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Many OEMs (Original Equipment Manufacturers) in the market today have run into this obstacle throughout the course of doing business. In essence, a custom designed part built by one specific manufacturer has become an integral part of your daily operation.

How can an OEM even begin to find cost saving opportunities when you’re handcuffed to one supplier? Believe it or not, the opportunity to go to market to find better pricing does exist, and these steps can help guide you along the way:

Step 1 - Create an NDA (non-disclosure agreement)

Protecting your intellectual property, data and drawings is crucial! Prior to going to market it’s important to build an NDA that keeps your proprietary information confidential. Before engaging in discussions with any potential manufacturers or suppliers it’s important that this document is executed by both parties.

Step 2 – Communicate with internal engineers and employees in the field

This is an important step that procurement groups miss periodically. Internal engineers more often than not need to be involved whenever custom built materials are being sourced. Involving engineers early will also help expedite the internal approval process with any potential new supplier designs. In addition, this is also the perfect time to communicate directly with the field to see if any improvements to the incumbent design should be considered.

Step 3 – Do your research

This is an incredibly important step that requires due diligence. Take your time when it comes to finding the right suppliers and manufacturers, and ensure they have the proper certifications and quality standards required by your organization. Once NDAs are locked in with potential candidates, use this time to interview potential new manufacturers.

Step 4 – Interview suppliers and learn about their capabilities

When interviewing suppliers about their design offerings, don’t be afraid to learn how they may be able to service other categories within your organization. Even if this supplier doesn’t end up panning out for this unique sourcing initiative, additional opportunities may arise and understanding their value for future needs may benefit your organization down the line.

Step 5 – Submit RFP (Request for Proposal) to approved suppliers

This is where your research and hard work come to fruition. By this point you should be well versed when it comes to your incumbent and potential new supplier capabilities. Now is the time to craft an RFP with an in-depth questionnaire that will help drive decision making. While many of these questions will be built according to the unique design and needs of the custom part being requested, other general points such as lead-time, warranty and in-field service offerings should also be considered in the RFP.

Step 6 – Decision Time

Scorecard each supplier’s response to your RFP by applying a set value to each quantitative and qualitative response given. Make sure this evaluation is performed by multiple people within your organization to help drive proper vetting and analysis. Once complete, see which supplier scores the best and begin the process of internal approval and contract execution.

Step 7 – Ensure compliance

No matter what decision you make from a supplier standpoint, it’s important to educate and train the field when it comes to implementation and execution. If this step is overlooked, any potential savings may be lost if the field fails to participate.


Keep in mind, much like any other sourcing initiative there are many variables and potential risks that could have a negative impact on this process. For example, stakeholders may be wary of changing suppliers of specialty engineered materials even when presented with lower cost savings.

If this ends up being the case don’t feel defeated, you can still utilize this newly discovered data from other manufacturers as leverage in negotiations with your incumbent supplier. In addition, this sourcing initiative also helped unlock a wealth of knowledge about other suppliers that may benefit your organization down the road.

ICYMIM: February 18, 2019

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

Digital Transformation Disrupts the CPO Role — Adding Pressure and Opportunity
Kyra Senese, Spend Matters, 2/18/2019
Based on the findings of a study conducted by ProcureCon, Amazon Business, and a few other organizations, "Examining the Role of the CPO as a Catalyst for Digital Transformation in a Time of Disruption," Senese concludes some added pressures and opportunities for Chief Procurement Officers. Increasing responsibilities to induce the adoption of new technologies and digital transformation deepens the influene of the CPO. The technological disruption is more necessary for CPOs with larger (billion-dollar) annual-spend to manage and it is important they garner a sense of urgnecy from their executives  to pursue technology changes so they're not left behind as the industry advances.

