CONSTRAINING SUPPLY AS A MARKETING ADVANTAGE

Surprise ... there is enought H1N1 vaccine available to inoculate everyone. In fact there is more than enough supply...but guess what...no one is showing up anymore.

From the hours and hours line ups...vaccine inoculation centers are now shutting down, because why have a party if no one shows up?

So what changed? Surely the so-called hyped up threat of this flu didn't change...there is still a reasonable amount of fear mongering out there. But what did change is that the supply is now abundant...so the cachet of being able to say, "I got my shot even though there is hardly any out there" is gone. If everyone can have it, then it isn't special anymore.

Marketers have long known constraining supply is a great way of creating frenzy and sales. Just look at the Christmas insanity of people lining up each year for the particular "must have" toy of the season. Whether Tickle-Me-Elmo, Nintendo Wii or this year's Zhu Zhu pet....constraining supply, creates hyped up demand, and so the braggarts among us can lament about the hours spent in line, or bragging about how they got the "last one" of something.

But truly, there is a tremendous amount of manipulation that goes into this. As someone who understands demand forecasting...don't tell me that the official line of these companies "well, we didn't know how popular this would be" is true.

Think of the psychology behind this. When you go into a store and a sign says "Only 2 per customer", don't you immediately think...well this must be a great deal if I can only have 2, and so even if this item wasn't on your list, there it ends up in your cart. Or how about "Limited Time Only", or "If you buy this is the next 90 minutes, you also get this never to be repeated again deal"...of course never has a whole new definition in the marketing world.

So before you go loading up on things you don't need, understand that advertisers have psychologists on call and they are capable of manipulating you into buying things you don't even want.

And as the Borg said on Star Trek Resistance is Futile!

Single Sourcing May Kill You

I have never been a proponent of single sourcing. I also don't believe in having an endless number of suppliers for every product.

Yet what I've always strongly recommended is having a primary and a strong secondary vendor, because as seen particularly in the last year with the economic downturn, that as a buyer, you can be left swinging in the wind if you only have one supplier and that supplier goes belly up. Your business could be compromised to the point of bankruptcy.

The powers that be have always argued with me on this point. "Oh...we can get better pricing by consolidating volume! We win -- our supplier will do anything to keep the business." Well that's a nice naive thought that doesn't take into account the fact that firstly there is an a limit to volume pricing....for every 1000 let's say you add, you don't get a tremendously better deal, because there is a limit to the profit that a supplier can give up. Secondarily, you may actually get better pricing by ensuring that you continue to have some competition going on by keeping at least two suppliers in the game. And thirdly? One that the government of Canada is now seeing -- there is a tremendous risk relying on just one supplier.

In the paper today it says that Ottawa is "rethinking" their sole source to GlaxoSmithKline for the swine flu vaccine. No kidding! The inability to supply the vaccine after the federal, provincial and local governments have created a panic of "if you don't get the vaccine you will die" is almost criminal. But what is worse is the fact that bureaucrats who don't understand the implications of lack of supply and who inherently put their misguided trust into one supplier are those that gave in to the "powers that be" whom I argued with often in my career.

As I said in my previous blog....the lack of supply and quite honestly the logistics surrounding getting people vaccinated should have been put into the hands of a competent supply chain professional. By the time now that the vaccine will be available..the flu season will be mostly spent...I for one am not getting the vaccine, because I also have never bought into the Chicken Littles out there...and I used to work for a vaccine manufacturer!

Swine Flu and Supply Chain

Quite honestly, I never thought that I would be referencing these two items in the same blog, but as the disaster of the logistics surrounding the distribution of the swine flu vaccine escalate, it begs the question...where is any thinking surrounding supply, demand and distribution.

In Toronto, people have lined up for upwards of 6 hours, just to get the swine flu shot. No opportunity to book times, just show up like for rock concert tickets and good luck. Beyond the fact that most of those in these lines will probably get sick with the flu now given the cesspool of germs that they were inhaling along with hundred of other people -- because let's not forget that it takes 10 days for the vaccine to be effective -- it seems to me to be an unconscionable that this could not have been organized better.

I mean it is not a surprise...this has been in the planning for months. And now when enough vaccine was going to be delivered next week, all of a sudden there are only 1/4 of the expected amount being made available, because, we are told, of the manufacturers shortage. Makes you wonder who paid more for the vaccine so it is getting delivered elsewhere first.

If there was a logistics expert hired to manage this process, this whole fiasco wouldn't have happened. Would there have been unexpected issues? Sure, but there always are. However, if you are an expert in supply chain and deal with these types of logistical issues day to day -- you can figure out better options pretty quickly.

So yes, the swine flu vaccine situation is a supply chain issue. Hopefully at one point in time, those in charge will see that and get the proper assistance.

The 5% solution

The Ontario Government is struggling with a 24 Billion dollar deficit...and they are looking at a 5% solution for cutbacks, but are not quite sure how to attain this.

Having worked in the public sector at one time and knowing others who do today, I will honestly tell you that there is way more than 5% the government could be saving without affecting services.

