muniBLOG: Purchasing

Check please!

Is your security risk management, business continuity and any other resilience program you have simply to prove you have one? Check the box, so to speak? It’s perhaps stable, reliable, unchanging?

Then you have a problem. You’re doing it wrong.

You’re doing it wrong.

You’re programs should be designed to generate improvements. There should be a built-in restart, of the assessment process. The cycle should ensure improvements re-align to the overall business objectives. Your improvements should replace those areas of the program that don’t work, are unnecessary, and need revitalization.

We can help. We can help get your program from simply sustaining itself to regenerating, restarting, re-aligning, replacing, and revitalizing itself so that it works when needed; so that it works for you. We can help get your program working for you.

It starts with a conversation.

Plan the Work. Work the Plan.

Should your Municipality need assistance, contact Michael White Group today, and we will be happy to answer your questions or provide quotations.

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Unused Technology Costs

How much does your organization spend each year on technology? Not just new technology but maintenance and subscription renewals as well?

 

If you’re a medium or enterprise-level corporation, it’s probably not an insignificant amount

 

For that matter, relatively speaking, a lot of small businesses can also point to technology as a good chunk of their operating expense

 

But now the more uncomfortable question…are you using all of that technology you’re paying for?

 

I was going through my invoices last week and realized that I’m still getting charged by our old hosting provider even though we moved our website to another platform several months ago

 

It’s a small monthly charge but, if I hadn’t caught it, who knows how long I would’ve kept paying those fees

 

Now imagine if that were to happen in a larger organization. Unfortunately, from what I’ve seen in large organizations, there’s not much left for the imagination

 

A few years ago, we were doing some consulting work for a client who’d heavily invested in a premier financial platform that was running on their on-premise servers

 

They’d paid seven figures for the initial license fee plus a year’s worth of consulting for customization, implementation and testing

 

And every year since they’d been paying close to six figures for annual maintenance

 

During our review we noticed two invoices our client had received from the same software supplier

 

One was for the annual maintenance, but the second one was for annual subscription fees

 

What had happened was, during the year they were going through their implementation, the supplier released a cloud version of the same product

 

And got the finance department to sign up for a one-year subscription so that they could start using the software right away

 

With the idea being that everyone would get moved to the on-premise version when it went live

 

But that road from on-premise to cloud is usually a one-way street. Rarely do you see an organization go the other way

 

So they went live, but everyone kept using the cloud version

 

And because there was a disconnect between the business and IT, the subscription would auto-renew each year and finance would pay the renewal

 

At the same time, IT would get an annual maintenance invoice for the server-based version and that would get paid as well

 

Now I know that a lot of you are hearing this and thinking about a time when this might have happened in your organization

 

Or you’re wondering if it’s happening right now

 

Folks, it’s September, which means a lot of your IT contracts are going to be coming up for renewals

 

And if there’s ever been a year when it was absolutely critical that you only pay for what you’re using…it’s this year

 

If you’re going to survive 2020 and still be standing in 2021, you have to get a handle on your IT spend

 

But you’ll never be able to do that until you have a handle on your IT contracts

 

And that’s where I believe we stand head and shoulders above everyone in this space

 

Because I designed a platform that gives your procurement team everything they need to properly manage contracts…and they’ll do it for pennies on the dollar

 

So take 5 minutes to see how OneView works

 

And if you need some help with your year-end renewals, reach out to us. We can help with that too

 

Mohammed Faridy

[email protected]

 

 

 

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Organizational Resiliency – What else is it good for?

What else does organizational resiliency do for the organization aside from being able to carry on during and after a disruptive event?

  • Reduces stress – it reduces stress in those managing and working prior to, during and after an event
  • Increase in trust and confidence – employees believe in the leadership, each other, and the plan to move through an event
  • Reduces absenteeism – people are comfortable and confident in the decision making of their peers and the responsibilities they have
  • Improvement in physical health and wellbeing – with strong mental health comes stronger and maintained physical health
  • Productivity increases – a happy workforce wants to produce
  • An alert workforce – reduction in accident and workplace injuries
  • Learning power – with overall personal health and wellbeing comes the drive, adaptability to learn and the willingness to be flexible in the event of change

There are other benefits to making your organization resilient that are not just about the bottom line.

