July 2017
Let’s face it – a software to automate the comparison between companies when sourcing a new supplier and provide you with the best choice sounds attractive on the outside versus utilizing the services of a consulting firm. Plug in your needs, and voila – a list of recommendations is populated for you to choose from! All for one quick fee and none of the mess of dealing with a consulting firm (and money). So what’s the catch?

              There’s a reason why procurement consulting is still going strong today. Sometimes what you think you need is either not what you need, or can be captured and addressed through a different service you may not immediately be able to identify. Algorithms are not going to be able to make that distinction for you. Algorithms are also not going to be able to negotiate for you. Identifying needs and negotiating with suppliers are two large skills of procurement consulting firms that a computer simply cannot do. It’s even been proven that companies who have suppliers with the lowest margins were those they were able to negotiate directly with.

              Even when it comes to things like spend analysis and item consolidation that could essentially be partially automated, a living, breathing human being is still needed to validate the results of such an exercise. Several issues can be present in a normalization exercise, such as two separate companies with similar names being grouped into one, or a company being miscategorized based on another firm with a similar name providing a different service offering, or simply not accounting for a service offering from the same firm that falls under one of several different capabilities of that company.

              There’s been some chatter in the procurement world lately that jobs are going to be fully automated soon. While that may be true in terms of actual purchasing software, it simply doesn’t make any sense when the sourcing and negotiation piece is considered. Automated purchasing software is a benefit for all involved – especially procurement professionals. If you’re able to automate the tactical part of sourcing and can focus more of your energy on strategic initiatives, therefore demonstrating greater value to your organization while reducing the need for resources in charge of that piece only (if you currently have it), then it’s a win-win for all involved. Using software to for purchasing with clearly defined parameters can also prevent the dreaded “human-error” aspect involved as well for that particular activity.

              The in-depth expertise that comes along with utilizing a procurement consultant is extremely valuable for any organization that struggles with standardization strategic sourcing initiatives and purchasing compliance. To restate -  a computer cannot take into the unquantifiable aspects of strategic sourcing and negotiation required for the most successful procurement and sourcing initiatives, and although Elon Musk has been sounding the alarm on A.I. as a huge existential threat to society, we probably don’t have to worry about it any time soon as it relates to the field of procurement.  

ICYMIM: July 31, 2017

Source One's series for keeping up with the most recent highlights in procurement, sourcing, and supply chain news week to week. To stay updated on the latest supply management articles, check in with us every Monday.

Nicole Shedden, Corporate United, 7/25/2017

At a recent SYNERGY conference held by Corporate United, marketing, legal and IT professionals from the C-Suite opened up about their function's perception of procurement, and the value procurement provides. With their feedback and suggestions, Corporate United has identified what exactly procurement professionals can do to not only improve their relationships and collaborative efforts with other departments in their organization, but also how they can use these strategic relationships to demonstrate value and innovation between the cross-functional teams. 

Shawn Fitzgerald, ThomasNet, 7/27/2017

The Thomas Industrial Index recognizes patterns and trends to support buyers and suppliers in being educated on the most recent shifts and upcoming trends in the digital industrial economy. Their latest analysis shares this weeks findings, including a rise in sourcing activity for Printed Circuit Boards (PCB). This increase is credited to a universal short supply of copper, which is a main component in PCBs. Manufacturers who are struggling to source copper to produce PCBs can't meet the timelines and price expectations of the various buyers seeking PCBs at this time. 

Kelly Barner, Buyers Meeting Point, 7/31/2017

As a procurement professional, it is crucial to identify and monitor trends that are present throughout procurement organizations in all companies and industries. This week, founder of Buyers Meeting Point Kelly Barner recognizes three webinars in the upcoming week that discuss current events and hot topics in the supply chain, sourcing, and procurement space. Barner's recommendations include topics such as invoicing patterns, direct and indirect sourcing, and more. 

Pacing developments successfully: The right way to modernize
Is technology moving too fast for supply chains to keep up with? This seems like something that might depend on each particular company's capabilities, but CSCMP's Supply Chain Quarterly editor Toby Gooley recently argued that this is, in fact, a possible problem, with businesses too focused on the promise of technology and not enough on the execution.
It does certainly seem at times that new tools and services are appearing quickly, but Gooley implied that there isn't enough planning to support the adoption of self-piloting planes, cloud-connected cameras and other leaps in technology.
"It does certainly seem at times that new tools and services are appearing quickly."
While she doesn't specifically mention the word "strategy," a strategic approach may be exactly what overseers need to ensure a real benefit. After all, if the ultimate goal is efficiency, then implementing robotics and other new systems haphazardly could prove counterproductive if the cost is greater than the ROI.
Multiple manifestations
There's more than one way technology can affect the industry, of course, and supply businesses should look for the direct and indirect means that this might impact standard performance, or perhaps require some sort of transition.
A Forbes piece from December 2016 featured some of the trends to look for in the new year of 2017. It's telling that the article listed both the rise of the Internet of Things and the growth of ecommerce as important factors for the logistics industry.
If these services continue to shift online and parallel the use of tablets and other connected devices, businesses may face the need to modernize on multiple fronts and prepare for market changes as well as expected efficiencies as the "digital economy" takes hold. There could also find be new competitors to contend with.
What works for each business
The clear takeaway from Gooley's piece is the idea that supply technology updates should be planned and selective. Different companies will probably have their own overriding concerns. Sometimes this might require complicated coordination, but it's still important to use procurement services efficiently, as needed.
Food supply chains, for instance, might have to acknowledge different systems and means of communicating than others. In a press release, the food delivery company Shotput recently referenced the multiple technological innovations intended to fuel its eventual goals.
This would, according to this statement, eventually involve both an app and a system of automated store locations, as well as a means of using robotics in retail settings. Another one of the company's stated goals is to provide fresh produce to customers from national suppliers.
In this example, the roles of automation and AI are just as important as transparency. Using a strategic plan, a business like this may be able to prioritize the services it needs and continue evolving as it makes use of all available resources.
Finally, there's the need to keep costs low, which is always a consideration and appeared in the Shotput example: The statement said that co-founder Praful Mathur specifically wants to compete with more expensive food delivery services such as Amazon Fresh.
Business procurement management and coherent strategies can be a way to harness all of their resources and map out a reliable plan.

