Source One Round Up: May 27, 2016

on Friday, May 27, 2016

Source One Round Up: May 27, 2016

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





NEW BLOGS:

When Investing in Marketing Means Investing in Technology
In today’s data-centric environment, companies are constantly looking for data to drive business decisions. It comes as no surprise that marketing platforms are a major tool for gathering consumer data to better target consumers with relative marketing campaigns. As more organizations invest in marketing technologies such as Customer Loyalty Program platforms, Marketing and IT departments need to unite, with the help of procurement to invest in the right tools that can be properly integrated with existing systems. This week, Source One Senior Project Analyst, Liz Skipor pulls from her experience helping companies strategically source Customer Loyalty Program platform providers to share how investing in marketing technologies goes well beyond marketing stakeholders. She explains the criticality of including IT stakeholders throughout the process to ensure the success of the program. 

Managing the Cloud
Everywhere you look in the IT space, the focus seems to always been on cloud platforms. While many companies are reaping the rewards of the cloud (such as cost savings, and agility), governance is a critical component to success. This week, Source One IT analyst, Maria Liesen shares advice for establishing the proper "red tape" for reducing costs. 








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Consumer demands forcing food companies to restructure supply chains

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Consumer demands forcing food companies to restructure supply chains

An increasing number of consumers today are becoming more conscious of their health. And in an effort to eat better and lead healthier lifestyles, shoppers are starting to pay more attention the ingredients used in food products. For years, the U.S. Food and Drug Administration has faced pressure to enforce stricter labeling guidelines and regulations that would improve the level of transparency between manufacturers and customers. People want to make smarter, more informed buying decisions. In order to do that, they need to first reduce the ability companies have to mislead and confuse them through packaging.

One of the topics that has gained significant attention has been the debate over mandatory labeling for foods that contain ingredients that have been genetically modified, also referred to as GMOs. On July 1, Vermont will be the first U.S. state to enforce the inclusion of a GMO disclosure on product packaging. Recently, the FDA announced the official changes it will be making to the Nutrition Facts label on food products - the first major update that has been made to the panel since 1993. By the end of July 2018, most companies will be required to list the amount of added sugars contained in the item, among other things.

Increased transparency requires tighter supply chain
The above are just two examples of the broader effort being made by government bodies and regulators to satisfy consumers' growing demand for healthier food products and more honest sourcing and labeling practices. And this trend is sparking a shift in how chief financial officers in the food industry are approaching their supply chain investments, The Wall Street Journal reported this week.

According to the source, at the recent BMO Capital Markets Farm to Market conference, Cargill Inc. CFO Marcel Smits explained that, as more people push to know about food formulation processes and want products that are organic and non-GMO, the organization is facing the need to reevaluate its strategy for sourcing and handling raw materials throughout its supply chain. 

The Wall Street Journal also indicated that food companies are directing more of their attention toward spend management solutions; some are struggling to combat a spike in production costs without simultaneously having to make consumers pay more for the products. 

It may come as a surprise to learn just how specific major food brands are getting with their supply chains in an attempt to comply with customer expectations. For example, the source added that General Mills Inc. CFO Donal Mulligan said the company now places sugar crystals on the exterior of its cereal pieces, instead of mixing it into the flakes. This seemingly minor modification was implemented to cut back on the sugar content of its product.

As the demand for better sourcing and manufacturing in food supply chains gain traction, it is going to become increasingly important for companies to improve the visibility, transparency and traceability of their production lines. Furthermore, the recent changes made in some state laws and requirements set forth by the FDA indicate the direction the industry is headed in. To ensure customer loyalty, regulatory compliance and long-term sustainability, it would be in the best interests of businesses to start adjusting operations in accordance with these new developments as soon as possible.

