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Mar31
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Note from Matthew W. Grant: I'd like to thank Scot Case for being the first guest blogger here on PurchaseRealm during Know More Media's Guest Blogging Week.
Scot is an expert on the topic of Environmental Purchasing and has written extensively on the subject. This article by him features interesting facts and many resources.
Whether most people know it or not, the purchasing officials working for large organizations have an enormous impact on the world in which we live. Their concentrated purchasing power controls what kinds of goods and services are available for the rest of us and how much we will have to pay for them.
Every purchase has human health and environmental impacts. Manufacturing a typical desktop computer, for example, creates 139-pounds of waste and 49 pounds of hazardous materials. It takes 98 tons of resources to manufacture a single ton of traditional copy paper.
Luckily for us, many institutional purchasers are working to ensure safer products are available. They are using their purchasing power to create or expand markets for safer, more energy-efficient, less toxic, and recycled-content products. (See New American Dream's website, especially the “getting started” section.)
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Mar31
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I've talked in other posts about various departments with which Purchasing interacts frequently including Accounting and Receiving. Another department that deserves its own post is Legal. When I worked at a large company, I was very fortunate to work with outstanding...
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In Part 1, we defined P-Cards and in this post we'll discuss some of the pros and cons of using them. Pros They are perfect for one-off situations in which the vendor will not be utilized again or will be...
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Are Purchasing Cards the latest trend in the collectibles industry? Trading cards with your favorite Purchasing superhero? Well, we can dream about that for the future! Many business people in diverse businesses such as Donald Trump, Jack Welch, Martha Stewart, Warren...
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Mar30
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It's true that many PO's are now eliminated by technology like online ordering. Others may be generated internally, but are not sent to the vendor because the orders are placed over the phone. What about all those vendors who still need to...
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Think your RFP responses are perfect? Let's hope you don't make any of these mistakes. 1) Skipping Questions - Buyers won't know whether you missed them, refused to answer them, or just didn't know how to answer them. 2) Falling...
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In parts 1 & 2, we defined Employee Purchase Programs and discussed how employees can utilize them. In Part 3, we'll discuss why they are beneficial to the employer, employee, and the vendor. It is rare in life to find...
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In Part 1, we established what Employee Purchase Programs are. Next we're going to talk about how they work. There are many ways for a Purchasing Department to set up a discount program. Any or all of these methods can...
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People who work in certain industries such as food service and retail know they are entitled to employee discounts and wisely take advantage of them. Did you know that most Purchasing Departments arrange some sort of employee discounts known as Employee Purchase...
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Mar29
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If you are asked to join a Sourcing team in your company, here are seven reasons to say yes, even if you don't work in Purchasing. 1) You will meet people from across the organization. 2) It will provide significant material...
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With NCAA March Madness fresh in everyone's minds, this is a great time to mention Spalding's NEVERFLAT ball (check their website to see the TV commercial and interactive features of the design) and the role the Spalding Purchasing Department had...
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This post pertains to many other areas of working in Corporate America besides Purchasing. One of the most frustrating things that happens during a Sourcing effort is that someone with a "better" idea comes along once the process is underway. Of...
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How many times (and often rightly so) do sales people complain that all Buyers think about is price? Isn't that the first thing that comes to mind when people think about the Buying profession? Some actually ask, "So, your job...
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I was going to start out by saying there is an unwritten rule in the Purchasing profession that Buyers always want to get a minimum of three bids. Actually, it is usually a written rule in large companies with a formal...
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Mar28
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Buyers have the expertise to manage the whole sourcing process, but the explosion of technology means that now, more than ever, they have to partner with their end users who have specific commodity knowledge. I was inspired today to write...
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As part of my new category on PurchaseRealm called Purchasing Perspective, I've been reading other Know More Media posts and commenting on the purchasing angle or topic they suggest. I loved the entry Woe To Him Who Distrusts The Vision in...
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If you did your homework properly prior to a negotiating session, then you have already defined your LAA - Least Acceptable Agreement. Therefore, everything between that and what you first present to the vendor, the MDO - Most Desired Outcome...
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I recently wrote a post about being silent during negotiations. That post focused on silence as a response to something said during the negotiations - such as what would happen if you were 16 and asked your father if you could...
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I just read an interesting article with the sub-headline E-Sourcing Does Not Equal Reverse Auction. I left a comment for the author telling him that I thought it was an interesting distinction. I have always equated the two concepts in...
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Silence. This is one negotiations technique that I personally have to actively think about during negotiations sessions. Being a writer and having a degree in Communications means I'm automatically disposed towards communicating verbally. Suppose there was such a thing as the Silence Olympics. Since...
