January 2014
Green energy jobs increase as benefits become clearer

Sustainable energy procurement has become an ever-greater concern for enterprises, and the demand is driving job creation and economic growth.

The Solar Foundation recently announced that in 2013, jobs in the United States solar energy industry increased by 19.9 percent in comparison with the year before. The sector now employs a total of 142,698 Americans.

Compared to other industries, the growth of solar power has been remarkable. According to the Solar Foundation, the sector grew at 10 times the rate of overall, cross-industry employment, which expanded by 1.9 percent. Coal mining jobs only saw a 0.25 percent increase, and employment in fossil fuel electric generation decreased by 8.7 percent, losing more than 8,500 jobs.

"In Colorado and across the country, we have seen that when the right policies are in place to create long-term market certainty, this industry continues to add jobs to our economy," commented Bill Ritter, the former governor of Colorado and current director of Colorado State University's Center for the New Energy Economy, according to the release from the Solar Foundation.

Meanwhile, investors are increasingly turning their attention to sustainable sourcing and renewable power as vital areas for energy investment. According to the Boston Globe, a record-high $10 billion in private and corporate funds were spent on clean energy projects in 2013. A group of major corporations - including Citi, Bank of America, Wells Fargo and Morgan Stanley - has committed to investing $180 billion in these efforts by 2022.

The phenomenon appears to be driven by the losses that enterprises stand to incur if they don't respond to climate change.

"The costs of another [Hurricane] Sandy will grow from $19 billion to $90 billion," Swiss Re Americas CEO J. Eric Smith remarked at the recent Investor Summit on Climate Risk, according to the news source.

Corporations will likely continue to find that investments in clean energy are an integral part of the risk management process.

Being a part of a growing organization certainly has its perks and pitfalls. One objective that comes with actively contributing the to growth of the company is networking, and it can be viewed as a perk or a pitfall. I've been doing some research on best practices to make sure that I am making my efforts worthwhile and thought why not share some of my collective tips with my closest friends! Take them as you may and let me know what experiences you have had in networking for yourself and your business.

Let's take both sides of the coin in each situation....

Do - Have business cards, and an ample amount. If you are expecting to meet 50 people, bring 100 cards.
Don't - Expect people to remember or write down your contact information. Another related don't, don't forget to collect their card as well. You don't want to be stuck "hoping he'll call first".

Do - Make notes on the back of business cards you collect with key points that will help you remember the person the next day.
Don't - Give out a card to everyone and anyone. Consider those who you might actually do business with, but keep in mind that while they may not be a prospect today, they may be tomorrow.

Do - Mingle, mingle, mingle. Ok, so this is not speed dating, but you should try to work the room a bit so you interact with several people throughout the event.
Don't - Spend all night talking to one person, you will likely miss out on some other great connections.

Do - Sit with a table full of strangers. You are here to meet people so put yourself in a position that will encourage you to do so.
Don't - Be joined at the hip with a colleague or friend, you are not at work or at the club so you do not need a wing man or woman. In fact, go to these events alone, it will further push you to meet new people.

Do - Practice and use a well structured, memorable elevator pitch. You want people to remember you and your business so build in key factors that make your business unique and stand out from the rest of the crowd.
Don't - Make yourself the focus, professionally (unless you are an independent professional) or personally. You are not there to talk about your new puppy or the great date you had last week, keep the topic on work while keeping the conversation light and engaging.

Do - Give a firm handshake, the handshake is the entrance to that first impression. Make sure its strong but not overwhelming (or sweaty, no one likes a sweaty handshake!).
Don't - Be overzealous in your approach. You don't want to scare them away before you even start the conversation.

Do - Eat and drink in moderation. This is not a wedding with an open bar, be mindful that you need to speak with people, with eloquence and nothing in your teeth.
Don't - Get drunk! One of the biggest don'ts in networking is having one too many and leaving a sour taste in people's mouths. Save your table dancing for Spring Break in Cancun.

Do - Prepare questions that will clearly and concisely get you the right information to gauge the connection quickly. No use wasting an hour talking to someone, albeit interesting, but who has no connection with your business type.
Don't - Forget to follow up. Email, call, connect with them in some way with a few days while the conversations are still fresh.

Finally, Do - Keep in regular communication with your new connections, even a few times a year, to see what they are up to.
Don't - Forget to nurture your current network. Develop some type of cycle to ensure you have routine check ins with all of your key connections.

I hope this collection of tips is helpful, there are many more, but I can only hold your attention for so long. Again, I'd love to hear your stories about networking gone right or terribly wrong so please feel free to comment below.

The importance of spreadsheets in an analytical setting is hard to quantify, but it's safe to say that, for most of us, it's downright essential. Since the mid-90s, and certainly for the past 15 years, spreadsheets have been equivalent to Microsoft Excel.

What Spreadsheet Software Is Out There?

Bundled in even the most basic builds of Microsoft Office, and taught as part of almost all high school and collegiate computer regimens, Microsoft Excel is the 800lb gorilla in the analysis room. Previous big-names in the spreadsheet (and office suite) world have disappeared (Lotus 1-2-3) or become heavily specialized to target specific industries (Quattro Pro, part of the WordPerfect Office suite still hanging on in Legal environments), leaving Microsoft Office, and Excel, as the big only big names. 

But that's slowly been changing due to the free offerings out there. Basic ones like Google Docs offer minimal features, but are easily accessible in the cloud. Open Office and Libre Office are free options that are installed on individual machines, and do their best to mimic the full Office experience. Given that Libre Office has been making the biggest publicity push lately, we'll focus on them.

Is Libre Office Viable?

For 90% of the work performed by a typical company, Libre Office can be used without a  problem in lieu of Microsoft Office. With its latest update, Libre Office now offers the Group Policy options IT teams are accustomed to finding with Microsoft Office, which increases the potential deployments of Libre. Libre Office also has a user community developing (often free) extensions to the suite, mimicking missing Microsoft Office features or, sometimes, increasing the Libre abilities past what Microsoft can do. Take a look at this chart for some of the major differences in the suites, and the individual programs.

Looking at Calc specifically, since we're almost all reliant on Microsoft Excel, the differences are few, but some are substantial.

  • Libre Calc allows you to view multiple sheets at the same time within one instance of the program, Excel does not. This is an example where Libre Office exceeds the capabilities of Microsoft Excel.
  • Libre Calc, along with the entire Libre Office package, has built-in compatibility with a variety of Document Management Systems (SharePoint, IBM FileNet, Domino, etc.) and legacy file formats
  • Libre Calc can only accommodate 1,024 columns, about 15 times less than is possible from Excel. When coming to grips with a data dump, this limitation hurts Libre.
Getting into the day-to-day things, however, Libre's limitations reveal themselves pretty readily. 
  • Libre Calc uses a different set of rules in creating functions/formulas, so bringing in a formula-rich Excel sheet into Calc can create issues
    • Excel doesn't always use semicolons to separate parameters. Calc uses them exclusively, so a comma in a formula can produce errors.
    • Excel allows you to leave optional parameters blank. Calc requires an input. On import, this can produce immediate errors.
    • Calc cannot handle the "INFO" or "GETPIVOTDATA" formulas from Excel, and has issues with an imported "CEILING" figure. 
  • Calc has severely limited support for PivotTables, and zero support for PivotCharts
  • Calc also has limited abilities when producing charts
  • Calc cannot support VBA macros from Excel, and Excel cannot support Calc macros
What's The Verdict?