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Are you using these four metrics to calculate ROI?

on Thursday, May 26, 2016

Don’t confuse social distribution with content effectiveness. As the Content Marketing
Institute explains, “metrics such as shares, retweets, and views are often the easiest and most obvious to gather, but they may be the most deceptive and unreliable when evaluating whether your content is genuinely making a difference.” According to The Fournaise Marketing Group, 76% of marketers use the wrong KPIs and metrics to assess the effectiveness of their strategies. And most marketers are still considering market effectiveness to be about awareness (74%) and/or engagement (71%). About 86% believe engagement was a form of conversion. But are customers scrolling through your social content and then “liking” your page or “retweeting” your content but then never buying the product?

It is important to not hide behind numbers that are flawed, inaccurate, inconsistent, or meaningless. Social can be a great way to share content and while we are not advising you to stop distributing content, we do caution you about the types of metrics you are analyzing. Stop to think if the metrics being measured really show insight into content effectiveness and translate directly to your bottom-line, if not, you have to take the numbers for what they really are, just numbers that don’t say anything about your ROI.

Achieving brand recognition and maintaining customer loyalty can be challenging- coupled with the added stress of evaluating and selecting a marketing agency best suited for your organization. Source One can help. Our marketing category experts understand the agency landscape and can help identify the right creative agency for company. Contact us today to learn how Source One can optimize your marketing budget.


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iPhone 7 production order higher than projected

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iPhone 7 production order higher than projected

The decline in iPhone growth has dominated the Apple narrative of late. Yet a recent report tells a different story, according to 9 to 5 Mac. The story, originally reported in the Economic Daily News, suggests that Apple's production order for the iPhone 7 was around 72-78 million, a number that surpasses analyst estimates of 65 million iPhone 7s this year.

If the report proves true this would mean production levels for iPhones would reach their highest levels in recent years, promising news in light of recent accusations by LeEco CEO Jia Yeuting that Apple is 'outdated'.

Supply chain partners of the company enjoyed a spike in stocks following the announcement. According to Benzinga, Apple's primary assembler, Foxconn, also known as Hon Hai Precision Technology, saw a 4.59 percent increase in Taiwan-listed stocks. The TSEC, Taiwan's main index, reported increases of 2.62 percent.

International Business Times reported that this speculation by Economic Daily News comes only a week after Foxconn and Pegatron announced they would be hiring extra workers a month earlier than expected. Pegatron is known for assisting Foxconn in iPhone production.

Shares in Apple took a notable hit recently as a result of the organization's first decline in quarterly earnings in 13 years, according to the source.

"The biggest challenge for Apple with the iPhone right now is the sheer unpredictability of demand, as we've recently entered an unprecedented period of year-on-year declines in sales," explained Jan Dawson, chief analyst at Jackdaw Research, to International Business Times. "There are so many uncertainties right now in forecasting iPhone demand, driven by the global smartphone slowdown, the lengthening upgrade cycles and other factors."

Dawson went on to predict that even Apple itself will have trouble projecting sales in the next year. However, upping production is always better than low-balling demand.

There has been much speculation surrounding what features the iPhone 7 will introduce. According to 9 to 5 Mac, industry leaders are not expecting any big external design changes. In fact, a recent leak suggests that the new iPhone will largely resemble the iPhone 6s but with some camera upgrades and internal improvement.

IBT noted that Apple has yet to comment on the production report. However, CEO Tim Cook did put an emphasis on customer satisfaction over production volume.

"The most important thing is that customers love our products," Cook noted to CNBC. "That is the most important thing for the long term of Apple."

The new report has certainly had a positive impact on Apple's outlook regardless of a lack of verification.

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Bayer offers $62 billion for Monsanto acquisition

