January 2018

Nothing cures the winter blues like the comfort of conducting a thorough spend analysis.  Performed effectively, a spend analysis can reveal hidden risks and shovel a path to future value savings. Without the proper attention to detail, however, a spend analysis can leave your Procurement team stranded on a risky patch of thin ice.

Don’t get left out in the cold because of inaccurate data.  Check out Source One’s latest infographic for three mistakes to skate around in your next spend analysis.

Interested in learning more about conducting effective spend analyses?  Contact Source One’s Procurement experts today and take a closer look at costs across all categories.  Also, check out SpendConsultant.com for more information on spend analysis as a service.

Since ancient Greek times, the Olympics have been a unifying, nationalistic force, helping celebrate some of the best and brightest athletes from across the globe. With the Winter 2018 Olympics right around the corner, it’s important to remember that with great games come great, procurement-related costs.

For instance – DID YOU KNOW – that to submit a bid to the Olympics’ RFx process, it costs millions of dollars?
Frequently, cities spend between $50 to $100 million on consultants, travel accommodations, planning, organizing, and more to ensure the strongest possible bid in the RFx process. For example, Tokyo recently spent $150 million on its 2016 Olympics bid, while it put forth $75 million for its 2020 bid. Although it currently costs millions of dollars to simply submit a bid, the IOC[CB1]  is reshaping its process to enable greater inclusion of other cities for the RFx process, according to the 2024 Olympic Games Framework guide.  

Besides bidding – DID YOU KNOW – infrastructure costs for the Olympics range from $5 billion to $50 billion dollars?
After a city wins the bidding process, the city must undergo extensive construction of the Olympic village to house athletes; provide lodging options for guests; and create other infrastructure like rail ways and airports, to accommodate the influx of people and augment the experience. Invariably, these costs include host cities procuring materials necessary to build new systems, negotiating with contractors who can complete the work, and often utilizing options such as outsourcing or offshoring projects that can be brought in at a later stage. 

Furthermore – DID YOU KNOW – cities hosting the Olympics can experience short-term positive gains?
Olympic-hosting cities generate thousands of temporary jobs, stimulating short-term economic growth, while improving city infrastructure for future use. The Olympic Games Beijing, for instance, invested $22.5 billion in roads, airports, and railways, and $11.25 billion into cleaning up the environment, in turn generating stronger systems for city-dwellers to use. Moreover, the Games’ attraction of thousands of spectators, athletes, media and sponsors six months before and after the games, helps derive additional revenue. Thus, game-hosting cities utilize strong brand management to ensure positive returns on their investments.

However – DID YOU KNOW – cities hosting the Olympics can experience long-term negative gains?
While hosting the Olympics can provide positives, it also has drawbacks. Fundamentally, Olympics costs often outweigh Olympics revenue. For example, London earned $5.2 billion against an $18 billion budget; Vancouver earned $2.8 billion against a $7.6 billion budget; and so on and so forth. Los Angeles is the only city to accumulate true profit from the games, as most of its infrastructure existed pre-games. Thus, to reduce costs, cities will need to assess and manage their spend such as through spend analysis services, while conducting benchmarking and accumulating market intelligence to ascertain cost-efficient options for infrastructure development.

The bottom-line: The Olympics maintains just as many procurement-related costs as it maintains incredible athletes; to circumvent debt and accrue long-term benefits, host cities will need to conduct themselves strategically.

In 2014, NFL veteran Ray Guy earned a place alongside the league's all-time greats in Canton, Ohio.  Enshrinement in the Hall of Fame is an uncommon achievement for any player. Just over 300 have achieved the distinction throughout the league's history. For Guy, however, the feat was especially impressive and unexpected.  The former Oakland Raider became the first - to date only - punter to claim a spot in the Hall.

The decision was met with no small amount of controversy.  After all, punters and kickers are practically second class citizens on NFL teams.  Few collect large salaries, and even fewer achieve the level of name recognition that players in more glamorous positions enjoy.  

Bias against punters is somewhat understandable.  At a glance, their on-field duties are the exact opposite of a quarterback's more obviously strategic ones.  Their impact on the scoreboard is rarely obvious, they spend very little time on the field, and only unsuccessful punts ever wind up on highlight reels.  To denigrate these players, however, ignores the considerable strategic impact of a well-executed punt.  The best punters consistently place their opponents on the wrong side of the field.  This sets the stage for defensive success and mitigates risk for the quarterback and his offense.  

