June 2017
“I am an individual!” –

These four words resound in your head often and ring the loudest when clicking the ‘submit’ button on an order that breaks your company’s established purchasing procedure. It's likely that you identify as a rebel; a free-thinker unrestrained by the chains of Corporate Policy. You do what you want because you are Enlightened, unlike your colleagues. The rules don’t apply to you.

Except that they do, and the executives at your firm have different descriptors for you that don’t exactly align with the forward-thinking labels you have bestowed upon yourself.  To them, you’re a rogue, a maverick… and you’re costing them money.

So you’re probably here now because your name showed up on a list of “Non-Compliant Purchasers” in a memo that every C-level at your company was copied on. Presumably, you value having a job and an income, so you’ve begun to seek assistance in managing your urges to purchase whatever and however you want. But why not go one step further? Instead of falling in line and under the radar, become proactive in enforcing compliance not only in yourself, but in the other delinquents whose names were right next to yours on that report.

This is your opportunity to redeem yourself. With the help of this guide, the next list on which your name will appear will be the Top Performers list, guaranteed*.

Step 1: Identify Gaps in the Purchasing Process
In order to adequately address the problem, you have to take a step back and identify all points in the process that contribute to the compliance issues. We already know that conscious disregard for the rules in purchasing at the employee level is one problem, but for many other employees the issue may be ignorance rather than malice. Do they even know what or how they should be purchasing, and if not, why are they allowed to make these types of ad-hoc purchases? While your firm may have a general policy around purchasing, if it is not holistic nor robust then ultimately it will be difficult to enforce.

The company policy should be readily available to any employee with the ability to make business purchases and should not be difficult to obtain. It may even be in the employee handbook that you definitely read cover to cover. 

Step 2: Obtain Spend Data and Supplier Contracts                                   
This step may be trickier for a lower level employee such as yourself, but it must be done. You’ll need to obtain the supplier contracts and the spend data associated with those categories in order to draft a better process and identify the gaps in spending. If you cannot break into your manager’s computer to pull the relevant data, an alternative and legal option would be to simply ask your manager for the data while informing them of your intended use.

Step 3: Develop a Better Process
Now you have all of the data you need to begin the real work. There are a few key things to keep in mind that will net a successful outcome when developing the new purchasing process:
  •  Draft a list that clearly outlines the approved suppliers, items and contract pricing for the purchasers to utilize. Use large, bold font to prevent confusion and capitalize all letters to optimize readability. I suggest the use of the Impact font face as it perfectly captures all of the above elements in the click of a button.
  • A resource should be assigned the role of Authorized Requisitioner by either department, category or location, depending on how your firm is structured. This individual will be responsible for the purchasing needs of their specified segment. Ideally, this person should be competent and rigid, yet also friendly and approachable, as to not deter employees from sharing needs simply out of fear.
  • The resource must produce a PO based on the items, which then must be approved by… somebody. You can suggest yourself for this role because of your insatiable thirst for power, but know that it will require work to validate the items on the PO against the corresponding contract. Keep in mind that you should approve a legitimate PO unless there is appropriate cause for rejection. Rejecting a PO because your horoscope predicted somebody would lie to you that day is barbaric and will ultimately reduce company morale if it becomes a frequent event.

The process will vary slightly depending on your company, but the principles are the same. While there is quite a bit more that goes into developing, refining, presenting and implementing a robust purchasing process, I simply cannot do all of your work for you. This is a self-help guide, after all.

Best of luck!

(*not guaranteed)

The role of a procurement professional has evolved significantly since the 1980s when it was generally perceived to be entirely tactical in nature. This evolution led us to the 1990s, when the role transitioned to that of a strategic sourcing professional. By most accounts, the role will see another evolution in the coming years as we transition into Procurement 4.0.

With that being said, in an effort to continue to evolve ones knowledge and skillset I have personally found that performing the following three actions on a regular basis is a highly effective methodology for staying on top of current trends:

  • Find job descriptions on Indeed and LinkedIn to see what technologies and skills are new and/or relevant.
  • Review academic curricula and syllabi to see what research and/or methodologies are new and/or relevant.
  • Learn new content or firm up my existing foundations around the above two points via reading books and research papers, watching videos, completing certifications and coursework, and/or completing independent projects and research.

Of course, some methodologies for learning resonate better than others. Joshua Foer’s excellent book entitled Moonwalking with Einstein exemplifies this fact. This is to be expected of course. We all have different life experiences, we all have different personal obligations and interests, and we all learn differently. Even within oneself these aforementioned qualities may change over time.

Data has proliferated so much that it has gone from being defined by 3Vs (volume, variety, and velocity) to being defined by 10 or more (volume, velocity, variety, variability, veracity, validity, vulnerability, volatility, visualization, value) in a matter of years. These developments have led to a deluge of new technologies and analytics methodologies. Data is becoming and unwieldy at a furious rate. Most useful information does not already exist is a spreadsheet or database. Rather it is disjoint and unstructured. In fact, from a spend analytics standpoint, I don’t believe that I have ever seen a spend dataset that didn’t essentially cause Excel to die.

I recently performed a search for “procurement” on Indeed. My observation? Every single job available on the first page listed Excel as the only analytics technology. Now, what is the point of my rant? This is unacceptable. A representative example:

Purchasing Analyst 
  • 3 to 5 years of experience working in Operations, Manufacturing, or Supply Chain
  • Proficiency in Excel, Word, and PowerPoint
No mention of any technologies that truly facilitate analytics or big data. Cherry picked coincidence? Unfortunately, no. Here is a word cloud that I generated automating the extraction of the text from every single result that Indeed reported after searching for the term “procurement” in the area of Chicago, IL:

Disclaimer: Chicago, IL was searched because it is considered to be a well-established hub for procurement and supply chain. This word cloud was generated from 100s of jobs. The underlying data was normalized for comparative purposes and the size of the words reflects the number of adds that included them. For instance, the word "experience" was included in a large number of the jobs adds that were processed.

