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Retail procurement: The fight against out-of-stock

Creating a strong chain connecting suppliers to customers is a major objective with many smaller goals within it. For instance, avoiding out-of-stock situations wherever and whenever possible may be one of the keys to selling success, as it represents a way to keep potential business from slipping away. In an era when people can make large-scale purchases from the phones in their pockets, losing customer attention due to an out-of-stock item is a more damaging prospect than ever before.

Today's innovations, from omnichannel operations to the increasing speed of delivery and logistics, have the simultaneous effect of making quick inventory adjustments possible and complicating the overall retail picture. Some manufacturers will find ways to master these processes, while others may struggle to help their retail partners put the right items in front of shoppers.

Cleaning up the supply chain
Supply and Demand Chain Executive contributor Paris Gogos explained that tracking down and preventing out-of-stock situations comes down to many different factors, and identifying what has gone wrong is the key to discovering an answer. Gogos offered several of these worrisome possibilities - if a manufacturer is able to pinpoint a single store in a chain that is suffering from "phantom" stock or incorrectly predicting the demand for an item, it can take a more active hand in getting retail partners on the right track.

More advanced supply chain technology can help companies resolve their connections with retailers and counter any stock outages. Gogos suggested cloud-based technology with clean and accurate data. Establishing close links to data flowing in from point-of-sale interactions at stores may be a more effective route to information gathering than simply relying on the databases operated by retailers; Gogos warned that stores' systems can be high on incorrectly entered data or phantom stock.

Data is the key to monitoring stock situations.Data is the key to monitoring stock situations.

Being proactive
Food Dive contributor Victoria Vessella recently explained that there is value in not just accurately determining when items are out of stock but also getting ahead being proactive. Focusing on food manufacturers that deal with businesses through sales representatives, Vessella stated that this active and effective approach to anticipating out-of-stock situations is based on auditing and frequent data gathering.

Representatives from food brands can become invested in ensuring that they account for all sales variables, from whether stores are complying with the planograms for product displays to the habits they have displayed in ordering new products, as well as the effects those purchases have had on inventory. Seasons and consumer preferences over time can also have an impact on which items linger on store shelves and which sell out quickly. If retailers track such fluctuations and keep their information up to date, they may be able to help their retail partners - and their sales - thrive.

Solid links needed
The retail supply chain from manufacturer to shopper can break down if even one step of the process has gone awry. Keeping products on store shelves is one of these potential failure points. Even supply agreements that look great on paper can disappoint all parties involved if problems appear in data, retailer policies or enforcement of those agreements.

Strategic sourcing experts, Jennifer Ulrich and Nicholas Harasymczuk, discuss the main elements that comprise a successful facilities management sourcing strategy in their 4-blog mini-series (Part 1, Part 2, Part 3, Part 4). The discussion centers around the most common roadblocks while sourcing facilities management and ways to overcome these challenges in order to reduce costs and increase efficiencies. Following the recommendations from Source Ones’ facilities management subject-matter experts can lead to the following results: 

ICYMIM: November 20, 2017

Source One's series for keeping up with the most recent highlights in procurement, strategic sourcing, and supply chain news week-to-week.  Check in with us every Monday to stay up to date with the latest supply management articles.

Creating a Successful Third-Party Risk Management Strategy: What You Need to Know
Sydney Lazarus, Spend Matters, 11/15/2017
It's almost 2018.  That means it's the perfect time to start thinking about third-party risk management strategies for the new year.  Most unsuccessful plans fail due to a lack of planning.  It's essential to tie risk management goals into the broader objectives of your business.  Successful businesses will determine methods for aligning their risk mitigation and cost reduction efforts while also driving revenue.   In addition to poor planning, Lazarus suggests many organizations have trouble creating measurements for success.  These are all things to consider as 2017 draws to a close.

Why You Need to Capture the Flag Sooner Rather Than Later 
Michael Lamoureux AKA The Sourcing Doctor, Sourcing Innovation, 11/16/2017
Companies of all sizes are leveraging Procurement in search of savings.  Many have found themselves coming up short. They're failing to meet expectations and missing out on potential billions. The Doctor suggests that "dirty data" may be to blame for these disappointing figures. Failure to get data under control leads to lost savings in the form of unnecessary RFXs, wasted buyer time, and missed opportunities for consolidation.  Those are just a few of the ways bad or insufficient data can hurt your savings initiatives.

