Blog Entries

Negotiating for Sandwiches


A few days ago I sat at the dinner table with a couple and was part of a conversation that made me think of this article. They had recently bought a house and had to furnish it. The husband had bought all the furniture from one shop and had bargained down the price substantially. His wife’s comment sparked this column: "I could never ask for this much money off! I just want to hide when he does it".

Her embarrassment is a common fact in our culture. Bargaining or haggling has a negative tone to it. We leave a lot of money on the table in the US because of it. It starts when we walk into a furniture store to furnish an entire house without negotiating the price. And it ends at work, where a lot of us are just as uncomfortable to ‘ask’ for business or a raise. Few people are born with the urge to negotiate here. It really is too bad, because I firmly believe that everything can be negotiated. Yes, everything: The interest rate on your mortgage or the sandwich in your favorite restaurant, to name just a few. And yes, I have done it. Like the husband in my story (who happens to be my brother), I like to negotiate. Not only does it keep me sharp for my professional negotiations, but also I truly enjoy it.

Negotiations have to be planned and prepared. It takes only a moment to work out the strategy for a discount on a sandwich, but contracts with suppliers or your raise require serious efforts. The rewards are well worth the time to do this. Negotiation strategies and plans will yield better results and, if prepared in a win-win approach, will make both sides happy. Like my brother who saved money, and the storeowner who sold a whole house full of furniture in one afternoon.

Writers Blog or the Art of Problem Solving


Maybe the holidays have left a little bit of the relaxed thinking in peoples’ minds; resulting in calm and well-managed months for my clients.

So this is really a good problem to have, but: I can’t readily think of a topic or issue for the newsletter this month. I stared at my page for a while, at the cursor, thought about the fog today and how good it felt when the sun came out. I thought about my son asking me (truly an Oregonian): “Mama, why is the sun shining all of a sudden?” “So we can make it until summer”, I answered. I forced myself to stare at my cursor again.

And then I decided to do what works best for me when I need to solve a complex problem: I go running. I realize this may not always be easy during the workday. But I challenge you to try it: Exercise works wonders for writer’s block or a multi-layered issue. The key to a successful run for me lies in first clearing my mind. I do this by using mindfulness principles: I force my mind to stay in the present. This is a tough thing to do for most of us, but it is achievable.

Focus on breathing and the sound of your breath. Maybe birds are singing. Maybe cars are zooming by. Focusing on sounds works well because they only exist in the presence. It will help your mind to stay in the presence as well. After a mile of running your mind will be quieter, mindful and ready. Now comes the fun part: Thinking about your problem. Just think about it, and try not to judge thoughts that might be odd at first. Just keep running, keep pounding that pavement, and keep thinking. There is some real magic in that extra oxygen flowing through your brain.

At the end of the run, you will most likely have the answer.

Keeping up with Expiring Contracts


Fall is truly here now. The leaves are changing from pretty colors to brown slush and the rain remembered us as well. It is easy to get drawn into the holiday activities and forget work. What I hope you haven’t forgotten in the midst of all this fun stuff are some important things for your supply chain: contracts, non-disclosure agreements (NDAs), and forecasts.

It is easy and quite common, human even, to create these documents and then forget about them. But, that can have unpleasant surprises. Contracts can expire, increase your prices or automatically renew themselves (ALWAYS read the fine-print!). NDAs expire and expose your precious intellectual property. Forecasts get ‘old’ and end up not really being a forecast at all at their very end.

So instead of coasting through the last weeks of the year, you should be busy ensuring that you are not missing out on some rather important action items. If you inherited less-than-pleasant contracts from your predecessor, remember last month’s column: everything can be negotiated. Even a very unfavorable contract. Do not assume that just because someone signed a seven-year contract with automatic annual price increases (without any comparison to what is going on the real world), you can’t renegotiate those terms. The same applies for NDAs of course.

And those pesky forecasts no one likes to do? Well, they tell your supplier what your estimates for consumption are and will make sure that they don’t stop planning for your product. If you haven’t already done so, start turning them into rolling forecasts instead of annual ones.

With those items completed, you will be able to truly enjoy this holiday season.

If You Shut Down Our Power Grid


“If you shut down our power grid, maybe we will put a missile down one of your smokestacks.”