Firstly, let's get rid of "March Madness". This is still occurring in all areas of the public service, whereby if budget monies have not been spent, there is a mad rush to do so prior to the end of the fiscal year of March 31st. I have lived this first hand, having all sorts of ludicrous purchases made just to spend the money...because if you don't spend it, you won't ever see it again...such is the mentality of many in the public sector. It would be interesting to see what would happen if starting February, all government purchases would have to be scrutinized for "worthiness" prior to purchases being made.

Secondarily, some of the processes within the government are so arduous (like issuing 164 page RFPs) that you need a small army to executive. If these were simplified, then you would be able to implement solutions faster and moreover reduce the number of personnel required....which is where most of the dollars are spent today.

But you know that this would actually require some planning and thought. Not something that is in high supply these days when dealing with politicians.

Corporate Social Responsibility

I am quoted in this article recently appearing in Inside Supply Management. The article Calculating TCO for Intangibles is interesting. I gave a lot more insight than what appears in the article, however, suffice it to say this is an important topic that requires a lot of dialogue amongst the C-suite and other levels of all organizations.

The Incredible Shrinking Customer Service

This title may not be the best grammar, but I think it brings the point across. Do you remember the 1957 movie, The Incredible Shrinking Man? The plot was that a scientist gets contaminated with radiation until basically he is microscopic. Well, that is what is happening to customer service today.

As corporations put millions of dollars into marketing and saying how they are the best, the have chosen to forget about the fundamentals, which is after the flash causes the buy, then the crash can cause the burn. That is, once you buy, what is important is after sales service and particularly how a firm deals with an issue.

I have always, in my corporate and private buying roles said, every supplier will encounter issues...so I never judge them on that, but on how they deal with it and how they move forward to resolve it and ensure it doesn't happen again.

You would figure in these recessionary times there would be a significant focus on maintaining your current client base -- that is keeping your clients "happy". Yet it seems in many cases the opposite is true...once the sale is made, damn the torpedoes, there off to the next potential victim.

This last weekend on a personal note, I've had two extremes...the good, followed by the ugly/bad. Yet even though this is a personal anecdote, this is also highly applicable in business to business transactions.

First, the good. I have been looking to buy appliances for quite a while and although I had always bought them previously from a major retailer, I chose to go to a appliance distributor. They have ads on the radio and I started going there about 6 months ago, trying to find the right 3 appliances -- issue was space. Well, over 6 months, dealt with the same sales person, and finally this last weekend I made the buy. At this point the sales rep, gave me the name of the installer this distributor uses, and said to save money go direct to him. (and he is the best) He also asked that I call him when I am told that the appliances are ready for delivery and he will coordinate drop off, pick up etc. He also said anytime if I have a question or issue to call him, because he would hope that he'll get referral business...well you can bet he will.

Second, bought some new light fixtures for outside the house. When the electrician was here..it became obvious the fixtures were manufactured crooked. The electrician and I went to the store (he had recommended this store) and they said well the others are a little crooked but perhaps good enough...no way ..said I. So I bought two others, slightly more expensive, but a known brand. To compensate for the issue, they gave me two tiny chandelier bulbs, which are too small for the fixture. Well got them back to the house...the first one was OK, the second, not so much. So the electrician went back, got a new one, and suggested they give me light bulbs for free that would properly show in the fixture...you know what they said to him...sorry, that will cost us $7 so we aren't going to do it....they didn't care that the electrician lost time, spent gas etc. and as well my day was shot...for $7...so do you think that I will be recommending this lighting store...no, in fact I will be trashing them at every opportunity.

I have many other examples, and it seems recently things have gotten worse. If it keeps going like this, we will have to chase customer service into the next dimension, because just like the incredible shrinking man, customer service is soon to be microscopic in many organizations.

Good Consultants Vs. Bad

Ok, it might seem a little odd for me, a consultant, to be writing a blog on how to procure consultants, but let's not forget that my specialty is in procurement and consultant and contract labor spend is often a major category for most public and private sector companies, except most often, there are no controls, consistent processes, or benchmarks surrounding pricing/disbursements. Furthermore, everyone knows someone who is in the "body shop" or consulting business.

So it is very difficult for organizations to actually know the value of the spend, because there is so much leakage surrounding it. And furthermore, often, during the contracting phase, the issue of disbursements is often overlooked. If you read the headlines in the newspapers, this is often what gets press.

I am getting a little tired of consultants taking the bashing for poor procurement practices...such as the media reports at eHealth and now Cancer Care. Interestingly at no time has anyone said that the consultants haven't done their work. The issue mostly is how the contracts were awarded, the pay rates and the disbursements (or in other words expenses).

Now personally, when I do a contract for a client, unless I have to travel outside of a 60 KM radius, I don't charge mileage; I certainly don't charge for meals (I have to eat anyway); and lord knows, I'd never even think of billing the client for coffee. The only extraneous expense that I charge is parking -- because that is directly related to the client and in a major metropolis it can get quite expensive. And as an independent (highly skilled I might add), I don't charge what other independents do nor big firms...because I recognize I don't have overhead like the latter do. Why the former charge $3K plus rates, who knows.

