Geopolitical Sustentation 25: Government Actions

Upon review of our damnation series, we know that governments can be a major source of damnation. From their meddling in the employment rate (economic damnation 3), currency strength (economic damnation 5), and their sheltering of the 1% (economic damnation 7); their lack of support for postal services (infrastructure damnation 11), ports (infrastructure damnation 13), and roads (infrastructure damnation 14); their (mis)management of customs acts (geopolitical damnation 28), trade embargoes (geopolitical damnation 29), and the TPP poison pills (geopolitical damnation 30); their taxation (regulatory damnation 33), tariffs (regulatory damnation 34), and health and safety (regulatory damnation 35); and their poor urbanization plans (societal damnation 43), utter lack of support for education (societal damnation 44), and their handling of workers’ rights legislation (societal damnation 48), their damning meddling is everywhere. (It’s more ubiquitous than the meddling of those meddling kids.)

But this is just the tip of the iceberg. In our damnation post we listed a few of the more focussed damnations that will cause you a never ending nightmare.

  • Budget Freeze
  • State of Emergency
  • New Legislation Outlawing your Product or Service
  • Criminal Charges against your Organization or Executives

1. Don’t Sell Governments More Than You Can Afford to Maintain in the Receivables Indefinitely.

There’s no guarantee of quick payment, or even late payment in the timeframe you are led to believe it will materialize in. Government might be good money, long term contracts, and guaranteed references, but they aren’t always the best customers if you need money now. Make sure you have a core business selling to the private sector that can sustain you through the dry times.

2. Don’t be slack in receivables recognition and collection

Insure all deliverables are received, acknowledged, and accepted on a timely basis. Make sure the invoice gets in the approved payment queue ASAP, and follow up the minute a payment date is missed. You don’t want multiple invoices in a queue during a budget freeze or budget shortfall. You want as few as possible, and you want them front of the queue as soon as the freeze is lifted.

3. Keep abreast of any proposed legislation that could impact your product

You want plenty of time to engage lobbyists if you can afford it, and if the product line is that profitable, or identify reformulations (or replacements) if the product is important, but not worth enough to engage lobbyists to try and alter the legislation appropriately (which may not be successful).

4. Make sure you have well documented policies and procedures in place … and all follow them.

Have a policy that failure to follow policies and procedures, especially those that are designed to protect the organization and stay on the right side of the law, will result in immediate discipline and possible dismissal. Also implement monitoring systems and processes to do your best to ensure that all individuals follow critical policies and procedures. The goal is that if someone breaks the law, it’s doing so in a way not supported or condoned by the company.

5. Make sure the board oversees the executive and reviews key financial reports and deals on a regular basis.

If one of your executives is engaging in shady business practices, you want to discover it and take action first. It’s often the difference between a slap on the wrist and a public hanging. (And don’t say you have nothing to worry about. It’s well known that the job that attracts the most psychopaths is that of the CEO, with the job that attracts the second most psychopaths being that of the lawyer who defends him.)

Key Questions When Selecting a Multi-Criteria Supplier Sustainability Monitoring Solution

In our last post on why Supply Risk Management Can Not Be Siloed, we noted that the average organization was not properly managing risk, and this was not only costing the organization time and money, but putting it at significant risk. We noted that there were a number of reasons for this — which included a lack of time, resources, and even immediacy — but the biggest reason was because there is a lack of cohesion in the fragmented risk management approach employed by many organizations. But we also noted that there was something the organization could do, namely, take a holistic approach to sustainable risk management.

In a holistic approach to sustainable risk management, risk management is centralized through a Centre of Excellence (CoE) that holistically manages risk for the entire organization. This CoE will put together policies and procedures that not only ensure that

  • every supplier is covered
  • on all relevant dimensions
  • but not on irrelevant dimensions
  • without any duplication of effort

but also ensures that

    • there are no false positives in the risk assessment and
    • there are no false negatives

Part of these procedures will include regular monitoring for risk and the regular re-examination of risk and sustainability of organizational suppliers and potential suppliers. And best practice will dictate that part of this monitoring and review will be automated by a multi-criteria supplier sustainability monitoring solution and supported by a provider that specializes in this type of platform as the monitoring will need to be maintained and adjusted as new data sources become available, old data sources go offline, and the depth of data changes over time.

But how do you select a good provider, and, most importantly, how do you select a good platform to meet your multi-criteria sustainability needs? The first thing you do is understand what makes a good platform and what the platform needs to do to take away your risk and sustainability management and your risk and sustainability monitoring pain.