Machine learning and artificial intelligence are only the starting point. Disruptive technologies that appear to be on the horizon such as Blockchain and smart contracts will only further exacerbate the need for technological adoption. Procurement departments need to evolve and adopt the technologies relevant to Industry 4.0 if they do not want their function to be absorbed by other departments.
There are a lot of benefits related to conducting a proper spend analysis. Getting a good look at your spend profile and vendor landscape is instrumental in planning and executing on strategic sourcing initiatives. Done correctly, a spend analysis provides the backbone for successful cost savings projects.

Key phrases that you should note are proper and done correctly.

There are a lot of benefits to conducting a spend analysis. There are also a good number of ways that an improperly performed analysis can wreak havoc. At worst, you could end up going to market with inaccurate data and lose out on potential savings or cause delays to the point of creating “lost opportunity” costs.  So what leads to these issues, and how can we as Procurement pros avoid them?

Biggest Spend Analysis Mistakes to Watch For
While not an exhaustive list, the mistakes below represents seven of the most common (and most costly) that could throw you off track:
   1.    Ignoring time parameters,
   2.    Not accounting for shifting spend trends,
   3.    Ignoring low-spend suppliers,
   4.    Not taking into account niche players,
   5.    Improper cleansing techniques,
   6.    Seeking too much granularity,
   7.    Failing to act.

Let’s take a deeper look at the first two to better understand what is at stake.

Ignoring time parameters. The first problem also relates to one of the first questions you should be asking yourself as you begin the spend analysis process: “How far back should I go when collecting data?” The answer depends on the type of products or services being purchased. Take office supplies, or any other similar commodity, for example – We typically pull a year’s worth of a client’s data when planning a strategic sourcing initiative to ensure that we are properly identifying a basis for usage. We could simply take the last month, but can you be certain that this short time frame is representative of typical usage? There are also reasons to go back even further. A number of years can pass between capex purchases – if such purchases are relevant to your analysis, you must identify these time periods and collect data accordingly. In short, if we aren’t correcting enough historical spend data, we risk developing an inaccurate market basket for our RFP or RFQ at a minimum. Even worse, we could potentially exclude entire supplier relationships from consideration.

Not accounting for shifting spend trends. The benefit of collecting multiple years of data goes beyond simply “missing” spend. Being able to compare a supplier year over year also allows us to see developing trends. Let’s say, for example, you identify a commercial printer with a spend level of $100,000 over the last 12 months. That may be a level you feel is significant enough to warrant further investigation. But is it? Suppose in the 12 months prior to our analysis that figure was closer to $200,000 – what is the reason for such a drastic decline, and what does that tell us about this vendor relationship? This is no random example: as clients of ours have moved away from physical printed materials to digital alternatives, we have seen spend with commercial printers plummet. In such cases, is it worth your team’s time to seek savings with a supplier who may not even be around a year from now?

The Domino Effect
One thing you’ll note from the two mistakes above is that they are interconnected. In other words, it is bad to make the first mistake by itself – however, making it will almost certainly set the stage to make the second.

Over the next two weeks, we will continue to discuss these mistakes and the implications they have on the strategic sourcing process. Moving forward, these next two posts in the series will show that this trend continues: each issue plays into the others, making it more and more likely that any one mistake will lead to another.

For this reason, it is critical to take a look at your spend analysis process early on, and keep these mistakes in mind as you set out.

UPDATE: For part two of this post, click here
There is a growing trend for clients to have their agencies located onsite at their offices in an effort to be more efficient. To clarify, we are not referring to an in-house agency but instead agency staff who are located onsite at the client’s location.

An in-house agency is an agency that was formed to work exclusively on a given account but is part of that client’s organization. Facebook, Google, and more have all shifted to an in-house agency model rather than the traditional outsourced services. While an onsite agency operates in a similar model with dedicated personnel to the account who work alongside the marketing teams to execute on ideas, they are not employed by the client directly. This model is becoming increasingly popular, especially in the UK, due to its direct access to team members – a benefit for both the client and the agency.

Having this direct access to team members presents numerous benefits including streamlined communications, increased collaboration, being immersed in the client’s culture, and more. Those benefits can have a tangible effective on the work product the agency produces in the form of reduced revisions, faster turnaround times, and innovations. However, before you relocate your agency onsite, you should consider the potential drawbacks, the biggest of which is the additional costs of this resource. For example the relocation expenses if the agency is not local to your area and additional billable hours since they will be working exclusively, or primarily, on your account.

Earlier this year, I had a client ask about having an onsite resource for one of their campaigns. They were planning a multi-city, multi-day event that would be taking place throughout the course of the year. They knew from previous experience that they would be working very closely with their agency to develop concepts and layouts and continually update those based on the latest changes to the program. With that in mind, they wanted to explore having a team member from the awarded agency sit onsite in their office in order to enhance collaboration and streamline communications between the teams. In this case, the costs outweighed the benefits and so they did not have an onsite resource for their engagement; however, I’m sure the concept will be explored again in the future.

As you evaluate the option of an onsite resource, it is important that you weigh the benefits against the costs before making a decision. So for your next marketing engagement, consider what it could mean to have an agency team member sitting a few feet away.

Retail owners may find themselves in a difficult position currently. With the line between physical stores and online retailers blurred, retailers have to consider the relevance of their current plans for asset management, as well as the perennial issues of meeting benchmarks while staying adaptive and flexible.

There's a lot at stake there, and the current business environment makes reorienting a challenge. Considering the following three areas, businesses can rely on new strategic systems for their own priorities in the current landscape and stay competitive, profitable and stable even when there seem to be major hurdles to overcome.

Space issues
Any business with a store to its name needs to manage retail space, but there's also warehouse availability to account for. CNBC recently spoke to the CEO of STAG Industrial, Ben Butcher, about the lack of warehouse space hampering the development of internet-based companies like Amazon.
The famous online marketplace has drawn attention for its recent purchase of Whole Foods, a well-known retail company and a buy that might be a boost for a business with needs to expand into physical space in the future. Butcher implied that this trend is about to develop further.

"As retailers reconfigure their supply chain to accommodate the shift in consumer behavior, the requirement for warehousing space will increase substantially - this is true incremental demand, not a displacement of existing demand for warehouse square footage," Butcher said.

