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Turning data into dollars in procurement

The rise of big data analytics throughout multiple corporate environments and industries has been inevitable and driven by several interlocked types of technology improvement. The algorithms that make real-time use of large and unstructured data sets would be useless if companies didn't have access to vast stores of information along with the expanding computing resources available through cloud models.

Now, with its star on the rise in general enterprise use, powerful analytics technology is making its way to the supply chain. This move coincides perfectly with the strategic sourcing movement, granting procurement leaders more decision-making power and general oversight. Empowered by the data flowing through their departments and ready to make greater contributions, supply chain heads must maximize the value of analytics.

Prediction is power
Turning data-derived insights into actual, tangible value comes from the potential improvement of decision-making. Information Management contributor Matt Clark specified that predictive analytics processes, derived from streams of real-time information and accurately projecting future outcomes, can bring about fruitful change within the supply chain. The actual procedures associated with implementing these systems can be surprisingly straightforward.

For example, Clark recommended that companies can track trends such as material price changes from their earliest stages and optimize their responses. This takes procurement from a reactive approach to an anticipatory one. In the best-case scenario, departments have their new contracts and vendor lineups optimized by the time a major shift takes place, preventing a nerve-wracking period of adaptation and coping with new conditions.

Strategic sourcing is predicated on the idea that the procurement department is well-positioned to be a leading corporate stakeholder because of its hands-on access to all the services and materials any company uses. The more powerful its tech tools are, the better this section will be able to uphold such a role. This reality confirms the value and positive potential of predictive technology and other advanced analytics within the supply chain.

The supply chain is poised for data-driven disruption.The supply chain is poised for data-driven disruption.

The slow march to value
According to EBN contributor Nicole DiGiose, sourcing and procurement departments in the manufacturing sector are not making the transition to contemporary, data-driven decision-making models quickly. This lag is not because of a lack of value, but rather a hesitation to set these departments as a high-priority target for technology investment.

LevaData CEO Rajesh Kalidindi, whose company recently surveyed tech usage rates in sourcing, stated that there is a long-term desire to bring analytics tools such as artificial intelligence into sourcing processes. However, it has not turned into immediate action, with overall leaders choosing to bring other parts of their businesses up to date. Of course, priorities can change, and they may do so very soon: Kalidindi suggested that once early adopters of data-based decision-making see the value-based advantages of their choice, others will hurry to emulate their efforts.

Every transaction and interaction between companies generates a vast amount of data. This free flow of information has been a fixture of sourcing for years, and it's clear that companies will be able to find value if they convert that content into a decision-making aid. Some businesses are moving in this direction already, and others may soon be on the way.

Although you may be inclined to say “yes”, or “why wouldn’t I be”, you might be surprised that for a lot of companies getting savings through the door is a lot harder than they thought. Is not that savings aren’t possible or that the marketplace isn’t yielding enough value, it is also not a problem with any specific categories, albeit cost reductions on some categories is a lot more complicated than others, the true issue lies within the organization itself, in that the internal structure may not be ripe to support a comprehensive cost reduction “seek and implement” initiative.

Generally speaking, finding savings across categories is not that hard, depending on the category (communications, marketing, MRO, logistics, etc.) and nature of spend (direct or indirect), a company may use a variety of strategies to optimize costs, typically by conducting strategic sourcing events, benchmarking exercises, engaging with GPOs or simply by negotiating directly with incumbent suppliers, all viable mechanisms to find real savings; however issues typically start with implementation.

Conducting an isolated event (whether that is full sourcing or three bids and a buy) will likely not uncover the deep issues or limitations of the organization as one single event may be accommodated with limited frustration by the different departments that would support it (e.g. legal is an entity that would be involved if a contract must be executed so one more contract may not impact their pipeline too drastically). However, the really ambitious savings initiatives are those conducted at the corporate level and tend to involve multiple businesses to seek and generate a tangible impact to the bottom line of the company.

