PROFESSIONAL PURCHASING Celebrating 40 Years of Publication VOLUME 40, REPORT NUMBER 1

www.american-purchasing.com

JANUARY 2012

Setting and Achieving Objectives

Inside this Issue: The Economy: 2011 Ends On A Good Note

Page 3

Employment Opportunities

Page 4-5

Online Course Schedule

Page 6

Recently Certified

Page 7

Welcome New Members

Page 8

Member Profile: Powerhouse Performer

Page 9

Member Question: How Should Staffing Level Be Calculated?

Page 10

Lesson Fundamentals: Preparing and Using a Budget

Page 10

Today’s Tip: Praise Your Suppliers When Justified

Page 12

How to Control MRO

Page 12

N

ot having an objective is like a person wandering aimlessly in the forest to reach home. It will likely take much longer and possibly you will never get there. An objective is a target that you can aim for and allows you to plan the best way of how you will hit it. When your first attempts don’t hit the mark in the bull’s-eye, you know what you need to do to adjust your aim. You may not need any extra equipment to try to obtain short-term objectives. Extensive planning may not be necessary once you decide on what you want to achieve. Long-term goals usually require a detailed plan. Preparation can include research, study, and testing. It may be advantageous to practice certain skills and scenarios in order to achieve a particular objective. For example, negotiating knowledge may need to be improved. Various scripts can be rehearsed as dry runs with colleagues. Good objectives are realistically achievable even though they are challenging. Any objective should have a target time for completion. The best objectives need to be measurable. Some are easy to measure by simply seeing the goal has been accomplished. Others require some scale of measurement that compares the previous situation with the new state of affairs. For example, the old price was $5.00 per dozen and the new price is $4.50. The change in price is an easy measurement of results. A change in total cost is a good measurement, but not always as easy to calculate. Not all objectives need to be monetized. Purchasing management may have the objective of having all the organization’s buyers obtain certified purchasing professional recognition. Buyers may have the objective of reading certain business books, or they may have the objective of attending a particular trade show. Continued on page 2

PROFESSIONAL PURCHASING (ISSN 1070-0455), published monthly free to members. Copyright ©, 2012, American Purchasing Society, Inc., P.O. Box 256, Aurora, IL 60507, U.S.A.,Phone (630) 859-0 250, FAX (630) 859-0270, E-Mail [email protected]. All rights reserved. Material may not be reproduced or quoted in whole or in part in any form whatsoever without permission.

PROFESSIONAL PURCHASING

Setting and Achieving Objectives

www.american-purchasing.com Continued from front

Information for business buyers and purchasing managers PUBLISHER American Purchasing Society, Inc. 630 859-0250 Fax 630 859-0270 E-Mail [email protected] EDITOR IN CHIEF Harry E. Hough, Ph.D., CPP, CPPM SENIOR EDITOR Lynne Marlor EDITORS Richard H. Hough, CPP Caroline S. Sieben CONTRIBUTING EDITORS Robert Menard, CPP, CPPC Jeff Steele ASSISTANT EDITOR Mimi Steinwart

COMING IN NEXT ISSUES February

Planning and Visiting International Suppliers March

Control of Expenses by the Purchasing Function April

Types of Buying Contracts PROFESSIONAL PURCHASING 2

Going to an out-of-town trade show may require planning the work schedule to free up the necessary time to be away from the office. It may require getting budget approval for the travel expenses involved. Planning includes assigning duties to specific individuals who must supply information required to achieve the objective. It includes establishing a time line that sets target dates for each incremental step that must be accomplished. The plan may include alternative action necessary if one method does not achieve results as scheduled. The time line can include dates to conduct follow-up to make sure each action has been started and is progressing. Let us assume that your objective is to obtain a 15% cost reduction in the purchase of Widgets. Your plan calls for itemizing the cost of components that make up Widgets and a projection of the cost of each component. The plan lists all the major and some of the smaller organizations who may be interested in supplying Widgets. The time line includes the time required to obtain competitive bids, the time to interview and talk to each interested supplier, the time to visit the most capable suppliers, and the time to discuss cost saving possibilities with the present supplier. Neither objectives or the plans need be cast in stone. Revisions because of extraneous duties may require changes in the time line or even abandonment of the particular goal. Any change should not be done lightly but is sometimes necessary. For example, suppose in the Widget example above that Marketing decides to discontinue selling Widgets or that your company decides to substitute another product for Widgets. You simply have no choice but to abandon the project. Knowledge of the organization’s objective helps managers establish objectives that tend to support the organization’s goals rather than possibly be detrimental. In turn the purchasing manager can inform each buyer about departmental goals so that each buyer can establish his or her individual objective in a like manner. For example, it would be counterproductive if a buyer negotiated a long-term contract to obtain a reduced cost if the company intended to change or eliminate the product. Establishing objectives goes hand in hand with the establishment of budgets. In some cases, for certain items the budget must come first. In other cases, it is more appropriate to establish your objective so that you can prepare your budget necessary to achieve your objective. There may be an objective for a day, a week, a month, or a year or more. The longer the time period the more planning and follow-up that must be done. Objectives for a year or more require periodic follow up. Otherwise they are eventually forgotten.

