PROFESSIONAL PURCHASING

PROFESSIONAL

PURCHASING

PROFESSIONAL PURCHASING (ISSN 1070-0455), published monthly free to members. Copyright ©, 2016, American Purchasing Society, Inc., P.O. Box 256, Aurora, IL 60507, U.S.A.,Phone (630)

859-0250,FAX (630) 859-0270, E-Mail [email protected]. All rights reserved. Material may not be reproduced or quoted in whole or in part in any form whatsoever without permission.

VOLUME 44, REPORT NUMBER 7/8 www.american-purchasing.com JULY/AUGUST 2016

There are a number of very good reasons to forecast

your costs for the balance of the year. First you should

know how your purchase prices are going to affect your

performance compared with your budget. You also want to know

if you should be interviewing potential buyers or other staff to

accomplish your projected goals for the year. If you expect the

economy to turn down, you need to plan how you will reduce

staff or take other measures to minimize the downturn.

Forecasting the cost of individual products will help determine

where your cost control efforts should be directed.

Most cost control effort should be placed on those products

that account for most of your expenditures. Many purchasing

managers set up meetings with their major suppliers to get their

input on ways of reducing cost. Suppliers usually are willing to

offer suggestions to please the customer rather than having the

competition gain credit for cost reductions. However, not all the

suggestions will be helpful or meaningful. Nevertheless,

occasionally gems will be offered. Don’t miss the opportunity

to get new ideas.

There are many factors that influence purchase costs. Not

the least is the general state of the economy, but the performance

of particular industries also affects product cost. For example,

personal computer sales have been declining whereas mobile

smart phone sales have been increasing.

Analysis of particular products can indicate normal times

of the year when sales of those products increase or decrease.

In other words, sales records may indicate cyclical sales volume

behavior and associated price increases or bargain pricing.

Historic company sales figures are available on the income

statements for publicly traded stocks. Some sales figures are

available for privately held corporation through trade magazine

and trade associations.

Inside this Issue Page

The Economy:How Will Brexit Affect The U.S.? 3

Job Opportunities 4-5

Online Course Schedule 6-7

History:Negotiation Lessons FromThe Battle At Appomattox 8

Member Profile:Pipeline to Professionalism 9

Overcoming The Salesman’sAdvantage 10

New! Certified Professional InDistribution And Warehousing 11

Recently Certified 12-13

New Members 14-15

Books Offered 16-17

Member Question:When Should We Obtain Bids? 18

Lesson Fundamentals:How Suppliers Try ToInfluence Buyers 18

Membership Application 19

Today’s Tip:Understand The Salesman’sPoint Of View 20

When Are Bids Obtained FromLongtime Suppliers? 20

Published Since 1972

Forecasting Your Costs

For Balance Of The Year

Continued page 2

PROFESSIONAL PURCHASING 2 JULY/AUGUST 2016

PUBLISHERAmerican Purchasing Society, Inc.630 859-0250Fax 630 859-0270E-Mail [email protected]

EDITOR IN CHIEFHarry E. Hough, Ph.D., CPP, CPPM

SENIOR EDITORLynne Marlor

EDITORSRichard H. Hough, CPP, CPPCCaroline S. Sieben

CONTRIBUTING EDITORSRobert Menard, CPP, CGPP, CPPCJeff Steele

ASSISTANT EDITORSMimi SteinwartEllen SiebenThomas Sieben

PROFESSIONAL

PURCHASINGwww.american-purchasing.com

Information for business buyersand purchasing managers

September

Differences When Buying For

Various Types Of Businesses

October

Maximize Benefits From

Available Time

November/December

How To Solve Purchased

Services Problems

COMING IN NEXT ISSUES

Forecasting Your Costs

For Balance Of The Year

Look at your own usage pattern to determine when you will be

needing more stock or when you will be cutting back on your ordering.

Relate your expected purchase volume to the expected price movements

to determine the effect on your organization.

Look for trends in the economy and in your purchase activities.

Plot those trends on a graph to forecast the future. If you haven’t had

a price increase in many years while all other costs have been

increasing, you should expect an increase sooner rather than later.

Be cautious about forecasting those price increases that may be

requested on products where prices have remained the same for a

long period. Inflation would have caused price increases for all other

products and should have done the same for those where prices were

not increased. Eventual requests are often exorbitant to make up for

the lost time. The companies suddenly realize that they are losing money

on every sale of those products. A counter argument when negotiating

to their large increase request is to point out that their previous price

must have been excessive if they can maintain it for so long while all

costs were increasing. Negotiating the large increase may substantially

reduce the amount. Therefore, be careful about forecasting large

amounts.

The expected volume of your own purchases is probably the most

significant factor affecting your costs. An increase in volume should

reduce your product cost per unit if you shop for the lowest cost and if

your negotiate with either your present suppliers or with new suppliers.

Unit cost is reduced through economies of scale. In most cases, the

more you buy, the lower the price. Conversely, if your company expects

a downturn in sales or usage of particular items, your cost per unit is

eventually likely to rise. We say eventually because suppliers will not

immediately recognize the slowing of orders or they will not realize

that quantity reductions indicate a permanent decline in sales.

The purchasing manager should get forecasting input from each

buyer. The buyer usually has more insight into the pricing stability or

vulnerability of the products that he or she purchases than the manager

who is not as closely involved with the suppliers of those products.

However, the manager must assess each buyer’s ability to predict price

movements. Over time with repeated requests, the manager will gain

confidence in which buyers make accurate forecasts and which buyers’

forecasts are wrong.

General management, sales management, and the financial people

may ask for purchase price forecasts for their own purposes, in addition

to the usefulness of a forecast for purchasing management, . In any

case, a careful well-prepared written report should be made and

distributed to interested parties. Good reporting of useful information is

appreciated and engenders respect for purchasing management.vvvvv

Continued from front


The Economy

How Will Brexit Affect the U.S.?

* Preliminary. All indexes are subject to revision four months after original publication. Source: U.S. Department of Labor, Bureau of Labor Statistics

The U.K. voted to leave the European Union. Stock

markets initially reacted negatively because many

investors did not believe that the final vote numbers

would be enough to leave the Union.

Now, many Americans are wondering how (the) Brexit

will impact their lives and the U.S. economy.

It appears that the U.K. does not have as much direct

effect on the U.S. as one might think. Wells Fargo cited

data that only 4% of U.S. exports are bound for the U.K.,

about 0.4% of U.S. GDP. British assets in U.S. banks are

$500 billion, which is only 3% of the total. British securities

owned by Americans is $1.3 trillion, but this is a very small

figure compared to the $70 trillion of American household

financial assets.

However, it is generally believed that the Brexit could

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have an effect on the U.S. economy through tighter financial

conditions, which means that it becomes more difficult and

more expensive to borrow money. Less borrowing will mean

less investing, which will decrease economic activity.

The main threat is not direct exposure to the U.K., but

whether businesses or consumers will borrow money or

need investment capital.

Marketplace and Edison conducted a national survey

with 1,022 participants about their financial lives. The results

were not very positive. 32% say they lose sleep over their

financial situation. 48% believe that the economy will be

worse for the next generation of Americans. Even more

alarming, 71% believe that the U.S. economic system is

rigged in favor of certain groups. 61% of Hispanics, 71%

of White/Other, and 80% of African Americans agree.vvvvv


Employment Opportunities

How to Plan Your Career

and Prepare a Resume Online Course

A self-running Web based course developed by the APS

and only available from the Society. In Part 1 learn how

to plan your career to achieve your goals. Then in Part 2

learn how to prepare a great resume that will get you

more and better job interviews. Part 3 will tell how to

take a successful job interview and avoid serious

mistakes. Go to www.american-purchasing.com and

click on Courses and Seminars to register. All students

who complete this course will earn a certificate of

completion and 2 CPP Points.

SENIOR BUYER

Apio, Inc., Guadalupe, California. The Senior Buyer will be responsible

for replenishment activities, supporting various reporting activities,

vendor management, and continuous profit enhancement initiatives. This

role will play an integral position in activities such as coordinating &

soliciting cross functional support, managing various information streams

and being accountable for identifying solutions in support of supply

chain related activities. Daily activities will involve procuring goods that

meet companys specific level of quality, delivery and optimum cost for

operation support. The Senior Buyer works closely with multiple levels

within production plants, internal customers and suppliers. The Senior

Buyer is well-versed in food ingredients and packaging. Responsibilities:

Maintain accurate inventory positions for all facilities with min/max

levels, avoiding stock out and overstock inventories. Reviews, interprets,

implements and communicates material supply forecast to suppliers and

co-manufactures. Ensure all suppliers have consistent forecast visibility

and adequate capacity. Create and manage purchase orders and subsequent

deliveries. To include shipment reconciliations, back orders, damaged

goods and invoice discrepancies. Actively participates in the RFP,

negotiation, and management of supplier agreements covering cost, quality,

and delivery terms. Researches and procures special ingredients for new

projects while keeping up with market trends. Understanding of

commodity futures and options trading in the Chicago Board of Trading

(CBOT), Chicago Mercantile Exchange (CME) and Chem Data Index

(CDI). Administers supplier performance management and improvement

efforts, including leading regular supplier business reviews. Act as

primary liaison between cross-functional partners, plants, and suppliers

to ensure supply plan requirements are being met and resolve supply,

quality and cost issues. Ensure material specifications are correct and

clear for suppliers and the Quality Department. Supervises the daily

activities of 3 buyers and support staff. Qualifications: 5+ years of

experience in procurement and supply chain in a manufacturing setting

preferred. Minimum four year degree in related field or equivalent on the

job experience. Microsoft Office with advanced Excel and PowerPoint

knowledge. Solid mathematical and analytical skills. Solid communication

and presentation skills. Strong working knowledge of JDE preferred.

Strong negotiating skills, Time management & Organization skills. Excels

both within a team environment & works with minimal supervision.

