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Consumer preferences: The engine of supply chain evolution

There is no better way to figure out where supply chain evolution is heading than to determine how customer preferences have changed over the past few years. No matter how determined they are to be strategic leaders, sourcing professionals' jobs are highly responsive. New practices and operations within supply chains are at their best when they bring processes in line with what individuals are looking for.

In recent years, trends such as e-commerce have changed the traditional retail paradigm. Breakthroughs in ordering and shipping have incentivized new patterns of consumption. Dealing with these has inspired shifts in supply chain strategy, at least at organizations in step with the times. Being aware of these changes and more will prove critical in the years ahead.

Rerouting the supply chain
Manufacturers are developing new channels for delivery, according to Supply Chain Quarterly, taking advantage of a new interest in direct-to-consumer sales to change their operations. Companies that once dealt with the public only through third-party retailers have decided to scale up their own ability to process orders and ship them. Of course, considering that this may represent a whole new line of business for several of these organizations, the pressure is on to build successful practices in a hurry.

Supply Chain Quarterly noted that when surveyed, consumer packaged goods manufacturers overwhelmingly believed selling directly to consumers will be a relevant strategy in the years ahead, and something consumers will want. In total, 87 percent stated that this method has merit and 48 percent are already working on building direct-to-consumer supply chains.

The new elements that will be necessary to make these chains work are many and varied, and include new distribution and fulfillment centers. Furthermore, they will have to ponder whether their delivery options are up to standards. Since an increasing amount of commerce is being carried out without brick-and-mortar stores in recent years, expectations are high. Venturing into direct sales then offering a disappointing service could hurt manufacturers rather than help.

Consumer demand is at the root of supply chain evolution.Consumer demand is at the root of supply chain evolution.

Staying ready to evolve
Sourcing Journal Online contributor Bill D'Arienzo pointed out the factors that have made clothing manufacturers rethink their approaches to logistics over the past few years, with direct-to-consumer sales ranking high among them. Fashion leaders have placed direct selling alongside a number of other disruptive trends, including the changing balance of power between different categories of retail stores, as well as the rise of merchants such as Amazon, which haven't traditionally been considered players in the clothing sector.

While each change is a little different, the kind of response demanded follows a general pattern. As D'arienzo pointed out, manufacturers are tuning up their supply chains to cope with consumers' new preferences. They are hoping to get their items in people's hands more quickly, with smaller lots enabling greater flexibility and hopefully enabling them to compete in the midst of constant disruption.

Detecting changes in consumer sentiment as early as possible is important for today's supply chain organizations, no matter where they fall between raw materials and the final sale. Audience desires will have ripple effects felt at all levels and by companies of all descriptions.

Did you know... Source One turns 25 this year! With a quarter of a century as a leading procurement services provider, we have much to celebrate! What better way to honor the occasion than with our friends and partners in a Chicago Procurement Professionals Happy Hour?

Thinking about attending but having a hard time tearing yourself away from work to attend? We've got a number of reasons you should be there: 

25. To Brush Up on Your History – Alright, while no one’s really hitting that pub crawl to admire the wonderful decades of alcohol history, it’s worth noting that happy hours began during prohibition, where sly men and women would sneak into speak easies for a quick refresher prior to dinnertime.


24. To Meet New People – What better excuse to push yourself outside your comfort zone, strengthen your ties to the Chicagoland community, and broaden your circle of friends and flames than through Source One’s Procurement Professional Happy Hour? Who knows, you might even meet the next love of your life!

23. To Gush Over Upcoming Sports Seasons – Ready for the Cub’s big debut in the 2017 World Series this fall? Or how ‘bout the Black Hawks, favored Stanley Cup champs for the past few years? What better way to geek out over the upcoming sports seasons than at the Source One Happy Hour!

22. To Recharge After a Long Week – As Aziz Ansari once famously chanted on Parks & Rec, “TREAT YO SELF!” After all, you work hard, you play hard. Everyone deserves a break, including you. You owe it to yourself to show up at Source One’s Happy Hour.