We’re Still Stuck in 2009 … Why?
Michael Lamoureux, Sourcing Innovation, 2/18/2019
Much like the reports five and even ten years ago, CPOs seem to still be focusing their attention on cost-reduction rather than talent or training budgets, and profitable technological advances. It is clear that new technologies are the future for procurement, and we are all aware of the everlasting talent-gap, yet some of our procurement leaders are still hesitating to make a change. Lamoureux warns us not to continue down this same road.

Contract Visibility & Analytics: The Next ‘Must Have’ Solution for Procurement?
Jason Busch, Spend Matters, 2/11/2019
Busch analyzes the importance of contract visibility in the vendor landscape and presents the idea as more than just an extension of spend visibility. The hard-dollar savings and avoidance of the "black-hole" are a couple defenses Busch poses as evidence that contract visibility is a new 'must have' for procurement. Take a look at the argument in more detail and let us know what you think.

As the threat of climate change looms larger with each new dire prediction, many businesses have made efforts to reduce their carbon footprint. But a new report is warning that such efforts may not be sufficient, and is instead encouraging industry players to adopt the more holistic tactics of the "net positive movement."

Report outlines "revolutionary" supply chain changes

"A Revolution in the Making: The Quest for Net Positive Supply Chains" is the special report recently released by the Wharton School of the University of Pennsylvania, the Initiative for Global Environmental Leadership and CHEP.

The report is free to download and filled with insights from global industry thought leaders such as Dell, Nike, the Ellen MacArthur Foundation and Forum for the Future, explaining in-depth the nature of the net positive movement, its core strategies, the progress made thus far and what it means for the future of complex global supply chains, according to Supply Chain Dive.

In short, net positive supply chains are those that do more than reduce a company's carbon footprint, but actually restore and replenish the natural resources that are necessary for the long-term survival of both the business and the planet. The notion is pithily summarized by the title for the first of the report's four sections, "Being Less Bad is No Longer Good Enough."
"Net positive is about rebuilding those assets you're totally reliant on as a business."

The rest of the document encourages companies to find new ways to collaborate with suppliers and customers, surveys the progress made towards sustainability and outlines the four principles for creating net positive supply chains: materiality, transparency, systems thinking and regeneration.

The report also notes that net positive results require collaboration with suppliers and within organizations, but that each company will need to spearhead its own approach and strategy based on the conditions of its unique supply chain.

Project has support of major industry players

"If you are an organization that depends upon natural resources or an organization where social cohesion is critical to the operation of your business, simply minimizing impacts isn't going to sustain your operation long-term," said Sally Uren, CEO of the global non-profit organization Forum for the Future. "Net positive is about rebuilding those assets you're totally reliant on as a business."

In 2013, Forum for the Future created the Net Positive Group with the goal of addressing sustainability challenges and promoting progress. In the years since, the organization has partnered with BSR and the Sustainability and Health Initiative for NetPositive Enterprise, or SHINE, to create the Net Positive Project, a global collaboration committed to enabling more companies to take a net positive approach to their supply chain operations.

The report's other sponsor, the Australian-based CHEP, is an international provider of pallet and container pooling services for industrial and retail supply chains. The company is in a unique position to help make a significant global impact, since it operates as a subsidiary of Brambles Limited, which helps move more goods to more people, in more places, than any other organization on the planet.

"CHEP customers use our pallets over and over again, so our business model has always contributed to a more sustainable supply chain, increasing efficiencies while eliminating waste, CO2 and reducing the use of natural resources," said Juan Jose Freijo, the global head of sustainability for Brambles. "We are always looking for ways to do even more. The net positive concepts outlined in this report are both reaffirming and encouraging. We continue looking for new ways to apply these principles to global supply chains."

Dell and Nike are two of the biggest global companies involved in this research study and the net positive movement, along with IKEA, Levi Strauss and the Crown Estate, which manages the monarchy's property in Great Britain. Also highlighted in the report is the Ellen MacArthur Foundation, which is working towards a circular economy and net positive supply chains, while stressing the urgency of the situation.

