November 2014

The Institute for Supply Management (ISM) will be holding its 2015 Annual Conference in Phoenix, Arizona. Source One will be exhibiting at the show, as well as speaking on the topic of nearshoring. Source One's William Dorn (VP of Operations) and Diego De La Garza (Senior Project Manager) were selected due to their unique experience with supplier development challenges in Mexico.

Many US companies outsource to low-cost countries, but lately there has been an uptick in moving manufacturing processes from overseas to closer to home. Mexico has become an increasingly attractive solution to supply chain managers, offering competitive labor and favorable trade agreements, but it is not without its challenges. Source One has been a champion of nearshoring efforts, helping many businesses revise their supply chain strategies and evaluate Mexican options for greater cost savings and operational efficiency.

Dorn and Garza will present both the pro's and con's of sourcing from Mexico, and provide insight into best practices for supplier identification. Key topics will include:

  • Inventory turnover
  • Logistics
  • Compatible business culture and time zones 
  • Labor and trade benefits 
  • Intellectual property securities 
To learn more about Source One's nearshoring practice, visit

To learn more about the 2015 ISM Annual Conference, visit
Analyzing the supply chain behind Coca-Cola Life

Soft drinks don't necessarily have the best reputations among health enthusiasts, and beverage giant Coca-Cola is recognizing this fact. 

In light of consumer sentiment, the company recently released Coca-Cola Life, a reduced-calorie drink that uses a combination of cane sugar and stevia leaf extract as sweeteners. Coca-Cola Brands and Coca-Cola North America VP Andrew McMillan noted the new release was produced on behalf of consumers looking for "more choices in flavors, package sizes and sweetener options."

Scrutinizing the supply chain 

For the past couple of decades, high-fructose corn syrup has been the sweetener of choice among Coca-Cola's procurement management team. The United States Department of Agriculture's Economic Research Service identified the U.S. as one of the largest producers of HFCS, with production increasing from 2.2 million short tons per year in 1980 to 9.2 million tons annually in the 2000s.

Essentially, this means that Coca-Cola plants located in the U.S. were able to receive the raw materials needed to produce certain beverages more quickly, although this proximity only applies to factories located domestically (Coca-Cola has facilities distributed throughout the globe). 

Given the fact that Coca-Cola's holistic operation stretches throughout many parts of the world, it can be assumed that the company is setting up manufacturing plants in nations located relatively close to where other sweeteners are grown. The less time it takes for sugar cane to be delivered to processing plants, the less risks persist throughout the supply chain. 

Morals in the right place 

Coca-Cola is a prime example of a company that partakes in global sourcing. With this practice comes intense scrutiny from consumers, journalists and even competitors. It only takes one report that details worker abuse in an overseas factory to permanently tarnish a brand's reputation. 

To the enterprise's benefit, Coca-Cola has made tangible commitments to provide its indirect and direct suppliers with the treatment they deserve. Last year, the beverage company announced the implementation of a comprehensive action plan to defend the "land rights of farmers and communities in the world's top sugarcane-producing regions." 

"Our company does not typically purchase ingredients directly from farms, nor are we owners of sugar farms or plantations, but as a major buyer of several agricultural ingredients, we acknowledge our responsibility to take action and use our influence to help protect the land rights of local communities," said Coca-Cola's Director of Global Workplace Rights Ed Potter.

Overall, the company is employing transparency in order to allay concerns expressed by consumers and businesses alike. 

Analyzing procure-to-pay options among B2B enterprises

Many enterprises partaking in the B2C sector have integrated e-commerce into their core business models, providing consumers with the ability to purchase goods from anywhere with an Internet connection.

However, the B2B contingency doesn't receive much recognition, despite the fact that suppliers are offering procure-to-pay and e-commerce solutions for their customers to take advantage of. The implementation of Web-based procurement technologies has vastly changed the manner in which organizations manage relationships with their suppliers.

The prevalence and rise of B2B e-commerce 

When comparing statistics between B2B and B2C online purchasing, one would discover that B2B enterprises are more involved in e-commerce than many would have initially estimated. For instance, Forrester Research found that 10.7 percent of all consumer retail purchases will occur online by 2017. In a separate study, Forrester discovered that 52 percent of procurement officers anticipate at least half of the transactions they sanction will occur online over the next three years. The latter research also acknowledged a few notable factors:

  • Just under half (49 percent) of B2B customers prefer to procure products online.
  • More than four-fifths (83 percent) of suppliers intend to spend capital and time deploying or enhancing their e-commerce solutions within six months.
  • Most procurement officers (60 percent) desire advanced search functions.
  • Sixty-nine percent of purchasing officers prefer to use instant payment systems as opposed to invoices. 

"Business buyers are coming online with high expectations across the board," said Accenture North American Omnichannel Commerce Managing Director Brigid Fyr. "With three out of four buyers stating they would buy again from a supplier with an easy-to-use website, sellers have a large opportunity for growth by focusing on making the entire purchasing experience as easy as ordering a book online or downloading music onto a smartphone."

How e-commerce is transforming supplier relationship management 

It's appropriate to view contemporary, digitized procurement processes as a two step-process, assuming that established partner relationships are long-term. The first stage involves an extensive vetting process consisting of conversations regarding finances, product quality, delivery models and sustainability commitments. 

For obvious reasons, this phase can be quite arduous, depending on how skilled a supplier is at divulging information. In an age when people are focusing on progressive environmental and fair labor practices, it's important for B2B e-commerce companies to deliver data in an objective manner. Let procurement managers know exactly what they'll be getting into if they choose to establish a relationship. Depending on how well a company exercises best practices, transparency tactics will likely work in its favor. 

The second phase concerns the cohesion of front-end and back-end systems to support B2B e-commerce initiatives. Researchers at the Nanjin Institute of Industry Technology wrote a white paper on the subject, developing an operation model composed of five components:

  1. Application portal: Provides personalized information to procurement officers based on their specific business needs. It connects distributors, suppliers and customers so that strategies can be better developed across long distances and time zones.
  2. Front-end trading system: Gives professionals the ability to scrutinize pricing models and weigh them against demand forecasts. After accurate estimates are discovered, materials acquisition processes can be delivered. 
  3. Back-end support solution: Monitors and analyzes the logistics and manufacturing elements of e-commerce delivery. Allows transportation personnel and assets to coordinate operations. 
  4. Partner and service support system: Synchronizes data from a B2B customer's applications, provides a portal through which the RFP process can be initiated. 
  5. Enterprise service bus: Serves as the primary, underlying information delivery software, supporting cohesion across all engines. 

As one can see, enterprises also have the ability to conduct endeavors related to spend management if they so wish. This e-commerce model unifies every consideration for procurement officers. 

Is Brazil a low-cost manufacturing economy?

For those with no experience in spend analysis, it's easy to assume that Brazil's manufacturing economy is an affordable alternative to the Asia-Pacific sector simply because the nation lies in the heart of South America.

