August 2015
Companies struggle to capitalize on mobile popularity

Technology is always evolving. It must be, to keep up with an on-the-go, fast-paced society. Because of this, companies continue to upgrade their devices to provide the best products to today's consumers. This is particularly true for phones. People have had the ability to talk without a landline for decades, and now they expect to be able to do more. Smartphones satisfy that desire. However, the growth in popularity of the devices has added pressure for e-commerce businesses to meet demand, and the supply chain is struggling to earn revenue.

The popularity of mobility
Cellphones today come with so many abilities that you don't even need a desktop computer or landline phone to go online or communicate with people. You'll be able to text, make calls, look up the answer to a question and view your social media pages all from your mobile device. If it weren't for the size of the screen, you wouldn't need other technology to do the majority of other things.

Many people are seeing the benefits of this. According to Trinity Digital Marketing, there are approximately 6 billion mobile subscribers, and one in seven searches is now done from a mobile device as opposed to a desktop computer. With these numbers, companies must take advantage of smartphones' abilities to capitalize on mobile usage.

Struggle to make ends meet
Unfortunately, making revenue isn't as easy as it sounds. According to the Pew Research Center, mobile spending makes up 37 percent of the $50.7 billion-worth of digital advertisements. However, those ads aren't bringing in the money that businesses had hoped, considering the popularity of mobile devices. Only 10 percent of The New York Times' digital ad revenue comes from mobile, Advertising Age reported.

This can come from a variety of issues. There isn't much room to display content that is both visually appealing and informational like there is on a larger screen, and publishers and marketers may not fully understand the strategy that is needed to earn a return on their investment, the source explained. They've stuck to desktop methods rather than adjusting their approach.

"It's still largely unchartered territory," Rachel Pasqua, lead of mobile and emerging technologies at MEC Global, told Advertising Age. "When you have uncharted territory, the knee jerk is to go to the big player everyone is familiar with."

To make all parts of the supply chain financially stable and beneficial, companies will need to rework their marketing strategies for mobile devices.

Oftentimes, the contracting process becomes an afterthought for procurement professionals. So much time goes into developing and executing sourcing events, that when the business is finally awarded to a winning vendor it may seem like the job is done. While selecting a supplier to partner with is a certainly an achievement to be celebrated, the supplier relationship cannot truly begin until a contract is signed. And in order to make sure that the relationship is long-lived and effective, the contact should be fair for both the vendor and the customer. Below are some tips that can help you get through the contracting process as quickly as possible, while also getting the most beneficial terms for your company:

  • Always use your own contract draft. Suppliers will try to convince you that using their paper is more beneficial, as they have included certain terms and definitions that only apply to their services. While this may be true in some instances, it is always possible to include some of this supplier suggested language in your own contract draft via the red-line process. However, using your own paper helps ensure that you stay in control of the negotiating process.
  • Whenever possible, give vendors the opportunity to review and comment on your contract draft throughout the evaluation process (i.e. during the RFP process). This way, if you have two suppliers with identical capabilities and pricing proposals, but one supplier indicated that they would require extensive changes to your contract draft while another indicated that their required changes would be minimal, you can go with the one you know will lead to a quicker contract negotiation process.
  • Identify the internal team that will need to be involved in the contract negotiation process. The procurement and legal teams will typically always be involved, but depending on the complexity of the agreement you may also need input from the business stakeholders, the insurance department, etc. Identifying all of the stakeholders ahead of time will help ensure that you will not miss anything throughout the process.
  • Identify any points or terms that are must-haves for your company and any that are only nice-to-haves. This way, if you notice that a supplier does not want to accept some of your nice-to-have terms, you can use that as leverage to ensure that you are able to get all of you must-haves.
  • Make sure that your team and the supplier always track their changes via the red-line process whenever making changes to the agreement document. If one party fails to track their changes for even one version, it could result in having to restart the contract negotiation process to ensure that no not-agreed upon changes accidentally made their way into the final version of the agreement.
  • Remember to be professional and fair. Although your instinct may be to want to come out of the negotiating process without any changes to your contract draft, the reality is that because most drafts are very standard, some changes will be required to address specific aspects of a supplier’s service offering. In order to maintain a long term on-going relationship, both sides should see the contract as fair and conducive to the future growth of their respective companies.

Although the above list is certainly not a comprehensive list of everything you need to think about during the contract negotiation process, it should provide a good framework for the negotiating process. Neglecting some of the above ideas may lead to issues in the day-to-day relationship with your vendor, and eventually a combative renegotiation or even contract termination. 

Source One Round Up: August 28,2015 

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


Onboarding a new marketing agency to your organization can be both exciting and challenging. This week, Source One Analyst Liz Skipor shares her marketing strategic sourcing insight to help your new marketing agency hit the ground running. She explains how to get the agency up to speed with your organization's culture and expectations to establish an effective vendor relationship early. 

Source One's Senior Project Manager and Latin America Liaison Diego de La Garza shares his years of nearshoring expertise to help shed light on the complexities and advantages of nearshoring. In this podcast, De la Garza explains why the trend has taken off and how companies can fully benefit by moving their supply chain closer to home. 

NASA plans interplanetary mission to Mars

When Mark Watney was stranded on Mars, he never thought he'd want to return. He encountered a multitude of problems in his 562 solar days - or 687 Earth days - on the planet. From separating hydrogen and oxygen to nearly running out of food, the narrator of Andy Weir's  novel"The Martian" had his share of obstacles. He didn't have much say in the matter when he found himself stuck on Mars, and he probably wouldn't want others in the same situation.

However, Watney may have found that other people aren't as reluctant to visit the planet as he is. Starting in the 2020s, NASA will send volunteers on a trip to the red planet, which may require some updates and additions to the supply chain.

NASA has eyes on interplanetary travel
There is a wealth of knowledge to be gained through space exploration. However, Earthlings haven't had the technology to allow them to travel into the depths of space - until now. NASA is in the process of building and testing Orion, the first spacecraft made for human occupancy and long-distance traveling since the Apollo missions. This will open up new doors for astronauts to explore much further than the Moon.

In 2021, Orion's crew will set off on its first mission to collect an asteroid and bring it into the Moon's orbit. This will not only provide further insight into these masses, but will also serve as an evaluation for the capabilities of the spacecraft. This will allow NASA's team to test the durability, electrical systems and safety to ensure that a longer journey will go smoothly.

