The Sourcerer's Apprentice

TOE DIPPING: STRATEGY OR EXCUSE

2012-02-11T11:21:00.000-05:00

There is an inherent lack of boldness amongst businesses today. It is a phenomenon which I would like to call "Toe Dipping".

My belief is that many corporations are into analysis/paralysis and when a new idea is considered, there is reams of information, market reviews, thousands of pros and cons identified and then maybe, just maybe, let's do a pilot. By that time often the opportune time for getting to market has passed and the corporate titans that go and high-five each other that they dodged another potentially unprofitable investment. But has this all just become a self-fulfilling prophecy?

Although I would not got strictly on "gut-feel", I do believe that we have missed grand opportunities across the business spectrum because we no longer trust our business acumen (aka intuition). That is partly because we do have so much information (much of it contradictory) at our fingertips and a multitude of people who have somewhere in their job description the term analyst.

Are we doing ourselves any favors?

Interestingly, one of the founders of one of the most successful companies detested market research...that being Steve Jobs. And do you think that Mark Zuckerberg said "well let's not launch this Facebook idea until we actually know that the public wants it!" Or Twitter, or Google...the list of examples is endless.

But here are large corporate entities who are probably sitting on the next innovation, but are letting it die because of corporate red-tape and fear. As Steve Jobs indicated, the market doesn't know what it wants until I tell them.

I'm not saying stop all due diligence, and I also recognize that there are some highly regulated industries (like pharmaceuticals) that definitively have to adhere rules.

However, mostly, I'm tired of seeing red-tape and pilots result in the crushing of opportunity. Let's be cautiously risky and although there may be some failures that will inevitably happen, those that would embrace this approach would leap frog the competition and become highly profitable.

Jump in. Toe-dipping is truly just an excuse.

THE FUTURE OF SUPPLY CHAIN AND PROCUREMENT

2012-01-27T13:37:00.000-05:00

I am often asked where I think Supply Chain and Procurement will be in the next couple of decades. Perhaps that is because back in the year 2000 I entered a North American contest wherein I identified that in years to come It went something like this

Buyers would be holographic avatars whom we could configure to our liking (George Clooney or Jessica Alba for the guys) and once we identified for them that which we wanted to buy, the would quickly provide all the relevant information for a service right onto your laptop, or in the case of a product provide you with a 3D representation floating in air. Once a decision was made, then the "buyers" would jump back into the portal (somewhat like in Tron) and within seconds come back with the top three alternatives -- pros and cons attached.

I also though ensured there was a fail-safe, because you see if I could call up George Clooney, perhaps I would do that every few minutes and buy much to much. So if you were trending to purchase above your budget or perhaps wanton buying then Barney the Dinosaur would show up singing "You're buying to much, you must stop now.."etc. etc.

Yes, for that "amazing" piece of insight I won the contest!

So back in 2000 my ruminations were wild...but today, they don't seem that far fetched! With websites like Second Life having the interest of corporations, maybe having an avatar to do your buying with all the algorithms built in is not so out of line!

But what about the rest of the Supply Chain. The warehousing, the distribution etc. Well, eventually you will be able to shop for everything at sites like Second Life. Their marketplace has real stuff.

If you think about all the bricks and mortar that companies have that distribute their own product, quite honestly, I believe that in the future, or at least those who want to be around in the future will start to outsource this to the experts. But even the experts won't be keeping tons of inventory. If you look at distribution behemoths like Amazon, a significant amount of their product is direct from a supplier. Ebay sends nothing direct. And although these sites are mostly consumer oriented (because consumers adopt before corporations do -- not as much red tape), it is only a matter of time that this trend will be accepted as the way to do business. Small bricks and mortar, lots of cross-docking and ship direct. There will still be lots of trucks on the road, so good news for the trucking industry, but they will have to start bringing their price-points in line. In fact the behemoths may very well negotiate on behalf of all those selling through their sites or with those firms that they are aligned with thereby decreasing margins. It will be a much more virtual world of Supply Chain in the future.

Is this going to happen tomorrow? Well, I believe it is going to happen a lot faster than most think. If you think of an example in the publishing industry, a few years ago they were not thinking that people would give up the touch and feel of books and today? Well, Amazon sells more ebooks that "real" books, so hold onto your hats. In a very short time paper books will be a thing that we remember fondly...at least a lot of trees will be saved.

I am not professing to be the Nostradamus of Supply Chain. But change is coming and it is worthwhile for companies to be ahead of the curve.

RACING WITH BLINDERS

2012-01-23T09:56:00.000-05:00

I'm sure many pundits will be writing today about the shakeup at the top of RIM. Certainly one must always consider the fact that often those that are best suited to start-ups are not the best individuals to keep the company running in the future. With of course the exception of Steve Jobs.

Why is this? I don't believe it is necessarily a truism. As Steve Jobs demonstrated at Apple, as long as you keep innovation alive then you can run not only a successful company, but one that constantly redefines the marketplace. In fact, I believe the opposite can be true...if you remove innovators then you can lose your way.

But what causes these leading edge companies to truly lose their way? Arrogance and blinders. When you think about it, whether Nortel, Kodak or RIM, the parallels are there. Leading edge, innovation and then a "well, we're the best, so we don't really have to try anymore! We'll just make what we have a little better and because we are the first one's out of the gate, of course we will always be the leading horse in the race."

As Dr. Phil would say "How's that working for you?"

Not so much. It is actually sad to see these firms, which truly redefined our expectations to sink into the mire of misery caused by this arrogance. And if anyone thinks that by chopping off the head and replacing it with a new one means success, you are delusional. George Fisher tried to get Kodak to consider itself a "picture"company as opposed to a "film" company and he was met with resistance every step of the way. He wanted Kodak to go full speed ahead into digital, but the mid-level employees of the company stymied every step, because of course they didn't see any reason to change -- they were getting their bonuses and commission, so who is this interloper who has this "vision."

I hope that this will not be the case with RIM...as opposed to Kodak in the '90s, RIM is in serious trouble. However, innovation cannot be dictated -- "today your job is Innovation with a capital I" --

nope...that just doesn't work.

Rebuild needs to occur -- bottom-up and top-down -- but only if they are truly serious about change!

PICTURE IMPERFECT

2012-01-14T10:56:00.000-05:00

When reading about Kodak preparing for Chapter 11 filing, I couldn't help but thing of the term innovative complacency. Here is a company that was way ahead of the curve for years and years, and in fact is the company that first came up with the concept, engineering etc of digital photography.

However, just like Hem in Who Moved My Cheese, a decision was made to protect the film business and not cannibalize nor infringe upon the mighty profits. Instead of changing the way we saw the world (which if you really think about it is what photography does), Kodak chose to ignore, foolishly so, the market trends, and in fact, missed defining the market trends. Thus the filing of Chapter 11.

I don't know if Kodak will recover. With many President's being put in place for the various business units, it is clear that there won't be one mega company, but many small ones. But the lessons are here for all enterprises who chose to protect their core business without trying to change the dynamics and lead their clients into a new world.

If you think about it we have seen many companies fall by the wayside. Nortel, BlockBuster, Borders, and although I'm not expecting it to file for bankruptcy RIM is also a company that was an innovator and then decided just to sit back and let the money roll in, while its competitors starting rolling over it.

I don't know what causes this. What lack of vision and insight there must be at the senior levels of organizations to let this happen. Maybe they just like the perks and ignore the future. In how my mind works, I can't even fathom this lack of insight.

The US car companies are another example...they were teetering on the edge and hopefully they have learned their lesson. But who knows -- after a few years where will they be. Will the cycle of complacency imbed itself once again?

What about companies that focus on printing and the distribution of paper. This train is coming a lot faster than I think any of these companies think. How about writing instruments, when I can now basically use my iPad as a notebook....makes you think.

So seeing Kodak go down is disheartening. But it is a lesson to CEOs and shareholders alike...complacency breeds bankruptcy. And that my friends is an imperfect picture for any firm!

A NEW YEAR -- WHAT WILL 2012 BRING?

2011-12-30T16:34:00.000-05:00

There was a show on this year called The Trouble with Experts (click here for information) the premise of which was that firstly, we are addicted to experts and their meanderings and secondly, that we place too much stock in their ability to "predict" the future. Furthermore we don't like experts who seem tentative and cautious -- because if they are not overly confident (aka arrogant) than we think that they really don't know what they are talking about.

Well in this last year the prediction by most "experts" was that the stock market had gone through the worst, and that we were in for a bull market. Predictions also were that in major cities in Canada, the real estate bubble would burst because prices, again according to the experts, were anywhere from 10 to 25% over-valued.

And what has happened, stocks went back down, the euro-crisis is running rampant with our lives and invariably the real-estate market has not collapsed or even remotely swung down in Canada.

So what to do? Well, I think the best thing is to stop listening to so called experts -- in some ways we are hooked on them, just the same way we are on weather forecasters -- no matter how wrong they are on a continual basis we chose to listen to what they have to say vs. looking out the window.

So this year...let's try to look out the window -- let's try to make sage choices based on what the world is telling us...get information from multiple sources -- you can listen to the pundits -- just don't believe them.

And perhaps place more credence on the real experts who are cautious in their approaches and provide insight but invariably will note that this is their opinion and not gospel!

I'M BACK

2011-12-07T11:04:00.001-05:00

After almost 18 months of working a corporate role, I'm back. Although I enjoyed my time as a VP of Supply Chain, I am looking forward to resuming my consulting practice and of course being able to blog on the ongoing issues of the day.

Since I last blogged, the world has been in an economic crisis; we have had an Arab spring and a lot of things for me to get caught up on over the next period of time.

It is amazing when you think of it how things that you hold to be consistent and unchanging end up being anything but. In some cases, that is due to a sense of entitlement -- which I believe is seen by those who are protesting the cutbacks in Greece and sometimes it is a sense of magical thinking that the good times will always be just that -- as seen with the downturn in Ireland.

Regardless, each global event has a significant impact on supply chain and procurement practices. Things that were top of mind yesterday -- like sustainability and other corporate social responsibility programs, get overwhelmed by the need to review business practices, keep costs down and well -- re-engineer.

Sometimes, unfortunately, things that are compatible are seen as mutually exclusive, because only the surface is considered vs. any in-depth consideration.

And I will write about that in the future...but today I'm just saying hello and I'm glad to be back!

There but for the Grace of God...the tale of BP

2010-06-18T10:58:00.003-04:00

There is an old phrase which goes "There but for the Grace of God go I." And when we look at what has happened with this environmental disaster on the shoulders of BP, this phrase came to mind.

There has been a lot of talk about the cost-cutting measures that BP underwent and how they had a risk profile of the drilling which identified that there was a potential of a spill (although I'm sure that risk profile never calculated anything quite of this magnitude). Yet this is what many companies do, on a regular basis.

I'm not excusing BP, as I wouldn't excuse any other firm that put lives at risk, however minutely, in the pursuit of a few more dollars. But let's be real...it happens all the time. Do you really think that every little screw that goes into holding an airplane together is the best money can buy? It will certainly meet standards but why get the Cadillac when the Volkswagen will do?

Procurement organizations throughout the world are being asked to find every nickel and dime and sometimes this means compromising quality and taking risk. Why have a relief oil well standing by, at a huge cost, when the risk of ever having to use it is minimal? I'm sure at this point BP wishes they had spent the few million more, as opposed to the billions they now need to fork over.

So all of us need to ask how much risk is acceptable. There is no magic bullet on this one...but I do believe that there is a lot of scrambling around the world in corporations today asking that question. I think often the risk assessments fall short...they deal only with the percentage of the risk...and don't go to the worst case scenario and analyze in great detail the potential downsides Why? Because of course, when does that ever happen?

Ask BP...it can happen and does....so before making risk pronouncements and cost cutting,(and make heroes of the CEOs who increase shareholder value by decreasing costs) let's have a more robust approach to the risk analysis..

But before everyone goes patting themselves on the back because this didn't happen to them...let's remember...there but for the Grace of God go I.

Keeping up with the changing times

2010-05-31T14:36:00.005-04:00

There were a couple of situations today that caused me to think about how in some cases "everything old is new again" and also about how some companies are spending money on things that will soon become somewhat irrelevant. And as they say in the opener of Law and Order "and these are their stories."

Old is New

Besides the retro clothing and the music of my youth making a resurgence I ask you to consider the situation with bags. We have all been inundated with the "plastic bags are bad" facts and pictorials and there is no question that the use of plastic bags has gone out of control. I can see making someone pay $.05 per bag at a grocery store, where sometimes people walk out with legions of bags, but when you are buying clothing...it doesn't make sense to put this into a cloth bag. Furthermore, I doubt very much that the charge for these bags are going to environmental initiatives....more likely they go to a corporation's bottom-line.

I was in a grocery store today, and in some other stores recently, wherein paper bags are issued. Convenient, sturdy and made from recycled material....and as such potentially less harmful to the environment than the use of cloth bags (because who knows what goes into some of them).

The reason this is in the old is new category is because growing up, there was nothing plastic...milk came in bottles...delivered every couple of days...as did eggs, cheese and even vegetables....so much for the discovery of the organic movement! But you brought groceries home in paper bags...and there was no recycling where they could be thrown...they just went out with the trash...if you think about it....some retailers have found the magic formula...to providing their clients with something to take home their product in, without unnecessarily polluting the environment....just like we did year's ago, except now, we can recycle....Nostalgic, isn't it.

Phone numbers that say something

How many of us have heard on the radio, read on signs, or trucks, or benches...phone numbers that spell something out? I'm hoping all of you and for a while, this was quite a trend....whether for a store, a real estate agent, a chiropractor, and even charities...the list goes on. I realized the other day how problematic this was when I wanted to make a call in reference to something I saw and went to my Blackberry Yup, I had no clue what the number was because the letters on the Blackberry have a QWERTY keyboard...that won't work for phone numbers that are letters....so sale lost. I don't think quite honestly that many companies have thought about this. You keep seeing new phone numbers popping up with some cute naming convention, but hey, doesn't work for a large part of the population now...if you are advertising anywhere where people are mobile...guess what, give the phone number, not the name...perhaps you can try for an easy to remember phone number...but drop the names...now...may even save some money on your bottom line!

The Business of Philanthropy; What happens if there is a cure?

2010-04-22T06:13:00.003-04:00

Recently there has been a lot of news swirling around a potential cure for Multiple Sclerosis. MS has always been considered a progressive neurological disorder, but that notion is being challenged by an Italian vascular surgeon Dr. Zamboni. The Liberation Treatment or CCSVI, has had amazing results. It takes MS to a vascular vs. a neurological disorder, whereby MS patients with clogged veins in the neck are "liberated" by opening these veins and allowing the blood to flow unrestricted.

Promising results have been reported and studies are underway, and rightfully there has been resistance by some, including the MS fundraising societies, to ensure that proper, repeatable, scientific studies are done to ensure this is not a false hope situation...and that it is not "the cure."

However, it got me to thinking about what happens if this is "The Cure" and what happens if cures are found for other diseases. Not what happens to the patients, and the researchers will always find something new to research, but what happens to the large infrastructure that has been put together to raise funds for the disease?

Because let's make no mistake about this...these societies that raise funds, provide awareness, support etc. are large corporate machines that employ hundreds if not thousands of people. So what happens if there is a cure? What happens to this large corporation which has basically lost its one "product" and now has nothing else to sell?

It is an interesting question...one that most of us in the corporate world do not have to consider, because most corporations do not rely on just one product/service offering...there is usually a slate of options...potentially related, but not alone.

How does this philanthropic organization wind down? Where do the monies raised go? Many, many questions...and as far as I know this has never happened since fundraising has become somewhat of a big business.

It will be interesting to see. From everything I've read to date and the reports coming forward it seems that Dr. Zamboni's CCSVI treatment may be the first real cure for a major disease that we have seen, and I hope it proves out. But the implications go beyond the thousands affected by this disease, the implications will also be felt by those who are employed by the societies some who have dedicated their entire life to the pursuit of a cure and may soon find themselves without viable employment!

The disruption of the organ donation supply chain

2010-04-19T11:36:00.007-04:00

We have a short memory. Although I am quite confident that there were many more contingencies in place since 9/11, however, once again we are being forced to recognize the fragility of the supply chain when modes of transportation are affected.

Although there are obviously many other modes of transportation that are unaffected, such as ships, rail and truck, there are many other items which actually do get flown with the likes of FedEx, DHL, and others that are now grounded.

Probably one of the things that has the most profound impact -- truly life and death -- has been the transportation of organs for transplant. In Europe, organs for the last week, have been going to those within driving/rail distance wherein the organ's viability is ensured.