However, as any experienced procurement officer would tell you, the situation is much more complex than that. Sourcing from Brazil has its benefits and drawbacks, advantages and risks. In this respect, providing a definitive "yes" or "no" answer to the question "Is Brazil a low-cost manufacturing economy?" is somewhat inappropriate. 

The challenges 

Given insights from Deloitte's 2012 report regarding the Brazilian manufacturing sector, many foreign investors pay close attention to the nation's poor infrastructure, low-skilled labor and a tangle of complicated corporate tax laws that often cause potential partners to refrain from establishing relationships with Brazilian suppliers. 

One of the biggest issues hindering the Brazilian economy is a perceived lack of sustainability. Spend management professionals are often wary of manufacturers that fail to use the resources available to them in an optimal manner. Deloitte Manufacturing Global Leader Tim Hanley noted enterprises are leveraging new mobility strategies and technologies to both satisfy contemporary consumption patterns and significantly reduced waste. The general consensus among Deloitte analysts is that Brazilian industrialists have failed to catch on to the trend. 

How can these issues be fixed? 

Foreign Policy contributors Joshua Kempf and Mark Kennedy conducted a brief analysis of Brazil's current challenges. While infrastructure, health care and education are all issues economists are quick to identify, it's evident that the nation's leaders need to make key reforms to position Brazil as a viable nearshore competitor:

  • Taxes: The two analysts noted that each of Brazil's states enforces its own taxes on goods from its counterparts. When crossing state borders, companies distributing goods are subject to customs checks to ensure those taxes have been paid. This causes unnecessary management complications. 
  • Labor: Payroll taxes are incredibly high, amounting to about 35 percent of a person's income, which in turn makes it quite expensive to hire skilled labor. In addition, one law requires Brazilian companies to pay fired employees a retirement fund, motivating workers to intentionally lose their positions. 

Finally, import fees need to be drastically reduced. Kennedy and Kempf acknowledged that a vending machine that costs $8,000 in the U.S. costs $20,000 in Brazil after taxes and port levees. This makes goods more expensive for consumers, causing them to refrain from participating in the economy. 

What does the Keystone XL pipeline mean for US oil procurement?

A key consideration procurement professionals take into consideration is the cost of delivering goods from one location to another.

For those involved in the energy industry, transportation is a significant concern. Oil spills can cause grievous disruptions to the supply chain, that could cause numerous detrimental environmental and social consequences.

That's why oil pipelines appear so attractive - they reduce the risk associated with distributing much needed resources to refineries and other facilities. However, installing and implementing these assets isn't always a smooth process.

Analyzing the Keystone XL pipeline

Since 2008, United States lawmakers have been contending over the construction of the Keystone XL pipeline, according to CBS. Six years ago, TransCanada applied to the U.S. federal government for a building permit that would transport 830,000 barrels of petroleum derived from Canadian tar sands to refineries located along the Gulf Coast.

Most of the pipeline has already been erected, spanning from Texas to Nebraska. The middle section, which will stretch from Nebraska to Canada through Montana, has yet to be established.

The source of contention

U.S. legislators remain divided on the issue. On one hand, supporters assert the Keystone XL project will create 42,000 temporary positions, ranging from construction to food services. In addition, they maintained that transporting petroleum via the pipeline is much safer than doing so by rail.

On the other side of the argument, opponents maintain that after the pipeline is completed, a mere 35 permanent jobs will hold up. Many also contend that the pipeline will indirectly contribute to the production of 17 percent more greenhouse gases, as tar sand extraction is more detrimental to the environment than conventional methods.

IndustryWeek noted the matter was recently settled in the U.S. Senate. Missing the mark by a single vote, the $5.3 billion project was rejected by lawmakers on Nov. 18. Many Senate Republicans noted they intended to revisit the matter in January.

A spend management perspective

From a purchasing management standpoint, the rejection of the Keystone XL proposal is a serious blow to energy companies with oil refineries dispersed across the American Gulf Coast. Although the pipeline would have been expensive to construct, this was a more feasible solution compared to the long-term costs associated with continuously transporting Alberta petroleum across the Plains States. Residual expenses will be caused by rail safety mandates, as well as recent laws that obligate companies to replace antiquated cars carrying chemicals.

The difficulties of procuring organic food

Supermarket executives are catering to a contingency of consumers who prefer to purchase organic produce, but guaranteeing that certain vegetables or fruit have not been treated with any chemicals whatsoever is quite a difficult endeavor.

It's a problem procurement management professionals face when connecting with farmers that specialize in raising organic foods. Visiting a farm is one thing, but doing an extensive investigation of their past relationships and practices is another. Arduous as it may be, the process is still necessary because consumers dedicated to eating organic diets typically conduct background checks of the foods they intend to purchase.

The difficulty of sourcing organic foods 

One should be cognizant of the fact that some farmers who originally intend to grow organic produce end up having to spray their crops with pesticides or fungicides. Ellen Knickmeyer of The Associated Press noted a case in which select agriculturists are contending a California pest-management program that many believe will be detrimental to the economic health of organic crop growers. 

The California Department of Food and Agriculture has responded by asserting that organic farming businesses will not experience any setbacks as a result of spraying organic crops. The reasoning behind this rebuttal lies in that farmers could instead market their crops as non-organic.

However, the organic food niche market is one that many agriculturalists would be hesitant to give up. That's the viewpoint of Zea Sonnabend, a Watsonville, California, organic apple producer and member of the California Certified Organic Farmers group. 

"I would rather stop farming than have to be a conventional farmer," Sonnabend told Knickmeyer. "I think I am not alone in that." 

Will consumers get involved? 

For some time, organic food has existed as a niche market, but for how much longer? In light of government mandates requiring farmers to treat what would be organic crops with pesticides, it's possible that some U.S. families may join farmers in their fight to combat state regulations. 

According to the Organic Trade Association, the popularity of organic products is increasing, as 81 percent of U.S. families reported they purchase such goods regularly, but not often. OTA CEO and Executive Director Christine Bushway noted this trend is supported by parents' desire to provide their children with healthier options. 

Overall, organic goods appear to become more popular every year. The OTA survey, which was conducted in 2013, found that the majority of respondents are buying more organic items now than they were a year ago. If these constituents could get more involved with public processes, organic farmers may still have a place in the U.S. economy. 