Guy's induction reignited the debate over a punter's importance to team-wide strategy.   Recent years have seen similar conversations emerge regarding Procurement.  Historically, Procurement has faced its own share of misconceptions and belittlement.  Seen as a tactical asset at best and a cost-slashing adversary at worst, Procurement and its practitioners have languished on the sideline for years.  The quarterbacks at the executive level and at the head of other departments have resisted Procurement's influence, undersold its value, and created unnecessary division between teammates. 

Punting, like old-school Procurement, can often look purely tactical and reactive in nature.  To the untrained eye, NFL teams bring out their punters exclusively to perform damage control.  Punting means things have gone poorly for the offense. They're losing field position, the fans are grumbling, and scoring points looks like a dream.  It's now up to the punter to win back some yardage with an effective kick.   

In the old days, companies typically leveraged Procurement for a similar purpose.  Waiting until fourth down, they would call upon their purchasing team to quickly make calculations, cut the necessary costs, and make sure the lights stayed on.  Engaging with Procurement was like snapping the ball to your punter.   It meant your team was losing.

Procurement's own Ray Guys have changed the department's reception and distinguished themselves as indispensable team members.  Business leaders are increasingly recognizing that Procurement's strategic value goes well beyond saving dollars on fourth down.  Their risk-averting tactics are now maturing into components of fully-strategic game plans.  In fact, within best-in-class companies, Procurement has begun to combine the value-adding qualities of both a punter and a quarterback.  They still save their companies from poor field position and help discourage future losses.  More and more, however, they are stepping inside the huddle and working with leaders at every position to draw up plays for scoring savings.

Victory on Sunday will mean locating value in unexpected places.  For the Eagles, a well-placed punt could make all the difference in keeping Tom Brady out of the end zone.  For your business, a well-appointed Procurement unit could make all the difference is gaining a competitive edge, establishing fruitful supplier relationships, and inspiring sustainable, enterprise-wide change.

ICYMIM: January 29, 2018

Source One's series for keeping up with the most recent highlights in procurement, strategic sourcing, and supply chain news week-to-week.  Check in with us every Monday to stay up to date with the latest supply management news.

Sydney Lazarus, Spend Matters, 1/23/2018
The World Economic Forum just released its annual global risk report.  Detailing the hazards facing businesses across the world, this year's report pays particular attention to extreme weather and cyberattacks.  In response, Spend Matters shares their strategies for risk management in an increasingly unpredictable supply management space.  While many Procurement organizations tackle risks on a case-by-case basis, the Spend Matters team cautions against this approach.  They instead suggest that Procurement teams address risk with an overarching governance model backed by data and Procurement technologies.  

Michael Lamoreaux AKA The Sourcing Doctor, Sourcing Innovation, 1/25/2018
The ugly truth, the Doctor suggests, is that most lifecycle management systems could be recreated by a teenager with Microsoft Word. These systems have shown the same flaws and shortcomings for nearly a decade. Procurement teams can only truly derive value from lifecycle management solution if it offers them both prescriptive analytics and semantic intelligence.  Only these technologies can quickly read through thousands of contracts, drill down into the details, and identify which ones will need human attention. True, situationally aware machine intelligence was impossible years ago, but that's not the case today.  With more than a dozen truly valuable solutions on the market, there's no excuse for Procurement teams who still rely on tools a kid could make.

Taras Berezowsky, Spend Matters, 1/23/2018
Leslie Campbell, a former procurement practitioner and current Coupa Board Memeber, joins Spend Matters to discuss how Procurement can respond to cultural conversations surrounding conduct and diversity.  She suggests that embracing diversity in Procurement starts with the hiring and recruiting process.  To truly build diverse businesses, Procurement leader's need to first look beyond the skills and talents they've traditionally preferred. It's also essential that they strive to construct workplaces in which everyone's voice is heard.  By championing diversity through mindful talent management, Procurement can set a standard that encourages better practices across entire businesses
To say that procurement, strategic sourcing, category management and vendor management professionals are “in-demand” right now would be a huge understatement (#yuuuge). The last couple of years, and the foreseeable future, have seen a huge demand for experienced procurement resources and not nearly the amount of available people to fill the roles. Just about everyone seems to be struggling to attract and retain good talent in procurement and strategic sourcing; from the small businesses to large corporations; even extending in to the procurement consulting firms.