So how do you procure consultants...Firstly, you don't need to tender everything, particularly if it is a smaller project and you need specific expertise. But what you do need to do is ask for a proposal that outlines approach and expected deliverables. You should know what the market pricing is, and you need to have a clear understanding of the costs of disbursements...don't pay for meals, mileage and the like...because this is a boondoggle. Make sure as well that any travel outside a specified area follows your corporate guidelines....not theirs.

I'll spec out full disclosure below, but this needs to be identified for any sole source arrangement. Also there should be some documentation that supports why this individual/company has the skill set required and why a tender was not required.

Make sure that there is a hold-back of 15 to 20% which will only be paid at finalization of contract. Oh and this brings me to another point. If you actually have a pretty clear project scope, have the consultant bill you on a fixed price vs. per diem base. Most consultants can pretty much figure out what a project will cost, and it will save you from having to pay for non-productive time.

If it is a larger project, of course you need to tender, but make sure there is no pre-conceived thought as to who to award it to...as my previous blog said, don't tender for the sake of tendering. Make sure that all conflicts of interest are clearly stated up front...that is has this person/company worked for you before, do you have a personal relationship with this person/company or anyone else (such as a wife/husband etc); have you ever accepted any service/good from this person/company greater than $100...well you get the idea.

I could rant on about this for a long time, but the reality is don't blame the consultants...there are always people who will try to take advantage of a situation -- but don't paint everyone with the same brush. If the appropriate procurement was done on this category...many issues could be avoided even more than those stated...because there is also risk, intellectual property, liability, not to mention what I have seen several times is that two different groups hire consultants for the same work, or a year later a consultant is brought in to do the same work someone had done before.

I'll stop now. But as you can see I could go on for a long time.

Deceit and Misdirection...the Ontario Way.

This entry is not about procurement or supply chain. It is actually about deceit and misdirection.

In today's Toronto Star, there is an article about civil servant salaries that made me believe that the current provincial mandarins should be put in the "Dr. Phil House" to understand what is meant to be truthful and above all open with the constituency it is serving -- the taxpayers.

The article, entitled Bureaucrats skirt rules to hide huge salaries speaks to salaries being paid to high ranking civil servants that are significantly outside the agreed to bandwidth for the positions that are held by these individuals. But beyond being outside the bandwidth, the government chose to pay them in a circuitous manner, not out of the budgets in the ministries for which they work, but through another almost hidden methodology, that quite honestly looks like minions skulking behind closed doors figuring out how they can pull the wool over those that the government serves.

The reason given? Well we have to be competitive to attract top talent. OK, I don't necessarily dispute this, yet there are three factors that I think are quite important to consider here.

• Firstly, if it is the case that the salaries are too low to attract "top talent", then why isn't the entire salary grid being reviewed to ensure that this is the case across the board, or is the "top talent" only those who have been deemed to be anointed by the politicos.
  
• Secondly, again, if the attraction of "top talent" is true, then why try to hide it? Why not put it out front that these people are worth the money being spent on them and they more than earn their keep? In my experience, people try to hide things that they can't defend.
• Thirdly, government workers have pensions the like of which private sector employees don't have. So, when trying to "attract top talent" isn't this a selling feature?

So perhaps we can get the Premier and all the cabinet ministers into the Dr. Phil house and see if the he can get to the underlying reasons for the intense deception that has become the norm vs. the exception in the corridors of the Ontario government.

The recent movie The Invention of Lying is probably used in training videos for the political mandarins....but they have moved well beyond the inventing stage. From what I can see they will be starring in an upcoming movie ... The Masters of Lying.

Tendering for the sake of Tendering

Today in the newspaper there was another in a series of articles on inappropriate procurement practices at e-Health. So not that this is new news, but the issue that caught my eye today was about the $1billion contract awarded to IBM without tendering.

The comment that was made by someone in the government was that even though it would have most probably gone to IBM anyway, it should have been tendered. And this is where I wholeheartedly disagree.

Please understand that I am a proponent of fair and ethical procurement. And this also means that when a tender is issued that all parties truly have a shot at the business, vs. issuing an RFP just for optics or for benchmarking.

Over the years, I was often asked to issue RFPs to "squeeze the incumbent" or to "just look like we are considering others." Well guess what? I refused, because I know the costs and time that companies will spend pulling together a competitive bid, the resources etc. And if this I as the issuer am just putting an RFP out there for the sake of optics, then I am being way more inappropriate than if I didn't do it in the first place.

The risks associated with the illusionary RFP are even larger than if no RFP is issued at all -- the main one being that the award can be challenged in court and that the evaluator(s) would need to defend the decision. I have worked on enough of these to know that there is a lot of subjectivity that goes into the final decision, regardless of the weightings and evaluation grids -- at the end of the day, it is not just a mathematical formula.