on Wednesday, May 25, 2016

Bayer offers $62 million for Monsanto acquisition
Earlier this month Bayer set forth a letter to Monsanto CEO Hugh Grant. The letter detailed plans of a proposed merger between the two companies, reported The Wall Street Journal.
This week Bayer AG solidified a proposed $62 billion offer to buy Monsanto. The deal, if approved, would create the biggest seed and pesticide business in the world. The currently proposed deal includes the assumption of debt spanning $8 billion.
In a conference call with reporters Bayer Chief Executive Werner Baumann noted that the proposed deal presents a powerful opportunity to provide Monsanto investors with near certain value, according to WSJ.
Bayer is offering all-cash for the acquisition of the St. Louis, MO.-based Monsanto and the union of the two companies is sure to create a powerful force in the agriculture industry. Beyond the sheer size of the business , Bayer's crop protection capabilities paired with Monsanto's seed offerings as well as the two organizations' considerable global reach would create a powerhouse in the seed and pesticide business.
USA Today reported that under the current deal Bayer would be responsible for paying Monsanto shareholders $122 per share. According to the source this represents a 37 percent premium over the closing price of $89.03 on May 9 and a 16 percent increase over the Friday closing price of $101.52.
Skepticism from shareholders
While Monsanto share did see a 4.5 percent spike following the offer, shares for Bayer dropped 5.7 percent with a cumulative 12.5 percent decrease since confirmation of talks with Monsanto. The reason? Well, according to Fortune, there are a few purported causes for this dip.
For starters, a portion of the deal will be funded by an issuing of new shares. In essence, shareholders will have two options: sign up or watch their shares lessen through the weakening of their holdings. Additionally, current investors in Bayer may have bought in due to its pharmaceutical offerings. The focus on seeds in the new deal may appear unappealing to shareholders.
On a more complex level, some investors may be jumping ship due to the implications of a more diversified company. The wider the range of business operations, the lower a business can potentially trade at. According to Fortune, more focused organizations tend to value higher.
Generally speaking, market players tend to view more complex companies as harder to manage, explained the source. Moreover, Bayer's potential purchase of an outside business signals that the current business functions are less profitable than desired.
Upping the ante
Monsanto investors are open to the current offer presented by Bayer but, according to WSJ, they expect board members to negotiate a higher price.
"It's a very good initial bid for the company," noted James Zoldy, president of Halsey Associates Inc., a New Haven, Conn.-based firm that owns Monsanto shares, repo​rted WSJ. "We think there is some upside from that, and it's going to have to be finessed by the [Monsanto] board to extract additional value."
Zoldy went on to explain that the board will need to approach negotiations very delicately. It cannot afford to drive too hard of a bargain considering the lack of other options.
Beyond some leeway on pricing, the merging of the two companies is generally seen to be sound strategically for both parties considering the mounting pressure on agribusiness businesses. WSJ explained that recently there has been a push to cut costs while building in scale. Farmers have dealt with a three-year dip in crop prices which has pushed many seed, crop chemical, fertilizer and tractor companies to not only reduce costs operationally but lay off employees across sites.
According to Fortune, one of the major reasons for the deal lies in the two companies' worth together rather than separately. By joining together research and development and product lines the combined company would bring in considerably higher earnings and save an estimated $1.5 billion annually from the outset by eliminating overlapping functions and other costs.
Pending approval from the Monsanto board, the deal is set to face some pushback from two major parties: antitrust officials and farmers. The former will undoubtedly scrutinize the size and scope of the resultant agribusiness conglomerate, explained USA Today.
"... [A]ny such acquisition would give Bayer significantly more control over supply chains in the agricultural industry," explained Terrence Oved, partner of New York law firm Oved & Oved and chairman of the firm's corporate, entertainment and real estate departments, according to the source. "[However, the two companies] have very little product and revenue overlap, so it is likely that any concerns raised from an antitrust perspective could be summarily addressed through divestitures of problematic assets."
Additionally, farmers will need to be convinced of the benefits of this union. There is ample concern currently surrounding tools and the players that provide them. Undoubtedly, the merger will only increase the worry.
The two companies employ a combined an estimated 137,000 employees worldwide. Neither business has commented on potential layoffs as a result of the merger.
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Selecting a Best Fit Merchant Account Pricing Structure

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As the use of credit cards, debit cards, and alternate electronic payment methods continues to grow, small and large businesses alike will find the utilization of credit card processing services a necessity to remain competitive.  The fees associated with credit card processing are often accepted as a necessary evil, and are overlooked as a place for negotiation and cost savings. With the right provider, knowledge, and enough leverage, even a small business can minimize their merchant account costs. Learning to navigate the cost structures present in the market can reduce the burden on the merchant and lead to more transparency between the merchant and service provider.

