March 2009
I recently listened in on a webinar by Supply and Demand Chain Exec titled “Good to Green”. They brought up some valid strategies for the MRO industry on inventory management and discussed some common issues that could occur in everyone’s storeroom. It’s important that every business understand their consumption patterns and the best way to do that is to understand the value of your inventory, standardization, and physically clean up the storeroom. Performing these tasks can reduce your inventory costs and it makes your company more aware of their purchasing habits.

The second part of the presentation was about going green. It looked at the chemical products companies have as part of their inventory. The presenter notes that the actual purchase costs of chemicals only make up 10-15% of what the product actually costs. The remainder of those costs is in maintaining those chemicals, for example, costs for proper storage and disposal. They gave an example of a company purchasing many types of cleaners including glass cleaners, bathroom cleaners, hand cleaners, etc. This company had 100’s of cleaning products by 100’s of manufacturers sitting in inventory. The company had 100 bathroom cleaners by 80 manufacturers that all did the same thing – sanitized the bathroom! A company was hired to take inventory, understand their consumption patterns, and work to reduce the amount of manufacturers and chemical products being used on site.

I started to think about those 100’s of products in that one company and how this relates to my own house and all the cleaning products I use and store. Are we all doing our part to keep our homes “Green” just like businesses? There are probably thousands of types of cleaners that we can choose from at the store. If I take some time and do my own physical inventory I can eliminate and manage my own costs and products and do my part in going “Green”. Before you make that next cleaning product purchase think to yourself, “how many types of this cleaner do I really need to have in my house”? In a time when we are all trying to reduce our costs and save the environment I think it’s important to look at your own spending habits and see how you can do your part for the environment.
I used to have a romanticized view of business travel. Dressing up all nice, jumping from here to there, shaking hands, getting things done. That is, until I got thrown under the business travel bus. The following is a blow-by-blow account of a recent daytripper I had. And I assure you, the Beatles’ idea of a daytrip would have been infinitely more enjoyable.

I wake up at 5am for an 8am flight. I hardly got any sleep that night due to anxiety over the meeting I was going to conduct. I thought I gave myself enough time to get to the airport, but I was dead wrong. I seriously thought I would miss my flight. And there are only two flights a day to my destination, so if I missed the first, I was SOL and would miss the meeting. I park in economy to save my company a few bucks. When the bus back to the terminal picks you up, it doesn’t go right back to the terminal. Hell no. They weave around the parking lot in a serpentine motion like those old mercury mazes we played with as kids that are now deemed hazardous. Those buses make sure every seat is taken and every inch of handrail has a person on it which has a hand on that person which also has a hand on that person.

I finally get to the airport security line to see it’s mobbed. I was so disheveled, distressed, disconsolate, dispirited, disparaged, and despondent, the guy who checked my license against my boarding pass asked me, “Dude, are you OK?” I miraculously make it to my gate right before they stop boarding. Just to cool my jets (no pun intended (who the hell am I kidding?)) I spent the first 30 minutes of a four and a half hour flight reading my newspaper. The other entire four hours was spent preparing for the meeting. Reading RFP’s, company bios, internal docs, you name it. Reading for procurement isn’t exactly like reading Hunter S. Thompson. This is dry, desiccated, dusty, depleted, devoid of all humor material.

So I land safely. Maybe Sully was flying my plane. I meet up with an associate and we take a 20 minute cab ride to our meeting which after tip cost about $90. The meeting went fairly well and was productive, with the exception of the fact a few times I mispronounced the name of the company I was presenting to. It reminds me of that old root beer commercial where the job applicant pronounces his would-be employer’s name “Dumbass”, rather than “Dumass” (think French, emphasis on the second syllable).

Meeting’s over, straight back to the airport in another $90 cab schlep. Again, the security lines are packed. It was like herding cattle. These were the people who took a half-day on Friday to make a weekend trip and have no clue about security procedures and hold up the line like a whinny old lady making a return at a department store. And the TSA and DHS doesn’t make it any easier. You have to remove your belt (among other things), as if my leather Banana Republic belt can be used as a weapon of mass destruction. The best I can do with it is strangle a rude security guard. So as I’m proceeding through the security line, my pants start creeping down on me. I inadvertently created a new class of traveler: the business skater punk. I wonder if I can get rewards for that.

