Global Sourcing has certainly been a trend in recent years and its benefits are clear…..increased cost savings being the primary. As with most initiatives the key is in implementation and a strong recommendation has been to include a Local Procurement Office (LPO) as part of a Global Sourcing program. The LPO is a procurement group placed in country and performs a variety of activities to ensure the supply chain is functioning within the local country.
A recent Accenture study, Global Sourcing for High Performance - Leading practices and the role of international procurement organizations in China highlighted not only the need for an LPO but for the LPO to be an integral part of the company’s procurement department. This means this group should not exist in isolation doing their thing in some foreign land, but it should be involved in the day to day activities, projects, events, etc, just like the head procurement group. The eSourcing tools and applications available today are a very effective method of facilitating the integration of these LPO. These tools give procurement organizations the ability to share a wide variety of information and knowledge including: standardized RFI/RFP/RFQ information, access to supplier information, and a record of past activities.
Additionally, these tools are valuable for keeping an LPO up to date on the sourcing activities on going, which can lead to coordination of projects, spend aggregation, and standardization on specifications.
As the sourcing world becomes more and more global, the ability to communicate, coordinate and share knowledge become more and more difficult. Effectively using the technology available today can allow a global procurement group to operate as a cohesive team.
ELP, who recently changed their name to build a more global presence, ran a series of short interviews of UK based supply management pros. I was particularly intrigued by the discussion with, Christopher Barrat- Director, The Greystone Partnership, who took a very pragmatic and realistic approach to the future of procurement.
If you want to make predictions on the weather then its statistically true that most likely conditions tomorrow will be broadly the same as today- providing you don’t get on a plane and fly to Barbados.
At the macro level, business conditions within the space of one year are not going to change very much. The dollar may get a little stronger with the end of Bush closer, and oil may get a little cheaper with minuscule improvements in Middle East security, but there will be no seismic change.
Likewise for procurement, the broad canvas will be in the same colors. We will seek more influences, more skills, more value, more leadership, more corporate social responsibility, and none of this will be new. The skill is to make the business equivalent of getting on the plane to Barbados. If you want your predictions to come true than you have to make it happen yourself.
My predictions for this year, is that it will work out exactly the way you intended. The challenge is getting your intention-your true intention aligned in the direction you really want to go in.
Ahh, some sage advice with a dose of realism. I have heard so many war stories of grand plans that fall short, it is nice to hear a prediction that is not Pollyanna. I would reckon that Barrat has seen his share of crumbled regimes.
Today, I welcome a guest post from Jason Busch and Lisa Reisman. This article was used for our latest newsletter, Iasta Insights, which has been running bi-monthly since 2004. You may sign up to automatically receive the newsletter, by following this link.
I’m not sure about you, but we find it almost hilarious how politicians tip-toe around the “recession” word. Seriously, why can’t our President and others call the economic situation for what it is? At least when it comes to the sourcing and procurement world, we don’t need to be as careful. After all, we’re not running for office or trying to obfuscate the truth – or the numbers as the case may be. And even one “R” word can be a boon for us and our companies. The word that we’re referring to here is re-sourcing.
Before you get confused, let us explain. Re-sourcing is quite a simple concept. It involves going back and re-bidding a category which you might have previously sourced. And it just so happens that with the economy the way it is today, there could not be a better time than now to revisit a range of categories that you previously achieved savings in. So get ready to dust off the old e-sourcing tool as re-sourcing becomes an “R” word which you can get the rest of the company excited about.
What categories of spend are ripe for re-sourcing today? A good many, in fact. But the sourcing environment is not always cut and dry. On the one hand, there remains relatively high commodity price inflation in areas such as oil, energy, plastics, metals and food related products despite rising inventories and capacity. So in categories where raw material inputs comprise a material portion of the overall total cost, it might make sense to adopt a sensible sourcing approach where suppliers separate out the raw material components from their bid (and agree to tie the underlying elements to some type of market index). This will create significant competition in a market with slackening demand where suppliers are hungry for business.