Buying vs. Leasing your Supply Chain: Lessons Learned From ‘Brew Masters’

There are plenty of pros and cons for both buying and leasing a part of your supply chain. At the end of the day, most think about cost. Which of the two will be the lowest cost while still upholding company’s values? Last weekend I learned about one organization that outsourced their logistics, helping reduce costs while maintaining their corporate standards.
This company, Dogfish Head, is at the top of their game when it comes to their business model. They hired MicoStar Logistics, a logistics company founded in 1996 that provides a comprehensive solution to eliminate waste and inefficiency in their industry. Some logistics companies are overpriced for their services, but Microstar is able to keep costs down because they use ‘just in time’ keg inventory, less freight by keeping the kegs local to a geographic area when possible, and realizes the earnings on their own investment for the life of their assets/kegs.
Instead of Dogfish Head paying for freight and other logistics costs to shipa keg from Delaware to any of the 29 other states (plus D.C.) and then back, they are able to ship one of MicroStar’s kegs and exchange for another one within their state’s depot. This not only reduces logistics expenses, but the brewery also does not have to invest in more kegs than they need. With more capital, Dogfish Head can  create more brews, invest more into distribution, or buy a treehouse from Burning Man to use on their front lawn (Seen here: In addition, Dogfish Head is helping the environment because less fuel is used in this model. Considering that Dogfish Head produces roughly 5,400,000 gallons of beer a year, it is easy to see how some big savings can be realized from this decision.
Whatever industry you are in you may face the decision to buy or lease a service for your product. Most companies are looking for the lowest cost. Some companies want to own their entire supply chain so there is no compromise to their quality. There is plenty of room in the spectrum to find the balance.
Lessons to learn from this story are:
·         Know your values and the expectations of your customers and do not compromise your quality just for costs
·         Identify highly rated companies providing the service for your industry and location but be aware that set up cost for a new supplier could be too high when comparing buying versus leasing
·         Find out if the money saved can be used for more core responsibilities of your company
·         Know if your company has the experience in the service to invest not only money but time and personnel on the service without being a waste

image courtesy of
Since Source One’s release of our recent benchmarking white paper, Attain Best in Class Status and A Competitive Edge through Cross-Industry Benchmarking, we have been seeing a lot of attention to the topic. We released this report to demonstrate the value of supplier benchmarking and using market intelligence to measure performance and supply chain effectiveness. For organizations with a focus on continuous improvement, benchmarking allows clear identification of problem areas and an easier road to developing a best-fit solution.

In the below infographic, we outline some of the points presented in the white paper and aim to introduce a new standard of benchmarking that goes beyond a surface view of the marketplace. Interested in learning more outside of the infographic’s summarization? You can download a free PDF of the benchmarking report today. To learn additional insights about Source One’s benchmarking services, visit

How can the Internet of Things impact the health care supply chain?

The components used to create complex medical machinery are produced by hundreds of companies distributed across the globe. Knowing whether or not these implementations were produced ethically or were transported under unfavorable conditions is a challenge for procurement officers in the health care industry.

Devices aren't the only component of the medical sector about which purchasing professionals are concerned. While the chemical processes used to make particular drugs are one consideration, another is deducing how the materials used to create these drugs were transported between facilities. Not to mention, sourcing managers want to know whether logistics partners distributed finished products appropriately. 

Radio-frequency identification and Internet-connected smart devices can provide clarity in regard to these questions, but a number of challenges are preventing organizations from implementing the assets and platforms necessary to support them. Before scrutinizing these problem areas, it's important to detail how the aforementioned technology can provide health care enterprises with supply chain visibility. 

RFID: The foundation of transparency 

While barcodes provide warehouse managers and others with adequate information, it's not as detailed as the kind that RFID tags hold. In addition, orders can't be expedited as quickly with barcodes because personnel must physically walk up to items possessing these labels to register information. What's different about RFID? 

A report conducted by Transparency Market Research noted that RFID as a whole is comprised of tags, middleware and readers. Whenever a reader passes by a package equipped with a tag, the tag's microprocessor exchanges information with the reader. Tags can hold a wide variety of data, such as where certain products were produced, which facilities the items were stored in throughout the distribution channel and so on. 

Usage rates of RFID 

The research firm discovered that RFID use in the health care sector can be seen in medical reporting, blood transfer surveillance, pharmaceutical monitoring, human resources identification and, of course, distribution tracking. However, Transparency maintained barcode technology has hindered RFID growth, primarily due to its pre-established use throughout the industry. 

That doesn't mean it isn't feasible to use RFID technology. Smaller tags are more convenient for hospitals to attach to devices and pharmaceutical packages. Overall, RFID systems are expected to become more affordable, as instances of theft, a rise in drug counterfeiting and a universal need for more efficient supply chain practices are increasing demand for such solutions.  

A notable challenge 

As almost every global sourcing expert knows, it's incredibly difficult to account for every indirect and direct supplier relationship. The comprehensive visibility associated with RFID is only possible if each partner cooperates with the organization that initiates the technology's implementation. 

How can this problem be resolved? Start at the very beginning of the supply chain. This will obligate companies down the line to use RFID technology, as it will be the only way they can register when products were received and transferred. Even if a company that failed to use an RFID system employed workers attempting to commit fraud, it would be incredibly difficult for them to do so because their employer would be the first partner to receive scrutiny. 

Why the cloud is necessary 

Health IT Analytics contributor Jennifer Bresnick acknowledged how cloud infrastructures provide organizations with the platforms necessary to aggregate, process and use data produced by Internet-connected devices. As cloud technology provides professionals with the means to access applications and data from any place possessing Web access, it makes sense to deploy RFID solutions through the cloud. 

Of course, this presents a challenge in and of itself. How does a hospital get each of its partners to use the same cloud platform? Is it optimal to simply leverage RFID as a service instead? What does this mean for purchasing? These are other concerns that must be properly assessed. 

Last week, Source One Management Services was happy to announce that it had won the Supply and Demand Chain Executive's Green Supply Chain Award for the third consecutive year. It has become more and more apparent that environmentally friendly initiatives within major corporations are no longer just a regulatory requirement, but an on-going investment into reducing their global footprint. Source One has a rich history of working with organizations to find suppliers who fit within their sustainability goals.

If you are considering going green, here are some tips on managing that within your supply chain:

One of the first steps into "greening" your company is to prioritize goals. Your procurement and sourcing groups can give insight into what green strategic sourcing initiatives are quick hits and what other projects are more long-term investments that require will require change management planning.

Additionally, some environmentally friendly objectives might align with existing spend management goals. For example, companies that are looking to reduce spend in office supplies can often find substitutions that are inexpensive and made from recyclable materials.

Secondly, it is important to take the time and assess your existing supply base. Some suppliers are just not the right fit for green programs, but very often suppliers do have sustainability policies that they neglected to discuss with you previously.

For those companies who believe green suppliers tend to be more expensive, it is important to realize sustainable providers are often aligned with market prices. If you are dealing with skeptics, a benchmarking report can provide the market data regarding green supplier costs, help gain buy-in from stakeholders.

Ultimately, sustainability is not just a trend, but a growing business practice. If you company is looking to be more environmentally friendly, utilizing green sourcing methods will not only help reduce your costs, but also achieve your goals. 

Need manufacturing skills? Invest in schools, in-house education

When it comes to finding personnel with the skills needed to keep state-of-the-art manufacturing plants operating effectively, strategic sourcing specialists should direct their focus toward hiring the young.

This, of course, is easier said than done. However, industry-wide concerns about a growing labor shortage have caused many private enterprises to take their own initiatives, implementing in-house education programs. In addition, public school systems are taking note of the troubles the production economy is facing. 

