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Procurement professionals everywhere have one word on their minds, Transformation. Tools are evolving, a new crop of professionals is entering the workforce, and the Procurement function is finally starting to secure some of the executive buy-in it rightly deserves. It's an exciting time and Procurement is understandably eager to evolve and enter a new, more strategic era.

But what does a Procurement Transformation actually look like? Is it a realistic goal for every organization?

The answer is complicated. Procurement Transformation isn't a term with single, static definition. It means something different to each and every organization. That particular definition will depend on Procurement's current state, its standing within the organization, and its goals for future strategic growth. For some companies, Transformation might be as simple as recognizing Procurement's strategic potential and beginning to invest in its growth. For others, the process will see Procurement bolster its strategic credentials and accept a spot at the executive table.

Whatever the process looks like, getting it started is often an initiative unto itself. Without a true sense of how and why Procurement should go about transforming, many organizations find themselves quickly admitting defeat. In all likelihood, these organizations skipped an essential step in the Procurement Transformation process. They've neglected to conduct a Procurement Maturity Assessment.

In theory, every organization wants to achieve best-in-class status. This lofty goal, however, is rarely a realistic one for your average Procurement team. A Maturity Assessment enables Procurement to reach a genuine understanding of its current capacity and capabilities. The exercise makes it possible for Procurement to set more realistic goals for itself and strategically target areas for improvement.

Where does your Procurement function land?

Laggard (Tactical)
Laggard Procurement teams are stuck in the function's tactical past. There's little if anything strategic about these small, obscure groups. In fact, these folks are the sort that have earned Procurement its less-than-stellar reputation. At best, they're perceived as a necessary evil within their organizations. Cutting costs and making purchases on a reactive, as-needed basis, they're helping keep the lights on. And that's about the nicest thing you can say for them. At worst, these groups are the cause of organizational friction. That's not entirely their fault. Organizations who've never watched a more strategic Procurement function at work can't reasonably be expected to invest in building one.

Traditional (Operational)
These Procurement teams aren't doing much better. For a traditional Procurement function, the three-bid-and-buy process is about as strategic as the sourcing process ever gets. Purchases are still made on a largely reactive basis with little thought to anything other than hard dollar cost. Though they occupy a slightly more prominent role than laggard departments, traditional Procurement units are still mostly mired in tactical processes. Managing inventory, processing purchase orders, and renewing contracts constitute the bulk of their daily workload. Though more and more organizations are working to build strategic Procurement teams, the majority still find themselves in this spot.

Augmented (Strategic)
Here's where Procurement starts to distinguish itself as a value-adding function. Enjoying a good level of executive support and buy-in, these teams employ a strategic sourcing process that takes into account far more than price alone. Though an augmented Procurement team isn't necessarily a leader within the business, it's earned internal respect by optimizing supplier relationships, providing for greater spend visibility, and (crucially) gathering metrics to report on its success. An augmented Procurement team looks for opportunities to boost its performance with the help of training programs, new technologies, and collaboration with representatives from other business units. If your Procurement team can count itself among this class, it's well on its way to becoming truly exemplary.

World-Class (Innovative)
These are the rare Procurement groups that occupy a fully-strategic, highly-valued role within their organization. They have the ear of the C-suite and are trusted to drive organization-wide strategic initiatives. Thanks to a strong, consistent brand identity they have no trouble attracting and retaining world-class talent. This talent enables them to make change not merely a goal, but a cultural imperative for everyone across the business. A culture of continuous improvement enables them to stay on the cutting edge of emerging technologies and consistently refine their own internal processes.

Want help determining where your Procurement team stands? Reach out the Procurement Transformation experts at Source One today.

In a candidate-driven marketplace, employers are the ones that need to set themselves apart. The emerging crop of Procurement candidates is looking for a lot in their future organization. In addition to compensation, opportunity for advancement, and flexibility, they want to join a Procurement team with a strong, impactful brand. 

Looking to refine Procurement's brand identity to attract leading talent? Check out some of Source One's tips for standing out as an employer of choice in a crowded marketplace. 

As quarter 3 draws to a close, Source One's spend management team is gearing up to share their insights and absorb thought leadership at a number of supply chain conferences. Over the next several weeks, the leading Procurement consultants will join their industry peers to network and exchange best practices at several exciting events.