But in areas where raw material inputs matter little – or are less transparent in the actual pricing – such as hotel spend, office products, or temporary labor, re-sourcing strategies can be quite simple indeed. In these cases, simply identify a list of new suppliers who you want to invite into the fray and join them with a previous approved bidder list. In some cases, you might find that the supplier landscape has changed quite a bit since the last time you revisited the category. Other times, it will look the same. But it’s always worth spending some time on supplier outreach to ensure that you’re creating a bidding environment – regardless of whether or not you plan to use a reverse auction, sealed-bid, multi-round, or optimization environment (or even a combination thereof) – with the maximum amount of competition.
If our experience about the hungriness of suppliers to participate in re-sourcing projects is any indication, you’ll find that each category will be hit or miss (but you’re more likely to find hits as the economic picture gets bleaker). The only challenge is you often won’t know before starting the re-sourcing process whether or not you’re going to achieve the type of results you’re hoping for.
A good way to test the waters is to reach out to suppliers you’re not working with today and engage them in conversation before bringing the process online. Find out what’s going on. How are inventory levels, orders, etc? Practice small talk by commiserating about the state of the economy and see if they take the bait. Then, once you’ve satisfied your curiosity that there really is a good opportunity, it’s time to pull the re-sourcing trigger – one category at a time.
Jason Busch is editor of the blog www.spendmatters.com and Content Director for Spend Matters Navigator (link to spendmatters.siderean.com, a procurement and operations research hub.) Lisa Reisman is co-editor of the blog www.agmetalminer.com and Managing Director of Aptium Global.
These are not the days of Spies Like Us, any more. ELP recently had a breakdown of some of the strongest LCCS countries of the old Soviet Bloc. Even though these countries would be excellent from a European perspective (because of proximity), we notice a large number of suppliers being utilized from the region, in our US based clients, as well. ELP summarized the strengths of each here:
Hungary-
High growth rates especially in electronics, automotive and steel. High education levels are spurring research and development in, for example, ambient intelligence. German and English widely spoken.
Czech Republic-
The most popular location in Eastern Europe for offshoring. Production of cars and automotive components account for a fifth of industry and are gaining ground, but focus of new investments is shifting from production activities to services.
Poland-
Major investors are Japanese companies, mainly from the electronics or automotive industries. So-called business process outsourcing centers are gaining importance. Growing industries are renewable energies, environmental projects, logistics and services.
Slovakia-
Manufacturing is growing fast, particularly machining, building, automotive, electronic. Plastic and construction materials. Slovakia offers low taxes, relatively low low wages and high productivity.
Slovenia-
Wages in Slovenia are relatively high but so is productivity. Infrastructure and language skills are very good. Slovenia has low corruption. Industry is growing rapidly especially in machine building, chemicals and electronics.
Bulgaria-
Very low relative wage levels coupled with high growth rates. Many companies have announced modernization and expansion investments. In 2007, investors were especially interested in the energy and water supply and distribution.
Croatia-
Leading industries including metals are attempting to improve competitiveness. Corruption remains a problem.
Baltic States-
Language skills are good, especially English and Russian. Important industries include metal and machine building, industry, telecommunication and It software and services. All Baltic states have high growth rates.
Romania-
High growth rates. Main industries include automotive, chemicals, machining and electronics. The IT sector is growing fast.
I will have to say, from my perspective; I have seen very high quality and professionalism in Poland. I am sure the other countries are also highly educated and perform well. This should not just go for the supply base, however. Iasta has an Eastern European outpost and the sourcing community (although not as advanced as other Western countries), is progressing quickly and has a grasp on eSourcing. I do foresee this collective group catching on and closing the gap on best practices, quickly.
