[linkedinbadge URL="http://www.linkedin.com/company/3025810?trk=NUS_CMPY_TWIT" connections="on" mode="inline" liname="American Purchasing Society"]

 

Robert Menard,  Certified Purchasing Professional, Certified Professional Purchasing Consultant, Certified Green Purchasing Professional, Certified Professional Purchasing Manager

Robert Menard,
Certified Purchasing Professional,
Certified Professional Purchasing Consultant, Certified Green Purchasing Professional, Certified Professional Purchasing Manager

No matter one’s politics, when the subject of President Obama and business appears in one headline, it stimulates curiosity and provokes investigation.  Such was the case with the Washington Post story entitled “Obama pushes faster payments for small businesses with help of Apple, IBM, FedEx” authored by J. D. Harrison  originally published on 11 July and subsequently syndicated nationally. 

Since payment to suppliers is a perennial source of argument and consternation in the Procure-to-Pay (P2P), sometimes called Source-to-Settle (S2S) universe , running this thunderbolt to ground was mandatory.   

The story reveals a White Hose initiative called “SupplierPay”, an initiative intended to encourage large businesses to pay their suppliers more promptly.  Among the 26 corporations endorsing this initiative are Apple, IBM, Coca-Cola, FedEx, Honda, CVS and Walgreens.  These and other larger companies have agreed to pay suppliers more quickly and assist suppliers in securing less-expensive financing. 

White House officials cited that small suppliers on average wait about two months to get paid for goods and services and those wait times, according to the Wall Street Journal , are growing.  “For the larger companies, joining SupplierPay demonstrates recognition that a healthy supply chain is good for business,” the White House. The statement continued, “For small firms selling to those corporations, it will translate into “more capital to invest in new opportunities, new equipment, and new hiring”.

SupplierPay is modeled after a similar White House initiative called QuickPay that requires federal departments to hasten speed to small-business contractors, ideally within 15 days. The White House blog  claims that the savings for small contractors has exceeded $1 billion in the three years of QuickPay’s existence.

The Post story cited one firm that serves as both a prime contractor to the federal government and as a subcontractor to other larger firms.  It may wait 75 to 90 days for payment as a sub but only two weeks for direct payment from the government on its prime contracts.

What does this mean for the purchasing community?The P2P conundrum is not new.  As long as three decades ago, the P-Card  family of solutions brought on a tectonic shift in the P2P world.  Abusive payment practices victimizing small businesses are legend in some industries, particularly construction and some of the manufacturing sector.The enlightened larger companies signing on to SupplierPay are engaging in good business practices.  Supplier Development  is the collaboration between large customer and smaller supplier wherein the larger company assists the smaller to grow and prosper.  Consider it a form of partnering.

It is well worth the effort to invest in supplier development.  Perhaps the best starting point with a high performing, low Total Cost of Ownership supplier is prompt payment.

 

 

 

Robert Menard,  Certified Purchasing Professional, Certified Professional Purchasing Consultant, Certified Green Purchasing Professional, Certified Professional Purchasing Manager
Robert Menard,
Certified Purchasing Professional,
Certified Professional Purchasing Consultant, Certified Green Purchasing Professional, Certified Professional Purchasing Manager

 

Last October, a blog post concerning hybrid and all-electric cars cited troubles Tesla Motors was having with its all electric $100,000+ luxury sedans.  According to Tesla’s site, the mile range on a full charge is only 265 and a full charge requires one hour and twelve minute.  Given rarity and dispersion of charging stations, and the high price of the Tesla vehicles, all of these serious impediments are a threat to sales growth.  Add to this the inanity of Carbon Offsets and Tesla vehicles have steep figurative and literal hills to climb.Meanwhile, Texas governor Rick Perry has been crisscrossing the country in a very successful recruiting campaign to have large and small companies relocate from high cost, high regulation, and business unfriendly states (particularly NY and CA).  The crown jewel of this effort is Toyota which is leaving California for the business Mecca of Plano, TX in the Dallas/Ft. Worth metroplex.   Another automotive company being wooed by Texas officials is Tesla.  It wants to build a $5 billion dollar, 6,500 job, 10 million square feet battery factory and it scrutinizing a variety of locations in four states, AZ, NM, NV and TX.  Two reported Texas locations are Dallas and San Antonio.  A drawback for Texas is that it prohibits direct car sales to customers – the state insists on a dealer network, unlike Tesla’s home state of CA.  

