Top Strategic Sourcing Articles by Source One:

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ICYMIM: August 20, 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.



Using Contract Management to Drive Cross-Functional Digital Transformation
Nick Heinzmann, Spend Matters, 8/16/2018
Heinzmann presents contract management as an effective enabler for Procurement's much-discussed digital transformation. Taking an enterprise contract lifecycle management approach, he suggests, can help units across the organization answer their prevailing concerns and make their processes more efficient. Nearly every business unit is responsible for interacting with contracts and their related software. As a result, an enterprise-wide effort to digitize contracting and contract management is an effective way to build support for a broader change management strategy. Heinzmann concludes, however, by reminding readers that transformation is about much more than embracing digital tools. Rather, it is about making consistent improvement part of an everyday conversation. 

Category Management: Getting it Right is the Key to Surviving the Trade Wars: Part III
Michael Lamoureux, 8/14/2018
The Sourcing Doctor continues his series on the importance of effective contract management in what are fairly uncertain times for supply chain managers. With tariffs and counter-tariffs popping up every day, it's essential for Procurement teams to refine their approach to essential commodity categories. A key measure, the Doctor suggests, is eliminating dependency on any single locale. This is particularly true for organizations operating in China or the EU. Without dependable alternate sources, these organizations could find themselves in dire straits when the next tariff is announced. Nearshoring, too, could prove a viable option for these organizations. The Doctor advises Procurement to pursue this opportunity aggressively while taking care to identify nearshore suppliers that do not conduct business remotely.

Mitigating Trade War Risks: Do Procurement Organizations Have the Data Needed to Respond
Nick Heinzmann, 8/15/2018
Heinzmann opens by suggesting that data is the single most important tool for Procurement organizations looking to stay ahead amid an escalating trade war. Reflecting on a recent episode of the Metal Miner podcast, Heinzmann quotes from Bindiya Vakil, CEO of Resilinc. Of his organization, Vakil says, "Our whole underlying philosophy is that the risk problem is actually a data problem." He goes on the emphasize the importance of taking a proactive approach to data collection and analysis. Failure to do so, he suggests, "is akin to flying blind through a storm." While laggards are still approaching risk on an ad-hoc basis, the true supply chain leaders understand the importance of acting on new regulations and risk factors before they present themselves. 

In theory, every Procurement team wants to reduce costs and optimize its approach to spend management. You wouldn't know it to look at the way many organizations approach their relationships with telecom providers. Not content to simply ignore best practices, they employ telecom worst practices. It's as if they're looking to overpay for these services!

Let's take a look at some of the most common worst practices in telecom sourcing.


Want some help transitioning away from these Procurement practices? Reach out to Source One's telecom sourcing experts today to begin introducing more effective cost reduction strategies. 


Walmart's recent Global Responsibility Report provides a summary of what Chief Sustainability Officer Kathleen McLaughlin calls the retailer's "aspirations, programs, and commitments in [its] priority areas of increasing economic opportunity, enhancing sustainability of supply chains and strengthening communities."

In addition to outlining Walmart's achievements throughout the fiscal year, the report presents an ambitious plan and a call to action for other organizations. McLaughlin writes, "our approach to environmental, social and governance issues goes beyond minimizing our own footprint or mitigating risk. We take a more assertive approach."

According to the report, the retail giant began its shift toward a more sustainable supply chain back in 2005. They've made considerable progress in the years since. By the end of 2017, Walmart diverted 81% of its U.S. waste away from landfills and 78% of its waste globally. While recycling accounted for the majority of Walmart's waste diversion efforts, other methods included donations, conversions to animal feed, and composting.

These numbers are certainly impressive, but Walmart has set a far loftier goal for itself. The company plans to achieve "zero waste" in its American, Canadian, Japanese, and British supply chains by 2025. According to the Zero Waste International Alliance's guidelines, this would entail diverting at least 90% of waste away from landfills and incinerators. To reach this goal, Walmart plans to invest in technologies that will improve data collection and provide for quicker, more informed decision making. What's more, they intend to collaborate with customers, suppliers, and even their rivals in retail to, "improve the broader ecosystem of waste prevention, reuse, and recycling."

