Harvesting Cash from Suppliers is Reaping With a Sharp Sword

The Wall Street Journal today reports that Procter & Gamble is planning to extend its payment terms to suppliers by as much as 30 days — from an average of 45 days to a new target of 75 days.
The Journal reports that P&G was following the lead of many other large companies that were keeping their cash longer to help them fund expansions, investor dividends or other needs.
Of course, payment terms have been and always will be an important part of the total cost of ownership of anything in the supply chain. They are tools like many others. But as one of the sharpest of those tools, payment terms can cut two ways.
You may be comfortable that your tier one supplier can find funds at low interest rates to manage the situation without affecting deliveries to you or the overall health of the supplier. But the fact is, the more likely scenario is that tier ones will extend their own terms to tier two, and so on. Eventually, the shock of the change has to be absorbed.
How well do you know the financial health of every company at every level in your supply chain? Can you be sure there isn’t a service provider in your chain that has to meet a biweekly payroll, or some other upstream company that supplies a critical part on a razor-thin operating margin because it’s a startup or has put everything into an R&D effort? If so, you might be sowing the seeds of disaster at the same time you are harvesting what appears to be an easy source of cash.

ISM’s Annual Conference – Best Ever

I have been an exhibitor and speaker at ISM’s Annual International Conferences and have had the pleasure of attending every one since 1992 in Orlando. Each conference offers a slew of current and useful information, great networking events, and numerous avenues for growth for all levels of expertise. However, i think this year’s conference in Grapevine (Dallas area), TX  will be the best one ever.

Check out ISM’s impressive lineup of keynote speakers, starting with the 66th U.S. Secretary of State, Condoleezza Rice. In addition, Hau Lee of Stanford University Graduate School of Business will speak about agile supply chains and Bernard Baumohl, award-winning economics reporter for TIME magazine, will lead ISM’s annual Business Survey/Economic Outlook.

Another reason I’m looking forward to this year’s conference is ISM’s increased presence in the exhibit hall. ISM’s booth is expanded and placed in the center of the exhibit hall. The booth’s Solutions Bar gives attendees easy access to ISM Board members, speakers, ISM staff members, and conference volunteers. There will be separate kiosks for ISM Professional Credentials, Membership, Education as well as CAPS Research. ADR North America will also have its own kiosk, so please stop by.

The real meat of the ISM conference, however, lies in its numerous hour-long learning sessions, two-hour mega-sessions, and pre- and post-conference seminars. ISM conference sessions have always been topical, but this year there’s even more of an emphasis on information you need now, like the new ’Breaking News’ sessions on supply chain security. Here are some other great sessions I jotted down while browsing the brochure…

• Session BI — Offshore or Reshore? How to Objectively Decide
• Session HH — Create Adaptive Sourcing Strategy Under China’s New Tax Code
• Session GC — Critical Skills 101: What CPOs Want
• Session IH — Volatility: Managing Price Fluctuations in Volatile Markets
• Session BG — Beyond BRIC: Supply Chain Strategy in Emerging Economies
• Session ID — Avoiding Risky Afterthoughts: Integrating the Management of Supply Risk and Business Continuity

ISM also has two new professional development tracks: ‘Supply Management for Emerging Professionals and Their Managers’ and ‘Game Changers’. These new tracks have learning sessions like, “Things My Professor Never Taught Me”, “Sourcing and Category Management 101”, and “Understand Uncertainty Before Building Strategy”.

Among the nine mega-sessions offered, I’m leading one on Wednesday morning called, “Accelerate Your Career: Do You Have What It Takes?”.

ISM is also introducing its first ‘On-Point’ seminar, to be offered on Wednesday afternoon (the last day of conference). The topic this year is Cost Containment and I’m fortunate to be the instructor for this class as well.

ISM Board members will have a stronger presence at this year’s conference. In addition to the Solutions Bar inside the ISM exhibit booth, you’ll see the following Board members presenting a session, sitting on a panel, or leading one of our ten learning tracks: Jason Kwan, Lisa Martin, C.P.M., Ann Oka, Joseph Black, Steven Miller, Tim Fiore, CPSM, C.P.M., MCIPS, Kimberly Brown, and new Chair, Thomas K. Linton. You’ll also see former Board Chairs Dave Nelson, C.P.M., A.P.P, and Shelley Stewart, Jr., CPSM on an all-star panel called, “How We Did It”.

Another nice addition this year is a Team Discount of $300 per registrant (if four or more register at the same time). ISM has always had a team discount, but the increase to $300 is a great deal. And be sure to take advantage of the additional discount when you register before April 15.

ISM is making concerted efforts this year by attracting emerging professionals, offering more timely and relevant information, by brining in great keynotes, and making its Board of Directors and staff more accessible. I invite you to take part in the excitement.

Drop by The ISM Exhibit and say Hello.