The Amazon Effect: Competition for Procurement Talent
Nick Lazzara and Naseem Malik, Spend Matters, 11/15/2017
As Amazon's service offerings and technological solutions expand, they continue to disrupt hiring and retention throughout Procurement.  It's not hard for the number one supply chain company on Earth to lure industry leaders away from their companies.  Procurement organizations should be wary.  There's still hope, however, for companies who take Lazzarra and Malik's advice.  By setting realistic career paths, offering workplace flexibility, and leveraging their CPO's brand, top Procurement organizations can still compete with Jeff Bezos and his behemoth.

Increased sourcing focus may fuel competition for talent

A major change of corporate priorities has ripple effects throughout any company. When organizations reorder their goals and decide to pursue new objectives, they'll have to revise the way they operate from the chain of command to technology use. Strategic sourcing represents such a high-level turning point, which means it's time for businesses to consider how to correctly support this new form of supply chain management.

Staffing is one area due for a serious rethink in the era of strategic sourcing, as the day-to-day productivity demanded of a strategic procurement department is different from the expectations placed on a traditional setup. Whereas in the past, officials were mainly called upon to cut costs at the contract negotiation stage, their input into all areas of the company's supply chain approach has become critical.

The talent crunch
In the midst of a revolution in the way companies look at sourcing and procurement, it shouldn't be surprising that top corporations are igniting a talent war for the services of the best procurement employees. Spend Matters explained that businesses such as Amazon are in the market for effective new workers, and that supply chain leaders will have to work closely with their top contributors to ensure they feel like staying rather than taking a role with an industry giant.

Procurement managers can get closer to their employees by working out customized and preferred roles and paths for progression. When workers' contributions are recognized, and when they are serving in roles that suit their talents and interests, offers from other companies will be less appealing. As with any department, procurement is the sum of its employees; losing even a single top contributor could have a lingering effect on a company while it tries to replace that person's production.

When teams have trusted leaders, they are better equipped to attract and retain people. Spend Matters explained that chief procurement officers have a strong personal impact on their departments. When companies seek high-quality new recruits for their supply chains, applicants will look at the CPO's history. If there's leadership who can get results, the prospective employee will see a chance to join a successful group.

People make the supply chain - so procurement departments must learn to make their people stay.People make the supply chain - so procurement departments must learn to make their people stay.

Retention is a challenge
Getting ideal new workers is a difficult task worth focusing on, and so is retaining the best members of today's team. A Procurious study warned that a significant percentage of procurement professionals are considering moving on from their jobs. Looking two years into the future, 40 percent of respondents anticipate finding new work, and 70 percent want to make a change within five years.

The report found that more than half of sourcing workers surveyed do not believe their present leaders will be able to help them progress within their careers. This data should worry CPOs and serve as a sign that they have to try harder than ever to create an environment that will incubate and retain talent. If they fail to convince their top performers to stay, there are many other organizations searching for talent to shore up their supply chains.

November 17, 2017

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

New Whitepaper: 

5 Pro Tips for Impactful Procurement
Today's best-in-class Procurement groups serve as a valuable, strategic, influential business units that deliver value across entire organizations.  Calling upon thousands of successful initiatives, Source One's consultants provide tips for optimizing Procurement's performance and emphasizing its value.  Obviously, there is no one-size-fits all approach to employing a Procurement team.  These tips, however, should provide an effective starting point for any business looking to align purchasing with their enterprise-specific goals.

Recent Blogs:

Redefining Modern Procurement 
William Dorn, Supply & Demand Chain Executive, 11/15/2017
Source One's VP of Operations looks back on the last 25 years of Procurement and Strategic Sourcing.  Though some Procurement groups have evolved from purchasing teams to more strategic units, Dorn argues this is hardly the norm.  Many organizations are still far too comfortable with purchasing as usual.  He suggests that Procurement's continued maturity will depend on its ability to produce value beyond cost savings.  Then, it can align itself with company-wide goals to drive future initiatives and promote innovation.

Recent Podcasts:

25 Years of Service from Source One
Take a look at how Source One Management Services, LLC has matured into a leader in Procurement and Strategic Sourcing with this short video.  Over 25 years, we've grown from a small firm specializing in contingency-based MRO and Telecom purchasing to a best-in-class provider of sourcing services.  Today, our clients trust us to produce savings across myriad industries and spend categories.  What's more, our expert procurement consultants and innovative tools are a driving force for innovation throughout our industry.