 

The importance of a lithium-ion battery plant was underscored in a statement by Elon Musk, the iconic business genius, founder, and CEO of Tesla.  He wants to reduce the price of the basic $70,000 Model S by at least 30% by vastly increasing the supply and availability of batteries.  Batteries are the most expensive component of the all-electric car.  Although all-electric cars constitute less than 1% of the automobile market, Musk and Tesla have Texas sized plans.  The goal is to drive sales from 22,400 units in 2013 to more than 500,000 in the next few years. 

An appeal to TCO  

You may have noticed the ads for Kyocera pitched by Professor Peter Morisi in his bow tie.  The slant is lowest Total Cost of Ownership.  The automobile sales business has embraced this concept.  All of the major car buying wesites, Kelly Blue Book, Edmunds, Consumer Reports  and others are promoting the TCO concept.  So is Tesla. 

This landing page on Tesla’s site purports to calculate TCO for a Tesla using a fairly sophisticated formula.  About the only important factor it does not take into account is the wasted energy lost in transmission and associated waste due to low voltages of the chargers.  Currently, and ironically, the electric vehicles create more greenhouse gasses  than they save, but that may change as more renewable sources of electricity come on line.

Robert Menard,  Certified Purchasing Professional, Certified Professional Purchasing Consultant, Certified Green Purchasing Professional, Certified Professional Purchasing Manager

Robert Menard,
Certified Purchasing Professional,
Certified Professional Purchasing Consultant, Certified Green Purchasing Professional, Certified Professional Purchasing Manager

Editor’s Note:  this is the second of a two part series on the near future of solar generated electricity in Texas, a state famously known for its oil and gas energy.  This Part deals with applications while Part One  looks at the landscape, quite literally.

The geography problem

With solar generation farms located in western Texas and population centers located in eastern Texas, the obvious problem is how to deliver electricity from origin to consummation points.  It happens, rather happily, that the Texas terrain suitable for solar is also suitable for wind generation.  In 2013, the Competitive Renewable Energy Zone (CREZ), a legislative creation of the Public Utilities Commission of Texas (PUCT) authorized and funded seven transmission and distribution utilities to build $7 billion worth of high-voltage transmissions lines that will eventually transmit about 18,500 megawatts (enough for 370,000 residences) of wind power from western Texas and the Panhandle to highly populated more eastern and central metropolitan areas of the state.

ERCOT believes that these new transmission lines can handle the upcoming solar load as well because most wind is generated at night and solar is an obvious day time phenomenon.  Solar is also far more reliable a renewable source than is wind. See the illustration below which appeared in the Houston Chronicle.

Sunny skies do not extend to the Texas residential sector

Geographic distances and associated losses in voltage drop and waste heat do not apply to residential solar power where panels are mounted directly on home rooftops so energy loss in transmission is nil.  Yet, the residential market remains clouded.

Prairie PowerElectric retailers in Texas like TXU and Reliant are aggressively marketing their leased roof top panels to residential customers.  The cash outlay of customers is much less than an outright purchase but the return is proportionally reduced.  Other companies try to sell them by offering much higher returns and sales of excess electricity back to the grid.  According to Reliant president Elizabeth Killinger, “It’s not my expectation that half of Texas customers will go solar overnight.  We think this is the beginning.”  Let’s hope she is right.