21. To Encourage Work-Life Balance – Besides simply recharging after grueling hours of work, happy hours like Source One’s event can provide a much needed balance between work life and social life that is so fundamental to maintaining one’s health and personal fulfillment between productivity and relaxation. 

For further information on Source One's Chicago Procurement Professional Happy Hour, please contact Kaitlyn Krigbaum at kkrigbaum@sourceoneinc.com

Source One Round Up

August 18, 2017

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

RECENT BLOGS:

Strengthening Your Strategic Sourcing Process by Incorporating Six Sigma Methodologies
Kevin Fraser, NLPA, 8/16/2017

DMAIC is a data-driven strategy that is utilized to improve processes, and is an integral part of Six Sigma. These methodologies are very similar to strategic sourcing, in that they both aim to achieve more cost-effective and overall efficient results. If you incorporate DMAIC into your strategic sourcing process, you have the opportunity to leverage those elements to optimize both the analysis and strategy for your process. In this blog, Source One Project Analyst Kevin Fraser breaks down the five phases of the DMAIC acronym and explains their role in sourcing.

UPCOMING EVENTS: 

Procurement and Supply Chain Professionals Happy Hour: Chicago, Illinois
In 2015, Source One opened the doors of it's Chicago office and hosted a happy hour to celebrate this expansion and meet professionals from the industry local to our new neighborhood. Business partners, clients, friends and other procurement and supply chain professionals are invited to come out on to Chicago River North on September 14 to enjoy great drinks, food, and conversation with other thought leaders in the industry. This event is also a great opportunity to recognize Source One's 25th anniversary by celebrating with some of the people who have supported us throughout the years.
Procurement departments' strategic involvement has benefits

How much decision-making responsibility resides with each section of a company's supply chain leadership? Where does tactical thinking end and strategy begin? These questions may determine whether sourcing operations live up to corporate expectations, fall short, or excel beyond businesses' goals. In the end, making sure sourcing input is made early in the process, and given appropriate overall weight for decision-making purposes, is the crux of strategic sourcing. It's up to organizations to figure out how to make this connection.
Getting personnel on the same page
Supply and Demand Chain Executive contributor Chris Crane recently explained that ingrained mindsets currently hold that procurement is a tactical rather than strategic operation, with personnel not getting involved until the only matters left to settle are the specifics of deals with suppliers. Crane believes that shaking off this current operational structure and including procurement teams in the strategic matters underlying the supply chain will have positive effects, to the tune of 9 percent sourcing budget savings.
Procurement officials hoping to get involved in some of the higher-level decisions behind deal-making should be ready to shake up the orthodoxy of their companies' operations. Crane suggested using logic to institute such a change, with sourcing pros pointing out that they and the IT solutions they use can inform the rest of the organization and save money.
When departments have strategic souring tools that set responsibilities by the individual, they can help get the new partnership between traditional leaders and procurement teams working. Crane noted that communication in general is an essential part of improving the supply chain. When every part of the organization knows what the rest is doing, there is less chance that a new approach to sourcing will lead to short- or long-term confusion or inefficiency. This close, new relationship between departments can deliver real financial advantages over time.

Real-time data is another sourcing boon.
Real-time data is another sourcing boon.
Working with better data
Having people working in tandem toward better deals and improved procurement is one way to make the whole process, but it's worth considering whether those individuals have the tools they need to make ideal decisions. Spend Matters explained that the singular platforms used by sourcing operations - the ones Crane recommended to help the team communicate on strategic matters - should also become repositories of real-time data.
When companies can all have access to the same streams of content, especially about matters such as previous purchase records, inventory information and market reports, they are ready to work intelligently with their suppliers. A disconnect about these facts - or a simple lack of insights - could prevent teams from working together effectively and limit their ability to maximize sourcing effectiveness.
The two elements described above are closely tied together: Having the right content to inform decisions is one way to make those choices better, and opening them up to expert employees is another. The goal when it comes to procurement is simple: Get the company the best possible deal. The methods organizations are using to reach that objective are becoming more varied and forward-thinking today, but that strong central objective remains at the center of operations.
As Jennifer mentioned in her previous blog, getting a grasp on the status of your organization prior to engaging in any sourcing event is critical to ensure that you have a sound understanding of where you stand in terms of priorities, organization, and accountability. This is especially important for larger companies with footprints spanning multiple locations and (potentially) multiple countries. Ultimately you need a plan, and without one you are setting you and your sourcing team up for headaches, inefficient practices, and money left on the table!
Facilities Management Sourcing Challenges Blog Mini Series Part 4
Once you can accurately assess the current state of your facilities, and have conducted a successful sourcing initiative, you then must determine what course of action you want to implement within your locations. There are several avenues you can pursue – ranging from purchasing facilities management software applications to help track and monitor your inventory levels, resource allocation, and labor to deploying a third party procurement team to help transform your department and prepare it for long term success.