Entering college, the discussion surrounding majors in the business school focused mostly on the basics: Accounting, Finance, Marketing, and Management.  Soon after arriving and introducing myself to other business students, I started to hear more about Minors or Double Majors in Management Information Systems (MIS), Computer Sciences, and similarly tech-based fields. Personally, I like to describe my as nearly tech-illiterate.  I can barely operate a TV remote.  However, as unfamiliar as many prospective business majors are with technology, it’s becoming an essential part of life and work for us.  Without developing some background knowledge in technology, without keeping an eye on where the industry is headed, we can say goodbye to the prospect of reaching our full potential.

Throughout several internships, I would constantly hear about the future of artificially intelligent technology.  Robots, I was told, are continually growing more capable of performing human jobs.  This projected disruption of the workforce seems to thrill employers while it terrifies employees.  How are people going to provide for themselves and their families if robots can perform their jobs for less?

I grew even more aware of this during my first few weeks with the procurement specialists at Source One. Working with colleagues to analyze strategic development among companies in the consulting and advisory field proved particularly educational. We analyzed where competition in the workforce was and how companies typically allocated resources.  Technology ranked highly across the board.  This wide range of companies, including many brand-new start-ups, considered emerging technology essential for growth in Procurement.  What’s more, it became clear that employees with backgrounds in programming and data science are increasingly sought after. 

This can look like cause for concern.  Young professionals looking for work might feel especially worried about entering ever-evolving, unpredictable fields.  Job security is a key consideration for students and graduates, and it’s unfortunately difficult to assess. Today’s recent graduates, however, also enjoy distinct advantages. We’re the youngest members of the workforce and our innovative, collaborative, and tech-savvy qualities can help drive the future of our industries. There’s also no reason that technological advancements should eliminate the need for diverse skillsets in Procurement.  Certainly analytical skills will help anyone looking to establish themselves in supply chain management and strategic sourcing.  It’s important, however, for both employees and employers to seek out a balance of hard and soft skills.  There’s no one-size-fits-all strategy for approaching sourcing initiatives, and there’s certainly no single model for an effective Procurement professional.
E-procurement now and in the future

The increasing use of technology in procurement and sourcing is one of the most visible and urgent trends in the global supply chain. Communication in particular has become drastically faster in recent years. Failure to incorporate this new speed of contact into sourcing and procurement strategies is a missed opportunity for companies of all kinds, and it may open up an efficiency gap between businesses with competent information technology in procurement and those without.
The potential positive effects of a technology refresh are among the many reasons to embrace strategic sourcing. It will likely be easier to find an effective IT improvement plan for the procurement department when this section is more closely integrated with overall organizational leadership and direction.

Searching for a workable solution
As Spend Matters recently indicated, the tech tools powering modern procurement are complex and powerful. These products are also customizable, and no two sourcing departments will have exactly the same requirements. When it comes to adopting such a program, the best approach may involve gradual progression. First, the teams can select a spend analysis tool. Next, the company can add on a related e-procurement tool - or replace the vendor entirely if the first implementation has gone poorly.
The mere act of buying a software tool doesn't ensure it will provide value. Spend Matters noted that companies have to deal with possible confusion and a lack of familiarity with the potential outcomes of their new platforms. The source reported that better implementation and usage of software tools is necessary and added that as of now, numerous sourcing departments that have e-procurement products use them only one-fourth of the time. With a little extra knowledge and some collaboration with analysts and consultants, companies can get these statistics up.

Data is the basis of procurement's future evolution.Data is the basis of procurement's future evolution.

Anticipating AI's rise
hat comes after today's IT tools? The answer to this important strategic question will likely involve better procurement analytics and data use. Artificial intelligence programs that use a flow of valuable data to make key decisions are in development, and they promise to be a fruitful next step for tech-conscious supply chain participants.
PYMNTS recently spoke with Xeeva CEO Dilip Dubey about how this technology will make its impact felt in procurement departments. He explained that supply chain executives shouldn't be afraid to think about moving into AI use if they still have trouble digitizing their transaction data and making it structured and machine-readable. Indeed, the powerful algorithms being considered for industry use could help make analog data into a usable resource for a company, without having to digitize it.

