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Presidents Message
We look forward to seeing everyone at our October Breakfast Meeting at the Greenbriar Hills Country Club. Registration begins at 7:00 A.M. followed by a breakfast buffet and the presentation at 8A.M. The topic of “Trust and Collaboration in the Supply Chain” should be interesting and timely.
“We make a living by what we do, but we make a life by what we give,” Winston Churchill I would bring to your attention the very real need to give back to the affiliate by volunteering. Not only is it vitally important to share the awesome wealth of knowledge and experience to others that our members have but volunteering on a committee or on the board enhances the life of the one who serves. If you can devote a little time to volunteer please contact myself or anyone on the board for further information. Thanks, Patrick
IN THIS ISSUE:
Where do we stand - S&OP Tomorrow’s Mexico is Worth Today’s Risk 9 key strategies of global logistics LTL Strategy: Edward Don 6 Ways to Think Like a Wise Person
Save the Date!
7:00 AM Tues, Oct. 22 Greenbriar Hills Country Club
Cindy Wessel Strategic Negotiation
Through
Strategic Supplier Relationship Management
And in every issue: Logistics Snap Shot – from Ernie Goss Upcoming Events New Members!
Supply Chain News: Where do we stand in S&OP?
By Dan Gilmore
Sales and Operations Planning - S&OP - one of the most interesting and at the same times curious topics in the supply chain today. Developed in the 1980s by consultant Oliver Wight (who was also instrumental in the creation of Manufacturing Resources Planning (MRP II), S&OP as most know started out as a technique to balance supply and demand, but has since evolved to be more about aligning business strategies and execution across the company. Getting deep organizational alignment on plans and execution isn't enough any more - companies must use S&OP to respond to continual changes in markets, conditions and opportunities faster than the other guy. It has more recently evolved to also focus on tying those aligned strategies and execution to the company's financial goals and budgets, and with that progression the concept of "Integrated Business Planning" (IBP) was born, though still a minority of companies use term versus traditional S&OP nomenclature. When I was on the true corporate side of things in the early to mid-1990s at divisions of NCR and Pitney Bowes, I never heard the term S&OP a single time, and there was no process even remotely similar to today's traditional S&OP monthly planning cycle. A lot has sure changed since then, with a clear preponderance of larger companies at least doing some form of S&OP, and many medium-sized firms as well. But how many of those companies are doing it well? That is the question many have been asking for the past 10 years. I would here draw some parallels with Lean. It is hard to find a manufacturing company (as well as many other types of firms) that doesn't use Lean/Lean Six Sigma in some form. But it is a real continuum from there, from companies just starting out at one end to the relatively few true pros (Toyota, Donaher, etc.), with the mass somewhere between those extremes: getting benefits from Lean for sure, but somehow failing to full reap the potential. That despite the fact that the Lean "playbook" is hardly a secret. It's out there for all to learn. Call Toyota, it will be happy to have you come in. Yet despite that clear path to Lean success, it takes many companies a very long time to get there, while many others simply hit a plateau. I think it is much the same with S&OP. Again, there are no end of playbooks out there for how S&OP should work, what the steps of the process are, etc. I might argue we almost have a glut of such insight. The path is clear, with many experts to show companies the way, but for whatever series of reasons, many companies struggle to reach high levels of S&OP performance. S&OP might be slightly different than Lean, however, in that "state of the art" concepts and processes I think are continuing to evolve more so than they are with Lean. That would include areas such the evolution to an IBP-type process, as well as more and more sophisticated analyses and scenario planning
exercises that S&OP leaders are adding to their standard processes. The basics remain the same, while the state of the art continues to advance, if that makes sense. All that as a backdrop to the release of a new benchmark report on the state of S&OP from our research arm, Chief Supply Chain Officer Insights, based in part of a survey of almost 400 respondents from supply chain, finance, and other disciplines. S&OP is as much studied as any topic, but I believe this report takes it further than any to date. The report is presented in a nice, easy to digest "infographic" style, full of graphs and concise commentary, no big pages of text to wade through. It can be downloaded here: Closing the Gaps in S&OP. There is also a resources page that goes along with the report, with SCDigest articles on S&OP, examples charts from the report, other white papers, etc,: Closing the Gaps in S&OP resources page. The results supported the initial hypothesis that there are important gaps between where companies are or believe they are with S&OP versus best current practices - and that closing those gaps will lead to significant improvements in operational and financial performance. A quick note of the research: I felt like I knew my way around S&OP well enough, but when an early version of the survey tool was reviewed by the experts at Oliver Wight consulting and Oracle, and when their significant improvements to the survey came back, I realized I had an awful lot to learn. Like many companies, I too had hit a plateau in my S&OP performance. So let's just quickly review some of the responses, starting with a basic question of where companies believe they are at in terms of S&OP effectiveness.