This is a different spin on the problem facing smaller retailers, which may have something of the opposite situation to deal with.

"Some retail companies could struggle to use the assets they have."
Inventory surpluses
While Amazon and other companies in a similar position could face a drive for leaner operations, others could struggle to use the assets they have. According to CSCMP Supply Chain Quarterly, Georgia State University's J. Mack Robinson College of Business professor Donald Ratajczak commented on this at a recent conference.

The issue, according to Ratajczak, appears to be more about matching inventory and store supply to the actual business market, something that is reportedly too skewed towards excess. Whether or not this is their personal experience, retailers can at least use the tools at their disposal to help shift the balance rather than simply trying to pare things down if that's unnecessary.

Rises in new technology
Retail, like many sectors, might see improvement through use of new technology, and a Supply & Demand Chain Executive article said that the Internet of Things, in particular, is perhaps still an innovation to help improve the retail business dramatically, thanks to smart components and data circulated throughout the supply chain.

Sensing demand and using detailed purchase information constructively, retailers with the IoT capabilities on their side possibly stand to have more efficient supply systems waiting for them if this implementation plays out for the retail world the same way it's predicted to work for other sectors of business.

From a supply chain manager's standpoint, all of this could indicate the strong need to implement successful strategic sourcing to help manage available inventory, space and technology. Sensing data and incorporating this kind of thinking ahead into your work can help you accomplish transformation.

It’s no secret that enterprise I.T. is moving more of its application portfolio to the cloud. According to Gartner research, software as a service (Saas) market share began significantly increasing in 2015 and is projected to double in market share by 2020. Cloud ERP alone will be a $30 billion market by 2021, as predicted by MarketsandMarkets.com

So it goes without saying that the big projects for sourcing professionals and vendor managers, particularly those who specialize in information technology procurement, in the next 12 to 24 months will be in the cloud services and applications. The market is and will continue to be highly competitive and there will be an intense sales cycle led by highly trained account representatives looking for a big score for themselves and their company.

There are several risk points when negotiating cloud agreements. In a competitive atmosphere, vendors will put extremely attractive offers on the table, both with their initial pricing, and payment terms. But what the vendors won’t provide is the underlying terms and conditions which are always favorable to the vendor and not their clients.

The contracts with the major vendors (SAP, Microsoft, Oracle, IBM for example) are extremely complicated with embedded documents (typically URLs) within the primary contract. It’s extremely important to receive those contracts, even if they are just sample documents, as early as possible in the RFP or sales process. Those contracts need a thorough review and mark-up. It is important to have the URLs in the contracts removed and have all of the contractual terms and conditions in the final document. The reason for this is that the additional terms in the documents referenced by the URL can change without notice and therefore, bind you into cost increases or other risks you were not prepared for long after the deployment of the new service.

Many times, the terms and conditions within a Master Licensing Agreement (MLA) an organization may have negotiated previously with a major cloud vendor are actually superseded by the service provisioning document for the specific application that is being procured. Meaning the price hold protections that were won during the MLA negotiations are rendered useless unless caught before signing the provisioning contract.

All of the major vendors have terms and conditions that are negotiable, and others that they simply will not give consideration to during negotiations. To be fair to the account representatives for these companies, they can be stuck between a rock and a hard place when it comes to certain terms that they know are important to their client in order to close a deal, but cannot have get own legal affairs team, nor their sales management executives to give them the wiggle room needed to find a solution that benefits both client and seller.

For example, any forward looking sourcing pro and their IT stakeholders want the ability to be flexible with their licensing needs as business grows and shrinks over time. Perhaps the contracting module of the ERP system can be reduced due to automation, while the number of users in the accounts receivable module needs to grow due to increased sales. It would be great to trade in one set of licenses for a credit to offset the cost of the additional licenses needed. But in almost every case, it is nearly impossible to get a major software provider to negotiate this flexibility in licensing. So your time will be better spent negotiating those terms that you can maneuver into your favor.

So what are a couple of terms that are fairly negotiable? The big cloud vendors generally will not allow transfer ownership of the licenses to another entity in the event of a merger or acquisition. But if you have enough leverage due to the spend amount, you can move the vendor to allow for a certain period of time for transfer-ability of the licenses.

Other terms that can be pushed into the favor of the client are locking in pricing for additional cloud licenses or subscriptions. Finally, the ability to use subscription licenses in the country of your choice, and not only in the country where the licenses were purchased is easy to have changed in standard agreements.

Source One Round Up

June 30, 2017

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

Competition When it Comes to Incontinence: Retailer Sourcing Considerations
Elizabeth Skipor, Sourcing Innovation, 6/26/2017

Not every sourcing category is glamorous, and Source One Consultant Elizabeth Skipor explains how product development and sourcing divisions for incontinence products are important for expanding product mix in this highly competitive market. Skipor's background in buying for this category give her the insight for sourcing in this sensitive category and knowing which factors were imperative to the consumers of these products, and how sourcing is responsible for meeting these needs to ensure the product performs and functions as desired. While these requirements aren't issues we don't always like to discuss, this category is no exception for a savings opportunity and in order to discover hidden value, someone has to do the dirty work.

Reduce Costs in Product Design Through Raw Materials Martin Przeworski, ThomasNet, 6/29/2017
As S1 thought leader Martin Przeworski details in his recent online publication, many firms frequently overlook fundamental strategies to reduce costs during their initial manufacturing phase because they fail to consider different design options. As Przeworski advocates, firms should follow a three-step strategy of defining product versatility, ascertaining realistic material/manufacturing options, and selecting an optimal design, in order to achieve highest possible cost efficiency paired with product quality. Przeworski’s decades of experience in engineering and strong background in material sourcing add further credibility and takeaways to his insights. 


In the beginning of June, spend management experts from Source One joined our partner Corporate United as they headed out on the Road to SYNERGY. The first stop was in Baltimore, Maryland, where local industry professionals were invited to attend an exclusive one-day conference to meet with other industry experts in the industry. The day includes engaging workshops, informative presentations, and educational speeches from supply chain, procurement and sourcing leaders. The Road to SYNERGY will only be stopping in select regional areas across the U.S, so don't miss your chance to participate in these events. The next one-day conference will be in Dallas, TX on August 15th. Members of the CU community are invited to register now to guarantee their attendance now. 