Companies may want to use global sourcing to strengthen their procurement and supply chain operations in the face of labor staffing concerns. Air Cargo News recently reported on a possible worker shortage, which could affect jobs just three years from now, according to DHL. Responding to this threat may be more easily achieved if businesses try to benchmarking services and other tools for reducing sourcing problems.

The scope of the issue
Referencing the report, the source article said that companies could try to take responsibility by making it easier for workers to adapt to the more technological future. With a clear plan, companies could potentially prepare for better employment practices, which might be one way to increase retention.

"Companies could potentially prepare for a shortage with better employment practices."
Supply Chain Dive's analysis of the situation was different. It acknowledged the existing efforts supply businesses have made to drive up recruitment and said that more needs to be done, suggesting that the heads of these businesses could take more initiative.

Larger-scale reports also seem to denote the need for more employees. A Beige Book from the Federal Reserve System said that manufacturer jobs were narrowing, despite a general increase in wages and prices in many of the 12 federal districts. Though the report, as with all Beige Books, was based on anecdotal evidence, it found tight market parallels in cities as diverse as Atlanta, Cleveland and Richmond.

Looking forward
The Bureau of Labor Statistics features a forecast of employment growth for "logisticians" from 2014 to 2024. While it said that job opportunities would be "good" in general over this time period, it also mentioned that the growth rate was 2 percent, 5 percentage points lower than the total projected employment change for all occupations during this ten-year span.

This would mean a mere 2,500 new individual jobs in 2024 compared to the 2014 amount. In a way, the BLS statement is more severe than the other reports, since it suggests that the main industry sources of employment for logisticians, including manufacturing, will decline seven years from now, while supply needs continue. The job openings that appear in this sector may spur on hope, but at the same time, supply executives could have to change the way they allocate resources to match the new reality.

How sourcing might help
Even a report from a source as large as DHL doesn't indicate a certainty, meaning that businesses face a variety of their own supply chain problems, no matter what the reality is. Businesses need to satisfy employment while also ensuring that the labor they do hire meets ethical standards, an especially fraught concern for large, complex chains. Staffing can also parallel other ethical issues, as supply employers look to place more individuals and respect both them and the environment in the process.

Reducing costs and making important supply chain changes can already be difficult, so taking these issues seriously may be an important step in enabling better hiring practices as part of a bigger attempt to set firm lines ahead of the anticipated future.
Source One Round Up

July 28, 2017

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


Amazon Business, Pt. 1: How It Stacks Up As Businesses Supplier
Nicole Mahaffey, Industrial Distribution, 7/25/2017

Amazon has become the largest internet based retailed in the world, and has done so by expanding and becoming competitive in new markets. In 2015, they introduced Amazon Business, featuring millions of products and discounts for bulk purchases. While it's a convenient solution for some buyers in the MRO space, traditional OEM suppliers are still competitive with Amazon Business, as they both offer different features that require purchasing professionals to weigh the pros and cons between the options. Stay tuned for Part 2 of the series where Source One Senior Analyst Nicole Mahaffey examines additional details to see how traditional OEM suppliers and Amazon Business compare. 

3 Ways an RFP Can Give Your Telecom and IT Services a Boost 
Jacquelyn Palantino, NLPA, 7/26/2017

The time and effort invested into an RFP will be rewarded with more control of costs and customized bids from vendors that are the optimal supplier candidates for your business. While discovering better pricing is the most highlighted benefit of an RFP, there are other ways your organization will find value as a result of this process. A successful RFP also has the potential to provide leverage to utilize during future negotiations with the incumbent supplier, or insight on categories where spend can decrease due to old technology or consumption needs that are no longer accurate. For more information about how to execute a successful RFP, check out these tips from Source One Senior Analyst Jacquelyn Palantino.  


Road to SYNERGY: Dallas, Texas

Source One's spend management experts traveled to Baltimore, Maryland earlier this summer to partner with Corporate United for their Road to SYNERGY series. In just a few weeks, our team will be getting back on the road to head to Dallas, Texas for the final event in the series. Members in the Midwest are invited for a one-day conference full of networking opportunities, educational sessions and exclusive presentations from industry leading service providers. As Premier Sponsors of the Road to SYNERGY events, Source one anticipating this final event to meet with CU members and discuss key trends in the procurement space.