The time that it costs the organization to issue and evaluate an RFP is also quite massive and I'm sure at this juncture the government and crown agencies are overwhelmed with what is being asked of them -- and understand the decisions that will be made because of lack of resources and time constraints will be suboptimal.

If an incumbent is doing a fine job and is market competitive (a little bit of research will ensure this) and if there is a need for continuity, if they only have this particular expertise -- whatever the reason, the organization would be better served by making a case for no tender than just put one out there which basically is like hiding yourself behind a fake nose and glasses. Everyone knows its not real, but suppliers feel compelled to participate.

If you are not sure, issue an RFI to at least investigate whether there are things you don't know -- which may convince you to issue an RFP.

But please, let's not issue RFPs, just for the sake of doing it. There is already too much waste in government and corporations.

Contracts, Flat-Foreheads and Ghosts

Yesterday when I was watching the news, lo and behold, there was another story about the e-Health imbroglio. This time it was about a consultant not having a contract setting out terms and deliverables. Why was this raised? Well because she had completed the work and then it was identified that she couldn't get paid because no contract existed between e-Health and this individual.

Cut to the final scene....after multiple emails back and forth between senior level people, it was finally decided that as she had done the work, regardless of whether a contract existed she was to be paid.

This is a regular practice in private sector and I'm sure that if one looked hard enough (or maybe even not so hard) you'd find it in public as well. And the pitfalls are enormous.

I have been decrying this for years (and have a flat forehead from banging my head against the wall) trying to get people to understand the massive risk undertaken. For example, if there is no contract, there is no confidentiality. If there is no contract, intellectual property is swinging in the wind. If there is no contract, if the services/goods do not perform what they were supposed to...too bad, the organization is on the hook to pay. If there is no contract, the organization maintains all the liability associated with the performance of the goods and services....And so on.

I have seen the bad and the ugly of this situation. Now on the other hand...many contracts are way too onerous and take too long to negotiate, about piddly, non-meaning things, which are in a contract just because (perhaps to make sure lawyers get paid). So simplification of contracts should occur too -- shouldn't be a one size fits all scenario.

And what other lesson was learned by this most recent issue at e-Health? That talking to colleagues is better than emailing, because emails can come back to haunt you!

11% doesn't warrant a ticker-tape parade!

You would think that Cadbury expects a ticker-tape parade if you read the recent story in The Globe and Mail, about it becoming the largest candy manufacturer in Canada to sell fair-trade chocolate. Wow...you want to set off the fireworks and send in the marching bands! Finally a big corporate behemoth is embracing its role as a leader in social responsibility!

At least that's what you think until you read to the bottom of the second paragraph of the story, wherein it states "In total, 11 per cent of the Cadbury products sold in Canada will be certified."

Now I'm not the greatest mathematician in the world, but doesn't this mean that for 89% of their products they cannot certify that they are fair trade? I don't enjoy being the cynic (ok, maybe a little bit)...but this isn't even close to a glass half full scenario -- bascially 9/10ths of the glass is empty here...and this warranted a press release?

I wrote about this almost exactly a year ago on a entry entitled Corporate Social Responsibility -- Statistically Speaking. In this blog entry, I wrote about how statistics can be massaged greatly by corporations to make themselves sound as they are doing significantly more than what is truly happening. Because you see these sound bites that we get don't give us the measurements/metrics and the meaning. Specifically the blog a year ago addressed some of the statistics that Starbucks was heralding regarding their "commitment" to fair-trade.

Now don't get me wrong...I believe that every move, no matter how infinitesimal is better than none at all. My issue rests with corporations giving themselves "atta-boys" and expecting others to put them on a pedestal because of 11%. I mean a company spokesperson for Cadbury even has the audacity to say "Companies should be responsible about where they source". I guess they mean only 11% of the time.

This is just marketing spin...hoping that we are stupid enough to go out and buy because of the halos on these corporations' heads....luckily I can read between the lines.

So it's Sunday morning, so I guess I'll start by making the world a better place by going out and getting my Starbucks coffee and a Dairy Milk bar!! Hmmmm.......

The Three Year CEO cycle -- for Better or Worse?

An article in The Globe and Mail is entitled "Ego and the CEO". In this article it states that a new study argues "that the biggest risk factor for fraud is a CEO with a truly oversized ego".

They needed a study to figure this out? There is no question that to lead a company or a country for that matter you need to have a healthy ego, because otherwise you wouldn't have the confidence to believe you were actually the person to lead thousands if not millions of people. However there is a fine (or maybe not so fine) line between healthy and overblown. The latter can often stem into the narcissistic arena if not into that of sociopath (more about this later).

Those who are inevitably charged with fraud most often believe that they are smarter than everyone else and that they won't be caught. They are able to quickly assess the vulnerabilities of their minions and pander to their woebegone egos to make them feel part of a special club and when these pawns realize that what is going on is fraudulent, they are either in to deep already and can't see a way out (or their boss threatens them with unspeakable outcomes if they blow the whistle) or they can justify their actions in some sort of twisted logic way.