"There's a time pressure to all this," said Joe Murphy, the foundation's Circular Economy 100 Network (CE100) lead. "We're pushing the limits of planetary boundaries, so success is a necessity."

Procurement is eager to realize a digital transformation. Last year, Hackett found that a staggering 95% of CPOs expect to within the next two to three years. Unfortunately, this level of excitement often leads organizations to jump into things and devote time and resources to pursuing the wrong tools.

In many cases, they embark on these fruitless initiatives based on the recommendations of a Gartner Magic Quadrant. On the latest episode of the Source One Podcast, Senior Analyst Benjamin Duffy discusses some of the problems Procurement runs into when it puts too much trust in a GMQ.

Magic Quadrant? 

Duffy suggests there's nothing particularly magical about the GMQ. At best, they provide a high-level snapshot of the Procurement technology landscape. Many organizations, however, take the name at face value and treat the GMQ's recommendations as the only advice they'll need. 

The situation can prove especially problematic for small and mid-sized organizations. Pursuing 'best-in-class,' they attempt to implement solutions that their teams are ill-equipped to leverage. Anticipating next-generation results and performance, they wind up with disgruntled end-users and wasted money.

A More Strategic Approach 

So, how should Procurement go about selecting its technology? "First," Duffy says, "you've got to outline your target business outcomes." These should drive Procurement throughout the process of assessing, selecting, and implementing its new tools.

Without a list of target outcomes, Duffy reminds listeners, Procurement teams can quickly lose their way and ultimately struggle to generate a clear ROI.

Check out the full episode to hear more of Duffy's thoughts on the GMQ and its fatal flaws. 

It shouldn't come as a surprise that technology will play a big part in the conversations at ISM2019. Headed to Houston this April? Make sure to stop by Booth #438 to meet some of Source One's Procurement technology specialists

The Tesla brand has made a name for itself by creating luxury electric cars that don't compromise on performance. In 2016, the Model S P100D with Ludicrous mode claimed the title of third fastest-accelerating production car ever made, thanks to its ability to accelerate from 0 to 60 mph in 2.5 seconds.

The new Tesla Model 3 enjoyed massive success when it launched in the U.S. last year, outselling all plug-in hybrids combined, thanks in large part to its own impressive 0-60 mph time of 3.3 seconds.
But now the Model 3 is attempting to complete a different type of speed challenge, as the luxury EV races to reach China before the March 1 tariff deadline.

Automaker uniquely vulnerable to trade war tension

The ongoing trade war between the United States and China came to a pause on Dec. 1, when presidents Donald Trump and Xi Jinping agreed to a temporary truce. However, the 90-day detente gave the two nations a deadline of Mar. 2 to reach a new agreement, and recent reports suggest that there is no such deal in sight. If no progress is made, the U.S. is poised to increase tariffs on $200 billion worth of Chinese goods from 10 to 25 percent, which would provoke a similar duty on American goods entering the People's Republic.

Should the two countries fail to come to an agreement and start another round of retaliatory tariffs, Tesla would be more negatively impacted than most of its competing automakers. While larger global OEMs such as BMW AG and Daimler AG are able to offset tariffs to a certain extent by increasing production at existing China factories, Tesla has yet to establish a manufacturing presence in the Asian nation, and won't be assembling any vehicles there until the end of 2019, when its Shanghai factory is set to come online.

For that reason, the automaker has loaded three ships roughly the length of two football fields with as many Model 3 sedans as possible, and is hoping they sail into port before the end of the month, reports Bloomberg.

Three ships carrying Tesla Model 3 EVs have left San Francisco for China. Three ships carrying Tesla Model 3 EVs have left San Francisco for China.
"Our whole focus is, okay, how do we get those cars made, get them on a ship as fast as possible ... get those cars to customers as fast as possible," Tesla CEO Elon Musk said on a recent earnings call. "We get them to China as fast as possible."

