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Strong green energy spend for businesses last year

According to one source, green energy seems to be a growing preference for businesses, at least compared to previous reports. With so many different pieces to a single supply chain, a strong market for these innovations could be good news for the environment and the sustainability sector.

Reuters cited multiple reports and datasets to show the recent favorability for green energy solutions. One of these was information about the solar contracts per year in megawatts. Measured this way, the amount of energy for each contract surged to 1,056 megawatts in 2016 after just 202 one year earlier. Other data, sourced from the American Wind Energy Association and GTM Research, showed solar as 10 percent of all corporate contracts, compared to the 39 percent accountable to wind.

With this information as a jumping-off point, we can look at some of the specific supply chain connections for different forms of renewable energy.

Solar
As with other forms of green energy, the supply sector is just a component of what could make solar viable. An Archinect article touches on this point, saying that the supply chain for energy efficiency can refine itself if the actual use of efficient products gets more prominent. Other possible factors the source mentioned included increased use of electric cars and more widespread energy types in general.

What about solar-powered supply chains themselves? Supply & Demand Chain Executive mentioned the current and planned facilities that the OPEX Corporation uses, including one forthcoming location that will offset its energy spend with solar to be "net zero." The company's vice president of corporate and legal matters, James Liebler, explained the company's position on sustainability.

"The supply sector is just a component of what could make solar viable."

"We subscribe to the idea that we've been given certain resources to take care of, to shepherd and be accountable for," he said. "That includes the environment around us and knowing we should not waste those resources. This all goes back to Al Stevens' vision for what a company should be."

This last comment referred to the company's owner and chairman of its board, and also how deep business values can drive major environmental decisions.

Wind
The Department of Energy said that logistics was one of the possible hurdles to more widespread use of wind energy, but also that the amount of revenue from wind technology exports has grown over the years. The source remarked manufacturing has to keep up with the latest turbines, since these can be complicated and demanding. 

Despite this, the advantages of modernizing and meeting the new technological challenges can come in multiple forms. The DoE, for instance, said that it granted millions in funds to help improve logistics for wind.

Solar and wind power may both be popular, but there are still barriers to implementing them more fully. This could be all the more reason for businesses to save money with benchmarking and other tactics so they can invest capital where it's needed for future development.


A few weeks ago, on June 7th, I had the privilege of speaking at the 2017 Plastics Financials Summit here in Chicago, not far from Source One's office.  My talk was about the importance of Indirect Spend Management in strengthening your company's bottom line. Here's what we discussed at the conference!

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Indirect spend, though often neglected, can range between 20% and 50% of a company’s expenditures, depending on the core business and industries it operates in.  Although there are particular nuances to this spend category, the approach should be much the same as direct spend: strategize, standardize, and streamline the sourcing process to align with business initiatives.  Effective indirect spend management drives greater efficiency across the enterprise and maximizes savings opportunities, resulting in future financial management success that will directly impact your bottom line, and elevate your business to the next level of success.

What is Indirect spend
It is important to first understand the notion of Indirect spend in order to properly sort your suppliers out and define the impactable spend of a future indirect spend sourcing initiative.  As opposed to Direct Spend, which includes all purchases of goods and services that are directly incorporated into a manufactured product (raw material, manufacturing services, etc.), Indirect Spend encompasses all of the supporting materials and services that do not end up in products or services directly delivered to the customer. Generally, Indirect Spend can be broken down into two major categories: MRO supplies and Indirect Goods & Services. MRO supplies include all spare parts and repair services necessary to keep production equipment up and running. Indirect Goods & Services include all the support tools and services necessary to run a business, such as office supplies, IT hardware and software, travel, and advertising.

From a purely financial standpoint, Indirect spend is what CFO look at in the SG&A (Selling, General & Admin) or GNFR (Goods Not For Resale) line items on their balance sheet, depending on the nature of your business. In a more detailed approach, Indirect spend is generally low-value goods or services (I.e: not the most important source of cost for certain industries, especially General Manufacturing) or items purchased through Purchasing Cards (for example any type of office supplies, travels, other general expenses). Indirect Spend can also sometimes be embedded into direct spend, such as transportation fees included in the overall price of supply of raw materials.
From a pure spend analysis and supply chain management standpoint, Indirect Spend can be a good place to look at for cost reduction initiatives. What the financial definition of Indirect Spend given above means from a procurement operation standpoint is that when not managed properly, it can lead to decentralize procurement practices, which ultimately leads to maverick spend or in other words non -budgeted costs due to lack of compliance control over pre-negotiated purchasing policies or agreement with suppliers.

