March 2017
              There is an ongoing inside joke amongst my family and friends that despite my constant reminders, none of them are exactly sure what I do for a living.  To my liberal arts friends I work in business, to my business friends I work in consulting, and even to my niche group of consulting peers the exact role of a procurement professional is opaque at best.  The role of a strategic sourcing consultant is one that requires a broad knowledge base of business functions, and an only slightly tighter range of subject matter expertise.  Consider this blog a freebie to the internship applicants who are slightly hesitant when asked what they know about the procurement consulting role.


             So what types of skills and expertise enable success in a strategic sourcing role?  Well, first one must become a Jack of:

Enterprise Software Platforms – A fundamental understanding of an organization’s procure to pay (P2P) model is critical for pinpoint areas of opportunity for streamlining workflows.  Being able to identify and map the dataflow from PO creation through invoice payment, GL coding, and Key Performance Indicator (KPI) reporting is necessary to properly assess the value of procurement, and eliminate manual integrations which are hurting the bottom line.

Dashboard Creation and Reporting – Tracking KPIs is all but useless if the metrics are not being communicated in a clear, concise, and accurate manner.  Procurement professionals must understand the metrics that are most valuable to the organization and ensure that those metrics are available to the key executives driving the organizational strategy.  A well maintained dashboard delivers a valuable storyboard showing the successes and opportunities identified in the procurement space.

Culture Adaptation – Adapting to a client’s organizational culture is not a skill limited to strategic sourcing consulting.  What is unique to this particular role is that the adaptation must flow from supplier to client and back to foster meaningful strategic partnerships.  A strategic sourcing consultant must be able to clearly and appropriately convey a message to suppliers from family owned packaging operations to multinational technology companies.

Category Adaptation – While most procurement professionals have one or more specific categories of expertise, those in the consulting space must be able to adapt the sourcing process to categories that may be less familiar.  The ability to perform efficient and effective market research is vital in finding opportunity in more obscure or less frequently sourced categories.

Interpretation of Product Specification and Requirements – Similar to category adaptation is the ability to interpret product specifications in categories outside of your immediate realm of expertise.  While stakeholders can be relied on for the more technical aspects, a sourcing analyst should be able to identify gap areas in the documentation that may become a roadblock during a competitive sourcing process.

           Essentially the procurement processional needs to have at the very least a proficient understanding of all areas within an organization that interact with procurement.  As the value of procurement becomes more apparent across organizations these interaction are becoming more frequent and more intricate, leading to a competitive advantage for those ahead of the learning curve.

           To fully take ownership of the various functions of procurement from identifying a need or opportunity to execution of a contract and the sourcing functions that fall between, a sourcing professional must be a Master of:

Data Analytics – A sourcing consultant must be able to validate data across multiple sources and reconcile to form a complete picture of current purchasing habits.  This relies heavily on the ability to manipulate and summarize data while maintaining its integrity even in categories with complex pricing structures or thousands of SKUs of data.

Market Intelligence and Research – One of the most frequently terms in business, procurement being no exception, is the word “opportunity”.  Utilization of market intelligence and research is key in identifying areas of opportunity prior to investing resources into a full sourcing initiative.  Efficient use of this skillset reduces the risk of wasted resources on a project that does not have feasibility, and ultimately increases your procurement ROI.

Negotiation – Possibly one of the more obvious required skills, the importance of negotiation tactics cannot be overstated.  A procurement professional must be able to approach negotiation from the standpoint of adding value both to the client and the supplier, and finding the ideal mix of leverage points to satisfy both parties and create the foundation for an ongoing strategic partnership.

Contract Development – While the legal terms are best left to the lawyers, the business terms are what drive the most value from the contracting process.  Procurement professionals must be able to integrate knowledge of best practices in payment terms, additional pricing incentives, termination and auto-renewal clauses, and language specific to the product or service in question to secure the relationship and maximize value.

Ongoing Category Expertise – While being a Jack of all categories is an asset, a procurement professional should always strive towards achieving and maintaining subject matter expertise in a particular area(s).  Many purchasing categories face frequent regulation changes, technological advances, commodity price fluctuations, and a multitude of other factors that require a dedicated subject matter expert to remain competitive as industry conditions change.

      While this list is certainly not exhaustive, it does begin to offer some insight as to what types of skills and expertise are needed to support procurement functions on a daily basis.  Certainly as procurement moves to the forefront of a business value driver, this list will only become more robust, and the need for experienced procurement professionals will grow.





             

Prioritizing procurement for better results
For smarter sourcing, businesses may have to break down their traditional procurement systems to improve each part. This could end up being effective in the long? run, since it allows companies to do what's best for several sectors and the whole at the same time.
Needs and demands
Writing for Spend Matters, Adobe's senior director of global procurement, Conrad Smith, recently wrote about structuring procurement based on the the classic hierarchy of  needs. The best way to do this could include seeing the early stages of development as necessary for the later ones.
In the "pyramid model" Smith uses, the top is dedicated to "design & strategy" while the lower layers concern themselves with aspects like transaction management. His conclusion states that attacking the basics this way sets a standard for reaching future goals. However, one thing Smith doesn't go into as much is the "need" to meet goals even after an organization has moved on to a "higher" level.
Cost efficiency
Factoring the need to save into the equation can complicate things. The elements of a good supply or procurement setup can help support the company's evolution by effectively adding recovered funds to the overall budget.
"Look for areas where you can save money through situation-related solutions."
Investigate each of the pieces of the chain and look for areas where you can save money through specific situation-related solutions, which can reflect the specifics of each and every function as the business develops more needs though its expansion.
A procurement plan can make this efficiency the target while even cutting certain aspects of the existing chain that are no longer valuable or can somehow be made more cost-effectively. Assessing supply decisions strategically could mean reduced spend in different categories.
Digital solutions
Reaching this kind of specificity can take procurement management improvements that integrate into the existing model easily, with no disruption. The transformation plan can incorporate this from the beginning, with an intent to slowly build into full integration for whatever the new procurement solution is. In a way, this can parallel the gradual development Smith mentioned.
That's what a Strategy& piece for Forbes said, outlining the goals of strategy based on a well-structured approach that starts with an honest assessment of the starting position. It's interesting to note that the final product of the piece's five-step plan actually involved a segmented rollout to move through the most important supply chains based on company priorities.
This is all in keeping with the author's commitment to a new view of business modernization called Industry 4.0. This is the vision of the fully-digitized business world, where the different sectors of the supply chain can all connect. The source also noted that simply embracing digital solutions could be transformative, so it recommended a small-scale pilot program first to develop the plan.
Taking a comprehensive approach
The most effective procurement management implementation plan will include new staff as well software, so the company uses the latest technology effectively.
How to achieve transparency in supply chain for continuous cost reduction
Strategic sourcing and procurement groups often view continuous cost reduction efforts as unsustainable, or believe the only opportunities to reduce costs beyond the initial efforts would require reducing the quality of the product. In reality, over time more opportunities can present themselves to allow further cost savings without sacrificing quality.

