Category Archives: Public Sector

Two MUST READS on SpendMatters UK!

Today’s post is being pre-empted with a request to go and check out two great posts published yesterday over on SpendMatters UK that:

  • echo a point that SI has been screaming for years and
  • echo another point that has been pointing out for years to anyone who would ask


Post 1: The True Cost of Screwing Your Supplier

In The True Cost of Delayed Supplier Payments, Nancy clearly explains just how much money you will save by extending supplier payments by 30 days on £1.2M annual spend against how much opportunity cost you will lose. An organization might think it will save a very pretty penny on the cost of capital by doing this, but the reality is that all it will save are a few copper pennies that the average CFO wouldn’t even bother to bend over and pick up if they were all dropped in front of him in a platinum-lined wicker basket.

The post works through the savings calculation in detail and the net result (with a cost of capital of 5%) is a whopping annual savings of £417! That’s right, over the course of a year you won’t even save enough to pay the consultant who forced this hare-brained scheme upon you. (Heck, you won’t even have enough to cover the executive lunches where the consultant pitched this hare-brained scheme upon you.) On the other hand, the organization loses a £60,000 benefit they could have gained from SRM (as well as any benefits they were getting as a customer-of-choice, as you’re no longer a customer-of-choice once you screw a supplier like this for no reason).


Post 2: “Made in X” – Legalized Piracy!

In “Made in Nigeria” Public Procurement Policy Will Simply Lead to More Corruption, Peter clearly explains how this new “anti-corruption” policy is just going to lead to more piracy at home (as if there isn’t enough piracy on the seas and over the internet as it is). You see, with the insistence that the government must buy local, and especially where there’s only a handful of suppliers, you’re just going to see cartels forming among the local suppliers for the purposes of colluding to double and even triple prices.

And this is the problem with any “Made in X” public procurement policy that insists that the government always buy local – for any category where the supply base is small enough, unless the product is a commodity that is sold in a local office supplies chain or store where public pricing can be easily tracked and monitored AND the government has a law that says the public sector cannot be charged more than the private sector MSRP or something similar, the public sector price is going to be significantly more than the price on the open market.

SI strongly recommends you check both of these posts out as both of these posts were, literally, between the posts.

 

Geopolitical Damnation 32: Political Unrest / Riots

It’s not just unexpected labour strikes that can throw a wrench into your best laid plans, but political unrest as well, both on the public side and the government side.

Political unrest on the public side can lead to widespread walkouts across the public and private sectors, including unauthorized strikes where unions are involved and unauthorized on-the-job walkouts in the private sector where unions are not present, and shut down the better portion of a city, state, or even a country. It’s like a port strike coupled with a driver strike coupled with a warehouse worker strike coupled with a retail sales outlet strike as your entire supply chain inbound and outbound in that city, state, or country is brought to a screeching halt. And this might be the best outcome as a result of widespread unrest.

If the people really get upset, they might not settle for walk-outs and instead decide that they are going to full-scale riot, which will, of course, result in looting, destruction of property, and possibly even terrorist-like actions that result in burning and destruction of entire facilities. So, not only might your supply chain come to a screeching halt literally overnight, but your inventory might be stolen, your production line destroyed, and your building burnt to the ground.

While political unrest on the public side can get quite bad, especially if your facility gets destroyed, political unrest on the government side can be even worse. If, all of a sudden, a government agent takes a strong dislike to your country of origin or your company, every one of your shipments can be held up at the border, any items that appear to be in violation of a directive (such as REACH, WEEE, or a country equivalent) seized until appropriate tests are conducted, each drum or container of a perishable food item at risk of contamination opened for inspection or confirmation (forcing an entire shipment to be destroyed), and each item deemed to be misclassified under the countries HS code held until you pay the maximum fine. And this is again the better outcome.

Your company can be put on a denied parties list and all imports blocked. Your country can be put under embargo for one or more categories of goods that your company produces, also blocking all imports. Your company can be suspected of engaging in, or doing business with companies that engage in, illegal activities and all of your operations in the country effectively shut down when your bank accounts are frozen, all of your files and servers confiscated, and your inventory seized. A government (agent) that has it out for you — possibly even because of the country your HQ is in, the country you are importing from, or the country you are exporting to — can effectively shut your entire operation down seemingly overnight with almost no notice whatsoever.

Political unrest is a very bad thing, and a very deadly damnation when it rises up to consume your supply chain operation whole.

Consumer Damnation #71: Government

In today’s post we’re taking on the first of the consumer damnations — the government. Everyone wants them as a customer because, as the saying goes, once you’re in, you’re in and it’s impossible to get thrown out unless you do something really, really egregious because the process to replace you is so long, arduous, and painstaking that no one wants to do it, especially since management will likely change half-way through the process anyway and put all projects on hold until a new assessment is done. Salesmen love government contracts because they can sell once and then sit back and rake in their commission year-after-year as the evergreen renewals keep coming in.

But, as a Procurement professional, you don’t have it so rosy. Not only can government customers be very demanding, and require you to work extensively with Engineering, Manufacturing, IT, and the Supply Chain to design custom solutions to meet their needs, but they can be quick to pass on the blame to your company even if it’s not your fault. (You didn’t specifically say that we couldn’t put low-grade transparencies with a low melting point through this high-output, high-temperature laser printer that specifically said only 50 lb or better paper stock in the trays.) And if they get caught knowingly outsourcing to China, when they preach “Buy American”, they’re going to blame you and redirect the public outcry your way even though they told you “lowest cost, American or not”. And if it comes to pass that there was child labour or unsafe working conditions two tiers down in your supply chain that you didn’t know about because your supplier used unapproved raw material suppliers, they’ll be the first to throw you under the bus, the plane, and the cargo ship they threaten to use to ship what’s left of your corpse back to China when they are done with you.

