourcing and reverse auctions have been around for a solid decade-and-a-half, there are some (actually, a lot of) procurement organizations who still haven't added those tools to their toolboxes.

Therefore, I am dedicating this post to an excerpt from the podcast that ended up on the proverbial cutting room floor for the article, but still may be helpful.

eSourcing & reverse auctions save money and streamline the sourcing process. But what is eSourcing? What is a reverse auction? And what’s the difference?

A reverse auction is an online event “in which there is true price-based competition [among suppliers] in real-time,” according to Jason Busch, Founder and Managing Director of Azul Partners and Editor of the supply chain blog spendmatters.com. “So, when a supplier submits a bid, they know where they stand” and is able to quickly adjust that bid downward, producing savings for you.

Reverse auctions are a subset of eSourcing. Busch suggests that eSourcing describes “a broader category of tools” that includes bidding formats ranging from reverse auctions to multiple-round events where bids are evaluated privately to a variety of other types of events. To Busch, the factor that distinguishes reverse auctions from other types of eSourcing events is the “real-time feedback” that suppliers get.

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
www.NextLevelPurchasing.com

Is What's Good For Procurement Bad For The Economy?

Yesterday, the stock market took an ugly hit. The Dow Jones Industrial Average dropped by the biggest amount since the financial meltdown three years ago. This drop followed smaller drops in prior days that were at least partially influenced by lower-than-previous-month numbers in ISM's economic indexes.

Earlier this week, the Next Level Purchasing Association released our August edition of Leading-Edge Supply Management magazine. Each month, we include graphs of the overall Producer Price Index, overall Consumer Price Index, and a reader-selected index to share with procurement professionals the trajectory of pricing. This is what this month's graphs looked like:


As you can see, after months of steady price increases, there was a sudden turn that began in June. While procurement professionals were frustrated this past Winter and Spring with upward price pressures, the easing of those pressures occurs contemporaneously with concerns about the strength of the economy.

So, is what's good for procurement (declining prices) bad for the economy (economic instability and investment market panic)? If so, you have to be careful what you wish for.

The one bit of good news today is that the unemployment rate dropped back to 9.1% in July after rising to a six-month high of 9.2% in June. Another interesting thing will be how the Gross Domestic Product changed from the 2nd quarter of 2011 to the third quarter (which we're close to being half way through). Looking at the graph below, third quarter GDP will either continue an upward trajectory, meaning that we're in the second phase of a "W" shaped recovery or will go downward, making the second quarter an anomaly in a declining trend that has us headed for another recession (already?).



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
www.NextLevelPurchasing.com

Another Apple Supplier Debacle: Supplier Exec Gets Paid To Reveal iPad Secrets

Listen, I know I post a lot about procurement-related problems involving Apple. But don't get the wrong idea - it's not that Apple's procurement is bad, it's just that when you're the hottest company out there, a lot of people are gunning for you and the challenges are perhaps greater than they are elsewhere.

Apple's procurement team does a fantastic job of supporting the company's innovation and speed-to-market. Actually, you'd probably be hard-pressed to find a procurement team that performs better in those respects.

With that out of the way, let's talk about the latest procurement problem du jour at Apple. Esteemed SPSM and former NLPA Dedicated Member of the Month, Paul Salisbury, tipped me off to a fascinating story involving Apple and its continuing struggle to protect its uber-valuable intellectual property.

The above-linked article describes how an executive of an Apple supplier shared confidential information (including plans for the iPad before its launch) with a research firm for whom he "consulted" (read: accepted bribes from under the veil of "consulting"). Apparently, the problem with payoffs in exchange for insider information is big. The article says that the US federal government is investigating "'expert networks' that solicit employees offering insider information and provide that nonpublic information to Wall Street money managers to facilitate insider trading. A number of arrests have been made over the firm's collection of insider information on Apple, Dell, AMD, and other tech companies."

Now, I'm sure that Apple had a confidentiality agreement in place with this supplier. But, obviously, it wasn't enough.

If you're a procurement professional for an innovative tech company, what are you doing beyond the traditional confidentiality agreement to ensure that your company's intellectual property and trade secrets are being protected? If your answer is "nothing else," I'd suggest you investigate some other options sooner rather than later.

There's money being paid out there for information. And it seems like there is always going to be someone with shady ethics out there eager to accept 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
www.NextLevelPurchasing.com

Whitepaper Wednesday - The Future of Procurement

Welcome to another installment of Whitepaper Wednesday here on the Purchasing Certification Blog. Today, I will be sharing some details of a new whitepaper entitled "The Evolution & Future of Procurement & Procurement Skills" from Next Level Purchasing.

This whitepaper is in interview format with me answering questions such as:

• Some experts are predicting that traditional, transactional procurement positions will disappear in favor of outsourcing. Do you see the procurement field going in this direction as well?
  
