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From supply chain leadership to corporate management

The rise of strategic sourcing has brought the supply chain closer to the rest of the company than ever before. This means that executives within the procurement and sourcing department are interacting with other departments more and expanding the operational details of their particular roles. Considering the relative newness of this strategic alignment, it's not outlandish to say that companies are still discovering new and valuable ways to work with their supply chain leaders.

"It will be essential for supply chain professionals to apply their expertise outside of procurement."

It's up to these management professionals to rise to the occasion. In the years to come, it will be essential for supply chain professionals to gain experience with other departments and apply their sourcing-specific expertise in functions outside of procurement.

Top leadership, via the supply chain
In an article contributed to Supply Chain Dive, industry trade group APICS, formerly the American Production and Inventory Control Society, explained that today's expanded roles for logistics and supply officers can point the way to overall corporate leadership. Due to the fact that the supply chain is relevant to every other unit of a given company, talented leaders from within this department can turn into overall organizational power players.

The development of supply chain professionals into corporate leaders begins with giving the employees a thorough grounding in supply processes and the way the organization moves its products. From dealing with suppliers to interacting directly with customers and serving every internal department imaginable, it's clear that these workers can pick up traits and talents that will serve them well further up the chain of command.

Creating advancement and education opportunities within the supply chain may provide companies with both long- and short-term advantages. The article stated that with the right level of support and mentorship, great overall corporate leaders can emerge from supply chain roles over time. Before this process is complete, the individuals will be able to apply their wide-ranging and strategic knowledge to improving functions such as procurement.

Improvement from within procurement
While the idea of crossing over to a larger role within the corporate structure is exciting, a modern supply officer will be able to enforce a great deal of change within the supply chain itself. APICS CEO Abe Eshkenazi stated to Industry Week that today's supply chain professionals are like members of the finance department, in that they should possess wide-ranging knowledge of every other functional silo, as each department will eventually need to work with sourcing.

This deeply involved model of participation stands in contrast to the traditional image of the procurement professional as someone who deals with contracts and little else. Eshkenazi noted that modern supply chain professionals are taking control of software and forging connections with the rest of the organization. During the first few years of enterprise resource planning software use, it was perhaps tempting to assume that the systems would be a largely automatic way to get companies connected. It has become clear, however, that a such a system requires personal guidance, which starts in the supply chain.

Whether they stay within their own department or go on to larger corporate roles, today's sourcing and procurement officers delive valuable results to their companies.

Looking to source new telecom products or services? How about renewing existing services? There's no doubt your telecom contract will be filled with an array of intricate terms and conditions. All of which, aren't necessarily in the large print. Many items are buried within complex language of the often lengthy document. 

Don't panic! Here are a few items to consider when assessing your telecom contracts:

Telecom Contracts 101

Telecom contracts are just one area IT and Procurement teams should align for optimal vendor relationships. Too often, Procurement is simply relocated to processing the PO rather than providing guidance during the sourcing process. This approach severely limits the impact Procurement teams can have in terms of providing market insight and budget optimization. 

Learn more about how Procurement and IT and Telecom teams can work collaboratively to support enterprise-wide objectives in Source One's latest whitepaper, titled: Equipping Procurement to Tackle IT Spend: Building Successful Relationships with Stakeholders

Need support ensuring the terms and conditions within your contract are best-in-class? Source One's Contract and Negotiation experts can help! 

Unless you live under a rock you have heard of 5G in some context. However, the question is do you REALLY know what it is? Well if not, you’re in luck! Even though news was recently just released that 5G is not coming as soon as we had hoped it would it is definitely still coming so it’s never too early to start planning and understanding how 5G will fit into IT plans across organizations of all sizes and industries.

Simply put, 5G is a business opportunity that is being designed to be implemented to provide all of the communication capabilities and performance we expect from a wireline network on our mobile devices. Therefore, end-users will now have additional throughput, capacity, and other elements to address the continuing growth in geographic availability, user base, range of devices and application requirements as well as enable carriers, operators, and service providers to benefit from new opportunities in overall strategy, service offerings, and broadened marketplace presence. This means that it will completely change the evolution of cell phones from a wireline extension to a wireline replacement and to a mobile only requirement.

So, now what you’ve been waiting for. Some of the many benefits we will be able to take advantage of once 5G is released.

1.) Enhanced throughput 
With so many devices we use daily on Wi-Fi the issue of throughput has become obvious. With 5G there will be major advances in cellular data with new upper bound throughput numbers. It has been mentioned that in 5G the floor for Wi-Fi will be 1 Gbps with a ceiling as high as 10 Gbps.

2.) Reduced latency 
Just as important or to some even more important than throughput is a reduction in the round-trip time for your data to get to where you need it to go. Reducing latency is important for voice and video, which for 5G will all be over IP.

3.) Advances in management and Operational Support Systems (OSS
This may not seem like a direct benefit for businesses and consumers but if the suppliers now reduce overhead and operating expense, they are able to enhance their system management and OSS which produces improvements in reliability, availability, serviceability, resilience, consistency, and operational efficiency, which all directly benefits consumers.

4.) Increased mobility 
An issue with our current mobile devices is the inability to use them on all different modes of transportation. That will now be solved with very high speed user mobility, to as much as hundreds of kilometers per hour.