Before diving into the payment structures, the transactions fees must be understood.  Each time a payment is processed, the transaction will be charged an interchange fee.  This charge is non-negotiable as it is set by the payment networks and will be passed through to the merchant by the merchant account provider.  Interchange fees vary depending on the type of transaction.  This fee varies depending on if a physical card was present, if a signature or PIN number was captured, and which card network is being used (VISA, MC, etc.). 

On top of the interchange fee, each merchant account provider will charge a markup.  This markup is the provider’s direct fee for processing and settling each transaction.  This fee is set by the merchant account provider and is one area for negotiation when choosing a supplier.  Additional ad-hoc fees exist as well such as chargeback fees, tokenization and encryption fees, and batch fees. However, the interchange fees and their markup comprise the majority of the cost, which is why choosing the cost structure that offers the best value for your business is important when negotiating a merchant account agreement.

Cost Structures

The first type is a blended cost structure.  With this, all transactions are charged the same fee regardless of the cost of the sale or type of transaction.  This fee structure offers very little transparency into which level of clearance (interchange rate) each transaction receives and the associated cost.  As a result, the blended rates run the risk of being higher than other payment structures, especially for businesses that primarily processes card present debit transactions.  One upside to this fee, however, is that there is typically not a monthly charge associated which makes it a reasonable choice for a business that processes a low volume of credit card transactions.

Another type is a tiered or “bundled” fee structure.  Tiered pricing operates similarly to the blended structure, however it breaks the transactions into three categories rather than treating them all as equal.   Each transaction is either marked qualified, mid-qualified, or non-qualified.  Qualified transactions are awarded the cheapest rate and must meet a list of criteria such as the card being present in the transaction and the customer’s signature being collected.  If one item from the criteria list is not met, the transaction may be downgraded to mid-qualified or non-qualified rates.  While this structure offers better pricing than the blended structure for a business with high volume card present transactions, it still lacks transparency into what the actual interchange cost is versus what the merchant is paying.  Additionally, qualification criteria can be increasingly complicated, leading to more transactions not clearing at the preferred rate.

The final structure type is what is known as interchange plus.  With this model, the credit network fee is clearly listed per transaction, and the markup is fixed and listed separately.  This structure allows for the most transparency into the true cost of each transaction, and offers room for negotiation of the markup fee charged by the merchant service provider, especially for large volume merchants.  While the visibility presents the opportunity to receive lower pricing, it is not a guarantee.  It is critical to audit the interchange costs to ensure that the amount being passed through matches the published rates from the card networks.  Additionally it is important to negotiate a markup that is competitive within the market. While the rate must be shown separately, it is not required to be a reasonable rate.  With the right expertise, this desirable structure can greatly reduce the overall cost of your payment processing services.

Regardless of which fee structure best fits your business model, Source One Management Services has the knowledge and expertise to pinpoint opportunities for cost savings and process improvement in the merchant accounts category.  For more information on our full suite of services please visit our webpage.
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ISM 2016 Recap

on Tuesday, May 24, 2016

Last week, the ISM held their annual conference in Indianapolis, Indiana.  The conference was well attended, and the folks that I spoke to appeared to be happy with the content and the training sessions.  Overall, I agree – the ISM did a great job organizing an agenda that met the overarching needs of the supply management community.  However, I can’t help but wonder if our profession is getting a little stale.  Year after year it seems like we are talking about different variations of the same topics – stakeholder engagement, category management, cost savings, sourcing strategy, and negotiation strategy, to name a few. This is not a criticism of the ISM at all – these topics are still relevant to our community.  My question is, why?  Aren’t we supposed to be evolving, adapting, and (hopefully) improving?  Yet year after year, we still cover the same topics, and people seem to need these same trainings over and over again.