The report also details Walmart's ongoing efforts to reduce its carbon footprint and embrace renewable energy sources. Through this initiative, McLaughlin points out, Walmart hopes to do much more than encourage sustainability in its own operations. She writes, "We aim not only to lower our own emissions, but to galvanize collective action across the retail supply chain to bend the curve on emissions." 

Walmart has already secured the support of more than 400 suppliers through their Project Gigaton initiative. Introduced in April of 2017, the project is dedicated to reducing greenhouse gas emissions by one billion metric tons before 2030. Walmart's efforts throughout its first year helped cut 20 million tons of greenhouse gases from the atmosphere.

The organization also hopes to cut back 18% of its own emissions by 2025. Walmart already leverages renewable energy sources for 28% of its operations. To reach its goal, however, the retailer plans to bring that number up to 50% over the next seven years.

Walmart CEO Doug McMillon is pleased with his company's success over the last several years, but suggests they've got a long way to go. He calls for nothing short of a transformation to both Walmart's operations and the retail space as a whole. "We're proud of this progress," he says, "but we know we can do more to create shared value and earn the trust of all our stakeholders."


August 17, 2018

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

New Whitepaper:
Today's highly-strategic Procurement departments have a lot on their plate. Tasked with performing an essential, multi-functional role they often require additional support to meet fluctuating demand. Traditional support models, however, are rarely sufficient in providing Procurement the flexible assistance it requires. That's why Source One introduced its Procurement Help Desk. Providing access to the firm's full arsenal of spend management resources, the Help Desk empowers Procurement teams to reach their full potential without breaking the bank. Source One's new whitepaper outlines the Procurement Help Desk and provides a case study in its versatility and effectiveness. 

New Blog:
MoviePass and the Importance of Strategic Suppliers
Bennett Glace, Sourcing Innovation, 8/17/18
It's been a rough couple of months for MoviePass. Throughout the summer, the discount subscription service has made headlines while hemorrhaging both money and customers. Glace presents the organization's struggles as a case study in the importance of developing strategic relationships with dependable suppliers. If nothing else, he suggests, MoviePass' woes are a perfect reminder that Procurement cannot afford to make its decisions based on price alone.

New Podcast:
Simplifying the Sourcing Process 
Few Procurement professionals would dispute the fact that needlessly complex documents and processes hamper the sourcing process. As a Procurement Transformation specialist, Jennifer Ulrich has witnessed first-hand the obstacles many organizations create for themselves. She joins the Source One Podcast to advocate for a simpler, more streamlined approach to RFx documentation and the sourcing process as a whole. Listen to the conversation today.

Maintaining a Resilient Supply Chain 
In a high-risk supply management space, due diligence has become more important than ever. Michael Croasdale, Source One's MRO strategic sourcing expert, joins the podcast to discuss the importance of identifying alternate suppliers and placing an emphasis on stability and dependability. With Croasdale's advice, Procurement teams should feel more confident in the resilience and sustainability of their supply chain operations. 
Being in the business of knowing Procurement best practices I find myself reading research reports and survey findings quite often. I am looking to understand what trends are surfacing that impact the traditional pillars of Procurement (People, Process, and Technology). A topic I read about consistently is the skills gap that exists in the Procurement function. Senior leaders are asked every year about whether they believe their team(s) have the skills and capabilities to perform at the level needed to ensure success functionally and in relation to broader company objectives. Sadly, more often than not I see the responses are less than ideal. Senior leaders recognize that there is a gap in their team’s skill level in comparison to what is needed to succeed. The follow up question therefore is how much budget or time do they intend to commit in the coming year to close that gap through training or other means. Surprisingly, the response is that they do not intend to pursue methods to enhance their team’s skills. Supply Chain training budgets are shrinking every year and the gap in talent and skills is widening. With the evolution of technology and process improvements, why isn’t there a bigger focus on training the staff?

Some theories might include:

1. “We hired these people to do a job, if they cannot deliver perhaps this is not the role for them.”
2. “We have other priorities that require the budget allocation.”
3. “We cannot sacrifice the team’s bandwidth for days upon days of training, our productivity and internal customer satisfaction will suffer.”

Let’s examine this a bit more, or rather debunk the theories.

“We hired these people to do a job, if they cannot deliver perhaps this is not the role for them.”