We can help your organization in building your risk and security management program resiliency.

It starts with a conversation.

We can Help.

Plan the Work. Work the Plan.

Should your Municipality need assistance, contact Michael White Group today, and we will be happy to answer your questions or provide quotations.

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Cost Savings and Contract Management in Q4

The Importance of Contract Management when Analyzing Spend

 

When my clients ask me to help identify areas of opportunity for cost reduction with their existing suppliers, I ask two questions:

 

1.     Where are your contracts?

 

2.    How much do you spend?

 

The first question usually gets a lot of blank stares, shrugging shoulders and a general sense of helplessness.

 

The second question generates massive spreadsheets from the finance department, listing every supplier that ever submitted an invoice and got paid.

 

But the spreadsheets don’t give the specifics about what was purchased or the underlying contractual obligations.

 

And the reality is that, without a solid understanding of the existing terms and conditions, it’s difficult for any organization to negotiate cost reductions with their suppliers.

 

Unfortunately, many of the consulting firms that are hired to find cost savings opportunities fail to mention the importance of contract management as an underlying prerequisite to spend management.

 

Instead they spend months sifting through a client’s financial data and produce impressive graphs and charts that show exactly where the opportunities are. All the client has to do is consolidate, renegotiate or cancel contracts in order to reduce spend.

 

But by the time the client realizes that they need to first find and understand their contracts, the consultants are either long gone or walking through the door with one of their ERP systems vendors who just happen to have the perfect (expensive, complicated, hard to implement) solution for contract management.

 

The reality is that contract management doesn’t have to be expensive, complicated or hard to implement, as long as an organization understands what it really needs.

ERP Systems

Enterprise Resource Planning (“ERP”) systems weren’t developed for contract management.

 

 ERP is business management software intended to collect, store and manage data from various business activities.

 

The system typically consists of a suite of modules that can be bundled together, or added on at a later date, to give the client an end-to-end solution.

 

Suppliers that sell a contract management module as part of their ERP system highlight 3 key benefits of their product:

 

1.     The client can create contracts from within the module, utilizing corporate standard terms and conditions, thereby eliminating the need to work off a supplier’s paper

 

2.    The client can produce reports and summaries of the contracts stored in the system

 

3.    The module seamlessly integrates with other modules (procurement, accounts payable, asset management, etc.) to provide a complete end-to-end solution

 

However, if we take a closer look at each of these 3 supposed benefits we see something different.

 

1.     Contract Creation – I’ve been managing and negotiating contracts for almost 20 years. The way lawyers drafted contracts when I first started is the same way it’s done today, and I suspect that’s the way it’ll be done for the next 20 years. I’ve seen many contract management modules implemented at various organizations but I’ve yet to see one that’s actually used.

 

2.    Reporting – Reports and summaries are only as good as the data used to create them. Garbage in, garbage out. ERP modules require manual data input into a lot of different fields across a lot of different tabs. This makes sense when dealing with numerical data such as financials or asset management, but it’s almost impossible with contracts. ERP systems produce very impressive financial reports but are utterly useless when trying to summarize contract data.

 

3.    Integration – The suggestion that the contract management module will seamlessly integrate with other modules is misleading, at best. At worst, it’s just a way for the supplier to sell more modules. The truth is that any module will only provide seamless integration with other modules within the same ERP system AND as long as there’s no customization. However most organizations don’t go all in with one ERP solution for all of their business management needs and they will almost always need customizations for the modules they do buy.

 

 

So what does an organization really need for contract management?

 

The Simplicity of Contract Management: What you really need

 

Most organizations, big and small, only have a handful of real requirements for contract management:

 

1.     Summary – Once a contract has been countersigned and returned, most organizations require a summary to be sent (along with a copy of the final document) to key individuals and departments such as the CEO, CFO, Legal and Finance

 

2.    Storage – The final version of a contract needs to be stored in a secure location that can only be accessed by authorized personnel

 

3.    Ease of Access – Most contracts that are signed and stored will never be read again, unless there’s a breach. However some contracts (usually IT) have renewal dates, service levels and milestones that need to be reviewed regularly

 

4.    Alerts – Organizations need to know when contracts are coming up for renewal so that they can plan for the cost to renew, as well as any renegotiation that may be needed.

