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What are Your Purchasing Goals for 2015?

The countdown to 2015 has begun. This is the time when people start talking about setting New Year’s resolutions; sometimes they follow and sometimes don’t. Sometimes the resolutions are a mix of personal and professional and other times the focus is on one or the other. Still others will invest a good amount of time creating separate goals for both personal and professional aspects. The principals apply to both, but we want to focus specifically on your professional purchasing goals. Here in this article, you will be able to get some realistic setting goals for the New Year.

Let us go through some of the tips for setting goals as a new year’s resolution:

1. Change of Behavior:
If you want to get a successful personal and professional life, then it is important to change your behavior. What small changes can you make in your daily behavior that will make a big difference in your interactions with coworkers, vendors and clients?

2. Organizing by planning:
Whether you prefer a paper planner or app on your phone or tablet, make sure you use it. Getting and staying organized will help you increase efficiency and productivity. You try to achieve that in the business so make sure you do that in your own professional life as well.

3. Regular communication with the workers:
There is often an invisible wall between the boss and the employee in the company. If you are the boss what can you do to stay in better communication with your employees? If you are the employee what can you do to improve communication with the boss? Communication is a two-way street and it takes hard work, but the extra effort can improve work relationships and lead to better collaboration and work performance.

4. Setting higher goals for success:
All the above-mentioned tips are setting goals by making small changes in your daily life but if you have a large goals to reach by the end of the year, then it will be necessary to give though and planning throughout the year. Don’t wait until mid-way to start thinking of your year-end goals. Take big goals and break them down by quarter, month, week, or even daily.

So take a little time as you prefer for the New Year to outline what you want to achieve in 2015.

December 30, 2014
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BY Bellwether
Watch Out for Purchasing & Procurement Fraud: A White Collar Crime

White collar crime is a term that refers to the passive behavior or rightly said as unlawful behavior committed by professionals in the field of both business and government or commonly know as white collar workers, hence the word for such type of crime is fairly well known as white collar crime. It is a kind of crime which might involve theft, violation of trust, purchasing and procurement fraud that occur when the white collar worker is employed in a particular company, where the crime is secretly taking place.

It is very alarming that this type of crime (white collar) is getting increasingly frequent in the workplace regardless of it being a small scale business or the huge one; any size business is vulnerable to purchasing and procurement fraud today. The higher the positions of the white collar workers, the higher and more complex the fraud of such type of unlawful actions are taking place in any business sector. Sadly, there are many cases of purchasing and procurement fraud that go undetected, where the crime and the white collar criminal get off with their crime very easy, without even getting noticed by anyone.

There has been increasing number of purchasing and procurement frauds cases in several recognizable companies over the past several years. No doubt, in recent times; there have been a lot of fraud cases which involved white collar crimes; one of the most talk about fraud cases was the case of 2104 of JP Morgan and his colleagues manipulating with the fixed rates and as well as trigger the clients for ‘stop loss’ orders.. Because of which British, US and Swiss have fined five global banks, which included Citibank, Royal Bank of Scotland, JPMorgan Chase Bank, UBS and HSBC Bank for attempting to manipulate the foreign exchange market. You can read the full story by visiting http://m.newser.com/story/198560/5-banks-fined-34b-for-market-manipulation.html

This case is one of the famous cases when it comes to fraud, where these white collar criminals are attempting to manipulate the foreign exchange market and getting to trigger a financial crisis. They had been doing it for a long time undetected, but in the end did get caught and now have to face the judges in court. They are many more cases of white collar crime in business of all sizes. Some are only discussed in the local news and others larger cases make national headlines. You don’t want this to be your business in the headlines one day. It is better to get a thorough check of your business bank account and details of our workers as well. Put safety precautions in place as much as possible so you don’t need to have to go through the purchasing and procurement fraud.

December 23, 2014
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BY Bellwether
The Household CPO – Chief Purchasing Officer

We discuss many different aspects of purchasing and procurement in this blog and thought it would be fun to take a slightly different approach today. The following infographic fromDigital Surgeons looks at the spending by women on fashion and media. It positions women in general as the household CPO, or Chief Purchasing Officer and examines how women spend their time and money. For all you women who hold the professional title of CPO, do you see yourself in this?

womenandfashioninfographic

December 18, 2014
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BY Bellwether
Purchasing Management – A Driving Force to Maximizing Profitability

ARTICLE REPRINTED

Purchasing Managers, purchasing agents and buyers are the life support system of your supply chain. I often use the phrase in leadership training; “You’re only as good as the people you surround yourself with.” That phrase also applies to one of the most critical functions in wholesale distribution, the Purchasing Manager. So what does being the life support systems to supply chain management mean? It means purchasing is the center of the universe, the equator, the fulcrum when it comes to meeting customer demands. This is a common fact. We all know it. Most of us say it and yet few of us really understand it. Even the US Department of Labor Bureau of Statistics supports it with reams of data on purchasing. However, the more important, often overlooked, misunderstood and underutilized concept is that Purchasing Managers in our industry are really the “Tendons and Muscles” that enhance profitability within the supply chain itself.