So me and my associate finally have some room to breathe and we eat dinner. We’re bs-ing about the meeting and other random stuff when I ask how we’re doing on time. Turns out, my associate’s flight is 20 minutes from taking off, meaning boarding is just about done. So he jets (again, no pun intended (again, who am I kidding?)) before the check comes. That’s fine by me, but I’m not much better off because my flight takes off 20 minutes after his and we’re eating in a terminal that’s not where my flight is.

I take a tram to my terminal and as I’m walking there, impending doom hits. Keep in mind, I just ate nachos with three different salsas, a burger, fries, and I drank two beers. Nature’s calling. I figure if the plane isn’t boarding, I’ll go in the airport head and all will be well. No, didn’t work that way. As I got to the gate, they called to board the last section of the plane. Now I need to wait until we hit cruising altitude which takes a good 20 or 30 minutes. That’s not including time spent taxiing on the runway and waiting in line behind other planes.

We finally hit cruising altitude and Glen Quagmire announces over the speaker we’re leveled off and he’s turning off the “fasten seatbelt” light. Apparently everyone else on the plane had the same idea as me. Before Quagmire could finish his sentence, there was a mad dash to the bathrooms. Panda-freakin’-monium (good use of tmesis (look it up)). Now I have to wait in line behind a bunch of people, including kids who don’t know how to be considerate.

That emergency eventually had a happy ending, although it’s never fun answering the call in an airplane. I finally get back to my bleacher seat to do some leisure reading. I touch down around quarter to one, and get back to my apartment at 2am. I pop open a Weyerbacher (excellent PA brewery, you should try one) watch a little TV, and go to bed at 3am, 22 hours after I woke up. What does this have to do with sourcing you ask? Absolutely nothing. This is just a rant. But the morale of the story is: Damn, business travel sucks.

BTW, this blog post had more force to it and is way funnier unedited. But the higher-ups thought it was too much and as a result it got cut, chopped, edited, and showered-down. If you like crude and crass humor, you can email me for the non-pc version at pyurkon {at}

A veteran sales rep for one of the world’s largest lubricant manufacturers describes the price volatility over the course of the last two quarters; “I’ve been doing this for 30 years, and I’ve never seen anything like it.” From January 2008 until the end of February 2009 the market saw Group I and II Base oils jump from the low end of three dollars a gallon to a high of around five, and then plummet back down below three (Lubes N’ Greases Magazine-March 09). As the roller coaster began its ascent with no end in sight, many organizations re-examined their lubricant purchases, and went to market in search of relief. While consulting a client in this exact situation, I found that, in today’s market, price response is often as important as the pricing itself. For the purposes of this article, I will refer to the primary incumbent supplier as Supplier A and the secondary as Supplier B.

In the early summer of ’08, I began negotiations with both Supplier A and Supplier B to accomplish the client’s goal of immediate price relief while rationalizing the base of supply. As Supplier B was the secondary supplier for the client’s lubricants, we developed a strategy around consolidating the volumes purchased from A and B into one source of supply with the supplier that offered the most competitive pricing for the total volume. Initial sourcing results produced a savings of approximately 36% by consolidating supply with Suppler B. This unfortunately is not where the story ends.

Since my company Source One works on a 100% pay-for-performance business model, protecting our clients’ savings is as important, if not more important, to us than it is to them. For this reason, we meticulously track both incumbent and market prices of any commodities/services we source. After a few months of observing the client’s purchasing from Supplier B, we noticed significant price increases that initially seemed unfair in the face of the sharply declining crude oil market. While pushing back on the increase, Supplier B explained that their pricing was tied heavily to the Base Oil market which was still increasing steadily. At the time, this was a very defendable position, so we had no choice be to accept the decrease in savings and keep a keen eye on the Base Oil markets.