It's interesting that as I consider myself to be a Supply Chain expert, that I hadn't actually thought of organ donation as having a very intricate supply chain aspect to it. In fact, considering the limited time for transport, it is probably one of the most complicated supply chain's around.

Firstly, if there is a mistake, it literally means life and death. Because the person on the receiving end, may not live until another organ donor becomes available. In the case of the volcanic ash from Iceland, there are surely dozens of people, whose life is now at risk or perhaps they have even died, because air transport is not available. Of course on the other hand, there are others who may very well be alive, because of the disruption. Waxing philosophically this is an inevitable yin/yang scenario.

But if you think of organ donation as an end-to-end Supply Chain issue consider these points.

you never know when your "product" will become available
you have multiple products coming from the same "supplier", which are going to different destinations, with a limited shelf life -- with the shelf life for each "product" being somewhat different.
you need to obtain the "product" from the "supplier" with specialists and each extraction requires a different approach. Furthermore, until the "product" is actually viewed/extracted, its viability is unknown
when it is known that a "product" is becoming available, there is a search to find who the customer is who is most in need. The customer could be a few kilometers/miles away or possibly hundreds
As the customer is identified, there is a need to assemble specialists at the "customer's" location for "installation" of the part
And during this entire time, the actual logistics for the transport will need to be put in place in a last minute scenario, with transportation "experts" accompanying the part/product

I know that putting life/death scenarios into these simplistic supply chain terms may seem a little harsh, but the reality is that this is exactly what it is. It makes me think that in reality, everything we touch, everything we deal with is somehow intertwined with the supply chain, and although I had already encompassed most of the world and activities in that thought process, I had missed organ donation as part of the vast world of supply chain.

I feel sorry for those who have lost their opportunity for a transplant and may die because of it. On the other hand, one can understand that there may be some rejoicing by some that the volcanic eruption in Iceland occurred.

Let's hope that the wind shifts soon, and that the supply chain world of organ donations can begin to deliver to those most in need.

THE GUARDIAN OF THE CORPORATE REPUTATION -- WHO IS IT?

2010-04-12T08:35:00.001-04:00

You are probably thinking that this is an easy question to answer, because by all logic it is everyone. But not everyone is affected by a misstep, and not everyone thinks about the ramifications of breaches -- ethical, legal, financial etc. -- which would irreparably harm an organization's reputation and potentially lead to its eventual demise.

In a recent conversation which I had, the question was posed "Is procurement the keeper of the keys to the corporate reputation vault?" And quite honestly, from my perspective, procurement has probably the most important role to play. But let's first look at the other players.

Legal: Well, there is an excellent argument to be made that legal is the inevitable authority on what could get an corporation into legal trouble. But considering the massive amount of interpretations that the law could take...this is an important consideration, but not the final one. Because often what is legal and what is not in important regarding fines, imprisonment and reputation as well...but there are things that might be perfectly legal, but are seemingly questionable -- ethically, morally etc. -- and might make a good headline in the newspaper...Legal yes, but a strike out on the reputational front.
Internal Auditor: Again, the internal auditor has an important role to play, but is often fiscally focused, although some internal auditors can be used as sounding boards for other issues. But the actual title "internal" auditor, harkens to the focus is internally and yes, ensures that things are being done correctly so that the organization can pass an external audit..but just like legal....not necessarily bigger picture focused.
Marketing/Communications: I put these two areas together, because they are impacted by the same issues to a certain extent. Certainly Marketing and Communication "spin" the message....trying to get clients to buy their product/service. When a misstep occurs both are severely affected -- communications trying to get ahead of the story and spin the issue, and marketing considering their options for messaging based on the headline story -- and how it is going to affect the brand. And although Marketing helps to build the brand, the message is a pitch and doesn't look at internal operations trying to figure out what could hit the company in the backside. And communications? Well there is a lot of reactivity there...and not the "keeper of the keys" activity.

There are other areas within organizations that could be discussed, but if I listed them all this would be a very long entry. So let me get to Procurement and why with the global view that procurement has, one needs to seriously consider the impact on the corporation's reputation, and also one needs to consider how some of the measurements that are used to determine a procurement team's efficacy may in fact be counter-productive.

First, let me go back a step and talk about the definition of "keeper of the keys". I want to make sure that no one believes that what I'm suggesting is "policing". That is not or never should be the role of procurement. This is at a higher level, which looks at moral, legal, ethical issues -- risk mitigation and the like.

Procurement has a 360 degree lens into the internal and external aspects affecting the organization. With appropriate market intelligence a good procurement department understands potential issues with suppliers -- including how they do business (around the globe) and the risks associated with those who have questionable business practices. Also, procurement has a lens into conflict of interest issues....and hopefully has a full disclosure policy to ferret out any potential issues regarding impartiality of the evaluation team.

How about sustainability? A lot of sustainability initiatives to date have been driven by the proverbial "low-hanging fruit", and that is in building operations (turn off the lights!), recycling etc. But what about the rest? What about travel and potential alternatives, such web conferencing etc. -- Travel is usually managed and negotiated through the procurement office -- so what better place to initiate positive change?

How are suppliers meeting their "global" obligations re sustainability? Right now, there is too little done within procurement organizations here -- beyond putting something into RFPs which says "Are you Green?" Reality check here -- no one is going to say no, and unless you are actually going to audit them and beyond them -- their suppliers as well -- their is absolutely no point in putting this into an RFP. Yet the point remains the same -- this could and should be driven by procurement.

I could go on ...but this posting is already too long...Nevertheless, I have one more comment to which I alluded to earlier, which is about counter-productive measurements. This brings me back to the nit which I have always had, regarding the inordinate amount of focus on cost savings -- which unfortunately drives the focus to be on price (and let's be serious here -- we can talk about total deliverable costs -- but often the measures issued by the powers that be end up being price driven) -- this pushes procurement to make decisions which may in fact be contraindicated when trying to focus on the corporate reputation -- not always, but it does have significant impact.

So the question becomes -- when it comes to the corporate bottom-line what is more important? A few thousand dollar savings, or a long term excellent reputation? I'm sure these days if you ask Mattel or Toyota you'd know what they'd say...the loss to the top-line can be measured by decisions made as a result of incompatible metrics....

....So procurement in my mind, should be the "keeper of the keys"....but the savings metric needs to be relegated to a lower status for procurement to become effective in this role.

THE TRICKY QUESTION OF EMAIL ETIQUETTE

2010-04-06T07:51:00.003-04:00

There are a lot of opinions out there on what is proper email etiquette. As a rule, I've always liked to say thank you or acknowledge an email receipt.

Yet this is becoming a questionable practice given the number of emails some people get in a day.

So I'm beginning to be careful about to whom I write a thank you, or in fact whose email I acknowledge. If an email says "I'll get back to you", then isn't it somewhat redundant or even pushy to say "Thanks, I look forward to hearing from you"?

At that point it could be said that they could write back to you and say "Yes I will" or "Me too", and then you'd have to answer again. This could result in an endless number of polite yet totally unnecessary emails.

I'm not sure about what the correct protocol is, but then again, I don't know how many folk do...and what's right for one person, might be wrong for another.

Which means there is no real solution to this quandry...so I decide to mix it up and judge the scenario based on the individual...and I hope that I get it right!

Internal vs. External CEO's: What's the Right answer?

2010-03-29T14:23:00.009-04:00

In a story today in the Globe and Mail, a study by the executive recruiting firm Spencer Stuart indicates that CEO's who are external hires tend to boost the market value of the company....in the first three years.

I wrote about the three-year CEO cycle on my blog last August "The Three-Year CEO Cycle...for Better or Worse". Basically I gave a compelling (at least I think so) indication that when corporations bring in outside CEO's and they stay for three years or less...then yes...the shares go up....and because of the PR spin...it seems like the corporation is doing well...Yet, time and time again, when these external CEO's stay for more than three years..the "Hawthorne effect" wears off and many corporations have seen that gutting the soul of the corporation has consequences.

When I see this kind of study, I first question the motivation. Spencer Stuart is an executive recruiting firm and as such has a vested interest in corporations hiring externally. This is not to say that their study is false in anyway...I am just pointing out a potential conflict of interest.

Secondarily, when you look at a three year cycle...it is like looking at what is to be a long term investment...say for retirement...and judging your investment solely on the last three years. If you look at mutual funds and the like...you can be misled by considering only the short term returns. A five to ten year retrospective gives you a lot more insight.

So I personally don't think that three years as a CEO enables anyone to state that external is better than internal. Personally I believe it is the quality of the leadership and that can come from within or externally.

I hope that corporations and shareholders won't be looking at this study and say, "well maybe we should consider an external hire" the first step should be to outline what the leadership qualities are and what short and long term outcomes are desired.

I am all for change and I don't think there is a good or bad approach....unless the only focus is short term shareholder value...I've seen the devastation caused by this and it is not pretty.

Conflict of Interest -- What is it that people don't get?

2010-03-10T07:45:00.003-05:00

I'm sorry, but I just don't understand what is so difficult when it comes to understanding the term Conflict of Interest!
According to wikipedia the definition of conflict of interest is as follows:
A conflict of interest (COI) occurs when an individual or organization is involved in multiple interests, one of which could possibly corrupt the motivation for an act in the other.

Seems simple right...I mean, it is pretty clear in my mind...there is not gray here, which is the situation in many ethical issues.

If anyone asked you "Is it alright to give my girl/boyfriend a lucrative contract, one that I would be approving", chances are you would say -- "Um...I don't think that's a good idea!"

But somehow this particular ability to understand ethical behaviour and downstream consequences seem to have been lost by John Cursio of the Toronto Transit Commission as outlined in a recent story in the Toronto Star.

Now I have been shouting from the hilltops for a long time regarding the gaps in process, the need for full disclosure, the approval hierarchies...and you know, what seemingly gets most people into trouble are the consultant type contracts....which, although, this is about photography...it can be lumped into the same category.

We don't know if his "girlfriend" was the best photographer since Karsh, and perhaps she should have gotten the job, but without stating the CoI right up front...one can only surmise she got the job because of her relationship. And for him to approve the contract/payments....'nuff said.

I still think there is real room for a Dr. Phil show on this....with a big "WHAT WERE YOU THINKING" session.

Kijiji and how buying and selling keep morphing...

2010-03-03T14:19:00.005-05:00

I am moving in a couple of months and have gone to the internet to sell my excess goods. What a difference from when I moved five years ago and the real only choices you had were garage sale, charity, put a posting on a board (which for me would have been akin to putting your phone number on a bathroom wall) or just giving it away for free.

Mostly 5 years ago I did the latter and we all know that if you put things into a garage sale...well, if it has a value over $5 don't expect to sell it for anymore.

But on Kijiji and Craigslist, within a couple of weeks I have sold quite a lot of things...not anywhere near what they are worth (and don't we always think our things are worth more) but certainly I have sold many things for basically what I was asking for them....and I continue to do so. I find this process so much better than eBay, because on eBay, you pay a percentage to eBay and then you have to incorporate shipping costs -- in fact with the likes of Kijiji and Craigslist, I would suspect eBay will have its own comeuppance soon.

It made me begin to wonder about how there should be a Kijiji for corporations. Not only would it be fiscally responsible, it would also be environmentally a sound approach.

Just think about it...instead of buying all new stuff, all the time...you can scan for items at a significantly reduced cost and you just go get it. In fact, the first step would just to be able to do this within the boundaries of a corporation and then expand between corporations.

I think this could truly revolutionize how business is done...result in a more collaborative approach between entities, reduce costs and save the planet...all with one simple process.

Yes, of course there is always a downside....if "new" stuff isn't bought, then it isn't made, which results in lost jobs...but I think the upside trounces the downside.

Maybe it should be called COjiji or some such for corporations...anyway...I'm off to sell more of my personal stuff on Kijiji...but think about your organization and how much you could benefit from such an approach!

Thinking about tomorrow, today!

2010-02-26T10:24:00.003-05:00

This is just such a great deal...let's do it now!

How many times have you heard someone say that? And yes, often it is a great deal if all you do is look at the item at hand. But what is often forgotten is the cost of consumables, services contracts etc., not necessarily by procurement folk (although under pressure to "close the deal" they may sometime capitulate) but from those who can only see two feet in front.

If you look at some of the offers held out for consumers....there is not a great deal of difference on how sales folk wave the magic wand that eliminates rational thought.

Why are printers relatively low in price? Because the cost of the ink is where the most money is made.

Why do telcos offer "free" cellphones when you lock into three years? Because that $100 that you saved (and remember that is not their cost, that is retail price...their cost for the phone is a lot less) is going to make hundreds of dollars for them in revenue.

Extended warranties to protect you? That is the biggest cash cow for many retailers and suppliers alike...

So as always, it is buyer beware. The good deal is good for today. But if you haven't calculated in the tomorrow, chances are this is a wolf in sheep's clothing deal.

Olympics and the need for input

2010-02-17T12:45:00.006-05:00

I have been watching the Olympics...cheering my country on and I've been known to yell at the TV every once in a while. Yet I'm not going to write here about the athletes or the medals...because from my perspective any athlete who has the skill and dedication to make it to the Olympics deserves a medal.

What I'd like to address is the insular thinking that seems to have marred some aspects of the Olympics...which is in my home country and thereby causes concern.

Yes, there have been glitches and quite honestly the Olympic organizers do not control the weather...although I think given the warmest winter on record some of them might have sold their soul to be able to do so...

What irks me is some more fundamental things that quite honestly have caused me to cringe to date.

The first thing was the opening ceremonies....I like our national anthem....so why did we allow a sixteen year-old singer to make it jazzy and provide her own rendition as opposed to belting it out...strong, proud and free! This is not American Idol, where you get praised for making it your own...this is our identity...what were the organizers thinking...oh well, let's just make the anthem a little more contemporary? We will show the world ...that hey, we don't really like our anthem...we will bastardize it to show we are hip? Strike one for the organizing committee...had they spoken to any regular folk they would have been told flat out that you don't mess with the anthem...

The second thing....opening ceremonies again....every stereotype that every one in the world has about Canada was reinforced....certainly there is the historic perspective and I am a big fan of showcasing the native culture in our country....but we have a multicultural mosaic second to none in the world...we are so inclusive and proud of that and we have amazing cities to showcase...not just the wheatfields and snow...come one...first you try to make us hip with the anthem and then you make it look like we are stuck in some sort of 19th century backwater...Strike two.

Strike three is the Olympic cauldron....the Olympics are to be about inclusion and harmony. So what do they do? They put the Olympic cauldron behind a ratty chain link fence...to keep the ne'er-do-wells away....reason...because they chose to put the cauldron in an area where they media has their outlets and as such it is a security perimeter...Huh? Why would they put it there and keep the key symbol of the Olympics away from the people....and the attitude from the organizing committee has been nothing short of arrogant in this regard....somewhat of the "too bad, so sad" attitude, until today...where they realized they had a mounting public relations disaster on their hand and needed to deal with it...But once again..had they asked the general public what they would like to have access to and see (that doesn't cost anything) it would have been the flame.

In reality this is also what happens in corporations....the "group think" from senior leadership that doesn't seek input from those most impacted by potential decisions. As I noted in my previous entry about the Undercover Boss series....same thing....wow, what a difference when the CEO sees what it is like to be on the ground...

Perhaps next Olympics...the organizing committee should team up with Undercover Boss and consider themselves as tourists...as opposed to putting something together that seems to smack of insular thinking.

Undercover Boss: Mandatory Leadership Training

2010-02-08T10:21:00.005-05:00

After seeing my team the New Orleans Saints win the Superbowl last night, I though I'd watch the new CBS show Undercover Boss. The premise of the show is that the CEO/President of a major corporation goes "undercover" to act like a new employee, doing entry level jobs, and finding out what the reality is of the "workers" and how the decisions from corporate effect the workers.

I found the show quite interesting, because in this first episode you have the President of Waste Management, Larry O'Donnell picking up garbage, cleaning toilets, sorting recycling etc. What I found amazing (and perhaps I shouldn't have) is his constant statements of (and I might be slightly paraphrasing here) "I didn't know how my decisions at head office were affecting the workers. This experience has changed me."

Good for Larry, but the issue is that had CBS not come along with this show (and let's face it, the company probably agreed to it because realistically it was one hour of free advertising for Waste Management) Larry would still be making ivory tower decisions without a thought to the ripple down effect -- and of course there is no saying how long Larry's epiphany will in fact effect corporate directives.

