An Affiliate of

92 Years Old and still counting!

December 2012 Volume 21, Issue 7

Communiqué Newsletter of NAPM-Indianapolis, Inc. Established in 1917

Inside This

Issue:

Letter From

the Board

1

Manufacturing

Activity Picks

Up in October:

2-3

Purchasing Stra-

tegic Planning:

CPOs, Have You

Done Your

Homework?

4-5

Making Opera-

tional Excellence

a Way of Life

6

How can you

draw the line

between being

flexible and be-

ing spineless?

7-8

Six Traits of

Procurement

Excellence

9

Upcoming

CPSM Certifica-

tion Details

10

ISM Term of the

Month

11

New Member 11

NAPM-

Indianapolis

Calendar of

Events

12-14

As we bring 2012 to a close and look forward to 2013, we should take some

time to reflect on both our professional and personal successes of the past year.

We can also think about what we’ve learned from any of the projects that maybe

didn’t go quite as well as expected.

In early 2013, NAPM-I will become ISM – Central Indiana. The board members

have worked diligently to make this transition happen. Feedback from NAPM-I

members has been extremely valuable and much appreciated. (I especially appre-

ciate that you take the time to respond to my surveys.) Overall that feedback

has been very positive, but for those of you who may not be quite as certain

about this change, our hope is that ISM – Central Indiana will be an organization

of individuals comprising all supply chain functions. None of the current benefits

or services will be negatively impacted. Our organization will be more readily

recognized both locally and nationally.

Perhaps you’ve considered becoming more involved in our organization. The be-

ginning of a new year would be a great time to become a volunteer on one of our

committees. Our members are what make this a great organization and we are

always looking for innovative ideas and fresh new eyes. If you are interested, you

may contact any of the board members to discuss opportunities.

In closing, on behalf of the entire Board of Directors, I would like to wish each of

you a wonderful holiday season. Here’s hoping that next year is a great year for

everyone! Don’t forget our first PDM of the New Year, will be January 17th at

Maggiano’s. See you soon!

Mira Pike, Director of Excellence

Page 2

Manufacturing Activity Picks Up

in October:

Production and new orders show

growth but Europe, fiscal cliff worries

are drag on U.S. manufacturing.

The October manufacturing report from the Institute for Supply

Management showed the sector edging up to 51.7%, an increase of

0.2 percentage point from September's reading of 51.5%. Readings

in the widely followed index over 50 indicate growth in manufactur-

ing.

The ISM report showed both new orders and production increasing

in October. New orders rose 1.9 percentage points to 54.2%, and

production registered 52.4%, an increase of 2.9 percentage points.

However, the employment and prices indexes both weakened. The

employment index fell 2.6 percentage points to 52.1% and the

prices index was off 3 percentage points to 55%.

Comments from the purchasing managers polled “reflect continued

concern over a fragile global economy and soft orders across sev-

eral manufacturing sectors,” said Bradley J. Holcomb, chair of the

ISM’s Manufacturing Business Survey Committee.

“The October ISM report provides some reassurance that manufac-

turing is growing again, albeit at a slow rate, and not slipping back

into recession,” said Daniel J. Meckstroth, chief economist for the

Manufacturers Alliance for Productivity and Innovation (MAPI).

“Manufacturing activity was very much front-loaded in 2012. Manu-

facturing production, as measured by the Federal Reserve, grew at a

10% annual rate in the first quarter, expanded at only a 1% annual

rate in the second quarter, and fell at a 1% annual rate in the third

quarter—signaling that manufacturing was effectively flat in the

spring and summer. The ISM report supports MAPI’s forecast that

fourth quarter manufacturing production will grow at a 2% annual

rate.

President

Megan Mills President@napm-

indianapolis.org

Vice-President

Stacie Neuhaus, C.P.M.