From September 24th-26th, representatives from Source One's Telecom and IT Procurement team will head to Philadelphia for the Enterprise Technology Management Association's Annual Conference. ETMA, an independent non-profit, commits itself to building awareness around emerging solutions and encouraging cross-functional collaboration. The theme for this year's conference is 'The Revolution of Connected Technologies' and its agenda will include panel discussions on topics like 5G, Telecom Expense Management, and Managed Mobility Services. Source One looks forward to gathering insights from other forward-thinking Supply Chain professionals and further refining its Procurement Technology Advisory practice.

On the 27th, Source One will take part in the Procurious Big Ideas Summit in Chicago. The invite-only event brings 50 of Supply Management's preeminent figures together to exchange their thoughts on the industry's most captivating topics. Described as a "CPO-level think tank event," the summit boasts an impressive roster of speakers and agenda covering topics like risk mitigation, corporate social responsibility, and change management. It promises to provide Source One's Procurement Transformation specialists with an even greater understanding how to drive the function forward.

Members of Source One's Marketing Procurement team will kick of Q4 with a trip to Boston for the MarTech conference. Intended to break down the siloes between Marketing, Technology, and Management, the event should provide valuable insights to Source One's collaborative consultants. Source One's team has long excelled at breaking down the barriers between business units. MarTech's conversations and panel discussions should help them do so even more effectively in the future.

Source One also looks forward to networking with fellow Procurement professionals at their fourth annual Chicago Happy Hour. For more information about this event, contact Kaitlyn Krigbaum (
Women may resolve construction industry's labor supply chain shortage

The production supply chain in the real estate industry isn't quite firing on all cylinders. The economy is at its strongest point in recent memory - with gross domestic product growth exceeding the unemployment rate, as reported by multiple news organizations - but this is part of the reason why the supply chain isn't meeting expectations - builders can't keep up with the pace of demand among homebuyers.

But there's another factor at work: labor. Developers don't have enough of it. In an attempt to build up the industry's manpower, builders are looking to women as a potential solution to the shortfall.

Women represent 9 percent of construction workforce
With Professional Women in Building Week in full swing - observed Sept. 17-21 - the National Association of Home Builders is renewing its entreaty for more women to join the ranks of the construction sector. At present, men outnumber women by a near 10 to 1 margin. Given that the country's populace is composed of more women than men - not to mention female employees representing 47 percent of the working population - this ratio is off-kilter.
Judy Dinelle, chair of the NAHB's Professional Women in Building Council, said there's never been a more opportune period for more women to come aboard and bring greater balance to labor crews.

"Right now more than ever is the time for our industry to not only increase our recruitment efforts, but to also change the way we talk about careers in home building to show women this industry has so much to offer them," Dinelle explained. "We need to help the public, guidance counselors and parents understand that the industry provides a high income, significant work values, job security and a sense of accomplishment."

Sold home sign.Homes are flying off the market due to high demand.
The average home sells in 27 days
Although the real estate industry is healthy and home values are rising - making investing in a home a move recommended by most financial advisors - insufficient inventory is preventing the sector from reaching its potential. In July, for example, the typical home sold less than a month - 27 days - after it went up for sale, according to the most recent statistics available from the National Association of Realtors. That's down from 30 days a year earlier.

The NAHB believes that the labor supply chain can get a real shot in the arm by directing more recruitment efforts toward women. Dinelle said the PWB intends to do so by developing more pre-apprenticeship programs, so women who may be unfamiliar with what the industry has to offer can get a better understanding of its value to them.

"We've seen examples of pre-apprenticeship programs that are really quite successful, so we need to replicate those programs and implement them into more communities across the country," Dinelle stated. "We should all promote and offer to help the programs and organizations that provide training for women. It's our responsibility to put our words into action."

The construction sector as a whole is short staffed, which is why the White House recently signed an executive order that would expand job training and apprenticeships opportunities for college students - both men and women. NAHB Chairman Randy Noel lauded the efforts made by the Trump administration and pledged to expand training and certification. The goal is to add 50,000 new workers to the industry by 2023.

September 21, 2018

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

New Whitepaper:
MRO Demystified: Repairing the Traditional Approaches to MRO Spend Management
No organization would dispute the importance of its MRO spend. Without the literal nuts and bolts of their operations, a company cannot hope to carry out operations. Understanding the importance of the category and tackling it effectively, however, are two very different things. Traditional approaches to the category often leave businesses struggling with inefficiency, missed opportunity, and poor communication. Source One's new whitepaper aims to correct this. Offering tips and strategies for organizations of all sizes, it promotes a more strategic approach to this critical category. 