For all the talk in the blogs on the evolution of procurement and procurement 2020, we are still rehashing the same challenges and making very little progress in a profession that has a lot of room for improvement.  The title of my session at ISM this year (co-presented by the esteemed Rebecca Karp), was “Navigating Ahead in an On-Demand World – Procurement’s New Realm”.  During this session, Rebecca and I covered the evolution, or at least perceived evolution, of procurement, from a three bid and buy facilitator to the role of true business partner.  Most people in the room agreed that business partner is where we are at today – both supporting the business objectives of the organizations we serve, and acting as a front line account manager for the suppliers we work with. The problem, as outlined by our presentation, is that the business doesn’t feel the same way about us.

To them, we are still a facilitator at best, and a bottle-neck at worst.  We focus on cost savings instead of value, we run a process that is too rigid, we aren’t customer-service focused, and no one understands our spreadsheets!  These are the basics, and we still aren’t getting them right.  So it’s not that strange that the topics covered at ISM this year are the same that were covered last year, and the year before.  Apparently, we aren’t learning anything!

Outside of the same old coverage, if I had to pick three “trending” topics based on the conversations I had at ISM this year, they would be “millennials”, “soft-skills” and “revenue-focus”.  In a way, all three of these trending topics give me some hope that the future is coming, but all for different reasons.

The millennial topic was covered in great detail, from senior procurement executives trying to understand how we manage this apparently new breed of human – that wants to be valued at work, but also have a work-life balance, to actual millennials either trying to explain why they are so special, or explaining that not all people, even within the same age group, should be considered the same.

The controversy around millennials in itself didn’t give me much hope, but the fact that so many people with a fresh perspective are entering our industry, excited about it, and see it as a good start to a career – represents a huge change from even the procurement function of 10 years ago.  Fresh blood never hurts!

Soft skills and revenue focus for procurement professionals are things we’ve known for a long time, but I have never seen them talked about as much as at the conference this year.  As an industry, we are starting to understand that just running a process isn’t enough, we need to provide good customer service to support the business and put strategy back into strategic sourcing.  We are also finally starting to understand that a dollar of cost savings is worth a heck of a lot more than a dollar of revenue.  That recognition is critical to our future success, and the sooner we can report the bottom line impact on EBITA and profitability to the C-suite, the better.

The reality is, while we are still trying to get the basics right, there is a lot ahead of us as an industry and a profession to be excited about.  It will be interesting to see what the next year brings.  Until then, see you at Disney!
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Amazon to increase storage and shipping fees for retailers

on Monday, May 23, 2016

Amazon to increase storage and shipping fees for retailers

Fulfillment By Amazon is a service offered by Amazon.com Inc that allows merchants that sell through its online marketplace to store and ship products through the retail giant. However, in an article for Internet Retailer, Sandra Guy recently reported that Amazon has decided to increase its fees for the upcoming holiday season to at least double the current rate. And, as a result, sellers are going to be forced to reevaluate their approach to inventory to avoid surge pricing during peak seasons.

According to Guy, the costs of storing and shipping products through Amazon's facilities will be lowered in October, but then will sharply increase during November and December. This strategy is to prevent merchants from taking up too much space in the warehouses with goods that have not yet been sold. In October, storing standard and oversized products will cost retailers 54 cents and 43 cents, respectively, per cubic foot. However, for the following two months, those prices will jump to $2.25 and $1.15 - marking a 212.5 percent and 101.8 percent  increase from last year's monthly fees.

Eliminating slow-moving inventory
Guy also revealed that the purpose of FBA raising its fees is to create more room in its warehouses for the products that consumers are actually purchasing and "reduce in-bound friction" during the busiest months of the year. Furthermore, the drop in October storage and weight-handling prices should offset the increased fees during November and December.

Inventory management is one of the most important yet complicated supply chain functions that retail companies must deal with. And optimizing operations without exceeding budget has become increasingly challenging with the rise of omnichannel purchasing. ECommerceBytes reported that one seller pointed out Amazon only had to create and implement this new policy because some merchants are not well-versed in the best practices for buying and managing inventory.

Tom Cook, an Amazon representative, told the source that its warehouses were becoming overcrowded with products that probably would not ever sell, such as calendars from four years ago. With this change in fees, the company hopes to make it so that, during the fourth quarter, its fulfillment centers only have items that will be sold over the holiday season.