This came out not far from where I would have predicted, with the preponderance (43%) believing they are pretty good at S&OP, but could improve. Fair enough. But that leaves even more (about 47%) saying that their S&OP is below average or just "adequate," while only 10% think they are "excellent" or "world class."
And here is where the "gaps" come in. The graphic below summarizes how companies rate themselves on a number of S&OP capabilities, from basic to more advance.
As can be seen, small percentages of companies, for example, rated themselves as having "high performance" in any of these areas, down to just 8.9% who feel that way about their scenario planning capabilities. This may sound harsh, but in fact many companies who believe they are "good but could improve" may in fact just be "adequate" at S&OP versus where leaders are today. I am as always out of space, but of course there is much, much more here, and the report in effect lays out the type of capabilities and processes leaders are using, from which companies can develop an S&OP improvement roadmap. In the end, that will in part involve moving to a culture of "dynamic strategy management." Getting deep organizational alignment on plans and execution isn't enough any more - companies must use S&OP to respond to continual changes in markets, conditions and opportunities faster than the other guy. That's simply how you win today.
Why Tomorrow’s Mexico is Worth Today’s Risk
By Hector Estrada
When you hear outsource do you automatically assume someplace in Asia? What about when you hear nearshore? Does Mexico come to mind? Well for more and more companies, nearshoring their production to Mexico is a competitive option. It’s true that Mexico’s transportation regulations can be difficult to navigate and that high risk situations are common. From law enforcement officers who can legally open your cargo at any point during transit to fake checkpoints throughout the country, freight can be vulnerable to both theft and damage. With these factors to consider, you may wonder why anyone chooses to near shore their manufacturing to Mexico’s shores at all. Transporting cargo through Mexico has unexpected hazards, but depending on your industry and product, it may be worth a move from an Asian location. Shorter Transit Times. In today’s highly customized and consumer driven market, achieving speed to market is a competitive advantage. Manufacturing products in Mexico can reduce transit times by days or even weeks. Lower Total Landed Costs. Because Mexico is closer to the U.S., shippers who near shore find savings accrue in every area of the supply chain—from reduced transit and inventory costs to lower employee wages. Improved Communication. Due to the 11-12 hour time change, communicating with facilities in Asia can be difficult. Mexico is in the central time zone, which allows for agile communication across border lines during normal business hours and faster travel times for onsite visits. There are also other promising indicators to Mexico’s future, including 15 consecutive years of sustained economic growth, added security measures for improved safety, and the development of the Nuevo Esquema de Empresas Certificadas or New Scheme for Certified Companies (NEEC) program. These changes are already in progress, and this July, President Enrique Peña Nieto announced the creation of the Investment Program for Transportation and Communication. The program will invest around $100 billion to road, rail, port, and communication infrastructure improvements from 2013-2018.1 This ambitious project could be the game changing move that will kindle a resurgence in Mexico’s economy and future.
Nine key strategies and trends of global logistics
by Alex Borg
Logistics complexity – in the form of fragmented channels, increased product variations and consumer demand for customised solutions – has been increasing, according to a global study published recently by BVL International, a worldwide supply chain and logistics membership organisation. “Several trends identified in the study demonstrate that a number of major challenges lie ahead as the world becomes a more complex place in which to operate logistically,” said Robert Handfield, University Distinguished Professor of Supply Chain Management at the NC State University Poole College of Management. Prof. Handfield led the study for BVL in collaboration with Frank Straube and Andreas Wieland from the Technische Universität Berlin, and Hans-Christian Pfohl from the Technische Universität Darmstadt. The study included more than 60 interviews with global supply chain executives and survey responses from 1,757 executives, and identified the following nine key trends and strategies: 1. Customer expectations. Rising customer expectations was ranked by survey respondents as the most important trend, and meeting customer requirements was ranked as the number one logistics objective by more than 20 per cent of the respondents. In essence, the results indicate that logistics and supply chain management should primarily enable a company to satisfy its customers’ needs. However, as customers become ever more demanding and critical, traditional measures often fail when pursuing strategies to satisfy customers. 2. Networked economy. In the past, companies typically considered themselves to be independent players in the market and, at best, managed interfaces to direct suppliers and customers. That is no longer enough in today’s networked economies. Companies are often forced to collaborate with partners both vertically and horizontally in their extended supply chain network, and these partners expect them to integrate their processes and systems. That requires network thinking rather than company thinking. 3. Cost pressure. End customers continue to expect low costs. Although other requirements such as sustainability, social issues or risk-mitigation capabilities are increasingly discussed in the media, cost pressure seems to remain the ultimate criterion. The trend towards increased customer expectations has made it ever more difficult to reduce costs further. Logistics costs play an important role in reducing overall costs; their share of overall revenue is as low as four per cent and six per cent in the electronics and automotive industries, respectively. However, the survey shows that costs are on the rise, greater than eight per cent on average in manufacturing industries. A concerning result is that as many as 14 per cent of the respondents cannot estimate their logistics costs.