Must be self-motivated, enthusiastic, positive and self-confident.

Demonstrates attention to detail. High level of integrity and outstanding

work ethic. Bilingual preferred. Benefits: 401(k) with Company Match.

Dental Insurance. Disability. Medical Insurance. Paid Holidays. Paid

Time Off (PTO). Vision Insurance. Salary: $80,000 - $90,000 per year.

Please email to [email protected] for more information.

PROCUREMENT SERVICES DIRECTOR

Collier County is located on Florida’s southwest coast approximately

150 miles south of Tampa. It is a diverse mix of urban and rural areas,

and coastlines and inlands. One of the largest geographical counties east

of the Mississippi River, the County encompasses over 2,000 square

miles and has something for everyone. Collier County, Florida is seeking

a collaborative, proven leader to head its Procurement Services Division.

The individual will be someone who is dynamic, energetic, of highest integrity

and with a passion for excellence. He/she will be enthusiastic, personable

and likeable with outstanding people skills. Living the County’s guiding

principles of honesty and integrity; service; accountability; quality; respect;

knowledge; stewardship; collaboration; and self-initiating, self-correcting

will be essential to success. This is a great job where the individual has a

high degree of independence. Consequently, he/she will be a self-starter

with a sense of urgency. For more details, go to www.cb-asso.com

under Executive Search / Active Recruitments. The minimum

requirements are a Bachelor’s degree in public administration or closely

related field; supplemented by five years of progressively responsible

managerial experience in public procurement; or any equivalent

combination of education, training, and experience which provides the

requisite knowledge, skills, and abilities for this job. Fingerprinting is

required. Certification by NIGP or other equally recognized organization

and a strong background in procurement and contract law is highly desirable.

The salary will be between $92,597 and $136,427 annually. The County

offers a broad benefits package and participates in the Florida State

Retirement System. To apply, e-mail your resume to Recruit35@cb-

asso.com by July 8th. Faxed and mailed resumes will not be considered.

Questions should be directed to David Collier, Senior Vice President at

(772) 220-4320, or Colin Baenziger at (561) 707-3537.


Employment Opportunities

Recruiters and HR Managers

Remember, when you are ready to find purchasing,materials management, or supply chain managementhelp, Professional Purchasing and the Society’s Webat www.american-purchasing.com is the place toadvertise to reach the best candidates. Many membersand guests visit our website each day looking for jobopenings and career enhancements. They also post theirresumes to the site, so recruiters and HR managers cansearch for and contact the best qualified person for theiremployment opportunity.

DIRECTOR OF PROCUREMENT

Saint Peter’s University, Jersey City, New Jersey. Under the direction of

the Vice President for Finance & Treasurer, the Director of Procurement

is responsible for all phases of the University’s procurement process for

goods and services for a public university with annual outlays totaling

more than $350 million. The Director develops University-wide

procurement policies and procedures; ensures compliance with public

bidding laws and regulations; manages the acquisition process in

collaboration with school and departmental sponsors (including RFP/

RFQ development, evaluation, selection, and contract negotiation); and

assists in the ongoing administration of contracts with suppliers. The

Director leads or participates in the final negotiation of University

contracts for goods and services, resolves bid and contract disputes in

consultation with other University departments and with government

entities as appropriate, and maintains all information required under

applicable laws, regulations, and University policy. The Director leads

efforts to introduce new strategies, techniques, technologies, and

workflows to the procurement process in order to minimize costs and

improve services to the University community. Formulates all purchasing

office policies, procedures, and related forms; revises them as needed or

required, publishes them for the benefit of internal users and vendors,

and educates/trains staff who are involved in the procurement process.

Plans, coordinates, and administers each procurement process, beginning

with the identification of need and continuing through the bidding,

evaluation, selection, award, and contracting process. Qualifications:

Bachelor’s degree in business or a related field, master’s degree preferred.

Comprehensive knowledge of public bidding laws, regulations, and

requirements; preferably through experience in a New Jersey public

entity. At least 5 years of experience directly supervising a procurement

staff team, including hiring, training, mentoring, and evaluating staff,

preferably in a comparably large, complex, and fast-paced procurement

operation. Strong technology skills, which include deep knowledge of

enterprise systems including a sophisticated procurement module, with

strong preference for experience with PeopleSofts procurement module

and experience introducing upgrades and new features. In addition, strong

spreadsheet and database skills. A commitment to the principles and

practices of continuous improvement. An analytical approach identifying

opportunities and barriers, but also a creative and pragmatic approach to

develop solutions. Excellent written, oral, interpersonal communications

and management skills. *When creating a profile, you will need to combine

your resume and cover letter into one Word or PDF document.** https:/

/jobs-montclairedu.icims.com/jobs/1503/director-of-procurement%2c-

goods-and-services/job.

Buyers, Purchasing Managers, Materials

Managers, and Supply Chain Managers

When applying for any of these positions, please tellthe employer that you saw the advertisement inProfessional Purchasing, a publication of theAmerican Purchasing Society. Go to www.american-purchasing.com for more help wanted ads and morejob information.

SITE PROCUREMENT LEAD WITH WAREHOUSE

PotashCorp, Augusta, Georgia. The Site Procurement Lead will be a

critical member of the PotashCorp Augusta’s on-site management team,

directing the procurement of all supplies, equipment and services to

ensure an optimum balance of quality, price and service. Education and

Experience Required: Bachelor’s degree and 6-8 years experience in

procurement of highly technical materials and equipment. Certified

Professional Purchasing Manager and/or Certified Professional in Supply

Management preferred. Strong analytical and negotiation skills and solid

understanding of contracting principles. Mechanical aptitude with a

working knowledge of machinery specifications and drawings. Must

demonstrate effective negotiating techniques and have a thorough working

knowledge of legal principles specified in the UCC and Contract Law as

they relate to the Procurement function. Benefits: Competitive

compensation package which includes an annual bonus plan. Our

comprehensive benefits plan includes health insurance that starts on

your first day of employment, a matching 401k plan and a pension plan.

Interested candidates will need to submit a detailed resume describing

work experience and education and a cover letter or brief explanation of

why you are a good fit for the position. Strongest applicants will be

contacted to interview with company representatives and may be asked

to give a PowerPoint presentation. Email resume

to:[email protected]. Extensive employment and criminal

background investigation and a comprehensive pre-employment medical

exam including a drug screen will be required for selected candidate. EOE.


Online Course ScheduleFor more information, a complete schedule and to register today go to www.american-purchasing.com

New! Purchasing For Manufacturing - Available at all times and repeatedcontinually. Fee $154, APS members $129. Qualifies for 2 CPP points.This course is for those who work for manufacturing companies or who

want to prepare themselves for the possibility of obtaining a position in

a manufacturing company. It is a course for buyers and managers who

buy products and services for manufacturing organizations, for those

new to their jobs, or for those who want to refresh their knowledge. The

course gives information about the differences in buying for various

types of industries. You will learn about the objectives of purchasing for

manufacturing. The course covers the buying process for manufacturing,

the important issues of buying tooling, the importance of proper

specifications, and the essentials of inventory management. JIT, MRP,

and Supply Chain Management systems are described, as well as Six

Sigma and Lean Six Sigma.

New! Distribution and Warehouse Management - Available at all timesand repeated continually. Fee $129, APS members $99. Qualifies for 2CPP points. This course will teach students what is meant by

warehousing, definitions, its importance, related functions, types of

facilities, and more. Also covered in this course are warehouse design and

space required, equipment, operating activities, and locator systems and

product identification.

New! Inventory for Distribution and Warehouse Management -Available at all times and repeated continually. Fee $129, APS members

$99. Qualifies for 2 CPP points. This course covers many aspects of

inventory and how they relate to distribution and warehousing

functions. Covered are types of inventory, types of controls, record

keeping, item identification, locator systems, RFID, counting

methods, and much more.

New! Management Operartions and Logistics - Available at all timesand repeated continually. Fee $129, APS members $99. Qualifies for 2

CPP points. This course will teach students about management operations

and include information on its purpose, duties, decision making,

organizing, staffing, planning, controlling, and more. Other areas covered

are management psychologies, human resources and the law, transportation

and logistics, domestic and international transactions, and ERP.

Forecasting for Buyers, Managers, and Business Executives -Available at all times and repeated continually. Fee $129, APSmembers $99. Qualifies for 2 CPP points. This course providesessential knowledge about forecasting methods. Using these methodshelps you predict how prices will change, what inventory you willneed, and the size of your staff required to run your operationefficiently. Buyers and purchasing managers should use forecastingto time their purchases for lower prices. Forecasts should be used todetermine how much they should buy at any point in time. Predictingsales and usage volume helps the manager know when to increase ordecrease the workforce. Buyers and management should useforecasting to predict market changes that may affect their operation.Participants will learn the strengths of short-term forecasts and thelimitations of long-term forecasts. The course was developed byMark Miller, Associate Professor of Business at Carthage Collegewith many years of business experience in purchasing and supplychain management. Prior knowledge of some mathematics is helpfulfor those taking this course.

Preparation for CPP Exam - 3 week online course including exam.Qualifies for 13 CPP points. August 15 to September 4, 2016. Fee$700, APS members $540. This course is required for the CPP and isthe best training for buyers and purchasing managers to prepare for theCertified Purchasing Professional (CPP) examination. When completed,you will be encouraged, if you have not already done so, to apply forprofessional certification recognition. The course includes an instructor,the study guide, five different online courses, and the exam. Registrationand payment are required in advance. Register online at www.american-purchasing.com or phone (630) 859-0250. Please visit our website formore details.

Preparation for CPPM Exam - 3 week online course including exam.Qualifies for 10 CPP points. July 18 to August 7, 2016. Fee $600, APSmembers $440. This is the only online course available and approvedby the APS to prepare for Certified Professional Purchasing Managerrecognition. The exam is given at the end of the course without extracharge and is accepted by the Society as fulfillment of the CPPMrequirements providing the student has achieved CPP and has madeseparate application for the CPPM recognition.