Despite the Model 3 being Tesla's cheapest car, there are many forces conspiring to drive up the cost of the vehicle when it arrives in China. In addition to the looming tariffs, Tesla faces elevated transport and labor costs, combined with the fact that imported electric cars are not eligible for local tax credits in China.

"Our car is just very expensive going into China," Musk also said during the earnings call. "The demand for Model 3 is insanely high. The inhibitor is affordability."
That inhibitor would be greatly exacerbated if tariffs were to shoot up again in March. Before the temporary truce, China was slapping 40 percent levies on American cars. That duty was dropped to 25 percent when the ceasefire was enacted on Dec. 1, but is apparently in danger of rising again if an agreement cannot be brokered by Mar. 2.

Automotive industry players have expressed a wide range of financial consequences related to the trade war between the U.S. and China, notes Supply Chain Dive. On a recent earnings call, General Motors CFO Dhivya Suryadevara complained that the situation was a "$1 billion headwind," while auto-parts manufacturer Cummins claimed that raising prices and other measures had enabled it to fully mitigate the cost of tariffs. At one time, BMW valued its tariff pain at more than $300 million, with the company's North American CEO Bernhard Kuhnt warning that any further rise in tariffs would be harmful to the consumer, auto dealers and "the economy in total."
Realizing Procurement's full potential is impossible if your organization doesn't employ the right operating model. Decentralized, centralized, and center-led Procurement units each have their strengths and drawbacks. Check out the inforgaphic below to learn more.

Supplier negotiations: A critical element of any successful strategic sourcing initiative, and one that carries a heavy amount of stress for too many Procurement Pros.

My job includes negotiating with my clients’ suppliers to establish best-in-class service at competitive pricing. The process is second nature at this point, but I see a lot of nervous avoidance from less mature procurement teams when it comes to sitting down at the negotiations table. Why? Because negotiating is uncomfortable. It is high pressure. Ultimately, it is an activity akin to a root canal for many, and they do what they can to avoid it altogether. Sometimes this means auto-renewing a contract, other times it means rationalizing a supplier’s opening bid as “good enough already.”

Sorry to say, that deal isn’t good enough already, and auto-renewing without attempting to improve terms is a losing game in the long run. Try as we might, we can’t escape supplier negotiations if we really want to earn our place in our organizations.
So, what can we do to be more comfortable at the negotiating table, and ultimately improve our outcomes? The key is to look at the internal and external factors that strong negotiators utilize to get what they want.

The Mental Game of Negotiations

We throw up a lot of mental road blocks when we think of negotiations. We think we aren’t “cut out” for a task that seems aggressively competitive and outside our own expertise. The beauty of this struggle is that the fix is entirely internal. We can address these fears simply by changing our mindset in a few ways.

  • Start loving “no.” Nobody likes being told “no,” yet strong negotiators seek it out. Why? Because that’s how they know they’re getting the best deal. Negotiations are meant to establish limits. When a supplier says no, you’ve effectively found theirs. Alternatively, leaving the negotiation table without hearing the word invariably means you left some money on top of it.
  • Recognize the other side’s mentality. Fear of failure can be a strong influence. Don’t get so wrapped up in it that you forget – this is true for suppliers, too. By the time you’re negotiating, they are invested in closing the deal as well. They won’t walk away any easier than you could, because they also have plenty to lose. 
  • Don’t View Negotiations as a Competition. At the same time, don’t think negotiations are a zero-sum competition. You don’t “win” just because your supplier “loses.” Aim for deals that create win-win opportunities to not only get great terms and pricing, but also establish long-term supplier relationships (instead of forcing a zero-sum transactional win that causes suppliers to bolt when the contract terms).

This change in mindset, alone, is often enough to get a newer, greener Procurement pro feeling more confident. And confidence is important. Suppliers need to recognize that we’re coming to the table ready to work – we’re here to guide the conversation, not just be led as the supplier sales team sees fit. Which leads to the second area in need of improvement…

Coming to the Table Prepared

Once our mental game is on point, we need to consider the other side of the table and understand how to best interact with them as negotiations proceed.