Gearing up for a bountiful career 

It's quite possible that one of the reasons why manufacturers have failed to attract young individuals into taking up the trade is that many people entering the workforce perceive factory jobs as low-paying. However, USA Today noted that machinists and other specialists focusing on production equipment, development and maintenance earn upward of $80,000 annually

Those are the kinds of positions Wheeling High School in Illinois are preparing its students to fill. The source noted the institution has offered production economy training to pupils for six years. Wheeling High is a member of Project Lead the Way, which designs curricula for schools providing manufacturing training to enrollees. 

Changing popular impressions 

Project Lead the Way was implemented in response to the hundreds of thousands of positions U.S. manufacturers are working assiduously to fill. Manufacturing Institute Vice President Gardner Carrick noted this and other programs work against the popular concept that manufacturing provides people with no career advancement, and is associated with dirty, arduous work. 

In contrast to this perception, Carrick maintained that modern production jobs are of a different ilk, asserting that today's professionals are "working with computers and robots that are doing what you used to do by hand," he told USA Today. 

Capitalizing on a convenient location 

IndustryWeek referenced a three-year, $32 million investment by General Electric that will be put toward constructing an advanced manufacturing facility minutes outside of Pittsburgh, Pennsylvania. The finished building will employ 50 positions requiring knowledge of high-tech engineering technologies. GE stated its hope that graduates of local colleges and universities will find work there. 

"It is how we will compete and win in the future," said GE Vice Chairman Dan Heintzelman, as quoted by the source. "We can more efficiently invent and build products for our customers, while driving better margins for our investors."

Commitments such as GE's position the U.S. to be a viable manufacturing competitor. 

How US-China accords affect global sourcing

The technology and energy industries will likely be profoundly affected by agreements between the U.S. and China. 

The manner in which enterprises participate in global sourcing is partially dictated by relationships between the nations they're based in. As China and U.S. are two of the world's largest economies, it makes sense for their leaders to collaborate for the benefit of both nations. 

For the benefit of technology 

Marley Jay, a business writer for The Associated Press, acknowledged a trade agreement between China and the U.S. that could abolish tariffs on $1 trillion in global purchases of semiconductors, MRI machines, GPS devices, printer ink cartridges and other high-tech goods. Jay noted that U.S. President Obama traveled to Beijing for the Asia-Pacific Economic Cooperation Summit, at which he and Chinese leaders discussed the expansion of the Information Technology Agreement of 1996.

The ITA prohibits tariffs on IT products, as they provide domestic items a price advantage over imported counterparts. Although the agreement wasn't finalized, it's expected the accord will officially be implemented at the World Trade Organization congregation, which will take place in Geneva later this year.

In light of this development, purchasing management professionals working at major tech companies will be able to establish relationships with manufacturers that produce higher-end, more expensive materials, because they won't have to consider the tariffs associated with procuring IT goods.

Commitment to the environment 

The U.S. and Chinese economies are bound to feel the impact of emissions agreements between the two nations. The Washington Post maintained the plan states that the U.S. will double the pace of its carbon reduction initiatives before 2025, reducing levels to 28 percent below 2005 output.

In turn, China will put a cap on its carbon dioxide emissions sometime around 2030. The nation will cease its rising emissions production by increasing investment in nuclear, hydroelectric, wind and solar energy, which currently accounts for 20 percent of its total power usage. 

What are the implications for procurement officers working in the energy sector? The prospect of carbon taxes has been discussed among both Chinese and U.S. lawmakers, requiring those concerned with spend management to deduce how these mandates will impact corporate budgets. In turn, these analysts may advice their employers to take advantage of federal subsidies provided to enterprises that make tangible investments in renewable energy. 

Will Apple's supply chain be able to sustain demand for smartwatch?

One particular issue that recently received a lot of attention from procurement management experts is involved the setbacks Apple encountered in regard to its supply chain.

First, the hardware developer's suppliers experienced a problem in which the iPhone 6 and iPhone 6 Plus failed to emit the appropriate amount of light. Then, after the two smartphones were released, Apple customers discovered the devices were bending in their pockets. 

The two primary issues 

Now, according to Manufacturing Business Technology contributor Paul Noël, Apple is finding its partners aren't producing the iPhone 6 and iPhone 6 Plus in tandem with consumer demand, resulting in shortages across the board. With this factor considered, it can be concluded that Apple is facing two central problems:

  1. Quality control: Not too long ago, Apple had a reputation for producing near-flawless goods that operated on a superb level. The latest reports regarding the new iPhone seem to contradict this image, signaling that Apple's development and quality assurance teams aren't paying as much attention as they used to.
  2. Purchasing: One can perceive Apple's product shortages as a problem rooted in two issues. In one respect, it's possible that the company's procurement officers aren't aligning themselves with Apple's sales department, meaning they're not receiving accurate demand reports on which to construct device orders. From a different angle, it's possible that Apple's purchasing division is overlooking factors that are preventing its suppliers from producing goods at the optimal rate. 

With respect to both points, it may benefit Apple to consider the benefits of business process outsourcing to conduct a thorough review of the enterprise's supply chain. Such companies can serve as quality control experts, as well as investigators that can identify which partners are unintentionally causing shortages to occur. 

Ready for a new device? 

Amid these concerns are tangible signs that Apple is preparing to unveil new products within the next three to four months, and the hardware developer's manufacturing partners are gearing up. Apple Insider noted the company's chip suppliers are preparing to initially turn out 30 million to 40 million Apple Watches. The source noted the following supply-related concerns:

  • The Apple Watch will run on advanced system-in-package (SiP) technology that allows entire computing systems to reside on a single chip. 
  • The device will be equipped with a Force Touch Retina surface that is able to identify the differences between a tap and a press. 
  • Wi-Fi and Bluetooth connectivity are expected to be a part of the final package.
  • Near-field communication will assist those using Apple Pay. 

Apple Insider acknowledged recent rumors that Apple Watch will debut on Feb. 14 of next year, but this estimate has largely been regarded as speculation. As one can see, a fair number of components are categorized as being the "latest and greatest," which means that Apple's supply chain may be sacrificing quality control to ensure the device functions adequately, as opposed to optimally.

Future supplier concerns 

In order to avoid future shortages, Noël recommended that Apple diversify its supplier portfolio, alleviating primary partners of production demands that, in some cases, are unrealistic. According to Noël, one of the reasons why the iPhone 5S and 5C didn't encounter the deficit woes associated with the latest iPhone releases is that Apple used two different manufacturers, Foxconn and Pegatron, to handle the assembly of the 5S and 5C respectively.

Now, Foxconn is handling much of the iPhone 6's production on top of managing all of the manufacturing needs of the iPhone 6 Plus. Alleviating some of the pressure on Foxconn will mitigate the shortage issues with which Apple is currently contending. As far as quality assurance goes, it's best if Apple sends development professionals to manufacturing. 

Scrutinizing the flexible side of spend management

Globalization opened up the Western world to the Eastern and vice versa. With this dismantlement of borders came a whole new set of risks, concerns and opportunities. 

The nature of spend management didn't necessarily change, but professionals concerned with the practice learned to take advantage of favorable circumstances when these were presented to them. Building relationships with overseas or nearshore suppliers involved deducing not how much a company would save, but how much it would gain. 