As we've noted before, the availability of free software can be alluring in an enterprise setting, given the tremendous cost of enterprise or per-user licensing, especially for companies with thousands and tens of thousands of employees. And Libre Office is clearly targeting the corporate environment, with built-in DMS interfacing and GPO support. But it looks as if the Libre Office developers focused on the polish and not on the substance. The formula and PivotTable limitations of Calc make it very difficult to manipulate large groups of data easily. 

Some of this isn't Libre's fault. Virtually everything they've incorporated into the software, they've had to reverse engineer from Microsoft products. Regardless, the limitations exist and they are pretty damning for power users. Until the formulas can perfectly mimic those in Excel, and until the data manipulation & reporting tools are as good as, or better, than those of Excel, Libre Office is not a good choice for an analytical environment. 
Global manufacturing shifts continue to gain momentum

As the consumer product market continues to grow more complex and businesses need to adapt their processes to an increasingly globalized customer base, the manufacturing strategies of major companies are changing, too. Not only do these processes need to be able to keep operating costs at a minimum, they must also ensure enterprise agility by making it easier for businesses to deliver their products to consumers with maximum speed.

In light of these concerns, companies are beginning to take a second look at both their offshore and nearshore manufacturing networks. Firms in the United States are going domestic for some processes and considering whether their foreign production relationships are the right ones - and these shifts are changing the procurement space.

President Obama announces new manufacturing hubs

In the near future, companies may be looking toward domestic partners for a greater portion of the products and raw materials they need. In his recent State of the Union Address, President Obama announced his plan to push for the creation of U.S.-based plants that would specialize in manufacturing sophisticated technological products.

"We also have the chance, right now, to beat other countries in the race for the next wave of high-tech manufacturing jobs," said the president.

President Obama went on to note that his administration has already set up "manufacturing hubs" in Raleigh, N.C., and Youngstown, Ohio, and revealed that he intends to continue this effort by launching six additional hubs this year.

Rethinking China

If implemented, the president's plan might continue the ongoing trend in which the U.S. has become a center for the production of high-quality, cutting-edge technologies - and as consumer electronics become increasingly important to the way people go about their daily lives, domestic manufacturing of these tools bodes well for the economy.

However, having global supplier relationships is often critical. While many firms chose China as their location of choice for offshore manufacturing in years past, that trend may be changing.

In a column, Manufacturing.net's Associate Editor Tia Nowack discussed how the growing cost of production in China is driving U.S. firms to consider locations closer to home. With Chinese manufacturing set to become just as expensive as domestic production by 2015, firms are looking to Mexico as an alternative. Nowack spoke with MFI International's Marketing Director Paula Ramos, who noted that lower labor spending and reduced transportation between the U.S. and Mexico are enabling business cost reduction.

After all, as demand rises for sophisticated technologies that are often expensive to produce, spend management will become even more important to American manufacturers.

Tackling the procurement problem in government IT

For companies in inherently tech-centric fields such as software development and Web design, keeping up with the new wave of technological developments is likely to have proven relatively easy. But not all sectors are naturally as quick on the uptake when it comes to taking advantage of cutting-edge tools. Furthermore, acquiring new technologies requires businesses to carefully strategize for procurement, as the costs can be considerable, especially when these products and services first make their debuts.

However, the most recent wave of IT innovation, which has inarguably been spearheaded by the adoption of cloud computing, has proven to be a cross-industry phenomenon. Health care, for example, despite its need for high-tech machines, has traditionally been more hesitant than other sectors when it comes to changes in information infrastructure and communications channels. Whereas businesses in other industries have been marketing to consumers via email for well over a decade, hospitals and doctors' offices have continued to rely on postal mail and telephone. But with the advent of electronic health records, care providers have been forced to grow their IT departments and alter their procurement strategies for industrial change.

The public sector catches up

The phenomenon isn't limited to the medical field. Governments have also had to catch up with the tech-savvy times in order to provide relevant services to citizens. But the difficulties in this regard have been considerable.

In a column for Spend Matters, procurement expert Jason Busch noted the efforts of public sector organizations to adapt their sourcing strategies for change in market conditions haven't been entirely successful. He pointed to the problems that beset the Healthcare.gov site upon its recent launch as an example of how government IT can mishandle sophisticated projects.

However, there have been major exceptions to this trend. Busch pointed out that there are "silver linings in public sector tech spending," and NPR contributor Elise Hu highlighted several of these in a recent column for NPR.

For example, the city of Philadelphia recently brought on IT expert Mark Headd as its chief digital officer. His dual focus has been to streamline the city's technology procurement efforts and get businesses to compete for tech-related contracts with the government.

"Governments don't move at the same pace as technology does, and certainly the procurement process doesn't," Headd noted. 

In an effort to address this fact, Headd has opted to "go where developers are," creating an official account for Philadelphia on the open source code repository GitHub.

As other cities and governments adopt similarly tech-centric tactics, the need for innovative strategies to procure IT resources will only increase.

New consumer technologies are pushing manufacturing change

Those who closely watch the consumer product market know that trends in customer preferences and demands have a direct impact on the manufacturing and procurement practices of companies in the sector. When a new item becomes popular - such as the smartphone - companies can't merely reinvent their product lines and begin churning out great numbers of the new gadgets immediately. The research and development stage needs to happen, and a whole host of supplier relationships have to be formed in order for the enterprise to be able to source the raw materials and parts that it needs.

The consumer electronics craze that has been ongoing for the past two decades and recently gained more momentum with the advent of Web-ready mobile devices is driving shifts on a much larger level than many users of the products realize, as these developments occur out of the public spotlight. The need to meet demand for smartphones, tablets and related tech tools has altered the way suppliers and original equipment manufacturers partner with one another, and it's begun to reshape the global manufacturing landscape.

Samsung, Google sign patent agreement

One of the results of the continual need to innovate in the current market has been closer, more dynamic relationships between business partners. Google, the company that developed the Android mobile operating system, and Samsung, which produces many of the most popular devices that run the platform, are a prime example of the trend. According to PC World, the two companies recently announced that they had signed a 10-year agreement to cross-license their patents, including those they already hold and those they'll secure in the future.

"It does make a lot of sense for Samsung and Google to work together more closely. Samsung is really the engine that drives Android, Google's operating system," Canalys Senior Analyst Tim Coulling told the news source.

Apple supplier to move manufacturing to U.S.