Several of my blogs over the past year have been focused on wide area networks (WAN), whether it's managing your budget, technology trends, or SD-WAN adoption. Those responsible for their company's corporate WAN are keenly aware of how quickly technology changes and how difficult it can be to keep up with. And while the ever-changing nature of the telecommunications and information technology world is always top of mind, it's worth highlighting just how blazing fast things are moving in the WAN space not only from a technology standpoint but also within the marketplace and how carriers are structuring their services and contracts. The driving force behind these fast pace changes is SDN and SD-WAN adoption.

SDN and SD-WAN are not new, per se, but their influence has been tangible over the past 6 to 12 months. We've seen carriers and hardware manufacturers alike scrambling for their piece of the pie, punctuated for example by Cisco's recent acquisition of Viptella. The sheer confidence and urgency of suppliers that they need to be on the bleeding edge of SDN offerings is driven by the ease of adoption and the strong promises that come with the technology. Lower cost transport? Easier access to cloud-based services? Better performance, control, and redundancy? Check, check, and check! What's not to love? -virtually every enterprise has some requirement that could be fulfilled potentially more effectively and almost certainly at a lower cost by an SDN solution.

The carriers and hardware manufacturers see this as an obvious threat to their core WAN services, MPLS offerings. Of course, the changing technology also represents an opportunity for them and we'll have to wait to see who garners the most success in the space. Irrespective, right now we're seeing carriers with more proactive management of their MPLS agreements and spend including aggressive renewal offers and RFP responses. They see the writing on the wall and recognize the criticality of maintaining control over the majority of connectivity within their existing customer base in order to insulate themselves from competitors and the alternate technology option SDN represents, but also to allow themselves time to bring the value add of their own offering to bear. What that means for customers is that they have opportunities to reduce cost for existing services, but also great opportunities to leverage these threats in their sourcing and negotiation efforts.

As we work with clients to design and source their next generation networks we're keeping all options in mind. Again, things are moving fast, faster than usual, really so it's necessary to keep a finger constantly on the pulse of the market and new and emerging technology. Taking into account market and tech trends and making a 3+ year plan can certainly be daunting, specifically if you're playing catch up in today's fast paced environment. Source One can help inform your decision making process and help you optimize your network, spend, and supplier relationships. For more information, visit www.sourceoneinc.com

There's one thing many of the nascent improvements to supply chain technology have in common: data. Implementing policies and changes based on harvested data will likely continue to set the tone for some of the most popular innovations, including those for procurement and supply management. For health care, the use of analytics is set to revolutionize the sector in several ways, according to a recent Zion Market Research report.

The abstract for the report said that predictive health care demand is set to rise in "significant" amounts between 2016 and 2024. It also said that North America, particularly the U.S. and Canada, have been the major centers for this market due to the available workforce in those countries.

Predictive analytics' wide range
Because of the many possible uses for these systems, the phrase "predictive analytics" obviously goes beyond the supply chain, but it could have implications for that area as well. A Society of Actuaries "Predictive Analytics in Healthcare Trend Forecast" for 2017 featured data culled from 223 health company executives.

Based on these results, 89 percent of the providers plan to implement predictive analytics over the next five years if they haven't already, and 93 percent of all respondents consider it "important" for the business's future. The executive subjects of the survey included those from both provider and payer companies.

"Anything that dramatically impacts health care operations will almost certainly have an effect on the supply chain."
When it came to possible hurdles for implementation, the one most prominent challenge was "lack of budget," which 16 percent of respondents attested to. The next two top obstacles were "regulatory issues" (13 percent) and incomplete data (12 percent).

The impact on supply chains
Anything that dramatically impacts health care operations will almost certainly have an effect on the supply chain side as well. If nothing else, the cost savings could stand to benefit the company and allow it to make different decisions. By focusing on obtaining usable data with greater accuracy, analytics also could steer deliveries to where they are needed and dictate important wholesale changes throughout a chain.

A Harvard Business Review piece from last April mentioned some of the many different roles that predictive analytics could play in the health care industry. Some of these possible uses include incorporating consistent electronic health record data, integrating all of the recovered data into the standard workflow successfully and prioritizing different decisions for maximum impact.

One earlier survey from Global Healthcare Exchange also seemed to assert predictive health care analytics as a priority. In a January 24 statement on its findings, the company said that predictive analytics was one of the goals for the 50 top provider organizations.

The company's CEO and President, Bruce Johnson, contextualized the current trend in the same statement.

"Health care's supply chain continues to be at a pivotal juncture, taking increased advantage of advanced technology to deliver affordable value-based care by accelerating efficiencies and improving access to quality data for decision-making," he said. "Improving operational performance and driving down costs through supply chain automation is one of our top priorities."

Practicing spend management and other measures may only be more important if health care technology follows this pattern.
For the global trotter, how nice would it be to pay for a plan that allows you to use your device (with limited restrictions) throughout the world? Sounds pretty nice, eh? Especially if you’re a company with employees that are constantly jet setting to international locations and racking up the roaming fees in addition to their already overpriced international add-on plans required to use the device internationally. I know from working with previous clients that these roaming costs can be substantial and they are always looking for ways to reduce those costs. In theory, the idea of the Global Mobile Plan  shouldn’t be too far out however there are some key roadblocks limiting the of which are: 1) Regulations and 2) Wireless carriers footprint.

About those regulations, let’s look at what’s happening across the pond: As of June 15th, 2017, European parliament and Council (EC) announced that Europeans will be able to travel through the participating member states and use their devices without roaming fees which has been a decade long project for the EC. All 28 member states will be participating in the new rule and travelers will be able to call, text, and connect without any roaming charges. It is important to note that although they will have full functionality of their mobile devices at the same price of their plan, there are some caveats that fall under a “Fair User Policy”. The policy limits usage for inexpensive domestic plans and unlimited data may not carry over, instead it will be capped at an unspecified amount of GB and is subject to the carrier's discretion.

