2017
Source One Round Up

April 21, 2017

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


RECENT FEATURES:
The Nuts and Bolts of MRO Spend
Lisa Arnseth, ISM Magazine, April 2017

This article features top MRO professionals advice for reducing the complicated spend within the category specifically, including Source One Senior Consultant in the MRO practice Michael Croasdale. In the article, Croasdale is quoted with a statement on removing the common misconception that MRO is a category too complex to contract for unplanned purchases, and explains that with the right approach, MRO professionals can identify important patterns. At the end of the article, Croasdale elaborates in a sidebar titled When to Bring In An MRO Service Provider.... And When Not To, where he explains how third-party firms can provide spend analytics and data aggregation, data management support and strategic sourcing and procurement transformation services to get a solid grasp on MRO spend.

UPCOMING EVENTS:
ISM 2017
Next month in Orlando, Florida the Institute for Supply Management will host their annual conference that welcomes more than 2,500 supply chain professionals from around the world, including consultants from Source One. ISM2017 includes educational sessions, informative presentations, and networking opportunities for attendees over the course of four days. The ISM conference features Exec In, a sub-conference designed specifically for supply management leaders and sponsored exclusively by Source One. Attendees for Exec In act as decision makers in their organization and can take advantage of this opportunity to reconsider processes and plan ahead for the future of procurement and supply chain management in their organization.

The Road to SYNERGY - Baltimore, MD
Corporate United will host regional events in their Road to SYNERGY series kicking off this summer, in anticipation of their national SYNERGY conference in the fall. These one day events around the country will invite professionals local to the area for smaller collaboration sessions that will prepare them to meet with colleagues from all over the U.S. at SYNERGY. The first stop for the Road to SYNERGY series will be in the fall in Baltimore, Maryland on June 6th. Procurement and supply chain professionals can anticipate members of the Source One team's insights as we follow along on the Road to SYNERGY as Gold Sponsors of the national event.

ISM- New York Annual Conference- Procurement Risk Management
After being rescheduled due to Snow Storm Stella at the end of March, ISM New York's Risk Management annual conference will be postponed until June 14th. Attendees can anticipate the agenda as planned, with small sessions that review procurement trends and anticipations for 2017. This event serves as a great opportunity for professionals local to the area to regroup after the international ISM conference in May. Members of the Source One procurement and supply chain team look forward to attending ISM New York's Procurement Risk Management conference and talking to other industry leaders in the area!

Now more than ever, consumers are conscious about what harmful effects the products they buy have on the environment.

As a society, we are more aware of environmentally friendly practices beyond recycling and are demanding more corporate social responsibility from the organizations we choose to invest in. New technology and scientific studies allow us to approach sustainability from all angles of operations, including facility management, manufacturing, production, distribution and even billing. Initiating more environmentally friendly processes in all areas of your business can not only decrease your carbon footprint and boost your corporate social responsibility, but also help you to reduce costs.  In honor of Earth Day on April 22, the Source One team has brought together their most efficient strategies for creating more sustainability in any supply chain. These environmentally friendly best practices are a great way to initiate going green and demonstrating how your business values the environment by utilizing the most effective methods for sustainability.

If you're looking for more ways to be sustainable in your organization's supply chain, check out the recommendations in our most recent infographic!


Sustainability in Supply Chain Infographic


Source One provides sustainability and green strategic sourcing solutions for companies looking to advance efficiency, reduce costs, and improve the environment. Last year, Source One received the Supply and Demand Chain Executive Green Award for the fifth consecutive year as recognition for their efforts in advancing the role of sustainability within supply chain management operations. The Source One team strives to help their clients achieve their environmentally-friendly supply chain goals and understand how sustainability is such a high priority for many sizable organizations today. To learn more about how Source One can assist your business in becoming more sustainable and environmentally friendly, visit sourceoneinc.com.

Mexico plans for port expansion as part of trade strategy
It's dangerous to reduce an entire country to just one shipping point, especially when many different areas could all open up under a single plan. While the future of relations between Mexico and the U.S. is uncertain, the southernmost of these nations has developed an initiative to invest in national ports for better trade.
The efforts to put $5 billion into these areas depend on some other outside factors, such as the country's relationship with NAFTA, according to Ship Technology. However, though it still has international concerns to consider, Mexico is still reportedly committed to improving trade for Latin and North America in general with a multi-prong plan. Just as Mexico is working on its strategic shipping expansions, businesses wishing to operate there can focus on strategic sourcing as well.
Where Mexico will focus
Because there are several potential projects in motion at once, companies that want to stay involved need to make a cost-conscious effort to choose procurement wisely. Some of the recent improvements either completed or in progress are:
  • Port of Lazaro Cardenas: This April saw the APM Terminals station in this port finally open, with a 30 percent higher container turnaround time capacity than originally predicted, as Container Management reported. The site is both an important geographical position for shipping and a place where operators plan to try out new technology for better efficiency.
  • Port of Veracruz: The Journal of Commerce said that this port is one of the several that have borne the majority of expansion efforts in the country in a plan stretching back years. The Veracruz port could also play a role as a destination for ships heading between any of the other major trading centers.
  • Three open corridors: On a similar note, the region could also be a source of new channels encouraging trade. The same Ship Technology article also said that Mexico will work on a trio of economic corridors in the north, center and south. Of these, the center channel seems to be the most immediately significant, since it accounts for more than half of Mexico's national GDP, Mexican Ports and Merchant Marine General Coordinator Guillermo Ruiz de Teresa told the source.
These and other projects are meant to propel Mexico forward as a strong figure in trade, while also possibly opening up further ways for both the country and the region to connect with the rest of the world.
"Mexico would work on a trio of economic corridors in the north, center and south."
NAFTA and international relations
The ongoing impacts of NAFTA and other trade conditions may have repercussions for the U.S. economy as well, as it adapts to fit new policies. Dairy Economist Scott Brown of the University of Missouri recently spoke to the Associated Press about the relationship between the dairy industry in the U.S. and NAFTA's influence.
"Can we renegotiate and get a better NAFTA deal?" Brown asked. "Only time will tell. Those trade agreements traditionally have taken a lot of time and effort to get everybody on the same page and we know we've benefited tremendously on the NAFTA agreement that we have."
Making procurement decisions with accurate data and benchmarking may be necessary going forward, regardless of trade policy changes, simply to match increasing complexity.
Bad RFPs make your company...look bad
Being in the business of strategic sourcing (and a lot more), the team at Source One has spent decades refining the way we administer RFPs. We understand how important it is to craft documents and communicate with potential suppliers to set the stage for successful future business partnerships.