As November passed, Group I and II Base Oils both dropped nearly a dollar per gallon. When prices continued to decline through December, we expected that we would surely see Supplier B’s prices follow suit. This, however, was not the case. When we contacted Supplier B to about the phenomenon, they refused to budge and could not offer any transparent means for explaining how they indexed and adjusted their pricing. After several hold-outs for information and discussion it became evident that Supplier B may have been planning to turn a blind-eye to the Base Oil markets until prices stabilized at more profitable levels. We called them on their bluff.

In January we reached out to Supplier A to see how their pricing structure responded to the Base Oil Market Conditions. Not only did Supplier A’s pricing respond more favorably, but they also provided a very clear weighting system of publicly available indexes that they use to determine prices. They also provided options for pricing review such as length of review period and different ranges of “trigger price changes”. Supplier A offered “trigger price changes” as high as 15-20% for risk averse or resource constrained companies and as low as 3% for companies that have the resources and security to attempt to capture savings from small enduring market movements. Considering the volatility of current lubricant prices, this sort of flexibility and transparency presents a substantial value.

The lesson to take from this is that we are no longer buying lubricants in a world where a 5% movement over the course of a month is substantial, and 10% quite large. Sourcing professionals are now purchasing lubes in a market where a 15% shift in one month has recently become the norm. In this environment great value can be derived from determining your company’s risk tolerance and finding a supplier with transparent pricing mechanisms that fit your company’s strategy.
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Jason Busch, in his March 23rd SpendMatters blog “A modest proposal” sarcastically (I think) suggests that we should take the bull by the horns and begin restricting performance-based procurement executive bonuses. Busch’s tongue in cheek argument is based on the idea that the Government has proposed huge taxes on F&I (finance and insurance) industry exec bonuses and that we shouldn’t wait for the interventionists to do the dirty work.

Consider first that the proposed 90% tax was a symbolic measure. Those who know about the politics of patronage understand that such a measure, even in this dark period, would never pass in the face of legislators who garner a huge portion of their campaign war chests from lobbyists; many of whom spring from the finance and insurance industry.

And forgive me Jason, but you’ve mixed your metaphors. The true flaw in your case is the idea that performance based bonuses and the thievery of finance and insurance execs are somehow tantamount. The reason for the interventionists’ intervention is not that the F&I execs received performance based bonuses, but that teetering institutions shelled out the megabucks in the face of the opposite of good performance, financial disaster. In many cases, the bonuses went out to execs who knowingly speculated on packages of bad paper (toxic debt, as we now label it) with the “in the long run, we’re all dead” investment plan and the “but Mom, everybody else is doing it” business case.

So let’s call a spade a spade, a crook a crook and a performer a performer. It’s not the Government’s efforts to curb executive thievery that’s at issue here. If restricting corporate rape is “paternalistic totalitarian legislation” then maybe what the world needs now is more paternalistic, totalitarian legislation merely to avoid another economic debacle. The short verse is this. The only flaw in performance based pay is the fact that the performers may work as hard or harder to manipulate the results as they work at their jobs.

It’s easy to blame the government, and always the hip, nihilist choice as well. But let’s not lose sight of the real problem, shall we?
One of my customers is suffering on multiple levels from the economic/financial mess.

First off, their sales have gone down substantially over the last few years, resulting in layoffs, site closures, and other downsizing initiatives.

Second, as credit dries up, banks have decided that companies with slumping sales are a low priority. Harder access to credit causes all sorts of problems, and as cash flow becomes an issue, suppliers begin to enforce deposit terms, charge late payments fees, etc.

Another thing that becomes difficult under these conditions is strategic sourcing. Right now suppliers are extremely cautious when it comes to extending credit to new customers, and when credit scores are poor, suppliers are actually turning down business.

These conditions make it much more difficult for a company going through tough times to source strategically and uncover the cost savings opportunities needed to help dig out of the hole. Even when opportunities are uncovered, restrictions such as shorter payment terms, deposits, or other punitive conditions are required to implement the new agreement.

Having success in strategic sourcing under these conditions is difficult, but not impossible. The most important thing is for the company to formulate a game plan, learn new best practices, adapt to change, and respond to the new conditions quickly.