 

A simple tool that addresses these 4 basic needs for contract management will be more than sufficient for most organizations and the cost will be exponentially less than an ERP module.

 

OneView

 

With Q4 around the corner, I’ve been talking to a lot of executives about the impact contract management’s having on year-end cost savings initiatives in the post-COVID environment. 

As one executive recently told me “…one outcome of remote work is that it exposed flaws in our processes that we just ‘made work’ when we were in the office”. 

It was an interesting comment that really drove home a point I’ve been making for some time…less is more when it comes to contract management. 

The reality is that expensive, complicated ERP systems just don’t make sense anymore which is why I truly believe the solution I designed and built, OneView, gives procurement teams everything they need when it comes to contract management…for pennies on the dollar.

If you would like to know more, feel free to message me directly at [email protected]

 

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How to Negotiate With Your Existing Suppliers

“If you know the enemy and you know yourself, you need not fear the result of a hundred battles”

–       Sun Tzu, The Art of War

 

When it comes to negotiating with a supplier you know versus a supplier you don’t, the tendency is to prefer the one you have an existing relationship with.

 

There could be several reasons as to why this would make the most sense:

 

–       Renewing an agreement for goods and services that are already being provided.

–       Engaging a supplier who is already on site for time-sensitive work

–       Leveraging pre-negotiated terms, conditions and/or pricing

 

However, these are not the most common reasons for businesses to prefer their incumbent suppliers to new ones.

 

The main reason we negotiate with incumbents is because we know them.

 

When I needed new tires I asked my mechanic what he would recommend, since he had been servicing my car for the last 6 years. Tires were not his specialty and I knew I would pay a premium by having him find and purchase the tires for me. But I also knew that he would recommend the best tires based on his knowledge of my car and the way I drive it.

 

Similarly, we tend to prefer looking to our incumbent suppliers for solutions to our problems because we feel that they will recommend what is best for our organization based on their knowledge and experience from having worked with us.

 

This makes complete sense, and in most cases would be the recommended approach. The goal should be to have 80% (or more) of your annual spend go through your top 20 suppliers.

 

But this should not mean that we forego the negotiation. A healthy supplier relationship is built not only on trust, but also on transparency and mutual benefit. Good suppliers understand this and are willing to open up discussions for a mutually beneficial agreement. The rest are looking to make a quick buck at their customer’s expense.

 

I recently had the good fortune and misfortune of representing a client in negotiations with two very well known software suppliers. The client had acquired another company through a divestiture and both suppliers were incumbents of the divested entity.

 

One supplier came to the table in the full spirit of partnership. Their team brought forth all of the knowledge they had gleaned over the years in licensing their products to the divested entity. They understood the architecture and proposed solutions that would allow my client to maximize their investment. They also provided industry insight that demonstrated an understanding of my client’s business beyond what their software did.

 

The other supplier pointed to their existing license agreement with the divested entity and stated that, since it did not allow for assignment of licenses, my client would need to re-purchase all of the licenses that were currently installed or face legal recourse.

 

In the end, we negotiated a short-term agreement with one supplier and established a longer-term strategic partnership with the other.

 

I will let you guess which supplier my client no longer uses.

 

Leveraging existing relationships doesn’t mean giving in to the incumbent’s demands, but rather negotiating mutually beneficial agreements with the suppliers that want to be true business partners and not just vendors that sell you things.

 

Have you recently negotiated with an incumbent supplier, or are you preparing to do so anytime soon? If so, I would love to hear about any challenges you’ve had to overcome or tips you may have for the rest of us.

 

OneView

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We are all facing Austerity…and here’s how procurement can help

A friend of mine recently asked me to explain austerity measures to him

 

So I said it’s like this…you know how you told your wife you needed a new set of clubs because that’s what was missing from your golf game

 

And she said fine, but then you should also let me know which of your three daily meals you’re going to give up 

 

Because we can’t afford to have you running around on a golf course pretending to know what you’re doing AND eat like a king at home

 

Well, that’s austerity. Now the term’s typically used in reference to governments that are finding it hard to borrow money or pay back loans

 

So they introduce austerity measures like increased taxes and spending cuts which then impacts a households disposable income…breakfast or golf?

