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Every Procurement team strives to realize continuous cost reduction. This goal, however, looks more like a dream to most organizations. Dismissing year-over-year cost reduction as unsustainable, they look for quick wins where they can get them. In certain cases, these quick-win cost reduction opportunities are really anything but.

At the start of the fiscal year, many Procurement professionals receive unwelcome news from their downstream direct material suppliers. Prices have gone up. However minuscule, these changes can add up, and Procurement cannot afford to ignore them.

The justifications for these changes run the gamut. Some are direct results of increases to index and material pricing. In these situations, the supplier has no choice but to raise their prices. Other times, the explanation is foggier. "Prices went up," a less scrupulous supplier might say. Whatever the situation, whatever reason your supplier provides for the change, it's important not to let it go unchecked. Procurement should obtain documentation that clearly and accurately explains the rationale behind any price increase.

Trust is an essential aspect of any supplier relationship. Without mutual trust and respect, Procurement departments and their suppliers will struggle to drive savings and establish strategic partnerships. Too much trust, however, and the department can run into even more costly trouble. A surplus of trust could lead your team to look the other way or conduct halfhearted negotiations when an unreasonable price increase comes along. Over time, this can shape supplier behavior and damage long-term cost reduction efforts.

A supplier might announce a price increase and invite you to negotiate. Ultimately, the process will result in a net price increase disguised as "savings." For example, let's say a packaging supplier experiences a 5% increase on the Lower Grade Polyethylene Index. In anticipation of an easy negotiation, they might pass a 10% price increase onto their customers. If the negotiations result in an 8% price increase, the customer can report cost reduction of 2%.

On paper, the supplier has made concessions to Procurement. Better still, Procurement looks to have realized its cost reduction goals. World-class Procurement groups know better than to fall for this facsimile of savings, but countless organizations do not. Many find themselves unwittingly losing money while celebrating their continued cost reduction victories.

Transparency, honesty, and thorough assessments are necessary in every supplier relationship. By avoiding vague and unclear communications, Procurement can better avoid vague and unclear price increases. The department should ask detailed, commodity and service-specific questions that truly require suppliers to engage and open their books. With more actionable insights into the cost drivers behind price increases, Procurement can manage (and mitigate) them in the future. A small extra bit of digging can go a long way in making cost reduction dreams a reality.

Want to learn more about developing strategies for continuous cost reduction? Reach out to the strategic sourcing specialists today.
Source One's new whitepaper series provides insights and reflections from numerous Supply Management thought leaders. Procurement Transformation:Industry Perspectives aims to cut through the noise and help organizations at every maturity level better understand what Procurement Transformation should mean to them.

Jim Baehr kicked off the series by providing some historical perspective. Reflecting on his decades in Procurement, he traces the function's ongoing strategic evolution. Throughout "Procurement Transformation: Then & Now" he points to a number of important milestones. These innovations and publications have redefined Procurement and many continue to drive our conversations today.

Take a closer look at some important moments in the history of supply chain management.

Want to learn more about Procurement's decades-long transformation? Read "Procurement Transformation: Then and Now" today and check out Jim Baehr's recent appearance on the Source One Podcast

This blog - the fourth in a series of four - comes to us from Jim Baehr

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

- Bill Gates

Information technology is too often seen as the elixir for procurement related tasks.  Supplier Relationship Management is one of those tasks.  The SRM process itself is not at the top of the list but it’s close.  Per the Deloitte Global Chief Procurement Officer 2017 Survey, 26% of CPOs are intent on delivering value by increasing supplier collaboration, an outcome of good SRM.  Technologies are expected to play an important role in supporting SRM.  The technologies that are available are increasingly robust, cloud based and very capable of making a difference.  But - not to be critical - how much SRM software is in use and being applied to even 50 % of its capacity?

Before going further, a question - is contract management critical to effective SRM?  It can be safely stated that contract management is a core activity in the post-award SRM process. Next question - does your group have a contract management tool in place?  If yes, congratulations.  Does your enterprise use it?  Effectively?  Why all these questions about Contract Management when the topic at hand is supposed to be about SRM technologies?