First of all, it’s rare that the recruitment process reveals top performing A players that walk in on day one and can master the role. Of course the onboarding process is a given and some initial training will be provided at any job. Beyond this it is often expected that the employees will learn on their own or rely on their expertise to perform at the expected level. The big missing element here is that even if a person is hired and happens to know everything there is to know to perform adequately, things change. Technology is upgraded, processes evolve, and the organization shifts. It is unrealistic to expect the individuals supporting all of this to be able to keep up WHILE running the day to day operations of the business.

“We have other priorities that require the budget allocation.”

There will always be competing priorities. What leadership may be failing to realize is that if they do not invest in the people that run the business, they will not retain those people. The emerging workforce of today is more concerned than ever about their career development opportunities. Candidates may even turn down a job offer where they do not feel there is growth potential long term. On the one hand, it’s easy to understand why justifying budget dollars is difficult. Tying an ROI to training is challenging, the task requires ingenuity and an open perspective, but it is not impossible. On the other hand, leadership is willing to invest hundreds of thousands, even millions of dollars into new infrastructure and procurement technology, but they cannot justify thousands to invest in their people…that just does not make sense to me.

“We cannot sacrifice the team’s bandwidth for days upon days of training, our productivity and internal customer satisfaction will suffer.”

This one is easy. Picture this…a classroom full of professionals sitting with people of varying backgrounds and role at tables with handouts, bad snacks, cold brandless coffee, and the promise of days of super fun training ahead of them. It’s easy to picture because most of us have experienced it. Now I am not downgrading some of those trainings, I have learned many a new things in them. But, as humans we have a capacity for learning in a single day and that traditional classroom based training is not completely effective.

What senior leadership needs to understand is this, training should be customized to the organization and to the individual. With all of that fancy technology we have access to nowadays the options for training are expansive. A custom training program can begin with a capability assessment of the team. One of the challenges with training, especially a larger group of individuals, is that the training will inevitably be too basic for some members, and too advanced for others. In this instance, time and money are wasted. With the results of the capabilities assessment the team can receive training that is more aligned with their current skill level, as well as with their career path.

In addition to the capability assessment that sets the baseline for the training content, it is important to offer a blended model of training programs. While classroom training is not the most effective means of training any longer, it can have its place when the content is more focused and interactive. This blended with micro-learning concepts through self-led training modules online can produce a much better result for the participants. They are encouraged to take the training at their own pace, and then follow this up with more focused concept adherence classroom training. This blended model is also much more budget friendly and sustainable.

The closing message here is that organizations need to invest in their people, they are their greatest assets. Training does not have to break the budget to be effective. And consider this, without a solid training and retention program, those asking about ROI should listen up here…how much is it costing to transition responsibilities from individuals who do not see a potential for growth and recruit and onboard the next set of people that, “are hired to do a job”?
Procurement Automation Insights

1. The first rule of any technology used in a business is that automation applied to an efficient operation will magnify the efficiency.
2. The second is that automation applied to an inefficient operation will magnify the inefficiency.

Though there are certainly a few Luddites left in Procurement, it's hard to imagine anyone disputing the first of these statements. It's clear that Supply Management is gearing up for a digital transformation and it's equally clear that Robotic Process Automation will provide many organizations with their first steps toward this transformation. SAP's 2018 CPO survey found that 19% of organizations are already leveraging RPA and an additional 20% plan to invest before the year is up.

It's not surprising that Procurement appears dedicated to embracing RPA. In the past, the function's strategic impact has been stifled by a number of tactical and time-consuming processes. Maintaining vendor databases, manually resolving price discrepancies, and filling out purchase orders have long monopolized Procurement's time and contributed to the misguided idea that the function is an inherently low-value one.

Genpact estimates that a staggering 70% of an organization's manual processes can be automated. By outsourcing its share of these processes to a robot, Procurement can presumably commit itself to accepting a more high-value workload and a more essential role within organizations. The promise of so much free time is undeniably enticing. So enticing, in fact, that it often leads Procurement to expect too much of its tools and ask too little of itself.

To look at many Procurement groups, you might assume they'd only read the first of Gates' rules. Eager to stand on the cutting-edge of their industry, Procurement often seeks out automation for automation's sake. In their haste, they develop outsized expectations and fall victim to wild speculation. Discussing Procurement's digital transformation in a recent whitepaper, JAGGAER's Kristian O'Meara notes, "Any and all buzzwords can be stumbling blocks." RPA, he suggests, is a particularly dangerous and particularly pervasive one.