Preparation for CGPP Exam - Up to 45 days online course includingexam. Continuous enrollment. Fee $300, APS members $215. Qualifiesfor 3 CPP points. Included are the workbook “Green Purchasing andSustainability”, the two-part self-running course titled “Green

Purchasing and Sustainability”, and the CGPP examination. As more

and more executive decisions include sustainability, buyers and

purchasing managers need to learn how they can be part of the process

before the policies and procedures are set in place. Sustainability is

quickly developing and changing, and the sooner purchasing

professionals begin to learn about the subject and current things that

they can do to encourage and embrace it, the better position they will be

in for the long-term future. Students will be taught what purchasing’s

role is in sustainability, how to develop a green purchasing plan, how it

can be included in facilities practices, how to utilize the 3Rs, energy

savings ideas, and more.

Applied Cost and Price Analysis - Available at all times and repeatedcontinually. Fee $154, APS members $129. Qualifies for 2 CPPpoints. This new online course will identify, define, describe, anddifferentiate the constituent elements of both Cost and PriceAnalysis. It will also provide step by step processes, lists, andactions that must be taken and/or avoided in selecting and managingsuppliers and their performance, and furnish specific tools andtemplates that make the Cost and Price Analysis decisions based onhard “Dollars and Numbers” criteria. Cost and Price Analysis skillsare among the most effective purchasing management tools. Theyreduce prices by eliminating unnecessary costs which leads tomutually beneficial results for supplier and customer. Some of theimportant skills you will learn are: The eight most common PricingStrategies revealed and explained. How prices are established. Dozensof tools, techniques, and modifiable, reusable templates. How toidentify and apply Cost Drivers. How to apply Cost and Priceanalysis to basic Spend Analytics. In addition, the course willdemonstrate with tables and templates how to use Cost and PriceAnalysis for better results in supplier negotiation, bid analysis, andsupplier performance evaluation. Website sources investigated and foundto be useful for purposes are included as supplementary resources.


Online Course ScheduleFor more information, a complete schedule and to register today go to www.american-purchasing.com

Business Ethics for Buyers and Sellers - Available at all times and

repeated continually. Fee $154, APS members $129. Qualifies for 2 CPP

points. The Certified Purchasing Professional (CPP) program has always

stressed the importance of proper business conduct. Now, recent surveys

have discovered that there is renewed interest in courses related to

business ethics. College students are beginning to request that their

attending school offer classes in ethics. This self-running course fills

this need. Learn the meaning and sources of ethics. Learn how ethics

affects the way in which we do business. Know how to make ethical

decisions. Understand the relationship between the law and ethics. Feel

more comfortable making ethical decisions. Become familiar with the

ethical issues that buyers and sellers confront. Know the APS Code of

Ethics. Qualifies as one of the free courses for new joining and renewing

members.Course runs approximately two hours long.

How to Save $Thousands Buying a Car - Available at all times and

repeated continually. Introductory Price $29.99. Qualifies for 1 CPP

point. Many of us overpay when we buy a new or used car. Take this

course to learn how to save hundreds, maybe even thousands of dollars

when you buy a new or used car. You will learn the best places to find

information about the car you want. The course will tell you how to

negotiate with the dealer. It will let you know how pricing methods may

mislead you and how you can avoid being deceived. It will tell you about

different ways to finance the car. It will give you information about

leasing compared with buying. It will give you what you need to know

about trading in your old vehicle. The course covers certified cars and

service agreements. What you learn will help you now and for many

years in the future.

About F.A.R. - Available at all times and repeated continually. Fee $59,

$39 APS members. Qualifies for 1 CPP point. If you buy for the

government or your organization sells to the government you should

know about the government’s rules and regulations concerning purchasing.

Even if you work in private industry you should take this course to learn

about the policies and procedures used for government purchases. If you

only buy for private businesses, this course will help you understand the

differences between private and public purchasing. You will learn about

the federal government positions who are authorized to buy and what

their authority is. You will learn what the applicable laws are that are

related to federal government transactions. The course includes various

terms and conditions useful for purchasers. It covers the differences

between government contracts and those used by private industry.

Influencing Suppliers, Colleagues, and Management - Availableat all times and repeated continually. Fee $129, APS members $99.Qualifies for 2 CPP points. This course teaches you how to negotiatebetter deals by influencing or persuading those individuals you dealwith at work or anywhere else. The course tells you how to persuadeothers by the proper way you talk, the appropriate way you look,and how you behave. You will learn the importance of dressingproperly, having proper body language, and expressing your interestin what others are also interested in. Using the information in thiscourse is proven effective by a wide range of experiments and researchstudies, as well as the experience of professional buyers, managers,and executives. The course was developed by Harry Hough, anexperienced negotiator, consultant, and business executive.

Managing Quality - How to Get the Quality and Service You Want -

Available at all times and repeated continually. Fee $154, APS members

$129. Qualifies for 2 CPP points. A course designed to help you obtain

the best quality for your purposes. Good quality starts with defining

what you expect. The course covers quality issues both inside the

organization as well as the quality produced by suppliers. Different

quality theories, measurement techniques, and the cost of quality are

discussed. Testing tools are also described. Quality standards and awards

are listed. This course should be a must for every quality control

employee as well as for all buyers and purchasing managers regardless

of their industry.

How To Be A Smart MRO Buyer - Available at all times and repeated

continually. Fee $154, APS members $129. Qualifies for 2 CPP points.

The course explains the differences between MRO buying and other

types of purchases and gives you the information that will permit you

to take advantage of the unique features of MRO buying. Take this

course to learn the best ways to reduce MRO costs. Learn the best

places to obtain supplies. Find out how you can reduce your workload

and satisfy requisitioners’ needs.

Accounting, Finance, and Cost Management for Buyers and

Managers - Available at all times and repeated continually. Fee $154,

APS members $129. Qualifies for 2 CPP points. This course is an

introduction to accounting and finance and suitable for those who have

never had a course in accounting as well as those who wish to review

the subject. Topics include the accounting process, financial reports,

methods of evaluating inventory, budgeting, methods of evaluating

financial performance, and many other related subjects.

Fundamentals of Business Buying and Purchasing Management

- Available at all times and repeated continually. Fee $154, APS members

$129. Qualifies for 2 CPP points. A self-running Web-based course

developed by the APS. Don’t know much about business or buying for

business? Then this is the course for you. A three part online course

that introduces you to accepted business practices and gives you the

understanding to accept a position as a buyer or purchasing manager.

76 Ways to Improve Purchasing Performance - Available at all times

and repeated continually. Fee $154, APS members $129. Qualifies for

2 CPP points. Invaluable information and tips to help you negotiate

transactions, show you ways to reduce costs, and provide help to make

your purchasing operation more efficient. The course provides well

over 76 ways to improve your operation.

5 Convenient Ways to Register

Call 1-630-859-0250, or Fax to 1-630-859-0270,

or fill out the online form at www.american-purchasing.com,

or send an E-mail to [email protected], or mail to:

American Purchasing Society

8 E. Galena Blvd., Suite 203, Aurora, IL 60506


Negotiation Lessons From

The Battle At Appomattoxby Robert Menard, CPP, CPPM, CGPP, CPPC

The battle at Appomattox, VA ended the American

Civil War and provided six enduring negotiation

lessons:

One - The power of Higher Authority. In April 1865,

the Confederate troops were sealed off in three directions;

their only escape route was to the north, into the volleys of

the advancing Union infantry. Union troops had captured

the replenishments of Confederate food and armaments at

a rail station east of Appomattox.

On April 09, Grant responded to Lee that he was not

authorized to negotiate on the matter of peace between the

two warring sides. Grant’s skillful application of the “Higher

Authority” tactic may well have prodded Lee to offer his

best deal to end the misery of the Civil War.

Two - Respect for the other side. Generals Lee and

Grant were honorable men and acutely aware of the toll

the war had taken in blood, treasure, and sorrow. In his

memoirs, Grant wrote of the negotiations with Lee “…it

was impossible to say whether he felt inwardly glad

that the end had finally come, or felt sad over the

result…I do not question, however, the sincerity [of Lee

or] of the great mass of those who were opposed to us.

Note the utmost level of respect Grant reserves for

Lee. He does not think of Lee as an enemy but also a man

of feelings, commitments, and honor. Grant recognized the

personality factors that play into negotiation and was

scrupulously careful to try to understand Lee’s while

controlling his own.

Three - Expect the unexpected. At the meeting, Grant

was underdressed with respect to Lee. Without a doubt,

the appearance of the two generals created an obvious

imbalance. Was power shifted by having the surrendering

general out dress the winning general? Was this sartorial

reversal an intended negotiation tactic by Grant? The

answer lies buried in history.

Four - Never drive your counterpart beyond a

reasonable position. Grant wrote, “The arms, artillery and

public property is to be parked and stacked, and turned

over to the officer appointed by me to receive them.

This will not embrace the side-arms of the officers, nor

their private horses or baggage. This done, each officer

and man will be allowed to return to their homes, not to

be disturbed by United States authority so long as they

observe their paroles and the laws in force where they

may reside.”

A condition of the surrender, insisted upon by Grant, was

that no Union soldier would abuse, taunt, or otherwise

demean any Confederate soldier. The Confederate soldiers

were allowed to carry their government issued arms and

pile them in rows along the roadway with the dignity of

erstwhile warriors intent on resuming their pre–war roles as

farmers and ranchers.

By this concession, Grant drove the negotiation to what

we could call today the “Win-Win” strategy. The Confederate

soldiers were fellow countrymen and honorable men who fought

for their beliefs but lost. Now was the time for healing. By this

strategy, Grant removed the motivation for retaliation.

