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Procurement Services Associates
Material and Contract Services

Summer 2011 Newsletter ☀ Website ☀ .pdf

What's Inside

Santa Ana Operations
Todd Snodgrass' Bio

Reducing Overhead
BIO Dana Keeling

BIO Eric Jenkins
COMMODITY TRENDS
Gold and Silver
Semi-Conductor

Pharmaceutical Industry Trends
Bio Tech
Food Industry

EMPLOYMENT TRENDS

Education and Certification
Fall 2011 Class Schedule

SALARY TRENDS Associations
Download Summer2011.pdf

News From
Dan Plute

PSA/MACs re-entered the San Diego County market by establishing a presence in Carlsbad, California. The new office will be managed by Dana G. Keeling. This office will focus on project support, consulting and outsourcing opportunities. Mr. Keeling's diverse background includes vice presidential positions in the Communications and Manufacturing Industries. Dana's business area will extend from the Southern end of Orange county to the California/Mexico border.

MACS-ARIZONA, LLC was established as a Service Disabled Veteran Business enterprise in June 2011 when the State of Arizona approved our request to be a self certified services disabled veteran business. Our office is located in Mesa, AZ. MACS AZ, LLC will continue efforts to provide project support, consulting and management consulting services in Supply Chain, Procurement, Contracts, Materials Management, Traffic and Logistics and Warehouse Management. Mr. Eric Jenkins will be the area manager. MACS AZ, LLC will join forces with PrimeXTechnologies and PrimeXTechnologies business lines will be marketed from MACS offices in California.

Material And Contract Services, Arizona http://www.macsazllc.com/

PSA's business inquiries expanded in May with new client job orders and we also saw an increase in inquiries from current and past clients. We estimate the trend will continue in the next few months. One trend is small to mid-size companies are discussing outsourcing acquisition management and contract administration services to special services companies. We are engaged by a Marin County company to manage and direct the RFP/Contract award process for their indirect commodities and services. We will be increasing our market efforts in these areas.

MACS completed a short term project with Eichleay Engineers in June. We provided a senior level Contract Administrator to support their project management effort for a Mining Industry client.

Mr. Plute will travel to Angola and Nigeria in July regarding engineering and construction opportunities in the commercial and residential construction, mining, petroleum, and mass transit sectors.

Santa Ana Operations

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Dennis Haskvitz, Senior Recruiter, and Teresa Schwartz, Marketing Manager, both attended an APICS meeting recently. The guest speaker, Allen Dunn, was the presenter. Allen was very informative with his discussion of how important it is for our economy to produce more manufacturing jobs because there is a correlation between the downturn in our economy from the late 1950's until 2010 with the loss of manufacturing jobs. Statistics show manufacturing job declines correlate with income tax revenue decline.

The only sectors that have had their salaries increased over the last few years, despite the economy, is and government sector jobs.

Allen broke his discussion down into what citizens can do to increase the number of manufacturing jobs, what the government should do, and what current manufacturing company executives should do to expand the jobs sector. He let us know that...
❝ In 5 years the cost of labor in China will increase to the point that the cost of goods will no longer be a reason to offshore our manufacturing which should result in a lot of manufacturing jobs coming back to the U.S.❞

He also discussed the fact that our colleges are not producing enough graduates in Science, Technology, Engineering and Math so once our baby boomer generation begins retiring the result will be a lack of qualified workers to fill those jobs.

He emphasized that our government leaders need to give incentives to manufacturing companies who will invest in proactive capital expenditures to produce more goods for export than we now import.

Tod Snodgrass BIO

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Mr. Snodgrass has been a Management Consultant since 1985. Prior to that (1972-1985), Tod was CEO of a printing and office products distribution corporation. Since the mid-1980s, Mr. Snodgrass has analyzed tens of millions of dollars in overhead-related expenditures while successfully completing scores of consulting assignments all over the country for corporations, companies, financial services firms, nonprofit entities and the public sector. Tod has in-depth experience and expertise in expense reduction, overhead measurement analysis, cost comparison surveys, procurement enhancement, inventory control, warehousing, in-house training, negotiations and contract compliance, etc. Over the years, Tod has created proprietary systems, procedures and controls customized to help clients substantially reduce S, G & A (Sales, General & Administrative) expenses. Mr. Snodgrass is the author

of several works on the subject, including:

✦ Office Purchasing Guide
✦ Profit Improvement System
✦ Office Buyers Manual
✦ Cost Reduction eGuide

He has been editor of two nationally syndicated business newsletters and contributing editor to several office/purchasing publications.
As a public speaker, Tod has given keynote addresses and led seminars at numerous meetings, conferences and conventions, including:

✦ Pricewaterhouse Cooper's National Financial
Administrative Conference
✦ Credit Union Executives Society
✦ Association of Legal Administrators
✦ Professional Law Firm Manager's Association
✦ Association of Accounting Administrators
✦ Association of Professional Consultants
✦ The Consultant's Forum
✦ Worldwide Investment Network

Please contact Tod Snodgrass at
tod@costreductionconsultants.biz

Todd Snodgrass Resume

Cost Reduction Consultant
Management consulting industry
April 1985--Present
Expense reduction/profit enhancement to the financial services sector as well as other service sector organizations, entities and companies.

Worked from 1991 to the mid-2000s with Eugene S. Mann, a highly regarded Management Consultant until he retired a few years ago. Here is what Gene Mann has to say about the many years they worked together:

Letter of Recommendation for Todd Snodgrass

To Whom It May Concern
❝ I have known Tod Snodgrass for more than 20 years. From 1991 to the mid-2000s when I retired and closed down my management consulting practice), he was a subcontractor to my firm. He actively participated in more than two dozen client projects having to do with expense reduction and profit improvement for commercial banks, savings banks, Savings and Loans, areas in which my firm specialized.

Tod is most knowledgeable about overhead-related cost reduction, such as those impacting office products, supplies and equipment, as well as printing, purchasing, energy cost containment, transportation, profit recovery, and other cost cutting disciplines too numerous to detail here.

During the years we worked together, Tod always conducted himself in a professional manner and interacted with our clients most favorably. His in depth knowledge and professionalism proved profitable to both of us as well as to the clients. ❞

--Eugene S. Mann, CMC

Reducing Discretionary Overhead:
An EARNING$ Enhancement Alternative

In response to the lingering effects of the recession, as well as competitive pressures, your company has laid off as many workers as possible and profits still aren't what they should be. Stockholders, board of director members and stakeholders want to know when profits are going to start growing once again. Now what do you do? An option more and more executives are exploring is to cut Discretionary Overhead (i.e., costs you can do something about without negatively impacting company personnel). Done properly, S,G&A (Sales, General & Administrative) cost reductions of 25%-40% are not unusual, with no diminution in quality or service.
Welcome To the World Of Cost Reduction
During good times, when sales and profits are rising, concerns about costs are usually secondary. The truth is, most organizations carry way too much overhead. With growth comes an increase in bureaucracy, the "mothers milk" of increased overhead.
In Pursuit Of Higher Profits
Normally, little serious consideration is given to cutting costs. Conventional wisdom for years dictated that if you wanted to increase earnings all you had to do was increase revenues, in one of two ways:
☛ a. Raise prices
As long as inflation was a factor in the economy, a lot of firms were able to garner new profits by increasing prices. With inflation currently at a low ebb, raising prices is no longer a profit enhancement option for most organizations.
☛ b. Increase marketing budgets
By increasing sales to higher and higher levels, most managers figured that profits would continue to climb as well. As long as the economy was growing, this was the (earnings enhancement) method of choice for most firms. No more.
Paltry ROI
Most organizations found that when the economy stalled a couple of years ago, their ability to more or less raise prices and boost profits at will, effectively came to a halt.One problem with trying to increase profits by increasing sales is that realistically, very little revenue actually finds its way down to the bottom line. It is not unusual for a company to spend $20.00 (in new marketing expenditures) in order to yield $1.00 of new, net pretax profit--a 5 percent Return On Investment (ROI); some firms don't do that well. It is not unusual to spend $20 and wind up with $.20 net, a paltry 1% ROI prices can't be raised due to a lack of inflation, and market share can't be increased because of a sluggish economy, that basically leaves two earnings enhancement options: Layoffs or reduce overhead. Until very recently, most companies chose to lay off people. It is obvious by now that no organization can do that forever. And in fact, there are inherent dangers if a company pursues that option too aggressively.
☛ Example #1: Laying off sales and marketing people may in fact create competitors--and very well trained competitors at that.
☛ Example #2: Layoffs usually result in higher work loads for the remaining employees. This often leads to lower morale and reduced productivity. Many firms find that they don't wind up with new profits for their efforts either. While there is usually a measurable short-term gain, it often comes at the expense of the longer term interests of the firm.
☛ Example #3: Companies are forced to hire new or rehire previous employees after layoffs. Business publications have reported on permanent, company-wide layoffs (many including generous severance packages) which didn't work out the way management at those companies had hoped. What often happens is that the best and brightest take the money and run while the dead wood remains. Some of those very same firms have later been forced to hire and train new employees, or rehire previously laid off workers--at no small expense.
Material and Contract Services--LLC
San Diego Operations Macs LLC--Managing Director

