July 2016

Source One Round Up: July 29, 2016

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

3 Roadblocks to IoT Adoption in the Supply Chain
The Internet of Things has certainly become a prominent aspect of our everyday lives. For many of us, look no further than the fitness watch on your wrist collecting data on your health. Even major cities like Chicago are at work collecting information on everything from sound intensity to barometric pressure. It comes as no surprise that the IoT offers major advantages when it comes to manufacturing. This week, Source One Project Analyst Matt Chabanon explains the opportunities at hand for leveraging the IoT in the manufacturing industry, but also the reasons why the supply chain isn't taking full advantage of the technology.  

Supply Management Professionals: Develop Your Brand 

Brands matter. At a superficial level, brands more often than not, guide our purchasing behavior. Brands invoke a sense of trust and connection in the product, person, or company they represent. But, what exactly does branding mean to procurement professionals? The answer is two-fold. First, branding is important to procurement professionals as individuals. Your brand is how your team, peers, and managers view you. Second, the concept of branding also applies to your procurement organization as a whole. How your organization represents itself is crucial to the perceptions of your stakeholders, external partners, and the C-suite. This week, Kaitlyn Krigbaum of MRA Global Sourcing, a Source One partner, expands on the concept of branding and how you can leverage branding to enhance your career and better position your procurement department to key stakeholders in your company. 

In case you need to catch up, here’s what we’ve covered so far in the Cost Reduction Series:
As we continue in the Spend Analysis Process, after we’ve collected our data the next step is to cleanse and standardize the information. You’ll start by sorting your data by the supplier field and creating a new column called Cleansed Supplier Name. You’ll more than likely find (especially if your supplier relationships do not all flow through one single point of contact or group), that each data set or even within the same data set, has multiple names for a particular supplier. Take for example FedEx. If your company makes payments to FedEx, you will probably see this supplier listed as FedEx, Federal Express, FedEx Corp, and so on. In the cleansed supplier name field, standard­ize all these different options to a single name. Repeat the process for all lines of data.

At this stage it may not make sense to standardize supplier names across 100 percent of the data. If you are dealing with hundreds of thousands of records, this could be a very tedious task. If that is the case, utilize the 80/20 rule. Run a pivot table on the data by supplier, then total up the spend. Identify which suppliers make up 80 percent of the total spend and focus your efforts on standardizing those supplier names. Ignoring 20 percent of the spend may seem troublesome, but keep in mind that within this data there are likely to be repeat entries for the same supplier (for example, FedX instead of FedEx). At this point, we are simply identifying target areas. Once we identify worthwhile projects we then focus on collecting more detailed information; at that point we will look more closely at the FedX data.

Once you have cleansed and standardized supplier names, it is time to group the data into sourcing categories. Sourcing categories are essentially high-level identifiers that indicate suppliers that provide the same or similar services. Grouping them together allows you to identify project areas and, eventually, leverage opportunities. Creating your category list is the first real step in the spend analysis pro­cess—turning raw data into actionable information. Spend analysis is not an exact science; there is no right or wrong way to do it, although there are some best practices that are worth considering.

First, be general in your initial classification. Start at the highest level of categorization you can identify, knowing that you may want to drill down later in the process. For example, you may know that Staples is used for pens and pencils and Xerox is used for paper products, but categorizing them in different buckets is not appropriate at this time. At its base, the initial spend classification is looking to identify which suppliers provide the same or similar services. Right now, you may use Staples for some items and Xerox for others, but a potential sourcing strategy might be to consolidate all of this spend with a single supplier. So for now, classify both suppliers under the category Administrative Supplies.

Many suppliers provide a wide range of goods and services, making classi­fication difficult. If you have managed to capture any line-item usage details in your initial data collection, this information can be used to classify the supplier. If a single supplier performs two different services or provides two very different types of goods, it is important to provide only one high-level classification for the supplier at this time. The final stage of spend analysis is an overall Oppor­tunity Assessment, and understanding the full impact of a supplier relationship is critical to identifying these opportunities. This high-level classification will help that analysis.

Another way to develop the initial list of supplier categories is through the use of industry standard categorization tools, such as NAICS (North American Industry Classification System) or UNSPSC (United Nations Standard Products and Services Code). NAICS is used predominately in the United States, Mexico, and Canada, and classifies suppliers based on the most general category of products or goods they provide. UNSPSC is recognized globally and classifies products and services down to the line item detail. Both coding systems are used regularly in the United States.

Once you have completed the initial classification, it is time to start rank­ing categories for further analysis.
Tips for establishing healthy supplier relationships

Establishing and maintaining good relationships with suppliers is critical to the performance and success of a business, and it should be something that is monitored and practiced throughout the entire duration of the contract. But sometimes it is easy to forget that one of the best and most important times to start improving supplier relationships is right at the beginning of the partnership.

Starting early is advantageous because it sets the stage for how the relationship will unfold and can greatly influence whether it will be a mutually beneficial engagement or not. If you haven't done business with the vendor before, it's hard to know exactly how it will pan out or what problems may lay ahead, if any. But there are ways to increase the likelihood that it will be a smooth and valuable partnership.

Communication is key
Clearly communicating with suppliers is imperative. Both parties need to know exactly what the expectations are, including both the short- and long-term goals.

According to a research report published by PwC, the top challenges businesses face with supplier relationship management, aside from a tendency to over-focus on costs, are misalignments with objectives and insufficient skills and capabilities when it comes to SRM. By getting as specific as possible, managers can help their suppliers better understand what they need to do to serve them best and reduce the chances of miscommunications occurring down the road.

Let them know what metrics will be used to measure their performance, as well as how frequently. Make sure you are both on the same page about how, when and by who the reporting will be conducted. It would also be helpful to make it clear from the very beginning which products and services in particular of theirs you are interested in - and which ones you most likely never will be.

Remember it's a two-way street
Make sure you have a clear understanding of what their goals and needs are as well. Offer to connect them with someone else in your network that may be of value to them. By communicating to them that you care about their success, rather than just what you are getting from them, they will be more inclined to return the favor and perceive you as a trustworthy and valuable partner. 