To help you achieve this goal, the doctor recommends that you download Sourcing Innovation’s latest white paper on 5 Essential Criteria for Selecting a Supplier Sustainability & Risk Monitoring Solution, sponsored by Ecovadis, that will help you understand what a good sustainability and risk monitoring solution needs to do, not just what features or functions need to be in the brochure.

What is ARM, and why should I care?

Today’s guest post is from Peter Portanova, a Senior Project Analyst for Source One Management Services that specializes in the marketing spend category decision support for clients seeking to enhance their strategic marketing efforts and drive valuable agency relationships.

Relationships. Is there any institution more complex known to humanity? Whether between a group of people, or between a group of businesses, relationships are complex, messy, and often times, toxic. As businesses struggle to remain relevant in a volatile and fast-moving environment, the push to do more with less has never been so evident. In a well-circulated and often-rebuffed article from 2015 titled “Your Agency Hates You and You Don’t Even Know It“, the author attempts to identify the reasons relationships seem to fail (that is, if you are an agency and you are comfortable placing the majority of the blame on your client).

Consider the state of the marketing and advertising industry in 2015. Buzzwords like “Reviewmaggedon” and “Mediapalooza” dominated headlines, and the year ended with marketers parading through the streets when Pepsi decentralized their marketing procurement team. Fortunately, Pepsi’s decision does not indicate a trend, and an ANA survey to marketers reaffirms the value of procurement in the marketing process. To summarize the findings, many executives see value in procurements process, as long as it does not hinder the fluidity marketers require. However, the overarching question remains: How does procurement adapt their process to become more accepted by marketing stakeholders?

Enter, Agency Relationship Management, or ARM for short. Like Supplier Relationship Management (“SRM”) ARM works on the client’s behalf to ensure a fair and equitable relationship. There are many processes and services that fall under the umbrella of ARM, and procurement is well tooled to operate simply as a mediator, or as the manager of a full sourcing event. The ultimate goal of an ARM program is to enhance the relationship between a client and agency, and to ensure that expectations are clearly communicated and campaigns are integrated and executed seamlessly. Whether working with an internal team or an external third party, ARM programs ensure a best-in-class contract, and enable the client and agency to react swiftly when the market shifts.

“My relationship is great!” “My agency does everything for me!” “My agency does nothing!” “My agency is terrible!” Relationships between clients and agencies exist on a spectrum from love to hate, and require regular maintenance to remain viable. Consider a married couple in their “honeymoon phase,” believing all is well and that the relationship will last forever, or consider the alternate feelings of disappointment and anger. ARM exists as the marriage counselor during rough patches, OR as the open lines of communication and responsiveness when everyone is happy. Simply believing your relationship is successful now, and therefore does not require proactive measures can be detrimental over time, and may lead to the ultimate dissolution of the union (which is expensive, time consuming, and disruptive).

Aside from mediating and working as the communicator, ARM is hugely useful is evaluating current relationships, identifying future opportunities, ensuring competitive rates, and developing a scope of work that is fair and equitable. While relationship management might connote issues, the beauty of ARM is that is works to ensure issues seldom arise due preventative and proactive measures undertaken to ensure the constant delivery of value. Whether there is concern over scope, rates, or capabilities, the objectivity of a third-party outside of marketing works to alleviate to concerns. Furthermore, as noted by the ANA, having a separate business unit working on negotiations is hugely beneficial, and allows those engaging in tactical work to remain focused.

Always remember that relationships are mendable. Unless seriously damaged with fundamental issues, replacing an agency partnership should be a last resort. While there are certainly benefits in doing so, alternative solutions should be the first consideration. A full search is time and labor intensive, and hugely disruptive to current operations. Typically, issues can be resolved through the rotation of resources, or the assignment of new teams to provide additional benefits. Similar drawbacks exist for agencies, which are forced to dedicate additional resources, which may distract from the execution of tactical work. By having an ARM team and process in place, the process is far more manageable, and can begin with simply evaluating the relationship and identifying both positive and negative aspects. After such an evaluation, a process for resolution can be created, ranging in both complexity and extensiveness.

An internal department is a viable solution is for managing relationships, but additional benefit is available through the utilization of a third party. Market data concerning rates and contract terms allow for a greater advantage in negotiations, and flexibility in resources ensures clear communication leading to a rapid resolution. Whether establishing an internal department, or looking for a wholly-outsourced solution Source One’s expertise and experience are ready to assist you in the implementation of your ARM program.

Thanks, Peter.