How to address Indirect spend from a strategic sourcing perspective
Managing Indirect spend is a team effort involving both Financial and Procurement department. Efforts must be focused on bringing control over your entire source to pay processes (3 components described below) for the targeted spend categories. This initiative overall goal will have a different definition from a CFO or a CPO point of view; Spend Control by CPO, Budget Control by CFO - but it will have a common positive result on your bottom line by bringing savings to your organization. There is 5 key steps to undertake to bring your organization’s procurement department to the next level:

Accountability and Sponsorship
Before to undertake such initiatives, it is mandatory to create or define a structured team that will be responsible for such projects. Building the team is not as easy as it can sound. Projects team members must understand the organization’s objectives and, most importantly, must be accountable for achieving them. This means that such projects must be sponsored by the highest level of the company’s management, and grant the team leader (who will report under the sponsors) with a strong decision-making power. This will facilitate communication among all stakeholders from different departments of an organization (such as finance, legal, operation, etc.) that will be involved in the initiative, and ensure its success.

Data collection – Company Procurement Operation Processes assessment and Spend Profile Analysis
The key to a successful Indirect Spend strategic sourcing initiative is to first get a clear picture of your organization’s procurement profile. It is essential to get a good visibility on your spend structure and your current control over it as well as your procurement operation processes and associated technology. Indeed, it will ultimately allow you to identified maverick spend and its associated financial impact and assess the gaps in your source-to-pay processes (technological, human or others). The best practice in terms of spend analysis is to focus on your top spend categories and associated suppliers first and tackle the remaining suppliers if need be, following the 80/20 rule. From this analysis, the team assigned to this initiative will establish a spend and a process/technology baseline. It will not only provide you with a better understanding of your entire supply chain management profile, but also provide guidance on which strategies to apply to what spend category (supplier spend reallocation, internal efforts to ensure contracts compliance, etc.).  

Objectives definition and ROI projection
Once your baselines are established, you can set your objectives and build your initiative roadmap. This step must be used to answer questions such as what spend category will be included in the cost savings initiative, how much savings is your organization planning on realizing (while being realistic at the same time), what will be your internal costs to achieve these objectives, and how the overall return on investment is going to be leveraged across your organization. Answering these questions will allow your company to set the overall expectations of such initiative, at a C-suit level, which is essential in the sponsorship role expected from the highest level of management as described above. From simply cutting costs to using realized savings in order to extend investments current budgets in areas such as R&D, IT support, or even company expansion/acquisitions, it is essential to clearly define the line your organization wants to take, and properly communicate it to the team member(s) accountable for achieving your objectives.  

Strategizing & Execution
Once the data collection process is completed and the initiative roadmap developed, it is time to strategize and go to market. Before exploring the different tools available for going to market, let’s take a look at what strategies could be applied specifically for Indirect Spend initiative. Some of the most common strategies that apply to decentralized Indirect Spend procurement practices are supplier consolidation, spend consolidation (consortium), and benchmarking and direct negotiation with incumbent suppliers. There are several points to take into consideration before choosing which strategy to go with, such as the impact it would have on the relationship with incumbent suppliers or the time and resources needed versus what’s available. These points of consideration should help you select the appropriate strategy to apply in order to maximize your results.

Some of the tools that can be used to support these strategies are RFx, Reverse auctions, consortiums, etc. RFx is one of the most straightforward processes that enables suppliers to gain access to the full scope of work a business is looking for, and that will enable your organization to collect valuable data about the market state of a specific Indirect Spend category (suppliers competitiveness, quality of services, etc.). Reverse auctions can be an efficient way to capture savings quickly, but will most likely not end up with a long-term, sustainable solution like a RFx will provide. Smaller companies who want to leverage volume to get better pricing can explore the Consortium option. It can be applied to health care plans, office services, etc. Contracts, existing or not, can be seen as tools to use for your direct negotiation approach, and can result in quick savings as well! Payment terms or extension of your contract duration term are points of discussion that can be leveraged to qualify your company for an immediate discount program.