That’s why it’s particularly painful when we see other procurement service providers running bad RFPs. I’m going to share some excerpts of a bad RFP we received a couple months ago and the surrounding bad communication, which was administered by a third party on behalf of another company, whose name we were not given.

Obviously I’m not going to reproduce the RFP in its entirety or include specific names and such - not just to preserve confidentiality and anonymity, but also to be professional. My intent here is not to viciously malign, but to present a real life, pretty dramatic, example of "what not to do" in a sourcing event. It's all well and good to talk about best practices, but dramatic examples of bad practices stick out more in our minds. Humans are interesting creatures.

Anyway, this bad RFP experience began with 3 (!!) different emails to our general emailbox and a phone call to our CEO (!?) inviting us to the RFP. That sounds like them being really thorough (read: general overkill to compensate for a lack of organization) - but there seemed to be more going on here than simple thoroughness. Here is the written correspondence we received:

Bad Sourcing Team: “Please submit your response to this RFP no later than [two business days from now] as we are running this process on tight timelines.” 

Wow, two business days is a crazy fast turnaround on a consulting/services RFP. What happened? Did someone drop the ball and now the client expects their sourcing event to be completed in a week? Or is it that thing where you tell people your party starts at 7:00 when it actually starts at 8:00, so that when they are inevitably “late” by arriving at 8:00, they’re actually on time?

In any case, with a 2 day turnaround, the opportunity is highly suspect. We don't know who the ultimate customer is, and we're being asked to drop everything and respond to an RFP or else lose out on a business opportunity.

I mentioned earlier that we were not even told who the customer is, just that this RFP was being conducted by BPO Firm X on behalf of some other company. That’s Reason #2 to be suspicious of this RFP.  A closed door secret you're-not-allowed-to-know-who-we-are RFP does nothing to make a potential bidder believe that there's a serious opportunity on the table, not just a price shopping exercise.

Even when faced with these factors, Source One is not in the business of knee-jerk reactions and dismissing opportunities. Even with that tight turnaround and limited info on the customer, maybe the opportunity is worth it. We’ve responded to, and won, rapid RFPs when the services requested were a strong fit for our strategic sourcing services, and where there was a clear business case for a long-term partnership. So in this case, I thought, “Let’s not rule it out – let’s first dig into the RFP and find out what the scope is. Maybe there’s gold in them thar hills!”

There wasn't. Not even fool's gold. I'll show you in Part 2...

Q&A with Martin Przeworski on Product Lifecycle Management
"Go and buy the materials."
That is often the command from other departments to strategic sourcing and procurement (SS&P) groups. Often later in the product lifecycle, SS&P is brought in to help acquire the goods and services needed to enter the market or worse, sought to reduce costs while the product meets it's maturity in the market and consumer demand for it has decreased.

Sure, SS&P is happy to help it's stakeholders find the most competitive prices for the needed products and services. However, this reactive approach can limit SS&P's impact. In reality, when collaborated earlier in the product lifecycle SS&P can optimize cost targets and even deliver a better view of the market landscape. This added value SS&P provides when consulted earlier in the product lifecycle is the topic of Source One's latest whitepaper,  Strategic Sourcing Throughout the Product Lifecycle.

As one of the main contributors to the piece, Source One Consultant and Direct Materials sourcing expert, Martin Przeworski elaborates on the concepts behind the white paper and his sourcing experiences that led to the white paper development in a Q&A podcast session. Przeworski shares how his background in engineering and previous experiences as an applications engineer allow him to take a unique approach to supporting clients when sourcing raw materials for their products. With his efforts to bridge the gap between engineering and procurement teams,  a common ground is developed that allows for more efficient processes and additional savings.

Read the full interview below to find out how Przeworski works to bridge the gap between engineering and procurement teams and find a common ground that allows for more efficient processes and additional savings.

Can you start off by giving us a little more background on what you do at Source One and what it is that inspired the whitepaper?

Przeworski: My education is in science and engineering with 5 years working in the industry as an applications engineer before making the transition to procurement consulting and joining Source One, where I've helped clients with strategic sourcing in the directs and indirects areas for the past 3 years. I believe my experience gives me a first hand insight into the daily pain points and bottle necks encountered by engineers and the pressures management faces to stay competitive within the market. I've worked hard to bridge the gaps between engineering, management, sales and marketing on technical projects to dissipate miscommunication and misconceptions and help everyone find common ground in order to make progress and achieve savings.

You mentioned that there's opportunity for better results when strategic sourcing teams are engaged earlier in the process. When is the sourcing team usually involved in the product lifecycle?


Przeworski: Strategic sourcing is usually involved as a somewhat 'necessary evil' during the manufacturing phase, or growth and maturity stages of the product's lifecycle to reduce costs as production volumes increase. In the classic analogy - if we can save 10 cents on a capacitor, we can save $10,000 on the production run of 100k units. Strategic Sourcing may also get involved to help reduce the overall costs of an established product by partnering with a contract manufacturer and opening-up the company's time for New Product Introduction (NPI) and development work. Some companies even progress to the point of taking the burden of manufacturing off their shoulders completely and recast the business as a design house.

But Strategic Sourcing and Procurement can achieve even greater savings by expanding on existing component opportunities to include the Engineering team's insights into critical and non-critical component selection, and leveraging DFM services provided by fabricators to reduce component count and increase production efficiencies in order to more than double original projections in most cases.

We often see that as procurement professionals - that for many organizations procurement groups are a 'necessary evil' that they're not initially inclined to engage. How have you approached strategic sourcing for clients?

Przeworski: Yeah, unfortunately procurement can often be viewed as an added obstacle to the sourcing process. But the reality is, they're driving added value by providing a clear view of the market landscape when it comes time to make a major purchasing decision - especially early on. By getting involved in and even leading key activities throughout the product lifecycle instead of simply being asked to 'go and buy the materials', Strategic Sourcing and Procurement can facilitate the process and add value for all key stakeholders. By bridging the gap in understanding between engineering, manufacturing, marketing/sales, and the management teams - and speaking a common language - Strategic Sourcing can  help shorten the development time frame and meet cost targets to make the design of a quality product in a competitive market a repeatable reality.

When it comes to meeting cost targets, it absolutely makes sense that sourcing would be involved prior to the manufacturing phase, but can the sourcing team actually help during the Ideation Phase?