How this affects retailers supply chains
LD Products Inc. CEO Aaron Leon told Guy that this change in pricing will make it so sellers either have to charge their consumers more or bear the extra expenses themselves. It will also put companies under pressure to improve inventory management to reduce the levels of items sitting in the fulfillment centers. He also indicated that it could result in "Amazon [being] a less profitable marketplace for sellers."

ChannelAdvisor Corp. Executive Chairman Scot Wingo added that e-retailers are going to need to be more strategic and selective in choosing the products they send through the service - and that failing to do so lead to them paying as much as triple the amount.

"Sellers need to get in front of the curve on this and have a deep understanding of which products are most appropriate for FBA, how they tie Amazon to their supply chain to optimize the situation, and how they will manage shipping to non-Amazon channels in this new, more expensive FBA world," Wingo explained, according to Guy.

Some businesses seem to believe that Amazon's performance and fulfillment capabilities are worth the fees. LabWorks Inc. Owner Jose Calero, for example, told the source that the profit margins of the company's products are enough to justify the rise in pricing. And FilterBuy.com CEO David Heacock added that the change in fee is actually beneficial because it sets a higher standard  for working with the e-commerce giant. 

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Supply chains and organic food

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Supply chains and organic food

The move toward more organic and sustainable sourcing has been a fast-moving trend in recent years. The global food system is seeing a strategic response to consumer demand for organically grown products. Clif Bar has been a leader in the shift since the company's inception in 1992. According to GreenBiz, Clif Bar has used around 637 million pounds of organic ingredients since 2003. In 16 out of the company's 18 product lines Clif Bar uses 120 total organic elements.

While the business has an impressive track record of organic sourcing, the regulations surrounding organic products make the transition a tricky task at best.

"What you're saying is, 'Let's use much more expensive ingredients,'" explained Clif Bar Director of Environmental Stewardship Elysa Hammond to GreenBiz. "We went organic without raising prices."

While the move toward organic ingredients can be partially credited to a commitment to sustainability by Clif Bar, it is worth noting that there is a growing consumer appetite for organic foods. According to a Gallup poll, 45 percent of Americans actively seek out organic foods for their diets. Research also indicates that the trend toward organic inclusion skews based on location and age.

On the West Coast over half of respondents reported including organic foods in their diets whereas East coast participants had the lowest level of inclusion at 39 percent. People living in big or small cities were much more likely to eat organic than those in towns or rural areas (50 percent vs. 37 percent). Lastly, it appears organic foods are much more popular with younger generations. Over half of respondents aged 18-19 reported the active use of organic foods in their diets vs. a mere one-third of participants 65 and older.

A complex process
Consumer demand clearly plays a role in this emerging trend but the move toward organic sourcing is no simple task. The amount of precision and effort required by companies making the transition from conventional to organic farming is considerable. According to the Gallup Poll, organic agriculture is closely monitored by the U.S. Department of Agriculture. There are lengthy and in-depth regulations in order to become certified as organic by the USDA.

Beyond these strict regulations, making the move to organic requires a complex supply chain process, explained GreenBiz. In order to be officially certified, farmers must ensure their soil is free of pesticides among a variety of other non-organic components. Typically, this recovery process translates to a three-year production gap while the transition takes place.

Understandably, this is not something many companies can afford to wait out. As such, leading organizations in the organic movement (such as Clif Bar) have turned to innovation in order to securely grow their organic food supply chains. For example, Kashi - a Kellogg-owned brand known for its environmentally friendly food - has just released a new initiative aimed at welcoming the transitional period for farmers, according to GreenBiz.

In June, Kashi​ customers will be able to purchase products labeled "Certified Transitional," meaning the food comes from farms in the process of going organic. This will help allow farmers looking to go organic secure income through their transitional period.

"Farmers face barriers to converting (to organic practices) around capital investment, new business plans and loans, and the lack of a premium market for the crops," explained Nicole Nestojko, senior director of supply chain and sustainability for Kashi, reported GreenBiz. "While they're in this three-year period, they're taking a lot of risk and they're not reaping any reward."