Meanwhile, the procurement network of Google's top competitor, Apple, is undergoing major changes. According to The Wall Street Journal, the Cupertino, Calif.-based tech giant's partner Hon Hai, which is based in Taiwan and also goes by the name Foxconn, recently began considering moving some of its production processes to the United States, particularly for its larger, 60-inch liquid screens.

It's unclear whether any of the items the firm manufactures for Apple would return to the U.S., but as the supply chain continues to shift, nearshore manufacturing by way of an international supplier might not be such an uncommon phenomenon.

Is collaboration on sustainable sourcing going far enough?

Sustainability has been a chief concern among many companies for some time now, but 2013 saw a number of advances that suggest the trend is continuing to gain steam. McDonald's announced its commitment to moving toward 100 percent sustainable sourcing for its beef, while Hershey publicized its efforts to ensure that the palm oil used in its chocolate is both traceable and environmentally friendly. 

Furthermore, collaborative partnerships dedicated to sustainable product sourcing have popped up within a number of industries - one of the most prominent is the Global Roundtable on Sustainable Beef, spearheaded by McDonald's . The promise that such organizations hold for reducing environmental impacts and spreading green logistics globally is considerable. But the question remains: Are these collaborations going far enough to bring about real change to procurement practices?

Signs are looking up

There are many factors that those who would respond positively to this question might cite as support for their position, but one of the more obvious signs is the sheer number of collaborative partnerships for sustainability that have cropped up in recent months. In a column for GreenBiz, the publication's chairman and executive editor Joel Makower noted that there are quite a few of these organizations: the Roundtable on Sustainable Palm Oil, the Round Table on Responsible Soy, the Better Cotton Initiative, the Sustainable Manufacturing Roundtable and others. 

"Talk about a collaborative economy!" Makower commented. But he went on to insist that such partnerships aren't always easy to implement, as they "require getting the right people and organizations to the table, having a clear vision, creating effective governance and setting the right goals."

There's still room for improvement

The difficulties outlined by Makower mean that despite the seriousness with which many collaborative attempts at sustainability are undertaken, these initiatives don't always achieve their intended goals, and some firms may be driven off by the potential complications. Accenture and CDP's recent Collaborative Action on Climate Risk report revealed that while progress is being made, there are still opportunities for collaboration that aren't being taken advantage of.

The study found that when sustainability partnerships are implemented, they can produce real impact. Last year, 427 initiatives to reduce emissions among CDP supply chain member companies resulted in a carbon dioxide reduction of 2.3 million metric tons. However, those companies also identified more than 2,100 instances where environmentally minded collaborations could be implemented but have not.

Companies that want to better understand how to reduce business costs while also improving green practices may find they can't afford to let such opportunities go untaken.

Sustainability begins at the source

Not long after companies start the effort to implement green logistics, a critical and challenging realization is likely to set in: The changes that need to be made begin at the first step in the supply chain. Factors working against sustainability - carbon emissions, fuel consumption, use of harmful chemicals - reach far back into the procurement process, and rooting them out of company operations entirely can be extremely difficult. 

As such, enterprises that value eco-friendly practices for their benefits in cost reduction and brand image need to look critically at where their raw materials come from and how they are produced.

Mapping the way to sustainability

In a column for GreenBiz, Jessica Wollmuth and Velislava Ivanova, sustainability executives at CH2M HILL, noted that one of the first and most helpful steps in moving closer to green practices is to create a map of the supplier network. Companies can start this process by following a simple, organized strategy.

"An early step is to inventory suppliers, identify the most significant environmental and social challenges they have and prioritize efforts with suppliers," Wollmuth and Ivanova wrote.

Once this step is completed, possible starting-points for a sustainability strategy should become clearer. For example, the CH2M HILL consultants noted that footwear retailer and manufacturer New Balance shed 65 percent of its suppliers and is looking to go green by making sure that the partnerships it maintains are strong.

But some firms may find they need to investigate new suppliers rather than (or perhaps in addition to) getting rid of old ones. Providing potential new partners with a questionnaire regarding their practices can be key in determining whether or not the relationship will fit the company's green initiatives, Wollmuth and Ivanova noted.

"The baseline assessments form the starting point for future programs to improve supply chain sustainability and help assess where the greatest need for improvement exists," they suggested.

Egg farmers work to reduce environmental impact

Luckily, many suppliers are working just as hard as major brands in the effort to ensure procurement's role in sustainability efforts isn't overlooked. In a post for Environmental Leader, American Egg Board Chairman Roger Deffner noted that egg farmers in the United States have been pushing for greener practices for some time now. The industry has reduced its greenhouse gas emissions by 71 percent since 1960. Deffner pointed out that this helps food manufacturers ensure that their products are sustainable.

Green procurement will ultimately require tough decisions to be made - but these are necessary for sustainability to be a real practice.

Source One's VP of Operations William Dorn will be presenting a free webinar tomorrow (Wednesday, 11/29) at 11:30a EST at NextLevelPurchasing.com. If your own procurement department has ever struggled with the technical requirements of an IT purchase, ever been excluded from a project by a department stakeholder, or ever been expected to produce savings from a project where a finalist has already been awarded the business, this webinar is of particular interest!

Those attending this free webinar will hear how IT & Procurement departments have seen their responsibilities grow, how difficult IT is to buy for using traditional procurement methods, and how these differences can lead to gaps. Following that, attendees will learn about the underlying causes of those gaps along with some methods of mitigating or repairing them.

If you're interested in attending this free webinar tomorrow, sign up here!
Retail shifts may increase technology procurement needs

E-commerce is now the shopping channel of choice for a greater number of consumers than ever before. Companies are enjoying record-high revenues through digital platforms, and the ubiquitousness of smartphones means that purchases can be made instantaneously from nearly any location. The retail sector and the consumer product market are rethinking their strategies in light of this trend, which has led to an increased operational emphasis on technology, accompanied by a shift in procurement needs.

Will the storefront of the future be fully digital?

A growing number of retail outlets are considering reshaping their brick-and-mortar shopping channels and allowing commerce to take place entirely online. A study by the National Retail Federation, in conjunction with Demandware and the University of Arizona, found that in the United States and Europe, nearly 36 percent of chief information officers at companies in this sector are thinking about moving all transactions to a single, unified platform

That doesn't mean retailers are thinking of abandoning their physical operations altogether. Rather, a single-platform approach would mean bringing e-commerce technology into the brick-and-mortar storefront, the NRF noted. Tom Litchford, the organization's vice president of retail technologies pointed out that consolidating purchase data within a single channel would "enhance the endless opportunities that new technologies offer" and "allow retailers to provide seamless, relevant and personalized interactions for all of their customers."

Clearly, the benefits of such a strategy are considerable, and unifying transactions stands to boost enterprise agility considerably.

"It's no surprise that retailers are increasingly looking to leverage e-commerce technology as the single platform for all commerce," remarked Rob Garf, vice president of industry strategy and insights for Demandware, according to the release from the NRF. "This provides retailers a great opportunity to reduce costs, improve operational efficiencies and enhance the overall customer shopping experience in a dynamic consumer environment."

