It’s back to school season for those of us with kids. And as we all know, a critical part of the first week of every school year is the back to school essay on “what I did this summer.” Rather than ask Supply Excellence readers to retell their tales of bocce ball, beaches and overpriced beer, I thought it might good to have us all share some of the nuggets of wisdom we’ve picked up in the last few months.

So, what did you learn this summer?

Any training sessions, websites, negotiations, or even pool side procurement epiphanies that have yielded insights that other readers could benefit from?

I’ll get things started…

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Editor’s note: Last week, we ran a post asking for input on the potential supply chain challenges companies will face during the economic recovery. Several influential and visionary people in our field provided some great insights, including Jeff Onesto, Gerard Aldridge, and Jon Hansen. But I think the response from Jeff Gordon, founder of the Software Licensing Handbook, warranted it’s own post since he tackled a risk that I suspect few companies anticipate and even fewer alleviate. Jeff agreed to expand on his comments as a guest post. Take it away Jeff…

I’ve been giving your question - “What challenges will your supply chain face during the economic recovery/expansion?” - a lot of thought and I have one really large risk that keeps popping into my head based on my experience as a buyer for several large organizations:

“Unfettered buying caused by instant amnesia.”

It’s as simple as that. When the spigot gets turned back on, the result is that people just start buying again without any thought as to what they’re buying or why. They’re able to buy again, so they do. They don’t for a minute think about why they weren’t able to buy for the last little while … only that they are allowed to do so now.

The problem really hearkens back to the fundamentals

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A Supply Excellence reader emailed me last week after reading some of our posts on managing supply risk. As Neil Tyson, Owner of GnT Fraud Solutions, pointed out, we have not discussed the risk posed by fraud. Neil was kind enough to agree to share his insights on the topic here on the blog:

“Firstly the issue of fraud risks is quite often an after-thought when contracts are negotiated and drafted. People seem fearful of using the ‘f’ word. Partly this may be because they don’t want to give the impression of not trusting potential contractors, partly this may be because they don’t want to admit to the potential for fraud to occur.

Secondly even when fraud risks are considered in the initial drafting of the contract, minor tweaks to clauses are made subsequently as the final contract wording is agreed. All too often the excellent original risk assessment is rendered obsolete by these changes, but no-one recognizes this and consequently the risk assessment is not re-visited to make sure it is still valid. (This also occurs in process and policy design projects too).

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We recently stirred up some interesting debate over risks and legal contracts, specifically regarding balancing risk and whether or not companies are actually protecting against the right kind of risk (or introducing risk and losing opportunities in the process). But we truly touched a nerve with a post quoting a presentation where a procurement leader at a large corporation suggested starting with a supplier’s paper rather than their own for some types of purchases. Given the emotions and indeed risks around the topic of legal contracts, I found an anecdote by Tim Cummins during a roundtable at the Ariba LIVE event in London a few weeks ago to be very thought provoking.

Tim, the President and CEO of the International Association for Contract & Commercial Management (IACCM), told the story of an IACCM member company that decided to do an experiment with their buy and sell side contracts. They had their in-house legal teams do a blind review (the company name was concealed) of their own contracts to look for misplaced priorities and potential exposure. Their sell side legal team looked at their own company’s buy side contracts and vice-versa for the buy side team, who reviewed the sell side team’s paper. To quote Tim on the findings:

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Tim Cummins, President & CEO of IACCM, discussed their organization’s recent survey results, which found a majority in contract/legal roles feel their company does not focus on the right types of risks.

***The video interviews from the NY, Chicago, San Francisco and London Ariba LIVE World Tour events are now in a playlist on YouTube.***

Justin Fogarty is Managing Editor of Supply Excellence. For any questions or feedback on the blog or its contributors, Justin can be reached at jfogarty[at]ariba.com.

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