NASA hopes to send astronauts to Mars in the next 20 years. At the moment, there are rovers and robots exploring the red planet, gathering information and searching for signs of life. This will help NASA plan for maintaining human life for an extended time on Mars.

Kinks in the supply chain need to be fixed
Unfortunately, an extended stay in space comes with its problems. Other planets do not have the atmosphere that Earth does, whichmay affect the health of astronauts. According to EuroNews, being in zero gravity and having contact with radiation reduces muscle strength and bone calcium. Just one year on the International Space Station can leave astronauts weak. Several years on Mars may be detrimental to their health. NASA will need to work out a plan to ensure these space voyagers can maintain their endurance while on the planet.

Space travel is also costly. Building the launcher and the spacecraft is just the start of the bill. NASA also sends equipment and cargo ahead of time to make sure astronauts have what they need while not on Earth. All of these supplies add up to excessive amounts for the agency. However, Ontario-based Thoth Technology may have a way to reduce at least some of the costs.

The company has received a patent for a space elevator, which will be used for launching payloads, scientific purposes, intergalactic communication and tourism, Agence France-Presse explained. The tower would allow spacecraft to be launched from the stratosphere instead of the ground, which may reduce costs by approximately 33 percent. This would eliminate drag and require less fuel, both of which add expenses and obstacles in space travel.

With blastoff to Mars set for sometime in the 2030s, NASA has time to work out any potential problems. Astronauts will need food, water, oxygen, shelter and a way to communicate to be able to survive on the red planet, and global sourcing will be futile for this mission. The supply chain must be able to account for interplanetary travel so that Mars' colonists don't end up in a Mark Watney situation.

Car recalls are driving customers away

Unless you live in a city, you probably need a car to get from point A to point B. Unfortunately, ownership comes with added expenses. You'll not only have to pay for a car, but you'll need to take care of gas, registration and repairs. In many places, gas prices are the most reasonable they've been in years. However, repairs are another story. This year's vehicle recalls have significantly reduced customer satisfaction with the automotive industry.

Customer satisfaction decreases with recalls
Buying your first car comes with the thrill of being an independent and free person. You no longer have to borrow your parents' vehicles or get rides from friends. However, the excitement of that may decrease once you hear of the countless recalls that have occurred in the past year. The U.S. Department of Transportation's National Highway Traffic Safety Administration reported 47 recalls for faulty car seats, defective air bags, oil leaks and incorrect manufacturing since Aug. 1. In the first seven months of the year, nearly 35 million cars were recalled, the Wall Street Journal stated. While that is a decrease from 2014's 49 million vehicles during the same time period, the number still causes problems for many citizens and companies.

According to the 2015 American Consumer Satisfaction Index, there has been a 40-percent increase in recalls since the second quarter of the previous year. This has caused people to be dissatisfied with service and car quality. Even the costs of vehicles in today's society have created a chasm between auto manufacturers and consumers. Satisfaction has fallen 3.7 percent to 79 of 100 on the scale.

"While it is true that all cars are now much better than they were 10 to 20 years ago, it is alarming that so many of them have quality problems," Claes Fornell, ACSI chairman and founder, said. "The number of recalls is at an all-time high. This should not happen with modern manufacturing technology and has negative consequences for driver safety, costs and customer satisfaction."

Used cars may cause more problems than new ones
Unfortunately, new car owners aren't the only ones to face problems with recalls. People who own used vehicles may experience even more issues. Federal law only stops dealers from selling new cars that have been recalled, but pre-owned vehicles have no such regulation, Consumer Reports explained. Dealer-owned companies may ensure that there aren't any recalls prior to selling to consumers, but private lots aren't guaranteed to perform such research and tests, nor do they always provide accurate information.

This means consumers must remain informed about recalls to ensure their cars are safe to drive. Consumer Reports recommended checking government databases, visiting auto manufacturers' websites, contacting your local dealerships and going to CarFax for car histories.

To make sure cars are safe for consumers, manufacturers and government agencies need to work together to improve the supply chain. Rigorous tests should be performed both before and after vehicles hit the market to ensure the safety and durability of these cars. A new method must also be created for making used-car owners as knowledgeable as new vehicle purchasers.

Companies remove color additives from food

As consumers, people have become accustomed to how their food looks and tastes. They expect the electrifying green color of Mountain Dew and the rainbow of shades in Trix cereal. However, many of these colors are about to change. To follow consumers' desire for "natural" products, food manufacturers have pledged to remove artificial coloring from their offerings, which may leave parts of the supply chain struggling.

What is the problem with color additives?
Striving to make their products more natural has proven to be a process for manufacturers. According to Wired magazine, there is no set definition for the term "natural" in regard to consumer-packaged goods, which can raise confusion. What may mean non-genetically modified organisms to some people could imply no chemicals to others. Even the U.S. Food and Drug Administration has been unable to properly define the term, and generally accepts foods that have no color additives, artificial flavoring or man-made substances as being worthy of the "natural" label.

Recently, many companies have adopted no artificial color as their definition of the term, and are attempting to dye their products with only naturally existing materials, much to the happiness of certain consumers and organizations. It is believed that certain color additives present a number of health issues for people who consume them, the Center for Science in the Public Interest reported. The FDA allows nine artificial colors to be used for food products - seven in food and two for casings. However, the CSPI found that many of these cause tumors, hyperactivity and hypersensitivity. While the FDA has not discovered a correlation between the dyes and health concerns, the organization is conducting further research because of the high amounts of additives people consume, according to a poster presentation from the agency.

How are manufacturers adhering to the desire for natural food?
Despite not having full evidence of color additives' health effects, food companies are working to remove the dyes from their products. The Scientific American reported that Kraft has pledged to remove yellow dyes from its macaroni and cheese by January 2016, and Medical Daily said Nestle will eliminate artificial coloring from its chocolate by the end of the year. 

However, keeping these products looking the same has proven to be an issue for food manufacturers, according to The Associated Press. Natural materials do not have the same dyeing capabilities as man-made additives, which means consumers may find their favorite foods have different appearances. Greens and blues have not been easy to replicate, and natural dyes for these colors have only been available since 2013. Because of this, General Mills' Trix cereal will appear without its blue and green pieces when the new version of the product is released later this year.