As Mickey North Rizza pointed out in an article for CIPS, "If you are aligned with your suppliers and treat them as partners, both businesses will experience higher success rates, decreased risks and enhanced collaboration and innovation."

Be transparent
Establish a platform that allows integration and collaboration so you can ensure you will both be able to access necessary data and information throughout the process. Gaining more insight into supplier operations can be beneficial to both parties because it facilitates workflow efficiency. In addition, being able to access and track the status of various processes and functions can help supply chain managers ensure the supplier is staying on target, as well as identify the source of any delays or inaccuracies.

Prioritize the policies
One area of supplier relationship management that should never be skimmed over is the written policies and documents. Putting in writing who will be responsible for what is important for risk mitigation and it can prevent breaks in production or business continuity due to confusion or misunderstandings about how a certain incident response should be executed. Also, make sure the service level agreements are written into the contract. Remember that being adamant and diligent about the supplier contract management process is something that benefits third-party vendors as well, so it should be an aspect they are happy to cover with you.

Supplier relationships can be difficult to navigate but, at the end of the day, making them a priority can offer significant gains. Although it is a business partnership, it is helpful for participating parties to remember that the same basic rules in other personal relationships are applicable in the work environment as well. Vendors want clear, ongoing communication and to be treated with honesty and respect. Making it a point to utilize these simple steps, both in the beginning and throughout the supplier contract cycle, can save businesses from conflict.

Procurement plays a pivotal role in most organizations due to the major influence it has on the overall costs of the business. According to the Deloitte Global CPO Survey 2016, the majority of chief procurement officers agree that cost reduction is their number one priority this year. However, 62 percent expressed dissatisfaction with the execution of their respective procurement strategies. So, needless to say, there's room for improvement.
Below are five tips that can help enhance procurement performance:
1. Develop strong risk management policies
Between the vast array of digital disruptions, including security breaches and system failures, and the myriad other unexpected events that can interrupt business processes, such as natural disasters, there is an overwhelming amount of threats procurement leaders have to prepare for. Unfortunately, as we previously covered, many are failing to do so.
Knowing ahead of time what the procedures and plans are in an emergency, as well as which parties are responsible for which tasks, is necessary to ensure business continuity. Make sure that all involved members throughout the organization are informed on the risk management policies, as incident response plans are only as effective as their execution.
2. Prioritize supplier relationships 
Procurement professionals must maintain strong relationships with the business's suppliers, which includes establishing clear lines of communication and building trust. It is essential to make sure that both parties are on the same page and have definitive goals and plans of action laid out. In addition to evaluating supplier contracts on a regular basis to ensure performance and compliance from vendors, procurement departments should also be looking for ways to improve their relationships with them. Simply asking what they could be doing better or how they might help them better serve their customers can go a long way.
3. Invest in the right supply chain talent
Procurement managers can help elevate supply chain efficiency, optimize workflow and drive performance by ensuring the right skills and tools are being onboarded. This isn't just for employees, but for the technologies and systems that are invested in as well.
4. Assess key performance indicators
To gain a comprehensive understanding of how well procurement is operating and which areas can be improved, it is important to make sure that success and performance are being measured against the appropriate metrics. It is worth noting that these indicators may change over time, which is why this evaluation should be conducted on an ongoing basis.
5. Take advantage of outsourcing opportunities
As with the supply chain, outsourcing procurement functions can increase the productivity and value of internal staff by handing over the tasks that could be done faster or more effectively by a third party.  According to Deloitte, more than a quarter of CPOs are looking to increase outsourcing for operational buying and 12 percent plan to do so for strategic sourcing and category management. Enlisting the help of a consultant can result in long-term ROI for companies because these experts offer an unbiased yet knowledgeable perspective on the changes that should be made to improve the bottom line.
True or False: Procurement outsourcing providers are strictly tactical resources and should not be considered as strategic partners. 

The answer is False. 

As procurement organizations mature, becoming more strategically aligned with business goals, so have the roles and responsibilities of these departments. Historically known as "Purchasing" Strategic Sourcing and Procurement Departments' primary role consisted of tactical purchasing tasks, including three-bid-and-buy practices to achieve the best pricing for supplies and services. However, cost savings are becoming just another metric on the long list of procurement KPIs for best-in-class companies. Strategic Sourcing and Procurement Departments are now responsible for optimizing relationships with critical suppliers, driving innovation, ensuring market competitive contract terms and conditions, leading supply chain efficiency, etc. -the list goes on and on. 

Maintaining a strictly tactical approach to procurement, companies have typically relied on outsourced procurement support for recurring and time-consuming tasks. However, facing shifting roles and responsibilities, SS&P departments are no longer limited to the traditional methodologies of outsourced procurement support. There are countless ways SS&P groups can enhance their current operations while lessening the burden on their internal teams, including staff augmentation and strategic advisory.  

As covered in Source One's whitepaper, Redefining Procurement Outsourcing: Looking Beyond the Limited Resources of Traditional BPOs, there are a number of options and types of firms available to support procurement's various functions. Depending on your organizational needs, firms of all shapes and sizes exist to provide contingent labor, market intelligence reports, and project staffing. With the benefits of these companies also come their shortcomings, such as limited implementation support, frequent staff turnover, and generic intelligence inapplicable to your company's shape and specific needs. 

Enter the role of one-stop Procurement Services shops. Rather than work different, single-focus procurement outsourcing providers, full-service providers can deliver all the necessary market intelligence, on-demand labor, and tools, combined with flexible billing options

This is the first of a mini blog series of quick tips on establishing a proper SRM program at your organization. 

Simply put, supplier stratification is the process of assigning categories to your supply base in order to more effectively catalog them for a broader purpose. This purpose in most cases will be supplier management of some form, ideally to form a supplier relationship management program within your organization. While each organization should use different criteria to perform this analysis, the step by step process can be similar.