Moving forward, companies like Clif Bar and Kashi will continue to strive for more organic ingredients throughout their supply chains. However, as GreenBiz noted, there are still some big questions surrounding organic food certifications. For example, can smaller operations endure the costs it takes to revamp their supply chains to become organic? Is the certification process biased toward larger operations? And can 100 percent organic supply chain ingredients ever truly be attained?

These questions largely remain unanswered. So, for now the moves being made by companies like Kashi and Clif Bar will need to become the industry benchmarks.

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Consolidating and optimizing suppliers for better supply chain performance

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Consolidating and optimizing suppliers for better supply chain performance

If a business is not continuously conducting a surveillance on its suppliers, there's a solid chance the supply chain is not performing as well as it could be. The problem is that, as the number of channels to connect and communicate continues to increases, companies are finding themselves enlisting the help of more vendors to help manage various operations and needs. 

Unfortunately, when a company is using an extensive list of suppliers - all of which are operating in silos using fragmented and outdated systems - it's almost a guarantee that the supply chain is missing out on opportunities to increase efficiency. Consolidating supply chain management to be overseen by a single vendor, or even a few key partners, can help optimize and stream flow production in a more cost-effective way than it otherwise would be.

By reducing the number of suppliers in their respective networks, supply chain managers can benefit from more visibility and control, process improvement, better integration and collaboration, stronger supplier relationship management and improved customer service. Below are some of the most important functions that can be especially challenging for companies - and how vendor consolidation can help make managing them easier.

Sourcing, training and using IT tools and software
One of the strategies many companies have started using is making more investments in technology systems. And while automation and computerized processes can surely help speed up production, eliminate inefficiencies and inaccuracies, and free up workers to focus on more pressing areas of business, the benefits won't be realized unless it is correctly implemented. Some supply chain managers deploy a new system or technology before they have been given - then passed on - the proper training. Eager to move away from outdated and ineffective models, many have made the mistake of launching a new platform or process before the organization was prepared for it. A primary example of this was when Target Corp. prematurely deployed new supply chain management software that, ultimately, led to disruptions that forced it to close its stores in Canada.

Instead of using a different vendor for every need and application along the supply chain, businesses should leverage a partner that specializes in end-to-end solutions that can connect them with the right tools and technologies for every function - from procurement solutions to contract management.

Supplier monitoring, auditing and reporting
It is critical that businesses make sure that all suppliers are compliant with regulation standards and performing up to the expected level of quality. One mistake in inventory management, for example, can have ripple effects throughout the entire supply chain, causing costly disruptions and even threatening customer satisfaction and loyalty. Plus, it is also necessary to ensure each vendor is adhering to regulatory requirements to maximize risk mitigation efforts. The process of doing this is, of course, much easier when there are fewer suppliers in the network. 

Inventory management 
Material Handling and Logistics recently pointed out why so many supply chain managers are recruiting the help of a third-party logistics provider as a way to improve the efficiency of operations and reduce costs. Many organizations are facing pressure to enhance just-in-time inventory, implement technology systems that automate processes and increase the visibility, traceability, agility and transparency of their supply chains.

To successfully achieve any of these goals, businesses require access to real-time data and analytics, better forecasting capabilities and digital systems that provide the exact solutions to meet their specific needs. As MH&L explained, a 3PL is an essential vendor that supply chain managers can use to significantly improve all functions of inventory, delivery and distribution operations.

Choosing the right supply chain solutions partner
Regardless of the industry, a business needs to remember that choosing vendors should be more about quality than quantity. When looking for a consulting and solutions provider for supply chain management and optimization, organizations should find one that specializes in all the above areas. This way, the company streamlines operations through one party that possesses the expertise, resources and time needed to find and onboard the best possible supplier and/or solution for the job.

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Gartner Reveals Annual Supply Chain Top 25

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Gartner Reveals Annual Supply Chain Top 25

Once again supply chain leaders and their operations have been highlighted in the annual Gartner Inc. Supply Chain Top 25. The results were announced at the Gartner Supply Chain Executive Conference this week in Phoenix, AZ.