Add commentMarch 24th, 2008Sean Delaney - Iasta UK
I have been desperate to take some time to read this article in SM on the A to Z of SRM. It is a big topic anyway but I was still hoping that It would offer some clarity on what is SRM. However, it gave me a lot more. During a recent SRM conference in Geneva, the speakers outlined how they interpreted SRM within their organisations and what benefits it gave. Let me summarise, by speaker:
BP, Bill Knittle – he believes that successful SRM programmes “require about 70% behavioural change and 30% process adjustment”. Bill went on to say that it had taken between 24 to 36 months before he could get suppliers to talk. Success must be linked to organisational goals like shareholder value which will reward innovation, growth and efficiency. Finally, Bill observes that Relationship management skills require a totally different skill set.
I totally agree with this ideology. Procurement can learn so much from their Sales & Marketing brothers across the desk. There are those who are good at acquiring business, and those who are better at managing the business….Hunters v’s Farmers. The “levers” that Bill adopted to reward suppliers are interesting, but in reality, with such a large organisation like BP, one suppliers efforts will have minimal impact…I would like to know more about the exact mechanism for measuring performance, as I feel this should always be realistic and achievable.
AVIVA, Sheilagh Douglas-Hamilton – SRM function is a department within procurement. Sheilagh suggests it is all about getting a deeper relationship with your suppliers and tapping into their resources like innovation and design. AVIVA have realised savings of £100m directly from SRM activity. What is interesting is that Sheilagh agrees with Knittle, that SRM managers need different skills than Category Managers.
Again, I would like to know more about how that £100m breaks down and by what mechanisms this benefit measured. What is really interesting is how AVIVA have organised themselves to manage SRM, and again, the different skills required.
BUPA, Steven Pink – Steven’s thoughts on SRM are much more simplistic and he gives the example of when he joined the business from BA there was an adversarial approach to suppliers. He summarises be saying their objectives were to align goals and create more efficiencies between both parties.
I think there is more to this – again what levers were used to measure and encourage a change in behaviour? This is starting to sound like the old Partnership agreements that were common during the late 80’s and early 90’s.
Diageo, David Lawrence – David suggested that SRM could be improved by reducing audit fatigue. David suggests this could be achieved by collaborating with other buying organisation in their sector. They use the International Labour Organisation conventions and the UN global compact as platforms to qualify suppliers.
I agree wholeheartedly with David’s sentiments to reduce audit fatigue. However, I do not believe alone that this constitutes SRM. I believe there are now automated processes in place to make measuring far simpler. Furthermore I also believe that SRM is not only about working with the large suppliers but also nurturing the new, small and innovative types as well. After all, sharing the same supply base with your competitors does not give you competitive advantage.
MacDonald’s, Joseph Youssef – Joseph believes that SRM needs executive sponsorship and a long term approach. It helped McDonald’s create greater visibility in the supply chain, foster innovation and for suppliers it allowed them to reduce costs by eliminating needless sales activity. Joseph interestingly pointed out that the focus shouldn’t be on the big picture and should focus on “one area at a time”. Benefits achieved from SRM activity have been $3.5m per year over the past 4 years.
This is interesting and quite different than BP which clearly focused on the bigger picture. Executive sponsorship is mentioned for the first time, but in all these organisations SRM wouldn’t have dedicated resources without it.
British Airways, Paul Alexander – BA were motivated to focus on SRM firstly after industrial action within the supply chain and secondly due to lack of competition within the supply chain. Paul believes that SRM will have a major part to play in the future because BA’s experiences will be felt by many more as scarce resources become scarcer
This is interesting perspective in many respects BA could be ahead of the curve in their thinking here. However, after reading this extract, I couldn’t help but feel that this had the look and feel of one of those Partnership approaches, rather than SRM. Also, should SRM be driven by “well, we have no other option”, or more about making both organisations more competitive?
This article has certainly given me food for thought. Is SRM just an advancement on the Supply Partnership theme used in the late 80’s/90’s? What mechanisms should be used to measure and change behaviour? Should it be less measurement based to avoid audit fatigue?