  • Come armed with market intelligence. Procurement pros may not engage in negotiations very often – it is safe to say that your suppliers’ sales teams have much more experience. This puts us at a disadvantage, since they know the market better and have more insight into inking these deals. Counter this by gathering your own intel. Minimally, engage with multiple suppliers in this space through an RFI or RFP to better understand your suppliers’ competitive landscape.
  • Focus on relationship building. Negotiations start with the first handshake, before talking turkey. Focus on building rapport before talking terms – doing so extends any hard, quantifiable leverage you have with a secondary form of social leverage. The more engaged the supplier rep is with you personally, the more open they will be in discussing concessions.
  • Expand the Scope of the Negotiations. Cost is critical, but there are other elements at play. Don’t focus exclusively on cost, relegating SLA terms, customer service capabilities, and other value adds to the back burner. All of these items are negotiable.

Long story short, if you go into negotiations unprepared, you are at the mercy of your suppliers. You need to know both what you want, and what that supplier can offer. Additionally, you need to understand how other players in the market can compete with those offerings to truly create leverage.

In Summary

Yes, negotiations can be tough – even for seasoned Procurement pros. However, we don’t have to let suppliers run the negotiation table. The strategies above help to even the playing field, while also elevating negotiations from a competition to a chance to build up a valuable partnership.

February 15, 2019

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

New Podcast:
The Problem with Gartner's Magic Quadrants
Procurement is eager to realize a digital transformation. Oftentimes, this enthusiasm leads organizations to jump into things and waste their time and money trying to implement mismatched tools. Oftentimes, they're inspired by what they've read on a Gartner Magic Quadrant. On this week's episode, Senior Analyst Benjamin Duffy discusses the GMQs potential shortcomings and outlines a more effective method for introducing new Procurement tools.

Upcoming Events:
ISM 2019 | April 7 -10 | Houston, TX
Get ready to spark your creativity at ISM 2019, Institute for Supply Management's (ISM) Annual Conference, sponsored by Source One! Mingle and learn from thought leaders and your peers in the Supply Chain industry. Engage in multiple breakout sessions and discover new solutions that are available with over 100 leading industry suppliers.

ExecIn | April 8 - 9 | Houston, TX
The premier Supply Chain leadership experience! An executive-level sub-conference for Supply Chain professionals taking place the second and third days of ISM2019. This private event hosts elite keynote speakers, collaborative and thought-provoking discussion and insights on the industry's most pressing topics. ExecIn is invite-only, so be sure to reach out to if you're interested.

You have found your perfect new hire. In the beginning, things are going great - they are connecting with the company and exploring new challenges. Within a few years, they unexpectedly switch to another job, leaving your company shocked and confused. Millennials are known for being job hoppers. There are even statistics to suggest they've earned this reputation (91% of Millenials expect to switch jobs within 3 years).

As a young professional, I witnessed my friends quickly job hopping from one company to another. One of my friends is on his 3rd job and only started working in 2013. While another two of my friends are on their 2nd jobs, both of them entered the workforce in 2015. Personally, I've seen both my parents continue to work for companies that they hate working for; however both are unwilling to change jobs or even look for another job. Looking toward the future, I do not want to end up like them.

When an employee leaves the company, it costs the company more than you might expect. There are recruitment costs, training costs, and the considerable they'll need to devote to fill an empty position. Keeping procurement talent within the company is important. Here are some tips on how to retain millennials from a millennial perspective:

Career Development

Millennials are always look for growth and development. While evaluating a job, I am always asking about mentorship, career development, and training opportunities. Many young professionals reported that they are even willing to take less pay for jobs that will encourage growth and development. Webinars and online courses are excellent ways to expand their skill sets and satisfy their desire for career development opportunities. However let's also look some options that has little cost.