Sustainability
Building control over your Indirect Spend categories goes beyond the strategic sourcing initiative your organization will conduct and the team you will assign to support it. Controlling your Indirect Spend also means being able to ensure compliance and track performance. As obvious as it sounds, the proper mix of human and technological resources is the key to ensuring that the full source-to-pay process is under control. That being said, your teams accountable for compliance and performance tracking have to be equipped with the proper tools! Technological resources must be carefully selected to fit your company’s profile and enable your source-to-pay process to become one continuous flow. Supplier enablement is critical and can be achieved by adopting systems that will ease the ordering and invoice processes. Investing in an intranet based electronic platform can be an excellent long-term solution as well; it will enable better control and tracking of purchases
and will facilitate any future sourcing initiative to be carried out. These are just examples of what can be applied to ensure proper control.


Indirect Spend sourcing initiatives follow the same logic as any Direct Spend sourcing initiative. However, it is not given the same focus, leading to decentralized procurement practices and maverick spend. Allocating the proper resources, both human and technological, is mandatory to the long-term success of any Indirect Spend sourcing initiative and to ensure the projected savings will be realized.
Global manufacturing has seen many changes recently in terms of the introduction of new technology, shifting industry demands and associated production levels, as well as the preferred production locations. The latter point is what I would like to focus on in this article from a US manufacturer’s prospective. There have been many conflicting schools of thought about where the truly “low cost” production regions reside. Traditionally, Asian countries (since the 1980’s) have dominated the conversation from a low cost manufacturing standpoint. However recently there has been a lot of buzz from companies operating and distributing products in the US regarding the idea of Nearshoring. Nearshoring, from the US’ prospective, is an alternative to outsourcing to low cost countries which are located extremely far away from the US  geographically speaking. Nearshoring entails moving production, assembly and other business functions and processes to our close neighbors in Mexico. This relatively new movement has solved quite a few challenges that come along with dealing with companies who operate in opposite time-zones as that of the US.

There are many financial reasons that have led to this shift of US companies moving operations from Asian and other low cost countries to Mexico:

·         With the maturation of the Chinese manufacturing industry specifically (along with other Asian countries) and the associated implementation of labor hour restrictions, training and safety requirements and other working condition regulations they have seen an accompanying demand for a higher wage for skilled labor. Since around the year 2000 and on the Chinese labor rate has steadily increased while on the contrary the Mexican labor rate remained relatively stagnant during the same time period. In 2013, for the first time, the average Mexican labor rate fell below that of China’s.

·         The Yuan/Peso exchange rate has created another financial advantage where the Peso has continued to gradually weaken against the Yuan over the past 5-6 years making it even more affordable to produce in Mexico.

·         The shipping costs from Mexico to the US are much lower as compared to cross-continent shipments. Shipping goods across oceans costs much more in fuel, labor, and other resources to get to the end destination whether by sea or air. The cost difference is further perpetuated by the establishment of NAFTA which eliminates tariffs and duties on shipments crossing the US/MX/CA borders.

·         Energy costs, and the associated overhead of production, are steadily increasing in China while, again, Mexico remains relatively flat. In fact, the cost per MMBTU has been increasing for the past 10-15 years in China.

There are many other advantages of moving production and operations to Mexico from far away countries that are not solely financially driven, as detailed below:

·         Reduced lead times which allows for lean inventory, better planning and therefore a decreased risk of product shortages.

·         It is easier to communicate with Mexico considering our time zones are all within 3 hours of each other. In China, their day begins when our days in the US end and the opportunity for face to face or even phone call conversations are extremely rare.

·         Intellectual property is heavily protected by Mexican regulatory bodies and they enable authorities to actually enforce IP laws. When you look at China and other less developed countries, the protection of IP is a huge problem considering the lack of infrastructure, prevalence of corruption, and the general inability of Chinese authorities and agencies to enforce IP laws.

