By Mare Allen
Throughout the year we will be bringing you various articles and updated information about the GOVERNANCE REPORT being presented by National. There are a lot of mixed feelings towards this Study and your Affiliate would really like to know where you stand with it. You can contact either Ralph Long your DNA or Mare Allen/President and we can send you the NAPM Governance Report and Recommendations first draft booklet that was published April 29, 1999. You can also receive a copy when you come to the dinner meetings. It is very important that all of the NAPM members read and understand what this Governance Committee is proposing. There is general concern over the possible loss of responsiveness, the amount of volunteer opportunities, and the need for genuine two-way communication, to name a few. The Governance Committee changed several of the recommendations in response to input that they have already received from some of the Affiliates.

A summary of the revisions to the Governance Report is listed below, but might not mean a whole lot if you don't have the original Governance Report and Recommendations. So we can't express enough how important this will be to all the NAPM members. See the NAPM-SA Board instructions to the DNA for more information on the proposed changes and your Boards reaction.

1. NAPM Bylaws will state the nine-member Affiliate Support Council (ASC)
   Composed of one member per region, with the balance of members at-large, plus the CEO.
2. It is recommended a policy be written that the nine ACS members from affiliates consist of a balance representation with a minimum of two members each from large, medium and small affiliates.
3. The initial ASC will be selected after the vacancies are advertised in Purchasing Today magazine and Newsline (the same process that has been in place for some years. The nominations will go to the Executive Committee, and it will recommend to the NAPM Board.
4. Future ASC vacancies will be advertised as outlines in number 3 above. The ASC will then select, as indicated in the current proposal, from those who nominate themselves and those who are nominated by others.
5. The Bylaws will state to be eligible to serve as a member of the ASC, an individual must be a current NAPM regular member and have been an affiliate officer (as defined in policy) in the last five years. The bylaws will state district officers are eligible for a period of five years as defined in the transition section.
6. The ASC role on the Executive Committee will be strengthened by one while Board representation is reduced by one.
7. The bylaws will reflect that at least seven members of the Board must be NAPM members.
8. The ASC role on the Nominating Committee for the Board of Directors will be strengthened by adding an additional ASC member.
9. The quorum requirement has been raised to 1,000 and a clarification will be added explaining how members may vote via fax, e-mail, or mail-in ballot.
10. It has been recommended a policy be established for recommendations and suggestions allowing each affiliated association to send recommendations and/or suggestions directly to the ASC. The ASC will be required to act on each.
11. It has been recommended a policy be established for recommendations and suggestions allowing each group or forum to send recommendations of and/or suggestions directly to the Groups and Forums Support Council (GFSC). The GFSC will be required to act on each.
12. It has been recommended that up to five individuals from each affiliate be funded (lodging, meals and transportation) by national, beginning in 2002, to attend the summer workshops, with an annual review thereafter to determine the value continued funding.
13. The Governance Committee recommended to the NAPM Board of Directors that one extra day be authorized for reimbursement from NAPM for the District Council meetings in March 2000 and October 2000. This reimbursement will include the DNA's, directors, assistant directors, and four chairs

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By Scott Oldendorph C.P.M.
Do you remember having to say, "I didn't say that" or "That wasn't what I meant" to someone you had just spoke to. Communications and its accuracy are one of the biggest challenges that we all have to contend with. Everytime we speak that little voice of ours is talking to us asking the age old question, did my boss, co-worker, spouse or friend really understand what I just said? Did I clearly convey my message and it's intent? The vast majority of our daily communications are spontaneous in nature where we don't think first of what we are saying; our mouth is just is auto mode. These are responses to our environment we are in and as such are only successful to the extent what others "hear" and what we really meant to "convey".

