BuyTrain News

December, 2005

Personal Development
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A little legal training doesn't hurt (much)

Did everyone read the article about Bankruptcy in the November 2005 Inside Supply Management? Author John H. Maddock III did a great job of describing the various terminology and contractual impacts of a supplier declaring bankruptcy. Really scary stuff - mostly because it is much more complicated than I realized. Yes, I've had it happen and I suspect many of you have also. When a supplier declares bankruptcy, buyers typically work through the problems and find a practical solution to get the product or service.

However, the article makes it clear, in some situations, the buyer may not have a lot of legal flexibility. Depending on the nature of the bankruptcy filing, the supplier's continued capability to perform work and some legal wrangling in the courts, you may or may not have a practical solution and may instead end up with a legal liability.  In my own simplified way, I boiled it down like this; "Buyers holding a contract for services are in the same boat as other creditors - waiting to see if they get anything out of the bankrupt company. Even worse, buyers also are still responsible for their own contractual obligations - the contract doesn't simply vanish."

O.K., I'm sure I oversimplified, but that's my point. The situation is not as simple as I once thought. Credit the article for raising my awareness about the issue. The next time I hear about a supplier who is using the "B" word, I won't hesitate to contact legal counsel.

However complex, I do highly recommend everyone read the article! ISM members can find it on the ISM web site at

How will Sox affect procurement?

What can procurement people do to get ready for the auditor invasion? NAPMCB invited me to present a program on this subject for their members.

The short version:  We are the experts in contracting and procurement. We are in the best position to know where procurement controls should be added to protect against fraud. It's just like using a computer hacker to develop a computer security program. Instead of waiting for the auditors to implement controls to satisfy SOX concerns, we need to take the lead and develop adequate controls  now.

You needed to be there to get the full effect. However, just in case anyone is interested I've posted the PowerPoint slides and one of the handouts where you can download them here.

C.P.M. Quiz

Module 1 of the C.P.M. exam is generally the easiest part of the exam for experienced purchasing practitioners. Module 1 covers the “nuts and bolts” of basic procurement, contracting principles, the laws and the processes which buyers use everyday to create contracts. Unfortunately it’s also easy to become too comfortable with topics we use everyday. The first paragraph below covers knowledge already expected of C.P.M. candidates. The second stretches into a realm likely to be addressed in the new exam.  

See how you do with this little exercise. Answer at the bottom of the newsletter

FOB is a term buyers use on a regular basis. It means ______ ___ _______. The term addresses the point at which _____ to the goods transfers from the ________ to the _______. It does not specifically define who has to pay the _______ costs. Insurance, packaging, loading, unloading, duty and transportation charges are all negotiable parts of the contract and can be included, excluded, itemized or handled by a 3rd party. In many shipments there is also a Commercial ____ of ____ which is a separate contract between the shipper and carrier that defines who will pay the carrier, who has to file a claim for loss and where the shipment will be delivered. The subject is complex and smart buyers do not rely on just a single FOB term to address all the issues. They address and identify responsibility for each aspect of the shipment in the contract.

Unfortunately, the subject is going to get more complicated.

FOB is defined in the ____________ _________ ______ section 2-319 which describes buyer and seller responsibilities. An amendment to article 2 has been drafted by the ________ _________ __ _____________ __ _________ ___________ ______ (NCCUSL) which deletes article 2-319 and several other articles addressing shipping terms. The shipping terms are being replaced by the widely used international shipping terms (commonly called _____________ ) which are promulgated by the ________ _________ __ ______________ . The international shipping terms are not exactly the same as the terms we have used in the past and carry some additional requirements for defining all the details of the shipment in the contract.

As of October 2005, 2 states (_______ and _______) have already introduced bills to adopt the amendment to article 2 and change contract law in those states.

Personal Development

If it has been a while since you interviewed for a job, you mighty not remember how tough some of the questions can be. Before the interview, it’s definitely worth preparing.

Here are a few generic questions provided to a friend getting ready to interview purchasing candidates. Assume that these will be in addition to many specific questions related directly to performing the job.  Give them a try to see how well you would do in the interview.

Protect Home Computers

Over the past two weeks I've had several people tell me that their computer at home might be infected by a virus or spyware.  It's certainly possible - my email at home has been flooded with messages generated by the latest computer virus. To try and help them, I provided the links shown below.

The bottom line is that there really is no free lunch. Sooner or later you are going to have to pay-to-play…. One of these nasty bugs is going to slip in and you'll get infected.  Interesting analogy;  you likely won't catch a cold if you never go out of the house… but step into the mall a few times and you'll likely catch something. 

Even good computer users are not immune. I recently ended up completely wiping my hard drive and reinstalling everything from scratch… actually, many advanced users do this every few years on purpose.

The best defense is installing and learning to use good protection. Antivirus and Anti-Spyware tools, need to be installed and updated on a regular basis. Keep in mind, they are not automatic. You'll need to invest some time in learning to use them and keeping them updated. Read more: Sharpen Your Software Tools

The next best defense in windows XP is to set up multiple user accounts. Set one account with just barely enough authority to browse email and the internet - but with no authority to make any system changes.  Always use the limited account unless you are deliberately installing or changing software. Kind of like setting a parental lock on the cable TV - it works even if you are the one changing channels while the kids are in the room.

If you think you might be infected, start here.  Norton has several tools to help scan your PC for virus' and remove the infections.

First link in the top right dialog box  "Free Scan for Virus" Click to scan your computer for virus.  If it finds a virus, it may also show a tool to remove the virus.

Also on the home page is a link to purchase the Norton Antivirus Software….  The Norton Internet security suite is hard to configure and control… but the basic antivirus is a must have!

To check for spy ware, there are three software programs you can download and use free. I'd recommend downloading and using them all one at a time.

Microsoft articles & information on PC security.

How do I know if I have a virus?

Set up separate user accounts to help block system changes while surfing the net.  (step 2)

C.P.M. quiz answer. Want to read more? Check out the article about the UCC amendment in this newsletter: 


Provide Feedback and suggestions for future newsletters at any time. I'll try and use what I can.

I really do appreciate those of you who take the time to write and comment on this newsletter!  



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MLTWEB is assembled and maintained by Michael L. Taylor, C.P.M. 
Materials and articles prepared by Mike may be shared for purchasing education provided that this source is cited and no fee is charged. The rights for any other use are withheld.
Copyright;  Michael L. Taylor, C.P.M.
Last Updated: 05/23/2006