Retail IT teams need more tech resources

But in order reap the advantages that Garf outlined, investments in software, hardware and other technological tools will be necessary. The NRF found that 80 percent of retail CIOs plan to increase spending on in-store technology over the next three years.

As such, companies that are planning to unify commerce need to develop well-planned IT procurement strategies. Even if the firm plans to leverage the benefits in cost reduction and minimized physical infrastructure that cloud computing offers, a fully remote data storage system may not be viable. Especially for large-scale operations with vast amounts of sensitive, personally identifiable customer data, it may be necessary to keep some resources on-site - and this will require additional hardware.

Consumer product market developments require innovative responses

Contemporary consumers have higher expectations of the companies they patronize than ever before. With the prevalence of smartphones and tablets, accessibility to technological resources has become instantaneous. Anyone can look up a product or service quickly on his or her mobile device and compare these with the offerings of competitors, in addition to reading other consumers' experiences with a given brand. This trend means that the average customer is far more educated than in the past, and the burden is on companies to prove that they can keep pace with demand.

Cutting-edge products go mainstream

These developments have direct implications for manufacturing procurement within the consumer product market. One of the primary areas of concern attracting an increasing amount of customers' attention is environmental impact, and as such, sustainable sourcing is on the minds of a growing number of companies.

The importance of adopting green practices is evidenced by the popularity of eco-friendly products that were once looked on as mere fads and must now be taken seriously. According to Sustainable Business, Ward's Automotive recently reported that sales of plug-in hybrid and electric vehicles in the United States nearly broke the 100,000 mark in 2013. The Nissan Leaf accounted for almost a quarter of these sales, with 22,610 cars sold. The increase in EV sales from two years prior - only 18,000 of the vehicles were purchased by consumers in 2011 - is dramatic.

These vehicles are becoming much more affordable than they were when they debuted. The price for the Ford Focus EV is falling $4,000 to $35,200, while GM's Volt will cost $5,000 less in 2014. This means that while electric vehicles still make up only a small component of the automotive market, they're becoming both more popular and more accessible.

Investing in innovative production strategies

But the auto industry isn't the only sector that needs to find creative ways to blend sustainable products with enterprise agility and adaptability. Food Manufacturing recently spotlighted salad dressing and beverage producer Bolthouse Farms and its efforts to try out new products at a facility devoted to innovation in Bakersfield, Calif. The firm's recent purchase by Campbell Soup has provided it with a wider range of resources.

"[Campbell] has a lot of resources, a lot of back-of-house technology that are really going to help [Bolthouse] jump from a small-sized company to a medium-sized company," Todd Putman, Bolthouse's chief marketing officer, told the news source.

At the facility, the company can ensure that its raw materials - namely, sustainably sourced vegetables - are being made into marketable products and thus driving profit.

A common word and theme in numerous supply chain journals and best practices echos the word "supply chain sustainability", but what does that term really mean?

Many think of supply chain sustainability as going "green" to help out the environment while creating profit opportunities as well. Whereas some think it's a business issue affecting an organizations logistics network as it affects the environment. Both thoughts are correct.

Supply chain sustainability can concern process and technology improvement that look beyond the inventory and costs of goods and services, but can also concern, at a larger scope, our environment as a whole. As stated in the UN's Supply Chain Sustainability, a Practical Guide for Continuous Improvement, "Supply chain sustainability is the management of environmental, social and economic impacts, and the encouragement of good governance practices, throughout the life cycle of good and services. The objective of supply chain sustainability is to create, protect, and grow long-term environmental, social, and economic value for all stakeholders involved in bringing products and services to market."

For large companies who wish to promote supply chain sustainability, partnership is key. For example, the Alliance for the Innovation and Operational Excellence (AIOE), has a diverse membership that includes global leaders like Del Monte, Sunny Delight, and PepsiCo, and is working together with Ecodesk. Ecodesk is a sustainability database and communications platform that allows its users to improve the performance of their supply chain while keeping environmental, social, and governance metrics in mind. The partnership will allow AIOE members transparency in their supply chain and provides members with better communication channels in regards to their sustainability efforts with customers.

What measures did your company take to promote supply chain sustainability? If you haven't already done so, it's wise to start thinking about. This is one of the new criteria that separate business leaders from followers.
Free is great right? Everybody likes free food, free prizes, and free t-shirts, but what about your business? There are a lot of free tools and software available for business use that, at first glance, would appear to be a win-win. The provider makes money from ad revenue or the hope that you will subscribe to an upgraded package and you get a free tool for your business that would otherwise cost hundreds or thousands of dollars. The problem here is that relying too much on free software could leave your business vulnerable to unexpected expenses if the developer decides that they no longer want to offer their software for free.

Free software can be great as it allows you to try something without a large commitment of time and money and allows for some cost savings, but it shouldn’t be relied upon as a primary tool that is crucial to your business’s day-to-day operations. Unexpected changes or price increases can leave you scrambling to approve a new budget or find a replacement for software that has become a major part of your business. Even if another alternative is utilized, there is still the expense of wasted time transitioning and training employees on how to use a new program. If free software is a big part of your business, you need to have a plan in place in the event that the software suddenly changes or becomes subscription based.

A recent example of this issue is the (formerly) free remote desktop tool LogMeIn.  For those of you not familiar with LogMeIn, it is a tool that allows you to view and control another computer from a remote location. This tool was great for IT professionals and help desk operations since it was easy to use and most importantly, free.  Now that LogMeIn is no longer free, users will have to pay the yearly fee or find a suitable alternative. This has caused a bit of an uproar in the IT community who used this tool as a key part of their daily operations as well as home users who enjoyed a simple free tool for the occasional long distance remote computing. LogMeIn Pro now costs $99 a year to access up to two computers and $449 to access up to ten. Another issue with the LogMeIn example is the timing; users were given only a one week notice before the new policy is implemented.  A week is simply not enough time to business users make an informed decision on how to move forward or research and implement good alternatives.

If your company is currently using a free piece of software across a department, entire company, or is considering the use of free software in the future, here are some key questions to answer in order to plan for unexpected issues or price increases:

·         Do they currently offer a paid option? Is this paid option competitive with others options?
For most free software, the free options are not suddenly switched to fee based. Usually, the free option is removed and free accounts are migrated (after paying) to the lowest priced paid option. Another way to look at this question is “If the price of the product wasn’t free, what would you be willing to pay for it?”

·         Are there features in the software critical to your operation that aren’t available elsewhere?
If the answer to this question is “yes”, planning for a LogMeIn-type of rate increase is harder to do since you must determine how critical these unique options are to your business, and what the best alternative is. A similar comparison would be if you compared Microsoft Office to Google Docs.

·         Is the data easily exported out of the presently-free software?
Whether it’s a significant package of software or a small note-keeping or task list app, do not use or even consider implementing a free piece of software that does not allow you full control and access over your data. This type of situation is extremely dangerous since a software crash or migration to a new system would involve re-inputting data manually into the new software. Oppositely, software that does not allow for the import of various data formats may be equally time consuming and cumbersome to use.