JANUARY 2012

The Economy

2011 Ends On A Good Note OCT 10

SEP 11

OCT 11

% Change from 2010

% from Pre v M onth

NOV 10

OCT 11

DEC 11

% Change from 2010

% from Pre v M onth

Consumer Price Index - All Urban Consumers

218.7

226.9

226.4

3.5

- 0.2

Consumer Price Index - All Urban Consumers

218.8

226.4

226.3

3.4

0.0

Producer Price Index - All Commodities

18 6 . 1

204.0

201.3

8.2

- 1.3

Producer Price Index - All Commodities

187.7

201.3

202.0

7.6

0.3

Producer Price Index - Industrial Commodities

188.4

204.8

202.3

7.4

- 1.2

Producer Price Index - Industrial Commodities

189.2

202.3

202.8

7.2

0.2

Finished Goods

181.2

192.5

191.9

5.9

- 0.3

Finished Goods

181.6

191.9

192.0

5.7

0.1

Finished Consumer Goods

190.8

206.1

204.7

7.3

- 0.7

Finished Consumer Goods

191.4

204.7

204.8

7.0

0.0

Capital Equipment

158.0

15 9 . 6

161.2

2.0

1. 0

Capital Equipment

157.8

161.2

16 1. 2

2.2

0.0

Intermediate Materials, Supplies, & Components

18 5 . 3

203.5

200.7

8.3

- 1.4

Intermediate Materials, Supplies, & Components

186.4

200.7

200.7

7.7

0.0

Manufacturing

175.5

193.4

191.4

9.1

- 1.0

Manufacturing

177.0

191.4

190.2

7.5

- 0.6

Iron and Steel

222.7

255.0

254.8

14.4

- 0.1

Iron and Steel

222.6

254.8

248.8

11.8

- 2.4

Steel Mill Products

191.7

216.9

2 17 . 8

13.6

0.4

Steel Mill Products

190.5

217.8

215.3

13 . 0

- 1.1

Materials and Components for Construction

205.9

2 13 . 9

2 14 . 2

4.0

0.1

Materials and Components for Construction

206.3

214.2

214.1

3.8

0.0

Processed Fuels & Lubricants

188.9

221.6

213.3

12.9

- 3.7

Processed Fuels & Lubricants

189.5

213.3

216.1

14.0

1. 3

Containers, nonreturnable

202.4

206.5

206.0

1. 8

- 0.2

Containers, nonreturnable

202.5

206.0

205.9

1.7

0.0

Converted Paper & Paperboard Products

212.5

218.3

217.8

2.5

- 0.2

Converted Paper & Paperboard Products

212.7

217.8

217.7

2.4

0.0

Supplies

17 6 . 4

186.5

185.4

5.1

- 0.6

Supplies

177.5

185.4

185.4

4.5

0.0

Crude Materials

215.3

253.0

242.5

12.6

- 4.2

Crude Materials

217.2

242.5

250.0

15 . 1

3.1

Industrial Chemicals

268.6

338.7

331.0

23.2

- 2.3

Industrial Chemicals

278.2

331.0

320.2

15.1

- 3.3

Crude Petroleum (domestic production)

224.0

275.9

260.7

16.4

- 5.5

Crude Petroleum (domestic production)

237.1

260.7

309.1

30.4

18 . 6

M ajor Inde xe s of Bus ine s s Activity

M ajor Inde xe s of Bus ine s s Activity

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

2

011 is ending with the economy improving. While there is currently a debt crisis in Europe, the United States economy has seen some positives recently. First, the job market is doing much better than it did last year and a good part of this year. The unemployment rate fell to 8.6 percent last month. This is the lowest figure since March of 2009. According to the National Federation of Independent Business, small businesses are beginning to hire again. Spending this holiday season has improved. Americans spent $32 billion online, which is up 15 percent from a year ago. Total sales since November through the last week of December were up 2.5 percent, and retail sales were up in November for the sixth month in a row. A good percent of the spending has been on clothes, cars, electronics, and PROFESSIONAL PURCHASING 3

furniture. According to the Conference Board, Americans feel better about the economy now than they did in July. The consumer confidence index rose by 15 points in November. This is the largest one month increase since April of 2003. The national average for gasonline is $3.21 a gallon. This is down from $3.98 a gallon in May. This decrease has kept more money in consumers’ wallets and has led to increased spending in other areas such as appliances, furniture, and vacations. In addition to all of the above, factories are keeping busy restocking shelves and warehouses, convinced customers will buy their products. There are even some signs that the housing market is beginning to climb out of the deep hole it has been stuck in for a couple of years. JANUARY 2012

Employment Opportunities PURCHASING MANAGER Our client, a customer-focused packaging solutions company located in the Twin Cities seeks a Purchasing professional to join their management team. Reporting to the company owners, this position is responsible for inventory, warehouse operations and purchasing. Additional responsibilities include, but are not limited to, managing all purchasing services, working with new and existing vendors, negotiating optimal pricing, delivery and terms. This position potentially will grow into a General Manager role with operational duties and responsibilities as the company continues its strategic plan of acquisition and expanded growth. We seek a college graduate with packaging industry purchasing management experience. Must be proficient in Microsoft Office, Ecommerce and ERP purchasing systems. Packaging products knowledge is ideal along with superior sourcing expertise within the distribution industry. Our client has made major investments in talent and new systems and is a leader in providing quality service and packaging solutions. They have been recognized as a single source provider of packaging products and equipment for over 35 years. If you are an exceptional communicator, self-directed, process-driven and have the ability to lead and motivate staff, please contact us in confidence to discuss this growthoriented opportunity. Teresa Mazzitelli, President, The Mazzitelli Group, Ltd., Executive Search Consultants, [email protected], 952-4765449. PURCHASING MANAGER Chestnut Health Systems is a leading provider of behavioral healthcare services. Over the course of 35 years, Chestnut has grown to over 700 committed, compassionate employees providing care at multiple substance abuse and mental health treatment centers in central and southern Illinois. Chestnut also conducts research and training throughout the U.S., as well as provides employee assistance programs internationally. Chestnut is seeking a full-time Corporate Purchasing Manager based at our Bloomington, IL location. Qualifications: Requires a Bachelor’s degree in Business Administration, or related field, with 35 years of demonstrated exempt level purchasing experience. Requires 1-2 years experience in a supervisory capacity. Experience with Microsoft Office (Word, Excel) is required. Must possess excellent oral and written communication skills, excellent analytical and negotiation skills and be detail oriented. Professional purchasing certification is preferred but not required. Job Duties: Oversee activities of purchasing staff. Responsible for all aspects of sourcing, quoting, negotiating, vendor selection and vendor performance. Ensure purchasing policies, procedures and practices are current and reflect best industry practices. Track purchasing activity and measurements in order to show cost reductions. Design, implement, manage and monitor purchasing reporting systems to meet company requirements. This full-time, salaried position includes an excellent compensation and benefits package including health, dental, life and disability insurance, a retirement savings plan with company match, generous paid time off benefits and more. For more information