Our guest speaker who will convey these tips for Strategic Communications is Carol Hartman C.P.M., NAPM District 1 Educational Resources Chair. Carol has been purchasing for over 20 years and is active in NAPM at the local, district and national levels. Most recently she was the co-chair for the 1999 NAPM 84^th International Convention recently held in San Diego, California. When Carol is not involved with her volunteer duties at NAPM, she is a Procurement Specialist at Solar Turbines, an international company in San Diego that manufactures land based power generation equipment. Carol has conducted many training seminars and classes in the areas of negotiation, supplier management and communication skills. She has even published articles in Pacific Purchaser, Purchasing Today, and in Simon & Schuster's Quality Management Bulletin and Purchasing Management Bulletin.

So I hope I have conveyed this notice or message well and have heard it's intent. Come, network, eat, listen and be merry when Carol Hartman talks to both NAPM-SA and APICS (American Production & Inventory Control Society) at the Doubletree Hotel on November 10 at 7:00pm. Remember, listening to the speaker is free but if your hungry the food does cost $18 so make your reservations.

By Ralph L. Long, C.P.M
If you have wanted to upgrade your professional status but always find something else needs your attention. Don't wait, sign-up for the NAPM-SA C.P.M. Review and start reading the NAPM Study Guide, Module One. During the Review we will discuss taking the test, and cover each of the Module One tasks. If you have already read over the information in the study guide this will be a real review. We will try to attach some meaningful experience to the materials and get you in a position to take the NAPM module one test. In the months ahead we plan to offer a review of the other three modules and hope the number of C.P.M.'s significantly increase in our affiliate. Remember sign-up now! The date is November 13th and the location is the Double Tree Hotel with registration starting at 8:30 AM. Lunch will be included and we will finish before "happy hour" at 3:30 PM. Call Mare Allen, 887-4816 or Ralph Long, 206-4759. This is a great opportunity to take a positive step in your profession. Act now, its important to your future. NAPM has authorized 5.5 continuous credit hours for taking this course.

Below is a letter to Ralph Long C.P.M. our affiliates DNA from the board of directors of NAPM_SA conveying our position in reference to the Governance report and recommendations.

To:     Ralph L. Long, C.P.M.
          Director National Affairs

From:  Board of Directors
           NAPM – SA

Subject:  Governance Report and Recommendations

Date: September 23,1999

The NAPM-SA Board of Directors have reviewed the subject report dated April 29,1999 and has serious reservations concerning the future of the affiliate and its relationship with the National organization. It is the Board's understanding that the October Council Meeting will include the report and future of NAPM as the major topic. Therefore the following guidance is provided to afford you a basic understanding of the positions taken by the Board in reference to the Governance Report and Recommendations.

First, the general conscience is that the committee and consultants have spent considerable time and effort in developing this report and recommendations and made an honest attempt to meet the objectives and goals set out for the reorganization, however what they have proposed seems to be a major shift away from support of the affiliates and placed several barriers in the strained communication links between the National organization and the individual members. The following are examples of recommendations that do not serve the members or affiliates.

One member-one vote. Members of the local affiliates entrust their local boards to represent them on district and national issues. If the majority of local members were surveyed they would respond that with work and family responsibilities, they do not have time to keep track of NAPM policies and/or Governance studies. They entrust the local affiliate leadership to do what's best for the local organization. You get the most informed vote using the current method. Historically a membership vote will result in less than 25% that care enough to vote and the members will lose control. The Board can "manage" any vote process. Continue the process of the affiliates placing block votes.

Regions verse Districts. The idea of five regions creates a watered down representation process where the local leadership will again lose. The current Districts/District Director system insures all affiliates have direct input in the operation and management of NAPM. The concept of Regions tends to limit local input, move local leadership away from having a say in the management of "our" organization. The smaller District operation allows training to be focused on the items important to the affiliates in a area. Joint Summer Workshops seem to work well as long as the participants agree to the type training needed. Continue with the Districts and do not go to Regions.

