Monthly Archives: February 2015

Dilemma or Not, Buyers Still Must Take Ethics into Account

In a recent post over on Spend Matters UK, Andrew Cox asked whether “aggressive buyers are stupid or guilty of segmentation errors”. In this post, the author chimed into the debate over supplier bullying, initiated by Peter Smith over the continued extension of unreasonable payment terms by 2 Sisters and Sainsbury’s, continuing the unsavoury Tesco tradition. According to Mr. Cox, food companies should not be condemned as ‘unethical’ just for extending payment terms as ethical standards are a contested concept.

While I agree that what is unethical for some is just fine for others, as per the example provided in the post, one would think that there are some positions that just about everyone with a conscious could agree upon, just like the vast majority of people in modern society believe that murder is wrong. In the debate, Peter Smith is condemning the act of a supplier unnecessarily extending payment times to the point where a company could risk bankruptcy. I would hope that this would be a situation that most people could agree is simply not ethical.

But this is not the only time when ethics should be taken into account. Ethics should also be taken into account when choosing a supplier. When choosing a supplier, fair labour standards should be considered. Now, while what is fair is always a subject of debate, it should not be a subject of debate that a fair supplier

  • follows all health, safety, and minimum wage standards of the country or countries they operate in
  • if there are no such standards, the supplier does not unnecessarily expose its workers to risk, does not maintain conditions that threaten its workers’ health, and/or does not pay its workers less than a living wage in the country that is being sourced from (as defined by the World Economic Forum, etc.)
  • does not unnecessarily harm the environment

And while it might be difficult if there are no standards to determine that conditions are sufficiently healthy or safe, that the wages paid are suitable, or that the supply is not unnecessarily harming the environment, there are points when it becomes obvious. Just like delaying supplier payments 180 days or more is ridiculous, so is choosing a supplier that houses its workers in buildings that should be condemned (which are doomed to collapse like Rana Plaza), that allows workers into a mine without adequate safety gear, that uses wide-spread clear-cutting that will clearly harm the local environment, or that pays its workers so little that they can’t afford to keep a roof over their head and eat. If we can’t agree that if the majority of the population, and in particular, the majority of the population that defines our customer base, would consider the supplier and its practices unethical that we should too, then do we even deserve to call ourselves professionals? Every professional organization worth it’s salt has a code of conduct, and most of these have an ethics clause that say we will adhere to the ethics of the industry we work in and the society we live in. If the majority of society condemns an action or a state of affairs, and, in the country we operate or sell in has laws that condemn an action or a state of affairs, how can we claim there is any debate whatsoever from an ethical perspective in regards to a supplier that takes that action or maintains that state of affairs?

You’d Think It Would Be Obvious By Now that You Should Not Poison Your Customer

After the plethora of lawsuits filed in 2008 against Sanlu Group for putting melamine in the milk (or, to be precise, a baby formula that was based on milk) as per this article in the New York Times, against the individuals responsible for importing rip-off toothpaste (that was not manufactured by Colgate) contaminated with diethylene glycol (which is a sweet tasting poison used in anti-freeze and which kills poor defenseless LOLCats), and against Mattel for importing toys coated in deadly lead paint (as per this article from USA Today), you’d think that even if they were run by sociopaths without any ethics whatsoever, corporations focussed on the bottom line would know better than to poison their customers.

However, after reading Pierre the maverick Mitchell’s Friday rant which was “an open call to hotels to NOT poison their customers”, all I have to say is, apparently not!

Maybe they don’t know they’re doing it, or they do but believe that the average customer doesn’t stay often enough or long enough to be exposed to enough toxins to be damaged. Now, this might be the case for the average person who only uses a hotel once or twice a year on vacation, but what about the travelling salesperson or executive who spends more time in hotels than in their own home? How long before BPA builds up to toxic levels in the bloodstream, given that a new study has determined that your body absorbs more BPA than previously thought (rodalenews.com)? If the coffee maker and plastic stir sticks that you use to make your coffee every day leaches BPA, how long before you are sick, whether you realize it or not?
And that’s just the tip of the iceberg! According to Pierre, the non-dairy creamers many hotel chains provide are full of toxins — sodium caseinate, monoglycerides, and diglycerides. We might as well eat glue!

It’s scary. And the worst part is that the cost savings the hotel realizes from buying cheap coffee makers, non-dairy creamers, and other toxic products are negligible. Compared to the revenue a hotel chain can see on a nightly basis from a quality offering that puts them ahead of their peers, a few pennies of savings versus a few dollars in profit is not only negligible, it’s just stupid!

