Common technology mistakes supply chains make

Supply chain management is a complex, ongoing process. There are a lot of moving parts, procedures and relationships that need to be regularly monitored and evaluated. A weakness at one checkpoint has the power to significantly impact the rest of operations.

Identifying and resolving inefficiencies along the supply chain is crucial for any company looking to maximize cost-saving strategies and facilitate long-term sustainability and success.

The industry is rapidly moving toward the Internet of Things. And, while digital devices are not exactly new to the world of business, many supply chain managers are still trying to figure out exactly how these technologies fit into their strategy, what the return on investment is and how they are going to affect business in the long run.

As these modern tools and systems begin replacing traditional, outdated systems, a period of trial and -error should be expected. But, to maintain a competitive edge and minimize cost reductions in the process, it is important for leaders to be careful of potential pitfalls.

Here are a number of supply chain mistakes often made while shifting toward digitalization.

Avoiding new systems altogether
Technology has made communicating and connecting easier than ever before and, as an increasing number of companies across all industries begin relying on the IoT, the need and the convenience they offer will only continue to grow. Supply chain managers may be hesitant to switch systems because they want to avoid disruptions. However, resisting the adjustment will only make it more difficult, and probably more expensive, in the long run.

"The bad news is that the rate of change isn't going to slow down," COO of VSc Solutions Grant Marshbank told Supply Chain Digital. "The good news is that emerging trends hold opportunities to reduce both costs and carbon footprints, and enable exceptional customer service at the same time."

Using the wrong applications
Accumulating pressure to keep up with competitors and stay innovative can make it all too easy for supply chain managers to prematurely adopt smart technologies they don't really need to. 

Implementing new systems that aren't consolidating and ultimately improving operations is causing unneeded complications. To prevent this from happening, Bob Derocher, principal of The Hackett Group, told Enterprise Apps Today that each time an application is introduced to a supply chain, it should be clear what its immediate purpose is.

"This can be addressed by explicitly linking the selection and design of applications to specific features of the business strategy," Derocher explained. "For example, if the company plans to grow by acquisition it will be important to select a package that is scalable across multiple different business models and can be quickly implemented in an acquired business."

Operating offline
Traditionally, most logistics and supply chain processes were run in silos. But using a network system that seamlessly integrates and updates all essential information provides key team members with the accessibility, capability and connectivity needed to heighten efficiency levels. Furthermore, utilizing the cloud can make database backup quick and easy.

In addition, using a transparent system along the supply chain enhances visibility and provides an abundance of benefits for all segments of the business, including logistics, inventory management, manufacturing and distribution, procurement and payment processing.

Not using data and analytics
Advanced technologies have made tracking and assessing essential data and information easier than ever. Through the use of analytics, managers will be able to significantly improve all aspects of business.

"Every single minute in operations and global supply chain management generates data, be it product testing data, transactions, pricing agreements, logistics, material costs and even tactic data like email communications between teams," Riverwood Solutions vice president of supply chain solutions, Akhil Oltikar, pointed out to Enterprise Apps Today.

Thinking technology solutions can handle all supply chain operations
While digital devices and the IoT provide managers with the tools and resources to perform more efficiently, faster and more cost-effectively than they otherwise would, they are not a cure-all.

Smart devices have undoubtedly transformed the capabilities of supply chains. However, the purpose they serve is ultimately ineffective without the collaboration of key supply chain members, regular assessments and evaluations and ongoing improvements. Modern technologies and devices are meant to enhance the efficiency and performance of workers, rather than eliminate their purpose altogether.

Top four supply chain predictions for 2016
The new year is rapidly approaching and as 2015 comes to a close, many industry leaders are beginning to formulate predictions for 2016. As with every year, new trends have emerged, better technology has been created and different techniques constructed. These developments ring especially true in the world of supply chains. Many trends that began in 2015 will gain traction coming into the New Year. Let's take a look at four predictions for supply chains in 2016.
1. Sustainability and transparency overrule spend management decisions: If there was one thing we covered a lot this year it was definitely the push toward sustainability in supply chains. Countless companies have made new commitments to reducing greenhouse gas emissions, eliminating forced labor and creating more eco-friendly products. From Coca-Cola to Nestle all the way down to McDonald's, the trend toward transparency and sustainability was born in 2015. The push for these environmentally friendly practices will go the extra mile in 2016. Cost efficiency will no longer be the top motivator for supply chain managers, explained Forbes contributor Paul Martyn. Modern consumers want more than low prices, they want to ensure safe and responsibly sourced purchases.
"Companies will finally realize that sustainable procurement means more than compliance and reporting," noted CEO and co-founder of EcoVadis Pierre-Francois Thaler, according to Martyn. "In increasing numbers, consumers will align with brands that offer quality products and make the world a better place. The organizations that best integrate sustainability into their systems and processes will experience a direct correlation to sales and brand reputation in 2016."
2. Increased consolidation of business and consumer apps: Supply Chain Digital contributor Jess Shanahan sees multipurpose technology becoming a major player in 2016. In a world where there is essentially an app for everything, consolidation is the way of the future. In the past, business and consumer technology have generally existed in separate spheres. However, with functions that can benefit both ends of the spectrum app designers will stop replicating and start integrating.
3. Predictive analytics and machine-learning will be major players: Big data provides companies with key benefits regarding consumer information and supply chain trends. Yet it is quickly being surpassed by predictive analytics and machine-learning technology.
"In 2016 we will see that bigger data doesn't make us smarter unless we couple the intelligence with problem-specific techniques that enable effective decision making," said CEO of BravoSolution Jim Wetekamp, according to Martyn. "Many people are still telling us that having all the data in one place is the goal. In reality, it's just a step in the journey."
High-level analytics software paired with machine learning can help supply chain leaders predict future results and make effective changes in supply chain functions. Whether answering questions of strategic sourcing or optimization of processes, these tools will help supply chains thrive in 2016.
4. Corporate card acceptance set to streamline processes: There are so many different ways to pay and the majority of the new technologies have just started making headway in 2016. From ApplePay to Venmo all the way down to Google Wallet, the world of purchasing goods has changed and suppliers will need to change with it, noted Martyn.
"The benefits associated with card acceptance will push more suppliers to accept this payment method, as buyers will take their business to those that do. In 2016, card acceptance will no longer be an AP-only issue. It will have a direct impact on customer retention," explained Vice President of North American corporate credit card products at BMO Financial Group Steve Pedersen, reported Martyn.
EMV technology has moved liability over to suppliers and merchants. This shift will ultimately lead to a mass acceptance of cards by suppliers which in turn will lead to more efficiency throughout supply chains, argued Pedersen.
Holiday returns push retailers to optimize reverse logistics processes

Just last week, retailers across the globe were pressured to meet the high demand of holiday sales, which included making sure inventory was stocked and shipments were delivered on time. Now that Christmas is over, the same retail companies are being forced to switch gears and focus on adequately managing the number of items consumers are unhappy with. 