Five - Allow your counterpart to thrive. Grant continued

in his memoir to relay the exchanges between him and Lee

about “…the [Confederate] officers’… private horses and

effects, which were important to them, but of no value to

us; also that it would be an unnecessary humiliation to

call upon them to deliver their side arms”.

Grant had the foresight to realize that it was necessary

for the Confederate soldiers to retain their steeds for basic

transportation and agricultural services. Otherwise, they

might starve and rejoin an insurrection.

In a gesture of good will and brotherhood, Grant acceded

to Lee’s request for “rations and forage” for his men. Grant

asked how many men to which Lee replied “about twenty-five

thousand”. Grant authorized Lee to “send his own commissary

and quartermaster to Appomattox Station, two or three miles

away, where he could have, out of the trains we had

stopped, all the provisions wanted.”

Six - Always close with honor, dignity, clarity, and amity.

After Lee’s departure for the evening, he commanded a

cessation to celebration by the Union forces that were firing

volleys into the air so that no exultation would be shown to

the Confederacy over their downfall.

As to amity, Grant recorded this observation. “I was

accompanied by my staff and other officers, some of whom

seemed to have a great desire to go inside the Confederate

lines. They finally asked permission of Lee to do so for the

purpose of seeing some of their old army friends, and the

permission was granted. They went over, had a very

pleasant time with their old friends, and brought some of

them back with them when they returned.”

Would this end to the Civil War have been anywhere

near as good if both generals, particularly Grant, had not

been so gifted in negotiation?

History


Member Profile: Eric Strinden

Pipeline To Professionalismby Jeff Steele

Eric Strinden has been avid about giving back to

society and his community his entire adult life. He

served in the Army National Guard and at a volunteer

fire department, spent 10 years each as a baseball coach

and Cub Scout leader when his kids were young, and now

has joined the local search-and-rescue ATV team in his

heavily rural area of Washington State.

Should it come as any surprise he’s equally dedicated

to his work? We didn’t think so, which is why Eric has been

tabbed this month’s featured member in the APS Member

Profile Series.

Eric is Purchasing Manager for Snelson, a Sedro

Woolley, Washington-based full-service pipeline and utility

contractor headquartered about 60 miles north of Seattle,

and 60 miles south of the Canadian border. The company

handles mainline distribution installation of pipeline, most of

it natural gas, as well as installation of compressor stations

that move product.

Last year, the company’s sales came to approximately

$280 million, and its purchases to $10 million. Eric’s primary

purchases include tools and consumables, piping, fittings and

valves, as well as MRO purchases. “In the piping products

area, I deal with about 10 vendors all the time,” Eric says.

“I get calls all the time from vendors wanting to get in with

us. The offers are for services from hauling freight to

providing tools and consumables.”

The size of the purchasing department varies from four

to five employees, depending on the number of projects in

which the company is currently involved. “I support several

projects on the station and distribution side of things, as well

as fab shop,” says Eric, who reports to the company

president. Purchasing is “somewhat decentralized,” he adds,

noting satellite offices in Colorado and California handle

some duties.

Among primary challenges Eric faces is getting the

specifications from external customers. “It’s sometimes

difficult to get all that information passed down,” he says.

“Gathering that information and making sure the materials

meet specifications can be a problem. We’re allowed to

use import, but it’s getting to know the AML [authorized

manufacturers’ list]. We work hard at making sure we

identify the right specifications, and when we don’t know

we’ll buy domestic instead of import, because domestic is

more accepted.”

Snelson does buy imported products, but typically

purchases from U.S.-based companies that themselves

purchase overseas product, Eric says.

The department has labored diligently to develop a

process of tracking and obtaining material test reports. The

MTRs, as they’re called, spell out the specifications on the

type of pipe delivered. “Now just about every customer

requires an MTR packet from us,” Eric says. “We

developed a means of getting them and putting them in

packages for our customers.”

Eric was born in Seattle but moved with his family to

Sedro Woolley when he was seven. His father taught at

local high schools and colleges, and the Strindens lived on a

55-acre farm where family members took care of cows,

harvested hay, mended fences and cut wood.

Having attended Skadgiit Valley Community College,

Eric joined Snelson in 1988, working as a small tool

mechanic, warehouseman and delivery worker, as well as

in the fabrication shop. He eventually was asked to handle

purchasing as well as small tool mechanic work and

dispatching. In the late 1990s, he was handed Snelson’s

purchasing manager reins.

Eric earned the Certified Purchasing Professional (CPP)

designation about five years ago.

“I just went for my five-year re-certification

[certification update] and now have my lifetime

certification,” he reports. “I wanted to further my education

in the purchasing area, strengthen my background and be a

better asset to my company. My company wants managers

to further their education by getting certified in whatever

area they’re in. The company financially assisted in my

getting the CPP. The owners were very excited for me to

get certified in the purchasing realm, so that is one of the

reasons I pursued certification.”

Asked to prognosticate on his future, Eric notes that he

has been with Snelson Co., Inc. for 28 years, some 18 of

those in the purchasing department. “I hope to spend another

10 to 15 years with them before I retire,” he says. “And I

hope to continue my education, including getting the CPPM

certification. That’s on my radar for the near future.

Developing the purchasing culture is important to our

company.”vvvvv


Overcoming The Salesman’s Advantageby Joseph L. Vasoli

It is commonly accepted that, all other things being equal,

a purchasing agent/buyer is at a disadvantage in

negotiation with a salesman. This is for three main

reasons:

Solicitation. Typically, it is the buyer who solicits the

exchange. Particularly in the case of things you need to

buy for your core value production. Meaning that the

salesman already knows that the buyer wants what he is

selling. He may not be the only person the buyer can get it

from, but the buyer does still need it.

Training disparity. Salesmen drive the revenue

generation of the company, so it is very much worthwhile

for the company to invest in their training, often with an

emphasis on negotiation or hard selling. Pace

Productivity claims that salesmen receive, on average, one

to two hours of sales training per week. The World

Economic Outlook of 2014 estimated that salesmen receive

somewhere between 27 and 36 hours of training annually. In

fact, there are plenty of folks who expound upon the

disparity in training between buyers and sellers. They are

taught all kinds of tricks. One of the most common is the

“built in discount” or, more pejoratively, the “idiot tax”. It is

a small markup on the “actual” price of a small percentage

that, as soon as the buyer tries to negotiate, the salesperson

will “cave” on. It allows the buyer to flash both of the quotes

to his manager, claim a 3% savings, and happily call it a

day. The salesperson has lost nothing and, even better, some

buyers will say nothing at all and pay the extra markup!

Knowledge disparity. Companies are more

specialized in what they sell than in what they are

buying. Therefore it makes sense for buyers at a given

company to buy a wide range of things while salesmen sell

a small range of things. This combined with the fact that

they are able to talk to production means that salesmen

know a lot more about what they’re selling than buyers

know about what they’re buying.

The knowledge disparity leads to an interesting question

in game theory. Since a lot of the companies purchasing

things in large amounts will also have a sales force, who

really benefits from the knowledge disparity? Well, the

disparity only exists if the buyer is buying one of many things

that they use to make their core value and thus cannot

master any one thing. So the best way to take advantage

of knowledge disparity would be to buy one raw

material and manufacture diverse products from it. The

more diverse the better. The people who do this best?

Machine shops and sheet metallurgists, of course.

The problem with having a diverse offering (machine

shops and sheet metallurgists make a lot of sales from small

volume, unique contracts) is that it does not allow you to

capture economies of scale. This is why machine shops

are frequently quite small.

Thought experiments aside, how can Procurement

Professionals overcome these disadvantages? Well, the first

step is to see what you can control. You can’t really control

the solicitation; if you need something you need it. The crafty

buyer might have a friend of his “refer” a salesman to him

to “talk him into” buying what he already needs. But other

than clever little gambits, there’s not much you can do. And

I advise against clever gambits as deception and parlor tricks

aren’t things you want attached to you.

And there’s really not much you can do about training

in the short term. In the long term, you can obviously pay

for/convince your company to provide training. But let’s

focus on the short term.

What you can control, and alleviate, is

the knowledge disparity. And here are some good ways

how:

1: Never go into a negotiation without a BATNA. Your

BATNA is your Best Alternative to Negotiated Agreement.

Essentially, if the person you’re negotiating with is inflexible

and hangs up the phone, what is your back up option? If

The Society is looking for members who would like to

contribute to Professional Purchasing by writing an

article. The Society will provide remuneration for any

article that is published. To submit an article for

consideration please send a copy to

[email protected] with the subject line

Purchasing Article. Articles should be between 500

and 700 words.

Continued on next page


you do not have a backup, you have zero leverage. So for

Purchasers this means always, always, always have multiple

quotes. One quote is not enough. Two quotes is not

enough. I’m not even satisfied until I have at least five,

depending on how common the item is. These not only give

you backups, but they let you get a sense of where the

market is.

2: Understand your two most important percentages. I

strongly believe in checking Producer Price Indexes. They

aren’t so great when it comes to initial negotiations, but

they are fantastic when you’re resisting price increases.

Inflation is just how much more money things on average

should cost whereas the Producer Price Index is what

producers in various industries have been doing to their

prices compared to 1985. It allows you to see how prices,

on average, have adjusted year to year. Unless your

suppliers are operating in a resource scarce industry, the

PPI will typically grow at a slower rate than inflation because

as the industry exists, it gets better and more efficient and

technology helps it to reduce costs. Obviously there are

exceptions.

Let’s say January rolls around and your supplier tells

you they need to jack up their prices by 5%. You find out

that inflation was only 1% (as of writing this) and the PPI

for their industry has actually gone down due to

technological advances! All you need to do is politely inform

them of this. They will do the math themselves: While their

prices are going up, their competitors’ prices are falling!

The death sentence of any supplier.