I have often said that if you consider an organization like a bunch of cog-wheels...if you have a big one at the top, they make what they consider a decision that in the grand scheme of things they think is small. So this "big wheel" moves one click. The couple of smaller wheels below, end up clicking twice to keep up. Now if you think of the next row of wheels...they are clicking several times...and so on. By the time you get to the bottom "little cogs" they are just spinning trying to keep up with that one, "minor" decision that the upper echelon made.

We need, as leaders, keep in mind that every day we are dealing with people's lives...and not just theirs...all the other people that depend on them in their lives....for Larry O'Donnell to say "I didn't know about how my decisions impacted the worker" is a sad testament to top leadership. He should have known, and cared. (and by the way, it was interesting that none of the workers remotely recognized him)

Now I am realistic....the CEO can't know about every person's issues...but every corporation can set up some method to get input from every level. I used to have monthly coffee meetings with a cross-section of folk who worked at all levels, just to get them comfortable with me and having the opportunity to put forward issues/concerns. Also the opportunity exists to have facilitated sessions, again with all levels, to determine how decisions are impacting them, but also get their input before you even go down that path.

Every organization will have in its mission statement something about valuing people and people are our most valuable asset. Well, most corporations don't walk that talk. When the going gets tough, they usually downsize on the people part, heap more work on those remaining, and then say, "well you should be glad you have a job!"

Wouldn't it be better to be honest with the employees in a corporation and tell them you need them to give you ideas....you need them to step up to the plate to help reduce costs or enhance efficiencies, so no one loses their job?

It might take a little longer, but the changes would be sustainable over time and the loyalty you would buy from your team would be immense. As Undercover Boss showed....the top leadership doesn't quite know what is happening downstream....it is about time for corporate leadership to step up to the plate and recognize that they aren't the only one's with ideas!

STATE OF THE UNION -- COUNTRY AND CORPORATIONS

2010-02-01T10:58:00.007-05:00

I was struck the other day by the visible partisan split during Barack Obama's State of the Union address. And what struck me, was that this wasn't about what was good for the country...it was about self-interest.

Now please understand, I am not here to make a pronouncement on either side of the coin...Democrat or Republican. I have been around long enough to know that making a political commentary in writing has very few upsides....but what I was struck with was how the "what's in it for me" as evidenced by the clapping or lack thereof during Obama's address, is very much what we see in corporations as well.

As a consultant, I bring leading edge ideas, challenge the status quo, show clients new ways of approaching old problems and the like. But you know it wasn't like I went into some sort of self-actualized metamorphosis when I became a consultant....I was providing the same insight and approach when I was an executive in corporate. Yet, as a consultant my ideas are readily accepted by all parties, and seen as a road map for the way forward.

While in corporate, as I said, I did the same thing...and yes, often times I was able to move an agenda forward because of following the same principles as I do in consulting. But, you know, it was never as easy. Because when you are working in the corporate environment as and "employee", your ideas are taken with a grain of salt, because others may believe that you have an "agenda", not quickly obvious to them, or, worse, that by moving forward on your proposal, even though it is better for the corporation, it may put you in the limelight and potentially, from this colleague's perspective, diminish them....or they see it as turf encroachment...or...or...or....

As a consultant, you are not a threat, you don't seemingly have an agenda and as such your thoughts and ideas are more readily acceptable.

But it causes one to wonder, if individuals in corporations, as well as the government, could put their partisanship aside and agree to a go-forward strategy, putting the business or the country ahead of their own egos and agendas, how much better both the country and those corporations would be!

Change Mis-management and the NBC Fiasco

2010-01-19T12:10:00.005-05:00

I have always been a proponent of stuff happens and as a corporation you've got to figure out how to fix it. Fixing it, however, does not mean having a heavy handed, this is the way it is approach. It is not about knee jerk reactions and it is also about getting buy-in.

Hence we get to the NBC Leno/O'Brien fiasco. Obviously NBC just came down with dictates and in the ivory tower back rooms decisions were made. Not only that, the easy decisions were made and again...although I understand the here and now of this media type of decision making, I don't believe a lot of thought was given to the demographic shifts, technology shifts etc.

You see, I like Jay Leno on at 10pm. I never watched the tonight show because quite honestly it was on too late...the time slot was great and I actually enjoyed having something on at 10pm that I could turn off if I wanted to, and made me go to sleep laughing. Yup...I'm one of those boomer types who needs my 8 hours sleep.

Yet beyond the shifts in how we lead our lives (those with young children are also often too exhausted to stay up that late) there is also the increasing use of PVRs and show "taping". So I tape all of the drama shows, watch them at convenient times and then reserve my before bed TV to light fare like Jay Leno.

And although I know I'm not alone...let me bring this whole discussion back into the realm of corporate and the mess that has been made of this.

I'm not sure what went on in the backrooms, but I have seen too much hammer-headed moves by the ivory towers when it comes to implementing change. The thought process goes only a few feet out, and the collateral implications are never considered. People are told, not consulted beforehand and as such, revolts begin, reputations damaged and businesses become unproductive because the staff are spending most of the time lamenting the change and not working with the leader or corporation to provide input, insights and assist in a proper implementation.

The whole NBC drama smacks of this type of approach. I'm sure there is a lot of hand-wringing happening, and as well I wouldn't be surprised if a few corporate scape-goats are handed their walking papers...Change can be implemented extremely effectively, but it can't be done with such little foresight, and dare I say arrogance.

So sorry Conan and sorry Jay....I won't be watching either of you (unless of course Conan...you get a 10pm time slot)

CONSTRAINING SUPPLY AS A MARKETING ADVANTAGE

2009-11-30T12:41:00.004-05:00

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

2009-11-03T08:55:00.004-05:00

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

2009-10-31T15:58:00.005-04:00

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

2009-10-24T16:03:00.003-04:00

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

2009-10-22T11:32:00.002-04:00

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

2009-10-20T13:23:00.003-04:00

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

2009-10-08T09:50:00.005-04:00

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.

2009-10-06T09:05:00.006-04:00

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

2009-10-02T14:27:00.004-04:00

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

2009-09-10T10:07:00.007-04:00

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!

2009-08-30T09:55:00.013-04:00

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 S pea king. 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?

2009-08-26T08:42:00.007-04:00

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

2009-08-24T14:36:00.007-04:00

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?

2009-08-19T16:28:00.004-04:00

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

2009-08-05T10:01:00.008-04:00

"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...

2009-07-16T09:02:00.007-04:00

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?

2009-07-09T14:27:00.009-04:00

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?

2009-07-06T10:17:00.005-04:00

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!

2009-06-08T12:34:00.004-04:00

"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:

Because you are asking me about it, means that your gut is telling you that it is inappropriate so .... follow your "gut"
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

2009-05-21T10:06:00.007-04:00

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.

Best-In-Class versus Best-for-You

2009-05-13T10:32:00.008-04:00

Everyone is constantly talking about best-in-class, and very often, for the wrong reasons, labelling themselves as such or indicating that that is what they strive for. According to the business dictionary, best-in-class is defined as:

"Highest current performance level in an industry, used as a standard or benchmark to be equaled or exceeded. Also called best of breed."

So what is this thing that many companies strive for, and is it truly what they should be doing. Sometimes by focusing on best-in-class, are we missing what is best-for-you?

No two businesses are exactly the same -- that is a truism. Comparatives are always interesting and knowing what others are doing is of value -- what is working, what is not. But there is a danger when looking at best-in-class -- who decides what it is, and furthermore, when looking at instituting what someone had deemed as best-in-class -- are you perhaps trying to put a square peg in a round hole.

Often times, corporations are disappointed with the results from some of the mega consulting firms coming in and leveraging on what they have done before -- cookie cutter their solution to a client. Too often, what I have experienced is that when I get to the client, they have spent a couple of years trying to implement something, which truly didn't make sense for them, but because this "respected" consulting firm told them this is what the "best-in-classers" do, they felt obligated to try.

Don't get me wrong. I am a big fan of seeing what has worked (or hasn't) for other firms. Yet once you've done that -- then look at the business your running, and see if it makes sense for you. Having been as an executive in many different industries, and consulting in many more, I can comfortably say that the Pareto rule is alive and well. That is to say that 80% of the aspects of the business are similar -- processes, business drivers, etc., however 20% are unique. What I have also learned it that if you ignore that 20%, anything you try to institute is doomed to failure -- the square peg, round hole scenario.

So let's give "best-for-you" more credence. Create your own horizon -- take heed of the lessons learned from others, but don't follow blindly -- just because some amorphous mass tells you this is what should be done. Create your own footprint...and who knows -- tomorrow someone might be calling you best-in-class!

Who me? Allegations of Bid Rigging and a call for Simplifying the process

2009-04-13T09:30:00.005-04:00

Back in February there were allegations made by the Competition Bureau that some technology services firms had engaged in "bid rigging."

"The Bureau says in a release that it has found evidence indicating that several IT services companies in the National Capital Region secretly co-ordinated their bids in an illegal scheme to defraud the government by winning and dividing contracts, while blocking out honest competitors."

It should be noted that these allegations are still to be proven in court, which of course could take years. True or not, the reputation of these firms has been damaged for the long term.

Yet the bigger question here is how could this happen? Let's face it, anyone who has ever dared to respond to a government RFP is inundated with pages upon pages of documentation, which even for relatively simple items can range well over 100 pages! So how is it that someone could engage in bid rigging, in a "bid rigorous" system.

The more you try to address every potential eventuality in an RFP document, the greater the chance for finding ways around it. Because let's face it, when things are kept simple then the opportunity to unveil ne'er-do-well activity is a little easier. I'm not saying go back to the handshake scenario, but we have gotten mired down in so much paper and evaluation that at the end of the day it has become somewhat self-defeating.

I know that it may sound contraindicated -- the greater the complexity to ensure compliance the easier it is to defeat the system, but think about it. When you have limited resources and limited time to come to a decision aren't the pressures going to result in just a cursory review, as opposed to a more indepth analysis.

I understand the need for diligence when the public's money is being spent...however, are our tax dollars being spend effectively when we are propping many jobs in the public sector, just because we have gotten so "scared" about the possibility of a misstep?

Missteps are occuring every day within organizations that allow themselves to be buried in outdated protocol vs. reality. And, as the story from Ottawa demonstrates, you are not eliminating the opportunity for unethical behaviour. Furthermore, to this point, we have seen, regulators like the SEC doesn't keep the world from becoming victims of folk like Bernie Madoff. In fact, it makes us more vulnerable, because we have the misguided sense that we are being protected.

Goes back to the old KISS adage, "Keep it Simple Stupid!" Hopefully sometime soon we will see a rennaissance in government structures to ensure this happens and our public monies are being spent effectively, better decisions are being made faster, and unethical behaviour is uncovered quickly....

Now that's something to hope for-- but I won't be holding my breath!

Earth Hour and Christmas Mass...

2009-03-29T14:58:00.003-04:00

I am so glad that Earth Hour has come and gone....now don't get me wrong...I am a firm believer that we need to make efforts to have an environmental conscience...but I don't appreciate being made to feel like a pariah because I am energy efficient everyday and not just for an hour once a year.

The mayor of Toronto even had the audacity to say the participating in Earth hour meant (and I'm paraphrasing here) you were voting for the Earth and to not participate meant you were voting for global warming! Huh? So what I do the rest of the year doesn't count? So all those who are energy hogs 8759 hours per year...are in with the environmental movement...just because that 1 hour...because of peer pressure...they succumb and say oh well, I look at me...I'm an environmentalist!!!

This is like saying your religious because you go to church on Christmas Day...Come on....let's be real here...I'm not against the symbolism of Earth Day, nor the symbolic gesture of going to church once a year...but to consider that if you don't participate in this most holy Earth Hour means you are against the planet.....I personally find that offensive...

So no, I did not turn off all the lights and burn candles and sing Koom-bay-ah for an hour. I had the one light on in the room I was occupying, and was watching TV....like I do most evenings between 830 and 930. On my street, all the homes which usually have their external lights blazing every evening, turned them off for 1 hour...only to turn them on again later...and probably for the next 365 days. I, on the other hand, only have the outside lights on when I have guests (because I don't want them to trip) or at Christmas time.

So does this make me a bad person....Just for the record...although I follow the tenets of a particular religion, I don't go to church...and I don't go at Christmas either, because I would find that somewhat hypocritical.

So why don't we look at a longer lasting solution to the environment, as opposed to patting ourselves on the back and saying "hey look what I did for an hour!" You never know...it just might save our collective souls!

Shut up Fools!

2009-03-19T10:36:00.003-04:00

Where is Mr. T when you need him? Remember his famous lines -- "Pity the Fool", and "Shut up Fool"? Well we need to resurrect Mr. T to deal with all those forecasters and pundits out there, because no matter how poor their forecasts were last year, they are still piling on more "informed" outlooks, which are pretty much a shot in the dark...just as they were before.
Furthermore, let's face it most of these folk have a vested interest in getting their face in the media, or in fact in potentially manipulating the stock market.

There is a guy from Merrill Lynch who is constantly pulled up in front of the media to be interviewed about his thoughts...Ok so Merrill Lynch had to be bailed out by the Bank of America because of their poor performance and their betting on bad investments. So why is this company's opinion being sought out? Because this guy likes to say some controversial stuff and so it makes good play in the media. At the end of the day...he is saying these things not for our benefit...but because it makes him look "wise" and in this way he might get a job somewhere else.

And what about the Oracle of Wall Street Mr. Warren Buffett? Why would he say that the markets are going to go down even further if it weren't true? Well, because Mr. Buffett is a very smart business man...which is why he is worth billions. He knows that the market reacts to his pronouncements, so he probably has his team poised to buy, buy, buy as the markets sink on his statements...and then of course, he states that things are looking positive because that helps his shareholders, when the markets go back up....Helloooo? Warren Buffett has a vested interest in having this kind of action go on....Is it illegal? Absolutely not...he can't be responsible for the stupidity of the masses.

And David Dodge...oh please, just shut up....what does it help ...true or not to come out with these damning pronouncements on the economy....I'm still trying to figure that out....so things are bad and they are going to get worse...well, we are kind of figuring this anyway, but why do we need salt put into the wound....I'm not a big Stephen Harper fan...but what's wrong with a little bit of optimism, even if it is misguided.....perhaps it will restore some consumer confidence and maybe we can see a little (even a little) bit of an upswing...

So please...shut up all you so-called forecasters...it doesn't seem that you had any clue that this massive correction was coming...so how is it that you have the "cojones" to come out now and talk a different game...oh yeh, it is in your self-interest isn't it....Mr. T....please put them in a headlock!

Crying over Spilt Milk

2009-02-06T15:47:00.006-05:00

Everyone now wants to be compensated for their investment decisions over the last few years. I do feel sorry for some...they got bad advice, but on the other hand they wouldn't be lining up to hand over the profits which they would have made had the economy gone the "right" way.

Unless you want to put your money under you mattress, or in a GIC or savings account, there is no safe haven. I have lost money too, as have most others I know...and not a little, but a lot. Am I thrilled about it ...no...but do I expect someone to give me back what I lost...well, no again. I understand the risks...so there you go...I just hope I live long enough to see the investments come back.

There are now the hard-luck stories of folk losing millions by investing with Bernie Madoff. (Please note that I wish I had millions to lose). Well as I said in an earlier blog entry...if it is too good to be true, it probably is. Individuals and seasoned investors were amazed at the returns posted by Madoff's firm and jumped on the band wagon. Greed was the overriding consideration...and let's remember that is one of the deadly sins.

Then yesterday on the news, there was a section where folk who had pre-purchased condo suites in the "up" market ...those which will not be completed for a few years, want to have the developer take the hit on the changed condition of the marketplace...Give me a break...real estate is just like the stock market...if you invest, you hope it goes up, but if it doesn't you take the hit. Do you think if the market would have gone up significantly that these same people would have said to the developer at closing..."Oh why don't you take half of the increased value!"..but on the loss side they don't want to have responsibility.

As you can tell, I am fed up with the whining. If you enter into a bad contract in business, shame on you...live with it. If you make a bad investment decision...shame on you....If you are the victim of a fraudelent activity....it is unfortunate and of course the SEC should be hoisted on tenterhooks for its lack of policing the likes of Madoff...but on the other-hand it should have been apparent that Madoff's returns were so far off the mark....that he looked like the Golden Goose...and hopefully most of us know that was a fairy tale.

So to all those crying over spilt milk...stop it now...you took the risk and now you pay the piper!

Blame it on the Economy...

