July 1, 2009 | Link This | Email this | Comments (0)

I know that in some circles it is popular to make public pronouncements about the degree to which a company plans to reduce its supply base. For example: "Company X announced today that it plans to reduce its supply base from 30,000 active suppliers to 5,000 within the next 18 months."

I’ve always wondered what the executive was trying to accomplish by making such a pronouncement. Perhaps it is part of the same logic as announcing internal layoff targets—trying to signify seriousness and suggest a degree of cost reduction. 

But the problem is that simply reducing the number of suppliers doesn’t guarantee good results. The appropriate number of suppliers—in a category ...Read More

June 26, 2009 | Link This | Email this | Comments (0)

I won’t tell you the particular graph that caused her to laugh, but go visit the site yourself. You’ll undoubtedly find something worth sharing with your spouse or colleagues.

June 23, 2009 | Link This | Email this | Comments (0)

When we work with clients on designing and executing a procurement transformation plan, one aspect (of many) typically involves analyzing current payment terms and making recommendations for changes (and how to approach suppliers). 

One classic error companies can make is to take a very arrogant approach, literally “dictating” that their supply base accept a new, aggressive payment term. 

The latest example of taking that approach appears to be AB InBEV, the large global brewer. News stories both in the U.S. and in Europe report that AB InBev has changed payment terms from 30 days to 120 days (in one fell swoop). To say that this has generated controversy and ill will is an understatement.

Sources tell me that this highly-ag...Read More

June 19, 2009 | Link This | Email this | Comments (0)

Assuming you are serious about your profession, and interested in advancing your skills and ultimately your career or responsibilities, my recommendation is straightforward: 

• Don’t ignore the warning signs. As indicated in my last posting, failure to invest in people is a leading indicator of future serious issues at a company. 
• In the near term, pay for it yourself. The “cost” of falling behind far exceeds the “savings” from deferring your professional development. Don’t make the same mistake your current employer is making. Invest in yourself—it’s the one investment tha

June 16, 2009 | Link This | Email this | Comments (2)

Let’s do the math on this decision. 

• Annual dues for ISM vary by affiliate, but average about $200 per person per year
• Assume the member attends 5 dinner meetings at $25 per event = $125 per person per year
• Potential corporate cost savings per procurement employee per year = $325 

In terms of the total “investment” that a company makes in its human resources, $325 per person per year is a pittance. To put this in perspective: a new PC alone can run a few thousand dollars per employee every two to three years. 

Wha...Read More