VP@napm-

indianapolis.org

Treasurer

Erica Voetsch CPSM Treasurer@napm-

indianapolis.org

Director of Programs

Patrick Carroll, CPSM Programs@napm-

indianapolis.org

Director of Education

Michelle Moore Education@napm-

indianapolis.org

Director of Communications

Dan Levine Communications@napm-

indianapolis.org

Director of Membership

Ron Wright, C.P.M. Membership@napm-

indianapolis.org

Director of Excellence

Mira Pike Excellence@napm-

indianapolis.org

Secretary

David Mumper Secretary@napm-

indianapolis.org

Past President

Lea Anne Fuchs, C.P.M., CFSP PastPresident@napm-

indianapolis.org

Office Manager

Wendy Bayley

317-889-9225 CustomerService@napm-

indianapolis.org

Phone: 317-889-9225

E-mail:

CustomerService@NAPM-

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Page 3

Of the 18 manufacturing industries in the ISM index, eight reported

growth in October in the following order: petroleum & coal prod-

ucts; furniture & related products; apparel, leather & allied products;

paper products; miscellaneous manufacturing; food, beverage & to-

bacco products; plastics & rubber products; and chemical products.

The eight industries reporting contraction in October — listed in

order — were: primary metals; wood products; machinery; fabri-

cated metal products; transportation equipment; electrical equip-

ment, appliances & components; computer & electronic products;

and nonmetallic mineral products.

Manufacturing Outlook Should Improve

“The rebound in U.S. activity echoes the improvement in the Chi-

nese PMI, with both gaining on domestic related strength. European

PMIs, on the other hand, continued to pullback in October,” noted

James Marple, senior economist for TD Economics. “The European

recession continues to be a drag on manufacturing output, but the

nascent improvement in the U.S. housing sector is providing some

support to manufacturing activity. As Europe's recession fades and a

modest recovery takes hold, the outlook for manufacturing should

improve further - buoyed by both external and internal sources of

demand.”

“The current pace of growth in manufacturing is modest and

should be much stronger,” MAPI’s Meckstroth added. “There is pent

-up demand for motor vehicles and housing and the capital stock of

equipment and structures needs to be replenished. A potential capi-

tal spending boom is being held back by the uncertainty concerning

the ‘fiscal cliff,’ the uncertainty about the severity of the recession

in Europe, a lack of clarity on future business tax policy, and the

lack of business confidence that policymakers can come up with a

credible plan for federal deficit reduction.”

Phone: 317-889-9225

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Page 4

Purchasing Strategic Planning: CPOs, Have You

Done Your Homework?

By Paulo Moretti

Every single year all companies face the budget planning cycle. At com-

pany level, this is defined as the revenue target, the costs and expenses

to run the company, and, the profitability for the following year. In a

perfect world this process should be two-way street where the corpo-

rate leadership defines the targets with functions and businesses giving

their input. In the end, all functions and businesses must follow the cor-

porate guidelines.

Short Term Planning

Once the company’s targets are defined, the CPO or Vice President of

Purchasing should define the Purchasing targets for the following year.

There are several Purchasing metrics available in the function that

should be part of planning cycle. However I’ll mention a minimum of

four targets the function head should define: Total Spend, Addressable

Spend, Savings and Resources (FTE).

Total Spend can be calculated using the company’s revenue and

CAPEX (capital expenditures) plan.

Addressable Spend can be estimated based on the previous year’s

sourced spend; contracts which will expire in the following year as well

as major spend needs based on Revenue and CAPEX.

Savings can be defined based on improvement from the previous year’s

savings in percentages (Savings/Addressable Spend), market economic

cycle and relative position to market savings based on benchmarks.

Resources (FTE) can be calculated based on a budget defined by the

corporation and previous year’s capacity (Spend/FTE) for each commod-

ity.

With these four targets, as VP of Purchasing or CPO, you are covering

Efficiency (Addressable Spend / FTE) showing how much you can handle

with existing resources and Effectiveness (Savings/Addressable Spend)

showing the quality of your sourcing projects.

Based on these targets, each Commodity Director can start defining

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Page 5

the projects to be sourced next year, using the same metrics, and, the

Sourcing Managers (buyers) can define their personal goals using the

same metrics.

Long Term Planning

Strategic Planning is more elaborate and time consuming. The CPO or

VP of Purchasing should lead the Strategic Planning exercise every

three years covering the next five years. The objective is to define: Vi-

sion and Mission for the Purchasing function, as well as the Objectives

and Goals for the next five years.