2009-01-20T10:29:00.004-05:00

There is nothing that happens in the world today for which the economy isn't responsible. Corporations are going down by the boatload, and they are seen like Oliver Twist before the governments going "More, please sir".

But are we being realistic here? One headline recently caught my eye "Icy Economy fells No rtel". Like Nortel wasn't having major crisis before -- poor leadership and a flurry of bad business deals? No...all of a sudden it is the fault of the economy, because, hey, it is an easy scape-goat for all that ails the world.

The reality is that this is a proverbial chicken and egg scenario...what came first...lack of vision and leadership on the account of corporations, greed by the investors and aspects of the banking sector -- or the economic apocalypse?

Well, my money (that little that I still have left) is on the poor leadership/lack of vision and of course the deadly sin of greed. You see, the US automakers acted like nothing in the world could ever touch them....so they kept on ignoring the signposts and kept making cars that no-one wanted to buy. And then of course the banks got into these lending schemes and poor decisions..which showed that the financial sector just seems like one big Ponzi scheme, with the same money being promised over and over again...and when the music stopped, so did the economy. And of course there are all those investors, who are now crying fowl (pun intended), because they got into bed with the likes of Bernie Madoff...which goes to prove the old adage "If it sounds too good to be true, it probably is."

So let's give the Economy a break....it is not the reason for all that's happening...the Economy is having a nervous breakdown...because all of those business Titans out there....have finally had their decisions come home to roost.

Predictions for 2009...

2008-12-22T09:58:00.009-05:00

I know there are many pundits and crystal ball gazers who feel compelled to make predictions for the New Year....which are typically far from what happens. So I thought that I could not do any worse than these folk so here you go....

I predict the media will continue to fuel the fears of consumers and investors by having eye-catching headlines which have words such as "loss", "bankrupt", "recession", "spiraling downward" and the like. These will be accompanied by large graphs which have red lines going down.

Stephen Harper will continue to present himself as uncaring and arrogant. He will only try to show a "sensitive" demeanour if it means he can remain as Prime Minister a little longer.

There will be more "ponzi" schemes uncovered. Unethical behaviour will seem to spike. The reality is the unethical behaviour has always been there, it is just that schemes seem to be uncovered in the economic musical chairs, because the "music" has stopped.

The US automakers will come back, hat-in-hand in the first quarter of the New Year, saying they need a few more billions to make their restructuring plans work. They will fly in for such meetings in their private jets.

After leaving the presidency, George Bush will become a spokesperson for a shoe company.

There will be no such thing as "Peace on Earth and Goodwill to All..."

...however we can still hope and pray that we may see that in our lifetime.

I want to wish everyone a very Happy Holiday and a Healthy,Prosperous and Happy New Year...

In my next blog in the New Year I will tell you a little about my new book...however if you can't wait you can go check it out at www.1pieceofadvice.com.

Analyze This!

2008-11-18T08:32:00.010-05:00

Every day we are being inundated with so-called experts who are giving us their latest economic forecasts. And many will listen and believe and follow their advice. To quote Dr. Phil "How's that working for ya?"

The reality is that what the latest global financial mess is pointing out is that these same "Oracles of Delphi", are the ones that not too long ago were stating that our economy was solid, gas prices were going to go up to $2 per liter, and on and on. Yet it is obvious that this is not what has happened and now just like a chameleon, they have changed their colors and if they are not trying to hide in shame are out touting their latest predictions.

This is just like the weather person -- who has a 50/50 chance of being right with a prediction. "It will rain tomorrow," they may say with utter certainty. The next day, when the sun is shining, they blame it on an unexpected shift in the thermal patterns -- not their fault. And we accept that, because, well, we have come to consider their inaccuracies acceptable.

Or what about any of the so-called psychics, who will predict that a celebrity will get married within the next year. Again, they have a chance of getting it right. If they don't, you never hear anything regarding their error, but of course if it is correct, the psychic will tout it as evidence of their magnificent sixth sense.

Quite honestly, after the recent market affliction, we should put economists and financial pundits in the same category as weather persons and psychics. If they are correct, they shine a spotlight on themselves and say "look at how great I am!" The reality is that they are often wrong and as demonstrated recently can be horribly wrong.

But then again, it may rain tomorrow....or not!

Lemon Contracts and Negotiation?

2008-10-24T09:29:00.007-04:00

By now those who live in the Greater Toronto Region have heard about the "lemon" hybrid Toronto Transit Commission (TTC) Buses. There is much talk amongst the TTC commissioners about the fact that these buses do not meet expectations.

Batteries that should be lasting five years are surviving only about 18 months, which affects service because those buses have to come off the road for repairs, he said.

The hybrids have also failed to live up to projected fuel savings because the technology is most beneficial in stop-and-go downtown traffic and there are a limited number of such routes, Ross said. Many TTC routes operate in less busy residential neighbourhoods.

It was hoped the hybrid buses would save 20 to 30 per cent on fuel but they are achieving only about a 10 per cent saving, he said. (From the Toronto Star: October 18, 2008)

Now understand, I don't have any insight into the contracts that were signed and agreed upon, but I have negotiated multi-million dollar deals for equipment and you don't just take the marketing hype as gospel! You ask the provider to guarantee that the equipment will be as "promised". This can be achieved through various standard approaches, but at the end of the day, it comes down to "put your money where your mouth is". If you say the batteries will last for 5 years, then guess what? When they don't -- the provider will absorb the cost of any retrofit, as well as any requirement to put other temporary buses on the routes for the period of time this takes (and by the way...the provider is on the hook for finding these temporary buses).

And what is this about the fuel consumption? Where is the due diligence that should be done by the city -- this is like looking at a car that says it gets 26 km to the litre -- and then in small print it says but city driving is only 12 km to the litre.

As a consumer, I read the fine print. As a procurement professional, I not only read the fine print, but I ensure that due diligence is done on the "promises" and then contractually bind the provider -- if they indicate this amount of fuel will be saved by using their buses then questions need to be asked how this number will be validated, what the experience has been in similar cities, during peak times. And more.

Obviously, none of these was done, and the politicos raced to get the payout from the Federal Government -- which provided financing for these hybrids.

Once again, it shows there is no such thing as a free lunch! The money given by the Federal Government will now be a small drop in the bucket compared with the issues that the TTC is facing to deal with the "lemons".

Why is the Wall Street meltdown a surprise?

2008-10-04T10:40:00.005-04:00

Everywhere the pundits are quoting Gordon Gekko from the 1987 movie "Wall Street". "Greed is good" he expounds -- and now everyone laments that we have allowed Wall Street to become a reflection of Gekko's philosophy.

The reality is that this is much deeper than just the traders on Wall Street. In fact what this is about is the entire way that the success of a corporation is measured. Look at the Fortune listing of companies -- it is by revenue...not in order of profit...but by revenue. Oh, profit is of course mentioned in due course, but it is this lusting after the Holy Grail of revenue that makes the numbers be massaged and the mis-truths told.

When corporate CEOs and their disciples are measured and rewarded on revenue growth and the analysts can make or break a company by their recommendations based on the latest quarterly report -- is it really a surprise that some shenanigans are in play?

For years I have been a proponent of focusing on the profit picture -- not at the expense of revenue -- but when making a decision -- it shouldn't just be "full speed ahead". There should be some reflection on whether a deal actually meets the standards which will ensure the growth of the company for the future. Yet, "alas poor Yorick, I knew him well", is the head of a corporation who wishes hailed as a saviour in the short-term, so he/she can reap the rewards and move on as a messiah to their next position...while leaving destruction in their wake.

Many years ago, I saw this in action in a firm where I was employed. The devastating effects from his reign resulted in this blue chip firm never recovering.

The problem is how the entire markets measure success. Perhaps it is time to go redefine its meaning and go down the right path for the future.

What about John McCain?

2008-09-19T14:52:00.006-04:00

I am going to divert a little from my normal blogging and write about the Sarah Palin phenomenon and what I, as a professional woman, think about it.

There is no question in my mind that Sarah Palin is not qualified to be the Vice President of the United States. Yet the trouncing she is taking is unprecedented. Questions are being raised as to why she would even think about saying yes...well, duh, how many people say "yes" to roles for which they are woefully inadequate? More than we care to think about.

Yet it is Sarah Palin who is getting the flack...not John McCain. Quite honestly I find that Sarah Palin, in accepting the opportunity did what most men, or women, would do...and she is being challenged because she didn't second guess herself? Oh come on...

It is John McCain's judgment and his readiness for the office of President of the United States which should be questioned. How can a man who would be President, be so out of touch with women to believe that women would just vote for Palin, because they share a chromosome with her. Because we are too stupid to actually consider the experience, stance on issues etc. of a potential candidate? Once again...oh come on....

So instead of crucifying Sarah Palin...let's go after the real culprit ... John McCain....he shouldn't ever be considered for the presidency, if his judgement to pick a VP candidate is found lacking....

Of course then, this doesn't mean he won't win....after all America did vote in George W. Bush.....twice.

Crisis Management and Maple Leaf Foods

2008-09-03T09:50:00.005-04:00

By now everyone should have heard about the Listeriosis epidemic across Canada. This occurred because of this bacterium being present in one of Maple Leaf's processing plants. There are a number of things which are amazing from this entire episode, which are worthy of mention.

Firstly, our vulnerability in the food supply chain is obvious through this episode. How many brands does Maple Leaf process? And how are we, the customers, foolish enough to believe that when we buy different brands, we are actually getting different product. That is how I was fooled into believing that cold cuts that I was eating were in fact not involved in the recall. Quelle surprise when I discovered that Bittner's was on the recall list and yes I had ingested quite a lot (note: I did get very sick, however the tests for Listeriosis were inconclusive).

When I realized that I had potentially eaten contaminated meat, I called Maple Leaf (this was when I was starting to feel ill). Their first line of response was great...phone call answered in two rings...however these folk were useless...as in they were just a clearing house....They then transferred me to the "product specialists", where I was on hold for 15 minutes. I hung up, called back and was told this never should have happened...there was obviously a problem with the line...and my information was taken and I was told I was going to get a call back.

After an hour, as my fever started increasing and I was getting sicker and sicker, I called back again. I was told that since it was Sunday, I shouldn't expect a call back....but probably Monday or the latest on Tuesday. Tuesday was actually when I was in the hospital...yes, that's how sick I was....but alas no call. Finally, ten days after my initial call, I did receive a call back...how pathetic is that....

Now I know that they were inundated with calls, however when you have the CEO, Michael McCain coming out and saying we are doing everything we can...then from a potential "victim" perspective...this was not the case. I believe that McCain is sincere, but he should check out how the situation is being handled at the lower levels...the execution of his intent is poor.

Finally, I do have a comment about these "class action lawsuits". These leeches...people out there saying "oh well, I wasn't feeling quite well, and it was probably due to this"...come on....These people are opportunists, as are the lawyers who are saying that they are doing it for the greater good....when they are only proceeding with the law suit to line their pockets. I believe that those who have loved ones die and who can prove loss due to listeriosis, have a right to consider claims...but not these others, who are just looking for the quick buck.

Lots of lessons learned through this....and Maple Leaf should truly do a post mortem on the handling of this crisis, once it is over....and this is not just from the public relations campaign...it is from how people were virtually ignored by their call center.

Striving for perfection: The perverse effect on people and the economy

2008-08-14T12:49:00.004-04:00

By now all of us have read the stories regarding the "faking" that China did at the Beijing Olympics. The cute little girl that was chosen to lip-synch the national anthem to the voice of another little girl, who was deemed "not perfect enough to reflect China". Moreover there are reports of enhancing of the videos of fireworks at the opening ceremonies as well, which again got everyone twisted up in knots.

Beyond the fact that this is entertainment, and often entertainment results in illusion, the issue is more that the Chinese tried to "pass-off" these two situations as reality vs. illusion and that's where the issue is for most, I believe.

However, aren't we a society where perfection is not asked for but demanded -- of our corporations as well. Why do we think that often we are "surprised" at the quarter-end results of some major corporations. Because we are focused on short term "perfection" or if you will "illusion of perfection". If a company has made major changes which will result in short-term hits to their bottom-line, the market reacts badly and sometimes causes a spiral for a firm -- being honest about its imperfection -- from which it can't recover.

This has resulted in some in the corporations' hierarchies to massage questionable results to again provide the market with what it wants -- continuous perfection. Sometimes unfortunately firms begin to believe their own press and ignore the warning signs of changes -- just look at what's happening at GM -- again they thought that they were "perfect" for the longest time and tried to convince the rest of us of that as well.

So is it any surprise that China decided that it wanted to demonstrate perfection? It is what most of the world demands! So don't blame the Chinese -- blame our expectations. Let's realize that honesty is perfect -- and sometimes honesty is marred with aspects of imperfection!

Beware of Snake Oil Sales Pitches

2008-08-07T09:34:00.005-04:00

I have heard a lot of sales pitches in my time, however recently I've found myself almost taken in by the "snake oil" sales pitches. Yes, that's right, even someone who is trained to look out for these ne'er do wells is not immune.

For those of you who are not familiar with the term "snake oil", let me explain. The most common usage of the phrase is as a derogatory term for compounds offered as medicines which implies that they are fake, fraudulent, quackish or ineffective. The expression is also applied metaphorically to any product with exaggerated marketing but questionable or unverifiable quality.

Both times the pitch pandered to my ego. One was in reference to a book I'm penning and the company provided a "free evaluation" which of course was exceedingly favourable. And then the pressure tactics began. The "president" was so enthralled with the potential that he wanted a conference call with me. Of course this "president" wasn't listed anywhere on the firm's website, and when asked about this he said that he preferred to remain in the background. (I guess in the background collecting the money). Then the pitch began....limited time, don't offer this to many, need to start working together on this now, and oh..of course I should fork over $40K to them immediately so that they can start working...and oh by the way there is no guarantee, but here are the references of past clients...email them and they'll tell you how good we are. Those references never responded and as soon as this firm was advised I was not moving forward with them at this time.....all communication stopped...not a perhaps at another time or let's keep in touch if there is anything we might be able to do....just dropped like a hot potato....whew...dodged that bullet.

And then again earlier this week, I get a call from a firm, saying they are looking to do a series of TV interviews on Supply Chain and can they call me to talk more about it to see if my knowledge/experience would be what they were looking for. Wow, me on TV!? How thrilling! The woman mentioned CNN, MSNBC etc...So I gave her some twenty minutes of my time, the next day. She was skilled in asking questions which were fed off my answers. Lo and behold, I was obviously ideal for their segment and the whole issue of Global Supply Chain was exactly what they were looking for. And then, all of a sudden, after talking about studio time, exposure etc. there was a $20K charge...scheduling fee they called it...which this would cost me....Of course I turned it down.

This is guerilla marketing....snake oil...whatever you want to call it...it is misleading....the latter one particularly as they sought me out. They try to hypnotize you with visions of fame and exposure and then when they pretty much have you seeing yourself having coffee with Larry King, they pounce with the "oh by the way, this is going to cost you only a mere $20K".

Luckily, although I have a healthy ego, it is not so big that I am a sucker for such obvious fake flattery. But as Barnum once said "There is a sucker born every minute", and I'm sure these firms are making money hand-over-fist with these tactics....So Beware...you too could be the next star on the Hollywood Walk of Fame....yeh, right!

"Do Unto Others....."

2008-07-29T14:00:00.001-04:00

Although commonly referred to as the Golden Rule the phrase "Do to other as thou wouldst they should do to thee, and do to none other but as thou wouldst be done to" has its earliest discovered origins with Socrates, but it is mostly quoted from the Bible (book of Luke).

There were a number of instances recently from a personal perspective which caused me to think of it in the perspective of supplier relationships.

Last week the good and the bad of this rule were evident at the Eagles concert in Toronto. For those of you who have been on a planet far, far away for the last few decades, the Eagles are an "uber" band, which in the '70's attained greatness from their rock/folk mix of music. Their music today, is as great as it was back then, which is the reason for the band's longevity in the hearts and ears of many.

The Eagles gave what can only be spoken of as a generous concert, giving their audience more than I have experienced any other rock band provide. There was no opening act -- they came on stage at 830pm and only with a short intermission in between, played until close to midnight. The fans felt appreciated -- that is this was not a band that acted as if the audience was privileged to see them perform -- quite the opposite -- the Eagles performed as if it was a privilege to be on a stage in front of the thousands of appreciative fans. Regardless of the cost of the tickets (which was hefty) I left with a warm glow, thinking it was worth it. The Eagles "did unto others, as they would have done unto them", and it is this approach which will ensure their long term viability.