4. Globalization. As global footprints expand, logistics performance as measured by delivery reliability has deteriorated, due to increasing customer requirements, greater volatility and problems with infrastructure. Two out of three respondents stated that their company’s logistics capability is negatively influenced by poor transportation infrastructure, which is a problem particularly in emerging markets. In sum, globalization clearly amplifies other trends and leads to an increase in complexity, particularly in regions of growth such as Russia, Eastern Europe, India, and Africa. 5. Talent shortfalls. Across all regions and sectors, talent shortages in logistics are considered one of the most important challenges in the coming years. Shortages are seen at both the operational level as well as the planning and controlling function; about 70 per cent of the respondents experience a shortage of skilled labour. In the US and Europe, talent shortages are also a function of demographics. In emerging nations, strong competition from other fields like finance, strategy and IT contributes to the talent shortage in logistics. The most important strategies to cope with this talent shortage are training and qualification programmes and strategic cooperation with universities and research institutions. 6. Volatility. Market turbulence on the supply and demand side has increased over the past years. This was amplified by the economic and financial crisis, which demonstrated how fluctuations in one part of the world can build up to dramatic problems in other parts of the world. Survey participants said they believe volatility will continue to increase; more than 50 per cent consider it to be a very important trend in five years. 7. Sustainability pressure. This trend has emerged as a very serious topic. Already more than 55 per cent of the respondents stated that green issues are part of their logistics strategy. Corporate social responsibility has also emerged as a highlight for debate. However, a great deal of uncertainty remains in the deployment of these strategies, especially relative to measurement systems, evaluation and setting goals and strategies for logistics sustainability. 8. Increased risk and disruption. The majority of companies, irrespective of size, sector, country and position in the supply chain, consider the mitigation of internal and external risks essential. Strategies for managing risk around demand and planning are also considered important. Executives concur that strategic frameworks and tools are needed for engaging the entire network in the management of risk and disruptions. Solutions focused on improving transparency of tier two suppliers, inventory and demand impede mitigation and force companies into reactive strategies. Proactive strategies should include research and development, procurement, production and sales. 9. New technology. The majority of companies are recognising the growing need for investment in new technology, with about 60 per cent of the respondents planning to invest in big data analysis tools within the next five years. These tools seek to develop capabilities around the comprehensive handling and intelligent connection of data to increase planning and control outcomes. This new wave of decentralised automated network technologies is in its infancy. Predictions from a trends study completed eight years ago concerning the use of these technologies have not yet materialised.