While investing in courses is always a plus, there are other way to encourage career development without occurring any cost. Feedback is an excellent way for growth and development. Feedback can range from how to do things more efficiently to critical thinking on how to process a problem. Having frequent discussions with millennial workers about feedback and make a big difference on deciding to stay with a company or leave.

Another way to challenge millennials to grow is to assigning projects slightly out of their comfort level. Challenging projects gives them an opportunity to think more about the issue and/or increase their skill set. However it is important to not assign projects out of their skill set range, so finding the proper balance can be difficult. In the past, I have asked for projects with certain skills so I could get the experience and learn more about the topic.

Meaningful Work

There are actually two parts to this. One, show appreciation and the impact of the millennial's work. Millennials want to know that their work is actually making a difference and is not something to keep them busy. A simple "Thank you" or "Excellent work" can go a long way. At my second job (a poker dealer), one of the supervisors comes by and gives little words of encouragement. Many of my co-workers has described this particular supervisor as their favorite supervisor.

The second part of meaningful work is social causes. Often at the casino, I hear my co-workers expression that they do not like how meaningless their jobs are. While most companies are for profit, there are still ways to create their impact. Companies can organize food drives or fundraisers. One creative fundraiser I saw included casual Fridays - where employees can donate $20 per month to wear casual outfits on Friday. This fundraiser has little impact on the business and was easy to implement.

Work/Life Balance

Many millennials will choose a flexible schedule over pay. Technology has allows us to work from anywhere at anytime. Since we grew up with technology, millennials want to take advantage of it. While remotely working employees raises new challenges, according to Harvard Business Review it raises productivity and happiness.

If remotely working employees is not possible, even given the scheduling flexibility may be enough to sway a millennial worker. We prefer to work on a schedule that fit us - instead of the traditional 9 to 5.


What could companies lose if they neglect to take these steps? Quite a lot. A study by the Center for American Progress reported on average it takes 20% of annual salary to replace a mid-range position - this does not even include the opportunity cost. So implementing the low cost solutions will save the company money and more importantly time and talent.

Supply chains live and die by innovation. That's why no effective Supply Chain professional can live in fear of failure. "By its very definition," says Jan Griffiths, "innovation is trying and failing and trying again." She suggests that any leader who instills a fear of failure may as well put a ban on innovation within their business.

Griffiths, the President and Founder of Gravitas Detroit, is a vocal advocate for a new, more empathetic and authentic kind of leadership. She'll share her thoughts with a group of similarly forward-thinking professionals as the moderator of this year's ExecIn Forum.

A private component of ISM2019's agenda, ExecIn welcomes executive-level Supply Chain professionals to absorb bold new ideas and engage one another in high-impact conversations. Leveraging her wealth of experience in both procurement and professional development, Griffiths promises to compel and inspire this year's attendees.

As in years past, technology is expected to dominate many of the conversations at ExecIn. Griffiths is outspoken on the subject and looks forward to encouraging a new outlook. She's certain that Procurement solutions, however advanced, will not replace the function's people. Quite the opposite.

"You can have all the technology in the world," she says, "but it's still people who are going to use that technology to inspire and to innovate. I think many businesses lose sight of that."

That's not to say she's a skeptic when it comes to automation. She continues, "Jobs are going to change. Automaton will certainly take over many of the jobs we see today." Her take on technology, however, sounds different than most of the usual commentary. While emerging technologies tend to inspire either unrealistic hopes or unfounded fears, Griffiths sees something else entirely. New solutions, she maintains, are both a challenge and an opportunity.

"Technology doesn't mean we've moved past humanity. In fact, it's helped take us into a new 'human age. Those skills that robots can't replicate are more important than ever. The sooner leaders learn to nurture those skills, the better.”