Dyes made from fruits, vegetables and spices may not be able to provide the same vivid colors that people have grown used to, but they will eliminate the potential for health concerns. However, they have caused problems to arise along the supply chain, The Associated Press explained. With natural dyes, purchasing and production costs increase. These materials also aren't as sustainable as their artificial counterparts. Fruits and vegetables can easily rot if not used within a certain time period, which adds more expenses for food manufacturers. These muted colors could also turn off some customers, as foods might not look as appealing as they once did. Companies will need to experiment with their formulas and dyeing methods to ensure they get the best and healthiest colors possible.

Now more than ever, a competitive advantage is rooted in efficiency. Most would agree that businesses want to save the maximum amount of capital while also maintaining or increasing the value of their services. While simple cost reduction measures may work in the short-term, there is no solution more effective in the long-term greater than the establishment of a proficient, integrated, and empowered procurement department. Procurement might evoke a negative connotation that is associated with the siloed departments of a decade ago, but now more than ever, procurement finds itself squarely rooted in most business decisions.
Starting a procurement department that is integrated and efficient can be a daunting task. From hiring the appropriate individuals, to setting realistic goals, to internally (and externally) marketing the program, there is much work to be done. For a more in-depth look at the first part of the equation, talent in procurement, read: Attracting Talent to Procurement.

Health care benefits from low oil prices

Health care requires an endless amount of supplies, from latex gloves to medications. However, full inventories of these products rely on the success of other industries. If a supplier struggles to meet demand, health care may face a similar setback in patient care. However, when business is good, doctors will notice the savings. Recently, procurement prices on plastic-based materials have decreased, meaning medical facilities are taking advantage of the lower costs of supplies.

Why is plastic inexpensive?
The price of oil has plummeted in the past two months. As of August, the cost of crude oil has fallen 4 percent, a six-year low since March 2009, according to The Associated Press. Since June, there has been nearly a $20 price difference, from $61.43 to $43.08. This is the lowest it's been since 2009. Because consumer demand has fallen and drilling has continued, there is a surplus of crude oil, which has led to lower prices for both oil and the products that require the resource. While this isn't good for oil companies, it is beneficial to airlines, shippers and other businesses.

The plastic industry is one of those areas that enjoy the low costs of oil. Plastic is made by combining natural gas, crude oil, salt, coal and cellulose, the Association of Plastics Manufacturers in Europe explained. This mixture produces hydrocarbon gas liquids, which are then used to make the material. Because the cost of oil has decreased, the price of plastic has also gone down.

How does this benefit health care?
The health care sector uses plastic materials in various medical devices, including pacemakers, gloves, syringes, bed pans and catheters. It even uses the product in its cafeteria trays and utensils. With the amount of plastic medical facilities need, the costs add up. Luckily for them, low oil prices lead to more inexpensive plastic products, which means fewer costs for hospitals and doctors' offices, Healthcare Finance News reported.

These facilities have contracts with the suppliers who provide them with their plastic products.Because if the decreased oil prices, supply chain executives have started to renegotiate the price of the materials to reflect the low costs, the source explained. To take advantage of these prices, hospital administration needs to track the progress of the supply chain so they know how individual parts are faring.

"Certainly there are a number of facilities where decreases in oil prices and modification of market prices impact on plastics-based products don't really register as a blip," Anthony Long, principal of Pinnacle Healthcare Consulting, told Healthcare Finance News. "But those who are up to speed and who have more sophisticated systems in place or resources to draw on are reaching out with the drive-down in petroleum prices and ultimately plastics."

While oil prices don't directly affect the health care sector, they do have an impact on the companies that provide hospitals and practices with the products they need. By monitoring the rest of the supply chain, medical professionals can ensure they receive the best materials at the lowest prices.

Can veterans solve the skills gap in manufacturing?

While the manufacturing sector has improved since the Great Recession, it's not in top shape yet. The industry still lacks skilled workers to fill positions. According to a report from Deloitte and the Manufacturing Institute, approximately 2 million positions will go unfilled in the next decade because of the declining number of people entering the sector to replace retiring baby boomers.

Manufacturers have been targeting school-aged young adults to boost interest in the sector, but there may be another group that companies are excluding. Veterans are already trained in the science, technology, engineering and mathematical fields, which means there are a number of skilled workers just waiting to be employed throughout the supply chain.

Military provides STEM training for recruits
When people think of the military, they may imagine people in fatigues on the battlefield. However, that isn't the only job soldiers are enlisted to do. There is also a need for "enablers," or supporting roles, such as doctors, nurses and technicians, the U.S. Army website explained. The Army Reserves is nearly solely dedicated to that purpose. This allows members to transition seamlessly between military and civilian life.

Even those who aren't part of the Reserves learn STEM skills during their enlistment. The Huffington Post contributor Lt. Gen. Clarence McKnight Jr. explained that new recruits go through a series of tests to evaluate their interests and abilities. From there, the military is able to find positions where members will excel and best serve their time. They receive hands-on training with veteran non-commissioned officers to ensure that they have a grasp of their roles in the armed forces.

"If you looked at the skills that we have - in the engineers, the cyber warriors, the medical - many of these are on the cutting edge with the technology that we use in the military that can also be applied on the civilian side," said Maj. Gen. David Conboy​, as quoted on the U.S. Army's website.

Along with the training from veteran NCOs, enlisted members are also able to pursue academic degrees. According to Conboy, the rushed pace of today's current society and economy can put stress on young adults, who may be torn between continuing their education and getting a full-time job. However, the military allows recruits to do both. They get paid to learn STEM skills and improve their knowledge, and they have much more time to do so.

Employing veterans benefits everyone
According to the U.S. Department of Defense, approximately 1 million to 1.5 million people will be leaving the military within the next five years, the Nebraska Manufacturing Advisory Council reported. Considering 2 million manufacturing positions will go unfilled in the next decade, veterans may be the answer to the employee procurement problem.

The switch to civilian life can be hard for veterans, but jobs in manufacturing may help ease the transition. Veterans have experience making decisions in high-stress situations, which can improve productivity along the supply chain, U.S. News & World Report explained. Their technical skills from the military can go a long way in making executive decisions to ensure the success of the company. Veterans will also excel at working in teams, as they are used to having roles in groups and following a chain of command, according to the NMAC.