There are dozens of management software and sourcing resources available to companies today. Whichever direction you choose to go, here are four categories you should to consider before making an investment in a facilities management program:

Essential
Every facility has a software application of some kind used to manage, monitor, and run. Whether it is a server that holds contracts, service agreements, employee records, inventory management, or time cards, you need it to run your business day to day. These essential programs are the backbone of your organization, and without them you’d cease operations.

Transactional
Transactional software applications are just how they sound – basic and straightforward. These applications will help you manage inventory levels, provide a repository for any and all contracts/service agreements, and allow your procurement team to centralized information in a single location at a tactical level.

Functional
Functional software provides companies with a cost effective resource to manage their business. In additional to tactical organizational value, this software tracks detailed asset and equipment information, manages maintenance costs, streamlines work orders and preventative maintenance, helps maximize the useful life of assets, reduces space and maintenance costs and much more. This allows managers to manage, and employees to focus on their day to day responsibilities without having to worry about having organizational data readily available.

Strategic
Strategic software is designed to help your organization handle multiple complexities to assist your company and position it for continued growth. While these types of software can provide all the services listed in the transactional and functional categories, it also has additional capabilities that can grow with your company if you plan to expand and develop your current business. Extended offerings may not be important at first, but it is good to know the service platform you are choosing can grow alongside your business.

In a world where everything continues to become automated, there are still other options available to help get your facilities organized and on the right track that aren’t as platform oriented. Third party consulting firms (such as Source One Management Services, LLC), can work with your current teams to implement sound sourcing processes internally without investing in automation. These firms can also assess your teams and perform unbiased analysis of their strengths, weaknesses, and areas they can improve. Firms offer these services for a predetermined fee, hourly rate, or even a contingency plan based on the amount of spend your facilities generate.

Just because you have successfully sourced a category doesn’t mean the process stops there. Determining how you will implement these wholesale organizational and cultural changes in your company is just as important. Whether you choose to implement via a facilities management program, third party consulting firm, or a combination of both, it is the actions of those parties moving forward that will determine the overall success of your strategic sourcing process. Thank you for following along throughout this mini-series. Be sure to check back on TheStrategicSourcer for more featured articles on facility management, as well as a variety of other categories and subject matters!


The IoT has become a supply chain advantage
Data is power in today's business world. The value of information is being constantly reaffirmed through its power to grant companies better insights and improve their decision-making. The supply chain is no exception to this rule: The more data companies can use to direct their sourcing operations, the more likely they are to see the underlying patterns guiding their efforts.

One of the most intriguing ways to collect data today comes from the Internet of Things. This blanket term, applied to smart devices that communicate with one another, has applications in almost every area of business. With more varied sources of content, especially ones that were not easily measurable even a few years ago, supply chain leaders can drastically improve their own performance.

Effects felt in food sourcing
Internet of Business recently focused on the effects increased IoT access will have on sourcing in the food and grocery industries, based on research by IGD. The main takeaway is that the IoT can collect real-time data from a company's consumers and let that information filter down into all levels of the infrastructure. When an organization is aware of how its audience is interacting with its products, it can change up its sourcing on the fly.