Transportation Best Practices : LTL Strategy: Edward Don serves up savings
Foodservice equipment and supply company leverages its technology partnership to secure capacity, simplify rates, and cut 12 percent from its transportation spending. Here’s how they did it. Read What's Related
By John D. Schulz
Sometimes it’s possible to teach an old shipper new tricks. Just take the case of Chicago-based Edward Don & Co., a 92-year-old foodservice equipment and supply company whose corporate slogan is “Everything but the food.” Edward Don operates nationwide from its six full-service distribution centers (DCs) using its own fleet plus a network of national carriers. And although it stocks over 12,000 items in its DCs, the company sources 50,000 items from a network of over 3,000 suppliers. Often, the logistics operation will instruct suppliers to ship direct to the customer, bypassing their DCs to expedite delivery and to save handling and transportation costs. However, just few years ago Edward Don’s efficiency was being challenged by a series of logistics issues. Its competitive bid process was skewered, complex, and not always data driven. Jennifer Blattner, the company’s corporate traffic manager, recalls negotiating rates separately with a series of trucking partners, but was unsure that it was always securing the best rate. When there were problems, it was difficult to ascertain the cause because carriers rarely were held accountable. For shipments direct from vendor to customers, the process was even more uneven. Vendors were not always encouraged to seek out the most favorable trucking rates, and there was no single set of guidelines for securing trucking partners, making compliance haphazard. And when exceptions to normal delivery times occurred, there was very little recourse. The solution came in the form of a thorough self-examination. Blattner and the logistics team discovered that they had to change the way the company procured logistics. However, what began as an attempt to realize savings on its LTL freight bill actually expanded into a fully functional logistics solution. Back in 2007, Edward Don was already using TranzAct Technologies’ Freedom Logistics program to handle its bill-payment. But under Blattner’s direction and with the support of upper management, the company expanded its use of the tool in order to take full advantage of its LTL procurement and management capabilities. “We had been managing our own LTL carrier contracts forever,” recalls Blattner. “We didn’t ship a lot of outbound LTL to customers, most of our freight spend was inbound, but we do a lot of drop shipments. I thought we had a good handle on things, but we started to look at whole pie, not just a piece of it.” Like a lot of shippers and corporate traffic managers, Blattner decided to delve deeper into her company’s operations. She wanted to know exactly how carriers were hired, their strengths and weakness, and, perhaps most importantly, in which geographic areas special carriers offered the strongest chance of rate savings.
Her story, and how she and the company achieved sustainable freight spending efficiencies over the past six years, is a terrific example of how a shipper with complex distribution needs can partner with a third-party in an effort to put the latest technologies to work to achieve new savings in transport operations. Finding the solution In 2007, Blattner decided that it was time to take a top-to-bottom look at Edward Don’s logistics needs. She dove deeper into how much the company was spending on transportation, the various freight movements, as well as it half-dozen distribution centers and the carriers the company was using. Having already enlisted a third party for its freight payment services, Blattner and the company decided to let that partner take over management of its entire transportation network, which included outbound LTL to its customers and inbound LTL from manufacturers. “It was a full outbound and inbound program, and the promise was over 10 percent in savings,” says Blattner. “How could we pass this up?” The decision was made in early 2008 to alter the existing procurement strategy. Edward Don first chose to change the master tariff covering all its carriers, a move that involved collaboration with its carrier partners. All of its LTL carrier representatives were invited to Chicago for three days of meetings to explain the changes. “It was all or nothing,” recalls Blattner. The carriers’ national sales reps then met with their local sales team and representatives of Edward Don’s six DCs to get input from that critical level. “That was extremely important,” says Blattner. “We manage it from corporate level, but the day-to-day problems at handled at the DC level. We wanted those people to still own that part of the operation with their local reps.” Previously, Edward Don had been using about eight LTL carriers. Those incumbent carriers were invited to resubmit bids using the Freedom Logistics program. Blattner says that one of the principal benefits for the carriers was the ability to receive accurate and complete information up front. First, it analyzes the shipper’s own freight history to determine shipping lanes, volumes, and carriers employed. Then it develops a unique “freight profile” by examining the type of freight shipped. The program than models the potential savings for the shipper and develops a request for procurement (RFP) before choosing the most efficient mode and carrier. After conducting that review, the eight incumbent LTL carriers Edward Don had been using were retained after they submitted new bids. “They were retained, but on different levels,” says Blattner. Following the process, about three or four new LTL carriers were added to Edward Don’s network. From a systems operations standpoint, says Blattner, the change was pretty smooth. “But bringing on new carriers was a learning curve,” she admits. “We understand that change is hard for everyone, and here are nuances to our business. Our customers are restaurants, schools, hospitals and institutions, and they often require specialized delivery services, such as inside delivery and lift gates. It’s not standard freight.”