If your company is blessed enough to have good procurement talent, chances are those employees are under attack from bigger companies with bigger salary budgets and procurement head hunters and recruiters that are aggressively trying to steal them away. Even if your company itself is one that has a great culture and salary budget, you may find that the big consulting firms and procurement business outsourcing providers and trying to snag your procurement team. And if you are investing in the next wave of college grads and early-career go-getters; good luck trying to find the right blend of salary, work style, culture, management technique and ability to create new challenges that “millennials” typically require to stay interested in your business. In short, creating and sustaining a motivated driven and successful strategic sourcing and procurement team is hard, very very hard.

Sales pitch time! For the reasons outlined above, Source One has been working to develop a solution to help procurement departments in need. We realized that not only is hard to staff and retain talent; in most cases, you likely don’t have the budget, and you’re more focused on the day-to-day aspects of conducting business that you can’t stay afloat. Often, we see companies resulting to using high-priced contractors, bringing in expensive consulting firms, paying enormous recruiting fees and even resulting to attempting to outsource their strategic functions to offshore outsourcing companies to save a quick buck. In all of those cases, those companies likely overpaid and still didn’t solve all of their challenges and projects. That’s why we launched Procurement Help Desk; a new, more creative approach to handling your unpredictable procurement project pipeline.

Source One is a procurement service provider that has solution centers in both Chicago and Philadelphia, and has additional procurement experts across the globe. Our team collectively has category experts in just about every spend category. On top of that, we’ve got analysis, data scientists, negotiation experts, and procurement advisors who currently support some of the world’s greatest companies. The Procurement Help Desk provides a simple and easy to understand monthly program that allows companies of any size to tap into our resource pool. But, it’s not just people you’re getting access to; you gain access to our market intelligence, supplier databases, RFX templates, category strategies, benchmark data, technologies and more. That means that you’re not just getting a person; you’re getting a senior experienced procurement department in a box. Now that’s an out-of-the-box approach.

Here’s how it works. Source One’s Procurement Help Desk clients commit to a monthly amount of hours, similar to a standard consulting retainer model. However, there is a few differences. The help desk model allows you to tap into any type of resource; be they high-level consultants to help you with your procurement strategy and procurement transformation initiatives; experts in a particular category or commodity, inclusive of hard-to-find experts in areas such as Marketing and IT; and even lets you access more tactical resources to do things like execute RFP events or find new suppliers. Ultimately, you can spend less time planning and figuring out how you are going to get the job done and instead use that time to actually produce results.

Procurement help desk clients use us for all kinds of activities, big and small. Whether you just need 10 minutes of advice or someone to bounce an idea off of, or you need a full project team; we’ve got you covered.

 Our Procurement Help Desk can support things like:

  • Procurement Strategy Development
  • Organizational Benchmarking
  • Supplier or Category Benchmarking
  • Ad Hoc Training
  • Category Management
  • Global Supplier Identification
  • Building SOWs and RFPs
  • Administering RFX events and score-carding responses
  • Tracking savings
  • Procurement project management
  • Reporting and auditing
  • And more! 

Now here’s where it really gets good. As mentioned before, the Procurement Help Desk isn’t just about getting great people, it’s about getting great tools, technology, and data too. For businesses who need it, we can bundle in the Source One solution suite; which includes: a Spend Analysis and Opportunity Assessment Platform (about.spendconsultant.com) and our soon to be announced e-sourcing tools and contract repository. We’ll give you licenses and access as part of the help desk solution. And for those of you that don’t need the technologies; don’t worry, by leveraging our procurement help desk, by the way of our team at Source One, you’ll gain access to RFX templates, benchmarking data, category data, supplier lists and other resources that you typically need to build on your own or license from a third-party.

Our Procurement Help Desk solution is a managed services offering; similar to a more familiar IT Help Desk. We customize it for our clients, set up project request forms, tracking, and reporting solutions. You’ll get a singular account manager and point of contact, so your team doesn’t have to wonder who to turn to get help. Ultimately, we just become an extension, (not a replacement) to your team.

Our Procurement Help Desk solution’s pricing is dependent on your ongoing needs; but starts below the typical cost of employing one full-time resource. We’ll build a bundle of hours for you that meets your ongoing needs and can adjust as necessary as our relationship and your business needs grow. 

Our Procurement Help Desk solution supports companies of all sizes, from your small businesses with a small budget that are looking to make a splash; to your large Fortune 500 companies that need surge support for a highly specific complex categories. We can help.

Contact Source One to learn more.
Too many manual processes drag procurement down

When considering a greater investment in automation, companies have to remain focused on end results; if everything goes well, where will the new additions leave the business? The results of this inquiry will determine whether the time is right for a new technology investment. This is a relevant discussion in sourcing and procurement departments at the moment, with a great deal of attention surrounding the transactional processes involving contracts.