New Podcast:
Strategic Sourcing: Back to Basics
Associate Director and Procurement Transformation Lead Jennifer Ulrich joins the Source One Podcast to discuss the knowledge gaps that exist within far too many Procurement groups. For many organizations, poor or nonexistent training is purely a budgeting issue. These companies, Ulrich suggests, still have options in the form of free online resources. However organizations elect to train their Procurement teams, Ulrich emphasizes the importance of training other business units on Procurement's role as well.

Upcoming Events:
Procurement Professionals Happy Hour: Chicago, IL 
October 18, Source One is hosting its fourth annual Procurement Professionals Happy Hour. Chicago-area Supply Chain professionals are invited to join us for cocktails, hors d'ouevres, and the opportunity to network with industry peers. Interested in attending? Contact Kaitlyn Krigbaum ( to learn more.

Enterprise Technology Management Association Conference: Philadelphia, PA
September 24-26, Source One's IT and Telecom Procurement team is headed to the City of Brotherly for this conference focused on 'The Revolution of Connected Technologies.' The event boasts a packed agenda covering topics like Telecom Expense Management, 5G, and more. 

Procurious Big Ideas Summit: Chicago, IL
September 27, Source One will join other forward-thinking Supply Chain Professionals at Procurious' annual thought leadership event. Aimed at driving the Procurement function into a new era, the invite-only event features an impressive roster and an agenda covering topics like corporate social responsibility, risk mitigation, and 

Food waste impairing restaurateurs' supply chain optimization

It's a simple concept: If you want good sales, make good food - so good that diners eat every last properly portioned bite. This straightforward principle makes a predictable food supply chain a core component of profitability and competitiveness, because it ensures that diners get what they expect - nothing more, nothing less.

But with as much as 40 percent of the nation's food supply winding up as waste, according to the U.S. Department of Agriculture, this dining doctrine is proving easier said than done.
"94% of restaurants' unused food is trashed, rather than donated or recycled."

Of all the industries whose profits derive primarily from food, the restaurant sector has the highest disposal rate. Indeed, according to a joint project spearheaded by the Food Marketing Institute, National Restaurant Association and Grocery Manufacturers Association, nearly 94 percent of the food that doesn't get used ends up in the trash. That compares to 27.6 percent in the retail/wholesale sector and 1.7 percent in manufacturing.

Transportation constraints common 
Part of the reason for such a large percentage of unused or partially consumed food end up being thrown out - as opposed to being donated or recycled - is due to hygiene and liability concerns, as cited by 39 percent of respondents to the report. The most frequent barrier - 43 percent - is transportation constraints, given perishable vegetables and meats often need to be chilled to stay fresh and reduce spoilage, which commercial trucks may not be capable of doing.
Frequently, however, perfectly good food winds up being thrown out when labels and expiration dates are misinterpreted. A report from the Natural Resources Defenses Council and Harvard Law School's Food Law and Policy Clinic found that as many as 90 percent of Americans may be throwing food away when it's still safe to eat.

Dana Gunders, staff scientist with the food and agriculture program at NRDC, said these actions make supply chain optimization virtually impossible.

"Expiration dates are in need of some serious myth-busting because they're leading us to waste money and throw out perfectly good food, along with all of the resources that went into growing it," Gunder explained. "Phrases like 'sell by', 'use by', and 'best before' are poorly regulated, misinterpreted and leading to a false confidence in food safety."

She added that since there isn't a universal standard for labeling or spoilage recognition, manufacturers get to decide sell-by dates for themselves, though how they determination this is unknown. The NRDC estimates that $900 million worth of food annually is removed from the supply chain, frequently due to businesses misinterpreting the meaning of "sell by" versus "best before."
Emily Broad Leib, director of the Food Law and Policy Clinic at Harvard, said there really ought to be a spoilage recognition methodology that is universal so everyone is working from the same understanding of what's safe to eat and what isn't. This would help with food cost reduction.
"We need a standardized, common-sense date labeling system that actually provides useful information to consumers, rather than the unreliable, inconsistent and piecemeal system we have today," Leib advised.