Unfortunately, many large companies that got into this mess are unwilling to do any of these things.

Let’s take the example of an electricity project I recently worked on. For the most part, electricity is a commodity item. With some exceptions, there is little difference between service providers, and other than ensuring your third party supplier is not a fly by night operation, electricity is electricity and the service you get from a third party will be about the same, if not better, than your utility.

The hardest part to achieve savings in electricity with a big company comes in the data collection phase, where you need to collect invoicing/account information for every customer location, then segment them out by region or state for bidding processes. Since electricity is a commodity item, reverse auctions are effective at driving down to the lowest price by allowing suppliers to engage in a bidding war. The only caveat is that because contracts need to be executed fairly soon after the bid takes place (prices change daily), any legal review of contracts needs to be done before the bid takes place.

In the case of this customer, legal was unwilling to look at multiple contracts before the quote, making a reverse auction impossible. They didn’t feel they had the bandwidth to look at every agreement, only the one for the supplier we decided to move ahead with. Legal also insisted on adding language to the contracts that provides little additional protection but did result in significant delays in the process (in some cases over a month).

In addition, several new end users that previously had ignored their utility bills came out of the woodwork requesting meetings to understand the savings, how we get paid, and asked that all decisions be put on hold until their considerations are met.

Another company I work with has also fallen on hard times, which have resulted in hundreds of store closures over the last few months. They recently decided to invest in an electronic RFP tool to help streamline the sourcing process, which is a great idea! Unfortunately, as we explained some of the best practices behind the tool, including that even with an electronic tool you should “talk to suppliers”; we were met with extreme resistance by people high up the chain in procurement. “Why would we use a tool if we still need to talk to suppliers? This product should help us save time!”

Simple commodity purchases getting tied up in committee, inflexibility of legal departments to change their process so more effective sourcing techniques can be utilized, and the avoidance of best practices (and ultimately, more cost-effective solutions) in the name of “saving time” are all something you might expect to see is a Dilbert cartoon. What ever happened to that guy anyway? Still, it begs the question, Are these companies too big to fail, or when companies get this dysfunctional should they fail?
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At a time that we are all fighting to save our companies, is there a conflict with protecting our own jobs? Are a company’s interests aligned with our personal professional and financial well-being? Well, it depends.

If I am an employee charged with lowering costs to help save the company money, do I reveal that some spend categories under my purview are very improvable? Will someone want to know what I have been doing all these years? Will my efforts to reach out to cost-reduction experts and help them achieve success within my organization be rewarded or be punished?

Does your company’s leadership look forward or look back? Are they looking for someone to blame or someone to help the organization become more competitive? My personal preference would be to give my employer the best that I can. I would assume that I am better today than I was yesterday. If I can recognize and harness other expertise to help me produce better results, I’d act in what I would believe to be the mutual interest of the company and myself. But what if my superior now expresses upset that I didn’t produce the same results last year? Here are some thoughts to express:
  • Would you prefer that I repeat last year’s misjudgment?
  • I am making an effort way above and beyond to help the company at this critical time. Why are you punishing me for that?
  • Are we about getting better and more competitive or about assigning blame?

If you want to serve yourself, do the right thing. Serve the best interest of the people and organization that you are a part of. Trust that doing the right thing is almost always the best direction.
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Jon Hansen, over at the Procurement Insights blog published an opinion white paper last week titled "Riding the Crest of a New Wave: How the Original SaaS Companies Have Gained the Upper Hand".

This paper discusses recent announcements of a major spend management software provider, and how their announcement of increased SaaS sales is really just proof that smaller players such as Source One have had the business model right all along. It also provides some insight into the struggles that larger Spend Management SaaS providers are facing in order to provide competitive products at an affordable price in an increasingly competitive marketplace.

Read the full whitepaper here.

Thanks for the mention!
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This headline "US Defense Dept. goes public with some open source plans" caught my attention this morning. I was excited about seeing our Government take a step in the less expensive open source software community. In fact, I briefly mentioned it in an article last week. However, after reading the article, the headline was a bit misleading.