A survey conducted by the National Retail Federation revealed that, this year, retail returns are expected to be higher than in previous years, with a total estimate of $260.5 billion.

Real cost of retail returns
The increase in returned goods could be attributed to the growth of online shopping. When people buy items online, such as an article of clothing, they can't be absolutely certain it will be what they expect until it is delivered. 

And, as the industry expands, companies are becoming more competitive. In an email to The Motley Fool, Optoro Marketing Director Carly Llewellyn explained that the numbers are "going up as e-commerce sales rise and retailers are forced to offer more liberal return policies. Returns and excess inventory cost retailers $500 billion in the U.S., and over $1 trillion worldwide."

However, inventory overstock and consumers simply changing their minds about items are not the only problems stores are presented with when it comes to returned products.

The NRF also reported that, of the merchandise returned this holiday season, more than 3.5 percent is expected to be fraudulent, which will end up costing retailers approximately $2.2 billion, more than last year's estimate of $1.9 billion. The survey also found that more than 90 percent of retailers agreed that one of the biggest contributing factors to the cost of illegitimate returns involves stolen items.

To minimize the risk of these financial burdens, it is essential for companies to properly manage reverse logistics, or retail return, processing. Unfortunately, this has become especially difficult. As the growth of e-commerce has come to influence return rates, it has also complicated the way logistics operate.

According to a RetailCustomerExperience.com article, Dale Rogers, a logistics and supply chain management professor, indicated in a Harvard Business Review webinar that nearly 70 percent of retailers lack a cohesive plan for handling the returns and reverse logistics of omnichannel purchasing.

This is a major issue, considering 88 percent of online shoppers assess a company's return policies before buying a product, the source noted.

Strategy for reverse logistics
In today's digitalized world, consumers have higher expectations than ever before, which is why it is so important for business leaders to ensure supply chain operations are able to efficiently meet such demands. But how can this be done?

In the article, strategy and operational consultants Brandon Rael, Simon Piesse and Andrew Billings suggested that, in order to strengthen the relationship between a company and consumer, retailers must facilitate loyalty and transparency while optimizing return and logistics processes.

"The challenge for the retailer is to provide a frictionless experiences while mitigating consumer risk by ensuring consumers are not penalized for in-store returns of online purchases," the authors stated. "We've seen consumers are willing to pay a premium (i.e. Amazon Prime) in order to mitigate the consumer risk proposition and have a better overall experience."

One approach the consultants recommended is using analytics and data to determine which items are returned most frequently and why, then applying the necessary changes and updates to improve the product, which, in turn, helps to reduce return rates.

The source also added that supply chains can be optimized to better prepare for expected volumes of return.

The Motley Fool revealed that another way some retail giants, including Target Corp. and Wal-Mart, manage return logistics is by allowing and encouraging consumers to purchase products online, but requesting all returns and exchanges be done in-store.

Audi announces driverless transport systems testing to enhance logistics

This month, Audi announced it has begun testing Driverless Transport Systems at its Ingolstadt plant, an innovative logistics development intended to improve overall performance and productivity of operations.

The German carmaker revealed that with the use of these autonomous systems, also referred to as carries, it would be able to save both time and space in warehouses. Essentially, these carries will significantly enhance the way facilities are managed by increasing speed and accuracy of traditional processes, such as workers manually tracking, retrieving and transporting items.

"Autonomous goods conveyance is another pioneering development towards the factory of the future," Audi Head of Logistics concept Development Axel Bley said in the statement. "By means of intelligent connectivity, we achieve additional efficiency and flexibility, while easing the work of our employees."

Driverless transport systems transform logistics operations
According to the source, the logistics employees, who have referred to this concept as the "supermarket of the future," will no longer need to manually retrieve materials from shelves because the parts will be delivered to them automatically through the DTS.

Not only can the carries transport and change materials at picking stations within a matter of seconds, but they are also able to locate and lift items from shelves, with a maximum weight hold of 600 kilograms. The Volkswagen brand explained that, once the autonomous devices deliver parts to the central station, employees will read monitors to determine what goes where. As a result, warehouse workers don't have to spend as much time at picking bays or moving the large amounts of materials.

These transport systems use 25 percent less space than previous approaches to commissioning have allowed, such as person-to-goods, since shelves can be arranged closer together. Audi also revealed that the DTS are operated and managed through a fleet-management system, Wi-Fi connectivity and Quality Response code tracking, with component updates seamlessly integrated.

Benefits of goods-to-person technology
Traditionally, logistics teams have used paper-based picking systems, which have evolved to automated storage and retrieval systems, or AS/RS. Though these solutions may be a sufficient and more affordable approach to operations, in the long run, businesses will likely benefit from investing in DTS.

In addition to saving space, time and manual labor efforts, goods-to-person systems are beneficial because they can be customized, allowing them to be used across virtually all segments, channels and industries.

"No one technology can do it all; we're seeing more hybrid systems with different types of goods-to-person automation in a single facility," Bill Leber, Swisslog Logistics director of business development and marketing, told Modern Materials Handling. "You can match each technology to different inventory profiles and handling characteristics to create the right total solution."

The source also added that, as more people hear about the use of these installations, the less dangerous they consider the investment to be.

As advanced technological developments and the Internet of Things redefine what logistics and supply chain operations are capable of, it is likely that many companies are going to start turning to robotic technologies to enhance performances.

General Electric Co. restructuring supply chain operations to increase profit margins

General Electric Co. has recently acquired Metem Corp., the New Jersey-based supplier it has been buying metal parts from since the 1970s, The Wall Street Journal reported.

And this acquisition is just one of the many steps the industrial company is taking to cut approximately $1 billion from supply chain costs per year. According to the source, GE also announced it would be increasing the components sourced from Russia, India, China and Mexico from 20 percent to 30 percent.

Reconfiguring manufacturing operations
Due to a slow economic growth, manufacturers are tasked with re-strategizing supply chain operations to increase profit margins and reduce costs, the Wall Street Journal indicated. To do this, some are outsourcing and relocating facilities to less expensive countries.

Gregory Hayes, chief executive of United Technologies Corp., told the source that instead of acquiring suppliers, the company plans to take the lead from others in the industry.

UTC has "some of the most productive factories in the world and yet all of our suppliers or all of our competition has moved to low-cost" areas, Hayes explained. "And so, we're going to have to follow them."

