April 2015
Drone delivery: Airborne or grounded?

It's fascinating to see what ends up in our mailbox everyday. Usually it's some array of advertisements and coupons, bills that need to be paid or companies offering credit cards to "Current Resident." It's so simple to send something through the mail or to have something delivered to our front doors that it seems impossible to think that the Pony Express revolutionized the postal service in the United States just under 200 years ago. Letters and parcels used to take weeks to get to their final destinations, switching hands multiple times and hopefully making it all in one piece.

Fast-forward to today where more junk ends up in our mailboxes than actual mail. We have the ability to get packages delivered in two days or less, for a small fortune in some cases. But what if we could get our mail faster? Enter the delivery drone. These machines could transport items on the day of order, rather than waiting for handling and shipping. Should this new method of delivery take off, what implications would this have for the supply chain?

Keeping an eye on the sky

The term "drone" had multiple meanings throughout the 20th century and beyond. The term refers to any unmanned aircraft or a robot that can carry a small item. Drones have been in the news for the past few years, generally mentioned for wartime purposes, but they have caused quite a stir in terms of their domestic use as well.

Large companies such as DHL and Amazon.com have made concerted efforts to get drone delivery projects off the ground. According to ZDNet, the European outfit of DHL tested out some prototypes to moderate success. It would seem that the tests were conducted in very mild weather and over relatively short distances. The delivery enterprise has yet to make any large moves to create a fleet of sorts, but it is certainly looking into the possibility, noted the source.

Amazon, however, is not experiencing the same level of success. The company has had some trouble with the government regarding drone regulations, and the public is also split on the matter. While SupplyChainBrain asserted that Prime Air, Amazon.com's drone program, would not fly higher than 200 feet off the ground, many believe that the drones will interfere with air traffic or run into buildings trying to find the fastest route. Only time will tell if the U.S. will permit such delivery practices in the public sphere.

Back on the ground

Drone activity could have quite a few implications for the supply chain. While the creation and testing of commercial drones would create a new industry, other businesses that rely on traditional methods of shipment might find themselves in a tough spot.

However, given the temperament of the government and the regulation hoops that DHL, Amazon.com et al. would have to jump through make a drone delivery fleet a futuristic thought. There shouldn't be any severe repercussions on the supply chain at this point, but drones are something that should be considered when looking toward the future.

It's impossible to say what even the next 100 years will hold for technology and how it will affect the lives of our children and their children, but it is safe to assume that people will continue to tinker with gadgets and could possibly create something better and faster than drone delivery. Until then, only time will tell.

If you need to find a benchmark in the fast food industry for driving supply chain principles while maintaining high standards, look no further than Chipotle.
Food Business News reports how Chipotle chooses to look beyond local sourcing of its ingredients to the land down under to purchase as much grass fed, free range beef as possible.

This article was written in July 2014. CMG’s stock price was being sold at $600/share. Nine months after this article was written, the stock reached its highest share price at $726/share in February and is currently at $683/share. Clearly the stock holders are agreeing with Chipotle’s management. What is better than a $7 burrito that has locally sourced or free range ingredients in it?

When choosing to source from half way across the globe, Chipotle now faces new risks they have not previously encountered. These risks include those associated with long distance transportation such as piracy and the threat of natural disasters. While these risks may not be posed every day, they could be devastating to a supply chain when they occur. Should a storm occur causing the transportation to reroute, the company would acquire costs for higher quality freight to ensure the beef or other ingredients stay fresh. Chipotle made the decision to take these risks versus succumb to more of their beef coming from the “normal” farms that inject antibiotics and added hormones into their cattle.

There have been occasions that Chipotle has needed to source “normal” beef to keep up with demand. The nation's beef supply is at a 60-year low and demand continues to rise. A great decision on Chipotle’s management’s part was to communicate to their customers when the beef is not up to their usual standard.

Chipotle’s commitment to high quality ingredients is not without its challenges.  Higher quality beef has resulted in raising the price of their menu items. What happened next was unbelievable

“Higher costs for such ingredients such as beef, cheese and avocados drove a nationwide menu price increase at Chipotle during the quarter, but that did not discourage customers from visiting the chain. An increase in traffic helped push revenues over $1 billion in the quarter, a first in the company’s history.

Though the average increase was 6.25% to 6.5%, the increase varied by market and by menu item,” said Monty Moran, co-chief executive officer. “So, for example, because of the significant recent inflation in beef and the expectation that beef prices will remain elevated for the foreseeable future, steak prices were raised by about 9%, on average, while chicken prices were only raised about 5%. We expected some customers would trade down from steak to chicken as a result of the higher steak premium, and we have, in fact, seen some customers shift from steak to chicken. Aside from the slight shift from steak to chicken, our customers have generally responded well so far, but it is early and we will continue to watch for resistance in terms of fewer customer visits, as well as customers trading down.””

There is something to take away from this article and about Chipotle’s standards in general. There is a market for locally grown and/or free range/grass fed beef. You do not have to be the cheapest option for the consumer, just the tastiest.

Picture from http://upload.wikimedia.org/
Spicing up the supply chain with with non-GMO ingredients

People are always looking for ways to cut out something in their diet to make themselves healthier. There are fads like juicing and only eating foods with easily pronounced ingredients. The recent topic on many minds, however, is the plight of genetically modified foods.

GMOs are everywhere. Because of this, people are usually unaware that they're ingesting something that's been tampered with or fixed in any manner. Eliminating GMOs from foods across the country is a noble endeavor, but one that will certainly take a while to accomplish. These days, restaurants and food brands across the globe are removing GMOs from their food sources, changing the way that the supply chain operates.