Initially, it’s important to establish why you are stratifying the supply base. Your broader objective will tie to what elements are used in the stratification process. Next, you need to establish how many metrics you will use, best practices indicate at a bare minimum two, the more factors used the more accurate the assessment will be. Keep in mind that some elements of criteria can be derived from other processes, such as supplier performance management practices that are already in place through a scorecarding process. While the information from the scorecard can act as a piece of the puzzle, it should not be the main driver. Other elements like profitability, risk, criticality to the business, distributor model, and overall value driven to the business. It is important to use a mix of quantitative and qualitative values to categorize your suppliers in this process.

The results of the stratification evaluation will provide a path in the course of next steps in developing a proper SRM program by helping to align resources and select the right suppliers based on their qualifications into the program. More to come on in this mini blog series on how to set up a proper SRM program.
The most admirable supply chains of this year

As we previously covered, a recently released report revealed which places across the globe have the weakest or least resilient supply chains. This index showcased the damaging effects factors such as high levels of corruption and poor quality of local suppliers can have on the overall performance of a business. It also underscored some of the pitfalls organizations should avoid at all costs.

In a sharp turn in the opposite direction comes the latest ranking from Supply Chain Insights LLC, which announced the businesses with the most admirable supply chains of 2016. This is the third consecutive year the analysis and awards have been conducted. The agency evaluates companies based on a variety of factors, including their improvement rates, shareholder value and overall performance. According to the press release, the top firms account for just 12 percent of those involved in the research. 

Below is a list of some of the winners in major sectors: 

  • Grocery retail: Whole Foods Market, Inc.
  • Mass merchants: Wal-Mart Stores, Inc., CVS Pharmacy and Dollar Tree
  • Business-to-business technology: Cisco Systems, Inc.
  • Consumer electronics: Apple Inc.

The announcement also noted that a handful of well-known brands made the Finalists list and, while these companies demonstrated valuable improvement, did not perform as greatly as other competitors in their fields. Such organizations include The Coca-Cola Company, The TJX Companies, Inc., Intel Corporation, Caterpillar Inc and lululemon athletica.

This guest blog post is brought to you by MRA Global Sourcing.

Companies are always looking for new and creative ways to retain their employees and maintain a strong workplace. Many have created daycare programs, maternity, and paternity leave, and gym memberships – all of which have costs associated. However, research shows that employee satisfaction is strongly linked to intangible elements of the workplace such as corporate culture, senior leadership, and opportunities for career growth.

In fact, a major drive of employee engagement is recognition. Simply recognizing employees for a job well done when credit is due, costs nothing and provides a workplace perk employees most crave.

“Leaders are concerned with finances of the company and often overlook the significance of everyday interaction with their employees. It is the little things such as a simple acknowledgement of good work or even a ‘Thank You’ that can make a difference.” explains Naseem Malik, Managing Partner of MRA Global Sourcing.

The supply management and procurement recruiting specialist recommends three tips to produce a culture of recognition in the office:

1: Be Genuine. Recognize your employees for a job well done. Don’t praise just to praise. Employees know the difference between a false compliment and actual recognition. Commending a team member should be natural and meaningful. Take time to discuss with them why they a great job. Be descriptive about how they had an impact on the company. Reassure them to continue the good work.

2: Place yourself in someone else’s position.
Think about when you were last recognized for the amount of work and extensive hours you put in on a project. Did you feel valued? This satisfaction is similar to what your employees are looking for and the commendation they are striving for. Each person has a specific role that contributes to the company, and merits some sense of gratitude.

Demonstrating attentiveness in your workers’ accomplishments shows that you are interested in their contributions to the company but also in them as an individual. When employees feel genuinely valued, it fosters a stronger dedication to any given project, client, and the company overall.

3: See everyone’s potential.
It’s not always easy to find a reason to recognize an individual. You need to understand that every employee offers something unique to the company, possessing their own specific talent and abilities. Maybe they improve comradery in the workplace, or they’ve been committed to the company for years. No matter what it may be, it is your responsibility to support them, inspire them, and recognize their contributions.

“The impact of simple recognition is often overlooked, especially when the company may be unable to provide extraordinary incentives. By taking some time to genuinely commend your team, you and your firm collectively will reap the benefits. As many will say, ‘It pays to praise.’ ” – adds Malik.
New research reveals countries with least resilient supply chains

Ensuring supply chain resiliency has become a critical focus area for many businesses worldwide. Also important is being able to identify which supplier regions pose a risk for disruption. Supply Chain Digital recently released a list of the top 10 national supply chains across the globe that are the least resilient, with the rankings based on research gathered and published in the 2016 FM Global Resilience Index. According to the company's website, this list measures a business's resilience against supply chain disruptions using nine main factors that influence an organization's vulnerability, which are divided into three categories: supply chain, economic and risk quality. Some of them include political risk, supplier quality, oil intensity and infrastructure.

For the second consecutive year, Supply Chain Digital reported, the research has found that Venezuela has the least resilient supply chain in the world, due in large part to high corruption rates and a weak infrastructure. Further hampering its appeal are the economic downturn it is currently experiencing, record-setting inflation levels and a susceptibility to harsh weather conditions and natural disasters.

Next on the list is the Dominican Republic, which is lacking particularly in the area of effective risk management strategies, followed by Kyrgz Republic. Both countries suffer from poor rankings on the Corruption Perceptions Index, or CPI.

Also included in the top 10 are Ukraine, Egypt, Algeria, Jamaica and Honduras. However, Supply Chain Digital noted that Mauritania is a country that supply chain managers want to pay particular attention to. Coming in at number five, the nation suffers from issues with its infrastructure and is riddled with poverty. Furthermore, the source said, part of what contributed to FM Global's weak ranking of it was that its local suppliers are of low quality.

7-Eleven, Flirtey make US retail history with drone delivery

Just last year, Amazon Inc. caused a stir when it indicated that it would soon be making drone deliveries to consumers' homes. In December 2015, it released its official prototype designs for the drones it would be using for its "Prime Air" services. As an online retail giant, the brand has been a trailblazer in the industry and set the tone for other companies to follow suit - which is why it may surprise some to learn that Amazon is not the first to make a drone delivery in the United States to a shopper's house. That achievement, instead, goes to 7-Eleven Inc. and Flirtey, TechCrunch reported.