SENIOR BUYER Kansas City, Missouri. Bayer CropScience (BCS) is one of the world’s leading innovative crop science companies in the areas of crop protection, non-agricultural pest control, seeds and plant biotechnology. With our headquarters in Monheim, Germany, Bayer CropScience has a global workforce of about 17,900, and is represented in more than 120 countries. The primary responsibility of this position is to provide both Strategic and Tactical Procurement of goods and services for Bayer CropScience. The incumbent will be responsible to: Develop Procurement/Vendor Strategies for the sourcing and procurement of goods and services; Be responsible for Strategic and Transactional Procurement activities including raw materials, capital expenditures, service contracts, repairs and maintenance and equipment to support the site; Improve Working Capital and Procure to Pay Processes at the site; Negotiate Contracts and agreements; Facilitate invoice reconciliation with Accounts Payable/ Vendors as required; Ensure Procurement Performance/Customer Satisfaction/Working Capital via established KPI’s and timely, accurate, and quality-focused delivery of Goods & Services. The selected candidate is required to possess the following: Bachelor’s degree in an engineering discipline with at least 6+ years of Procurement experience; Experience in Commercial Operations/Marketing Services/Business Development is an asset; Demonstrated strong verbal and written communication skills; Demonstrated problem solving skills and project management skills; Ability to network among various technical and non-technical functions including Marketing, Sales, Supply Chain, Quality Assurance, R&D, Manufacturing, AP and Finance; Proficient knowledge of Business Systems is essential. Preference given to those individuals with SAP, APO and PP/DS enterprise systems. Preferred Qualifications: Professional purchasing and supply chain management certification. Salary and grade level will be commensurate with experience and/or education level. We offer a wide variety of competitive compensation and benefit programs. We are also committed to supporting your professional development through career ladders, training programs, tuition assistance and professional association events. To apply: www.myBayerjob.com. Bayer is an Equal Opportunity Employer. Reference Code: 0000028949.

Recruiters and HR Managers Remember, when you are ready to find purchasing, materials management, or supply chain management help, Professional Purchasing and the Society’s Web at www.american-purchasing.com is the place to advertise to reach the best candidates. Many members and guests visit our website each day looking for job openings and career enhancements. They also post their resumes to the site, so recruiters and HR managers can search for and contact the best qualified person for their employment opportunity.

please contact Mark Campbell at [email protected].

PROFESSIONAL PURCHASING 4

JANUARY 2012

Employment Opportunities DIRECTOR OR PURCHASING AND CONTRACTING San Diego, California. Under the leadership of the Mayor and the general direction of the Assistant Chief Operating Officer, the Director of Purchasing and Contracting is responsible for directing and coordinating the services and activities of the Purchasing and Contracting Department. The Director develops and implements policies and procedures conforming to applicable laws and regulations and best business practices to ensure the provision of efficient and effective services to the City. The Director oversees and is responsible for the City’s centralized purchasing and contracting administration, material management and property disposal. Qualifications: The ideal candidate will possess the following qualifications. Knowledge of principles and practices of purchasing, contracting, materials management, and property disposal. Demonstrated success in contract administration and management. Knowledge of laws, codes, standards and best practices related to purchasing, contracting, and materials management. Demonstrated skills in contract negotiation and administration, government bidding and purchasing procedures. Demonstrated ability to maintain a high ethical standard in conducting procurements and selecting vendors. Demonstrated leadership in solving complex problems by using a high degree of sensitivity, tact and diplomacy. Excellent problem solving skills, with the ability to proactively identify and support creative and viable solutions. Possession of a Bachelor’s Degree in public administration, business administration, business management, or related field and 7 years of progressively responsible professional procurement and contracting experience would be a typical way to demonstrate these qualifications. At least three years of public sector procurement or contracting experience is highly desirable. Management Benefits: The successful candidate will be eligible for participation in the City’s Flexible Benefits Plan that offers several optional benefit plans or a taxable cash option; $50,000 in City-paid life insurance; paid annual leave accruing at 6.77 hours each biweekly pay period (equivalent to approximately 22 eight-hour days per year) for the 1st through the 15th year of services; defined benefit City retirement with CalPERS reciprocity for those with eligible service and a mandatory 1% contribution to the 401(a) plan and .25% contribution to a retiree medical trust with a City match to each; and optional deferred compensation (457) and 401(k) programs. Retirement benefits for current City employees may differ for this unclassified position. For further information contact Risk Management at (619) 236-6600. The benefits currently offered to employees may be subjected to future modifications. Selection Process: To be considered for this position, please submit two copies of each of the following: your current resume, a letter of interest highlighting your relevant work experience and a list of three workrelated references in an envelope marked “CONFIDENTIAL: Unclassified Recruitment – Director of Purchasing and Contracting”, to The City of San Diego, Human Resources Department, 1200 Third Avenue, Suite 1316, San Diego, CA 9210. Submission may also be sent via email to: [email protected]. The City of San Diego has an active Equal Opportunity/ADA Program for employment and vigorously supports diversity in the workplace.