However there are some common themes here:
• Executive Sponsorship
• Dedicated resources to SRM
• Mirror Customer Relationship Management in your SRM methodology and approach
• Use some measurements to change behaviour and align goals
• Regularly update success criteria so it is aligned with the organisational goals
What is still unclear is:
• What measurements should be used?
• How much measurement?
• Is it a Partnership or something different?
The first round of the NCAA basketball tournament, is arguably one of the best weekends in American sports. It is also a day that many workers across the land, find themselves taking 3 hour lunches or mysteriously ill.
Since my team is on the brink of sustained disaster and many readers could be absent today, why not offer a little nostalgia of how college basketball used to be, before the days where ESPN and 24/7 media coverage sterilized it.
I used the term “sustain” above, so this qualifies as a supply management topic, right?
Back in the go-go days at the turn of the millenium, digital marketplaces were taking the world by storm. Everywhere you looked, industry groups were creating business-to-business marketplaces. Sales at Commerce One and similar software companies were exploding by selling to digital marketplaces and exchanges. Millions of dollars in revenue were anticipated by charging transaction fees to suppliers. Large amounts of venture capital poured in for just about any market segment imaginable.
Unfortunately, “the music stopped” when the suppliers rebelled and the revenue did not materialize. The VC’s closed the money spigots and it all came crashing down. After the dust settled, a few of these marketplaces actually survived. How? By evolving their business models to one that adds value for their members, not creating friction between buyers & suppliers. The survivors use their domain knowledge and category-specific expertise to help aggregate spend across multiple companies and source group contracts based on greater volumes and economies of scale. The buyers save money, the suppliers increase revenue and the marketplaces earn consulting revenue. Everyone wins in this scenario. This is one of the many ways that these organizations have adapted for survival in the current supply management landscape.
In this new business model, eSourcing tools play a major role in driving value, as opposed to the eProcurement tools used in the old paradigm. By tying the wisdom of their industry veterans with the productivity of an SRM platform, these companies provide their clients the benefits of authentic supplier consolidation and cost take-out.
What’s next? Advanced Sourcing Optimization will enable them to extend their reach beyond the “low hanging fruit” captured in reverse auctions or comprehensive RFx’s. By targeting complex categories that historically take weeks, or months, of analyst time, marketplaces will increase their applicability to more strategic categories and continue to drive value to their members. Ultimately, vertical marketplaces are not only responsible for delivering ROI to their members but also acting as a trusted advisor on new opportunities and best practices. We see this first hand and the survivors have learned the lessons of the past well.
If you thought blogging was goofy, think again. SCDigest alerted me to a new corporate blog by Global #1 (or was that Public Enemy #1?). The Wal-Mart blog, named Check-out, “are buyers or merchandisers in a number of product categories (e.g., “gadgets” or “lawn and garden”) who went through detailed training in how to blog effectively and, one assumes, guidelines on what not to write.”
SCDigest is somewhat critical of the output, noted that there is very little supplier critiquing going on. By reading the posts, I agree with this but never saw anywhere on the blog that this was to be the mission.
Ultimately, they raise a good point about ripping suppliers in the open.
It’s unrealistic to expect retail corporate buyers to aggressively critique vendor offerings, for at least three reasons: (1) they would be critiquing the merchandise they had decided to stock on store shelves; (2) vendors would go ballistic over unfavorable reviews; and (3) it could potentially impact Wal-Mart sales revenue – which simply isn’t going to happen.
We have a number of progressive clients that use an internal wiki or bulletin board to post and share best practices or protocols. Information about supply bases can and should be shared on this internal resource.
It will be interesting to see what Wal-Mart does with this forum. The guy that writes on sustainability had some interesting topics. But, like the rest, the entries were more product reviews, and of course, everything is meant to look like water cooler conversation, so you have a hard time believing the genuine nature of it all.