Griffiths acknowledges that there's a lot of work ahead. Office tyrants still outnumber empathetic and vulnerable managers by a good deal. She is hopeful, though, because of shifts in the cultural conversation.

"People aren't as afraid to talk about their feelings as they were in the past. As a result, the people in charge are starting to get it. They’re starting to make progress toward a more"

If overcoming fear is the key to innovation, then overcoming the fear of vulnerability and 'the f word' (feelings) could be the key to making innovation a central part of company culture. Griffiths concludes with a warning to fearful businesses. Failing to think differently now, she suggests, could soon mean ceasing to exist altogether.

As moderator for ExecIn, Griffiths will share the stage with a number of prominent Procurement professionals as well ISM2019's keynote speakers: former Hewlett Packard CEO, Carly Fiorina and former Federal Reserve Chair, Janet Yellen.

Want to join the conversation in Houston this April? Reach out to Carole Boyle ( to express your interest in the ExecIn Forum.

A pioneer in the fast-casual restaurant chain industry, Chipotle Mexican Grill enjoyed rapid success in the 2000s, growing from a single location near the University of Denver in 1993, to boasting over 1,000 nationwide by the year 2010.

There are more than twice that many locations today, yet the company's image still hasn't fully recovered from the major setback it faced in 2015, when a series of E. Coli, salmonella and norovirus outbreaks were traced back to various Chipotle locations. Additional foodborne illness incidents in 2017 and 2018 put renewed pressure on the restaurant chain to make adjustments to its supply chain in order to combat food safety issues.

According to the company's most recent earnings call, the changes are already well underway.

New supply chain team and operational changes in play

Chipotle's past problems have stemmed from a variety of issues. While the E. Coli and salmonella outbreaks were attributed to contaminated raw produce or inadequate cooking, other incidents have been blamed on individual restaurants' allowing sick employees to prepare food.

To combat all of the causes, the company has created a new supply chain team and enacted several operational changes.

Carlos Londono, who previously worked in supply chain planning for Heinz and Starbucks, was named Head of Supply Chain at Chipotle last spring.

Hard to clean produce that's eaten raw, such as lettuce, is considered a risk. Hard to clean produce that's eaten raw, such as lettuce, is considered a risk.
"Our new supply chain team is now fully in place and we set to find efficiencies later in the year by strategically reviewing this sourcing of all of our ingredients," CEO Brian Niccol revealed in a recent earnings call.

Niccol, who last year replaced company founder Steve Ells, has also instituted a program called "Focus Prep." The new preparation protocol is designed to reduce the number of staffmembers prepping food to a minimum, and therefore reduce the risk of contamination.

Over the years, the chain has also transitioned more preparation out of the restaurants and into a central kitchen, while also increasing the frequency of food safety training in restaurants. Furthermore, the company is also focused on reducing turnover, so that the increased food safety training accumulates within the restaurant staff.

Since 2017, digital tracking tools have also served to improve supply chain visibility, as the company has used FoodLogiQ software to track produce from farm to restaurant.

New leadership and methods striving for old reputation

Chipotle has its work cut out for it if it hopes to regain the public's trust.
A 2016 Harris Poll conducted in 2016 found that the restaurant had a Reputational Quotient score of 71 out of 100, which dropped the following year to 66.36, putting it below rivals McDonald's and Burger King for the first time. Last year's poll revealed that Chipotle had only inched up to an RQ score of 67.69.

However, despite his short tenure in the CEO role, Niccol has already received plaudits for his efforts to change the organization's operations and be more open about them than his predecessor. Supply Chain Dive notes that founder and former CEO Steve Ells had a reputation for being "quiet and defensive" when it came to the restaurant's failings.

While blockchain-empowered solutions have made countless headlines over the last several years, the Boston Consulting Group reports that adoption has proven slower than expected.