PROFESSIONAL PURCHASING 5

PROCUREMENT SPECIALIST Kansas City, Missouri. Bayer CropScience (BCS) is one of the world’s leading innovative crop science companies in the areas of crop protection, non-agricultural pest control, seeds and plant biotechnology. With our headquarters in Monheim, Germany, Bayer CropScience has a global workforce of about 17,900, and is represented in more than 120 countries. BCS is structured into six Business Operations units: four regional crop protection units and two units responsible for Environmental Science and BioScience – offering an outstanding range of products and extensive service backup for modern, sustainable agriculture as well as for nonagricultural applications. The primary responsibility of this role, as Procurement Specialist/Senior Procurement Specialist, is to provide Strategic Procurement services to the US Bayer CropScience (BCS) Business. The incumbent will: Develop Procurement / Vendor Strategies for the allotted portfolio of chemicals; Be responsible for Strategic Procurement activities including category segmentation, minimizing single Sources, documentation of procurement decisions and negotiation of procurement / supply contracts; Support e-sourcing implementation and maintenance. The selected candidate is required to possess the following: Bachelor’s degree in Chemistry or chemical engineering with at least 6+ years of Procurement experience; Experience in Chemical procurement in Agro Business environment is an asset; Demonstrated strong verbal and written communication skills; Demonstrated problem solving skills and project management skills; Strong team player; Ability to network among various technical and non-technical functions including Supply Chain, Quality Assurance, R&D, Manufacturing, AP and Finance; Proficient knowledge of Business Systems is essential. Preference given to those individuals with SAP, APO and PP/DS enterprise systems. Preferred Qualifications: Professional purchasing and supply chain management certification. Salary and grade level will be commensurate with experience and/or education level. In addition to a competitive base salary, you will be eligible for an array of innovative rewards and recognition programs, variable pay and incentive opportunities as well as benefits coverage beginning on your first day of employment. We are also committed to supporting your professional development through career ladders, training programs, tuition assistance and professional association events. If you meet the requirements of this unique opportunity, we encourage you to explore how you can make a difference at Bayer by applying now. To all recruitment agencies: Bayer does not accept unsolicited third party resumes. To apply: www.myBayerjob.com Reference Code: 0000028526.

Buyers, Purchasing Managers, Materials Managers, and Supply Chain Managers When applying for any of these positions, please tell the employer that you saw the advertisement in Professional Purchasing, a publication of the American Purchasing Society. Go to www.americanpurchasing.com for more help wanted ads and more job information.

JANUARY 2012

Online Course Schedule For more information, a complete schedule and to register today go to www.american-purchasing.com NEW! Now Available. Managing Quality - How to Get the Quality and Service You Want - Available at all times and repeated continually. Fee $129, Members $99. Qualifies for 2 CPP points. The course covers quality issues both inside the organization as well as the quality produced by suppliers. Covers measurement techniques, the cost of quality, testing tools, quality standards and awards, and more. This course should be a must for every quality control employee as well as for all buyers and purchasing managers regardless of their industry. Managing Inventory - Maintaining the Proper Level - Requirement of the Certified Purchasing Professional (CPP) program.Available at all times and repeated continually. Fee $154, Members $129. Qualifies for 2 CPP points. Controlling the amount of inventory is an important and complex function of business. This short online course introduces buyers, purchasing managers, and others to the many aspects of managing inventory. The course covers record keeping, types of inventory, physical control, reasons for shortages and how to prevent them, supplier held inventory, and many other subjects. Accounting, Finance, and Cost Management for Buyers and Managers - Available at all times and repeated continually. Fee $154, Members $129. Qualifies for 2 CPP points. The course is an introduction to accounting and finance and suitable for those who have never had a course in accounting as well as those who wish to review the subject. Topics include the accounting process, financial reports, methods of evaluating inventory, budgeting, methods of evaluating financial performance, and many other related subjects. Fundamentals of Business Buying and Purchasing Management Available at all times and repeated continually. Fee $125, Members $99. Qualifies for 2 CPP points. A self-running Web based course developed by the APS. Don’t know much about business or buying for business? Then this is the course for you. A three part online course that introduces you to accepted business practices and gives you the understanding to accept a position as a buyer or purchasing manager. Preparation for CPP Exam Full Version - 3 week online course including exam. Qualifies for 13 CPP points. January 9 to January 29, 2012. Fee $660, APS Members $540. This is the best training for buyers and purchasing managers to prepare for the Certified Purchasing Professional (CPP) examination. When completed, you will be encouraged, if you have not already done so, to apply for professional certification recognition. The course includes an instructor, the study guide, all required online courses, and the exam. Registration and payment are required in advance. Register online at www.americanpurchasing.com or phone (630) 859-0250. There is also a condensed version of this course. Please visit our website for more details. Purchasing Management - 4 week online course. Continuous enrollment. Fee $225, APS members $200. Qualifies for 4 CPP points. This course is strongly recommended for anyone who is interested in taking the “Preparation for the CPP & Exam” or “Preparation for the CPPM & Exam” and who is also fairly new to purchasing or has entry-level responsibilities. Preparation for CPPM & Exam - 4 week online course including exam. Qualifies for 4 CPP points. February 6 to March 4, 2012. Fee $225, APS Members $180. This is the only online course available and approved by the APS to prepare for Certified Professional Purchasing Manager recognition. The exam is given at the end of the course without extra charge and is accepted by the Society as fulfillment of the CPPM requirements providing the student has achieved CPP, has management experience and has made separate application for the CPPM recognition. PROFESSIONAL PURCHASING 6