"Everything that you do in your organization happens in the military, too," Mike Grice, a board member for Medtech and the Biotech Veterans Program, told U.S. News & World Report. "It's just a variation on a theme."

Through apprenticeships and mentorships, businesses can show veterans how to transfer their military skills into manufacturing. This will help them make the transition into civilian life and show them how to perform certain tasks to benefit their new employers.

While a worker shortage is predicted for the upcoming years, it doesn't have to dominate the manufacturing sector. By recruiting veterans to their companies, manufacturers will be able to close the gap while offering retired members of the military civilian positions.

Beer: The new breakfast of champions?

As the Pawnee Parks and Recreation Department's most dedicated employee Leslie Knope once asked, "Why would anybody ever eat anything besides breakfast food?" The "Parks and Recreation" TV character may have had a point. There are many foods and beverages that would be considered breakfast food. Eggs and pancakes make the perfect main dish, while bacon, sausage and hash browns complement them to perfection. Maybe you'll have a glass of orange juice or a mug of steaming coffee to wash it all down. For the more untraditional breakfast eaters, cold leftover pizza and water may alleviate the hunger.

However, even Knope may not have considered having the newest addition in the morning. Food manufacturers and breweries have blended their supply chains to bring consumers breakfast-themed beer.

The sugary goodness of breakfast on tap
While the alcohol isn't necessarily meant to be drank at breakfast, it is styled after some of your favorite morning treats. You'll still have to make your own bacon and eggs, but you may soon enough be able to find the sweetness of cereal and pastries in bottles.

General Mills has partnered with several breweries around the United States to bring you a delicious treat for many occasions. Recently, the manufacturer has teamed up with Fulton Brewery to create the breakfast of champions in liquid form. HefeWheaties will be available in the Minneapolis and St. Paul, Minnesota, regions by the end of the month, according to The Associated Press. While the beer isn't made with the cereal, it is modeled after the wheat ingredients.

"We're not saying it's a breakfast beer, but we're not saying it's not," Ryan Petz, president of Fulton Brewery, told the source.

The breakfast corporation has also contributed its sweet Count Chocula cereal to Colorado's Black Bottle Brewery's Cerealiously Count Chocula ale. Last October, the beer producer bought out its local store of the breakfast treat, The Coloradoan reported. This time, General Mills provided the supply the brewery would need. Black Bottle plans to re-release the beer on tap on Aug. 25 and the drink should appear in bottles around Halloween. The brewery has used Golden Grahams and Cinnamon Toast Crunch in previous recipes, according to Fortune magazine.

However, cereal isn't the only breakfast food you'll be able to drink. San Francisco-based 21st Amendment brewery's new beer gives a nod to Kellogg's Pop-Tarts, the source explained. Toaster Pastry, an India Red Ale, contains 7.6 percent alcohol by volume in each 19.2-ounce can. The beer comes with the bitterness of an IPA, but the sweetness of the processed treats, which may make an interesting combination, according to the source.

The cure to what ales you
These new alcoholic creations may bring a new crowd of breakfast lovers to companies' audiences, which may be beneficial in many ways for some. General Mills' sales have not been as high as they once were. According to Euromonitor International, U.S. sales have dropped from $63.7 million in 2009 to $19.4 million in 2014, The Associated Press reported. This partnership with Black Bottle and Fulton breweries may help increase the company's revenue.

No matter what sales are like for any business, the shared venture between breakfast companies and breweries has extended the supply chain. Both manufacturers may reach audiences they would not have appealed to otherwise. Breakfast lovers may be drawn to the sugary alcohol, while beer drinkers could find they enjoy the taste of certain cereals. This has opened new avenues for these companies, and may redefine the way consumers view breakfast.

The following article comes to the Strategic Sourceror courtesy of Supply Solutions, a leading Supply Management services provider based in Brazil. 

Most executives in the world know that Brazil is a huge market, but less know why and how there are so many opportunities. Brazil is one of the largest consumer markets in the world, with a highly productive agriculture sector and a diversified economy, and it is the 7th economy worldwide and accounts for almost USD 3,0 trillion GDP (2014 basis).

According to consolidated data from the 1,000 biggest companies in Brazil produced by Valor Econômico (the largest local financial newspaper) in partnership with Serasa Experian and Business School FGV:

By the end of 2015, however, this table will be out of date because of a serious political and economical crisis. The GDP shall decrease as Brazil is facing a recession and investigations of corruption in the government.  It is directly affecting sectors like Gas & Oil and Electric Power (where there is government participation) as well as others such as Automotive and Construction & Engineering.

Still, there is some good news. The favorable exchange rate is making some companies take advantage and export more. In the domestic field, some companies expanded geographically and won market share as others decided to please class C consumers like some retail chains. Also drug retailers are thriving, particularly thanks to the aging population. Therefore there certainly are great opportunities of sourcing from Brazil at this time.

Supply Solutions 13 years experience has shown that Brazilian market has evolved fast. There is a comprehensive professional supply market available to meet demands in almost every segment. Most of them knows Strategic Sourcing Processes very well and already deal with customers using local or foreign SaaS solutions. It means that closing deals is becoming more professional over time.

There are still a lot of opportunities, of course. Many companies rode the successful wave of Brazilian growth during the periods of 2003-2008 and 2010-2013. Some grew very fast and others were born as a result of the merger or acquisition processes. The ones who seized the moment and improved their administration processes are now ready to face this complicated economic time.

There are however many that are facing difficulties and need to rethink their cost processes rapidly - but are still struggling to make a decision.  

The Brazilian government intervenes in business environment at its own convenience. It changes taxes and business rules, and creates an uncertain environment impacting on decisions companies have to make.  Even for multinational companies or highly professionalized local companies, decisions take more time because of the additional analysis that this uncertainty requires.

Local companies tend to be faster. They override this problem and just carry on. They tend to be smaller than their competitors and risk much more on almost all ways. The decision must bring quick wins and if not they just change it until they go right.

In summary it can be said that doing business in Brazil is not so complex - it just needs some knowledge about the business behavior and to be current about governmental measures on the sector - just like you need in any other country.
Consumers want transparent seafood supply chain

In many countries, seafood is a staple in their citizens' diets. They feast on various fish, shrimp and shellfish. While fishing provides many places with the amounts they require, the practice is not sustainable in the long run. People consume large of quantities of seafood, which means they need another source for provisions beside fishing to accommodate them. This has caused fish marketers to turn to farming fish. However, consumers want to know where their food is coming from, which means companies need to follow guidelines to ensure people receive the information they desire and that the supply chain remains sustainable.