On the other hand, I went to Morton's Steakhouse in Toronto that same week, where from the moment I walked in, I felt like I was being treated as if I should consider myself lucky to pay $50 for a steak and then the additional $10+ for potatoes, vegetables etc. It was a "hurry up" feeling, where the waiter was hovering to take the order (even though we told him we weren't in a hurry) and then the salad plates were taken and the full meal plopped down in front (which makes you wonder how long it was sitting in the warmer before being served). When the time came for coffee, we ordered some and with the coffee, came the bill -- no further request if we wanted more coffee or anything else. So a $200+ meal was over in less than an hour and a half. As opposed to the Eagles concert -- I felt that I was unappreciated and although my presence and that of other patrons at Morton's would inevitably ensure their success, they seemed oblivious to that fact -- needless to say, they won't be seeing me anytime soon and furthermore, I would suggest others take a pass.

So how does this relate to the world of procurement and supply chain? It is in the way firms treat their vendors and vendors treat their customers. Too often large firms feel that it is OK to "beat their suppliers up" (yes this is a term I have heard time and time again) believing that in doing this you demonstrate somehow your superiority -- when in effect you are only demonstrating you lack of understanding how important the vendor is to your success. That is not to say that you shouldn't get the best deal possible -- but it does mean understanding the total relationship (because if you "beat" suppliers up -- be assured they will nickel and dime you when you are in need and when they have a chance to recoup they will). The other aspect of this is that it comes back to haunt you -- because the Golden Rule -- Do unto others.... -- was not adhered to and in the end -- well, look at some of the major companies that are in severe financial difficulties now.

The same goes for vendors who have monopolies today, but again, as we have seen time and time again -- that also doesn't last -- and at the first opportunity a hostage customer will make the leap to a new competitor. The arrogance of some suppliers and their lack of flexibility because they are the only supplier of software, product etc. (you know who you are) results in a lop-sided arrangement. Many customers and suppliers talk about partnership -- but most have no clue as to the true meaning -- but it sounds good -- so they continue to pretend.

So it all comes down to what is effectively a truism --"Do unto others, as you would have them do unto you". It doesn't just work for rock bands and restaurants, but in every day business (and personal) transactions.

An update: As is my nature I sent an email complaining about my treatment at Morton's to through email. Within 24 hours I had the General Manager from the restaurant call me, apologize and is sending me a gift certificate. Kudos to Morton's for responding to the email quickly -- it gives me hope that they do appreciate the Golden Rule!

The Same Issues -- No Matter where!

2008-07-23T12:27:00.004-04:00

Recently I had the privilege of meeting with some top procurement/supply chain leaders in Austria. I wanted to hear from them what the challenges and opportunities were in the European market vs. that which I am more familiar with, which is North America.

Obviously there are some differences, particularly regarding the vast number of countries, in a relatively small geographical space, with different languages, different laws, and inherently different cultures. There are also the issues of emerging economies and in some cases the not quite ethical accepted way of doing business in these types of marketplaces.

But what struck me more were the similarities -- the business attitude towards the procurement organizations. The individuals with whom I met faced the same barriers that procurement groups do in North America. That is gaining the requisite respect from the rest of the business for how procurement can impact and advance the enterprise.

Procurement in Austria also carries with it the "cost savings" hair shirt and the teams struggle to position themselves more effectively. The individuals with whom I met with have made significant strides in their being accepted by the business, but just when they potentially are on the tipping point of greater acceptance, the other leaders in the organization seem to lose their appetite for pushing further to achieve beneficial inroads.

The same question is asked by these procurement leaders -- which is why? Why can't the organization see that not everyone is a negotiator, not everyone knows the dynamics of the marketplace, not everyone has the unique insight that procurement professionals have of the activities of the entire organization and the marketplace and that this group can provide leading edge advice which can not only save "costs" but deliver excellence, as well as enhance revenues significantly. Similar as to here in North America, there is the proverbial banging of the head against the wall.

In the June/July issue of Supply and Demand Chain Executive Magazine, which should be available any day now, I write an article called "Is Procurement a Brand or is it Branded".
In this article I provide some insights, which I now believe have global relevance, based on my recent meetings.

Lining up for expensive Gas...give me a break!

2008-06-20T15:31:00.007-04:00

My tank was nearing empty today, so I had to go and get gas. Lo and behold, people were jockeying to get to the pumps for regular gas priced at $1.29. Yes, we have now been conditioned to believe that gas just below $1.30 is a deal.

Instead of going out and protesting and questioning these ridiculous prices many almost bow down to the gas gods and are thrilled that they are asking for a few cents less on a truly exhorbitant rate. Because let's face it....the oil companies aren't suffering a profit downturn.

I remember gas being $ .30 a gallon -- yes a gallon and that was only a mere 30 years ago. And yes other prices have gone up and all that stuff, but from approximately $ .07 to $1.30?

We have had OPEC reductions and all that jazz, but we have never seen it at this level with no crisis in site. It is being driven up by speculators and let's face it....the gas we put in our cars is the least of our worries, because this whole thing is going to start fueling inflation as everything starts going up in price -- yes everything because somehow it all needs to be manufactured and transported to you and that uses oil/gas. Not only that but many products have oil derivatives as part of their constitution.

Oh and by the way...wasn't the invasion of Iraq make oil more available and drive down the prices?

But we sit idly by as sheep to the slaughter. We need Chicken Little, because the sky is actually falling, but most are too busy with their forehead scrapping the tarmac to notice!

Making something difficult -- Loyalty Points Cards

2008-06-05T08:58:00.005-04:00

Sometimes you have to wonder whether the folk who come up with the so-called "new & improved" actually ever set foot into a store. Marketing guru's hear my plea -- simple is often times better -- don't just jump on the bandwagon!

My rant today is about the "latest" innovation for Carlton Cards. I like greeting cards -- I send them often for no other reason that the card reminded me of someone and off it goes...who cares if it is yet their birthday -- so I'm early or late -- depends on whether you are a glass half full or empty type of person.

Recently I went in to Carlton Cards to buy a few greeting cards. When I went in a month ago I actually got a free card -- you know they had this simple system where they gave you this little cardboard business card type loyalty card that got stamped each time you bought a card and then after buying ten cards you got one free. As I had redeemed my "free" card last time, I eagerly anticipated getting a new one -- to start collecting again. But, alas when I got to the counter life wasn't that simple anymore.

You see, the muckety-mucks at Carlton had decided that -- get this -- for your benefit-- you would now have to fill in a form to get a plastic points card! And not only that -- to be able to redeem anything -- or get coupons or whatever -- you'd have to go to their website to do so. Of course it would be necessary to give your email information, so that they could send you useless sales/marketing dribble that you don't want or need! So I left the store, having bought 3 cards -- but I did not fill out the form necessary to get this points card -- which for my loyalty to the store they now were going to make me work to get a reward.

How stupid is that -- when I simply would have had this little folding card in my wallet -- where I would have earned almost 30% towards my "free" card, I was asked to find room in my already overstuffed wallet for another points card for greeting cards and then on top of that I had to not go into the store but onto a website to make a redemption????

Quite honestly -- I am sick and tired of points cards -- every store, selling every which way type of product/service, is now giving you points -- but you need to carry about a zillion of these in your wallet at any given time because you never know when you actually might go into a particular store to make a buy. Enough already -- and by the way -- is making these little plastic cards really environmentally friendly??

So I guess I'll go to another store to buy my greeting cards -- Hallmark still has the simple stamp process -- please executives at Hallmark -- don't change your process -- you may actually be giving away a competitive advantage!

"Ooops", "I didn't know", "I'm sorry" and other unacceptable excuses

2008-05-28T08:55:00.004-04:00

The media is fraught this week with "hand caught in the cookie jar" tales. Oh, of course, the responses try to deflect responsibility from the individuals involved, but let's be real -- they only care because they've been caught.

First, the Toronto Dis trict Catholic School Board (TDCSB) trustees. All of a sudden they seem to have a "hallelujah" moment wherein they declare that they will give away all the perks, which they shouldn't have had in the first place and which were against all rules and common sense. They believe that this will help restore trust in their ability to perform their functions!!! Give me a break -- any other thief repenting might get a few years less in jail -- but quite honestly -- their actions when they felt they were not being watched give the true picture of what they are -- pigs lined up to at the public trough. Not only should they all be dismissed from their posts, but there needs to be ramifications to their actions which border on criminal. Of course it begs the question -- who is monitoring the school board activities in general and how many other of these abuses are going on?

Then there is Gordon Eckstein from Livent who has is trying to save his own skin by being a defense witness against Garth Drabinsky and Myron Gotleib. Eckstein -- oh yes he repents -- but he was after all "only following orders!". How often have we heard this one? Ok folk say oh it's the Nuremberg defense -- but let's face it -- this has been used over and over again it various corporate corridors -- and of course he was only following orders -- and he didn't personally benefit from it? The following orders defense might even be acceptable if you believe that by not doing something you or someone else will be killed, maimed etc. But in this case -- what would have happened to good old Gordon -- Oh my gawd -- he would have possibly lost his job and worse -- lost a significant amount of his probably pumped up salary -- well that's a good enough reason isn't it to do something criminal isn't it????

Siemens executives are on trial for authorizing bribes to various countries to obtain business.
Of course -- they were probably just looking out for the greater good weren't they? Or again -- just for their self-interest??

Recently, I was presenting on leadership to a large group of procurement professionals and during that presentation the issue of ethics and integrity arose. What was interesting in this discussion that a number of folk noted that their corporations had a "zero tolerance" for taking gifts, lunches etc. However in the same breath -- all of these individuals noted that "zero tolerance" was a moving target and the higher you went up the corporate food chain -- the more tolerant accepting gifts, tickets and invitations to lunch and dinners became.

So that begs the question -- does zero tolerance mean that if you are a zero in the corporate hierarchy -- we will have no tolerance?

Why can't corporations have an Auditor General?

2008-05-13T16:07:00.005-04:00

Recently Sheila Fraser came out with another one of her "take no prisoners" Auditor General Report. It is always amazing the shenanigans that go on that makes you wonder "Who is actually watching the hen house?"

I know corporations have annual reports that are fully audited, and there are requirements from a SOX perspective to keep things on the up and up. But anyone who has worked in a corporation has seen many different rules for many different people. And when you sit in the Procurement chair and observe some of the ridiculous and unnecessary wastage -- well let's just say that it's a good thing that blood pressure medication exists.

We all know that there could be a multitude of things that could occur that could enhance processes, create efficiencies and of course provide significant savings. Yet what happens is the extreme bad or just dumb practices are allowed to go on and on -- because sometimes organizations consider "those folk in Procurement" to be akin to Chicken Little. The reality is that we all have flat foreheads from banging our head against the wall so often with limited success.

Imagine if corporations would have someone in place like a Sheila Fraser or Andre Marin, who answered to the shareholders and did not have to massage or downplay the message. What effect do you think this would have on corporations.

I believe that you have one of these "What were you thinking or were you?"
reports and then the roaches would go scurrying for cover saying "not me; not me" and perhaps think twice about acting in an inappropriate way....well at least temporarily -- because as we know, Sheila Fraser will always have a job, because just when the light is shone on one travesty, some "untouchable" (or so he/she thinks) does something again that makes you wonder if they were truly seeking their 15 minutes of infamy.

The Power of Why?

2008-05-05T14:49:00.007-04:00

In a recent article in The Globe and Mail, George Stalk a Sr. VP from the Boston Consulting Group, writes about the power of Why?

So why is Why so powerful? It is what enables us to understand the world and inevitably identify route causes of issues and problems. Without the answer to Why? we cannot hope to discover the How's, When's, Where and What's.

But as Stalk points out, too often people stop the questioning because the norm is to accept and move on, to fix what' s obvious and not spend too much time on delving too deeply. Stalk quotes an interesting example identifying the risk associate with defying the conventional norm:

" But the risks of asking “why” are real. The “Lord” in his fiefdom can inflict great pain on the questioner. In the early 19th century, doctors routinely went, without washing, from autopsies to the treatment of patients – with disastrous results. Ignaz Semmelweis is the man who first hypothesized the basic relationship and proposed and tested a change to clean hands – yet in his own time he was rejected by his peers, because he questioned the accepted practice. Mr. Semmelweis was only vindicated by research that occurred after his death in an insane asylum."

If you are an agent for positive change, you've probably recognized the exasperated looks on the faces of people when you've challenged the status quo and asked the ever threatening question why. The looks say "Are you nuts?" as you questions are seen as threats as opposed to opportunity for advancement and improvement.

Yet imagine if the three year old child stopped asking the why and just accepted things how they are? Imagine if Einstein, Madame Curie, Galileo and a myriad of others would have accepted the answer "Because" or the more advanced version "Because we've always done it this way!"

Stalk recommends asking Why? at five times. In fact if there is an attempt to red herring any changes -- five might be the minimum.

Corporations and governments which on a continual basis hail the advancements of others believe they are being appropriately cautious when not allowing for more of the why questioning, when in fact they are stifling creativity and enabling their enterprise to remain on an ever-revolving hamster-wheel.

People are afraid of Why -- a simple three letter word that can open up an entire new way of thinking -- But aye there's the rub -- many are happy with mediocre and why might mean more work!

Spending someone else's money -- a Favourite Corporate Pastime!

2008-04-28T09:42:00.005-04:00

Why is it that individuals within corporations are allowed to spend someone else's money (the taxpayer or the shareholders) with total abandon, with limited consequences associated with highly questionable behaviour?

In the Toronto Star today, there is an article which highlights the Natural Resources Department in the Canadian Federal Government, failed an audit with it proliferation of wireless devices. There are over 900 blackberries and 720 cell phones and the audit noted "one in every five of these devices was used by workers who had no clear job-related reason for carrying one."

That is of course if you could find them because the audit also noted "Oversight was so weak that department managers could not provide auditors with even a basic inventory of its wireless devices."

Maverick spending is not new in corporations or government. Its proliferation is the bane of all procurement professionals existence, yet often it is the procurement team that is vilified for suggesting appropriate spending as opposed to the offenders who are throwing the organization's monies around to feed their own egos.

In Business Week an article refers to the Royal Bank of Scotland and MasterCard who have in concert launched a corporate spending card called "inControl" that allows organizations to set strict parameters on which restaurants, bars, hotels etc. that employees can patronize.

This is meant to curb spending and reduce expenses that are constantly eroding the profit margins of firms and the benefits of which are ill-defined. It also enables immediate reporting to an individual's manager regarding the expenses being incurred by an employee.

On the surface this seems like an amazingly sound idea, yet the reality of implementation will be interesting. You see, in most firms the rogues are often in the sales groups and of course no rules seem to apply to the most senior of leadership. There may be sound reasons for this, but in fact it creates second-class citizens within the corporation.

The real impact in reducing expenses and rogue spending in corporations will occur not by implementing another control mechanism but by ensuring that the actions reflect the desired outcome.

Senior leadership must walk the talk. If the leadership adheres to the rules that they put in place for the organization, then others will follow. If what's good for the goose isn't good for the gander then you will never gain control.

If an employee, regardless of rank, thumbs their nose at expense control/reduction and continues their rogue spending habits, an example needs to be made. This is not a "oh don't do it again" slap on the wrist. This means terminating the employee for going against corporate policy and demonstrating a lack of fiscal responsibility. You just have to do this once or twice and the rest of the organization will fall in line.

In reality, there will continue to be rogue spending, as well as indefensible spending such as is the case with the Department of Natural Resources, because no one wishes to take that stand.

So credit card companies and others will continue to make money because they indicate that they have the Eureka solution.

The reality is that this is not rocket science -- it's common sense -- something which is sorely lacking in corporations and governments.

Award and Consequences -- The Bejing Olympic Fiasco

2008-04-11T08:52:00.006-04:00

The head of the International Olympic Committee (IOC) Jacques Rogge was recently quoted as saying that with hindsight perhaps Bejing wasn't the right choice for the Olympics but clearly they had the best bid and as such he has no regrets regarding the final choice.

Well, Mr. Rogge, I beg to differ, because you see in Procurement, if you awarded bids, just based on who put forward the "best" bid, and ignored all other aspects -- political, environmental, financial, ethical -- you would be putting your organization at tremendous risk.

Just think of the issues that Nike and other clothes manufacturers faced when confronted with the fact that they outsourced to companies that utilized child labour caused them to rethink their awarding of business. Or how about Mattel whose reputation may have been irreparably damaged because of the "best" bidder for the business (in China), putting lead into the paint of toys, so that toddlers could get their non-recommended quota of potentially brain damaging substances!