I expected to see an article talking about the Federal Government finally taking some steps to move to open source, but instead the article is about how DoD officials have partnered with the Open Source Software Institute to push some of their software suites that were developed for the Government into an open source package. While I admire the fact that the Government is putting some of their work in the public domain, I wonder a few things. First, "partner with the OSSI" to me, means that the Government is now paying someone else to figure out how to move their packages to the open source community..-Edit, this was clarified in the comments as not to be the case. Secondly, the suites specifically include "more than 50 applications involving human relations, training, security, acquisitions".

Few would argue that the US Government could be considered the poster child for best practices in any of those categories, so I am not very excited about seeing the final products. I recently pointed out in a blog post that the government admittedly does not have proper management of resources (in procurement specifically), so I can only imagine how much tax payer's dollars were pumped into these applications, which obviously do not work.

I do commend the efforts of the Government to push work (that was funded by people) into the public domain for public consumption. After all, we did pay for it. However, I would be hesitant to recommend it to anyone as a resource for determining how to run your business.
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Q: What do you do?

A: I’m a business consultant, I help companies save money.

(Long pause)

“Oh, I see, you’re one of those guys . . . . .”

And the conversation ends.


Sometimes I think I should just answer; “I sell broken down used cars to little old ladies”. The response couldn’t be any less enthusiastic, or more terminal. Of course the reputation was long in the making. Process re-engineering, down-sizing and right-sizing all seemed to point in the same direction for almost two decades. RIF (reduction in force) was an easy, quick-fix to cutting expenditures. Hilarious movies like “Office Space” with the hatchet man team of “the Two Bobs” did nothing to dispel the impression that consultants are head count guys either.

All things considered, head count consulting is the product of two major forces. One is that many work forces were/are egregiously inflated, and making head count cuts is the brain- dead solution any consultant would be remiss not to make. Second is the fact that there is no quicker solution to cost reduction than “not buyin’ any”. Last we checked, labor costs are a pretty significant part of most corporate ledgers.

Still, there was/is a human element to RIF consulting that left a bitter, even indigestible taste in the mouths of the workforce. Those that lost jobs were subject to the painful transition of being disenfranchised. Those who were left in place absorbed the additional workload and lived with cliché’s such as “work smarter, not harder” as their corporate mantra. Perhaps worse than layoffs was the indignity of “posting” for one’s existing job.

RIF consulting left an ugly mark on consultants’ altogether; even those, like me, who never recommended workforce changes as a solution.

So how do we scrub away the gruesome specter of the “hatchet man”, at a time when RIF is still a fact of life? When the staff cuts are at the behest of employers; and there are no consultants recommending the tough choices.

It doesn’t help that there are consulting firms out there who assist companies in handling RIF, either.

But there is hope to dispel the challenge of a negative first impression. For me, it’s been a simple addition to my one line job description. “I help companies save money, without cutting staff”. Taken a step further, it’s the addition of text to marketing materials, PowerPoint presentations, and written correspondence altogether.

Still, nothing works more effectively than human reinforcement. Merely marketing the anti-RIF approach is the first of many steps to reinforce the approach. It’s important that consultants alleviate the angst of the middle-managers and line in order to foster the atmosphere in which success is possible. Too often, the mid and line level touch points are ignored in favor of C-level relationships.

The moral to the story; send the message early, often and to as many as will listen. Beating the RIF rap is no easy task. If you’re so fortunate to be able to take the anti-Rif stance, use it your full advantage.

It’s nice to be the good guy for a change.

A fellow blogger recently pointed out some positive experiences he had for his business with migrating away from Microsoft as his primary operating system and software provider (SpendMatters) . While I do not completely share his utter enthusiasm for all things Apple, nor the next levelup from that, the full-blown Fanboy, I do agree, as a technologist and a sourcing professional, that businesses should be constantly reevaluating their infrastructure and the available solutions and providers in the market, no matter how unconventional.

The French police have recently reported that the national police force has moved a portion of their infrastructure (5,000 workstations) to Ubuntu Linux and had saved an estimated 50 million Euros in the last 5 years. The program has been so successful that they intend to roll Linux out to the rest of their 90,000 workstations over the next 6 years. While France's police department decision to move open source is nothing new, they could still be considered on the cutting edge of other government's that have been testing the waters and will joining the ranks of India, UK, Canada, Denmark, Taiwan and a few others. Are you listening United States?