Operationally, carriers had to be told exactly what was expected—and vice versa. Blattner says that “getting to each other from operational standpoint” was the biggest hurdle. That was overcome through the diligence of Edward Don’s DC personnel becoming open to working with new carriers, and their new ways of conducting business and operations. According to Blattner, the savings were significant. Last year, company officials reported that they saved 7 percent on their LTL freight spend, while its savings over five years have been nearly 12 percent on a sustained basis. “I’m really not surprised by the results, but I’m definitely pleased by it,” says Blattner. Significant information advantage Besides creating efficiencies on the inbound and manufacturing end, Edward Don’s use of the Freedom Logistics program has offered other cash saving advantages. The company has put other tools furnished with the Freedom Logistics program to work to shorten its order-to-cash cycle as well as monitor both carrier and supplier performance-to-plan. The rating tool helped Edward Don determine the most efficient weight rating of shipments. It can also provide accurate transit times. The web-based rating/routing engine and optimizer identifies the preferred mode and carriers to use for a given shipment—both cost and service comparisons are available. The information can also be extended to other customers within, or external to, Edward Don’s operation. According to Blattner, the company doesn’t use the tools on a day-to-day basis for its everyday freight. Instead, it uses it for vendors when using drop shipments. And since supplier-direct shipment is a common occurrence, the company extended the use of the rating software to its suppliers so they could route direct shipments to customers and employ the company’s preferred carriers and enjoy their preferential rates. Instead of those vendors getting rates from just one carrier, it uses the new freight rating tool to get their own freight estimates. “Our accounting group then uses it to apply freight charges to vendor invoices,” says Blattner. Yet another tool in the program keeps a 16-month rolling history of freight invoices. Edward Don uses it as an analytical tool, pulling all pertinent information to analyze vendors to see if they’re using the most efficient carriers. “This simply allows us to work with vendors to use the most efficient carrier,” adds Blattner. In this delicate area, Blattner says she uses a “three strikes and you’re out” approach. If she discovers vendors are not using the carrier with the best freight rate, she gives them one strike. “If you do it three times in a row, three strikes and you’re out and you get penalized.” Edward Don also uses the program to perform auditing on the back end. Routine freight charges are paid automatically by TranzAct, “but if there is anything they can’t audit, we can see it on web site and approve it,” says Blattner. “It’s very timely information and we can take that and run our own analysis on the back end.”
For example, Edward Don can take its rating information and compare it with SAP information. For instance, vendors who don’t fulfill an entire purchase order with one shipment can be highlighted through use of the data analysis. “This particular feature has been extremely beneficial,” says Blattner. Vendors who had been shipping one item in a shipment were also asked to combine into larger volumes. This resulted in hard savings because Edward Don worked with so many different vendors. Blattner adds that having complete access to data was useful in other ways as well. She found that it was a complete analytical tool, not just a freight payment mechanism. Through her carrier partners, Blattner was able to analyze and improve Edward Don’s supply chain network on an ongoing basis, creating new efficiencies in her network—and new savings for the budget. The technology provider also supplies Edwad Don with a shipper-branded web-based inquiry for suppliers to receive routing instructions—as part of this process they’re supplied with the preferred routing minus the carriers’ cost. The company then uses TranzAct’s StarBrite reporting tool to audit performance-to-plan to ensure that their suppliers use the proper carriers. In the event they don’t comply with the routing instructions, the company will charge the suppliers back for the difference between the company’s rate and the actual movement rate. To accelerate its order-to-cash cycle, Edward Don extended use of the rating methodology to its accounting department. Accounting employs the tool on supplier-direct shipments to determine what the pre-paid shipment cost for the invoice should be, and that amount is added to the invoice. If Edward Don waited for the carrier freight bill to arrive before it produced the invoice for the product there would be a substantial delay. Now it has the ability to receive the freight bill, match it to the order, and transcribe the shipment costs before the invoice could be completed and sent. Employing these tools to pre-determine shipping costs allows Edward Don to invoice the customer immediately. According to Blattner, the reporting system has been particularly important to the company during the past several years when staff reductions occurred. “I think it makes my job easier, but it’s opened our eyes to some other things,” Blattner adds. “I used to make more work for myself, but now the work I’m doing is improving our company’s performance overall.”