The move toward a greater strategic role for the supply chain depends upon businesses committing to more heavily automated operation. This shift in the way companies view and use their sourcing and procurement departments is a convincing point in favor of automating but not the only factor in play. Several smaller operational elements change when supply chains remove some of their manual operations.

Saving time and money
Contributing to EBN Online, Scout RFP's co-founder and vice present of operations Andrew Durlak recently listed several problems experienced by companies that haven't automated. For example, he indicated that the process of comparing suppliers is far longer and more complicated when supply chain operations are too heavily manual. Getting the financial department and sourcing leaders on the same page, working to vet potential suppliers and determine the best match for a business, is significantly less complicated when digital data is flowing through a heavily automated set of sourcing technologies.

The transparency possible with heavily automated sourcing can go well beyond finance. Data from such a procurement process is much easier to share with the rest of a company than information gathered during a manual and hands-on bout of sourcing. Transparency in operations is its own advantage, allowing leadership and other departments to become more aware of the work the sourcing department is doing to get them the goods they need.
Today's business improvement initiatives often revolve around analytics and the improved decision-making that flows from these powerful algorithms. Giving these programs access to raw data means gathering information in a digital format, which is a natural part of automated procurement and sourcing. Companies still stuck with many manual options may end up unable to make analytics work for them.

Automation can solve specific procurement issues.Automation can solve specific procurement issues.
Watching for inefficiency
Beginning or continuing an automation project in sourcing can come down to determining which manual processes are costing the organization the most. In a new year's round up of key metrics for supply chain leaders, Mylan EMEA Commodity Manager Barbara Toth told Spend Matters it pays to study procurement cycle times. When they zoom in on how long it's taking to get key materials and supplies, they may find surprising elements causing continued inefficiency. Toth recommended either automating these problematic processes or eliminating them outright.

When organizations consider carefully how their current procurement systems work, they may realize that not only does automating their operations make sense, but also it may be costing their organizations a significant amount of money to stay with inefficient legacy processes. The next step for these businesses is making intelligent technology investments in line with their overall goals, making a graceful step into the next generation of procurement.

Capital Sourcing in the New Environment: They Didn't See This Coming

This blog comes to us from Chuck Brady, C.P.M.

Much has been written in both the business and the secular press about the effect of the new tax law enacted in the waning days of 2017.  Dozens of corporations have announced bonuses for their employees.  AT&T and Comcast, between them, will give $1,000 bonuses to some 300,000 employees. Walmart will dole out $1,000 bonuses and will raise its corporate minimum wage to $11/hour. Wells Fargo and Fifth Third are raising their minimum wages as well.  Take home pay for some 90% of wage earners will be increased due to lower amounts of Federal income tax withheld.  Does anyone believe that recipients of these bonuses and higher paychecks will stash the money in their mattresses?  Isn’t it more likely that they will either spend those bonuses, pay off some of their debt, invest the money, or some combination of the above?

Some corporations, Apple notable among them, have announced plans to invest $Billions in the US over the next few years.  Fiat Chrysler even announced the repatriation of some of its production back from Mexico – accompanied by $1Billion invested in their Warren, MI facilities. These are just some of the headlines.  Many more corporations are doing the same thing. 

Part of these investment plans is spurred by provisions in the new law that drastically reduce the penalty for repatriating profits that have been “stranded” in other countries.  Before the law, those profits would be subject to a 35% tax as soon as they were brought to the US.  Now, profits earned and kept offshore are subject to a one time tax of 8 – 15.5% whether they are brought back or not and offshore profits thereafter will not be subject to additional tax.  Profits earned in the US will be taxed at 21%, down from 35%. There will no longer be “double” taxation on profits earned overseas.
This is huge.  The US is suddenly competitive on tax rates with other developed countries.

Yet another provision of the new tax law is the treatment of capital expenditures for smaller companies.  In some cases $1 Million in capital expenses can be written off in the year of purchase rather than being depreciated over multiple years.  Although this provision is not available to larger firms, the effects of decisions by many smaller firms can have a great impact on the supply market as well.

All of these factors will likely cause a surge in capital spending in the near term. 
What does this mean for Sourcing operations?  It means many headaches and a few opportunities.

Capital Supply Market

The capital supply market (construction, equipment, installation contractors) by its nature is incapable of supporting a large surge of capacity.  Let’s think about this.

