Monthly Archives: June 2014

Enjoy Your 32 Day Vacation!

The World Cup starts today.

For 30% of you, that means a 32 day vacation until the final match is played on July 13, or, at the very least, your best effort to work as little as possible during matches so that you may watch as many matches as possible.

How do I know this?

Is the doctor psychic?

Does the doctor have inside information?

Has the doctor been informed of your plans en masse?

No, he just has historical knowledge to guide him. SI has been going for 8 years (as of Monday, June 9) and over this timeframe has grown steadily in readership quarter-over-quarter, and often month-over-month, with only one exception which lasted for one month, where it saw, on average, a temporary drop in stats of almost 30%. An exception which happened almost four years ago to the day which, of course, coincided with the start of the 2010 World Cup.

So, for those of you taking vacation, enjoy it!

For the rest of you, you’ll be happy to know that SI plans to keep publishing, and will keep bringing you insights day in and day out.

What’s the Easiest Way to Save Another 220K or Even 498K per Person?

Get Certified!

According to the most recent Next Level Purchasing Association Purchasing & Supply Management Career & Skills Report, 2014 Edition, the average cost savings and avoidance per person per supply management department among the survey respondents was:

  • $1,175,319 per person if they were not certified
  • $1,396,972 per person if they were certified
    with a certification other than the SPSM
  • $1,673,096 per person if they were certified with the SPSM

The fact of the matter is simple. Certified people are trained people. Trained people have the knowledge and skills needed to apply the tools and resources they have at their disposal to the greatest extent possible. And, because they are trained, they get results.

But don’t take my word for it. Download the 2014 Purchasing & Supply Management Career and Skills Report today!

To download the 2014 Purchasing & Supply Management Career and Skills Report,

  1. Login to the NLPA,
  2. select the library tab, and
  3. the 2014 Purchasing & Supply Management Career and Skills Report is the 2nd report available for download.

Hidden Risks are Everywhere!

In yesterday’s post, we noted that one of the workshops being offered in the 2nd NLPA Conference is on the Hidden Risks of Terms & Conditions. We noted that this is an important topic because terms and conditions are the concealed weapons of the legal world and a big hidden risk in your supply chain that you are likely not aware of.

There are more risks in an average set of terms and conditions then just the one-two knock-out punch of just Force Majeure and sole-source. Other risks that can be hiding in your contracts include:

  • buyer beware
    if you do not take the time to properly specify acceptance (testing) procedures, the goods will be yours the minute they are unloaded into your warehouse and/or a warehouse worker issues a goods receipt
  • non-compliance
    if you do not insure that there are no appropriate no-subcontracting clauses, your supplier could be sub-contracting services that are only to be supplied by certified companies or individuals (which is critical in health care, etc.), critical services could be subcontracted out, leaving you liable
  • weak confidentiality clauses
    if the clause doesn’t specifically indicate that confidential information may only be revealed to non-identified parties in the case of an official legal request, and that any request must be reported to you before such information is revealed, who’s to say that the information won’t be released without your knowledge upon an informal inquiry by someone asking for related information
  • increased liability
    if the contract does not specify a minimum insurance requirement for your supplier, who is performing sub-contracted services on your behalf, and does not mandate that they provide proof of such insurance on a regular basis, then a mistake on their part could result in increased liability on your part, beyond any limits specified in the contract
  • no termination clause
    just because you think you can end the contract for non-compliance doesn’t necessarily mean that you can, if it is sole-source for a guaranteed time, the supplier can argue Force Majeure, lack of quality requirement, etc. to negate any non-compliance claim you may bring forth

And this is just the tip of the iceberg. That’s why poorly negotiated contracts are note just the concealed weapons of the legal world, they are minefields!

The 2nd NLPA Conference: Tackling Topics that Matter!

On September 15th to 17th, the Next Level Purchasing Association is hosting its 2nd Procurement Conference in Pittsburgh, Pennsylvania. The agenda is almost final, and the topics being covered in the workshops are important ones. Unlike most conferences, the NLPA conference is focused on education — education that you need to do your job better (which is what conferences should be about, and not full-time speakers blowing their horns or vendors pitching their products, as you’d know what you had to buy without being told with the right education).

