7 Star Purchasing Report

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    P U R C H A S I N G & P R O C U R E M E N T

    C E N T E R

    S E V E N S TA R P U R C H A S I N G

    B E Y O N D T H E W O R L D C L A S S P A R A D I G M

    This Report is brought in co-operation with Cattan Service Group.

    Cattan

    Service Group, Inc.

    By Thomas L. Tanel, C.P.M., CTL, CCA, CISCM, President & CEO

    And Loran K. Boenig, CIPME, CO & Treasurer

    2009 Cattan Services Group, Inc.

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    INTRODUCTION

    This whitepaper describes Seven-Star Purchasing: Beyond the World Class Paradigm, encouraging

    purchasing and supply management professionals to move these organizational functions toward

    seven critical areas of excellence. Though we recognize that some organizations, including publicsector, governmental agencies, notforprofit institutions, and nongovernmental agencies, are

    bound by unique regulatory and legislative requirements, they nevertheless can profit by some of

    the approaches proposed here.

    BEYOND THE BUZZWORDS AND BACK TO THE BASICS

    We have observed a fairly disturbing trend: Many organizations are heavily engaged in

    reengineering or change management efforts that are focused on best practices, benchmarking,

    balanced scorecards, metrics and KPIs, etc. in order to become agile, customer-relationship-centered,

    world class entities. Additionally, many young professionals are learning purchasing based

    primarily on the use of their organizations resident computer systems and software rather than

    learning the basics of the purchase process itself. While these may be useful tools, they are no

    substitutes for the logical processes and foundational principles they execute. Without knowing

    how and why these tools work, the purchasing professional is reduced to wooden puppetry, unable

    to respond with the intelligence and self-directed agility needed to cope with todays challenging

    purchasing environment.

    Such fad-oriented tools and techniques may be based on good intentions, but they are undoubtedly

    of more benefit to the self-labeled gurus, evangelists, masters, and thought leaders who generate andpublicize them. We need to get beyond the buzzwords and back to the basics. In reality, the

    purchasing profession, which we call ours, is not a simplistic craft or a job, nor is it grounded on the

    latest techno-babble. It is a blend of both art and science. At its best, it is based on fundamental

    facts, application of the basics, and good practices rather than on elusive jargon, formulaic processes,

    or canned computer software magic. While never losing sight of its foundation, sound purchasing

    keeps a skeptical eye on the latest fad, hype, trend, or new practice before implementing it.

    In truth, the concepts of structuring supplier relationships, vendor managed inventory, conflict

    resolution, risk management, SOW and specification development, teamwork, total cost ofownership, and cost targeting are not new ideas. Rather than representing a new paradigm, they are

    tried-and-true areas of excellence that have long been driving forces in the purchasing and supply

    management field. Sometimes, its easy to get lost in the intricacies of aiming while losing sight of

    the target. In an attempt to move to a world class mode, many companies focus on the

    technicalities of achieving the paradigm in lieu of achieving the true goal: to master the basic processes

    that will produce excellence in the end result.

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    Dont be fooled. You may be tempted to make the kind of mistake being made by so many

    purchasing and supply management professionals todaythinking that the more traditional

    purchasing skills they have honed in the past are no longer needed. Ironically, forgetting the basics

    can make them more vulnerable to purchasing cut-backs, job attrition, or downsizing efforts in

    organizations that increasingly rely on automated systems to do their thinking for them. Even moreironically, it is not a computerized system or a fancy buzzword but the well-grounded purchasing

    professional who has the flexibility to be truly responsive to an ever-evolving supply management

    environment.

    So lets get back to rediscovering and perfecting the basics, what we call the Seven-Star Purchasing

    Areas of Excellence:

    SEVEN-STAR PURCHASING AREAS OF EXCELLENCE

    1. Think strategically about how to add value.

    2. Encourage training and development of purchasing personnel.

    3. Use cost-price analytics and techniques.

    4. Develop structured supplier relationships for your commodity/service group.

    5. Advance your communication and negotiation skills.

    6. Cultivate inbound freight control opportunities.

    7. Focus on enhancing the contracting process.

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    1. Think strategically about how to add value.

    This strategic area includes selling the importance of Purchasing, Procurement, and Supply

    Management to the C-level (CEO, COO, CFO) executives responsible for strategy involvement.