Elimination of DNA position. The DNA position has been valuable to the local affiliates by taking a leadership load off the president. National activities can be monitored and reported to the board by the DNA. Voting at district council meetings is another reason for this position. The DNA can carry an "informed " vote representing the membership and be responsible to the membership. The DNA can also be helpful in carrying the Affiliates concerns to the District level. Keep the DNA position.

Membership on the National Board. The recommendation is to set up a national board to provide "oversight to all NAPM functions, including having general charge, management, and control of the affairs, funds and properties of NAPM". This board will be made up of members and non-members, including individuals outside purchasing and supply management. No direct relationship to members. Members are allowed to "ratify" the selection. This seems to be governance with out representation. Are we giving away our organization??? The NAPM-SA Board can not agree to this arrangement.

An advisory board is reasonable. An advisory board of senior executives of major corporations has strong support from the board. This board should be advisory only and have no direct management responsibilities or authority.

Inadequate representation on the Affiliate Support Council (ASC). The ASC is to focus on the management and operational issues relating to the affiliates, however the membership is only one representative from each region plus five at large members from the affiliates. That means two representatives for over 25 affiliates. That does not seem like reasonable representation to this board. Do not support in this form.

Stacked representation of the Executive Committee. This committee is to address the operational issues, coordination and oversight of the governance process. Again representation was slanted toward central management and away from the individual member. The committee is made up of the Chair of the National Board plus three National Board members, two from the ASC and one from the Groups and Support Council and the CEO. The NAPM-SA Board can not support this recommendation.

The NAPM-SA Board understands that several changes were made at the August 20^th NAPM Board meeting and many of our concerns were taken into consideration. The package may be more acceptable, however there is still the question of why change for change shake. There are lots of opportunities to improve NAPM without mortally wounding the organization and forgetting about the "grass root" members as represented by the affiliates. As usual the NAPM-SA DNA is given the authority to represent our affiliate as he determines what is in the best interest of its members.

By Ralph Long, C.P.M.
The District 1 Fall Council Meeting was held in Las Vegas October 8^th and 9^th. The DNA's a few Presidents from affiliates in District 1 assembled in a small, smokey room with only bread and water to discuss the proposed changes as a result of the Governance Study. There was a lively discussion and differing opinions on almost all the changes. By the way, the smokey room with bread and water was a little exaggeration, but not any more than calling the changes "proposed". There are a few members that know what's best for the rest of us and are pushing this Governance Study. The District 1 Council was told that regardless of our stand, the changes will go to a by-laws vote, then make changes after they are approved. This didn't happen either. What did happen was a lot of discussion and very little agreement. Personally I feel the affiliates are on the short end and if we ever had any ability to influence the direction of the National organization it will be eliminated. Our local affiliates will still be responsible to the membership but will have very minor ability to communicate to the National Board.

The Governance Study Committee worked hard to get to this point and I don't know where they went wrong, but the result will be less membership driven and more central control. I 'm not sure how many of you care. That's the sad part. If you and the other members don't exercise your right to vote on the Governance by-laws changes, it will surely pass and you will no longer have a voice in the direction National takes. In the meantime if you would like to express your opinion, E-mail Dick Rick at the NAPM Web site (www.napm.org).

Other business discussed at the Council meeting include:

• NAPM-SA was recognized for the outstanding newsletter.
• Most affiliates are struggling with the Marketing Plan
• District 1 needs volunteers for the Membership Chair and Educational
• Resources Chair. Let me know if you're interested.

If you would like to discuss any of the above information, give me a call or stop me at the next dinner meeting.

A new phenomenon has entered on the Purchasing scene. Major companies such as United Technologies is placing strategic contracts using Internet auctions. As reported in the Wall Street Journal¹ using the Internet as a sourcing device is "part of a revolution sweeping companies as they harness the power of the Internet for buying and selling."