A large construction project in any location will absorb hundreds of skilled workers.  Two large construction projects close to one another will absorb skilled workers from far and wide, if they can be attracted at all.  Wage competition for the limited work force will drive up costs.  Now think about this happening all across the US.  Remember also that the unemployment rate is 4.1%.

Manufacturers of capital equipment don’t have infinite resources either.  And remember all the new spending from those bonuses and lower personal taxes?  They produce what is called the acceleration principle.  When the consumer buys more widgets, the widget manufacturer may sell 10% more.  In order to make that additional 10%, the manufacturer may buy another widget-making machine.  The widget-making machine manufacturer may need to increase its production by 50 – 100% to produce such an additional machine.  It doesn’t take long for some serious lead-time effects on the machinery manufacturers.

Installation contractors are hit by both the labor force issues of the construction contractors and those issues facing the equipment manufacturers.  General construction labor specialties compete with the building trades while specialists unique to certain types of equipment have too much on their plate.

Sourcing Headaches

It is easy for a Sourcing professional to despair when faced with such an environment.  After all, capital projects by their nature tend to be unique, unrepeatable events.  Knowledge of the specifically relevant supply markets may not exist in the Sourcing department that supports on-going operations.  Engineering and or Operations may believe that capital spending is their turf.  Sourcing professionals often need to face off against unfamiliar suppliers from the outside and maverick buyers from within.  Without capital sourcing experience, it is hard to hold the attention or the respect of the parties involved. As we have seen above, suppliers may be unwilling or unable to provide the desired lead-times or competitive pricing. Only those who understand the unique nature of capital sourcing stand much of a chance.


When the world looks its bleakest, that is when Sourcing professionalism can come to the rescue.  Let’s face it – things can’t get much worse.  Nearly anything that Sourcing can do to improve the situation will demonstrate the value of the Sourcing Management process.  Understanding the real needs, the nice-to-haves, and the luxury components of the purchase is vital.  Expanding the pie from a single purchase to a program of purchases can help as well. Using payment terms both to attract suppliers and to keep them focused, if management allows, can be very powerful.  Calculating the Total Cost of Ownership, and addressing service component needs will show the value that Sourcing brings to the organization.  One of the most valuable things that can be done right now, however, is to warn management that they are already late to the party and that swift decisions will give them an advantage over their competitors.

On-Demand Expertise

Putting skilled and experienced capital sourcing professionals in place now will help companies to take advantage of this new environment.  It is too late to develop this capacity in-house. And once you have developed those skills, the need to retain them will go away after the capital investment projects are complete.  This is time to bring in skilled resources from outside your company.

Chuck Brady, C.P.M. is a Senior Sourcing Consultant with expertise across a wide range of processes. He has decades of experience in Strategic Sourcing, Global Procurement, and in the implementation of procurement systems. Brady's particular areas of category expertise include Capital, Construction, Contracted Services, Facilities, and MRO, and he has helped produce savings in sectors including Hospitality, Steel, Textiles, and Retail.

January 26, 2018

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

Recent Whitepaper:

2017 was another unpredictable year for Supply Management professionals across the globe.  The combination of natural disasters, policy changes, emerging technologies, and political unrest made for a hectic twelve months of Procurement.  2018 has already provided it's own share of surprise and uncertainty.  At least one thing, however, remains certain.  Leading organizations will continue to embrace the strategic potential of Procurement to dictate their short and long-term goals.  Source One's expert consultants have proven instrumental in encouraging companies to make this shift for over two decades.  Informed by their years of success, they offer their predictions for the trends that will define procurement throughout the New Year.

Recent Podcasts:

More and more companies are embracing the strategic benefits of effective Procurement departments.  To help themselves establish the teams, they are devoting more time and effort than ever to identifying, recruiting, and hiring top-notch talent.  Too few of these companies, however, are taking the same pains to ensure their Procurement hires stick around. Senior Project Analyst Nick Harasymczuk joins the Source One podcast to discuss strategies for retaining talent.  With is tips, you'll not only ensure your new hires stick around, but you'll also better engage them and empower them to grow as Procurement professionals.

Nearly a third of working American are currently employed on an independent basis.  Experts predict this number to increase steadily throughout the rest of this decade.  Understandably, companies are increasingly looking to independent contractors for help evolving and optimizing their Procurement function.  Still, some companies hold misguided notions about independent labor.  Fearing the worst, they are missing out on what could very well be the best possible resources for their Procurement operations.  Strategic Account Consultant Andy Jones joins the Source One Podcast to dispel some of these misconceptions.  Calling upon years of Procurement recruiting experience, he also emphasizes the strategic benefit contract labor.