    If purchasing cannot prove it is adding value to the organization, the function my face

    outsourcing or elimination or downsizing. According to the Center for Advanced Purchasing

    Studies Report on CEOs/Presidents Perceptions of the Purchasing Function, the problems that

    purchasing has to deal with are these:

    1. Many firms feel their purchasing and procurement function is not very effective.

    2. In the eyes of many CEOs and presidents, purchasing is not a major contributor in most

    business decision making.

    It follows that there are two possible reasons why the purchasing and supply management

    profession today does not command higher, value-added respect by an organizations C-level

    management:

    3. Purchasing is actually not adding much value to the bottom line.

    4. The purchasing department is indeed adding value, but it is not communicating it in a

    manner readily understood by senior management.

    Without knowing what performance measures or metrics to use, how can you help C-level

    (CEO, COO, CFO) executives understand how the function is adding value? How do you know

    whether you are doing a good job if you dont know where you began versus where you are

    now? Therefore, every purchasing executive should have a set of key metrics or Key

    Performance Indicators (KPIs) for their organization.

    Each metric or KPI should have pre-established targets, which may be subject to change along

    with the performance evaluation needs of the department. Metric or KPI development is an

    ongoing process that should be improved continually. It depends heavily on the strategic

    information available on your computer system as well as data governance issues such as

    enterprise-wide data naming conventions and standards; data quality, availability, timeliness,

    latency; and spend management information. Without KPIs or other established metrics, you

    will find it challenging to document the data and demonstrate to upper management the

    improvements purchasing has madeand can maketo the organizations bottom line.

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    2. Encourage training and development of purchasing personnel.

    Purchasing executives must be a combination of talent scout and mentor, with a passion for

    seeking out raw talent and developing it into strong, qualified, well trained, functional

    personnel. Such development should cover core supply chain content knowledge and process

    skills as well as the interpersonal skills needed to operate in a cross-functional team

    environment.

    As the profession becomes more and more sophisticated and environmental change accelerates,

    the need for personal professional development becomes proportionally important. Training

    purchasing professionals, however, needs to be smart trainingthe type of development that

    focuses first on making sure professionals are comfortable with the basics before tackling the

    esoteric.

    There are many avenues for acquiring essential skills: via public seminars offered through trade

    associations, universities, or professional seminar providers; through customized corporate in-

    house training; and/or through focused topics presented in webinars or e-learning forums. Some

    of this training can even build toward certification in specific areas, which enhances your

    companys profile and makes the purchasing professional more indispensible to the

    organization.

    As a people-oriented function, purchasing professionals need development in these three

    primary skill sets:

    CCOORREE BBAASSIICC KKNNOOWWLLEEDDGGEE

    SSKKIILLLLSS

    PPRROOCCEESSSS KKNNOOWWLLEEDDGGEE

    SSKKIILLLLSS

    IINNTTEERRPPEERRSSOONNAALL

    KKNNOOWWLLEEDDGGEE SSKKIILLLLSS

    General business acumen Strategic planning Interpersonal relations

    Commodity or service

    marketplace/supply base

    Process redesign, policy and

    procedure development

    Coaching, counseling, and

    mentoring

    Solicitation process for

    quotes, bids, tenders, etc.

    SOW and specification

    origination

    Team development and

    management

    Logistic, inventory, and

    transportation options

    Total landed cost analysis

    and measurement

    Internal customer focus and

    facilitation

    Price and financial analysis Should cost analytics Problem solving

    Terms and conditions Contract writing Written communication

    Negotiations Conflict resolution Change advocacy

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    Successful purchasing organizations are increasingly aware that they must put an end to silo

    buying and begin to form and utilize cross-functional teams. In order to increase coordination,

    internal linkages, communication, resource utilization, focus, efficiency, creativity, and overall

    effectiveness, cross-functional teams must be trained and developed to assist in guiding the

    purchasing process.

    Finally, with supply management becoming more complex daily, its also important for

    professionals to go beyond the scope of their own functional areasto explore the complete

    supply chain and its interrelated components. Training provides a venue for such exploration.

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    3. Use cost-price analytics and techniques.