The appeal of using free software in a business setting is very tempting for obvious reasons, but there is always the potential that it won’t stay free for long. If you must use free software or feel it is the best fit for your individual situation, make sure you are prepared for for the end of the "free trial".

[Fill-in-the-Blank] is the perfect business; said no one ever. Nobody’s perfect—including businesses and corporations. One way to stand a step closer to perfection is to recognize risks and try to do so in a way that is better than competition. This concept seems elementary; but in the case of Whole Foods Markets, the unique business model leads to a set of equally unique risks. Regardless of the industry, it can serve as an advantage to analyze the supply chain, compliance, and operational struggles of other companies to learn from mistakes and triumphs to better impact ones’ own business decisions.

The most severe risks WFM faces are increased competition threatening revenues and profitability, changes in the availability of quality natural and organic products, disruption of significant supplier relationships, actual or perceived food safety concerns, and unfavorable changes in governmental regulation.

One situation that is crucial for Whole Foods to prepare for is the potential of competition offering the same organic products, at a cheaper price. This is of high importance because, although it has not noticeably affected business thus far, wholesale markets and large, established grocers currently offer such food products at a substantially lower price point. Also, in the same way Whole Foods seeks to appeal to consumers who want solely organic foods, well-known competitors are able to reach these same targets with larger marketing budgets and resources for loyal customers with a longer spanning relationship. One way Whole Foods can combat this issue is through potentially adjusting their pricing strategy or offering promotions that make their items a bit more cost-effective for consumers. They should continue to be active in communities, because this is one area that larger grocery stores would struggle to keep up with Whole Foods’ involvement and influence.

There should also be attention paid towards changes in the availability of quality natural and organic products. Since the business is so heavily reliant on suppliers, any interruption in the supply chain can produce a major stigma to the brand. One major tactic to offset this risk of being so dependent on suppliers is to consider business interruption
insurance. In the case of equipment failure or malfunction, equipment breakdown insurance can also cover mechanical errors and set Whole Foods back on track following an unexpected disaster. Both options insure businesses against lost profits.

Along with supply chain risk management for product availability, disruption of significant supplier relationships is another area crucial for Whole Foods to prepare for to prevent any major loss to profitability. United Natural Foods, Inc. (“UNFI”), the organization’s single largest third-party supplier, would represent a huge loss for the company if they were to discontinue their relationship. One way for Whole Foods to offset this risk is to diversify their supplier relationships to be a bit more equal in the amount of profit each represents. Also, it would be beneficial to have terms of contracts where other suppliers with standing relationships would be willing to step in during the circumstance that Whole Foods would need certain foods from a supplier whose relationship has ended.

Due to the increase in popularity, and the resulting mainstreaming of organic foods, there is the potential for research to show previously unknown information detrimental to the Whole Foods brand. Actual/perceived food safety concerns are already a large concern to consumers, especially families, and Whole Foods should prepare accordingly. If this situation were to arise, the organization would be wise to work with their public relations representatives to offer solutions and put forth a strong sense of customer intimacy despite a harmful situation. There are about forty-eight million food borne illnesses in the U.S. each year, leading to major sickness and in some circumstances, even death. Since there are such major health complications associated with food safety and/or recalls, appropriate insurance coverage and preparation are viable options for Whole Foods.

Unfavorable changes in governmental regulation can also present a great deal of risk towards Whole Foods’ business model due to the large role the FDA, USDA and other government organizations can play with developments in organic foods. For example, due to the strict guidelines of the USDA Organic Rule, some suppliers may be unable to comply, leading to a discontinued relationship which would limit the supply of the particular food item from that resource. This can be detrimental if a supplier represents a large portion of Whole Foods business; however, this risk can be managed through diversification of suppliers so that they equally represent portions of profit.

While Whole Foods’ risks and mitigation strategies are easy to identify, due to continual public discussion about the company, it goes without saying that the risks and the solutions for every organization are going to be unique. In developing risk plans for your own organization, it’s not enough to just identify those risks that present physical danger to your supply chain (like moving manufacturing from disaster-prone Asia to an environmentally safer area like Latin America). Look for the implicit and tertiary dangers to your supply chain – changing environmental laws for hazardous materials can affect the availability of critical cleaning agents and solvents for your production facilities, causing delays or shutdowns, for example – and work to mitigate those issues as well.

Photo Courtesy Of: www.gaiahealthblog.com
3 strategies for boosting sustainability across company operations

Segregating sustainable product sourcing practices from the larger company strategy and culture can be an easy mistake to make. However, businesses that have long been working to decrease the environmental impact of their procurement processes are well aware that isolated attempts at sustainability are often left behind or discredited over time. What many companies find they need is an emphasis on eco-friendliness that is central to their operations rather than peripheral. 

While each firm's approach will differ based on its unique supplier network, some tried and true principles can be adapted and applied across the board. Here are three strategies that can help ensure sustainable sourcing is as effective and fully integrated as possible.

1. Increase communication

In order to avoid sustainability initiatives taking place in a vacuum, they need to be understood across the company. Visibility and communication have been a critical part of the success that Campbell Soup has enjoyed with its green initiatives. Dave Stangis, the company's vice president of public affairs and corporate responsibility, recently gave Sustainable Brands an instructive example of this principle.

"Someone in our communications department aims to tell a better sustainability story from our plant level; he's taken this objective to understand what sustainability work is happening in our 30 manufacturing plants around the world and help communicate that better externally," Stangis told the news source.

Without a solid understanding of sustainable practices internally, it's extremely difficult to communicate these efforts to the public in a cohesive way.

2. Make strategic partnerships

Firms also need to bear in mind that consumers will jud
ge them based on the business relationships they foster. Growing companies looking to make acquisitions, for instance, need to do so with sustainability in mind. According to Sustainable Brands, Campbell chose to acquire Plum Organics, a well regarded company with a reputation for its green mission and employees' involvement in those goals.

3. Consider supplier practices

Lastly, it's key that companies consider the processes of their distribution and sourcing partners as an extension of their own operations. Suppliers need to be factored in when firms calculate their environmental impact and plan for improvements. Sustainability consultant Bill Barry recently began working with book publisher Macmillan to lower carbon emissions across the company's production chain, GreenBiz reported. Barry helped the firm calculate and plan to reduce its direct and indirect environmental impacts by 65 percent over the next five years. He did this by helping Macmillian restructure its paper milling, transportation and other partnerships. 

Sustainable supplier management is critical, rather than optional, for companies that are serious about green procurement. 

How market changes are reshaping manufacturing, procurement

Arguably at no other time in recent history have the markets changed so dramatically at such a rapid pace as they have over the past decade. A brief recollection of what the consumer product market looked like in 2004 should provide sufficient support for this claim.