This is where companies in pursuit of increasing the value of the company within a year chase aggressive savings targets and request their procurement organization to orchestrate and coordinate efforts across the company to meet them. The problem is Procurement - as well as the rest of the company - may not have the resources, capacity, process, tools or knowledge to 1) identify savings across the board and more importantly 2) effectively implement them. The answer, before pursuing an inclusive savings initiative, a maturity assessment of the procurement organization should be conducted.

Not long ago, our company was engaged to source a multitude of categories and support the implementation of identified savings across all their business units, long story short, not long after our initial data collection had stared we realized the company had deep deficiencies across functional departments, and their procurement organization wasn’t set up adequately to support the ask. We made a series of transformative recommendations and highlighted multiple risks that would impede savings from being realized, nevertheless, we were asked to proceed with our processes and sourcing strategies and reassured that the company would support as much as needed to see savings realized. It wasn’t long after that an overburdened procurement team and an overwhelmed legal department realized that millions of dollars of identified savings were not going to be implemented on time. Needless to say, we repurposed our efforts and executed on our procurement transformation recommendations in order to enable procurement for a much more successful second round.

The lesson: a good fighter may very well win a one-on-one combat, but there are many problems with going to a major battle without bringing the right weaponry. The same happens with executing on ambitions sourcing efforts without knowing the true capabilities of the organization, risks such as alienating the supplier base, losing savings momentum, overburdening functional departments and angering stakeholders may have long term repercussions for the business, let alone missing on the initial objective, which beyond getting savings is about value generation. Next time your company decides to embark on an ambitions cost reduction adventure, think about whether the organization is trained and ready to sail those waters.
Software Defined Wide Area Networking (SD-WAN) solutions are reaching a crescendo in contemporary Wide Area Network sourcing initiatives. We have not had a single client in the past year that did not at least dip their toe in the water with SD-WAN and in many cases, clients had much more significant plans for adoption. But as the MPLS market had mostly stabilized and most enterprises had to simply consider whether they wanted their MPLS WAN to be with their incumbent or an alternate carrier, SD-WAN disrupted the market, bringing a new technology and new players, and therefore much more complexity, paralyzing many companies with too many options.

Over the last ten years, most enterprise customers focused on just a few requirement areas when sourcing their networks: 1. Who will manage it? 2. What bandwidth and connectivity do I require to each site? 3. What quality of service (QoS) tiers do we need for our applications? 4. What should our Internet ingress/egress/security look like? There are others, of course, but answers to these questions would ultimately form the backbone of the vast majority of requirement building. Thankfully, these questions have been fairly straightforward to objectively answer for most, which translates into a relatively expeditious supplier identification and RFP development process. Unfortunately, however, the introduction of SD-WAN has complicated matters on each of these fronts by adding new, interdependent variables to the equation.

Consider management, the first example. Most companies have a strategy for how they acquire and manage their network equipment and services. Usually, this is something that has been fairly institutionalized and approach does not often change overnight; they either have the infrastructure -CapEx investment, people, processes, etc.- in place or they do not. Do some companies change approach as part of their sourcing endeavors? Of course, but usually this is a cut and dry decision to either make a major shift or not. With the introduction of SD-WAN and its application ranging from provisional, just-in-time access for new sites to primary connectivity for low priority locations, to backup links for high priority locations and the possibility that a hardware manufacturer may provide the technology but the customer will provide the access, suddenly the complexity may easily challenge the most confident self-managed companies. Conversely, the cost and complexity may intimidate the staunchest of companies who prefer to outsourc their network management with the feeling of too many moving parts and too much surrender of visibility of control. "So now what? Do we decide to move to fully managed? Self-managed? Hybrid -and which pieces do we take? We don't even know what to expect and how disparate the pieces will be, so it's too early to decide so we'll need more information!"