In March of this year, Flirtey became the first organization to complete a drone delivery in a residential area within the United States using an unmanned aerial vehicle that was approved by the Federal Aviation Administration. From the software to the packaging, the Nevada-based technology start-up develops its own flying robots and its equipment essentially from scratch, rather than building upon other UAVs.

Flying robots for retail deliveries
According to TechCrunch, the drone delivery occurred earlier this month in Reno, Nevada; the carrier transported a handful of food and beverage products, including coffee, candy and Slurpees. And while most people tend to consider 7-Eleven a brick-and-mortar retail chain, the company, which has nearly 11,000 stores in North America and almost 60,000 worldwide, does offer its customers online ordering and delivery services via third-party vendors such as Postmates.

The source also reported that making drone deliveries is part of 7-Eleven's future plans, though the business's Chief Merchandising Officer Jesus H. Delgado-Jenkins didn't give a specific timeframe for when such services would begin to be available.

The problem is that, while drone delivery would be a game-changer for most retail supply chains, the logistics of being able to develop, let alone test and roll out the use of unmanned aerial vehicles for consumer product distribution are clouded with regulatory complexities. And this recent event was an example of how much work goes into being able to make just one safe and legal delivery.

"This delivery required special flight planning, risk analysis and detailed flight procedures ensuring residential safety and privacy were equally integrated," Nevada Institute for Autonomous Systems Director of Operations Chris Walach stated in 7-Eleven's announcement.

However, Flirtey Chief Executive Officer Matt Sweeny said that this latest delivery signifies "rapid progress" both for the start-up and the industry in general.

"When I moved to the U.S. two years ago, only one company had a 333 exemption to do this and that was in the Arctic!" Sweeny said, according to TechCrunch.

In the corporate press release, Sweeny indicated that this is just the beginning of Flirtey's partnership with the convenience store titan and that this latest milestone is "is a giant leap toward a not-too-distant future where we are delivering you convenience on demand."

Regulation development and research underway
As we previously mentioned, last year the FAA and U.S. Transportation Department announced that they were creating a task​ force to handle the registration regulations of unmanned aircraft, a decision that seemed to be driven, in large part, but a spike in the number of cases reported about the hazardous operation of unmanned aircraft systems.

According to TechCrunch, by the end of August, the FAA will enforce updated policies on operating UAVs in the U.S. aviation system.  Furthermore, earlier this month, both houses passed the FAA Reauthorization Act of 2016 which, in addition to pushing the agency to create regulations specifically for drone distribution services, also requires it to perform research on beyond the visual line of sight flying of drones, also known as BVOS.

Moving forward, although incorporating drone and other small aircraft carriers into the supply chain will surely help retailers improve inventory and distribution operations, it might also pose a number of challenges, particularly with safety and tracking. In addition, this trend could cause a shift in supplier relationships, as retail companies that begin using their own aerial delivery systems will not need the services of logistics providers as much.

Procurement's need to prioritize risk prevention

There is no shortage of pressing tasks, jobs and responsibilities that procurement professionals must deal with on a day-to-day basis. Unfortunately, it seems that one of the biggest threats to the success of their operations is flying under the radar for the majority of leaders in this department.

According to a recently published report by A.T. Kearney and Rapid Ratings International, risk management is not a critical focus area for procurement professionals, although most understand that the threats are present, Supply Chain Quarterly reported. So why, if they know the risks are there, aren't they doing anything to address them? Many attribute their inaction to a lack of time or resources. This, and the fact that their performance isn't evaluated on their risk mitigation abilities.

Procurement procrastination a security risk
Although the source noted that the procurement leaders agreed that they plan to prioritize risk management within the next few years, this suggestion of dealing with it later raises several concerns. The first is that these executives may be underestimating just how severe supply chain disruptions can be, as well as the impact incidents can have on procurement.

Another is that, as A.K. Kearney put it, "getting by with a strategy of 'hoping our luck holds out' leaves procurement vulnerable in today's tenuous geopolitical and economic environment, where many public and private companies are in precarious financial positions."

Put simply, there are really no justifiable excuses supply chain teams can use as to why they have not made establishing a risk mitigation and recovery response plan a priority, and this includes procurement leaders. Whether it is a natural disaster, security breach or other type of unexpected supply chain disruption threatening business continuity, failing to have the proper strategies for not only preventing but dealing with such interruptions can lead to significant delays and financial loss - damages that will likely be much harsher than they otherwise would be with a solid plan of action in place.

How should procurement go about risk mitigation? 
The first step is to understand what the biggest risks are, especially for procurement in particular. In a recent article posted by PYMTS.com, it was pointed out that procurement teams could benefit from adopting a more thorough approach to cybersecurity. 

Using the financial industry as an example, FICO Vice President of Cybersecurity Solutions Doug Clare explained to the source that suppliers are becoming increasingly pressured to ensure the security of the vendors they work with - and doing this is especially important when partnering with a new party. Clare suggested that a metric be used to establish the security not just of the infrastructure of the supplier but of the end-to-end supply chain as well. With banks, the source said, procurement is often the first "the first point of attack to assess vendor risk" and, as such, they should have digital tools and technologies that help with risk assessment.

"Usually, within the banks, it's the procurement function that's accountable for managing vendor risk," Clare told PYMTS.com. "They're the front line in terms of knowing who the vendors are, contractual relationships, driving accountability with those vendors."

Supply chain segmentation
Before even choosing a new supplier, A.T. Kearney recommended that procurement conduct spend segmentation by category management, since the beginning stages of strategic sourcing operations present an opportune time for market analysis and supplier risk evaluation, taking into consideration the vendor's history and identifying any possible red flags for risks. This technique can be used throughout the entire supply chain, the source suggests, including to second and third tiers of the network. The key to procurement professionals being able to gain the insight and information needed to effectively evaluate supplier performance and use it as a risk mitigation tool, though, lies in data.  