The Wall Street Journal also noted that the manufacturing company expects to spend approximately $1.5 billion over the next few years implementing a new approach to supply chain operations.

"The weak link in our whole manufacturing process remains the supply chain," Hayes added. "As good as our factories can be, if you have a crappy supplier, it doesn't matter. You need all the parts."

Industrial giant's cost-saving strategy
According to The New York Times reporter Steve Lohr, GE's chief executive, Jeffrey Immelt, said he anticipated The Federal Reserve's announcement that it would raise interest rates and that, over the next year, the company is "counting on a stronger dollar year."

The source also revealed that GE plans to restructure operations in a way that, come 2018, the industrial segment would produce nearly all of its profits.

Coalition addresses supply chain concerns about shipping weight verification

This year, the World Shipping Council and International Maritime Organization announced that, as of July 1, 2016, all packed containers would need mandatory weight verification before being exported. This amendment, made to the Safety of Life at Sea Convention, was intended to increase safety regulations for merchant ships.

Included in these SOLAS guidelines was the statement that said all participants along the supply chains would be expected to adhere to the new policies. However, not all manufacturers and shippers felt the updated regulations were fair.

Changes to supply chain cause for concern
The Wall Street Journal revealed that industry professionals had some serious concerns. Some told the source there wouldn't be enough providers or equipment to handle mandatory weight verification on all containers. Others argued it would lead to additional costs for supply chains and slower transportation times. The executive director of the Agriculture Transportation Coalition added that he would be asking for a margin of error due to weight fluctuations of certain items.

The announcement of the new mandate left many companies upset and worried. Looking to clarify and alleviate some of the confusion, the WSC, International Cargo Handling Coordination Association, Global Shippers' Forum and the TT Club released a document of frequently asked questions about container weight verification.

One of the questions pointed out that requiring the gross mass weight verifications of all shipping containers would not be enough to achieve the intended goal of enhancing the safety of operations throughout industry supply chains. This regulation is ineffective, the question indicated, since many problems that occur during transportation are attributed to loads not being distributed or secured correctly.

In its answer, the broad coalition explained that it has worked to minimize these types of incidents by developing the "Code of Practice for Packing Cargo Transport Units." Though it isn't mandatory to be used along supply chains, it is meant to guide shippers in best practices for safe and secure cargo packing and loading.

Industry regulators clarify shipper confusion
"The FAQs have been developed by the industry coalition in response to numerous questions from shippers, carriers, forwarders and terminal operators about the steps they must take to ensure successful implementation of the new regulations," the TT Club said in a statement.

The source revealed all the questions on the list were based on ones stakeholders actually inquired about and that the coalition plans to regularly update the FAQs document as additional concerns surface.

Global grocers' supply chains tied to forced labor practices

An ongoing AP investigation has uncovered that global grocer supply chains are connected to slave-peeled shrimp. Major chains such as Wal-Mart and Red Lobster receive shrimp products that are the result of forced labor.

The working conditions of these laborers is deplorable. Many poor migrant workers and underage children are force to peel shrimp for 16 hours a day. One worker named Eae Hpaw, aged 16, was interviewed by the AP about the grueling hours. As she answered questions, the reporter noticed scars up and down her arms which were caused by shrimp-related infections and allergies.

"They didn't let us rest," said Hpaw. "We stopped working around 7 in the evening. We would take a shower and sleep. Then we would start again around 3 in the morning."

Human trafficking in Thailand sullies supply chains
Human trafficking has run rampant in Thailand despite continued promises of reform by businesses and governments alike. This low-cost, unethical labor has resulted in Thailand becoming one of the biggest shrimp providers in the world, reported the AP.

Currently, the seafood export industry in Thailand is worth $7 billion. The market is largely powered by corrupt authorities and wide-reaching complicity. When arrests and raids do occur undocumented workers are usually punished, owners of these shrimp-peeling sheds remain unscathed, explained the source.

Former workers report peeling up to 175 pounds of shrimp each day for a daily wage of $4. While this forced-labor shrimp ends up in many major supply chains, it is hard to determine where and exactly how much. According to United Nations and U.S. standards any supply chain that has even minimal traces of this shrimp is deemed to be connected to slavery, reported the AP.

U.S. customs records traced this forced-labor shrimp and found many major brands had some connection. Whole Foods, Dollar General, Red Lobster, Wal-Mart, Petco and Olive Garden were among the retailers connected to supply chain shrimp originating in Thailand.

Major players speak out
Earlier this year, the same AP investigation led to an internal investigation of supply chain practices by Nestle. The company confirmed the reports of forced-labor shrimp in its Fancy Feast products.

According to Undercurrent News, Nestle responded by releasing a six-page action plan titled "Responsible Sourcing of Seafood - Thailand." The initiative will seek to improve supplier relationships within Nestle's supply chains. Some of the action items include training for workers and increased educational initiatives for boat captains. Additionally the company plans to form an emergency response team who will be dedicated to dealing with reports of labor abuses.

Other businesses connected to the AP investigation were quick to speak out against the abuses. Red Lobster, the world's largest seafood restaurant chain, was very vocal about its commitment to ethical sourcing.

"As the world's largest seafood restaurant, we know the important role we play in setting and ensuring compliance with seafood industry standards, and we're committed to doing our part to make sure the seafood we buy and serve is sourced in a way that is ethical, responsible and sustainable," said the company in a statement, according to the AP.

Thailand has passed laws in 2015 to address these persistent problems. However, many critics believe that these legislative actions are merely for show. The U.S. State Department's new Anti-Trafficking Ambassador Susan Coppedge believes this has a lot to do with a lack of accountability. While the US hasn't punished Thailand in any major ways, Coppedge encourages consumers to "speak through their wallets" and try to avoid slave-produced products whenever possible, reported the AP.

Source One Round Up: December 25, 2015 

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


A Merger of Colossal Proportions 
Quite a few industries have been a buzz lately with talks of major mergers - Pfizer and Allergan in the biopharmaceutical sector, brewers Anheuser-Busch and SABMiller and chemical manufacturers Dow and DuPont. When is comes to supply chain management what do these companies need to focus on, should their mergers happen? This week, Source One's Associate Director Jennifer Ulrich weighs in on the impact these mergers will have on their industries, as well as how to successfully plan and coordinate the combined spend categories. 

The Island of IT Part I & Part II
Even the most mature Strategic Sourcing and Procurement departments are still shunned out of the IT spend category. While there are a number of excuses for why these two departments work separately, there are still ways to overcome these challenges so Procurement departments can optimize IT spend. In part I of her blog series, Source One's Project Manager, Torey Guingrich explores these excuses and how Procurement professionals can navigate these hurdles to get the necessary stakeholder buy-in. But, what do you do once you're able to overcome these hurdles? - make sure you deliver on the value of procurement you promised.  In her follow up blog piece, Torey explains how to ensure procurement working together with IT is a valuable experience. 