Meanwhile, back east in New Jersey…

An embarrassing attempt to place a solar farm on the site of an abandoned landfill has proven to be disastrous.  ENR  reported in its 30 June 2014 edition that an unreleased and delayed New Jersey Dept. of Environmental Protection (NJDEP) report may show that landfill materials have contaminated water in local streams.  NJDEP states that the report, when released, will not show any significant and/or lasting damage to the watershed from the landfill.  HUH?

The NJDEP press director did admit that the effort to put a solar farm on the landfill had gone horribly wrong.  Nevertheless, most similar projects in NJ to put solar farms on brownfield sites have been successful, according to ENR.

So what went wrong?

Accusations are being tossed around.  The contractor on the failed Fenimore landfill in Roxbury, NJ project has been removed by NJDEP.  Litigation has predictably followed.  One principal of the contractor has previous convictions for bribery of a public official.

God bless Texas.

 

Robert Menard,  Certified Purchasing Professional, Certified Professional Purchasing Consultant, Certified Green Purchasing Professional, Certified Professional Purchasing Manager

Robert Menard,
Certified Purchasing Professional,
Certified Professional Purchasing Consultant, Certified Green Purchasing Professional, Certified Professional Purchasing Manager

Editor’s Note:  this is the first of a two part series on the near future of solar generated electricity in Texas, a state famously known for its oil and gas energy.  This Part deals with the landscape, quite literally, while Part Two looks at applications.

As any proud Texan knows, we do things here in a big way.  Alaska likes to brag about it’s size, but we have more residents in the City of Dallas than the Alaskans have in their entire state.  DFW airport is so large, that JFK in New York, ORD in Chicago, and LAX in Los Angeles fit inside its footprint, with plenty of land left for natural gas wells that yield millions in revenue per year.  God bless Texas! 

So why is the leading state in oil and gas energy production looking at the solar alternative?  Because it is Texas and we believe in free enterprise.  Texas has led the country in job generation during the Obama recession and it will soon surpass California as greatest green energy producing state in the Union.

Solar power generation on an industrial scale has been limited to sites in California, particularly the Mojave Desert.  The Ivanpah Dry Lake Solar Electric Generating System  is one example.  The southwestern Texas regions have vast stretches of land that resemble the Mohave in terms of geology and meteorology.  The generally flat terrain, usually cloudless skies, and abundant sunshine throughout the year make thousands of square miles suitable for solar energy generation.  Especially for urban dwellers, if you have ever enjoyed the good fortune of driving through the desolation of the Mojave or the 300 miles emptiness of I-10 from El Paso to Midland, or for that matter 100 to 200 miles north or south of I-10 in SW Texas, you were doubtless stunned by the beauty, serenity, and ennui of the land that rolled away under your wheels.  Nevertheless, this barren and inhospitable landscape is ideal for solar power creation.

Plans for Texas solar are as big as the Lone Star State 

Solar (Photovoltaic) technology is advancing rapidly on a global basis, especially where the heavy and inept hand of government does not tamper with the market.  Greater choice and lower prices always proceed from free markets.  Texas is soon to announce its solar presence to the energy consuming world.

Already, a solar firm that exceeds thrice the size of any existing plant is underway in the Lone Star State.  What is more, lucrative subsidies that drive solar development in states other than Texas.  Jams Osborne, Energy Reporter for the Dallas Morning News  wrote in a 05 June 2014 story that almost 400 megawatts of capacity are under construction, permitted, or proposed through 2106.  Osborne attributes a quote to Arno Harris, CEO of Recurrent Energy, based in San Francisco, CA as saying, “It’s really just economics.  The solar industry has driven prices down to where solar can compete.”  Harris cited a 60 to 70 percent drop in the cost of solar generated electricity, mostly attributable to advancing technology and global competition.

Osborne claims that Texas accounts for almost the lowest per-capita solar power usage in the US, a statistic that will soon change.  Recurrent plans to build a 150-megawatt solar farm in western Texas.  First Solar  based in Tempe, AZ, has begun construction of a 22-megawatt farm near Stockton.  Expansion plans call for a 150-megawatt ultimate build out.  By way of magnitude, one megawatt can serve an average of 200 residential properties. 