Procurement and Supply Chain Professionals Happy Hour: Chicago, Illinois

After two successful years in a row, Source One is hosting the 3rd annual Procurement and Supply Chain Professionals Happy Hour in Chicago on September 14th. The event will welcome business partners, clients, and friends in the area out to Chicago River North for an evening of drinks, food, and good conversation. We also want to use this as an opportunity to celebrate Source One's 25th anniversary with our Procurement and Strategic Sourcing associates, and hope that you'll join us for this special occasion. For more information and to register for the event in advance, visit the event page

Report shows employee support for automation
A report from WorkMarket recently cast some light on the real opinions regarding automation and its role in the workplace. Typically, the perception is that workers are distrustful of automation or afraid of losing their jobs, but the highlights of this report seem to show enthusiasm for automation and awareness of how it could possibly make things better, based on the responses of 400 people, half employees and half business leaders.

Automation on the way
Among many notable findings, 90 percent of the subjects of the report said they saw some sort of advantage to automation. While more employers than employees did report feeling "interested" in automation, 58 percent of employees said they believed that parts of their jobs "could be automated," which was only 3 percentage points lower than the percent of employers who felt the same.

In addition, only 3 percent of employees and 6 percent of employers thought automation could account for their entire jobs. However, this could still indicate a growth in positive opinion regarding automation, or at least a sense that incorporating these features into business could be inevitable.

"Incorporating automation into business could be inevitable."
The company's statement on the report quoted Arun Sundararajan, professor of information, operations and management sciences at NYU, on the major potential for disruption that could come with more automation.

"A key to success with tomorrow's mix of traditional employees, digital substitutes and crowd-based work systems is ensuring that the needs of both shareholders and the labor force are met," the professor said. "Productivity gains through automation and on-demand innovation are essential to maintaining economic growth levels that create sufficient future demand for human talent." He also praised the WorkMarket report and said it "encouraged" him.

What jobs can be automated?
A Ball State University Paper, specifically from the Center For Business And Economic Research Rural Policy Research Institute Center For State Policy, cited evidence of the actual consequences of automation in communities and jobs across the U.S., using research from different sources. It referred to the work of Carl Frey and Michael Osborne in the form of a chart showing the most and least "automatable occupations."

The types of careers, and annual salaries of workers in them, varied widely. The list of most automatable positions included mathematical science professionals, with a wage of $66,210, and telemarketers, who earned $23,530 in the same time. The least automatable professions, on the other hand, were mostly health care-related, although that list also included "first-line supervisors of mechanics, installers and repairers."

The BBC supported this idea in a recent article where it affirmed the possible value of "emotional labor" in the coming years, which might be more difficult to automate, if not impossible. This includes education and care roles in particular.

As a piece for The Manufacturer stated, automation also potentially means connecting devices and systems to each other. The source said that the Internet of Things means devices could work together for production efficiencies. That means that automation, as opposed to simply being its own process, may also perhaps serve as a lynchpin for different transformative processes. Strategic sourcing can also be a similar driver for change.
Becoming "Certifiable" - My Journey Taking the ISM's CPSM Certification Course
As a procurement professional that likes to learn as much as I can about our industry, I recently realized that after 15 years in supply management, I don’t maintain any professional certifications, nor have I gone through any formal training in a long time.  This epiphany really started to hit home after Shelley Stewart, the CPO of Dupont, gave an informal presentation during an executive luncheon at the ISM national event this year.  He talked about the CPSM (Certified Professional in Supply Management) certification, how important it is, and his experience getting it.  He saw it as an effort to lead by example for his team, as continuous learning was critical to success in the organization he runs.  Other than practicing what he preached, it sounded like Shelley felt strongly that certifications can help us all do our job better.

As the months went by, I procrastinated.  Do I really need certification?  I’ve already written a book about strategic sourcing, I do trainings on procurement related topics, and I blog about best practices.  What will I learn from this experience?  But as I thought more about what Shelley said, I decided that it was finally time for me to become “Certified”.  If a CPO of a Fortune 500 company got value from it, then I certainly will as well. 

The first decision I had to make was which certification to go for.  While the ISM’s CPSM certification was certainly high on my radar, there are others out there.  I decided to take a look at the certifications available for procurement professionals, and what value and knowledge come with each.

Capterra did a pretty good job detailing some of the top certification programs available today on their blog, so with a hat tip to Andrew Marder, I would recommend you check it out here.  After reading this blog and doing some additional research on my own, I can tell you that I was surprised by the level of detail that goes into each of these certifications, we well as the time commitment.  What I assumed was an online LMS driven test turned out to be much more comprehensive.  These certs require independent study (even for highly experienced procurement pros), interactive learning and formal testing in a classroom environment.  They also came with a much heavier price tag than I expected going in.  That’s not to say they aren’t affordable, but the pricing did take me by surprise.

My initial research told me there are two certifications that would have the most relevance to my job, those being the ISM’s CPSM, which is by far the most well-known and well-respected of the certifications, and the SIG CSP (Certified Sourcing Professional), which goes beyond basics and into areas such as AI and big data – certainly major themes in any future of procurement discussion.  Both certifications will certainly help any procurement professional become more proficient in their job, but they also come with a network of like-minded colleagues that are willing to talk about their experiences, which can be just as helpful for procurement pro’s trying to learn more about their industry.