Cellphones were nearly ubiquitous, but they were nothing like the smartphones that are currently the top consumer electronics item. Meanwhile, sustainable product sourcing was a concern for a relatively small contingent of individuals, whereas today, demand for local and eco-friendly products is exerting considerable influence on mainstream trends in food, retail and other sectors.

Such changes don't occur in a vacuum. There are myriad cultural influences behind the shifts - but more importantly for manufacturers, these trends also have implications for the way goods need to be produced and sourced. Procurement strategies must keep pace with market developments, and companies are finding that the need to adapt is reshaping their supplier networks and making them take a second look at their products.

Reconsidering the nearshore manufacturing model

For many companies, the benefits of offshore manufacturing have been considerable. The ability to source certain raw materials and goods from overseas partners has helped firms limit production costs and stay agile. But with global markets undergoing considerable changes - not to mention consumers' increasing demands for locally sourced products - the model may no longer work for all companies.

In a column for The Boston Globe, Donald Rosenfield, a senior lecturer at MIT's Sloan School of Management and director of the Leaders for Global Operations Program, suggested that domestic manufacturing may become a more viable option for many firms. He enumerated five key criteria that companies bear in mind when deciding where they'll move production.

  • Location: The site should be close to other suppliers so production timelines can be minimal.
  • Innovation: Manufacturing will ideally be close to hubs for new product development technologies.
  • Consumer access: Production should not be far from the target market.
  • Transportation costs: Movement of goods should be streamlined for minimal expenditure.
  • Direct labor costs: These should be as low as possible.

Increasingly, these criteria point toward housing manufacturing in the United States as an ideal choice, Rosenfield asserted. With sophisticated production technologies such as three-dimensional printing and water fabrication more readily available in the U.S. than in other locations, enterprises such as New Balance and Intel have continued to leverage domestic manufacturing partnerships

E-commerce means "lean" won't suffice

The shift toward online and mobile purchasing is another development that firms have to consider, especially in the retail space. In a column for EBN, storage engineer and consultant Jim O'Reilly suggested that the culture of instant gratification fostered by e-commerce means that firms can no longer afford to adopt the philosophy of "lean" operations, which states that inventories should be kept as low as possible, products should be assembled at facilities with minimized costs and shipments should arrive just in time. In a climate characterized by demand for immediate service and speedy delivery, adaptability becomes a greater virtue than leanness.

"We need to reduce the logistics chain and increase flexibility, while keeping inventory down and quality up. We need to get nimble," O'Reilly wrote.

He pointed to the smaller companies - not Apple and Samsung - that recently showcased their products at the Consumer Electronics Show in Las Vegas and noted that their lower volumes require flexibility.

"A long, rigid pipeline doesn't make any sense for these companies. Having to forecast volumes for six months and place orders before unit one has shipped, they risk disaster from a lack of sales or a start-up quality issue. They need a nimble supply chain," O'Reilly argued.

Minimally, companies need to continually evaluate their business cost reduction strategies in light of broader market shifts.

I'm late again this year in wishing all of the Strategic Sourceror's readers and Source One's customers a Happy New Year. But as you all know, January brings new budgets, new projects, and lots of inbound activity that require attention.

2013 marked a year of stability, and maybe even some growth for most businesses. But, in the supply chain and strategic sourcing industry, it seems that 2013 marked the year that we hit mainstream. I've never seen so many nightly news channels, blogs and even print newspapers mentioning the words supply chain, logistics, procurement and supply constraints as we saw last year. Sure, a lot of it was negative press (natural disasters disrupting or destroying products), but a lot of it was positive as well.

Over the last few years, Apple, almost single handedly, raised the average Joe’s interest in such bland topics as manufacturers capacity and supplier demand as it continued to push its iDevices. People appear to be receptive of those stories, and the mainstream media followed the quick and easy stories and wrote about LG, Motorola, Samsung and the other electronics manufacturers. The public liked those stories so they expanded coverage to talk about car manufacturers and food companies. Now, barely a week goes by without the Wall Street Journal quoting an “analyst” that has a completely speculative and non-informed quote about something to do with supply chain.

But it’s not just the media that has taken supply chain awareness mainstream. Businesses across the world are seeking supply chain professionals in record demand. The job postings for procurement, supply chain, strategic sourcing and supplier relationship management professionals have exploded, with dozens of jobs listed in just about any small region. In prior years a query on Monster or CareerBuilder for those terms would be lucky to yield one or two positions within a 100 mile radius.

And the higher education market is listening to that demand. Colleges across the country are scrambling to offer supply chain programs. An article in business week in the middle of 2013 mentions 9 major U.S. business schools that launched supply chain management programs in just the last three years. And since then, I recall at least 3 other big schools announcing their new programs or enhancements to existing programs. In the mid-tier colleges it seems that two new schools a month are announcing programs. I do wonder where all of these professors and textbooks are coming from, but we’ll save that for another blog post.

But the explosion in our industry is not just about being able to tell your friends and family what you do for a living and have them actually understand (75% of my friends and family still define my job as “something to do with computers”). No, as evident in the uptick of hiring, the explosion has forced companies to reexamine their own internal processes, systems AND people.

Unfortunately, for many people, they may not survive this new explosion. For certain people, the ones that still see their job as a tactical role of placing orders and pushing things through a templated 3 bid RFP process, things are going to change. In many companies, “Purchasing” was the old dumping ground of where they stuck that loyal “grade c” employee that they just couldn't get rid of. But those days are gone; our industry, technology and processes have evolved. I predict that we’ll see a lot of turnover in the next few years in purchasing, procurement, logistics, sourcing, SRM and other supply-chain supporting positions. As companies reexamine the way they've been doing things and realize that they are frequently leaving savings opportunities on the table, they’ll look to improve their resources (technology or people). But, for those hidden professionals have been just waiting for their voices to be heard, now is their time to shine. I’ve conversed with dozens of procurement professionals over the last few years that had excellent ideas on ways to improve their companies, but just could not get the attention they needed to enable organizational change. These are the people that I expect will be the next news makers, and the quickest to rise within their organizations.

I also think we are going to see more outsourced BPO in our line work. But this BPO isn't the call-center or back-office processing type of stuff; no we’re talking BPO for strategic sourcing, supply relationship management, “centers of excellence”, and the like. We, at Source One, have already seen a huge uptick in the amount of companies looking for highly strategic BPO providers for supply chain projects. It’s exciting stuff, but I still struggle with the marketing of the terms: “Business Process Outsourcing Strategic Sourcing” or is it “Business Process Strategic Sourcing Outsourcing” or do we just go with “Strategic Sourcing Outsourcing”?