Globally sourcing seafood for consumers
As sustainability becomes a larger issue for consumers and the debate over genetically modified foods continues, companies must be open about where they are sourcing their provisions. People desire transparency throughout the supply chain. They want to know where their food is coming from and the farming methods those locations use to catch the food consumers require. To accommodate this need, businesses should be open about their procuring and purchasing habits.

The U.S. Department of Agriculture created the Country of Origin Labeling laws to fulfill this desire, and the ruling covers seafood, fresh meat, fruit, vegetables and nuts. Under these regulations, companies must label their food with where it was sourced in a way that people will understand. When it comes to seafood, retailers must also specify whether their food is wild or farm-raised. This allows consumers to buy the products they desire from the region they want they want. More people are interested in buying local and homegrown items, which could boost the domestic economy.

Changing laws may alter supply chain
Because of the desire to buy local and sustainable products, consumers do their research before purchasing. However, this ability may soon change. In May, the World Trade Organization deemed the COOL law discriminatory, as it potentially harmed business for Canadian and Mexican companies, Food Safety News reported. The U.S. would be required to pay $3 billion in penalties because of lost revenue. To counteract this, Congress has proposed repealing the mandatory COOL law and replacing it with the Voluntary Country of Origin Labeling and Trade Enhancement Act of 2015, which would allow businesses to choose whether or not they label their foods. While, at the moment, this law only applies to meat, it may expand to seafood at some point.

This may be beneficial for other countries and companies. In August, Alphin Brothers Inc. pleaded guilty to making false records and mislabeling their shrimp. Nearly 25,000 pounds of farm-raised shrimp were labeled as wild-caught and sold to consumers in Louisiana. The company was required to forfeit more than 20,000 pounds of shrimp and pay $100,000 in fines. Alphin Brothers was also placed on a three-year probation and will need to have all its employees participate in a training program on federal labeling requirements.

While the voluntary regulation will help businesses such as Alphin Brothers and other countries like Canada and Mexico, it may prevent consumers from finding out where their food has come from. They will no longer know the country of origin or how it was procured through simply reading the label unless companies decide to voluntarily add them to the package. Local purchasing may become more difficult as shoppers will need to resort to other methods to acquire the information they want.

The Voluntary Country of Origin Labeling and Trade Enhancement Act of 2015 will expand the supply chain for suppliers, as they will face less competition from locally grown products. 

Source One Round Up: August 21,2015 

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


With the advent of social media and other online forums, companies large and small have been drawing on the ideas of the masses, implementing new products and services designed by their consumers for their consumers. This concept, known as crowdsourcing, is catching on beyond retail organizations and is spreading to procurement departments. This week Source One Project Analyst, Nicole Mahaffey explains how organizations are utilizing crowdsourcing to solve major budget issues, and how the practice expands talent pools. 

Breakdown in supply chain raises oil prices

When many sectors and people need oil, the power is in the hands of those who can provide it. Some countries have their own companies that collect and refine crude oil, and proceed to export it to the nations that need it. However, if part of the supply chain breaks down, those countries' businesses and citizens may experience setbacks that could be financially detrimental.

Benefits of low oil costs
In the past few years, the United States has accumulated a surplus of crude oil. From its own drilling activities, the nation has been able to provide  the resource to its citizens and export some to other countries. This has brought gas prices down to a six-year low. Costs fell 4 percent to $43.08 per barrel, the least expensive price since 2009, according to The Associated Press. The decrease is almost a $20 drop from June's number of $61.43.

This is beneficial to consumers, shippers and airlines, as procurement has become much cheaper. Once crude oil is refined into petroleum, it has a plethora of uses. In 2013, petroleum made up 36 percent of the energy the U.S. used, the Energy Information Administration reported. It also aids in the production of plastics, asphalt and polyurethanes. Gas for transportation, heating and cooking require crude oil as well. 

Broken pipe hurts supply chain
Unfortunately, this decline in prices isn't as beneficial to the oil industry as it is to consumers. While consumption of both petroleum-based and nonpetroleum-based fuels will continue, the former will see a significant decrease by 2040, according to the EIA. The increasing use of biofuels and alternative energy has lowered the need for crude oil, which forced oil companies to cut spending and lay off employees, The Associated Press explained.

The surplus may also see a decline, as the seventh largest crude oil refinery in the nation and the largest in the Midwest has had to temporarily shut its doors due to leaky pipes, The New York Times reported. The Whiting location just outside of Chicago is BP's primary facility and can produce 413,000 barrels of refined oil daily, which creates 19 million gallons of fuel.

Repairs on the refinery are expected to take at least a month, according to Reuters. BP officials are not sure yet what has caused the leaks, but it may be corrosion from the crude oil. The $4 billion Pipestill 12, which runs oil from Canada to Whiting, refines approximately 240,000 barrels per day of oil, which will leave BP behind on work and production. This may put a dent in BP's revenue, as the breakdown comes at a time of high travel.

"It is a mess," Tom Kloza, global head of energy analysis at the Oil Price Information Service, told The New York Times. "It might take a month to fix, and it's a bad month to miss because you can still see a lot of summer driving."

The timing of the shutdown has also affected vacationers, as the halted manufacturing at Whiting has caused gas prices to increase dramatically in the Midwest. Wholesale costs have risen 50 to 80 cents as far southwest as Oklahoma and northeast to the Great Lakes, The New York Times explained. Prices for consumers at the pump have experience a related change, with increases as high as nearly 25 cents.

With prices high and production down, other U.S. companies may face added pressure to make up the difference. There is no definite timeline for Whiting's crude refinery to be up and running, so similar businesses' supply chains must be efficient.

Are implanted gadgets the next big wearable?

In post-apocalyptic Chicago, the desires of one woman pit one faction against another. While inserting a tracking devices into the Dauntless seemed like a good idea in theory, it actually posed more problems than benefits. With the help of simulation serum, the people in charge coerced that group to overthrow another, and no one had a say while under these individuals' control.