Przeworski: Yes, during the Ideation Phase the product is conceived, and where many costs are built into the product before it even exists in physical form. When establishing the Market Need, a thorough understanding of the competitive landscape and market pricing can provide key guidance for product placement and feasible manufacturing cost targets.  This is the value Strategic Sourcing and Procurement can bring - enabling manufacturers to understand the market for material/functional design considerations, evaluate their current contract engineering relationships and determine the best approach to balance costs with technical considerations.

And, when should suppliers be involved in the PLC?

Przeworski: The production phase is an ideal time to gather input from key suppliers. In this phase, the product's construction and components parts are established, typically by engineering with little to no input from Strategic Sourcing and Procurement.But during this phase, Strategic Sourcing and Procurement should be engaged to begin supplier identification, identify opportunities to localize designs to low cost regions, and guide the Engineering teams through the off-the-shelf (OTS) commercial offerings to ensure a cost-competitive and sustainable initial design. By utilizing the experiences and insights of manufacturers who have already successfully addressed these changes with similar customers (and are more than willing to share their knowledge to expand their business opportunities), SS&P can take the heavy burden of 'getting everything right' off the engineering team.

To hear the entire conversation, check out Source One's YouTube channel. For more information on how Strategic Sourcing and Procurement groups can deliver at each stage in the product lifecycle, check out Source One's most recent whitepaper: Strategic Sourcing Throughout the Product Lifecycle: Balancing Competitive Costs with Innovation and Speed to Market.
ICYMIM

ICYMIM: April 17, 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.

Wellness Check: How healthy is your Procurement and IT relationship? - Infographic
Ben Hatch, Corporate United, April 12, 2017

When Procurement and IT departments work hand in hand to improve processes throughout their organization, they have the potential to offer innovative and unique solutions for every area's technological needs.  To achieve a healthy relationship, Procurement should be included regularly in IT meetings, listen to IT when measuring their success, share a contract calendar for all technology related agreements, and understand IT's threshold for risk. Procurement can also contribute by monitoring IT systems to identify potential areas for sourcing and savings, and ensuring these efforts are continuous so results may be continuous, because one conversation now will not offer solutions for issues of tomorrow.

More on Palambridge - A New Model For Procurement Consulting
Peter Smith, Spend Matters UK/Europe, April 13, 2017

Recently launched online platform Palambridge features a select group of solution providers and consulting firms, including Source One, that include industry experts in specific categories of the procurement supply chain industries. These professionals can collectively offer strategic advise for capability development, tools and implementation support across a variety of procurement processes. Ideson explains in the second conversation of this two part series how he and Palambridge partner Kelly Barner of Buyers Meeting Point decided which firms to include in Palambridge based on their networks of leaders in the industry.

Mind Over Matter: Planning Horizons in a Dynamic Economy
Kelly Barner, riskmethods, April 10, 2017

Every supply chain must endure uncertain conditions, but many aren't able to identify what exactly that entails. Being capable of predicting and forecasting conditions or circumstances that can disrupt the supply chain is an important strength to possess when mitigating risk for your organization. Most often, we consider the potential of a natural disaster and the damage that will follow based on scientific predictions through modern day technology. Ultimately, the more data and information available, the better procurement can analyze these unfavorable circumstances. The best way to achieve the most information is through maximum visibility in the supply chain. 

New trucking merger reorganizes market
It's hard to talk about freight trucking without mentioning one of the most prominent deals of the year so far. In a recent press release, Knight Transportation announced it would merge with Swift Transportation to create a new company worth $5 billion. The resulting enterprise, Knight-Swift, doesn't just combine financial resources but physical ones as well, giving the new company 28,000 employees to work with.
The new merger
Though Swift stockholders will own approximately 8 percent more of the company than Knight stockholders will, the action does draw attention to the force of this effort. This is especially noteworthy considering current trucking industry concerns, such as a lack of employees and an oversupply of freight.
In the release, Knight's CEO, David Jackson, described the benefits of the new merger and committed to putting both employees and customers first.

Oversupply could be a deciding factor for 2017 logistics.Oversupply could be a deciding factor for 2017 logistics.
"Under this ownership structure, we will be able to operate our distinct brands independently with experienced leadership in place," Jackson said. "We look forward to learning from each other's best practices as we seek to be the most efficient company in the industry. We are dedicated to a seamless transition and ensuring continuity for our customers and professional Driving Associates."
Oversupply and demand
Coming in to 2017, the predictions and figures surrounding freight demand weren't highly positive. A Trucks.com article from October suggested numerous factors making trucking slower than usual, including a low GDP and a low shopper turnout, leading in turn to a surplus for retailers and less of a need for manufacturers to act.
More recently, the American Trucking Associations said that the "annualized rate" of trucker turnover was at a six-year low while large carrier turnover has sunk continuously for four quarters in a row. According to this statement, the figure was at 71 percent as of March 29. However, the organization's chief economist, Bob Costello, said that this is just a sign of stabilization as the market changes.
Looking forward
Oversupply is a hurdle for trucks because it risks leaving companies with too many trucks for a drought in current orders. It also seems that this could be a problem for other industries beyond automotive freight, as well, as a press release from Moody's recently asserted.
That firm claimed that excess aircraft capacity could also be an issue this year, part of a larger challenge to shipping in general. Overall, the source said that earnings before interest, taxes, depreciation and amortization could drop by as much as 10 percent throughout 2017 as a whole, while the growth rate for passenger demand also shrinks. The statement did note that railroads may fare better, with the North American railroads sector possibly growing and grain shipments potentially rising as well.
Controlling resources
In the face of these different factors, purchasing management is crucial. Businesses could look to professional staff and software to promote communication and work with resources for a lower cost. Being able to respond to new fluctuations could help businesses lower waste and deal with unnecessary operations.
In the most recent episode of the Source One Countdown to ISM2017, we talked to Jami Bliss, Program Management Director at Teva Pharmaceuticals and Naseem Malik, Managing Partner at MRA Global Sourcing about their participation in the upcoming conference. Bliss and Malik will be featured as the moderators of ExecIn's CPO Roundtable session during the first day of the executive-only sub-conference inside of ISM 2017. In this conversation, Bliss and Malik share what they are most looking forward to about the upcoming event while reflecting on ISM conferences from previous years. As both have been in attendance for years, they offer their insights on what sessions and topics provide the most anticipated insight for attendees.

The speakers and panelists featured during ExecIn are all Directors, VP, or CPO level in sizable organizations and offer their specific expertise to attendees that are in similar situations. Highlights including the CPO Roundtable, Procurement 4.0 and more are all opportunities for the managerial attendees to learn how to challenge traditional procurement mindset and focus on the potential behind data innovation through recent technological advancements. As procurement professionals, it's crucial to be in touch with new improvements including  AI, IoT, and Block Chain, and globalization, on-shoring, offshoring and consolidation's effect on shifting business models.