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Mar27
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You've probably seen an episode of a TV show in which a lawyer role plays with a client. The lawyer pretends to be the opposing lawyer and grills the client until he or she breaks. Then the lawyer tells the client that...
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Do you find it unusual in sporting events like the Super Bowl or the World Series for a team manager to call for a time out? Of course not, those are part of the rules of the games, the outcomes of...
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Like any business area, Purchasing has its share of jargon. Knowing what the different terms mean make you an insider. These three terms are used in Purchasing as well as other types of negotiations. Even if you don't use these...
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If you have a small, but growing business, you will ask yourself this question at some point, "Do I need a Purchasing department." Only you can can answer that question, but I'm a little biased towards you answering affirmatively....
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Mar24
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Just the other day, I was reading this Procurement post that mentioned outrageous gas prices. I was compelled to leave my comments. Today, I went to Purchasing.com and found this post citing what can now be considered "the usual reasons" (political turmoil...
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Mar23
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1) Requisition? What requisition? 2) Back-ordered! 3) Your overnight package made it to Washington - to Washington the state rather than to Washington, D.C. ...
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I love to read Rich Ottum's MarketingBlub blog here on Know More Media. Something always catches my eye because he finds great pictures for his entries. The post titled Hasbro Thinking Outside The Basket got my attention and set off a warning on my Purchasing...
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In Part 1, we discussed Buyers working on outsourcing the call centers of their own companies. This post is about Buyers' approaches to vendor's outsourcing their call centers. Public relations issues aside, the ultimate questions in call center outsourcing are...
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Call Center Script here on Know More Media, recently tackled the subject of Call Center Outsourcing and reminded the readers that customer service should still be any company's primary focus regardless of who provides the service. The topic of call center outsourcing...
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As I was reading my co-authors here on the Know More Media site today, I was thinking that the site is really a treasure trove of business information. I thought it would be fun and interesting to give the Purchasing...
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Mar20
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There is a crucial and very often overlooked aspect of Purchasing which has a direct impact on the success of our work: End User Communications. Procurement can set up the best deal in the world with a phenomenal vendor, but if...
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Are all Buyers automatically located in the Purchasing Department? This is not a trick question. The surprising answer to outsiders is that no, they are not. Where are they then? Buyers often are geographically located with their key contacts in...
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Should Buyers volunteer to learn commodities other than those assigned to them and should they volunteer to take on special projects? You're probably thinking that you have a million things to do every day and that you can't get to all those,...
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The task of screening sales calls may fall to Buying Assistants or may belong squarely in the Buyer's lap depending on how a Purchasing Department is structured. Whoever gets this unpleasant task, it is sure to be a drain on...
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I recently wrote a post called The Top 7 Signs They're Trying To Outsource Purchasing. Just the word "outsource" usually sends shivers up and down the spines of corporate workers. Purchasing Magazine has some interesting articles about outsourcing in the current...
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Mar17
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Has your company started using (or perhaps stopped using) Supplier Report Cards? Don't the title and topic of this post just bring up all kinds of feelings that you might rather forget? I remember the day "they" (who will remain nameless...
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When it comes to keeping records of your Purchasing work, I have one piece of advice: SAVE EVERYTHING! A logical prerequisite to being able to save everything is that your work is in tangible form. Therefore, e-mails are preferable to conversations. Of course, e-mail is...
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In business, someone is always looking to fill a need to help you (for a price) manage something that has the potential to take all your time and energy away from your core competency. Freight management is no exception. Freight...
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In Part 1, we talked about the surprisingly high cost of freight (and you can believe with gas prices what they have been for the past year or so that those "fuel surcharge clauses" in contracts are in high gear),...
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In the first two posts, I mentioned that market fluctuation and volume changes are two reasons that contribute to the questionable utility of savings reports. Here in part 3, I'll tackle savings report source material. Large companies make their Purchasing employees...
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Mar16
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It's probably not news to tell any consumer who has ever had an item delivered to the home that freight charges can be as much as the cost of the item itself. As troublesome and costly as freight is to...
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In the Part 1 on this topic, we talked about market price fluctuations and savings reports tied to baseline spend numbers which become irrelevant soon after they are established. So what else is wrong with savings reports?...
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In part 1, I discussed self-confidence as the first trait needed for success as a Buyer. In Part 2, I'll discuss two more essential traits. Effective Communication Skills - Buyers need to be able to build rapport with all of...
