Beruflich Dokumente
Kultur Dokumente
with Dr. Tom DePaoli Author of Common Sense Purchasing August 2011
When I am reading the books that may end up on the Buyers Meeting Point Endorsed Publications list (in the Procurement Library), I often find that they are missing a certain something? Now I know what it is cartoon illustrations! All joking aside, I am now in a position to recommend a book that contains solid procurement advice and pictures. Read all the way to the end of this interview to see my favorite from the book. Common Sense Purchasing is structured around 100 lessons, the kind of lessons that are easy to agree with, but not always so easy to consistently put into practice. My personal favorites are: #3: Plan or Perish. Make sure you have a strategy first. Not technology first. #12: Do your homework with suppliers and industries. #21: Pick the right metrics [for procurement performance]. The right ones.
Following each lesson are examples and other ideas backing up why the lesson is important and how to execute its advice. If you need an additional reason to buy and read this book, it is the price. As of this interview, Common Sense Purchasing is available new for purchase on Amazon for $9.99. This is a significantly lower price than many of the more academic books out there. The price and the content are both accessible and down to earth.
Buyers Meeting Point interviewed the author, Dr. Tom, about Common Sense Purchasing.
In
the
introduction
of
the
book
you
say
that
you
have
made
just
about
every
darn
mistake
one
can
make
in
purchasing.
We
are
glad
that
we
are
not
alone
in
that.
Which
mistake
was
your
favorite;
which
taught
you
the
most
important
lesson?
BMP:
Dr.
T:
One
of
my
favorite
mistakes
is
when
we
went
through
a
disciplined
and
arduous
supplier
selection
process.
The
selection
process
was
done
by
a
cross
functional
team.
All
the
numbers
were
favorable
and
the
supplier
had
good
references
and
was
eager
to
get
started.
The
total
cost
of
ownership
savings
were
well
over
$1,000,000.
We
did
all
our
homework
and
were
very
confident
of
our
decision.
The
new
supplier
promised
to
provide
a
supplier
representative
on
site
for
20-30
hours
per
week.
We
even
had
a
celebration.
The
supplier
representative
started
and
I
thought
that
things
were
going
well.
Unfortunately
our
maintenance
personnel
just
could
not
get
along
with
the
representative
and
conflicts
arose.
It
was
more
a
personality
issue
rather
than
competence.
Luckily
the
supplier
had
another
representative
available
who
replaced
the
initial
representative
and
was
well
liked
by
our
internal
customers.
The
lesson
learned
was
that
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once
again,
relationships
are
not
only
critical,
but
"king"
in
supply
management.
We
added
to
our
supplier
selection
process
an
interview
(performance
based)
of
any
on-site
representatives
by
our
internal
customers,
like
maintenance,
and
a
reference
check
and
discussion
with
other
customers
about
the
on-site
representative.
Also
don't
celebrate
prematurely.
Lesson
#1:
Its
about
relationships
first
and
foremost.
BMP:
How
does
the
rising
role
of
social
media/networking
relate
to
the
need
to
emphasize
the
value
of
relationships?
Dr.
T:
Social
media/networking
improves
or
enhances
the
value
of
relationships.
They
are
an
excellent
tool(s)
not
only
for
developing
deeper
relationships
but
getting
to
know
people
in
the
supply
chain
on
a
personal
basis.
This
is
an
asset
and
people
appreciate
attempts
to
build
better
personal
relationships.
It
is
the
Internet
version
of
playing
golf
with
someone.
You
get
to
know
a
lot
about
an
individual
when
you
play
eighteen
holes
of
golf
with
them.
Obviously
social
media
is
not
that
intense
but
it
does
help
build
relationships.
Bottom
line
it
helps
build
trust,
especially
internally
which
is
a
key
for
managing
change.
Some
argue
that
we
should
not
build
these
type
if
personal
relationships
with
a
supplier
or
internal
customers
but
I
disagree.
More
often
than
not,
this
type
of
relationship
will
help
especially
in
a
crisis.
Besides
what
is
the
alternative?
Being
constantly
adversarial
adds
no
value.
The
watch
out
is
that
you
cannot
let
personal
relationships
sway
your
judgment
when
major
decisions
have
to
be
made.