 Other sessions include The Science of Leadership, a conversation about how to lead different personalities and successfully manage the variety of individuals on your team. Real world practices are introduced to metrics and research in the 10X Your Supply Management Function: What Does the Best of the Best look Like in Practice? session that reviews emerging practices and programs of world class supply management organizations that are the behind the best metrics, results and performances. ExecIn concludes with a connection reception that allows attendees to meet with the future of procurement and supply chain, individuals that are recognized as rising talent in the industry and have received awards for their accomplishments in their work.

Source One serves as the exclusive sponsor for the ExecIn sub-conference and is pleased to present these sessions that offer a distinct experience for the procurement executives who act as decision makers in their organization. For two days of ISM, top supply management leaders can attend ExecIn as a private experience. While team members attend sessions for the general audience at ISM, the ExecIn audience gathers for specialized breakout meetings to participate in discussions that allow them to re-evaluate their processes while discovering new opportunites that can rejuvenate development that will assist them in better achieving their organization's goals
Source One Round Up

April 14, 2017

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


UPCOMING EVENTS:
ISM 2017
ISM2017 is coming up next month in Orlando, Florida and the Source One team is looking forward to meeting with supply chain and procurement professionals from around the world over the course of this four day event! The Institute for Supply Management's annual conference is an international event that brings together over 2,500 industry professionals for educational presentations, networking opportunities and informative sessions for an incredible experience. ISM2017 also features sub-conference Exec In, exclusively sponsored by Source One. Exec In was created  specifically for supply management leaders who act as decision makers in their organization and offers the opportunity  to reevaluate processes and prepare for the future of procurement and supply chain management.

The Road to SYNERGY - Baltimore, MD
This summer, supply chain and procurement experts from regional areas across the country are invited to meet for one day events on Corporate United's Road to SYNERGY. These individualized conferences will prepare industry professionals for the national SYNERGY conference hosted in the fall. Baltimore is the first stop, meeting on June 6th. These opportunities are ideal for smaller collaborations before meeting with procurement and supply chain professionals from around the United States. Source One is featured as a Gold Sponsor for SYNERGY and members of the
supply chain and procurement team look forward to meeting with other industry experts on the Road to SYNERGY this summer.

ISM- New York Annual Conference- Procurement Risk Management
Originally scheduled for the end of March, ISM New York's Risk Management annual conference has been postponed due to Snow Storm Stella and will now be held on June 14th. Luckily the schedule will remain the same for the one day event, and the expected speakers and presentations will still be featured. Procurement experts local to the Institute for Supply Management's New York chapter continue to anticipate this annual event that allows for collaboration on a smaller scale after the international conference in May. Supply chain and procurement professionals use this regional opportunity to share their predictions of industry trends in 2017, including members of the Source One procurement and supply chain team. 

Conflict minerals rules change to suspend enforcement
For businesses with complex procurement concerns, conflict minerals should be a necessary area to focus on. Preparing for audits, guaranteeing best practices and reporting issues can take planning. However, a recent update from the Securities and Exchange Commission could affect how businesses handle relationships with suppliers when conflict minerals are involved.
A new court decision has pressured the SEC to respond to actions surrounding a challenge to current regulations. For years, the District of Columbia Circuit Court of Appeals has said that the existing requirements of the SEC violate the First Amendment.
In a statement, SEC Acting Chairman Michael Piwowar said that he has asked the Commission's staff to develop a recommendation in response to public comments from the end of January. While this response is pending, though, companies may have to question the proper course of action, especially since the previous regulations have been part of the Dodd-Frank Act and therefore highly visible to businesses.
Finding a way forward
As it stands, this decision could cause understandable confusion, leaving organizations to try and decide which rules still hold. The recent suspension does not affect the current filing deadline for May 2017 filing, but it does possibly complicate what companies need to prioritize to comply with existing regulations.
Verisk Maplecroft recently released the results of a risk analysis showing the issues surrounding the so-called "3TG" minerals most likely to be from a conflict, consisting of tantalum, tin, tungsten and gold. The countries at highest risk for the T's in this equation included not just the Democratic Republic of Congo, a major target of conflict minerals work, but also Nigeria and Myanmar. For gold, the biggest risk seems to come from Indonesia and Russia.
The report also created four different categories of risk, including environmental, political, social and supply concerns in the different countries, measuring them on a scale from low to extreme risk. The DRC had the most categories of extreme risk, with all of the above four categories except environmental risk said to be at "extreme" levels. Despite this, the country with the highest overall risk score was Rwanda, even though none of these categories were considered an extreme risk.
"Companies like Apple declared that they would still support efforts to regulate conflict minerals"
Even so, companies could take from this the fact that compliance efforts need to go beyond the DRC. MINING.com spoke to Verisk Maplecroft commodities research director Stefan Sabo-Walsh, who commented on the current impact of U.S. efforts to address conflict minerals so far.
"U.S. supply chain legislation on mandatory reporting and traceability has focused on 3TG minerals from the Great Lakes," he said. "This can leave tech firms focused on one region despite the myriad of risks occurring elsewhere in their supply chains."
Major companies standing by
It might seem like businesses have to go where the law does, but some major corporations seem to think otherwise. Before the announcement about this decision, companies such as Apple declared that they would still support efforts to police conflict minerals and uphold human rights, including through accountability measures.
If this kind of example holds, businesses can look to supplier relationship management solutions to help handle risk.
"Team work makes the dream work."

Whether the economy is expanding or contracting, a major component to supply chain success is collaboration. Having a stronger understanding of your supply base is just one way to optimize efficiencies and reduce costs when budgets are tight. If you're seeking opportunities for sales growth, improved processes, or innovations within your supply chain, dialogue with your key suppliers is a great place to start. Access to the data of your suppliers and partners can provide valuable insight and with constant enhancements in technology, it's now easier than ever to exchange this information. Consider even how you manage risks. Sure,you (or, at least you should) have a risk mitigation plan for risks associated with your internal operations. However, do you have an action plan for the risks facing your supply base that may ultimately impact your supply chain operations? Rather than wait for an unanticipated disaster to strike, proactively work with your suppliers to identify their risks and potential impact on your organization. This collaboration can help minimize disruption.

Need more convincing? Check out our infographic below to see how collaborating with suppliers can benefit your business!