BIO Dana Keeling

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Material and Contract Services
Arizona (MACS AZ, LLC)

BIO: Eric Jenkins

In addition to contributing his vision for PrimeX, Eric brings over twenty years of leadership experience to his role as CEO. Eric's technical knowledge ranges from his Navy training in Nuclear Water Chemistry to a comprehensive understanding of the semiconductor industry as Chemical Vapor Deposition Process Engineer for Applied Material. As a Lead Engineer for Applied Materials, Eric successfully oversaw the mechanical and Process installation of 45 units of equipment within a 15-month period. Eric received multiple awards both from Intel and Applied Material for transforming the way systems start were monitored and delivered. Ultimately resulting in significant saving across the board for customer and vendor. After several positions in senior level management, Eric decided to combine his technical skills with his Project Management experience; In 1999, He formed PrimeX Technology, Inc. Under Eric's watchful eye, PrimeX quickly grew to a multimillion-dollar operation, which managed to continuously post profits despite an industry wide downturn.

Eric's strong leadership skills and unrelenting drive for excellence are the backbone to PrimeX's success. His ability to assess the marketplace, research alternatives and develop a strategic action plan led PrimeX to become a viable and successful certified small business entity completing projects for multiple, government agencies and System Integrators for the United States Government.

COMMODITY TRENDS: Top

Gold and silver prices - June 2011: Decreasing Trend
Gold price keeps on seeking a direction as it fell yesterday by 0.68% and reached $1,532, Silver price kept on falling and declined by 3.96% to $36.20, During June 2011, gold price decreased by 0.3%, while silver prices declined by 5.5%.
Major precious metals prices are traded with mixed trends in the US markets:, The current gold price, short term futures (July 2011 delivery) is traded at $1,541.2 per oz. a $8.5 increase or 0.55%, as of 16:44*. Current silver price, short-term futures is at $35.75 per t oz - a $0.452 decline or 1.25%, as of 16:44*.The current ratio of gold to silver prices is at 43.10.

Semiconductor Industry: Increasing Trend
Semiconductor sales in January totaled $25.5 billion, a 14 percent increase compared to January 2010. January chip sales increased 1.5 percent from December 2010, when sales totaled $22.4 billion.

Major Players
The key domestic players in China's semiconductor industry, are SMIC, Hua Hong NEC and HeJian. Known as the largest semiconductor foundry in China, SMIC ranks among the world's leading companies.Headquartered in Shanghai, SMIC is a pure-play foundry that offers 0.35 micron to 90 nanometers IC manufacturing services. In 2006, SMIC realized a gross profit of US$150.7 million, recording a growth of 68.0% from the previous year and accounting for 40.0% of China's overall market share. Sales volume also reached US$1,465 million in the same year. Established in 2000 with wafer fabrication plants, Grace Semiconductor entered into a strategic partnership with Sanyo Semiconductor in 2003, thereby fueling further growth of the company. Meanwhile, Hua Hong NEC, a joint venture between Hua Hong and NEC in an 80%-20% share, was the second largest foundry in terms of sales revenue in China in 2006. In a bid for further expansion, the company increased its production lines in 2007, with a total capacity reaching 110,000 pieces per month by the end of the year.

COMMODITY TRENDS continued

Pharmaceutical Industry Trends - Global Scenario Top

★ Global pharmaceutical market in 2010 is projected to grow 4 - 6% exceeding $825 billion.

★ The global pharmaceutical market sales is expected to grow at a 4 - 7% compound annual growth rate (CAGR) through 2013.

★ Global pharmaceutical market value is expected to expand to $975+ billion by 2013.

Asia-Pacific region will emerge as the fastest growing pharmaceutical market over the recent past. The reason for this positive shift can be attributed to the low costs and favorable regulatory environment. This region has experienced important developments regarding contract manufacturing, especially in generics and APIs. Increased R&D activities in the region has helped Asia-Pacific pharmaceutical industry to achieve an estimated market size of around US$ 187 Billion in 2009. Here, the pharmaceutical industry is expected to grow at a CAGR of around 12.6% during 2010-2012. It can, in fact, become the global API production hub in next few years.