 

But austerity doesn’t just impact the public sector or limits itself to the Federal government 

 

Like when corporations find they have to pay more taxes, they try to counter-balance that with either more revenue or less spending

 

But it’s always easier (and faster) to cut costs then it is to increase sales

 

And this is where our jobs as procurement and supply chain professionals becomes so critical

 

Never has it been more important to make that shift from tactical purchasing to real strategic sourcing and vendor management

 

Before the pandemic, that shift would have occurred in one of two ways

 

Either the organization would mandate a greater focus on strategic, cost savings activities while maintaining business as usual on the tactical purchasing side

 

Or they’d bring in outside help for the strategic stuff while their existing team focused on tactical purchasing

 

But we’re in a post-pandemic world and most organizations I’ve spoken with don’t have the appetite to spend money in order to save money

 

They need cost savings now, not 6 months from now or a year from now…so they need the people who are already there to find a way to do more with less

 

And that could be a tough ask for procurement departments that were already understaffed and struggling to just keep up with the day to day stuff

 

Unfortunately, I don’t have a magic bullet to fix that problem. But I do have a suggestion, based on my experience and what’s worked for me over the years

 

I suggest taking a look at your procurement process to see where you can create some efficiencies

 

Because those efficiencies will give your team the extra time they need to focus more on cost savings activities

 

And you don’t need some big shot consultant, or even a little shot like myself, to review your process for you or point out the inefficiencies

 

You can do it yourself, and you could probably do it in one day. The harder part will be in convincing your people to give up some of the administrative tasks they spend time on every day

 

The reality is that, as much as procurement people complain about not having enough time to get everything done, they love their SharePoint folders and Excel spreadsheets

 

It’s mindless busywork but it gives the appearance of a really complicated, IQ-intensive task

 

Have you ever walked by someone in procurement who’s staring intensely at a massive spreadsheet and thought “man, I don’t wanna be that guy”

 

When I see that I think “man, there goes a couple of thousand dollars in salary down the drain”

 

If you’re a procurement person managing your work on a spreadsheet…you’re doing it wrong

 

And you’re wasting time that could be used to focus on more strategic, cost saving activities

 

If you don’t believe me, check out some of the testimonials on our website …or feel free to reach out to me directly for a chat

 

Mohammed

[email protected]

 

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Pandemic/Epidemic Business toolKIT

We are deeply focused on keeping your employees, customers, and suppliers safe while working, visiting, or conducting business at your facilities and supporting your business operations.

The Michael White Group International and Hilt International Security have partnered together in order to create a dynamic resource that is continuously growing, developing, and being  revised to keep you informed of the latest requirements, new best practices, and procedures.

As we all continue to navigate our  ‘new normal’, we have tapped into our global resources to develop a toolKIT that lays out processes to raise awareness of new health and well-being protocols and potentially helpful practices for cross-functional teamwork, operating discipline, and training for employees.

While it is not a one-size-fits-all approach, the Pandemic/Epidemic Business toolKIT includes practical recommendations, based on guidelines from Health Canada and World Health Organization, that could be tailored for different  businesses (when required) to address various scenarios they may face when returning to work. Regular updates will be made to the toolKIT based on real-time feedback. The toolkit covers a wide range of topics, including:

•      Step-by-step guides for setting up a pandemic response team

•      Cleaning and disinfection procedures

•      Staggering shifts and lunch breaks and other physical distancing strategies

•      On-site health screening

•      Protocols for isolating employees who become ill at work

•      & more.

This has been a difficult time for everyone, and re-establishing a workplace where employees feel comfortable performing their jobs safely is a multi-faceted challenge. It is our hope that by developing and providing this resource we can help your organization accomplish and adapt to the new operating protocols in today’s still ever challenging conditions.

Should your Municipality be open to exploring the need, whilst accessing our  toolKIT to assist you during  the re-opening, and re-populating of your facilities, contact Michael White Group International today, and in partnership with Hilt International Security we will be happy to assist.