Source One's Year in Review: 2015
2015 has been quite a year for Source One! We've grown significantly - opening the doors to a new and larger Chicago Office allowing us to expand our Mid-West presence, welcomed bright new talent to our team, created new partnerships, and made strides in our thought leadership efforts. In addition to our growth, we've observed a number of trends in the industry as well. For an in depth look at Source One's observations and what we're looking forward to in 2016, check out our year in review infographic. 

Raised interest highlights importance of supply chain cost-saving strategies

The Federal Reserve recently announced its decision to increase short-term interest rates. In the statement, the organization said this mandate would "raise the interest rate paid on required and excess reserve balances to 0.50 percent, effective December 17, 2015."

Though this change affects several aspects of business operations, it could have a particular impact on supply chain financing.

Managing end-to-end cash flow
When interest rates are raised, many businesses are immediately forced to see where and how they can cut costs.

However, as Rick Erickson suggested in an Industry Week article, supply chains, specifically those handling the transportation of products, are presented with the advantageous opportunity to implement a financing strategy that can help with cash flow management.

"As companies face increasingly complex global supply chains, the importance of disciplined working capital practices cannot be overstated," Erickson argued.

And while cash flow management should be a staple of all company operations, it is now especially important for supply chains. Erickson noted that logistics, freight and freight spend are key areas that require special attention.

Supply chain cost-saving strategies
By using an electronic system for all transactions and payment processes, companies will have the advantage of increased visibility and insight as well as improved cost controls. Erickson also suggested that shippers and logistics providers could maximize working capital by integrating operations into one digital portal, a process that would mutually benefit both buyers and suppliers.

In an interview with PYMNTS.com, Taulia Chief Product Officer Markus Ament also indicated that the focus of supply chain finance should be on working capital management. The source pointed out that, unlike the environment of the economic crisis in 2008, where it was common for a company to delay payments in an effort to increase its capital, the advanced technologies available today make reaching new suppliers quick and easy.

Ament also said that an important part of effective cash flow management for supply chains is to abandon paper-based payment processing and move all transaction-related operations to a digital platform. By using these technologies, suppliers are able to perform better for buyers. Furthermore, buyers will be able to pay suppliers sooner.

Adopting an electronic system reduces the margin of error and increases speed, accuracy and efficiency of cash flow management at each checkpoint of the supply chain. This strategy also heightens the level of transparency, which becomes even more necessary as industry expansion complicates supplier relationships.

Reducing risk of disruptions along supply chains

Preparing for different types of disruptions is a key component of effective supply chain management.

However, as businesses begin implementing the Internet of Things into operations, making the industry more complex, it is becoming increasingly difficult for global supply chains to forecast potential disasters.

Potential threats
Research conducted by Zurich Insurance Ltd. and the Business Continuity Institute found that, last year, due to lack of visibility, 74 percent of businesses across the globe experienced supply chain disruptions, which ended up costing some of the companies over a million dollars, The Wall Street Journal reported.

The researchers also revealed that, of all possible disruptions supply chains may experience, the most frequent are unexpected outages, delays from weather, Internet attacks and transportation problems. Furthermore, it was also found that most global companies don't have continuity plans in place with suppliers.

Zurich's director of strategic business risk, Linda Conrad, told The Wall Street Journal that these interruptions can result in significant monetary losses and hurt supplier relationships. 

In a recent interview with DC Velocity, Yossi Sheffi, director of the Massachusetts Institute of Technology's Center for Transportation and Logistics and author of "The Power of Resilience: How the Best Companies Manage the Unexpected," pointed out that the issue of cybersecurity is relatively new and, as more systems begin using digital technologies, the likelihood of an attack increases.

On the other hand, Sheffi added, there are many software applications that can be used to alert a business of possible threats, such as a cyberbug, and inform it of potential risks and repercussions to better prepare the company to respond. 

The source also explained that natural disasters are still a concern for global supply chains because if it is impossible to see a threat approaching, it's impossible to know how to prepare for it.

Reducing supply chain risk
Regardless of the type of disruption, Sheffi said one of the most important steps in reducing supply chain vulnerability is having a definitive emergency response plan in place. Manufacturers, he suggested, should turn to the supply chain and engineering divisions.

"Supply chain management should focus on inventory - looking at how to acquire more supplies where needed and seeking alternative suppliers," Sheffi said. "Engineering should look for damage solutions."

As a company expands and implements additional processes and systems in its operations, the number of potential threats it faces will continue to grow. But while the Internet of Things may make supply chains more susceptible to unplanned attacks, it also gives businesses access to technologies for better control and improved predictability processes.

Ask an organization’s procurement team about the biggest factors considered during vendor selection, and you’ll likely hear the same things over and over.

Competitive pricing, a proper mix of capabilities, and a solid track record are usually at the top of the list, and with good reason – but they shouldn’t be the only things considered.

There are other hallmarks of a good vendor that often go unquestioned, to the detriment of their customers. We’ve included a few of them below: gaining an understanding of a potential supplier in these ways will put you in a better position to evaluate them as a partner.

Amazon.com has become the largest online retailer in the Unites States. One of the prime (pun intended) reasons people love to shop from Amazon is because of their two-day guaranteed delivery option known as Amazon Prime. The $99-a-year service was launched a decade ago with the guarantee of standard, reliable two-day shipping on online orders. Prime has since become the cornerstone of Amazon's growth and U.S. Prime memberships continue to increase each year.

Even though Amazon’s delivery service draws customers in, it doesn’t necessarily always keep them. In addition to the free two-day shipping, there are many other benefits to Amazon Prime.  Upon signing up, customers also receive Prime Instant Video which allows customers to stream thousands of movies or TV shows and Prime Music which provides ad-free access to playlists and more than a million songs, both at no additional cost. While some customers will remain Prime members because they love these and the many other aspects Prime offers them, others value the service for on-time delivery guarantee. Unfortunately for Amazon and these delivery-focused customers, Amazon Prime isn’t always perfect. According to a poll by Reuters/Ipsos last year, 10 percent of Amazon shoppers who chose two-day shipping said their packages did not arrive on the expected day.