Upcoming Event:

Source One Associate Director Jennifer Ulrich will address the Institute for Supply Management's Philadelphia chapter as a keynote speaker on February 8th. Ulrich is an industry-recognized authority on Procurement Transformation and Category Management.  Her presentation, entitled Sustainable Category Management Solutions, will discuss methods for taking Procurement's operations to the next strategic level.  Sub-topics will include optimizing Procurement talent, communicating the department's considerable value internally, and developing more strategic relationships with stakeholders.  The event will provide a prime opportunity for one of Source One's true thought leaders to share insights gained from over a decade of consulting experience.  Supply Management professionals at any stage in their professional development are invited to attend.

Training procurement teams is a core component of the procurement transformation process – by learning each persons’ skillset, each persons’ talent may be optimized to achieve the highest results possible. However, when it comes to training a team, generalized on-boarding sessions are not always the best fit for procurement professionals. Since the procurement field is so diverse and constantly changing to accommodate new innovations and technologies, creating training customized and tailored to the needs of procurement professionals can be worth the long-term investment, as it can lead to greater effectiveness at achieving long-term, sustainable goals.

To implement an effective training program, begin with a team-base assessment that will determine individual strengths and weaknesses. Some key areas to consider with this assessment include evaluating category management skillssourcing experiencenegotiationsanalytical skillscommunication, and strategic thinking. From there, the assessment will act as a benchmark for creating courses that augment these expertise areas; each course will build off one another, that can eventually progress the skills of team members to advanced levels. Formats to consider include in-person, virtual, or remote training, and will consequently determine material needs. Finally, training should end with continuous reviews to determine how to improve the training process, and ensure materials are aligned organization objectives as they evolve.

To gain more in-depth information on the procurement training process, check out Source One’s blog, Building an Effective Procurement Training Program. 

We've all read the articles.  Young talent promises to drive the future of Procurement and supply management. That's why leading companies are devoting more and more time and resources to recruiting, vetting, and interviewing top Procurement talent.  Too few, however, are taking the same dedicated approach to optimizing and retaining their hires.

What good is an expert Procurement team when every one of its members is trying to find the door?

Not much good at all, suggests Source One's Nick Harasymczuk.  He join the Source One podcast to discuss strategies for holding on to leading Procurement professionals.  It's imperative, he says, that companies empower their hires to succeed from day one.  Consistent feedback, clear career pathing, and a culture of mutual respect are all essential for securing the industry's future leaders and ensuring they reach their full potential.

Check out the episode today.
Retail's supply chain future: Streamlined and fully digitized

The movement of goods is the beating heart of retail. Without the ability to transport products where they're needed on a tight schedule, companies won't be able to live up to their potential. Supply chain improvements that are relevant across all sectors may have their earliest or fullest adoption in retail, where trends such as the rise of e-commerce are forcing organizations to become incrementally faster and more accurate to stay competitive.

From sourcing to delivery, every step of a product's journey is subject to revision and improvement. Periodic changes in tech standards and norms may have ripple effects that alter the retail world. These updates come in reaction to new customer preferences and can set expectations for the years ahead.

Laying out an ambitious vision
Essential Retail's report from the National Retail Federation Big Show carried predictions from event speaker and Li & Fung CEO Spencer Fung. Fung delivered the view that the next generation of retail supply chains will be based on simplified and expanded contracts with suppliers. While retail procurement may have meant casting a wide net in the past, organizations are hoping to simplify their partner networks and deal with a few mega-suppliers. Fung named BetaBrand as a chain that has already made such a shift and emphasized that efficient processes are the main benefit.

Fast and convenient operations are so important to retailers that they are foregoing potential cost savings and instead streamlining their processes where possible. Fung stated that cost is on the back burner, and that organizations may turn their backs on established orthodoxies, such as saving money with overseas manufacturing. Supply chain elements that add time or complications to operations may no longer be judged worthwhile.

Digital data is the fuel for this efficient new retail model, with Fung predicting that the visibility and operational benefits of tech revision will force companies to evolve. While the advantages of digitized operations are becoming clearer, not every business is ready to seize them. In fact, Fung observed that many of today's retail players still have numerous analog processes in their supply chains. Those inefficient links will be replaced in the name of speed and agility soon.