Most of us “Talk the Talk” and can quote supply chain gospel. In fact, deep down we really do believe that profitability in the industry is driven by the supply side of the equation. Yet, in reality, we may not really understand the true value, the contributions, the skill set required for success and how to recognize or leverage talent within our own organization for this critical piece of our overall success formula.

Supply Chain Management (SCM)

Understanding SCM is basic to understanding the necessary purchasing culture required to leverage our ability to maximize profitable growth. It begins with understanding your markets, your customer base and the future of the industry. It is critical that we understand SCM and how to create an effective purchasing culture that supports company strategic initiatives. This obviously includes maximizing profitable growth while maintaining world class service and customer satisfaction.

Keep in mind the fact that the supply chain will exist whether or not we have a competent, Superstar Purchasing Manager running the buy side of our profitability equation. (E-mail rick@ceostrategist.com for a copy of the article “Margin Management–Using the Supplier Profitability Ratio”) There are a number of academic definitions of SCM published today for reference. However, I believe the definition can be stated in these terms:

“Supply Chain Management is the coordination of partnerships between the manufacturer, importer, distributor and customer that results in maximizing growth, profitability and customer satisfaction.”

How Do We Create the Successful Purchasing Culture?

The Purchasing Manager must become the Driving Force. Sometimes the simplicity of the answer lies within the complexity of the question. Start by asking the following questions:

1.	How was the Purchasing Manager selected?

2.	What criteria were used in the selection process?

3.	What kind of qualifications beyond seniority was brought to the table?

4.	What kind of training did the Purchasing Manager receive after being promoted?

5.	Does training include leadership skill development, coaching, mentoring, negotiations, sales effectiveness and team building?

Keep in mind that the purchasing environment at many companies is strictly determined by size and revenue stream of the organization. In larger organizations there is a distinction between the duties of a Purchasing Manager, a Buyer and a Purchasing Agent. And in some cases we just employ order placers with little or no responsibility for growth and profitability.

Purchasing agents and buyers often focus on routine tasks and they may specialize in particular product lines or other groups of related commodities. The Purchasing Manager needs to focus on the strategic side of the business, tracking market trends, customer preferences, price trends, cost effectiveness and managing the supply chain. This includes evaluating and qualifying vendor partners, improved negotiations and the support of merchandising strategies. Critically important to creating a successful purchasing culture is their ability to coach, mentor and train their buyers on creating profitability, maximizing customer service and building relationship equity with their own sales force.

The Purchasing Management Superstar

Finding the right person to fill the critically important role of Purchasing Manager can become quite a challenge. Often times there is a tendency to simply rely on tenure, product experience and the compassionate, often misguided feelings of employee entitlement.

The Owner —–“We have grown to the point that Purchasing Management needs to become a strategic initiative. Let’s promote Old Joe, he’s been with us for twenty two years now and has been handling the commodity side of our business for the past fifteen years.”

The VP of Sales —- “But Joe doesn’t have any formal management training and some of our sales people think he’s a real pain! He’s doesn’t understand cost effectiveness and lacks creativity. Remember the major problem we had with our number one supplier.”

The Owner — “Hey, he’s been with me for twenty two years. He deserves a promotion. We can send him to a seminar on Time Management.”

Some of you readers may recognize that conversation however many may not recognize the fallacies that lie within it. In wholesale distribution, it seems that the primary prerequisite for becoming a Purchasing Manager is being a buyer for the company and having long tenure… Promoting our senior buyer to Purchasing Manager simply due to how long they have been with the company is a common mistake. This misconception is often based on the lack of understanding about the critical nature of the position and how it should contribute to the overall success of the organization.

