October 2016 Volume 6, Issue 10

Mayor Declares: Make Your Mark on Procurement History

Certification & Training Spotlight

A Disturbing Procurement Statistic

Event Spotlight: 2016 NLPA Conference

Gas Trickles Down

Building a Competitive Advantage

Internal RFP Process Management

Your RFP Format: Why It Matters

Price and Commodity Indices

Puridiom Becomes Part of BravoSolution

9-10
11

Cover Image Source: images.trvl-media.com

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Fax : 1-412-294-1992
Mail your correspondence to Next Level Purchasing, P.O. Box 1360,
Moon Township, PA 15108, USA
Leading-Edge Supply Management is published monthly by Next Level Purchasing Association as a free
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11

All rights reserved. 2016 Next Level Purchasing, Inc.

From The Purchasing Certification Blog

Pittsburgh Mayor Declares:

Make Your Mark on Procurement History Day
by Megan Nicol, SPSM, SPSM2

The 2016 NLPA Conference is already beginning to make its mark on procurement history
and it doesnt even kick-off until next month!
We received a pretty amazing envelope in the mail recently that we had to share. The Mayor of the city of Pittsburgh heard
about the 2016 NLPA Conference. He was so impressed that he made an official proclamation: October 24, 2016 will
officially be known as the Make Your Mark on Procurement History Day in the city of Pittsburgh.
How amazing is that! Our attendees will not only be learning how to make procurement history throughout their careers, but
they will officially be a part of procurement history on October 24th!
There is still time to join your procurement peers for this historic
event!
We have a great group of attendees already registered for the event
from organizations including:

Ansys
Bayer Healthcare
Bobcat
CompSource Mutual Insurance
Crane & Co
Florida State University
Goodwill Industries
HSN
IEWC Global Solutions
Nationwide Childrens Hospital
Olympus
RaceTrac Petroleum
Rolls-Royce
Seattle Genetics
Select Medical
and many more!

This is one event that you absolutely cannot miss if youre looking for an opportunity to learn what works and what doesnt
from some of the brightest minds in procurement today. Were bringing together some of the best procurement practitioners
and thought leaders for 2 dynamic days of procurement insights and solutions. And, weve recently added a general session
on procurement negotiation to amp up the conference even more!
As a result, the conference is booking up quickly! Were down to less than 25 spots remaining and the hotel space is even
more limited. If youre used to waiting until the last minute to register, youre going to risk missing out. A sell-out is expected;
if you dont want to be left out you need to secure your place as soon as possible!
To register or learn more, visit: http://www.nextlevelpurchasing.com/procurement-conference
Page 2 Volume 6, Issue 9

Certification and
Training Spotlight
September 2016 Recipients of the SPSM Certification
Haitham A., Head of Procurement, Dammam, Saudi Arabia

Kimberly L., Analyst, Pennsylvania, United States

David A., Purchasing Manager, Vermont, United States

William L., Manager, Purchasing, Virginia, United States

John B., Purchasing Manager, Missouri, United States

Cami M., Procurement Supervisor, Colorado, United States

Marcia C., Customs Agent, Kingston, Jamaica

Stephanie N., Procurement Category Manager, Douala, Cameroon

Subir D., Management Trainee, Hyderabad, India

Debra N., Contract Specialist, Louisiana, United States

Byron D., Procurement Professional, Texas, United States

Florina P., Project Manager, Cluj-Napoca, Romania

Leslie E., Senior Buyer, California, United States

Jessica R., Senior Business Professional, New York, United States

Becky H., Buyer, California, United States

Linda R., Buyer, Pennsylvania, United States

Annie J., Buyer I, California, United States

Cristina T., Sourcing Buyer, Bucharest , Romania

Annette K., Procurement Professional, Pennsylvania, United States

David U., VP Corporate Services, Florida, United States

From The Purchasing Certification Blog

A Disturbing Procurement Statistic

by Charles Dominick, SPSM, SPSM2, SPSM3
In being interviewed for a business publication, I was asked the
question: What percentage of procurement professionals receive
negotiation training?
Now, without having access to the personal training records of the
millions of procurement professionals on the planet, I had to make
some assumptions.
But, Im the type of guy that doesnt like off-the-top-of-my-head
answers, especially when it involves numbers. So, I took a look at
summaries of the Next Level Purchasing Associations records over
the past 16 years. I compared the consumption of our negotiation
training versus our training on other topics. I took into account our
market share.
I consider what I observe in procurement
departments outside of NLPA business. In other words, I really put
some thought and research into my answer.
That procurement statistic is that only 55-65% of procurement professionals have received negotiation training. Now, that is
not negotiation training this year. That is negotiation training ever.
Continued on Page 13
October 2016 Page 3