Fort Bliss solar farm

Fort Bliss solar farm

Counting isolated rooftop solar panels and a 39-megawatt facility operation in San Antonio, Texas currently has less than 220-megawatts of solar power.  Almost 350-megawatts of solar are set to be built and operational by 2016, over a 150% increase in just two years.  Another 2,000-megawatts in solar farm applications have been filed with the Electric Reliability Council of Texas (ERCOT).

Even the US army is getting into solar power.  In 2013, Fort Bliss hired El Paso Electric to build a $120 million  plant and will sell the power generated by the plant to Fort Bliss at a set price. The 20 MW solar farm will provide about 14 percent of the base’s energy needs.

Click here to learn much more about Texas solar from the Solar Energy Industries Association.

 

Editor’s Note:  This is the Fourth in a six part series on how to succeed in the purchasing profession.  Part One  explores the overall view.  Part Two explains the legal requirements.  Part Three  focuses on negotiation, communication, and interpersonal skills.  Part Four plumbs the general business knowledge needed to excel, lead, manage and advance into executive management.  Part Five (link) and Part Six (link)

Robert Menard,  Certified Purchasing Professional, Certified Professional Purchasing Consultant, Certified Green Purchasing Professional, Certified Professional Purchasing Manager

Robert Menard
Certified Purchasing Professional,
Certified Professional Purchasing Consultant, Certified Green Purchasing Professional, Certified Professional Purchasing Manager

To advance throughout your purchasing profession, we must constantly develop, grow, learn, experiment, invest, and constantly learn.  In many ways, this is the as axiomatic as the old chestnut, “Everything I need for life I learned in kindergarten.”   To rise to the top, we need ample portions of leadership and management.Leadership is to the “What” as management is to the “How”.  Successful purchasing pros have stocked tool chests in both disciplines.  Leaders “see”; managers “do” and both excel.  It is rare that good leaders are good managers so here are a few tips on combining and nurturing our potential.

Leadership skills are mandatory for a buyer or a Chief Purchasing Officer.  These skills include the ability to”

  • Identify an implement a purchasing strategies
  • Challenge the assumptions of main stakeholders – Rumsfeld’s Rules is an excellent read on this
  • Define priorities in order of rank within the business plan

Management is almost by definition, an operational function as compared to leadership but just as essential.  Without expert management, leadership will always fail.  Managers must have:

  • Business acumen  this is accumulated through experience, education and training with emphasis on economics, law, global affairs, foreign trade, etc.  Additionally, mastery of principles like lean, Six sigma, P-Cards, and other initiatives must constantly be developed and new ones learned.
  • People Attitude       This is a tricky skill for procurement pros because we are left brained creatures by nature.  We favor processes over people as opposed to sales pros who are generally right brained.  Get training in communication and interpersonal skills
  • Focus on the problem not the people.  This is always good advice but more essential for left brained process types.
  • Critical thinking skills        Perhaps the best guide here is an essay by Francis Bacon called “Of Studies”.

Motivation is an elusive quality but it within all of us.  We might be tempted to think of some shiftless kid as unmotivated but put a baseball in his hand and he inspires the entire team.  We must find our own sources of motivation and that of our subordinates.  Purchasing is not a clerical function.  Demonstrate your value to end-users and they see you as that kid with the baseball.   

Mistakes are essential to success.  Sam Walton, Walt Disney, Steve Jobs and others all tasted the bitterness of mistakes and failures.  We learn from them.  Encourage boldness in others and the spirit of taking calculated risks.  Counsel yourself and others when mistakes are made.  Not only will the mistakes become fewer, but the learned wisdom spawns more good decisions.

Commitment to lifelong learning is where some pros fall short.  I constantly find myself in new endeavors; study is required.  If you are not in the learning mode, opportunities may pass you by without you ever noticing.

Entrepreneurial spirit will always serve you well.  You are a leader, not a mere bureaucrat.  Critical thinking skills will complement an entrepreneurial attitude.