There are several methodologies to define this roadmap; however my

preference is get grounded in facts; externally and internally. Let me

elaborate about it.

Externally: Generate data from Global Economy Trends, Your Indus-

try Trend and External Purchasing Trends.

Internally: Get data from Your Company (Business) Strategy and

Your Purchasing Function.

Once you get all the information and data, through several sessions

with the purchasing leadership, cluster and affinitize the ideas and

trends into five to seven themes related to the Purchasing function.

For each theme, define the strategic objective. Now you have enough

material to define the Vision and Mission for Purchasing.

For each strategic objective, you need to define the goals for the next

five years. Define as many goals as you think appropriate, then priori-

tize them by using value and impact to the company, also defining the

completion date. It is recommended that for each strategic objective,

the CPO defines a person from leadership as “owner” of the objec-

tive.

Once you complete the Long Term Planning, it is much easier to do

the Short Term Planning because now you understand the “roadmap”

and each year you refine the goals aligned with the business strategy.

As strategic planning is complex and time consuming, it can be worth-

while to have an outside consultant to help with the development of

this process, at least for the first time. The consultant is unbiased and

has an outside perspective helping to challenge the goals.

Phone: 317-889-9225

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Page 6

Making Operational Excellence a Way of Life Operational Excellence Update, Nov, 2012

In October, Hewlett-Packard’s six-year run as the dominant maker of

personal computers ended when China’s Lenovo group (owner of the former

IBM PC unit) edged out HP in shipments of PCs for the previous quarter. Was

the shift for HP inevitable? Perhaps it was a matter of time. PC sales are down

overall as people move from laptops to other types of personal devices such as

smartphones and tablets. HP has also suffered from acquisitions missteps, nota-

bly the Palm fiasco in 2010. And Lenovo has been gaining on HP, partly because

of its acquisitions but also because it is better positioned in emerging markets.

Here’s another crucial point: As HP’s chief executive Meg Whitman put

it during the company’s annual meeting with Wall Street analysts in early

October, “Operational excellence should have become a way of life” at

HP. “I’ve learned at HP that you do not get what you expect, you get what you

inspect.” These are telling remarks from a CEO about the criticality of opera-

tional excellence.

In an interview with the Wall Street Journal, Whitman also commented that HP

has diminished its capabilities for building talent internally over the past 10

years. Hewlett-Packard was long known for excellent talent development, and

was a pioneer of practices such as MBWA(management by walking around—a

management style in the same spirit of lean practices such as going to the

gemba and leader standard work). But the last four HP CEOs have come from

outside the company, and HP is in chaos (more or less) with problems in inter-

nal communications and ineffective management systems.

Two key takeaways here: 1) It’s virtually impossible for operational excellence

to take hold and be sustained in an organization unless its top leaders are ac-

tively and consistently engaged. And 2), instilling operational excellence in the

corporate culture is essential for long-term success.

As Art Byrne says in his new book The Lean Turnaround:

Improving your operations (i.e., your value-adding activities) by

relentlessly trying to find and eliminate the waste should be your primary,

all-consuming strategic focus. … Most people see Lean as some

“manufacturing thing,” and so they simply make it one element (usually

a minor one) of their overall strategy. Lean gets delegated to operations

and gets an increasingly narrow focus on cost or inventory reduction.

…. It can’t just be delegated down. The CEO must lead it in a hands-on,

out-front, in-the-gemba (workplace) way. If the CEO won’t change his

ways and become totally engaged …, then there is little, if any, chance of

turning any company around using the Lean principles. The focus has to

be on creating value, not on cutting costs.*

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Page 7

How can you draw the line between being

flexible and being spineless?

Written by: Lynn Zettler, Owner & President at LifeAction Coaching Inc.

In the business world there are those who are naturally assertive,

quick to make decisions and let others know if expectations are out

of line, and there are those who are naturally flexible and more in-

clined to be the giver when compromise is needed.