Being
honest
with
a
supplier,
when
they
are
deselected
or
disqualified,
is
always
the
best
option.
Most
experienced
purchasing
professionals
can
remain
objective
and
not
let
personal
relationships
derail
their
judgment.
They
can
usually
avoid
what
I
call
Supplier
Stockholm
Syndrome.
Lesson
#6:
Ruthlessly
rationalize
suppliers
first
and
then
dont
back
off.
BMP:
As
the
need
to
manage
risk
increases
in
organizations,
many
companies
are
moving
away
from
supplier
rationalization
or
rather
away
from
single
sourcing.
Does
your
recognition
of
risk
as
one
of
the
bottleneck
materials
strategies
(lesson
#19,
bullet
4)
fully
address
that
or
do
you
think
supplier
rationalization
as
a
strategy
should
be
reconsidered
altogether?
Dr.
T:
There
is
no
standard
answer
for
this.
You
need
to
have
a
different
supplier
strategy
based
on
the
particular
service
or
material
that
you
need
and
the
risk
of
supply
interruption.
The
more
critical
or
strategic
the
material,
the
more
that
you
have
to
make
a
sourcing
decision
based
on
risk.
This
may
include
multiple
suppliers,
alternate
materials,
or
backup
suppliers.
Sole
sourcing
decisions
can
have
significant
dollar
savings
but
an
interruption
of
the
supply
chain
can
carry
8/21/2011
great risk and cost. The purchasing professional must have multiple sourcing strategies to deal with risk. This is especially relevant today where many companies have international suppliers who can deliver at much lower costs. However, many of these countries are at risk not only from a political or stability aspect, but natural disasters. Lesson #12: Do your homework with suppliers and industries. BMP: I love the fact that you advocate not being intimidated by bullying stakeholders/internal customers, Purchasing is not an unctuous service organization at the beck and whim of internal customers (p. 11). What advice would you give for managing or minimizing the inevitable fall out? Dr. T: My advice here is to always lead with the facts and stay professional. Make sure you have a good supplier evaluation process in place with great metrics. Bullying stakeholders often focus on one incident and over dramatize the single event and impact. Maintenance people often focus on one incident of late delivery of a part. This is a standard bullying exaggeration procedure. When shown that the supplier evaluation data reveals a 99% plus on time delivery of thousands of parts, the drama is often defused. My other advice here is to publish supplier performance metrics (visibility) so that everyone can see how they are doing. BMP: You use terms such as procurement, purchasing, buying, sourcing, etc. in your book. Do each of the terms used have specific meaning to you or do you use them interchangeably? I ask because of the growing association between purchasing and tactical buying v. procurement and more strategic activity (for instance). Dr. T: I use them interchangeably in the book. I categorize these terms as skill sets that all purchasing professionals must have. Purchasing professionals need to switch gears in their approach based on the customer needs. They may have to quickly be tactical, strategic or bureaucratic based on what the customer wants. What every purchasing professional should ask themselves at the end of their day is "What did I do today to help move the business ahead?" BMP: Nearly 10 years after your book was originally published, if you were to write lesson #101, what would it be?
8/21/2011
Dr. T: Do not give up on relationship building. It does take time, effort and stamina. But the rewards are huge. The first test of a relationship is very important, so make sure you do your very best to maintain and improve the trust. BMP: In the interview posted on your site, you mentioned plans for another book on the role of managing relationships. Is that still in your future? Dr. T: Yes this book is still in the future and an outline is currently being developed. BMP: Several times in your book you mention Dr. Deming (W. Edwards Deming, I presume). How did his work come to play a role in your purchasing philosophy? Is there a book by (or about) him that you would recommend? Dr. T: Dr. Deming was actually more of a people person not a statistics or quality person. He trusted people. He often noted that over 90% of defects were not caused by people or the workers, but by defective materials purchased for the process or the poor design of the process. People cannot make a bad process design much better, and over 90% of quality is imbedded in the initial process design. Purchasing can play a tremendous role in assuring that the incoming materials are of high quality (world class suppliers) and that the process is designed correctly (cross-functional teams with engineering). The role of purchasing on quality is critical. I will not recommend a single book Dr. Deming but here is a good website to review many books and articles on him. http://www.deming.edu/BA/BATheMan.html -- K.B.
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8/21/2011