3: Know as much about the supplier as you can. If you

know about their supply chain, whether they’ve lost

business, what their sales tactics are, all of that knowledge

is useful to you.

Don’t be intimidated. And if you find out that a price is

high, do not be afraid to renegotiate! Stay thrifty, my

friends.vvvvv

Overcoming The

Salesman’s AdvantageContinued from page 10

Joseph L. Vasoli is a buyer who lives in Hatboro,

Pennsylvania. He joined and became a member of the

Society in February of this year.

The American Purchasing Society was the first

organization to offer national purchasing

certification. The Certified Purchasing Professional

(CPP) program was developed in 1970 by a group of

businessmen who recognized the need for improved integrity

in business and improved competence in the purchasing

and supply chain function.

The Certified Professional Purchasing Manager

(CPPM) program began in 2002 and was designed to certify

those who manage purchasing departments and supervise

buyers and purchasing agents.

The Certified Green Purchasing Professional (CGPP)

verifies training in green procurement and sustainability.

The area of sustainability is growing quickly and many

companies already have plans and policies/procedures in

place. This trend will only continue to grow.

Now, in 2016, the Society has announced a new

certification program, The Certified Professional in

Distribution and Warehouse Management (CPDW).

The area of distribution, logistics and warehousing is a

quickly blossoming type of business in the U.S. and other

places. Warehouses and distribution centers are popping up

everywhere as competition for immediate delivery increases.

As this quickly growing business advances, the need for

professionals in this field increases. The Certified

Professional in Distribution and Warehousing (CPDW)

program is designed to educate and train people in

distribution, logistics, and warehousing management.

Students who take this course will be prepared for

professional jobs in distribution centers and warehouses.

Anyone may apply for the CPDW. The CPP is not a

requirement for this certification, and there is a separate

application for the CPDW. The requirements for the CPDW

are three online courses and an examination. The courses

may be taken separately or through the CPDW prep course.

The three courses are Distribution and Warehousing,

Inventory for Distribution and Warehousing , and

Management Operations and Logistics. Once the courses

are completed an examination must be taken and passed.

The passing grade for the CPDW examination is 75%.

The CPDW application can be obtained from the

Society’s website.

New! Certified Professional In

Distribution and Warehousing


Recently Certified

Certified Purchasing

Professional (CPP) Awards

CPPM

C ERTIF

IEDPROFES

SIONAL

PURC

HAS IN G M

AN

AGER

Eileen Brown is an employee of the City of Flagstaff inArizona. Certification number - 121697P.

Leann Bush works for the Cherokee Regional MedicalCenter in Cherokee, Iowa. Certification number - 121747P.

Rahima Chowdhury is an employee of Hi-Tech Pharmacalin Amityville, New York. Certification number - 120410P.

Jesse Clark is employed at the Power & Telephone SupplyCompany located in Memphis, Tennessee. Certificationnumber - 121239P.

Carly Dalton is an employee of MEMIC located in Portland,Maine. Certification number - 120652P.

Lisa J. Demeule works for Eastern Bank in Lynn,Massachusetts. Certification number - 115409P.

Steven L. Fawver is an employee of PCC Structurals locatedin Portland, Oregon. Certification number - 121035P.

Tangela A. Gallagher works for Extended Stay America inCharlotte, North Carolina. Certification number - 121773P.

Ryan Holland works for Medifast, Inc. located in OwingsMills, Maryland. Certification number - 121842P.

Jeffrey Hussien is employed at Excelitas Technologies inSalem, Massachusetts. Certification number - 121736P.

Hussein Said Jaber is employed at Weill Cornell Medicien -Qatar in Doha, Qatar. Certification number - 121767P.

Tyanne Jacobs-EL works for Castella Imports locatedin Hauppauge, New York. Certification number -121408P.

James Langton works for KRB Machinery Company locatedin Wrightsville, Pennsylvania. Certification number - 121471P.

Diane Limouzineau is employed at Club Med located inSingapore. Certification number - 1121800P.

Jesslyn R. McCutcheon works for PrimeSourceOPClocated in Winston Salem, North Carolina. Certificationnumber - 121648P.

Jayson Mills works for MVH Pharmacies in Augusta,Maine. Certification number - 121003P.

Paul Norris is employed at the State of Tennessee inNashville, Tennessee. Certification number - 121739P.

James David Nowell, Jr. is an employee of CampbellUniversity located in Buies Creek, North Carolina.Certification number - 121698P.

Cheryl R. Perez is employed at Mednax Services, Inc. locatedin Sunrise, Florida. Certification number - 121121P.

Ryan Petrilli is an employee of Filters Fast located in Monroe,North Carolina. Certification number - 121647P.

Jussara Philippet works for Extended Stay, America inCharlotte, North Carolina. Certification number - 121770P.

JoAnne Robichaud works for the Rutherford County Boardof Education located in Murfreesboro, Tennessee. Certificationnumber - 121711P.

Laraine Santiago-Martinez works for Transamerican AutoParts in Compton, Georgia. Certification number - 121784P.

Irene Scott is employed at Ithaca College in Ithaca, NewYork. Certification number - 121284P.

Libby M. Simmons works for the Dover School Districtlocated in Dover, New Hampshire. Certification number -121465P.

Anthony Simonetti works for Plex Systems located in Troy,Michigan. Certification number - 121258P.

Marvin Smith is employed at Hudson County CommunityCollege in Jersey City, New Jersey. Certification number - 120721P.

Scott Townsend works for Omron Oilfield & Marine inHouston, Texas. Certification number - 120304P.

Ionela Daniela Verzescu is employed at Standard GolfCo. in Cedar Falls, Iowa. Certification number - 121529P.

Linda Webster works for ControlAir, Inc. located inAmherst, New Hampshire. Certification number - 121738P.

Scott T. Weyandt works for Hart Precision Productslocated in Redford, Michigan. Certification number - 121494P.

Leone Zion is employed at Imperial Toy, LLC in NorthHills, California. Certification number - 119682P.


Recently Certified

Certified Professional Purchasing

Manager (CPPM) Awards

Nicholas W. Anderson is an employee of the PacificResearch Laboratories in Vashon, Washington. Nicholas earnedthe CPP in March of 2012. Certification number - 113319M.

Scott Bater is employed at Lupin Pharmaceuticals, Inc.located in Baltimore, Maryland. Scott was awarded the CPPin December of 2015. Certification number - 121378M.

Lee Branch works for Hargray Communications inBluffton, South Carolina. Lee received the CPP in Marchof 2014. Certification number - 117264M.

Ben Bridwell is an employee of Sumitomo Metal Mining Pogoin Fairbanks, Alaska. Ben earned the CPP in May of 2015.Certification number - 114679M.

Fredrick B. Brown is employed at the Gulf Coast StateCollege located in Panama City, Florida. Fredrick was awardedthe CPP in January of 2016. Certification number - 117062M.

Julie Cameron is employed at iAutomation located in NorthAttleboro, Massachusetts. Julie was awarded the CPP inNovember of 2010. Certification number - 106148M.

Debra Diaz is employed at UnitedDC located in Houston,Texas. Debra was awarded the CPP in July of 2015.Certification number - 121144M.

Jennifer Dziedzic works for Bell Flavors & Fragranceslocated in Middletown, NY. Jennifer received the CPP inNovember of 2015. Certification number - 116683M.

Keith Fitzwater is an employee of Kor-Chem, Inc. inAtlanta, Georgia. Keith earned the CPP in November of2014. Certification number - 120488M.

Guillermo T. Fong works for Senninger Irrigation, Inc. inClermont, Florida. Guillermo received the CPP in Novemberof 2012. Certification number - 115903M.

Rebecca Glimsdal is employed at Gopher Sport inOwatonna, Minnesota. Rebecca earned the CPP inSeptember of 2015. Certification number - 95238M.

Terry Govostes works for Gerber Technology located inTolland, Connecticut. Terry received the CPP in January of2016. Certification number - 120938M.

Erika G. Jerez is an employee of Gonzaba Medical Groupin San Antonio, Texas. Erika earned the CPP in January of2013. Certification number - 115441M.

Bruce C. Lemon works for Alt-Tech, LLC in China Lake,California. Bruce received the CPP in September of 2015.Certification number - 121247M.

Denise A. Roy is employed at Gerber Technology inTolland, Connecticut. Denise earned the CPP in April of2015. Certification number - 117248M.

Charlene Fales Rubacha works for Gerber Technologylocated in Tolland, Connecticut. Charlene received the CPPin March of 2015. Certification number - 117247M.

Ryan Schmitt is an employee of The Shepherd ChemicalCompany in Norwood, Ohio. Ryan earned the CPP inJanuary of 2016. Certification number - 121486M.

Carlene N. Seaton works for Simpson Thacher & BartlettLLP in New York, New York. Carlene received the CPP inNovember of 2015. Certification number - 108036M.

Robert W. Seekford is employed at Wolseley IndustrialGroup in Point Comfort, Texas. Robert earned the CPP inMarch of 2014. Certification number - 119778M.

Joginder Singh works for Lupin Pharmaceuticals, Inc.located in Baltimore, Maryland. Joginder received the CPPin December of 2015. Certification number - 121379M.

Jodi Weier is an employee of Dufeck Manufacturing Co.in Denmark, Wisconsin. Jodi earned the CPP in August of2015. Certification number - 116981M.

Mimie L. Woods works for the City of Atlanta in Georgia.Mimie received the CPP in January of 2016. Certificationnumber - 121558M.


Welcome New Company Members

Congratulations to the following new company members of the American Purchasing Society. Each organization appoints one or more

representatives to the Society and each company representative receives all the benefits of membership.