One of the primary reasons for a contract is to ensure the buyer and seller are on the same page.  Contracts help create boundaries. Contracts set expectations. Contracts are a relationship roadmap. It’s difficult to perform Supplier Management if the basic Contract Management disciplines aren’t in place.   Contract Management systems provide visibility, support basic transactions, and can improve compliance which limits contract leakage. This is basic day-to-day stuff.  How can you initiate discussions on collaboration or innovation if you don’t manage the basics?  An effective Contract Management process/system is a prerequisite for effective Supplier Management.

Technology is the biggest influencer of today’s business.  It can automate every facet of the end-to-end supply chain. And, Artificial Intelligence (AI) is already playing a role.  Buyers and Suppliers want to deploy IT systems that enable them to collaborate in different ways - from sharing transactional purchase order data to collaborating on major projects or new product development. Surely, there are relationships benefiting from the deployment of collaborative technology platforms.  But, how many?

Applying the 80/20 rule it’s probable that top twenty percent of Supply Management organizations are using SRM technologies to do bigger, better and faster.  But what about the 80% that are trying to make SRM happen but are challenged? They’re challenged for resources - both people and funding. And, they’re challenged for IT support on SRM technologies.

At present, IT based SRM technology can be an important enabler for value creation.  IT based tools can bring transparency, enable awareness and deliver process efficiencies. But, implementing software doesn’t add value just because it’s there. For technology enabled SRM to add value the emphasis needs to be on transparency and access to the information for all parties involved.  This creates awareness of the state of the relationship.  Awareness becomes understanding and this understanding must be communicated to both internal and external stakeholders to deliver any meaningful benefit.

All the above are difficult to make happen using spreadsheets, surveys and manually generated scorecards.  Monitoring, measuring and tracking are process dependent. But, even more so, in today’s world, systems dependent. Trying to manually support SRM may have been a good thing twenty years ago but it’s now a fool’s errand.  Without technology it’s labor intensive, opaque, and almost certainly counterproductive. Having said all this, if you are operating with a manual process, it at least shows an understanding of the importance of SRM and its benefits.  A manual process can also help in defining the requirements for an automated one.

There’s an interesting twist in this matter of relationship management and technology.  While Procurement groups struggle for funding Sales groups do not.  Per Gartner, Inc., “at the end of 2017, worldwide Customer Relationship Management (CRM) software revenue overtook that of database management systems (DBMSs), making CRM the largest of all software markets”.  Seems that there is a very strong commitment in business to CRM products.

Regardless of where you are in business - Sales, Procurement, or otherwise, most people have at least heard of - a CRM platform.  Its cloud-based applications cover sales, service, marketing, and more.   CRM systems have been around longer than SRM systems.  CRM starts before the first prospective customer contact.  SRM starts at the contract. CRM is seen as focused on building and maintaining relationships.  SRM is seen as focused on measuring performance and at times used as punitive.  CRM is considered a “must have” process regularly supported by
technology.  SRM is considered a “nice to have” process that is sometimes supported by technology.

On the Buy side of the equation – we need to convince ourselves of the importance of SRM. We need to understand how the process enables sourcing strategies. We need to demonstrate that the process has value.  We need to sell SRM’s value - both internally and externally. And then, maybe we’ll see a commitment to investing in SRM technologies.  The sooner we do this, the better!

Jim Baehr is the Lead for the Sourcing Strategies Group, LLC (SSG) supporting the Supply Management needs of clients in both the Public and Private sectors. He's also aligned with Source One, a Corcentric company, as a Senior Advisor.

His recent corporate roles were as VP of Global Information Technology Procurement Reed Elsevier, and Director of Technical & Services Procurement for Bayer Corporation. Jim has extensive experience in IT management positions and an accomplished career in Sales.

Jim is the Past President of ISM - Pittsburgh and a member of the Board of Governors of the Joint Chemical Group of Pittsburgh.

He's a frequent presenter at industry conferences; an established blogger; author of featured articles for industry journals and whitepapers on the relationship between Sales and Procurement; and a contributor to the book Next Level Supply Management Excellence: Your Straight to the Bottom Line Roadmap. 