By leveraging the eProcurement tools, software and technology available from third-party solutions providers, procurement teams can significantly enhance their ability to ensure supply chain continuity after a disruption, as well as improve their overall risk mitigation strategies. 

Source One Round Up: July 22, 2016

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

Four Guidelines for Suppliers Responding to an RFP
Responding to RFPs take time and effort. There are fewer more frustrating hurdles to the sourcing process than unnecessary proposal revisions. Whether it's as major as pricing discrepancies or seemingly as small as agreeing on product turn-around times, the back and forth of proposal revisions can extend the sourcing process and even negatively impact the company-supplier relationship.  As a strategic sourcing project Analyst, Nicole Mahaffey understands the headaches caused by constant back and forth of proposal revisions with suppliers. This week, she breaks down for guidelines suppliers should keep in mind when submitting request for proposals.

To "Term" or Not to "Term"... That is the Question

Signing your company's name to the dotted line of a contract can be concerning for some organizations, leaving many to opt for suppliers that do not require having a contract in place. However, the absence of an agreement can have dire consequences. Part of the strategic sourcing process is addressing the need for contract components such as terms and ensuring stakeholders understand the associated risks of moving forward with a supplier without an agreement. Also this week, Source One IT Sourcing Project Manager Torey Guingrich explains a few of the key considerations to keep in mind when deciding contract terms and agreements as they relate to the spend category, pricing, supplier flexibility, and changeover. 

Congratulations are in order for Source One's Associate Director Diego De la Garza. De la Garza was named an Emerging Leader by the Council of Supply Chain Management Professionals. He is recognized for his contributions the supply chain management profession, particularly for championing Source One's Nearshoring Practice, his role in the company's expansion in the Midwest, and his supply management thought leadership. 

This month, the Council of Supply Chain Management Professionals announced the winners of their 2016 Emerging Leader Award. Among only three winners selected this year is Source One’s very own Associate Director, Diego De la Garza. Each year the CSCMP recognizes up-and-coming leaders, ages 30 or younger, in the supply chain management profession for their contributions to the practice.

What, you may ask, was Diego recognized for?

First, let’s take a look at his contributions to Source One. Diego started his career as a strategic sourcing analyst at Source One in 2010. During this time, Diego observed a growing trend of companies looking to transplant manufacturing operations from countries in Asia to Mexico. Putting to use his language skills and vast knowledge of the Mexico market landscape, Diego became a go-to resource for Source One’s nearshoring projects. While these began as one-off projects, Diego recognized a growing shift in the industry and took the initiative to build a solidified practice around nearshoring. Diego formed relationships with key stakeholders in Mexico such as universities, business networks, and governmental agencies to forge a mutually beneficial network that eased the nearshoring process for Source One clients and enhanced the education of future supply chain professionals. Today, Diego leads Source One’s Nearshoring Advisory Practice. He and his team have helped countless companies reduce costs and realize the benefits of moving supply chain operations from Asian countries to Mexico and Latin America.

Over the years, Diego has executed and lead hundreds of strategic sourcing initiatives. His categorical expertise includes direct materials, logistics, merchant account services, and professional services. His experience enhancing supply management processes for Source One clients has allowed him to grow into a Procurement Transformation pundit. He is a regularly sought resource for optimizing procurement operations, providing strategic advice on supply management process improvement, human capital management, and tools and technology. In addition, Diego has been particularly instrumental in Source One’s expansion in the Midwest. Diego has acted as a pioneer for the company - building Source One’s Chicago office as the first employee in the Midwest to now managing the entire office and developing the team.

As for his contributions to the supply management industry, Diego is the definition of a procurement thought leader. He continuously shares his expertise at supply chain management conferences such as the Institute for Supply Management Annual Conference and UnimarketNow. He is also a member of a number of organizations for which he is also a frequent guest speaker including the Chicago chapters of the US-Mexico Chamber of Commerce and The Mexican Entrepreneur Association. He also contributes to a number of procurement and supply chain publications such as Buyers Meeting Point and Spend Matters Latin America.

Needless to say, we at Source One are so proud of Diego! He truly leads by example, continuously working to improve Source One’s procurement services offering and acting as a mentor to the team.

On behalf of all of us at Source One, congrats Diego!

This fall, Diego will be honored as a CSCMP Emerging Leader at the CSCMP Annual Conference held in Kissimmee, Florida September 25-28th. During the conference, Diego will also be presenting a session titled Sourcing from Mexico. The presentation will cover the many drivers influencing the nearshoring trend, the challenges of identifying and engaging suppliers in Mexico, and how companies can navigate these market challenges to successfully transition manufacturing operations from Asia to Mexico.
Former Apple supply chain exec joins Target

This week, Target Corporation announced that it has named Ben Cook as its new senior vice president of global logistics, inventory allocation and replenishment. As a supply chain veteran, Cook has experience working for Apple Inc., The Home Depot and Kimberly-Clark. In this latest position, which he will assume this week in Minneapolis, Cook will oversee a number of in bound and outbound supply chain operations and processes, such as last-mile delivery and transportation, global logistics and inventory and merchandising planning.

Prior to being hired by Target, Cook worked at Apple as the director of supply and logistics strategy. At Target, he will report to Arthur Valdez, a former Amazon executive who the big-box retailer hired earlier this year to head its supply chain operations. (Amazon later filed a lawsuit against Valdez, claiming he violated a non-competition agreement. However, the online retail giant later dropped it.)

In the press release, Cook expressed excitement at the opportunity to use his experience and creativity to help Target grow.

"Our guests expect us to deliver product quickly and reliably, and that means we need a supply chain that's increasingly fast and precise,"  Valdez added. "Ben's expertise and proven track record in cutting cost and reducing complexity in the name of speed will be an incredible asset to our team."

This move is just one example of the overarching strategy many retailers are now taking in adjusting supply chain operations to better support and respond to changing shopping patterns and the rise of omnichannel and e-commerce purchasing. Much of the aim for these companies has centered around figuring out a better way to manage inventory levels and optimize distribution centers to reduce costs and speed up delivery times. Another solution that an increasing number of organizations seem to be implementing is increasing spend on new technology and innovative systems to replace the outdated platforms and processes that are no longer efficient in handling customers both in-store and online.