Now let’s discuss why this might apply to us in the
rest of the world. With the EU eliminating geographical boundaries for users and their mobile devices, why can’t other countries or regions do the same? For example, in North America the United States shares boarders with Canada and Mexico (similar to the layout they have in the EU just the EU has 25 more countries) so theoretically they could adopt the same wireless policy. One restriction is obviously that the 3 countries have separate governing bodies so a similar wireless policy may not be possible on the government side, but the wireless carriers might be able to provide a solution by working together.

As mentioned before (roadblock #2), wireless carriers are limited by their home countries geographical footprint so in order to provide services internationally, they need to pay the international carrier the cost of the usage. However, there has been a shift in the industry: Verizon, AT&T & T-Mobile have been partnering with carriers in Mexico and Canada to offer their user’s unlimited access to their plan features while traveling in those countries (T-Mobile since 2015). Sprint on the other hand has partnered with various carriers throughout the world which allows their users with access to their plans in over 200 countries but they are limited up to 2G data speeds (higher speeds available at a cost) and they still have to pay $0.20/min for voice usage. The other three will also allow you access to your plan for varying dollar amounts but your data speeds and usage amounts are capped at certain levels. The providers individually inching towards a comprehensive global mobile plan but their still pretty low below mark and it’s still unclear as to who will be the first (my bets on Verizon).

So bringing it back to those two roadblocks (regulations and wireless carriers footprints) it looks like both sides are working towards the nirvana state of offering user global mobile plans. However, it seems that they are working towards this customer solution from opposite sides of the aisle. Carriers are unable to expand their wireless service offerings internationally due to varying reasons and regulations but if they (government and providers) worked together, would this get the job done? In my opinion, yes. Customers today are 24/7 and operating globally (regardless of physical locations). It’s time that our providers and government bodies allow us to do so without the high costs. While I haven’t unearthed enough data to give a definitive answer on when this Global Mobile Plan will be available at a provider near you, I do feel that it is on the horizon. 

In the first two months of my internship at Source One, I have already conducted research to assist our team in prepping for several kick-off meetings with a variety of new and potential clients. For those of us who don’t know what a kick-off meeting is, it’s an initial meeting between members of the Source One team and stakeholders from the client’s organization.  It’s a time for all initial questions to be asked and answered, expectations and projects to be identified, and among many others, it’s a time for business relationships to be established. From preparing for it, to actually being in the meeting itself, up until the aftermath of it all, there are a lot similarities between these kick-off meetings and first dates. Below, I evaluated the before, during and after stages for both and realized that creating business relationships and personal relationships aren’t so different after all.  

Stage 1 –Prepare
Kick-Off Meeting: For any meeting, it’s important to have done your homework and come prepared to listen, take good notes, and be ready to present your information.  The key, is to make absolutely certain that you and your team are ready to impress the client with the research you’ve done on them, to demonstrate how much you already know about their organization. Researching anything and everything about the spend category and business unit from who they are, what they do, and how they operate to any current events or fun facts you can find. When researching before a kick-off meeting, it’s a good idea to become an expert on the unit’s existing processes, current suppliers, mission statements, and any other information that could be used as talking points that leverage your statement as to why you and your company are going to be a great fit for them.
First Date: Before a first date, you are essentially researching similar topics that you would for a kick-off meeting. You want to impress this person by coming to the date prepared with topics for conversation about their interests, work, and other ways to engage them. Whether you already knew this person or met them online, researching everything you can (without reaching a creepy level, of course) about ways to engage and connect with your date will heighten your chances of going on a second date. Ultimately, this is an opportunity to enhance your relationship with this person, like you do with the business during a kick-off meeting.

Stage 2 –Make an Impression:
Kick-Off Meeting: This is it, the moment you and your team have been waiting for! The kick-off meeting is finally here and it’s your chance to make the stakeholders fully satisfied with their decision to pursue you over the other fish in the sourcing sea. During the kick-off, aside from making sure you are fully prepared, you want to make sure you are dressed to impress. Additionally, now is the time to present yourself and your company in an honest, yet solid manner. Just like a date, make sure your presentation (personal, and PowerPoint) is professional, visually appealing, and engaging. Anticipate the questions and comments of the stakeholders, and be able to give clear and concise answers, hopefully before the stakeholders even need to ask them! Remember all of that research you did on this company? Use it to your advantage during the meeting by relating yourself, your team, and your company to the client. Wow the stakeholders with your knowledge on their sourcing and buying strategies. The more connections you can make between your offering and their organization’s needs, the more information you might uncover that can help the relationship develop.
First Date: Again, dress to impress. The other person’s first impression of you has a lot to do with what you wear on a first date just like it does for a business meeting.  In either setting, it may be tempting to stretch the truth to make you or your company sound more appealing, however it’s crucial to be true to who you are without overwhelming your stakeholders or boring your date., You can use the research you conducted earlier during the date to bring up common interests and other talking points to steer the conversation in addition to learning more about this person, you may even be able to test the waters and touch on deeper topics of conversation like life goals and aspirations. Though you most likely won’t have a PowerPoint presentation to share with your date like you would in a kick-off meeting, it’s still important to be interactive, and share things about yourself that would be good for the other person to know. This may make them more comfortable in sharing more information about themselves.

Stage 3 – Reflect 
Kick-Off Meeting: When leaving a kick-off meeting, you might walk away asking yourself some important, sometimes unanswered questions. Did the stakeholders seem impressed with what I delivered? Did they seem uninterested? How do I see my team and I working with this client in the future? It’s completely normal to have questions like these ruminate your head after a kick-off meeting. For either a positive or a negative evaluation, be sure to send a thank you email or call to show your appreciation for their time and business opportunity. When the kick-off meeting is done, you’ll need to identify the next steps in order to make the relationship and work progress. Do your goals and skills align 
First Date: When leaving a first date, your head might be flooding with questions and constant evaluations of the time you spent on the date. Regardless of what positive or negative thoughts might be taking over your mind, evaluating your time is something everyone does after a first date. What was the chemistry between us like? Did we connect? How much do we have in common? Do I see myself with this person in the future? For any evaluation, it’s important to weigh the pros and cons against our own values and beliefs. If you enjoyed your night, contact them and pursue the relationship. If you had any sort of bad feeling, thank the person for their time, but politely go your separate ways.