Thanks to science fiction and the endless hype machine, automation has some fairly misleading connotations. Inspired by images of hands-off operations and heightened efficiency, many Procurement teams pursue automation without doing their due diligence. They forget that realizing the benefit of RPA comes down to far more than selecting a tool and implementing it. Even the best tool won't perform to its potential when it's slapped like bandage onto a poorly designed Procurement apparatus. Before attempting to introduce a tool, Procurement must optimize its processes to accept automation, train its people accordingly, and develop a clear roadmap for introducing the tool and tracking its performance.

Procurement teams wouldn't present a new hire with dirty data and disorganized processes. At least, they wouldn't do so and expect that hire to succeed. They shouldn't treat their technologies any differently. A multi-step on-boarding process with clear milestones and regular performance reviews will ensure Procurement identifies roadblocks and avoids the pitfalls of ineffective automation.

Robotic Process Automation cannot drive Procurement's future on its own. Rather, these tools must function as one component of a broader change management strategy. That means Procurement teams must cease to view Digital Transformation as something to be gained through a one-off initiative. Like the evolution Procurement has seen over the last decade, the move toward digitized processes and operations will require consistent efforts and present Procurement with a number of setbacks. Those Procurement teams that will successfully transform their operations in the coming years are the same ones who have refined their manual operations and developed sustainable governance structures in years past.

Source One's Procurement Technology advisers can help ensure Procurement's people and processes are equipped to introduce automation and reap the considerable benefit. We'll also help you navigate the provider landscape and select the tool best suited to your unique goals and objectives. Reach out today to take your first steps into Procurement's next era.


From supply chain veterans to Procurement neophytes, nearly every industry professional would agree that the sourcing process is often a needlessly convoluted one. When companies waste time and effort putting together overloaded RFx documents, they set themselves up for inefficiency and exhaustion throughout every stage of their sourcing initiatives.

As a Procurement Transformation specialist, Associate Director Jennifer Ulrich has witnessed first-hand what inefficient processes and can do to an organization. She joins the Source One Podcast to advocate for a simpler, more streamlined approach to Strategic Sourcing.

She is quick to emphasize that simplifying Strategic Sourcing does not mean getting lazy. Quite the opposite. For Procurement to develop an effective RFx and kick-start a successful sourcing process, the function needs to work hard to collect data and develop a clear roadmap for its initiative. This is true for project's of any size, scope, or spend category. "Laying the right groundwork," she says, "will guarantee a smoother process regardless of complexity level of the project."

While its important to gather all relevant data, Ulrich cautions Procurement teams against overloading their RFx documentation. She remarks that an RFx filled with superfluous content won't just lead to a drawn-out sourcing process, but could alienate suppliers before they've even assessed your organization.

On the subject of suppliers, Ulrich emphasizes the importance of conducting thorough research into capacity and capabilities. Oftentimes, in an attempt to cover every base, organizations distribute RFx documents to suppliers who aren't at all qualified to meet their needs. These aborted engagements are little more than a waste of Procurement's valuable resources.

Subscribe to the Source One Podcast today to hear the rest of the conversation.


High-tech solutions are sometimes presented as human replacements that can cost human employees their jobs. In a supply chain dominated by smart algorithms and robotic appendages, is there still a space for human decision makers? At least in the near-term future, the answer is an emphatic yes. People are still a key part of the supply chain. Their exact roles, however, may change.

The use of AI solutions in logistics and beyond has taken the form of analytics optimization. Companies are employing systems that help their teams spot opportunities that cannot be grasped by people working without technological assistance. The addition of these robotic brains to the supply chain team has freed up workers to change their everyday tasks. The quicker employees can slip into these new practices, the greater the potential changes for their own work and companies' bottom lines.

The AI assistants
According to The Harvard Business Review, some of the positions developing within AI-enhanced environments are unprecedented. Some companies will need individuals to train their algorithms, tuning up processes over time. Systems that are based on machine learning models are designed to improve through repeated use. Specialized employees will keep these bots' development on track.
Furthermore, there is a need for other specialized analysts who are experts at dealing with the information coming from algorithms. Making critical business decisions based on automatically generated results is a naturally high-risk process, so having human employees on hand to interpret the digital output is a way to ensure processes stay accountable and visible, without putting AI entirely in the driver's seat.