Different Skill Sets

It is an undisputable fact that different skill sets are required to become a successful Purchasing Manager as compared to being a successful buyer. Purchasing is a profession that requires professionals. Managing a group of professionals with the type of personalities required to succeed sandwiched between the needs of the sales force, the needs of the vendor partners and the obligation to be cost effective, competitive in the market place and maximize growth and profitability is not an ordinary challenge. Yet, in my humble opinion, it is probably one of the most important management positions you can hold in a company. Purchasing Management holds the key to meeting company objectives. Effective Purchasing Management builds the platform for success.

Don’t cringe; Purchasing Managers need to have a sales personality before they can really understand the science of selling in the wholesale distribution industry. This is a prerequisite to building an effective, supportive purchasing organization that develops policy and procedure, creates a cost effective process, negotiates beyond the purchase price, develops a staff that understands the necessity of relationship equity with the internal sales force and embraces the concept of purchasing strategies that are in alignment with company strategy. This sales DNA will come in handy for the development of true partnerships with vendors and gain the respect of the company’s sales force.

Experience in the industry is critical and a college education is a foundation to build upon. The building blocks should include:

 

1 Leadership Skill Development

2  Mentoring & Coaching Skills

3  Sales Effectiveness Understanding

4  Purchasing Certifications (CPM, APP, CPP etc)

5  Organizational Skills

6 Scenario Planning

7 Strategic Thinking Skills

8 Time Management

9 Operational Analytical Skills

Super Star Characteristics

  • Highly Self Motivated
  • Optimistic
  • Excellent Leadership Skills
  • Skilled at Coaching & Mentoring
  • Calculated Risk Taker
  • Listens Well — 80% of the Time
  • Plans Well
  • Ability to Think Outside the Box Because They Know What Goes on Inside the Box
  • Excellent Communicator
  • Inspires Excellence in Others
  • Strong Social and Interpersonal Skills
  • Commands a Presence
  • Honesty
  • Integrity
  • Embraces Accountability for Self and Purchasing Personnel

Stop and Think

When the time comes for your company to create the position of Purchasing Manager or perhaps you realize it is time to redefine what purchasing management is all about — Stop and Think; or, as Lieutenant General Russell Honore so eloquently stated during the Katrina crisis, “Don’t Get Stuck on Stupid”. Think about the real value Purchasing Management should bring to the company. Think about leverage, profit opportunities, merchandising and product creativity. Think about, cost effectiveness, relationship equities and most importantly, think about the individual requirements necessary to maximize success. Purchasing Management should focus on maximizing profitable growth. We all look at sales first when it comes to growth and profitability. Don’t overlook the ability and responsibility to contribute to the primary reason we are all in the business. Remember, Purchasing Management must become the muscles and the tendons that maximize profitable growth.

*******************************

 http://www.ceostrategist.com Dr. Rick Johnson (rick@ceostrategist.com) is the founder of CEO Strategist LLC. an experienced based firm specializing in leadership and the creation of competitive advantage in wholesale distribution. CEO Strategist LLC. works in an advisory capacity with distributor executives in board representation, executive coaching, team coaching and education and training to make the changes necessary to create or maintain competitive advantage. You can contact them by calling 352-750-0868, or visithttp://www.ceostrategist.com for more information. CEO Strategist – experts in Strategic Leadership in Wholesale Distribution. Sign up for Rick’s monthly news letter – “The Howl” email rick@ceostrategist.com.

Article Source: http://EzineArticles.com/226929

December 16, 2014
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BY Bellwether
How to Assess Strategic Procurement Maturity, Part 2

ARTICLE REPRINTED

Continued from How to Assess Your Level of Strategic Procurement Maturity, Part 1

A strategic approach to IT procurement can help cut costs and improve efficiencies. The first step to taking a strategic approach to IT procurement strategy is assessing your current procurement maturity.

Strategic Procurement Part Two

Many enterprises have gained a strategic advantage by treating their procurement as a strategic function. Map out your procurement process and make sure it encompasses these best practices.

Strong procurement processes align purchasing decisions with corporate strategy, increase bargaining power with suppliers, and increase the value obtained from investments.

The key is determining when to put procurement through a detailed process. The dollar value of the purchase is always a strong indicator of strategic relevance. For example, ordering all of office supplies from one supplier at predetermined intervals can increase purchasing leverage. More obvious examples include replacing 50 CRT monitors with LCD monitors, purchasing 30 handheld devices, investing in a storage area network, or establishing a wireless local area network. To achieve maximum value from purchases such as these, a procurement protocol must be followed.

Best Practices

Add the following best practices to your current procurement procedures to minimize maverick spending, maximize operational efficiency, achieve substantial bargaining power with suppliers, and align purchasing decisions with corporate goals and objectives.