The potential that IGD found is based on products themselves becoming sources of data. Items equipped with improved tracking technology can become beacons moving between different levels of the supply chain. When dealing with the grocery industry in particular, smart sensors on household objects such as refrigerators can deliver data that informs producers and retailers about how quickly their items are being used up.

Projections and predictions about distribution and consumption become downright outdated when compared to this living, breathing source of demand data. Sourcing operations that become quick and savvy enough to respond to this new and highly accurate source of truth can reap the rewards - reduced waste and increased efficiency at every link of the chain.


The IoT has supply chain implications, mainly through improved analytics.
The IoT has significant supply chain implications, mainly through improved analytics.
The next few years
What's coming down the pipeline for sensors in the supply chain? According to Supply Chain Dive, the creation of vast new data reserves has passed from "buzzword" status into real activity. The source explained that Mobile Expert's recent research on the IoT points to the smart device market tripling from today to 2022. By the end of the studied period, $70 million of IoT tech could be purchased each year. The general pattern underlying this expansion appears to be progress from passive sensors to even more intelligent technology.

The source noted that the true IoT may fare better than the tracking technology that has come before. While radio-frequency identification tags received considerable hype as the items that would open up supply chain visibility on a grand scale, they have thus far been limited in their transformative effectiveness. Smart devices will have to fare better to reach their potential. Retail Dive pointed out that trends are aligning: Companies want to sell their products across a host of channels, and to harness big data analytics. The data needed for these operations must come from somewhere, and the IoT is a great candidate.
In a previous post, SupplyChain – When Will It Stop?, I discussed supply chain and the tremendous growth the field of study is experiencing. I also reviewed some of the skills it takes for young candidates to remain successful throughout their careers. The opposite side to that coin is taking a deep dive into what corporations and universities are doing to stay relevant in supply chain. I recently took part in a networking event with colleagues from my alma mater, Marquette University, and had an interesting conversation with a mentor of mine and the Director for the Center of Supply Chain Management. Dr. Fisher mentioned that he attended the Gartner Supply Chain Executive Conference in May and was disappointed and shocked to see so few educators in attendance. Topics ranged from identifying innovations to support the supply chain of the future, to exploring the role of smart machines and how to optimize processes, to learning how to leverage data from the Internet of Things (IoT). In short, the conference was aiming to prepare participants for Industry 4.0 and cloud computing.


In typical Dr. Fisher fashion, our conversation moved away from a high-level discussion about supply chain as a whole towards a much more narrowed topic of Industry 4.0. It’s an exciting time to be in the industry but there’s an immense pressure to compete with the best of the best. In his article titled, What a great time to be in Supply Chain Management – if you like pressure, published in May, Dr. Fisher stated, “All of these increased scale, decreased the cost per unit, and improved access to products by the masses through lower prices” in reference to Industrial Revolutions 1.0, 2.0 and 3.0. “Now emerges Revolution 4.0 in the first half of the 21st century, also named Smart Automation, Advanced Manufacturing and the Internet of Things.” He then brilliantly linked the responsiveness of Industry 4.0 to the demand-sensing visibility of Supply Chain 4.0. Business clockspeeds that were once measured in weeks and months are being measured in days, hours, minutes, and seconds under Supply Chain 4.0 as everyone is pointing to the likes of Amazon.

The article poses a challenge for supply chain professionals to stay sharp, hone their skills, and gain a wide variety of experience. It then challenges businesses to seek out these motivated individuals aggressively because the demand is projected to far outweigh the supply as this ‘Industrial Revolution’ takes over. It’s difficult not to notice the reaction of enterprises to Supply Chain and Industry 4.0. Same-day delivery and low inventory are contradictory in nature but somehow being combined like never before. What about universities and masters programs? There were over 2,000 professionals who attended the Gartner conference in Phoenix; only 2 of which were educators. Is this a product of not having enough money in the budget, a lack of awareness, or a disinterest in competing with the best and staying relevant? Potentially it’s a combination or includes other components but there’s undoubtedly a gap. Universities should be focusing on Digital Business, Industry 4.0, Supply Chain 4.0, IoTs, cloud computing, and AI (Artificial Intelligence) because that’s where corporations are heading to keep up with instantaneous consumer demand.