Hiring and training these more data-savvy new employees may present unique challenges for supply chain leaders, according to the HBR. Managers who seek talent outside traditional pipelines may get better results than those who are bogged down in the conventional practices of their industries. The continued value of human employees is clear, and not at risk from today's AI solutions. The exact
tasks those people will carry out, however, are changing to suit the new digital environment.

A robot hand and human hand reach out to one another.People who can work with AI are valuable employees.
The main barrier
While getting the right people in the door is clearly a path to better tech-infused supply chain practices, that may be easier said than done. After all, whole industries changing overnight are liable to experience serious growing pains. According to Rajiv Aserkar, professor and head of logistics and supply chain management at the SP Jain School of Global Management, talent and organizational culture are two of the primary stumbling blocks for overall digitization. Companies don't have the right people or frameworks to become data-driven - not yet.

Writing for Entrepreneur, Aserkar stated companies' employee development systems are less developed than the technology becoming available to them. This means until they get up to speed, there won't be an effective way for businesses to make the most of AI and other advanced processes. Simply buying a new software package is useless if no one in the logistics department can make it work as intended and produce real value. Therefore, imparting new skills will be essential in the months and years ahead.


On its face, a two-year-old boy enjoying a Popsicle on a summer day hardly sounds like newsworthy stuff. Last week, however, Brianna Smith and her son took part in an experiment that represents nothing less than a historical milestone in the histories of aviation and logistics.

In May, the U.S. Department of Transportation and the Federal Aviation Administration (FAA) unveiled their Integration Pilot Program (IPP). The initiative pairs 10 government and tribal agencies with academic and technological institutions in order to conduct test flights and deliveries. In addition to answering questions regarding the technical viability of drone-based delivery, the program is intended to answer lingering questions regarding safety, privacy, and the public's perception of this technology.

When Ms. Smith and her son accepted a Popsicle from the Hummingbird V2's delivery tether, they helped bring the first experiment of its kind to a successful close. While FAA-approved tests have gone on behind closed doors since the IPP's inception, last week's delivery broke new ground in several respects.

While the roadblocks to wide-spread drone use are numerous, the FAA's so-called "line of sight rule" has generally proven the most restrictive. Mandating that drone operators keep their aircraft visible at all times, the regulation is intended to stymie any potential unsafe or unlawful applications. Typically, bypassing the rule means completing a "line of sight" waiver. The document requires drone operators to prove definitively and objectively that their drone will operate safely. According to PrecisionHawk, an FAA partner, less than 1% of applications are successful.

After a representative from Alphabet, Inc. placed an order, the company's Hummingbird V2 drone took flight. As it made the mile-long journey from a simulated ice cream shop to the Smith's Blacksburg home, it traveled well outside its operator's line of sight and passed over a congested suburban area. The pioneering flight was, to date, the most realistic public demonstration of what drone-based deliveries could look like.

The delivery was also notable for the variety of technologies it enabled Alphabet and the FAA to test. Alphabet's CEO James Ryan Burgess, remarked, "It's an exciting opportunity to build a whole ecosystem." Technologies related to guiding drones, tracking them, and ordering drone-based deliveries all made their debut during the experiment.

Following the delivery, sponsors for the program surveyed the Smith's neighbors to gauge their reactions. After conversing with around 40 homeowners, they found that responses were universally positive.

How did the package's young recipient respond? According to Bloomberg, the young man provided just one sentence of commentary, "Airplane brought me a Popsicle."


The following blog comes to us from Jessica Barrett Halcom of TechnologyAdvice.com

Data is everything for today's Procurement teams. With quicker and more robust tools at their disposal, more organizations than ever are recognizing that the need for utilizing spend and performance data to drive decision making and develop competitive advantages.

But what does Procurement do with all of that data? Collecting it is just the first step. What really matters is how its used. Procurement teams well know that their efficiency is dependent upon systematically and effectively analyzing their data.

To make data work for you, it’s critical to set up metrics whereby you can measure your key performance indicators (KPIs). How do we know which metrics to use? There are several that every leading Procurement departments pays close attention to.

