Best Practices in Supply Management Journal

68th Edition, October 2014

Articles In This Issue
"Trends in Contract Drafting Today"
"Professional Certifications - Intersting Choices for Supply Chain Employees"

Founder Appearances, Articles, and Reader Job Opportunities.

 

Upcoming Public Founder Appearances and Online Events:

October 19th to 22nd at the Fairmont Dubai Hotel (5 Star).  Mark Trowbridge will conduct a three day public workshop titled Innovative Trends in Technology ContractingClick here for registration information at Conference Signup

November 10th to December 19th Mark Trowbridge will teach and moderate a six-week long online training forum on the topic of Strategic SourcingWeekly web videos and online class discussions & assignments will be part of this forum.  Click here for registration information Online Sourcing Forum Signup
 
November 11th to 13th at the Fairmont Dubai Hotel (5 Star).  Mark Trowbridge will conduct a three day public workshop titled Expert Technology ContractingClick here for registration information at Sourcing Conference Sign Up

Job Opportunities:  We are currently helping clients fill the following SCM career opportunities.  Contact Strategic Procurement Solutions by clicking the following link if inerested...Apply for Job Opportunity (Type Job Title Into Subject Line)

- Senior IT Procurement Sourcing Manager, Nashville, TN USA.  Annual Base Salary between $110K and $125K USD, plus excellent bonus and benefits packages.  Relocation negotiable.

- Category Manager - Executive Services, Princeton, NJ USA.  Manage a team of people sourcing/managing a corporations acquisitions of Professional Services, Travel Services, Fleet Services and other Administrative Services.  Annual Base Salary between $115K and $130K USD, plus excellent bonus and benefits packages.  Relocation negotiable.

- Marketing Sourcing Specialist, South San Francisco Bay Area, California, Technology Company.  Annual Base Salary between $100K and $120K USD, plus bonus and benefits.  Relocation negotiable.

- Conracts Manager, South San Francisco Bay Area, California, Technology Company.  Annual Base Salary between $115K and $130K USD, plus bonus and benefits.  Relocation negotiable.

- IT Sourcing Specialist, South San Francisco Bay Area, California, Technology Company.  Annual Base Salary between $100K and $120K USD, plus bonus and benefits.  Relocation negotiable.

- Director of City Procurement, A greater Sacramento Area City, California. Experienced governmental procurement leader with strong Capital and Operational procurement and contracting skills with background in progressive municipal procurement.  Base Salary between $115K and $125K.  Strong Benefits Package. Relocation Negotiable. 

- Procurement Specialist, South San Francisco Bay Area, California, Technology Company.  Annual Base Salary between $85K and $90K USD, plus bonus and benefits.  Relocation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

This electronic journal is distributed bi-monthly to 
nearly 13,000 Supply Management Professionals around the globe. Note that our educational articles are 'in depth', unlike most online publications.  We hope you enjoy this edition. Feel free to forward to your SCM colleagues!  And keep SPS in mind when your organization needs top quality Supply Management Consulting, Employee Skills Testing & Training, P2P Efficiency Reviews, Cost Reduction Support or SCM Staff Augmentation/ Recruiting Services.

 

 

"Trends in Contract Drafting Today"... by Mark Trowbridge - Principal, CPSM, C.P.M., MCIPS

During my years of working with contracts; initially in procurement roles with leading corporations and now in the consulting space, I have seen migrations in drafting principles. Recently, these trends have hit critical mass as they impact contract documents for a majority of organizations.

 

This article will discuss three trends in contract drafting being employed  to an increasing degree by leading procurement organizations:

 

Trend One - Business English  is Replacing Legalese. Consider a sentence which reads like this:

 

 "Notwithstanding the foregoing, the rights granted to XYZ Corporation shall heretofore inure to its Affiliates, as such term is defined herein, but not in any such manner which shall impede Corporation's ability to enjoy such rights heretofore."

 

ReallyNow fill a 25 page contract document with similarly-constructed sentences, and you've ensured the Sales EVP won't sign the agreement without having their attorneys tear it apart.

 

So where did "legalese" originate? Some has evolved throughout the history of contracting. Case law precedence has been built around certain legal terms (such as "indemnification") which has ongoing merit.

 

But some words like "hereunder" or "therein" may have developed for another reason...money.

 

Long before we had the Xerographic process or even printing presses, copies of legal documents were made by a group of well-paid persons called "Scribes". A royal or their attorney might dictate or write a contract, and then the scribe would create a clean copy (and often additional copies for the benefit of other parties). Guess how scribes were paid? That's right, by each line of text. Scribes were not cheap either, due to the expectation for perfect documents. Errors could not be erased or whited out, and the scribe would typically begin a page again whenever an error occurred. Standards existed for the size of their text (similar to today's font sizes), and they were paid for every line of text they wrote on each copy.

 

So which takes up more space, scribing "in this agreement" or "herein"? It didn't take the attorneys too long to figure out how to get more words into a line of text by consolidating phrases into single words. The rest is history. And the problem has been compounded further by some attorneys who want/need their clients to rely on them to interpret legal documents.