I was sent a link from the doctor, regarding entrepreneurship, as he thought I would find it interesting. And, I did. This blog/article was written by Scott Shane, the A. Malachi Mixon Professor of Entrepreneurial Studies at Case Western Reserve University.
Since almost every other spend management company, eroded its entrepreneur spirit long ago, I thought I would provide commentary on some of the myths that I related to most.
Myth 2: Venture capitalists are a good place to go for start-up money. Not unless you start a computer or biotech company. Computer hardware and software, semiconductors, communication, and biotechnology account for 81 percent of all venture capital dollars, and seventy-two percent of the companies that got VC money over the past fifteen or so years. VCs only fund about 3,000 companies per year and only about one quarter of those companies are in the seed or start-up stage. In fact, the odds that a start-up company will get VC money are about one in 4,000. That’s worse than the odds that you will die from a fall in the shower.
Well, there is a strange convergence here. We are in high tech (which is were the vast majority of VC goes), but, never tried to get any money. I still remember the headlines from SupplierMarket.com (6/20/00 - $581M purchase price, low customer count, only 155 employees when purchased and bleeding money). Who knows what path we would have taken, with different decisions, but its unlikely we would be here today, and even more unlikely we would have hit the lottery like those SM guys did.
Myth 7: The growth of a start-up depends more on an entrepreneur’s talent than on the business he chooses. Sorry to deflate some egos here, but the industry you choose to start your company has a huge effect on the odds that it will grow. Over the past twenty years or so, about 4.2 percent of all start-ups in the computer and office equipment industry made the Inc 500 list of the fastest growing private companies in the U.S. 0.005 percent of start-ups in the hotel and motel industry and 0.007 percent of start-up eating and drinking establishments made the Inc. 500. That means the odds that you will make the Inc 500 are 840 times higher if you start a computer company than if you start a hotel or motel. There is nothing anyone has discovered about the effects of entrepreneurial talent that has a similar magnitude effect on the growth of new businesses.
Ok, glad we did not open a bar. I would be out of business and have lung cancer. I actually do agree though. When you build something that has value to so many, you have slightly more margin for error. Oh, and since we did make that Inc list, I guess we are also in the 90th percentile of start ups in the computer industry.
Myth 10: Starting a business is easy. Actually it isn’t, and most people who begin the process of starting a company fail to get one up and running. Seven years after beginning the process of starting a business, only one-third of people have a new company with positive cash flow greater than the salary and expenses of the owner for more than three consecutive months.
Surprisingly, this is true, even if you are in the right industry at the right time. Look at all the acquisitions that constantly occur through out supply management. They are usually raids on financially distressed companies.
And, if you thought running a business was hard, try writing a daily blog.
A couple months ago, I received a newsletter from Denali under this title. The is content very, very good and is a “sneak peek” at the bigger set of information available, at Denali Intelligence, a category specific market intelligence service.
There is some fascinating analysis in this FREE newsletter.
Some economists project that the US dollar is now undervalued and will rise soon, but the current momentum is downward and will continue to be so into most of next year. A chief source of downward pressure comes from foreign central banks and investors as they work to reduce the volume of US dollars in their portfolios. Simply put, US imports flood foreign investors with payment dollars that they must absorb or reinvest. As the tide of dollars is traded, supply and demand laws take over … and the dollar surplus drives the “price” downward.
In 2008, on average, prices of imported goods will rise 3% to 4% to directly adjust to the recent dollar depreciation. How quickly this inflation will occur depends on the particular market parameters (degrees of demand, supply and competition), but most of the price adjustment is expected to occur by mid 2008.World demand for the commodities used in construction and manufacturing, such as cement, steel and energy, is straining supply capacity. Therefore global conglomerate suppliers do not need to absorb as much of the exchange rate loss when they get paid in cheaper dollars than they expected. Metals, plastics and cement international product prices are already displaying this impact, but the prices of materials produced in the domestic U.S. market are insulated from this effect. The decline in foreign supplier’s interest is sometimes first observed in reduced auction participation. In these occurrences, domestic suppliers may regain an advantage previously lost to foreign competition.