However, that isn’t to say that Amazon isn’t constantly working on ways improve their process. Currently Amazon is increasing their tapped local and regional package delivery companies to improve speeds, as well as help cut their shipping costs. Guaranteed two-day shipping on items as low as a few dollars, such as $4.90 for a pack of crayons, costs Amazon big. Amazon is rapidly adding new fulfillment centers, sorting packages for carriers, and even delivering some orders directly to customers. All of these logistical advancements will help the e-commerce giant cut those increasing shipping costs and deliver orders to customers rapidly. If successful, Amazon may soon be able to offer services like free next day (or even same day) delivery and have much more control over order fulfillment during peak sales periods.

If Amazon were able to implement these sorts of programs successfully, small and mid-sized retailers might need to find ways to improve delivery speed and reliability too- if they hope to meet potentially rising customer expectations. Understanding shipping costs and the details that go along with it can be confusing and complicated at times. The aspects of shipping which all companies need to asses include: the challenges, developing your analysis, collecting data, where to find data, evaluating your analysis and your final cost assessment. Regardless of how familiar you are with the shipping industry all companies must evaluate these steps wisely and finalize the process that best suits their business model. For more information about shipping costs and process, check out Manage Indirect Spend: Enhancing Profitability Through Strategic Sourcing.

All businesses go through shipping difficulties and not all businesses are a multi-billion dollar company like Amazon. This is where is becomes extremely important to learn the shipping industry even if you are not a shipping company. As other businesses show advancements in this category everyone else must keep up before you fall behind being left in the dust.
Retail supply chains struggle to fulfill

Between the crowded stores and long lines, shopping online becomes especially appealing during the holiday season. And while e-commerce purchasing is convenient for consumers, it can be particularly problematic for retail supply chains.

The Washington Post's Sarah Halzack recently revealed that companies are finding it difficult to adequately fulfill "click-and-collect" orders, the option that allows customers to place an order online then pick it up at a local store.

There are many benefits to retailers offering this feature. In addition to reducing shipping-associated costs for both the consumer and company, it provides people with a quick and convenient platform on which to shop online without sacrificing the businesses' in-store traffic.

According to Halzack, research conducted by Forrester Research revealed that roughly 42 percent of online consumers utilize the "click-and-collect" feature. Furthermore, a StellaService report showed 25 percent of these type of orders faced issues during the holiday season.

Increasing complications of supply chain management
Many of the problems experienced with click-and-collect orders could be attributed to lack of inventory management and miscommunication along the supply chain.

"It's like the 12-step alcoholic program. We're on step one. We realize we have a problem," WD Partners Retail Strategist Lee Peterson told Halzack.

A retail and consumer specialist at PwC, Steve Barr, added that, "The idea of 'buy online, pick up in-store' is a great idea. But today it's more aspirational than it is achievable."

The holidays aren't the only time when these difficulties arise. JDA Software Group recently found that, over the last year, approximately 40 percent of click-and-collect shoppers weren't completely satisfied.

This struggle contributes to the ongoing complexity of retailers having to adjust supply chain operations to meet the rapid growth of omnichannel purchasing.

Research conducted by PwC indicated that multichannel shoppers are increasing and retailers are struggling to keep up with them. The report suggested that there is a great need for businesses to align supply chain operations with consumers' expectations. The source added that, in order to address this, supply chains must implement digital technologies.

Improving inventory efficiency
Though it may be difficult to accommodate the heavy influx of click-and-collect orders, it is not impossible.

The retail supply chain consultancy company Kurt Salmon conducted a study that found Macy's, Lowes and Target were some of the best major retailers at fulfilling these types of orders, Halzack reported. Target and Wal-Mart have both reallocated and increased the number of assigned staff members to provide more efficient customer service.

Another key strategy is rethinking the design of stores. For example, Halzack pointed out, Best Buy started expanding in-store counter space for click-and-collect shoppers and Kohl's created parking spaces solely for pick-up purchases.

In order to improve the supply chain inefficiencies of major retail companies, better inventory management is needed. Enhanced analytics and increased visibility could make determining which and how much of products to offer consumers easier and more accurate for retailers. Considering the volume of e-commerce shoppers will only continue to increase, it is imperative companies prioritize the optimization of inventory and supply chain management.

Organizations often go out of their way in an effort to manage change. Recently however, we have seen a desire for those individuals who can come in and effectively inspire change and new ways of doing things.  While we constantly see advances influencing change in every other aspect of our organizations, one of the most difficult jobs is influencing change among the people themselves. People, by nature, resist change.  Suitably timed for the New Year, below are strategies for finding opportunities to drive change within your organization: 

Embrace Potential Problems. You should first and foremost adopt a positive attitude towards change and be excited by the opportunity. Having such a mindset will allow you to take an active role in identifying opportunities and potential issues.  It is important to not only focus on the issue at hand, but also take a proactive approach identifying those future problems and opportunities for a resolution. 

Research and Gain Additional Insight. Those who are seen as natural leaders within an organization seem to always have a practical understanding of the situation at hand, no matter the project. This usually stems from their desire to gather information from a wide variety of sources to stay current with what's happening in their field of work. In order to successfully address the root cause of a problem you have to at least have an understanding its current status and possible underlying issues.

One of the primary tasks at Source One is to present benchmarks to clients that compare their performance with industry best practices. A benchmark can also be a source to find out how well others are addressing similar problems, and look at the issue from a wide range of perspectives.  Having this additional insight at hand allows you to analyze your initial identification of potential problems to confirm whether or not a real problem does exist.  While having the correct attitude is one key component of driving change within your organization, gaining additional insights, can save you a great deal of time later on and will help ensure that you only act on the most relevant problems and issues.

Generate Solutions. When working with a new department or for a new client, it is easy to identify all the things we would like to do different or changes we would make for improvement.  This task becomes even more difficult once we are set in our ways and have become accustomed to a certain routine. Organizations often struggle to see familiar things in a new light. They often enlist the help of an outside resource, such as a consultant, to assist with providing a new way to do things. But why wait until the problem already exist to begin looking for solutions?  An effective change leader is always looking for opportunities to investigate how things are working, and improve accordingly. Complaints and bottlenecks are typically a good indicator that there is a better solution available and an opportunity for change.  It is also important to realize to not be discouraged just because there may not be enough resources at a particular time to implement a proposed solution.

It was just recently that I had the opportunity to share some insights on this topic at an event in Chicago. It wasn’t really much of a surprise that nearshoring trends and practices are becoming more attractive to the manufacturing community in the United States, but what amazed me was that despite the rapid growth in the Mexican market, a lot of companies still struggle to find the right suppliers and develop the adequate partnerships to sustain a successful nearshore operation. Our experience has taught us that there are still many important considerations that cannot be taken from granted when undertaking these efforts. Therefore, I wanted to share the top three questions I was asked during the event along with simplified yet illustrative responses that summarize our experience:

1)      How is the supplier base in Mexico today different from what it was a few years back?
ü  The maquiladora environment is changing and identifying suppliers in Mexico in a contract manufacturing capacity is becoming more and more relevant. New taxation requirements are reshaping the landscape.
ü  The Automotive and Aerospace industries are driving the phenomena by developing manufacturing clusters that generate collateral business to tiered suppliers and foster a competitive environment, which is developing at an increasingly fast pace.