Looking to improve relationships with suppliers and start experiencing the benefits of collaboration mentioned above? Source One's supplier relationship management service experts can help you reach your goals by establishing the most mutually beneficial relationship with suppliers through structured program guided by open communication. By being more involved with suppliers, your organization can discover opportunities to optimize within your supply chain and learn more about supplier capabilities that can produce more efficient solutions for you both.


Creating Engaging Presentations
What are the first things you think of when you hear the word presentation? If you are like me your first reaction might be “Ugh.” Having to sit through another boring lecture, hearing someone drone on and on about something you don’t even care about, wasting time when you could be working on something else, or maybe realizing at the end of the presentation that you didn’t even learn anything or could have read it all on your own.
During my years of school there were certain tips to follow when developing PowerPoint presentations and I’m sure you can recall some of these as well:


1.      Limit text on the slide-No paragraphs
2.      Use appropriate charts
3.      Limit animation and transitions
4.      Have a visual theme and choose fonts and colors accordingly

I have found that these tips still hold true in the procurement profession when developing a Presentation for a stakeholder. A stakeholder’s time is valuable. They don’t have hours on end to listen to another presentation and even more than that, you don’t want them to come out of the presentation and have their only take away be “So, can you summarize that for me,” or “So bottom line, what are you trying to convey.”

A PowerPoint presentation is meant to support what you are saying to your audience. The visuals and charts are to be used as tools to illustrate certain points. The presentation however, isn’t meant to have your script on the screen.

As a procurement professional, when developing a presentation for a stakeholder, it is best to put yourself in their shoes. Think about what they really want to get out of the meeting. Often times an executive listening to your presentation is going to want to know high level what you are presenting, what are the key takeaways, what are they getting out of it, and what are your recommends/next steps. Some of the best presentations I have listened to have been TED talks and there is tremendous value in utilizing their public speaking tips.

Here are just a few to think about:
  • Don’t defer answering questions- During a presentation stakeholders might ask something either relevant to what you are talking about or relating to a different topic entirely, but you shouldn’t defer their question. The question means they are listening, but deferring to only taking questions at the end, they might be totally turned off by that response and then disengaged
  • Create contingency plans- Plan for the what if. What if the projector fails or your audience isn’t engaged? Plan for those fears and address them.
  • Share a story- This one is huge to me…which is why it is in bold. The average audience has an attention span of five minutes and you have 15 seconds to make a good first impression. From an article written by Business Insider regarding data by Quantified Communications, messages that included a well-crafted story were 35 percent more persuasive than the average communication and these story based messages were also 21 percent more memorable. Work to incorporate stakeholder testimonials and past experience examples into your presentation. It not only helps the listener pay attention, but also exemplifies your expertise and knowledge of the topic.
  • Pause for 10 seconds- Pause for 2-3 seconds and the audience thinks you lost your train of thought, pause for 5 and the audience thinks its intentional, but pausing for 10, even those who aren’t paying attention can’t help but notice. The audience then assumes you are a confident and accomplished speaker.
  • Always, always run short- If you have 30 minutes, take 25, if you have an hour take 50, respect the stakeholder's time and as a bonus shortening your presentation forces you to hone in your skills.
The next presentation you give, incorporate these ideas. And when developing your presentation, stop and think about what message you are trying to convey and what tools/support is needed to illustrate that message. Is it necessary to have a PowerPoint? Is it better to show your data in excel and have a couple support charts and graphs? Is this something you can speak to? Can you incorporate a story that illustrates your expertise and gets the message across?




ICYMIM

ICYMIM: April 10, 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.

9 Reasons Suppliers Aren't Participating in Your RFP
Nicole Shedden, Corporate United, April 7, 2017

Every procurement professional knows conducting an RFP is a time consuming process that doesn't always guarantee better pricing. Collecting data, creating documents, and communicating with suppliers can require a lot of time. For this reason, it's important to ensure your RFP includes all the necessary details for suppliers to seriously consider participating. This process can take up a lot of time on their end as well, and if they don't win the business it could have been wasted efforts on their part. Suppliers look for warning signs of an RFP before becoming engaged in the process, and as procurement professionals it's important to avoid these details that could turn a potential supplier away from participating.

To Truly Be Successful at Supplier Risk Management, ADMIRE!
Michael Lamoureux, AKA The Sourcing Doctor, Sourcing Innovation, April 6, 2017

Supplier relationship management and risk management have been separated in the procurement and supply chain in the past, but supplier risk is a hot topic in the industry right now. There's a bit of debate on the most successful route for executing supplier risk management, but it seems there's a few general ideas most experts can agree on. Collaborating with key suppliers is a best practice that can not only manage supplier risk but offer valuable solutions for your supply chain that can reduce costs for both parties. The Doctor recommends engaging the ADMIRE model, which offers effective approaches for managing risk with suppliers.

3 Steps To Be More Sustainable On The Shop Floor
Christina O'Handley, THOMASNET.com, March 31, 2017

In the amount of jobs in the U.S. Clean Economy in 2010, the manufacturing industry proved to be the greatest producer of clean jobs. They've particularly embraced sustainability, as supply chain and procurement groups have enforced environmentally friendly standards to support the business's corporate social responsibility and overall bottom line. There are many benefits of being more sustainable for any manufacturing organization, including faster growth compared to competitors that are less focused on going green.

How to Leverage Economies of Scale for Continuous Cost Reduction
By the time most organizations identify a need for cost reducing initiatives, they are experiencing some type of financial issue where they may be spending more than they're earning. The typical solution for these situations is to consult a procurement group or firm that can offer insight on how to cut back on spending in multiple areas of the business without sacrificing quantity or quality. But what happens after these sourcing processes are implemented?

Usually, businesses are satisfied after they've revised their spending and believe their current supply chain is operating as efficiently and effectively as possible. However, there are still further opportunities for continuous cost reduction in supply chain that can be revealed with changing market landscapes and influences from the economy as prices fluctuate. Leveraging economies of scale is one way to discover areas of any business that can experience continuous cost reduction. The strategic sourcing and supply chain professionals at Source One provide their recommendations for guaranteeing your supply chain is reducing costs on a regular basis.

Manufacturers & OEMS:

Base production schedules on demand for maximum optimization - Carefully evaluating and planning production schedules will allow OEM's to reduce the variable unit cost of the goods they're producing. By anticipating demand and working with the manufacturer to decide when production should be escalated to produce as much as possible and leveraging larger run sizes, which results in cost reductions that can be passed on to the customer.