What are GMOs and why are they so bad?

People tend to shudder when they hear the letters "GMO" uttered together. There's a stigma attached to them - messing around with the genetics of food cannot be good for us, right? For the most part, yes, modifying things we ingest at the genetic level is dangerous. Some of the tweaks are designed to help crops resist pesticides while others induce shorter growing seasons.

Consumers are generally anti-GMO, but mostly for psychological reasons, reported National Public Radio. For some, "genetically modified" immediately triggers an association with "unnatural" or "unhealthy," and while these aren't necessarily false accusations, they certainly aren't always the case across the board. Did you know that the corn we eat - corn on the cob, corn kernels from a can, etc. - was genetically modified by farmers many years ago to be better digested by the human body? As EatingWell reported, this strain has since been mass-produced and is sold to farmers across the country.

However, the source indicated that there is still a large debate over the issue of health. Many believe that GMOs are to be avoided at all costs while others assert that GMOs are fine in moderation, like any other food. Regardless of the public opinion, there are large chain restaurants around the world that are taking  steps toward entirely GMO-free operations.

Cutting GMOs out of the chain

Chipotle, the fast-casual burrito chain, recently announced that its restaurants will no longer be serving any foods that were made with GMO products, reported RT.com. Hungry patrons are very happy with this decision, feeling that the chain has listened to their concerns about health and the nature of ingredients. The restaurant asserted that it would like to change the way people think about fast food - mainly that "fast" and "healthy" are not mutually exclusive terms in regard to food.

This Chipotle announcement comes on the heels of poultry producer Pilgrim's Pride raising its livestock without antibiotics, a move that followed in the footsteps of Tyson and Purdue, stated TakePart. Restaurant chains using antibiotic-free chicken include Panera and McDonald's, and many consumers are hoping other chains and smaller food establishments will follow suit.

What does this mean for the supply chain?

Because GMOs are such a hot-button topic at the moment, procurement services will need to find a consistent supply of natural ingredients free of GMOs, antibiotics and worries. Should this become the new normal, there will most likely be some drag time for suppliers to get with the program. These changes cannot be made overnight and the restaurants should not expect immediate results. However, it does seem that this trend will not be slowing down, so suppliers and procurement services should take notice and make the necessary changes now to account for the inevitable demand that will come later.

Brewing some good will: Fair trade coffee matters

For the past few years, people purchasing their coffee and other imported products may perhaps have noticed the phrase "fair trade" on the packaging. This is not a trendy catchphrase only slapped on various boxes or bags to make them seem healthier or to make them sell faster. Fair trade products can only claim that moniker if they are in fact made with ethically sourced ingredients.

One of the most prized commodities in our world that can have the free trade trademark is coffee. Since millions of pounds of the precious bean are shipped across the globe each year, it's important that it's procured in a humane and safe manner. Fair trade is important for all products, whether cocoa, timber or gold. Coffee beans play a vital role in the world of commerce and their procurement should be handled with care.

Protecting those in the supply chain

The only way that we can create sustainable supply chains is by treating every single person involved with respect. This can take a few forms, such as paying a livable wage and providing safe work environments, but the main thing is to offer work with real results on the other side.

According to The Seattle Times, it should be the duty of the coffee industry to take care of workers in developing nations. Coffee procurement generates money for those at the top, and those funds should make it down to the bottom as well. The source indicated that poverty among growers and farmers is especially high, and the coffee industry will only survive if they can make a living from producing the commodity.

The Fair Trade certification, which gives farmers a stable minimum price for their product and directly connects them with importers, has been getting fixed up to make sure workers are not exploited by any means. Humanosphere asserted that the trade group has been making a lot of progress to keep growers and farmers happy, though there are still more issues to work through so all coffee can be sourced ethically.

Getting the word out

While many people have seen the "fair trade" phrase bandied about, many don't realize how truly important it is. Bringing attention to the plight of the coffee farmer is imperative, and global enterprises are doing their part to ensure safety for all involved.

The international coffee chain Starbucks has certainly done its part to make people aware of fair trade coffee and what it means. Treehugger reported that the caffeine conglomerate now serves 99 percent ethically sourced coffee. This is great news, as Starbucks is the largest coffee retailer in the world. Joining forces with conservation groups, Starbucks has made sure that the practices in its supply chain are ethical for the environment and humane for the growers.

The source noted that as a result of Starbucks' commitment to fair trade hundreds of thousands of workers on coffee farms make more than minimum wage and are allowed to have benefits such as sick days and schooling for young children. These efforts have not gone unnoticed, and earned the praise of humanitarian groups around the world. Starbucks wants to have 100 percent ethically sourced coffee eventually and also protect the environment from other detriments.

This is a company that cares about the issues and is actually doing something about it. Consumers can sip their lattes with the assurance that the enterprise took great pains to ensure the safety of the individual who harvested the beans. Now, isn't the something to toast to?

Whether you’re just starting to source a new product and service, or preparing for contract negotiations, market intelligence is a critical aspect of success. However, having this multifaceted information shouldn't be contingent on impending business decisions. Instead, market intelligence should be an ongoing guiding resource for a company’s strategic direction. A lack of proper information can lead to excess spend and missed savings opportunities.

What can companies do to gather market intelligence? - Benchmark.

Benchmarking is a strategic tool that measures business performance, supply chain efficiency, and supplier relationship adeptness against established best practices in the industry. Through 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. A benchmark report will provide actionable intelligence for guiding a company’s strategy focused on operational, financial, customer services, contract, and other improvements.