Spend Under Management
Possibly the most common metric Procurement teams talk about is spend under management. This is because it reflects how closely the team follows its sourcing schedule, the number of active contracts they have in place, and the documentation of expenditures on requisition orders in a given fiscal period. When the Procurement department has more control in this area, it’s able to make better decisions, which leads to a cost reduction overall.

Cost Savings
Cost savings are one of the most obvious and critical metrics Procurement is measured against because it’s a direct reflection of how they’re impacting the bottom line. There are several things that can be factored in as we consider cost savings outside of purchase price, such as indirect costs that include things like Total Cost of Ownership. This looks at costs like maintenance, end-of-life disposal, and replacement expense.

Procurement Cycle Time
Cycle time is another common metric that Procurement teams are measured against. It begins at the time of purchase and ends when products are delivered to the warehouse. When the cycle time runs smoothly, it suggests that purchasing process are running as they should  and truckloads are reaching their destination on time. A quick cycle time enables companies to sell those products sooner, and may also present the opportunity to receive discounts by paying their suppliers earlier. Slower cycle times, however, mean lost revenue and savings.

Quality
Finding suppliers who will sell the best materials at the lowest rates affects more than just the quality of your inventory. Procurement managers who build strong relationships with dependable suppliers will make better quality purchases year-over-year and enjoy the benefits of a Procurement process that isn't drawn out due to returns or defective products.

Procurement Team Return on Investment (ROI)
Like IT, Human Resources or Accounting, Procurement is a non-revenue generating department. Therefore, to measure its ROI, organizations compare its costs to the savings it helps produce. This means looking at operations; labor, wages, supplies, and technology against the amount of money the department is saving the organization overall.

Contract Compliance
This area can be a tough one depending on who your department heads are and how rogue they like to get with their spending. When you have departments going off-contract to make purchases your Procurement department isn’t aware of, not only can spending get out of hand, but it can actually hurt your reputation with contracted suppliers and make future negotiations more difficult. Procurement teams should be encouraged to work closely with department heads to ensure that they understand the importance of contract compliance. Using a customer relationship management (CRM) tool with built-in contract management features (find recommendations for great CRM products here) can help everyone across the organization keep contracts in a central location.

Delivery
Procurement teams involved in supply chain operations are typically measured against on-time delivery. This essentially measures whether or not shipments are getting to their destinations at the time they need to. In addition to on-time delivery, they’re also measured against the percent of shipments arriving in usable condition and quoted delivery time versus actual delivery time. Additionally, some teams are measured against things like line shutdowns due to late deliveries and the subsequent costs incurred.

Supplier Count Per Category
Though a little tougher to determine, there is generally a “sweet spot” number for how many suppliers a company should engage within a given spend category.  Engaging too many suppliers makes it tougher to build relationships and negotiate better pricing, however, too few can create unnecessary risk (there are exceptions such as employee health insurance or a temporary staffing agency). Procurement teams should be familiar with existing contracts and market trends to help them determine the right number of suppliers in each category.

Having heightened visibility into your data is critical when it comes to understanding how your procurement team is performing. Using these key metrics positions your team to continue adding value across various business units while positively impacting the bottom line for the entire organization.

***

Jessica Barrett Halcom is a writer for TechnologyAdvice.com, with specializations in human resources, healthcare, and transportation. She holds a bachelor’s degree from the University of Wisconsin, Green Bay and currently lives in Nashville, TN.


Have food supply chains become less safe?

To your average grocery shopper, it certainly looks that way. With product recalls affecting everything from romaine lettuce to sugary cereal, it's been a decidedly unappetizing summer. So, are instances of food contamination on the rise? The answer, according to The Chicago Tribune, is complicated.

Global food supply chains have grown considerably more complex in recent decades. What was once a simple path from local farm to kitchen table is now complicated and "rife with opportunities for contamination." Processors, packagers, distributors, and grocery stores all introduce new risk factors and amplify the possibility for an outbreak. While the years have introduced new risks, they've also seen government agencies embrace new and better technology for identifying, containing, and reporting on outbreaks. These improved capabilities, the CDC, USDA, and FDA suggest, are at the root of this summer's countless nauseating headlines.