·         Mexico has strict child labor laws and enforces a 48 work week. Though China and other low cost countries are generally improving in this regard, Mexico still has superior working conditions and laws in place to protect the workers.

Overall, as companies evaluate the opportunity to move operations and production facilities to different countries, there are many factors that need to be considered and weighed before making a decision. As globalization in Supply Chain/Procurement continues to grow, and countries’ production advantages continue to change, it is important to stay informed with current events and shifting cost factors. Just because something was true today doesn’t mean it will be true the next. With changing political climates, technology, and other economic factors it is hard to say where the next popular manufacturing destination will be for many US companies.
3 benefits of strategic sourcing

Strategic sourcing can be the bedrock for deep change within a supply chain that leads to better financial gains. With all of the necessary tasks facing an organization, improving procurement and sourcing practices is the effective way to work toward better business. There are more specific means to measure the importance of strategic sourcing, though.
These are three of the most persuasive reasons to work with expert sourcing resources that can counter expenditures while still being productive.
1. Better guidelines for future improvements
Strategic methods allow businesses to gather data and make informed choices with a better idea of the outcome. This can mean reassessing current contracts. Federal News Radio wrote about the Department of Homeland Security's efforts, as told by the Office of the Chief Procurement Officer's Strategic Sourcing Program Office director, Jaclyn Smith.
According to this article, Smith explained the significance of the department's interest in strategic procedures at a panel earlier this year.
"We are talking policy impacts,"  Smith said. "We are talking about how you are fulfilling now and shifting from 'OK, this contract is up for recompete, and just because it's up for recompete, it doesn't mean we need to recompete it in the same manner that we did before.' "
"The need for a good business relationship can be all the more noticeable."
2. Strong relationships within the supply chain
When businesses need to work with an extensive list of enterprises, the need for a good relationship between them can be all the more noticeable. Strategic sourcing is once again a key way to respond to this complexity.
Supply Chain Quarterly spoke to the lead author behind a research study about the different types of "power" that buyers and sellers have. This author, Felix Reimann, summarized the findings by saying that supply chain executives should be "fully aware" of supplier interactions. He suggested multiple ways this can influence performance, from assuring suppliers that efforts are more coordinated to providing a platform for incentivizing this coordination.
This speaks to the more indirect effects that using strong sourcing and procurement practices might have. Even if your organization has to change suppliers or renegotiate, having enough recorded data can help you make this decision, as well as others. In fact, using the right processes can provide some concrete information about who the suppliers are and perhaps even what their practices might be in the first place.
3. More justification for change
Once again, the data discovered in strategic sourcing can be the beginning of meaningful changes. Rather than just an improvement, this could reflect a realignment or some other overhaul that indicates a bigger switch for the company itself.
It all comes from knowing which points will mean the lowest costs and are going to be most effective in the long term. The changes you choose may also fall in line with other important imperatives, such as better use of ethical or green sourcing. In addition, these methods could also allow you to verify that new changes really are as productive as you'd like them to be and having the desired effect.
If they can't appreciate the value that procurement can deliver or understand the sourcing process, stakeholders won't want to participate in the initiative. As supply chain, procurement and sourcing professionals, it is our responsibility to drive stakeholder engagement as a strategy for maximizing the success of the sourcing initiative. So how can we effectively communicate with the stakeholders of these other business units and encourage their engagement in our efforts to support them?

Here are a few suggestions for gaining loyal supporters in any sourcing initiative:

1. Understand their perspective - Every group of stakeholders within an organization has a unique set of needs, concerns and requirements. By making the effort to understand everyone's perspective, they will realize this sourcing opportunity has the potential for them to drive results and add value for their organization. The stakeholder's preferences with the incumbent supplier can also be established here and provide them with the guarantee that the factors they value will not be thrown aside for the lowest price. As an added bonus, understanding these stakeholders will offer the opportunity for them to understand your perspective as a procurement or supply chain stakeholder and establish some common ground. 