I have often watched some of these so-called "celebrity CEOs" who come in to great fanfare, only to gut a corporation's soul. It is interesting to watch from the sidelines (although once I had the academically interesting but emotionally unfortunate opportunity to watch it close up and personal). They are "what the company needs", "they will enhance shareholder value"...blah, blah. And for a time, they seem to do just that. There is a bit of excitement (and fear) that goes along with a new CEO coming in and at the beginning it seems that their actions will be good for the company.

To be fair, these CEOs are not necessarily fraudulent, although their actions are highly questionable and the devastation that they leave in their wake is just as palpable as that resulting from fraud.

There are so many of these CEOs that have crashed and burned (along with the companies they ran) that you need to ask the question..."How do they keep on getting work". I think there are a few key points to consider:

1. Many of these CEOs are brought in by a board, may members of which may know them personally. Note to board members -- how someone is personally does not necessarily mean that they are good leaders. I am not passing any judgement here, but how can a Bob Nardelli go from being tossed out from Home Depot (with $200M severance) to leading Chrysler (which of course now is going into oblivion -- and don't say it is because it was on its path there anyway -- Nardelli was brought in as its saviour). Or Mike Zafirovski -- Nortel's answer to survival? Yeh right. Should I also mention that these two were from GE and the Jack Welch school of leadership? (don't get me started!)

2. I've also noticed a trend (not picked up by the study noted earlier) that there seems to be a three year rule. These "wunder-kinds" can keep on moving from company to company and have a grand reputation go with them, as long as they don't stay beyond three years. Because you see, if you have a big behemoth of a corporation and you rip the guts out of it, it actually takes about three and a half to four years for it actually to realize that it is in its death throes! Because I don't want to be sued for defamation of character, I won't name names here, but go back and look at those over the years who have their names in lights in Business Week, or similar magazines.

Firstly, the Boards and shareholders should keep a view to the company the CEO just left (and even those prior) to keep a view on its performance. Because I tell you, if you look back, it can often predict the future. Many of the companies that these CEOs leave end up having huge issues. Of course the CEO will indicate that this is due to the firm not being able to run without his/her (although its mostly a "his" issue) mastery at its helm. Hmmmm.....

When this CEO begins believing their own press, and stay beyond three years in a company, then their actions do catch up with them. And eventually, within the 3 1/2 to 4 year time period they walk the plank. Of course they often walk the plank weighed down by the millions of dollars which can only be seen as a reward for being incompetent -- the analogy of pirating truly fits here.

Oh...and if your CEO ends up as the CEO of the year in Report on Business -- start looking for a new job, because to date I have not been too impressed with their choices.

There is a good book which I recommend to anyone who wants to learn more about the psychopaths who lead us should read Snakes in Suits -- When Psychopaths go to Work. I found the book fascinating and scary -- because it was too easy to see how many there are actually out there!

Client/Supplier Symbiosis

I have been preaching for a long time that suppliers are critical to the success of any business. It seems like somewhat of a truism -- not difficult to comprehend -- but at the end of the day exceedingly difficult for many to "walk the talk."

It was somewhat refreshing to read the story of Sam Baio, CEO of West 49 in a recent edition of The Globe and Mail. His epiphany was borne out of a crisis when the Canadian dollar was close to par with the US currency and many shoppers were trekking across the border for the "better" deals.

Although the initial issue was reduce pricing (which he did get from suppliers), it seems that at this juncture he has moved beyond the typical supplier/client relationship -- still focused on the bottom-line, yet with steamlining systems, processes, inventory management, etc.-- hand-in-hand with the suppliers of goods.

This should not be heralded as rocket science, because its not. However it is nice to see a CEO understanding the 360 degree matrixed relationships within the business and noting how all aspects of the supply chain can severely and often irreparably harm business.

Suppliers need their customers to stay in business and customers need their suppliers to also thrive so that the goods and services are available -- inevitably to service the end consumer.

It is sad when there are too many companies out there who like to take the 2x4 to their suppliers, with nary an askance glance at the potential deadly blow that they have wielded at their profitability.

West 49 provides some of the hippest garments for the tween and teen set. It is nice to see that their trendsetting ways also are evident in their business dealings!

Bravo Mr. Baio!

Why is it wrong to support business in your own backyard?

Ok, my feelings on the whole "Buy American" thing isn't going to make me too popular. You see, philosophically, I don't see a problem with it. Monies spent by the US Federal Government, and the State and Local governments comes from where? The American taxpayer! And I can see why the American taxpayer would say "If there is no benefit coming to our local economies from awarding this contract to this company, then why should we do it?"

Of course this can go a little too far, which is buying substandard products or services, just to meet a specific government requirement - which unfortunately is often the case -- but if the quality is equivalent, even if the price is a little more, I say give it to the local supplier.