The intense conversation surrounding data security and digital privacy will reach a new peak this week with the EU's General Data Protection Regulations finally coming into effect. Throughout the two-year transition period, questions have circulated and tensions have run high across the globe. The new regulations promise hefty fines (up to 4% of annual global turnover) and have made GDPR the scariest acronym since Y2K.

GDPR provides 'data subjects' with greater control over how their information is collected, distributed, and applied. More than ever before, data 'collectors' and 'processors' will be held accountable for protecting the subject's privacy. They'll not only need to comply with regulations, but are responsible for clearly and consistently demonstrating their compliance. This is particularly distressing news for companies who've historically taken a hands-off approach to maintaining their databases and auditing their third-party partners.

Are North American organizations in the clearly? Absolutely not. Any business that processes information from EU data subjects is required to adhere to GDPR.

These companies aren't just accountable for how they handle data. They're also responsible for ensuring their third-party vendors remain responsible and compliant. If they haven't already, they'll need to refine their contracting, auditing, and reporting processes to reflect GDPR's sweeping reforms.

On paper, GDPR compliance might look like a job best left to IT and IT alone. The looming risks and lingering questions presented by this legislation, however, are largely associated with supplier relationship management. In other words, "the most important change in data privacy regulation in 20 years" could provide Procurement with the perfect opportunity to set itself apart as an indispensable strategic asset. Leading departments have already distinguished themselves as valuable risk management and mitigation functions. Now, even laggard Procurement teams have a chance to follow suit.

Companies with robust Procurement departments are well equipped to answer the performance and contract management questions that GDPR poses. First, the department can serve an as investigator across the supply chain. They can take a deep dive into relevant data, identify which suppliers come in contact with EU data subjects, and point out risky contracts and relationships.

Procurement's contract management skills will play a major role in preventing violations. Teams will have to assess existing contracts, amend them where necessary, and develop effective repositories for keeping high-risk documents readily available. It will also fall on Procurement to refine workflows and ensure communication is clearer and more efficient than ever.

Enforcing compliance could mean a complete overhaul of Procurement's methods for managing supplier relationships. GDPR-specific performance reviews, audits, and supplier surveys will become an integral component of its efforts.

To succeed, Procurement will have to work closely with internal stakeholders. IT, in particular, will prove an all-important ally. Though the two functions have a history of butting heads within some organizations, they must come together as partners in a post-GDPR world.

Stressful times await businesses in the EU and everywhere else. A fully strategic Procurement department could be the perfect antidote to that stress. Need help auditing your supply chain or promoting compliance? Contact the supply chain risk team at Source One today.

Graduation season is here again. That means a whole new crop of Procurement and Supply Management professionals are getting ready to enter the workforce and embark on exciting careers. They'll need to work hard to distinguish themselves. They're entering a workforce that's crowded with educated, tech-savvy, and innovative young professionals - all of whom are looking to get their start.

Entering the job market for the first time is scary. Post-collegiate uncertainty can elevate the stress levels of even the most decorated graduates. These days, however, it's not just applicants feeling the pressure. In the highly-competitive market for Procurement talent, the candidate actually has the upper-hand. They'll still need to work hard, but standing out is no longer their responsibility alone. Hiring managers, too, need to set their organization apart and sell the unique benefit of their employee experience.

Many are already doing an effective job. Combining internal resources with third-party recruiters, they're taking an active role in locating the next generation of Procurement leaders. These organizations will likely identify (and soon employ) the Class of 2018's most promising young professionals.

Recent graduates are just one particularly active sector of the Procurement talent pool. There's a world of world-class professionals out there who are only passively looking into their options. Procurement can no longer take a passive approach to pursuing these individuals. A lackluster job board posting won't cut it. Check out some tips for directly sourcing passive talent from the recruiting and staffing team at Source One.

1. Partner with Universities
More colleges than ever are offering degree programs for Supply Chain Management. These programs are incubators for the skill-sets and expertise you'll need to build an optimal, fully strategic Procurement department. Do some research. Determine which programs tend to produce candidates that align with your companies goals, values, and internal culture. Attending job fairs and other on-campus events can help you establish a rapport with promising students and turn them from passive job-seekers to active applicants. You might even consider reaching out to professors. They'll know better than anyone which students show particular promise. With a little effort, you can establish a pipeline of talent from the classroom to your offices.