According to The Wall Street Journal, Target has had a difficult time in the past, particularly with inefficient stock levels, and that the goal is to reduce the number of trips carriers need to make for smaller items. Earlier this year, Target COO John Mulligan revealed that key investments the organization made in improving inventory led to an uptick in stock levels by almost 30 percent compared to the same quarter the year before, the source added.

Historically, when a company had a capability requirement but did not have the internal infrastructure and resource pool to support it, they turned to business process outsourcing (BPO).  It's tried and true, and when managed correctly, it became a tremendous business advantage - and countless BPO providers entered the market to fill the need.  Particularly for the Procurement and Sourcing function, the relative immaturity of the profession - coupled with the universal need to improve the bottom line through cost savings – firmly cemented the business case for businesses to hire third-party support and procurement services providers

But the cost model for traditional procurementservice providers and consultants often means that only large companies can afford them - and to make things worse, contracts are often constructed in such a way that prevents any adjustments to the procurement support team’s staffing levels, regardless of the operating tempo of the business.

Sourcing organizations in smaller companies can end up stuck – they know the solution is not to hire full-time procurement resources in times of peak need and then lay them off when things slow down. But they also know not to sign convoluted contracts with management consultants and offshore BPO providers without any way to demonstrate a return on investment. So how do they solve this dilemma both in the short- and long-term? What happens when their procurement and sourcing requirements inevitably change?

Source One has helped companies solve this very problem with its innovative Sourcing and Procurement Retainer Model

Just as we’ve helped industry leaders with complex sourcing and procurement operations realize the limitations of traditional business process outsourcing, we have supported small and medium-sized companies (e.g., manufacturers) in achieving their strategic sourcing goals with a flexible, lower-cost option. For these companies, having 100% access to a large pool of sourcing professionals is overkill and not affordable; once the significant sourcing activity is complete within a particular category, the procurement operations enter a “business as usual” phase (until a contract comes up for renewal again, or you want to redesign a product line, etc.). Under a lower-cost retainer model, companies get a customized, scalable solution where resources go where they are needed and are not long-term fixed costs.  For the cost of one full-time resource, you get access to an entire team of sourcing professionals and category subject matter experts – who can ramp up or scale back as your requirements dictate.

Every business has different requirements, and the size of your organization doesn't need to prevent you from getting the procurement and sourcing support you need. Head on over to SourceOneInc.Com to learn more about this unique offering. 

"The world is the true classroom. The most rewarding and important type of learning is through experience, seeing something with our own eyes."– Jack Hanna

Throughout the year, the Source One team offers the “classroom” mentioned in this influential quote by Jack Hanna by allowing college students to participate in the internship program. Throughout their tenure as an Analyst Intern for Source One, students are educated on procurement consulting through real world experience. Interns are included as a full member of the team from the moment they step through the door – from participating in various process trainings to attending team building events. Gaining real world experience is a key component of the internship program as interns are exposed to a number of verticals including client services and business development and marketing. 

Here’s an introduction to the excellent talent participating in the summer internship at Source One. Be sure to look for more blogs from our interns titled: The Intern Corner.

My name is Colin Sloan and I am twenty-one years old. Originally from Wilmette, IL, a suburb on the lake just north of Chicago. Growing up, I always dreamt of one day being able to commute and work every day in one of the best cities in America—just another benefit of working at Source One’s Midwest office. As I approach my senior year this fall at The University of Iowa, I do so with much excitement and some grief knowing that my time as a Hawkeye undergrad will soon be over. Originally I went to Iowa to pursue a degree in English, however after much consideration and realistic projections of what my future holds, I switched gears to a more business-oriented route. Now, I will finish up my senior year studying Entrepreneurial Business with a minor in Business Administration. The question I often get with this Major is wondering when I plan on starting my own business; and while the idea of trying to start my own venture is not a major possibility in my future, what was most attractive to me in taking this route were ample opportunities for real-world application in the many facets of business and the independence to craft the scope, methodology, and execution of projects and assignments.

After I was offered a position with Source One, I was more than eager to begin knowing that I would most thrive in an environment where similar opportunities for real-world application and a certain degree of autonomy were present. 

As I began my first day as an intern, after making the scenic commute into Chicago’s River North area, I was greeted by the team that seemed as excited as I was to begin this intern experience. The training courses I took laid a very detailed foundation of the Source One process and what it really means to operate in the procurement space. As I received my first few assignments, I was quickly exposed to the three verticals that we service through several audits, gathering telecom data for an expansive baseline report, and kicking off the mock sourcing event which each intern will work to complete and present on their deliverables by the end of the internship. Leading up to my first day, I had no idea how my initial understanding in the world of procurement and strategic sourcing would expand in being exposed to the daily activity at Source One. With insight from those who worked to prepare me for my first day, the opportunity to be surrounded by busy analysts and project managers is what made me truly realize just how critical strategic sourcing is to a company’s bottom line—especially when an organization has no idea of the cost-saving alternatives in their supply chain. 

Initially, I wanted to gain influential responsibilities while seeing exposure to several different industries, stages in projects, and business segments. Now six weeks into my internship experience with Source One, these goals have been and continue to be met with each new project assigned to me. 

Check out Colin’s most recent blog reflecting on his experience as a procurement consulting intern!


My name is Irena Fridman and I am a 21-year-old from Philadelphia, PA. I am going to be a senior at Temple University, majoring in Actuarial Science and minoring in Business Analytics. Some fun facts about me are that Russian was my first language even though I was born here, and I studied abroad in Rome for a semester last summer. 

While searching for an internship with the help of Temple University’s Fox School of Business, I was given numerous tips. These included: business casual attire means a blouse and pants; you should be generally prepared for anything your internship throws at you; and attend every happy hour without getting too happy. My first week here taught me that although these hints would be helpful for the typical corporate workplace, they do not apply as strictly to Source One. The laid-back, friendly atmosphere here surprised me instantly. With a “Welcome to Source One” IM from several co-workers, and a manager that I could both talk to about my weekends with and ask for assistance with projects from, I instantly felt at home. 