However, with limited resources and internal data, many companies lack access to comparison information of industry pricing and terms in preparation for contract negotiations, let alone be equipped to conduct benchmark studies on an ongoing basis.

Utilizing an extensive database of proprietary market intelligence, Source One can provide organizations with benchmarking services for pricing, contract terms, and service level agreements across a variety of industries and spend categories. Based on an organization’s specific and unique requirements, Source One produces benchmark reports with actionable recommendations and long-term sourcing strategies.

In just days, Source One will be an exhibitor at ISM 2015 Annual Conference in Phoenix, Arizona. Source One experts will be hosting discussions at their booth: #542. Attendees are encouraged to stop by and learn more about Benchmarking Services in addition to Source One’s strategic sourcing offerings.

For more information on Benchmarking visit: Strategic Sourcing and Benchmarking Services.
Every employee is looking for that one moment; that one achievement that catapults their career. Usually, that achievement involves either saving money or making it. A lot of it. So how do you get your fifteen minutes of fame? My career started with implementing a procurement program. Once I started, I quickly came to the realization that procurement process is difficult for many reasons including: lack of resources and expertise, and little to no executive sponsorship within the organization. So what do you do? A recent finding in “Pulse of Procurement"(i) research series indicates that “30% of the corporate leaders will NEVER be persuaded to invest in procurement powered business performance improvement.” Although this is an alarming figure, it can be attacked through a paradigm shift and can be attributed to the fact that many organizations do not recognize procurement’s ultimate value and its ability to impact organizations bottom-line line while supporting the company’s overall business strategy.
Many people have found success by highlighting the simple equation below that encapsulates procurement’s value proposition to business: 

A groundbreaking study conducted by Proxima(ii), which included an analysis of 2,000 financial reports from 2009 to 2011, found that on average, 70% of an organization’s revenue is used on suppliers; revenue spent on labor costs account for only 12.5% of total revenues. If businesses reduced their labor costs by 1%, profits would improve by an average of 0.7%. However, if the organization shifted their focus on reducing the same 1% with their non-labor costs, the profits can be increased by 4.1% - six times higher than the labor equivalent. It is important to note that these figures are averages of all sectors; the increase in profit as a result of reduction in non-labor costs by 1% can be as high as 10% within retail and as low as 1.2% within financial services. The implications of this go to the heart of procurement’s case. Rewards can be reaped for those willing to embrace the changing nature of business and think differently about how costs are managed.

But there are few things you should know before development to ensure your organization doesn’t end up with a program that doesn’t help it reach its potential. With the right approach and a few simple steps, you could easily create a successful, effective procurement program– all without fancy resources, huge budgets, and/or exhaustive timelines.
If you or your business is interested in implementing a new procurement program or optimizing an existing one, these simple steps should be followed:
1. Identify the pillars that will structure your procurement strategy.

This entails a clear vision and mission for the procurement function that is well defined and marketed throughout the organization.

2. Gauge a company-wide knowledge of procurement.

Deliberate whether or not the organization understands what procurement is, what it takes to deliver procurement capabilities and how procurement can support the company’s overall business strategy. Deficiencies in this area can be overcome through education, employing people with procurement experience and/or engaging external resources with an emphasis on knowledge transfer.

3. Develop an understanding of the culture that procurement will be operating in.

Gauge how open the organization is to sharing and collaborating. If there are any constraints such as departmental, divisional, and geographical, the program will likely evolve into segmented initiatives and siloed functions. Engagement from key stakeholders, executive sponsorship and a solid governance structure will help overcome the unwarranted barriers.

4. Define the variety of roles within procurement and their relative competencies.

The degree to which procurement is able to achieve its vision and mission is very much dependent on this. Consider the degree to which the procurement roles and responsibilities have been defined as well the skills and experiences that are available to fulfill those roles. In addition, establish the right environment in terms of motivation, career development, and reward and recognition. Deficiencies in this area can be overcome through education, training, and recruiting.

5. Isolate processes which are in alignment with your procurement program objectives.

Processes are foundational building blocks for procurement. The two most important, end-to-end processes worth noting are source-to-contract and procure-to-pay. To address deficiencies in this area, review best practice procurement methodologies and, if needed, modify the company’s methodology to encompass the unique characteristics of procurement initiatives.

6. Data: Availability, Accessibility, and Quality.

Data is critical for Procurement; the key reasons include spend analytics, supplier management, and forecasting and predictive analytics. The organization’s data management practices must be evaluated to determine if they can adequately support the procurement program.

7. Recognize and identify the tools needed for execution and follow-through.

Determine whether existing platforms can support the procurement needs and whether additional tools are required. This can range from market intelligence tools and e-auction for strategic sourcing to an electronic transactional platform for the creation and transmission of procure-to-pay documents. The resulting gaps will require evaluation, selection and deployment of tools and technologies.

8. Create a detailed, comprehensive program charter.

The program charter establishes the overall direction and scope of the program. It should be a brief document that includes information such as the business drivers, overall scope, roles and responsibilities, methodology, and business value and risks. It will also address any deficiencies identified in previous steps with a plan of action. It should be reviewed and approved by the key stakeholder overseeing the program.

The journey to a successful and efficient procurement program can be long and arduous. Developing a detailed, yet high-level outline of your program’s structure and objectives while practicing excellent resource management can put you AND your business on the right track towards company-wide savings and success.