The Science and Art of Negotiating - Available at all times and repeated continually. Fee $195, Members $175. Qualifies for 2 CPP points. This is a two part online program. This is the best and most comprehensive course about negotiating that you will find anywhere. All buyers and purchasing managers are well advised to include this program to improve their purchasing skills. Either part can be purchased separately, but a discount is obtained when purchasing together. You may register for both parts or either part on the Society’s Web site at www.americanpurchasing.com. Math for Purchasing and Business: Essential Knowledge for Profitable Transactions - Requirement of the Certified Purchasing Professional (CPP) program. Available at all times and repeated continually. Fee $154, Members $129. Qualifies for 2 CPP points. A self-running Web based course developed by the APS. The object of this course is to inform business people, buyers, purchasing managers, and executives about various mathematical methods and tools that are useful to help control prices and costs. Successful business people have used the ideas, methods, and procedures mentioned in this course for many years. They contribute to cost reductions and increased profit for any type of organization that uses them. Essential Law for Buyers and Sellers - Requirement of the Certified Purchasing Professional (CPP) program. Available at all times and repeated continually. Fee $154, Members $129. Qualifies for 3 CPP points. Learn what a contract is and what it takes to make one. Understand the difference between common law and statute law. Know the importance of the Uniform Commercial Code. Understand what the antitrust laws are and how they affect you. Beware of the implications of patents. Learn how to protect your organization and yourself from legal problems connected with the business and your employment. Business Ethics for Buyers and Sellers - Requirement of the Certified Purchasing Professional (CPP) program. Available at all times and repeated continually. Fee $154, Members $129. Qualifies for 2 CPP points. The Certified Purchasing Professional (CPP) program has always stressed the importance of proper business conduct. Now, recent surveys have discovered that there is renewed interest in courses related to business ethics. Learn the meaning and sources of ethics. Understand the relationship between the law and ethics. Become familiar with the ethical issues that buyers and sellers confront.

Other Online Courses from the American Purchasing Society Read details about these courses on the Society’s Web at www.americanpurchasing.com. Use of Terms & Conditions, Documenting the Purchase Agreement 76 Ways to Improve Purchasing Performance Body Language

Diversity for Purchasing and Business

Green Purchasing and Sustainability

5 Convenient Ways to Register Call 1-630-859-0250, or Fax to 1-630-859-0270, or fill out the online form at www.american-purchasing.com, or send an E-mail to [email protected], or mail to: American Purchasing Society 8 E. Galena Blvd., Suite 203, Aurora, IL 60506 JANUARY 2012

AL

F

C ER TI

D PROFESS

N IO

C

H

GE

R

CPPM

AS

A

PU R

Recently Certified

IE

I N G MA

N

Certified Purchasing Professional (CPP) Awards

Certified Professional Purchasing Manager (CPPM) Awards

Mohammed Ahmed was most recently an employee of ABC Imaging of Washington in Washington, DC. Certification number - 110212P.

Rachel Bernard is employed at Kaplan, Inc. in Fort Lauderdale, Florida. Rachel earned the CPP in June of this year. Certification number - 109162M.

Dan W. Buckley works for Ferguson Enterprises located in Newport News, Virginia. Certification number - 113237P.

Kevin P. Bowen works for the United States Olympic Committee located in Colorado Springs, Colorado. Kevin was awarded the CPP in October of this year. Certification number - 92017M.

Sean Cochran works for Valentine Enterprises, Inc. located in Lawrenceville, Georgia. Certification number - 107720P. Richard P. Guyot works for Synthetic Genomics in La Jolla, California. Certification number - 113335P. Marché Hampton is employed at IAP World Services in Annapolis, Maryland. Certification number - 109312P. Chad Harmon is an employee of Twigg Aerospace Components located in Martinsville, Indiana. Certification number - 110215P. Brian Keith Johnson is employed at Triple Canopy, Inc. in Reston, Virginia. Certification number - 101869P. Steve Michalak works for BNSF Railway Co. in Fort Worth, Texas. Certification number - 110213P. Prasad Padamanabh Mathakari is employed at Firstsource Solutions Limited in Mumbai, India. Certification number - 113379P. Liani Richardson is an employee of Sigma Space Corp. located in Lanham, Maryland. Certification number - 107315P. Kathleen Talbot works for the National Bank of Arizona located in Phoenix, Arizona. Certification number 113450P. Stefanie Thornton is an employee of Brightside Academy, Inc. located in Pittsburgh, Pennsylvania. Certification number - 113239P. PROFESSIONAL PURCHASING 7

Nicholas D. Corby, III is employed at TIMET in Morgantown, Pennsylvania. Nicholas received the CPP in May of this year. Certification number - 108359M. Ivan Jose Ortiz is an employee of Schratter Foods, Inc. located in Miami, Florida. Ivan earned the CPP in August of this year. Certification number - 108467M. Stacey Patrick works for IAP World Services, Inc. located in Annapolis, Maryland. Stacey was awarded the CPP in August of this year. Certification number 108719M. Raymond Wong is employed at Adams Rite Manufacturing in Pomona, California. Raymond received the CPP in October of this year. Certification number - 113359M.

Certified Professional Purchasing Consultant (CPPC) Awards Mark Jason works for Looking Glass Consulting, Ltd. in Glenview, Illinois. Mark earned the CPP in July of this year. Certification number - 105957C. The American Purchasing Society was the first organization to offer national purchasing certification. The Certified Purchasing Professional (CPP) program was developed in 1970 by a group of businessmen who recognized the need for improved integrity in business and improved competence in the purchasing and supply chain function.

JANUARY 2012

Welcome New Company Members Congratulations to the following new company members of the American Purchasing Society. Each organization appoints one or more representatives to the Society and each company representative receives all the benefits of membership.