After much debate, I decided to start with the ISM certification.  I’ve been meaning to become a member of ISM and to get more involved with my local chapter, and I noticed that attending local chapter meetings counts towards recertification credits, which is a nice incentive for me to start going to them!  I also thought that if I was going to start somewhere, it should be with the most well-established certification our industry has to offer.

Over my next few blog posts, I will talk about my experience going through the CPSM certification process, from both an operational perspective (the steps you need to take, costs, lessons learned), as well as from a knowledge perspective (What did it teach me?  Can I use that information in my job?).  I am looking forward to the journey, and to sharing my experiences.  Stay tuned to find out if the ISM can teach an old sourcing dog new tricks!
Robotic assistance vs. full automation in the supply chain

Opponents of fully automated technology, whether it's for cars or factories, sometimes argue that a shift to robotics would replace jobs and be harmful. Currently, the counterargument has invoked a more gradual model that keeps humans in similar roles of authority with AI and robotics only enhancing what they do. Though full automation may happen eventually, the supply side and industries such as retail might learn more from considering a partial approach, with robotic technologies filling an important gap.
Why automate in retail?
To some extent, it's understandable to connect automation with job loss. However, a piece for The Wall Street Journal said that automation has risen to match high demand for labor, a need that has led to the danger of worker shortages. Warehouse "picking," the source said, could be a useful way to lower expenses and process orders, even though the current systems don't quite seem ready for the kinds of warehouse operations currently in demand.

Robotics and human workers may have to coexist for the near future before full automation.
Robotics and human workers may have to coexist for the near future before full automation.
U.S. labor costs may also be part of what encourages outsourcing, as a Digiday article described. Using apparel as an example, this source posited a future where automated robots may reduce production costs and help with restoring practices on U.S. soil, a goal which could coincide with other similar low-cost country sourcing/nearshoring endeavors.
Barriers to full automation
Automated assistance seems more plausible for multiple reasons. One of these is the sheer time and effort it will take to reach the full potential of robotics. Edited data scientist Paulo Sampaio told Digiday about the many immediate forces for change in the clothing industry.
"The apparel retail market is one of the most competitive industries in the world, driven by shrinking product cycles, declining mall and in-store foot traffic, and the online retail onslaught," he said. "But it's also one of the slowest in its uptake of technologies, like automation. Today, it's more than buzzwords; it's table stakes."
Other possible problems include cost and the lag in development. Some tasks may simply be too complicated or impractical for the current generation of AI and robots to cleanly move in to adopt, demanding a kind of co-working approach.
Working together
A Forrester Research piece for ZDNet referenced the need to prepare what it called a "mixed human/machine workforce." That can include a plan for new jobs and other strategy to sustain the workforce/robotics relationship and harness automation successfully for the long haul.
A final key point suggested by this article is the role that incomplete automation might have in preparing for the future. With partial automation already established, companies can try to adapt to the more full version, and potentially have a stronger infrastructure ready to support it. In a retail setting, robotics can support expansion and a better customer experience, as the point of sale and the warehouse both see assistance, not full automation, take hold.
The final outcome will almost certainly be better if strategic sourcing influences a company's growth in AI use.
New frontiers opening in U.S./China trade

China's economic dominance has been a major discussion point for those wondering about the future of international relations, and some of the more recent developments point to a possible swell in opportunities for the U.S., despite its large existing deficit.
Trading rice
The U.S. Department of Agriculture released a statement on a new decision that could signal a notable change in policy. As this statement said, the agreement would initiate rice exports to China from the U.S., potentially placing the latter country into greater prominence, making it part of a market that, by the USDA's count, represents demands for millions of tons of rice.
In the same statement, Agriculture Secretary Sonny Perdue remarked upon the possible benefits for the U.S. that can come from this deal.
"This is another great day for U.S. agriculture and, in particular, for our rice growers and millers, who can now look forward to gaining access to the Chinese market," Perdue said. "This market represents an exceptional opportunity today, with enormous potential for growth in the future."
"Could there be a chance to improve upon this economic relationship?"
Although there are some necessary processes the U.S. may have to pass through to meet Chinese trade standards, could there be a chance to improve upon this economic relationship?
The BBC's report on this development also mentioned the ongoing conflict about steel imports, calling it a "tricky issue" and positioning it as the opposite of the possible promise of the U.S. rice exports.
This news came on July 20, closely following reports of apparently inconclusive negotiations between the two countries. Reuters said that the talks haven't yielded as many results as may have been desired, following the "100 Day Action Plan" discussions.
A Department of Commerce press release in May said that the oversight for the discussions included Wang Yang, China's vice premier, and Wilbur Ross, the U.S. secretary of commerce, among others. The top item of a list of 10 "initial actions" regarded beef import regulations for China starting in July, another sign of possible advancements for U.S. trade standing.
Because of all of this, the upcoming trade decisions might reflect the U.S. interest in reducing its deficit, possibly maintaining some sort of trade ties and arguing for better position. If demand for exports continues to be strong, the role of successful, responsive production could be crucial.
The New York Times said that Chinese economy is now adapting to an environment where large conglomerates influence the latest changes and are possibly unpredictable and could over-borrow. Information from Thomson Reuters and the Bank for International Settlements said that nonfinancial borrowing was between 150 and 200 percent as of 2016, and has been above the 100 percent mark since 2011.
This places the non-financial borrowing rate for China far above not just the U.S but Britain, Germany and Japan, with this possibly being a sign of its own continuing financial significance. To get the best advantages in the current economic landscape, businesses may need to use global sourcing and better support their own strategic decisions as well, based on a solid structure.

