Purchasing and Negotiation Training

Robert Menard, Certified Purchasing Professional, Certified Professional Purchasing Consultant

Editor’s note: this is the second of eight chapter previews of the new workbook and manual, Green Purchasing and Sustainability, that will be available to order in July 2011.  To see all chapter previews, click here.

 Ohm’s Law

The basis of electricity for engineers and physicists   

We can’t see electricity so we don’t understand it, even though we use it constantly.  It is easier to view electricity by comparing it to a more familiar and equivalent system, water.  

Here are simplified basics that make electricity more user-friendly. 

Ohm’s Law E = IR                   where

E is voltage, I is current, and R is resistance of a system  

To compare an electrical system and a water system 

• Voltage (Electromotive force) is equivalent to the pressure driving water and is measured by Volts
• Amperage (current or electron flow) is equivalent to the flow of the water and is measured by Amps or amperes 
• Resistance Conductor size and material (copper, aluminum, etc) resist electron flow just as pipe size and material (concrete, plastic, etc) does in a water system.  It is measured in Ohms. 

back cover, Green Purchasing and Sustainability

An interesting development proceeds from Ohm’s Law that will help you understand the tangible relationship amongst voltage, amperage, and resistance.  In a simplified system, power is equal to voltage multiplied by amperage. That is, E x I = Watts. 

Applying Ohm’s law to a 120 W light bulb attached to a 120 volt (house) circuit shows amperage draw of 1 Amp. 

• E x I  = Watts       
• Substituting , E @ 120 V and Watts @ 120 and solving for I
• I = 120/120 = 1 Amp

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Robert Menard, Certified Purchasing Professional, Certified Professional Purchasing Consultant

Editor’s note: this is the first of eight chapter previews of the new workbook and manual, Green Purchasing and Sustainability, that will be available to order in July 2011.  To see all chapter previews, click here.  

The economics of business drives green purchasing to achieve cost savings such as energy reduction and conservation, Reuse/Reduce/Recycle (3R) programs, construction, facilities, and chemical management while political factors like diversity, environment, and governmental concerns drive the CSR aspects.  Economics is very much under purchasing’s control and skill set while CSR is far less so but green purchasing must be informed and conversant in both.  CSR issues are already forcing major organizations such as Wal-Mart, Proctor & Gamble, Home Depot and many other multi-billion dollar business giants to adopt sustainability as a corporate goal.  Even such giants cannot achieve their sustainability goals on their own; they must count the gains of their suppliers throughout the supply chain.  Therefore, it arrives at purchasing’s door to drive sustainability throughout the supply chain to meet the demands of customers, prospective work force, and society at large.  The old adage of “fore warned is fore armed” applies.

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back cover, Green Purchasing and Sustainability

The five main areas of sustainability

• Energy   Electricity, motor, and power
• 3Rs        Reduce/Reuse/Recycle
• Construction and Facilities
• Chemical/Environmental Management
• CSR       Corporate Social Responsibility

Green purchasing practices dominate the first four and provide the fodder and funds for CSR.  For example, the Limited retail chain boasts huge CSR contributions, almost all of which are bankrolled from the cost savings of green purchasing in the other four categories.  

Some things we must know  

When viewed through the lens of commerce, sustainability is not a matter what to do.  Society is screaming for it, including those who are not exactly sure what sustainability really is.  The big question to answer is how to do it.  That is the essence of this manual.  Apropos, there will be great amounts of science, engineering, and green purchasing practice required to become a sustainable operation.  Accordingly, we need to know about many disciplines that might be beyond our skill and knowledge.  Professionals constantly invest in continuing education.  We will need to investigate some arcane areas of knowledge if we are to become sustainable.  The good news as we shall soon see is that green purchasing saves money.

Robert Menard, Certified Purchasing Professional, Certified Professional Purchasing Consultant

These individual endorsements are all from practicing purchasing and supply chain professionals.  Here is what they have to say about the importance of this workbook and manual, Green Purchasing and Sustainability which will be available to order in July 2011. 