Allegis Group, Hanover, MD CCS-Inc., Christiansburg, VA City of San Luis, San Luis, AZ Coloplast Corp., Minneapolis, MN DRS ICAS, LLC, Merrimack, NH Enginuity Communications, Batavia, IL Global Cash Access, Inc., Las Vegas, NV Hotstart, Inc., Spokane, WA

Leatherman Tool Group, Inc., Portland, OR Norplas Industries / Magna, Northwood, OH Northeast Valley Health Corp., San Fernando, CA SGS LSS, Lincolnshire, IL Ulbrich Shaped Wire, North Haven, CT VSD, LLC, Virginia Beach, VA WahlcoMetroflex Inc., Lewiston, ME Yulista Mgmt. Services, Huntsville, AL

New IIndividual ndividual Members and New Company Re presentatives Representatives Welcome to the following individuals and company representatives. Please take advantage of all the benefits of membership. Please visit the Members Only area of the Society’s website at www.american-purchasing.com. Annette Adams, Technical Buyer, Cirque du Soleil, Las Vegas, NV Rosangela Alves, Mat. Master Analyst, Pilgrims Pride, Longmont, CO Nicholas Anderson, Mat. Mgr., Pacific Research Lab., Vashon, WA Sandy Astin, Dir. of Ops., Enginuity Communications, Batavia, IL Shari Belcher, Buyer, CCS-Inc., Christiansburg, VA Linda Bell, Operation Supervisor, Pac Sun, Huntington Beach, CA Maria Bonilla, Sr. Buyer Associate, Amigen Mfg., San Juan, PR Greg Brain, Purchasing Manager, Hotstart Inc., Spokane, WA Joyce Brandon, Ops. Mgr., WI Nipple & Fitting, Milwaukee, WI Dan Buckley, CPP, Accounts Mgr., Ferguson Enterprises, Apex, NC Debra Burger, Purchasing/Office Mgr., Maidenform, Orange Park, FL Donna Burns, Senior Buyer, Aeroflex Plainview Inc., Plainview, NY Angelica Cifuentes, Procure. Specialist, City of San Luis, San Luis, AZ Maureen Collins, Purchasing Agent, Pacific Sunwear, Long Beach, CA Marcus Cordero, Purchasing Mgr., Global Cash Access, Las Vegas, NV Sarah Couch, Buyer, CCS-Inc., Christiansburg, VA Joan David, Purch. Agent, Black Butte Coal Co., Rock Springs, WY Barbara Dillon, Acting CFO,VSD, LLC, Virginia Beach, VA Cortney Dunmyer, Purch. Assist., Arthritis Foundation, Atlanta, GA Angela Duszynski, Procurement Spec., SGS LSS, Lincolnshire, IL Harold Flores, Supply Base Manager, TE Coinnectivity, Ventura, CA Charles Gaglione, Purchasing, Mearthane Products., Cranston, RI Linda Gandel, Dir. of Pur., Scout Hotel & Resort Management, Edgartown, MA Lisa Gomes, CPP, Purchaser, Harvard University, Woburn, MA Michael Gould, Inventory Mgr., Haver Services., Conyers, GA Glenn Grayson, Operations Engineers II, Goleta, CA Shenequa Green, Purch. Assistant, Safe Horizon Inc., New York, NY Richard Guyot, CPP, Purchasing Agent, Lakeside, CA Donald Hamilton, Purch. Mgr., Micropen Tech., Honeoye Falls, NY Kenneth Hill, Purchasing Mgr., Futura Industries, West Jordan, UT Lisa Huggenvik, Pacific Research Laboratories, Vashon, WA Kerry Hunsley, Proc. Mgr., McCarthy Building Co., Phoenix, AZ Denise Hutchison, Proc. Mgr., Paton Controls, Port Arthur, TX Tara Kephart, Technical Buyer, Cirque du Soleil, Las Vegas, NV Randy Kinnear, Purch. & Industrial Mgr., Laddawn Inc., Devens, MA Mona Klaerner, Decatur, TX Sue Komenda, Sr. Buyer, Schleuniger Inc., Manchester, NH David O. Lavoie, Suffield, CT

PROFESSIONAL PURCHASING 8

Beth Lewis, Assist. Mgr. of Purch., Enkei America, Columbus, IN Anthony Lopes, Purch. Agent, Consolidated Metco, Clackamas, OR Gillian Lougeman, Purch. Admin., DRS ICAS, LLC, Merrimack, NH Patricia Manuel, Buyer, River Rock Casino, Geyserville, CA Mark Mascarenhas, CPP, Purch Mgr, Weatherford Int’l, Houston, TX William McCormick, Dir. of Mat., Leatherman Group, Portland, OR Timothy McGuire, Buyer, Jennmar Corporation, Pittsburgh, PA Kent A. Miller, VP, Silver Spring, MD Darren Montgomery, Purch. Mgr., Quileute Council, La Push, WA Denise Muccioli, Buyer II, DRS ICAS, LLC, Merrimack, NH Bakali Mukasa, Everett, MA Linh Nguyen, Purchasing Mgr., Pasternack Enterprises, Irvine, CA Eric Olsness, Hotstart Inc., Spokane, WA Dwayne Outlaw, Purchasing Manager, KaMin LLC, Macon, GA Isabel Perez, Assist. to Mex. Prod., Mat. Marketing, San Antonio, TX Tresa Petty-Edwards, Purchasing Agent, RTI Biologics, Alachua, FL Kathy Pifer, Sr. Prod. Planner, Westinghouse Electric, Butler, PA Addie Segura, Dir. of Materials, Wing Inflatables Inc., Arcata, CA Carla Sheets, Purchasing Admin., DRS ICAS, LLC, Merrimack, NH Alexandra A. Silcox, Purch., Yulista Mgmt. Services, Huntsville, AL Kathy St. Martin, Purch Coordinator, Bio Pappel Int’l, Prewitt, NM Larry Stanley, Procurement Manager, InfoPro Corp., Harvest, AL Lenny Steppes, Buyer, Rollins Supply Inc., Atlanta, GA Jayne Stone, Procurement Mgr., Hoosier Lottery, Indianapolis, IN Dwight Taflinger, Purchasing Mgr, Vaughan & Bushnell, Bushnell, IL Laurie Taylor, Buyer, Yulista Mgmt. Services, Huntsville, AL Jennie Theriault, Asst. IT Purchasing, Gensler, Denver, CO Stefanie Thornton, Pro. Spec., Brightside Academy, Allison Park, PA Cynthia Tilmans, Proc. Mgr., Minova USA, Georgetown, KY Mandy Vaudrey, Dir. of Operations, CCS-Inc., Christiansburg,VA John L. Vetter III, CPP, St. Augustine, FL Johnnie Wagoner, Materials Mgmt., Wagoner Int’l, Humble, TX Julie Watson, Technical Buyer, Cirque du Soleil, Las Vegas, NV Kevyn Watson, Senior Buyer, Solo Cup Co., Evanston, IL Suzette Williams, Purch. Coor., Hospice of the Valley, Phoenix, AZ Linda M. Wilson, Buyer, Terphane Inc., Macedon, NY Raymond Wong, CPP, CPPM, Buyer, Adams Rite Mfg., Pomona, CA Victor Wright, Buyer, Yulista Mgmt. Services, Huntsville, AL