• How can people in the procurement trenches make themselves more strategic and take advantage of the evolution of procurement rather than being destroyed by it?
• The Next Level Purchasing Association recently did a thorough procurement salary survey. What do your findings tell us about where procurement is headed?

In addition to my answers to these questions, you'll also find some predictions and insights like those in this excerpt:

"I think one of the areas that is weak today from both a skill and a technology standpoint is predicting supplier performance. As in predicting future supplier performance, not just measuring past supplier performance.

"While skilled procurement professionals have good judgment in their supplier selection decisions, there’s still somewhat of a leap of faith involved when selecting a supplier. Sure, we do reference checks, evaluate financial statements, audit the supplier’s facility, and so forth but, to a large degree, we are taking a leap of faith by awarding business to a supplier.

"I predict that, in the future, we will have at our disposal better tools and practices for more scientifically predicting supplier performance. We’ll be able to calculate probabilities of success. We’ll be able to easily build simulations of what supplier performance will look like in the years ahead. These new approaches probably will never be perfect and will always require a skilled procurement human to manage them, but I believe that the leap of faith of today will be reduced to a baby step of faith in the future."

If you're interested in reading my answers to the above questions and getting even more predictions and insights, you can download the whitepaper from Next Level Purchasing's website at http://www.NextLevelPurchasing.com/EFP .

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
www.NextLevelPurchasing.com

American Airlines & Boeing: Did A Supplier Labor Issue Scare Off A 50 Billion Dollar Order?

Late last month, American Airlines announced what has been called the "largest aircraft order in aviation history." Interestingly, it did not single source the order - it split the order of 460 aircraft between Airbus (260) and Boeing (200).

There is debate as to exactly why it split this order when, traditionally, airlines purchase aircraft from single manufacturers in order to take advantage of various efficiencies, most notably those that result in the lowest purchase price per plane.

CBSNews.com says that "many industry analysts suspect the deal was motivated by the ongoing labor disputes at Boeing's assembly plants." In the video embedded below, one of those analysts said that Boeing has "had some challenges with labor and people have been wondering if they were going to get their production lines in order in time to really sort of get some of these newer aircraft out."

According to the above-linked article, American Airlines insists that those labor issues were not a factor in the decision with their president quoted as saying "Our needs were just so great, and we wanted to do this in such a big way, that one company, one manufacturer couldn't fulfill our needs in the timeframe."

But it makes you wonder, doesn't it?

Certainly a labor stoppage is a supply risk so common that it's mentioned in our 19-Point Supply Risk Checklist. Plus, it's a supply risk that is much more predictable than a natural disaster. So, it's not a bad idea to dual source if the threat of a labor stoppage is more than insignificant.

Here's the video.

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
www.NextLevelPurchasing.com

As A Procurement Negotiator, How Should You Be More Like A Pediatric Surgeon?

We all have insecurities or qualities of ourselves that we'd like to improve, right?

Well, I'm no exception. One of my skill sets that I'm always trying to take to the proverbial next level is my speaking skills.

I'd love for the day to come when I could get through a day of speaking without uttering a single "um." Or being able to speak at a quick pace for a long period of time without pausing to collect my thoughts. Or without meaning one thing while saying another.

I work on these shortcomings. Especially as an instructor of the art and science of procurement negotiation, I strive to be the best communicator I can be because verbal communication skills are so critical when negotiating.

I admit it. I get jealous when I speak with someone who can gracefully go through a highly-technical conversation without filler words, stumbles, and mistakes.

Such was the case last week when I took my daughter to have ear surgery. When I spoke with her surgeon, I was so impressed that he was able to rattle off all of these facts confidently while speaking at such a quick pace.

Question about healing time? Bam - quick, intelligent and confident answer.

Question about pain? Bam - quick, intelligent and confident answer.

Question about medication side effects? Bam - quick, intelligent and confident answer.

"Darn," I thought to myself. "I wish I could communicate like this guy. He's brilliant!"

Then it dawned on me.

This doctor probably performs dozens of ear surgeries every single day. He gets asked the same questions every single day. He tells parent after parent the same exact thing.

If he was stumbling through his advice and answers after all of that practice, he would have to be an idiot! If you don't know your stuff after doing the same thing every day for decades, you probably shouldn't be wielding a scalpel.

While procurement negotiation may not be an "assembly line" type of task, certainly if you've been in dozens of negotiations, there are plenty of common and similar elements. So, when you run into common situations, do you "wing it" and make up what you say as you go? Or do you say things that you said (or practiced) before so that they come out smoothly and you brand yourself as a powerful, intelligent professional in the mind of your supplier counterpart?

Too many of us don't plan or practice our negotiation communication. And then, when we do negotiate, the words come out sloppily. When we let this happen, we are failing to take advantage of our ability to drive an advantage in the negotiation.

The bottom line is this: good communication gives you power, and repetition breeds good communication.

Are you using repetition to make yourself a better communicator and skilled negotiator?

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
www.NextLevelPurchasing.com