The Strategic Sourceror

The Supplier Stall Game

2009-07-09T15:50:00.001-04:00

As a consultant that helps companies reduce their cost of goods, I find that many suppliers try to avoid me. That’s understandable – some of consultants out there don’t do what they say or say what they do, or even try to consider the suppliers requirements/business needs. Most suppliers have war stories about bad experiences with these types of consultants. I like to think that my company is an exception to that “bad consultant” rule, and feedback I get from suppliers at the end of an...

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Fireworks or Workers Fired

2009-07-07T09:33:00.005-04:00

That was the mentality of the mayor of Lowell, Massachusetts, who cancelled the city’s fireworks display as a result of an $18 million budget gap and 48 layoffs this year. The New York Times explained that the city’s show would have cost about $45,000, equivalent to one full-time job. “If we hadn’t cut off the fireworks, we would have had to lay off 49,” said Bernard Lynch, Lowell’s city manager. Lowell had a lot of company this year as many cities and communities struggled to find room for...

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Payment Terms and Supply Chain Risk

2009-07-06T09:48:00.002-04:00

I was somewhat surprised over the last few quarters as buyers went to their supply base, normally at the request of the Finance Department, to extend standard payment terms from 30 days to 60 days. I was even more surprised at how quickly that request changed from 60 to 90, and eventually 120. So what comes after 120? Frequently, a Chapter 11 filing. But Chapter 11 isn’t always an issue limited to the customer – in a lot of cases, the supplier that accepts these terms will be filing as...

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Changes in attitude, Changes In Latitude

2009-06-30T14:54:00.000-04:00

Studies show that the job=career equation is no longer a sound proposition. Most workers will change jobs numerous times in their life; as often as every seven to ten years on the average. For procurement professionals, that rule of thumb will mean retraining, retooling and often relocation. For as long as most of us can remember, those facts meant new companies, new processes, new tools and often new home towns. Add, new cultures, new countries and new continents to that list. Perhaps...

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Some Food for Thought

2009-06-29T09:20:00.005-04:00

It’s better to be safe than sorry. That is at least the mindset of the Chairman of the U.S. House of Representatives Energy and Commerce Committee, Henry Waxman (D-California), and his sidekick, John Dingell (D-Michigan). These two individuals are currently at the forefront of The Food Safety Enhancement Act of 2009. The purpose of this legislation is to establish a more efficient food safety plan and enforce safety standards in all food production facilities. The efforts associated with...

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Space-Based Solar Power Plant – Wait…What?

2009-06-26T14:00:00.004-04:00

I’ll bet you never thought you would hear the word “space” and “solar power” in the same context! You read it right folks, the May 2009 issue of Electrical Wholesaling mentioned that PG&E, California’s utility, has worked out a deal for the world’s first space-based solar power plant. What sounds even more sci-fi is just how they plan to harvest solar power in space and be able to use it on earth. Solar panels in the earth’s orbit will convert power to radio frequency to transmit to Fresno...

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2009 Supply & Demand Chain Executive 100

2009-06-26T08:10:00.003-04:00

Yesterday, Supply and Demand Chain Executive magazine announced their eighth annual "Supply and Demand Chain Executive 100". This annual listing identifies the top innovative supply and demand chain vendors. This year the magazine focused the criteria for its "100" feature on economic recovery. Source One (the sponsor of this blog) is proud to have been listed for the fourth consecutive year. Read about it: Source One Awarded Supply & Demand Chain 100 in 2009.Brought to you by the The...

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20,000 New Jobs in Government Procurement

2009-06-24T08:57:00.004-04:00

According to an article published by the Federal Times, the Defense Department has introduced a new bill with the goal of testing new procurement approaches and evaluating acquisition positions within the Department of Defense. The bill will mandate that new procurement approaches must be taken as a trial for up to 10 information technology projects per year. Specifically, they are attempting to streamline the existing processes that have been labeled "too long and cumbersome" by the Defense...