One of the most promising elements of AI is that these decision-making algorithms can fit into several different roles when integrated with more standard procurement technology. Dubey pointed to processes from sourcing to cataloging; anywhere there's data to assess, an AI program could help. Companies that want to ensure their supply chains run smoothly may soon have help from these new programs, with their own data serving as the fuel. For businesses still struggling with the early stages of e-procurement, this future enhancement can serve as further motivation to evolve.

Since 1992, Source One's procurement consultants have executed thousands of strategic sourcing initiatives.  Clients in a variety of industries trust us to reduce costs across all areas of spend and drive efficiency throughout their organizations.  Though every company and every initiative is unique, a number of fundamental strategies always help produce success.

We've spent the last few weeks sharing some of these foundational best practices.  Check out our latest infographic to learn more about standing tall in procurement and building future savings

Contact Source One's team of sourcing specialists today.  We'll assess your operations and help you construct a more strategic approach to purchasing and supply chain management. 

25 years as a leader in strategic sourcing provides a unique vantage point.  Source One’s procurement experts have both witnessed and inspired monumental shifts in the nature of their business.  While our diverse offerings still set us apart, we were practically an anomaly in the early days.  Just a decade ago, most of the purchasing groups we encountered were purely reactive; they employed age old tactics, and relied on 'conventional wisdom.'  Procurement and purchasing were more or less synonymous.  So long as stockrooms stayed stocked, there was little cause for concern.  Even many of our larger clients lacked the structures and resources for sourcing indirect spend items or accurately assessing risk.  A number of Source One's veterans can recall explaining the very idea of strategic purchasing.

Persuading clients to abandon the ease of the three-bid process and the comfort of preferred supplier relationships was no small feat.  After all, bad or inefficient purchasing habits are just that – habits.  The worst ones are never easy to break.  What’s more, cost reduction can make people uncomfortable.  Reduced budgets often conjure images of inferior products and subpar services.  Even seasoned Procurement professionals still face friction during early discussions.  This continues to ring especially true during collaborations with areas like IT and Telecom for whom Procurement can look especially unfamiliar.

Reducing costs is still a key objective for Procurement groups.  The best, however, know that their advisory role must go well beyond savings considerations.  Locating the right suppliers and markets for our clients depends upon our ability to establish, nurture, and maintain amicable relationships.  Strict budget policing encourages the exact opposite sort of partnership.  Focusing on costs not only inspires resentment, but undersells Procurement’s considerable potential for shaping a business’strategy

In its newest iteration, Strategic Sourcing is increasingly linked to category management.  Successful organizations appoint sourcing leads to oversee particular departments (IT, Marketing, etc.) or spend categories (Telecommunications, MRO, etc.).  Dedicated subject matter experts do much to inspire meaningful collaboration between business units.  Working across organizations, Procurement teams can better gain a comprehensive understanding of stakeholder needs and deliver results that can profoundly reshape an entire enterprise.  Though these changes are still very much underway, Procurement's new role in negotiations suggests more change to come.  

Tomorrow's Procurement organizations cannot hope to reach best-in-class status without further developing management skills and building credibility across businesses.  Simply put, many companies retain internal structures that could discourage Procurement from fulfilling its potential.  Successful procurement departments will navigate corporate politics and continually emphasize the broader implications of the word 'savings.'  As always, some Procurement groups will drive these changes while others watch from afar.  Count on Source One strategic sourcing specialists to remain the former.

ICYMIM: November 13, 2017

Source One's series for keeping up with the most recent highlights in procurement, strategic sourcing, and supply chain news week-to-week.  Check in with us every Monday to stay up to date with the latest supply management articles.

Supplier Rationalization - Revisited
Tom Finn, Spend Matters, 11/8/2017
Finn reminds procurement professionals that supplier rationalization does not have to mean consolidating or reducing your supply base.  In fact, securing more strategic relationships can often mean increasing the number of suppliers utilized, routinely shifting a supply base, or developing a strategy that allows for continuous changes to supplier relationships.  It's important to remember that the process of supplier rationalization is a constant one.