A tablet screen showing supply chain concepts.The retail supply chain needs an infusion of digitization.
Getting retailers digital-ready
Companies' level of digital transformation varies across the field, and it's unclear whether the retail sector as a whole is ready to make the jump. SAP's recent study of retail transformation, performed by Oxford Economics, noted more than half of organizations are interested in focusing on strategies that will improve their speed to market. The data also revealed that digital improvement is a priority at 48 percent of the top 100 retail organizations.

As for digital transformation's effects so far, SAP noted that 50 percent of mid-sized companies predict a 5 to 10 percent revenue boost due to their upgrade efforts. The percentage is slightly lower among big companies - with 44 percent expecting the same level of growth - but still represents a significant amount of the overall industry. Rebuilding a sector based on new underlying processes will be challenging, but the efficiency benefits will likely speak for themselves.
Supply chain leaders delve into blockchain technology

The use of blockchain technology to store and transmit secure data has become a topic of intrigued discussion across industries over the past few months. While it's probably still best known as the concept behind bitcoin and other cryptocurrencies, blockchain technology could become a more widely applicable backbone for everyday enterprise software.

The supply chain is a hotspot for discussion of next-generation blockchain usage. Secure, quick and accurate data tracking and transmission has powerful implications for companies trying to ensure goods move smoothly from one partner to another. Complications such as cross-border transportation could be easier to address when trading partners have access to a blockchain ledger. This potential has brought a wave of investigation by interested companies.

Executives' interests revealed
According to Computerworld, a recent trip to China taught Bill Fearnley Jr., IDC Worldwide Blockchain Strategies research director, that leaders are interested in the improved recordkeeping enabled by blockchain ledgers. Fearnley added that companies with their own systems on this model can gain limited value. If they want to see large-scale returns on their technological investment, they'll have to connect their digital networks to trade partners' infrastructures.
When businesses commit to blockchain-based finance records, they replace inefficient old systems that are holding them back. Fearnley noted that there are still faxes, paper documents and phone calls passing between businesses. When companies collect information via fax, then enter that content into a simple spreadsheet, the risk of human error or careless data loss is great. Blockchain technology could give organizations a new and more accurate way to handle this information, providing immediate value.

Maersk Line North America CEO Michael White told Computerworld that even when companies aren't dealing with paper, they are handling antiquated technology. Electronic data interchange systems are based on a 60-year-old framework, and it's time for an upgrade. Speed and visibility will both get increases, and White praised the ability of blockchain-based systems to keep stakeholders in the loop about any changes made to their shared documents. Partners will always be working with consistent records, which will help their interactions.

Digial numbers light up.Consistent, accurate data - that's blockchain technology's essential promise.
Escaping currency's shadow
As practical uses for blockchain ledgers become clearer, the underlying technology will continue develop an identity separate from cryptocurrency. This shift will be a necessary and important step in the mainstreaming of these applications, as the past year has proven to be extremely volatile for bitcoin. GeekWire pointed to practical supply chain uses for blockchain ledgers revealed at the MIT Enterprise Forum of the Northwest, an industry get-together held at Seattle University.

These early implementations include Boeing's documentation of its airplane construction supply chain. Considering the amount of parts that go into a single plane, improved accuracy in component tracking could be transformative for the aviation giant.

Walmart is also employing a blockchain ledger in its supply chain, focusing on its international food acquisitions. Since importing these items is a process governed by numerous strict customs laws, it is a scenario where blockchain technology can shine, carrying accurate and timely information that will help the foods pass inspection and get to their destinations on time and accounted for. More such use cases will likely accrue over the months ahead.
Alternative Procurement Outsourcing and Procurement Staffing Options
Outsourcing is not an altogether novel concept. Historically, Procurement departments leveraged a traditional contingent staffing program to outsource a significant portion of their transactional procurement tasks in an effort to meet shifting economic demands and reduce employee costs. Unfortunately, the demand for qualified sourcing and procurement talent is high, while the supply of candidates with the requisite skillsets—supplier relationship management, contracting & negotiation tactics, end-to-end category management expertise—remains far lower.

Even with a robust contingent labor program, it can be challenging to achieve everything your Procurement group is tasked with. Leading Procurement Organizations recognize they can unlock more value and become a strategic business partner by taking a holistic approach to strategic sourcing and procurement outsourcing. Below are a few alternative external resources for staffing Procurement and Strategic Sourcing roles to consider as part of an outsourcing strategy.