Mr. Rogge -- China has a deplorable human rights record. They are polluting their own country and thus the world with reckless abandon. Yet they presented the "best bid" and you have no regrets? Shame on you -- the "best bid" should take into account all the external factors noted above -- then, and only then, can you accurately determine the "best bid". You can't approach awarding business (because the Olympics are business) with blinders on.

If a Procurement professional approached awarding contracts with such reckless abandon, they wouldn't have a job for very long!

Mixed Messages....

2008-03-14T10:52:00.004-04:00

When you hold yourself up to be a paragon of virtue and the crusader for all things right, then you better ensure that you haven't built your pedestal on quicksand.

Eliot Spitzer, the now disgraced former Governor of New York, did just that. He was gleeful when he followed a take no prisoners approach to his mandates as Assistant District Attorney and as Attorney General of New York State. His zealotry was hailed as he seemed to slay the evil dragons of Wall Street and of moral corruption in other arenas.

I always felt with Spitzer that he was much less about setting things right and ensuring on-going morally upright behaviour than he was about his own power. I consider myself to have an extremely high standard of ethics and I usually am a supporter of those who take on those who are morally decrepit. But with Spitzer it was all a little much, and it is now borne out with fact -- it was more about him than setting the world straight.

There is a lesson to be learned here though of the corporate titans, who are constantly focused on driving cost savings within organizations on the backs of the "little people" both internally and externally. As I've noted before, cost savings are the ball and chain that procurement professionals bear, but often the hypocrisy in organizations is so apparent that it makes one want to put on sunshades to block out the blinding glare of falsity.

There are two (and sometimes more) tiers within organizations and there is a large gap between the haves and the have-nots. Executive bonuses still get paid, even though the business profits have tanked; expensive executive retreats at far-away places are common-place while the team at home is scrambling to meet their cost savings targets; codes of conduct prohibiting gifts, golf, trips etc. from suppliers, don't seem to apply to the senior ranks....and as Kurt Vonnegut said...."...and so on".

I was in the corporate senior ranks and I always questioned this paradoxical behaviour. At times, I even called people out on it -- of course that's why I'm not in corporate anymore.

Was I perfect -- no -- no one ever is. But I maintained a higher ethical standard than most and expected that my team did as well. And if someone had a lapse of judgement, it was discussed and rectified, not with moral outrage, but with reasoned discourse that ensured the ramifications were understood and the behaviour wasn't repeated.

I guess Eliot Spitzer didn't realize he wasn't perfect! Of course now the whole world knows the truth!

Statistically Speaking.....

2008-02-10T16:07:00.000-05:00

We live in a world where people believe that when someone quotes statistics then it must be true! In fact the only truth in statistical truth lies (oxymoron intended) in what a company, a researcher, a politician, a statistician wants us to believe.

Do you remember the old toothpaste commercials where it said "4 out of 5 dentists recommend XX brand". Surprisingly there are many toothpaste brands that are bringing in a decent profit for conglomerates -- but how could this be. Well the secret is in deconstructing the information and determining what it truly means.

Quite honestly there are a number of questions which the above example should elicit -- a) how many dentists did you ask and are all the results included in this submission, or did you ask 100 or so until you actually found four in a row that supported your premise? b) How was the question asked? Did you say to said dentist "We are from the XX toothpaste company and we were wondering if you recommend our toothpaste to your patients?" -- By asking the question in this manner, you would inevitably find that the dentists would say yes -- because firstly, they don't want to go into a whole dissertation with you as to why they wouldn't be recommending your brand of toothpaste and secondarily -- you haven't asked whether your brand is the only one which is being recommended. The dentist could just be saying to his/her patients "use toothpaste" so again, the data is meaningless.

Recently I taught a course on communication and in the materials which were prepared by a known business school, statistics were incorporated which provided information on what kind of communication types and number an individual in business could expect on a daily basis. There were two iterations on this -- one from 2004 and another from 1999! Yes 1999! I guess communication hasn't changed that much in the ensuing years!

But had I not pointed out this glaring issue (note even 2004 data is highly irrelevant) the class would have sat their, written it down, and taken it as gospel! People are too willing to accept things as indisputable when it is tied up in the shiny package of math and science.

Businesses are continuously using statistics to measure so-called productivity but one must question what behaviour do statistics drive and who is minding the shop of what they are saying.

Procurement is often saddled with the "hair-shirt" of cost-savings and what this does is drive a focus on the short-term (so that someone gets their bonus) as opposed to the long term of viewing the situation holistically and making decisions that inevitably will provide a beneficial total cost dimension in the future, but not immediately. But by proposing such approaches to the long term, you need to accept the fact that you will be called a heretic and potentially burned at the proverbial stake...because our world revolves around quick hits, as opposed to long term strategy.

I watch organizations daily in this hamster wheel existence, driving individuals to distraction who figure that their only way up the corporate ladder is to demonstrate a positive statistical outcome. There are many ways of presenting that number and mostly it will be to the benefit of the individual vs. the whole.

I am a heretic in this regard. I like to focus on the long term strategy of defining a methodical approach that will certainly produce some measurable short term results, but more profitable outlooks for the future -- it is about qualitative and quantitative, with the former being of much more significance than the latter -- but alas, in the search for the almighty statistic too many are pursuing the latter.

Unfortunately sometimes I feel like I am fighting a battle which is doomed, but nevertheless I will continue until such time as I am mortally wounded....and of course, statistically speaking, the chances of that are 1 in a million!

The Simple Life?

2008-01-20T14:38:00.000-05:00

When did it become backward to be simplicity? Every day we are faced with the marketing frenzy to get the latest, and greatest...not because it's better because it does more "stuff" and of course we always want to be able to do more! Or do we?

Over the last number of months I've been hearing more and more about the One Laptop per child organization and their development of a $100 laptop. I'm not going to get into the details of this program or computer, but it begs the question of how much that we have sitting in our home and on our computer has many components that we needed to have when we bought it, because it sounded "cool" but realistically we never use it!

Same thing with mobile technology -- we use it for emailing and calling and maybe there are some "heavy users" but most of us listened to the sales pitch and said "yes" to a whole bunch of stuff we don't need.

I remember years ago when I was sitting in a room with engineers from the company I was with and the engineers from the suppliers. There was a desire to get down to a significantly less costly cable set-top box. As I sat there listening to the engineers speak about what the consumer needed on this box it was obvious that the ones who like the toys, shouldn't be making assumptions about the user. In one instance the supplier indicated the ability to lower the cost if some of the buttons were removed from the front of the box. Our engineers said "No...our customers expect the buttons to be there." To which I said "there are buttons on the box now?" You see if my technology doesn't work , I don't go looking to fix it...I just call the support desk!

Needless to say I was viewed as if I had just blasphemed the world of technology and was seen as a dinosaur, who was soon to be extinct.

I'm not saying technology isn't great. I love it. But the question becomes is with new laptops, software etc. being launched daily -- is it really required?

I think all of us should take a step back, forget about the marketing hype and actually ask ourselves (and our corporations) is this something we need and is it truly going to enhance our performance, or do we just want to show off our new toys to our friends?

Corporations and The Ethical Three Ring Circus

2007-12-19T16:43:00.000-05:00

Many like to say in jest that our organizations are reminiscent of a three ring circus. Well, within those three rings it is the Procurement professionals who are the ethical tightrope walkers of their corporations.

Right now, there are individuals at every corporation who are treading the ethical line because of expediency, undue pressure or perhaps just because they don’t know better. Fear of potential ramifications to career and reputation, ironically, keep many from questioning clearly inappropriate behaviour from someone they perceive to have more power than they do within the environs of the organization.

Why is it so difficult for businesses to consistently maintain high ethical standards? As an independent observer, many would sit on the throne of judgment and consider themselves imbued with a much higher moral standard and wax poetic about the failings of others

But life isn’t black and white. In fact, since right is rarely diametrically opposed to wrong, it is sometimes easier to “turn a blind eye” as opposed to following Hamlet’s path and suffer “the slings and arrows of outrageous fortune”. Many situations are cloaked with uncertainty, incomplete information, multiple points of view, contradictory responsibilities and pressure – external or self-imposed.

Procurement is a hot bed of ethical challenges and too often the procurement professionals are left feeling that there is no net to catch them when the make the politically incorrect, but take the ethically correct stance. Choices made by those in procurement can affect the entire corporation. The processes within purchasing ensure that fair and objective decisions are made. Yet other areas of the enterprise may have another agenda. Yet if Procurement waivers on its ethical foundation, it traverses the tightrope without a balance bar, and discovering that there in no net to catch them below.

The ethics of an organization are determined by the actions of the top leadership on down. Ethics are not bottom-up in the enterprise. Ethics must be valued by leadership and the corporation as a whole. If the bending of the rules results in accolades because of increased short term revenue, or other perceived benefit, then many in the business will rightly believe that ethics don’t matter, performance does – the end justifies the means. That is of course until the issue hits the front page of the newspaper and then the organizational navel-gazing commences.

Procurement professionals need to embrace a standard that is above reproach, even when they believe that the rest of the organization is acting like the ethics circus clowns. In some cases it may mean that a job or position needs to be risked. It is important to remember that the perception of reputation is the reality. As Lady Macbeth discovered that the taint can’t be washed away when it is perceived that one’s “hands are dirty”. If a job is lost because of an ethical stance, reputation is not lost, nor career options in the procurement field.

Although a myriad of ethical issues await procurement on a daily basis, there are three key one’s which provide the basis for many a sleepless night because of the inane pressure to “get with the program” or “turn a blind eye”. These are reciprocal business awards, conflicts of interest and maverick spending.

IN THE FIRST RING…..RECIPROCAL BUSINESS

Mention reciprocal business to most procurement professionals and an audible groan can be heard. At its simplest, reciprocal business is any arrangement under which a seller of one product or service buys another product or service from one of his or her customers. It is a basic quid pro quo. However as many in purchasing can attest there is often more “quid” than “quo”.

With ever-increasing rapidity and perhaps as a result of the mounting competitiveness in the marketplace, the procurement process is seen as just another opportunity to advance a sale. The “best” decision for the organization, and by default the shareholders, is often over-ridden because of the rallying call for more revenue. There is often little analysis performed, as assumptions are made that more revenue and an intricately linked customer-supplier relationship by its very nature must be good for the corporation.

If the procurement team raises questions, even with all the facts in hand, that this potential reciprocal reward is flawed and does not conform to the standard of mutually beneficial, they are most often shut down, and seen as fear-mongering. They are seen as not “understanding” the total corporate picture – just old wives making up another tale.

But here’s the rub – it is the sales organization and those that support reciprocal business, without a full analysis that don’t understand the total picture. If the comparator is revenue, then the award will be faulty. Revenue in a client relationship cannot be compared to the cost of a supplier. Profits, instead of revenue, enable the “apples-to-apples” assessment, but this is often the quickest way to raise the ire of the sales organization, because it could stop their elephant stomp cold.

If business is awarded based on questionable measures, then the corporation exposes itself to significant ethical and legal concerns, which can irrevocably damage its credibility in the marketplace.

In an ideal world there would never be cross-contamination between customer and supplier. Each company would compete on their own merits and be awarded business because of a superior offering. Unfortunately Utopia is only a concept and hardly a reality. So the question becomes can reciprocal business be done ethically and to benefit the bottom-line of the business.

The answer is a qualified yes, because it requires a significant amount of work and collaboration between sales and procurement.

Sales should not be involved in the initial process of a procurement. Weighting of the responses the request for quote/proposal should be done with no consideration as to whether the supplier is a current customer or potential customer. Once a shortlist has been determined, then the deliberation between sales and procurement can begin. The main consideration should be profit vs. cost, because this is where the heart of shareholder value lies. If the profit and cost equation show a benefit to proceed with an award to a client then such an award is justifiable.

However, some customers believe that by the very fact that they hold this exalted position, they should automatically be given the business. Many of a procurement professional has dealt with the undue pressure of sales and senior level leadership in an attempt to influence the buying decision. As well, some organizations take the view that procurement is just an extension of the sales team – that the purchasing process should be used to strong arm suppliers into becoming customers. Accepting that premise provides a one way ticket down the slippery slope of ethical reproach and regret.

IN THE SECOND RING – CONFLICTS OF INTEREST

Procurement is rarely the final decision maker in any buy. Most assuredly procurement is an influencer, negotiator and generally ensures that a fair and objective process has occurred. But most have encountered an illusionist on the evaluation team, who conjures up rationale as to why one supplier should be chosen over the others, often to the bewilderment of the rest of the group.

There are several questions that must be asked to uncover the illusion. Have all the suppliers been vetted through the same process or have some been given preference because of who they know? When evaluating a potential vendor of goods and/or services, is there a process in place that ensures all the potential conflicts of your evaluation team are known? Is there a requirement for those evaluating the viability of suppliers to complete a full disclosure form and get the potential vendor to do the same?

Full disclosure ensures that anything provided to the stakeholders within the corporation, such as fact-finding trips or other “enticements”, as well as identifying any pre-existing relationships (business or personal) has potentially affected the impartiality of anyone of the team. It doesn’t mean that it has, but at least full scope information is available to ensure that decisions aren’t tainted and inevitably are defendable.

IN THE THIRD RING – MAVERICK SPENDING

In every circus, and in every corporation, there are the proverbial cowboys. Regardless of the “rules” or defined benefits to the organization by working with procurement, these mavericks continuously ride roughshod over policy and ethics and when asked why they respond with haughty arrogance, that the procurement team doesn’t know what’s best for their business.

These cowboys prance out with examples, from “I can negotiate a better deal” and “I know the best suppliers to work with” to “Procurement processes take too long”, each of which can be quickly debunked by the procurement professionals with facts and figures and shown to be lame excuses. Even when this rogue behavior results in major issues, it is left to procurement to get out the shovels and clean up the results of the cowboys’ act.

Corporations need to bring these cowboys’ to heel because the potential impacts are huge. The issues resultant from such conduct is ethically barren. Even if one was to dismiss the fact that the corporation could obtain positive bottom-line impact from leveraging the rogue spend dollars, these mavericks are often conducting business with suppliers with whom they have a “cozy” relationship, without due diligence of their competitiveness, their long term viability and often without the basic protections of a contract. They’ve often swaggered forward and shot from the lip, committing the organization via a verbal agreement.

Watching this act, the procurement professionals are often side-lined, waiting for the repercussions of this high-risk behavior, but most often the ring master looks at them, rolls his or her eyes and says “Don’t worry, that’s just the way he/she is. I’ll talk to him/her”. And after a quick discussion and a virtual slap on the wrist, they are right back to continuing their dodgy deeds, with procurement having the shovels at the ready.

Lately, a fourth ring has been making itself known and that is the ethical issues being encountered when Offshoring, but that’s for the next curtain call.

The shareholders are ultimately the audience of the corporate three ring circus. It is for them that the organization should be performing to the best of its ability to ensure the creation of value and ensure that nothing is done that can appear in a negative front page headline.

Perhaps it is of little solace to procurement professionals, but it is important to remember that the high wire act is the one that always gets the standing ovation!

High Dollar highlights lack of efficiency

2007-12-11T09:00:00.000-05:00

The Chicken Littles of the manufacturing industry are running around saying "The Sky is Falling" because of the Canadian dollar being near parity. The question becomes is it the "loonie's" performance or is there a deeper issue for consideration.

The Canadian manufacturing sector and by extension the export business is certainly being "hurt" by the rise of the Canadian currency. Yet in my opinion there are other mitigating issues that are causing the panic and it is being unearthed now due to the dollars trajectory.

Canadian companies have allowed themselves to get sloppy and inefficient because they didn't need to be at the top of their game. It has engendered the dangerous thought process of "if it ain't broke, don't fix it", and many questioned the need for continuous (and creative) improvement -- because why bother? The Canadian dollar will always be there to protect us -- "The Good North Loonie Weak and Low!"

Now the screaming has begun and the pandering to the government for bailouts has begun. Yet before the government starts handing out dollars to what can be a very long "bread line", it is important that they first consider looking into the effectiveness of the enterprises that are asking for money.

If an individual becomes unemployed, there is tremendous rigour around the actions and activities that they should take in re-asserting themselves in the workplace. Why doesn't the same type of rigour apply to corporations?

If companies are asking for government money (i.e. my tax dollars) then this should be provided on a short term basis, contingent on an improvement plan which demonstrates how they will become competitive regardless of the state of the currency. From what I've read to date, there is just a desire for the hand-outs -- no strings attached and this could become a recurring visit to the public trough -- so that inefficiencies are rewarded.