I find this so interesting. Not only has Denali Consulting created a tremendously valuable resource (and business), they are also distributing useful parts in the form of a dense newsletter. I know these guys well and this is a rapidly expanding business for them. It is well worth looking in to, for any sourcing professional that does not have its own supply market research team.
I am not sure if I had missed this American Strategic Management Institute conference in previous years, or if it was relatively new, but I did catch the announcement this year. It appears to have many good topics that will be covered such as:
Reporting Quality Improvements from Strategic Sourcing Data
Overcoming Common Hurdles to Strategic Sourcing Implementation
Reporting Quality Improvements and Cost Savings from Strategic Sourcing
Many of these topics impact how an eSourcing tool is being used, generates reporting and builds (or loses) adoption. I would be interested to hear thoughts of people that might have attended previous years or actually attend this year. At any rate, it is good to be aware of these conferences and this one might be small enough to really leave with good ideas.
Even in these very turbulent economic times, we are still seeing a large volume of reverse auctions being executed. However, now is a good time to remember the definition of cost avoidance, as explained on the eSourcingWiki and pulled from CAPS.
Cost avoidance is a cost reduction that results from a spend that is lower then the spend that would have otherwise been required if the cost avoidance exercise had not been undertaken.
This accounts for the situations where spend is higher due to higher demand but overall cost per unit is lower, where up-front investments reduce overall spend in one or more categories over a multi-year initiative, and where a process improvement or product replacement resulted in a lower operating cost or cost per unit compared to what the company would have spent had the company not improved the process or replaced the product.
Or to add to these guidelines, cost avoidance can potentially be measured and impacted when the market conditions are raising unit costs but the introduction of competitive bidding lowers the delta between your former pricing and the new escalated pricing.
Although the concept of an on-line reverse auction is not necessarily within the definition of cost avoidance, I have seen it work many times this year already. A recent example in packaging had suppliers with 20% increases across the board. However, the auction concluded with a 1-2% savings in some lots and no more than a 5% increase in the other lots.
As always, it is critical to enforce best practices and know your market and suppliers. This tactic is not a guaranteed outcome, but should not be summarily discounted either.
A generally accepted (and obvious) “best practice” is to procure services via a robust competitive methodology. In general, this is achieved by issuing a comprehensive request for proposal (RFP) to each of the potential vendors for that service. The practice has now become so common that many organizations have developed a standardized template (or templates) and are able to rapidly churn out RFPs to meet the demands of its business unit customers. This semi-automated approach accelerates the overall procurement timeframe and enables the organization to rapidly achieve superior results for the procurement of commodity products and services. Unfortunately, as with any automated process, this approach has also led to a reduction in critical thinking that is applied to each RFP.
Hear, Hear! This is precisely the point I was trying to make in the doctor on Technology RFPs: Don’t Put The Cart Before The Horse!, although I was restricting my attention to technology RFPs at the time. “Filling in the blanks” on a template isn’t sufficient for large and/or complex projects. The RFP needs to be carefully composed if you are to achieve maximum value from it. That’s why it was nice to see the article Beyond the Template over on SourcingMag.com which outlined some best practices for:
effectively creating a competitive environment
clearly defining the services being procured
enabling the objective evaluation of vendor responses
achieving optimal terms, conditions, and pricing in the competitive environment
The article may be services centric, but it still has great advice.
Creating a Competitive Environment
Accentuate the positive
Why should the supplier want to engage in a relationship with you?
Clearly specify what you hope to achieve
What are your goals? What do you require from the supplier?