From a business standpoint, the initial meeting with a new or prospective client is going to set the tone for your business relationship, as first impressions are highly memorable. As for first dates, this is the opportunity to feel out the chemistry and identify how or where the relationship is going to go. In either case, both scenarios are crucial in creating a valuable relationship with others who you could end up spending a lot more time with in the future.
Revisiting your spend with distributors is often one of the most fertile areas for savings opportunities, and by keeping six key elements in mind success may be close at hand. If we consider electronic component distributors as a test case we can identify the six primary stages to be needs assessment and strategy development, data gathering, data validation and preparation, supplier relationship development, negotiations and contracting, and implementation tracking.

A first step in the process that's often taken for granted is needs assessment and strategy development. During this phase we determine what the primary drivers and metrics for the initiative are. These can be as varied as ultimate cost savings or minimization of supply disruption, but are usually a combination of savings targets and risk mitigation.

To prevent supply disruption both valued incumbent vendors and possible alternates can be approached in order to define primary and secondary suppliers. We aim for a preferred supplier agreement at full annual volumes with SLAs, blanket orders, and quarterly releases or VMI agreements to maximize savings while ensuring consistency of supply.

After all parties are aligned with respect to goals, we can begin gathering the data from the engineering and procurement teams. The key here is to make sure you have all of the necessary information including supplier and manufacturer names, part numbers, descriptions, pricing, and historic annual volumes.

Reviewing the data for inconsistencies and building the market basket can often be one of the most time consuming phases of the overall process. Here, unit of measure issues often occur where components may be purchased in packs, cases, or individually, so each SKU must be converted to unit price each along with the tier the component is ordered on. Since parts tend to change rather quickly in this commodity group, validation of the data set against obsolete components and inclusion of replacements is also needed. To maximize savings while minimizing inventory levels forecast which indicate annual volume needs and determine desired stock levels must also be considered against blanket orders and release schedules.

Once all of the necessary documentation is in place, management of the supplier relationships becomes critical. During the sourcing initiative you must approach the supply base directly, not through online forms or directories. A close relationship with a representative will allow you to ask the supplier to identify generics for passive components and cables along with alternates for obsolescence components. You can also look for off the shelf components to replace comparable custom parts such as power supplies.

Negotiation of best in class pricing with the primary supplier becomes key after conclusion of the sourcing initiative. With the selected finalists you can look for sign-on bonuses and rebates along with tiered discount structure on the overall volume of business.

Perhaps the last phase is often overlooked by separate sourcing teams, but is part of day to day operations for most purchasing teams. Tracking implementation at the facility level is vital to ensuring projected savings are actually achieved. Implementation of tiered based pricing in ERP and electronic purchasing platforms to ensure compliance by buyers is the first step. And, by instituting product and pricing list, monthly reporting becomes possible to enable tracking of purchases from preferred and secondary suppliers.

It may seem overwhelming when considered together, but setting expectations, getting buy-in from all parties, and approaching each one of the six sourcing areas individually can achieve the greatest sustainable savings while simultaneously resolving supply chain bottle necks.
Strong green energy spend for businesses last year

According to one source, green energy seems to be a growing preference for businesses, at least compared to previous reports. With so many different pieces to a single supply chain, a strong market for these innovations could be good news for the environment and the sustainability sector.

Reuters cited multiple reports and datasets to show the recent favorability for green energy solutions. One of these was information about the solar contracts per year in megawatts. Measured this way, the amount of energy for each contract surged to 1,056 megawatts in 2016 after just 202 one year earlier. Other data, sourced from the American Wind Energy Association and GTM Research, showed solar as 10 percent of all corporate contracts, compared to the 39 percent accountable to wind.

With this information as a jumping-off point, we can look at some of the specific supply chain connections for different forms of renewable energy.

As with other forms of green energy, the supply sector is just a component of what could make solar viable. An Archinect article touches on this point, saying that the supply chain for energy efficiency can refine itself if the actual use of efficient products gets more prominent. Other possible factors the source mentioned included increased use of electric cars and more widespread energy types in general.

What about solar-powered supply chains themselves? Supply & Demand Chain Executive mentioned the current and planned facilities that the OPEX Corporation uses, including one forthcoming location that will offset its energy spend with solar to be "net zero." The company's vice president of corporate and legal matters, James Liebler, explained the company's position on sustainability.

"The supply sector is just a component of what could make solar viable."

"We subscribe to the idea that we've been given certain resources to take care of, to shepherd and be accountable for," he said. "That includes the environment around us and knowing we should not waste those resources. This all goes back to Al Stevens' vision for what a company should be."

This last comment referred to the company's owner and chairman of its board, and also how deep business values can drive major environmental decisions.

The Department of Energy said that logistics was one of the possible hurdles to more widespread use of wind energy, but also that the amount of revenue from wind technology exports has grown over the years. The source remarked manufacturing has to keep up with the latest turbines, since these can be complicated and demanding. 

Despite this, the advantages of modernizing and meeting the new technological challenges can come in multiple forms. The DoE, for instance, said that it granted millions in funds to help improve logistics for wind.

Solar and wind power may both be popular, but there are still barriers to implementing them more fully. This could be all the more reason for businesses to save money with benchmarking and other tactics so they can invest capital where it's needed for future development.

A few weeks ago, on June 7th, I had the privilege of speaking at the 2017 Plastics Financials Summit here in Chicago, not far from Source One's office.  My talk was about the importance of Indirect Spend Management in strengthening your company's bottom line. Here's what we discussed at the conference!


Indirect spend, though often neglected, can range between 20% and 50% of a company’s expenditures, depending on the core business and industries it operates in.  Although there are particular nuances to this spend category, the approach should be much the same as direct spend: strategize, standardize, and streamline the sourcing process to align with business initiatives.  Effective indirect spend management drives greater efficiency across the enterprise and maximizes savings opportunities, resulting in future financial management success that will directly impact your bottom line, and elevate your business to the next level of success.