While "Divergent" is just a fictional world created by Veronica Roth, it may have some basis in reality. Mind control isn't on the menu, but implantable devices are. NewDealDesign, the creator behind the FitBit, is working on a new wearable device, only this one goes in the body. While the company's Project Underskin won't happen in the next few years, it will be released at some point after that. Testing and upgrades throughout the supply chain will be needed to avoid serious situations like those in Roth's world.

The benefits of implanted tech
In theory, Project Underskin is a forward-thinking and resourceful idea. These digital tattoos would be able to monitor your health, unlock doors and ensure only you can use your credit card, Fast Company explained. The devices would even exchange contact information through a handshake. The technology would be customizable for each user, so only that person will know what Underskin is telling him or her.

This communication happens through an implanted device that fits on your thumb. Underskin would light up in various shapes to signify different meanings for the user, but would keep the information private to everyone else. Unlike traditional wearable devices that you would have to remove and charge, Underskin is always on, running on the body's electro-chemical energy. The tattoo is should be safer and more convenient than those gadgets and other smart technology. However, it may take some convincing for the implanted devices to be accepted.

"When we started working on it, everyone was a little squeamish about implanting something, but there's a lot of cultural [precedent]," Jaeha Yoo, director of experience design at NDD, told Fast Company. "Obviously tattoos, piercings - people are implanting birth control. This stuff is going on now. It's not a huge step forward to implant something like Underskin."

Hacking risks of wearables
Underskin has been celebrated because of its high-tech abilities, but it may also face criticism for the same features. The digital tattoo stores countless amounts of personal information, which can be dangerous if the wrong people get their hands on it. In a society where nearly all technology faces threats from hackers, the implanted device could pose a greater risk, contributor Melissa Fassbender explained.

Cyberattacks have already posed a problem for health care, retail, credit card companies and individuals. The information hackers collect can expose people to financial crises and personal problems. However, Gadi Amit, president of NDD, believes Underskin will be much safer than its wearable counterparts, as there is no chance of losing it or giving access to someone else. While these worries are understandable, they are also standing in the way of innovation.

"The fear of hacking has prevented the wide use of Bluetooth, which is an amazing enabling technology," Amit told the source. "We are in a weird situation where these types of hacking fears are actually preventing these devices from saving lives."

Before the device is available to the public, NDD will need to perform a series of tests in various parts of the supply chain to ensure Underskin is safe and secure enough to be used in its desired way.

Tire safety reduces risks for drivers

For many American citizens, cars are their primary mode of transportation. People need them to get to work or school, to go grocery shopping and to attend appointments. While public transit exists, the system isn't always the most reliable or timely, and unless inhabitants live in cities, they won't experience the advantage of those railways and buses. Because of this, personal vehicles have become a standard of living. According to the Department of Transportation's Bureau of Transportation Statistics, more than 253 million vehicles were on U.S. roads in 2012, and that number has likely increased since the report. With the growing number of cars driving on the nation's highways, it's important that manufacturers ensure their vehicles are safe by the end of the supply chain.

Mechanical problems put drivers at risk
Cars are only as safe as their drivers and the efficiency of their parts. While people have control over their own driving habits, they don't have power over a malfunctioning vehicle. Brakes may stop working, tires can pop and the engine may die. These can lead to both fatal and non-serious accidents. According to a 2015 report from the National Highway Traffic Safety Administration, an estimated 44 million crashes from 2005 to 2007 occurred because of mechanical problems. While this only represented 2 percent of the accidents the organization investigated in the two-year span, this number can cause countless of unexpected problems.

To prevent these issues, Discount Tire recalled nearly 80,000 tires in July. The company discovered separation between the treads on several models of Pathfinder tires sold between August 2013 and May 2015. This may be caused by the incorrect sizing of the tires' inner liners, which hold the air. While Discount Tire's products' issue has thus far not resulted in any injuries or fatalities, the problem could cause more serious accidents if not taken care of.

Ensuring the safety of consumers
According to the National Highway Traffic Safety Administration, tire issues cause 35 percent of car accidents. When the treading on the rubber is worn down or separated, it can lead to low air pressure, loss of control and accidents. Yet, tires are used long past their recommended lifetimes. In a study of 11,500 cars conducted by State Farm, 50 percent of tires are nearing their end, while another 10 percent have no treading left.

People at all parts of the supply chain must check and maintain their tires' health. Consumers should replace their tires when they notice the treading is worn down, and manufacturers should perform several tests before releasing their products to the public. Companies must also conduct checks after their tires have been used by consumers.

After being notified in February 2015 that its tires may have problems, Discount Tire started investigations into the safety and durability of its products. It performed various tests before deciding to recall the Pathfinder tires to prevent any future issues. The company then maintained its goodwill with its consumers by offering free replacements or full refunds.

Eco-packaging appeals to consumers

Americans generate millions of tons of waste annually. They toss their leftover food, plastic packaging, aluminum cans and printer paper into the garbage can without thinking about where it will go next. While most of that can be recycled, not much is. Many U.S. citizens don't have a problem recycling paper, but when it comes to plastic, those efforts aren't as strict. Because of this, some companies are attempting to create a greener supply chain by making their products and packaging more eco-friendly.

Consumers want sustainable products
According to the U.S. Environmental Protection Agency, Americans generated 33 million tons of plastic waste in 2013. However, only 9 percent of that was recycled. In a society where the material is predominant in all parts of the supply chain, this number isn't where it should be. While efforts have been made to reduce the amount of plastic in consumer products, such as water bottles, cosmetics and packaging, these endeavors don't stop the material from ending up in landfills.

However, in the upcoming years, these numbers may change and businesses may be forced to completely alter their packaged goods. More Americans are becoming aware of their impact on the environment and are switching their purchasing habits to reduce carbon emissions. In a survey conducted by Tetra Pak and the Global Footprint Network, 69 percent of respondents said they search for products that come in sustainable or renewable packaging. Approximately 90 percent of women and more than 75 percent of men would continue to do so if it reduced their carbon footprint.

"With the heightened focus on climate change ahead of the U.N. Climate Conference in Paris in December, it is important not to overlook the role that renewable packaging and sustainable sourcing can play both in keeping the climate in balance and allowing precious natural resources to be renewed," said Elisabeth Comere, the director of environment and government affairs for Tetra Pak.