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What to do in the event of a fire (sale)

2009-06-22T11:27:00.000-04:00

While no one likes to admit it, many companies are living “on the margin” these days. For those firms, a few crucial decisions can make the difference in survival. Too often, it comes to the dreaded Chapter 11, for the big companies. But for smaller firms, the time, money and resources necessary for a filing are all luxuries they can’t pile on top of necessary expenses. The truth is, unlike GM, some organizations are simply “too poor for bankruptcy”. Maybe Saab can work the system, pay...

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Shifting Paradigms at Points of Inflection

2009-06-19T15:16:00.002-04:00

In differential calculus, an inflection point refers to the place on a line at which the direction of the line’s curvature shifts. I hated calculus, but the term applies well to certain business situations. The concept was first presented to me by University of Scranton management professor Len Tischler during a lecture on business policy and strategy. The idea is that every so often within a given industry, events occur (technological advances, process innovations, political policies, economic...

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Getting End-User Buy-In – A Critical Step in the Process

2009-06-18T14:36:00.000-04:00

End-user feedback is crucial in any strategic sourcing initiative. Their buy-in and commitment to the process can either make or break a project. Suppliers want to see a willingness to change, or at least make sure the customer does not intend to maintain the status quo, before they will get aggressive on price (or in some cases, even place a bid). The level of participation and engagement from the end-users will determine how the incumbent responds to the sourcing event, as well as how...

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What's That Behind Your Ear? Savings!

2009-06-17T13:52:00.000-04:00

Creative solutions do not need to be complex to be effective. When it comes time to sign your next telecommunications contract, you may have all the tools you need to achieve significant savings already sitting in your toolbox. And you may not know it. We are always looking at emerging technologies to better streamline and optimize our telecommunications, but new does not always mean appropriate nor does it mean that one time costs associated with a technology change will be within budget....

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It's a User Issue

2009-06-16T11:05:00.001-04:00

Ariba’s May 2009 White Paper-“Next Generation Spend Analysis” invests heavily in examining the limitations of inexplicit data, and the paralysis by analysis factor as major reasons why spend analysis “fails” to deliver the desired result. This issue stand alongside the why SAAS (software as a service) isn’t producing the ROI that so many SAAS suppliers pitch. It amazes me, though that sourcing experts still focus on the data and the tools as the reason clients never realize the expected ROI...

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For Polypropylene Purchasers Pondering Propylene Price Increases

2009-06-15T15:43:00.002-04:00

As the focus of a recent sourcing engagement, I have been working to help a client diversify his polypropylene supply base while driving cost savings. Considering the client’s stringent requirements for efficient, reliable delivery and a resilient “run on any machine, at any time, under the supervision of any technician” film, many foreign suppliers were off the table from the get-go. As a result, we ended up working with several brokers to identify domestic suppliers that could provide local...

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Buy American Update: Canucks Strike Back. Steelers Fight Amongst Themselves

2009-06-10T07:41:00.001-04:00

As things have continued to heat up with the “Buy American” legislation situation, a few more notable developments have occurred. According to an article published Monday in American Metal Market, Canadian municipalities took steps to encourage retaliation while constituents of the US steel industry feuded over the provisions’ clarity. After meeting last weekend to vote affirmatively on measures that will encourage retaliatory actions, the AMM article suggests that a “full-scale attack on the...

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3 Unique Offerings to Cut Costs Without Reducing Headcount

2009-06-09T08:23:00.006-04:00

For many of us Procurement Service Providers, inbound calls & interest in our services have been up significantly these last few months. In this economy, companies of all sizes are looking for ways to maintain or increase their profitability, but just don't know where to get started. In response, Source One put together a quick summary of 3 unique ways it can help any size company to reduce costs and increase profits. Read: "Businesses Can Cut Costs Without Reducing Headcount" to learn...

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The Role of a Strategic Sourcing Professional – No Sacred Cows Allowed

2009-06-08T11:39:00.001-04:00

In my last post, “Strategic Sourcing – A Reality Check”, I wrote about the limited role strategic sourcing plays in many organizations. Ultimately, an effective strategic sourcing professional will shift their organization in the right direction, but it’s not easy. The spend areas with the biggest savings opportunities also tend to be the least visible (think banking, legal, marketing). In addition, end users managing categories that did not traditionally fall under “procurement” control are...