The workshops being offered are the following:

There’s No ‘I’ In Team: Collaborative Sourcing in a Decentralized Organization
Procurement success depends on collaboration — because procurement success depends upon consistent category management. Proper needs identification, vendor selection, contract creation, and compliance! Because, without compliance, maverick spend runs rampant — maverick spend with can only be eliminated when everyone is collaborating and on the same page.

Who’s on First? Strategies for Management and People Changes
Sourcing Innovation is always saying it’s technology, talent and transition for a reason. You need good technology to do your jobs effectively, technology that requires trained skill (talent), and technology that requires you to change your ways and transition to a better way of doing things. This is one type of management. But some people will be resistant to change, this is where transition management comes in — because they will need to be guided to the better way of doing things.

Charting Your Path to Victory: How to Successfully Manage Procurement Projects
Procurement is a lot more complicated than the 3-bids and a buy it was in the not-so-good ol’ days. In fact, some projects will require multi-phase vendor identification and pre-selection before you even begin the multi-phase negotiation and analysis that will lead to an award — which is where the real (multi-year) Procurement process begins! Which will have to be executed as plan, or you will have a lot of maverick (and expedited) spend.

Where is the Playbook: Hidden Risks of Terms & Conditions
Terms and conditions are the concealed weapons of the legal world. Concealed weapons that will be pulled on targeted upon you at the worst possible time. For example, Force Majeure, while seeming fair and innocuous, when combined with sole-source requirements, is a Masamune blade guaranteed to cut you every time. While it’s fair for a supplier to not be expected to deliver when a typhoon shuts down their factory, it’s not fair to have a non-breakable sole-source clause for the contract duration which could force you to shut your production line down if you are unable to get your parts in time.

Supply Managers Will Be the RockStars of The Resource Revolution


I’m through with standing in line
To clubs we’ll never get in
It’s like the bottom of the ninth
And I’m never gonna win
This life hasn’t turned out
Quite the way I want it to be

  from Rockstar by Nickelback

Supply Management hasn’t exactly been the poster-child of the corporation in recent years. In fact, in some organizations it would have been lucky to be the Island of Misfit toys that Mr. Dominick of Next Level Purchasing has compared it to. But if the Resource Revolution comes to pass, that might all change.

A recent article in the 2014 Q2 Edition of the McKinsey Quarterly that asked Are you ready for the resource revolution? said that another industrial revolution is coming, and while the first two focussed on labour and capital, two of the three primary business inputs identified by Adam Smith in his classic treatise The Wealth of Nations, the third will focus on the last input identify by Adam Smith — resources that come from the land.

According to the authors, who recently authored Resource Revolution, five approaches will be utilized by companies that lead the resource revolution. And three of these — namely substitution, optimization, and virtualization — will be critical to success. (The other two, circularity — or design for reuse and recycle, and waste elimination — or lean to the next level, will primarily be used in conjunction with the other methods to deliver significant enhancements that neither approach on its own to achieve. )

Substitution, the process of replacing costly, clunky, and/or scarce materials with cheaper, better, and more readily available materials, is already being used by those companies that have advanced to the highest stage of maturity in Supply Management.

Optimization, the process of embedding software in resource-intensive industries to improve how companies produce and use scarce resources, is also being used by those companies that have advanced to the highest stage of maturity in Supply Management.

Virtualization, the process of moving processes out of the physical world, is being employed by leading manufacturers (who will use a platform like Aravo’s) to determine the most efficient and cost effective process to produce a part as well as aircraft and car manufacturers (who will use advanced 3D modelling tools) to determine the most environmentally friendly or best performing design. But this too will be used more and more by leading Supply Management organizations to design the best supply chain to support the products and the business.

And when you get right down to it, no other organization in the corporation is in a position to make more use of these approaches than any other. That’s why, if the Resource Revolution is to come to pass, forward-thinking Supply Managers will have to lead the way, and become the corporate rockstars they always desired to be. (And put those motor-mouth marketers in their place.)