Outside looking in 

Arguably, globalization also gave birth to business process outsourcing. All too often, enterprise leaders who have been working at their companies for some time are emotionally invested in the decisions they make, hindering their ability to make critical decisions, a few of which may or may not "fit protocol." 

SupplyChainBrain noted that, on average, spend management entities can deliver up to $6 million in savings to their clients, providing services at expenses 19 percent lower than in-house teams. While the statistics shouldn't be negated, it's important to analyze why these cost reductions are apparent. Those at procurement firms bring a number of different factors to the table when scrutinizing the sourcing concerns of their clients, such as:

  • A diverse partnership portfolio: Vendors connect with hundreds of different organizations or more every year. With this networking comes a fundamental knowledge of what specific enterprises have to offer. Recommending certain suppliers based on past, thorough experience is a capability in-house teams can't necessarily offer.
  • Knowing what's best: As was mentioned above, it's sometimes difficult for in-house teams to view situations without some level of emotional investment. In addition, professionals used to operating in a particular manner for an extensive period of time are typically hesitant to implement change. Outsourced procurement officers can objectively view situations, deduce which protocols are working and which are not, and then make calculated recommendations based on their conclusions. 

An example of flexibility with critical assessment 

One particular part of the world that is receiving an incredible amount of investment is the Middle East, especially around the Gulf region. Supply Management contributor Helen Gilbert noted that firms based in the region have many opportunities to expand portfolios, but the pace at which procurement teams must be developed isn't up to par. 

Gilbert noted a survey of 100 chief procurement officers and directors throughout firms conducting business in the region, which discovered 95 percent of respondents believed strategic assessment will improve the Middle East's ability to add value. 

What will procurement look like in 2015?

The current generation of procurement officers are being viewed as pseudo-investigators. 

The intention isn't to write a ground-breaking dissertation on India's manufacturing economy - rather, it is to determine which partnerships and supplier relationships befit company requirements and standards. Due to the vastness of the average supply chain, purchasing experts need to scrutinize every line for a number of reasons, including, but not limited to:

  • Detecting fraud and other unfavorable financial activity
  • Ensuring raw materials are being acquired by suppliers through ethical means
  • Deducing whether partners are treating their employees fairly 
  • Identifying problem areas in which distribution costs are getting out of hand 

What's to expect from the future 

The present character of procurement management is one that favors holistic oversight of all assets and relationships. This approach will have a profound effect on the way in which professionals working in this field will conduct themselves in the near future. Supply Chain Digital contributor Mickey Rizza named five trends that will define purchasing in 2015:

  1. Achieving holistic, transparent inventory management is a goal many enterprises, particularly those in the retail industry, will strive to attain. The Internet of Things and analytics tools enables supply chain experts to develop more accurate demand forecasts, quickly liquidate returns and adjust tactical strategies in the blink of an eye. 
  2. Procurement teams will become more acquainted with other departments. Each team has its own needs, and developing an understanding of what those necessities are will help purchasing officers acquire materials and services with regard to what an organization requires as a whole.
  3. Real-time performance monitoring will become a regular practice. Being able to look at a vast chart displaying how each supplier and partner is contributing to the success of a business is a capability of the near future. This will enable professionals to not only identify problem areas, but figure out how and why issues are occurring in particular sectors. Acknowledging a dilemma is one thing, being able to zero in on the root cause is another. 
  4. Trusted partners will become suppliers. As it's a "who you know" world, it makes sense that companies will be looking to build economic relationships with enterprises they have conducted transactions with in the past. This trend will be driven by pre-established connections among professionals. Furthermore, Rizza noted businesses will be more likely to plan meetings between prospective suppliers and research and development teams to collaboratively figure out ways in which operations can be improved.
  5. Sourcing from Latin America and Asia Pacific will increase. These two markets are home to some of the world's most esteemed burgeoning economies. As investment ramps up in these regions, organizations will look to throw support behind fledgling manufacturers with a lot of potential. In turn, this will have an impact on the supply chain. Rail transportation between Latin America and North America is due to increase if this trend persists.

What's the general message? 

Each of the aforementioned trends pertains to a competitive advantage. If Supplier A can develop higher quality goods at a minimal markup while Supplier B fabricates products of average condition, then contracting the former company is more beneficial because it's worth it for organizations to pay a little more for superior materials. 

Product quality is just one facet of a successful supplier relationship. Profitable connections depend on how efficiently products can be delivered and whether those goods are being produced with ethical practices in mind. 

Above all, the chief reason why procurement behavior will encounter a shift in 2015 is that outsourcing is such a popular practice. Sigi Osagie, a contributor to Procurement Leaders, noted the Internet, the jet engine and decreasing telecommunications expenses have spawned a global economy that, now more than ever, favors holistic oversight and better shareholder returns. Deducing which relationships will support these goals is a responsibility that lies with purchasing departments. 

Earlier this year, Source One’s marketing sourcing team developed a three-part series covering the marketing services decoupling debate itself, its history, and some pros and cons. Although centralizing a supply base and consolidating wherever possible delivers cost and supplier relationship management benefits, it is helpful when analyzing spend categories to be able to separate certain services to increase visibility into quality and cost. Thus, the decoupling debate begins.

Usually, sourcing professionals are concerned with identifying cost savings opportunities and marketers are expected to always be aware of the latest trends in their field in order to stay ahead or keep up with competition. However, if executed properly, decoupling is a strategy that can accommodate both parties. Learn more about some different decoupling viewpoints from this infographic and decide where you stand in the debate.

To learn more about Source One’s marketing/advertising sourcing offering, visit our Strategic Sourcing Marketing Services webpage and learn how Source One can help you increase agency value.

When companies are pressed to find real-time market intelligence that provides the necessary insights into their industry, there are few resources that offer in-depth data or action plans to pave the way for a competitive edge. One definite resource towards not only market data, but also continuous improvement, is discussed in Source One’s latest white paper, Attain Best in Class Status and A Competitive Advantage through Cross-Industry Benchmarking.

The exclusive Source One Benchmarking White Paper allows readers to gain insights into the road to strategic advancement, an explanation of benchmarking, why it is done, the process, the benefit of a third-party benchmarking consultant, and case studies of improved operations from benchmarking. For organizations focused on improvement, benchmarking can help identify problem areas where there is opportunity for renegotiated contract terms, a more efficient supplier, or more competitive pricing.

A 2008 study by the Global Benchmarking Network indicated an average financial return of $100,000 to $125,000 per best practice benchmarking project with over 20% reaping benefits of more than $250,000 per project. With the use of benchmarking, a company can evaluate its pricing, workflows, contractual relationships, spend profiles and other parameters against the marketplace to gain insights on current operations and recommendations for continuous improvement. This type of information is extremely valuable for companies with a vision towards ongoing success and profitability. Our free white paper can serve as a first step towards evaluating and aligning future goals with present strategy.

To learn more about Source One, visit our supplier benchmarking services webpage.