2)      What are the challenges in identifying suppliers in Mexico these days?
ü  Suppliers in Mexico weren’t prepared to hone on the business potential and therefore are still hard to find – Regional databases are limited (with only Promexico supporting the effort from a federal, regional and local basis) and private databases are scarce and often expensive.
ü  Suppliers are not used to advertise themselves and don’t know how to do it effectively, many of the struggle to attack the market without adequate platforms.
ü  Certain industries are restricted as new antidumping practices are imposed on certain commodity groups (metals predominantly).

3)      How should we address those challenges to successfully develop a robust and sustainable supplier base?
ü  Supplier communications are still extremely involved – face to face discussions or at minimum over the phone interactions are required. E-mail does not suffice.
ü  Opportunities should be clearly stated to suppliers upfront – from a business and revenue standpoint as well as a relationship and expectations basis. Mexican suppliers build trust based on interactions.
ü  Collaborate with agencies and institutions at a government level. Promexico’s capabilities may be serve as a great resource. Complementing those efforts with professional assistance will support a smoother process and effective transition.

While these questions may not cover it all, they do provide a summary of the foundation needed to start thinking about a successful initiative. If your company is expecting or evaluating a nearshoring effort for 2016 understanding that the Mexican landscape is evolving rapidly and knowing that there are tools and mechanisms to navigate it efficiently is the first steps towards devising an adequate strategy. Every initiative will be different, and efforts need to be properly targeted and aligned with the corporate objectives as challenges must be anticipated. 
As 2015 comes to a close, we would like to thank you for making it a success!

This past year has been one of significant growth for Source One: We've opened the doors to a new Chicago office and expanded our Mid-West presence, welcomed bright new talent to the team, made major strides in thought leadership, and expanded our service portfolio.

As for the industry, we've observed a number of trends, most predominantly:

  • More and more companies are seeking help in specialized categories like IT and Marketing 
  • Procurement Transformation & Center-led Sourcing are growing priorities 
  • Low-cost country sourcing & nearshoring are increasingly attractive for US-based manufacturers 
  • The demand for qualified sourcing & procurement professionals is at an all-time high 

Please scroll down for our "year in review" for 2015 for more on the trends we've observed in the previous 12 months, and preview to what we're excited for in 2016.

We wish you a happy and merry holiday season!

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Your business’ social media efforts have gone dormant or you’re recognizing a social media platform would be a beneficial addition to your business’ growth. Should you decide to manage multiple social media platforms across different channels and potentially target multiple different audiences, it sometimes becomes obvious that obtaining assistance from a marketing and creative agency that specializes in social media or a social media agency can be a substantial benefit. These agencies encompass social media management tools to diligently manage and observe the performance of your social media efforts. Their competencies vary from analyzing the data, reporting on the ideal times to post content, manage content, and strategize how to increase the effectiveness of each campaign. Whatever your social media management needs may be, creative agencies that specialize in social media marketing and planning will assist you in everything from the development of a social media strategy, content development, social media community management and platform management.
The first step is to structure a detailed Social Media Marketing Strategy which encompasses 5 crucial stages to plan for how your company will effectively utilize Social Media into your overall business objectives. These 5-steps will help guide your business to obtain the most out of your social media efforts by helping you identify, plan, and implement your social media goals:

1. Make your social media goals clear and concise: First, ensure that the goals of your social media strategy are driven by the overall business objectives of your company. Everything from the tone, message, branding and overall look and feel should also match that of the company’s marketing message and strategy. Be specific and focus on specific areas of improvement and confirm targets can be set and that they are measurable. Ensure the goals are attainable and realistic. Set a timeframe for each goal and benchmark the progress on an on-going basis. You will want to sync with business development and marketing teams to ensure your goals align with the overarching company goals.

2. Review your current social media status: Analyze and understand the effectiveness of your existing social media efforts. Identify what is working and not working. You can view your current social media data records to analyze observe your follower count, average weekly activity, average rate of engagement and conversation rates of engagement to sales. You should also audit what type of content drove traction and what did not. What types of messages did your audience respond to? Which did they not respond to? You can also perform a competitive analysis and view your nearest competitor’s social media platforms and analyze what type of messaging and overall look resonates with their audience. Once you go through the audit, determine which platforms are not sparking engagement and consider closing them. Throughout the new strategy development, if you believe traffic and engagement will increase on a certain channel do not close the account and monitor it closely during implementation. You will also want to connect with your marketing department and collect information about any demographics such as age, gender, buying habits and overall interests to tailor each of your platforms. 

3. Content strategy: Just like you want to meet with your company’s business development and marketing teams to ensure all goals align, you want to maintain consistency across all social media channels. The personality of each separate platform should be recognizable and exactly the same. How you speak to your audience should match the tone and voice your marketing team is projecting to your audience. You will want to document the personality of your brand and ensure this is funneled through to all of your platforms. Your messages should always remain on brand and never stray to risk confusion by your audience. Also, you will want to plan out your social media calendar to give yourself time to prepare for each content release. Specify the period of time when you will be developing your content, the dates when you’ll be releasing it, and the overall duration of each campaign. 

4. Track your progress by utilizing analytics: To measure and track your progress, you will need to apply quantitative and qualitative measurements to your social media strategies. You should continuously measure your results against each goal that was created. Quantitatively, you will need to track the increase and decrease of your social media values which includes: Base, Reach, Engagement, Conversion Rates, number of e-mail sign-ups, qualified leads and conversion into sales transactions. Qualitatively you should be collecting insight after each social media content deployment and establish reporting intervals. You want to look at the trends over a longer span of time, for example, over a few weeks rather than measuring the day to day traction. Looking at trends over a wider span of time will help you clearly see how your strategy is really working. Look closely at what your data is telling you and do not ignore it. 

5. Alter strategy as needed: Through the qualitative and quantitative data gathering and analytics, you will want to optimize your strategy on an on-going basis. Should you notice any efforts are not working, consider pursuing a different direction immediately. You want to gather your data, analyze it, and take action. Don’t wait until your social media community abandons your platform; re-grab their attention by deploying your new content strategy and engaging your audience by utilizing information that is meaningful to them.

