The Pareto Principle at Play in Procurement

This week's Wiki-Wednesday topic is the Pareto Principle - also known as the 80/20 rule. Many of us use it all of the time, but do we really understand the implications of the distribution principle? I'm sure I hadn't fully thought about it until reading up for this weeks' posting. Other things I did not know about the primciple are that it was incorrectly attributed to early 20th century economist Vilfredo Pareto because he observed that 20 percent of the landowners in Italy owned 80% of the land. (He also noted that 20% of the pea plants in his garden produced 80% of the peas...)

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Market Analysis Process Example: Gypsum

Gypsum was the first category I was asked to do research for – truthfully, it was very early in my career and I think my manager was trying to productively keep me busy. But the process was a good learning experience and I think I added real value to the team. For lack of a reason to pick any other product or service, I’ll start with gypsum here too.

Gypsum is used to make plaster and plasterboard – basically drywall. So if you are sourcing in the construction category, and your General Contractor is not responsible for materials costs/purchases, you might find yourself bidding this out.

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Financial Statement Analysis for the Faint of Heart

This week’s Wiki-Wednesday topic is financial statement analysis, and hopefully you’ll believe me when I say that if I can get comfortable with this, ANYONE else can too. Financial statements are not always easy to read, but with risk management and new supplier identification on the docket, the time has come for all of us to get used to doing it.

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Procurement Impact from Top to Bottom

This week’s Wiki-Wednesday topics are Revenue (Net Sales) and Net Income (Earnings After Taxes). As at least a third of all procurement teams report into finance, pressure is mounting for us to articulate our value in financial terms. I’m covering both at the same time because while traditionally procurement has focused on Bottom Line (net income, EAT) impact, the time has come to start looking at the Top Line (revenue, net sales) as well.

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Instant Customer Service Feedback for Procurement

If you’ve spent any time on our site this week, you’ll see that we are having a customer-service centric week. It all started when I attended last week’s Next Level Purchasing Association webinar where Peter Nero of Denali Group shared his thoughts on what is next for procurement. The answer was better customer service.

As a follow up, we spoke with The Sales Guy about the kinds of internal customer service he thinks procurement can provide, and this morning we read the Wikipedia article on customer service. We’re not looking to turn procurement into a transactional call center, but some of the traditional wisdom about how to keep your customers happy applies to the relationship between us and our internal stakeholders.

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Force Majeure, Hardship, Impossibility, Hell or High Water, Act of God or all of the above?

Last week I attended an excellent supply chain risk management webinar sponsored by the Next Level Purchasing Association and featuring a global supply chain manager from a Fortune 500 company. The event followed the story of this particular corporate supply chain through the 2010 tsunami in Japan (you can click here for my notes).

One of the lessons this particular company learned was about finding the right place for addressing the human side of a very complicated business issue. I was impressed with the efforts they had made, particularly for such a large company. A thought started to form in my mind: what contract clauses were put aside in order to have an appropriate response to the devastation while not creating serious business continuity issues?

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