What can restaurateurs do?
Supply chain experts Siva Arumugam and James Cooke noted in FSR Magazine that restaurateurs should also be more strategic when they purchase the ingredients for menu items. In other words, managers should be cognizant of what dishes their customers are ordering the most, avoiding cost overruns on items proving less popular. They should also have a point-of-sale system that keeps track of demand trends.

"The digital network must be able to sense demand patterns, generate corrected forecasts, translate these forecasts from menu-items to supply forecasts for SKUs, and orchestrate replenishment from suppliers - all in real time," Cooke and Arumugam wrote.

This week, Associate Director  and Procurement Transformation Lead Jennifer Ulrich joins the Source One Podcast to discuss a troubling trend within many of today's Procurement groups. In their pursuit of the latest and greatest, she suggests, many organizations forget to educate their teams on the fundamentals of Procurement and Strategic Sourcing.

Whether it's thirst for a new technology, a fundamental misunderstanding of Procurement's role, or something else entirely, the issue affects organizations of all shapes and sizes. Ulrich urges these companies to take a step back and rethink their priorities. Without the necessary training, she remarks, organizations will "struggle to even support an effective Procurement function, let alone prepare for the digitalization of it."

For some organizations, internal knowledge gaps are simply the result of low budgets. All is not lost, however, for these teams. While investing in third-party support might be off the table, these organizations can more than afford to invest in online resources. Educational materials like webinars and eBooks are often available free of charge. Though these resources can't truly replace a formal training program, they'll provide a useful supplement to any internal efforts.

Before committing to training of any sort, Ulrich advises Procurement's leaders to interview their team members and thoroughly assess their capabilities. A program will prove infinitely more effective if its tailored to build on Procurement's strengths and correct its particular shortcomings. Such a program will provide for a more engaged, motivated, and productive team. Gradually, any issues related to poor employee retention will fall by the wayside as Procurement grows more strategic and impactful.

Ulrich concludes by reminding listeners that Procurement training is not for Procurement alone. "Procurement's processes," she says, "impact all business units." For that reason, it's essential that individuals across the business possess at least a working knowledge of what Procurement does and how it enables the business. With these cross-functional training programs in place, Procurement should excel at promoting collaboration and delivering on its business objectives.

Want to listen to the rest of the conversation? Subscribe to the Source One Podcast today.

A fractured supply chain can spell disaster for auto manufacturers, which is why the industry - in no uncertain terms - has aired its frustration over the tariff war between the world's largest economies. Dealers have made their displeasure known as well, with 56 percent saying they expect import tariffs to adversely affect them in a Cox Automotive poll.

Now, dozens of trade associations throughout the U.S. are joining the growing chorus of detractors to the ongoing tariff dispute.

The National Retail Federation, Farmers for Free and the National Fisheries Institute represent three of the more than 80 trade groups that recently formed Americans for Free Trade, a coalition speaking on behalf of thousands of business owners and entrepreneurs who believe that raising tariffs is more harmful than helpful.

Matthew Shay, president and CEO of the NRF, said no one wins when tariffs increase.
"Every sector of the U.S. economy stands to lose in a trade war," Shay warned. "The stakes couldn't be higher for American families, businesses, farmers and workers threatened by job losses and higher prices as a result of tit-for-tat tariffs."

45 percent of Americans oppose tariffs
It isn't just business owners who are opposed to them; everyday Americans are none too pleased either. Forty-five percent of respondents in a Gallup survey said they anticipated tariffs having an unfavorable impact on the country's economy. Thirty-three percent said their personal financial health would likely also experience the unwelcome effects.

Brian Kuehl, Farmers for Free executive director, said he's personally witnessed the fallout himself.
"If you are in Des Moines, Iowa or Harrisburg, Pennsylvania it's not just that tariffs are dropping the value of corn, soy or pork," Kuehl explained. "Increasingly it's that the price of buying a dishwasher has gone up, or that a local business has put off expansion because of the price of steel or aluminum."

Line of dominoes.Tariff opponents stress that they can have a domino-like effect on the U.S. economy.
Job losses are possible
National Fisheries Institute President John Connelly added that tariffs have a domino effect, because when the cost of supplies go up - which makes the supply chain less predictable - consumers feel it one way or another. They may be impacted in what they spend out of pocket and in what they earn. Connelly also referenced how tariffs are poised to damage the seafood industry.