BCG suggests the technology has presented stakeholders with a troubling paradox. In Transportation and Logistics, adoption is slowed by the same issues the blockchain and its tamper-proof ledger are meant to address. They write, "By increasing transparency, these distributed ledgers can mitigate the mistrust that often exists among the industry's transacting parties." Unfortunately, they continue, "this same mistrust makes it hard to bring together the industry's diverse participants into a common blockchain ecosystem."

The Blockchain Paradox: Enthusiasm and Uncertainty

When it comes to blockchain, enthusiasm and expectations far outstrip action. The results of BCG's recent survey underline this fact. 88% of the Transportation and Logistics executives surveyed fully expect to see the blockchain bring about industry-wide disruption. Nearly 60% expect this disruption to occur within the next five years. 

Respondents are far less bullish, however, when it comes to their own capabilities. Citing poor coordination, understanding, and preparedness, 74% of executives rate their company's blockchain initiatives as superficial at best. Worse still, many of the executives in this group have yet to explore the technology at all. 

Though practical applications are still limited, investors continue to pursue them aggressively. BCG found that venture capitalists have contributed around $300 million to blockchain startups over the last five years. The sheer volume of investments, they write, "suggests that new solutions will reach the market in the next one to three years." What remains uncertain is whether or not organizations will adopt them. 

Why Blockchain? 

More than perhaps any industry, T&L stands to realize considerable benefits if it can resolve this paradox and commit to blockchain adoption. It is an industry, BCG remarks, that is "rife with sources of friction." Contending with numerous suppliers, disparate hand-offs, and evolving regulations, stakeholders are continually faced with time-consuming and costly processes. 

BCG identifies a number of common T&L pain points that blockchain could soon address. Among these are inefficient data management, limited traceability, and needlessly complex reverse logistics processes. 

A number of leading organizations have already started to make progress. BCG points to De Beers whose Tracr platform is bringing much-needed visibility to the controversial diamond supply chain. Marking each stone with a digital fingerprint, the platform provides stakeholders at each stage with information related to origin, quality, and transaction history. The solution will ultimately ensure the consumer that their jewelry was ethically and responsibly sourced. 

What Can You Do? 

Widespread adoption of blockchain solutions will require peers and competitors alike to align on a common value proposition and eliminate the sense of distrust that often characterizes the T&L industry. BCG expects the formation of this "industry-wide ecosystem" will take some time, but they encourage all businesses to begin considering how they can take part. 

They outline a four-step plan for organizations looking to distinguish themselves as participants in the growing blockchain ecosystem:

1. Learn About the Technology

Before making any definitive moves, it's essential that organizations educate themselves on the potential benefits and drawbacks of blockchain. Throughout this process, BCG reminds Procurement to carefully consider how new tools might compare to their traditional resources. 

2. Identify Opportunities

While recognizing that blockchain is not a cure-all, organizations should begin to take stock of their pain points and consider how a new solution could help address them. With these findings, they can prioritize the most relevant use cases and build an impactful business case. Then, the company should draw up a clear, strategic roadmap for adopting blockchain. BCG suggests this map should take into consideration "the company's market positioning and capability gaps, the maturity of the existing ecosystem, and regulatory barriers."

3. Conduct Pilot Tests

Before launching full-scale blockchain initiatives, organizations need to confirm the feasibility of their applications. Selecting an agile and decisive team to conduct pilot tests will help expedite the process. 

4. Scale

Once they've validated their proofs of concept, organizations should introduce plans to implement blockchain at scale. The process won't be easy. It will require participation in an evolving ecosystem or efforts to create a new ecosystem altogether. BCG writes, "this includes collaborating to develop governance protocols to maintain and evolve blockchain standards and architecture." And that's just the beginning. 

Organizations who wait too long risk leaving themselves on the outside looking in. While the future of blockchain adoption is uncertain, consumer expectations are very, very clear. They demand visibility into the supply chain and a guarantee that the products they purchase are ethically sourced and processed. The blockchain has shown it can provide both, but first businesses must work together to address its central paradox.