One way this technique is used is demonstrated by United Technologies. At a prescribed time selected bidders enter their bids via the Internet from locations far and near. These bids are identified to specific "lots" of material, which United Technologies desires to purchase. Bids are displayed on a large screen where they are visible to purchasing executives who then make decisions as to the best bid, all things considered. A secure network is used and bidders do not know who their competitors are, nor do they what competing prices are bid.

There are several companies who provide the coordinating services required to conduct such an Internet Auction. One of these is FreeMarkets OnLine Inc., a Pittsburgh based company. Some of these "auctioneers" work in specialty areas such as steel, computer parts, airplane components, marine supplies and agricultural commodities.

These companies arrange for the Internet connections and assist in qualifying potential suppliers. In advance of the auction, the list of potential bidders is screened, narrowing the field to a manageable group of qualified suppliers. These selected suppliers receive bid packages detailing the items to be purchased and the buyer's quality and other requirements with which the bidder must comply.

A major advantage of the Internet Auction is that it widens the buyer's market to encompass essentially the entire world at minimal cost. The greater competition results in better pricing and possibly better suppliers. The use of the Internet places psychological pressure on suppliers to offer their best possible prices.

The on-line bidding is, of course, only a part of the process. The qualifications of any new supplier(s) must be checked out and a decision reached as to whether it made sense to switch suppliers.

Price is normally only one evaluation factor; however, a "reserve price" may be specified which is a level below which a bid must fall to make the expense of switching suppliers worthwhile.

The low bidder does not necessarily "win". United Technologies sometimes stays with the "incumbent supplier even if their prices are higher because it already has a good sense of their abilities. Sometimes low bidders don't factor in all the costs of taking the business, such as tools to move and processes to learn."

Internet bidding works best for low tech, pre-engineered items and a market composed of many suppliers. Industrial Internet auctions differs from those on the Internet that caters to the retail market. The latter are concerned mainly with price competition while industrial Internet auctions take other factors into account as well.

The growth of this form of sourcing is illustrated by the experience FreeMarkets OnLine Inc. In 1998 they brokered slightly over $500 million and in 1999 they expect to handle three times that amount. The fact that this technique for selecting suppliers works is illustrated by United Technologies experience reported in the Wall Street Journal1. Their target was to identify potential Savings of 15 percent on $7.3 million of simple machines metal parts. They realized a 25 percent savings and in one case an incumbent cut its price for a particular item by more than 52 percent.

¹ The WSJ article quoted above was written by Staff Writer Timothy Aeppel and appeared on page B1, of the March 12, 1999 issue.

From these principles are derived the NAPM standards of purchasing practice. (Domestic and International)

1. Avoid the intent and appearance of unethical or compromising practice in relationships, actions, and communications.
2. Demonstrate loyalty to the employer by diligently following the lawful instructions of the employer, using reasonable care and only authority granted.
3. Refrain from any private business or professional activity that would create a conflict between personal interests and the interests of the employer.
4. Refrain from soliciting or accepting money, loans, credits, or prejudicial discounts, and the acceptance of gifts, entertainment, favors, or services from present or potential suppliers that might influence, or appear to influence, purchasing decisions.
5. Handle confidential or proprietary information belonging to employers or suppliers with due care and proper consideration of ethical and legal ramifications and governmental regulations.
6. Promote positive supplier relationships through courtesy and impartiality in all phases of the purchasing cycle.
7. Refrain from reciprocal agreements that restrain competition.
8. Know and obey the letter and spirit of laws governing the purchasing function and remain alert to the legal ramifications of purchasing decisions.
9. Encourage all segments of society to participate by demonstrating support for small, disadvantaged, and minority-owned businesses.
10. Discourage purchasing's involvement in employer-sponsored programs of personal purchases that are not business related.
11. Enhance the proficiency and stature of the purchasing profession by acquiring and maintaining current technical knowledge and the highest standards of ethical behavior.
12. Conduct international purchasing in accordance with the laws, customs, and practices of foreign countries, consistent with United States laws, your organization policies, and these Ethical Standards and Guidelines.

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