Bandwidth and connectivity used to be simple decisions as well. Usually, if the bandwidth would remain in NxT1/E1 territory or NxDS3 territory, decisions were made early about incremental increases, since additional loops, router cards, etc. may be required to increase bandwidth. Over the past several years, most organizations have moved on to Ethernet where the limiting factors of bandwidth increases still exist, but are less of a concern due to the broader thresholds for changes to equipment and our local loops. Now that SD-WAN brings a mix of MPLS, broadband, dedicated Internet access (DIA), and 4G LTE, clients have a lot more to consider in terms of bandwidth capacity for each location, and for the network at large, specifically with respect to Internet distribution across the enterprise, SIP, and redundancy. With so many viable permutations, it's become extremely overwhelming to plan for and even choose which mix is best.

SD-WAN has even thrown a wrench into QoS planning. The ability to balance traffic across multiple links and flood locations with low cost broadband megabits per second has changed the way many organizations view QoS. Of course, most will stick with a profile that supports real time applications, but even applications that would typically sit just below real time might be perfectly fine without any QoS applied due to the increased capacity and load balancing made available by SD-WAN. This is dependent on the application, the organization's tolerance for risk, and, admittedly, whether foregoing the nominal cost (if any) of QoS even makes sense, but it requires careful consideration and QoS profile planning at minimum, nonetheless.

Most enterprises have carefully managed their policies on Internet ingress/egress, typically with distribution based on geography or via carrier interfaces layered into their MPLS cloud. This enables simpler management and tighter security. The introduction of SD-WAN complicates this strategy a bit. First, it theoretically introduces numerous additional points of entry into the enterprise from the outside world. Can these be satisfactorily secured? Depends on who you ask. From a security perspective alone, SD-WAN is not an option for some companies. Second, once again it begs the question of allowing direct access to the outside world at each SD-WAN connected remote node vs. maintaining a centralized model. Navigating the technical and operational pros and cons vs the potential economic benefits is certainly not easy as, once again, it's technically not a binary decision but rather a mix of options on a per site or per type of site basis.

As SD-WAN continues to rapidly mature and gain adoption, it's something every enterprise should be considering from a variety of perspectives and the options it brings can bring tremendous operational and financial benefits to the companies who capitalize on them. But the world of options to pick and choose from are daunting, especially coming from a time of much lower complexity from a sourcing perspective. If you're interested in sourcing your wide area network and taking advantage of SD-WAN and the latest technologies made available from the carriers and hardware manufacturers, contact Source One to learn how to make your next generation network best in class.
Happy Holidays from Source One's tech-enabled procurement support team! 
Thank you for making our 25th year an incredible one! 

Check out our Year in Review which captures some of the highlights of our 25th Anniversary, the procurement awards we've received, content we've produced over this past year and some of happenings we're looking forward to in 2018! 

Whatever your category, successful Procurement initiatives are built on solid baselines.  Data collection can be time-consuming, even tedious work, but no sourcing efforts can succeed without it.

Unfortunately for Procurement teams, some categories are far more challenging to assess than others.  Recently, Source One's Jennifer Ulrich and Nick Harasymczuk sat down with the Source One Podcast to discuss data collections for one especially complex spend area: Facilities Management.

Even seasoned Procurement professionals sometimes struggle with Facilities Management's diverse subcategories and large supply bases. If they run into trouble early, they might find themselves establishing inaccurate baselines and going to market without the appropriate strategies.

Reflecting on their years of Strategic Sourcing experience, Nick and Jen share best practices for weathering the category's challenges throughout the data collection process.  Don't have time to listen? Here's a transcript of the conversation:

Source One: Hello, and welcome to the Source One Podcast.  Consider us your source for insights and updates on Procurement and Strategic Sourcing, anytime, anywhere.  Today I’m joined by Source One Associate Director Jen Ulrich and Senior Project Analyst Nick Harasymczuk for the first installment in a three-part series on effectively sourcing Facilities Management Services. 

This complicated spend area includes costs as diverse as pest control, custodial services, security systems, and fire protection.  Understandably, it can pose distinct challenges for organizations looking to optimize spend and supplier relationships

Before we get started, could you both introduce yourselves and give us a sense of your position at Source One? 

