Monthly Archives: March 2013

Don’t Take Late Payments Lying Down

As pointed out repeatedly by Pete Loughlin over on Purchasing Insight (and in this recent post on “social media the new weapon to combat late payment”) and SI (including this recent Blue Friday post), big customers are trying to push payment terms to ridiculous extremes and, frankly, hoping their suppliers will bend over and take it without any resistance. But just because it’s their fantasy, it doesn’t mean it should be your reality. You have to stand up for yourself and help bring this foolishness to an end.

How do you do it? A recent article over on CFO.com on what to do “when your big customer wants to pay late” had some great advice. Summarizing, and extending, it, we can see that you should:

  • Know Your Worth
    Chances are that you are providing a unique value and you should not be afraid to make it clear. And if it’s really unique, your customer doesn’t have (very m)any options besides you.
  • Understand the Relationship
    Has it been a long term relationship? A good relationship? Have you been paid on time regularly in the past? Have you been providing value over and above committed levels? If the relationship has been good, if you were contracted to provide a product but have also been providing free value-add consulting, if you were always paid on time for always delivering on time and maintained a good relationship, point that out.
  • Create Flexible Payment Strategies
    This doesn’t (necessarily) mean early payment discounts, but it could include such for (really) fast payments. Consider multiple (milestone-based) billings that the customer can digest over time, rather than one big bill at the end (within reason).
  • Avoid the Procrastinating Accounts Payable (AP) Department
    They are the boneheads that still believe extending DPO is a good thing (even though a recent Hackett study demonstrated that playing this game actually costs them an extra 10% in the end). Deal with Procurement and/or the buying organization who have a better chance of understanding that delaying payments unnecessarily only hurts everyone in the long run.
  • Suggest Financing
    where the customer enters into a relationship with a bank who pays you right away, at a small discount, and then the customer pays the bank on their schedule, for a fee. Done right, it’s better (for you) than an early payment discount as its an immediate payment.

and if all that doesn’t work, do what Pete suggests:

  • Name and Shame Them Publicly
    Be civil and respectful, but don’t be afraid to let the world know, in no uncertain terms, that they are either being deliberately cruel or incompetent.

SI likes Pete’s suggestion best, but agrees that you should try the more professional methods listed in the CFO article first. But if they don’t work …

Supply Chain Syllabi Suck – But Should You Be Designing One?

It’s an interesting question, and one I have to ask after coming across Adrian Gonzalez’ recent post over on Logistics Viewpoints on A Supply Chain Course Designed by You. While I agree that the average life of a supply chain text is two to three years where case studies are concerned (but not where core principles are concerned as some of the classics by Robert Rudzki and Dick Locke are still holding up eight and seventeen years later), I don’t necessarily agree that syllabi go out of date that fast, or that you are the best person to be designing one.

I also agree that trends do develop every day, that most traditional syllabi are about two decades out of date, and that an instructor should update the syllabus as required before every course delivery, but I’m not sure it should be based solely on student requests. While an instructor should attempt to address as many student questions as possible, they should be restricted to the subject matter of the course. More specifically, if the course is on sourcing and procurement technology, the instructor should not go off on a tangent on proper multi-tier supply network design, which should be a different course.

However, the real reasons that an instructor should not design an entirely student driven course are the following:

  1. Every student will likely have a different problem that he or she believes he or she needs addressed that is
  2. based on a different understanding of what proper supply management for (what) a proper supply chain (is) and
  3. that problem is not necessarily the root problem or representative of the core theory, and practical solutions, that need to be addressed.

If the student knew what she needed to learn, she would not be a student, she would, at the very least, be a mentor, if not a teacher herself. For those of you with a martial arts background, you would not be deshi, you would be yudansha or sensei yourselves. Because you have not gone before, you don’t know the way you need to go. That’s why you need a teacher, a guide, to show you the way and teach you the basics you need to know in a cohesive, relevant framework appropriate to the course. A well-designed course by an instructor who is trained in the theory and experienced in the practice will weave together the foundations with relevant examples in such a way that the student will learn to identify what the root problems are, what solutions might work, and what questions should be raised, and addressed by the instructor — who will have no problems weaving the answers in, on the fly, to the lectures at hand.