For those of you that are not up to date on your "tech speak", Ubuntu is a community developed, open source operating system that works on laptops, workstations, servers, etc. Some creative folks have even ported versions of Linux onto everything from cell phones to toasters. When most people here they words Linux or Unix, they immediately conjure up pictures of comic book guy from The Simpsons pounding away at some command line prompt reminiscent of the days of DOS. However, Linux has evolved to much more than that. In fact, after you install a distro of Ubuntu, you will find the learning curve to be very small, in fact, the learning curve is less than that of a Windows user moving to Mac. Ubuntu and a few other distros have done an amazing job in the last few years of upgrading their GUIs and making the end-user experience familiar and easy to use for your non-tech personnel. Besides being free, what is really great about the newer Linux flavors is that you can pop open a menu and select from thousands of free open source software applications and install them right to your machine, without searching the web or buying from an over-priced software vendor. In the free software options you will find everything from Open Office (a Microsoft Office alternative) to Gimp (a Photoshop alternative) and just about everything in between.

Another huge advantage of Linux based systems is that they are relatively lightweight in install size and really do an excellent job of utilizing available system resources. This means that you can install Linux on older equipment (slower processors, smaller hard drives, less ram) and experience a significant performance boost over you old Windows installation. In fact, Ubuntu is so easy to install, and uses resources so well, that it is a great thing to put on older equipment that has been retired by you and you can hand it off to your parents or grandparents as a "new" computer. If you do choose to install it on newer equipment, expect to see performance speeds and memory management similar or better than a Mac, yet with pricing less than that of a windows based pc (1/3 the cost of Apple products).

If you do intend to evaluate any open source alternatives in your business or home life, there is no reason that you have to jump in all at once. Start with installing the windows version of Open Office on your Windows box. Try using it instead of Microsoft Office and see how it works for you for a few weeks. If you like it, go a bit more daring and install a free Ubuntu distro on one of your old PCs or laptops. If you don't have a spare computer handy, then install VMWare's Hypervisor and then install ubuntu within hypervisor. Hypervisor allows you to run a virtual computer inside of your windows machine (so no worries about losing data and formatting your computer).

Now Ubuntu is not right for every business. Nor is it truly free. If you do roll it out on an enterprise level, you would likely need to contract with a third-party support service in order to meet your emergency needs or to address oddball issues such as missing drivers or non-support for legacy applications. You should also make sure you are comfortable with the release schedules of the products and should thoroughly test to make sure every application in your business is supported on the Linux OS. There are ways around non-supported legacy apps that were not developed to be compatible with Linux, such as running Wine, which allows you to run windows apps on Linux, but in reality, that adds a level of complexity to the end-user which is just not desirable. This is particularly important to road warrior consultants that often need to install customer software, ERP clients, or VPN tunnels on their laptops in order to mine data from a client's systems. In these cases, it may just make more sense to stick with the tried and true Windows installation.

Then of course, there are those businesses that for one reason or the other, just are stuck with Microsoft. Nothing wrong with that at all, but there are still options to help you save on your end-user costs. Having a thorough understanding of the Microsoft Enterprise licensing structure combined with a good audit (with the help of a third-party) and some creative thinking, substantial savings opportunities may be available. By removing features that are not used by every individual, or by upgrading to newer licensing models of an old application, you can actually save a substantial amount of money, and can often enhance or upgrade to newer technology than your business currently uses.

Edit: A friend of mine just dropped me a note and reminded me about the obvious security benefits of moving to Linux. Though I do not have the energy right now to expand on it in-depth, it is a good point that I wanted to include here. Besides the piece of mind of having something that is not as susceptible to viruses and unwanted intrusions, there is actually a cost benefit of not having to run expensive Anti-Virus solutions. (You still should have security software, it is just not as expensive).
In the greatest movie of all time, the Dark Knight, Batman comes to a point where he actually has to choose to continue being Batman or not. His choice to continue is driven by the idea that, as the story goes, “he’s not the hero Gotham City wants, but the hero it needs, right now”.