As the economic landscape of the industry changes, and factors that effect the costs associated with direct materials used, there is constant potential for further savings. The procurement experts at Source One have a few best practices for achieving continuous cost reduction with downstream suppliers based on their experiences, and they've provided three methods for delivering cost savings by creating transparency in your supply chain.

1. Track annual price increases - While it is typical to receive price increases from downstream suppliers at the beginning of each new fiscal year, documentation justifying the price increases is still important to collect to ensure the increase is even. This gives you the opportunity to anticipate increases, mainly for direct materials, and be aware that your supplier will increase the cost of your goods.

2. Negotiate superficial cost increases - Procurement professionals possess quality negotiation skills as demonstrated during the sourcing process, but they can apply these tactics when suppliers announce the annual price increases year to year. If suppliers are aware that your business will want to discuss the price increases and won't simply accept the superficial cost, they'll allow you as the customer to negotiate savings.

3. Request a paper trail to ensure price increases are justified - As the customer, you can ask detailed questions and make requested that require the supplier to be more open about where the price increase comes from. If they can provide documents stating the price increase and you can match it to their increase passed on to you, your business can be confident the supplier isn't padding their margins with the new price for your commodity or service.

Source One Consultant Ken Ballard provides further details on the most effective methods for discovering saving opportunities regularly in his recent podcast Achieving Transparency for Continuous Cost Reduction. This episode is the first in it's series, as Ballard continues the conversation by discussing leveraging economies of scale, streamlining transactional and manufacturing processes, and decoupling value added services such as design and development from a product's unit cost. This episode is featured in Source One's Countdown to ISM2017 series, in anticipation of the international industry conference hosted by the Institute of Supply Management later this year. Source One is the exclusive sponsor of ExecIn, a subconference designed specifically for high level procurement professionals attending the event.
ICYMIM

ICYMIM: March 27, 2017

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


Philip Ideson, Art of Procurement, 3/23/2017

As procurement professionals, it's important to consider the difference between where we focus our efforts and where the executives in our organizations believe we should focus our efforts. Traditionally procurement offered cost reducing initiatives that offered savings viewed as extremely valuable throughout the business. Procurement has developed, and their strategic efforts are proven to be a higher priority for company executives that are seeking to utilize the procurement function to it's full potential.

Contingent Workforce Management Is Changing - Are You Ready?
Tim Holland, Corporate United, 3/20/2017

When it comes to non-employee labor, there is considerable value that sourcing can offer when hiring independent contractors and other managed services. Achieving the paradigm shift in the way you approach this contingent workforce usually requires the support of your procurement group or other strategic sourcing professionals. It's more than updating old practices, focusing on qualitative and quantitative measures, applying ICC and technological advancements can upgrade your program to be best in class. 

Spring Will Be Here Soon. Time To Clean Up Your Procurement Operation
The Doctor AKA Michael Lamoureux, Sourcing Innovation, 3/16/2017


Identifying the people, processes, platforms, and progression in your procurement organization that require support to be reevaluated or redesigned is crucial in ensuring every aspect of your department is running smoothly. This is a first step in guaranteeing that your being as efficient as possible, and every part of your procurement group is on the same page. If you're using the latest platforms but you feel you aren't reaching your full potential, review the talent and change management to discover what is necessary to fill those gaps.





What procurement can get from predictive analytics
Why is it important to bring predictive power to the procurement sector? As IT evolves, procurement technology can also keep pace so it stays relevant. Predictive systems aren't just about knowing what's likely to happen: They're about consistency and efficiency, some of the core values of businesses today in general. We can go even further, though, and analyze what it is about predictive tech that will continue to make it essential.
What predictive analytics means to procurement
To understand this, we need to have a definition of what predictive technology really means for the procurement and supply sector. Unsurprisingly, a big part of predicting procurement is setting up accurate plans for future shipments.
Naturally, this can build off of a strong foundation of data, which procurement organizations should have plenty of access to. However, it's possible that the sense of scale could actually harm companies by giving them unrealistic expectations.


Analytics still offers much to procurement.Analytics still offers much to procurement.
Getting too far ahead?
Forrester Research research analyst Mike Gualtieri believes that businesses can invest too much into this: instead, he told Health Data Management about what really makes predictive analytics work. He specifically referred to this as predictive analytics and machine learning, or PAML.
"The best PAML solutions have model management," Gualtieri said. "The dirty little secret about machine model is that they are based on correlations that work on historical data. That can be a problem since the models created using that historical data are used to predict future outcomes."
While this publication may be health care focused, the basic principle of staying level-headed can still be relevant to procurement professionals in every sector. This might require a data-oriented plan, though, to start at the areas with the most information and work off of that for important tasks. These can include benchmarking, logistics adjustments and other necessities.
New management structures
Overseeing predictive transformation could also require a new focus from the top. Existing leadership might have to refocus, and the isolated tech sectors may take on a larger role to help the overall effort take shape.
Whether this is in the C-level or some other similar high position, the organization can shift to accommodate the latest predictive availability. Being in charge of so much important data means the business may have to change the system it uses to handle it. There's no reason that the added responsibility of this information has to be a burden, though, if companies are well-equipped enough to respond.
Strategic sourcing and effective decision?-making
?At its heart, the big advantage of predictive tech could be translating different data factors into strategy. Strategic sourcing can be a similar corollary, since it's based on using various measurements to guide procurement choices. With other trends such as the Internet of Things also confronting businesses, the scope of this sort of plan likely needs to get wider and more comprehensive.
These can include pricing, stability, fuel concerns and other granular issues. Identifying the most relevant data begins the process, and establishing appropriate purchasing management protocols could help develop more effective, efficient coordination.
Is an RFP always your best option?
When people hear the term strategic sourcing, it is commonly associated with Request for Proposal (RFP). However, it is a misconception that strategic sourcing and RFP are synonymous. Rather, a RFP is just a tool in the strategic sourcing toolbox. Behind strategic sourcing there is a process; some processes may vary but the general process flow is pretty much the same. The most important thing to keep in mind is that your approach to each step of the process should be shaped around developing the best strategic path forward for a given sourcing category. What I mean by this is that you should be thinking about how to shape a solution that elicits the lowest total cost of ownership (TCO) and is actually implementable for the organization. These two elements are key and need to be at the forefront of when executing all sourcing based activity.