 

But leading companies and their attorneys are beginning to move away from legalese towards more-understandable Business English. Some procurement groups are also learning that by making agreements be clear and understandable, some of their suppliers are turning them around more quickly; often signing contracts without involving a time-consuming and contentious legal review.

 

A few years ago, Strategic Procurement Solutions did a P2P Efficiency Review for one of the largest consumer goods manufacturers in the world. That company's executive team and general counsel's department had embraced the concept of making contracts understandable. For example, here are a couple of sentences from one of their legal documents:

 

* "Don't modify the materials or use them for any other purpose; if you do, you'll be violating our intellectual-property rights."

 

 * "We may terminate this agreement at any time and without notice to you if, in our sole judgment, you breach any term or condition of this agreement."

 

Note that you don't see "herein" or other legalese in either of the prior two sentences.

 

Now I'm not suggesting that all contract language can (or should) be made this simple. But if your own counsel won't draft a sentence that can be read and understood by non-attorneys, they may be seeking to guarantee their own employment rather than helping procurement put good working agreements in place with our suppliers.

 

Trend Two - Shorter Can Be Better than Longer. During my career,I've worked with many great attorneys; both in directing all contracting management for two different Fortune 25 companies and subsequently in helping many corporate and governmental clients improve their contract template and fallback clause libraries. This first type of attorney works alongside procurement leaders to make supplier deals come together with intelligent protections.

 

But a second type of attorney seems only to have listened to law school professors who said their main job is to protect clients from all risk. When placed in an environment (especially as external counsel) where they can bill by the hour, this unfortunate combination of perspective and re-numeration often results in contract documents that are far too long and complex; mysteriously-formatted so as to require frequent amendments whenever business conditions change.   Do any of our readers have this second type of legal "support"?

 

It's my theory that waving words under the nose of this second type of attorney is like waving a red flag under the nose of a bull. As soon as opposing counsel sees a complex or overly-long contract draft, the battle begins.

 

So here's a question. Is it better to have a short contract which says, "ABC Company's maximum liability under this Agreement shall be $100,000 (USD)" or to have three pages of language putting non-defined restrictions on different types of liability? The first group of attorneys is beginning to trend towards the former while the second group remains strongly fixated on the latter. 

 

As one of our clients recently said about an external attorney their company had paid to draft contract language, "Last week, we paid her to re-write language we had paid her to write in a nearly identical contract two months ago!"

 

Trend Three - The Rule of Ten. If we return in history... back to the days of our friends the "Scribes"... a trend emerged to resolve unclear handwritten numerical values. We still see that methodology today on our personal checks, which contain a space for the handwritten value of the check (for example, "One-Thousand, Nine-Hundred and Fifty Dollars & 50/100") and another space where we write "$1,950.50". This duplication of value allows the check processors at a merchant bank to accurately process the claim, even if the account holder's handwriting wasn't perfectly-clear.

 

This methodology continued past the days of scribes into the modern era. Typewritten documents were made with carbon paper copies which marred corrections (even when correcting typewriters were developed). Thus the second or third copy could not be clearly-read, even if a correction had been made to the first copy.

 

But today we have computers and printers which do not require the redundant statement of numerical values. They clearly print numbers. For that reason, as well as ease of reading, the Rule of Ten has been adopted by many attorneys and contracting professionals.   This principle says that if a numerical value is ten or below, it should be spelled out in letters (for example "nine"). But if the numerical value is above ten, it is stated with numerical characters (for example, "€968,005.56"). Using the Rule of Ten makes contracts shorter and easier to read, and still provides complete accuracy.

 

Lots of other beneficial trends are taking place with Business-to-Business (B2B) and Government-to-Business (G2B) contracts. Feel free to email us to learn more about those trends.

 

Strategic Procurement Solutions help clients in the private and government sectors optimize their Contracting Management practices. We work with procurement leaders and their legal counsel to develop template agreements, clause libraries and fallback language. We also evaluate contracting management processes, CLM system utilization, and techniques. Our skilled instructors train procurement audiences with onsite workshops like Strategic Contracting™ (2 days) and Innovative Trends in Technology Contracting™ (2 days).   More information can be requested at Info@StrategicProcurementSolutions.com about these or our other services.
 
 

About the Author - Mark Trowbridge, CPSM, C.P.M., MCIPS is one of Strategic Procurement Solutions founders. His 30 years in procurement leadership began in the Manufacturing, Airline, and Financial Services sectors...culminating in a role leading three-quarters of the strategic sourcing activities, and all of the contracts management responsibilities, for Bank of America (then, the USA's third most-profitable company). During his final two years with Bank of America, Mark's areas of responsibility delivered a Quarter Billion Dollars in cost reductions. During the last 15 years, Mr. Trowbridge has worked in the consulting field with many leading corporate and governmental clients. His business travels have taken him throughout North America, Europe, the Middle East, and Asia. He is a frequent author on supply management topics, with articles appearing in publications like Supply Chain Management Review, Inside Supply Management, IFPSM's eZine, eSide Supply Management, and Strategic Procurement Solutions' own Best Practices in Supply Management Journal.  Mark's  is among the top 1% Most-Viewed LinkedIn profiles.