Plus, now many government agencies mandate that you provide bill of material data, shipping manifests, country of origin determinations, quality inspections, and other information with every product that you provide the government so they can meet their accountability mandates. It used to be you just shipped the product. Now you have to ship the product and, in some cases, a literal CD’s worth of information — even though they don’t need 90% of it to fulfill their mandates and answer the questions they need to answer. (Your organization needs all of it to maintain import / export / product / regulatory / security compliance across the supply chain, but most parties you sell to only need a small subset of that data.)

And if that’s not enough, if the government runs out of budget and can’t get agreement to run a deficit, there can be an indefinite spending freeze while the situation is resolved. And, unlike the private sector where you have the right to suspend delivery of goods and services until payment resumes, if your organization is providing goods considered necessary for essential services, your organization can be (legally) ordered to continue providing those goods and services during the spending freeze (as your organization will be paid when the freeze is over as a provider of essential goods and services). If the spending freeze drags on for months, this can put your organization in dire financial straits, and additional stress to reduce costs below the baseline established during the sourcing phase will be put on Procurement.

Governments can be your organization’s best and worst customer and Supply Management’s biggest point of leverage and largest risk (as the volumes required can often allow the organization to negotiate great deals but the reputational and legal liability as a result of a single mis-step in the supply chain can be exceedingly costly).

However, in this rather stagnant economy, for many companies, it’s a damned if you do (get Government as a customer) and damned if you don’t (have Government as a customer). Have fun!

Enterprise Software Companies Do Need Media Relations

In yesterday’s post, we insisted that Enterprise Software Companies DO NOT need Public Relations, because they do not. Why? Simple. They DO NOT sell to the public. They sell to big corporations. Big corporations are not the public.

Also, the messaging that you need to sell to a CFO is nothing like the message that you need to sell to an impulsive consumer. Good business is all about productivity, progress, and Return On Investment. Good public relations is all about feeling, connection, sexy, environmental responsibility, or anything else that happens to be the buzz of the day. Good enterprise relations is all about results. Public relations, like consumer advertising, is in constant flux. But the basics of good business never change.

However, the advertising channels through which business advertising have exploded, not only as a result of the rapid expansion of the ubiquity of the world wide web, but of social media as well. As a result, the complexity of media management has increased dramatically. The fundamentals haven’t changed, but the amount of work required to coordinate and manage the effort has. Not to mention the knowledge required to strategically place your advertising and messaging to stand out amidst the noise, which consists not only of a constant stream of advertising and messaging from your competitors but analysis, third party reviews, and random comments. It’s a media jungle, and unless you have a team of full time pros to manage it 24/7, you need help. Even if you do have a team, you probably need guidance.

A good Media Relations Team will help you:

  • Identify the Right Channels
    Which traditional print and online web publications are right for you?
    What are the right channels to advertise your coverage?
    Who are the right people at these outlets to reach out to?
  • Tailor the Message
    While you need to craft and own your message, you also need to recognize that different individuals at different publications who control different channels are interested in different parts of the message you have to deliver. To get your message heard, sometimes you have to focus in on the part that will get a crier’s attention.
  • Spread the Message
    Parts of your message have to spread through others, but thanks to the social media revolution, other parts have to be spread by your organization through social media channels. Managing these can be a full time job, and not the best use of your limited resources. This is best left to an expert.

In other words, you need help, but the help you need is not Public Relations. It’s Media Relations.

And if you really need someone to talk to in order to help you elicit your messaging in a collaborative fashion, hire a subject matter expert (SME) whom can also offer you project management, product development, or thought leadership consulting services. This will jump start those efforts as the subject matter expert will not only be fully familiar with your messaging, but with your modus operandi as well. As a result, there will be little to no learning curve for the SME when it’s time to start the project management, product development, or thought leadership creation. This will pay off in spades as you’ll get your project, product, and/or thought leadership done faster, hit the market faster, and see a significant return faster.

So when it comes to getting help, get the right help. Even if you don’t thank me for it.

Top 12 Challenges Facing India in the Decades Ahead – Epilogue

As we have chronicled in the past 12 posts, India has a large number of significant and imposing challenges ahead of it — challenges it has to face, and conquer, to rise to the glory it aspires to. Moreover, the identified challenges of:

are just the biggest challenges that SI has identified as being the most important to solve; they are by no means the only challenges that lie ahead of India. Pick a topic. Any topic, somewhere, somehow, India is facing a challenge. Maybe it’s just minor and restricted to a small percentage of the population or a few states, but it’s there. And until the major challenges are addressed and reasonably solved, progress is going to be slow and India is not going to surpass the US to become the number two producer of GDP as some economists and futurists are predicting. In fact, if it doesn’t make progress on a number of these challenges, India, which was ranked 10th in GDP production at the end of 2012 (Source Wikipedia), is not even likely to surpass Japan, which currently holds the number 3 slot according to the UN (United Nations), IMF (International Monetary Fund), and WB (World Bank). (However, it is quite likely to pass Italy, Russia, Brazil, the UK, France, and, a few years after France, Germany to take the number 4 slot even if it doesn’t make much progress on the challenges, simply by virtue of the growth that its middle and upper classes, which constitute about 30% of its 1.2 Billion people, can produce on their own.)

But it’s not all doom and gloom! As SI will discuss in a future series, it has as many opportunities as it has challenges and if it conquers its challenges, it will have opportunities that are only equalled by the opportunities before China (and, with China, control approximately 1/3rd of the global economy in the latter half of this century)! What future lies in wait? That’s up to India to decide, but a future blog series will discuss aspects of one possible future. Stay tuned.