I continue to see improvements in the employment market for Supply Chain professionals. We are receiving more ‘direct hire’ inquiries regarding mid to upper level management positions. We’ve also seen more inquiries from Silicon Valley companies – a great trend. The other area that impacts Supply Chain professionals – the wage scale and the position titles are improving. I’ve seen more CPO titles appearing in job advertisements. The salary scale for Supply Chain professionals appears to be increasing at a higher pace than some professional titles. The recent salary survey from Purchasing Week and ISM also report wage increases.

Material and Contract Services will be rolling out its new EZBuy software in July. The software coupled with our cooperative/purchasing programs will save money for client companies. We are estimating savings in the range of 10 to 15 percent for most commodities. The value of EZBuy is also its capability to provide budget, commodity and dollar level controls to a department level. The catalogue feature will store the frequently purchased materials for your operation and it will allow easy access to the ‘core’ items purchased by your company and by a department. The software will electronically transmit packing slip and invoice data to the EZBuy system to facilitate the receiving and invoice processing functions. We will announce via e-mail when the flash demonstration becomes available on the MACS web site: www.macservices.us.

I hope our newsletter provides insights into new and current trends and prices in the commodities areas. Also, our data base of Supply Chain professionals is always a good source for ‘top professionals’.

Regards,

Dan P. Plute
President

Planning For Negotiation Success

“What should I do to be successful in negotiations?”

This question is frequently asked when teaching and discussing the art of negotiation. My answer is always the same. There is a direct correlation between time spent in negotiation planning and a successful outcome. Let me expand on my answer by defining NEGOTIATION and briefly identify and discuss the planning factors.

First, what is NEGOTIATION?

Ury defines negotiation “as a basic means of getting what you want from others. It is the back and forth communication designed to reach an agreement when you and the other side have some interests that are shared and others that are opposed.” Negotiation is a process that includes (1) planning, (2) negotiating, (3) reviewing results, and (4) analyzing results. Planning is the first activity in the process and is the keystone to a successful negotiation.

Agreements result from each side deciding that its own best interest is to agree rather than not to have an agreement. Prior to conducting negotiations, each party must decide under what conditions it has a better alternative to a negotiated agreement (BATNA). In other words, you must identify the conditions under which you will walk away from the negotiations. It is during the planning activity that an objective BATNA is determined. Planning is an essential activity in the negotiation success.

Second, why is planning essential to successful negotiations?

Planning is a critical element in the negotiation process. The research and compilation of information to develop a plan will reduce stress, avoid estimating errors, and identify areas of agreement. This information provides the negotiator the foundation to increase his confidence, effectiveness and control over the situation.

Third, if planning is important to ensure negotiation success, then what factors should be considered?

The following factors identify the scope of the planning effort. For each factor I give sample questions that should be addressed in developing the detailed elements in your plan.

FACTOR EXAMPLE / QUESTION TO ADDRESS

1. determine goals
What did you ask for in your Request for Proposal (RFP)? Which ones are essential, desirable, short term and long term?

2. identify issues
What was the difference between your RFP and the proposal received? Which ones are real, artificial, and available for trade offs?

3. analyze the market
Is it inflationary, deflationary, or stable? What is the product’s supply and demand condition? Is it a Buyer’s or Seller’s market?

4. assess strengths and weaknesses
What are my strengths and weaknesses? What are the other party’s strengths and weaknesses? What is my dependence on the other party? What is the other party’s dependence on me?

5. estimate other party’s bottom line and opening position
I know what he asked for, but what is his BATNA? What will be his opening and target positions?

6. consider win-win outcomes
Can I trust the other party to share information? Will there be a mutual gain by fair exchange of values?

7. setting your opening position
What offer can I make without insulting the other party?

8. setting your bottom line
What conditions would force me to walk away? Under what conditions do I change my BATNA?

9. choosing strategies and tactics
Is Take It or Leave It a good strategy to use? Will the bluff work? Is splitting the difference an advantage to me?

10. consider concessions and tradeoffs
What can I give up with low value? Should I expect reciprocal concessions in reaction to mine?

11. determine an agenda
What is the best sequence to discuss the issues?

12. analyze timing
Should I negotiate at home or at the other party’s office?

13. choose mode of communication
Should I negotiate face to face or use the telephone?

The above list provides you with the factors that should be considered in planning for negotiations. The example questions provide a non-definitive and general scope of the area to be researched. Depending on the complexity of the negotiation, each factor can include an extensive number of questions and decisions to be made. In general, for every hour of negotiation you should estimate ten hours for planning and preparation.

Finally, face to face negotiations can be filled with drama, tense theatrics, and emotional displays of convictions. Observers may walk away with the belief that successful negotiation is dependent on persuasiveness, oratorical eloquence, and explosive histrionics. Observers may view the process as interesting and even entertaining; however, the foundation of successful negotiations is not in game playing and dramatics. The foundation of successful negotiations is constructed in the planning activity that takes place before the dialogue. While negotiation success is affected by the way we play the game, it is the preparation of the game plan that leads to success.
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Mr. Edward Zabrycki's Biography:
Edward Zabrycki is an adjunct faculty member at the University of San Diego Supply Chain Management Institute and Dominican University in San Rafael. He is deeply involved in the supply chain management function as an educator, researcher and consultant. He retired as a Commander, Navy Supply Corp. with 23 years experience in purchasing, materials management and logistics. Ed’s teaching experience began as a Lecturer in procurement courses at Air University, an accredited University of the United States Air Force. His next assignment was as Associate Professor at the Naval Post Graduate School in the Project Management and Procurement Programs. Ed’s private sector experience includes being a Materials Manager for a small manufacturing company and an internal consultant for Pacific Gas and Electric Company where he introduced two major changes in their supply chain. He developed and implemented a Distribution Resource Planning software and created a cross functional team that included representatives from purchasing, engineering, warehousing, and construction to manage corporate steel pipe. As a direct result of these changes, steel pipe inventory levels dropped from $11 million to $4 million while service levels increased.
Ed received his BS degree from the U. S Naval Academy and his MBA from Ohio State University. He holds two certifications: Certified Professional Contracts Manager from the National Contract Management Association and Senior Logistics Professional from the Society of Logistics Engineers.
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Trio boosts paperboard prices

Packaging makers Rock-Tenn Co., Caraustar Industries and Sonoco are raising prices on all uncoated recycled paperboard grades by $15/ton effective with March shipments.