BIO-TECH INDUSTRY:
The Biotechnology Industry is a highly volatile and unpredictable sector due to the scientifically intensive nature of the operations of companies that reside in the Bay Area. Markets served include medical, agricultural, environmental, and industrial. This industry emerged in the 1970s, with the main goal of enhancing the quality of human life. Biotech firms differ from conventional drug makers in that they utilize natural ingredients, as opposed to synthetic ones. Drugs are manufactured in a living system, i.e., a microorganism, plant or cell. New discoveries for the treatment of diseases provide opportunities for growth and gains in stockholder value. Investors must, however, be willing to endure volatile or weak results in the short term. In many instances, a biotech firm may have to endure a lengthy period of sometimes-heavy losses before a drug comes on the market and yields operating benefits. The sales and earnings potential of a newly introduced commercial drug or treatment can be immense and remain positive for years. Indeed, patented biotech drugs enjoy a 12-year period of protection from competitors, guaranteeing investors favorable long-term returns. Biotech drugs are expensive, however, and there is pressure from insurers, governments, and consumers to rein in healthcare costs. Some legislators regularly attempt to increase industry competition. If the period of market exclusivity is ever reduced, research-funding sources likely would be derailed and there would be a material negative impact on long-term sales and profitability. So far, the companies have held on to the prohibition period by successfully arguing that biotech drugs are scientifically complex, not easy to duplicate, and costly to develop. In fact, most prospective drugs never complete clinical trials and reach commercialization, since conclusive scientific evidence of efficacy, in many instances, proves elusive.

Food Industry:
Emerging food trends that will impact new product activity in 2011.

♕ Processed food is Out for 2011, Processed food may be convenient, but consumers are looking for a direct connection with more natural food. Manufactures have responded by positioning their products as natural, organic, or having no additives.

♕ Selling the new food Technologies: Manufacturers can expect consumer resistance to new food technologies such as genetically modified foods. It will be critical for companies using these technologies to communicate the advantages for consumers, such as less use of pesticides.

♕ Fine home dining is in. People are eating out less. Instead, they are indulging in luxurious cooking ingredients and equipment. Many homes now have nearly professional kitchens. Cooking shows have become very popular, as consumers seek the skills and tools to create an extraordinary home dining experience.

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☂ EMPLOYMENT TRENDS ☁

	FEBRUARY 2011	MARCH 2011	APRIL 2011	MAY 2011
Unemployment Rate	8.9%	8.8%	9.0%	9.1%
Non Farm Employment	192,000	216,000	224,000	54,000
Temporary Help	15,500	28,800	-2,300	-1,200
Manufacturing	33,000	17,000	29,000	-5,000
Construction	33,000	-1,000	5,000	-2,000
Professional and Business Services	47,000	78,000	51,000	44,000
Computers and Design	4,200	6,400	7,900	8,200
Financial Activites	3,000	6,000	4,000	3,000
Retail Trade	-8,100	17,000	57,000	-8,500
Transportation and Warehouse	22,000	-100	4,100	3,000
Health Care	34,300	36,000	37,000	17,400
Mining Employment	4,000	13,600	11,000	6,700
Leisure & Hospitality	21,000	37,000	46,000	-6,000
Government	-30,000	-14,000	-24,000	-29,000

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Education and Certification
for the New Millennium!

Purchasing and Supply Management have evolved and expanded into the new 'Supply Management'. The National Association of Purchasing Managers is now the ISM. The C.P.M. has been replaced with the CPSM. Have you expanded your skills to cover the new Supply Management? Are you prepared to move into the expanded supply management positions? Does your resume reflect the skills required in the new millennium?

Preparation for a career in Supply Management can be achieved through education provided in the California State University East Bay Supply Management extension program.

Your studies will result in a career enhancing Basic, Advanced and/or Executive Certificate from California State University East Bay:
http://www.ce.csueastbay.edu/certificate/supply_management/index.shtml

Your career preparation may also include becoming a Certified Professional in Supply Management:
http://www.ism.ws/ Enhance your competitiveness for the new supply management positions!

For a quick self assessment, evaluation your skills and experience against the ISM's expanded definition of Supply Management as follows: "The identification, acquisition, access, positioning, management of resources and related capabilities the organization needs or potentially needs in the attainment of its strategic objectives."
The ISM lists the following functions under 'Supply Management'
♞ Disposition/Investment Recovery
♞ Distribution
♞ Inventory Control
♞ Logistics
♞ Manufacturing Supervision
♞ Materials Management
♞ Packaging
♞ Product/Service Development
♞ Purchasing/Procurement
♞ Quality
♞ Receiving
♞ Strategic Sourcing
♞ Transportation/Traffic/Shipping
♞ Warehousing

The following courses are available this fall. I am available to answer your questions about the classes and certification program or the CPSM program.