 

 

"Professional Certifications - Interesting Choices for Supply Chain Employees"... by Robert Dunn, MBA, C.P.M., Principal

As our readers know, Strategic Procurement Solutions' company leaders have traveled quite extensively to work with clients and train audiences around the world.   During our client work during the last few months, we have been intrigued to learn perceptions about the procurement professional certifications which are felt by company leaders to be of most value.

 

This article will discuss interesting trends many groups are observing in the primary procurement certifications, as well as explain recent changes to the examination content for one of the leading certifications, the Certified Professional in Supply Management (CPSM)...

 

As many are aware, for mainline procurement two trade associations dominate the industry. With 45,000 members the Institute of Supply Management (ISM) is one of the largest procurement trade group in the world, and offers the Certified Professional in Supply Management (CPSM) certification. The CPSM certification seems to be preferred in North and South America and much of Asia.

 

Competing with ISM is the Chartered Institute of Purchasing and Supply (CIPS) which is based in London and seems to be the preferred credential throughout Europe, Africa, and the Middle East, as well as Australia. With a claimed 103,000 members, CIPS offers a professional designation named MCIPS, which has several levels of succession.

 

Little known is that if you have earned either a CPSM (from ISM) or a MCIPS (from CIPS) certification, by joining the other organization a reciprocity arrangement exists which allows you to secure their comparable certification.

 

A battle continues between the two associations for greater traction in Asia and Asia-Pacific regions. Companies headquartered in the United States tend to align with ISM and those with British roots seem to lean towards CIPS. Depending upon the roots of the parent organization or where the bulk of business is done, management may support certification through one or the other association. But both groups are investing in resources to capture more of that marketplace.

 

One factor which differentiates the two associations is that CIPS bridges both private and governmental procurement. ISM focuses more on private sector procurement and the elements of strategic sourcing, while leaving the unique nuances of governmental procurement to another trade group in North America, the National Institute of Governmental Purchasing (NIGP) which has 16,000 members.   Interestingly, CIPS and NIGP have recently announced a partnership that will provide synergies across international boundaries for those involved in governmental procurement.

 

Other certifications also have meaning within the supply management space. Those persons who have responsibility for inventories often earn a Certified Production & Inventory Manager (CPIM) certification from APICS (the American Production and Inventory Control Society). APICS has members in 200+ countries. Those having even broader supply chain oversight roles can also receive a Certified Supply Chain Professional (CSCP) certification; although this is less frequently held by those in procurement roles.

 

Those professionals who deal with contracts are often torn between allegiance with the National Contracts Management Association (NCMA) or the International Association of Commercial Contracts Management (IACCM). The former operates primarily in North America while the latter is smaller but with a growing international scope and less-oriented towards government. NCMA certifies contracting personnel with their Certified Professional in Contracts Management (CPCM) designation.

 

These are the certifications most-recognized within today's supply management world. Of course these certifications can be augmented further by process expertise, such as LEAN, Six Sigma, PMP, etc.

 

For those persons who wish to earn a professional certification, these are the certifications most-recognized within today's supply management world.   PLEASE DO NOT spend time earning a spurious certification from one of the many consultancies, colleges, or training providers who are pitching their own certifications. These are not universally-recognized and lack the credibility of well-established credentials from the above trade association groups. In fact, these types of flimsy certifications may detract from your reputation as they will be questioned by potential employers.

 

Finally, many readers will be interested to know that the examination content for the three CPSM certification exams has recently changed. In the first major revision since the designation was introduced, the knowledge base has been altered to reflect newer procurement methodologies. In the 2nd Edition study guides and materials, more than 348 alterations have been introduced.   Some of the changes were relatively minor but others were substantive. Exams taken at ISM testing centers after December 2014 will reflect the revised study guide content.

 

Every one of Strategic Procurement Solutions' trainers are certified by ISM as instructors for CPSM exam preparation. Using our own proprietary 300 page training manual, we present a three-session series of workshops (one per CPSM exam) to corporate groups who are sponsoring their procurement teams in becoming certified. We also partner with ISM affiliates to train their members. Please contact us at Info@StrategicProcurementSolutions.com for information about these CPSM exam preparation workshops (or for details about any of our in-depth training programs on a variety of procurement and supply management topics).


 

About the Author:  Robert Dunn, MBA, C.P.M. is one of Strategic Procurement Solutions' founders.  His 40 years in procurement leadership covered management positions in the Government, Technology and Financial Services sectors; culminating in a role directing all of BankAmerica Corporation's procurement operations.  He has served as President of two ISM/NAPM affiliates, and taught supply chain management at the post-graduate level for California State University - Hayward and St. Mary's College - San Francisco.  He has also worked with major corporate and governmental clients in the consulting industry for the past 18 years, and was one of the founders of Strategic Procurement Solutions.   Robert has worked on major procurement initiatives in North America, Latin America, Europe, and Asia.  He is a noted author, with recent articles in eSide Supply Management and Strategic Procurement Solutions' own Best Practices in Supply Management Journal (the latter of which is now distributed to over 13,000 readers).

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