What is Indirect spend
It is important to first understand the notion of Indirect spend in order to properly sort your suppliers out and define the impactable spend of a future indirect spend sourcing initiative.  As opposed to Direct Spend, which includes all purchases of goods and services that are directly incorporated into a manufactured product (raw material, manufacturing services, etc.), Indirect Spend encompasses all of the supporting materials and services that do not end up in products or services directly delivered to the customer. Generally, Indirect Spend can be broken down into two major categories: MRO supplies and Indirect Goods & Services. MRO supplies include all spare parts and repair services necessary to keep production equipment up and running. Indirect Goods & Services include all the support tools and services necessary to run a business, such as office supplies, IT hardware and software, travel, and advertising.

From a purely financial standpoint, Indirect spend is what CFO look at in the SG&A (Selling, General & Admin) or GNFR (Goods Not For Resale) line items on their balance sheet, depending on the nature of your business. In a more detailed approach, Indirect spend is generally low-value goods or services (I.e: not the most important source of cost for certain industries, especially General Manufacturing) or items purchased through Purchasing Cards (for example any type of office supplies, travels, other general expenses). Indirect Spend can also sometimes be embedded into direct spend, such as transportation fees included in the overall price of supply of raw materials.
From a pure spend analysis and supply chain management standpoint, Indirect Spend can be a good place to look at for cost reduction initiatives. What the financial definition of Indirect Spend given above means from a procurement operation standpoint is that when not managed properly, it can lead to decentralize procurement practices, which ultimately leads to maverick spend or in other words non -budgeted costs due to lack of compliance control over pre-negotiated purchasing policies or agreement with suppliers.

How to address Indirect spend from a strategic sourcing perspective
Managing Indirect spend is a team effort involving both Financial and Procurement department. Efforts must be focused on bringing control over your entire source to pay processes (3 components described below) for the targeted spend categories. This initiative overall goal will have a different definition from a CFO or a CPO point of view; Spend Control by CPO, Budget Control by CFO - but it will have a common positive result on your bottom line by bringing savings to your organization. There is 5 key steps to undertake to bring your organization’s procurement department to the next level:

Accountability and Sponsorship
Before to undertake such initiatives, it is mandatory to create or define a structured team that will be responsible for such projects. Building the team is not as easy as it can sound. Projects team members must understand the organization’s objectives and, most importantly, must be accountable for achieving them. This means that such projects must be sponsored by the highest level of the company’s management, and grant the team leader (who will report under the sponsors) with a strong decision-making power. This will facilitate communication among all stakeholders from different departments of an organization (such as finance, legal, operation, etc.) that will be involved in the initiative, and ensure its success.

Data collection – Company Procurement Operation Processes assessment and Spend Profile Analysis
The key to a successful Indirect Spend strategic sourcing initiative is to first get a clear picture of your organization’s procurement profile. It is essential to get a good visibility on your spend structure and your current control over it as well as your procurement operation processes and associated technology. Indeed, it will ultimately allow you to identified maverick spend and its associated financial impact and assess the gaps in your source-to-pay processes (technological, human or others). The best practice in terms of spend analysis is to focus on your top spend categories and associated suppliers first and tackle the remaining suppliers if need be, following the 80/20 rule. From this analysis, the team assigned to this initiative will establish a spend and a process/technology baseline. It will not only provide you with a better understanding of your entire supply chain management profile, but also provide guidance on which strategies to apply to what spend category (supplier spend reallocation, internal efforts to ensure contracts compliance, etc.).  

Objectives definition and ROI projection
Once your baselines are established, you can set your objectives and build your initiative roadmap. This step must be used to answer questions such as what spend category will be included in the cost savings initiative, how much savings is your organization planning on realizing (while being realistic at the same time), what will be your internal costs to achieve these objectives, and how the overall return on investment is going to be leveraged across your organization. Answering these questions will allow your company to set the overall expectations of such initiative, at a C-suit level, which is essential in the sponsorship role expected from the highest level of management as described above. From simply cutting costs to using realized savings in order to extend investments current budgets in areas such as R&D, IT support, or even company expansion/acquisitions, it is essential to clearly define the line your organization wants to take, and properly communicate it to the team member(s) accountable for achieving your objectives.  

Strategizing & Execution
Once the data collection process is completed and the initiative roadmap developed, it is time to strategize and go to market. Before exploring the different tools available for going to market, let’s take a look at what strategies could be applied specifically for Indirect Spend initiative. Some of the most common strategies that apply to decentralized Indirect Spend procurement practices are supplier consolidation, spend consolidation (consortium), and benchmarking and direct negotiation with incumbent suppliers. There are several points to take into consideration before choosing which strategy to go with, such as the impact it would have on the relationship with incumbent suppliers or the time and resources needed versus what’s available. These points of consideration should help you select the appropriate strategy to apply in order to maximize your results.

Some of the tools that can be used to support these strategies are RFx, Reverse auctions, consortiums, etc. RFx is one of the most straightforward processes that enables suppliers to gain access to the full scope of work a business is looking for, and that will enable your organization to collect valuable data about the market state of a specific Indirect Spend category (suppliers competitiveness, quality of services, etc.). Reverse auctions can be an efficient way to capture savings quickly, but will most likely not end up with a long-term, sustainable solution like a RFx will provide. Smaller companies who want to leverage volume to get better pricing can explore the Consortium option. It can be applied to health care plans, office services, etc. Contracts, existing or not, can be seen as tools to use for your direct negotiation approach, and can result in quick savings as well! Payment terms or extension of your contract duration term are points of discussion that can be leveraged to qualify your company for an immediate discount program.

Building control over your Indirect Spend categories goes beyond the strategic sourcing initiative your organization will conduct and the team you will assign to support it. Controlling your Indirect Spend also means being able to ensure compliance and track performance. As obvious as it sounds, the proper mix of human and technological resources is the key to ensuring that the full source-to-pay process is under control. That being said, your teams accountable for compliance and performance tracking have to be equipped with the proper tools! Technological resources must be carefully selected to fit your company’s profile and enable your source-to-pay process to become one continuous flow. Supplier enablement is critical and can be achieved by adopting systems that will ease the ordering and invoice processes. Investing in an intranet based electronic platform can be an excellent long-term solution as well; it will enable better control and tracking of purchases
and will facilitate any future sourcing initiative to be carried out. These are just examples of what can be applied to ensure proper control.