Nick Little, Asst Dir, Executive Development, Eli Broad Graduate School of Management, Michigan State University  “Sustainability is critical to business success both now and in the future.  This book impressively compiles both the “what” and the “how to” into an indispensable guide that brings together academic concepts and tactical solutions in this emerging arena.”

Gerry Dempsey, Director, Materials Logistics at Vector Aerospace, former Director – Procurement & Contracts at Vancouver Organizing Committee for the 2010 Olympic and Paralympic Winter Games  “ “Robert’s cost savings expertise will serve you well.  He shows clearly, forcefully, and undeniably that sustainability is all about saving money, reducing consumption, and thus costs.  His chapter on construction will help any growing business.  This book brings huge ROI to a huge gain to the bottom line.”

George Parson, Purchasing Manager at Tutor-Saliba Corporation  “This book drives home the practical value of  gong green in the face of  a skeptical audience.  Bob Menard has written the definitive work on sustainability that serves the entire purchasing profession.”

Lori Averso, CPP, Director Operations at Aeropostale  “The only resource you’ll need to gather enormous cost savings and sustainability gains.”

Matthew D. Blondin, MBA. Director of Supply Chain and Materiel Management, Aerojet, Redmond, WA  “Going green” means many different things to many people. For years Robert has been inspiring our profession as to “creating Green” for our companies’ bottom line. We share the view that Supply Chain is a profit center. I’m thrilled he continues to challenge us to utilize our talents in connecting sustainability with our procurement and logistics organizations. It’s time to stop talking about it and start doing it ! For the supply chain pro this book is a must read and a call to action – driving profits into our organizations at overall lower costs – both on and off the balance sheet.”

 Mary E. Walker, MBA, CISM, A.P.P., CPP, CPPM, CISCM. CIPTC, CIPM, DTM,  former Inventory Manager, Buyer, Hagemeyer North America  “This book will take its place among beside the very few giants published about the purchasing profession.  Even the most complex and seemingly unrelated ideas are translated to practical, useful, and always money saving results”

Shawn M. Scheffler, Strategy Manager–Instructor Development / H&R Block and former Program Manager, American Management Association  “Robert is a veteran pro at designing instructional content.  He takes complex and mysterious problems down to street level where solutions are applied.  This book is his latest masterpiece”

Michael Colvin, Consultant at Resources Global Professionals, former Director, Procurement at Dell Perot Systems  “The chapter on energy is jam packed with charts and calculations that provides the know-how necessary to prove sustainability.  The physics and engineering is presented in a user friendly form that can be applied in any professional workplace.” 

Nicholas Teklu, Six Sigma Black Belt, CPP, CPPM, CISM   “As a Six Sigma Black Belt, CPP, CPPM and CISM, cost savings and waste avoidance is of greatest interest. He has done a masterful job in crafting a sustainable plan that is a template for any business.” 

Tony Hinds, Sr. Director, Supply Chain Management at El Centro Medial Center, former Corp. Director at Baylor Health Care System and VP Strategic Sourcing at Parkland Hospital  “This singular combination of skills, experience, and knowledge has created this authoritative manual that serves the entire purchasing profession.  Menard has blazed the path to lead the sustainability and green purchasing revolution.” 

Steve Hague, Supplier Services Manager, Citizens Financial Group.  “Bob brings his expert knowledge of Purchasing and Negotiation to this area of untapped profit potential.  If your responsibilities include Purchasing or Facilities Management, get this book now!  It’s full of practical and easily understandable advice and tips on how to save money and contribute to the new Green revolution!”

Gary Beaudreau, Sr., Director, Supply Chain Management, Xcellerex, Inc., formerly Global Indirect Sourcing Leader at GE  “This book helps every organization to save money and go green in the process.  No other work goes to such great lengths to connect sustainability with procurement.  For every supply chain pro, this is the ultimate musts read and apply.”