To read the white paper, visit

Could the US be at the helm of the next industrial revolution?

Given the advent of the Internet of Things, personalization and an overall need to reduce distribution risk, procurement officers aren't necessarily crossing off reshoring as an option. 

In fact, many analysts would assert that the U.S. and the global manufacturing industry as a whole is due for an industrial revolution. To some, what the new age of production will look like is somewhat of a mystery. Will factories be completely devoid of human labor? Is a new form of "raw" materials to be established? How can artificial intelligence contribute to future development? 

A need for ascension 

There's no doubt that globalization transformed the conventional supply chain model. Instead of purchasing materials produced at factories distributed across North America, sourcing specialists were obligated to set up logistics models that included overseas manufacturing facilities, oceanic shipping companies and hundreds of partners.

These types of operations have made spend management and other tasks associated with procurement much more complex. They inherently carry risks that can obstruct or delay shipments and even result in criminal investigations. 

MAPI Director of Economic Studies Cliff Waldman wrote a piece detailing what the "new factory" will look like in the near future and beyond. He maintained the aforementioned factors, in addition to the ubiquitous need to lower the costs with which goods are produced, have incited a need for an industrial revolution. It's more convenient for a U.S. company to source items that are produced domestically for a few reasons, such as:

  • It's easier to build relationships with suppliers. Just because airlines provide professionals with the ability to fly across the Pacific, doesn't mean doing so is convenient. 
  • Maintaining quality control isn't as arduous. Apple is one company that's known for putting a lot of effort into R&D, but needs to send personnel overseas to ensure its production partners are making devices up to pre-established standards.
  • It costs less to distribute goods across a continent than it does to transport them halfway around the globe. The longer a logistics chain, the more vulnerable it is to sustaining disruptions. 

Technology to be a main driver

In order for reshoring to become a reality, U.S. manufacturers will not only have integrate technology into existing processes, but make it the basis of the way in which goods are fabricated. While advanced machinery and robotics is certainly a part of this revolution, professionals such as Accenture Strategy Managing Director and IndustryWeek contributor Cv Ramachandran maintained that software is going to be essential for the success of U.S. manufacturing.

Although there are many dimensions to production's use of applications, there are two ways in which digital assets will be leveraged to further the industry's progression:

  1. Reliability and performance: Using data analysis software to deduce how well implementations are performing will show managers ways in which processes can be adjusted or transformed to improve their functionality. Predictive maintenance is a popular topic among industrialists, as it allows them to fix issues before they exacerbate. 
  2. Centralized administration: Being able to control the way in which dozens of factories behave from a single location is a powerful capability. Imagine receiving a sales forecast for January 2015 and programing facilities to either scale back or increase production based on those statistics. 

What's preventing the U.S. manufacturing economy from jumping feet first into this digital environment? A skills shortage. Ramachandran noted a survey conducted by The Manufacturing Institute, which found 60 percent of the 300 surveyed U.S. fabrication leaders asserted trying to find the appropriate people to fill essential positions was difficult. 

To allay the severity of this situation, it's possible that U.S. production companies may find the required talent through vendors, but a need for permanent personnel will persist nonetheless. As such, industrialists should increase efforts to attract college students and recent graduates. 

Retail procurement demands due to increase

If there's one economic sector that supports initiatives to bring Internet access to more people around the globe, it's the retail industry. 

Greater Web access typically means merchants will be able to bring e-commerce services to more consumers. As many companies throughout the world are looking to increase Internet availability, retailers will have to procure more goods to deliver to prospective customers.

Product purchasing and demand forecasting are closely related, as the results of the latter business responsibility typically dictate the priorities of the former. 

Global retail commerce expected to rise 

If healthy economic activity continues, the merchandising sector is anticipated to reap large benefits. Euromonitor International recently conducted a study on the matter, estimating $19.6 trillion in retail sales by 2019. Overall, this activity is expected to be supported by a burgeoning Western European sector and Chinese trade. 

"Western Europe registered its biggest increase since 2008, while Eastern Europe experienced its biggest slowdown with 6 percent growth due to the conflict in Ukraine and economic sanctions on Russia," said Euromonitor International Head of Retailing Daniel Latev. 

In addition, Euromonitor International made several notable findings:

  • E-commerce is expected to produce a third of all new merchandising sales.
  • Mobile transactions will comprise 32 percent of Internet retail purchases. 
  • Apparel and footwear stand as the most popular products sold online.
  • The Latin American, Middle Eastern and African retail sectors reported sales greater than 12 percent this year. 
  • Alibaba and Amazon are the only e-commerce enterprises listed in the top 15 global merchandising organizations.

Assistance from procurement management firms 

If companies such as Wal-Mart and Amazon continue to cater to the needs of market segments across the globe, it's likely they'll need an extra pair of eyes to help them deduce which products they're most likely to sell during certain time periods. This may be the case once these companies begin expanding operations to economies they aren't so familiar with. 

Research by TechNavio found that organizations typically outsource procurement responsibilities when entering unfamiliar territory, whether that involves opening new stores in previously untapped regions or acquiring goods they have never sold in the past. All in all, the firm found that the global procurement sourcing market is anticipated to increase at a CAGR of 22.48 percent over the next four years.

Seeking advice from third-party professionals provides enterprises with a level of operational efficiency many of them couldn't have achieved on their own. 

Earlier this week, the Strategic Sourceror piece “Understanding the Staffing Industry” gave a clear explanation of the complex staffing market and its range of employment-related services. This content sparked an idea to develop an infographic expanding the material—and further drive the benefit of HR sourcing consultants. With the high volume of staffing companies in the United States, it is often difficult to judge a best-fit partner. Especially with companies’ own HR departments being able to do the work, there can be confusion surrounding the potential benefit of a staffing company helping out. This infographic tackles many of the gray areas of not only the staffing industry, but also the prospect of hiring a staffing company and using an HR sourcing consultant to take advantage of savings and additional value. Since HR is a core function of an organization’s sustainability and culture, it is essential to take advantage of any opportunity to develop the value of its programs. Source One is specialized in HR best practices and understands how to seek a staffing agency qualified to be a best-fit for your company. 

Learn more about Source One’s HR Sourcing Offering here.

Does it make sense to procure 3D printers?

Although the technology has been around for about three decades, 3D printing technology didn't step into the limelight until recently. 

Consistent investment in the sector has caused organizations to leverage additive manufacturing to make particular materials. While many creations are quite impressive, the time it takes to print certain goods is causing procurement management firms working for production companies to refrain from purchasing 3D printers. 

Adding metal to the mix 

For a while, 3D printers were only capable of using plastic filament, but recent techniques have made it feasible to leverage substances such as titanium, steel, aluminum and copper - some of the most popular materials used in manufacturing. 

Dave Greenfield, a contributor to Automation World, noted Alex Chausovky's estimate that industrial machinery will be dramatically impacted by 3D printing. This sector could give additive manufacturing the investment boost that it needs to really take off, as production implementations account for $1.6 trillion of total global spending on industrial goods. 