JANUARY 2012

Member Profile: Michael Dobyns

Powerhouse Performer by Jeff Steele

A

s a member of a military family, Michael Dobyns never lived longer than three years in any one place as he was growing up. He guesses he resided in 10 different settings across the United States during his childhood, as well as three different sites in Germany, before graduating from high school in Canada. Did the nomadic life take a toll? Quite the contrary, he says. “It kind of teaches you at a young age flexibility and adaptability,” he reports of his upbringing. Mike would need that malleability during a career that saw him forced to scramble for new jobs after not one but two recessions 17 years apart. His selection as the latest member spotlighted in the APS Member Profile Series is testament to his ability to absorb the hard knocks that too often impact today’s workforce, while continuing to steer his career path ever higher. Mike is facility buyer in a Colorado Springs facility of Minnesota-based Xcel Energy, an $11-billion-a-year power and energy firm that runs power plants and owns grid lines in eight states. “I’m on the energy supply side and work with the power plants,” says Mike, who reports to the purchasing manager. “Facility buyers like myself are decentralized and we are stationed within power plants through the state, traveling to different plants as needed. The agreement buyers are centralized in the Denver headquarters for Colorado.” Mike’s primary purchases are pumps, valves and motors, but he also handles MRO purchases, as well as safety products and equipment, he reports. The company has about 50 employees in purchasing and a $3 billion yearly spend. “We have a lot of people buying all the time,” Michael notes. “Vendors are competing for the business, and pulling a lot of tricks to get in the door. We have to play our cards right and talk to who we need to talk to.” What are his top challenges? Keeping up with the volume of emails, documents and follow-up needed to receive deliveries on time, he says. “When you have that kind of volume coming through, you have to keep up a lot of documentation. After I started here, I had to sit down PROFESSIONAL PURCHASING 9

and establish a process. A big challenge is deciding whether to keep or delete, and the process of filing documents in the right folders, and labeling subject lines [for searchability].” Following his peripatetic early years, Mike settled in Colorado Springs in 1980 and accepted a job with an electronics company while taking some college courses. But he let his education lapse after receiving eight promotions from his employer. Then, in 1991, “the recession took place, and I was laid off,” he recalls. “It took eight months of diligently looking for work, and I had to take a downgraded position with a machine shop. After three years there, I started working for a non-profit, and it was there I went into purchasing.” He worked there for a full 13 years and survived several employee purges toward the end, before being laid off in August 2009. The layoff resulted in another eight-month job hunt before hiring on at Xcel Energy, he recalls. During the course of his career, he has earned three certifications, including a Certified Purchasing Professional (CPP) from American Purchasing Society, and is currently working on a fourth. “I feel I need certification to stand out a bit and be more marketable,” he says. “My attitude is you can never know enough, and you should never be satisfied with what you know.” What surprises him most these days is how much he can get done with the technology tools now available to purchasing professionals. He looks at his to-do list each morning and says to himself, “I’ll never get through this.” At the end of the day, he’s astonished by all the line items checked off the list. “I really enjoy this job,” he says. “It’s just amazing how far purchasing has come in productivity, since I started in this career field. You can get so much work done so much faster. With some of the technology, you lose the relational side. But you have to make the effort to keep relationships going with vendors.” He has no doubt he’ll continue in purchasing. Says Mike: “I have finally found my career after all these years.” JANUARY 2012

Lesson 135 Fundamentals

Questions From Members

Preparing and Using a Budget

How Should Staffing Level Be Calculated? QUESTION: How can I determine the proper number of buyers and other employees in my purchasing operation? ANSWER: There are so many variables that apply to a particular company and a particular industry that it is almost impossible to provide statistics that should be used for your organization. However, the Society accumulated data from our recent Benchmarking Survey for all types of organizations as shown below. Purchasing Staffing Level Information Number Who Buy Size of Company Average Median Min Max Number Employees 20-99 100-499 500-1000 Over 1000

2.3 3.3 5 11.4

2 3 3 5

1 3 1 1

7 12 20 100

It is better to calculate your proper needs based on your company history and expectations rather than use this table. For example, if sales volume of your company has increased by X percent and the number of employees has increased by Y percent, it is only logical that your staffing level should accordingly be changed. With more employees there are likely to be more requisitions, more need for supplies, and  more need to communicate with the new employees. Send your purchasing related questions to the Editor, Professional Purchasing, American Purchasing Society, P.O. Box 256, Aurora, IL 60507 or Email to [email protected].

All part of the job

“Guilt, innocence; they are not concepts that come naturally to you are they?”