In Canada we are tip-toeing around this issue and going ..."oh, well we believe in being fair and all that...let's go out an make in an absolutely equal playing field even if our taxpayers money is helping another country's economy." Quite honestly -- Dr. Phil would be saying "How's that working for you?"
The reality it is not. Hey, I know we are part of the global economy and open trade and all that jazz, but there is an old saying "Charity begins at home." And this isn't charity -- it makes long term viable economic sense!

We had an issue with the Canadian Federal Government spending not too long ago when the government awarding the provision of mid-size trucks for the Canadian military operation in Afghanistan to a US outfit, when there were two potential locations in Canada that bid and could have easily been retrofitted to provide this requirement. Moreover, these two plants were in economically depressed areas! So why didn't this factor into the decision? Because often bureaucrats can't see the forest for the trees....I mean -- for our own Canadian military -- the Canadians who are risking their lives each and every day??

The Americans and the Canadians should make it mandatory to provide information of how awarding business will assist the local economy -- what kind of off-set, job creation etc. would occur. Not rocket science is it?

And furthermore, what about foreign aid. Again I am not opposed to spending significant monies to help poorer nations and the like -- but unfortunately a lot of this aid ends up lining the pockets of corrupt government officials in these far away lands. Yet beyond that we have our own issues here -- why can't we take better care of our own -- maybe scale back a little of the foreign aid and help the First Nations, or the many abused children in our own country. Or what about the homeless etc. etc.

So call me a heretic if you want to, but for me I think, I prefer to have my taxes go toward helping my economy and those who live in this great country...So go ahead US -- have your "Buy American" policy. I just wish Canada would have the fortitude to do the same!

The SEP Theory is Alive and Well

"An SEP is something we can't see, or don't see, or our brain doesn't let us see, because we think that it's Somebody Else's Problem...."

...from Hitchhiker's Guide to the Galaxy

I was reminded of Ford Prefect's theory again yesterday when I was watching a documentary on the CBC network last night. Called the E-Waste Dumping Ground it first aired in October of last year, but the issue has been around a long time and certainly I have mentioned it before in this blog. Basically our e-waste -- computers, cellphones and the like, end up in poor regions of China where they take apart and salvage any of the pieces within this equipment that may have value. Although those working on the salvaging are able to make money on it (note the poor peasants make meager wages, while those orchestrating this become middle-class or more entrepreneurs) -- there are significant health hazards just as lead poisoning just to mention one. Yet we pat ourselves on the back and say look how environmentally friendly we are "recycling" our outdated equipment.

Basically the SEP theory -- we don't see it so it doesn't exist or to take it a step further -- we chose not to see it because it would damage our notion of ourselves and our superior "green" status.

The SEP theory also holds in other areas. Again on the CBC a documentary ran called Canada's Ugly Secret wherein it was exposed that to keep the Thetford Asbestos mines and the commerce that comes from that going in Quebec, that Canada, exports asbestos to India for them to use in their building projects. Yes, that's right -- something that we know to be deadly -- Canada exports just so that we keep a few jobs going and make a few bucks. I guess from the government's standpoint they value the life of those in other nations less than those of Canadians.

I find these two things totally morally and ethically reprehensible but it definitively shows that what Ford Prefect theorized many years ago is true -- when it becomes somebody else's problem it ceases to exist -- in other words it becomes invisible.

Well, I guess to a certain extent that may be true -- when all those people in China and India die -- they cease to exist -- in other words they become invisible.

Environmental knee jerk reactions...

OK, maybe as I get older I have gotten a little more contemplative. I focus on the long term, look at all the possibilities and then try to strike a balance between some short term gains, but building towards a sustainable future. And by sustainable, I don't just mean "green" -- because the true meaning of sustainable is to "support, hold up and endure without yielding." The word was hijacked by the environmental movement and certainly has applicability. Yet in business, it has always meant making sure that the decisions that are being made will "hold up" and be relevant in the long term.

When you look at the "green" sustainability movement, I'm wondering how many of the corporate and government decisions that are being made will actually stand this test of time. Because you see, from my perspective, many of the decisions that are being made (and note this is my opinion only) with the emphasis on how much of a media splash can you get so that everyone looks with adoration on the green halo above your head.

So a few examples. Yesterday, with great fanfare the Premier of Ontario announced that beginning in July 2010 the provincial government will provide a rebate of upwards of $10000 to anyone purchasing an electric car. Yet from my perspective, although getting a great deal of media coverage, I'm thinking why? Firstly, this is obviously a rebate for those who can afford a vehicle which will cost upwards of $40K, leaving out a significant part of the population who cannot partake of the premier's generosity. However, I thought and maybe I'm naive here is that the idea was to get more vehicles off the roads, because in Toronto as well as cities around the globe do not have the infrastructure to support more vehicles. So if there are programs to buy more cars - even if environmentally friendly - that means that more roads need to be build, meaning that all those non-environmentally friendly dump trucks, bulldozers and the like need to be used, and the wonderful aromas of tar and fresh asphalt wing their way into the stratosphere.

The cost of this program is potentially of $3Billion -- so I ask myself, why wouldn't we try to put this money into public transportation systems that span effectively out to suburbs of major cities? I would love to have take the commuter trains into the city, but because of their unreliability and minimal service in my corridor, I don't.