Despite the frequent jokes that communications remains a catch-all degree, poor communication remains the number one most cited reason as to why relationships fail. Therefore, communications couldn’t be any more fundamental to the building blocks of success for supplier relationship management within the procurement industry - with all the complexities inherent within the communications chain, finding ways to optimize one’s interactions and minimize the risk of misunderstanding will yield stronger relationships with clients and suppliers, and deliver greater cost-efficiency in the long-run. Thus, here are five communication strategies to consider that can maximize your procurement success:

5)       Designate Roles, On-board the Team, and Maximize Individual Strengths- Before practical consultation between clients and suppliers even begins, it is pertinent to establish specific roles for each team member. By doing this, along with informing each member what everyone else is responsible for, this creates accountability and helps eliminate potential confusion over who should complete certain tasks. Roles should also be assigned to maximize individual strengths – for example, if a certain member excels at implementing software solutions that manages suppliers, they should be delegated this task to produce the highest results possible.

4)      Enable Timely Output Through Strategy- When initiating discussions with clients and suppliers about the current procurement process, structuring a specific communication “plan of attack” to satisfy both ends can eliminate time wasted on discussions which lack focus. Creating an input-malleable SRM strategy that augments your client’s staff, while detailing how to overcome internal and external obstacles that prevent relationship and product optimization, is a good place to begin. Plus, following a strategy can be conducive for a more open communication environment, leading to my next point.  

3)      Maintain a 2-flow engagement- When working with clients to determine their best-fit suppliers, it is vital to not merely “hear” their feedback, but truly listen to what they are saying, as their feedback will guide strategic decisions that eventually lead to a compatible supplier. Nevertheless, communication cannot be a one-flow engagement solely between your firm and the client; it is also vital to engage the potential supplier for their feedback to understand their own objectives. Through assessing both sides’ people, processes, and technology, your firm will learn what is and isn’t working, and can use this knowledge to start formal negotiations that speak to what both sides are looking for.

2)      Drive Productivity Through Consistent Interactions- When communication remains unpredictable and does not follow a cohesive chain of command, it makes others less inclined to engage with you and hinders productivity. To heighten productivity, utilize consistent communication practices, such as maintaining a professional demeanor in all interactions, as well as determining a specific chain of command when responding to questions, emails, or otherwise. Additionally, productivity can be further heightened through consistent application of supplier governance tools that provide tangible metrics on performance, and act as grounds for communication between clients and suppliers.

1)      Implement Transparency, but Tread Cautiously- When clients or suppliers aren’t forthcoming about sensitive information with one another, this can act as a barrier within the communication chain by creating confusion, which hampers success. Thus, encourage clients and suppliers to engage in open dialogue about their processes so you can minimize and manage risk. However, what can be tricky is understanding where to draw the line between transparency and privacy – some information a client or supplier may leave out of discussions because they feel it will negatively impact the relationship, the contract, or even their general business practices; therefore, in your capacity as a consultant, work to mediate each side appropriately while simultaneously respecting rights to confidentiality.

ICYMIM: July 24, 2017

Source One's series for keeping up with the most recent highlights in procurement, sourcing, and supply chain news week to week. To stay updated on the latest supply management articles, check in with us every Monday.

IT's Role in Procurement Digitization
Andrea Brody, BravoSolution

Procurement's relationship with IT is much more involved compared to their relationship with other functions in an organization. Both share the common initiative of improving business processes throughout the company through automation, and strive to reduce costs while increasing efficiency. When IT and Procurement can collaborate effectively and support one another, both teams can optimize their results and reach their greatest potential. Procurement can deliver more value while IT has better control over the security and performance of systems throughout the organization. 

Deconstructing Procurement
Kelly Barner, Sourcing Solved, 7/14/2017

In this conversation, Kelly Barner describes the challenges that come with deconstructing traditional approaches to procurement and why it's necessary for professionals in this industry to make this change now for their organization. This includes a focus on bringing together other functions in the business, such as IT and Finance, to understand the greater goal of driving value and not substituting current processes for less expensive options. Translating that procurement offers innovation, not just cost reduction, and can be utilized even without the need to reduce spend. 

The Advanced Supply Management Phoenix Takes Flight
Michael Lamoureux aka The Sourcing Doctor, Sourcing Innovation, 7/24/2017

Advanced spend analytics can discover savings throughout every category of spend by identifying value across the overall spend from consistent suppliers of products or services in multiple categories. The results of this evaluation will allow you as the buyer to create beneficial supplier relationships and begin SRM best practices if they aren't already in place. By utilizing this partnership as more than transactions between buyer and supplier, your organization has the opportunity to realize innovative solutions that can reduce costs for both you and your suppliers. 