If you identify with the latter personality, you may find yourself strug-

gling to walk the line between flexibility and becoming what others

view as spineless, a pushover, or someone that can be taken advan-

tage of by being given extra assignments, pushed for a better deal by

clients, or asked to cover for another’s responsibilities. No one

wants to be treated this way in their business relationships. We want

to feel valued and respected – and the first step to successful busi-

ness relations is establishing boundaries early in the relationship that

allow for both flexibility and respect.

Boundaries are important in every relationship. You have to know

what your limits are – what you need to take care of and what you

don’t need to take care of, what you will tolerate and what you

won’t tolerate. In the business world, being too flexible or

“spineless” can impact not only your ability to do your job effec-

tively, but it can hurt the reputation you earn among coworkers and

clients alike.

Whether we are aware of the perception or not – weak boundaries

are associated with weak or needy personalities. Strong boundaries

are associated with strong, confident people – natural leaders. In ad-

dition, strong boundaries can enhance the work environment. For

example, a manager who sets a boundary that he must leave work

by 5:30 in an office that is used to putting out fires until 6 or 7 pm

had to find another way to get it done. Others in the office started

setting boundaries as well and the whole work process is now more

streamlined and efficient.

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Page 8

Your ability to set boundaries is a direct reflection on how much you

respect yourself, your time and your talents. Our behaviors are con-

stantly giving clues to others about how we will allow ourselves to

be treated. If you don’t like the way that you’re being treated by

someone, don’t blame them, change how you treat yourself. Make

your boundary known in a positive way and reinforce it whenever

needed. Remember — you are building a foundation for successful

and respectful relationships.

Setting boundaries with clients and coworkers is what is best not

only for you and your career – it is what is best for the corporation.

Boundaries encourage efficiency, keep us from becoming overcom-

mitted and overwhelmed, manage expectations, allow room for ap-

propriate flexibility and create a respectful, balanced atmosphere

where employees’ time and efforts are valued.

Even if being assertive doesn’t come easily, you can learn to set

boundaries that work within your comfort level – and are a match

for your naturally flexible personality, because the best boundaries

and solutions work towards a win-win for both parties. One of my

favorite books, Crucial Conversations, is a great read and will help

with any relationship and looking for a win-win solution.

Remember, opportunities to set boundaries are everywhere, and

once you establish your boundaries, learning when and where it

makes sense being flexible will come naturally.

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Page 9

Six Traits of Procurement Excellence The Point, November 2, 2012

Definitions of excellence are constantly changing. A friend of mine is

in rehab, gaining strength and learning to walk again. A few years ago,

hiking, swimming and running was no big deal. Now it is excellent

for them to walk down the hallway without resting.

The same is true in procurement. What skills have been utilized in

the past are not enough anymore. We have seen that in many of the

articles and publications that have been reviewed by Buyers Meeting

Point.

This blog from procureXcellence discusses Six Traits of Procure-

ment Excellence. Once again, we learn that being a good negotiator

is not enough for procurement professionals. In the past that was all

that mattered but now there is so much more. This was published

by Robert Brindle who has accomplished a great deal while trans-

forming procurement organizations.

Here are highlights of the six traits.

• “Leading companies align procurement strategy with the overall goals of

the company. These companies also engage more fully with other business

functions to address a larger percentage (94 percent) of external spend-

ing.”

• “Leading companies consistently outperform other companies in contri-

butions to top–and–bottom line strategies.

• “Leading procurement organizations excel at risk management by antici-

pating, tracking and planning mitigation strategies covering a wide range

of threats.”

• “Leading companies use supplier relationship management (SRM) proc-

esses more consistently than followers

• “Leading companies are far more advanced in their adoption of technol-

ogy.

“The leading companies are more forward-looking and bold in their

approaches to recruiting and retaining top talent, including establishing

relationships with universities and using a systematic approach to

managing a more diverse and dispersed workforce.”

Since none of us are perfect, which of these are strong traits for you?

Which need some attention to get better?

Page 10

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NAPM-Indianapol is MEMBERS HIP

September, 2009

270

Building a Powerful Profession:

One Member at a T ime

Social Media in the Supply Chain

Page 11 Volume 21, Issue 7

ISM Membership

38,996

Number of CPSM®s

5,211

Number of CPSD®s

253

NAPM-Indianapolis

Membership

224

New Members of our Affiliate

Please welcome the following new members of NAPM-Indianapolis, Inc.

