PurchTips - Edition # 163

 

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Picture of Charles Dominick, SPSM, SPSM2, SPSM3

Assess Supplier Financial Risk Now!

By Charles Dominick, SPSM, SPSM2, SPSM3

Can Your Suppliers Survive The Credit Crunch?

Stock markets are at 5-year lows, banks have failed, and lending practices have tightened. Governments are promising intervention, but will it be fast and effective enough to prevent the global credit crunch from claiming some of your suppliers? Use this three-step model to assess your supplier's financial risk now to prevent a severe supply disruption later.

Step 1: Identify Your Critical-To-Operations Suppliers. Make a list of all the spend categories where you are sole sourced. Rate each spend category on the Difficulty and Time required to find and qualify a new supplier. Does the time to find and qualify a new supplier exceed your normal inventory levels? If yes, you have identified an immediate threat to operations if the supplier fails.

Step 2: Evaluate Supplier Financial Risk. Insufficient capital is a leading cause of supplier failure. Aging payables, slower inventory turnover, delayed expansion plans and a decrease in available credit are additional early warning signs of supplier financial risk. Liquidity ratios like the Current Ratio are good indicators of financial solvency because they measure your supplier's ability to pay short-term debts.

Determine your supplier's Current Ratio by dividing Current Assets by Current Liabilities. These figures are easy to get online for publicly-held suppliers but you may have to use expert negotiation skills to persuade privately-held suppliers to disclose them. As an example, if your supplier has $750,000 in Current Assets (cash, receivables, inventory, etc) and $900,000 in Current Liabilities (debts due within one year) then their Current Ratio would be 0.83. A common rule of thumb is that a Current Ratio of 1.5 or greater indicates the supplier can sufficiently meet near term operating needs.

Step 3: If Necessary and Practical, Help Your Supplier Survive. If you determine that a key supplier is on the verge of failure, your options include finding a new supplier, buying more stock than you usually do to secure your supply while infusing the supplier with cash, helping the supplier locate sources of capital through your company's bank, or even recommending that your company consider investing in or buying the supplier.

(keep reading for a FREE Offer)

Spotlight On Professional Development Opportunities

SPSM Certification

Are you tired of not getting enough opportunities, respect, and money out of your purchasing career? Well, guess what? Nothing will change unless you take action towards becoming a world-class purchasing professional.

You see, today's employers refuse to reward employees for yesterday's skills.They demand that purchasing professionals like you use the most modern skills and achieve unprecedented results. They want you to save more money, achieve better operational performance, and reduce risk.

Is lacking a purchasing certification keeping you from getting the results, opportunities, respect, and money that you want out of your career? Today's employers refuse to reward employees for yesterday's skills. They want you to save more money, achieve better operational performance, and reduce risk. They demand that purchasing professionals like you achieve unprecedented results and without the most modern skills that can be a challenging feat!

So how can you acquire the most modern skills, achieve meaningful results, and convincingly prove your capabilities to today's employers? There is an impressive purchasing certification program that will teach you what you need to accomplish all of this and more. It is the SPSM® Certification, earned by completing the Senior Professional in Supply Management® Program. And you could earn it in less than a year - maybe even much less than a year!

Earning your SPSM® Certification by completing the Senior Professional in Supply Management® Program is the action to take if you want to bring the most modern purchasing practices into your organization and achieve your career potential. Learn how to earn your SPSM® Certification (and perhaps get an iPad) (with the option of getting a Study Guide on an iPad) at:

Distinguishing yourself as an achiever in purchasing is key to sustaining a rewarding career, even in these difficult economic times. Earning your SPSM® Certification by completing the Senior Professional in Supply Management® Program is to take if you want to bring the most modern purchasing practices into your organization and achieve your career potential. Learn how to earn your SPSM® Certification (and perhaps get an iPad) at:

Earning your SPSM® Certification by completing the Senior Professional in Supply Management® Program is the action to take if you want to bring the most modern purchasing practices  into your organization and achieve your career potential. And if you sign up for the Senior Professional in Supply Management® Program on or before May 31, 2008, SPSMSM Certification Program on or before 4/30/2007, you also get these and other bonuses valued at over $700:

  • FREE $30 gift certificate to Amazon.com!
  • FREE CD-ROM with printer-friendly versions of the class materials!
  • FREE Purchasing Performance Measurement spreadsheet template!
  • FREE audio CD about purchasing job security!

To learn how to earn your SPSM® Certification and get these valuable bonuses, visit:

Earning your Senior Professional in Supply Management® (SPSM) Certification is the action to takeif you want to bring the most modern purchasing practices into your organization and achieve your career potential. Learn how to earn your SPSMSM Certification at:

Learn how to earn your SPSM® Certification at:

www.NextLevelPurchasing.com/spsm.html



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FREE Offer!!!

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Free Procurement Training & Certification Starter Kit

This Starter Kit gives procurement professionals like you a clear idea on what it will take to become certified. You'll get an excellent feel for what you will need to learn and how long it will take.

Click here to learn more

Included in your free Starter Kit:

  • Access to two lessons from courses that are part of the Senior Professional in Supply Management® Program
  • A Certification & Training Planning Template
  • Case studies
  • A free Basic Membership in the NLPA

Together, these materials will help you decide how well the SPSM® Certification can help you achieve your career goals.

So, what are you waiting for? Begin your pursuit of a more rewarding procurement career – get your Procurement Training & Certification Starter Kit now by signing up for a free NLPA Basic Membership!

If you are already a member of the NLPA, click here to login and visit the "Starter Kit" tab to access these resources.