The real benefits of 3D printing lie in how quickly complex items can be created. Think of the implications it will have for the automotive industry, for example. Traditional manufacturing techniques require enterprises participating in this sector to procure thousands of individual parts, some of which are assembled to make larger components. Being able to create these cohesive parts in one step is an attractive concept. 

"We're on the cusp of seeing new ways to produce motors, using [fused deposition modeling] versus lamination," said Chausovksy, as quoted by Greenfield. "Leading motor manufacturers are experimenting with this now." 

How the aerospace industry leverages 3D printing 

Advanced processing isn't the only benefit associated with additive manufacturing. Manufacturing Global contributor Abigail Phillips maintained that 3D printing has enabled aerospace businesses to produce essential parts that are lighter than traditional models but still maintain their robustness. 

This process is made possible by the manner in which metals are used in 3D printing. Lasers are positioned at the printing head to set layers of powered metal into a digital mold. Aerospace producer Pratt & Whitney recently developed the PurePowerPw1500G engine by assembling parts fabricated in this manner. first engine of its kind, it uses a unique cooling system that allows the turbines to operate at higher speeds than conventional turbofans. Best of all, it uses 16 percent less fuel than traditional engines.

Purchasing officers would ask P&W one question: "Can the process sustain order fulfillment requests?" Phillips acknowledged that P&W has received more than 5,000 engine orders since the product was unveiled. 

What to look for when procuring IT security solutions

There are two sides to IT security procurement.

On one hand, enterprises should look for software capable of detecting malicious behavior, identifying and patching vulnerabilities, setting strong network access permissions and dismantling malware. In conjunction with this necessity, organizations should seek talented professionals capable of combating cybercriminal activity.

It's important for companies and public authorities to regard these two facets not as separate priorities, but as one cohesive solution. Software compliments the capabilities of IT administrators and vice versa. This approach is conducive to strategic sourcing practices, which obligate purchasing officers to regard the needs of each facet of an organization holistically.

Data analytics tools as security assets

For those who follow the IT industry, you've probably come across big data analytics at some point. The technology's use cases are quite diverse, ranging from predictive maintenance to demand forecasting, so why can't the same engines be leveraged as a part of security solutions?

One company based out of Framingham, Massachusetts, is working to bring data analysis into security platforms. According to CRN, Prelert has developed a scrutiny program capable of assessing information across various systems such as Hadoop, Plunk and other repositories to detect anomalies that can potentially threaten businesses.

The company isn't stopping there. CRN noted that Prelert is taking several measures to further perfect its software.

  • The developer recently unveiled a second wave of investment funding to support its engineering and sales departments.
  • Prelert is recruiting personnel possessing experience in professional services and managed IT protection solutions.
  • Although Prelert's technology is already compatible with nearly 110 vendor-driven applications, it is looking to expand its portfolio by establishing more partnerships.

The value in Prelert's technology is its ability to scrutinize and validate terabytes of data in a single minute - not to mention the fact that its applications are also quite broad. For instance, a bank could use Prelert's engine to peruse transaction information to detect fraud.

The talent to run it

In regard to acquiring professionals needed to conduct intricate security tasks on a consistent basis, organizations have two options.

  1. Connect with soon-to-be-graduates, established workers and others with cybersecurity experience or credentials to formulate in-house teams entirely dedicated to protecting systems, software, databases and networks. This requires an extensive vetting and testing process, but the results will be well worth the effort.
  2. Contract third-party managed IT services possessing staff who are knowledgeable of the latest cybercriminal tactics. Optimal companies specializing in this field should provide 24/7/365 support remotely and on-premise.

While the choice between the two depends on the priorities of different companies, it's generally best if enterprises elect to develop in-house security teams that function as sub-sets of IT departments. Why? Because nobody knows an organization's IT requirements and use cases better than internal teams. Sure, hiring an extra set of eyes can't hurt, but relying on them to provide comprehensive security isn't going to cut it.

Still, finding professionals to comprise these teams isn't going to be easy. Cisco's 2014 Annual Security Report noted that most organizations do not possess the human resources needed to monitor their networks and systems on a consistent basis, nor can these entities determine how the assets are being infiltrated. Worst of all, a shortage of more than 1 million security experts persists throughout the IT industry.

To mitigate this issue, enterprises should strongly consider putting existing IT personnel through extensive training courses to familiarize those possessing antiquated skill sets with top-of-the-line security techniques. Although CIOs may be wary of allocating a portion of the budget to support this investment, the return will consist of long-term benefits.

In general, the IT security landscape will demand more of specialists working in this field. Organizations must arm them with the means to satisfy these needs.

The importance of being honest: Routing out bribery in procurement

It's unfortunate when it occurs, but bribery can severely damage an organization's reputation among both businesses and consumers. 

Such unfavorable behavior typically occurs at the request for proposal or procurement stages, consisting of sourcing agents attempting to subvert customs standards, professionals looking to win profitable contracts or a wide host of other scenarios. For this reason, many organizations are working with purchasing management specialists that abide by international bribery laws and scrutinize trade relationships throughout company supply chains. 

The price of information 

The thing is, bribery isn't necessarily black and white - it can be incredibly difficult to identify such activity when occurs. One particular incident involved an ex-Boeing procurement officer, 48-year-old Deon Anderson, providing private data regarding a competitor's bidding and historical prices to proprietors of three Boeing subcontractors in exchange for money, according to the St. Louis Business Journal. 

Overall, Anderson pleaded guilty in June to three counts of mail fraud, one count of wire fraud and one count of currency structuring. He is due to spend 20 months in prison. The news source acknowledged that Anderson also partook in a bribery scheme involving Boeing military aircraft parts and attempted to hide this transaction by concealing his receipt of the cash bribes in financial reports. 

This particular case shows the importance of protecting the integrity of confidential information. Businesses value intelligence, and some practitioners are willing to disacknowledge what's right to obtain it.

Giving in to the rules of the law 

More often than not, when substantial proof is given that fraud or bribery has been committed, organizations are willing to settle up. IndustryWeek noted Bio-Rad Technology, a procurer of hospital diagnostic equipment, decided to pay $55 million to the U.S. Justice Department and the Securities and Exchange Commission as a settlement.

Allegedly, Bio-Rad SNC, a subsidiary of Bio-Rad Technology, allegedly initiated fabricated commission payments to Russian enterprise agents that were ultimately intended to help the firm solidify contracts with the Russian Health Ministry. 

"Bio-Rad managers repeatedly ignored various red flags indicating that the Russian agents were likely bribing government officials, and they condoned an atmosphere of secrecy," said the SEC in a statement, as quoted by the source. 

On top of these charges, Bio-Rad SNC was accused of leveraging Vietnamese and Thai intermediaries to win contracts through bribery and illicit commissions. All in all, the enterprise paid nearly $7.5 million in bribes over the course of five years, earning $35 million as a result of those deals. 

Outlining 'natural' supply chains for the chemical industry

Environmental and social pressures have indirectly increased expenses for companies participating in the chemical industry. Still, these enterprises need to identify ways in which finished products can be competitively priced.