Enable the vendors to differentiate themselves
Be sure to allow some open-ended responses. Check-the-box, multiple-choice radio-buttons, and fill-in-the-blank does not leave much room for vendor differentiation.
Ensure the vendors understand your environment
How do you work? How will the relationship be managed? What do you expect from a supplier?
Emphasize the importance of the transition period
If you are transitioning away from a current supplier or a current process, be sure to explain how the transition process is going to work and what you expect from the supplier.
Defining the Services
Know what you want
An RFP should not be used to gather information to help the enterprise decide what it would like to procure — it should be used to gather information about what the organization is going to procure and how it is going to go about the process.
Define the boundaries
If you are procuring a product, who is managing the transportation? If you are procuring a service, what capabilities will the supplier be providing, what capabilities will you be retaining, and how do you define the break-points?
Define the measurement criteria
How will the supplier’s performance be measured?
Put yourself in the vendor’s shoes
Read the RFP from the viewpoint of a supplier. If there is anything that requires clarification, then clarify it. If you’re unsure if it is clear or complete enough, have an uninvolved third party (such as a colleague in another department) review it.
Objectively Evaluating Vendor Responses
Establish discrete requirements
What do you need at a minimum to consider a supplier? If you are unsure, do a multi-round process where you ask for general proposals on how a supplier will solve a problem, followed by a request for specific proposals once you have selected an approach.
Weight the requirements according to their relative importance In order to score the proposals to select a winner, it is important to give more weighting to key factors.
Define the proposal pricing format
This will allow you to compare proposals apples-to-apples.
Achieving the Best Buy
Make it clear that RFP responses are contractually binding Of course, this only applies to the final RFP/RFQ in a multi-round process.
Use contract-ready requirements in the RFP This will prevent snags in the negotiation.
Don’t put off until later what you can do now
Do your best to make sure that the requirements in the RFP address all key considerations. After all, how likely are you to receive favorable terms regarding any items you forgot to address once you enter into a deal and lose the competitive environment?
This is great advice and, if you have the time, the full article is worth the read.
Today, I welcome Charles Dominick, of Next Level Purchasing, who took my offer to elaborate more about his own procurement certification program.
In a recent post here on eSourcing forum, David Bush shared his interest in the story behind the rise of the Senior Professional in Supply Management (SPSM) Certification. He shared his curiosity about how the SPSM Certification came to prominence in perhaps an unlikely marketplace that seemed to be dominated by the Certified Purchasing Manager (C.P.M.) certification in earlier years in the USA.
Specifically, David pondered: “What was wrong with the C.P.M. that created a business opportunity? What was the ‘A-ha’ moment? How long did it take before the dam broke and acceptability was easier?”
Let me begin by answering the last two questions first.
You may be surprised to learn this, but the impetus for the creation of the SPSM Certification was not originally to take advantage of the weakening status of the C.P.M. Actually, creating the SPSM Certification was inspired by our students!
You see, in 2001 through 2003, Next Level Purchasing simply provided online training to purchasing professionals. That training was designed as a veritable how-to program for delivering measurable results in the workplace.
Then, students started telling me: “I’ve learned so much through your training. I’ve implemented so many things and my performance has improved dramatically. I should be certified for this.”
The first couple of times I heard such things, I didn’t think much of it. But as I heard these requests for a new certification over and over, I realized that I need to be listening to the market.
So, my team and I researched ISO 17024 – the international standard for personnel certifications - to learn what it would take to create a valid certification program. We also carefully examined the marketplace. And what we realized was that there were no globally recognized purchasing certifications.
Sure, here in the US, lots of people had known about the C.P.M. being that it was created way back in 1974. But in England, we found sentiment that the C.P.M. and ISM (formerly known as the National Association of Purchasing Management) were pretty much irrelevant there. CIPS was the big national institute there. Of course, nearly no one in the USA knows or values CIPS. The same thing with Canada, India, and pretty much every major industrialized country – they have national associations and/or certifications that are meaningless outside of their own borders.