Industry 4.0 is here and creating efficiencies in business is essential. “Supply chain people will have to have functional expertise, and credibility, across all elements of the supply chain: sourcing, manufacturing, service operations, inventory management, distribution and logistics, and customer service to execute against click-to-buy,” proclaims Dr. Fisher. It’s without question a great time to be in supply chain management, but that is associated closely with pressure linked to adapting customer demands and businesses everywhere reacting to them. The best companies have been adjusting for years. It’s time for premier academic institutions to follow suit.
Yesterday members of the Nation's Largest Indirect Group Purchasing Organization, Corporate United, gathered in Dallas, Texas for the final Road to SYNERGY event this summer. As Gold Sponsors of the events, members of Source One's consulting team attended this final one-day conference of the series, to meet with CU members from this area to discuss the latest industry trends.

The event offered several informative sessions in  both the morning and afternoon, all presented by industry leaders who provided best practices they've achieved from their own experiences. In between the sessions, there were multiple opportunities for networking that allowed attendees to share insights on best practices in procurement, strategic sourcing, and supply chain. Throughout the day, attendees met with the leading service providers for all their spend categories, including the IT and Telecom consultants from Source One.

Our team was happy to speak with so many members to discuss how we can help them optimize their spend as the designated telecommunications management partner for Corporate United. In the evening, the event concluded with a private reception at the 6th floor museum at Dealey Plaza. With live music, food, and drinks, attendees enjoyed this additional opportunity to network and reflect on the days events during this exclusive evening at a historic landmark.

The Road to SYNERGY series this summer was a success, and we want to thank everyone for coming out to each regional event to meet with us and hope everyone was able to gain valuable takeaways from every meeting. Stay tuned for future events hosted by Source One and Corporate United!
Any supply chain management or procurement professional can tell you that certain categories can be more difficult to reduce spend in than others. When it comes to IT, the stakeholders in this department have a history of avoiding procurement support out of fear that quality will be sacrificed in the name of savings. It is crucial to take a strategic approach to reducing spend in this category, that stakeholders can agree with. Today's Procurement groups understand that limiting manufacturers and increasing compatibility for IT throughout an organization are easy ways to gain a better control of spend.

Check out our latest infographic for more ways to discover savings and reduce spend in the IT category!




Source One's IT strategic sourcing services support clients in discovering ways to reduce spend for this technical category that requires a very unique approach. These experienced consultants are visiting Dallas, Texas today, as they partner with Corporate United for the final Road to SYNERGY event!

ICYMIM
ICYMIM: August 14, 2017

Source One's series for keeping up with the most recent highlights in procurement, sourcing, and supply chain news week to week. To stay updated on the latest supply management articles, check in with us every Monday.



Philip Ideson, Art of Procurement, 8/08/2017

Recently, procurement groups everywhere have emphasized value over cost, in both indirect and direct spend. While the cost of one product or service may be more than another, it might offer more value in the long run to invest in now. It's important to take value into consideration when identifying new talent opportunities, and how the variety of options can each offer different results for your organization. The workforce is ever-changing, and with more non-traditional workers than ever before, companies are required to be open minded when sourcing new talent.

Designing A New Breed Of Procurement Professional - Part 1 
Gary Como, Corporate United, 8/08/2017

Candidates who possess the skills and knowledge ideal for a traditional procurement role aren't meeting the needs of today's procurement organizations, and this skills gap is challenging many companies when trying to fill sourcing and purchasing positions. Even with years of experience, traditional candidates are skilled at writing contracts, developing scorecards and other documents, but aren't familiar with digital transformation or practices that focus on achieving value beyond cost. 