How do they achieve this goal? By scrutinizing facets of their supply chains and finding the most efficient way to procure and distribute goods. It's a concept that revolves around the "natural" supply chain, a term that inspires a vague understanding among some professionals.

A burgeoning economy 

Although the chemical economy is competitive, that doesn't mean North American organizations partaking in this sector will struggle to find business. Investor Place noted statistics from the American Chemical Council, which anticipated the industry to reach $1 trillion in 2018. Last year, it was valued at $789 billion. 

Although the Chinese and European markets will experience lackluster growth as a result of this activity, the North American segment is expected to contribute a significant amount to this burgeoning sector, primarily due to the region's growing shale energy sector. In general, the North American economy appears to be faring better than its Chinese and European rivals. 

Chemical industry improvements are largely driven by increased focus on research and development. The source referenced the ACC's estimate that R&D investment will reach $68.7 billion in 2018 - $12.1 billion more than 2012. 

A need to reduce costs 

In addition to the attention R&D endeavors are expected to bring, notable chemical companies are dissecting ways in which overhead can be decreased. For example, Dow Chemical Chairman and CEO Andrew Liveris noted the enterprise intends to cut $1 billion in fixed costs over the next three years. How can such an ambitious endeavor be delivered successfully?

Now enters the concept of the "natural" supply chain. Dennis Cassidy, Jayant Gotpagar and Marcus Morawietz, contributors to Strategy and Business, noted this practice involves deducing how every facet of the business - customer service, marketing, logistics, inventory management and so on - contributes to the costs accrued over a specific period of time. It consist of identifying how certain procurement actions, partnerships and needs enhance or hinder the bottom line.

In regard to chemical companies, this process begins with forming and segregating three distinct categories:

  • Basic compounds,
  • Specialty materials 
  • Petrochemcials

From there, these segments are then further subdivided to determine how producers add value throughout the manufacturing and distribution initiatives. For example, while one form of purchasing and logistics may be needed to support supply volumes with long lead times, another approach can be utilized to best handle products with short lead times. 

Is it all just talk? 

Although the natural supply chain development approach may not seem all that special, implementing it in the appropriate manner yields favorable results. The holistic concept behind the method involves scrutinizing how each partnership contributes to or damages profits. This is when procurement enters the picture. It's advisable that companies look for suppliers and partners that not only offer materials, but residual support, guidance and expertise regarding those products.

For instance, Swiss chemical enterprise Lonza Group presents itself as a "partner of choice" in biotechnology. The company provides insight into mammalian and microbial fermentation, in addition to intuition regarding the life-science manufacturing. This allows its partners to gain a better understanding of the goods they're purchasing, thereby enabling them to deliver said items to the market more quickly. 

From a statistical standpoint, Cassidy, Gotpagar and Morawietz noted one particular chemical production business increased fulfillment instances by 20 percent, decreased inventory expenses by 40 percent and cut overhead by nearly 20 percent. 

Although the natural supply chain concept may appear ambiguous at first, the approach can deliver clarity to distribution and procurement when executed step by step.

ProcureCon Pharma was last week in Philadelphia, and Source One was proud to be a sponsor of the event. With their history of partnering with major pharmaceutical companies, Source One was enthusiastic to attend and share their industry experience. This event has sparked us to consider some of the major issues facing pharma today—most notably, the ripple effects from the patent cliff that have left many organizations reeling.

There have been many changes since big pharma’s major brands have started to go off patent. However, the most notable differences, from a procurement perspective, involve indirect spend management, increased competition, mergers and acquisitions, uptick in biopharmaceuticals and even investments into emerging markets such as Africa. The infographic below explains some of these post-patent trends and their subsequent results.

Visit to learn more.

The staffing, recruiting, and workforce solutions industry is larger than you probably think. According to the American Staffing Association, there are more than 17,000 staffing and recruiting companies in the United States, which operate more than 35,000 branch offices. These companies range from small mom and pop shops with one office, to multinational organizations with hundreds of offices and tens of thousands of employees.

Staffing companies offer a wide range of employment-related services, which can be broken down into four main categories:

  • Temporary and contract staffing
  • Recruiting and permanent placement
  • Outsourcing and outplacement
  • Human resource consulting

Of these four categories, temporary and contract staffing is by far the largest, accounting for about 89% of the industry’s total sales in 2013. For those who prefer numerical values to percentages, that 89% represents annual revenues of over $106 billion.

During the course of a year, staffing companies in the United States hire more than 11 million temporary and contract employees. In 2013, temporary employees worked in virtually all occupations in all sectors. According to the American Staffing Association, 37% of all temporary employees worked in industrial positions, 28% in office/administrative positions, 13% in professional/managerial positions, 13% in technical, information technology, and scientific positions, and 9% in health care positions. These positions range from janitorial employees making minimum wage to project managers making more than $100 per hour.

So why would a company hire a staffing company for these services, when their own HR departments are already tasked with finding qualified candidates to fill open job requisitions? Well, the reasons are plentiful. Oftentimes companies need to fill a position on short notice and for a short time period- anywhere from one day to several months. Rather than having your HR department spend weeks or even months recruiting and interviewing candidates, a staffing company can have a qualified employee at your job site within just a couple of days from your request. Additionally, you might just want to try to see how an employee will do at your company before extending them a full time offer. Most staffing companies will work with you to staff temp-to-perm employees, where an employee will work a certain number of hours through the staffing company at which point you can decide to convert them to your company’s payroll. No matter what the request, most staffing companies will have the experience and pool of qualified candidates to find a fit for your need.

Because HR departments do so many of the same things that a staffing company offers, it might seem practical to task an HR employee with selecting the staffing company that your firm will use for years to come. However, that may not always be the best idea. Working with your company’s procurement department to select a staffing company can lead to significant cost savings. This is partially because procurement has a 360 degree view of purchasing, and might be able to share efficiencies across multiple departments and locations. Additionally, as HR is not normally involved in selecting suppliers, they may not know how to best approach negotiating contracts with multiple potential suppliers. Once again, procurement can step in and help evaluate multiple suppliers and offers and help to negotiate with multiple suppliers in order to receive the lowest possible price for staffing services.

But with more than 17,000 companies throughout the United States claiming to all provide the same service, how do you know which company to go with? Although on the surface their service offerings might seem identical, that is not the case. Some companies specialize in specific sectors or industries while others may be able to fill any position within your company. Additionally, some companies may charge you supplementary fees to conduct services such as background checks and pre-employment drug screens, while other companies will include these services at no charge. And last, but certainly not least, staffing companies’ payment structures vary greatly throughout the industry. For a company that utilizes the services of staffing companies regularly, this can amount to hundreds of thousands of dollars of savings opportunities if your company is not being charged fair market rates.

There are service providers who can consult with HR and procurement to source ideal staffing agencies and negotiate best-in-class contracts and pricing. These procurement consultants often have worked across multiple industries and understand how to optimize temporary labor service providers, and can tell whether or not there are savings opportunities that your company is not taking advantage of.

Image courtesy of