With this rather powerful statement the Pentagon commented on their first formal cyber strategy, which concluded that computer sabotage coming from another country can constitute an act of war. This is the first time the US has considered answering with traditional military force when a cyber attack causes ‘death, damage, destruction or high-level disruption that a traditional military attack would cause’. This stems from the notion of ‘equivalence’, one idea getting more popular at the Pentagon. While certainly worrisome for most people with any imagination (who likes to think that hackers can gain access to sensitive military information, or start playing with the controls of your nuclear reactors?), a lot of us still look at cyber security as other people’s problems. Yet, this is a growing issue that we all need to address. And that means all of us. Most companies do not pay enough attention to this issue and find themselves under attack on a more and more frequent basis. Lockheed Martin Corp and broadcaster PBS are just some of the prominent recent victims. Banks are regular targets and almost no one gets upset anymore when another notice of ‘compromised personal information’ from several million users is lamented. On top of people trying to steal valuable data, so-called hactivists will surely become a force to reckon with as companies wrestle with their public images. In a recent WSJ article, Ted Chung, chief executive of Hyundai Card/Hyundai Capital Co., an auto finance provider in South Korea, was quoted saying: “When it comes to big companies or big banks, no CEO is that stupid not to pay attention. But maybe they pay the same attention I did, which is giving encouragement and budget to IT but then saying ‘What do I know about programming?’ he said in an interview Monday. “That is the wrong support.” Corporate executives have to take a more active approach to cyber security.

While you might feel like ‘putting a missile down your hacker’s smokestack’ after an attack, prevention is the better strategy and will keep your blood pressure lower.

On a personal level, it’s a wise decision to have different passwords for different things (yes, really)… and while you probably have decent security software on your laptop, you may not be as diligent with your smart phone. Hackers like to use those to get to your other accounts (like mobile banking, email, etc).

“Miscreants are continuing to find new and creative ways to exploit network, system and even human vulnerabilities to steal information or do damage. The challenge is that we need to block their exploits 100 percent of the time if we are to protect our networks and information. They can be right once; we have to be right all the time. We need to be ever-vigilant in our efforts to protect our assets, information and ourselves online.” says John N. Stewart, vice president and chief security officer, Cisco.

I could list recommendations of how to prevent these things but they would probably be outdated by the time you read this. What is important is to take an active role and be diligent with the information you use and transfer – your own or your employers. And if you are one of the lucky ones that have IT report into you – take an active role. Consider using VPN’s with business partners you trust and digital signatures to ensure your documents arrive un-tampered. Create an incident response team and consider hiring experts that can diagnose your network vulnerabilities. It may not eliminate all risks, but it will reduce your exposure greatly.



Modern Chairs


Remember my article about productivity and efficiency improvements? Have I got another one for you!

If your employees need a refresher or an introduction to TQM principles, I highly recommend the video Modern Chairs. In a little more than 10 min you are treated to one of the best summaries of TQM (Total Quality Management) principles, including an excursion into lean manufacturing that I have seen. It is done in the style of Charlie Chaplin’s movie ‘modern times’, with a nice dose of Scottish Humor; and not only do you learn something, but will actually enjoy the process. The objective? 6 stacks of 5 chairs each.

A group of men sets out to fulfill this customer order. The initial production takes 120 seconds. Through applying TQM principles like teamwork, process optimization (lean manufacturing) they reduce the cycle time to 90 seconds while maintaining flawless quality. That is a 33% improvement! This would make most people pretty happy. But our guys were not yet satisfied! They continue, to Orff’s dramatic Carmina Burana, to apply continuous improvement principles. This last important action of TQM brings the cycle time down to 65 seconds. And that even includes some (very important) time for cheering and celebration of the team at the end.

You, too, can learn how to cut your production time in half. Watch this video while sipping a cup of coffee. And if your employees haven’t been trained in TQM and/or Lean Manufacturing yet, it is time! It will increase your productivity and efficiency. Less waste helps everybody, even the planet. But that is another blog post altogether.

Things Change


Things change. But change, while often good, usually also means additional work. In our current economic climate, we have to achieve more with less. Increasing our efficiency and productivity becomes a top priority.

Many companies focus on supply chain optimization as discussed in ProcurementLeaders. KPMG noted that consumer companies worldwide report that “improvements in supply chain efficiency are critical to growth strategies with 50% of respondents intending to improve distribution structure, invest in technology, decrease inventory and consolidate suppliers”. Most low-hanging fruit have been picked and companies have to get more creative to optimize the supply chain. How? Optimizing the forecast and then lowering inventories for example. Re-shoring and thus lowering the logistics cost and inventories (again!) is another option to drive cost out of the supply chain. With the Chinese labor rates and currency rising at 17% per year, the US is becoming competitive for some manufacturers.

Another significant aspect in cost and strategic growth initiatives is information technology (IT) investment. More than 70% of respondents plan on investing in “IT systems for customer relationship management, enterprise resource planning, business intelligence and forecasting”. One way to achieve this is document control software that automates workflows, moves documents electronically and allows for complete version traceability of specifications, contracts, drawings, etc. And when was the last time that you updated your IT infrastructure? Do your systems have the uptime required to support your operations and allow you to ship on time? Do you use ERP and CRM systems that are tailored to your company’s specific needs? Customize where you can to reduce the redundancies in your systems. It will free your employees up for productive work and reduce your bottom-line.