Jennifer Ulrich: This is Jennifer Ulrich, I'm an Associate Director here at Source One.  One of my main areas of expertise is the Facilities Management space.  I'm focused on executing Strategic Sourcing initiatives for my clients and helping them navigate through the various challenges that come with running and managing a facility

Nick Harasymczuk: And I'm Nick Harasumczuk.  As a Senior Project Analyst,  I primarily develop ideas for current and potential projects.  Over the last year and a half, I've collaborated with Jen on several Facilities Management initiatives. I'm focused primarily on optimizing spend and streamlining services pertaining to subcategories like the ones you've mentioned. I also serve as the Project Lead here for various additional projects and manage the teams of interns assigned to these projects. 

S1: Thanks, so why not start with the very beginning of a sourcing initiative?  Whatever your spend area, it’s crucial to collect data and establish an accurate baseline before going to market.  Nick, could you speak to the importance of this process and describe what it typically looks like?

NH: Well, we can’t kick off any sourcing effort without an understanding of our project’s scope.  To begin developing strategies and allocating resources we’ve got to familiarize ourselves with our client’s goals, the specifics of the products and services being sourced, the timeline of the project, and the identities of all relevant stakeholders.

Once we’re certain of that information, we can start to collect data.  Conducting interviews with stakeholders and suppliers, we assemble all the detail we can about the client’s past, current, and planned purchases.  This means looking at contracts, statements of work, and other documents to develop our baseline.  That provides our minimum starting point. Then the sourcing process can begin in earnest.  

S1Are some categories easier to baseline than others?  

JU: That’s definitely the case. It all depends on what sort of information we’re looking for and how companies and their suppliers track it.  With Utilities, for example, contracts and invoices typically provide a sufficient picture of current rates and usage.  That’s because the nature of the cost model within the supply base necessitates historical tracking.  This, in turn, makes baselining simple.

S1But achieving a baseline for Facilities Management spend is rarely so simple

JU: That’s right. Within this spend area, companies are oftentimes managing multiple suppliers at varying levels of sophistication. This category is also heavily service-oriented and often based on ‘time and materials’ cost models. Unless the suppliers are explicitly asked to track information such as labor hours spent per job, both capital and ad hoc work, material costs by line item including markup and unit cost, and any ancillary fees assessed – they’re unlikely to keep it for their own records. This is especially the case for those "mom and pop shops" using off the shelf technology to quote and invoice their customers.

S1: And what are some ways a poor baseline can cause headaches for this category in particular?

NH: Inventory management, for example, can prove both tedious and daunting task if we’re going in with data that’s inaccurate and/or nonexistent. Unfortunately, the larger the footprint a company has the more opportunities there are for data to be muddied and inaccurate. 

S1Could you describe an example of an initiative you’ve seen slowed by poor data? 

NHRecently, Source One was involved in a large-scale facilities sourcing project for a client with over 200 locations throughout North America. These locations varied in size, region, and even country. While a streamlined, single-source provider was the original goal with the majority of these facilities projects, we quickly learned that the amount of data available was not sufficient.

Conducting an efficient, standardized, streamlined approach nationwide would require more information and detail that simply was not available. Market feedback was also unclear and was built around a variety of assumptions that did not align with the baseline data that we were able to capture. Many locations had scopes that were not able to be standardized (additional kitchen area to be cleaned, different sprinkler systems, multiple HVAC compressor units, etc), and proved to be extremely difficult to standardize in one RFx. It became clear a shift in strategy was required.  

S1: What did a “shift in strategy” entail in this instance? 

NH: Our team began to engage directly with the incumbent suppliers at each location in hopes of leveraging a long-term contract, client/supplier relationship, and long-term strategic growth in order to achieve savings. This ensured that scopes were level set, and eliminated service gap exposure. While our initial projections fell short due to this shift, we were still able to secure savings on a site-by-site basis.