Andrew Adams, CPP, J.T. Wimsatt Contracting Co., Inc., Valencia, CA

Bobbi J. Allen, MD Building Products, Brooklet, GA

Patricia Arias-Brown, Hormel Foods, Vernon, CA

Susan Asato, MiraCosta Community College District, Oceanside, CA

Jeanette R. Bagcus, San Diego, CA

William J. Baker, F.L.Smidth Inc. - AFT, Evans, GA

Christi Balfour, CPP, CPPM, Tierney Brothers Inc., Burnsville, MN

Melissa A. Balzer, Accudyn Products, Inc., Erie, PA

Andrea Barkholz, Par Pharmaceuticals, Rochester, MI

Esmeralda Batista, Simpson Thacher & Bartlett LLP, New York, NY

Michael A. Bellflower, Vitamix Corporation, Middleburg Heights, OH

Beth M. Benke, Tech-Energy Co., Schertz, TX

Daniel Benton, Priefert Manufacturing Inc., Mount Pleasant, TX

Werner Berger, WB Management Consulting, Escondido, CA

Kajori Bhowmik, Apple, Sunnyvale, CA

Kelley Blow, Fiber Materials Inc., Biddeford, ME

Pamela Bowen, UIC Government Services, Lexington Park, MD

Joel G. Braddock, Krone NA, Inc., Germantown, TN

Thomas Brannick, Techmer PM, Clinton, TN

Tracy A. Brigner, Keller Logistics Group, Payne, OH

Eileen Brown, CPP, City of Flagstaff, Flagstaff, AZ

Elsie M. Burgess, Seminole State College of Florida, Lake Mary, FL

Leann Bush, CPP, Cherokee Regional Medical Center, Cherokee, IA

Di Ann Butkay, CPP, City of Flagstaff, Flagstaff, AZ

April Carlquist, UIC Government Services, Plano, TX

Brandon Carty, Blue Cross Blue Shield of Alabama, Birmingham, AL

Sarah Daly Caylor, CPP, 3north, Richmond, VA

Jenny Y. Chung, CPP, CPPM, Pier 1 Imports, Dallas, TX

Alex Cooper, Blue Cross Blue Shield of Alabama, Birmingham, AL

Michelle L. Czarnecki, Titan International, Inc., Urbandale, IA

Cynthia L. Daies, City of Winter Park, Winter Park, FL

Teresa Dayman, Cambridge International, Cambridge, MD

Krisha V. De La Fuente, Apple, Sunnyvale, CA

Martha A. DeLoge, Par Pharmaceuticals, Rochester, MI

Alysson DeTroy, SCS Direct, Inc., Stratford, CT

Luciana Dias, Apple, Sunnyvale, CA

Eric Dibble, CPP, Extended Stay America, Charlotte, NC

Michael DiBenedetto, Volunteers of America-Greater NY, New York, NY

Scott Dillingham, Apple, Sunnyvale, CA

Peter R. Duane, Avnet Inc., Chalfont, PA

Noel Emanuel, Simpson Thacher & Bartlett LLP, New York, NY

Andrew Engelson, CPP, CPPM, OTG Management, Brooklyn, NY

Janet P. England, Mondelez International, Portland, OR

Urban Peter Faria, CPP, Atlas Southeast Papers, Inc., Sanford, FL

Ciaran Farrell, Edge Adhesives, Fort Worth, TX

Steve Fawver, CPP, CGPP, Precision Castparts Corp., Boring, OR

Kristin A. Francavilla, City of Renton, Renton, WA

Erich J. Frye, Howard Industries, Ellisville, MS

Sharon Gage, Natoli Engineering, St. Charles, MO

Tangela Gallagher, CPP, Extended Stay America, Charlotte, NC

Ana M. Garcia, Chula Vista, CA

Karen M. Gerber, Middletown, RI

Maria Petra Goldstein, Caterpillar, Naperville, IL

John Gonsalves, Butler Automatic Inc, Middleborough, MA

Apio, Guadalupe, CA

Apple, Sunnyvale, CA

Blue Cross and Blue Shield of Kansas, Inc., Topeka, KS

Blue Cross Blue Shield of Alabama, Birmingham, AL

Cambridge International, Cambridge, MD

Cincinnati Public Schools, Cincinnati, OH

Coeur Rochester, Lovelock, NV

Edge Adhesives, Fort Worth, TX

Education Management Solutions LLC, Exton, PA

Extended Stay America, Charlotte, NC

Fitbit, San Francisco, CA

Formel D USA Inc., Greenville, SC

Great Lakes Environmental & Infrastructure, Rocklin, CA

Greenway Health, Apollo Beach, FL

Howard Industries, Ellisville, MS

HP Hood LLC, Lynnfield, MA

Kamco Industries, Inc., West Unity, OH

MaltHandling.com, LLC, Chicago, IL

MiraCosta Community College District, Oceanside, CA

Natoli Engineering, St. Charles, MO

Par Pharmaceuticals, Rochester, MI

Pedernales Electric Cooperative, Inc., Johnson City, TX

PL Developments LLC, Lynwood, CA

Red Hawk Casino, Placerville, CA

Rehabilitation Institute of Chicago, Chicago, IL

Rumpke Waste & Recycling, Cincinnati, OH

Spancrete, Valders, WI

St. Louis Public Schools, St. Louis, MO

Sterling Global Operations, Lenoir City, TN

Switch SUPERNAP, Las Vegas, NV

The Lighthouse for the Blind, Inc., Lakewood, WA

West Valley-Mission Comm. College Dist., Saratoga, CA

New Individual Members and New Company Representatives

Welcome to the following individuals and company representatives. Please take advantage of all the benefits of membership. Please visit the

Members Only area of the Society’s website at www.american-purchasing.com.


New Individual Members and New Company Representatives

Continued

Welcome to the following individuals and company representatives. Please take advantage of all the benefits of membership. Please visit the

Members Only area of the Society’s website at www.american-purchasing.com.