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Like all professions, Purchasing is filled with as many personalities as there are people. That being said, there are certain personality traits that will serve Buyers well in a variety of situations that may arise. I categorized this...
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Why 7? If you've reached 10, it's too late! 1) Your boss asks you to "write down what you do all day." 2) An e-mail arrives instructing everyone to update the Standard Operating Procedures. 3) The higher-ups suddenly take part in a...
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Mar15
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In the previous post, we discussed the positives to joining a Purchasing Consortium. This post will warn you of some potential pitfalls. One main concern is sharing information with competitors who may be part of the group. Being part of the...
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How do small companies gain the Purchasing power of big companies and how do big companies gain the Purchasing powers of giant corporations? They join Purchasing Consortiums. Purchasing or Buying Consortiums are simply a group of two or more companies...
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You've just been handed a new commodity at work. If you are new to managing this commodity, how do you find vendors to which you'll send the RFP's? Here, in order, are the fastest ways to compile your list....
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Have you ever used a Purchasing headhunter? By that I mean a recruitment firm whose main clientele is Purchasing people as opposed to a temporary firm which may happen to place employees or contractors in a Purchasing department in an...
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I just came across a great post comparing being in a cult to contract management! Read it; it is very creative. The point that stood out most to me was about setting goals. Cult members' lives are highly structured; they...
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Mar14
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1) Know what you want/expect from the deal before you enter the room. 2) Decide what you are willing to give up before you enter the room. 3) Focus on the goals and how to reach them rather than on the areas...
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Another aspect of your job affected by the Receiving Department is receiving accuracy. Unit of measure errors can be your worst enemy sometimes. If something is received as a quantity of one, but it should be a quantity of twelve that happen to...
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While I'm on a roll here talking about building rapport with co-workers, let's complete the three-way match participants and talk about Receiving. The most important point in this discussion is this: If Receiving says an item is not in the...
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Accounting also enhances or minimizes Purchasing's clout and reputation with vendors. This is a result of how fast Accounting pays invoices. Think about it. If you were the vendor, to whom would you give the best attention - an account...
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I've mentioned the three-way match (Purchase Orders - Received Goods - Invoices) in previous posts. Not only must the paperwork/goods as sent by vendors match, but the Accounting, Receiving, and Purchasing Departments must work together in order for things to...
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Mar13
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Why 7? It's 30% quicker to read than if there were 10. 1) You tell your neighbor's children that you can't buy the Girl Scout cookies until you've seen at least 2 other competitive bids. 2) Your teenager asks for a...
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Now that you have committed to writing a newsletter you have to decide how often you will write it and what content to include. Decide on either every 2 weeks or once per month and stick to that schedule. Anything...
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Buyers can always benefit from increased communication with suppliers. Creating a newsletter will be helping them help you. Thanks to companies like Constant Contact and their competitors, which combine e-mail lists and newsletter templates, it is easier than ever to create newsletters...
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Does your company have any kind of formal supplier recognition programs? Some may argue these are not necessary since the awarding of continued business should be payment enough. While this may be true, our receipt of our weekly paychecks should...
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It's challenging enough getting everyone on board the Sourcing train when your entire company is centralized in one building or complex. (I'll never forget the day we happened to look out the window of our Purchasing Department and noticed the delivery truck belonging...
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Mar10
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I love to read material such as this that states Sourcing Departments are gaining more respect in organizations. The article quotes information from IBM that indicates companies are increasingly valuing the contributions their Procurement Departments make to their bottom lines. When...
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A provocative point is made right up front in this article in Purchasing Magazine. The article states that the company's supply chain comes to the attention of the CEO when great savings have been achieved or when the supply chain...
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Just as important as utilizing previously mentioned electronic ordering systems is utilizing electronic invoicing systems. Electronic invoicing need not be as scary as it sounds. In fact, the most common form of it I have seen is a monthly consolidated...
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Let's face it, everybody loves to receive gifts. They're fun, exciting, and change your outlook on your day. Why then would you discourage gifts? To twist a phrase: "Beware of vendors bearing gifts." Even if everyone involved has the best of intentions,...
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Being an assistant in any industry is often seen as the ticket to the big time, at least by those trying to break into that industry. (For those that need a refresher on the reality of being an assistant, I suggest...
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In part one of this post series, I asked if your desk looked like this. If so, there is hope! In addition to implementing requisition/purchase order software internally, you should definitely take advantage of any and...
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Mar 9
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Are you drowning in paperwork? Do you have more PO's and requisition forms on your desk the person in the picture at Deskbound Dan? It might be time to think about obtaining specialized Purchasing software for your department. Keeping track of paper...