Nate Brown, Buyer at Bio-Rad Laboratories, formerly Operations Officer at US Army  “This thoroughly researched reference manual shows how to create a bona fide sustainability initiative through green purchasing.  Robert’s systematic process eliminates greenwashing and drives sustainability while cutting cost and overhead.  This is not a quick fix solution but an iterative process that produces incontrovertible sustainability gains.”

Scott Heilman, Materials Manager at Sinclar, formerly Inventory Data Analyst-Supply Chain Consultant at Logic PD  “Menard is a proven expert in the purchasing profession.  This manual is his latest contribution to business leadership.”  

Ann Unsworth, Senior Buyer, Qualex, Inc  “This is a must read for every business pro; these pages contain the wisdom and know how that can be applied to advance sustainability and earn huge savings in the process.” 

Jim Gomes, CPSM and PMP, former VP Administration at ISM Dallas  “This book is exactly what the purchasing profession needs to convert good intentions into sustainable gains and attendant cost savings”

Mike Wilberg, Retail Business Analyst at Johns Manville  “Every chapter is filled with tips, advice, techniques, and provable methodology to bring your sustainability program to and advanced level.”

Carol Ford, Contract Specialist at U.S. Mint Philadelphia  “With such conflicting advice on how to purchase green and feel confident about it, Robert Menard’s book is a must-buy for any purchasing professional/department.  It presents sustainability issues clearly and concisely; after reading the book and doing the exercises, you can become the ‘go-to’ person in your organization for green purchasing/sustainability”.

Robert Menard, Certified Purchasing Professional, Certified Professional Purchasing Consultant

Editor’s note: this blog post is the Table of Contents of Green Purchasing and Sustainability, a workbook and manual of how to go green and save money in the process.  Order information will be available in July.