Creative solutions is a skill that should be second nature to you.  Lifelong learners tend to be creative as part of their psyche.  Over used terms for creative solutions are “thinking outside the box” or “paradigm shifts”.

Consider your career to be parallel to that of a military officer.  You will always be in the position of being a superior and subordinate, the classic “servant/leader” role.  You need heaping helpings of leadership and management skills to succeed.

 

 

Robert Menard,  Certified Purchasing Professional, Certified Professional Purchasing Consultant, Certified Green Purchasing Professional, Certified Professional Purchasing Manager

Robert Menard
Certified Purchasing Professional,
Certified Professional Purchasing Consultant, Certified Green Purchasing Professional, Certified Professional Purchasing Manager

The online course, “How to $ave Thousands Buying Buy a New or Used Car”, has been expanded and republished to meet the demand from the car buying public.  In a larger sense, this online course solves the request for a knowledgeable and workable solution to perhaps the most predominant purchasing problem in America – that of how to buy a car!   

You will find practical advice along with personal anecdotes that punctuate the buying experience, and scores of pointers on what to do, what not to do, what to expect, and what you need to understand about the car buying world.

It is available here  for $77.  Use Coupon Code VOMRPDAL for a 25% discount.

Course Summary: 

A practical instruction guide for buyers packed with how-to advice and tips, background and explanations to save money when buying a new or used car.

Course Description: 

Most of us overpay when we buy a new or used car. How can we not?  All the sellers do every day, all day, is sell new and used cars. How often do we buy a new or used car, once every five to ten years?  That is economic lambs to the slaughter.

Instead of hiring someone to buy a car for you, or worse yet, charging off on your own to do battle with seasoned sales pros, learn how to buy a car like a pro and keep the savings in your pocket.  This course does exactly that.

new carIt teaches how to save hundreds, maybe thousands, of dollars when you buy a new or used car.  You will learn

  • the best places to find information about the car you want
  • how to determine which vehicle is best for you
  • if new or used is the best choice for you
  • how to negotiate with the dealer
  • how much to pay for a used car
  • how your credit affects finance costs
  • how to improve your credit
  • how to create a budget whether you buy a Maserati or a Mazda
  • essential laws about titles (without the title, you do not own it)
  • the “test drive” sales strategy
  • how to calculate resale value
  • how pricing methods may mislead you and how to avoid being deceived
  • the different ways to finance the car
  • about leasing compared with buying
  • how to factor in mileage and gas prices
  • what you need to know about trading in your old vehicle
  • about certified cars and service agreements.
  • how to manage the used car salesman and his manager
  • tips on negotiation
  • information resources
  • mistakes to avoid

Although this online course was written by a Certified Purchasing Professional (CPP), and Certified Professional Purchasing Manager CPPM), it is not aimed at the purchasing pro.  Ironically, purchasing pros would benefit by this course since they are not routinely engaged in this personal pursuit.

Watch a 41 second video by Robert Menard on the How to Buy a New or Used Car online course.

Praise for this course

“This course is a must! I learned so much and realize the many mistakes I’ve made in the past on a personal level when leasing/buying a car; but not anymore.”  Susan Pace-Burke, CPP, AVP/Procurement Manager, New York Community Bancorp, Inc.

Robert Menard,  Certified Purchasing Professional, Certified Professional Purchasing Consultant, Certified Green Purchasing Professional, Certified Professional Purchasing Manager

Robert Menard
Certified Purchasing Professional,
Certified Professional Purchasing Consultant, Certified Green Purchasing Professional, Certified Professional Purchasing Manager

Editor’s Note:  This is the Third in a six part series on how to succeed in the purchasing profession.  Part One  explores the overall view.  Part Two explains the legal requirements.   Part Three (link) focuses on negotiation, communication, and interpersonal skills.  Part Four plumbs the general business knowledge needed to excel, lead, and advance into executive management.  Part Five (link) and Part Six (link) 

