Monthly Archives: December 2015

Consumer Damnation 73: Individual Consumers

Of course individual consumers are a consumer damnation (and you were just reminded of that while trying to keep the shelves stocked this holiday season). They are the consumer damnation. Corporations are bad. Governments are worse. But individual consumers take the cake, especially considering most of them bring their views to corporate and government purchases. And you are left trying to deal with the inanity and the insanity. When dealing with consumers, damnations are plenty.

Consumers are fickle.

Their tastes can change overnight. Today they want red. Tomorrow they want black. Then they don’t want the product at all because the competitor’s product glows radioactive green.

Consumers are demanding.

They want the newest operating system, the biggest screen, the fastest processor, the most spacious hard drive, the longest battery life, and the absolute lowest price for that new smartphone, even though all of these requirements might be mutually exclusive with today’s technology. And the minute you don’t deliver, they abandon your product to wait for the product from your competitor who is promising more than your current offering.

Consumers are impatient.

If you promise 72 hour service, you better deliver in 48 hours or they will be calling every hour asking where that service professional is. And if you can’t repair the product, you better have a replacement on hand or they will be demanding a refund for the service plan they purchased.

Some consumers are vindictive.

Your product didn’t perform. It broke a day after the warranty. The store wouldn’t take it back. Complaints are filed with every better business bureau and consumer protection agency the consumer can find, and that’s a best-case scenario. If the consumer discovers that there was a banned or dangerous chemical in the composition of the product, they rally a few friends, get a lawyer hungry for some media sensation, and launch a very public class action lawsuit. And if they get hurt opening the hard shell or sick licking the lead paint, that’s a multi-million lawsuit coming your way.

And of course Procurement will be on the hook for not getting the product on the shelves before the consumer tastes change, not getting the price point low enough to appease the consumers enough to buy the company’s product when it is missing a new feature just included in a competitor’s product, when the company contracted for service doesn’t deliver fast enough, or when the supplier ships a defective unit and a consumer gets hurt and sues in a very public way that is very damaging to the brand.

Consumers might be the reason the company, and Sales and Marketing, exist, but they are a perpetual damnation to Procurement who will have to deliver on every insane and inane promise made by Marketing or Sales (which are, as we know, their own damnations).

The Island of IT, Part II

Today’s guest post is from Torey Guingrich, a Project Manager at Source One Management Services, LLC who focuses on helping global companies drive greater value from their indirect expenditures, such as IT and Telecommunications investments.

In our last post we noted that even some of the most mature Strategic Sourcing departments tend to struggle with IT because IT spend is off limits or out of reach for traditional sourcing and procurement efforts. We then examined the three most common excuses, or hurdles, and provided some guidance on how to overcome them. Once you convince IT to give Procurement a chance, the next step is to …


Once you have overcome these hurdles with IT stakeholders, it is critical to follow through with the value that Procurement has promised in the sourcing and contracting process. Looking at a need identified by IT through a sourcing lens will likely lead to better defined requirements and a better relationship between the IT department and the supplier with whom they ultimately work.

  • Sourcing: Competitive bids and the RFx process can, and should, be used for IT and telecommunications initiatives. Because IT departments tend to partner more closely with their supply base as compared to other indirect categories, it can be easy to accept a proposal or pricing from a supplier who knows the company’s systems and basic requirements quite well. While this may be a faster route, Procurement needs to help IT ensure that the supplier’s proposal is the best fit for the organization’s needs and is competitive in the market. Work with IT to develop an RFP that allows suppliers who may not be as intimately connected with the department to propose innovative solutions and competitive pricing.
  • Scope and Deliverables: Once Procurement and IT have worked together to award an initiative to a supplier, Procurement’s value will be further demonstrated while going through the contracting process. Press your IT stakeholders to clearly define their expectations, the scope of the project, and the deliverables that the supplier will provide. Many business owners tend to think in “end state” deliverables, but be sure to inquire whether there are processes or defined stages that the supplier is expected to go through to get that end state, e.g., system, integration, and/or user acceptance testing. While there may be assumed expectations, work with IT to ensure those assumptions and expectations are defined.
  • Timelines and Acceptance: While working with IT to define the agreement deliverables, tie in timelines and dates for the company’s acceptance of mid-stream deliverables. Ensure there are key checkpoints prior to the final acceptance testing window to minimize rework or changes that need to be made. Also, be sure to use a critical eye when defining acceptance procedure and timing; often suppliers will insert language that assumes acceptance if no formal communication is received by a certain number of days. While this is intended to keep projects moving forward, you can change this language to require an affirmative acceptance by the company or at the very least, ensure the timing for default acceptance is ample enough to allow for any internal reviews that may take place.

While IT systems, products, and services may not be second nature, treat your business owners in a way that lets them know you are there to help ensure their requirements are met and their budget is maximized. IT — more than any other area — seems to consistently have budget on the chopping block, have projects pushed out year after year, and be asked to do “more with less”; by becoming a solid partner and delivering value to this group, you can not only help them make better buying decisions, but actually achieve their departmental goals.

Thanks, Torey.

Provider Damnation 67: Tier 2

Suppliers. You can’t always deal with them, but you cannot survive without them. The same goes for your Tier 1 suppliers. They can’t always deal with their suppliers, but they cannot survive without them. Your suppliers don’t have a magic replicator that your products just materialize out of. They have to manufacture these products from components and raw materials that come from their suppliers. And their suppliers are their problem, right? Wrong.

If Tier 2 Suppliers are late with shipments to your Tier 1 suppliers, you don’t get your product on time.

And, most importantly, while you might get some insight from your tier 1 supplier that a shipment they were expecting is late (and your shipment is going to be late) if you have a great, and very well managed, supplier relationship, you’re never going to get insight from a tier 2 supplier that a shipment is (going to be) late (because there was a delay in their raw material shipment or a production line broke down).

If your Tier 2 Suppliers ship sub-standard materials, your Tier 1 supplier ships sub-standard products.

And there’s no guarantee that your tier 1 suppliers are going to notice that the grade 5 bolts for the transport vehicles were only grade 4, that the dysprosium foil supposed to be 99.99% pure is only 99%, or that the milk powder isn’t tainted by melamine powder to bulk up the weight.

If your Tier 2 Suppliers use forced labour, you get brought up on criminal charges under the emerging anti-trafficking acts and modern slavery acts (California, UK, etc.)

Don’t think that just because you visited the primary factory locations of your supplier and your supplier’s supplier and did an audit that all is clear. Your supplier’s supplier might have five different locations, and while the main location is clean, safe, not overcrowded, and complete with paperwork on all workers demonstrating minimum age and fair wage, the additional locations might be dirty, full of safety hazards, over crowded, and use hordes of undocumented workers, including underage, underpaid, and even forced workers brought in by the local “contractor” to make sure the line runs 24/7 to get those orders out and more currency in. But your supplier’s supplier, operating in a relatively lawless zone compared to the zone your headquarters is in, does this with impunity as it knows that, with the right bribe here and there, the most it will get is a slap on the wrist for its transgressions while your officers could be facing criminal charges.

Damnation exists throughout the supply chain, not just with the immediate supplier and the immediate customer.

Damnation, you left a happy job
Damnation, and now your head throbs
Damnation, now you’re in too deep
It’s a Procurement Damnation
and it makes you wanna weep