 

 

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Even the Best Technology Needs Good Process

We know that technology is the backbone of any successful organization and, as a company grows, it must constantly add and change the internal tools that will enable it to stay competitive and profitable.

 

This applies as much to Procurement as to any other department within an organization.

 

But new technology on its own can’t overcome gaps in a broken or non-existent Procurement process.

 

In fact, some Procurement groups will actually create redundant steps when forced to incorporate new technology solutions into an overly complicated, inefficient procurement process

 

Case Study: Procurement Process Redundancy

 

Many years ago I worked for an organization that was using:

 

        i.         A home grown Purchase Requisition system to create and track internal requests for goods and services

       ii.         An add-on document management module from the corporate Print solution for Contract Management

     iii.         An add-on module from the corporate ERP system for Purchase Orders; and

      iv.         An add-on module from the corporate help desk ticketing system for Asset Management.

 

Since none of these disparate systems were integrated, the Procurement team had created a series of processes to manually input information into each of the systems for every purchase.

 

The overall process was incredibly redundant and full of vulnerabilities.

 

Purchasing agents would print out fully approved Purchase Requisitions and manually input the information in the ERP systems to generate Purchase Orders.

 

Contracts would go through several redundant approvals before final approval and signature, only to be stored in a standalone document repository with limited search capabilities.

 

Assets were received and tracked in a separate Asset Management system that required manual receipt of products and a 3-step invoice approval process.

 

Having failed several audits, the organization purchased very expensive Purchasing Requisitioning and Contract Management add-on modules from their ERP supplier, who assured them that their solution would provide an airtight Procure-to-Pay solution for the company.

 

What the supplier failed to highlight, and the organization failed to address, was cost and effort to redevelop processes, retrain employees and re-input years of historical data across 4 different legacy platforms.

 

So several years, and millions of dollars later, the add-on modules are collecting dust and the organization continues to limp along with even more redundant process bandages to stop the bleeding.

 

There have been exponential advances in Procurement technology over the past 20 years. And in the hands of skilled Procurement professionals the results have been amazing.

 

But Procurement tools are very closely integrated with Procurement processes.

 

Before investing in new technology an organization should evaluate the processes that are in place and then determine what, if any, new technology can be easily integrated into organization without creating redundancies or complexities that will increase costs.

 

Is the Procurement technology in your company an asset or a crutch? How has Procurement process, or a lack of it, affected your organization?

 

Please download our free report on Procurement Process Innovation here -> http://oneviewnow.com/report and see if there are potential cost savings opportunities hiding in your Procurement process

 

by: OneView

 

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The Negotiators Toolkit: 6 Roles for Effective Contract Negotiations

Contract negotiations are often complicated processes that can take several weeks or months to finalize.

 

The responsibility of the negotiator is to not only engage with his or her counterpart on the other side of the table, but to also oversee and manage the overall process.

 

While this may sound simple and intuitive, a closer look at all of the roles and responsibilities of a negotiator shows just how complex the management of a negotiation can be.

 

More importantly, not giving each of these distinct roles its due diligence and attention could be the difference between a mutually beneficial negotiation that mitigates risk and a lopsided negotiation that benefits one party while setting up the other for failure. 

 

When representing my clients in a negotiation, I typically wear a few different hats.

 

The Negotiator

This is the obvious one. The role and responsibilities are fairly well defined. My job is to understand the requirements of the business and negotiate the most favourable outcome while mitigating as much risk as I can in the contract.

 

The Lawyer

All lawyers are negotiators but not all negotiators are lawyers. I’m not a lawyer, but I’ve been negotiating for over 20 years so I know my way around the legal terms and conditions of a contract. That doesn’t mean I don’t need a lawyer on the team, but part of my job is to know our lawyer’s threshold of acceptability and negotiate terms as close to that threshold without going over it.

 

The Accountant

Two of the most important business terms in a contract, for both sides, is a description of what goods and/or services are being transacted, and for how much. Because of their importance, a lot of focus is given to making sure the “what” and “how much” in a contract is well defined. But there are other aspects of the agreement that also require some level of financial analysis such as payment terms, taxes and delivery fees.