    This requires an understanding of the global economy, such as marketplace infrastructures,

    supply chain requirements, logistical channels, and total landed costs. Specifically, this area

    emphasizes the following factors:

    5. The market determines the selling price.

    6. Prices fluctuateboth up and down.

    7. Prices have a tendency to react faster to upward pressures than to downward pressures.

    8. Downward pressures include lack of customers, vigorous competition, and insufficient total

    demand.

    9. The buyer needs to understand the difference between price and cost.

    10. The knowledge of prices and costs is a powerful tool in negotiations when determining what

    something should cost.

    11. The buyer must ensure that the prices offered are fair, reasonable, and affordable.

    Purchasing management makes significant contributions to the control of vital organizationalresources, and the quality of these contributions greatly impacts the organizations financial

    condition. Therefore, there should be mutual objectives existing for both finance/accounting and

    purchasing/procurement, the goal of which is to optimize organizational operations by:

    12. Minimizing costs

    13. Maximizing profit or revenue

    14. Maximizing the value of the organization

    Purchasing and procurement can significantly affect the organizations ability to control costs

    and thereby improve profitabilitymuch more so than you might expect. For example, lets

    assume your organization makes a 5% net profit after taxes. To produce this level of

    profitability, lets compare what it would take for purchasing to produce such results versus the

    equivalent profitability generated through marketing or sales:

    SSAAVVIINNGGSS TTHHRROOUUGGHH PPUURRCCHHAASSIINNGG EEQQUUAALLSS SSAALLEESS OOFF::

    $10,000 $200,000

    $100,000 $2,000,000

    $1,000,000 $20,000,000

    Clearly, effective purchasing can have a profound effect on the bottom line. This often

    overlooked source of profitability is ripe for exploration by many companies who have long

    emphasized their sales as the primary vehicle for fiscal strength. With the current state of the

    economy and its negative ramifications in the marketplace, purchasings cost-price analytics

    should be employed with even more fervor than ever to eke out elusive profitability.

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    Alliances

    Partners

    Suppliers/Contractors

    Vendors

    4. Develop structured supplier relationships for your

    commodity/service group.

    Suppliers play a critical role in the success of anorganizations operations. However, different

    suppliers require different management techniques.

    A stratification of the supply base not only

    identifies the depth of your relationship with

    the supplier but assists purchasing and

    supply management in utilizing its

    resources effectively during its

    management of the supply base.

    Normally, most organizations willcategorize the supply base

    relationship into four tiers:

    These tiers will formally define the level of your relationship with the supplier, determine types

    and frequency of formal communications, and outline the overall program management

    structure. Here is a description of the 4 tier-based system:

    VVEENNDDOORRSS SSUUPPPPLLIIEERRSS OORRCCOONNTTRRAACCTTOORRSS

    PPAARRTTNNEERRSS AALLLLIIAANNCCEESS

    Little or no

    differentiation in

    products or services

    Focus on lowest

    price

    Transactional

    business relationship

    No contract term

    commitment As needed

    Spot-type

    purchases

    Superior performance

    on quality and delivery

    Corporately

    contracted but non-

    exclusive

    Specific, available,

    off-the-shelf products or

    standard type services

    Multi-product/serviceoffering ability

    Trust has to be earned

    Seeking longer term

    relationship; usually

    contracting for 6

    months to a year

    Mutually

    advantageous to both

    parties

    Bounded relationship

    Focused interaction

    and significant value-

    added

    Negotiated formula

    type pricing Established level of

    trust

    Sharing & exchange

    of abilities and ideas

    Multi-year contract in

    place of 1-3 years or

    evergreen contract

    Mutual dependence

    beyond supply &

    technology

    Unboundedopen

    relationship

    Broader business

    operating arena

    Total landed cost

    Unique commitments

    Joint long-term broad-

    based planning for the

    most complex of

    relationships

    Multi-year contract in

    place of 4-5+ years

    SUPPLY BASE RELATIONSHIP CRITERIA

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    To achieve excellence in this area effectively, most organizations have gone through a strategic

    sourcing program that allows them to focus on their most important structured supplier

    relationships. A good rule of thumb is that approximately 5-20% of your supplier base will

    account for 70-85% of your organizations purchase spend, which accounts for 10-25% of the

    materials and services that you procure on an annual basis.