The cry for the bail-out smacks of Hem -- a character in the popular book "Who Moved My Cheese", who eventually starves because he keeps on waiting for things to go back to the way they always were -- and has great faith in that occurring. From my perspective, if he can't get out of the box -- let him starve!

If you dance with the Devil....

2007-11-16T11:24:00.000-05:00

There is a lot of media coverage these days on the most recent travails of the former Canadian Prime Minister Brian Mulroney. The issue of cash payments, potential corruption and intrigue always send the media into high gear and whether true or not the reputations of many are hanging by a thread.

Quite honestly, I've never been a fan of Mr. Mulroney, however I do believe he is a very smart man and he wouldn't engage is something so blatantly obvious that has been alleged. I personally believe that Mr. Mulroney did and has tremendous respect for the office of the Prime Minister and would not have engaged is such corrupt behaviour during his term.

The problem here is when one is hood-winked by individuals such as Karlheinz Schreiber, who probably sold his grandmother sometime ago. Almost all his dealings over the years seem to be cast with murkiness and even his latest allegations against Mulroney seem to be little more than a ploy to fight his extradition to Germany for --what else? --fraud, tax evasion, etc.

Now having said earlier that Mulroney is a smart man, he must have had a synapse break the day he decided to accept cash payments from Mr. Schreiber. As Dr. Phil would say "What were you thinking!" If somebody is giving you cash, then either they are trying to hide something (for example laundering money) or it is done with a wink, wink, nudge, nudge -- as in you don't have to make this part of your taxable income (Mulroney has indicated he declared these payments and paid tax on them).

So inevitably Mulroney will be tried and convicted in the realm of public opinion because of a significant lapse in judgement. And I mean significant. He made the mistake of trusting an untrustworthy individual and for that he must pay. The downfall of many over the years can be traced to that momentary lapse, that ends up haunting the reputation forever.

In the area of Procurement a lapse in judgement can ruin a career, or potentially even ruin a company, because without a good reputation, inevitably you have nothing.

So I ask Mr. Mulroney and any others out there who are thinking of engaging in what may seem like questionable dealings, with questionable individuals....

If you dance with the Devil, do you really expect him not to lead?

Loonie Toons!

2007-10-29T09:47:00.000-04:00

As the Canadian dollar, otherwise known as the Loonie) hits new highs everyday, it becomes imperative for both consumers and businesses to begin questioning the costs of items.

Simply put, over the last few weeks, just as a consumer, I've managed to buy "right" and questioned some other ludicrously large differentials.

Check what the currency conversion is on credit cards. Prior to buying something in US Dollars, I called both Visa and American Express. Visa's conversion earlier last week was $1.005, while American Express was languishing in the .97 area. So of course I bought the item with my Visa (although let's face it they are also making money on the soaring Loonie).
If you've gotten a renewal notice from a US magazine publication, check their website subscription rates, and then question the rate you are being charges. I subscribe to Business Week, and received a renewal notice that said "Best Rate" which stated it would cost me $63.95 CDN to renew for the next year. I checked their website and in US dollars the magazine was significantly cheaper. So I emailed them and asked them their rationale and then requested their best rate in US Dollars. Lo and behold, my cost to subscribe to Business Week for a year is now $ 45.97 US...what a deal!
I went to purchase something online which is manufactured in Cambridge. Online you can only buy through their PayPal alliance. So when I put in my order and then was asked for final review....are you ready?.....the conversion rate used by PayPal for Canadian to US Dollars was .94!!! The company stated well this was what PayPal would get from American Express...so that is why there is the difference. If you look at point number 1 above it is apparent that PayPal is also taking some additional profit on the conversion.

It is important for corporations as well to look at their contracts for products and services from US or foreign firms. If not already paying in US dollars, they may have inserted an uplift based on currency conversion and risk. Good negotiators usually put a caveat into the contract that allows renegotiation based on a 5% currency fluctuation. Unfortunately, many negotiators aren't that savvy.

Look through all your contracts and start asking the questions and forcing the issue. Otherwise, you will be helping other firms get rich, while your profits fall.

And forget the old adage -- "good things come to those who wait". As a consumer -- go out there and push the envelope and start asking the questions....retailers do respond to customer demands.....eventually....And don't forget to tell Santa to buy in US dollars.

Negotiate Everything and Anything....

2007-10-09T08:17:00.000-04:00

In the November 2007 issue of Consumer Reports there is an article entitled "How to bargain for almost anything". The basic premise of this article is that although most consumers are comfortable with negotiating the price of a house or car, they believe that everything else is more or less must be accepted at the price offered.

In the US and Canada, we tend to buy without considering the fact that there is an option to negotiate, whereas in other cultures there is an expectation that one does. This also transcends into the corporate arena, where often one encounters the attitude from the inevitable end users of a product or service that a quote is the end of the negotiation.

Moreover, there is often a fear associated with further negotiation -- "what if they get offended, then they won't do business with us"!

This is such a ludicrous opinion that you want to give folk a shake and say "wake up -- these suppliers are in the business of getting our business".

People fear a two-letter word "no". It holds many hostage, because they believe they don't know how to comeback to this retort. People feel embarrassed when someone says no, but in reality, in my mind, no just means find another way.

The one thing you don't do in a negotiation is state an ultimatum "if you don't do this I won't buy from you" -- unless of course you are willing to walk, and never re-engage with this particular company. It is better to probe and discover their business drivers, and carefully, but skillfully peel back to onion of their issues and determine what their bottom-line is and see how it maps to yours.

Beyond the business aspects of this, as Consumer Reports points out you can negotiate everyday, for almost everything. I've negotiated down my cable rates, my phone rates, my internet rates, just by asking how important my business was to these companies. I also ask for some type of discount when I purchase clothing -- if I'm a regular customer, I ask how important it is to this store to retain my loyalty.

In regards to loyalty, I have also recently written to the bank which has both my personal and business accounts. I am always disturbed when corporations have special promotions to get "new" clients, but take their current and loyal clients for granted. Seeing a most recent promotion which gave new customers an iPod for switching to this bank, I wrote an email, asking what they were going to do for existing and loyal customers.

After a couple of emails (never accept the first response) I received $200 credited to my bank account. Not bad for a 1/2 hour work.

Pinocchio must be turning Green with Envy!

2007-09-24T12:23:00.000-04:00

In the September 24, 2007 issue of Business Week, a column entitled "Telling Little Green Lies" suggests that a recent survey of consumers showed that 56% stated that living in an ecologically irresponsible manner was a societal taboo -- which is why that a staggering 90% of those surveyed said that they had lied to friends a neighbors about living in an environmentally friendly way.

So what about corporations?

If you ask any of their suppliers if they are engaged in eco-friendly process within their corporations, I highly doubt if any would say no. However, when your suppliers say yes, be assured that most have their fingers crossed behind their back and hope that you don't delve further into the issue.

Most corporations have engaged in energy efficiency (turn off the lights), recycling paper, toners and other sundry items. Some may even have telecommuting programs which they will proudly state is part of their program to minimize the carbon footprint.

Don't get me wrong -- these are good things -- but they hardly make you eco-friendly.

Many companies are long on promises and short on commitment. The reality is that you can't turn around years of "bad" environmental behaviour around overnight! A stepped process is required and an understanding that to become environmentally "neutral" can take years.

Even if your company has eliminated many of its own irresponsible practices, you are still buying from companies who may be investigating options and alternatives to their own environmental dilemma. Nobody can turn on a dime -- but what you can request from your suppliers is an audited annual progress report which shows their efforts to minimize their carbon footprint and their plans and targets for future years.

And if you have been anointed as the Green Hornet of your organization -- make sure you are not out there on your own -- create an internal and external advisory group which can act as a think tank for your environmental pursuits.

You should also look at getting buy-in from the corporation to do something symbolic -- like getting rid of bottled water. Let's go back to ice water in pitchers for meetings. This symbolic gesture would get the attention of all levels of the organization, because it would impact them all, behaviourly, but let's not forget, it would actually reduce costs.

So let's stop with trying to pretend we can go from pastel green to evergreen overnight. It is a noble thought, but unachievable.

And let's stop the lies. A current advertisement for a printer from a major corporation states "Using our Printer Helps the Environment". Oh Please! If you believe that I have some swampland for you in Florida (which actually may become an increasingly scarce commodity)

Corporate Social Responsibility -- Statistically Speaking

2007-09-04T07:08:00.000-04:00

There is an old adage "Statistics don't lie, people do". In today's competitive landscape of corporations wanting to demonstrate that they are leaders in the realm of corporate social responsibility, there is also a preponderance of "don't ask, don't tell!"

In a September 1 article in the Toronto Star headlined "The Fine Print of Ethical Shopping"
shows us how the world of corporate social responsibility can be massaged to a company's advantage.

In this case, they tell of Starbucks who have supposedly embarked on a Coffee and Farmer Equity (CAFE) program to reward farmers with premium pricing if they adhere to environmental and socially responsible standards. In fact Starbucks proudly states that 53% of its beans are now certified under the program.

But what this article clearly points out is that certification and true corporate social responsibility are a game of statistics.

Most regular consumers would look at that statistic and say "wow, that's great!" and assume that a "certified" supplier would meet most of the standards -- at least 80% or more.

Unfortunately the reality is much different. In fact, according to someone who ran the statistics, only 19% fall into the 80% + category, 12% in the 60%-80% category, and the rest -- more than two thirds fall below 60%, which is not quite the pretty picture Starbucks is trying to paint.

In today's market company's seem to be getting in touch with their inner social responsibility, because it provides potential competitive advantage. Perhaps this is a little cynical, and I'm sure that some corporations and individuals within come organizations are truly committed to making the world a better place.

But let's face it -- the better place for most corporate titans is if they get accolades for enhancing shareholder value. If this requires mouthing the tenets of "I care" then so be it. If we get a more environmentally sound planet out of this, that's not a bad thing -- the fear that all should have is that if corporations aren't encompassing social responsibility for the right reasons, it could become a passing fad -- inherently not sustainable.

I give Starbucks credit for their CAFE program, but why leave out critical information and try to boast that you are better than you are? Why not just say it is a work in progress, and state objectives and report and monitor on progress to the consuming public?

For me, at this juncture, I will truly question anything that is reported by Starbucks in the future and look under the covers to where the real facts lie!

Holy Magnets Batman -- you are supposed to fight evil not be it!

2007-08-15T09:38:00.000-04:00

Ah Robin....how naive youth is. Why would anyone ever not think that toys from Mattel could be potential harbingers of injury & death? Oh wait a minute ....that's only happened recently right? Before that you could pretty much be guaranteed that toys from Mattel and Fischer Price would bring smiles to children, not choke them or cause brain damage....my mistake...I've just been focused on the last few weeks.

OK -- here I go again......in regards to China....recently a lot of my attention has been focused on the lack of standards in the manufacturing in China. I even gave China the benefit of the doubt -- and now I have to agree with a comment on my last entry -- that this was a mistake.

So yes, it seems that there is a depth of corruption and pursuit of the almighty profit in China, that transcends human decency. I mean, these are our children that are being put at risk! The following quote from cbc.ca says it all:

"The Chinese official, who asked not to be identified, said the issue with the magnetic toys was known back in March, but neither the U.S. company nor the manufacturers were notified."

Yet I still believe that the major responsibility is with the quality control from the Western corporations that are subcontracting out the work. Of course, Mattel's response is that a subcontractor violated the terms of the agreement by further subcontracting -- and as such somewhat trying to distance themselves from this scandal.

I feel like slapping Mattel upside the head and saying "hello -- anyone in there? "-- this is after all China -- a economy growing by leaps and bounds and not grounded with the same ethical standards that we in the West take for granted. A contractual commitment? Oh well -- who cares -- we'll do it this way instead. And by the way Mattel -- great -- now you are putting in a 3 point check system -- Yippee -- a) why wasn't that there before until this subcontractor had proven their worth; b) why don't you start looking for manufacturers closer to home -- because I'm sure that now with the costs incurred by the recalls and multiple quality checks (not to mention the damage in reputation) -- the profits garnered by offshoring have become a red mark in the income statement.

Let me get back to the contractual issue for a second, and in a future entry I'll delve into this in a little more detail.

In the West, there is an egotistic arrogance, that the rest of the world is just like us. Well, the issues regarding Intellectual Property, Subcontracting, Liability/Indemnification, etc, in the offshore world, quite clearly indicate that this is not the situation. Whether because of jealousy of the West's success that leads developing nations to the attitude "it's our turn now -- so who cares about the rules", or there is only consideration of the short term profit motive, as opposed to the long term relationship, who knows -- but it is there.

Then come to think of it -- isn't a lot of the offshoring of manufacturing by Western corporations based on a short term profit motive, as opposed to the long term relationship with their customer? It does seem so lately, doesn't it?

To get to the Mattel recall site click here.

Sesame Street teaches Science gone Bad!

2007-08-02T09:45:00.000-04:00

Sesame Street has started teaching science to youngsters and their parents. Not by choice, mind you, but as a result of a massive recall of lead contaminated toys manufactured in -- where else -- China. Perhaps that's why Elmo still speaks like an infant -- it's all the lead that was used to make him that has caused irreversible brain damage!

I have written previously about China and the dangers in outsourcing manufacturing to this country. Again, not to say there aren't some honourable and viable manufacturers in China, but quite honestly, every week, we are being inundated with another story about lack of quality and ingredients being used in the production cycle that can either harm or kill.

I'm not going to blame China. They are trying to keep up with the unprecedented demand being placed on them by the Western conglomerates, eager to enhance their profit margins by engaging with cheap manufacturing costs in this country. But of course there is the old adage "you get what you pay for!" And in this case, it's substandard and dangerous products, once again.

In the July 30th issue of Business Week there is an article entitled Not Made In China, which talks about the success of companies who are now labeling and marketing products as being China-free. These items are flying off the shelves. And IBM is successfully exploiting the situation with a "cradle to grave" software program which provides insight into every step of the supply chain!

So why aren't more companies doing significant due diligence on quality and manufacturing standards before leaping off the cliff without a parachute? There are a plethora of answers to this question but the most compelling, I believe, rest in the almighty profit motive and of course the bandwagon effect.

The bandwagon effect is defined in Wikipedia as "the observation that people often do (or believe) things because many other people do (or believe) the same. " Basically it means that it is the adolescent need to fit in and be like everyone else, because, of course, if they are doing it and are part of the "in" crowd, then it must be great.

The corporate titans must enjoy sitting around in the airport lounge talking about their latest exploits in China. If you aren't there you can't join in the conversation, and just like in high school, you slink away, sitting in the corner, watching the "cool kids" having fun.

Well, just like in high school, the "cool kids" often drop out or fail and end up bagging groceries for a living, while the "geek" becomes magnificently successful aka Bill Gates.

Maybe it's time for everyone to sit back and consider what benefit the additional profit is giving their corporation. One of the most respected toy manufacturers, Fischer Price, is not tainted because of the pursuit of the almighty dollar.

Perhaps Dora the Explorer should re-examine her destinations, and stay away from China -- for now.

Over Promising and Under Delivery -- What's wrong with Companies these Days?

2007-07-14T11:10:00.000-04:00

I should know better. After years and years of watching sales pitches and seeing the hypnotized look from decision makers in corporations who believe every word that comes out of a supplier"s mouth in pursuit of business and then equally experiencing the issues and problems arising from under (or no) delivery to expectations I should have known!

So what am I rambling about? I recently decided to get myself the Blackberry Curve. I'm not a Blackberry virgin either, because I had one of these devices in my last corporate stint. So I went to the wireless provider's store (who shall remain nameless) and after more than an hour -- which was just the paperwork, I happily trotted off with my device. I had received confirmation from the store that when I get home, it will just take a few minutes to set up and I'll joyfully get vibrated as my mail is continuously being transferred from the great beyond to my little device.

Clap if you believe it was so simple. Well Tinkerbell, let me tell you, after a couple of hours I was ready to find the highest cliff and catapult the device to the bottom -- not because of the device itself...but because of the difficulties in getting the wireless aspects to work at all.

I was given a number by the store to call to assist in this task. When calling (on a Sunday) the recorded message said that wait times could be up to 30 minutes! Eventually, after much less than 30 minutes (do they say 30 minutes just to get people to keep from staying on the line?) I got a fellow from a call center in India, who was very pleasant and seemed to get me up and running.