It was clear that the Dark Knight’s choice was one of public service.

We label Consulting as a service. The service we offer to our clients is to generate recommendations that will help them better run their businesses from day to day. But there is a fine line between selling the work and delivering the work that every skilled consultant toes, every day. The fine line is in knowing when to stop being a salesman (the hero they want) and start being a consultant (the hero they need)”.

Salesmen, after all, deliver what the client wants, at an agreed price. The relationship is built on positive interaction for mutual satisfaction. Consultants tell you what you don’t want to hear, and then charge you more than you wanted to pay not to hear it. It’s kinda like when you go to the Doctor or get a root canal. He tells you you’re sick, gives you a prescription that makes you queasy, and then charges you $125. And the dentist . . . . no more need be said. Nobody wants to see the Doctor or especially the Dentist.

But when you need a 5-way bypass or you crack a molar, Doctors and the dentists are they’re the heroes you need. Even though you’ll have to suffer bit so they can get you healthy.
Ultimately, that’s the service that consultants offer. We deliver the tough truths and the plan to get better.

It’s a challenging practice, when you consider that some solutions have deep human interests attached. One such solution that’s gaining traction in every sector is moving from human touches to technology. Consider that entire departments of companies are composed of folks who perform tasks that can be performed by software or machinery, or a combination of the two. Software and machinery, by the way, that is more effective, more efficient and saves significant dollars over the cost of human resources.

To whom does the consultant present those solutions, how and when? Is it our place to even broach the discussion? How is it service to the client when jobs will be slashed?

I posit that not presenting those solutions is a disservice to the client. If for no other reason than that the proverbial ship has left the harbor. For every one of your clients to whom you do not present challenging solutions, another consultant is presenting them. And those tough choices are the same tough choices with which your client’s competitors are faced. Choices some of them will choose to make in order to remain market competitive.

Thus it’s important to remember that the needs of any individual must be weighed against the good of the organization. If only because the organization must survive in order to serve the needs of individuals. While it’s our duty to be caring and compassionate, Consultants work toward the good of the organization.

Sure, we’d all like to hear that business as usual still keeps business afloat, but there’s too much evidence to the contrary now. We’d love to believe that GM, Ford and Chrysler are just one more money bath from coming out sparkling. We’d love to believe that there’s a hero out there who can tell us all what we want to hear; the hero that we want.

But the hero that we need right now is truth and tough choices. Some of them not so easily digested, some of them with painful transitions. The ability and willingness to deliver those messages is what makes Consulting truly a service to our clients.
I recently read a Business Week article titled Customer Service in a Shrinking Economy which outlined how companies and businesses are working to keep customer service up with poor sales and low employee morale. I'll admit, it's definitely difficult to put on a happy face and treat callers like royalty if your company and job security are full of uncertainty.

This article suggests keeping the customer service front lines strong while researching other ways to cut back such as office expenses. One of their examples mentioned consolidating customer call centers rather than eliminating representatives which would force longer hold times for customers. Another good strategy mentioned was to cross-train representatives to reduce hold times, transfers between agents and increase productivity. What a great idea!

More companies are aiming to please repeat buyers over acquiring new customers. Being eligible to receive free overnight shipping on a pair of shoes from might just be the thing to keep and expand their recurring customers! Another great example of cutting costs without compromising customer service mentioned in this article was when BMW implemented Wi-Fi service at its dealership. This gave customers an inexpensive way to pass the time productively while their cars were being serviced and decreased the dealership's free loaner car expenses by 10% to 15%.

Hotels and other business are aggregating purchase contracts of goods and services across multiple properties/locations to reduce costs without compromising customer expectations and loyalty. We at Source One have definitely seen these benefits with multiple client locations for electric and telephone rates and many more goods and services. Contact us to see what areas we can help you produce savings without losing your customer service.