    Strategic sourcing is itself a benchmark. It relates to getting the best products and services at the

    best value and lowest overall cost. It is designed to segment external spend and ensure that

    procurement resources are focused on the most important sourcing purchase categories. What

    sets strategic sourcing apart is its continuous attention to improving and re-evaluating the

    purchasing activities of a company, thus enabling organizations to adapt to changing market

    forces.

    The structuring of supplier relationships also depends on the sourcing group strategy chosen.

    The first step is to place your types of sourcing into strategic categories:

    15. Category 1Non-critical:

    Usually, indirect materials and services, standard off-the-shelf items, and MRO-type items

    16. Category 2Leverage:

    Usually, components, parts, and raw materials that enter into the composition of the end

    product

    17. Category 3Bottleneck:

    Usually, a one-time purchase of fixed assets, capital equipment, facilities, or technology

    18. Category 4Strategic:

    Usually, high spend-type services like security, travel, maintenance, transportation,

    engineering, etc.

    Remember that supply market characteristics and commodity/service importance can drive your

    procurement strategies as well as being a strategic component used to drive maximum

    organizational competitive advantage.

    The following model can help you visualize what type of impact these purchasing categories can

    have on your business in relation to market complexity and can assist you in procuring specific

    goods and services:

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    For example, in this Purchase Category Assessment Positioning Grid, you can see, based on each

    categorys business impact and each categorys supply market complexity, that Category 4

    Strategic should be your highest priority. Therefore, using the purchasing strategic relationships

    of alliance or partnering in conjunction with global sourcing, you will be most apt to achieve

    purchasing excellence for your organization. Applying this logic to the remainder of the grid

    should help you determine progressively those areas that demand your attention most.

    PURCHASE CATEGORY ASSESSMENT

    PPUURRCCHHAASSEE CCAATTEEGGOORRYY AASSSSEESSSSMMEENNTT PPOOSSIITTIIOONNIINNGG GGRRIIDD

    LEVERAGE

    CATEGORY 2

    Supplier consolidation

    Volume leveraging

    STRATEGIC

    CATEGORY 4

    Strategic relationship

    Global sourcing

    NON-CRITICAL

    CATEGORY 1

    Best price evaluation

    Volume leveraging

    BOTTLENECK

    CATEGORY 3

    Process improvement

    Process redesign

    HHIIGGHHCategorys Supply Market Complexity

    CategorysBusinessImpact

    HHIIGGHH

    LLOOWW

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    5. Advance your communication and negotiation skills.

    With so much procurement taking place on a global level, one needs to hone the ability to

    negotiate effectively, especially across international boundaries. In short, a cross-cultural

    negotiator has to be a good communicator. It may sound obvious, but communication impacts

    everyone and has a profound influence on how we act and respond. It is the way people create,

    send, process, and interpret information.

    Once negotiators establish cross cultural rapport, barriers disappear, trust grows, and an

    exchange of information follows. This means negotiators must be aware of:

    19. Their own culture

    20. The recipients culture

    21. The expectations surrounding the situation at hand

    To function successfully in a variegated worldreflecting multi-national, multi-ethnic, multi-

    environment, and multi-functional factorsyou should strive to be as comfortable doing business internationally with your global colleagues as you are at home. Even the most

    successful native negotiator will need to keep abreast of ever-evolving cultural influences as he

    inevitably ventures into the realm of foreign negotiations.

    The study of paralanguage (also known as paralinguistics), which focuses on the verbal aspect of

    communication, opens up the most direct avenue of understanding other cultures which may

    have been elusive to us in the past.

    Beyond paralanguage, studies also show that we are more comfortable with certain cultures and

    have an easier time establishing rapport there than we do in less familiar cultures. Thosecultures that are more difficult will require the negotiator to work harder to establish rapport so

    that barriers disappear, trust grows, and an exchange of information flows freely. It is therefore

    essential to become aware of key cultural variables that can affect the communication process,

    thereby influencing perceptions during the negotiation process.