Of course, whenever a major shift in strategy occurs during a sourcing initiative there are bound to be ripple effects. These can’t be ignored.  For example, our timelines had to be adjusted, resources allocated accordingly, and additional stakeholder engagements were required as while we implemented the shift. 

S1: Sounds like all the more reason to strive for the most accurate baseline possible.

JU: That’s right, it’s important to identify any gaps in your data that might create these challenges and develop a methodology for calculating savings that Finance will support and recognize.

Without data such as typical labor hours billed within a specified time period, it will be very difficult to forecast savings results on a labor rate reduction. The same goes for materials markups, without a detailed list of materials used including quantities and markup structures, claiming savings on this spend will take some creativity.

S1: So what can the creative procurement professional do to avoid or address these challenges at the baseline stage?

JU: Well, it’s always important to remember that a lack of historical data does not limit your ability to recoup these savings in the future by applying new best practices to contracting and billing. 

One effective best practice might be requesting that all future invoices be detailed at the line item level.  That way, in a quarter or six months, you can revisit the data for analysis or sourcing. .  Additionally, you can insist that contracts include language that tasks suppliers with providing more visibility into particular costs so that an apples-to-apples comparison can be made in the future.

NH: I’m glad you mention contracting, Jen.  Our biggest take away from this particular initiative was the realization that our client did not have transparency into their line item cost(s) across their facilities.  To remedy this, we worked with the client to add binding language to every service agreement. Suppliers would now be required to provide line item breakout and details for any and all goods or services rendered on site.

S1: And you expect changes like these to have a lasting impact for your client? 

JU: Absolutely.  In addition to short-term savings, this new degree of transparency will have even greater benefits down the road.  They’ll not only better understand their spend, but also enjoy increased visibility into specific costs.  This should mean greater savings and more efficient operations well into the future.

S1: What other strategies would you suggest for companies looking to better collect data and assess their inventories before going to market?

JU: Insisting on more transparent contractual language and greater line item detail is a good start, but for companies with large amounts of inventory or several locations, additional long-term options should be considered. For example, there are a variety of facility management software programs that offer companies the chance to gain control of their supply chain operations and inventory. The costs can range from hundreds of dollars per month per service to annual subscriptions that can cost as little at $1,000 per month depending on the type of facility a company has to manage.

S1Thank you both.  I look forward to continuing our conversation in the next installment.

Next week, Nick and Jen will discuss leveraging your data to develop strategies for going to market.  You won't want to miss it.  In the meantime, consider reaching out to Source One's Procurement experts. They've got the experience and the market intelligence to optimize spend in Facilities Management and any other category.

December 15, 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
Source One's Procurement and Strategic Sourcing specialists have executed thousands of successful initiatives over the last 25 years. Looking back on their success, they offer 5 pro tips for maximizing Procurement's performance and aligning it to meet enterprise-wide goals.  There's obviously no one-size-fits-all approach to Procurement.  Companies of any size, however, should find this whitepaper's advice a great starting point.

Recent Blog:

Net Neutrality & Vendor Selection Criteria
Kevin Fraser, Next Level Purchasing, 12/13/2017
Net Neutrality is back in the news.  The FCC's recent vote to reduce economic regulations will affect every internet user, but IT and Telcom sourcing professionals should feel an even greater impact.  Telecom's newfound freedown could have major repercussions for supplier relationships within the category.  For example, a provider might reduce data speeds for clients who fail to utilize their preferred technoligical platforms.  We can only deal in hypotheticals for now, but Procurement professionals should seriously consider the ways their vendor selection critera might change in the near future.

New Podcasts:

Optimizing Facilities Management Spend - Part 1 (Data Collection) 
Regardless of category, successful sourcing initiatives start with the development of an accurate baseline.  Data collection is an all-important process.  Without it, Procurement teams can't hope to develop strategies for going to market or managing spend.  Source One's Jennifer Ulrich and Nick Harasymczuk stop by the Source One podcast to discuss collecting and cleansing data in the highly-complex Facilities Management category.  