Like most Americans, even American Strategic Sourcerors, I have credit cards. Recently, my moving expenses have led me to carry a substantial balance on my Citibank MasterCard. When I received my bill this month, the monthly payment seemed extraordinarily high. I’m no math Wizard, (I’m a Sourcerer, remember) but the quick math told me something was wrong.

A closer look revealed that Citibank had, at its sole discretion, raised my interest rate to a lusty %29.99. This, I suppose is because usury restrictions start at 30%. While I don’t plan to carry the balance for long, the effect on my minimum payment was substantive. Again, I’m no mathematician, but even a few months at 29.99% interest . . . . . .well that could get ugly.

My call to the customer contact center; not customer service because customer service is an oxymoron these days, revealed that even though I schedule my electronic payment on the due date, it had not posted until two days later, making the payment “late”. Thus, Citibank, per my cardholder agreement, had the right to raise my cardholder interest rate to the legal limit; which they did, immediately.

The customer contact (not service) representative was even kind enough to tell me why my payment showed as late. Her kindness did not extend to helping me rectify what I thought was an unjust measure for a good and timely customer of eleven years. After numerous attempts to get her help and numerous “there’s nothing I can do’s”, I asked for a supervisor. The supervisor immediately restored my rate to the previous rate and credited me for the “unjust” interest charges.

When I asked the supervisor why the customer contact representative didn’t refer me to her as a possible solution; she simply replied, “That isn’t how it’s done. You have to ask”.

Of course that isn’t how it’s done. The system is designed to discourage folks from pushing for fair treatment. The fact is; many would and do stop there. So Citibank reaps the benefits of customer disservice.

But would you expect anything different? Have you seen Citigroup’s stock price lately? Banks and companies in general are pulling out all the stops to try and cut the bleeding. Whether it’s interest rate punishment, late payment penalties, fees and surcharges that mysteriously arise from the ether; the moral to this story is that the emptor better caveat like never before.

This new normal makes a great case for managed services, by the way. Managed services that closely monitor billing, kick out exceptions, and even advocate for your company like this Sourceror advocated for himself.

Two things are for certain. If you weren’t watching it before, you might want to take a look. If you were watching it, you might want to look closer. The Sourceror’s magic may extend to credit cards, but who knows whence the next dirty trick springs .

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A couple of recent articles caught my attention today:
2010 budget plan would increase procurement officers’ ranks and Panel: DOD needs experienced procurement people

Here is the quick summary:
A joint panel of defense experts lead by Jacques Gansler (former undersecretary of defense for acquisition, technology and logistics) on March 3rd, told a Senate committee that the procurement and acquisition workforce is undervalued and underpaid. They then elaborate to say that there is little to no opportunity for advancement for federal employees to advance into senior positions. The argument is simply that employees do not care and receive no motivation to move projects along quickly, on-time or within budget.

Digging in a little deeper, Office of Management and Budget Director Peter Orszag proposed a huge one-time increase in discretionary spending to hire new employees. He is asking for a budget increase of 18% next year, and then will go back to "typical" budget increases of 1/10th of a percent for each year moving forward. Republicans are arguing that it is unrealistic to think that an entire federal department's budget could increase so significantly in one year and then absorb a huge decrease the following year.

Having spent a portion of my career as a consultant developing best practices in the procurement of commercial-off-the-shelf systems for the Department of Defense, I can most certainly say that the answer is not just to hire new employees. In fact, I worked with a few resources in DC that were able to absorb much more work than they already were handling. The reason that they opted not to, was not out of lack-of-care or laziness, more so that the bureaucracy of their positions did not allow them to work outside of their assigned responsibilities. In my brief term consulting with the government, I met literally dozens of people that held identical positions doing identical redundant tasks, though for different departments or branches of the armed services.

So instead of hiring more resources, lets focus on using the resouces we have more effectively. Rather than request huge budget increases, they should look at consolidating positions and implementing better, more efficient systems, that will then free up a portion of the existing budget. That portion of the budget that gets freed up can then be used to create a new level of true management (not just people with titles) that will provide the career advancement opportunities that should be sought out by good people. The rest of the funds can be used for bonuses and other incentives to encourage the best of the group to perform to their best ability, and help to attract new talent.