So there you have it. In short, I think 2014 will bring:

  • More qualified entry-level candidates with relevant degrees from both notable and local institutes of higher learning. 
  • We’ll see some existing professionals get weeded out from the place they've been hiding and either commit to improving their skill sets or finding a new career 
  • We’ll see other professionals rise to the challenge and demonstrate to their companies just how much they've been missing out by not listening to the “procurement people” 
  • We’ll continue to see departments that have traditionally operated in a silo starting break down and ask procurement teams for help for the first time ever (I’m talking to you, IT, Marketing and HR) 
  • An increase in the adoption of consulting firms or BPO providers in supply chain 
  • An increase in the demand for third-party benchmarking data beyond the generic stuff that top 3 "analyst firms" produce
  • We’ll probably see more mergers and acquisitions of supply chain software and consultancies as the big providers scramble to catch up to an industry that is moving much faster than they are.
How'd I do, what did I miss?

Following up on last week's announcement, in less than one week from today, Source One's William Dorn will be presenting a webinar hosted by Next Level Purchasing on Wednesday, January 29th, at 11:30 am EST. Signup is here.

Titled "Bridging the Gap Between IT and Procurement", the webinar will focus on changes that have affected both IT and Procurement as the business environment evolves, how those changes have impacted each group, and how each groups' reaction to the changes creates gaps and negatively alters the work environment. Dorn will then discuss the underlyign causes of those gaps, and offer steps to not only mend the gaps but increase organizational efficiencies in the process.

The presentation comes at an opportune time, with IT predicted to be a hot category in 2014 for many procurement teams and Source One's IT teams seeing a rise in clients seeking IT procurement services. Those attending the webinar next Wednesday are sure to come away better equipped to improve their own IT procurement policies, and if there are still lingering questions, there will be a questions period immediately following the formal presentation.

We look forward to seeing you there!
The rise of private clouds creates issues for IT procurement

Even for professionals whose specializations are well outside the realm of technology, the rapid adoption of cloud computing among contemporary companies is easy to understand. By allowing data and applications to be remotely hosted and delivered via the Web, thus minimizing the amount of on-site hardware necessary to maintain an IT infrastructure, the cloud has proven to be an immense asset to enterprise agility.

But for some firms, it isn't effective to place all assets in a public cloud, which is controlled by a third-party vendor and occupied by all of that provider's clients. The need for greater security and higher performance has driven many businesses to opt for private clouds, virtualized environments owned and operated solely by the company. But single-tenant deployments, which are often located on-site, require hardware investments. For many IT teams, the move to a private cloud may lead to uncertainties about procurement strategies for the necessary resources.

The spike in private cloud implementations

More companies than ever are likely to be experiencing these issues, as private deployments have become an increasingly popular option. Research by InformationWeek recently found that private cloud adoption rates had risen to 47 percent by the end of 2013 - more than double the previous year, when that figure stood at 21 percent.

The trend may be due in part to the growing realization that it's possible to set up a private cloud while still keeping certain data and applications in a multi-tenant, public environment. This is what's known as the hybrid cloud model, and it's making private clouds more accessible by allowing them to be implemented on a smaller scale.

Managing the costs of hardware procurement

Opting for a hybrid deployment is one strategy for keeping down the direct material cost of a private cloud. But the need to invest in company-owned infrastructure remains. Many firms have found that setting up a private cloud requires a certain amount of procurement adaptability, with teams being flexible and creative in terms of how they source the necessary hardware and other physical resources.

Windward IT Solutions CEO Sean McDermott told BizTech Magazine that companies should consider how to reduce business costs gradually, making the investment in private cloud hardware piecemeal.

"For example, make a small investment that enables the organization to automate the delivery of applications to reduce costs related to staff time," McDermott told the news source.

The complexities of private cloud implementation remind firms that procurement in IT needs to be just as carefully managed as in other areas of the business.

If you're anywhere on the East Coast, over the past 24 hours you have likely witnessed several key mistakes companies often make when preparing for potential risk without even realizing it. As it turns out, the latest "Polar Vortex" and the resulting snow it has produced has served as a microcosm of business planning, and the mistakes are the same in both. How? How about an illustrated guide!

Using low probability and historical results to dismiss concerns. 

If your headquarters are situated in a "500-year" flood plain, and it last flooded 125 years ago, you might think you've got 375 good years to go and shouldn't factor flooding into your risk plan. Same with historical results - if your offshore manufacturing is centered on an island in the Ring of Fire with a volcano that spits some smoke & ash every few decades, it's easy to ignore that in your risk plan. 

You're seeing this right now in cities that are completely unprepared for the snowfall amounts that they've received. In cases like Philly, where Source One is located, predictions for snow ranged from 5-10". Five inches of snow is navigable, but 10 means untreated roads get locked up fast. Over the past three years, weather services have historically overstated expected snowfalls enough that public works departments ignored the risk, resulting in untreated roads and city workers playing catch-up.

Regardless of if you're trying to plan around the next Krakatoa or keep drivers out of snowbanks, downplaying the potential impacts of a low-percentage event or relying on history to predict the future is bad practice, and a mistake you shouldn't be making.

Not planning adequately

In most cases, an ineffective plan is just as bad as not planning at all. Back to our previous example, if your plan to avoid potential slowdowns from volcanic activity is to build redundancy with a manufacturer located on another nearby island, volcanic activity large enough to disrupt your primary supply stream will more than likely negatively impact the entire region (see the Eyjafjallajökull eruption's disruption of European travel in 2010).

This applies to areas that may have planned to treat the roads, but didn't book crews to plow or react to wind damages. 

In both instances, plans were made and steps were taken in response to a perceived risk, but the steps were not adequate, and were ineffective in mitigating the risk.

Not using the available resources

All the planning in the world won't do you a bit of good if the plan isn't implemented, or is implemented incorrectly. Whether its a risk plan that doesn't get stakeholder buy-in, or serious issues pop up during implementation that delay or minimize the plan's intended effects, or the people in charge of implementation simply fail at their job, the failure to implement a policy that will avoid or mitigate risk increases loss. Not only is productivity lost due to the risk event, but all the time, resources, and effort put into the planning stages is now a wash because the plan did not have the proper effect. 

This is akin to the new, safety-enhanced cars you'll see sliding across three lanes of traffic in icy conditions. The all-terrain tires, the all-wheel-drive, and stability controls mean nothing if the vehicle isn't operated correctly.

Besides the obvious "no one knows what to do when it's snowing", the key takeaways are:

  1. When planning for risk events, plan to mitigate the effects and impact of the events. Don't plan around likelihoods.
  2. Plan robustly. Know the full impact of the risk event and be sure you have all corners of it covered.
  3. Make sure the implementation procedure for the risk planning is as robust and locked-in as the risk plan itself. 
2 models for sustainable energy sourcing

Creative business strategies and technological innovations are enabling companies to move toward sustainable procurement for their energy needs. Recently, two developments in green fuel suggested that these efforts may be moving in the right direction and highlighted the fact that there is more than one approach to eco-friendly energy sourcing.

1. Boeing thinks big with green diesel

Effective energy procurement has long been a challenge for companies in the aviation sector. The amount of fuel it takes for an airline to run its operations on any given day is tremendous, and even though oil prices aren't currently as high as they were in 2012, the energy expenditures required to keep aviation firms afloat remain immense.