2. Encourage collaboration - The earlier stakeholders can be involved, the more they can offer their input on and ensure the majority of the decisions made are taking their expectations into consideration. These individuals possess the expertise, additional resources and access to data that can be supportive during the sourcing engagement. When supply chain or procurement stakeholders can effectively communicate their intentions with stakeholders from other functions in the organization, the relationship can be mutually beneficial. Procurement needs the groups of stakeholder's they support to offer visibility into their function so they can identify areas for additional value. 

3. Demonstrate the value Procurement offers- The inaccurate stigma associated with procurement and supply chain professional's willing to sacrifice value for cost reduction initiatives has left stakeholders hesitant for procurement's involvement in their function. To help stakeholders understand that procurement is not purely tactical and does not simply want to achieve a percentage of savings, procurement can share success stories from previous work of the procurement department. These examples will build credibility and establish stakeholder buy-in that can ease the process ultimately achieve optimal results for all stakeholders involved. 

Recently, Source One was recognized for bringing together supply chain and IT stakeholders in a strategic sourcing initiative by Supply and Demand Chain Executive's Top 100 Projects Award. This client was seeking a more efficient Warehouse Management System (WMS) that supported their goal of organizational wide sustainable practices. Both IT and supply chain stakeholder input was necessary for the success of this project, and Source One's procurement consultants prioritized the alignment of both of these groups. By gaining both the units' perspectives in their strategy Source One's team was able to identify the best-fit WMS that met the client's IT and supply chain needs. 

To learn more about Source One's procurement and strategic sourcing abilities, visit sourceoneinc.com
ICYMIM

ICYMIM: June 26, 2017

Source One's series for keeping up with the most recent highlights in procurement, sourcing, and supply chain news week to week. To stay updated on the latest supply management articles, check in with us every Monday.


Brian Lyew, Art of Procurement, 6/22/2017

Procurement is required to have a thorough understanding of all aspects of an agreement, including the legal implications. Being knowledgeable of these components and effective negotiating strategies to enhance the overall agreement can accelerate the entire contracting process. Meeting in person for face-to-face negotiations will decrease the chances of miscommunication, offer better collaboration and build stronger relationships between supplier and procurement for the future. Along with these strategies, Procurement can also consider electronic contracting, applying a skills test, or completing due diligence to accelerate the process. For the complete list of methods for a faster procurement contact process, check out the full article. 

Sonda Sahley, Corporate United, 6/20/2017

Utilizing indirect spend categories are one of the best ways to increase cost savings and achieve procurement goals in your organization. In this case, the opportunities associated with break room supplies are evaluated as a category where not a lot of time is dedicated but with a few minor adjustments can offer considerable savings. Recent studies show significant reductions in indirect spend by making small changes to paper products that have no effect on the organization's operations. Specific substitutions that can easily go unnoticed by a majority of the company will be recognized as savings and successful procurement initiatives to save in these indirect spend categories. 

Michael Lamoureux, AKA The Sourcing Doctor, Sourcing Innovation, 6/20/2017

While it would be ideal to have a Source-to-Pay solution that could predict every action a person could take and support professionals from non-Procurement backgrounds, it's important to remember that these applications are not all about being capable of everything for anyone and the main goal is to generate value. Even the best applications that are noted as being easiest to use and considered logical for most of the functionality aren't completely foolproof. Vendors are making efforts but a totally foolproof application is not in the foreseeable future, and it's important to be focused on a solution that will offer the most value over being infallible. 
The many faces of supply chain space management