Table of Contents

Chapter One 

Overview                                                1

Introduction                                          3

What is sustainability                         6

Why sustainability                                6

Agendas                                                  10

Drivers                                                     11

Politics                                                     12

Global Economics                               13

Recap                                                       15

Quiz                                                           16

 Chapter Two

Energy                                                        19

Electricity                                                 21

Exercise Electricity                               26

Fuels, Power                                             27

Exercise Fuels, Power                          33

Fuels, Motor                                             35

Exercise Fuels, Power                          44

 Chapter Three

Reduce/Reuse/Recycle                        47

The 3Rs                                                        49

Reduce                                                         51

Exercise, Reduce                                     56

Reuse                                                             57

Exercise, Reuse                                         60

Recycle                                                          61

Exercise, Recycle                                     66

 Chapter Four

Construction and Facilities                   67

Construction                                                69

USGBC and LEED                                         70

Exercise, Construction                             72

Concrete                                                          73

Exercise, Concrete                                      76

Water                                                                77

Low Impact Development                       78

Retention and detention ponds             79

Exercise, Water                                             80

Facilities                                                           83

Solar Energy                                                   84

Exercise, Solar Energy                               87

Facilities tips                                                   88

Exercise, Facilities tips                               92

Web site information                                   93

 Chapter Five

Chemical/Environmental Management      95

Chemistry                                                                  97

Carbon Footprint                                                   98

Policies & Procedures                                           99

Exercise                                                                    102

Pushback                                                                  103

Solvents                                                                   104

Exercise, Solvents                                               106

Case Studies                                                           107

Exercises, Case Studies                                     112

ISO 14000                                                              113

Exercise, ISO 14000                                          115

Chapter Six

Corporate Social Responsibility (CSR)        117

A must unusual experience                              119

The Public                                                               120

The Press                                                                 121

Corporate Examples                                          122

Exercise                                                                  124

Supply Chain                                                         125

Exercise, Supply Chain                                    129

Case Studies                                                         130

Exercises, Case Studies                                   135

Data Center Dilemma                                        136

ISO 26000                                                            137

Chapter Seven

Writing a Green Procurement                  139

Da Plan, Da Plan                                               141

Green Procurement Principles                  143

Vision                                                                  144

Current Status                                                   145

Metrics                                                                 146

Goals                                                                      149

Actions, Schedules, and Responsibilities           152

 Chapter Eight

Recap and Conclusion                                153

Congratulations                                             155

Two distinct categories                               156

Expect these constant companions       159

No magic bullets                                             160

Follow on                                                           161

Quiz and Exercise Answers               163

How Green is your Purchasing                  165

Chapter One                                                       169

Chapter Two                                                      171

Chapter Three                                                   177

Chapter Four                                                     181

Chapter Five                                                      187

Chapter Six                                                        193

 Appendices                                                  197

Carbon Disclosure Project                         199

Supplemental Information                        203

 Index                                                                207

Richard Hough, Executive Vice president, American Purchasing Society

Editor’s note:this blog post is the Introduction of Green Purchasing and Sustainability, written by Rich Hough, Executive Vice President of the American Purchasing Society.  This workbook and manual details how to go green and save money in the process.  Order information will be available in July.

Green practices and sustainability as a business movement is still new to many business organizations.  Were you to ask professionals at random for their reactions, they would range from awareness to ignorance.  It would also be difficult to separate politics from sustainability.   

 Regardless of the viewpoint, the reality is that sustainability ultimately relates to conservation and preservation.  Whether the processes at hand relates to fuels, electricity, storm and sanitary waste water, all manner of natural resources, chemical substances, or even construction and facilities, all can conform to sustainability standards.

 Another word for conservation and preservation is saving.  Conservation and preservation saves on consumption. It also reduces costs.  In business, savings and cost reduction are a vital role of professional purchasing.  

back cover, Green Purchasing and Sustainability

The author of this book, Robert Menard, is a renowned expert to the purchasing profession who has trained purchasing professionals and companies worldwide. He is a long time friend and resource to the American Purchasing Society.  In addition to his books, CDs, and online courses, he is an expert in all purchasing and negotiation matters.  We are grateful for his expertise, enthusiasm, experience and business savvy. 

 In his typical education and training style, Menard provides, in his characteristic “how to” style, content intensive material in small bites and then reinforces the material with challenging exercises.  Other books may talk about what to do in sustainability but provide scant instruction on how to actually do it. By the time the reader has completed this manual, he or she will be ready to lead an enterprise wide sustainability initiative.  Whether the motive is to save money or comply with market place dictates, you will be well-served by this publication. Menard provides a depth of knowledge in all categories of sustainability matters as well as purchasing – a combination available in no other quarters of the market place.

 Whether you are a serious student, casual observer, or practitioner ready to undertake sustainability, you will derive extreme value from this manual that produces immediate payback and hundreds of multiples in return on investment.

Jeanette Nyden, J.D.

Editor’s note: Jeanette Nyden is a frequent contributor to this blog  

 When is the last time that you sat down to think about your goals for an upcoming negotiation? If you are like many others, you have not considered this question beyond thinking about price. There is much more to setting negotiation goals than hitting a certain price point.

By setting a goal, you are creating your roadmap for success. Studies show that negotiators who take time to set a goal not only reach that goal, they are more financially successful than those who don’t set goals.

When setting goals, consider these three elements

1.  Specific — A specific goal is one that has a defined outcome or objective. You should know exactly what you want and need from the other party, and you should know exactly what you are going to tradeoff–or exchange–to reach your goals. 

Some of my clients struggle to set goals. Some set goals that are too detailed, while others are too vague. Negotiators have to strike just the right balance. For example, when I work with clients I ask them to define not only price but also total cost of ownership. By looking at both sides of the equation, you will have a much more specific financial goal.

2.   Objectively justifiable — An objectively justifiable goal is one that appears reasonable to those knowledgeable about the issue. It can also be supported by third party facts and figures.   