Chuck Noland ✉ Charlesrnoland@gmail.com

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Supply Management
Fall 2011 Schedule

✔ Basic Certificate
EXSP 8779-KA, Contract Administration/Management
Tuesday, September 13th, 9 am to 5 pm
at our Oakland Center
Instructor, Charles Noland
Fee: $225.00 (0.7 CEUs/7 hours)

EXSP 8772-KA, Fundamentals of Supply Management
Saturday, October 8th, 9 am to 5 pm
at our Oakland Center
Instructor, Charles Noland
Fee: $225.00 (0.7 CEUs/7 hours)

EXSP 8773-KA, Supply Chain Management: Sources and Requirements
Tuesday, November 8th, 9 am to 5 pm
at our Oakland Center. Instructor, Vish Hegde
Fee: $225.00 (0.7 CEUs/7 hours)

✔ Advanced Certificate
EXSP 8782-KA, Quality Essentials for Supply Management
Thursday, September 23rd, 9 am to 5 pm
at our Oakland Center
Instructor, Charles Noland
Fee: $225.00 (0.7 CEUs/7 hours)

EXSP 8819-KA, Globalization and the Supply Chain
Saturday, October 22nd, 9 am to 5 pm
at our Oakland Center
Instructor, Jim Hays
Fee: $225.00 (0.7 CEUs/7 hours)

EXSP XXXX-KA, Quality Project Management for Supply Managers
Thursday, November 17th 9 am to 5 pm
at our Oakland Center
Instructor, TBD
Fee: $225.00 (0.7 CEUs/7 hours)

✔ CPSM Study Series
EXSP 8897-KA, CPSM Exam Review Module 1: Fundamentals of Supply Management
Saturday, November 5th, 9 am to 5 pm
at our Oakland Center
Instructor, Jim Hays
Fee: $225.00 (0.7 CEUs/7 hours)

SALARY TRENDS Top
Compensation Levels Increasing - Average of 57%

♦ The relatively small number of executives (CEOs, presidents, vice presidents, owners) reports a median annual salary of $156,000 which is $36,000 per year more than managers ($120,000). Supervisors earn a median of$102,000; staff members $79,000; and all others $100,000.

♦ The most highly compensated job titles include attorney (median $148,000); consultant ($125,000); contract manager, supervisor, and director ($112,000); and program manager/analyst ($105,000).

♦ Top earners are vice presidents who make $210,412.

♦ Compensation - salary plus bonus - for purchasing professionals rose 6.9% to $94,317, up from $88,206, a year ago.

Ref: http://www.ncmahq.org/files/PDFs/salarysurvey2010ExecSummary.pdf
http://ism.ws/

Associations Top

Institute of Supply Management (ISM)

ISM Sacramento Valley:
Web http://ism-sacramentovalley.org/home/>
philolis.goode@na.flintgrp.com

ISM Diablo Valley Chapter
http://www.napm-dv.org/
Contact by calling (925) 355-2492

ISM Northern California
http://www.ism-nc.org/index2.html
j.hays@ism-nc.org

The Association for Operations Management (APICS)

APICS Golden Gate
http://www.apics-ggc.org/
Chapter email address admin@apics-ggc.org

APICS Mission Peaks
http://www.apicsmissionpeak.org/
Contact Bruce Hoyt at bbstocker@yahoo.com

National Contract Management Association (NCMA)

NCMA Sacramento Gold Rush
intranet.ncmahq.org/sacramentogoldrush/
Contact Cheryl Keith (VP, Membership)
310-516-7070
k2005success@aol.com

NCMA Tri-Valley
intranet.ncmahq.org/trivalley
Contact Roberta Spalding
510-642-0847
r_spaldi@berkley.edu

NCMA Silicon Valley
intranet.ncmahq.org/siliconvalley

Golden Gate Chapter
Leslie Yamagata, CPCM, Fellow
415-522-4520
les.yamagata@gsa.gov

NCMA Tri Valley Chapter is trying to re-organize
Contact: Joe Tortolero
jtorto@msn.com

Key Contacts:
San Jose State University (SJSU)
Yasser M. Dessouky
Yasser.dessouky@sjsu.edu

Operation/Supply Chain Procurement Courses Contact Golden Gate
ISM Certification: Chuck Nolan
noland339@yahoo.com

California State University East Bay (CSUEB)
Zinovy Radovilsky, Ph.D.,
zinovy.radovilsky@csueastbay.edu

Procurement Services Associates Material and Contract Services

What's Inside

News FromDan Plute