The single most important skill in business, let alone purchasing and sales, is negotiation.  In over two decades of training involving many thousands of supply chain pros, it is far and away the greatest skill demanded.  In late late 1990s, I undertook authoring the first book on negotiation ever written by a purchasing pro.  It took another five years to get it to print.  Until that time, every other negotiation book had been written by lawyers, sales pros, or academics – little of which was of applicable value to the practicing procurement professional.You’re the Buyer – You Negotiate  first published in 2004 was the first to address negotiation from the buyer’s perspective.  Ironically, sellers who are interested in learning about buyer behavior, constitute a great part of the readership.  In more recent years, the online version  has become a far greater seller.  the online alternative affords the work-a-day purchasing pros the convenience of their own schedule and a more economical choice compared to live instructor led seminars.Communication is the stage upon which the negotiation drama is played out so mastery of communication skills is a co-requisite of negotiation skills excellence.   Study by online courses  or live seminars   is mandatory.

Your supporting cast of skills must include personal integrity, basic morality, sound character, and basic interpersonal communication and behavior abilities.  Your suppliers will contribute in greater measure to mutual negotiation success is they find you trustworthy and reliable.  Honesty is a big part of trust so purge any temptation to deceive.  In the long run, it is the surest path to failure. 

Helpful blog posts on negotiation:

There is so much to say about negotiation skills.  Due to its importance, negotiation is the leading topic on my blog.  Here are some but feel free to search on many topics – you are bound to find it addressed here!    

Boeing’s Unions Continuing Failure to Embrace Negotiation

Multiple posts on Labor Negotiations at Volvo’s NRV Truck Plant

http://purchasingnegotiationtraining.com/negotiation/negotiations-at-appomattox-part-four/

Click here for Bob's book and CDs

Click here for Bob’s book and CDs on negotiation

Two posts on construction negotiation

Multiple posts on negotiation as a life skill

Foreign negotiation

Power in negotiation

Multiple posts on negotiation tactics

Multiple posts on listening and speaking skills in negotiation

Email negotiation

Body Language

Multiple posts on Communication Deficit Order

Robert Menard,  Certified Purchasing Professional, Certified Professional Purchasing Consultant, Certified Green Purchasing Professional, Certified Professional Purchasing Manager

Robert Menard
Certified Purchasing Professional,
Certified Professional Purchasing Consultant, Certified Green Purchasing Professional, Certified Professional Purchasing Manager

Editor’s Note:  This is the second in a six part series on how to succeed in the purchasing profession.  Part One  explores the overall view.  Part Two explains the legal requirements.  Part Three (link) focuses on negotiation, communication, and interpersonal skills.  Part Four (link) plumbs the general business knowledge needed to excel, lead, and advance into executive management.  Part Five (link) explores the character traits and Part Six wraps up loose ends.(link)

With some exceptions, work-a-day purchasing pros are surprised to learn that knowledge of the law is a requirement of their job.  They are yet more surprised to learn that ethical behavior in purchase and sale transactions is the law.  This legal requirement stems mostly from the Uniform Commercial Code  (UCC), the governing authority for the purchase and sale of goods throughout nearly all of the United States.

For those who would like a short and entertaining quiz on purchasing law, click here

Purchasing Manager's Desk Book of Purchasing Law

Purchasing Manager’s Desk Book of Purchasing Law

A great and essential addition to any professional buyer’s library is The Purchasing Manager’s Desk Book of Purchasing Law (Prentice Hall).  I commend you to a thorough study of this exhaustive tome that covers our profession’s legal landscape.  Among many other topics, it identifies the seven duties of an agent.  In short these are, loyalty, obedience, reasonable care, account (to the principal), inform (the principal), confidence, and necessary education, skills, & training.

Note the last duty, that of bringing the necessary education, skills, & training to the agency.  What is so stunning about this (aside from the fact that most buyers are ignorant all seven) duty is the wide-spread, almost universal lack of purchasing education and training.  In research for my first book, You’re the Buyer – You Negotiate It, I discovered that the average sales person receives more education & training in the first year than the average purchasing receives in a career!