For example, a client was about to negotiate a facilities management contract. An objectively justifiable goal would include market research about the market rates for various aspects of the contract. I see too many people base their pricing on internal budget mandates and inaccurate market data. That’s no way to establish a goal.

3.      Related to your interests — Your interests are the positive, motivating factors for your being at the bargaining table. Your goal must get you closer to those motivating factors. While this appears obvious, I’ve seen really good people get pulled way off track when they lose focus on their motivations.

When setting a goal that includes a mandate to reduce total spend for a specific purchase, also consider the other interests your company might have. For example, you might also consider past performance issues or a new internal initiative.

The client mentioned above wanted to reduce spend and roll out “green” program at the same time. My client’s goal included reducing overall spend and a significant investment by the service provider in their sustainability program. If you were to lose sight of one of these interests, you would have either an expensive green contract, or a cost effective traditional contract.

At the end of the day, you need to have a specific, objectively justifiable goal that is related to all of your interests. Your goal creates a picture which acts like a guiding light. These three elements will help you stay on course.

Robert Menard, Certified Purchasing Professional, Certified Professional Purchasing Consultant

Editor’s note: this blog post is the Foreword for Green  Purchasing and Sustainability, a workbook and manual due out in July of this year.  It will detail how to go green and save money in the process.  Order information will be available in July.

 This manual addresses the demand in the market for practical advice and instruction on how to go about creating a sustainable business organization.  Much of that demand is being driven by large multinational industrial, commercial and retail giants.  In every case, they admit that their very ambitious goals cannot be accomplished without the mandatory and active participation of their supplier base. 

 It cannot be over emphasized that virtually all sustainable goals come in tandem with cost savings.  This means that purchasing is in a position of leadership in the so called green revolution.  This work book and manual devotes abundant effort to that leadership potential and demonstrates how purchasing can accomplish sustainability goals and translate the cost savings measures already in place to sustainability standards. 

 During the research stage, it became evident that competing views of sustainability were needlessly hampering the cause.  For example, some on the political right suspect what they interpret as leftist leanings of “tree huggers” or even the pejorative term, “watermelons”, green on the outside but red on the inside.  An amusing epithet, but damaging to the sustainability cause.  This same crowd is expresses grave doubts about Cap and Trade and Kyoto Protocols legislative and treaty initiatives.  Some on the political left believe that the business world will not come to the sustainability unless dragged by force of legislation and regulation as the will connect sustainability with cost increases.

Still others, including the casual observer is content to wait to see what happens to others before committing, see sustainability as a fad that has no significant impact or proven value.  But the same was true before ISO 9001 and Six Sigma changed the world’s business landscape. 

As a practicing business professional for my entire career, and a purchasing expert, it was obvious that these debates offered little value and missed the point entirely.  What is of immense value is that the very acts of cutting costs and saving money are intrinsic to and integrally inseparable from sustainability. 

What is as clear as the legendary Texas blue sky is that green purchasing and sustainability are two sides of the same coin.  On one side is sustainability written in the mantra of reduce, conserve, and preserve.  On the flip side is the reward of reduced costs and increased profits.   

Complicating this whole matter is what is considered to be sustainable.  Reactions to sustainability vary from rejection, through apathy, and on to embrace.  There is no clearing house or even universal acceptance of what is considered a sustainable practice.  We shall see examples from forests to seafood to electric cars. 

A predictable outcome of so many controversies is the allegation of interested parties against others.  The most notable of these is the allegation of greenwashing, a name derived from an aspersion cast with the intent of tainting a product or process.  By hurling the greenwashing charge, doubt is introduced.  Without an adjudicating authority, every organization must be prepared to defend its efforts.

Thus, specific references are cited in this manual to bring attention to many of these controversies. Further, emphasis is placed on diligence in evaluating sustainability initiatives.  Such diligence is presented in various measures such as computations, inclusion of resources and authorities, such as web sites, and compliance with or reference to best practices as can be reasonably established.   

 Should you choose the sustainable path, the reward will be attendant cost savings, the size of which depends only upon a willingness to invest the time and effort.  How to do it is no longer a mystery.