Essentially, strategies centered on TCO and implementable solutions are the focal point of strategy development and should heavily factor into approach. Your approach to strategy development must factor in numerous elements, such as the organization’s outlook, insight gained from contract analysis, supplier relationships, as well as a cost analysis, and proceeding with a RFP isn’t always going to be the right approach to execute. Remember it’s just one tool in the toolbox. Other options include request for quote (RFQ), direct negotiations, reverse auctions and benchmarking to name a few. I find it always helpful to have a candid conversation with the end users and the suppliers in order to fully understand the relationship and let them know what your objectives are. From there you can work together to attain your goal.

Suppliers understand the business and sometimes the business is calling for cost reduction. Incumbents will do their best to help reduce costs, but they also understand that sometimes they aren’t the best fit solution. For example, there may come a point where these suppliers, due to company size etc, may not be able to meet the target cost requested in order to continue operating while making a profit. However, I’ve always found that supplier’s appreciate this transparency, and are more willing to take a first pass at reducing costs by working with you rather than being drug into a RFP process. In my experience, sometimes the threat of a RFP works better with incumbent suppliers rather than actually pursuing the more burdensome activity of taking the category out to market. This is an even more effective strategy when you have benchmark data against which to compare the incumbent’s pricing.

From a pure negotiation standpoint, the incumbent generally appreciates that you reached out to them first and gave them a first pass opportunity to hit your goal. They are more apt to work with you and even more importantly, being transparent with the incumbent, is a more effective method of handling an important supplier relationship. Now if you have a limited understanding of the category, and the incumbent supplier isn’t one that would be considered a preferred supplier, or identified as being a partner, I’d be more likely to take the category out to market in order to gain an understanding of what the market has to offer. Then I am able to include the incumbent supplier in the RFP process and compare their proposal to the rest of the market and negotiate from there.

 Now for more tactical categories with a much lower risk impact to the organization, like office supplies, I’d be much more likely to benchmark and negotiate, or proceed with a RFQ. For this type of category, the requirements are fairly basic and consistent across the industry, limiting the need to conduct a full qualification assessment. I’ve also used reverse auctions where appropriate. Again this is a good strategy to utilize for categories that are less strategic in nature and very price driven. Let’s say I’m making several large purchases of rebar over the course of a year, I’ll most likely conduct an RFI to identify a supplier who can fulfill my needs. Then run a reverse auction for each product purchased. The rationale here is that I can take advantage of the hungrier supplier. Supplier X might be at capacity but Supplier Y is desperate for business.

The lesson overall is that each category needs to be looked at individually in order to shape the most effective strategy for a given category for a given organization. There is no cookie cutter approach and all factors must be considered in order to be strategic and effective. Strategic sourcing is not synonymous with Request for Proposal, and an RFP is just one strategy, “tool,” that can be employed when shaping a strategy and working to achieve sustainable cost savings.
Source One Round Up

March 24, 2017

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

RECENT FEATURES:
40 WMS selection tips to help you find the perfect software
Software selection projects are typically long and tedious processes, and any individual that has had to be responsible for reviewing RFP responses, vendor demos, and stakeholder meetings can appreciate suggestions for making the process more efficient. Senior Consultant Torey Guingrich and other industry experts offer their advice in this extensive list of tips for the WMS selection tips. Guingrich suggests considering both existing and future warehouse requirements, creating a WMS vendor shortlist with practical considerations, and including all key stakeholders input on the RFP.

NEW PODCASTS:
Strategic Sourcing Throughout the Product Lifecycle Q&A
Direct Materials Sourcing Expert Martin Przeworski offers his perspective on sourcing throughout the product lifecycle in this recent Q&A. Based on his experience, Przeworski provides examples for how sourcing and procurement groups can create value in every stage of the product lifecycle. These professionals possess the market intelligence, ability to engage suppliers and cost-reducing methods that can be applied beginning to end of the product lifecycle, not just when looking to cut spend during the manufacturing stage. Further insights on this topic are available in Source One's most recent whitepaper Strategic Sourcing Throughout the Product Lifecycle: Balancing Competitive Costs with Innovation & Speed to Market.

CURRENT EVENTS:
Today is the last day of ISM Tech 2017! The three day even kicked off on Wednesday in Washington, D.C. and the information technology and services sourcing experts from Source One are enjoying the last few sessions of the conference. Over the last few days, attendees have had the opportunity to hear from industry experts as they presented educational sessions focused on technology and all the options available to take business operations to the next level. The informative conference delivered excellent insights into the best practices for identifying, sourcing, and implementing performance boosting technology and software.

UPCOMING EVENTS:
Industry professionals around the world are looking forward to the highly anticipated international conference hosted by the Institute for Supply Management in May. Over 2,500 global supply chain and procurement professionals come together for four full days of presentations, networking opportunities, and educational sessions that allow attendees to work with experts in the supply chain and procurement industry. As the exclusive sponsor of ExecIn, a sub-conference at ISM2017 designed specifically for supply management leaders, Source One prepared a schedule that attendees can anticipate as an opportunity to reevaluate their business operations and existing procurement processes with the support of best in class procurement experts.