So I'm just wondering how this "green" program is actually helping the environment.

What else? Plastic bags. Please let me start this by saying I'm in favor of bringing my own bags. This has been a standard in Europe for years and truly it only makes sense. However, the big fanfare of saving the environment because of reduced use of plastic bags? The CEO of one of the major food retailers in Canada is the TV pitch man for this firms environmental push. The stuff that they are focusing on are the easy, big media splash elements. And they are doing this while continually buying more and more of their goods from China, where environmental standards to say the least are lax and furthermore, there is a significant amount of pollution generated by the transportation of these products ( I won't get into the health aspects but I'm sure most have read about the cautionary tales about products from China). Furthermore, shouldn't they be looking at their shelves and the massive amount of unnecessary packaging that they allow their suppliers to put their products in? To "trick" consumers into thinking they are getting more bang for their buck, they put small quantities into huge boxes -- the packaging could easily be taken down in many cases by half -- that would have a significant impact on the environment. Yet this type of approach -- although long term i.e. sustainable -- would not create the type of media splash -- because it would mostly be done behind the scenes, away from the spotlight.

So when corporations and governments get on their high horse and talk about caring about the environment -- look beyond the media hype and see if they really care or are they just enjoying the photo-op.

Is it time for more entrepreneurial thinking in Procurement?

When most think about procurement (of course that assumes that some do think about it), they often perceive a group that is so focused on the savings line and therefore misses the bigger picture. Of course, for procurement, one of the key measures of success often lies in the "savings metric", but as always, be careful about what you measure because it won't necessarily drive the correct behavior.

So why not focus on more of an entrepreneurial procurement organization -- focused on top-line and the bottom-line,with more of an emphasis of providing frameworks and act as a consultant for corporations in all matters relating to procurement, and at the same time ensuring that effective partnerships are pursued with vendors (note I mean real partnerships --walking the talk, not just talking and tripping when push comes to shove), and that the innovation within that community is utilized for enhancing the overall business model for the corporation.

Depending on where you are at in procurement's evolution within your organization this may need to be done incrementally vs. in one fell swoop. The stepping stones which I see to get to entrepreneurial procurement are:

• If mostly tactical and administrative and decentralized -- focus first on centralizing and moving the team up the ladder by developing effective processes/procedures in concert with your constituency...internal and external
• Focus on understanding the business as a whole...not from your little world. Although you cannot cut lose the savings umbilical cord quite yet (as this is what binds you to the organization)...start working with your internal business partners...try to understand the business from their perspective....then develop your strategies to align with those of the business.
  
• Reach out to your suppliers...go visit them...meet with their key people, including their procurement and supply chain folk....you might find that there are some common issues/challenges which you can work on commonly. Utilize your suppliers knowledge of the marketplace as a whole...find out what innovations they see coming up in the future...how can that potentially advance your corporations competitiveness?
• When you have gained traction within the organization and a centralized model is working effectively, it is now time to decentralize (OK stop the screaming)....There is an old adage that before you can let go, you need to take control...so the first steps here are taking control...and now...when it is in the corporation's DNA to understand the procurement protocol...it is time for procurement to become more of a high level consultant to the organization...working with the internal teams to ensure that they have effective go-to-market strategies for procuring goods and services and that all options have been considered; maintaining the relationships and tapping the innovative supplier corridor; providing high level negotiation and dispute resolution skills; acting as an ombudsman(woman) for issues/challenges;....there is more but you get the idea. The senior leader of this group would be part of the executive leadership team and actively participates in corporate strategy development and discussions.

Being the police and the savings entity is not helping move procurement to the boardroom table...

Where have all the nice people gone?

I was reading the other day about Gordon Ramsay's restaurants taking a 90% profit dip....of course those of you who may not know he is the centerpiece of Hell's Kitchen TV show, where he basically behaves like a 2 year old child with a tantrum. His screaming and ranting are his signature, but what I find amazing that today we somehow have decided to idolize these mean and nasty people.

In fact, besides the usual suspects in the media -- such as Simon Cowell, Kevin O'Leary (Dragon's Den), Piers Morgan -- we have allowed this to morph over into organizational leadership too. The Globe and Mail made Hunter Harrison (CN) last year's CEO of the Year...with the moniker "hardass of the year"....sermonizing about his take no prisoner's approach. And let's face it prior to him Paul Tellier, had a similar reputation.

There are many examples of this -- when teaching a leadership course I ask participants to provide insight into the "good, bad and ugly" of leaders they have encountered. For most, it is easier to give multiple examples of the bad -- screamers, control freaks, liars etc -- then of the good. Yet one thing is constant...when they are working for good leaders -- those who are just, fair, encourage and mentor -- their productivity goes up, as does their creativity.