Much has changed in the past 25 years in terms of recognition of purchasing as the most efficient profit center in business but ours is a work in progress.  Most influentially, the supply chain in general, and purchasing in particular is increasingly recognized as the single most efficient generator of profitability in all of business .  As purchasing increasingly seeks or is thrust into the forefront of business, professional buyers cease to become functionaries.  As leaders, it is incumbent on us to be conversant with a menu of competencies and purchasing law is high on the list.

Noted above is the requirement imposed by the UCC for ethical conduct in the purchase and sale of goods.  I contend that ethical behavior extends to the purchase and sale of services too, whether inscribed in statute or required by good business practice.

For a quiz on legal conduct, ethical behavior, contract law, please click here.

Legal Vs EthicalTo conceptualize the difference between legal and ethical behavior, picture the politician in handcuffs mugging for the camera that, “I did nothing wrong”.  He probably means illegal but that is always in doubt.  I might cynically question if he did anything right but the better question is, “Did you violate any law or ethics?”  Illegal action cannot be ethical, by definition.  As the graphic show, legal conduct is the lowest form of ethics.  Ethics is a cut above, a higher standard. If we do not scrupulously observe the demarcation between ethical and illegal, we fall into the land mine.

There is so much more to learn about law.  In the interests of time and space, here are links to blog posts on the following topics.

Buyer/Seller Authority and types of purchasing authority in agency law

Oral Contracts

Reciprocity   

Negotiation and the law   

 

Robert Menard,  Certified Purchasing Professional, Certified Professional Purchasing Consultant, Certified Green Purchasing Professional, Certified Professional Purchasing Manager

Robert Menard
Certified Purchasing Professional,
Certified Professional Purchasing Consultant, Certified Green Purchasing Professional, Certified Professional Purchasing Manager

Steve Coscia  is a professional colleague and good friend in the speaking and training business.  He and I share a common background and experiences that has helped to grow and nurture our relationship over most of a decade.  Accordingly, we trust each other’s’ counsel.

Steve is an expert in Customer Service (C/S)  and Customer Relationship Management (CRM),  who has chosen to specialize in the Heating, Ventilating, and Air Conditioning (HVAC) industry  but any other construction industry in particular and most other businesses in general would benefit from Steve’s services.

How does C/S and CRM relate to purchasing?

In the same way that purchasing and sales are two sides of the same coin, CRM and Supplier Relationship Management (SRM)  are two sides of another coin in the same currency.

CRM and SRM are not the same thing but at their core, they have the same principle.  That is, to improve and strengthen the relationship between buyer and seller.  The sales world may have the ulterior motive of increasing sales and profitability and bravo that!  Viva capitalism.

From the SRM side, we also share interest in improving sales and profitability. The fundamental difference is that the supply side is more interested in reducing the Total Cost of Ownership (TCO).

C/S: Image and Reality

In the Business to Consumer (B2C)  world, consumers have been accustomed to little to no customer service.  Individual retail customers are largely intimidated by large bureaucratic business organizations.

Anyone who has ever dared to dent the C/S armor of business giants knows the frustration of C/S delivered via L/S, lip service.  The business model of B2C dictates the downgrade of C/S to L/S.  That is, the business tends to have very many customers for relatively few dollars per transaction.  It is possible to alienate small customers with negligible impact.

I cover this very topic in my book, You’re the Buyer – You Negotiate It  when I point out that one must never accept a “no” from a person who cannot say “yes”.  It can be as easy as asking for a supervisor or qualifying the C/S person before proceeding and wasting time.  Ask the C/S person about the extent of their ability to solve your problem of “X” dollars or “Y” conditions.

Many C/S organizations purposefully make the first line incapable of saying yes.  They act as a roadblock to the chiseler customers who want to pump up the problem in order to extort an unwarranted concession.  Recognize this possibility and move past the person if they have no authority.  This tactic is akin to the low skilled “Higher Authority” used so frequently.