The Source One team looks ahead to SYNERGY national conference in this summer. Baltimore, Maryland hosts the first conference in June, where local procurement professionals can collaborate with other experts in their industry on a smaller scale in anticipation of the national conference. As a Gold Sponsor for these Road to SYNERGY events, Source One's procurement experts are looking forward to connecting with attendees and sharing more information on our cost reduction services.  
This past Tuesday I had the pleasure of returning to my alma mater, Penn State Abington, as a member of a Corporate Communications alumni panel. As a student, I remember attending these panel sessions, appreciating the valuable career advice and perspective the panel members offered. Quickly approaching 4 years since I've stepped foot on the beautiful campus, I jumped at the opportunity to come back and speak to students to share my experience and, dare I say, words of career development wisdom.

While this particular session was geared towards Corporate Communications students, the advice offered by myself and the other panel members can really apply to future graduates in any major looking to set themselves up for success in a career they love upon graduation.

1. Intern, Intern, Intern - Whether your school mandates internships as a part of your graduation requirements or simply recommends them, secure an internship - or rather, internshipS. Don't wait until you need internship credits to start looking and applying for internships. As one of the most educated generations, simply having a degree no longer sets you apart in the workforce, but experience does. Intern as early and as often as you can so you can start getting the experience you need to distinguish yourself from the competition. Plus, internships are a prime opportunity to identify what you enjoy, or possibly even more importantly - what you don't like about a particular career path.

2. Network - This is a piece of advice given by almost every professional and while it might seem a bit cliche, nearly every member of the panel had personal anecdotes on how networking benefited or impacted their career. This trick here is to simply meet and get to know people in the field you're looking to pursue. Do not approach networking with a "What's in it for me?" attitude. Instead, approach it with sincerity in learning more about the professional. Set up informational interviews over coffee or lunch just to get a better idea of what this particular professional does everyday. Find out what they love about theor work or what they find most challenging. This will help you get a perspective that isn't necessarily offered in your textbooks and it may open up opportunities for you later down the road.

3. Be Proactive in Developing Your Skills - Regardless of whether you know exactly what you want to do upon graduation or are still trying to figure it out, identify different career paths you could take with your major and begin to develop your skills and experience. More specifically, research different positions in that career trajectory and take steps to build out your resume accordingly. For example, certain positions may require that you have specific certifications outside of your degree. While you may not want to immediately enroll in that certification program, you can begin looking at the course work and requirements.

Overall, take the time while you have it to explore your opportunities. Maintaining a high GPA is important but it's not the only thing employers look at when considering their candidates. Take initiative and balance the time you spend studying with gaining experience.

Interested in taking me up on the first piece of advice listed here and joining the Source One team as an intern? We're always looking for motivated individuals who are interested in learning more about procurement and strategic sourcing, as well as gaining exposure to dozens of industries. To learn more about our internship opportunities, visit Careers at Source One.


Yesterday kicked off the Institute for Supply Management's Tech conference in Washington, D.C. An evening welcome reception and supplier display greeted attendees and set the tone for an exciting three days of educational sessions, networking opportunities, and innovative consultations with suppliers and providers. With the convenience of so many supply management professionals in a collaborative environment, attendees can strategize with experts to discover the best options that fulfill all their technological needs. In addition to identifying solutions for existing challenges, representatives from top providers are available to offer insight for potential growth opportunities by utilizing technology to gain a competitive advantage and bring a business to the next level.

For Day 2, supply management professionals attended a variety of presentations discussing how new technological innovations of today are influencing the future, and which advancements are allowing businesses everywhere to stay ahead of their competition. Some of the hot topics to be covered include the role of artificial intelligence in the future, robots outside of the manufacturing line, and best practices for procuring software and technology. Attendees also have the opportunity to hear from experienced leaders in their industry as they advise the most efficient methods for identifying, mitigating and managing risk.

The day concludes with a session on the future impact of supply chain, IoT and analytics followed by supplier displays for attendees to discover solutions and services that will support them in all their technological needs.Tomorrow will be the final day of the conference, featuring a panel with data experts providing their insights on how the transportation revolution is driven by data and wrapping up with a keynote addressing technological advances that are outpacing humans across a variety of sectors.

Source One's information technology and services team members have enjoyed meeting with other industry experts and collaborating during the sessions at ISM Tech 2017. With their extensive background creating and implementing sourcing and procurement initiatives for clients of a variety of industries, the experts at Source One can assist with business intelligence, data center management, IT managed services, software development and more. ISM Tech 2017 is one of the events hosted by the Institute for Supply Management in anticipation of their international annual conference in May. As the exclusive sponsor of the ExecIn subconference at ISM 2017, Source One looks forward to the future opportunities to network with other supply chain experts from around the world.

For more information on Source One's offerings, visit the team online at sourceoneinc.com.
Most commonly, strategic sourcing is only introduced during the manufacturing phase of the product lifecycle, during the growth and maturity stages. Organizations often only consider procurement a necessity when considering their options for reducing the overall costs of the established product. Within many organizations, procurement is viewed as an obstacle in the sourcing process. However engaging sourcing and procurement teams throughout the product will offer a clear view of the market landscape when it comes time to make serious purchasing decisions, and ultimately result in added value.

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 selection. Including SS&P during the ideation phase can offer an abbreviated development timeframe that meets cost targets to ensure the design of a quality product in a competitive market is a repeatable reality. Procurement has the ability to enable manufacturers to understand the market for material and functional design considerations, evaluate their current contract engineering relationships, and then determine the most efficient approach to balance costs with technical considerations. Beyond that, procurement can leverage supplier input during the Production phase that can assist engineering teams to guarantee cost-competitive and sustainable initial design.

In a recent conversation, Strategic Sourcing Throughout the Product Lifecycle Q&A, with Source One Consultant Martin Przeworski, he reveals the benefits of including procurement during the earliest phases of the product lifecycle. Przeworski applies his background in engineering as a direct and indirect material sourcing expert to improve communication between engineers and procurement professionals that achieves savings and allows both parties to stay competitive in their markets. This question and answer session follows the release of a new white paper titled Strategic Sourcing Throughout the Product Lifecycle, which explores the value of engaging Strategic Sourcing and Procurement groups at each stage of the product lifecycle. Przeworski was a main contributor to the white paper, and collaborated with other members of the Source One team to offer their perspective on utilizing procurement earlier in the product lifecycle than it is traditionally and how it can provide additional value start to finish.