PROFESSIONAL PURCHASING 10

M

ost well run organizations prepare and use a budget. This is usually done at least annually, but may be created more frequently. Good management monitors the budget to see that operations are performed as planned or to take any corrective action deemed necessary. Purchasing budgets are prepared by the purchasing manager, sometimes with the help of the buyers and staff. There are various types of budgets including one for head count (the number of employees), the capital budget for the amount spent on particular capital equipment, and the operating budget for amount to be produced or spent. The numbers in a proper budget should be close to what is actually spent. Operating far below budget or far above budget is an indication that either planning was incorrect or operations are not performing as planned. The amount budgeted may be variable or fixed. A fixed budget would be for rent or insurance or any other item that does not vary over an extended period of time. A variable budget provides for changed allowance depending on sales volume or the amount of production. Budgets for purchased items should include both fixed amounts and variable amounts. The fixed amounts would apply to capital equipment, the variable amounts would apply to items for production or resale. The individual buyers who may be a specialist in a purchased product can provide valuable input for budget preparation. Such buyers may have knowledge of price increases to occur or know about other market conditions that may affect what will be spent to obtain needed goods. Budgets should be somewhat firm for a given period but need not be cast in iron when conditions change. Due to economic downturns or booms, a revision to the budget may be called for. Periodic meetings to discuss performance compared with the budget is useful to inform management of financial problems or other difficulties. An explanation of the reasons why the budget was significantly missed is helpful in taking steps to offset the differences. Budgets should not be used to browbeat workers for higher productivity. Their purpose is to avoid problems  through planning and control of expenditures.

Articles in this series are intended to inform new buyers about the fundamentals of purchasing for business and act as a review for experienced purchasing professionals. The series is in response to requests from purchasing managers who want to provide training for their staffs. JANUARY 2012

If not a member and you would like to receive Professional Purchasing monthly and all of the Society’s benefits, join at our website at www.american-purchasing.com and use promotion code: JAN12, or send this form via fax or mail to:

APPLICATION FOR MEMBERSHIP AMERICAN PURCHASING SOCIETY, INC. North Island Center, 8 E. Galena Blvd., Suite 203, Aurora, IL 60506 P.O. Box 256, Aurora, IL 60507 Telephone (630) 859-0250 FAX (630) 859-0270 Please print or type clearly. Mr.

Promotion Code: JAN12

Ms. Name

Title

Company

Division

Company Address City

State

Telephone (

)

FAX (

Zip

)

E-Mail

Join now and your benefits will include:

• Professional Purchasing every month

• Discounts on business books offered by the Society

• One FREE qualifying online seminar

• Discounts on seminars offered by the Society

• Free purchasing forms

• Eleven buyer checklists

• Access to the Members Only area of website

• Annual salary report & annual benchmarking report

• Consulting on specific purchasing issues

• Much, much more

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

Fees & Amount Enclosed ANNUAL DUES INDIVIDUAL

$194

ADD ONE-TIME MEMBERSHIP PROCESSING FEE

45 TOTAL DUE

$239

PAYMENT METHOD Check

>

MC

#

<

Visa

=

AMEX

Exp. Date

CCV Number

Card Holder Name (Please Print) Credit Card Billing Address:

Signature City

State

Zip

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

PROFESSIONAL PURCHASING 11

JANUARY 2012

Today's Tip

Praise Your Suppliers When Justified

G

iving a compliment to a supplier when it is warranted does not encourage a supplier to lessen performance. On the contrary, if done properly, it may produce a continuation of good results or even stimulate better performance. It is proper to tell a supplier when errors have been made or when actions are less than expected. But some buyers may be inclined to only criticize poor performance. The problem with this approach is that suppliers can become insensitive to such fault finding. They may then pay little attention to serious problems and deficiencies. Of course any compliments must be sincere and based on any benefits actually received. The amount of praise needs to be in proportion to the results obtained. For example, suppose a product is required in two days that would normally take two weeks to deliver. If a supplier salesperson or representative goes beyond what is reasonably expected to satisfy this critical need, then a thank you or other spoken statement of gratitude is appropriate, a written letter of appreciation may even be better. Don’t always take the opportunity of adding criticisms when giving praise. The criticisms are best left when reporting a particular failure or for a negotiation where you can itemize both the supplier’s good efforts as well as the failures; hopefully by quoting statistics that have been obtained from recorded instances of each. The amount and frequency of the praise should be based on the length of time doing business with the supplier, the total experience with the supplier, and the particular relationship with the supplier. For example, suppliers who have performed consistently well for years may not need much praise, whereas those who have had problems may need a little encouragement when they deliver products in an exceptional fashion. Giving occasional praise improves the buyer-seller relationship. Both criticisms and compliments are teaching tools. The criticisms let the supplier know what is wrong and what needs improvement. The compliments tell the supplier what is done well so similar behavior can be  continued.

“Always do right, this will gratify some people and astonish the rest.” Mark Twain (Samuel L. Clemens, 1835-1920) PROFESSIONAL PURCHASING 12

New Books of Interest

How to Control MRO and Other Purchasing Costs

O

perating supplies account for important and significant expenses of running any organization. A new book, Managing Indirect Spend by Joe Payne, William R. Dorn, Jr., and other contributors thoroughly addresses this subject. A few of the many covered topics are data collection and analysis, conducting research, negotiations, strategic sourcing, and supplier collaboration. Chapters are devoted to the purchase of office supplies, telephone services, and the use of carriers for small packages. This book is highly recommended for both purchasing managers and MRO buyers for all types of organizations. Anyone interested in hearing today’s business jargon will be rewarded by the use of such words or phrases as indirect spend, strategic sourcing, scorecarding suppliers, continuous improvement, and leveraging supplier feedback. The book is available from the American Purchasing Society for $85.50 for members or $95 for nonmembers, plus shipping and handling. Order online by clicking on  Books and Services at www.american-purchasing.com.

Live CPP Preparation Seminars A new two-day live seminar schedule now includes three locations for the program. January 24-25 - Tampa, Florida February 28-29 - San Antonio, Texas March 6-7 - Nashville, Tennessee The program is being given by Nahabit & Associates and the instructors are Mary L. Farrar and John T. Hazard. Both speakers have been certified by the American Purchasing Society. Successfully completing this live seminar is accepted by the Society in place of three of the required online courses. The fee for the two day seminar is $749. Call Nahabit & Associates at (512) 349-7977 for further information or to register. $50 discount for early registration. JANUARY 2012