Efficiency is a big word in procurement and supply chain management, and it means not just reducing energy expenditures but getting the most out of available resources as well. Sharing spaces, freeing up unused storage and other tactics may be a major priority already, but the current conversation is hinting at some improvements which may help steer developments. There's not just the amount of space within supply chains to consider, but also other ways that limitations may impact distribution.
Supply Chain Dive mentioned the space needs of retailers as part of the growing modernization demands they face in general, with a strategic reason to unify actions for faster performance. The source specifically pointed out the desire for an integrated supply chain that fits in with the rest of a company's operations. Let's follow the thread of space management specifically and see how different strategic sourcing solutions might play into this goal.
Freight simplification
Many have talked about "gig economics" and the "Uberization" of different services. As a corollary to space concerns, simplified freight management may also offer efficiency benefits for complex supply chain setups.
A Supply & Demand Chain Executive piece recently looked at Uber Freight, a service which intends to make it easier for truckers to accept and complete jobs, also allegedly reducing the amount of time it takes for these employees to receive their payment.
The article didn't mention the space management aspect of this service, and it also suggested that more data is needed to see whether or not it will actually disrupt freight, since the goal is a large one. Still, the potential is still there for a more agile model to arise that benefits truckers and the companies they work for alike.
"The potential is still there for a more agile model to arise."
Urban mobility
Existing alongside space concerns are the difficulties that can come with travel through highly populated areas. In its 2015 Urban Mobility Scorecard, INRIX, alongside  the Texas A&M Transportation Institute, said that trucks accounted for 18 percent of congestion cost in 2014.
Though it noted that the future results of urban congestion costs will depend on different regions, it did say that 2020 congestion could lead to an estimated cost of $192 billion in 2014 figures, as well as 3.8 billion gallons of wasted fuel and 8.3 billion hours of delay.
Among the strategies mentioned as a response, the report stated that the ideal options could build naturally off of existing elements and perhaps include workforce changes that allow for different routes. It's a different type of space concern, but one that freight and supply chain managers will need to consider to continue meeting their goals successfully.
Warehouse space
One final way space concerns manifest themselves is through the physical availability of warehouses. JLL recently announced the results of its United States Industrial Outlook, where it examined the rent growth rates of industrial real estate over the past decade. While the year-to-date figures for 2017 only put the growth rate at 8.2 percent, lower than last year's late, there's still the chance for this to be higher by the year's end.
Coordinating the supply chain efficiently can help businesses take all of the different kinds of space concerns into account for maximum cost effectiveness.
Source One Round Up

June 23, 2017

Here's a look at where Source One's cost reduction
 experts have been featured this week!

RECENT AWARDS:

Source One Strategic Sourcing Initiative Receives Supply and Demand Chain Executive 2017 Top 100 Project Award


Yesterday Supply and Demand Chain Executive announced the recipients of their 2017 Top 100 Projects Award, including Source One Management Services who received recognition for a recent Strategic Sourcing Initiative that aligned supply chain and IT stakeholder groups to ensure everyone's needs were met when deciding on a better equipped Warehouse Management System (WMS). Source One's procurement consultants incorporated the different perspectives of these two groups to develop a go-to-market strategy and was able to present stakeholders with the information necessary for choosing the best-fit WMS. Through these efforts, the client was able to satisfy both group's requirements, align with the organization's overarching goals, and achieve a 40% savings. This accomplishment is a prime example of Source One's ability to equip their client's Procurement groups with strategies and best practices for improving their role in their organization. 


UPCOMING EVENTS: 


Road to SYNERGY: Dallas, Texas


Earlier this month, members of Source One's spend management team joined Corporate United on the Road to SYNERGY for their first stop in Baltimore, Maryland. This one-day conference series will be hosted in a variety of regional areas across the country all summer long as CU and Source One host engaging workshops, educational presentations and informative speeches from leaders in the supply chain, procurement and sourcing space. Industry professionals in these select cities will have the opportunity to meet with other experts in their local area for these exclusive opportunities. Next up on the Road to SYNERGY is a stop in Dallas, Texas for CU and Source One on August 15th. Local members of the CU community are encouraged to register now to reserve their spot in advance. 


Today Supply & Demand Chain Executive announced the recipients for their 2017 Top 100 Projects award, including Procurement Services provider Source One Management Services for their Strategic Sourcing team's recent initiative. The projects awarded were selected based on their forward-thinking perspective for the industry and ability to identify new opportunities. SDCE believes that one of the most crucial methods for developing and implementing best practices is to utilize well-scoped projects that can demonstrate the organization's strategic objectives. The results of these projects can offer insight and opportunities for improved operations and innovation.
It's becoming more and more common for companies to seek the support of various business units in reconstructing their supply management practices," explains Source One's VP of Professional Services Joe Payne, "As procurement professionals, we are in the ideal position to align stakeholders for developing the most efficient solution for the organization's underlying goals.
This specific project involved a specialty foods manufacturer in need of a more efficient and better equipped Warehouse Management System (WMS). They were seeking a system that was capable of supporting their company's goal to deliver plant-based foods of the highest quality for their customers by utilizing best practices for sustainability. In this situation, the Strategic Sourcing team at Source One received input from supply chain and IT to ensure both stakeholder group's needs were met. The Source One procurement consultant team recognized how important it was to align these stakeholder groups, and incorporated both team's perspectives when developing the strategy for an improved WMS that matched everyone's needs. The client was able to achieve 40% savings based on the information Source One presented them.