Will AI disrupt procurement?
When it comes to risk, procurement management teams have to be wary of possible disruptions. But these can come from several places including changes that occur when technologies that once seemed uncommon are normalized.
A classic example of this right now is Artificial Intelligence, sometimes thought of as a danger to the supply industry because of its potential impact on jobs. Now there's speculation surrounding the real force of this technology as research into it continues. The World Economic Forum's most recent Global Risks Report included mentioned the lack of strong governance for Artificial Intelligence, considering how new it is to supplier systems.
AI and different categories of disruption
In fact, one of the organization's previous perception surveys, mentioned in the report, placed AI and robotics as the top technologies in need of better governance, with 46.3 percent of survey respondents affirming this idea. That put these areas ahead of other types of tech gaining steam, including 3D printing and virtual reality systems.
The report also found a widespread range of disruptions associated with AI, all of which could add to the need for some sort of plan to account for it in the near future. The same perception survey ranked AI as the No.1 technology for exacerbating risks in economic, geopolitical and technological fields. While there is some appeal to the consistency AI represents, there's also a sense of danger that comes with this developing sector.
"Speculation surrounding the real force of this technology as research into it continues."
What could AI do?
With this much interest directed toward AI, procurement companies can't help but take notice, and possibly prepare. In a Supply Chain Digest piece from last month, Institute for Supply Management CAP Research research associate Roberta Jennings described some of the areas where AI, or cognitive systems, could improve procurement. Despite possible benefits in managing contracts, supply and spend, though, Jennings discussed some of the drawbacks to implementing "smart" procurement in the near future.
"It can be extremely challenging to cleanse data, determine weights for various classifications of data and ensure that there is some standardization among measures," she said. "Firms may feel confident about data generated through their own ERP systems, but the situation gets murkier when also feeding external data into a cognitive system."
The idea appears to be that automation could make predictive and analytics-driven changes easier, taking in data from different sources to create automatic plans. A big question, though, is whether or not automation is ready for supplier adoption. A more meaningful strategy could be either a slow phase-in or the use of human staff alongside potentially disruptive tech.
The Fourth Revolution
Some might see AI as an argument for the Fourth Industrial Revolution, as Spend Matters noted. This trend, also called 4IR, refers to a digital transformation that stands to shift business as much as other major developments have in the past. What could matter the most during this time is the stability that comes with experienced purchasing management.
Without discounting them completely, businesses can prepare for the arrival of new technology by paying more attention to different suppliers.
There’s no doubt category managers and stakeholders make significant investments to sourcing the products and/or services they use, building relationships with suppliers, and ensuring these purchases meet specific business needs. However, sometimes having an outside perspective and a more strategic methodology to how purchases are made can result in a cost effective and efficient solution that betters overall business operations. Procurement resources within an organization offer tactical and objective insight to improve processes and enhance manager’s abilities to effectively obtain the required services.

Specifically within IT and Telecom commodities, managers and their supporting resources are responsible for ensuring technologies meet business standards and requirements that are critical to maintaining business operations. The focus tends to be less on the cost of service or market conditions, but rather on keeping business communications and connectivity to the outside world working. Although Procurement’s role is to help simplify and standardize processes, in order to be successful in working with stakeholders, Procurement needs to be mindful of current initiatives and relationships in place today. With that in mind, here are a few benefits procurement can offer IT and Telecom teams and parallel best practices for approaching stakeholders and implanting oneself within the sourcing process.
  • Leverage market competition: While IT and telecom professionals know the technical details of the services they are using, they might not know all of the suppliers capable of providing that service or other solutions available that might be a better fit and more cost effective. Procurement teams invests resources to research market conditions and uncover potential viable alternatives to both the supply base and technology. This allows for competition when sourcing these commodities and negotiating with incumbents suppliers resulting in improved service at a reduced cost.
    • Learn from the subject matter experts: Have a foundation of the product/service being purchased. Procurement needs to be educated by end users why they are buying what they are buying and what the requirements are. If you understand how all pieces fit together the team will not only have confidence in your capabilities, but will respect the investment you are making with instilling yourself to support them.
  • Spearheading sourcing initiatives: If stakeholders have good relationships with suppliers, they tend to rely on them to not only bring ideas to the table, but to be fair with pricing and overall account support. Unfortunately, supplier sales teams have their own agendas and quotas to meet. Procurement takes a more strategic approach by engaging in sourcing activities, such as Request for Proposal or Request for Information initiatives, with both incumbent suppliers and the alternates they have uncovered during their market research. Stakeholders do not typically have the time to interview multiple suppliers, review proposals, and assess capabilities in a productive way. Procurement will not only facilitate and manage these processes, but will assess and report the results in a way that allows the team to make an informed decision.
    • Be sensitive and considerate of existing relationships: Within the telecom and IT categories, most suppliers have ingrained themselves from both a financial and technological perspective and are involved for many years. It is not common practice to changes suppliers. Therefore, Procurement needs to approach the team delicately if recommending a change. There will be some hand-holding and it is important to consider all of the requirements and focus on the facts. For example, if alternate supplier pricing is very attractive, what are the technical and functional benefits on making a change? How will the new supplier ensure an easy transition? What are the value added-services they provide and how do they differentiate themselves compared to the incumbent? If you can get everyone to see the big picture, it is more likely they will support your recommendation for a change.
  • Perform billing audits: Although basic checks and balances might be in place when reviewing invoices, it is very common especially within telecom and IT for miscellaneous discrepancies to occur. They might be small miscalculations or slight price increases, but these minor changes can have a major impact on the overall budget. Procurement will ensure an understanding of each billing element on an invoice from monthly recurring costs to applications of taxes and surcharges. They will validate against contractual obligations and work with suppliers to correct any billing anomalies.
    • Provide constructive feedback: Don’t put the blame on the team for missing billing errors or shame the suppliers for making mistakes. Many times these are system generated issues; although both stakeholders and account reps should be completing reviews to catch these inaccuracies. Procurement should offer insight into best practices for completing billing audits and suggest more formal assessments from the supplier accounts team to ensure not only correct billing but to motivate opportunities for price concessions or recommendations for innovative technology refreshes.
Procurement can be a great asset to IT and telecom teams in support of overcoming challenges, better internal sourcing processes, and achieving the best bang for your buck!  However, if Procurement wants to be considered an ally, they need to promote themselves as an additional resource to the team and not someone trying to take control.
Intern Corner - From Financial Accounting to IT/Telecom Strategic Sourcing
When I began my internship at Source One Management Services, I was unsure what to expect. In preparation for my interviews I studied materials about procurement and strategic sourcing consulting, but I still wasn’t entirely sure what my day to day work would consist of. I knew from the interview process the majority of the work would be used through Excel and I felt confident in my abilities as a result of my previous internship experience and coursework at DePaul. Approaching my first day I felt eager to learn more about a previously unknown space.