1.Establish the procurement goal.
oDefine the target consumer and the borders of the area impacted by the purchase as precisely as possible (i.e. dependencies on other projects, items and systems, the effects on business processes, etc.).

  • Determine whether the purchase is aligned with corporate goals and objectives. If the argument for the purchase cannot be justified along strategic lines, save yourself a lot of work by aborting the purchase and turning your focus toward more strategically relevant procurements.
  • Interview stakeholders and analyze their stakes in the procurement. 
  • Analyze costs and benefits.

2.Define procurement requirements. The most important part of the procurement process is planning out the details of the purchase. Keeping in mind that even good plans are susceptible to change, it is essential to ensure thorough version management of the goal and plan during the whole process. The list of requirements demands completion of the following activities:

  • Determine scenarios for receiving the product or service from the supplier.
  • Analyze the risks involved in the purchase. 
  • Plan the procurement within a risk management framework. 
  • Identify the main decision points, including timelines, type of supplier, type of tendering, flexibility of contracts, and project requirements.

3.Tender the offer. The objective of tendering is to select a supplier, and agree with a chosen supplier on a contract that defines deliverables and the responsibilities of both parties. The following activities are required to complete this step:

  • Evaluating the previous performance of suppliers (if the information is available).
  • Preparing a request for proposal (RFP). 
  • Evaluating the suppliers’ response proposals. 
  • Selecting the supplier that best meets the strategic needs of the organization. 
  • Preparing a supplier contract for the delivery of products or services.

4.Monitor supplier deliverables. This step aims to monitor the procurement objective as defined in the contract, i.e. to ensure that the deliverables conform to the requirements. Therefore, a defined number of contract status reports should be prepared during the project. The purpose of these reports is to minimize the risk of unfulfilled contract obligations, and to build a performance knowledge base of the supplier.

5.Complete the procurement. This task ensures that all outstanding issues regarding the procurement have been concluded to your satisfaction. Activities to perform include:

  • Ensure all contracts are completed.
  • Assess the achievement of the procurement goal. 
  • Evaluate the results for future procurements, including supplier quality and areas to improve the procurement process.

In Summary

A strong procurement strategy aligns purchasing decisions with corporate strategy, increases bargaining power with suppliers, and boosts the value obtained from investments. In order to develop your procurement function, focus on processes and people.

Article Source: http://EzineArticles.com/4085000

December 11, 2014
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BY Bellwether
How to Assess Your Level of Strategic Procurement Maturity, Part 1

ARTICLE REPRINTED

A Dynamic Field

Procurement’s increasing importance is being driven by two economic changes:
•Increasing competitive pressures are forcing companies to look at procurement as a means of helping boost the bottom line. CEOs are looking for areas to cut costs, and streamlining procurement processes is a viable solution.
•A lot of companies are doing more outsourcing. This makes procurement decisions increasingly important to business vitality.

There are numerous ways an effective procurement strategy improves performance, including:
•Eliminating maverick spending.
•Streamlining operations.
•Improving supplier relationships.
•Increasing bargaining power with suppliers.
•Strengthening supplier relationships.
•Aligning purchasing decisions with corporate goals and objectives.

How Mature Are You?

Measuring an organization’s procurement maturity involves assessing how close it is to achieving each of the aforementioned results. There are four levels of maturity: novice, intermediate, advanced, and expert. There is no relationship between company size and procurement maturity. Companies of all sizes are at various stages in the development of their procurement functions.

Maturity Assessment Guide

1.Evaluate maverick spending in the IT department. Talk to supervisors and find out if unauthorized purchases are being made. If so, what kind of purchases? You may be shocked by the number of purchases occurring outside of formal procurement protocols. On the other hand, with no protocol in place, expect excessive amounts of maverick spending. Procurement maturity is typically characterized by the following levels of maverick spending:

  • Level 1: Significant maverick spending.
  • Level 2: Minimal maverick spending. 
  • Level 3: Virtually no maverick spending. 
  • Level 4: No maverick spending.

2.Examine your procurement processes and procedures. Find your written set of procedures detailing the procurement processes for your company. If there is no documentation, does your company follow repeatable procedures? Or does each purchase result in an ad-hoc patchwork of steps? Procurement maturity is typically characterized by the following levels of procurement procedures:

  • Level 1: No processes or procedures. 
  • Level 2: Processes and procedures exist, but are not documented. 
  • Level 3: Processes and procedures are documented and implemented. 
  • Level 4: Major procurement decisions are determined by a multi-function team.