Bridging the Gap Between IT and Procurement 
Though Procurement's influence continues to evolve, many departments are still considered off-limits.  Historically, IT has been a particularly difficult department for Procurement to engage with.  Strategic Sourcing expert Torey Guingrich joins the Source One Podcast to discuss strategies for eliminating the barriers between IT and Procurement.  The key, she suggests, is for Procurement to prove its value and refute any misconceptions IT might have.  Once perceived as a cost-cutting adversary, Procurement can now function as a strategic decision support unit.

5 Essential Procurement Metrics
Many companies lack even basic methods for measuring Procurement's performance.  By keeping themselves in the dark, organizations could miss out on opportunities to optimize their Procurement function.  Procurement and Strategic Sourcing analyst Jennifer Engel offers 5 simple metrics for companies looking to start assessing the department.  Ranging from cost savings to spend under contract, they'll provide the foundation for a thorough evaluation of Procurement's impact.  They'll also pave the way for more sophisticated analyses in the future.

Like most Procurement interns, I arrived at Source One feeling more than a little uncertain.  It doesn't take a lot to make me feel anxious.  Accepting a position in a totally unfamiliar industry certainly did the trick.

Luckily for me, Source One made it easy to develop my knowledge of Procurement and Strategic Sourcing.  They literally wrote the book on the subject.  It's hard to believe there are many better teachers out there. With that expert guidance, I set about studying the industry and familiarizing myself with Source One's unique approach to producing cost savings.

One of my initial misgivings was that my tasks might feel disconnected from Source One's real business.  I'm allergic to data, but I didn't want to feel too removed from the day-to-day efforts of Source One's Procurement analysts and consultants. Worrying to myself, I thought back on my time working in Operations for an elementary school.  Our team often had trouble communicating with the teaching staff.  At times, we effectively functioned as though we worked in two different buildings. I did not want to relive that experience under any circumstances.

I was delighted to learn that Source One's workplace wasn't so siloed. Immediately, my role in supporting both the Marketing unit and our consultants became clear.  I was soon working closely with co-workers across the organization to develop marketing strategies, produce communications, and ultimately serve our clients.

I've learned a lot over the last four months, but I'm still especially motivated by a lesson I learned in my first week.  Studying industry blogs and publications, it occurred to me that every step in a Procurement initiative depends on effective communication.

Let's take a look at a few examples:

1.  Attracting Talent
Tomorrow's Procurement leaders are out there.  Companies can't bring them onboard, however, without communicating their own value.  Have you browsed a job board recently? Surely, you'd agree that most listings are pretty uninspired.  Attracting emerging talent will mean changing the way Procurement presents itself.  It'll fall on Marketing and Communications teams to develop more dynamic strategies for engaging applicants.

2. Team Building
You'll never execute a successful initiative without the right team of motivated, dedicated Procurement professionals.  Managers can no longer afford to communicate goals and expectations during annual performance reviews. To effectively develop a team, Procurement leaders need to make feedback and career pathing part of an ongoing conversation. A transparent, constructive, and fair dialogue will help retain top talent and optimize Procurement's performance.

3. RFx Administration
Developing an effective RFx document basically comes to down to developing a communications strategy.  If you're asking too many questions, too few questions, or the wrong kind of questions you won't get the answers you need.  The process can also require more direct communication with prospective suppliers.  It's sometimes not enough to assume an organization understands your expectations.  Misunderstandings might lead you to miss out on potential business.  Taking time to reach out to suppliers directly and discuss a document could make all the difference.

4. Supplier Relationship Management
A relationship with a vendor isn't so different from any other relationship.  It can easily fall apart as a result of inconsistent or ineffective communication.  Maintaining close contact with incumbent suppliers is the only way to ensure both parties are satisfied.  Regular check-ins are your opportunity to assess performance, enforce compliance, and discuss potential strategies for future initiatives.  Without them, you could find yourself unwittingly locked into inefficient agreements.