Of course, business today is conducted globally. Purchasing professionals deal with suppliers from around the world. When negotiating or developing relationships with these suppliers, purchasing professionals should want these suppliers to know what caliber of counterpart they are dealing with. With national certifications and international suppliers, that just wasn’t happening.
So responding to marketplace requests and seizing the opportunity to create the only globally recognized purchasing certification were the two main factors in deciding to launch the SPSM Certification in 2004.
The question “How long did it take before the dam broke and acceptability was easier?” is an interesting one. I don’t know if the dam broke early, hasn’t broken yet, or if there never was a dam.
Right from the beginning, prestigious Global 2000 companies began both enrolling their purchasers in the SPSM Certification Program and advertising jobs for which they preferred candidates with the SPSM Certification. In addition, the SPSM had gotten a lot of positive coverage early on in publications like Purchasing Magazine and Supply & Demand Chain Executive. So the SPSM Certification has been on a steep upward trajectory of growth since its inception.
But what I think really helped the SPSM Certification gain acceptance is simply the fact that it is a results-based program. Its priority is not to teach a bunch of definitions to remember. The priority is to teach students how to deliver measurable results.
So if there was any formula to gaining widespread acceptance, I’d have to say that it is simply knowing the results that employers want and actually delivering on our promise to help them get those results in the real world.
Now, getting back to that question: “What was wrong with the C.P.M. that created a business opportunity?”
Well, not too long after we started gaining major traction with the SPSM Certification, ISM made the announcement that it would soon no longer be awarding new C.P.M. certifications. In fact, later this year is when ISM will cease allowing people to register for the C.P.M. exams.
So did this factor help the SPSM Certification rise to prominence more quickly?
I believe it did. Naturally, professionals do not want to invest their time and money in credentials that are obviously on the road to obsolescence, if not already there.
The SPSM Certification represents a long, bright future of career success for the purchasing professionals who pursue it.
Of course, we can’t take credit for another organization pulling the plug on its own certification. But as they say: “timing is everything!”
So, it has been a very interesting story. Seemingly out of nowhere, the SPSM Certification came onto the scene and today has purchasing professionals from places as near and far away as Macedonia, Germany, Tunisia, Canada, Lebanon, Singapore, all across the USA, the United Arab Emirates, and so many other places using the SPSM credentials after their names on their business cards.
And Next Level Purchasing is not done growing the SPSM Certification yet. Not by far.
So consider this just Chapter 1 in long story with a major impact on the purchasing and supply management profession.
Charles Dominick, SPSM
President & Chief Procurement Officer
Next Level Purchasing, Inc.
http://www.NextLevelPurchasing.com
Occasionally, it can be difficult to see the forest through the trees, especially as economic pressure is stripping away extra budgets. Supply Chain Brain published findings by AMR last month that advised the opposite.
“Companies that have invested in sourcing and procurement technologies did so to improve operational performance and align with CEO objectives, according to AMR Research analysis in Global Logistics & Supply Chain Strategies magazine’s 2008 Resource Guide & Executive Yearbook.
Improving operational performance is vital for organizations striving to grow top-line revenue and reduce overall costs. This requires CEOs and their organizations to execute in the present and innovate for the future. Doing so means the CPO initiatives must become imperatives.”
Of the four CPO imperatives identified:
Ensure reliable supply
Mitigate risk
Improve working capital
Reduce and contain the costs of goods and services. Spend analytics, e-negotiations, e-procurement workflow, expense management, and catalogs help reduce and contain the costs of good and services.
The article goes on to forecast the technology industry for these tools by claiming:
All imperatives are driving sourcing and procurement technology investment and in turn the market, which AMR predicts will grow from $2.4bn in 2006 to $3.5bn in 2011. Buyers are calling for a transformation from traditional, localized sourcing and procurement practices to demand-driven and efficient ecosystems that exist in a global economy.