Formulating the social media strategy is only the first step in the in developing your social media presence.  You will need to staff an internal team to develop the strategy, formulate and deploy targeted and relevant content, manage each social media community, perform constant due diligence, complete on-going monitoring, present reporting, and manage each platform closely and carefully. Sourcing a social media agency that encompasses all social media competencies may be the best route to take should your company not have the available resources or subject matter expertise to strategize and deploy full social media platforms and channel management.
Hoverboard manufacturers under scrutiny for safety hazards

Digital devices have become a staple holiday gift. But, this year, the hoverboard is one electronic product consumers should be wary of.

After a dozen cases reported of these electronic scooters posing a safety hazard, the Consumer Product Safety Commission announced it would be conducting an investigation on the product suppliers. CPSC Chairman Elliot Kaye said that he has engineers working to find the source of the issue and determine exactly how dangerous they may be to people.

Hoverboard hazards
According to the statement, there have been severe injuries attributed to the hand-free scooter, including concussions and fractures, as well as the products catching on fire. Kaye added that he is especially worried about the lack of safety standards and regulations for the market.

"Retailers should always be asking their suppliers if there is an applicable safety standard in place before agreeing to sell those products," said Kaye. "The absence of any standard should cause retailers to require extra proof of sound design manufacturing and quality control processes."

Though some big-name companies, such as Sharper Image, sell their own private-label hoverboards, there have been an accumulating number of new companies emerging on the market, The Wall Street Journal revealed.

And it seems a contributing factor to the safety issue is that U.S. companies can source this device from manufacturers in China and sell it online. The Wall Street Journal reported that a single search on Alibaba, a popular e-commerce search engine in China, produces nearly 4,000 suppliers that can make internal shipment orders of the product.

"Many aren't even registered," Zhao Zhongwei, chief operating officer of Ninebot Inc., the Chinese parent company of Segway, said to the source. "They may open one day and the next day, they might shut down and disappear."

Shane Chen told the Wall Street Journal that he created the original blueprint for a hoverboard, which he called Hovertrax, several years ago. He filed for a patent for his invention in 2012 and, a year later, launched a Kickstarter campaign. This is when, Chen claimed, manufacturers began copying his prototype.

Safety precautions
According to the Wall Street Journal, retail giants such as Amazon.com Inc. and Target Corp. have already temporarily stopped selling the products of certain brands and, last week, the U.S. Postal Service announced it would prohibit air shipments of these balancing devices if built with lithium batteries. To avoid fire hazard concerns, some major airlines have also prohibited hoverboards from being brought on planes.

Kaye assured the public that this is a problem the CPSC plans to thoroughly examine and correct.

"We know this is a popular product during this holiday season, and we are doing everything possible to determine if consumers are at risk," he said. "We will keep the public up-to-date with new information as it becomes available.

In the meantime, the CPSC recommended that any user of this product should always wear a helmet and that they should avoid purchasing it unless they are able to verify it comes from a credible and certified manufacturer. The organization also suggested the product never be charged while unattended or for long periods for time.

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Most companies are finally over the hump of migrating from legacy wide area network (WAN) technologies like ATM and Frame Relay to more contemporary MPLS networks. For many, the pain of moving in terms of the cost, resources, effort, and disruption may still be subsiding. Others have been on MPLS for quite some time, but both camps are falling into the trap of becoming too heavily embedded with their carrier and its network which is compromising their leverage to obtain a good, competitive deal. Why? Well, if a company just moved from a legacy network to MPLS, they're not even going to consider moving to another carrier at the end of their three year deal, which results in a minimum of 6 years with the same carrier before a change will be entertained. Those companies that may have moved 6+ years ago are now heavily embedded with their carriers, layering complex fiber builds, SIP, native connections to third party services, firewall in the cloud, and more into their network. In both cases, the organization has stifled its ability to understand what's going on in the market and to capitalize on the opportunities it brings. Most of all, though, companies struggle to develop a time line and change management plan that will allow them to go to market with an RFP and actually make changes or negotiate competitive deals with their incumbent carriers. The biggest mistake you can make while trying to get a competitive deal for network services is waiting until your agreement has expired or is about to expire.

So when should you start? Depending on the complexity and scale of the services you're organization is using, it will typically range from 12 to 18 months out from the end of the contract. There are a few reasons for this. One is that if you negotiated a good contract last time around, you will likely have some flexibility to begin moving services prior to the end of your three year term. The sooner the better. The other is that you will lose an enormous amount of leverage as soon as your incumbent carrier knows you can't get your services migrated prior to the end of your term. You may be asking why this is a problem, you know you negotiated a month to month clause into your current agreement upon expiration and so you won't have any interruptions when your term lapses, right? Not necessarily. If your carrier sees or hears you're moving away from them, they'll usually be able to drop your discounts or disconnect services upon 30 days' notice. And with many carriers providing services with 50%-90%+ discounts, that's a pretty big risk. So the key is to start early. It takes time to organize an internal team, compile the data necessary to develop an RFP, conduct the RFP process, make network design decisions, contract, and to move services, if you actually decide to make a change. And if you don't decide to make a change, you at least have left yourself with the option to move if your incumbent doesn't come to the table in a satisfactory way.

In a follow up article, I'll write a bit more about what you can do to maximize your leverage if the 12 to 18 month window has passed. In the meantime, if you need help getting the best possible deal for your wireline voice and data services, contact Source One Management Services, LLC at www.sourceoneinc.com.
You have competed your initial proposal based on a lengthy RFP and feel you have put your best foot forward.  You then make it through the initial down select and your company is chosen to come onsite and pitch your solution to the team.  Now’s your time to shine and really show off your agency’s capabilities. Sure, the potential client can read all about you and your agency based on your website and RFP response, but this is your time to really make an impression – an opportunity you want to make sure you nail. Here are five tips on how to not mess up during the delivery of the pitch:

    1.  Forget to bring team members who will be working on the account

Everyone knows the senior level employees have the most experience and can speak more fluently about your business and company, but the potential customer wants to meet their account team or at least, their account lead.  They need to understand they can work with that team and assess if there is a connection there.  It is essential to have individuals in the room that will be working on the account approximately 50% of the time.  No customer wants to feel as though a bait and switch has taken place and the account team they met and liked is only working 5% on their account.

2.  Use a boilerplate, non-customized presentation

No one wants to be labeled as generic or “cookie-cutter.”  When developing the presentation make sure to reference as much information about the client as possible.  Use the correct logo, utilize the scope of work from the RFP and actually solve the specific problem that you have been invited to solve.  It is great to give an overview of your services and capabilities, however, the client wants to feel as though you understand their business and have tried to jump in and present the solution as if you have already won the business.