2. Leverage Veteran Placement Organizations
Like graduates, many veterans find themselves in a transitional space. Leaving the armed forces, they're looking to apply their skills and experiences in a new position. Forming a partnership with a veteran placement organization can help your organization activate this group of candidates. The skills they've honed in the military could be just what your organization is looking for. Veterans are leaders who've learned to make tough decisions in high-pressure situations. Applying those leadership skills to Procurement, they can help the department take its place as a strategic business partner and an agent for enterprise-wide change.

3. Check Your Databases
Hopefully you haven't been tossing out applications. Occasionally, the right hire only reveals themselves well after you've turned them down or forgotten about their application. As Procurement's role evolves, your definition of a best-fit hire will naturally evolve with it. It's possible that near-miss candidates from the past are what your team needs for the future. Ensure your hiring managers or recruiters are consistently surveying your resume database. Relocate promising applications and sort them by position. With a more organized database, you'll feel prepared to reach out when you're in need of someone new. Many past applicants will have accepted new jobs, but with the right incentives you can bring them aboard and start constructing a stronger Procurement function.

Taking the hunt for passive talent into your own hands doesn't mean going it alone. Reach out to Source One's experts today for help identifying the next member of your Procurement team.

In an era of expanding supply chain and logistics footprints, it's important for companies to ask whose hand is on the wheel within their departments. The next few years could prove pivotal to development and improvement, with organizations needing leadership and guidance as they digitize processes, become more analytical and increase the amount of input departments such as procurement have to overall corporate direction.

Supply chain leadership demands a special kind of expertise. The many moving parts within global logistics departments are hard to coordinate at the best of times, and recent years have seen these operations become faster and more all-encompassing than ever. Not only should supply chain managers be able to handle these evolving processes, they have to translate the relative value of logistics operations to the rest of their companies.

An empty seat in the C-suite
According to CFO contributor Chuck Franzetta, many organizations lack supply chain leadership at the C-suite level, though such management could help them understand the impact of supply chain operations. In situations where there is no chief supply chain officer, the chief financial officer tends to take over. This isn't a perfect solution, however, as a granular level of detail will likely be lost when the leader in charge of all financial operations is responsible for negotiating future initiatives.
The quest to hire an outside CSSO and remedy this insight shortfall is another area where some businesses make missteps, Franzetta reported. This is due to a lack of specificity about what a CSSO does. Firms looking for someone to fill the supply chain oversight role may not have an ingrained idea of what they want or need in a leader. Making a new hire could result in an uncomfortable period of restructuring as department leaders try and decide which of their duties go to the CSSO.

As for what C-suite supply chain managers should know, Franzetta suggested their experience must be wide-ranging. While many "ideal" CSSO candidates come from the logistics or sourcing side of the discipline, they should also be ready to handle manufacturing, customer service and more. These executives should also be tech-savvy, as the next generation of supply chain excellence will involve heavy use of new IT options.

An empty boardroom table.What's the supply chain's role in the boardroom?
Companies open their wallets
According to The Wall Street Journal, a relative lack of workers with supply chain leadership skills hasn't gone entirely unnoticed by U.S. organizations. These businesses are now engaging in an escalating round of wage hikes to attract and keep top talent. Citing Institute for Supply Management data, the newspaper explained salary gains among supply chain professionals were higher than U.S. averages, and that 2017 growth may just be the beginning.

Knowledgeable executives are particularly valued for their ability to keep costs low when organizations run into problems such as rising fuel costs. When profit margins fall, these businesses have to find ways to make up the difference. Skilled supply chain managers are being called on to maximize their departments' spending, and to minimize the impact of common risk factors. If they can succeed in these tasks, they'll save their employers enough to justify high wages.

Last week, Corcentric - a provider of automation solutions for Procurement and Finance departments - announced its acquisition of Source One Management Services. The leaders in Procurement consulting join Corcentric in helping businesses reduce inefficiency and optimize the ways they purchase, pay, and get paid.