[i] “Pulse of Procurement 2014,” Zycus Inc. (2014); 6.
[ii] “A global study of cost externalization and its implications on profitability,” Proxima (2013); 2-12. 

We've all been there- relentlessly Google searching and still unable to find what we’re looking for despite turning through dozens of pages of search results. So, what do you do when you still can’t find the information you’re looking for when you reach the twentieth page on Google? Source One Market Research expert, Megan Connell shares her advice for conducting extensive research in Research Business Daily Report’s recent video.

When you hit that wall, Connell suggests:
  • Take a Break – Stop your search, take a break, and come back to it for a refreshed perspective

  • Change your search terms  avoid tunnel vision by trying different search terms to render different results which may provide you with the answers you’re looking for

  • Talk to your colleagues- Sometimes it may be helpful to use someone as a sounding board or for getting input for new ideas to aid your search

At Source One, our analysts are well versed in conducting research to produce detailed reports related to competitive markets, sourcing strategies, cost savings, opportunities, and bench-marking. Our supply chain experts help streamline clients’ operations and drive sustainable cost savings. Contact us today to arrange a discussion about how we can assist your business

What can the Nepal earthquake teach us about risk management?

In late April, a massive 7.8-magnitude earthquake shook the lives of thousands of people across Nepal, India, Bangladesh and China. With the casualty count steadily climbing as more victims are discovered and named, it's important that citizens of the world band together to help our brothers and sisters in Asia who are suffering the repercussions of this literally earth-shattering event.

As people start the rebuilding process, picking up the pieces of their broken lives but not broken spirits, many believe that "the show must go on" mentality is applicable here. It's important to keep business going, if at all possible, and find a new normal that can survive past this terrible tragedy.

For the supply chain and the world of manufacturing, this will be incredibly difficult. There are many factories in this part of the world that have been affected, sustaining everything from a few cracked walls to massive loss of life and property. How can the global supply chain industry learn from the efforts to quickly better recover from natural disasters that could seriously disrupt procurement and global sourcing services?

The effect on the economy

First and foremost, it is important to examine the lives and livelihoods of the people working in the supply chain. According to The Wall Street Journal, the overall infrastructure of transit in the area has been destroyed and it's very likely that the imperative hydroelectric projects close to the quake's epicenter have been entirely compromised.

As the region fights to rebuild and win back tourists and the local governments finds their footing in the aftermath, those in the supply chain will also journey forth to find new ground on which to set perhaps more solid foundations. It's important for companies that rely on global sourcing to be prepared for natural disasters to strike at any moment, and to have backup suppliers so that all workers can have safe environments. As bdnews24 noted, many buildings in Bangladesh are tilted and unfit for habitation. 

Ultimately, the earthquake is a setback that could have long-lasting effects on the world of the supply chain. 

Lessons learned

Every natural disaster we've encountered in the past 15 years has made it clear that supply chain management is never more crucial than it is in the first few days. As the United Nations reported, a person living in the Asia-Pacific area is nine times more likely to be affected by a natural disaster than someone in North America  and 67 times more likely than a person living in Europe. These statistics make disaster planning a priority for companies that source from this area, which include members of many industries around the globe.

According to The Diplomat, it's imperative for supply chain managers to have constant access to early warning systems, as these may help mitigate imminent disaster. In the event there is a disaster, it's important to have backup suppliers in another area of the world to keep business going but without risking the lives of those in affected locations.

Looking forward

The restoration efforts in Nepal will feel like astronomical feats, as Quartz asserted that the quakes and aftershocks have set the country back by more than a decade. It's of paramount importance that all parties involved have safety measures in place when working in high-risk locales. If these quakes can teach us anything, it's that disaster happens on its own schedule and the after-effects could take years to recover from. Having plans in place that put as little strain on the supply chain as possible during a time of need will undoubtedly help keep assets and businesses safe.

Promoting animal rights in the supply chain

When people consider the rights of those in the supply chain, they are mainly focused on the well-being of those making electronics or farming the cotton for garments. Even the individuals who transport the materials or final products are carefully considered and taken care of. But what about our friends that are the goods being managed and shipped?

Animal welfare in the supply chain is something that many activists are adamant about changing. Many believe that the creatures that quench our appetites in the end should be treated with respect and dignity while they are still alive. Fortunately, there are efforts being made across the globe to eradicate the atrocities of animal treatment in the supply chain.

Fighting for their rights

While there are activist groups around the world that boycott the meat industry as a whole, there are select others that only object to the way animals are treated while they are being transported to their destination.

In Israel during the Passover season, animal rights groups such as Israel Against Live Transports and Anonymous for Animal Rights protested against inhumane travel processes, according to The Jerusalem Post. These activists staged a series of demonstrations that depicted the intense conditions that animals are forced to endure when transported across the ocean.

The source noted that more than 200,000 sheep and cattle are imported into Israel each year and subjected to utterly inhumane conditions for the entirety of the trip. There have been multiple instances in which mass death of cargo occurred due to the filth and neglect. Fortunately, Australia's Exporter Supply Chain Assurance System has set strict policies regarding the condition of the animals' transport, the source reported.

A little hospitality

The hospitality chain Hilton and all of its umbrella companies have turned over a new leaf in terms of improving the welfare of animals used in hotel restaurants across the world. The chain has made a vow to source its pig and chicken supply from free-range farms, reported SupplyManagement. In order to earn the "free-range" designation, all pork products need to be raised in a group rather than a small enclosure and chickens need to be able to roam without the confines of a cage.

These new policies were created in conjunction with the United States Humane Society and will be implemented across other nations as soon as the means to procure animals humanely available.