Distributors:

Forecast demand & schedule deliveries- In this case, distributors can leverage the total volume between you and their other customers for common parts that you both buy to offer cost savings through reduced carrying costs. Together, your team and your supplier, can discover reduced spend in their processes that will translate to increased savings for your organization.

In the latest episode of Source One's Countdown to ISM2017 series, Consultant Ken Ballard discusses Leveraging Economies of Scale for Continuous Cost Reduction. Following a podcast explaining how to achieve transparency in supply chain, Ballard provides further examples of how to ensure your supply chain continues to experience savings beyond a sourcing process. The Source One Countdown to ISM2017 series continues with more insights in anticipation of the annual conference hosted by the Institute for Supply Management. The event welcome supply chain professionals from around the world, and features the sub conference ExecIn, exclusively hosted by Source One. ExecIn invited high level procurement professionals attending ISM2017 for presentations and informative sessions that are designed for them as decision makers in their organizations.
The need to update legacy systems: Could it benefit from strategic procurement?
New IT demands in government may lead in turn to a focus on the supply systems for businesses. It's clear that several agencies need to modernize, and there's a chance there for smart procurement to solve the problem.

Reflecting other trends

Looking at what governments will expect from IT, it's  hard not to see the impact of general changes. Government Technology mentioned the growth of cloud technology and the influence of Software-as-a-Service models on key decisions. There's also the push to modernize old systems, something many legacy companies are dealing with but which can be especially concerning for high-stakes government agencies.

The source spoke to Amy Tong, CIO for the state of California, who referred to updating efforts at the state's Office of the Treasury.

"They were looking to replace a legacy system and instead of going for a single system integrator, they too have grouped their functionalities in smaller scope and then they sequenced those scopes based on the priority of the business," she said.
"There is recognition that modernization needs to happen in government as a whole."

Tong also said that the organization is using a third party to manage other contractors. As similar measures prove far from unusual, the process of organizing and obtaining new components may need to change as well.

The article as a whole emphasized the desire for speed and flexibility in government IT, but relevance could also be a factor. One of the other consequences, the source added, is a model where multiple agencies work together to share resources.
The need to update

The prevalence of legacy systems has been a specific problem from the government, and could reflect a decrease in IT spending as a whole. Last year, the Government Accountability Office released a report on the trends seen over the years, noting that federal IT expenses dedicated to "development, modernization and enhancement" have dropped by $7.3 billion in the past seven years. The Departments of Defense, the Treasury and Veterans Affairs all were said to have systems older than 50 years.

Along with this report, there is at least some recognition that modernization needs to happen in government as a whole. FedScoop recently reported on a gathering of IT professionals in government, and what they believed was important for the future of the field.
Some of the necessary changes they noted included a need for external partnerships outside of the industry, as well as a culture within different groups that encourages necessary updates. Though these concerns may fall beyond the realm of supply and procurement, per se, they do lay the possible grounds for future updates, as buyers start reacting, especially with the prospects of security vulnerabilities in older systems.

Procurement responses

With this environment in place, agencies can look for IT sourcing options that help streamline delivery for efficiency. One of the biggest reasons to embrace this is to attain the flexibility needed due to the new focus on improving older systems. There might be other priorities, including maintaining these old systems instead of replacing them, but the ultimate goal could still be to save money and increase response time.
Source One Round Up

April 7, 2017

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

NEW BLOGS:
The Evolution of the Cloud and It's Impact on Supply Chain
Cloud-based technologies are providing solutions for businesses in various industries. This on-demand network that merges configurable computing resources in three main service modes. Source One Project Analyst Dejana Dosen explains the benefits a cloud based network can have for businesses and their suppliers and partners that exchange data for greater collaboration and more effective communication. The cloud also offers visibility throughout processes for every individual involved, a crucial factor in the supply chain and procurement industries.

Achieving World-Class Procurement Part 2: Taking A Deep Look At Your Current Operations
Many organizations are being heavily influenced by today's competitive market landscape to rely on their procurement and strategic sourcing departments to reevaluate technology, processes and other resources throughout their business. Source One Consultant Ken Ballard discusses how assessing existing operations through a procurement transformation process can be a more effective approach for managing spend by streamlining purchasing practices and improving supplier relationships. An understanding of the ongoing procurement landscape can provide insight for the best strategy moving forward.

Is UNSPSC Really the Best Route? 3 Reasons... 'Against'
In Part 1, Source One Consultant Brian Seipel discussed the benefits of the standardized taxonomy of UNSPSC. There are also a few critical issues that those utilizing UNSPSC often encounter, and in this second contribution Seipel will review how a lack of proper fit as far as goals and usage within the business can present complications. It's most important to remain focused on achieving the best strategy for identifying savings opportunities, and the taxonomy might not offer all the customized categories required for you to meet your goals.

UPCOMING EVENTS:
ISM 2017
The Institute for Supply Management's highly anticipated annual conference ISM2017 is quickly approaching, and members of the Source One team are looking forward to traveling to Orlando, Florida for the event in May. ISM2017 is an international event that unites more than2,500 global supply chain and procurement professionals for informative presentations, networking and educational sessions over the course of four days. Source One is an exclusive sponsor of ISM2017 sub-conference ExecIn, designed specifically for supply management leaders and decision makers. ExecIn offers the opportunity for the key players in procurement groups of major organizations to reevaluate processes through sessions prepared by select presenters.

The Road to SYNERGY - Baltimore, MD
Procurement pros in select regional areas are invited to attend Corporate United's Road to SYNERGY events this summer in preparation of their annual national SYNERGY conference in the fall. The first stop invites those in Baltimore and surrounding locality to meet on June 6th. This one day opportunity allows for collaboration on a smaller scale, before procurement and supply chain professionals from around the country gather during the national conference. As a Gold Sponsor of SYNERGY, Source One anticipates these events to speak with experts in the industry from across the nation.

ISM- New York Annual Conference- Procurement Risk Management
At the end of last month, this annual event was canceled and later postponed due to Snow Storm Stella. The Procurement Risk Management conference hosted by The Institute of Supply Management's New York chapter will now be held June 14th, and the itinerary will feature all the speakers and highlights that were anticipated in March. This one day event allows procurement experts to share their predictions of industry trends in 2017, including members of the Source One procurement and supply chain team who will share their insights and expectations for the upcoming year at ISM2017. 