3.Evaluate your relationship with suppliers. Look beyond your internal procurement processes and focus on how well you know your suppliers. Typically, the more information you have about the people you do business with, the better the relationship. With no purchase information on hand, you cannot develop a partnership with suppliers and service providers. With proper information, you can evaluate and rank suppliers.
Your procurement maturity level relates to your supplier relationships as follows:

  • Level 1: No purchase information on record; need to ask suppliers for it.
  • Level 2: Use supplier information to evaluate price, quality, and delivery. 
  • Level 3: Rank suppliers and develop strong relationships with select suppliers. 
  • Level 4: A supplier’s percentage of business correlates with performance ranking.

4.Assess your bargaining power. Information also provides you with purchasing leverage. To what degree do you leverage information about suppliers to increase spending power? Do you coordinate purchases to increase leverage? Does your company possess strong negotiating skills? Your procurement maturity level is characterized by your ability to leverage spending power:
oLevel 1: Company spending power is not leveraged.
oLevel 2: Major purchases are negotiated and coordinated to increase leverage.
oLevel 3: All purchases are coordinated and leveraged.
oLevel 4: Supplier’s cost-reduction ideas are brought to your company first.

5.Determine procurement’s strategic alignment. Experienced buyers understand the overall corporate strategy and the procurement strategy. How many of your buying decisions are viewed as strategic decisions? Do you have a strategic plan in place? Procurement’s strategic alignment relates to maturity as follows:

  • Level 1: No strategic plan governing procurement.
  • Level 2: Although no strategic plan exists, purchases are strategically relevant. 
  • Level 3: Virtually all purchases are aligned with corporate strategy. 
  • Level 4: Perfect alignment with company goals and objectives.

6.Evaluate your buying experience. Do your buyers receive training? Do they understand the strategic relevance of buying decisions? Do they know how to apply cost accounting to a negotiation? For example, do they know the difference between direct and indirect costs, as well as overhead? Your procurement maturity level with respect to buying experience is characterized as follows:

  • Level 1: Limited buying experience; no training.
  • Level 2: Buyer training program is in place. 
  • Level 3 & 4: Buyers understand strategic buying and the importance of cost.

 

Article Source: http://EzineArticles.com/4085000

December 9, 2014
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BY Bellwether
Purchasing Managers Working to Gain Favor with Upper Management

ProcureCon TV screens exclusive interviews with Europe’s leading procurement professionals. They go behind the scenes at major industry events to bring the very latest news, views and insight from the procurement sector.

Nick Brazier, Chief Procurement Officer at the corporate investment bank BNP Paribas talks some of the challenges he faced and what he did to suprass them. One of the greatest challenges he faced was gaining board-level buy-in for new strategies. When the focus is on profit often times strategies that would have long-term savings are harder to get upper level management on board because it affects profits today. See what Mr. Brazier did in his situation and consider how you can do something similar when trying to win favor with upper management.

December 4, 2014
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BY Bellwether
Online Resource for Purchasing Managers

Concept of learning

Do you have a favorite resource online for getting news and information about the purchasing industry? There are quite a few reputable organizations and publications available, but we wanted to highlight one today called Supply Management: The purchasing and supply website.

The http://www.cips.org/ publishes the latest news, views and analysis for those working in the procurement profession through the Supply Managment website. You’ll want to bookmark this and visit daily or subscribe to receive emails. Every day you can find news, opinions and exlclusive content with a global audience. Much of news is focused in the UK and Europe, but the discussions and lessons that can be learned would apply to purchasing professionals anywhere. They even have their own dedicated job website listing 100s of vacancies all over the world.

Some of the features on the site include:

News: published daily, this gives a broad look at things affecting purchasing and supply chain around the world including, weather, war, management changes, and just about anything you can think of that would be newsworthy.

Blog: “Quick fire topical postings on purchasing and supply chain issues from independent expert commentators and the Supply Management editorial team”

Law: This category narrows the news topic to that consisting of a legal nature. This includes news about bribes, white collar crimes, legal battles between companies and governments, legal battles between companies, and so on.

Analysis: Articles from professionals in the industry or their editorial team giving their opinions and insight into industry challenges and news.

Resources: Webinars, How To Guides, Q&As, Knowledge zone, and case studies make these a great way to expand your personal skills.

Careers: Monthly articles with career tips published in association with London Metropolitan University.

December 2, 2014
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BY Bellwether

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