"The seafood supply chain works off of low profit margins," he said. "A 10 percent duty added to commercial seafood items will harm seafood businesses large and small, but a 25 percent duty will devastate them and ultimately cost jobs here."

The tariff trade dispute doesn't appear to be ending any time soon, especially between the China and the U.S., the world's biggest economies and first and third, respectively, in population. As reported by The Wall Street Journal, the White House announced an additional $200 billion of new levies on Chinese imported goods, slated to go into effect on Sept. 24. China responded, stating that it will install $60 billion on U.S.-made products.

The paper noted that if the threatened tariffs go into effect, almost all forms of trade will experience price modifications.

According to the Office of the U.S. Trade Representative, the top products the U.S. sends to China are aircraft, machinery and staple foods like grain, seeds and fruit. Its chief imports from there include electrical machinery, furniture and bedding and toys.

Leading Procurement organizations – or any organization looking to join those ranks – know the importance of technological innovation. Advancements in ERP modules, P2P platforms, e-sourcing suites and other tools make for better relationships with stakeholders and suppliers, more comprehensive market intelligence, and considerable cost savings. According to a recent Hackett report, a whopping 95% of Procurement professionals fully expect to undergo a digital transformation and reap these benefits within the next two to three years.

It seems Procurement teams everywhere share a single mission. There is not, however, a single strategy for identifying and implementing the right technology. Hasty or misguided decision making can lead to wasted time and resources and even discourage the very changes the technology was meant to inspire.

Here are a few tips for developing a balanced approach to Procurement technology and ultimately delivering on Procurement's objectives.

1. Look for the Right Bells and Whistles

Have you ever shopped for a TV? Those huge walls - strewn with screen after screen - always have one thing in common. They bombard everyone with technical specifications and fancy features that'll mean very little to the average buyer. And that's before you learn about the five remotes!  Procurement technology is often quite similar. Many organizations find themselves salivating over highly sophisticated tools only to wind up bogged down by complicated interfaces and uneasy adoption. There's a reason so many firms still rely on the dependability, simplicity, and familiarity of good old Excel.

2. Invest in Training

What good is a shiny new tool if your team is unable or unwilling to use it?  Even a simple, appealing, and beneficial new tool could face resistance from an office stuck in its ways. Take whatever steps necessary to extol the virtues of your new technology. It's also important to make sure everyone - from the C-suite executives down to the interns, know the ins-and-outs of the tool and can successfully confirm their understanding. Demonstrations are a great opportunity to walk through a tool's functionality while providing direct evidence of its benefit.

3. Make Sure to Gather Feedback 

Before, during, and after introducing new technology to your office, survey everyone the change will affect.  It’s especially crucial to learn what they like and dislike about your current tools.  That way, you’ll better understand what features to look for. If you provide the particular things your team is looking for, they’ll respond more positively to its introduction. These efforts will make for a more collaborative, inclusive workplace and environment and encourage an informed approach to technology.

4. Leverage Millennial Talent 

Like nearly every industry these days, Procurement looks poised to welcome a tidal wave of young talent in the very near future. Ignore the articles blaming them for destroying everything from chain restaurants to higher education. The next crop of Procurement professionals promises to change the field in ways that could actually save countless organizations. They’ll not only encourage businesses to pursue new tools, but their lifelong familiarity with advanced technology will make for quick adoption and a wealth of useful feedback.

5. Don’t Scare Suppliers Away

Rigid technologies tend to exacerbate a Procurement group’s worst practices. This is especially true during the RFx process. Say, for example, you work for an organization that relies on a standard set of questions to qualify suppliers. It would prove especially disastrous if you leveraged a new tool that enabled or encouraged you to keep doing this. Dependence on inflexible technology limits the potential supplier pool and could lead to poor interpretations of whatever results you do receive.  Always look for tools that open up the sourcing process and know when to distance yourself from tools that do the opposite.

6. Keep your Current Systems and Processes in Mind

Even if you're looking into a near-complete overhaul, chances are you've been doing some things right. It's important to make sure your new tools won't disturb or discourage any effective systems you've put in place. Worse still, certain tools could prove completely incompatible with your current model. Look for opportunities to augment - rather than replace - your business' infrastructure. You'll avoid serious technological mishaps and enjoy a more streamlined implementation process.