A must-read for anyone who wants to write a book

I came across Guy Kawasaki’s book, APE: Author, Publisher, Entrepreneur — How to Publish a Book because my wife Linda was a beta tester for it. And this blog is a perfect example of one the many great strategies Kawasaki suggests for subject matter experts to use to help them write, publish and promote their own books. The title is appropriate Kawasaki walks the reader (i.e. aspiring author) through the process from writing to post-publication publicity with every detail covered. I’ve been an author, and I can vouch for his descriptions of the effort it takes to finish a book and publish it through traditional means. Self-publishing offers some great advantages for writers; Kawasaki shares those, but he doesn’t hide any of the pitfalls either. It’s not an easy task to be managing all three aspects of traditional publishing.
He’s got a great chapter on making your book look like it isn’t self-published, for instance. It includes suggestions for naming the publishing imprint you create for yourself. Hint: don’t pick your own name.
The book is right up to date in its references to social media and the quickly changing environment of publishing, but as Kawasaki points out, that dynamic will also put some of the information out of date quickly, too. He does address that issue, and since there is so much in APE that is fundamental to the process, it shouldn’t be a deal-killer.
I shared the book with a friend of mine in marketing and he called the tips for guerrilla marketing a self-published work “spot on.” I suppose good guerrilla marketing should be expected from any author who names his book, “APE.”
Here are the basics:
Name: APE: Author, Publisher, Entrepreneur–How to Publish a Book (ISBN 978-0-9885231-1-1)
Price: $9.99 as a Kindle ebook
Website: http://apethebook.com/
SPIT (Self-Publishing Intelligence Test):
http://electricpulp.com/guykawasaki/ape/

ISM Report on Business: Working on the Edge

ISM released its August Report on Business – Manufacturing, and the news is not surprising considering the continuing European debt saga, Indian snafus such as the biggest power outage in history and other uncertainties. The index is just under the 50 mark — making it the second consecutive month of manufacturing decline after a run of 34 positive months. According to ISM, the overall economy is still growing, and that mixed result is reflected in comments from survey participants that ranged from “demand is strong” to “a marked slowing in business overall.” While it generally makes sense not to take great risks in the face of such uncertainties, there are also good opportunities for leverage if your company or your industry is one of those that still has positive momentum. Suppliers who see softening demand from other customers may be willing to trade margin for the certainty of your business. These are times when you can take advantage if you have been careful to build cost models for what you buy. The more you understand what drives the prices of your suppliers, the better position you’re in lower them without driving your supply base out of business.

Slow Motion

According to the monthly survey by ChiefExecutive.net, CEOs confidence in the economy is on a seven-month downward slide. A majority of those polled thought overall business conditions over the next year would be just below average, on a ten-point scale. Nearly 25% of CEOs responded that they expect their profits to drop and their capital expenditures to decrease as well.
Even so — most CEOs polled also are not expecting a serious downturn in conditions. From where they sit, it looks like another year of slow motion.

http://chiefexecutive.net/nearly-25-of-ceos-expect-drop-in-profits-and-cap-ex-this-year

 

Consumers Role in Chain of Custody

Can you remember everything you’ve eaten in the last week? That apparently was one of the issues facing investigators trying to track the source of antibiotic-resistant salmonella that killed one woman and made people sick in 26 states over a five month period. According to an Associated Press story, some victims won’t or can’t recall what they have consumed that might have been contaminated. That makes it difficult to track down the source of the infection. A USDA official told AP that grocery loyalty cards helped investigators pin down the source when memories failed.
The scope of the recall — 36 million pounds of ground turkey — and the size of the company involved — Cargill — will likely heat up discussions about tighter chain of custody regulations in the food industry. The recalled turkey was packaged under eleven different brand names. And five months is a long time between the first illness and the first public alert.
Nevertheless, the situation also shows that no matter how well you document the chain of custody from raw material to consumer, there is still one more link –  the consumer him or herself.

Caution flag for China as labor rates rise

Labor rates in China are on the rise. Inflation is fueling the concern of many workers according to this report in TodayOnline.com.
The publication says that projections have notched up from 3-4 to 4-5 percent in Singapore, but some economists in the region still say the slow global recovery is helping to keep a lid on a wage-price spiral.
In short — more evidence that sourcing in China is not the “no brainer” decision that many experts once claimed it was. There are still many benefits, but as any sourcing decision — it requires careful analysis.

What CEOs Want

Supply Management has come a long way since it was essentially an administrative function. CEOs now expect procurement teams to be executing strategies that bring innovation, manage risks, and bring other value to the organization. The skill sets for these assignments go far beyond closing a deal.
I’ll be describing more things CEOs expect in a webinar hosted by MyPurchasingCenter.com on Tuesday, August 2.  Please join the discussion by registering for What CEOs Expect: http://bit.ly/ncYfpr

 

Waiting Has a Cost

CEOs and CFOs that are sitting on cash right now, waiting for an indication of which way the economy is going, are losing an opportunity to prepare for whatever is next. Here’s the link to my article on it, posted on MyPurchasingCenter.com and called, The Cost of Waiting.

From Buyer to Supply Manager in 25 years

ADR celebrates its 25th anniversary today. We’re here at the annual ISM annual conference, where we are seeing and getting to meet some of the newest and brightest practitioners in our profession, as well as colleagues I’ve worked with for many years. All in all it’s a fitting place to reflect on the changes we’ve seen in those 25 years, as well as the challenges ahead.

I chose the headline for this post because it pretty well captures the path of procurement since ADR was founded. What once was primarily a back-room administrative function has become an important process that CEOs recognize as critical to the success of the enterprise.

Clearly the trajectory of the profession is continuing in the same direction. My presentation this morning was on business skills supply managers need outside their envelope of typical experience. It wasn’t long ago that we’d be delighted to see a procurement professional on a cross-functional team trying to bring new value from suppliers through strategic relationships. Now we are starting to see CEOs calling on procurement executives to lead teams addressing a wide orange of business issues. The scope of our work has increased dramatically, and when it does, the old silos have truly toppled.

BTW – here’s the link to a brief article about our anniversary.

http://www.adr-international.com/news-media-pr/press-releases/365/