The Strategic Sourceror sat down with Source One CEO Steven Belli to discuss this exciting news.

Belli couldn't be happier with the acquisition. "When I look ahead, I see nothing but bright days and opportunity for everyone within our organization. We've enjoyed a lot of success over the years, and things can only improve from here."

During any acquisition, both organizations naturally feel at least some trepidation. There's always a question in the air, how will we work together? Where will synergies arise? What about conflicts?

Belli ensures the spend management team At Source One they have no cause for concern. "Over the years, we've turned down a number of offers to acquire our organization," he says. "The most important consideration has always been Source One's unique culture. Our consultants possessed a can-do attitude and an innovative spirit that few of our competitors can equal. Corcentric clearly shares this attitude as well as our commitment to quality and service. I've been confident from the start that they're a great culture fit."

After ensuring a cultural fit, Belli suggests, it's essential to ensure a "business fit." In Belli's opinion, Corcentric and Source One are an ideal match in this respect. "Source One and Corcentric's service offerings complement one another perfectly. There's not only no overlap, but a great number of synergies are immediately obvious. We extend their offering in interesting ways, and they do the same in return."

Corcentric shares Source One's belief that an optimized Procurement departments provide a competitive advantage that cannot be overstated. Over the years, they've refined their procure-to-pay offering. Reducing inefficiencies and providing spend visibility, they've helped clients in various industries refine their approach to Procurement. Supplemented with Source One's unparalleled category expertise and years of best practices, they'll support increasingly ambitious projects.

The move empowers both Corcentric and Source One to offer their clients a true end-to-end solution for optimizing the people, processes, and technologies of their Procurement function. Both organizations' clients have long expressed interest in such an offering. "Both of us see this as the perfect opportunity to provide our clients the comprehensive source-to-pay service they've been asking for."

Officially, Source One Management Services no longer exists. Its mission, however, lives on."Source One's goal has always been to grow into the world's best Procurement Services provider," says Belli. "As a Corcentric company, we're better positioned than ever to reach that goal."

As technology advancements continue to rapidly improve, companies are exposed to a large amount of new tools and methodologies to enhance their business practices. With special regards to procurement, many professionals have been raving about the rise of a few recent developments: cognitive procurement and cognitive computing.

There is a growing demand for artificial intelligence (AI) to help organizations continue to grow by improving efficiencies, developing better strategies, and enhancing their level of competition within the market. The main idea behind AI and cognitive computing is often that humans program the computer to perform certain tasks to allow companies to shift resources elsewhere. However, with cognitive procurement, the computer is programmed to perform tasks and solve problems with human-like thinking, as if it were a human were the one performing the work. Though the two are very similar, many times they are mistaken for one another.

Within cognitive procurement, many tools have been developed to alleviate some of the day-to-day pain points in a company’s procurement department. Some examples of these tasks include replacing purchase order systems, automatically generating product forecasts, identify and evaluate suppliers, and even contract analysis. There is opportunity for process automation that is associated with cognitive procurement, which leads to quicker task completion rates and a higher productivity overall as the business is able to achieve more efficient operations.

Aside from the daily tasks that cognitive procurement and AI systems are able to assist with, they are able to improve the way a procurement team develops their strategies. These systems are able to rapidly comb through any size of structured or unstructured data sets understand the information involved. IBM’s Watson is a primary example of a system that is capable of sifting through large amounts of data and drawing conclusions and possible action items from the information collected from the data. With such emphasis put on developing these types of tools, companies are able to strategically place resources in other areas of the business, while maintaining resources to work with the cognitive procurement systems.

Many companies are getting involved with improving their knowledge of the topic as well as implementing these systems in their own operations. While implementing these tools and developing better strategies, another key idea behind cognitive procurement is the enhanced ability to make more informed decisions at a quicker rate. The idea of making stronger, faster business decisions has become a major driver in the rise of cognitive procurement because it significantly adds to the continuous process improvement and higher productivity that companies are constantly striving to achieve.