7. Look to the Future

Technology evolves more and more quickly with each passing year. You can't afford to get comfortable.Today's most innovative and intuitive tools will eventually go the way of whichever tools they replaced. Gathering feedback from users, scouring industry publications, and maintaining an open mind could make the difference in discovering the next big thing.

Finding the right tools means much more than finding the best price. It's essential to locate the option that's sophisticated enough for your current needs, flexible enough to adapt and improve, and not too complex to adopt or use effectively. The process of development, refinement, and enhancement requires continuous efforts and a thorough understanding of your organization's current status and future goals. Need help identifying or implementing a new sourcing tool?  Contact Source One's procurement technology experts today.

When you think about it, Procurement departments aren't so different from Transformers.

In recent years, the once-tactical function has changed shape. Like Bumblebee, Starscream, and Jazz, the Procurement function has morphed from something run-of-the-mill and easily dismissed into something truly extraordinary. In its new, more strategic form, Procurement has accepted more essential responsibilities and started to produce otherworldly results.

Most Procurement groups, however, have yet to fully make the switch from family car to fighting robot. Sure, they've pulled the metaphorical Lift-Switch, but they've only begun to see what this value generator in disguise is capable of.

It's not Decepticons holding Procurement back, but a relative lack of Autobots. To complete its Transformation, Procurement requires a leader as driven, collaborative, and experienced as Optimus Prime. How can organizations identify this super-powered CPO? Don't go looking for a Peterbilt 379. Instead, keep an eye out for these must-have qualities.

1. Active Listening Skills
Optimus Prime is plenty powerful, but even he knows he can't go it alone. The leader of the Autobots has no trouble deferring to Bumblebee or Ironhide when the going gets tough. A great CPO is similar. Rather than driving home their own agenda, they actively seek out feedback and input from the rest of their Procurement team. Before embarking on a Transformation, they embed themselves within the department, interview its every stakeholder, and collaboratively develop a plan of attack. Opening their eyes and ears, they'll more effectively target Procurement's most pressing concerns and lay the groundwork for consistent improvement. All good CPOs are good talkers, but the best are great listeners as well.

2. Enthusiasm 
Why has it taken so long for Procurement to transform and reveal its true nature? Because when you're told time and again that a car is just a car, you're not very likely to believe it's actually a robot. For generations, most companies have allowed Procurement to languish in obscurity. They've done little to build interest in making the department more strategically valuable. As a result, Procurement has sat dormant in the garage gathering dust. To truly change shape, Procurement requires a leader who'll evangelize the function and sing the praises of more strategic Procurement. With this enthusiastic CPO at the helm, Procurement should find it far easier to gain executive buy-in and build momentum.

3. Flexibility
Today's strategic Procurement departments are tasked with performing a multi-functional role. That means its not enough for a CPO to take two forms like Optimus Prime. To truly excel and bring Procurement to the next stage in its strategic evolution, CPOs need to take on several dozen forms. Among other roles, they'll need to function as contract negotiators, category managers, risk mitigators, and talent scouts, and spend analysts. Procurement's list of responsibilities transforms by the day. To perform them effectively and accept its rightful seat at the executive table, the department needs a leader who'll transform just as quickly.

Looking to speed up Procurement's transformation? Reach out to Source One's supply chain staffing team for help with interim CPO selection. Like Archibald Witwicky, we'll uncover the Optimus Prime your organization needs to do battle with inefficiency and assume Procurement's final form.

Stop me if you’ve heard this one before: “Groundbreaking new technology has emerged that promises to end all woes and transform the digital landscape.” There’s no shortage of these breakthroughs. Hell, Gartner’s Magic Quadrant series lives and breathes by them.

Today’s technology in the spotlight? Blockchain. No doubt you've heard of it by now, potentially you've heard some of the benefits as well. It has been front and center in the media lately, largely thanks to its proposed utility.

Like all technological advancements before it, blockchain will likely end up in one of three camps:
  • A flash in the pan, on our minds only until the next big thing,
  • A monumental advancement that Procurement can harness for added trust, efficiency, and security,
  • A great technology that could have been the “it” tool for Procurement… if only we had caught on.
I’m not a tech guru, and wouldn’t begin to guess whether camp #1 or #2 above is more likely. My only goal here today is to make sure we don’t land squarely (and embarrassingly) in camp #3. At the very least, Procurement professionals must understand the benefits this technology offers and the value that it holds.

So, what is blockchain and, more importantly, what’s in it for Procurement?

What is Blockchain?