The companies last raised sales rates on bleached paperboard by $30/ton in October to offset energy costs that exploded after the late-summer Gulf Coast hurricanes. Caraustar says the latest price increase "is necessary as critical energy-related costs remain high without expectation that these costs will return to historic levels." Sonoco vice president Marty Pignone says "the increase is necessary to help offset widespread inflation in virtually all…raw materials, supply items and other production cost components." He adds that "these increased costs are not expected to abate in the foreseeable future."

Source: www.purchasing.com/article/CA6341647.html

Natgas storage glut could reduce prices

Natural gas prices are headed for a nosedive this fall as storage fields are filled to the brim, predicts Cambridge Energy Research Associates (www.cera.com) in Cambridge, Mass.

CERA says operational limits of some portions of the North American natural gas storage system may be reached this autumn--producing “real potential for an abrupt decrease in gas prices”--as some storage fields become unable to accommodate additional injections. However, this forecast needs warmer-than-normal summer or a lack of significant gas supply disruptions by hurricanes to drop prices from their current range of $6.50 to $7 per million British thermal units (BTUs).

Ken Yeasting, a CERA director, expects the North American gas storage inventory level to reach 4.2 trillion cubic feet by the end of October, or a working gas storage fill rate of 95%. At that point, Yeasting expects some storage fields, especially in the eastern U.S., will not be able to accommodate additional injections.
There will be little spare working storage capacity to accommodate additional gas supply, Yeasting says. “So, in today's North American gas market, where prices are market responsive, insufficient storage working capacity to accommodate all gas available for injection is likely to lead to a sharp and swift drop in spot gas prices…toward $5/million BTU," forecasts Ken Yeastin.

Similar findings come from consulting firm Bentek Energy of Golden, Colo., (www.bentekenergy.com) which has predicted that some major U.S. natural gas storage facilities will be full as early as July. Bentek’s analysis suggests that without hurricane disruptions or hotter-than-normal weather, many facilities will be turning away gas before the heating season begins. This analysis also sees the potential of natural gas prices plunging this autumn.

Source: www.purchasing.com/article/CA6341649.html

World coal prices still undecided

The world price for thermal coal continues around $50/metric ton, according to analysts at UBS Securities in Sydney, Australia, which isn’t forecasting much of an increase for fiscal year 2007 contracts. “Spot steam coal price continues to trade above $50/metric ton,” write the analysts this week. “So, a rollover at $53/ton or slightly lower on contracts seems possible” even though they say global markets continue to firm in favor of producers of the thermal coal used for electricity generation. Executives from major producer Rio Tinto indicated to the AFX News Service (www.afxnews.com) during a tour of the mining group's Australian project sites this week that the group has not yet settled contract prices for the current year which started in April, but spot market prices indicate that at least a roll-over contract price will be achieved. Rio Tinto is a major producer of thermal coal in Australia.

Source: www.purchasing.com/article/CA6341652.html?industryid=21950

Consumer prices post another sizable gain

May inflation data show big 0.3 percent rise as gasoline prices surge

WASHINGTON - Consumer inflation registered another sizable increase in May, pushed higher by soaring gasoline prices. Core inflation excluding food and energy was also worse than expected but analysts took comfort in the fact that the jump came from special factors.
The Labor Department reported Wednesday that its Consumer Price Index rose 0.4 percent in May after an even bigger 0.6 percent rise in April. Gasoline prices jumped by 4.9 percent and have been soaring this year at an annual rate of 69.4 percent, as motorists contend with pump prices above $3 per gallon in many parts of the country.
Excluding energy and food, core inflation rose by a larger-than-expected 0.3 percent. That increase was certain to get attention at the Federal Reserve, where Chairman Ben Bernanke last week said a recent uptick in core inflation has Fed officials concerned. Private economists said the advance made another rate hike at the Fed’s June 28-29 meeting a virtual certainty.
However, they said the advance was primarily driven by special factors related to how the government measures housing costs. Outside of the 0.6 percent rise in owners’ equivalent rent, inflation was fairly well contained, they said.
“This inflation figure is disappointing but it is not as bad as it appears at first blush,” said Mark Zandi, chief economist at Moody’s Economy.com.

Source: www.msnbc.msn.com/id/13312533/

PSA Welcomes New Staff Members

The strong job market has caused PSA to expand and add several new professional recruiters. These include Janet Beck and Kim Schweitzer in northern California as well as Tony Dineen and Dennis Haskvitz in southern California. PSA has also hired Ron Carrigan to handle business development in southern California and brought Jeff Hickenbottom aboard as a Vice President to head a Sacramento office.

New Jobs Available

PSA has many new job opportunities, both contract and direct-hire. We welcome applications from any interested candidates. Our job listing can be viewed using the link below.

Click here for PSA's job listings.