It is our duty to ensure the well-being of all creatures involved in the supply chain, and we should do our part to source our produce thoughtfully and humanely for all parties involved. 

Finding a breath of fresh air in the local supply chain

When it comes to green technologies, people are usually first appalled at the initial cost of a project. Many see the large numbers and high projections of time investment before they can even think about how much money could be saved in the long run. Even though there has been push-back from the government, city officials and citizens claiming that tech such as solar panels or wind turbines are both very expensive and not aesthetically pleasing have been steadily pushed aside in favor of renewable energy sources.

While these projects are expensive, however, they are also great for the economy - with more jobs and people putting their money back into the community - and the supply chain industry.Renewable wind energy has recently been making headlines for its myriad benefits to the supply chain and communities at large.

International changes

The winds of change are certainly blowing on a global scale in terms of turbine technology acceptance. Projects in Great Britain are wrapping up just as the people of Chicago are looking to propose their own.

In Great Britain, the new wind farm is small, but certainly made a big impact in the local supply chain. According to reNEWS, Banks Renewables awarded contracts to local suppliers whenever possible. Much of the £11.7 million budget went back into the community of North Lancashire and the surrounding areas.

Over in Chicago, many companies are looking to establish turbine farms and take advantage of the wind that the city is so known for. In a large manufacturing city like Chicago and the surrounding region that also sustains itself via production, re-outfitting factories with energy from wind turbines will help cut down on emissions. Crain's Chicago Business asserted that new Illinois plants could be powered by nature, without using precious water from the Great Lakes and without making any landfills. Building these new projects will put people to work with money in their pockets, and help to make Chicago the greenest city in the world.

Bringing it home

When it comes to reinventing the way materials can be produced, people have been turning to green energy as a sustainable and renewable resource. In places where wind is not only constant, but has the means to be harnessed, we should be taking advantage of our local suppliers. The whole supply chain can find new life with green solutions, from building the technology in the first place to lowering costs of production to keep money in local communities.

Image result for shaking handsGame theory has been a working subfield of microeconomics since its inception formally in the early 1800’s; however, it has only really taken off in research and literature since the 1970’s with the advent of computer modeling and data aggregation. Some useful insights from game theory can be applied to how businesses function and synergies, how suppliers respond to negative leverage, and how using asymmetric information may be more beneficial that using the whole picture. Some of these topics appear to be unrelated, but they have a few important factors in common. They are all part of a game. Not in the “Let’s play monopoly” sense, but in these types of interactions there are risks, odds, payoffs, winners, and losers. From these topics some interesting findings involving business transactions, cooperation, and negotiating leverage can emerge. One such finding can be seen in the British gameshow, Golden Balls Game.
The intellectually testing gameshow, challenges contestants to work cooperatively, playing the odds and taking risks. However, the contestants’ biggest risk isn’t even the game’s mechanics, rather the other players. Contestants work together to accumulate a large sum of money but vote one player off each round. In the final round, the two players remaining must each decide if they want to “split” or “steal” the money.
For anyone familiar with the prisoner’s dilemma, this should sound relatively familiar. There are two players who both have two options placed in front of them and a sum of money they have accrued over the course of the game. Players can choose to “split”, meaning they agree to split the money 50/50 with the other contestant. Or they can choose to “steal”, meaning they choose to take the whole sum of money and leave the other contestant with nothing. There are four potential outcomes that can occur:
1)       Player 1 and Player 2 chooses split; they both split the money 50/50
2)       Player 1 chooses split, Player 2 chooses steal; Player 2 steals all the money and Player 1 gets nothing

3)      Player 1 chooses steal, Player 2 chooses split; Player 1 steals all the money and Player 2 gets nothing

4)      Player 1 and Player 2 both choose steal;  both players get nothing.

It is important to emphasize, if both players choose steal, neither of them win the money. With these rules in place, the gameshow host prompts each player to say a few words to make their case to the other player regarding the decision they should make. Usually this culminates with both players agreeing to split the money after having some heart felt conversation and boasting about being better than the unsuccessful temptation of greed. While this may be a “feel good exercise in human behavior” this does usually end with at least one of the players feeling cheated, resulting in one, or both, going against their word and choosing steal. While on face value, this may be what you would expect, looking at the players’ incentives actually offers valuable insights.

The following link shows the specific situation I am describing and look to expand upon: https://www.youtube.com/watch?v=S0qjK3TWZE8

