Category Archives: rants

It Isn’t Always Strategic! Part I

There’s been a lot of debate about The Life and Death of Strategic Sourcing ever since Dalip Raheja claimed that Strategic Sourcing is Dead back in August (with numerous posts indexed at this link), and while most of it has been good, there’s been one major point missing in all of the debate to date:

Sourcing is NOT always Strategic!

That’s right! Sourcing is NOT always Strategic!

First of all, most of what you buy is not critical to operations.Consider all of the following which is bought by most businesses on the planet:

  • office supplies
  • office computing equipment
  • janitorial services
  • HR support
  • print material for marketing
  • electronic discovery for legal services
  • outsourced manufacturing for commodity products

Not Strategic!

  • office supplies

    who gives an albino rat’s behind who made your stapler and copier paper and where they came from

  • office computing equipment

    for 99% of companies out there, as long as it runs Microsoft Office and an internet browser, who made the machine is irrelevant

  • janitorial services

    it’s not too hard to wash a window, sweep a floor, or empty a trash basket

  • HR support

    there are at least six top-tier HR-support agencies out there whose services are essentially indistinguishable

  • print material for marketing

    any print shop that can print 8.5″ x 11″ brochures in 16M colours does the trick

  • electronic discovery for legal services

    there are a number of software packages out there that do exactly the same search on exactly the same file formats and thousands of monkeys who can use them

  • outsourced manufacturing for commodity products

    if you’re manufacturing office supplies, clone PCs, or children’s toys, there are hundreds of factories that can get the job done

Let’s look at the definitions of the word strategic:

  • Merriam-Webster: (a) a careful plan or method : a clever stratagem or (b) the art of devising or employing plans or stratagems toward a goal
  • Wikipedia: a word of military origin, refers to a plan of action designed to achieve a particular goal. In military usage strategy is distinct from tactics, which are concerned with the conduct of an engagement, while strategy is concerned with how different engagements are linked
  • Business Dictionary: Art and science of planning and marshalling resources for their most efficient and effective use

These say that strategy is

  • carefully thought out,
  • goal focussed,
  • efficient, and
  • distinct from its implementation, which is tactical.

Thus, if you simply jump to strategic sourcing techniques, you are not being strategic. If you’re not planning how to efficiently use all of the affected resources, you’re not being strategic. If you’re not thinking about why a certain plan of action is being considered, you’re not being strategic, and, most importantly, if what you are doing does not relate to a major business goal or objective, it’s not strategic.

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Don’t Forget the Time Zone!

You’d think that this would be obvious in the year 2010, but it’s ridiculous the number of companies that advertise on-line events, for which they are obviously seeking a global audience, and don’t include the time zone. Not only does most of the world NOT run on your timezone, but most of them don’t have a clue what time zone you’re in. And don’t give me that B.S. that “your customers know where we are”, because, if you have multiple offices, I guarantee that at least some don’t. And if you are doing it at a partner or customer office that is not in your head-office time zone, how are they supposed to even have a clue?

And learn what daylight standard time means. It’s amazing how many events I see for 11:00 EDT in December (not possible!) or EST in July in New York (again, not possible!). And don’t take the timezone shortcut and just use ET, CT, or PT. Remember, not all provinces and states (like Saskatchewan and Arizona) use daylight savings time, and the usual assumption is that if an abbreviation is used, you mean xDT in summer and xST in winter.

And if there is any possibility of confusion (and with timezones there usually is), spell the timezone out. BST can mean British Summer Time, Burma Standard Time, or Bangladesh Standard Time.

Don’t be a Dummy! Use the fully qualified timezone.

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A Most Favoured Nation’s Rant

Editor’s Note: Today’s post is from Dick Locke, Sourcing Innovation’s resident expert on International Sourcing and Procurement. (His previous guest posts are still archived.)

News yesterday:

U.S. Sues Michigan Blue Cross Over Pricing
(Source: New York times, Oct 19, 2010)

The US Department of Justice and the State of Michigan have sued Michigan Blue Cross over their practice of having a clause in their contracts requiring that hospitals never charge other insurance companies less than they charge Blue Cross. In some cases they allegedly required the hospitals to charge 25-39% more than they charged other insurance companies The plaintiffs charge this is anti-competitive behavior.

US purchasing shorthand calls such clauses ‘MFN’ (Most Favored Nation) clauses.

My response:

Well duh, it's about dxxx time! These clauses are a refuge of lazy-axx purchasers who rely on their competitors to do their price negotiations. The clauses I've run into also would require sellers to open their books to audit so buyers can actually check what a seller charges others. If that isn't anti-competitive, I don't know what is.

It's also futile and, in some cases, comical. I had a major client who wanted me to agree to such a clause. They were some of the most lackadaisical price negotiators I've seen. They had just asked me to become an employee of their temp agency (for the same consultant rate) because they didn't have a process to reliably send 1099 tax forms reporting my income to the US Internal Revenue Service. That raised their cost 20% and increased my profit by 7% because now they didn't have to pay the employer's share of Social Security and Medicare. I was waiting for them to ask for a 7% price reduction but the request never came. Sure I signed their agreement but I made sure that my services to them were 'different' than services to others.

So if anyone thinks you're accomplishing anything with these clauses, look again. If it's not a more or less standardly defined good or service, all you've done is increase bureaucracy. If it's a standard product, I agree with the plaintiffs that it's anti-competitive.

Thanks, Dick!

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Why So Few Tweets from the C-Suite?

A recent HBR blog post asked “why so few tweets from the C-suite”. Apparently the author, a “reputation strategist” at a public relations consultancy (no surprises here!), believes that all modern CEO should have a presence online and that the best way to accomplish this is to use modern social platforms, among which Twitter (again, PR person) is supposedly included.

Well, there’s an easy answer to this question, and since I’m such a nice guy, I’m going to give it to her:

Because, contrary to popular opinion, C-suite executives are not a bunch of twits.

Generally speaking, you do not get promoted to the C-suite if you’re an idiot. And most modern executives, who know that Twitter will make a twit out of you by causing you to lose basic writing skills, understand that they need every brain cell they have to survive in today’s modern economy. So while there is an argument for them to be blogging and communicating more with the public using modern tools, there’s never a good reason to use tools like Twitter, and thank whatever deity you believe in that some people still have the good sense to know this!