Editor’s note: this blog post is the Preface of Green Purchasing and Sustainability, a workbook and manual due out in July of this year.  It will detail how to go green and save money in the process.  Order information will be available in July.

In late 2009, marketplace research worldwide yielded the fact that despite all the publications advocating sustainable business practices, there was no resource available on how to do it.  There were isolated documents, particularly in the educational sector, that touted green purchasing but were rather vague on recommendations.  Expressed in other words, every body was yelling about what to do, and no one was explaining how to do it.  What is more, it is entirely apparent to anyone conversant in sustainable practice that savings of all most all types constitute sustainability. 

 Clearly, savings in electricity, fuels, green house gas emissions, natural resources, water, and so forth are sustainable.  Savings, whether achieved through reduction, conservation, preservation, recycling, or other means are cost reductions.  Cost reductions are the province of purchasing and thus the inviolable contention that purchasing pros can and must lead the green revolution.  

 Throughout all of 2010, this book was thoroughly researched and vetted.  Assistance and input in areas beyond the author’s basic competence was obtained.  The result is this assemblage of knowledge, best practices, and proven technologies and methods in all areas of sustainable practice. 

 The plentiful experiences and extensive savvy obtained from decades in the education and training, seminar, and consulting business have been applied to enhance and enrich the value to the reader of this manual.  The many exercises are designed to reinforce the content and provide the practicing purchasing pro with the tools and skill sets needed to develop, implement, and defend any sustainability program.

back cover, Green Purchasing and Sustainability

This publication is a training manual and work book rather than a casual read.  As such, ample white space is provided for notes, comments, and questions.  Computation space is provided where appropriate.

A basic version of manual is offered in the digital media alternative of online courses.  That may raise a question about whether the printed book is in harmony with sustainability principles.  As the reader will observe many times, there is not usually one clear cut, unchallenged, and definitive answer. 

For example, the debate raging over of “pixel or paper” is becoming more complex with the exponential propagation of data centers.  Computer hardware contains toxic substances and troublesome metals.  What is more, huge amounts of energy are consumed forever in pixel media whereas paper medial is recyclable. 

The book is printed both sides on 100% recycled acid-free paper using water soluble ink.  No volatile organic compounds were liberated into the atmosphere as a result of this book’s printing. 

Robert Menard, Certified Purchasing Professional, Certified Professional Purchasing Consultant

When it is time to complete the Exam, do not invite a case of “test anxiety”; the online courses you’ve taken and your career path have already equipped you with ample credentials. 

Please again read the instructions carefully.  The Exam is one hundred questions, all objective type.  You will have three hours to take the Exam, all at one sitting. Record all your answers on the attached Answer Sheet and fax, or scan and email the it to the Society no later than midnight (11:59 PM) Central time at the number or email address provided in the instructions.   

 Special note: If you get stuck on any questions, you may return to them if you have time at the end of the test.  Do so no later than question number 98; use the back button to return to revisit the unanswered questions, record your answers, then complete the remaining questions.  Good luck.

Robert Menard, Certified Purchasing Professional, Certified Professional Purchasing Consultant

The American Purchasing Society has appointed me to be the instructor and coach of the full version CPP Exam Prep course. Let me introduce this course. 

 Click here for a 90 second video. 

Most importantly read all instructions carefully.  Most folks do but those that do not tend to have more self inflicted problems.  

You’ll receive two more online course instructions this week, one on Wednesday and one on Friday , and two more next week, one on Monday and one on Wednesday before receiving the Exam on Friday of next week.  

My role is to help if you run up on the rocks. I do not grade the Exams, cannot change any schedules, and have no administrative responsibility. That is handled by staff at the Society. Email me at RobertMenard@Propurch.com  with any questions or comments and we’ll get you back on the right path.  

Pursuing the CPP is a good career and professional move  because you will earn more money. Good luck and let me know if I can help.