Companies rethink their packaging
Americans use many resources, and paper is among the popular ones. Their efforts to recycle it are much more constant than those for plastic. In 2012, people used nearly 70 million tons of the material, but they recovered 65 percent of it, according to the EPA. Because of this, paper may be a better packaging material than plastic.

Tetra Pak is one of those businesses that have come to that conclusion. The Swedish packaging company has partnered with JUST Goods to bring paper-based water bottles to the U.S., Food Production Daily reported. The cartons are more than 50 percent paper, lined with a layer of aluminum to protect from light and air. Only the cap and opening of the bottle are made of high-density polyethylene, a plastic that is more durable and environmentally friendly than its BPA counterpart. The empty containers can also be transported flat, which means it is more cost-effective to ship them.

While not all of the companies have gone the paper route, other corporations have taken steps to create more sustainable packaging. Coca-Cola created the first plant-based bottle for its products, which has reduced annual carbon emissions by 315,000 metric tons, according to the company. While its current packaging only uses up to 30 percent renewable materials, Coca-Cola's future containers, which was revealed at the 2015 World Expo in Milan, will be completely made of plants.

As consumers demand more eco-friendly products, companies must find ways to create more sustainable packaging. By implementing green methods throughout the supply chain and rethinking their processes, businesses will be able to create items that both benefit the environment and the public.

In my previous post, data science, I defined data science, introduced a small collection of useful technologies for conducting data science, and mentioned a few applications of data science. I then discussed data acquisition via Quandl, an excellent source for financial and economic data that supports easy integration with R, Python, MATLAB, and Excel (among many other technologies as you can see here).

Unfortunately, most of the time we will want to obtain data from sources that do not make the process quite so easy. In these instances, we will often be downloading structured data files such as comma delimited ones. If we only want one file, then this is not a big deal. However, the obvious question arises: what if we want more files? Say 10? 100? 1000? What if we have to download some file(s) every month? Every week? Daily? Do we really want to manually download each and every one of these files every single time? Absolutely not!

When one conducts spend analysis they generally have to acquire a large collection of disparate information and clean/aggregate it before digging deeper. As a contrived example, consider obtaining procurement card information from the Gosport Borough Council. Unfortunately this process won't be as straight-forward as it seems. Note that the files are spread over multiple webpages. Fortunately, this is just a minor deterrent thanks in part to Hadley Wickham's excellent R package rvest. An excellent tutorial on using this package for webscraping can be found at R-Bloggers.

We begin by loading the package and identifying the aforementioned webpage.

link <- ""

Next we extract the html contents of the page, determine how many pages there are, and construct the url to each.

page <- html(link)
# identify number of pages with material for download
page_count <- length(html_nodes(page, ""))
# construct link to each page
link <- paste(link, "?p=", 1:page_count, sep="")

Now we loop through each of the (two) pages, extract the url to each of the files, and download them to a temporary directory.

# loop through each page
for(i in 1:length(link)){
  # read html
  page <- html(link[i])
  # extract link to downloadable files
  page <- html_nodes(page, "table.DataGrid.oDataGrid") %>% html_nodes("a") %>% html_attr("href")
  # convert to searchable strings
  ind <- as(page, "character")
  # identify the partial links of interest
  ind <- grep("full&servicetype=Attachment", ind)
  # subset to the links of interest
  files <- page[ind]
  # construct full link of interest by adding base url
  files <- paste("", files, sep="")
  # download each file on given page and save in temporary destination
  for(j in 1:length(files)){
    download.file(files[j], destfile=tempfile())

By throwing the commands

start <- proc.time()


proc.time() - ptm

before and after the code, respectively, we can even time how long the execution takes.

> proc.time() - ptm
   user  system elapsed 
   0.11    0.19    7.35

And... Voila! We have downloaded all 16 files in 7.35 seconds (on a Microsoft Surface Pro 3).

In this post I used webscraping as a vehicle for downloading structured data. That is, we used it as a vehicle to complete our primary objective. In my next post I'll use it as the primary tool for assimilating data from a website.

If you’d like accurate and efficient help with your company's spend, please contact a professional at Source One Management Services, LLC

Remote monitoring and diagnostics streamlines supply chain

There may be few manufacturing problems worse than a machine breaking down unexpectedly. It stops production, disrupts the workflow and slows down the supply chain. If the equipment isn't fixed immediately, it could cause countless other problems, such as the inability to meet demand. However, some suppliers have discovered a way - remote monitoring and diagnostics - to not only prevent this from happening but to improve various aspects of the supply chain.

What is RM&D?
In the past, if you had a problem with your technology, you would have to contact customer service. At this point, there is nothing that can be done to prevent the current issue, as it has already happened. Remote monitoring and diagnostics will allow manufacturers to detect a potential problem before it affects the device's performance.

Today's technology comes equipped with sensors and programs that monitor the inner workings of the equipment. Through RM&D, this data is sent back to the manufacturer so that they can detect and diagnose an issue long before it harms the supply chain, LinkedIn contributor Victoria Sikopoulis explained. The collected information is analyzed and compared to expected behavior to predict future bottlenecks in the workflow. Technicians with the manufacturer or supplier can schedule maintenance to the machine's system prior to it breaking down. These managed IT services reduce workplace downtime and allow for the consistent monitoring of devices, which will minimize workloads and aid technicians in providing customer service without setting foot in the building.

How does RM&D improve the supply chain?
Original equipment manufacturers, as well as their customers, will experience countless benefits when RM&D is mplemented by third-party companies. Because the system monitors machines and equipment in real time, problems are diagnosed before they happen on the consumers' end, according to IndustryWeek contributor Steve Pavlosky. This creates goodwill with clients, because they know that their suppliers will always ensure their businesses are running smoothly. Preventative measures can be taken prior to something going wrong, which will keep the supply chain up and running.

RM&D also improves efficiency in the workflow. Because data is constantly being collected, manufacturers and business owners have a better understanding of the inner workings of the equipment, Pavlosky explained. They'll know how machines are being used, if they're working properly and where there is room for improvement. If any problems arise, this will reduce downtime because they'll already know where the issue is, Sikopoulis claimed.

The process also provides OEMs with new revenue sources and money-saving options, according to Pavlosky. They are able to offer businesses additional contracts that will provide these preventative measures, which offers more coverage than the traditional warranty would. RM&D also requires fewer employees, so OEMs can cut costs by limiting the number of workers they hire and recruiting more qualified candidates.