2016 NLPA Conference

If you want to Make Your Mark on Procurement History, time is running out!
The deadline to register for the 2016 NLPA Conference is October 10 at Noon Eastern US time.
If you havent already researched the NLPA Conference, this years event is packed with value for procurement
professionals who want to innovate! It is being held on October 24-25, 2016 at the Heinz History Center in Pittsburgh,
Pennsylvania. Some of the awesome educational sessions include:

War & Peace: Effective Negotiations Must Consider Both

Make Procurement Great Again: How To Win The

Campaign For C-Level Support

One Giant Leap For Procurement-Kind: Future

Breakthroughs in Procurement Technology

And many, many more!

Please understand one thing: there are no walk-in or last minute registrations to NLPA events. Unlike other procurement
conferences at old-school, sterile, boring venues, we hold our conferences at unique facilities that fit with our trademark
themes. So, space is limited. We dont squeeze attendees in like sardines in a can. We create an environment that is
enjoyable, comfortable, personal, and ripe for truly meaningful networking. In order to support this fresh and exciting style,
we limit the number of attendees and cut off registration in advance of the event.

So, be decisive and join us at the 2016 NLPA Conference!

To learn more or to register, please visit http://www.nextlevelpurchasing.com/procurement-conference.
But do so quickly the October 10 deadline is right around the corner!

Register Now
Less than 25 Seats Remain for this historic event!
Register Now at http://www.nextlevelpurchasing.com/procurement-conference.
A limited number of rooms are still available at The Westin Convention Center hotel, 1000 Penn Avenue, Pittsburgh PA
15222 (A five-minute walk from the Conference Venue). Click Here for online hotel reservations.

Page 4 Volume 6, Issue 10

From The Purchasing Certification Blog

Gas Trickles Down

Special thanks to Source One Management Services for this guest post
by Maribeth Klinger
Have you stopped by the pump to fuel up your car recently? If so, your wallet may not have felt that much lighter afterwards.
Do you remember filling your gas tank back in 2008? Paying at the pump then probably felt similar to wringing your wallet dry
as gas prices were at a peak.
Much to the joy of many American consumers right now, gas prices are continuing to slide downward. Gas prices are at their
lowest since April, with the national average for a gallon of regular unleaded gas going for $2.14, according to AAA. To put this
in perspective, AAA reports a year ago gas was $2.69 a gallon on average for regular unleaded fuel. In 2008, as some
consumers will remember, gas hit a high of $4.11 a gallon
for regular unleaded fuel. Even with the national average
currently at $2.14 a gallon, the most popular price
throughout the nation currently is $1.99 a gallon for
regular unleaded fuel.
In the face of cheap gas prices, consumers are soaking up
the savings and hitting the road. This year has seen a
record number of road trips and this summer season is no
exception. Consumers are enjoying the lowest seasonal
prices in 12 years. Less than 1% of gas stations in the
U.S. are selling gas at $3 a gallon, which means
affordable gas is in ample supply almost anywhere a road
trip could go.
Regionally, gas prices can fluctuate, even if the overall
national average remains fairly steady. This is something
travelers could encounter, depending on circumstances
and how far they travel. Problems at a refinery, cuts to production at the local refinery, or even stronger demand than was
planned for are all reasons gas prices could go up within a given region. Additionally, for most areas, the summer season
comes with an increased possibility of weather threats that are not as typical at other times of the year. Weather can impact
gas prices if storms cause conditions that lead to disruption in either the distribution or production or both of gas.
In addition to the joyful savings consumers are experiencing on the roads, lower gas prices also translate to other savings as
well. Airline prices tend to fluctuate based on fuel prices, transportation costs of goods fluctuate and trickle down to the prices
of goods encouraging consumer spending. The transportation sector benefits as well when consumer spending increases. The
more consumers buy, the more goods need to be transported between locations, creating an uptick in business and a positive
cycle of both spending and saving. Additionally, as the fuel prices remain low, this can create larger margins, making business
more lucrative for logistics and freight companies. In general, this creates a win-win situation for everyone in the
transportation sector.
Low gas prices saved consumers $115 billion last year according to AAA.
When savings go bad There is a point when low oil prices are not a good thing. Though consumers do not see the effects
right away, in the long term, this good can go bad. From an economic standpoint, lower prices boost the GDP and
consumer spending. This leads to lower inflation. On the surface, lower inflation sounds really wonderful to most people. The
catch is when inflation goes too low and the reverse happensprices begin to drop and deflation happens. Deflation causes
falling prices across the board and initially, this seems really wonderful to consumers. Unfortunately, as prices fall, so do
profits at companies producing the goods, and then a whole domino effect occurs that is bad for the economy and for the
consumer. The trick is to keep inflationary forces stable and low. Low enough to not hurt consumers overall but high enough
to reduce the risk of deflation or falling prices from happening. This is why, although consumers are enjoying low gas prices
due to low oil prices, economists are carefully watching.
Continued on Page 11
October 2016 Page 5