The main reason that cognitive procurement is a recent hot topic is because it is enabling professionals to engage in intelligent sourcing, where sourcing events such as Request for Proposals (RFP) and supplier identification are automated and more efficient. Along with intelligent sourcing activities, these systems are also able to assist with contracting and make the negotiation process much more effective, in addition to eliminating time spent on these various processes. With automated assistance in these crucial areas of procurement, companies are able to better strategize and make much more educated decisions in a shorter amount of time. As a result, businesses are able to make themselves more competitive within the market in addition to pursuing greater opportunities to differentiate core offerings to current and prospective clients. Ultimately, the new tools and technology advancements that are being developed are paving the way for companies to drive new innovation, become more efficient, and keep up with the competition, and cognitive procurement has proven to become a major player in the way businesses are transforming.

Part 2 of Procurement Transformation: Industry Perspectives is here. The last installment saw Jim Baehr reflect on the evolution of Supply Chain Management over the last three and a half decades. This time around, the focus is more philosophical than historical. In "The Right Mindset," Phil Ideson (The Art of Procurement) and Source One's Joe Payne discuss the motivations behind Procurement Transformation. Success, they suggest, starts with asking the right questions, identifying the right priorities, and developing the right mission. Too few organizations devote the proper resources to these processes. As a result, they embark on transformative initiatives with the wrong mindset.

Throughout his contribution, Ideson reminds readers that Procurement Transformations depend on a series of smaller transformations. First, Procurement needs to transform the way it thinks about itself and its role. The department can no longer afford to lament its poor reputation. It needs to take an active role in revealing its strategic value and work to change the conversation surrounding it. The rest of the organization, too, needs to retool its approach to Procurement. While Procurement should take the lead in encouraging collaboration, executives and internal stakeholders need to put aside their past opinions. Embracing one another will mean forgetting the tactical past and working together toward a more valuable future.

In a more fundamental sense, organizations need to change the way they think about Procurement Transformation. The term itself, Ideson suggests, keeps many initiatives from leaving the ground. He writes, "A more fitting (and far less dramatic) name for these endeavors might be 'continuous improvements.'" Framing initiatives like this could have a two-fold effect. Not only will internal stakeholders better understand the all-encompassing nature of these changes, but they'll also avoid the trepidation that accompanies words like 'transformation.' Procurement Transformations will prove more successful, he concludes, once organizations accept that they aren't really about Procurement and that they're not really transformations at all.

"The Right Mindset" continues with insights from Source One's VP of Professional Services. Like Ideson, Joe Payne, takes time to outline what a Procurement Transformation is. More importantly, however, he outlines what it is not. He reminds readers that Procurement Transformation is not change for the sake of change. So many initiatives fail, he suggests, because their leaders never take time to consider why they need to transform their operations. In his mind, this question should not only help plan initiatives, but should help to drive them every step of the way.

Echoing Ideson, he concludes, "The true power of a procurement transformation is not tied to procurement at all. Rather, it is all about how a business recognizes the value of their Procurement function and answers the question, 'Why do we need a Procurement department?'"

Check out the rest of Procurement Transformation: Industry Perspectives - Part 2 today. Don't forget to check back in throughout the coming weeks for more insights from Supply Management thought leaders.

While supply chain transformation and modernization are commonly stated goals for companies of all kinds, those organizations may hesitate to put in the time and money necessary to enforce real change. This is natural, as it can be tough to envision the concrete effects of any true high-level change to corporate practices. Leaders outside of logistics may need to see a huge potential impact in terms of the bottom line before they give the go-ahead to change procurement, sourcing, transportation or other core functions.

Culture refuses to change
According to a recent Janeiro Digital survey of management personnel, industry culture is a prominent roadblock keeping organizations from changing the way they handle their supply chains. This reluctance to embrace digital ways of operating has deep roots and takes several forms. Over 23 percent of respondents stated they haven't been given enough support to change their operations. The same number said they're being held back by existing legacy systems. More than 27 percent stated they'd been given a budget that couldn't get the job done.

When organizations are mired in old-fashioned technology, with leaders not seeing the potential for upgrades or failing to give the transformation process a fair share of the budget, change can seem far off. Supply chain professionals falling behind the modernization curve are likely looking for positive examples of the effects transformation can have when firms forge ahead with revisions. Fortunately, some brands have taken these steps, and their pioneering examples can be instructive.