Perhaps it is time that we stop making folk heroes out of those who do not know how to lead and be able to provide constructive criticism to ensure that people grow and flourish. This is not Pollyanna ramblings -- I have held many leadership roles over the years and thankfully most people would chose to work with me again -- not because I created a country club atmosphere, but because I helped them develop beyond their expectations -- by being direct, honest and above all a mentor. These people delivered amazing results and although it was their work, and they were credited with it -- they made me look good -- and for that I am thankful.

Let's make heroes out of those who have emotional and social intelligence -- a return to civility -- not hailing the bullies in the backyard.

So to Gordon Ramsay lamenting the loss in profit in his restaurants -- no sympathy hear

If it would look bad in a headline...don't do it!

"I think there's less than meets the eye and less than meets the headline with respect to the story."

...Colin Powell

For years, whenever someone asked me about a potential ethical dilemma, I always gave the same advice:

1. Because you are asking me about it, means that your gut is telling you that it is inappropriate so .... follow your "gut"
2. If you wouldn't want to see it in a headline...don't do it!!

Interestingly, the retort I usually got back from the latter usually was "Well, that's unfair, because headlines are taken out of context." Well duh...no kidding...that's the point...there is generally no context to news stories.

Which brings me to the "scandal" around E-Health Ontario. I know there are two sides to this story -- Sarah Kramer was brought in to kick start an organization that had woefully gone off track and spent hundreds of millions of dollars with nothing to show for it. She most assuredly was given short timelines to begin showing results, so perhaps shortcuts were taken. To follow pure public procurement rules/procedures results in onerous delays, which is why we often see the government's not achieving as much (or much of anything) as they should -- although they can always say ..it was a fair/open and transparent process-- but at the end of the day..the process may not demonstrate value for money.

So understand, I'm not defending Ms. Kramer (and btw I don't know her), but what I am saying is there is a lot more to this story than is written in the media.

So that brings me back to the headline issue. You see if Ms. Kramer had stopped for 1 minute and asked herself that question, she would have ensured that there was a significant amount of documentation for sole-sourcing -- explanations that were bullet-proof (perhaps there are, but you figure, if there were they would have been made public by now). So the headlines of "untendered, multi-million dollar contracts" could have been quickly addressed with this type of document/business case/justification.

But that wouldn't have gotten rid of the issue of expense claims by the consultants, the coffee and muffin and the now infamous Chocobites. Interestingly, a number of years ago, one of my staff was travelling and tried to expense a $1.50 coffee at the airport. I didn't allow the expense, and the rationale was this...if you were in the office at that time, would you have gone down to Timmies and bought a coffee, or was there a coffee machine in your cubical I wasn't aware of? Needless to say, there were never any such claims made again.

I have travelled on behalf of clients and when I do my expenses, number 1, line up with their specific corporate policy. Secondarily, I don't expense coffee or anything below $10 actually, and if I have a glass of wine at dinner, I don't expense that either -- it is my choice -- a want not a need! And in fact, if I am working for a client in the Toronto Area, I only charge for parking...no mileage, no meals -- and my rates are significantly below those charged by the E-Health consultants -- and I consider myself to be very good at what I do...

So shame on the consultants for expensing these claims, and shame on whoever was reviewing the invoices for allowing them (not to mention the one where the consultant supposedly billed for consulting to herself -- error or not, it should have been picked up by somebody). Perhaps these expense claims never made it to Sarah Kramer, but inevitably the buck would stop at her door.

The travesty began when someone agreed to a contract that allowed for these claims to be made...disbursements in professional services can cost more that the per diem rates...but many corporations fail to put a lid on disbursements when negotiating this contract.

So remember -- no headlines please...if individuals dealt with corporations money as if it was their own..there would be peace and harmony for all :)

In Business, as in American Idol -- too often we make the safe vs. innovative choices

I love innovation and creativity. That's why I was hoping that Adam Lambert would win American Idol last night. But, as my son calls them, the "sheeple" won the day.
I'm not taking away from the fact that Kris Allen has talent. He has loads of talent. Unfortunately, he is like a lot of other performers out there and inherently a safe harbour -- people felt comfortable with Kris, whereas Adam, with his looks and his innovative approach to every performance made many a little uncomfortable.

Well, we often make this type of decision in business as well. Go with the "tried and true", vs. the innovative and creative. Yes, the choosing of the latter is riskier...you might be pushed to have to think in a whole new way, but the payoffs for reinventing your business could be amazing.

Just think if GM had chosen to follow the Lambert Way, instead of the Allen comfort zone? We might actually had seen some innovation and perhaps the firm would not be teetering on the edge of bankruptcy today. Same goes for Chrysler...and let's not forget Microsoft, which to a certain extent has rested on its laurels...as opposed to Apple, which has continuously pushed the envelope. The mantra of "it worked before, so let's not change it", is inevitably the death knell for many companies...who once were leading the pack, but now find themselves at the back of the pack...seeing the competition ahead by many lengths in the business Kentucky Derby!

So good luck to Adam Lambert. This young man is going to be a superstar, regardless of mainstream America's rejection of him. In a few years, Kris Allen will be all but forgotten, and Lambert will be playing to packed stadiums around the world.