5.) Improved security 
Security seems to be an increasing issue these days with many top name companies reporting a security breach of consumers’ private and crucial information. Therefore with 5G there will be enhancements to encryption, authentication, and privacy.

6.) Industry growth 
5G will allow all carriers, operators, and equipment vendors of both infrastructure and subscriber devices to deploy all new types of technologies and devices for consumers and businesses with countless end-user visible benefits.

This is only a short list of the various advantages we will see in the world of technology with 5G. It definitely seems like an exciting time within the always evolving IT and telecommunications world. From the talks of carriers and suppliers it looks like 5G will not come into our lives until late 2019 or early 2020 but whenever it does come we will be ready.
Ethics are now sourcing's business

Sourcing and procurement departments have been going through numerous changes in recent years, with the shift to a strategic model being perhaps the most notable. The general theme of the evolution within the role is that while companies once called upon these individuals to manage contracts and negotiate prices down, today's positions are far more integral to overall operations.
"It's not worth pursuing the lowest possible price for goods if it comes at the expense of unethical practices."

Letting supply chain leaders take a more active hand in finding and working with suppliers from an early stage means these departmental heads can put their data to good use, informing the business as a whole and guiding decisions in a new direction. Sometimes, that effort involves adding new variables to how partners are chosen. For instance, it's not worth pursuing the lowest possible price for goods if it comes at the expense of unethical practices.

Awareness and ethics
According to TechTarget, ethical sourcing decisions are becoming relevant from a number of perspectives, including reputation management. Consumers have become committed to dealing with businesses that set and live up to moral standards. This reality means that a failure to adequately vet a new supplier could be a disastrous decision down the line, as inhumane practices are sometimes present throughout the supply chain. Companies that are found to have contracts with companies that have criminal labor standards or cause damage to nature may suffer image damage.

Today's procurement departments have to complete the tough task of obtaining their goods from sources that live up to high moral standards. With supply chains stretching around the globe and professional conditions different from one region to the next, this is a role for deep research by the sourcing department. These departments can lay out inviolable standards of conduct to partner organizations, and in cases where suppliers are out-of-line with those rules, large organizations can work on new training programs to directly influence conditions.

Companies that have access to large databases can use analytics to help them navigate the world of ethical sourcing. TechTarget explained that this is a risk management issue, falling into the same category as preparing for a natural disaster or a man-made supply chain disruption. When suppliers violate codes of conduct, the companies they deal with will feel negative effects.

A new role
Indeed, getting a company's moral compass pointing in the right direction is such an important operation, professionals dedicated specifically to this task may soon be commonplace. TechRepublic named ethical sourcing officers among 21 job titles that could be widely used within the next few years. These employees would be coordinators of teams who ensure the business's moral standards are universally understood - and being met.

From customers to workers to leadership, there will be many sources of input that will inform a company's moral code. TechRepublic explained that when organizations have ethical sourcing officers, they gain professionals who are dedicated to turning values into actionable priorities, and then inspecting the supply chain to ensure such ideals are being upheld. The company's contracts should also be open to scrutiny to make sure the business is living up to the standards it demands of suppliers.

Retail procurement: The fight against out-of-stock

Creating a strong chain connecting suppliers to customers is a major objective with many smaller goals within it. For instance, avoiding out-of-stock situations wherever and whenever possible may be one of the keys to selling success, as it represents a way to keep potential business from slipping away. In an era when people can make large-scale purchases from the phones in their pockets, losing customer attention due to an out-of-stock item is a more damaging prospect than ever before.
Today's innovations, from omnichannel operations to the increasing speed of delivery and logistics, have the simultaneous effect of making quick inventory adjustments possible and complicating the overall retail picture. Some manufacturers will find ways to master these processes, while others may struggle to help their retail partners put the right items in front of shoppers.

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

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

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

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

Solid links needed
The retail supply chain from manufacturer to shopper can break down if even one step of the process has gone awry. Keeping products on store shelves is one of these potential failure points. Even supply agreements that look great on paper can disappoint all parties involved if problems appear in data, retailer policies or enforcement of those agreements.
Strategic sourcing experts, Jennifer Ulrich and Nicholas Harasymczuk, discuss the main elements that comprise a successful facilities management sourcing strategy in their 4-blog mini-series (Part 1, Part 2, Part 3, Part 4). The discussion centers around the most common roadblocks while sourcing facilities management and ways to overcome these challenges in order to reduce costs and increase efficiencies. Following the recommendations from Source Ones’ facilities management subject-matter experts can lead to the following results: 

ICYMIM: November 20, 2017

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

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

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

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

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

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

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

Procurement managers can get closer to their employees by working out customized and preferred roles and paths for progression. When workers' contributions are recognized, and when they are serving in roles that suit their talents and interests, offers from other companies will be less appealing.

As with any department, procurement is the sum of its employees; losing even a single top contributor could have a lingering effect on a company while it tries to replace that person's production.

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

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

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

November 17, 2017

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

New Whitepaper: 

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

Recent Blogs:

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

Recent Podcasts:

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

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

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

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

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

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

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

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

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

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

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

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

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