Supply and disaster management: How the I-85 collapse affects logistics
Responding to sudden logistics changes tasks companies with being flexible and responsive. Procurement management and supply challenges can crop up at any time, but when a major disaster impacts routes, there could be more to be done. The recent Interstate 85 highway bridge collapse in Georgia gives one example of the adjustments companies may have to make.
Facts of the collapse
CNN reported that the collapse stemmed from a fire in a storage area under a stretch of highway. The source said that authorities believe the blaze to be man-made and intentional, since the polyethylene pipes stored in the lot were not normally combustible on their own.
Regardless of the origin of the fire, though, it has indisputably hurt the sections of interstate, requiring replacements for 350 feet of road. That figure comes from the head of the Georgia Department of Transportation, Russell McMurry, as referenced in the source.
Georgia Governor Nathan Deal commented on the ongoing repair effort in an April 3 statement, in which he thanked local citizens and organizations while also calling for caution in the coming days.
"We encourage everyone to continue using caution and exercising good judgment on the roads going forward," he said. "We have undertaken several initiatives to safely and expeditiously move traffic and will continue working with state, federal and local authorities to ensure timely repairs, safe alternative routes for motorists and access to mass transit systems."
The collapse has also brought general infrastructure issues with the bridge to the forefront. The Atlanta Journal-Constitution examined some of the facts surrounding the roadway, including its last inspection date, which occurred in August 2015. At that time, officials graded it a 78 out of 100 points and noted signs of decay, such as cracks and crumbling concrete. The bridge itself dates back to 1984 and was rebuilt in 1993.

Efforts to rebuild a section of Georgia interstate could challenge logistics.
Why this matters for businesses
If the repairs indeed take months to complete, businesses relying on transport through Georgia should be wary. The Drive argued that I-85 is a crucial link to the Hartsfield-Jackson International Airport in Atlanta, which sees "millions of tons of goods" in commercial transport.
As a result, businesses could have to find other alternatives to this busy stretch of road, including different connected routes in the city or modes of transportation, like freight rail. Even though there are other rail options within reach, the need to manage this freight could be difficult, the source said, simply because of the sheer volume of traffic I-85 typically sees.
Even with the government looking for ways to divert traffic, businesses have to consider the impact of this event on everyday logistics. The cost of doing business through this area could change dramatically, now that typical transit time isn't assured.
Efficiency should drive business decisions and keep performance standard, even during times of disruption. E-sourcing and procurement can lower costs from the beginning so organizations have more flexibility to work with. Creating a transparent supply process could also help businesses use resources more intelligently.
Sophistication & Utility: Procurement Metrics and Dashboarding
The role of Procurement has evolved from a reactive buying group, to a more strategic organization – and this evolution means that procurement and sourcing groups are now required to manage data efficiently and effectively in order to support more informed decisions.

To demonstrate Procurement’s value, you need to collect relevant data, organize it accordingly, process the information in a way that makes sense for your goals, and present the information in way that is easy to understand. Here we are talking about Procurement metrics and dashboarding, and as with anything in business these days - people look to software to solve their problems.

The challenge in finding a Procurement Dashboarding tool – as with any toolset adoption- is balancing utility with all of the bells and whistles that may or may not be useful to the company. Not just within Procurement do companies try to employ highly sophisticated tools with a lot of bells and whistles only to find that what looked ideal on paper ultimately didn’t yield the expected return. Usually this is due to the unnecessary complexity creating distractions and adoption hurdles. That’s not to say that these tools can’t deliver significant value when appropriately aligned with companies ready for them. However, you may find it surprising to know that many large companies with mature Procurement and Sourcing organizations have found that the right foundation to build their metric tracking and reporting is actually Excel. In many cases, they go this direction after trying much more sophisticated tools and having them fail.

With Source One's Data Science discipline, our Procurement dashboarding experts know how to identify the right platform that’s sophisticated enough to suit your current requirements, flexible enough to adapt and support continual improvement, and not unnecessarily complex or over-specified so as to inhibit use or dilute your Procurement message. We’ve seen, used, and developed tools with excellent adoption and perfect alignment with Procurement and organizational goals, mainly because they’re accessible, configurable, and low or no cost.

Most important to note: to successfully implement a program like this you need to have a comprehensive guide or document for governance purposes. Your Procurement organization should have a centralized reference point that addresses all there is to know about the your metrics reporting. It should answer what metrics are being tracked, the reasons why they are tracked as they relate to greater organizational goals, and how they’re defined. Doing so will ultimately support your implementation and adoption of your Procurement metrics.

Obviously this is a much bigger undertaking than a simple blog can communicate. But if we were to try and summarize what it takes to institute effective metrics and dashboarding, it would be these three steps:

  1. Select Procurement metrics that are relevant & aligned to your organization’s goals
  2. Formulate solid business rules for deriving and tracking these Procurement metrics 
  3. Report on these Procurement metrics with the right balance of sophistication & utility

Simple? Maybe. Easy? Not exactly, but that doesn't mean it should be difficult.
ICYMIM

ICYMIM: April 3, 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.


The launch of Palambridge made international procurement news as experts and thought leaders from consulting and solution provider firms around the world are participating in this unique platform. The people and firms involved all possess a high-level expertise in the procurement and supply chain industries and are credited for being leaders in their field, including Source One Management Services, LLC. Art of Procurement founder Philip Ideson has partnered with the owner and director of Buyers Meeting Point, Kelly Barner, to create this business model that connects users with firms who offer strategic tools and execution support that assists them in reaching their procurement and supply chain goals.

What Procurement Needs to Know to Improve Your Office Supplies Program in 2017
Sonda Sahley, Corporate United, March 27, 2017

Direct Materials sourcing can often be a main focus of procurement groups, however it is be coming more common for these professionals to recognize savings opportunities for indirect spend categories such as office supplies. As the market for this spend changes, exploring options for best pricing and contract terms for these indirect spend categories can offer substantial savings. While limited time and resources can cause indirect spend categories to be a lower priority, GPOs can provide purchasing power for all of their members and offer savings beyond what procurement groups can achieve on their own.

Procurement Must Distinguish Between the Ambiguity and Volatility of Business Conditions
Kelly Barner, Art of Procurement, March 26, 2017

As the Business Survey Chair for the ISM- New York Report on Business, Barner shares her reasoning for focusing on a six month outlook as procurement professionals are responsible for managing risk. Investors are also interested in managing risk and uncertainty, as they want to quantify and measure the probability of effect for various factors in the markets and global economy. For procurement, being capable of differentiating between volatility and ambiguity can improve results and ensure time and effort are dedicated to categories and suppliers that are uncertain without the distraction of elevated risk that is assumed. 
Tips for Capturing Long Term Success in Procurement Transformation
The topic of the evolution of Procurement has been quite popular in recent years as professionals within the industry look to advance and change the perception of the role holistically. In fact, I was fortunate enough to speak on the topic among several other poignant speakers at the NLPA conference in 2016. With this topic comes one that also has been around for some time and pairs well with the idea of change and evolving one’s organization in preparation for the future, Procurement Transformation. Like any other major initiative within an organization a Procurement Transformation requires many elements to align in order to increase the rate of success long term and ensure its impact is felt throughout the departments it affects. While there are a myriad of sources and articles on this topic, I just want to highlight a few key factors for success based on my experience and research.