From The Purchasing Certification Blog

Building a Competitive Advantage through a

Business Continuity Plan
Special thanks to Source One Management Services for this guest post
by Jennifer Engel

Building and maintaining a competitive advantage in todays complex supply chain environment can be a never-ending
endeavor. As customer needs and economic conditions evolve, what once put your company at the forefront of the industry
may become your downfall. Producing a product or providing a service that is superior in quality, the most cost competitive,
and comes with best-in-class customer support is certainly the goal, however in reality, choosing two of the three and aligning
with customers who are seeking that mix is the standard in many markets today.

While external factors outside of your immediate control can drive cost and quality depending on the availability of raw
materials, taking ownership of internal operations can provide an advantageous perception of your companys overall
competitiveness through the promotion of supply chain resiliency. This can be done by designing, implementing, and most
importantly being transparent in sharing a Business Continuity Management (BCM) plan with all current and potential
customers.
Undergoing such an initiative may seem laborious,
however the process can drive advantages at every
stage, the first of which, is proving there is a need. This
is best executed by performing a comprehensive audit of
all critical incidents of both large and small scale. The
costs incurred to alleviate these incidents are hard
examples of the impact a lack of a BCM plan is having
on your bottom line. While further value will certainly be
driven upon execution, the immediate financial incentive
to resolve these issues should be enough to keep senior
management engaged. The specific details of a recovery
and continuity plan will vary depending on the product or
service being provided, however there are general
stipulations that will make a plan not only critical to the
continued success of the company, but also attractive to
a current or potential customer.
A first best practice is to ensure that you are taking an
enterprise approach to your continuity plan. This will
centralize all stakeholders needed to respond to a
particular crisis, and gives each customer piece of mind
regardless of geography. It also eliminates duplicate
efforts as all instruction comes from a single source of
information throughout the response period. Finally, this
approach allows for the revision of the plan based on
lessons-learned from past responses leading to constant
improvement.
A second best practice is to ensure that your plan covers and reports on all fathomable losses. This includes a loss of facility
due to a fire or natural disaster, an interruption in your own supply chain due to external or internal forces, a loss of personnel,
a change of government policy, or any other industry specific risk. Expected recovery times and where applicable, historic
recovery times, should be clearly communicated for each associated risk.
Next, address how interruptions will affect a customer specifically, especially for large scale customers. This should include
setting aside a clear communication plan between yourself and a designated point of contact at each necessary location to
Continued on Page 12
Page 6 Volume 6, Issue 10

Have You Ever Wondered These Things

About RFP Process Management?