3.  Criticize the client’s current situation

You are bidding in an RFP and therefore the potential client is unhappy with a service or product they are current receiving.  Be positive. Come to the pitch with a solid solution or a series of potential opportunities that your company can offer.  Do not just point out the obvious, which is that what they are currently experiencing is not working.

4.  Be unprepared for questions

When preparing the presentation, plan to be interrupted.  When you are performing a dry run of the presentation, remember that areas that are covered quickly, may end up taking twice as long due to questions by the clients in the room.  Do not assume you are going to be allotted extra time because the client seemed engaged and asked multiple questions.  Be prepared to understand where in the presentation you can proceed lightly or jump over without losing the overall objective of your presentation.  This will allow you to still finish in time and show your flexibility, which ultimately will keep the client happy.

5.  Pay no attention to how you're using your time

Most likely you have been given an agenda and an allotted amount of time for your presentation.  Do not perform death by PowerPoint.  Make sure both your agenda items and number of slides will fit within the specified timeframe, but also keep point #4 in mind.  This can, at times, be the trickiest to balance.  Remember more can be less and if you can get to the crux of your position, the abilities your company has in performing this service and solve the problems that have been presented by the client without 100 PowerPoint slides, you again have found favor with the potential client.

Be mindful that during the pitch, the client is not only assessing the content you have presented but also the culture fit, personalities presenting and time management skills.  While, these 5 points do not cover everything you need to deliver a winning pitch, they will save you from being the company the potential customer regretted inviting to the pitch in the first place.
In the beginning of the year I talked about the announcement of Staples and Office Depot potentially merging forces.  To this day, the Federal Trade Commission (FTC) is still against the merge, looking to prevent the industry from being completely taken hostage by The Imperial Forces, fearing the merge will only encourage a monopoly in the industry and pose threat of price increases for consumers.  These two retail giants provide office supplies to both large businesses and many consumers based on their footprint, product/service offering, and longevity in the market.  The FTC claims they would own the market if the merger went through and could potentially hurt other businesses chances to compete and impact the industry on the whole. 

However, I still believe that Staples and Office Depot are expanding their focus to other commodity areas like technology, facilities products, copy center solutions, and beverage services; just to name a few.  Although a price increase within office supplies is always possible, it is highly unlikely.  The potential buying power of Staples and Office Depot should only leverage the ability to negotiate more competitively with manufacturer’s allowing for additional concessions for consumers.  In addition, with companies like Wal-Mart, big wholesale clubs, and Amazon, competition is thriving as well for basic office supplies.  The challenge however, is that the companies are still struggling to provide the same type of dedicated account support for large accounts.

What I find interesting lately is the other concerns in the galaxy this merger may affect.  Retailers are keeping their fingers crossed that this merger does not happen, panicked that if the merger goes through, there is a likelihood of store closings in regions with multiple real-estates in close proximity.  Causing unattractive store fronts and retailers to lose the rent on these several thousand footage locations.  Also, what about all of the jobs that would potentially be lost should this come to fruition?  Although workers could have the ability to move from store to store, this would probably not be viable for everyone and the overall workforce would likely be downsized, going hand in hand with store closures.  Unfortunately that is just the mark of the beast…or that way of the dark side.

Another rumor I am hearing is what will happen to Office Depot if this merger is not executed?  Office Depot has never really surpassed its bad wrap after merging with Office Max.  Sales have continued to decline and my experience has told me service quality has not been to par lately.  When engaging with customers, I still hear Staples as the leader in this business.  They are innovators and strategic thinkers, marketing savvy and always one step of the competition.  To be honest, they will go on with or without this merger and will most likely give a little help to Office Depot if this does not go through.

Hence, this only supports my thought that this merger is not a real threat.  It should encourage competition to flourish for office supplies, allowing Staples and Office Depot to nurture their new passions in other areas.  They may seem like the Darth Vader of the industry looking to seek control and a strong force to be considered, but there is still opportunity for the little guys, or the rebel forces- if you will, to work their way up the food chain.
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Timeframes for projects are not always under control of the sourcing team. And, as clients wrap up their year, needs arise for last minute efforts to either close out ongoing initiatives, demonstrate progress on internal initiatives that have not moved forward as originally expected, or take on needed projects to warrant the year's spend without losing operational capital for the next year. This presents opportunities to all parties involved, but careful attention needs to be paid to both the supplier's needs and client's timeframes.

Suppliers usually find themselves under staffed and under pressure to finish and deliver orders before the end of the year so they can meet their own schedules. This creates a conflict between internal and external interests for each supplier. In a real sense the choice is one of satisfying existing customers, or building business and expanding opportunities for the coming year.

In December, the last two weeks are especially considered off limits due to the pressure of "use it or lose it" vacation policies and family commitments. Some companies will even shut down their operations on the 21st and not reopen until the 4th of January as standard practice.

In larger companies a separate team is responsible for the quotation of orders. So, even though they are probably understaffed a quotation can still take place with an extended time period. Depending on your past dealings with the company and the business opportunity that's offered a one week timeframe can still be reasonable for distributors.

When quoting manufacturing services a more detailed look needs to be undertaken in order to ensure the bid will meet the interests of both parties. Larger companies are adept at quoting complex bid packages and can leverage their supply chain to relatively quickly turn-around a quotation once the technical questions concerning the assemblies are satisfied. However, small companies where the manufacturing team is also responsible for the quotation process will be heavily burdened to ship product during this time and will struggle to provide even a partial bid.

This places a heavier burden on the sourcing team and forces compromises in timelines, completeness, or quality. From the supplier’s point of view an extension to timelines or a reduction in the items to be quoted with iterative and immediate feedback are ideal.

However, both approaches are problematic from the sourcing perspective. A partial submission doesn't provide the feedback to the client on a complete market basket perspective or demonstrate that the supplier is capable of meeting all needs and requirements. Furthermore, cherry picking assemblies that have high quantity orders and consist of parts that can be sourced at low cost is a common and understandable practice that gives a false pricing outlook for the other assemblies.

Feedback on a partial bid is also unreasonable from the client's perspective because it does not permit a complete analysis of the offering or a comparison between suppliers on a level field. It's understood that suppliers have preferred relationships for some components, but that pricing would net reflect their ability to provide competitive pricing across the full market basket.

Most importantly, if a supplier can't be bothered to bid on all items they are capable of manufacturing how can they be trusted to fulfill crucial orders in a timely manner.

Under close examination sourcing initiatives can present unique challenges in December, but there are also opportunities to end the current year with a bright outlook for the next year. The key is to set expectations up-front and remain flexible and understanding throughout the process to the supplier's needs while keeping the client's needs as a focus and driving force.