Indirect Spend sourcing initiatives follow the same logic as any Direct Spend sourcing initiative. However, it is not given the same focus, leading to decentralized procurement practices and maverick spend. Allocating the proper resources, both human and technological, is mandatory to the long-term success of any Indirect Spend sourcing initiative and to ensure the projected savings will be realized.
Global manufacturing has seen many changes recently in terms of the introduction of new technology, shifting industry demands and associated production levels, as well as the preferred production locations. The latter point is what I would like to focus on in this article from a US manufacturer’s prospective. There have been many conflicting schools of thought about where the truly “low cost” production regions reside. Traditionally, Asian countries (since the 1980’s) have dominated the conversation from a low cost manufacturing standpoint. However recently there has been a lot of buzz from companies operating and distributing products in the US regarding the idea of Nearshoring. Nearshoring, from the US’ prospective, is an alternative to outsourcing to low cost countries which are located extremely far away from the US  geographically speaking. Nearshoring entails moving production, assembly and other business functions and processes to our close neighbors in Mexico. This relatively new movement has solved quite a few challenges that come along with dealing with companies who operate in opposite time-zones as that of the US.

There are many financial reasons that have led to this shift of US companies moving operations from Asian and other low cost countries to Mexico:

·         With the maturation of the Chinese manufacturing industry specifically (along with other Asian countries) and the associated implementation of labor hour restrictions, training and safety requirements and other working condition regulations they have seen an accompanying demand for a higher wage for skilled labor. Since around the year 2000 and on the Chinese labor rate has steadily increased while on the contrary the Mexican labor rate remained relatively stagnant during the same time period. In 2013, for the first time, the average Mexican labor rate fell below that of China’s.

·         The Yuan/Peso exchange rate has created another financial advantage where the Peso has continued to gradually weaken against the Yuan over the past 5-6 years making it even more affordable to produce in Mexico.

·         The shipping costs from Mexico to the US are much lower as compared to cross-continent shipments. Shipping goods across oceans costs much more in fuel, labor, and other resources to get to the end destination whether by sea or air. The cost difference is further perpetuated by the establishment of NAFTA which eliminates tariffs and duties on shipments crossing the US/MX/CA borders.

·         Energy costs, and the associated overhead of production, are steadily increasing in China while, again, Mexico remains relatively flat. In fact, the cost per MMBTU has been increasing for the past 10-15 years in China.

There are many other advantages of moving production and operations to Mexico from far away countries that are not solely financially driven, as detailed below:

·         Reduced lead times which allows for lean inventory, better planning and therefore a decreased risk of product shortages.

·         It is easier to communicate with Mexico considering our time zones are all within 3 hours of each other. In China, their day begins when our days in the US end and the opportunity for face to face or even phone call conversations are extremely rare.

·         Intellectual property is heavily protected by Mexican regulatory bodies and they enable authorities to actually enforce IP laws. When you look at China and other less developed countries, the protection of IP is a huge problem considering the lack of infrastructure, prevalence of corruption, and the general inability of Chinese authorities and agencies to enforce IP laws.

·         Mexico has strict child labor laws and enforces a 48 work week. Though China and other low cost countries are generally improving in this regard, Mexico still has superior working conditions and laws in place to protect the workers.

Overall, as companies evaluate the opportunity to move operations and production facilities to different countries, there are many factors that need to be considered and weighed before making a decision. As globalization in Supply Chain/Procurement continues to grow, and countries’ production advantages continue to change, it is important to stay informed with current events and shifting cost factors. Just because something was true today doesn’t mean it will be true the next. With changing political climates, technology, and other economic factors it is hard to say where the next popular manufacturing destination will be for many US companies.
3 benefits of strategic sourcing

Strategic sourcing can be the bedrock for deep change within a supply chain that leads to better financial gains. With all of the necessary tasks facing an organization, improving procurement and sourcing practices is the effective way to work toward better business. There are more specific means to measure the importance of strategic sourcing, though.
These are three of the most persuasive reasons to work with expert sourcing resources that can counter expenditures while still being productive.
1. Better guidelines for future improvements
Strategic methods allow businesses to gather data and make informed choices with a better idea of the outcome. This can mean reassessing current contracts. Federal News Radio wrote about the Department of Homeland Security's efforts, as told by the Office of the Chief Procurement Officer's Strategic Sourcing Program Office director, Jaclyn Smith.
According to this article, Smith explained the significance of the department's interest in strategic procedures at a panel earlier this year.
"We are talking policy impacts,"  Smith said. "We are talking about how you are fulfilling now and shifting from 'OK, this contract is up for recompete, and just because it's up for recompete, it doesn't mean we need to recompete it in the same manner that we did before.' "
"The need for a good business relationship can be all the more noticeable."
2. Strong relationships within the supply chain
When businesses need to work with an extensive list of enterprises, the need for a good relationship between them can be all the more noticeable. Strategic sourcing is once again a key way to respond to this complexity.
Supply Chain Quarterly spoke to the lead author behind a research study about the different types of "power" that buyers and sellers have. This author, Felix Reimann, summarized the findings by saying that supply chain executives should be "fully aware" of supplier interactions. He suggested multiple ways this can influence performance, from assuring suppliers that efforts are more coordinated to providing a platform for incentivizing this coordination.
This speaks to the more indirect effects that using strong sourcing and procurement practices might have. Even if your organization has to change suppliers or renegotiate, having enough recorded data can help you make this decision, as well as others. In fact, using the right processes can provide some concrete information about who the suppliers are and perhaps even what their practices might be in the first place.
3. More justification for change
Once again, the data discovered in strategic sourcing can be the beginning of meaningful changes. Rather than just an improvement, this could reflect a realignment or some other overhaul that indicates a bigger switch for the company itself.
It all comes from knowing which points will mean the lowest costs and are going to be most effective in the long term. The changes you choose may also fall in line with other important imperatives, such as better use of ethical or green sourcing. In addition, these methods could also allow you to verify that new changes really are as productive as you'd like them to be and having the desired effect.