Question From NLPA Member: How do you get stakeholders to cooperate with RFP process best practices?
First, you must continually work to create a culture where the procurement department is invited to engage with the
stakeholder as close to the time when a need for purchased goods or services is realized. Second, you must communicate
why cooperation is important and, specifically, how management and stakeholders can cooperate.
Either when a procurement department is first engaged in an isolated procurement or when procurement decides to bring
about an enterprise-wide change, it is helpful to communicate procurements new expectations in writing. If youre SPSMCertified or enrolled in the SPSM Certification Program, a Sample RFP Preparation Letter is one of the many free tools you
have access to in the NLPA Library. Learn more at http://www.nextlevelpurchasing.com/procurement-templates.
Question From NLPA Member: We often put in a milestone on our timeline of when we will announce the selected vendor and
finish the contract after. How do you balance announcing a winner but then keeping competition after they are announced
while finishing the contract?
I recommend never announcing the selected supplier until the ink is dry on the contract or your order accepted. Only bad
things can happen by announcing a supplier selection before it is official, such as:

The supplier learning that it is the selected supplier and, as a result, having no incentive to capitulate to any requests for
concessions you make in negotiations between the announcement and the order or contract being awarded.

Finding out that the selected supplier isnt going to work out after all and having to select another supplier, thereby
embarrassing the procurement department to all who were told that the first supplier was going to be selected.
Internal RFP Process Management by Charles Dominick, SPSM, SPSM2, SPSM3 was originally published in Edition 358 of PurchTips.

October 2016 Page 7

NLPA Member Question: Are there any limits for the RFP size or it will depend on the scope of work?
The ideal format of an RFP will vary based upon the situation. You should have two goals for your RFP: (1) maximizing
competition, and (2) getting your best fit suppliers to respond. A poorly formatted RFP can cause you to fall short of those
two goals by failing to get enough of the right suppliers to respond. An RFP that is too long has the scare factor that scares
suppliers away from investing the time to respond.
Therefore, you should focus on making your RFPs as concise as practical. This can be done by NOT including:

Requests for information that is not truly needed

Redundant or conflicting verbiage
Requests for information that is only needed from short listed suppliers and can be requested later

For comparison, the RFP template available in the NLPA Library has four pages plus a cover page and two exhibits.
NLPA Member Question: You have said that the scare factor not only applies to RFPs, but to purchase orders, and supplier
registration forms, too. What is the scare factor of a PO?

Ive been seeing a lot of purchase orders containing way too many terms and conditions. I have seen purchase orders
exceed a dozen pages, even though they were orders for the simplest products and services. This can cause delayed
delivery of products or performance of services as suppliers will often seek legal review of the terms and conditions and
negotiate terms with which they are unwilling to comply. In addition, suppliers can decline to do business with you.
Extended terms and conditions should only be used when appropriate and not in every situation.

Your RFP Format: Why it Matters by Charles Dominick, SPSM, SPSM2, SPSM3 was originally published in Editions 359 of PurchTips.
Page 8 Volume 6, Issue 10

Price and Commodity Indices

Producers Price Index
The Producers Price Index (PPI) measures the change in the
wholesale selling prices that producers charge for goods and
services. It is typical for producers to offset rising prices by
passing on the higher costs to consumers in the form of
higher retail prices, therefore the PPI is often an early
indicator of inflation. Inflation is a decline in the purchasing
power of a currency, for example the USD, where each dollar
buys fewer goods and services than it could previously.
Interpreting the PPI: When the PPI rises, this signals an
increase in inflationary pressures. When the PPI falls, this
signals a decline of prices and may suggest an economic
slowdown.

Consumer Price Index

The Consumer Price Index (CPI) is used as a measure of
inflation. To calculate the CPI, first a fixed basket of goods
is determined and a baseline of prices is calculated. Then
changes in price are calculated for each item, averaged and
weighted according to the importance of the item.
Interpreting the CPI: A higher CPI indicates that the total price
of the basket has increased and it now costs more to buy
that same basket of goods (inflation). A lower CPI indicates
that the total price has declined and now it costs less to buy
that same basket of goods (deflation).