Source One Round Up

July 21, 2017

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


In early June, Source One's spend management team joined Corporate United for their Road to SYNERGY event in Baltimore, Maryland. Now Source One is heading down to Dallas, Texas in August to meet with industry professionals local to the area through out the educational sessions and networking opportunities available during the one-day conference. This series is allows members across the country to learn from the leading service providers who offer solutions in the specific categories they possess expertise. Source One is included as a Premier Sponsor of the Road to SYNERGY events and has appreciated meeting with members all over the U.S. throughout the series. 

As the summer winds down, we're gearing up for all the industry events the fall season has in store. First on the list is the third annual networking event hosted by Source One's Chicago office. This happy hour invites businesses in the area out to Chicago River North for a social event without the sales pitch. We're also celebrating our 25th anniversary this year, and hope our business partners, clients, and friends in this part of the country will come out and recognize this milestone while enjoying a few drinks with us. If you're interested in connecting with other Procurement and Strategic Sourcing professionals, visit the event page to find out how you join us on September 14th. 
While with a group of friends recently, someone brought up that they heard Michael Phelps was going to be racing a shark. Needless to say, we spent the next 20 minutes debating this topic – primarily just how they were going to pull this stunt off. For those not familiar with “The Battle for Ocean Supremacy” as its being promoted, Discovery Channel announced earlier this summer that Michael Phelps will be racing a great white shark to kick off Shark Week 2017.

This conversation got me thinking how impressive Shark Week is from a marketing perspective. After nearly 30 years, Discovery Channel is still able to pull in millions of viewers each year to watch seven days of programming about sharks. Even I find myself tuning in at some point during the week to watch the jumping sharks off the coast of South Africa and to see if they finally solved the mystery of where great whites give birth.

So how does Discovery Channel pull this off? They capitalize on their brand awareness with creative content. In this post, I will highlight some of the key tactics that they have used in recent years, aside from awe-inspiring shark videos, of course.

Social Media
Discovery has been integrating social media into their programming for years with live feeds from Twitter displaying on-screen during programming to social media Q&A sessions with experts. Additionally, they utilize branded hashtags to promote both the program itself, as well as individual episodes during the week. Finally, this year they will be working with Snapchat to develop custom content that will be available to users during the week, including filters and other content libraries (i.e. stories). Discovery is doing its best to bring audiences closer to the action of Shark Week through these social media interactions during their programming.

Celebrity Marketing
Partnering with Michael Phelps is only one example of Discovery using the fame and appeal of celebrities to promote Shark Week. They have brought in hosts for the week from other Discovery Channel personalities such as Mike Rowe and The Mythbusters to comedians Craig Ferguson and Andy Samberg, and even the author of Jaws, Peter Benchley. Beyond that, other notable personalities have been featured in programming including Paul Walker, Rob Lowe, Blake Lively, Seal, and more. In addition to that, Shark Week receives numerous endorsements each year from celebrity fans via social media posts, whether intentional or not. By capitalizing on these individuals’ popularity and influence, Discovery is able to expand their reach to more potential viewers each year.

Brand Partnerships & Sponsors
Along with celebrities, brands also hop on the Shark Week bandwagon through partnerships and sponsorships – with everything from movie promotions, custom products, co-branded content, and more. For example, as a sponsor of the 2012 program, Volkswagen created a model of their car to drive on the ocean floor. Also, last year the move The Shallows (a movie about sharks) used this programming as a promotional opportunity. These partnerships have also resulted in limited edition shark-themed products, such as with Dunkin Donuts and 7-Eleven. Other companies, simply get wrapped up in the excitement of Shark Week and create oceanic content.

While Shark Week will always have its die-hard viewers, the challenge Discover continually faces is keeping those fans engaged and growing their audience year-over-year. It will be interesting to see what new and innovative content they develop in the years to come.

And for the record, my money is on the shark (sorry Mike).
Source One is a consulting firm that provides strategic sourcing services and procurement advisory solutions to companies around the globe.  One of the ways we provide support to internal corporate procurement and sourcing teams is through the use of contracted labor when companies have a need for on-site short term support.   However, we find it’s not always easy for organizations to engage with providers such as ours for this type of labor; and we find that it is often due to a fundamental misunderstanding between contracted labor and temp labor.  More specifically, there is often confusion about what you get and how costs are modeled for traditional temporary labor versus contract labor.  This is often due to HR being involved in the mix and/or having a rigid procurement process for the onboarding of procurement temp/contingent labor.   This post is intended to help arm you for the conversation/negotiation that you might need to have in order to ensure you get the RIGHT resources in place to fit your temporary procurement talent needs.

While the below is very oversimplified, let’s try to look at it at a high level. We’ll try to break down three of the most common ways that procurement contingent labor costs are modeled.

  • Temporary Labor – Temp works are typically employed by a temp agency for limited periods of time.  While these individuals are sometimes also called “contractors,” the reality is they are usually employees of a temp agency, and the agency itself pays them their salaries and benefits. In many cases, these types of resources are able to purchase benefits from their employers.   Temp staffing firms typically charge a markup on top of the wage rate (inclusive of overhead charges and taxes) in order to establish the “bill rate” that the temp staffing provider charges. Many times, temp labor providers can provide help for as little as a one month period.
  • Independent Contractors - Independent Procurement Contractors are typically individuals who work for themselves and handle billing directly to their clients.  They are often much more experienced and specialized in the procurement space, and as such bill at a higher rate.  In most cases, these contractors bill as 1099 workers; and in some cases might bill through a third party agency or have their own LLC set up for billing purposes.  They typically seek out engagements that will last 3 months plus.