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Vendor reference checks are like employment reference checks for HR people or for hiring managers - everybody does them, but most people think they are waste of time because references tend to sing the praises of the candidates. I suppose...
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How does the chain of command flow in your company once it leaves Purchasing? This is not the innocent question it might seem at first glance. The answer reveals many things including the importance and respect placed upon the department...
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Mar 8
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This article from Purchasing Magazine is a must-read. I love to hear (and share) success stories. The article describes how a new Director of Procurement implemented some much needed changes and also highlights the results of those changes in several...
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So we've established that there are subtle differences in the various names your department might be called. Here are the names in order of "flash."...
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We've already established that the terms "Purchasing," "Procurement," and "Sourcing" are used interchangeably as the names of the departments in which we work. This is done for a matter of convenience in writing and practicality when discussing our careers with...
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I mentioned something in a previous post about "whatever contract management system you use." Then I started to think about it further. Do all Procurement departments use some kind of a contract management system to help keep track of when contracts expire and who is...
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Why 7? Any more would just be cruel. 1) You look out into the parking lot as the vendors leave the negotations and notice they are all dancing and singing, "I got the money. I got the money." 2) After...
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Some Purchasing Departments live and die by the savings numbers. Everyone involved with generating savings numbers hates them. Everyone knows they are not perfect and the system is flawed, but since nobody can come up with something better, we're all stuck...
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Mar 7
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Are sales closing techniques really a form of subtle (and sometimes not so subtle) manipulation? I was just reading some material about closing a sale. There is no shortage of this type of information. Google it and you will be overwhelmed. Simply ask Dan...
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Negotiations can be the best part of being a Buyer or the worst part depending on one's personality and preparedness for a given session. Personally, I think it's one of the best parts of the job. It's the chance to...
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Some may caution about leaning on auto-renewal clauses in contracts as crutches. That could be the case if a Buyer is not using them wisely as part of an overall contract management strategy. Vendors love these clauses (which naturally make them suspect...
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Why not 10? How much proof do you need? 1) Your monthly savings reports are always in negative numbers. 2) You thought "vendor terms" meant those conditions under which a vendor rep would go on a date with you. 3) You accidentally sent the acceptance...
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Mar 6
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No, this is not an ad for some new Kermit the Frog promotion; another title for this post could have been Environmentally Responsible Profits. I used to always hear that objection that recycling or using recycled goods costs too much time and/or...
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I was just looking an article from Purchasing Magazine in which they discuss the biggest challenges that Purchasing professionals reported in their annual survey. Before you read the article, stop and ask yourself what you think your three biggest challenges are. Here's...
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You have to read this article if for no other reason than the headline deserves attention: National Aquarium Reels in Savings with Online Buying. It also proves that someone can establish a career in Purchasing in just about any industry. I...
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Does your Procurement Department insist on/support/negotiate on-site vendors? I've worked with many vendors over the years, both on-site and off. Which is better? Technically, it should make no difference, but practically, I found that we had much better relationships with on-site...
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It's perfectly understandable that there are expiration dates on vendor bids, especially in areas with fluctuating commodity prices such as a printing bid if paper is included or a product that relies on raw materials in manufacturing. However, there is one area...
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Mar 5
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We've talked about metrics before and their importance to your job. How else will you know if things are improving, if nothing is measured? I'm not against metrics, when they are meaningful and useful. In those cases, metrics are great tools. I am...
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A few days ago, I introduced readers here to Greg Richardson's Contract Blog. I have been reading more of the entries and finding more wisdom. He has a really interesting post on the (overlooked) importance of Sourcing Departments to their...
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Mar 2
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I thought the concept of "going around purchasing" went out years ago along with the paper-based PO! Oh, wait, technology has not completely taken over your Purchasing Department? (None that I have worked in either, but we've tried.) Apparently, paper PO's are not...
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It's so easy to complain about vendors and vendor reps in our business. That's a given. Let's not forget about the vendors who ride in on the white horses to rescue us or make things easier for us when we are...
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Mar 1
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For everyone who enjoyed all those disclaimers in my contract blog entries about how I am not a lawyer, nor do I play one on TV, I have news for you. I have found a purchasing contracts lawyer out there for...
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Soft costs are the costs associated with a process or procedure that are not apparent when looking at just the price of an item. (This overlaps with, but is not the same as the Magic of Cost Accounting.) We tend to...
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Single Source Savings (also known as Vendor Consolidation) is a great way to quickly remove "soft costs" from your daily routine. It can also make you very unpopular at work! Using a single source means that one vendor is going...
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