Companies in this space are starting to think about how they'll pair long-term business cost reduction goals with the need to move toward sustainable energy. Aircraft manufacturer Boeing recently announced that tests run by its research team found that a type of green diesel made from oils and fats rather than fossil fuels would emit about 50 percent less carbon dioxide than major fuel sources currently in use. 

The development represents a large-scale approach to sustainable energy sourcing. The company is pushing for approval of the green diesel by the United States Federal Aviation Administration, and James Kinder, a technical fellow in the commercial airplanes propulsion systems division at Boeing, made it clear that the firm thinks the fuel will transform the industry.

"Green diesel approval would be a major breakthrough in the availability of competitively priced, sustainable aviation fuel," Kinder said.

2. Harvard scientists get down to earth

While Boeing is looking to replace current fuels on an industry-wide scale with a green, yet affordable option, researchers at Harvard University are taking a less flashy approach - but one that may be even more revolutionary. The institution recently announced that a team of scientists had developed a flow battery, which operates much like a fuel cell, capable of storing greater amounts of renewable energy (primarily wind and solar) than traditional batteries can, while at the same time reducing costs. The technology is made possible in part by quinones, a type of molecule that occurs in humble plant life.

"Quinones are abundant in crude oil as well as in green plants. The molecule that the Harvard team used in its first quinone-based flow battery is almost identical to one found in rhubarb," the university noted.

While Boeing has offered an immediately available solution, Harvard's looks ahead to wind and solar power as long-term answers - but both recognize the importance of cost reduction.

John Q. Procurement is an MRO category lead for a large diversified manufacturer, ABC Incorporated.  Recently, he read about the new government regulations aimed at phasing out energy hogging incandescent bulbs.  Based on the information, he decided it was time for ABC to develop a new standard for their lighting requirements.  To accomplish this, John planned to engage in comprehensive sourcing event for lighting that would result in a detailed comparison of the benefits and drawbacks of both compact fluorescents and LED bulbs, and would lead to the selection of a new preferred manufacturer and set of standards for ABC.

To get started, John reached out to Steve, who leads the Sourcing and Procurement Center of Excellence at ABC.  Steve oversees the coordination of all sourcing activities company-wide, and makes sure that the appropriate policies and procedures related to sourcing are followed.  Since it was the beginning of the year, Steve was heavily involved in a lot of planning meetings, and wasn’t available to talk to John for two weeks. 

John needed to talk to Steve before he could get started though.  He had to get approval for the project and verify that no conflicts exist with other sourcing activities that are ongoing or scheduled for the year.  Once Steve became available he was able to validate that no conflicts existed, and the project could move ahead.  However, Steve recommended that John talk to the Supplier Relationship Managers that represented ABC with their integrated supply company, as well as their electrical distributor, to ensure that the timing of the engagement was appropriate given the ongoing initiatives with those two suppliers.

Sandy, the SRM for integrated supply, was available the same day, but Jeff, the lead on electrical was currently in the middle of a two week road show, meeting with suppliers to finish up annual evaluations and scorecarding.  Feeling it was best to kill two birds with one stone, John scheduled a meeting for the following week so both could attend.

After presenting his strategy to Jeff and Sandy, the team of three agreed that now was the right time to look for lighting alternatives.  Both SRM’s had market intelligence regarding bulbs from their suppliers that they could provide to John, including manufacturer overviews and the latest technological advances.  They also suggested that John meet with the head of Sourcing Analytics to determine what type of usage data could be provided to John to support the RFP process.

John then tried to reach out to the head of sourcing analytics, but found that the current lead was leaving the company at the end of the month, so John would need to wait until his replacement came in to review the project.  Later that month he met the new lead, Donna, and gave her an overview of the goals and objectives of the initiative.  Donna was happy to work with John on the project, but was still learning about the Ariba buying platform, since she had not used it at her old company.  She suggested a joint conference call with the P2P manager and Ariba subject matter expert to ensure they could assist in providing John with meaningful spend data that could be used in the RFP.

Ted, the P2P Manager, called John the next day, and was able to confirm what reports could be pulled from the system at an SKU level. Ted also suggested that John consider extended payment terms and the ability to accept purchase cards if ABC were to buy direct from manufacturers.  He also suggested John loop in the plant level buyers to get their input on qualitative and technical requirements for the sourcing engagement.  John thanked Ted for his input, and decided to coordinate a lunch meeting with the plant buyers for the following month, when they would all be in town for a corporate training and team building event.

When the day of the lunch meeting came, John was excited and ready to move this project to the next level.  He felt that this meeting was the official kickoff of his project, and he was ready for it.  With 20 plant buyers in the room, he presented the business case and strategy for this initiative. When it came time for questions and comments, he received the following feedback.

We can’t change manufacturers; we have a local deal in place.

I don’t understand why we can’t keep using incandescent bulbs.  CFL’s are more expensive, isn’t this the opposite of what we should be doing?

I’ve already switched to LED’s, and I will NOT use a CFL.

I’ve done the research, and it will cost our plant $750K to retrofit all our existing fixtures.

I don’t use corporate deals.  The electrical distributor you selected can’t service our needs.

John did his best to address the concerns, even those that didn’t make much sense to him, but he left the meeting feeling demotivated.  After 2+ months of getting the proper alignment within the strategic sourcing group at his company, he now worried that whatever his findings were would not be implemented.  He decided to proceed with the project, but was unsure if it would be successful.


While this story is fictional, the challenges sourcing professionals have to face, even within their own organization, are very real.  Even more troubling is that many of these challenges are self-inflected.  Sourcing has discovered the enemy – and it is us!

2013 will be looked back on as the year we officially compartmentalized strategic sourcing.  Roles have been defined and job descriptions have gotten narrower, all in an effort to create specialties within our industry.  While these were done in the name of efficiency and improved support of the business, the long term result is individual sourcing professionals with no relevant experience, business acumen or skillsets outside of their area of focus. 

Does this matter if it results in efficiency and improved results?  Perhaps not, but I am guessing the extreme example of John Q. Procurement, reminded you of similar situations at your company.  Efficiencies aside, as we commoditize our roles, the case for outsourcing our jobs becomes much easier.  Why does your company need a sourcing analytics person to support the business full time, when they can outsource the function at half the cost and get access to more relevant market intelligence?  Why have a category manager dedicated to the human resources department when there are subject matter experts that can take that role and utilize cross-industry experience to support the business?  Why hire a P2P Lead when the supplier can provide that support at a discounted rate?

In the long term, compartmentalization is a not going to improve service levels to the business, because it makes the individuals supporting the business more tactical and less strategic.  This is the opposite of what we should be trying to accomplish.  Sourcing professionals that can adapt to different situations, have a broad based understanding of qualitative, financial and operational issues, and are empowered to make decisions based on these factors, is what we should be looking to develop in our teams.  If sourcing groups don’t strive to make these changes, then there is a high probability that their jobs will be the next to be outsourced.