During my first few weeks at Source One, my workload consisted of pulling invoices and data entry, and ultimately this work proved to be valuable experience in learning all of Source One’s different business offerings. It was a highly educational experience to apply what I’ve learned during my classes at DePaul one day to business decisions the next. The data collection tasks I undertook in my first few weeks provided first-hand experience in the main driver of Source One’s decision making. This experience, while mundane at first, formed an important base as I expanded my knowledge of sourcing and procurement.

As I gained a better understanding of some of the industries Source One’s clients operate in, I’ve been able to conduct supplier research. This is one of my favorite and most educational parts of interning at Source One.

I greatly valued these initial data collection tasks as they’ve exposed me to a wide variety of business segments, leading me to be placed on the Telecom/IT team. While Telecom uses the same overall Strategic Sourcing process, the content differs greatly. Working on projects in the Telecom team allowed me to expand my procurement knowledge into a previously unknown field. This came with a learning curve but as I’ve progressed I’ve been able to take on greater responsibility in these projects. I have found it incredibly valuable to stay with the same project for an extended amount of time as opposed to completing one off tasks for a variety of projects. Being able to use the information I had helped gather to reach out to suppliers, provided me with a deeper understanding of the Strategic Sourcing process. 

From my first day at Source One I felt welcomed by everyone at the Chicago office. Source One’s office culture is such that I’ve been able to work closely with everyone from Analysts to Directors on a number of projects. No one at Source One has ever been too busy to offer help in understanding the Strategic Sourcing process. A variety of social events such as the 2017 Kickoff Meeting at For the Win Chicago, reinforce a collaborative and welcoming environment. I’m now two months into my internship and couldn’t be happier with my opportunity at Source One. In this short time I’ve worked on a diverse spectrum of projects, gaining valuable experience in both consulting and strategic sourcing. I plan to continue a career in consulting after I graduate from DePaul. I hope to apply the analytical and technological skillsets I’ve developed at Source One to a variety of business problems down the line as I advance in my career. 
IT Sourcing: The importance of defining requirements
In 2017 alone, business leaders are expected to spend $3.49 trillion on software and IT services.
When it comes to purchases IT software or hardware, it comes as no surprise ROI is a top concern. These tools and products can provide efficiency throughout your organization and create new opportunities across operations and processes that have the potential to take your business to the next level. However there are so many options in today's world where new technological innovations are revealed regularly, one of the most difficult steps in updating your software and IT needs is selecting the right tools.

Before even evaluating all the options you believe your business has, develop a comprehensive set of system and user requirements. Decide what components are negotiable and which are necessary to assist in eliminating potential suppliers before you even create your RFP. It's common that sourcing professionals will request that businesses provide a User or System Requirements Specification Document to identify potential suppliers that meet these specifications. It's never too early to outline these needs and offer any details that can allow Sourcing professionals to leave out suppliers that may not be able to provide all these specifications and prevent them from participating in a sourcing event for business they have no chance of winning. To save time and energy for everyone involved, it's best as the business to decide on a good set of system requirements in the very beginning. Technology gives your business a competitive edge and shapes the future of your organization, and you will want to seriously consider the needs of your business and the options available before making any decisions.

This week, The Institute for Supply Management invites supply management professionals to meet for a three day event in Washington, D.C. focused entirely on technology solutions and services. ISM Tech 2017 offers supply management professionals the opportunity to meet with experts and leaders in the industry to learn about new possibilities and cost-reducing efficiencies in a range of departments throughout any business. The conference also allows attendees to collaborate with innovative suppliers and top providers in procurement to discuss solutions for existing challenges and opportunities for growth in the future. The IT and Telecom experts on the Source One team are looking forward to meeting with attendees to offer their services and professional experiences.

ISM Tech 2017 is just one of the many events the Institute for Supply Management hosts in preparation of the international annual conference that welcomes supply chain and procurement professionals from around the world. ISM2017 is one of the most highly anticipated events in the industry, with more than 2,500 professionals from all over the world meeting in Orlando, FL for four days of presentations and informative sessions from leaders in the industry. The conference also features sub-conference ExecIn, sponsored exclusively by Source One. ExecIn is designed for procurement decision makers and leaders in their organizations, with opportunities to meet with other professionals at their level that share a similar perspective. 
The Growth Marketing Funnel Brands are pouring out new marketing campaigns and communications, with the goal of remaining relevant – and at the end of the day, increasing revenues. Marketing campaigns depend on countless IT requirements to make these brand messages effective. Why are brands constantly pumping out content? They are attracting, nurturing, converting and engaging their current and future consumers. Where does this start? It starts with strategic marketing plan development by the brand(s). Similar to The Sales Funnel, growth marketing follows a likewise path, which I will be referring to as The Customer Growth Marketing Funnel, which include the five stages shown to the left.

As you can see in the illustration, the Customers are always on top – they should always be the driver of all decisions. To support any marketing plan, they are many software platforms to help develop, organize and deploy marketing initiatives; they include the ability to forecast and budget, customize templates, tools to define your target and reach market, and embedded calculators to help you realize the ROI, cash flows, customer conversion rate, break even points, and marketing deployment success rates. They also support competitive analysis, marketing strategies, product development, Ad content and the ability to delegate to your team. Overall, this software allows you to develop your positioning and brand strategies across a multi-channel business, use interactive marketing plan templates to map out your strategies, and organize and manage your team through implementation through pre-built, guided templates and additional tools.