6 Ways to Think Like a Wise Person
By Adam M. Grant
If I asked you to judge how smart someone is, you’d know where to start. But if you were going to assess how wise that person is, what qualities would you consider? Wisdom is the ability to make sound judgments and choices based on experience. It’s a virtue according to every great philosophical and religious tradition, from Aristotle to Confucius and Christianity to Judaism, Islam to Buddhism, and Taoism to Hinduism. According to the book From Smart to
Wise, wisdom distinguishes great leaders from the rest of the pack. So what does it take to cultivate wisdom? In an enlightening study led by psychologists Paul Baltes and Ursula Staudinger, a group of leading journalists nominated public figures who stood out as wise. The researchers narrowed the original list down to a core set of people who were widely viewed as possessing wisdom—an accomplished group of civic leaders, theologians, scientists, and cultural icons. They compared these wise people with a control group of professionals who were successful but not nominated as wise (including lawyers, doctors, teachers, scientists, and managers). Both groups answered questions that gave them a chance to demonstrate their wisdom. For example, what advice would they give to a widowed mother facing a choice between shutting down her business and supporting her son and grandchildren? How would they respond to a call from a severely depressed friend? A panel of experts evaluated their answers, and the results—along with several follow-up studies—reveal six insights about what differentiates wise people from the rest of us. 1. Don’t wait until you’re older and smarter. The people with the highest wisdom scores are just as likely to be 30 as 60. It turns out that the number of life experiences has little to do with the quality of those experiences. According to the data, between ages 25 to 75, the correlation between age and wisdom is zero. Wisdom emerges not from experience itself, but rather from reflecting thoughtfully on the lessons gained from experience. Further researchshows that intelligence only accounts for about 2% of the variance in wisdom. It’s possible to be quick on your feet and skilled in processing complex information without reaching sensible solutions to problems. Cultivating wisdom is a deliberate choice that people can make regardless of age and intelligence. Here’s how they do it. 2. See the world in shades of grey, not black and white. Imagine meeting a 15-year-old girl who plans to get married next week. What would you tell her? Here’s a response that scored low in wisdom: “A 15-year-old girl wants to get married? No, no way, marrying at age 15 would be utterly wrong. One has to tell the girl that marriage is not possible. (After further probing) It would be irresponsible to support such an idea. No, this is just a crazy idea.” In contrast, wise people embraced nuance and multiple perspectives. Consider one answer that received high marks for wisdom: “Well, on the surface, this seems like an easy problem. On average, marriage for 15-yearold girls is not a good thing. But there are situations where the average case does not fit. Perhaps in this instance, special
life circumstances are involved, such that the girl has a terminal illness. Or the girl has just lost her parents. And also, this girl may live in another culture or historical period. Perhaps she was raised with a value system different from ours. In addition, one has to think about adequate ways of talking with the girl and to consider her emotional state.” Wise people specialize in what strategy expert Roger Martin calls integrative thinking—"the capacity to hold two diametrically opposing ideas in their heads”—and reconcile them for the situation at hand. In the words of the philosopher Bertrand Russell, “fools and fanatics are always so certain of themselves, but wiser people so full of doubts.” 3. Balance self-interest and the common good. A second defining quality of wisdom is the ability to look beyond our personal desires. As psychologist Robert Sternberg puts it: “wisdom and egocentricity are incompatible… people who have gotten where they are by not taking other people's interests into account or even by actively thwarting the interests of others… would not be viewed as wise.” This doesn’t mean that wise people are self-sacrificing. In Give and Take, I report evidence that well-being and success both suffer if we’re too focused on others or on ourselves. It’s neither healthy nor productive to be extremely altruistic or extremely selfish. People who fail to secure their oxygen masks before assisting others end up running out of air, and those who pursue personal gains as the expense of others end up destroying their relationships and reputations. Wise people reject the assumption that the world is a win-lose, zero-sum place. They find ways to benefit others that also advance their own objectives. 4. Challenge the status quo. Wise people are willing to question rules. Instead of accepting things as they have always been, wisdom involves asking whether there’s a better path. InPractical Wisdom, psychologist Barry Schwartz and political scientist Kenneth Sharpe describe a Philadelphia man who was convicted of holding up a taxi driver with a gun. The sentencing guidelines called for two to five years in jail, but the facts of case didn’t fit: the man used a toy gun, it was his first offense, he had just lost his job, and he stole $50 to support his family. A wise judge gave him a shorter sentence and permission to hold a job outside of jail during the day so that he could take care of his family—and required him to repay the $50. 5. Aim to understand, rather than judge. By default, many of us operate like jurors, passing judgment on the actions of others so that we can sort them into categories of good and bad. Wise people resist this impulse, operating more like detectives whose goal is to explain other people’s behaviors. As psychologist Ellen Langer is fond of saying, “Behavior makes sense from the actors’ perspective, or else they wouldn’t do it.” Over time, this emphasis on understanding rather than evaluating yields an advantage in predicting others’ actions, enabling wise people to offer better advice to others and make better choices themselves. 6. Focus on purpose over pleasure. In one surprising study, Baltes’ team discovered that wise people weren’t any happier than their peers. They didn’t experience more positive emotions, perhaps because wisdom requires critical self-reflection and a long-term view. They recognized that just as today’s cloud can have a silver lining tomorrow, tomorrow’s silver lining can become next month’s suffering. However, there was a clear psychological benefit of wisdom: a stronger sense of purpose in life. From time to time, wisdom may involve putting what makes us happy on the back burner in our quest for meaning and significance.