Each month well include an updated graph of the PPI and

CPI as well as the PPI graph of an individual commodity. This
month we had a request to include Advertising Space Sales
in Newspapers, Print Only.
Send your request for which commodities you would like to
see featured in this section in upcoming issues to:
commodityppi@nextlevelpurchasing.com.
To learn more about these and other indices, we recommend
reviewing the Inflation & Prices section of the Bureau of
Labor Statistics (US) website at: www.bls.gov or by
researching indices calculated in your specific country.

October 2016 Page 9

Price and Commodity Indices

(Continued from page 9)

Our Raw Steels MMI fell 7% to 53 points last month. This is the first time we have seen a significant decline in steel prices this

year. August brought some interesting developments for the steel industry.

US prices Down, While Chinas Prices Rise

By the end of the first half, domestic hot-rolled coil prices had risen 70% while prices in China were up by just 30%. The main
driver of this price gap was trade cases, which made U.S. steel imports plunge this year, inflating prices domestically. But, the
arbitrage between U.S. and international prices might be already narrowing. While U.S. prices fell in August, Chinese prices
rose. What explains this divergence in August? Perhaps, imports are starting to pick up?

Rising Imports
The

arbitrage

between

domestic

and

international prices remains strong enough to

justify shipping to the U.S. and enough holes
exist in the anti-dumping duties to allow
material to reach U.S. shores. Since early this
year, U.S. steel imports have fallen sharply each
month. However, the rate of decline last month
was the lowest since April 2015. July steel
imports rose 12% from Junes figures, reaching
a one-year high. Rising imports should help
narrow

the

gap

between

domestic

and

international prices going forward.

CRC-HRC Spread Rises to Record Levels

In July, we saw a sharp increase in flat steel imports, especially HRC imports, which rose 48% compared to June. Meanwhile

cold-rolled coil imports rose 7% compared to June. As HRC imports increased more than CRC imports, HRC prices fell more
than CRC in August, widening the unprecedented price gap that we are witnessing between these two.
The Raw Steels MMI collects and weights 13 global steel and raw material price points to provide a unique view into global
steel price trends over a 30-day period.

NOTE: Next Level Purchasing is exploring the possibility of making actual metals price points available as an inexpensive service. If you might be interested
in such a service, please contact Kara Uhrlen, Business Development Manager, at kuhrlen@nextlevelpurchasing.com or +1-412-294-1990 to help us
determine the level of interest and how rapidly we should pursue this option.

Page 10 Volume 6, Issue 10

Procure-To-Pay Specialist
Puridiom Becomes Part of BravoSolution
by Charles Dominick, SPSM, SPSM2, SPSM3
In a surprising and dramatic fashion, multi-module
procurement technology provider, BravoSolution, last
month acquired procure-to-pay (P2P) specialist,
Puridiom. This acquisition comes on the heels of
Baswares acquisition of long-time P2P solution
provider and former BravoSolution partner Verian
earlier this year.
With Puridiom, BravoSolution picks up strong P2P
technology to complement an already-impressive
offering of digital procurement tools. A successful
integration of the Puridiom technology will give
procurement leaders another fantastic option,
alongside other independent suite providers like GEP
and iValua.
Though Puridiom had an already strong P2P solution,
the market can expect an even stronger and more
innovative solution in the near future. With BravoSolution being a much larger enterprise than Puridiom both companies are
privately held, so exact revenues are not known previously unavailable R&D money could flow into the new P2P solution. In
fact, Puridiom CEO Jesus Ramos used the words total upgrade to describe what he expects of the forthcoming P2P piece of
the BravoAdvantage suite.
Speculating about the future of procurement, Ramos says that Procurement and accounts payable have no choice but to join
as one single function and that the new P2P capabilities will be designed to provide the best solution to serve the combined
function.
The BravoSolution/Puridiom combination is largely market driven. Ramos estimates that for every RFP he has received that
seeks a P2P-only solution, Puridiom had been receiving five RFPs seeking full suites. He says that technologically connecting
upstream (eSourcing) and downstream (procure-to-pay) processes has become much more of a priority among procurement
departments undergoing transformation.
Despite Puridiom being in existence for over 30 years, the marriage with BravoSolution is being perceived as more of a new
beginning than an end for the Puridiom staff, which is being positioned as BravoSolutions P2P team. Marketing Director
Cindy Cornman says that the Pennsylvania-based team is excited to be a part of the BravoSolution team and work towards
the goal of a robust, user-friendly P2P solution as part of the BravoAdvantage platform.
More information from BravoSolution about this acquisition can be found at http://bravosolution.us/news/bravosolution-buyspuridiom/
Disclosure: BravoSolution is an exhibitor at the 2016 NLPA Conference.