If you believe the opposing players’ heart wrenching testimony and are 100% certain they’ll split the money with you, you would be silly not to take advantage of the situation and choose to steal and take all of the money. Otherwise, there may be some moral compass guiding your decision, inclining you to split the money. If you’re a great negotiator and aware that you’re leaning towards split, you recognize the opposing player’s incentive to then choose steal. They know you’re falling for their plea and now have the opportunity to take all of the money for themselves.  More often than not, this leads to either one person choosing to steal and the other getting nothing, or both players trying to take advantage of the situation and deciding to steal resulting in neither of them taking home the money.
Believe it or not, there is a correct strategy for aligning incentives and goals in a zero-sum cooperation game. To fully incentivize the other player to commit to splitting the money, you need to give them no other option. In this situation, this means convincing them that you are going to steal, giving them no hope of obtaining the money unless they choose to split. Forcing the other player to make the decision, rather than try to convince you of their good intentions, is the only way to align incentives and make them cooperate. This strategy can be carried over to negotiating. 
Have you ever needed to take a hard line stance in a negotiation with a supplier, knowing all well they have become familiar with the process and can guess at outcomes in the bidding for packages? 
Have you ever gone into a negotiation with little to no leverage and nothing but your persuasion? While it may not be true all of the time and using your best judgement is important, representing strength and going against cooperative pleasantries may be the best strategy. By eliminating personal ambiguity, you make the other party’s decision clear cut. Making all of the information available and leaving the other player with their only other option to negotiating with you because not negotiating is potentially harmful to their business then establishes a logical rational of authentic cooperation.  As a result, you may walk away from negotiations with a more beneficial outcome than showing “cooperation” from the beginning. 
Preparing for the Big Ideas Summit 2015 with Procurious' Tania Seary
In the world of the supply chain, professionals aren't overwhelmed with options to connect with other people in their field. And what's especially difficult is that the supply chain is a global enterprise, but how are procurement specialists supposed to come together and talk about the issues that affect everyone involved?
This is where Procurious CEO and Founder Tania Seary comes in. Procurious is a network for the emerging generation of procurement professionals that will allow them to interact on a social media platform specifically tailored for this industry. This year, Seary and her team have put together a summit that's the first of its kind: a digital and interactive think tank designed for procurement "intrapreneurs​" that delegates can attend from the comfort of their homes.
That's right. The speakers are assembling in London on April 30, but the delegates will tune in to the Big Ideas Summit 2015 from their couches, offices, taxis or wherever else they choose. This model enables thousands more people to attend because it doesn't interfere with daily life. Taking time away from work and buying a plane ticket to London is not cost-effective for many, but this changes all that.
"It's about connecting people around the globe in an efficient way," Seary asserted.
These social media platforms serve as a way for professionals to talk about the current issues in the supply chain and bolster their understanding of how the industry works across different cultures and products.

Why is it so important for procurement specialists to stay connected to each other?

"It's about staying on top of potential supply chain disruptions," Seary claimed. "When [specialists] find out [about an issue], they can respond quickly and make sure their company isn't impacted negatively."
There are so many things that could throw a wrench into the supply chain and create really big issues for brands. Child labor, horse meat and plastic in milk powder are a few of the recent problems that companies have experienced, all of which reduced brand equity and lowered stocks. While larger companies can bounce back from this type of issue, the procurement services involved seriously took a hit.
Procurious provides an outlet for global professionals to have up-to-date information about their extended supply chain. Another thing that's great about the Big Ideas Summit is that specialists can come together on their own time and watch the speakers free of charge. This isn't a fancy club for the procurement elite, but an open forum in which all levels of supply chain management can take part.
This summit will enable delegates to submit questions via the social media platform of their choice - Twitter, Facebook, LinkedIn or Procurious - and connect with the speakers. Then, after a speech is done, people can respond to it on a forum and have a real conversation about the relevant procurement issues around in the here and now.

Who can we expect to hear from in London?

Among the 40 esteemed guests will be C-suite executives, authors and professors to make the summit a well-rounded and highly informative gathering. As well as presenting their own material, the speakers will address the questions put forth by the delegate community. After these speeches are over, delegates and other interested parties will be able to watch and re-watch the speakers at their own leisure.
At the end of the day, Seary would like every person to come away from the summit with a reinvigorated passion for the procurement industry.
"I really want to inspire entrepreneurship in procurement," Seary concluded. "I want people to use the [Procurious] platform as much as they can so they can do their jobs the best they can."
What will really drive the success of the industry is for professionals to look past the traditional way of doing things that specialists have stuck to for the past 15 years and really think outside the box.
"The more you give to your profession, the more you get out of it," Seary stated in closing.
She hopes that the Procurious Big Ideas Summit will inspire people to throw themselves into the industry and make some meaningful changes with long-lasting results.
Interested in taking part? Tune in the the Procurious Big Ideas Summit on April 30 to listen to speakers and participate in this digital procurement event! Stay in the loop on Twitter and Facebook with the hashtag #BigIdeas2015. Send in your questions and be a member of the supply chain nation's first digital summit!

Why nearshore to Mexico? In recent years, China and Mexico have competed to be the prime hub location for logistics operations for North American companies. While China still boasts advantages for off-shoring, more and more companies are realizing the power of moving the supply chain closer to home; to Mexico.

Supply Chain models have drastically evolved since the onset of off-shoring practices decades ago. Consumers now demand nearly-immediate delivery of products and perceive empty shelves as sign of poor supply chain management. Seeking better control and efficiency of operations, North American companies large and small are nearshoring their supply chain to Mexico.  Among those leading the charge to Mexico: General Electric, Ford and Microsoft.

Mexico proves to be a major Nearshoring opportunity for many reasons including:
  1.     Reasonably-priced labor
  2.     Less expensive shipping as compared to overseas
  3.     Geographically easier to visit and evaluate suppliers

Next month, Source One Vice President of Operations William Dorn and Senior Project Manager and Latin America sourcing expert Diego De la Garza will be presenting at the Institute for Supply Management Annual Conference on the topic of Nearshoring to Mexico. Attendees will gain an understanding of the status of supply chain today, including the challenges companies face outsourcing manufacturing, as well as the process and benefits of nearshoring to Mexico. Source One is also hosting discussions at Booth #542.  Hope to see you there!
Exploring global sustainable supply chain initiatives

In this day and age, it seems that we are using up all of our resources. Every other day, there are news pieces about what's running out, the earth getting warmer or even sometimes the end of days (though the expected causes range from human error to an alien takeover). And though the news may seem bleak at times, we are also in an age where we are aware of how the Earth is responding to our habits and we have the technology and information to make better and more environmentally friendly decisions.