  • Consulting Firm Managed Services – Consulting Managed Services firms typically have their own highly experienced and specialized procurement resources.   These resources are managed by the consulting firm and may consist of employees or employees and sub-contractors.    The rates are often similar or slightly higher than those of independent contractors, but may have the additional flexibility of getting down to an hourly rate (vs daily, weekly, or monthly).  Consulting firms will typically not be transparent with their cost margins and markups, similar to independent contractors.
Now let’s take a look at the differences in the types of workers and procurement positions each type of supplemental procurement solution provider may provide, and the pros and cons of each procurement labor supplement solution:
  • Temporary Labor – Typically, temp labor firms are providing resources that are of a more tactical skill set than alternative procurement providers.   More specifically, they tend to be acceptable places to turn when you need transactional jobs; such as placing purchase orders or reviewing inventory cycles; but should not be relied upon for category strategy, analytical or negotiation skills.   While the cost of this type of labor is often the cheapest, it often would create more harm than good to deploy this type of solution into areas that have large spend or strategic spend.  Think about it rationally, and it makes sense.   Good procurement professionals are in very high demand right now, and the pay scale is increasing.    To find individuals that are ready on a moment’s notice for a low cost means that you are getting a low skill, junior, or unreliable resource; or someone who is temporarily in-between positions and could leave the temp position at any time to pursue greener pastures.   Additionally, typically a temp provider provides no management responsibility or supervision of the resource; and instead relies on you to manage them. 
    • Pro: Low Cost, Rapid Deployment, Quick to Scale
    • Con: Low Skill, Tactical Focused Only, High Turnover, High Degree of Management Require
  • Independent Contractors – If you only have a need to fill a singular position, and you don’t see that role expanding; and independent contractor might be right for you.  Typically independent contractors are highly capable, self-managing, more experienced, and bring a particular focus and subject matter expertise in a particular subject/category.  However, some have a tendency to chase the next big gig; meaning turnover is a risk, they don’t have the ability to scale (since they are one individual) and they have the most time consuming interview, onboarding and ongoing financial/billing management costs.
    • Pro: Highly Specialized Subject Matter Expertise, Self- Managing, Reliable, Accountable for Results
    • Con: Can Be Expensive, Moderate Risk of Turnover, Typically Seek Longer Term Gigs, Can Be Very Time Consuming to Find, Onboarding and Interviewing Can be Time Consuming, Can’t Scale Beyond Their Own Small Network of Other Contractors
  • Consulting Firm Managed Services – Often, the best of all worlds is to use a managed services firm to supplement your procurement or sourcing team.  Though, admittedly, this can be a bit confusing as well.  A managed services firm can help provide resources utilizing their own staff in an offsite capacity; but can also place individual contractors on-site for you.   This means that they can not only place a named individual onsite, but they can provide access to a broader team; often on an hourly basis.  That broader team can do things like provide back office analytical support; expertise and subject matter experience in categories outside of the onsite individual’s own capabilities; and can generally help ramp up and down more quickly.  Consulting firms also typically assume greater responsibility and accountability for their teams than a traditional temp labor firm.  You also can rely on them to prescreen candidates and have confidence in the reliability and work product of the on-site people they would place; which is something you can’t always say when you individually bring in direct independent contractors.  And, consulting firms typically have knowledge bases, templates, previous project results, tools and technologies that will help their team perform faster and better than your internal team could typically do on their own. 
    • Pro: Self Managing, access to institutional knowledge and category benchmark data, multiple SMEs and Skills, can get to hourly instead of daily or monthly commitments; can flex up and down quickly via offsite support, they remove the individual interview component of hiring a contractor.
    • Con: Not as cheap as a traditional temp worker (but returns a high turn on investment).
The above is very much an oversimplification of the temporary procurement labor landscape; but it gives you a better understanding on how to build a business case with your HR team and controllers of budget on why you probably should not be chasing low cost temp labor.    

One major problem when HR departments, MSPs, or VMS staffing solutions get involved is that they want to have negotiations with your temp labor provider on controlling markups.  While this is a valid sourcing strategy for traditional temp labor firms; it simply does not apply to independent contractors or consulting firms.   Your task will be to help communicate why you may need to deviate from this type of thinking; and show them that the total Return on Investment of more experienced labor is much more important than keeping an ultra-low hourly rate for support.    

The below decision matrix can help you understand some of the key decision points in selecting a procurement labor provider:

And this table gives you an idea on which type of procurement temp labor provider you should be utilizing based on the job requirement:

And of course, the easiest way to solve your staffing and procurement temp labor and contractor needs is to simply call Source One.

