SALES OUTSOURCING: ANOTHER USCF GIVEAWAY?
On May 19, we reported the two year USCF extension of its Games Parlor contract, with terms that appear highly unfavorable to the federation. The full extent of the pending damage to USCF is not yet apparent, as the Board majority is asserting that details must remain confidential. An ADM has been placed on the agenda for the Delegates meeting requiring that copies of the contract be distributed to the Delegates present. As the Delegates are the supreme authority in the federation, it is hard to believe that they will approve a budget for the next fiscal year without knowing how much future revenue has been promised to Games Parlor, and what options, if any, remain for USCF to make alliances with or accept advertising from other companies offering online play.
The Games Parlor contract was signed with only three months remaining before the Delegates meeting at Framingham. Surely the Board majority could have waited and consulted the Delegates regarding its decision to spend hundreds of thousands of dollars to provide the membership with free online play, something which is already available to them at FICS, OnlineChess.com, and Chess247.com.
As bad as the online play situation is, there is an even greater danger. It appears that the lame duck Executive Board, after crippling USCF book and equipment sales in January by reducing inventory to "basic items," may "outsource" the operation by signing a Games Parlor type "fait accompli" contract, before the Delegates can meet in August to forbid the giveaway of one of USCF's most valuable assets. This despite the fact that the USCF sales program has been consistently profitable, and could be even more so with improved software, and under the direction of an employee with substantial chess and marketing experience.
At least two "outsourcing" bids have already been received, one from a former Executive Director who has supported the Board majority. I wonder how these two bidders were aware that offers would be entertained, as USCF has issued no public call for bids. One would think that if the Delegates had approved outsourcing the sales operation (which they haven't), there would be an announcement in Chess Life and elsewhere, in order to maximize the number of offers. When politically connected people not currently in the business of selling books and equipment submit bids, while most who are in that business are not even notified, I worry that another Games Parlor type "sweetheart" contract may follow.
What alternative to "outsourcing" is the current administration considering? Here are some interesting remarks by Executive Director George De Feis at the April EB meeting in Kansas City. Note that "Malcolm Pine" is actually Malcolm Pein of England, who sells books and equipment out of London and has a Florida branch office.
"The other item, update on books and equipment. Let me say that this was a presentation that I made in January at the January board meeting, extensive presentation about where we're going with books and equipment relative to downsizing our effort there and increasing our effort in grants and sponsorship and everything else. That has brought us to a backorder level of $11,000 only and also to consider other outsourcing proposals. We have on the table one from Malcolm Pine, one from Al Lawrence, and one is that we're going to stop and wait and see how we're doing ourselves because we got -- once we get our orders down to where we could handle them ourselves, we think we might be in much better condition, so we're going to see how things fit out relative to that process, but we do have proposals in from Malcolm Pine, Al Lawrence, and doing it on our own.
But it's still kind of early to tell on the books and equipment, but the outsourcing policy that was approved by the board is in place where we're going down to 35 books. I should mention that in our catalog here, it really reflects that policy, where we're down to about 40 books and we're down to, I think, a couple hundred items. But this is way down from the thousand or so items, books being at three or 400 and products being at six or 700 items that we maintained in the past. Getting it down to a manageable level where we can control the backorders really enhances our customer service and that will be one way that we increase more value for our membership."
I'm sure that USCF members will be overjoyed that the federation has increased "more value for our membership" by no longer carrying 90% of the books and 70% of the other items it used to sell. Just as the Tournament Life department has become far more manageable since price hikes killed off most of the TLAs, the Sales department will offer far better service when USCF offers so few items that most members take their business elsewhere. And we won't have to worry much about backorders, because without an order, there cannot be a backorder.
As a bonus, as a result of the federation's various enhanced services, the Membership Processing department, too, will soon be operating with far greater efficiency.
It's almost enough to make "outsourcing" look good by comparison- which, perhaps, is exactly the intention.