Name Company

Ronald Young Rolls Royce

Rilla Borders Dupont

The Board of NAPM-Indianapolis would like to express a warm welcome to each of our new mem-

bers. Please let us know how we can better serve you by answering any questions you may have.

ISM Term of the Month:

DELIVERY TERMS

Conditions in a contract relating to carrier and routing, freight charges, place of deliv-

ery and time of delivery.

Join us on Linked-In and NETWORK, NETWORK, NETWORK with your colleagues.

http://www.linkedin.com/groups?about=&gid=1817281&report%2Esuccess=r3Tayp0nRRro3Er8iWS8vO-u_mFd11ndGIOEdAI27ES3KgpplepkOcIgotS3mJWzXqb2u21wqjDJwM

Phone: 317-889-9225

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Page 12

Registration & Networking—5:30 PM

Dinner—6:00 PM

“FREE” for Members $40 for Guests $20 for Students

Prior to Monday, Jan 14th.

PDM Location:

Maggiano’s 3550 E 86th Street

Indianapolis, IN 46240

Phone: 317-889-9225

E-mail:

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Page 13

NAPM-Indianapolis Monthly Calendar

DATE DAY TIME EVENT

1/17/2013 Thursday 5:30-8:00 PDM

Speaker Mike Hicks

Economic Outlook for Indiana in 2013

Location Maggianos, Keystone at Crossing

2/21/2013 Thursday 5:30-8:00 PDM

Speaker Joe Arruda

Health Care cost and the Supply Chain

Location TBD

All reservations must be received and paid prior to the Tues-

day before the PDM. No meal guarantee for reservations af-

ter this date or unpaid reservations. No price guarantee after

this date. All cancellations must be made 48 hours in advance

for a refund consideration.

Please remember that if your plans change and you cannot make an

event, you must contact the Office Manager, Wendy Bayley (317-889-

9225 or customerservice@napm-indianapolis.com), to cancel your res-

ervation. You cannot cancel a reservation on-line.

Members - Free.

Early Bird Specials: Academic Members - $30 if paid prior to Tuesday, Oct 23rd.,

fee then increases to $35. Students - $20 if paid prior to Tuesday, Oct 23rd., fee then in-

creases to $25. Non-Members $40 if paid prior to Tuesday, Oct 23rd, fee then

increases to $45.

Phone: 317-889-9225

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Page 14

NAPM-Indianapolis 2012-2013

January 17, 2013

Thurs-day

5:30 pm

PDM – Economic Outlook For 2013 – Mike Hicks – Maggianos, Keystone at The Crossing – Earn 1 CEH

January 19, 2013

Satur-day

8:00 am

Certification Review Classes – Foundation of Supply Management – University of Indianapolis – Earn 16 CEH’s

February 21,

2013

Thurs-

day

5:30

pm

PDM – Health Care Cost & The Supply Chain – Joe

Arruda – Indianapolis Zoo – Earn 1 CEH

March 21, 2013

Thurs-day

5:30 pm

PDM – Extended Supply Chain Management – Tech-nology Tools To Survive The Unforeseen – Don Jour-ney – Piper’s Grand Manor, Greenwood, Earn 1 CEH

March 16, 2013

Satur-day

8:00 am

Certification Review Classes – Effective Supply Man-agement Performance –University of Indianapolis – Earn 16 CEH’s

April 18, 2013 Thurs-day

5:30 pm

PDM – Venture Capital & The Supply Chain – Matt Neff – NCAA Hall of Champions – Earn 1 CEH

April 27, 2013 Satur-day

8:00 am

Certification Review Classes – Leadership in Supply Management –University of Indianapolis – Earn 16 CEH’s

May 16, 2013 Thurs-

day

5:30

pm

PDM – President’s Night & A Supply Chain Manage-

ment Guide To Business Continuity – Jazz Kitchen, Broad Ripple – Earn 1 CEH

May 2013 Thurs-day

12 Noon

Golf Outing