    Negotiation can be considered a very specialized form of communication. More specifically, it is:

    22. A specialized process of communication called bargaining

    23. A mutual discussion and arrangement of the terms of a transaction or agreement

    24. The use of argumentation and persuasion to resolve issues in a business arrangement

    25. An attempt to find a win-win solution which will maximize the interest of both parties26. The application of facts and logic supported by the strengths of a bargaining position to

    achieve valid and necessary business objectives

    27. A give-and-get situation, where the purpose is to exchange a material, item, product, or

    service for monies or value in order to reach agreement

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    The successful negotiator deals most effectively when he/she has identified his/her strongest

    points and uses them strategically. Here is the essence of the negotiation process:

    THE NEGOTIATION PROCESS

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    6. Cultivate inbound freight control opportunities.

    Management of the inbound freight function is one of the most overlooked areas for significant

    cost reduction. Some estimates rate inbound freight costs as high as 35% of the total logistics

    cost for many companies. Remember that any savings in inbound freight costs can go directly to

    the bottom line. Most successful organizations who have paid attention to inbound freight view

    inbound freight management as controlling their inventory in transit.

    Since your inventory is, in many cases, your largest asset, the management of this asset is critical

    to your business success. The proper management of this function plays a key role in achieving

    supply management inventory, productivity, and service goals. Inbound freight involves the

    management and control of freight from domestic and offshore suppliers, consolidation of

    vendor shipments, direct (drop) shipments to customers, multiple shipping points, and

    warehouse cross dock opportunities for replenishment and backorder processing.

    Effectively controlling the inbound flow of materials/product to your organization is a

    complicated process, and it is becoming more complex as customer demands increase in terms of

    their expectations of service levels. As you begin to analyze your inbound freight practices, you

    should establish objectives that will help guide your decision making process. Objectives can be

    established in the following areas; among others:

    28. Reduced freight costs and improved bottom line

    29. Improvement in on-time deliveries

    30. Reduction in purchasing lead times

    31. Fewer handlings and less damage

    32. Lower inventory levels and reduced carrying costs33. Providing maximum visibility into the receiving process

    34. Improvement in warehouse productivity

    35. Increased customer service

    7. Focus on enhancing the contracting process.

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    Sometimes the most difficult part of the contracting process is knowing when you truly have a

    contract and when you do not. There are a number of quasi-contractual situations that have

    caught many purchasing professionals off guard and cost their organizations dearly.

    Conducting the contracting process across international boundaries can complicate matters

    further.

    For example, the UN Convention for International Sale of Goods (CISG) permits all types of

    evidence, including that developed prior to, during, and subsequent to the formation of the

    contract. Sometimes, international parties in a negotiation may be motivated to take your

    discussions as offers. Under the CISG, there is no provision for preventing assertions that

    contracts have been concluded solely on the basis of oral statements. The message to purchasers

    is to maintain more copious records of all negotiations with international suppliers in order to be

    able to come forth with complete evidence if called upon to interpret a contract under the CISG.

    To avoid committing yourself, especially in international settings, follow these guidelines:

    36. Document your conversations.

    37. Conclude conversations with, You, of course, recognize that we do not have a contract until

    .

    38. Send a follow-up letter, facsimile, or e-mail that sets forth the precise status of your

    negotiations.

    The concept and design stage for your internal customer involves the introduction and

    specification design of a product or a service project SOW, or it can involve an improvement or

    modification made to an existing product or ongoing service. It is during this stage when

    purchasing has the most impact on reducing costs.

    There are plenty of acronyms to go around in the contracting process, and choosing the right tool

    for the task at hand often proves perplexing to even seasoned purchasing professionals. RFX, for

    example, is one of the most common acronyms in strategic sourcing and procurement. It is a fill-

    in-the-blank type of reference. The RF represents Request For and the X is just a placeholder

    for I, P, B, and/or Q. In other words, RFX is a term that captures all references to RFI, RFP, RFQ,

    or RFB. The RFX process, for example, includes Request for Information (RFI), Invitation for Bid

    (IFB), Invitation for Tender (IFT), Request for Bid (RFB), Request for Quote or Quotation (RFQ),

    and Request for Proposal (RFP). Their purpose is to provide a solicitation platform for a

    purchaser to gather information from suppliers in various manners that will allow them to makeeducated decisions on whom to purchase from, which products or services to buy, and under

    what terms.