A signpost pointing to the past and the future.Supply chain leaders are at a crossroads.
Learning from positive examples
A recent Supply Chain Digital report exposed the many internal changes that have gone on since Sprint decided to digitize its logistics process. The telecom company decided to take a twofold approach to enforcing change. Part of the strategy will involve an efficiency focus, which is meant to ease the strain of getting new devices from the drawing board into consumers' hands. The other half of the approach is based on resilience. When the marketplace suffers a shake-up or other disruption, Sprint will theoretically be able to mount an effective response.

The first few years after setting these objectives have been positive. The company reported massive reductions in both operating expenses and existing inventory levels. Sprint has struck up a series of partnerships that allow its own operations to be relatively resource-light. Data has become more central to the decision-making process as well. With faster and more accurate data flowing in, the organization has made its consumer-facing logistics offerings more user-friendly and proactive. The result is a renewed focus on securing loyalty and enhancing the overall experience.

Organizations can make the leap
Often, the forces keeping companies from making their own supply chain operations more effective are artificial restrictions imposed on themselves. When leaders discover the ways in which businesses are becoming more digitally savvy - and turning that new focus into relatively quick bottom-line boosts - they may have less trouble giving logistics managers the money, support and strategic responsibility they need to create positive experiences. Depending on the organization's present status and future goals, the effects may be felt in a variety of different functional areas.
The Institute for Supply Management's annual Conference only just ended, but it's never too early to start planning for next year. After reflecting on this year's discussions and expert-led sessions, Source One's team share their predictions for ISM2019.

1. The Talent Conversation Continues
This year's conference once again featured Source One's ExecIn Forum. Day 1 of this exclusive subconference culminated in a panel discussion on the issue of talent in Procurement. Sharing their concerns and solutions, supply management leaders examined the crowded and candidate-driven market for Procurement hires.  Nearly everyone agreed that there are more promising applicants out there than ever before. Volume, however, doesn't always make things easier.

Even the leaders at ExecIn acknowledged that name-brand organizations are increasingly poaching top talent. As competition intensifies and Procurement continues to grow more essential, passive recruitment methods grow less and less useful. Aggression has become the name of the game. Companies of all sizes are taking a more active role in identifying Procurement hires and ensuring they build the diverse skillset they'll need. Many are pairing with universities and veteran placement organizations to develop talent pipelines. Others are developing programs to train employees from other departments on the ins and outs of Procurement.

This conversation was far from unique at ISM. Nearly a dozen agenda items focused on Procurement's ever-growing talent concerns. It's clear that the conversation isn't stopping any time soon. Expect ISM2018 attendees to take what they've learned, enact changes within their organization, and bring new questions and concerns to Houston next year.

2. Retention, Retention, Retention 
Even organizations who've optimized their recruitment processes still run into trouble when it comes to retention. Today's young professionals expect a lot. They want challenge, compensation, and recognition. They want to align themselves with organizations that pride Procurement and have allowed it to build a strong, impactful brand. Small and mid-sized organizations often struggle to provide these. Even Fortune 500 companies sometimes put retention on the back-burner as they dedicate themselves to recruitment. As a result, they're forced to contend with a disengaged workforce and a high rate of turnover.

Throughout the conference, presenters and attendees alike asked how Procurement departments can better engage and incentivize their teams. Keynote speaker Arianna Huffington suggested taking a more empathetic and humane approach to talent management. She suggested that so-called "brilliant jerks" have no place in modern supply management. These individuals, however savvy, will only lead to poor morale and performance. Under their watch, Procurement's veterans will grow disengaged and young professionals will look for the nearest exit.

A year is a long time. You can expect many ISM2018 attendees to rethink and refine their talent management efforts before ISM2019. It's clear, however, that retention is an evolving issue. Whatever new policies are enacted, no one can expect to  fully answer the question of employee retention alone. Count on them to bring new questions and concerns to next year's conference.