Gas Trickles Down (Continued from Page 5)

What the future holds, no one can know for certain. The important thing is to be optimizing the present. Is your company
enjoying all the savings attached to low gas prices right now? Some expenses may have automatically reduced but have you
looked into all your contracts and agreements to see if your company is benefitting from ALL the savings that are possible?

October 2016 Page 11

Building a Competitive Advantage through a Business Continuity Plan (Continued from Page 6)
discuss any interruptions. This is also valuable to a potential customer as it will likely feed into their own continuity plan
creating a seamless chain of communication and reaction. It may also be advantageous to communicate the prioritization
schedule for customers in the event of a disruption. Customers with larger volume and thus larger leverage will be further
incentivized to remain with a company, even despite a lack of competitive advantage in other areas, knowing that they are
higher up on the priority chain should inventory be unavailable to fulfill all current orders. Record and communicate the
frequency of which your plan is reviewed, tested, and updated. This will keep customers engaged in the agility of your
operations and serve as a reminder of your commitment to providing uninterrupted products and services.
It is also useful to communicate and share all updates with your own supply chain and engage in open two way communication
on the best way to minimize interruptions and mitigate disaster. It is just as disadvantageous for your supplier if you
experience an interruption that will stop production as it may cause a decrease in purchasing or even the loss of your
business. Sharing your continuity plan up the supply chain will give you leverage to negotiate better pricing or terms as it gives
the supplier piece of mind that you will continue to purchase, especially with custom materials. This furthers your competitive
advantage by keeping quality consistent while minimizing cost.
The value of transparency can be overlooked in customer vendor relationships as business processes are often held as
proprietary and confidential. Certainly there is reason to create a business continuity plan that is held internally and not
shared with current or potential customers, however this drastically diminishes the plans value. If a company is fortunate
enough to never experience a major disruption, its reaction abilities are unknown to the general market. As supply chain
resiliency becomes a greater focus, customers want proof that a company is reactive and responsible, and that will drive
competitive value.

Page 12 Volume 6, Issue 10

A Disturbing Procurement Statistic (Continued from Page 5)

I would say thats kind of a problem, wouldnt you?
I mean, after all, in many organizations, over half of all expenses can be attributed to the purchase of external products and
services. Thats a lot of money to be spent by people who arent fully equipped to get the best value.
Why is this?
I think that there is a legacy perception of procurement that it is a function whose primary purpose is to save money.
Therefore, dedicating money towards training is spending money, not saving it. But thats not smart. Negotiation training is
an investment, not an expense. The return that an organization can achieve by having a well-trained procurement staff far
outweighs the outlay of cash for training them.
Assume that:

Each procurement employee is responsible for spend of $30 million annually

The current average savings as a percentage of spend is 2.6%

Each procurement employee can be trained on procurement negotiation for $229

That negotiation training would require 8 hours of the procurement employees time

The hourly salary for a procurement employee is $26

That would mean that the investment for the above negotiation training is $437. To recoup that investment, each
procurement employee would simply need to increase his or her savings from 2.6% to 2.6015% by applying what was learned
in negotiation training.
Pretty safe bet, huh?
If procurement is going to continue to evolve into a profession on the level of accounting, law and medicine, this number
needs to grow. You wouldnt want only 55% of surgeons to have been trained how to use a scalpel or only 55% of attorneys to
have been trained on how to interpret a contract or only 55% of accountants to be trained how to prepare a tax return.
So, as the procurement profession, we should not tolerate only 55% of procurement professionals being trained how to
negotiate.
Heres hoping that, in the not-too-distant future, this procurement statistic improves to a more respectable number. If you
need ammunition for getting support for procurement negotiation training in your organization, perhaps this rant will give you
the fuel you need to drive change.

October 2016 Page 13