PurchTips - Edition # 131

 

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Supply Chain Optimization Simplified

By Charles Dominick, SPSM, SPSM2, SPSM3

What Is Supply Chain Optimization?

Some sourcing situations involve constraints and complexities. Constraints are limits on your decision, for example:

  • A requirement that you must select two suppliers (as opposed to one, three, or any other number)
  • No supplier has the capacity to handle 100% of your business
  • A requirement that a certain percentage of your award must be placed with diversity suppliers

Examples of complexities may be:

  • A large number of line items being bid
  • Suppliers offering discounts at different volume levels and/or combinations of line items
  • Various delivery locations with differences in the suitability of certain bidders to supply some of them
  • A choice of freight lanes at differing costs

When you encounter situations with lots of constraints and complexities, it becomes quite challenging to figure out the best supplier selection. For these types of situations, some purchasing departments utilize supply chain optimization technology to support their decisions.

Supply Chain Optimization Expert Lamoureux

Simplified, supply chain optimization is a technology that applies "rigorous mathematical techniques to a well-defined sourcing scenario to produce an optimal award allocation," according to Michael Lamoureux, president of ToP KaTS Consulting and editor of the Sourcing Innovation Blog. Supply chain optimization helps purchasing departments "arrive at the best decision out of all the possible alternatives."

When there are multiple bidders, multiple constraints, and lots of complexities, there can be a massive number of alternatives and combinations! And the more options there are, the higher the probability that you will make a suboptimal decision.

While it is possible to work out some slightly complex bid analyses by hand, there is a significant chance that using supply chain optimization technology can save money, save time, and reduce errors. But supply chain optimization may not be appropriate for every organization or spend category.

According to Lamoureux, "You would use [supply chain optimization] to source high-value core commodities, parts, and materials for which there are capacity constraints, associated risks, and multiple potential suppliers." And because supply chain optimization technology requires a significant investment ? Lamoureux estimates a premium of ?anywhere from $100,000 per year to a few million? dollars above the cost of a standard eSourcing application - it is typically adopted by larger organizations who are able to achieve a larger return on investment due to their spend volume.

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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

The Latest Purchasing News!

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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.

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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

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