This type of software is also applicable to the “Attract” portion of the funnel. I like to refer to this stage as the Buyer Stage, the customer exploration and education phase. This is the stage where you are executing your Marketing Plans, where you’re producing, publishing and promoting suitable content across all strategic channels; you are drawing consumers in to your content hub(s) and ultimately your database. Strategic Marketing Plan Platforms assist in tracking the views, visits, followers and opt-ins and downloads from your initiatives. Deployment tools include your website, social medial pages, mobile aps and interactions, videos, podcasts, SEM, SEO and blogging. When you have attracted customers you then should nurture them and show your company is worthy of keeping a customer’s attention by offering additional value adds to keep and foster consumer loyalty. Loyalty Platform Software, for example, can drive and maintain quality conversions, encourage engagement and increase the customer’s time spent on your website and other engagement platforms. Other software platforms that assist in the nurturing portion of the funnel include landing pages, automated e-mail deployments, webinars and marketing automation software. Marketing automation software is crucial to a company’s marketing plan; it allows you to relay information quickly and effectively to current and future members. This software will also pick up any information that you may have missed and track the information allowing you to be in real-time cognizant state of knowing the success rate and effectiveness.

Now that we have nurtured your most loyal customers, let’s convert them to be regular purchasers and advocates to your brand, otherwise known as influencers. Marketing automation is the driver to consumer conversions, but your website, landing pages, staff and hubs should be the “closers”. Key metrics to this phase include multi-channel sales, click to purchase rate, revenue/profit and repeat purchasing, to name a few. In my opinion, this is where the most important and crucial marketing software platforms come into place; all Customer Relationship Management (CRM) platforms fall in this phase. Not only does CRM collect data on customers across many different channels including contact hubs between the customer and the company (i.e. company's website, telephone, live chat, direct mail, marketing materials and social media), but they can also provide customer-facing staff comprehensive information on customers' personal information, purchase history, buying preferences and concerns for more targeted and personal shopping experience. CRM also drives future marketing strategies and investments. CRM comes full circle and supports all aspects of The Customer Growth Marketing Funnel.

You have all of this valuable information, so what do you do with it? You utilize this data to not only drive future decisions but also to engage your customer base. You identify your advocacy champions and enhance your customer engagement. In this stage, your goal is to turn your most loyal customers into social advocates for your brad, value and product/service. For example, beauty bloggers are influencers in the market where, at times and most likely, are paid by brands to promote their product through their blogs and websites. Key metrics within this phase include reviews, comments on social media, social support, referrals, and survey responses and indirect sales. Gathering measureable feedback allows for action planning and execution. When you pay attention to when your customers are talking, you may uncover things you would have not known and not be able to adjust course in time. There is software available for Reputation Management. These platforms allow you to grow your customer relationships, gather actionable feedback, standout online, get customers interacting, build repeat business and monitor customer trends.

Customers are the essence of any business, but within today’s overabundance of communication hubs, it’s become more difficult to get your message through. Investing in and utilizing marketing software platforms increases your chances of getting your messaging and initiatives through to not only your loyal customers but your “reach” ones. Investing in marketing technology can and most likely will increase your ROI and effectiveness of your marketing initiatives. Run through The Customer Growth Marketing Funnel and ask yourself the following:

· What is the ROI on each marketing campaign?

· Do we have the proper marketing software to foster and grow my business?

· Is my technology performing affectively in real-time?

· Do we Plan, Attract, Nurture, Convert and engage our customers?

If the answer to any of these is no, it’s time to look into sourcing the proper marketing software partner to increase your strategic marketing plan and more importantly, profits!
ICYMIM

ICYMIM: March 20, 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 Doctor (AKA Michael Lamoureux), Sourcing Innovation 3/14/2017

Many organizations only begin to include procurement during the New Product Design stage of the product lifecycle, without considering the benefits of utilizing procurement during Market Needs Analysis or the New Product Definition phase. The best time to involve procurement is at the product's inception, when they can offer solutions that maximize profit and in turn maximize value for the company overall. Lamoureux emphasizes that wherever and whenever procurement can provide support, they should be utilized to offer the most efficient options throughout the product lifecycle. Procurement has the potential to apply processes that go beyond cost-reducing initiatives in specific phases, as they can provide solutions for more efficient practices all around. Organizations that included procurement from the first stage of their product lifecycle have discovered the benefits beginning with the function's market intelligence during Introduction up until the Product's End of Life, where it offered solutions for maturity through decline.

Rooting out 'Fake News' in Supply Chain Risk Management
Kelly Barner, riskmethods, 3/16/2017

When it comes to determining if content is worthy of your time and attention, Barner provides her advice for deciding whether a news piece is quality or 'fake news.' Before reading the article word for word, first scan for data that could offer reliable sources to prove the author did their research, and these statistics or charts have real value for you. It's also important to consider before seeking the information you need, that first referring to a verified source could be a better place to start than simply performing a general search for the desired information and sorting through the results to find a trusted source. In supply chain risk management, it's crucial to make decisions based on facts, and professionals in this industry need to be capable of determining whether the data and reputation can justify making an important decision. 


Breaking News: Art of Procurement Founder Philip Ideson Partners with Kelly Barner of Buyers Meeting Point to Launch Palambridge

Philip Ideson, Art of Procurement, 3/13/2017

Palambridge, a new virtual platform that unites procurement experts, technology, and intelligence in an on-demand setting, launched at the end of last week. The founders of Palambridge include Philip Ideson of Art of Procurement and Kelly Barner of Buyers Meeting Point, who combined their individual years of experience to develop this model to deliver procurement solutions for subscribers of the service. The idea came about after the founders hosted The Procurement Revolution in 2016, and their network of experts and partners included valuable procurement intelligence, solutions, and professionals who could contribute to this change in the industry. Specifically, Ideson and Barner aim to connect subject matter experts with the businesses seeking services from experienced professionals like themselves. The category experts at Source One are featured on Palambridge as their background as procurement professionals for clients in various industries and ability to provide solutions for the Palambridge community.






Why GPOs should standardize healthcare sourcing
Health care organizations can rely on complex systems to meet supply and delivery goals. To control spending, they might also work through a Group Purchasing Organization. Though this can already offer value, strategic sourcing can add even more to the mix, as stakeholders make better procurement decisions with lower costs in mind from the start.