Tuna company commits to supply chain change

Making a sustainable, compliant fishing supply chain can put a lot of pressure on companies, but big corporations still strive to be better. That could be one of the lessons companies take away from the recent announcement from the tuna business known as Thai Union Group.
Working together
On July 11, the company and Greenpeace released a joint statement detailing shared efforts from both organizations to enforce change. According to this release, the new agreement focuses on multiple different improvements meant to enhance both the quality of life for laborers and the habitat quality of marine life affected by their operations as well.
This includes everything from a bycatch mitigation best practice implementation plan set to appear later this year to an audit program and ethical recruitment practices. Taken as a whole, the agreement could be a major milestone for green commitments in fisheries, especially given the immense size of Thai Union Group and its holdings. As with all major changes to big companies, this could have an extra impact if it proves to be a working model that others in the same industry can follow.
In an article on this development for National Geographic, Greenpeace International Executive Director Bunny McDiarmid wrote about the decision and what Greenpeace's role will be in keeping the company accountable.
"At our request, Thai Union has agreed to pay for an independent third-party audit of their progress on this agreement in just 18 months' time," McDiarmid said. "We will build on the momentum created by these reforms and demand that other seafood businesses step up and follow suit."
"Thai Union Group seems to specifically be looking at some of the recurring issues found in fisheries."
Persistent problems
Some of the issues the agreement aims to fix can apply to supply chains and sourcing in general, but Thai Union Group seems to specifically be looking at the recurring issues found in fisheries, mainly poor regulation for workers and a lack of information on catches.
Despite the awareness others have brought to these issues, there is still much at stake, and the confusion within the supply chain could be enough to dissuade some companies from investing in the supplier relationship management tools they need to course correct.
Is insufficient monitoring the root?
Even though there are many actions Thai Union Group is committing to as part of the agreement, ultimately it seems that the biggest problem is the single one of transparency, or the lack thereof. A 2015 report from Oceana (the most recent of its annual reports available) listed transparency alongside other priorities for companies in heavy fishing countries.
The same report also said that "illegal, unreported and unregulated" fishing was responsible for as much as $23 billion in economic losses each year, as well as more than a fifth of the total amount of fish caught annually. This source also cited data showing an uptick in yellowtail flounder and redfish in the Atlantic Ocean after fishing limits were proposed in the late 1990s for each of these species.
In the effort to follow these and similar trends, businesses in fishing and other food industries might all need to look into new ways to measure activity.
When online shopping was first introduced, consumers jumped at the opportunity to make purchases that would be delivered straight to their door without ever leaving the comfort of their home. This was back when shipping took multiple weeks, and online shopping was mainly utilized for items that couldn't be purchased from local brick and mortar stores. Amazon aimed to become truly competitive with traditional retailers and began offering a wide variety of household items, health and beauty products, sports equipment, and much more. The expansion of their fast delivery options, from two-day to two-hour has allowed them to offer perishable grocery products that raises concerns for an industry that was otherwise safe from the competition of e-Commerce. Amazon and other online retailers aren't showing signs of slowing down any time soon, and the opportunities for e-Commerce's future are seemingly endless. 

Check out this infographic provided by Villanova University's Online MBA Program, and visit their site for the full story. 

Inside the mind of the Corporate Buyer: Supplier Diversity Trade Show Etiquette

The supplier diversity business trade show season is currently in full bloom.  Companies are strategizing over which events to attend, who should go to represent their company, and what their targeted list of potential clients should be.  As a former corporate buyer, I have several tips that if implemented, can increase a diverse supplier’s ROI with these events:

1)      Never ask the potential customer’s Buyer/Rep: “What does your company do?”

Usually most organizations publish a list of companies having booths at business fairs in advance. Attendees of these events should use that list to do research on the businesses they wish to target in advance of the fair.  Not doing so shows a lack of maturity in your sales strategy.

2)      Focus on demonstrating how your business can help their company.

As a salesperson, it is your responsibility to explain the benefits of a new company buying your products or services, not the other way around. Will your ‘X’ provide improve speed, quality, or cost as compared to the company’s current supply chain partner? If this is a new service, how would it help a company gain an advantage over its competitors and increase market share?  If you cannot clearly state these reasons to a potential customer, you have more work to do.

3)      Being a MWSBE cannot be your only value proposition.

Each time a Procurement Professional makes a supplier recommendation after an RFX, she or he places their reputation on the line.  If something goes wrong, they will receive some blame for leading the process that recommended a supplier that failed.  Because of this, evaluation criteria for RFX’s include several different factors, including but not limited to cost, quality, speed of delivery, etc. Being a diverse supplier is a plus, but it cannot be your only differentiator.
4)      Know your competition, and why your value proposition is better than theirs.

Be able to speak specifically on how doing business with your company instead of your competition would be beneficial to the buyer’s company. 

5)      Register as a supplier on the prospective client’s website.

If a prospective company has an online supplier registration (OSR) tool, be sure to fully complete the registration of your company prior to the event.  Be prepared to upload any diversity certifications you have obtained.  Why is this important?  These tools are normally the first place a buyer goes to start building a potential supplier list for RFX’s.  At a glance, buyers will choose to discontinue or pursue investigating your company further based on this information!  View these opportunities as mini RFI’s.  Your chances of being invited to RFX’s could solely depend on the breadth and depth of information provided here.  If the potential client does NOT have an OSR Tool, it is appropriate to ask the buyer/ trade show representative how can your company get on their radar.  

By keeping these five simple steps in mind, I guarantee you will leave a positive impression on the potential customer.  The rest is up to you.  Good luck!