Evelyn D. Goodger, Osburn Hessey Logistics, Hernando, MS

Donald Gotsos, Elim Christian School, Palos Heights, IL

Kim Gould, Education Management Solutions LLC, Exton, PA

Carol Hagerich, Martin-Baker America, Inc., Johnstown, PA

Kevin R. Hale, National Academy of Sciences, Washington, DC

Hayley K. Hammond, DepotStar, Inc., Saint Francis, MN

Jason W. Harper, Sallyport Global Holdings, Minonk, IL

William E Harris, CPP, Aldersgate Retirement Community, Charlotte, NC

Moustafa O. Hassan, Al-Inma Medical Services, Riyadh, KSA

Anna Hassay, UIC Government Services, Lexington Park, MD

Catherine W. Hawley, General Dynamics, Savannah, GA

Daniel E. Hearne, CPP, Marble Falls, TX

James G. Hernandez, CPP, Planned Parenthood of Illinois, Chicago,IL

Sheri L. Hinton, CPP, Flowery Branch, GA

Ryan Holland, CPP, Medifast, Owings Mills, MD

Jeffrey L. Ice, Sandia National Laboratories, Albuquerque, NM

Stephanie Imthurn, Blue Cross & Blue Shield of Kansas, Inc, Topeka, KS

Mohamed Ismail, CPP, CPPM, CPPC, Dubai UAE

Hussein Said Jaber, CPP, CGPP, Weill Cornell Medicien-Qatar, Doha

Terrance Jones, Fashion Glass & Mirrors, Grand Prairie, TX

Nicole Kennedy, Magnetic Inspection Lab., Inc., Elk Grove Village, IL

James M. Kerbey, West Valley-Mission Com. College Dist., Saratoga, CA

Breanna L. Kirtley, MD Building Products, Woodburn, OR

Timothy Krukoski, Kaman Precision Products, Middletown, CT

Bradley S. Kuriger, Noshok, Inc., North Ridgeville, OH

Vanessa Lauchaire, Broward County Pub. Schools, North Bay Village, FL

Shannon Letts, Walmart, Bentonville, AR

Marc D. Lloyd, Natoli Engineering, St. Charles, MO

Mark Ludes, Filters Fast LLC, Monroe, NC

Kevin P. Mackall, Entrematic, Kernersville, NC

Sharon K. Mahan, Sterling Global Operations, Lenoir City, TN

Danielle Mamede, Coconut Creek, FL

Diane Manganaro, HP Hood LLC, Lynnfield, MA

Natalia Martinez Lugo, PREPA, San Juan, PR

W. Tony Masters, CPP, O’Neal, Inc., Taylors, SC

Lauren Mayock, COCC, Southington, CT

Jesslyn R. McCutcheon, CPP, PrimeSource OPC, Winston-Salem, NC

Eric McGaw, Par Pharmaceuticals, Rochester, MI

Barry McInturff, Cambridge International, Cambridge, MD

Kelly McRae, United States Olympic Committee, Colorado Springs, CO

Carlos Mendez, Kaman Precision Products, Middletown, CT

Jessica Menke, Rumpke Waste & Recycling, Cincinnati, OH

Harold K. Midgett, Jr., CPP, Adams Group, North Port, FL

Mark Miller, CPP, CGPP, Extended Stay America, Charlotte, NC

Jayson Mills, CPP, MVH Pharmacies, Augusta, ME

Ken Miracle, Monti Inc, Cincinnati, OH

Heather Moss, Par Pharmaceuticals, Rochester, MI

Megan Munoz, CPP, Greenway Health, Apollo Beach, FL

Vincent Natoli, Natoli Engineering, St. Charles, MO

Robbin Nauman, CPP, CHS, Laurel, MT

Vance Nieweg, Natoli Engineering, St. Charles, MO

Michelle K. Noorman, The Tech Group, Walker, MI

Michael J. Norris, Omniticket Network, Orlando, FL

Paula Norris, CPP, State of Tennessee, Nashville, TN

James David Nowell, Jr., CPP, Campbell University, Buies Creek, NC

Linda Olone, Global Convergence Inc., Clearwater, FL

Tracy Orner, New Pig Corporation, Tipton, PA

Donna Orzano-Walker, Formel D USA Inc., Greenville, SC

Melisa Peck, PSU-Applied Research Laboratory, State College, PA

Byron B. Peltier, Samson, Lafayette, LA

Thomas A. Peters, Par Pharmaceuticals, Rochester, MI

Ryan,Petrilli, CPP, CPPM, Filters Fast LLC, Monroe, NC

Jussara Philippet, CPP, Extended Stay America, Charlotte, NC

Chanda Price, CPP, Southern Methodist University, Dallas, TX

Rekha-Leigh Punch, Stamford, CT

Jennifer E. Quinones, CPP, CPPM, Martinsburg, WV

Austin W. Rash, HF Mixing Group, Topeka, KS

Atmar K. Robert, First Source Supplt, LLC, Houston, TX

JoAnne Robichaud, CPP, Rutherford Cnty Sch. Board, Murfreesboro, TN

Lisa Rodenberry, Atrion Medical Products, Inc., Arab, AL

Andrew Rodriguez, ClarkDietrich, Dallas, TX

Melissa A. Rogers, Tyonek Manufacturing Group, Inc., Athens, AL

Terry Rosenfeld, Filters Fast LLC, Monroe, NC

Marcus Rucker, Franklin University, Columbus, OH

Laraine Santiago-Martinez, CPP, Transamer. Auto Parts, Long Beach, CA

Joshua J. Schulz, CPP, A&B Packing Equipment, Hartford, MI

John Schwartz, CPP, CPPM, ADP, Roseland, NJ

Debbie Self, Blue Cross and Blue Shield of Kansas, Inc., Topeka, KS

Kim Simonds, MiraCosta Community College District, Oceanside, CA

Audrey Sinopoli, Gensler, Denver, CO

Richard Sipmeier, Cambridge International, Cambridge, MD

Tyler Smith, Gensler, Denver, CO

Jonica J. Smith, University of Utah Health Care, West Jordan, UT

Yvette Stevens, Stemilt Growers, Inc., Wenatchee, WA

Elizabeth A. Stewart, American Cancer Society, Marietta, GA

Michelle Stone, CPP, Rumpke Waste & Recycling, Cincinnati, OH

Peggy Stroika, MiraCosta Community College District, Oceanside, CA

Darrin O. Swait, Central Plains Cement Co., Tulsa, OK

Nicole A. Sweitzer, CPP, Oven Industries Inc., Dover, PA

Kay K. Syed, CPP, School Board of Orange County, Florida, Orlando, FL

Olga Symoshyn, Keysight Technologies, Roseville, CA

Brandon L. Taylor, Sonnax Industries Inc., Bellows Falls, VT

Orethia Terry, City of Houston/P.W.E., Houston, TX

Megan Thorne, CPP, Glacier Fish Company, Seattle, WA

Angela Thurston, Caesars Entertainment, Henderson, NV

Jennifer Turgeon, HP Hood LLC, Lynnfield, MA

Joseph Vasoli, Hatboro, PA

Samuel Velez, CPP, Institute for Family Health, Woodhaven, NY

Cary Vincent, CPP, Kaiser Permanente, Pleasanton, CA

Catherine A. Weis, Kettering Health Network, Dayton, OH

Christine Wholley, Town of Salem, NH, Salem, NH

Shanna R. Williams, Switch SUPERNAP, Las Vegas, NV

Debbie L. Wilson, Cadman, Inc., Redmond, WA

Glenda J. Wiltz, Samson, Lafayette, LA

Jean M. Winkelman, Derichebourg Recycling USA, Inc., Humble, TX

Diane Wylie, Kaman Precision Products, Middletown, CT


Over the past decade organizations have

faced relentless customer demand for

better value at less cost, individual

customization, greater choice, faster

delivery, higher quality, exceptional

service, and more recently – increased

environmental and social consciousness.

The organization’s weapon of choice to

address this increasing demand has been

the supply chain. However, as the supply

chain footprint changed (e.g. outsourcing,

off-shoring, and customer/vendor

empowerment) so did the organization’s exposure to uncertainty.

Organizations were taken by surprise since this exposure was

unanticipated, complex and beyond their ability to manage.

Organizations and societies are at much greater risk of systemic

failure because of the massive interdependency throughout global

supply chains. Single Point of Failure: The Ten Essential Laws

of Supply Chain Risk Management uses analogies and dozens

of case histories to describe the “risk parasite” that infects all

supply chains while revealing methods to neutralize that parasite.

Retail price is $39.95, however it is available to American Purchasing

Society members for only $35 plus shipping and handling.

Single Point of Failure

By Gary S. Lynch

Purchasing Books Offered

By The Society

Operating supplies account for important

and significant expenses of running any

organization. A new book, Managing

Indirect Spend, by Joe Payne, William R.

Dorn, Jr. and other contributors thoroughly

addresses this subject. A few of the many

covered topics are data collection and

analysis, conducting research,

negotiations, strategic sourcing, and

supplier collaboration. Chapters are

devoted to the purchase of office supplies,

telephone services, and the use of carriers

for small packages. This book is highly

recommended for both purchasing managers and MRO buyers

for all types of organizations. Anyone interested in hearing

today’s business jargon will be rewarded by the use of such words

or phrases as indirect spend, strategic sourcing, scorecarding

suppliers, continuous improvement, and leveraging supplier

feedback. Retail price is $95, however it is available to American

Purchasing Society members for only $85.50 plus shipping and

handling.

Managing Indirect Spend

By Joe Payne, William R. Dorn, Jr.

The American Purchasing Society offers more than twenty

books on purchasing, supply chain, and procurement-related

subjects. All of these books can be purchased through our

website at www.american-purchasing.com.

As a member make sure to log in to your member account

before shopping so you receive the discounted member prices.

Special offer! Use the promotion code BDJA16 when you

checkout with your book order and receive an extra 15% off

your order. Offer good through September 15, 2016.

New fourth edition. This how-to book is

truly the most practical Purchasing

Handbook available to the professional-

minded Purchasing Agent/Buyer. It is

intended to be used by the Buying Agent

of a Small Business (or Municipality) as a

working guide, not a textbook. It contains

every aspect of buying and purchasing

management in 50 chapters, each purposely

short and to the point. Written by Robert J.

Nahabit, CPP, CPPC, who has been

teaching purchasing seminars for over 30 years. It is a well-indexed

true handbook of real-life, everyday solutions for the Buying

Agent. It is the only “Handbook” on the market that compares

and details more than 15 certifications available to the buyer. The

Handbook includes sample letters which can be used as templates

to cover most types of communications needed with your

suppliers, sample forms to simplify your job and an illustrated

purchasing glossary, and best of all, it contains the most useful

information-packed Appendix available to the purchasing

community. This Appendix contains everything from World

Voltages to Incoterms, Conversion Factors to Weights of Water,

Steel Plate, and Common Building Materials. It even has a list of

Electoral Votes by State. It is published in a handy 8 1/2 x 11 spiral-

bound format, packed with 284 pages of vital purchasing

information. No other published purchasing handbook is as useful

and user friendly to the buyer. Published by Nahabit & Associates,

Inc., a small business located in Austin, TX. 100% written,

published and printed within the USA. ISBN number: 978-0-

9845049-2-3. Members $75 and nonmembers $84 plus shipping

and handling.

The Purchasing Handbook for Small Business Fourth

Edition

By Robert J. Nahabit, CPP, CPPC


Timeless stock-keeping fundamentals meet up-

to-the minute technologies to optimize

efficiency and drive profits! Inventory

management is about more than counting what

you’ve got. It’s about understanding business

realities and making decisions that balance

current demand with future needs—while

keeping overhead and operating costs to a

minimum. Now in its Second Edition, Essentials

of Inventory Management gives inventory

professionals the information they need to

maximize productivity in key areas, from

physical stock issues to problem identification

and resolution to technologies like RFID and other automated inventory

mechanisms. Perfect for novice and veteran managers alike, this ultra-

practical book covers topics such as: Forecasting and replenishment

strategies • Differences between retail and manufacturing inventories •

Materials requirements planning and just-in-time inventory systems •

Simple formulas for calculating quantities and schedules • Management

of inventory as a physical reality and a monetary value • Supply chain

risk management. Complete with detailed examples, handy tools, and a

revised and expanded chapter analyzing “Why Inventory Systems Fail

and How to Fix Them, this nontechnical yet thorough guide is perfect for

both instructional and on-the-job use. Nonmember price $39, Member

price $31.99 plus shipping and handling.

Essentials of Inventory Management

By Max Muller

Books Recommended

By The Society

This book assists the reader and provides value

in three ways: First, model contract language

in the form of commercial terms and conditions

are provided. Second, the contract language is

annotated with explanations and suggestions

for each of the key articles. Third, summaries

of actual litigated cases are provided in

synopsis form. This triple combination of

language, annotations and key case synopses

all work together to instruct and enlighten the

reader. This book also facilitates the creation

of a project or transaction specific Contract

Management Plan (CMP). A CMP is essentially

an internal document prepared by either the Company or the Contractor

for use by their respective employees in managing the transaction that is

the subject of the Contract. The CMP is not shared with the other party

since it deals exclusively with the internal considerations and mechanics

associated with one party’s administration and management of its rights

and responsibilities under the Contract. The CMP supplements the

Contract and also permits a documented methodology for applying lessons

learned from past transactions. Nonmember price $80, Member price

$70 plus shipping and handling.