In the supply chain, the nature of the beast is production and movement. There are many processes that are so deeply ingrained in the system that they might be hard to change. However, it is our duty as humans who inhabit this planet to make the effort and create an environment for the supply chain that is effective and sustainable. Corporations around the world have already shifted gears to accommodate the changing tides.

Leader of the pack

Many people claim that making a change happens one step at a time. However, there are quite a few global enterprises that have adjusted their supply chain and delivery processes so quickly that it appears they've sprinted toward environmentally conscious solutions.

In honor of Earth Day, SupplyChain247 acknowledged giants of the consumer products world that have made impressive progress in sustainable and rewarding supply chain practices. Of those listed, Unilever perhaps has the widest reach of products that the general public consumes. According to the company, Unilever has made a vow to reduce its CO2 emissions by half, even though production has only increased. The consumer goods manufacturer is well on its way to producing less carbon dioxide and using less water in its manufacturing.

The list of efforts continues and includes lessening deforestation, promoting small farmers and green farming practices and making climate change a topic of discussion for all those involved in the supply chain process. With Unilever at the helm, other businesses, no matter the size, can take a page from its book and make some long-lasting and important decisions pertaining to manufacturing and delivery.

Making real waves

Even though there are fantastic role models like Unilever and Ikea for other companies to follow, many businesses around the world aren't entirely riding the wave of change. It would appear that motivating firms to go green is only effective for getting companies to the base compliance levels, reported TriplePundit. After the bare minimum is met, businesses have no reason or incentive to move forward with improved efforts, instead maintaining the same level and making no effort to keep the ball rolling.

It is up to the C-suite to ensure the supply chain is running at maximum capacity yet adhering to environmentally smart standards. Sustainable performance is critical, noted the source, and engagement is perhaps the most important approach to ensure longevity of the initiative. Engaging suppliers in sustainable practices can sometimes be precarious, but properly educating and collaborating with all parties is a great first step toward sustainable practices without risking the supplier relationship.

Looking forward

These are not initiatives that can happen overnight, or even in the course of a month. They take careful planning and execution to make sure that every manufacturer, supplier and delivery system is on the same page. Not all attempts will be successful on the first try, but the important thing is to find a solution that keeps business booming and the Earth blooming.

Supply chain gurus changing the game

Apple has always been one to revolutionize the way things are done. First came the iPod, then eventually the iPhone, iPad and Apple Watch. Consumers seem to have a fanatic reaction to these new products and how they impact our daily lives. Behind the scenes, Apple has been relatively open about how it procures and sources materials and products for our gadgets. What people seem to overlook is the method by which the company alters its services to eventually provide the best product for the general public. Apple regularly changes its supply chain strategy, which keeps the tech enterprise at the top of the game.

A history of excellence

According to Gartner, Apple has achieved the top spot on the analytics  company's Supply Chain Top 25 list for the past seven years in a row. When the list is released later this year, no one will be surprised if the enterprise takes the No. 1 slot again. Businesses that claim this honor must start with customer needs and behaviors and shape their values around them.

Since the company is so consumer-centric, the fact that Apple sold the equivalent of 326 iPhones per minute in 2014 isn't entirely a shock, reported EBN Online, but it does certainly give one pause to ponder the implication of the sheer demand and efficiency of the supply chain.

Meeting the market

As there is such a high demand for what seems to be every Apple product available, the secrets of the corporation's supply chain are sure to reveal a bit of its success. To meet the clamor of the customer, the company has multiple electronic manufacturers that provide the innards for iPhones, MacBooks and more, noted Bidness Etc. This allows Apple to keep prices down and assure that consumers will still be able to purchase these must-have gadgets.

Apparently, the tech magnate is branching out to various companies all over the world to ensure the Apple Watch supply does not run out when people can begin to purchase the item on April 24. The success of this product in particular rests on the ability of all the companies involved to deliver the timepiece in a timely manner. Thousands of people will be expecting their preorders to come in and Apple has a legacy to uphold.

While not every company can find the same success as Apple, supply chain management can certainly take a page from the Apple playbook.

While today’s job market is beginning to look much better than it did in the immediate post-recession years, job seekers still face an incredible amount of competition. Companies forced to downsize during the Great Recession are only slowly starting to fill available positions, which are still greatly outnumbered by the amount of qualified applicants. As result, job hunters need to get creative in their career pursuits. Whether you’re emerging talent looking to land your first position or a seasoned professional considering your options, these avenues could boast major benefits for your search.

  1. Tap into your existing network. Take a look at the people you already know to identify who could be a resource to grow your network.  According to JullienGordon.com, 65-70% of jobs are gained through personal referrals or networking connections

  2.  Work with a recruiting or staffing company. A great way to break into a company is to work with a recruiting or staffing agency who may already have an existing relationship with the company to which you’re looking to apply. The agency will have insights into job openings whether they’re publicly posted or not.

  3. Attend an Event. These may include events hosted by charities or professional organizations. If possible, get the list of attendees and identify beforehand who you would like to meet. This can be the perfect opportunity for you to connect with professionals from an organization you would have otherwise never met.

    On April 23rd, Source One will be attending ISM-7 Counties’ Professional Networking Event. Joining the industry’s best and brightest, Source One experts will be sharing their insights, as well as connecting with other industry veterans and emerging professionals. Event attendees will also hear from guest speaker Julienne Ryan, a professional speaker and prominent leadership coach. 