The benefits of GPOs
A GPO does more for health care organizations than simply lowering prices. In January, the Healthcare Supply Chain Association published its latest annual report on the impact these groups have for health care supply.

According to this source, GPOs are indeed set to save as much as $864 billion within 10 years for healthcare, but they're also focusing on important supplier issues, including transparency, disaster management and knowledge sharing.

In a press release accompanying the report, Todd Ebert, the CEO and President of the HSCA, described the vast scope that the CPO has come to represent.

"The importance of GPOs seems to reach local groups as well as larger ones."
"GPOs are expanding their offerings to meet evolving hospital and provider needs, including data analysis and benchmarking, market research, innovative technology integration, infection control, electronic product tracking and developing and facilitating communities of knowledge among healthcare providers and supply chain experts to share best practices," Ebert said.


The importance of GPOs seems to reach local groups as well as larger ones. Modern Healthcare reported on the Michigan-based HPS and its deal with Resource Optimization & Innovation. The two are now sharing contracts, possibly affirming the strength that even smaller-level GPOs feel they have to expand in the current market.

Why use strategic sourcing?
Much of what a GPO does (or is poised to do) aligns with the benefits of strategic sourcing, something healthcare decision?-makers should recognize. The GPO is meant to support supplier value and keep the organization connected to new trends: Sourcing technology can help with the same things, with an additional focus on system standardization.

This could put it back in control of supply, cutting down on the distance between it and its business processes. The end user is important, too, and instead of simply saving money, the smartest system can maximize the final results as well as the ROI for the health care organization in charge.
That need for end results was evident in a recent interview between Becker's Hospital Review and two representatives of Cardinal Health: Senior Vice President of Supply Chain Scott Nelson and CMO Dr. Shaden Marzouk. Dr. Marzouk told the source that 57 percent of hospital staff are aware of some incident when a physician didn't have the product a patient needed.

To highlight the need for patient-centered transformation, Nelson said that automation, analytics and transparency are all elements of the ideal supply arrangement. This reflects the consistency that strategic sourcing provides.

Even when GPOs think they've already made improvements, they may actually still need the added help of e-Sourcing and other important management tools.
Source One Round Up

March 17, 2017

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

NEW BLOGS:
Marketing Procurement: Understanding Event Budgets
There are a variety of fee structures that an event management or experiential agency may apply when hired for your event, and it's important to understand how the different options make for a difference in price. Regardless of the compensation structure your event agency uses, it's important for you to have transparency and understand exactly how you will be billed for these expenses and how the process aligns with your expectations. Ultimately, the portion of the costs are not entirely out of your control and you should be aware of the steps to ensure cost competitiveness. Megan Connell, a consultant on the Source One Management team, explains how negotiating the agency compensation can have the greatest impact on your events overall budget.

UPCOMING EVENTS:
ISM Tech 2017
As supply management professionals, we have the choice to make technology work for us to improve operations or allow our processes to fall behind and see our business suffer. With so many technology offerings in this day in age, it can be difficult to decide what options will benefit your organization and have the greatest ROI. Next week, the Institute for Supply Management is hosting ISM Tech 2017, in Washington, D.C. This event is the perfect opportunity to meet with innovative suppliers and procurement providers that can assist you in taking your business to the next level. Source One is looking forward to talking to attendees about new ways to tackle existing challenges and discovering future growth opportunities.

ISM 2017
Source One is also looking forward to the highly anticipated international conference hosted by the Institute for Supply Management, to be held in Orlando, Florida this May. This event brings together over 2,500 global supply chain and procurement professionals for four days of presentations, networking opportunities, and educational sessions that allow attendees to work with experts in the supply chain and procurement industry. Source One is featured as the exclusive sponsor of ExecIn, a sub-conference at ISM2017 designed specifically for supply management leaders. The audience at ExecIn can look forward to this opportunity to reevaluate their business operations and existing procurement processes with the support of best in class procurement professionals.

The Road to SYNERGY - Baltimore, MD
While the Source One team looks ahead to the annual SYNERGY national conference in the fall, host Corporate United is holding one-day regional meetings on The Road to SYNERGY. The first stop is in June, in Baltimore, Maryland, where local procurement professionals can collaborate with other experts in their industry on a smaller scale in anticipation of the national conference. These meetings offer presentations that discuss leadership in the industry, allow for conversations among attendees on best practices and are great opportunities for personal development. Source One will be represented as a Gold Sponsor for these Road to SYNERGY events, and is excited to attend these focused events in preparation for the national conference. 

ISM Tech 2017
According to the Institute for Supply Management, business leaders are expected to spend $3.49 trillion on software and IT services alone in 2017. Any business, regardless of industry, is aware of the crucial role IT plays in the operations and overall success of their processes. Procurement groups and supply management experts can discover new options that provide competitive advantages for organizations that dedicate a greater percentage of their revenues to information technology services. 

Correctly implemented and adopted technology allows organizations to operate more effectively and stay ahead of the curve. However, it also requires the enterprise, especially end-users, to constantly evaluate existing tools and platforms, determine needs, and plan for the future. While the latest innovations may allow an organization to gain a competitive edge, sustainability requires due diligence in the form of a constant understanding of market options and how they can be implemented - a responsibility fit for a Strategic Sourcing and Procurement team. SS&P can help monitor the market, manage IT spend, and foster the optimal ROI when investing in new systems or technology. 

From March 22nd - 24th, the Institute for Supply Management will host ISM Tech 2017, a conference focused specifically on supply management and procurement solutions for a variety of areas in technology including advancing analytics, manufacturing 2.0, the role of robotics, going digital, utilizing augmented reality and more. ISM Tech is just one of the many spotlight events leading up to the international ISM annual conference held in Orlando, FL in May. The three-day event taking place in Washington, D.C welcomes a limited audience including supply management industry leaders and experts, innovative suppliers and top providers in the field. Source One Management Services, LLC anticipates this opportunity to meet with other procurement experts and industry professionals to collaborate on innovative solutions to the latest technology offerings that provide new possibilities and cost-reducing options for all any businesses' needs. ISM Tech is a conference industry professionals look forward to in addition to the other events the Institute for Supply Management will hold prior to the highly anticipated annual international conference.