Cottrill Research's Open Access Research Provider List of Honor
Cottrill Research, 11/2/2017
To commemorate Open Access Week, Cottrill Research has announced their annual list of honorees.  These are organizations and publications who reject traditional, exclusionary publishing models and choose instead to provide valuable information absolutely free. This year's Top Honorees include Spend Matters and Buyer's Meeting Point.  My Purchasing Center also earned an Honorable Mention.  Thanks to each of the recognized organizations for the vital service they provide procurement professionals everywhere. 

Leveling up to E-Sourcing Mastery: A Collaborative Approach
Nick Heinzmann, Spend Matters, 11/8/2017
It's clear that many e-Sourcing providers have failed to adequately inform procurement teams of their tools' benefits.  Heinzmann suggests a number of options for encouraging adoption.  The key, he suggests, is to treat it like a game.  For example, providers could introduce modules that provide "selective access" to their e-Sourcing platform.  This would encourage users to continually employ the tool in hopes of earning access to more sophisticated features.  Consultants, too, can stagger their on-boarding procedures to ensure tools are introduced more effectively.

Jennifer Engel, one of Source One's Senior Procurement Analysts will attend and address the American Supply Association's Fall Dinner on Monday, November 13th.  This annual event has become a valued tradition for a reason.  Bringing together supply chain professionals from across the Midwest, it always features impassioned discussion and expert insights from industry leaders.

Engel has years of experience helping best-in-class organizations produce cost savings in their MRO and Facilities purchasing.  As a result, she possesses considerable insight into the motivations and considerations behind procurement decisions.  She'll call upon her history of successful initiatives to discuss recent developments in the ever-evolving field of e-Commerce.  In particular, she'll address how online transactions have affected supplier relationships and the potential threats posed by industry giants like Amazon.

Amazon Business, introduced in 2015, has quickly established itself as a rival to more traditional industrial distributors.  Though Amazon offers convenience in the form of its Prime delivery services, they have yet to develop a customer service apparatus to match that of their more established competitors.  Engel will take special care to discuss the value-adds that can help veteran firms not only stay competitive, but continue to outperform these emerging challengers.

Check out Source One's recent infographic 'Can Amazon Business Really Compete with MRO, IT, and Office Product Suppliers' for more information on how Amazon Business compares to similar services.

November 10, 2017

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

New Whitepaper: 

5 Pro Tips for Impactful Procurement
Today's best-in-class Procurement groups are not merely tactical purchasing teams.  Instead, they serve as a valuable, strategic business unit that delivers value across entire organizations.  Leveraging 25 years of sourcing experience, Source One's consultants provide tips for maximizing Procurement's influence.  Obviously, there is no one-size-fits all approach to employing a Procurement team.  These tips, however, should provide a starting point for any business looking to align purchasing with their enterprise-specific goals.

Recent Blogs:

Managed Print Services Models Part 2: Actual Volumes or Allowance + Overages?
Torey Guingrich, Buyer's Meeting Point, 11/07/2017
Guingrich concludes her series on procuring copiers and printers by taking a closer look at maintenance structures.  First, she says, it's important to determine whether you'll pay for the actual volume of printing, or make payments based on your adherence to a predetermined allowance.  Companies that opt for the latter need to pay particular attention to their organization's overall print strategy.  They should also push suppliers to underline cost-savings opportunities during quaterly meetings. Without a detailed look at this spend area, it can prove especially challenging to optimize savings.

Recent Podcasts:

25 Years of Service from Source One
Take a look at how Source One's become an industry leader and helped drive the evolution of Procurement over the last 25 years. In this short video, you'll see how a small firm specializing in MRO and Telecom purchasing matured into a best-in-class service provider.  You'll also learn more about Procurement's decades-long shift from a mostly tactical function to a more nuanced, strategic business unit.

How Much of your Telecom Spend is Going Unreviewed?
Taxes, surcharges, and fees often account for as much as 30% of an organization's total Telecom spend.  Many companies lack and the time and tools necessary to effectively audit these charges.  Others are simply unaware that a little effort could mean huge cost savings and efficiency boosts.  In this short video, David Pastore takes a closer look at the potential benefit of assessing these charges.

Upcoming Events:

American Supply Association Fall Dinner: Oakbrook Terrace, IL
Senior Project Analyst Jennifer Engel will speak at the American Supply Association's annual fall dinner on Monday, November 13th.  Drawing from years of procurement experience, she'll discuss the emergence and ongoing evolution of e-commerce.  She'll pay particular attention to the ways it has affected relationships between buyers and suppliers.