    The goal of an effective RFX process is to deliver the greatest value to your organization through

    a course of action that provides a true and solid means of obtaining information from your

    supplier. It is a means of assembling all the information required to arrive at a well-grounded

    conclusion. Without the ability to select and apply the correct RFX tool at the correct time, the

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    solicitation process can suffer timing setbacks, miscommunicated terms, and even the need for

    complete redefinitionall of which adversely affect the desired end result.

    Here is a snapshot way to determine what RFX formats to use in certain sourcing conditions:

    Though each type of RFX has a unique function and place in the solicitation process, it is

    amazing how few purchasing professionals know when and how to apply them accurately. So

    one of the first challenges to achieving excellence is learning how to make the most of these tools

    RFX FORMATS & SOURCING FACTORS CONDITIONS

    SOURCING FACTOR

    CONDITIONS

    RRFFII RRFFQQ RRFFBB//IIFFBB//IIFFTT RRFFPP

    DEFINABLE OR

    AVAILABLE

    SPECIFICATIONS OR

    REQUIREMENTS

    Known and

    unknown

    Known off-the-shelf

    goods and standard

    services

    Known goods and

    services

    Unknown detail,

    providing the what

    and why

    AVAILABILITY OFSUPPLIER CAPABILITY

    OR COMPETITIVE

    SUPPLIER BASE

    Known & unknown;depends on

    preferred or

    approved supplier

    lists

    Known, usuallyqualified supplier

    list

    Known & unknown,

    depends on

    preferred or

    approved supplier

    lists

    Known, if RFI hasbeen used

    USER OR INTERNAL

    CUSTOMER

    COLLABORATION

    Encouraged by early

    purchasing

    involvement

    Completed, off the

    shelf goods or

    standard type

    services

    Usually completed Required through

    early purchasing

    interaction

    LEVEL OF SUPPLIER

    COLLABORATION OR

    COMMERCIALLY

    ATTRACTIVE

    Encouraged by early

    supplier or vendorinvolvement

    Completed since it is

    commerciallyattractive

    Completed since it is

    commerciallyattractive

    Required through

    supplier and vendor

    value proposition

    analysis

    NEED FOR DETAILED

    PRICING

    INFORMATION

    No, but standard

    pricing acceptable

    Yes, based on trade

    custom/practice

    Yes, based on your

    bid/tender

    guidelines

    Yes or no, according

    to RFP format

    POTENTIAL SAVINGS

    OPPORTUNITIES

    Low potential Low potential, but

    possibly negotiable

    It depends if sealed

    bid or subject to

    BAFO

    Very high,

    depending on spend

    category

    INHERENT SOURCING

    RISK

    Low risk Low to medium risk Medium risk, more

    so if sole source

    High risk

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    in the appropriate context. Your sophisticated suppliers will know the difference, and so should

    you!

    In todays litigious and competitive business world it is also important for contracts to reflect

    accurately the rights and obligations of the parties. Increasingly, purchasing departments and

    purchasing professionals are being held responsible for assuring that appropriate language is

    included in contracts to ensure that the purchaser obtains the goods and services desired at a fair

    price and their interests are appropriately protected.

    Why have contracts?

    39. To obtain needed goods and services on schedule

    40. To create a meaningful relationship between parties

    Agreements define rights and obligations

    Breaches have legal consequences

    41. To create a lasting relationship between parties

    Contracts are documents that memorialize agreement about the relationship

    They enable separation of formation and performance

    42. Contracts are risk management tools

    And lets not forget that the primary purpose of a contract is to obtain goods or serviceson

    schedule. As such, the most constructive way to resolve contractual difficulties is through the

    negotiation process.

    To create sound contracts, though, purchasing personnel have to go beyond the negotiation

    process. They cannot rely on busy legal staff to review all their actions; rather, they must

    understand the laws and business environments relating to the contract and know when to seek

    additional legal advice.

    Purchasing provides the most value when it anticipates events and mitigates loss and risk.

    When negotiating contracts, the parties try to anticipate likely and unlikely situations that may

    arise and provide for their solutions. When this fails, parties often resort to formal dispute

    resolution methods such as litigation or arbitration. It is therefore critical for purchasing

    personnel to become actively involved in avoiding contractual problems and resolving legal and

    business disagreements early in the process, limiting or eliminating the subsequent need to resort

    to formal dispute resolution or claims in a court of law.