For starters, blockchain isn’t really “today’s technology.” The concept has been around for about a decade, and is familiar to most people through association with cryptocurrencies like Bitcoin. The technology is essentially a digital ledger. The benefits of this technology are that it is both decentralized and distributed.  In other words, blockchain transactions do not require agency, and multiple copies of each transaction may exist in more than one location. These two elements lead to great security – falsifying the record in one location can’t work because of the true, untampered version that resides everywhere else. This makes blockchain a permanent, tamper-proof record keeping device.

Rooted in finance, blockchain is actually very versatile. The technology can record and track essentially any data you want. If there’s an element of a good or service that can be tracked, blockchain can help you do it.

Which leads to the other half of our question…

What’s in it for Procurement?

Think of all the systems we work with each day. Consider what a headache we get when the data in one system doesn’t agree with that of another. Using blockchain technology, any changes made to a ledger are logged, thus ensuring up-to-date information among all systems referencing it.

Speaking of these changes, blockchain introduces a level of tracking and transparency that would be a boon to Procurement. Think of all the places along your supply chain where things can and do go wrong. Tracking such problems back to their source could be made easier by reviewing the entries made to the blockchain ledger, and you can be assured that the record is tamper-proof.

The technology also isn’t without downsides. Blockchain’s hack-proof quality doesn’t mean everything attached to it is. A chain is only as strong as the weakest link. We live in an age where our coworkers are still falling prey to phishing schemes and our third party integrations open the door to supply chain cyberattacks. In short, the danger of calling something hack-proof comes from the false sense of security it emboldens… An impression that could spread to other less invincible realms of our technology landscape.

Should Procurement Delve Deeper into Blockchain?

This technology is as valuable to Procurement as the applications being built using it. Smart Contracts are a great example of blockchain being used to solve issues for Procurement. Think of a Smart Contract as an automated and streamlined contract process that removes all middlemen and, critically, time wasted in contract preparation. These tools encode the terms of a contract into a secure digital ledger that all parties agree to, executing when the conditions of said terms are met.

There is precedent for bringing this technology into Procurement. I linked to a rancher experimenting with blockchain above, and there are plenty of other examples as well. De Beers is also getting in on blockchain to track diamonds to ensure ethically sourced stones.

This technology is only limited by how far Procurement can run with it – although caution is necessary when considering any new technology, I believe blockchain will play a key role in supply chain management going forward.

ICYMIM: September 17, 2018

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 news.

Tariffs: A Black Cloud Marring the 2019 Commodity Outlook
Taras Berezowsky,Spend Matters, 9/17/2018
Reporting from a recent conference on trends in commodity sourcing, Berezowsky suggests tariffs continue to command the attention of industry experts. While exemptions are an option for certain companies, Berezowsky outlines five more likely options for mitigating tariff risks. These include should cost analyses and alternate source identification. Surprisingly, not everyone is looking to change their operations in the face of tariffs. A survey administered at the conference found that 54% of respondents plan to maintain (or increase) their volume of foreign purchases. Our fraught political climate means that tariffs are both inevitable and unpredictable. Vulnerable organizations must act now.

Where No Manufacturer Has Gone Before: The Industry of Mars Colonization, Part 1
Kristin Manganello, Thomas New, 9/11/2018
While the prospect of colonizing Mars has thrilled scientists and stargazers for decades, it's only recently begun to look like serious possibility. The challenges presented by life on the Red Planet are numerous, but Manganello suggests NASA has already made strides. Partnering with organizations like the University of Arizona and Mars One, they're already developing an infrastructure for sustaining both human life and industry. Later this week, she'll take a closer look at some of the manufacturing and logistics practices that will make for an effective transition into colonization.

2020 is Fast Approaching - What Have You Accomplished? Part 2
Michael Lamoureux, Sourcing Innovation, 9/11/2018
Lamoureux continues his investigation into the supply chain advancements of the last five years. Once again, he concludes that the Big 4's predictions for Supply Chain 2020 are still a ways away. Artificial Intelligence, for example, offers very little that it wasn't offering a full decade ago. Though the user experience for artificially intelligent tools is improving, capabilities remain largely stagnant. RFX and e-Procurement, too, have seen few changes besides the odd new feature or increase in third-party support. Lamoureux concludes by asking his readers to look inward and thoroughly assess their organizations. He asks, "What have you accomplished?"