From the Desk of Ernie Goss Ph.D., Mid-America Job Index Sinks for September: Affordable Care Act Having Large Negative Impact
September survey results at a glance: Regional index rises for the second straight month. Approximately 37.5 percent of businesses report negative employment impacts from the
Affordable Care Act (ACA). Approximately two-thirds of firms report no impact from federal spending sequestration. Inflationary pressures at the wholesale level rise again. Business confidence plunges.
The monthly Mid-America Business Conditions Index, a leading economic indicator for a nine-state region, rose for a second straight month. Surveys over the last several months point to positive, but slow growth for the final quarter of 2013. Overall index: The Business Conditions Index, which ranges between 0 and 100, increased to 54.8 from 53.8 in August. “Despite all of the domestic economic uncertainty, the Mid-America survey points to positive growth for the final quarter of 2013. Growth among durable goods manufacturers more than offset pullbacks among nondurable producers and value-added service firms. Businesses linked to agriculture are experiencing much slower growth stemming from weaker agriculture commodity prices. Both exports and farm income growth are down from earlier in the year,” said Ernie Goss, Ph.D., director of Creighton University’s Economic Forecasting Group and the Jack A. MacAllister Chair in Regional Economics. Employment: After moving below growth neutral for January, the region’s employment gauge has remained above 50.0 for the past eight months. The September reading declined to a tepid 51.8 from 52.8 in August. “Uncertainty surrounding the Affordable Care Act and the budget stalemates in Congress are causing firms to be much more cautious about hiring and have encouraged layoffs and cuts in hours worked. Nondurable goods manufacturers, especially those tied to agriculture and international markets are cutting employment and new hiring in the region,” said Goss. Wholesale Prices: The prices-paid index, which tracks the cost of purchased raw materials and supplies, increased for a second straight month. The wholesale inflation gauge climbed to 64.8 from 61.8 in August. "For the last two months we have recorded fairly sizable jumps in our inflation gauge. Given that the Federal Reserve continues its $85 billion monthly bond buying stimulus program, the risk of elevated inflation is climbing but still remains well below levels that should cause concern,” said Goss. Confidence: Looking six months ahead, economic optimism, as captured by the September business confidence index, fell to 51.8 from Augusts 53.9. “Uncertainty surrounding implementation of health
care reform and the Congressional/Presidential budget impasse pushed supply managers’ economic outlook lower for the month,” said Goss. This month supply managers were asked how the Affordable Care Act (ACA) was affecting hiring in their company. More than one-fourth, or 26.3 percent, reported that the ACA was making their firm more reluctant to hire new workers. Overall 37.5 percent of supply managers indicated that their firms either cut hiring or reduced hours worked as a result of the ACA. Approximately, 62.5 percent reported no hiring or staffing impacts for their firm. For each of the last seven months, supply managers were asked how the federal spending sequestration was affecting their company. “In the September survey, approximately two-thirds of supply managers indicated that the cuts have had no impact to date. Slightly less than one-third reported only modest impacts from sequestration. Only 1 percent of businesses reported significant impacts. According to surveys over the last seven months, the impacts have been modest and have not grown,” said Goss. Inventories: After declining below growth neutral for August, supply managers reported upturns in the level of raw materials and supplies to support future production. The September inventory index increased to 55.7 from 49.4 in August. “A large portion of the increase in the overall index for September was the result of an increase in inventory levels. We will have to wait and see if this upturn in inventories was planned or unplanned,” said Goss. Trade: The new export orders index fell sharply to 49.0 from 56.2 in August. The import index increased slightly to 50.8 from August’s 49.3. “Slow regional growth weighed on purchases from abroad for the month. The weakness in the export reading was in line with what we have been tracking for several months, except for the weaker exports in August,” said Goss. Other components: Other components of the September Business Conditions Index were new orders at 53.7, down from 56.8 in August; production or sales at 59.9, down from last month’s 60.1; and delivery lead time at 53.7, up from 50.0 in August. The Creighton Economic Forecasting Group has conducted the monthly survey of supply managers in nine states since 1994 to produce leading economic indicators of the Mid-America economy. States included in the survey are Arkansas, Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota, Oklahoma and South Dakota. The forecasting group’s overall index, referred to as the Business Conditions Index, ranges between 0 and 100. An index greater than 50 indicates an expansionary economy over the course of the next three to six months. The Business Conditions Index is a mathematical average of indices for new orders, production or sales, employment, inventories and delivery lead time. This is the same methodology used by the National Institute for Supply Management, formerly the Purchasing Management Association, since 1931.
And Don’t Forget!