Steve Coscia writes, speaks and consults about customer service

Steve Coscia writes, speaks and consults about customer service

In the Business to Business (B2B)  realm however, no company can ever afford to be as cavalier with their customers.  The business model here is relatively few customers for relatively many dollars per exchange.  It should be obvious that no customer can be alienated, save for the rare exception when the customer must be fired.

 

Contact Steve Steve Coscia is certainly the most gifted advocate in customer service; he enjoys a peerless reputation amongst his clientele.  One piece of advice epitomizes Steve’s approach to B2B C/S/.  When the customer calls with a problem, that is your new top priority.   Steve may be reached at 610.853.9836 or steve@cosciacommunications.com.   His CDs and videos are available on his site.

Robert Menard,  Certified Purchasing Professional, Certified Professional Purchasing Consultant, Certified Green Purchasing Professional, Certified Professional Purchasing Manager

Robert Menard
Certified Purchasing Professional,
Certified Professional Purchasing Consultant, Certified Green Purchasing Professional, Certified Professional Purchasing Manager

Editor’s Note:  This is the first in a six part series on how to succeed in the purchasing profession.  Part One explores the overall view.  Part Two explains the legal requirements.  Part Three  focuses on negotiation, communication, and interpersonal skills.  Part Four (link) plumbs the general business knowledge needed to excel, lead, and advance into executive management.  Part Five (link) explores the character traits and Part Six wraps up lose ends.(link)

Over the course of many years of training , consulting, writing, speaking and practicing in the purchasing profession, I have observed many oddities.  One of the most curious is the path that many folks have trodden to arrive at purchasing.

In some companies, including the unsophisticated to global operators, virtually everyone has purchasing authority; therefore, there is no maverick spend.  This sounds unbelievable, but it is true.  In others, accounts payable and inventory clerks, even volunteers are appointed to the purchasing department.  I used to joke in my public seminar days of the 1990s that most of us were promoted to purchasing because we succeeded at something else.  Expressed differently, “Your reward for prior success was a sentence to purchasing.”

Organizations that neglect purchasing’s contribution to profitability are bound and condemned to mediocrity or failure as they lack basic understanding of the enormous contribution (indeed, the largest single component) to profitability exercised by professional purchasing.  No more needs be said about this crowd.

Successful businesses are careful to select the best talent 

Top purchasing talent comprises a variety of traits.  When helping clients to select high level personnel, my interview follows the second round of HR screening.  My interests center on leadership, integrity, education, and training.  Accomplishments are a function of and depend upon these qualities.

Good management skills are necessary but not sufficient.  Being able to skillfully turn the same cranks is important.  Knowing where to look for new cranks is more important.

Top level purchasing personnel must be more than technocrats.  Mastery of the tools of the profession is again, necessary but not sufficient.  In general, purchasing pros tend to be left brained, logical, scientific, and more rational than emotional in decision making.  Call these process skills.  Those are good but they must be supplemented by the people skills of communication, personality management, even body language.  We all deal with other people.  Sales pros, which tend to be right brained, have excellent people skills.

The union of people and process skills is the single most essential quality for purchasing talent.  The epitome of people and process skills is one’s mastery of negotiation . If you are not superb at negotiation, your other efforts will always fall short.  We’ll address this vital requirement in more detail in Part Three (link)

How do you become the best talent, at any level of the purchasing profession? 

The answers are a matter of degree, not kind.  We must have a hunger for knowledge, a passion for excellence, and an unshakeable belief in hard work.  Advocates of this trite but true adage almost always rise to the top, not via bestowal of others, but by dint of your own force and presence.  Whether you are a junior buyer or Chief Purchasing Officer, it matters if you accept new assignments, volunteer for challenges, and demonstrate devotion to duty and profession.

So far, this is all about what to do.  Plenty of folks will tell you that.  Very few can or will tell you how.  Part Two (link) begins that examination with legal requirements.