    Essentially, as a purchasing professional, your role in creating contracts is twofold:

    1. Make sure that what the internal customer or user wants is in the contract.

    2. Make sure that the contract contains the necessary clauses for the type of purchase at hand.

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    Contact Us for A Free 30 Mins Consultation at [email protected]

    WHY SEVEN-STAR PURCHASING MAKES SENSE FOR YOURIGHT NOW

    CPO Priorities , a report by Aberdeen Research Group, shows a marked acceleration in the

    significance of procurement's current role. Although it remains the extreme exception forprocurement to be considered the leading competency of an enterprise, 89% of the survey

    respondents indicated that the procurement function has grown more strategic over the past three

    years. Procurement's continued stride forward is also evidenced by the fact that nearly a fifth of all

    Chief Purchasing/Procurement Officers (CPOs) now report directly to the president or CEO of their

    organization. More than ever before, purchasing managers are seen as needing an increasing array

    of tools and best practices that can be leveraged to reduce costs and increase procurement

    effectiveness.

    According to another new study sponsored by KPMG International, Beyond Purchasing: Next Steps

    for the Procurement Profession , procurement management has taken on an increasingly strategic

    and important role at many companies, but in many respects still has a long way to go to reachmaximum performance. The report, based on surveys of nearly 600 company executives from across

    the globe, was conducted by the Economist Intelligence Unit. A full 74% of respondents consider

    purchasing/procurement performance to be either high or very high on the corporate priority

    listperhaps not surprising in a period of rapidly rising commodity-related costs, but also

    undoubtedly reflective of a growing appreciation for the role that purchasing/procurement can play

    in improving the supply chain and bottom line.

    Why is this important to you? As we move into a new era of great expectations for the purchasing

    and supply management executive, each of the Seven-Star Purchasing Areas of Excellence will

    represent areas that need to be handledand handled wellby tomorrow's purchasing and supply

    management functions. Keeping up with the fads simply wont keep you competitive: Perfecting

    the basics will.

    Please note that the Seven-Star Purchasing Areas of Excellence presented in this whitepaper are

    prescriptive rather than diagnostic. Our goal is to provide you with a catalyst for ongoing

    discussion about identifying your top improvement opportunities. With a plethora of distracting

    tips, techniques, and technologies competing for your attention, its all too easy to overlook the less

    glamorous fundamentals, those that may be considered pass but will nevertheless provide you

    with the surest foundation for achieving purchasing excellence and corporate profitability. Amidthe critical challenges, talent shortages, tightening constraints, cloudy strategies, and ever-increasing

    pace of todays purchasing environment, we urge you to focus first on what is vital. Acquiring skills

    relating to the Seven-Star Purchasing Areas of Excellenceand being able to use them with

    agilitywill ultimately yield the greatest possible ROI for you and your organization.

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    Contact Us for A Free 30 Mins Consultation at info@purchasing-procurement-center com

    ABOUT US

    PURCHASING & PROCUREMENT CENTER

    The Purchasing & Procurement Center provides comprehensive information for Purchasing &

    Procurement Professionals. Within its scope the Purchasing & Procurement Center ensures that you

    get all your needs covered through web based information, Reports & White Papers, and more

    importantly thru personal assignments of in-house trainings, consultations etc. You can contact us at

    [email protected] a Free 30 Minutes Consultation of your purchasing &

    procurement needs.

    CATTAN SERVICES GROUP, INC.

    CATTAN is a consulting and training firm specializing in Procurement & supply chainmanagement. Cattans cooperation with Purchasing & Procurement Center extends in jointly

    providing seminars, in-house trainings, consultations etc.

    Cattans success is based primarily on the high level functional expertise of our staff. We offer our

    clients value through a very unique combination of advanced degrees and certifications as well as

    line, staff, and consulting experience, thereby providing a unique blend of theoretical values mixed

    with firing line, hands-on experience to ensure bottom-line results. Simply put, we practice what

    we teach. To find out more Cattan, see www.cattan.com.

    mailto:[email protected]:[email protected]://www.cattan.com./http://www.cattan.com./http://www.cattan.com./mailto:[email protected]:[email protected]