7:00 AM, Tues, Oct. 22 2013
Cindy Wessel Greenbriar Country Club
Strategic Negotiation Through
Strategic Supplier Relationship Management
Does negotiation give you the shivers, send your blood pressure to the roof or do you do the happy dance whenever you go into a negotiation?
If negotiation is part art and science, which part is science? Art? What is the single most important outcome of Strategic Supplier Relationship Management
(SSRM) for your company? How many suppliers have you targeted for your SSRM? The contract is finally signed after a months of negotiation. Do you go out and celebrate
that negotiations are finally over?
Cindy Wessel has over 18 years experience in Supply Chain Management and Strategic Sourcing having worked with several Fortune 500 companies. She headed corporate-wide global initiatives in Supply Chain process improvement and cost reduction and served as lead corporate negotiator for domestic and international business. Currently, Cindy is an adjunct professor at Washington University, Lindenwood University, and Kaplan University offering courses in Supply Chain Management, Project Management, Principles of Management, and Organizational Behavior. See you there!
For directions to Greenbriar Country Club, visit www.ismstlouis.org
You earn 1 hour for general meeting And you will get hours for participation on the board
AND, for a sneak peek into 2013 / 2014 scheduled events, visit our website!
www.ismstlouis.org
14th Annual ISM Indirect/Services Conference
December 5-6, 2013 Phoenix, AZ
Please join us and many other professionals in attending one of ISM's highest rated conferences
the 14th Annual ISM Indirect/Services Conference!
This year's event is happening on December 5-6, 2013 in Phoenix, Arizona. If you or anyone in your organization is involved in the procurement of indirect spend and services, this is the conference to attend!
Please take a look at the conference brochure that details the strong content that will be delivered. There will be ample time to learn as well as share insights with others that are attending. Not only will there be industry leaders attending, but there will also be a select group of suppliers available to demonstrate solutions for various spend categories. This diverse group of individuals, all focused on indirect/services procurement, provides a great forum for each attendee to leave the conference with ideas that will have an immediate impact in their workplace.
Be one of those industry leaders and register today!
We hope to see you in Phoenix!
ISM UPMG (Utility Purchasing Management Group Forum) Conference
September 15-17, 2013 Austin, TX
67th Annual Southwest Supply Management Conference (SWSMC)
October 2-4, 2013 Albuquerque, NM
ISM Supply Chain Diversity Summits 11th Annual Black Executive Supply Management Summit 6th Annual Women Executive Supply Management Summit 7th Annual Hispanic and Latino Executive Supply Management Summit
February 26 - 28, 2014 San Francisco, California
Sponsorship/Exhibit Opportunities Available
WELCOME OUR NEW MEMBERS:
Andy Heers, Mastercard Worldwide
Clark Singleton
Donald C Stolberg, UMSL
Heather Grewe, Mastercard
Chrystal Brown, Ameren Services
Ryan M Heard, CPSM, Mallinckrodt Pharmaceuticals
Get involved! For Volunteer Opportunities Contact our BOARD!
In many survey's the membership have spoken of how much they like more pre-dinner sessions. Volunteering to teach a session helps to accomplish this. When you volunteer your time to teach a class or facilitate a workshop, you get a chance to polish your public speaking skills, and you get a nice credit to add to your résumé. Volunteering allows you to meet people who have similar interests. You may make new friends of the same professional background or a different one all together. Or you may make contacts that become important in the future. There are a variety of opportunities to get involved in our affiliate. Sharing your knowledge of purchasing or logistics topics is of vital importance to grow others in our field and the professional and personal rewards are abundant. If you have a passion for any aspect of purchasing please consider sharing that passion with the other members of your profession.
BOARD OF DIRECTORS
Patrick Williamson C.P.M. President Term: 2013-14 [email protected] Melissa L. Orlando, CPSM, C.P.M. President Elect Term: 2013-14 [email protected] Dawn Fadler CPSM Vice President Term: 2013-14 [email protected] Max Merz, CPSM, C.P.M. Director of Finance Term: 2012 -14 [email protected]
AFFILIATE DIRECTORS AND ADVISORS
Christine Wojak Director of Marketing Term: 2012 -14 [email protected] Patricia Greathouse Director of Membership Term: 2012 -14 [email protected] Paula J. Matousek Director of Professional Development Term: 2011 - 14 [email protected] Kimberly R. Butts, CPSM, C.P.M. Affiliate Advisor [email protected] Larry Jackson, CPSM, C.P.M. Immediate Past President [email protected]