In other words, I don’t think the methodology proposed by Adrian is necessarily the right process for designing a course, but I do think it’s a great process for tweaking a course, and, more so, for determining what course(s) a student should be taking. In other words, an organization or institution offering Supply Management and Supply Chain training should, before allowing students to enrol in a course,

  • request that the students fill out a questionaire that outlines their key questions and topics of interest a month or so in advance,
  • analyze the responses and determine potential best fits between the students and the courses being considered, and
  • create pre-course discussion groups, facilitated by the likely instructor, a few weeks in advance and invite the students to participate in the group to gather consensus on key topics, issues, and questions that should be addressed — and figure out if the course is really for them.

Then the provider can let students register, knowing that there will be good fits, and the instructor can tweak the course to be as relevant as possible to the needs and interest of the students, using the most relevant case studies and focussing on the secondary topics of common interest once the core material has been covered.

Of course this is just the doctor‘s opinion (and his only real qualification for this argument is that he has been an Assistant Professor in Academia and an Industry Trainer), and it will be interesting to see the results if 30 (thirty) practitioners take Mr. Gonzalez up on his offer.

Some Decent Tactics for Working Capital Management Improvement

A recent white-paper by GT Nexus on “Holistic Supply Chain Management” had some decent tips for improving WCM (Working Capital Management) that, amazingly enough, didn’t focus on DPO extension at the expense of the struggling supplier. Because of this, SI is going to review some of the better tactics identified in the white-paper and recommend that you read it.

Remembering that the goal of working capital 101 is to improve the Cash Conversion Cycle (CCC), which is generally defined as DIO (Days Inventory Outstanding) + DSO (Days Sales Outstanding) – DPO (Days Payable Outstanding), there is more than one way to improve the CCC. You don’t have to increase DPO, you can decrease DIO or DSO.

Starting with DIO, the paper recommends to lower the amount of buffer stock needed to maintain customer service levels. While there is safety in safety stock, there is also cost in safety stock. Cost that is likely unnecessary when you consider that most companies have way more stock on hand then is needed when you add stock in transit, stock in production, and stock at other locations that could quickly be moved if necessary. As a result, a company needs less stock than it thinks it needs.

Moving on to DSO, the paper recommends to use a collaborative platform for shipment planning and execution. This allows the company to ensure that inventory doesn’t sit idle and is shipped as soon as sales come in and to make sure that the shipments reach the customer quickly to allow for faster invoicing, and subsequent payment.

It also has other recommendations to balance DIO and DSO, reduce COGS, and minimize errors, but the primary point is the important one — you don’t have to increase DPO to improve your CCC and WCM. Remember that.

Don’t Follow Me!

Get offa me!
Away from me!
Get me outa here!
Don’t follow me!
Don’t bother me!
I’m no leader.

What’s wrong with you?
I tweet a LOLCat.
Rant about DPO.
I get some news of the day.
I spit it out.
I spit it out.
I spit it out.
I spit it all over my blog page.

I’m not yours or anyone’s.
I don’t even own myself.
Why do you always judge me?
I just wanna be by myself.

Get offa me!
Away from me!
Get me outa here!
Don’t follow me!
Don’t bother me!
I’m no leader.

You don’t know me,
so don’t ping me.
I’m not here to validate your behavior.
You need to stop.
You need to stop.
You need to stop tweeting so fast.
(I’m not interested in anything you have to say)

I wish you would log off, go to a blog.
Read it from the page.
Learn it from a sage.
And take a second look.
Don’t ask me.
Don’t message me.
I want you to kill your stream.

Get offa me!
Away from me!
Get me outa here!
Don’t follow me!
Don’t bother me!
I’m no leader.

I can not be your leader.
I can not be your leader.
Stop followin’ me.
Stop followin’ me.
Stop followin’ me.
Stop followin’ me.

I send a tweet,
stop following me.
I share a link,
stop following me.
Get on the train,
stop following me.
I turn around,
you stop following me!


To the tune of Leader by the Punk Princess, Bif Naked, which is a Twitter anthem if I ever heard one 😉