Model Contract Terms And Conditions With

Annotations and Case Summaries

By X. Paul Humbert, ESQ. and Robert C. Mastice, MSME

This book provides a survival manual for

anyone invo lved in the c ra f t ing ,

structuring, negotiating, supporting or

managing contracts involving commercial

transactions of goods, services or both. It

blends the practical with general legal

principles and highlights best practices for

supply chain professionals and anyone

else involved, directly or indirectly, with

the generation or management of contracts

from cradle-to-grave. Even commercially

wise and sophisticated organizations can

be untrained and unaware of certain gaps and traps in the

management of their contracts. This book addresses those pitfalls

and provides lessons learned and guidance that are not typically

taught at the college or even graduate school level. Experience

can be hard and expensive to come by and this book provides a

concentrated dose of experience that immediately raises the

reader’s level of sophistication and awareness for gaps and traps

while providing practical solutions to pitfalls that can haunt

any organization. Left unchecked, these pitfalls can lead to

dysfunction and confusion; both of which can be an expensive

proposition in today’s competitive and uncertain economic

environment . Who should use th is book? Supply Chain

Management Professionals, Risk Managers, Insurance Experts,

Project Managers, Purchasing Agents, Contract Administrators,

Executives and any business or technical professionals who are

involved with developing, managing or implementing projects,

purchases or any complex transaction or procurement where

cost, schedule and scope certainty are important. What does

this book cover? This book covers how the relationship of the

parties affects commercial transactions and addresses the

importance of upholding the integrity of the process and the

contract by understanding key supply chain best practices. The

book focuses on contracting strategies and approaches including

how to structure requests for proposals and instructions to

bidders as well as key considerations in pricing and pricing

adjustments , r isk management tools and techniques, the

importance of defining the deliverables and outcomes, negotiation

strategies and techniques, negotiating warranties and remedies,

applying leadership and influencing skills to the process, how

to implement sound change management as well as capturing and

applying past lessons learned. In addition, special attention is

given to the importance of sound “kick off” and “close out”,

including termination for cause or convenience techniques and

other best practices. Nonmember price $115, Member price $105

plus shipping and handling.

Contract and Risk Management For Supply Chain

Management Professionals

By X. Paul Humbert, ESQ. and Robert C. Mastice, MSME


Lesson 178 Fundamentals

All part of the job

Questions From Members

When Should We

Obtain Bids?

QUESTION:What is the suggested minimum dollar amount before com-petitive bidding should be recommended or required? In otherwords, what is the rough spend level where savings achievedfrom competitive bidding is greater than the value of thetime and effort spent to obtain bids?ANSWER:

It seldom pays to go out for bids on every purchase

regardless of the amount or type. The time to issue requests

for bids and then collect and analyze them may exceed any

savings obtained. The ideal time to request bids differs from

organization to organization depending on the salaries or

labor rates assigned to the purchasing staff and the

availability of buyers that are not otherwise occupied.

Well-managed purchasing operations usually obtain new

bids annually for items used in production where the purchase

amount exceeds at least $1,000. Many companies only obtain

bids for annual purchases that are much greater than that.

Most companies have a policy of obtaining at least three

bids for new items never purchased before. It pays to obtain

bids for high cost capital equipment items which are seldom

purchased on a regular basis.

Savings obtained through the bid process alone depend

on the commodity, the amount being purchased, the

frequency of purchasing the same product, and the

frequency of obtaining bids. On average, at least a ten

percent saving can be obtained when bids for similar items

have not been obtained for a year or more. However, some

buyers have reported savings of over 50% for some

items.vvvvvSend your purchasing or job related questions to the Editor, Profes-

sional Purchasing, American Purchasing Society, P.O. Box 256, Au-

rora, IL 60507 or Email to [email protected].

Understand The

Salesperson’s Point Of View

Don’t resent salespeople who seem to be

uncooperative or who seem to be only interested

in what they can get. The only difference between

such salespeople and all other salespeople is they can’t hide

their feelings very well.

Of course good salespeople will try to help the buyer and

the buyer’s organization if they can do so without unduly

reducing their own benefits or the benefit of their own

organization. But the buyer must keep in mind that the

salesperson’s objective is to make a profit, either short-term

or long-term. The more profitable the salesperson’s results

for the supplier, the better they will be regarded in terms of

salary and/or commissions.

Many, if not most salespeople have no authority to reduce

prices without approval of their management. Prices may

be set by policy. Prices may be established in whole or in

part by the supplier’s cost account personnel.

Some salespeople have a certain latitude to adjust prices

or certain terms by a small amount without further

authorization, but they usually require further approval when

the reduction in price or improvement in terms for the buyer

exceed those established guidelines.

The lesson here is to make sure you understand the

authority of the person you are dealing with. Understand

his or her point of view. A reduction in a price may affect

the salesperson’s bonus. Naturally, he or she is not likely to

give ground when it reduces income, unless they will lose

even more by not getting the sale altogether.

All of this being said, many products have inflated prices

that allow for negotiation. The supplier is only too glad to

take orders at those inflated prices accepted by a naive

buyer. Both salesperson and supplier will say to themselves,

why not take an exorbitant profit if you can get it? Don’t

blame the salesperson or the supplier, blame yourself if you

fail to shop the marketplace and compare costs with the

competition. Caveat emptor - let the buyer beware.

The buyer can get a cost reduction even when prices

are firmly established by the supplier’s accounting or

management. To do so, extraordinary measures may be

required. One way is to offer bigger quantities or a long-

term contract. Another method is to make sure you are

dealing with the person authorized to make the change. That

person may be a sales manager, a vice president, or even

the president of the company.v“Stop feeling guilty. Our spells work. Our potions are

effective. Why shouldn’t we live well?”


Please print or type clearly.

Mr. Ms. Name Title

Company Division

Company Address

City State Zip

Telephone ( ) FAX ( ) E-Mail

Join now and your benefits will include:

• Every issue of Professional Purchasing • Discounts on business books offered by the Society

• One FREE qualifying online seminar • Discounts on seminars offered by the Society

• Free purchasing forms • Eleven buyer checklists

• Access to the Members Only area of website • Annual salary report & annual benchmarking report

• Consulting on specific purchasing issues • Much, much more

Please enroll me as a member of the American Purchasing Society and provide all of the benefits described above.

Fees & Amount Enclosed

ANNUAL DUES INDIVIDUAL $199

ADD ONE-TIME MEMBERSHIP PROCESSING FEE 49

TOTAL DUE $248

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NOTE: Members receive 12 months of benefits for the annual dues collected with this application. Payment for the next year is due on the anniversary ofmembership. Dues or educational expenses are usually tax deductible if for business purposes (Reg. § 1.1625).

If not a member and you would like to receive all issues of Professional Purchasing

and all of the Society’s benefits, join at our website at

www.american-purchasing.com, or send this form via fax or mail to:

APPLICATION FOR MEMBERSHIP

AMERICAN PURCHASING SOCIETY, INC.North Island Center, 8 E. Galena Blvd., Suite 203, Aurora, IL 60506

P.O. Box 256, Aurora, IL 60507

Telephone (630) 859-0250 FAX (630) 859-0270


“Google alone has nearly a million serversdistributed all over the world. Each server sucksup a lot of energy - the big data centers use thesame electrical supply as a town of 80,000people...”

“Chilled” (2015) byTom Jackson

Buyers Can Initiate

Make/Buy Studies

Today's Tip

It is more usual for cost accountants or operating

managers to initiate make/buy studies than for buyers

to do the same. Managers of manufacturing operations

may not be eager to raise the make or buy question because

the out-sourcing results may reduce the size of their

operation and weaken their responsibilities. Purchasing

managers may also be reluctant to raise the question since

changing purchases to inside production may reduce their

responsibilities. But it is general management and cost

accounting people who are directly concerned about

reducing cost and maximizing profits. Thus they are the

ones that usually bring up make or buy studies.

However, dedicated buyers and purchasing managers

are also concerned about cost, and they are in an excellent

position of evaluating the pros and cons of outside sourcing

and comparing it to in-house production. The buyer must

gather information internally and from suppliers to do the

analysis properly. More than just apparent cost is involved.

Recently, the Society was asked for information to

conduct such an analysis. It included a request for a

template to make the job easier. It is not likely that a

template would fit all companies or all products.

The best way to analyze make versus buy is to list all

the costs for manufacturing the product side by side with

all the cost for the purchase of the product. Those costs

include the cost for space, the price for raw materials, and

components, the cost of any tooling involved, the cost of

setup, and the cost for all labor involved. The number of

hours for each operation and the rate for each type of

work must be considered. Using Excel or any other type

of spreadsheet program is very helpful.

The quantity to produce is an important input. The

economic amount needed for one company may be too

large to justify production. The tooling required for small

production amounts may not justify the investment

An important make or buy consideration is the

availability of technical employees for the work involved.vvvvv

The American Purchasing Society’s recent online

survey asked business buyers and purchasing

managers how often other suppliers’ prices are

checked for items that have been purchased from one very

good supplier for many years. Here are the results.

Frequency Of Checks Percent of

For Competitive Prices Respondents

Longer than annually 13.74

or only when necessary

Annually 22.3

More frequently than annually 63.9

Note that the question pertained to getting bids in cases

where good suppliers were providing the same product

for years. Many purchasers believe it is a costly waste of

time to get new bids if the supplier is doing a good job and

has been competitiive in the past. They also believe that

asking suppliers for new bids too frequently makes the

suppliers reluctant to give out their proper prices when

they feel there is little real chance for the business.vvvvv

When Are Bids Obtained

From Longtime Suppliers?

Easily Convert One

Measurement to Another

It is commonly necessary to convert one type of

measurement to another. You can do this easily using

the Conversion Calculator on the American Purchasing

Spciety’s web. Simply go to the Society’s web at

www.american-purchasing.com, click on Resources near

the top of the screen, then click on the Conversion

Calculator in the drop-down window. Look near the bottom

of the screen and click on the type of conversion you want,

such as Area, Bits & Bytes, Density, Energy, Length,

Volume, etc. Then enter the quantity and the units of

measure that you wish to covert. Finally, enter the units of

measure you want and instantly it will show the actual

quantity that you will have with the new units of measure.vvvvv

PROFESSIONAL PURCHASING

Documents

Transcript of PROFESSIONAL PURCHASING