To learn more about Source One's Strategic Sourcing services, visit sourceoneinc.com.

The procurement side of the Amazon/Whole Foods deal
Amazon made major headlines this June with the high-profile purchase of grocery chain Whole Foods. The deal itself doesn't seem to be too surprising, since Amazon and its CEO, Jeff Bezos, have been in the habit of major acquisitions.
An unusual partnership
This new Whole Foods transaction, however, is slightly different, since it places a retail grocery business under Amazon's umbrella. There has already been much speculation and attention given to Amazon's grandiose ideas about logistics, including using drones and other innovations. As such, it's a deal with possible procurement implications for how tech-savvy giants can reign in the retail space, or at least how Amazon itself will proceed.
"This merger brings the chance for Amazon to take on multiple tracks of customers at once."

As Forbes pointed out, this merger brings the chance for Amazon to take on multiple segments of customers at once and be a leader in the retail space. This is because it will be both an experienced online company with a dedicated system of distribution centers and the owner of a very popular standard-style grocery chain.
According to this summary, the two halves can cross-pollinate themselves to some extent, with the online capability strengthening the retail element and vice versa. The source hinted that Amazon could particularly solve labor and logistics concerns. Amazon does have existing food delivery service experience with some of its grocery options, though the article notes that this is a different customer experience than the retail environment of an institution like Whole Foods.
Closing the gap
Other sources seem to also see the new demographic of grocery store shoppers as a possible challenge for Amazon. A San Francisco Chronicle piece said that the crucial element is the expected quick response of many online retailers, as well as the need for in-person consumers to see grocery items before they buy. Even with the added resource of Whole Foods, Amazon may have to focus on this aspect of its enterprise to stay relevant.
The Chronicle spoke to PricewaterhouseCoopers Real Estate Practice leader Byron Carlock about the importance of location to a business like Amazon as it expands. The article also made the connection between the acquisition and Amazon's own interest in opening up in physical stores, perhaps through brand-specific shops. Amazon will also reportedly acquire Whole Foods' various assets, including 11 distribution centers and 460 stores, an undeniable factor in what the online giant stands to gain.
"For the two- and three-day delivery standards, you can have warehouses out in the middle of cornfields in Kansas, but for same-day delivery you need premium fulfillment facilities closer in to the city," Carlock said. "Major online retailers are seeking space closer to large cities."
The Wall Street Journal puts the number of Whole Foods stores coming to Amazon at 430, and points out that the size and worth of the chain makes it a marked difference to the other acquisitions Amazon has made in recent years.
Purchasing management and other related tasks may be understandable challenges for companies that want to modernize, so other businesses may want to keep pace as well with well-planned supplier relationships.
On this day, 25 years ago, just as Source One was beginning to launch in Pennsylvania, simultaneously, Batman Returns officially debuted in theaters across America, bringing together some of 1990's Hollywood’s biggest names: Michael Keaton (of earlier Batman fame), Danny DeVito (a legendary in the TV series, Taxi), and Michelle Pfeiffer (later renowned for her work in Criminal Minds.) As the 6th highest grossing film of 1992, Batman Returns acts both as a cultural landmark in a time of grudge music and coffee shops, and as a characterization of Source One’s primary principles in Project Management and Strategic Sourcing.

To begin, one must first understand the basic premise of the film: Batman returns to the screen to fight a new arch nemesis, the Penguin, while at the same time collaborating with and fighting off a new flame, Selina Kyle, also known as Catwoman. Contrary to intuition, however, Batman is not the true star when it comes to highlighting Source One’s Project Management and Strategic Sourcing principles – it is the Penguin’s failures who prove these points.