Image provided by: Vulcanpost.com
This post is part of our series: Alternative Solutions for Staffing Procurement and Sourcing Positions

Let’s start with some good news. Supply Chain careers are actually becoming a desirable thing! Twelve years ago, I don’t know that any college-aged young adults would have been able to tell you the definition of a supply chain, let alone express interest in it as a career path. But times have changed. Companies like Apple have made supply chain, logistics, warehousing and demand planning hip and interesting. Okay, maybe that’s a bit extreme, but they are responsible for making those terms relevant and common. Even high-schoolers are learning about supply chain disruptions when their favorite technology provider can’t meet the demand for their next gadget. So maybe supply chain careers are not as cool as being a researcher at Google, engineer at Apple, or pharmaceutical rep at Pfizer; but at least the younger generation is aware of it as an option.

And universities and colleges have been listening to the business world. Most of the top schools now offer some sort of supply chain programs. And that’s just talking about people new to the working world. For those that have already pursued other interests to start their careers, there are plenty of programs to help transition into the exciting world of supply chain. There are a few good procurement certification programs and customized and specialized sourcing training programs. So even those looking to make a career change can do so gracefully.

So what does that all mean for you, the employer? Hopefully it means that recruiting should get easier in a few more years as schools continue to pump out students and those that have already left the programs get a few years under their belts. But in the meanwhile, how do you tap into a market of junior resources when the biggest (and wealthiest) Fortune 500 are trying to grab the same talent?

  1. Go the traditional route. Post on job boards and participate in career fairs. Don’t just use the alumni networks, students are constantly connected to the web and will seek out every resource they can to find a job. Therefore, continue to use the regular internet job boards including indeed, monster, careerbuilder, craigslist, etc. (skip the newspaper). Don’t forget to contact each school you are interested in directly. Most of them have FREE job boards specifically to recruit to the students. Don’t limit your search to schools in your geography, a lot of students went away for college and are looking for a job back home.

  2. Target students who didn't study supply chain or procurement. Yes, I know, you are looking for people that can hit the ground running. But, let’s be honest, supply chain programs will give students a good foundation knowledge, but you are going to wind up training them about your specific business and processes anyhow. Look for students in the specialty you need. Information Systems and Computer Sciences majors can make excellent IT buyers. Marketing students who don’t want to work trade-shows or grind out marketing portfolios at ad agencies for low pay can make excellent additions to your marketing and media sourcing team. And finance majors make great analysts and metrics trackers. Just be sure to test their analytic skills (excel and critical thinking) during the interviews.

  3. Make your job advertisements interesting and SEO rich. Students will search jobs by keywords. If you use a boring, flat, buzz-word laden job description you are not going to get good resumes. Don't let HR "handle" the recruiting on its own, chances are they can't explain what you do in simple terms. Explain your business, explain the perks, explain what they will do; but use plain language. Most students are going to ignore or never see things like “Track KPIs and report metrics” “Conduct BATNA analysis” or “Use Ariba to qualify suppliers”.

  4. Internships!!! Some of the best talent I have ever recruited started with an internship. And students really seem to understand the value of an internship now more than ever before. Internships are a great way for a student to test you as an employer, but also for you to test them as a worker. If you like the work they do, make them an offer for full-time employment and lock them in before they wrap up their degree. What’s really interesting is that students do not appear as focused on the pay they receive as they do the experience they receive in their internship. So make sure you use those students for things beyond data entry and number crunching. Let them see the interesting nature of a complex sourcing initiative and let them participate in a negotiation. And be realistic, while students are completely driven by money; the days of the unpaid internship are over!

  5. Use a recruiter. Believe it or not, good recruiters have access to top university talent as well (not just experienced pros). Specifically, they will have access to rising stars; those students who went above and beyond at their institution, or perhaps completed an extensive internship at a top company.

Now for the bad news. While we are certainly seeing an uptick in new talent and higher-education programs that cater directly to supply chain related curriculum, it doesn't really solve the immediate need for experienced professionals. While we've ran into (and recruited) some incredibly bright talent from both supply chain and non-traditional curriculum; those individuals are not able to hit the ground running on project work as a seasoned pro might be able to do. Sure, they might have learned what an RFP is and how to write a project plan, but following a methodically stagnant sourcing process isn't going to produce optimal results. Sure, they know textbook definitions, how to create a spreadsheet or run an e-sourcing platform and perform a BATNA; but do they really know how to draft a proper SOW and SLA or read through the marketing fluff that supplies spin back to them? Do they know how to motivate a supplier who doesn't want your business? Do they know how to get an internal stakeholder to give up “their” spend? Hint, they don’t.

You’re going to have to invest significant time and resources in training and bringing them up to speed. Students are not a “quick answer” to your resource deficit. And unfortunately, fresh recruits are not all rainbows and unicorns. As the world renowned poet, farmer and sourcing guru, Naseem Malik, points out in his critically acclaimed research exposé, Talent Management – The Millennial Challenge; Millennials have the highest turnover rates with an average 2.5 year career and are frequently looking for new opportunities to leave. He cites lack of training and mentors as a prime reason for their lack of loyalty. So while it’s not particularly difficult to get a recent graduate in the door, it is resource intensive to keep them.

Millennials have the highest turnover rates with an average 2.5 year career and are frequently looking for new opportunities to leave. He cites lack of training and mentors as a prime reason for their lack of loyalty. So while it’s not particularly difficult to get a recent graduate in the door, it is resource intensive to keep them.

You've got a few choices to help get these new recruits up and running though. Our next series will discuss building a sourcing and procurement team of leaders and learners.