1. Have a really solid support mechanism. This goes beyond just having executive buy-in, but having a team INCLUDING executive that will drive the change throughout the organization. This also includes have a structured business case for initiating the change, this will help to have something to lean on when challenges arise from any nay-sayers in the process.

2. Have a clear method of measuring the impact of the change. This means establishing a clear calculation of ROI of the initiative but also having several other metrics in play. Some might include reductions in invoice processing costs, process efficiencies gained from technological improvements, and productivity level changes within the staff.

3. Setting the right expectation for the change based on the current level of maturity within an organization. People often throw around terms like “world-class” and “best-in-class” more than we hear about Kim Kardashian in pop culture news. While these terms are effective in selling an idea around an ideal state, they are not indicative of where all organizations need to be. Procurement departments that are well under staffed with no processes in place and rudimentary technologies will benefit first from just establishing core process definitions and technologies that will improve efficiency. World-class to an organization in a very immature state could be incredibly daunting and overwhelming, and altogether not realistic in the near future. Ultimately what I am saying is that each Procurement Transformation needs to focus on determining a clear starting point and moving to a realistic state within a reasonable amount of time.

4. While many articles note that success is driven by gaining momentum early on, and I agree, I think a key factor is longevity. Starting the race at full speed will only lead to an inevitable slow down long below you cross the finish line. Make sure the right team is in place to continue tracking the initiatives that come out of the Procurement Transformation road-map. Tracking the successes from these actions will help to keep people engaged long after the dust has settled from the initial starting line take off. Levering external support is one way though to get the right pace set up front with a core internal team to carry out ongoing activities.
During a direct materials data collections process the initial time commitment to gathering technical and qualitative data and developing a robust market basket pays off great dividends in time savings and alleviating confusion during the sourcing initiative.

Key steps include determining what specifications must be shared, if non-disclosure agreements (NDAs) are necessary to protect IP rights, gathering a complete set of designs from the technical team, and paying careful attention to the qualitative criteria of the product or supply base.

An accurate quote and achieving sustainable savings are the main objectives of most sourcing initiatives. In order to ensure that the supply base knows the product or service they're bidding on a detailed technical package must be compiled. The key tradeoff is deciding what specifications and documents must be shared and what you would like to leave out in order to manage intellectual property (IP) concerns. This is especially critical in regions such as China and India.

To some extend IP concerns can be addressed with NDAs. And, NDAs are always necessary if sharing engineering quality 2D or 3D mechanical drawings or electrical designs such as CAD drawings, STEP files, or Gerber files.

But, for less complex items you can consider drafting a table of the critical or key specifications which must be met to fabricate the component. Since materials are large price drivers a preferred materials and characteristics list along with acceptable alternate materials and even material specification documentation should always be included. Other items include primary fabrication process, secondary or finishing processes, and assembly processes to ensure supplier capabilities. To narrow down the supply base a component sizing, volumes, and ship schedule table is necessary. You may also consider including list of acceptable deviations and no-go criteria to uncover possible cost saving alternatives.

The next step consists of gathering the complete set of all of the pre-selected designs contained within the market basket into a technical package for the suppliers. If it's a large market basket you'll have to select representative drawings to determine if the supplier is capable of manufacturing that part type at a competitive price. This includes tolerances and manufacturing processes divided by commodity group. But, there can be enough feature variability within a single product group to warrant multiple drawings in cases such as machined shafts, couplings, non-flat feature items, and complex cavities.

The last key factor which is commonly overlooked is developing a scope of work for qualitative criteria. Establish qualitative requirements for prospective suppliers includes reviewing service levels, technical support, certifications, required account management, reporting capabilities, and any other commodity group specific supplier selection criteria. Most critical factors can be determined during stakeholder interviews and reviews of previous sourcing efforts. Logistics are also a key area and include order placement, lot traceability, packaging, shipping, and stocking.

As with any sourcing effort key factors vary by commodity group, but by ensuring careful attention is paid to critical specifications, IP concerns and NDAs, technical design files, and qualitative criteria the overall timeline of the initiative can be shortened and supplier confusion avoided.
In recent weeks, YouTube and parent company, Google, have come under fire as high-profile companies have halted their advertising due to controversies with ad placements. Earlier this month major advertisers like AT&T and Verizon announced that they would no longer be placing ads on YouTube citing concerns that their ads were being placed with controversial content (e.g. hate speech, politically motivated, etc.). Along the same lines, advertising agencies have been reviewing their relationships with YouTube and Google following the news of the controversy. Havas Worldwide, one of the largest advertising agencies, announced that their UK office would halt all media buying from YouTube or Google until the issues can be resolved.

In an effort to amend the situation, YouTube released a statement outlining how they will be addressing the issue and reviewing their current policies. They have always had policies surrounding the type of content that is eligible for advertising with restrictions on what could lead to a channel being removed from this “advertising-friendly” list. As of last week, YouTube has strengthened these restrictions to capture a broader range of content and “demonetized” a number of channels based on these new parameters. YouTubers have already started to feel the effects of these policy changes, with many noting a loss in revenue over the last few days as their channels were impacted by these changes.

Similarly, YouTube has added more options to their “sensitive subject exclusions” filters that marketers can apply to their campaigns. The intention of this filter was for marketers to be able to ensure that their advertisements were not posted alongside content that was related to “sensitive social issues” and/or “tragedy and conflicts”. Following recent events, YouTube has expanded the filter selection to include a broader range of categories that marketers can exclude from their campaigns.

Many agencies are taking this a step further and leaning on big data to increase transparency into the content tied to their ad placements. GroupM announced that they will be partnering with OpenSlate, an analytics firm, to provide further insight into the content associated with campaigns their clients are running on YouTube. By leveraging the learnings from this data, GroupM will work with their clients to create better controls around brand safety to avoid potential issues as digital advertising platforms like YouTube continue to evolve.


It is with these changes that YouTube and Google are hoping advertisers will increase their confidence levels that content is being monitored effectively and potential risks are being mitigated. Only time will tell if these changes will be enough for YouTube to regain the trust of advertisers.