Those are just some of the ways I've seen effective communication play a role in Procurement.  As the industry, its professionals, and its technologies continue to evolve, communication will only grow more essential.  Spread the word!

No Procurement initiative will ever succeed without proper attention to data collection. Assessing purchase histories, analyzing contracts, and engaging with stakeholders helps Procurement teams to establish an effective baseline for sourcing efforts.  The process might sound straightforward, but the slightest misstep can have major ramifications.  Inaccurate or inconsistent data could mean lost time, missed savings, and damaged client relationships.

Associate Director Jen Ulrich and Senior Project Analyst Nick Harasymczuk join the Source One podcast to discuss data collection for Facilities Management Spend.  This complex spend category includes subcategories like fire protection, pest control, custodial services, and security systems.  Companies also typically find themselves managing multiple suppliers at varying levels of sophistication.  As a result, the category can prove especially challenging for Procurement professionals to evaluate.

Ulrich and Harasymczuk describe the potential hazards of neglecting the category and offer strategies for more effectively handling it.  Give it a listen. 

Contact Source One's Procurement experts to learn more about managing spend across all categories.  Check back in next week for more information on establishing sourcing strategies for Facilities Management spend.

The Procurement and Strategic Sourcing experts at Source One Management Services are honored to accept Supply and Demand Chain Executive's (SDCE) 2017 Green Supply Chain Award.  This year marks the sixth-consecutive year that SDCE has recognized the Procurement leaders for their efforts to encourage responsible sourcing practices.

Over the last 25 years, Source One has provided forward-thinking companies with the sourcing expertise, procurement insights, and cross-industry market intelligence to achieve their sustainability goals.  Their procurement consultants have continually succeeded in implementing eco-friendly, cost-saving procurement strategies for clients.

One of this year's most successful initiatives saw Source One's engineered products sourcing specialists assist a building products manufacturer.  This client was interested in setting themselves apart from competitors with a new product design.  Leveraging their years of experience sourcing direct materials, Source One's consultants located the ideal supplier.  What made this vendor so appealing? Two words: Recycled plastics.

The combination of compression molding and repurposed resources presented a major cost reduction opportunity. They passed these savings onto their customers while differentiating themselves as a sustainability leader within their industry.  With a new, uniquely-green manufacturing process, they're poised for years of sustainable practices.

With this honor, Source One ends its 25th year on a high note.  Expect their sustainable purchasing specialists to produce even more responsible savings in 2018.

Interested in learning more about developing a sustainable supply chain? Contact Source One's green Strategic Sourcing experts today.  They'll uncover savings opportunities that serve both your company's goals and our planet's well-being

Enterprises across all industries are working to incorporate technology with the goal of driving down costs and increasing efficiencies. That is no easy feat as new technology continues to get more and more expensive and convoluted. A few underlying questions then arise:
  •        Can we get rid of other services/suppliers upon implementation?
  •        Where will we see savings/efficiencies on the backend?
  •        What does the timeline look like before benefits are noticed in the bottom line?
In the case of network connectivity; mergers, acquisitions, and new solution rollouts within the market are constant. The latest buzz word in the Telecommunications and Network Industry is SD-WAN. Organizations want to know how to implement, which provider(s) to use, and how it will impact their current network layout.

As it stands, software-defined wide area network (SD-WAN) appears to be the future of wide area network connectivity solutions that is taking over a spot previously held by multiprotocol label switching (MPLS). SD-WAN enables your business to utilize its MPLS, dedicated internet, and broadband links in a more efficient and effective way, while optimizing network traffic based on changing conditions. For example, if a connection point is being affected by packet loss or jitter, SD-WAN will route traffic to a connection with more availability without the need for your IT team to take action. While calculating and chosing the best path, SD-WAN also supports prioritization of traffic and provides visibility into cloud-based activity, which has been a struggle for corporate IT departments in the past. This technology identifies certain types of network traffic and prioritizes critical over less important traffic. Additionally, the traffic flows over fully encrypted tunnels and can be broken down, providing a high level of security. It’s as if you have a third party essentially manage network activity at each of your locations. Ultimately, SD-WAN helps to ensure that minimal bandwidth is wasted and you’re not paying for links that sit idle. Best-in-class corporations using SD-WAN are realizing substantial savings through optimization, have better access to cloud based services and notice better performance, control and redundancy.