"2016 marks the 12th year of our annual Supply Chain Top 25 ranking," stated Research Vice President at Gartner Stan Aronow, in a company press release. "In this year's edition, there are several longtime leaders with new lessons to share and a number of more recent entrants from the high-tech, industrial, chemical, auto and life sciences sectors."

For the first time ever Anglo-Dutch multinational consumer goods company Unilever topped the list. Co-headquartered in Rotterdam, Netherlands and London, the organization has been in the spotlight recently for its impressive track record of sustainability.

According to Sustainable Brands, Unilever's branch of Sustainable Living Brands has delivered some impressive results for the multinational organization. Last year these businesses were responsible for almost half of the company's growth, and they also saw a 30 percent faster growth rate than the other areas of the business. Notably, Unilever's top five largest brands - Knorr, Dove, Dirt is Good, Lipton and Hellmann's - were included in the sustainable living initiative.

"Business can play a leadership role in disrupting markets in support of sustainable living - and they will be rewarded by consumers who are also seeking responsibility and meaning as well as high quality products at the right price," explained Unilever CEO Paul Polman, reported Sustainable Brands. "There is no trade-off between business and sustainability; it is creating real value for Unilever."

Sustainability's ranking role
This year, Gartner included sustainability as a contributing layer to the list rankings. The organization noted that this push toward more ethical supply chains is a critical component of leadership, and as such factored corporate social responsibility into the methodology. This new component and Unilever's leading record in sustainability could help explain how the company finally snagged the top spot.

Beyond sustainability, the ranking is based on an overall composite score. Gartner takes a quantitative measurement of business performance and a qualitative overview of peer and Gartner opinions. The company creates a master list of companies via the Fortune Global 500 and the Forbes Global 2000. To keep the list manageable, Gartner created a revenue threshold of $12 billion.

Unilever was followed on the list by McDonald's, Amazon, Intel and H&M. In addition to the usual players, this year's ranking saw the arrival of five new companies: Schneider Electric, BASF, BMW, HP and GlaxoSmithKline.

Leadership recognition and supply chain trends
Both Procter & Gamble and Apple qualified for the Masters Category this year. Gartner introduced this new grouping in 2015 to highlight consistent supply chain leadership over the last decade. The category is not a part of the top 25 list but Gartner continues to evaluate these organizations as a part of its annual research.

According to Chain Store Age, the report also included a list of leading supply chain trends in 2016. This year, Gartner saw the adoption of advanced analytics, customer-driven partner integration and an increased emphasis on corporate social responsibility as the leading inclinations.

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Source One Round Up: May 20, 2016

on Friday, May 20, 2016

Source One Round Up: May 20, 2016

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





NEW BLOGS:

4 Contract Management Best Practices for Improving Supply Chain Performance
According to Aberdeen Research Group, best-in-class organizations achieve up to 80%  more savings than others through a clearly defined contract compliance process. However, only 48% of organizations possess a centralized contract management process. This week, Source One Analyst Jennifer Engel provides 4 ways for managing contracts including establishing a template and centralized location for storing documents, as well as monitoring compliance and being proactive. 

ISM2016 Recap: Day One
The most anticipated supply chain event of the year happened this past week! ISM2016 kicked off celebrating the future of supply management at Thomasnet's and The Institute for Supply Management's 30 Under 30 Reception. Thomasnet caught up with Source One's 30 Under 30, Michael Croasdale. When asked about his advice for young professionals interested in a career in procurement, Croasdale shared, “You have to work hard but my advice to them is, if you put your nose to the grindstone, you’re going to get where you want to get,”.

Croasdale, Source One's MRO Category Expert, was recognized for his innovative implementation of a preferred vendor program for a construction client. Croasdale designed an ordering guide leveraging Google Earth that allowed purchasers to find suppliers based on their proximity to the job site. In addition to producing over $1M with the new program, the client also saved time and transportation costs through the new ordering guide. 






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