The Evolution of Purchasing


Today’s guest post is from Lisa Nyce, Senior Project Analyst for Source One Management Services, LLC. Source One is a leading provider of sourcing consultancy and category management services.

Over the years, purchasing has become more strategy-oriented, rather than transactional. Purchasing professionals have evolved from the processing of traditional purchase orders and similar responsibilities to involvement in higher value and higher impact ROI projects. Technological advances enable purchasing professionals to offer so much more to an organization today. So sit back, buckle up, and get ready to navigate through a number of drastic transformations – we’ll show you how to become a more involved player by taking advantage of a shifting technological landscape.

Procurement pros have a growing number of tools in their arsenal to help make their lives easier and their projects more successful:

  • Spend Analysis Software – Get a better understanding of the Total Cost of Ownership (TCO) of goods and services. To get the most out of any software, the backing of the supporting department and program is essential. For example, with supplier relationship management software, a thorough strategy containing performance management and risk mitigation plans allows a software solution to serve with a full-circle advantage.
  • Cost Savings Tracking – identify cost savings opportunities and aid in the verification of implementation. Aside from the straight-forward benefit of tracking immediate cost savings, these tools can be used to remain competitive by ensuring that these savings are sustained over time and supplier rates remain locked at negotiated levels.
  • Supplier Report Cards – Ensure that expectations are being understood and met by both suppliers and internal stakeholders. These serve as an asset as new technology is presented and suppliers are scorecarded for future endeavors. As the technological landscape shifts, suppliers who don’t “keep up with the times” can be eliminated.
  • Stronger Legal Controls – minimize the need to involve a legal department or outside counsel when engaging in contractual negotiations. As heavily-regulated industries see a new or adapted regulatory climate, these legal controls assist in preventing penalties or a stigma attached to a brand as a result of internal or third-party noncompliance.

Purchasing has been incorporated into the more inclusive Supply Chain operation – it is no longer just a function of buying what is needed at the right time, at the right price with the right quality. Supply Chain activities encompass Strategic Sourcing, Supplier Relationship Management (SRM), Logistics, Planning and Quality. All of these new factors make purchasing a strategic function and the key to being able to meet or exceed the customer’s expectations.

New options abound for management and procurement professionals alike

Organizations have reduced the number of individuals required to get work done. Thirty years ago a typical Purchasing Department could include a Purchasing Manager, Buyers, expediters and clerks. That amount of manpower is simply not needed today. Electronic efficiencies have virtually eliminated clerical positions, and due to more efficient MRP systems, transactions are completed in less time allowing more time to source strategically, build stronger relationships with suppliers, and engage more with customers and stakeholders. Furthermore, employers today have many more options for staffing.

There are permanent, temporary, contract-to-hire, and various staffing options specific to the procurement industry. Procurement consulting is a viable option for companies wanting to obtain subject matter expertise on a particular spend category.

Likewise, supply chain professionals have access to a wider range of educational options to up their game: Logistics, Planning, Procurement, Supplier relations to name just a few. Not only are degrees available in Supply Chain but certifications from accredited institutions and groups are also available to a much greater extent.

The evolution of the Purchasing function has developed and will continue to do so. The change is necessary for organizations to continue to prosper. To stay ahead of the curve, remember to always monitor developments and consider what areas of improvement are possible – this will pave the way to not only personal gains but also further changes in the industry.

Thanks, Lisa.

Another Prediction LOLCat Can Get Behind

We all know what LOLCat thinks of futurists and their ideas. (Just see this post.)

But every now and again, someone comes along with an insightful, and true, prediction that LOLCat can get behind.

Earlier this year, LOLCat discovered an amazingly accurate prediction by Peter Smith (of Spend Matters UK) who, as summarized in this post, predicted that all predictions will be wrong.

However, LOLCat recently stumbled upon this great post by Pierre Mitchell who, in LOLCat’s view (and the doctor‘s view), predicted that “2015 Will be the Year of the Chief Buzzword Officer” [Spend Matters].

And it will. If you thought filling up your Buzzword Bingo card was easy last year, just wait and see what this year, the year of Procurement Damnation, brings. (In fact, this will likely be the year that Buzzword-Free Bingo hits the scene. Once your office mates get tired of filling their card before the boss takes his second breath, they will be searching for a game that lasts the entire hot-air filled meeting.)

What do you think LOLCat?

I Win!