After working on several spend analysis, audits, and blogging projects, I hope to continue learning about the multiple aspects of procurement and the sourcing strategy process. As an Actuarial Science major, my work opportunities lacked diversity. Branching out to business analytics allowed me to have an opportunity to work at a company that touches on anything that might interest me, from luxury car brands to health insurance. 


My name is Jared Rosenberg; I am 26 years old and am from Richland, PA, currently living in Warminster, PA. I am going into my senior year at Temple University working toward a BBA in Economics. I am currently the Director of Jobs and Outreach for the Temple Economics Society, where I bring in employers and assist in planning career fairs and events for the members. Before coming to Temple University, I spent over three years on active duty in the United States Marine Corps working in the communications profession. 

At Temple I attended many events, one of which where I was introduced to some of the Source One team. When I started at Source One, I didn’t really know what to expect and definitely was over dressed wearing a suit on the first day. The amount of information received on the first few days was a bit overwhelming at times because I had no idea of many of the terms and processes utilized. I got to meet everyone at the office and they were all very inviting and helpful. I have been working on multiple projects including working with the spend analysis tool, spend classification assistance directory, clients manufacturing new products, and many other projects. Source One has provided me with the guidance and opportunity to further my career. My goal is to gain as much information as possible to better prepare me for my future after graduation. 


My name is Joseph Belli and I am nineteen years old from Colts Neck, New Jersey. I am approaching my sophomore year at Seton Hall University in South Orange, New Jersey with majors in Accounting and Finance. My first year in college passed by all too quickly which helped me realize that the next three won’t be any slower. So, I concluded that I need to make every year count in order to take full advantage of everything these upcoming years have to offer – which is why I began my internship at Source One. 

On my first day I was introduced to everyone in the Willow Grove office, some being familiar faces from when I had visited Source One in the past. Learning about everyone’s role and position followed by a sincere “welcome to the team” and “we can really use your help this summer” gave me feelings of excitement. After meeting every one, I was shown to my desk and began all of the introductory training processes and starting learning about the intricacies surrounding the world of procurement. I then began working on several audits and various projects for the communications team such as reaching out to non-profits to organize a service event that most of the team could attend. 

Whenever being assigned a task from a member of the team, I realized how eager everyone is to make me feel included in the project. Before beginning a task, I am normally told why what I am doing is going to be important in the long run and what impact I am having on the project, along with some background on the client and what we are generally doing for them. I seriously appreciate how I am told why I am doing something, rather than solely what I am doing. It makes me feel important in the overall scheme of the project.

Another initial thought I had after working at Source One for a few days was how connected everyone is. From using the instant messaging system, to e-mails, to google hangout meetings with the team in Chicago, everyone is brought together through all possible means of communication. Although the Chicago office is hundreds of miles away, it seems as if the two offices are physically connected due to the various methods of communication between the two offices. 

For my first internship experience, my only goal is to learn and adjust to what a normal office environment would be like – but Source One does not have a typical environment. The feeling of camaraderie and the evident gregariousness of every employee makes Source One have a unique environment that cannot be mimicked. The members of the team are not only interested in what I can do, but who I am as well. I came to Source One with an open mind and an attitude geared towards learning. Within my first few weeks here, I realized all that there is to learn and know that Source One will not fail to educate me in things I do not know, and things I never thought to learn.


My name is Sydney Cucchiara and I am twenty years old. I am from Kansas City, KS and will be a junior at Southern Methodist University in Dallas, TX. I am currently a dual Industrial Engineering and Mathematics major with a minor in Statistical Science. I have always wanted to live in the city of Chicago, originally looking to attend school there, however I decided on attending SMU with the possibility of interning in the city over the summer. I was very excited to be offered the intern position at Source One and to be able to spend my summer in one of my favorite cities in America. 

Before my first day at Source One, I was a little nervous to begin my first internship. However, from the moment I walked through the door, I was greeted by the local Chicago team and was immediately put at ease. I was lucky to find out that I wasn’t the only newbie at the office, because there was another intern, Colin, who had just recently started. I was excited to begin my work after going through all the training and learning exactly what it means to be a procurement service provider. Since my first day I have worked on projects focused on data cleansing, contract analysis, as well as internal work such as content for the Source One webpage. I have really enjoyed working with data analysis because I can see first-hand how we are reducing a company’s cost. My main goal with this internship has been to gain as much experience across all areas of strategic sourcing and to hopefully find a focus on what I really enjoy. With any luck, by the end of the summer I will have gained a vast knowledge on what it means to function in the procurement world and have found an area that I would like to focus on when I finish college.
The overlooked security risk threatening supply chains

Supply chain management has grown significantly more complicated over the past few years due, in large part, to the rapid acceleration of the Internet of Things. While the enhanced connectivity of digital devices and increasing sophistication of technology have provided companies with means to make powerful process improvements, it has also paved the way for an accumulating amount of potential disruptions.

Currently at the forefront of common supply chain challenges is the issue of security. For decades, organizations have dealt with the threat of production disruptions caused by incidents such as natural disasters. These events, though often unpredictable, have always been an important event for businesses to prepare for. However, in this digital era when companies are becoming more integrated, visible and accessible than ever before, there is an unprecedented amount of risks to consider. And one of the biggest problems with this is that some organizations may not be aware of how vulnerable they are or the severe damage that can occur after the safety or security of the supply chain infrastructure is compromised. 

Defending supply chain devices
As Robert J. Bowman recently pointed out in an article for Supply Chain Brain, although the internet has become an essential tool for supply chains to improve operational efficiency, it has also made them more susceptible to cyber attacks and other types of security breaches. This is why, the source explained, industry experts emphasize the critical importance of managers taking the necessary measures needed to safeguard their systems and ensure the sensitive data and information exchanged between suppliers is protected.