While project management for Source One clients means utilizing strategic sourcing to develop strategic partnerships and relationships with suppliers, along with determining a strategic plan for utilizing innovative technologies to ascertain the company’s end goal, for the Penguin, project management means forging false strategic partnerships, manipulating relationships with suppliers, and misusing innovative technology to achieve his mission.

As a result of the Penguin refusing to abide by basic Source One project management and strategic sourcing principles, the Penguin is the source of his own, gradual downfall. For instance, after forging a false strategic partnership with a petty criminal named Schrek through blackmail, this partnership hurts the Penguin’s villainous projects, as Schrek is the reason for Catwoman’s inception, one of the protagonists who eventually turns on the Penguin and assists Batman.

Similarly, the Penguin’s ruin continues through his manipulated relationship with suppliers – after deciding to kill all of Gotham’s first-born sons, the Penguin turns to outside suppliers to provide him with henchmen and weapons to accomplish this project. Where the Penguin miscalculated, however, was the strength of his suppliers: the strength of his henchmen and their weapons were not wieldy enough to overcome Batman and Catwoman; had the Penguin developed legitimate relationships with his suppliers, the quality of his products and team might have been stronger.

Finally, however, the Penguin’s ultimate untimely end occurs through the Penguin’s misuse of innovative technology. After the defeat of his henchmen and their weapons, the Penguin turned to his final backup plan: using outsourced mercenaries to direct a path of missiles to destroy Gotham City. However, Batman’s strategic planning and utilization of innovative technology proved greater – using the Batmobile, Batman rerouted the Penguin’s missiles to destroy the Penguin’s lair, effectively ending the Penguin’s villainous career once and for all.

Ultimately, as the Penguin’s failures in Batman Returns highlight, it is paramount that successful companies – villainous or not – follow guidelines like those advocated for by Source One, in order to achieve the utmost success. Perhaps if the Penguin had utilized Source One’s expertise in project management and strategic sourcing to develop strategic partnerships, relationships with suppliers, and a strategic plan for utilizing innovative technologies over turning to false relationships, manipulation, and misuse of technology, things would have turned out differently for the Penguin – if only it weren’t 25 years too late for the Penguin to find out!
ICYMIM

ICYMIM: June 19, 2017

Source One's series for keeping up with the most recent highlights in procurement, sourcing, and supply chain news week to week. To stay updated on the latest supply management articles, check in with us every Monday.


Kelly Barner of Buyers Meeting Point for BravoSolution Blog

While most Procurement groups take a customer service approach to demonstrating value to internal stakeholder groups, this can prevent them from understanding their influence on the end customer. Procurement should work to thoroughly understand the customer value proposition, and increase its efforts to foster corporate citizenship by investing in supply chain sustainability and corporate social responsibility. In this post, Barner recommends five methods for ensuring your procurement team is actively considering customers with their efforts and not just catering to internal stakeholder groups.

3 Tips To Sourcing Packaging
Donna Cicale, ThomasNet, 6/15/2017

Packing is one spend category that is applicable in almost all industries and for that reason, there is a wide range of suppliers that offer a broad spectrum of price, performance and other details. While sourcing for these products may seem simple, there are actually a number of variations of most standard products that have individual specifications to differentiate and meet a range of needs for many businesses. It's also important to consider if shipping products that are only able to be used once are more efficient than shipping products that can be reused multiple times.

What is Visibility?
Michael Lamoureux, AKA The Sourcing Doctor, Sourcing Innovation, 6/16/2017

Strategic Sourcing and Procurement professionals strive to find transparency or visibility in the supply chains of their organizations, and while those terms seem clear, The Sourcing Doctor evaluates what we are looking for and why. Data is constantly being reviewed and organization to gain an understanding of processes and purchases in the supply chain, and while this information can answer some questions it does not provide complete visibility. With risk management, you can access activity reports that may clarify some of the information found after cleansing data, but this still will not create a completely visible supply chain. Ultimately, there is no direct path to achieving complete visibility and the definition is unique to each organization's supply chain operations.