3. Responsible Sourcing is No Longer an Option
Human, animal, and environmental issues are a fixture of our cultural conversation. Social media not only provides a forum to take these discussions online, but offers real-time insights to consumers. At a moment's notice, they can familiarize themselves with an organization's stance and critical issues. They can also easily dig deeper to learn who's really walking the walk.

Today's consumers aren't just engaged. They're also highly passionate. They are eager for opportunities to align themselves with ethical organizations and distance themselves from less ethical ones. A number of ISM2018's presenters discussed their efforts to promote sustainable and responsible sourcing practices. Each expert seemed to agree that sustainable and ethical sourcing have far-reaching benefits for the company, the consumer, and the world at large. They also suggested that Procurement is perfectly equipped to encourage these practices and ensure they're adopted company-wide.

It's hard to imagine that ethics won't figure into ISM2019's agenda. Nearly every day companies earn praise for their responsibility while others attract derision for suspect behavior. By the time ISM2019 comes around, presenters will have a whole list of success (and horror) stories to use as examples.

4. An Even Bigger Seat at the Table
Predictably, Procurement's evolving role within organizations was a popular topic at ISM2018. Diego De la Garza's presentation Overcoming Procurement's Internal Image Problem, for example, opened with a discussion of Procurement's reputation. While Procurement is no longer the scorned cost-cutter of decades past, few organizations have seen the department reach its full potential. 80% of CPOs, De la Garza noted, still consider cost reduction their primary objective. Procurement needs to take a more active role in encouraging their organization to ask for more.

De la Garza was not alone in calling for a new definition of Procurement. The department's evolving role - and the lingering barriers to this evolution - were among the conference's most popular topics. While numerous solutions were proposed, all attendees seemed to acknowledge that Procurement still has a long way to go.

Procurement Transformation means something different to every organization. Many still aren't sure what it means to them, or what a 'transformed' Procurement department should look like. Presumably, many professionals left ISM2018 with as many questions as answers. The most proactive among them have already set about answering these questions. Right now they're assessing their operations, developing action plans, and working to construct a more mature function. With any luck, they'll have accepted a more essential role by next year. They know, however, that their efforts can never stop. They'll come to ISM2019 prepared to discuss the next big step for their organization.

We've still got another year to go before we head to Houston. In the meantime, check in with the Strategic Sourceror every day to read what Source One's spend management team have to say about Procurement's emerging trends and topics.

ICYMIM: May 21, 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.

Sean Harley, Spend Matters, 5/16/2018
Procurement professionals understand the importance of supplier relationship management. Many organizations are discussing the potential benefit of investing in enhanced programs. Few, however, follow through on these discussions. The readily apparent ROI of chasing annual savings targets tends to take precedence. In the first installment of an upcoming series, Harley outlines a number of challenges facing today's Procurement departments. He then describes the way a more nuanced approach to SRM could provide the answer. For example, he suggests that closer, more strategic collaboration with suppliers can provide the innovative technologies and process improvements Procurement is eager for. 

Should Procurement Leaders Apologize? 
Charles Dominick, Next Level Purchasing Association, 5/16/2018
It's no secret that authority figures often struggle with apologies. To many, Dominick suggests, they're perceived as a sign of weakness. He challenges this idea. "If you even think that apologizing might be a sign of weakness," he writes, "then you are already a weak human being." Apologies are invalid and insincere when they're not supported by a desire to actually fix the problem in question. Equivocating and casting blame tend to only make matters worse. The best Procurement leaders are courageous people. They're not afraid to innovate, and they're not afraid to fail trying. They shouldn't be afraid to admit when they're wrong.

Companies are Investing in AI and Automation to Boost Talent Recruitment and Retention
Sydney Lazarus, Spend Matters, 5/16/2018
Randstad Sourceright recently conducted a survey of over 800 talent management professionals. Over half, they found, believe that AI will soon make their hiring processes more efficient and consistent. One hope is that artificial intelligence will help make the hiring and recruiting process seem less impersonal. A well-designed chatbot can engage the applicant directly while freeing up time for hiring managers to reach out to the most promising candidates. It might sound ironic to suggest that AI could make a process feel more personal, but 43% of respondents suggested they had already begun to feel this effect.