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The price of inefficiency

2009-06-05T11:06:00.001-04:00

A sentence taken from an article in the Wall Street Journal: "GM made twice as many vehicles as Chrysler's 1.5 million last year and employs 235,000 people compared with Chrysler's 54,000." No, it’s not a misprint. And it’s the Journal, not Fox news. Let me restate that for the purpose of comparison; GM’s 235,000 employees made 3,000,000 cars. Chrysler’s 54,000 employees made 1,500,000 cars. In HR terms, the average GM employee (granted this includes many non-production employees) produced...

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“Buy American” Update: The Rest of the World and the NY Times Agree with Canada

2009-06-03T16:02:00.003-04:00

Apparently the staff of The NY Times subscribes to The Canadian Press too. Or, as I’d like to believe, they read The Strategic Sourceror religiously. Either way, I opened to page A26 this morning to see some nice follow up coverage on the “Buy American” situation. The editorial touched on some of the information we already knew, but also brought to light three other concerns my original blog-post and our friends in Canada did not take into consideration. Do American-Made Alternatives...

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Canucks: Buy American….Eh?

2009-06-02T15:08:00.002-04:00

As a part of much of the recent stimulus legislation, many US lawmakers have added “Buy American” clauses to ensure that the American economy reaps the intended benefits of government investments, cash injections, subsidies, and tax breaks. These clauses basically stipulate that, in order for companies to take advantage of the benefits from a given piece of legislation, they must purchase a specific amount (percentage) of supplies, services, and labor from American-based companies. According to...

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Strategic Sourcing – A Reality Check

2009-06-02T13:58:00.003-04:00

In recent months, I have read many posts on this blog and others about the role strategic sourcing plays within an organization. I have even read some posts that indicate that the “tool” known as strategic sourcing is becoming a thing of the past, and that the strategic sourcing professional needs to evolve into the “relationship manager”. All this talk of change and evolution makes me scratch my head, because most of the companies I deal with - large and small - still don’t practice true...

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“We’re the Government; we always get the best deals”

2009-06-02T07:58:00.001-04:00

But not from NetApp . . . . Information Technology Product supplier Network Appliances Inc. agreed to repay the Government $128 million dollars for overcharging GSA employees on IT purchases. Thankfully Government watchdogs chased our misspent tax dollars down, right? Well, not exactly. A former employee of NetApp blew the whistle on NetApp disclosing to the Government that while GSA employees received a 20% discount, firms such as Citigroup received discounts of 50% and higher. The whistle...

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The Government doesn’t trust Government data

2009-06-01T08:08:00.004-04:00

The Government doesn’t trust Government data Federal Times.com reports that Government contracting officers rarely use Government data on contractors’ past performance because they don’t think the information is reliable. The contracting officers’ consensus, as reported to the GAO (Government Accountability Office) was that past performance data is the most reliable predictive data for future performance, but they lack confidence in the Government’s PPIRS (Past Performance Information...

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Capital Stimulus Just Isn’t Cutting it...Yet

2009-05-27T17:06:00.002-04:00

In a recent entry about 2009 Tax Incentives I relayed some interesting tax stimulus information and urged managers to examine the opportunity and decide if the incentive was enough to persuade them to make a capital investment. In this week’s issue of BusinessWeek, the “Numbers” section certainly suggests one of two things. Either companies are taking a “wait and see” approach, or the stimulus just isn’t enough. According to the “Numbers”, capital spending in the private sector dropped at an...

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Keep your Friends Far, Far, Away (Unless They Have Good Credit)

2009-05-27T10:22:00.002-04:00

An article in the June 1st edition of Business Week titled “What’s a Friend Worth?” provides insight into behind-the-scenes research going on within the largest social networking sites on the web. The goal of the research is to get as many people as possible to click on ads that show up on a webpage. The basic premise of this particular set of studies is that people with similar interests or bonds, (Friends on Facebook, Colleagues on LinkedIn, Followers on Tumbler/Twitter/Blogger) will click on...

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