RM&D provides protection throughout the supply chain. With this system in place, businesses can ensure that their machines stay in top shape and productivity remains high.

How does the skills gap affect manufacturing?

The global economy wouldn't exist without the manufacturing sector. The companies and workers in the industry provide consumers with the goods they require to maintain their desired lifestyles. As people's demand for their favorite products increases, businesses in the sector and the need for skilled employees grow. However, this may be a problem for the supply chain, as interest in the field from younger generations declines even as job openings go up. To be able to meet demand, manufacturers will need to find new ways to recruit workers and build enthusiasm for the industry.

What's the employment outlook?
The Great Recession affected the success of various sectors in the U.S. However, since its end in 2009, the economy has been on the rise. Manufacturing, particularly, is no stranger to an increase in production. According to the recent "Report on Business" from the Manufacturing Institute for Supply Management, the industry is experiencing an upturn in business for the 31st consecutive month. While the manufacturing index is down 0.8 percent from the previous month, July registered a manufacturing index at 52.7 percent. Any number above 50 percent generally signifies that the sector is expanding. While it has slowed, the demand for manufacturing workers is still increasing.

Deloitte and the Manufacturing Institute reported that approximately 700,000 new positions in manufacturing will be created because of economic growth by 2025. Another 2.7 million jobs will also need to be filled as baby boomers reach retirement age. While this provides plenty of opportunities for aspiring manufacturers, this employment growth may not be as positive as it seems. Approximately 2 million of those positions will remain open because of a lack of skilled workers. Employees left during the recession, interest in the field has declined, and many students are not receiving an in-depth education in science, technology, engineering and math at school. There will be a plethora of jobs to fill, but there won't be enough employees to do so.

What can be done to boost interest?
The U.S. is an increasingly white-collar society. According to a study from Deloitte and the Manufacturing Institute, millennials rank the manufacturing industry last on their list of possible career paths. However, many of them may not have any experience in manufacturing or technical activities. Approximately 53 percent of the survey's respondents believe schools provide an education that supports a career in manufacturing, and only 40 percent said today's students are qualified for those jobs. With the average retirement age of American workers at 64, 22 percent of manufacturing positions would be open by 2025, Deloitte and the Manufacturing Institute reported. Interest from the younger generations is crucial.

The best way to build curiosity for the sector is to offer apprenticeships, which combine on-the-job learning with in-class education. These programs offer countless benefits for both employers and students, the U.S. Department of Labor explained. Young workers can learn skills that will help them throughout their careers while earning wages for the tasks they do. They'll also be trained for positions before they even graduate high school. Employers with apprenticeships have seen higher retention rates, as 87 percent of students remain with the companies for at least nine months after they finish the program. They'll also be training people specifically for their positions, which means managers won't have to waste time and money teaching a new employee how to do the job.

The supply chain won't be successful if there aren't enough workers to fill positions. Manufacturers must start employee procurement processes before they require new staff members. By partnering up with schools throughout their communities, these businesses will be able to boost interest, provide technical skills and begin training potential workers before they're needed.

   For companies looking to launch direct marketing campaigns (whether phone, fax, email, or direct mail), lead prospectors can be a great resource for acquiring contact information for a prospective target market. In Part 1 of this series, I laid out some questions that need to be nailed down before sourcing a lead prospector. In Part 2, I will detail some questions you need to ask when sourcing a prospector. If you have not read Part 1, you may do so by following this link:

   So, once our primary marketing strategy questions are answered, we can start to ask questions specifically about our prospect list purchase.

What information is provided by the prospector?

   Contact information, such as email address and phone number, is critical for delivering your marketing messages. Equally important is demographic information (such as name, title, company, address, etc.) which can be used to help hone in your marketing campaign, effectively delivering your message to the appropriate audience. The more information given, the more precise your targeting can potentially be, allowing you to more efficiently focus your marketing efforts on the people who are most likely to purchase your product or service. Typically, there is a positive relationship between the amount of information provided in the list and the value you can potentially gain from it. Of course, not all demographic information is necessarily going to be particularly valuable to you, so ask potential prospectors for summary overviews of the information provided before sourcing.

How valid is the given information?

   Just because a prospector shows a list of 1,000 Medical Directors with their respective emails does not mean that they possess a list of 1,000 Medical Directors with their respective emails. I have seen lists where 25% of the contacts given were completely invalid. This occurs for a variety of reasons. For example, the contacts’ information may never have been true to begin with, or perhaps contacts switched companies, and the company emails and phone numbers on record are no longer valid. Information (like fruits, vegetables, and nuclear weaponry) has a shelf life, and a good prospector will find ways to ensure bad information is removed from their databases as best as they can. The greater the lengths they go to ensure this, the more valuable their lists are likely to be. Find out the methods prospective prospectors use to ensure their data are valid before sourcing.

How is contact information captured?

   How information is captured and warehoused will largely determine the quality of the information provided. Just because you sent an email to a contact and did not get an error message does not mean that your contact will be receiving your message. It is not uncommon for people to submit junk email addresses to companies that ask for them—email addresses that are technically active but are rarely utilized (you probably have one yourself, don’t you?). The prospectors that provide the highest quality lists capture contact information from a variety of reputable sources to corroborate its accuracy, such as trade publications and organizations, company websites, networking platforms, and social media. Others may even directly engage their contacts regularly to ensure quality—the higher the quality, the higher the value. Be sure to learn what methods potential prospectors use to capture information before sourcing.

Are refunds available for bad information?

   If you are purchasing a list of substantial size, you are inevitably going to have some invalid information. It happens. The question is: are you going to be charged for invalid information? Good prospectors will give refunds for invalid contacts, so make sure that is their policy before sourcing, or at least negotiate the price down beforehand.

Is the information for sale or for lease?

   Contact information is considered proprietary information, and serious legal ramifications can come about if it is misused. Some prospectors will simply sell you the information, and others will allow you to utilize it for a set limit (either by allotted time or times utilized). Do not assume; find out the utilization details from prospective prospectors and decide what makes the most sense for your campaign.

   No matter what you do, there is always going to be a level of uncertainty when purchasing a list of contacts. However, taking these things into consideration will help ensure you are getting the most value out of your list purchases.

 Happy sourcing, everybody!