Not all outbreaks are as deadly as the recent romaine lettuce episode, but they all take a toll on consumer confidence and leave the affected organizations on the defensive. In an industry that's already contending with ultra-thin margins, contamination can lead to disarray across the entire supply chain. The Tribune reports that experts at the CDC currently employ a "genome sequencing" tool to create a kind of fingerprint for food. Once a contamination occurs, they can use this fingerprint to "link illnesses to one another and try to determine the source of the outbreak." These tools, however, cannot yet track contamination to its origin.

Nestle hopes that partnering with IBM will help them do just that. This month, the Swiss Food & Beverage giant joined nine other large companies, including Walmart and Tyson Foods, in IBM's Food Trust network. Powered by IBM's blockchain technology, the group is described as a "network of growers, processors, wholesalers, distributors, manufacturers, retailers, and others enhancing visibility and accountability in each step of the food supply."

While blockchain technology is most often discussed in relation to cryptocurrency, it's implications for food supply chains are significant. The Food Trust's member organizations can electronically store a secure digital ledger and track all data related to their products' harvesting, processing, packaging, and shipping. With access to a shared system of records, these partners and rivals can collaborate to develop more transparent operations, make food safety a less costly concern, and ultimately protect American consumers.  Since its inception, the Food Trust has processed over 350,000 data transactions and reduced the lead time for traceback testing from a week to just over two seconds.

A number of Food Trust members have already leveraged IBM's solution for portions of their supply chain. Nestle, for example, has experimented with the traceability of Libby canned pumpkin. The results were promising. Speaking to the Wall Street Journal, Chris Tyas, Nestle's Global Head of Supply Chain, said, "tracking a single-ingredient food from a limited number of U.S. growers is relatively simple." The company is now engaged in a more far more ambitious blockchain project.

The organization is currently testing whether food-tracking blockchain technology can provide insights into the fruits and vegetables used in Gerber baby foods. Tracking multiple ingredients from multiple countries of origin, the project has already presented its fair share of challenges. "We have multiple data sets from all the different ingredients," Tyas says, but that's just the beginning. The organization has also found that migrating data onto a shared ledger and "dealing with the mix of paper and electronic data in different formats" has necessitated some heavy lifting.

There's a lot of hard work to come, but this collaboration between high-powered rivals suggests a safer future for grocery shoppers everywhere. "We wanted a product in which trust meant something," Tyas says. As a member of Food Trust, his organization could soon reach that lofty goal.



ICYMIM: August 13, 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.



5 Key Factors to Consider When Conducting a Supplier Evaluation
Chris Feldsine, Thomas Net, 7/26/2018
Behind a successful business you often find a strong supply chain serving as its backbone. Proper supplier relationships lead to high product quality, targeted production timelines, and minimal operation costs. The key to maintaining strong relationships is ensuring that your supplier is the best choice for your company, meaning you need to evaluate the supplier's performance on a regular basis. Areas such as capacities, delivery strategies, technological resources, and general business practices are ones that should be aligned with your organization to confirm shared priorities. Successful evaluations and supplier selection can help reduce your company's risks, improve operation visibility, and generate a greater value for products and services. 

Procurement's Guide to New Digital World Terminologies
Dennis Bouley, My Purchasing Center, 8/2/2018
In today's constantly evolving world, it's hard to keep up with all of the technological advancements, let alone the terms people use to talk about them. In any business, it's vital to be well-versed on the latest trends and topics, being able to participate in any discussion. While the definition of something may seem obvious given its name, there is often more than what meets the eye, meaning you should have an understanding of the capabilities and categories of the various technologies out there rather than just familiarizing yourself with the names of such. For example, blockchain is not just a chain of blocks, and digitization and digitalization are two different concepts.

U.S. Companies Improve Working Capital Performance- But Is It at the Expense of Suppliers?
Sydney Lazarus, Spend Matters, 8/6/2018
A study from The Hackett Group discovered that U.S. companies' working capital performance has reached its strongest since 2008. While this is a great improvement, it does not tell the entire story; companies are often shifting the burden of their working capital on to their suppliers. They are able to do so by extending payment terms and the average days payable outstanding in 2017 was 56.7 days, 3.4 days more than in 2016. The main metrics analyzed in the study were cash conversion cycle, and days sales, inventories, and payables outstanding. The main strategy identified is to hold back payments to suppliers, extending the payment term. This hampers the suppliers, particularly in their day sales outstanding performance, which has now reached a decade-high amount across companies nation-wide.