To appropriately implement the adequate layers of defense, supply chain managers must first identify which technologies, tools and devices pose the greatest risk. When it comes to cybersecurity, most people think about computer networks. However, virtually all electronic machines and equipment have the potential to be maliciously penetrated by unintended parties. As a mobility enterprise expert pointed out to IT Business Edge, smart devices often used along the supply chain, such as RFID tags and sensors, create vectors for data attacks - especially when they are ones workers also use for personal purposes. Instead of allowing a bring-your-own-device workplace, then, supply chain managers should enforce a mobility enterprise device-only policy.

Another step IT Business Edge suggested organizations take is to prioritize data governance which, as Elementum Head of Growth Rob Cheng explained to the source, "requires that your vendor clearly defines ownership of data elements and the governance controls to ensure the information remains confidential. That way, your information remains your information."

It is imperative that supply chain managers understand that a security incident doesn't just threaten the sensitive information and assets of internal processes; it also puts the privacy, safety and protection of its vendors and customers on the line as well. Furthermore, to guarantee end-to-end supply chain defense, business leaders must assess and monitor the processes and operations of their entire supplier networks to make sure all involved parties are also adhering to security best practices and safety standards. 

Special thanks to Charles Dominick, SPSM3 of the Next Level Purchasing Association for this guest post.

Every organization would love to have top-level procurement talent. However, no matter how much some organizations claim to want nothing but top-level procurement talent, their pay scales don’t agree with those claims.

If you find yourself unable to get or keep top-notch procurement professionals on your team, remember this: If you want to attract higher-level talent, you must be willing to pay for higher-level talent.

But how much extra does a more qualified procurement candidate cost?

Well, fortunately, at the Next Level Purchasing Association, we’ve spent years conducting the most detailed research on procurement salaries and the factors that influence them. Based on our latest research, I’ll provide you with some statistics that illustrate the premium you will pay for characteristics of higher-level candidates. Because procurement salaries vary wildly by geography and industry, I won’t express values in currency amounts. Instead, I will express salary premiums in percentages above the average.

Salaries By Supervisory Status

Will your candidate have other procurement professionals report to him/her? If so, you may need to pay more, especially if you are looking for prior supervisory experience. On average, supervisory procurement positions pay candidates 7% more than non-supervisory positions. Obviously, the more distance on the organizational chart, the larger the gap. On average, procurement directors make more than twice as much as buyers.

Salaries By Education

Though the cost to earn a master’s degree adds a significant amount to a candidate’s overall educational cost, the salary premium in procurement for master’s degree holders is probably less than you think. Procurement professionals with master’s degrees earn about 8% more than those with just bachelor’s degrees.

Salaries By Years of Experience

Now, experience…experience is where salary premiums really start kicking in. Procurement professionals with six to 10 years of experience make a whopping 31% more than procurement professionals with only three to five years of experience. And procurement professionals with 11 to 20 years of experience earn more than double what procurement professionals with three to five years experience make! So, be careful if your job description says “Salary commensurate with experience.” That may imply more than you think!

Previous Position’s Impact on Salary

Supervisory status, educational level and years of experience are just three of the 14 ways that we at the NLPA sliced and diced data in our latest Purchasing & Supply Management Salaries report. The last thing I’ll mention is that you also need to consider the effect of the candidate’s previous role in determining what his or her acceptable salary may be. Large companies, centralized organizational structure, and whether the candidate was recruited or promoted from within all conspire to inflate one’s procurement salary.
Automating the procurement process

Virtually all aspects of businesses are moving, at least to some degree, toward a more electronic environment. The acceleration of the Internet of Things, digital devices and other technologies has provided organizations with the ability to operate more efficiently, work more collaboratively and communicate more effectively. Furthermore, automated processes have gained significant traction and widespread adoption because, put simply, they enable companies to save both time and money.

However, the rate and manner in which certain sectors are using automation tools and technologies for business functions and processes seems to be varying. PYMTS.com recently reported that Proactis, a spend management company, conducted research that indicated procurement departments of organizations are taking somewhat of a gradual approach to process automation - which is to say that, rather than making the complete transition from manual to automated in one sweep, managers are handling it one step at a time. And while there is an advantage to being careful about implementing any major changes to essential businesses operations, it seems there is a lot of untapped opportunity for companies to evolve from manual to automated. 

The most and least automated procurement processes
According to the Proactis survey, there are certain areas of procurement that organizations have been slower to automate than others. For example, the least automated is supplier information management. Not only did half of the respondents admit to not having any part of this automated, three-fourths of those who do said it is at a very low level.

Contract management, strategic sourcing and e-supplier commerce are also among the least automated functions in procurement, with almost 70 percent of survey participants agreeing they have very little, if any, automation in these areas. 

On the other hand, there are a handful of procurement-related processes companies seem more apt to automate, most having to do with payment functions. The most automated areas, Proactis found, include:

  • Invoice receipt and processing
  • Strategic sourcing
  • Spend analysis
  • Purchase-to-pay

It is worth noting that, although these are the most automated, they still are not very far along. For example, although almost 50 percent of respondents reported being relatively far along in automating invoice receipt and processing, less than 15 percent said they would consider it complete. Only 25 percent of participants have fully automated purchase-to-pay and just 5 percent of have done the same for either spend analysis or strategic sourcing.

Procurement management tips for adopting automation
Considering which procurement segments other professionals have already begun to automate can help other business leaders get a better idea of where they should start, as well as how modern and adaptive their organizations are in comparison to others. It can also shed some light into which areas competitors may be lacking in and which can, in turn, be leveraged to gain a competitive advantage. 

When it comes down to transitioning from manual to automated processes, managers must make decisions based on needs that are specific and individual to them. However, it is important to keep in mind that, because one of the most crucial responsibilities of procurement is spend management, the functions that offer the most automation value are those that are highly repetitive. 

There are many factors that can contribute to why a business may be lagging in its process automation. For example, some likely fear that changing systems or models will cause lead to major disruptions or unnecessary costs. Others might assume the automation tools won't offer a high ROI. Either way, one of the most effective and efficient ways for companies to ensure their procurement processes are as functional, valuable and efficient as possible is to work with a specialized consulting and solutions partner.