SD-WAN is unique as solutions are offered by the large carriers and hardware manufacturers as well as smaller, emerging players, all while mergers and acquisitions seem to be occurring each week. Each supplier has their own approach, and no “one size fits all” model exists. An SD-WAN solution can be laid on top of your current network, enabling it to utilize all types of links in a resourceful, robust fashion. There are different tiered suppliers with different capabilities and functionality who are purchasing companies and platforms while adjusting their own footprint and technology. With all of this in mind, it’s critical to develop a well-defined strategy to procure an SD-WAN solution.

To begin evaluating the market landscape and identifying the appropriate provider(s)/solution, consider an elaborate RFP process. Though the task may seem initially daunting, you’ll find an SD-WAN RFP process valuable in learning which services and providers best fit your network requirements. A comprehensive baseline and spend analysis are beneficial exercises in understanding which department utilizes each component of your network and the potential for right-sizing within your organization. A company must understand their unique underlying services in order to grasp the sensitive balance between retaining incumbent providers and building a new SD-WAN strategy. Up front cost and overarching changes to your network can appear overwhelming but benefits from a swifter and more agile network are endless. SD-WAN will empower your employees to do their jobs more effectively and set your company up for growth in the future. For additional support navigating the SD-WAN supplierlandscape, contact Source One’s IT Sourcing experts to help you partner with the best-fit SD-WAN vendor and negotiate a best-in-class contract.

I opened my email to find I had received an online promotion for an upcoming flash sale at a major department store. The sale was for 30% during certain hours. So I thought great, the store is right down the road, I’ll go there during the hours, and pick up some new gear. With several hundred dollars’ worth of stuff….I go up to the register and ask the employee to apply the 30% off coupon. I showed her my phone with the coupon and I could tell from her face I was not going to be able to have the coupon applied to my order. She looked at the coupon and explained that it only applied to online orders. So now I am standing there with a bunch of stuff I spent time selecting, and have a decision to make. I decided to purchase the items in the store and then look to see if the 30% coupon applied to the same items online.  

Of course, the 30% coupon did apply allowing me to save an additional $99. I decided to order the same items online so that I could apply the 30% off. But I really didn’t want to have to pay for shipping for them when I could just get them at the store down the road, so I selected the option to have the items shipped to the store to pick up. This was at no cost to me, however, now the department store had to pay shipping to have the exact same items I already bought shipped to the store. 

Other than ranting about how I saved an additional $80 by repurchasing online using the coupon code and returning the original items I had bought in the store, what about the overall methodology? Did it make sense for them logistically and cost wise to only have the coupon offered online. 

              Let’s look at it cost wise:
  • In store for the basket of items let’s say I paid $329.
  • Online, for the same basket $230; saving about $99.
  • For refusing to offer the discount in-store the store now was forced to incur administrative and processing costs for the original purchase and return and shipping cost of the discounted items. Worst of all they also still hold the exact same items back in inventory.
As a consumer though, I would want the store to apply the discount offered online in store as well and eliminate all the return and pickup hassle. From a financial perspective for the company, it makes sense to apply the coupon to in-store items, for one they don’t have to incur the hassle and additional cost but more importantly, the overall sale of the item should be valued most. Companies have to make strategic decisions daily and while it might seem like a quick decision to throw out sales left and right, ultimately the decisions do affect a company’s bottom line, and the revenue they generate or money they may lose adds up.
Be Smart and happy shopping!