Procurement As An Insurance Policy?
Charles Dominick, SPSM, SPSM2, SPSM3, NLPA Blog, 8/09/2017

While procurement was once viewed as a solution to cutting costs when budgets were low, today's procurement organizations should be recognized as an investment for the future, much like insurance. The more you pay now, when there is no specific need to find savings, the more you be protected in the long run, to avoid a need to reduce spend. Reducing the chance of interruptions in the future by investing in procurement now is very similar to insurance, and should be treated as much of a priority. 
Source One Round Up

August 11, 2017

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


UPCOMING EVENTS: 

Source One's spend management team will travel to Dallas, Texas on Tuesday for the final event in the Road to SYNERGY series! These consultants attended the first one-day conference back in June in Baltimore, Maryland, as Source One partnered with Corporate United to kick off the series. The Road to SYNERGY has invited members from around the country to engage in a variety of networking sessions with the service providers who support them as industry leaders. As a Premier Sponsor of these events, Source One is anticipating this final opportunity to talk about the latest news in the industry and discuss current trends with CU members. 
Since 2015, Source One has hosted a happy hour exclusively for Procurement and Supply Chain Professionals in the greater Chicago area. On September 14, business partners, clients, friends and other professionals in the industry are invited to Chicago River North for this year's happy hour. The evening will include great drinks and food, and even better conversations. We also want to take this opportunity to recognize Source One's 25th anniversary by celebrating with some of the people who have supported us throughout the years. For more information and to register for the event in advance, please visit the event page
It seems there is a new announcement each week – whether it is a carrier acquiring one of their competitors or acquiring a company to add a service to expand their portfolio, change may be the only constant in the world of telcos.

In Part I of this series, we looked at the account-level and billing impacts that are likely to come from market consolidation within the telecom industry. In Part II, we’ll look at the technical or service impacts and how you can be informed and ready to take advantage of the changing market.

Service Availability/Compatibility: As acquiring/acquired carriers move to combine their operations, services, and networks, be careful not to assume the services from the acquired company will be compatible with the existing network and technology of the acquiring company, and vice versa. Also consider and understand from the carrier how they plan on managing the assets going forward – in some cases, acquired companies end up maintaining some separation and continue to act almost independently. While this may lessen the impact to your services, it may also affect your carrier’s ability to be competitive for the services that you are buying, i.e. if services are left as-is, they may be delivered with higher overhead and therefore higher cost to you the customer. Talk with your account rep around the supplier vision for the future, timing for consolidation, and what you can expect from an overall network/service consolidation standpoint.

Redundancy: As carriers bring their networks together, consider the redundancy/back up strategy you have in place. You may not be affected if your previous strategy established redundant circuits with one carrier, but do consider that the new/unified supplier may be looking to retire legacy services or consolidate their services, which may affect the redundancy you have in place. Plan to discuss with your carrier the redundancy strategy in place today, their plans for service retirement, any impacts that may be forthcoming to your back-up strategy, as well as any opportunities to improve your redundancy strategy based on the expanded footprint.

Re-provisioning: In order to take advantage of “one” carrier, you may have to re-provision your service to get services on the same network, have access to lower pricing, and consolidate to the same billing platform. Keep in mind that re-provisioning, even when moving from one platform to another within the same carrier (cough, Verizon’s VRD, cough) can create duplicate billing, inaccuracies, and bill management issues – this will likely only be amplified when dealing with separate carriers. Be prepared to discuss re-provisioning requirements, timing, costs (yes, they’ll tell you that you have to pay for a change they want or need you to make), and process with your carriers. When the re-provisioning is actually complete, ensure you are reviewing your service orders and invoices for accuracy and chasing those credits if (when) things are not correct.

Contracting/new agreements: If the change is significant enough, you may want to look at establishing an entirely new/revised MSA with the carrier, but before you do so, ensure that your current agreements are closely reviewed. Some of the larger carriers tend to have convoluted or inflexible contracting mechanisms and terms, so there is likely to be a cost/benefit associated with creating a new MSA. Consider your leverage position, overall spend, and future network strategy before jumping into a new contract with the acquiring carrier.


These service considerations, along with the billing and account management considerations discussed in Part I, are all key to managing change with your carriers. For any M&A activity that affects your organization, be sure to understand the options available to you, push conversations with your carriers so that you can prepare for the changes coming your way, and continue to review your own network strategy as the market continues to change.