Of course my euphoria was short lived, when I realized my emails were taking close to 1/2 hour to come onto my device. I called again, listened to the same 30 minute warning, and got another fellow from India, who told me that is what I should expect. Because I was not part of a huge corporation with it's own Blackberry enterprise server....so sad, too bad. Not as advertised right?

As my frustration continued to grow, I decided to call the company that hosts my website and lo and behold, they walked me through a way to ensure that my emails were simultaneously sent to both my wireless device and my Outlook Inbox. Kudos to the support team at Korax who kept my Blackberry from suffering a painful demise.

Whether in corporate or as a consumer, we are constantly faced with promises which can't be delivered on, or purposively left out information, which could allow us to make an informed decision on a make or buy proposition.

Quite honestly, I would become an intensely loyal customer to any company who actually stood for full disclosure. I would even be willing to pay more money, because I consider that ease and lack of frustration is priceless.

So to all the corporations out there -- forget the glitz and provide the truth.

Of course, I should have known better -- and Tinkerbell, I'm not going to clap anymore!

(*note that the above Customer Hall of Shame came from an article on MSN Money April 26, 2007)

Waiting for the Wave

2007-07-03T16:04:00.000-04:00

I thought instead of writing a new blog entry at this time I would redirect to an article that I wrote which was just published in CPO Agenda magazine. It is my opinion on the future of procurement outsourcing.

You can access the article by clicking on this link Waiting for the Wave

I'd be interested in the opinions of others regarding procurement outsourcing's future.

"To Boldly Go Where No Buyer has Gone Before"....

2007-06-15T14:13:00.000-04:00

Do you ever wonder what Procurement will look like in in another decade or two? Do you ever sit back and imagine the future?

Take a look into the future, which with the rapid advancement of technology is more imminent than further away!

Do you ever feel like you should be dodging and weaving because you know that all around you little information packets are rapidly hurrying to their inevitable destination? It's quite amazing when you think about it.

Now envision a world of the future, when you want to "buy" something in the virtual corporation (because of course bricks and mortar won't exist anymore).

You make a statement to the effect of "Buyer" (or perhaps in the future, just thinking about it will be enough) and from you computer pops a holographic "buyer". You can program what you want this image to look like -- mine personally would be the mirror image of Mel Gibson.

This "buyer" asks you what you are looking to buy. After you make your request, Mel dives back into the portals of the web (somewhat like in the movie Tron), and within seconds comes back with three alternatives. (Mel has also made sure that you have the spending authority and if not, has already assured the approvals).

You can view the image of this product in 3D, right in front of you, and this multi-talented buyer would be spouting off the full scope analysis and providing you with the best alternative from an initial total cost perspective.

You make an interim decision although you are not quite convinced that Mel has "negotiated" the best "deal". So you request that the other party's negotiator meets with you to hash out the details. So out pops a holographic image of Mr. T (your supplier has a real sense of humor).

Within minutes you get to end state and your product is on its way -- within minutes of your first determining a need.

Of course the problem is that with a wonderful holographic image, you may decide that you are going to buy more often, just to get a glimpse of your hologram.

So there is a trigger built into the system that after so many "buyer" requests, Barney the Dinosaur shows up singing

"You've bought too much
It's time to stop

Or the boss will come
and you will be chopped...."

Yes, it will be a bright new world out there.....any other ideas?

Let's hear it for simplicity!

2007-06-04T15:48:00.000-04:00

Leonardo da Vinci was once quoted as saying , "Simplicity is the ultimate sophistication". If he were alive these days he would realize how we have strayed from this few point. Perhaps Thor Heyerdahl is correct when he states "Progress is man's ability to complicate simplicity".

Look around you. From cell phones to restaurant menus we are being inundated with too much choice, which complicates an already complicated life!

In a Harvard Business Review Article from 2006 entitled More Isn't Always Better, it shows that there have been studies done that as choices increase, customer satisfaction decreases! Go figure!

Why does a supplier need to give me a 100 pens to chose from? Or do I need technology that does everything but walk the dog?

If you look at this from the supply chain perspective, every new version of a product adds costs . Warehousing, transportation, well you know the drill. Not to mention the marketing material costs, and different packages for only slightly different offerings. Is it good business practice to cannibalize your own products?

Wouldn't it be nice if a supplier came to us and said "You know, I realize that my competitors are going to bring you 15 different options with this product, but our intention is to provide you with what you truly need at the best total cost you can imagine!"

It goes back to the Saturday Night Live skit with John Belushi and Bill Murray -- not matter what anyone came into the restaurant to order it was just Cheeseburger and Pepsi! Now if we could only get corporations to understand the sophistication and benefit to this simplicity!

Now give me a Cheeseburger and Pepsi please!

It's Not Easy Being Green

2007-05-29T10:37:00.000-04:00

Many years ago Kermit the Frog of Muppet fame, came out with his hit single (okay, maybe not quite a hit) "It's not Easy Being Green", and for many in the procurement profession the words ring true .

Today, being "Green" or environmentally friendly is in vogue. Let's face it -- Al Gore -- has reinvented himself into the Oracle of Delphi for the Green movement. And to say anything contrary to this movement could result in being shunned.

But how "Green" are corporations in general. Oh yes, everybody talks the good talk, but is there actually true effort beyond lip service being given in many organizations. Everybody has their blue boxes in their offices and there is double-sided printing -- but is this really making a difference.

If an organization truly wanted to be heralded as environmentally friendly it would need to truly set its current practices on its head.

For the procurement profession, it would mean firstly stopping the process of having paper RFP's sent out and allowing suppliers to provide reams of binders and glossies as part of a response -- the electronic tools are here, why aren't we using them. Of course even with the electronic tools, the option to PRINT still remains -- and I will accept that I am guilty of that as well -- but if when we went out to tender for computer screens we thought of making them more "eye" friendly perhaps we would not need so much paper.

A "green" commissioner should be appointed in organizations, much like integrity commissioners seem to be the flavour de jour. These green advocates, would report directly to the CEO and be responsible for creating strategy and policy around the greening of the corporation -- from lights being on, products being bought and suppliers being used.

The latter is of extreme importance and it talks to a corporation's social responsibility. In the rush for cheaper goods, a lot of offshoring is used and a blind eye is being turned to the lesser environmental requirements in some locales like China, India and Mexico. This is by no means an exclusive list, but it highlights some of the major sectors for offshore manufacturing -- where pollutants are being spewed into the atmosphere, but, so what? -- the products are cheaper!

Corporate responsibility would say that we ensure that no one, anywhere now or in the future will be harmed by our decisions today.

We need a corporate titan to stand up and be counted and say "hey, we may be a little more expensive, but we are ensuring that we are not killing you and your descendants tomorrow, for a little more profit today!"

I'd buy that!

It's in the Fine Print....

2007-05-18T15:12:00.000-04:00

As consumers we are constantly barraged with accepting or signing contract of which we nary take a look, figuring that "What are the chances...." of something going awry. But it is for that very reason that items are noted in contracts, board and securities filings -- for that day when things do go off the tracks.

Recently there has been a lot of media attention on the woes of the former executive of Hollinger International. For those of you who have not been keeping up with the trial, it is basically a question of whether non-competes negotiated by/for the leadership are fraudulent or whether they had been exposed to the required scrutiny and been passed by the board's audit committee, through SEC filings and rulings obtained by lawyers.

It seems the more the trial progresses that it seems to be the latter. Maybe not in the absolute best interests of shareholders, but not fraud and thereby not criminal (note -- as I am not sitting in the courtroom and just reading sanitized versions of the proceedings in the newspaper I am giving an opinion and not passing judgement).

During the trial what truly was amazing however was the fact that the Board members who sat on the very important audit committee, signed their names to documents that had these very "non-compete" payments for all to see. Granted it was buried in dozens of pages of other corporate meanderings, but nevertheless do not seem to have been hidden.

This brought to mind the question of how many in corporations sign legal documents without reading what is put in front of them. Most likely it happens thousands of times a day, trust in those that are providing the documents have not put a blank cheque in sheep's clothing for signing.

It is important for all those who are officers of companies and have the legal status to commit the organization to do their due diligence and read that which they sign. If the contracts are more or less the same, then an exception report can be attached for discussion purposes.

Do you initial every page of the document you are signing? You should, because it is not outside the realm of possibilities that these could be switched.

I understand that it is difficult to keep up with much of the paperwork that comes one's way, but as seen in the Hollinger trial, it is imperative not to just skim and/or scan, but to exercise more due diligence and focus. After all, think of how you would look on the witness stand if you haven't!

Ethanol, Corn Shortage and a Healthier Diet

2007-05-02T07:35:00.000-04:00

This corn cob mascot better start taking some lessons in self defense pretty soon, otherwise the makers of ethanol will be tracking him down and turning him into clean fuel.

Yes, our direction to a cleaner environment, which we all agree is a good thing, has corn cobs everywhere running for cover, knowing that soon there will be a struggle of the titans -- the ethanol producers and those who bring us tasty treats!

There are shudders running up and down the corridors of supply chain personnel in the food industry -- where are we going to get the corn when the acceptance of ethanol explodes?

Recent statistics have the US converting over 50 million tons of corn to ethanol in 2008. By 2012 ethanol availability has to double (as a result of a US federal requirement) to 7.5 Billion.Analysts predict increasing competition between the fuel industry, and supermarkets.

So corn prices are going up and moreover the supply for food products will keep on dwindling. Let's face it, there is no federal requirement to increase the amount of corn chips that are produced.

This issue has started to percolate and will reach the boiling point sometime soon. Have you ever looked at the index of ingredients on food packages. Almost everything has some corn product in it -- simple thing like cornstarch, corn oil, condiments, snack foods (and my favorite corn relish)-- well the list goes on and on.

So the supply chain has to become creative in its approach to this issue. Do the food producers start buying up fields of corn, or invest in locations overseas to do this? Are the substitutes for corn (can you imagine non-corn corn chips?) a viable alternative -- do they pass the consumer taste test?
But there is a further issue also to be dealt with -- a significant amount of corn exports go to developing nations. Just as the anti-hunger movement has gone into high gear, another issue challenges the desire to feed the less fortunate.

It is a true dilemma and one that was probably not anticipated by the policy creators, as they usually have one focus only and certainly don't consult with supply chain experts who would have identified the issues and tried to determine reasonable alternatives before making broad spectrum changes.

Perhaps the food industry reliant on corn should mandate a corn growing in every backyard ---"You want to work for us -- well then are you willing to give up your lawn for the greater corn good?"

I don't know about you, but I'm thinking of turning my backyard into a mini-corn field -- and then selling to the highest bidder!

The Issues with procuring from China -- quality and culture

2007-04-15T16:55:00.000-04:00

Recently in the paper there have been a spate of headlines about product coming from China. Wheat gluten that was used in pet food has caused numerous animals to get sick and some die. The chances of some North American companies not recovering as a result of this issue looms large. Pets are part of our families and we won't let the pet food manufacturers consider them less than worthy of the utmost quality in what they bring to the marketplace.

Then there was the story about furniture being sold with the colour "N____ Brown" -- the N standing for an inflammatory racial epithet used to describe African Americans. Again this product was manufactured in China. (note: I've removed the offending word from the picture)

As companies are racing to the low cost production in China, these issues are bound to come up time and time again and it is important for procurement professionals to continually monitor and ensure that the best value is being derived. As we all know low cost can sometimes be a misnomer, because the missteps as cited above can irreparably damage a company -- so there are no savings, just a slippery slide to damage control and potential bankruptcy.

Do you remember years ago (the 60's) when you picked up something and it said "Made in Japan" you would put it back because it represented poor quality! Just think of where Japan is today, significantly outdistancing both North American and European manufacturers -- their quest for quality knows no bounds!

And China, I'm sure will get there some day, but in many situations they are not there yet, and it becomes necessary for those buying products from this company to perform their due diligence before considering a contract.

When you ask for samples from a company in China (or quite honestly, from anywhere in the world) are you sure that these are not handmade samples, but are actually from a production run? Often in the pursuit of business, significant care is taken in ensuring the samples are the best of the best, and once in a production run, then the quality slides.
Have you sent someone to inspect the plant? From both a quality and working condition perspective this must be done -- the former to protect your business interests, the latter to focus on corporate social responsibility -- if there are violations, you know that it is just a matter of time before it hits the press.
Continuous monitoring of quality is also of paramount importance -- who was minding the quality store, when this wheat gluten got into a vast variety of dog and cat foods? Of course the excuse of the North American producers was that they didn't know the supplier of this product was getting it from China....sorry -- that doesn't absolve them of the quality testing issue.

Is the company in tune with the Western culture, enough so the identify that "N.....Brown" is not an acceptable naming convention? It seems in our minds impossible to imagine that anyone would even consider usage of this word anymore, but remember China has been culturally isolated for a long time.

For procurement professionals the pressure is significant to identify and enter into agreements with low cost producers throughout the world. And I'm not saying it is necessarily a bad thing to do. But you must ensure that your quality standards are met and that no embarrassing "other" issues come to the forefront. Don't sole source or completely source from China or anywhere else, because putting all your eggs in one basket makes it very difficult to recover from a fall.

The Real Magic Lies in the Performance....

2007-03-20T14:51:00.000-04:00

David Copperfield (the illusionist, not the Dickens character) once said that the real magic lies in the performance. And it is the performance that is both the bane and the blessing of procurement and supply chain professionals.

It is because of the performance and the seeming ease of performing the functions, that many within the organization believe that they can perform at an equally adept level.

If someone had performed magic at one point in time in her/his life, they might reflect on the Copperfield magic and believe that they can perform a specific illusion. Yet, when the jet airplane doesn't disappear they would have immediate feedback that perhaps they had overestimated their own capabilities.

Unfortunately the feedback is not usually that immediate when someone in your company, other than a member of the procurement area, initiates a negotiation, contract or some other commitment with a vendor. Everyone else in the organization believes that they have been endowed with some "magical" talent, after all haven't they negotiated deal X or Y and got concessions here and there. We've all heard our internal clients say "I or a member of my team can do pretty much everything the procurement folk do."

And, as Shakespeare would say "Therein lies the rub!" Many believe that the work and effect of the procurement team is simple and as such they can do it themselves. Furthermore, these internal groups often feel they can do it better. And that is because of the master illusionists that Procurement professionals are.

We make it look easy, because a lot of what is done, is done behind the scenes. And because there is a belief that if we give our client credit for the outcome, it will cement our relationship with them. But as comedian John Pinette would say, "Nay-Nay!"

When procurement shies away from the limelight and allows the client to take the bows, it in effect has the counter effect. As they are buoyed and repeat to others how this outcome was achieved, the role attributed to procurement becomes less and less -- and in fact this client may actually come to believe that they were solely responsible for the outcome. And moreover, this will then harm the opportunity for you to make inroads with other clients, because of course, if X client didn't need you why should they.

Now this doesn't mean we need to become aggressive chest thumpers and horn trumpeters. It does however mean, that is important to continuously message on successes and contributions, throughout the organization. Make the company understand that procurement is such a vital component that there would be significant deleterious effects without it's involvement.

McKinsey just published a study that showed that companies that had highly integrated procurement groups -- at the corporate strategic level -- had on average a full 5 percentage points of EBITDA than those which were marginalized.

It's time that procurement allowed the organization to access to the work behind the magic, because the only true illusion is that procurement brings no value.

Where's the Contingency Plan?

2007-02-28T16:00:00.000-05:00

There is an old saying that pessimists are never disappointed and always prepared. Well obviously the oil and gas industry in Ontario and Quebec is being run by optimists!

Who would ever believe that a major industrial corridor would be closing gas stations because they can't get supply. Where is the contingency/disaster planning which would avert such situations.

The Premier of Ontario is getting assurances that the oil and gas companies are doing everything they can. Well shouldn't they have already broken the glass of the "in case of emergency" container? Shouldn't there have been a contingency plan for supply disruption?

It's not like the CN strike was a surprise. There had been ample notice that such an event would occur. And yes, the Nanticoke refinery disruption didn't help, but should it have gotten us to the point that I had to pass four gas stations in a "world-class" city, before I found one that actually had some remaining supply?

Every Supply Chain professional knows that disaster/contingency planning is a must. And it is not just planning about pandemics (which seems to be the fad de jour) but about every day possibilities -- strikes, blackouts, plant shutdowns. Because these are a lot more apt to happen than avian flu.

Perhaps this is a warning to all the supply chain personnel -- don't assume it won't happen to you! Build contingency plans for a multitude of scenarios -- best case to worst case (the latter would have a couple of the possibilities being triggered at the same time). And then do a mock situation to determine the flaws and opportunities within this. Hospitals have done this for years, why can't industry?