 

The Decision Maker

A good negotiator takes the time to really understand the business requirements before getting into a negotiation. Because as much as we try to put structure around our negotiating strategy, there will always be unstructured moments when one party puts something on the table and the other party needs to make a decision. There have been times, during a meal or a round of golf, when my counterpart has casually offered up or conceded a key point in a contract and I’ve found myself having to make a quick decision on behalf of the business

 

The Project Manager

As a negotiator, I’ve often found myself at odds with project managers, and to some extent they’re my nemesis in negotiations. Gantt charts, timelines and status updates define their world. But contract negotiations are hard to manage on a Gantt chart because I don’t know if it’ll take 4 hours, 4 days or 4 weeks to agree on Warranty language or an Indemnity clause. However the reality is that project managers are there to make sure things are moving forward on time and on budget, and since they can’t sit in on every negotiation, I often find myself taking on that responsibility.

 

The Admin

This is probably the most overlooked and challenging role I’ve had to assume in a negotiation. It’s also the reason why I believe a good administrative staff is the backbone of any successful business. Even simple contract negotiations involve a lot of paperwork exchanging hands. In addition to several iterations of the contract draft circulating internally and back and forth between parties, there are also emails, meeting minutes, term sheets, schedules, addendums and other miscellaneous notes that need to be tracked and summarized

 

So all of this begs the obvious question: How does one person handle all of these responsibilities?

 

The short answer is that in most cases they shouldn’t, at least not directly.

 

Good negotiators are also good delegators. They have a keen sense of their strengths and weaknesses, and will move other resources in and out of their negotiations as the need arises.

 

When I’m working on a deal with a strong emphasis on protecting my client’s Intellectual Property, I’ll lean a little more heavily on our lawyer to help negotiate key legal terms and conditions.

 

Similarly, if my client’s business requirements seem high-level or somewhat undefined (which is a very common occurrence) I’ll make sure to involve a decision maker from the business in key discussions with our counter-parts.

 

What hats do you wear as a negotiator? Which ones do you find most challenging?

 

By: OneView

The only platform built for managing contracts!

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Security Risk Assessments; high level breakdown

Critical Infrastructure Protection

Security Risk Assessments are a vital insight into your organizations security gaps, vulnerabilities and most importantly strengths. To not dive too deep into the technical structure and methodology of a comprehensive Security Risk Assessment, we provide this brief and mostly non-technical article to break down the basic components.

Recognize – more commonly stated as Identify the hazards or risks. Before you really can do that, you need to know and understand the difference between what a hazard is and what a risk is. A hazard is “something” with the potential to cause you, your organization, your employees, your reputation harm. A risk that “likelihood” of that harm actually happening.

Impact – more commonly known as deciding who is going to be harmed and how. Who’s going to feel it, how is it going to happen? Almost like trying to figure out whether or not it is the butler in the den with the candlestick …for those who appreciate a good game of Clue.

Bump – So you’ve recognized the hazards and risks and you’ve figured out where the impact is going to be. Now what? Now you have to protect it or at least put some form of management or control piece in to either slow it down or stop it completely from happening and affecting you. The virtual or very much physical speed bump.

Note it – Write it down, digitally record it, take pictures, tell a few people. Do what you need to, to record it. Why…because you want to monitor your success. You want to know that the bump you’ve put in place is working or needs to be re-recognized because the impact may have changed. It’s also due diligence. You can show that you know that there is or was something that raised whatever level of concern, you thought about it, did something about it and continue to watch it.

Recognize it again – Plan the Work. Work the Plan. Once you’ve done the assessment you need to do it again. You need to understand what is working, what has changed, what is new and what are you doing about it.

This article is to serve as a high level awareness tool. Unfortunately it doesn’t remove the complexities of your operation or the complexities of the security risk assessment. But boiling it down to it’s barest components allows you to understand the varying phases or steps that are taken during a security risk assessment. It’s important to note and understand that each of these components can be expanded and contracted as necessary to have a myriad of steps or components within each of them.

Nevertheless it all falls back to these high level principal components.

Should your Municipality be open to exploring the need, the application and benefits of a Security Risk Assessment, contact Michael White Group today, and we will be happy to answer your questions or provide quotations.

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