Outsource to Specialized Procurement Contractors

Freelance Strategic Sourcing and Procurement Contractors or Independent Supply Management Consultants are self-employed, and provide a flexible solution for companies with temporary procurement projects, seasonal strategic sourcing needs, or critical supply management skill gaps in a particular core competency. Procurement and Strategic Sourcing Contractors are both cost and project efficient, since they do not require training or employee benefits, and come with specialized expertise to hit the ground running and deliver impact on assignments within a finite timeline.

Outsource to a Strategic Sourcing and Supply Chain BPO

A traditional BPO model for Procurement and Strategic Sourcing allows organizations to be selective in choosing which tasks they outsource to a third-party, ensuring these are still strategically managed while freeing up time for Executives to focus on Procurement core competencies. Rather than hiring multiple fulltime Procurement and Strategic Sourcing resources with the specialization to manage every spend category, organizations can implement a Strategic Sourcing BPO solutions provider, resulting in streamlined processes. Typically, Strategic Sourcing BPO’s require a multi-year contract, making it critical for a Procurement Organization to assess whether the initial cost savings sustain long-term ROI.

Outsource to a Procurement Advisory Firm

Niche Procurement Advisory Firms solve challenges through strategic sourcing strategy development. Procurement Organizations may find Strategic Sourcing and Procurement Advisory Firm’s useful if their focus is on gaining critical and innovative insights to facilitate strategic cost optimization and outperform their competitors, but have the manpower and expertise internally to translate the recommended strategies into project execution.

Outsource to a Group Purchasing Organization (GPO)

GPO’s leverage the purchasing power of multiple members to drive supplier costs down, by driving supplier volume up. Some organizations want to fully relinquish responsibility of one or more spend category because they do not have the internal resources, or the negotiating power to strategically source them. If an organization meets the purchasing minimums, the GPO covers the category the organization is looking to outsource, and the membership fees are aligned with expectations, then a GPO can be a reliable solution.

Outsource to a Hybrid Model

When organizations are looking for a scalable, customizable solution rather than a tradeoff of services and resources, a hybrid model provides the best option to supplement a traditional contingent staffing program. This strategic sourcing outsourcing solution produces cost savings and higher ROI by leveraging on-demand and onsite procurement and strategic sourcing resources, supported by a behind the scenes Procurement Consulting Firm.

Understanding the external resources available for staffing Procurement and Strategic Sourcing positions as part of a holistic outsourcing strategy can help companies drive top-line growth and deliver quantifiable results to the bottom line. By supplementing a traditional contingent staffing program with the right third-party resource, Procurement can deliver better metrics, build stronger stakeholder relationships, and demonstrate more value across the organization.

If any of the above options sound like a viable solution for your organization, contact Source One today to talk to our experts about implementation.

The future of procurement will involve departments at companies of all kinds receiving an infusion of transformative technology. While such a statement seems grand in scale, the process has already begun. Organizations that have handled transactional matters manually for years or even decades are committing to more heavily automated systems, opening up new lanes for data analysis and strategic thinking in departments that have historically been constrained in their capabilities.

Watching this transformation take place is a good way for sourcing leaders to get ideas on how to change and improve their departments, but they shouldn't stay on the sidelines for long: Executives who don't make use of their observations may end up falling behind more adaptable competitors.

The goal: Take the next step
Not every organization has reached the same level of automation within the supply chain, which means that it's impossible to give a blanket objective for the sector. Instead, every firm should strive to take steps in the right direction. Coupa board member Leslie Campbell told Spend Matters that procurement departments should visualize how they want their processes to work when they are done digitizing their day-to-day tasks, and then get to work implementing systems that will help them on their way.

Campbell specified that automating transactional systems is the pillar of all efforts to make companies more efficient, effective and digitally driven. When many steps of procurement are automated, companies are saving time and money due to the new ease of these processes.

Furthermore, data is flowing into standardized systems. With that information on hand, organizations can commit to more ambitious new projects, such as advanced analytics use driven by artificial intelligence and machine learning.

The general visibility of supply chain data, enabled by digitization, is a powerful tool in the hands of a procurement leader. Campbell specified that beyond improved analytics, companies with easy access to a trail of information can gain general decision-making power. Accurate insights may come from advanced algorithms or leaders' knowledge, but they're always better when empowered by data.

When information is digital, soucing can make progress.When information is digital, sourcing can make progress.
The situation: Upgrades needed
Some industry sources are particularly insistent that procurement organizations hurry up with their IT development. According to Supply Chain Digital, Accenture's Kristin Ruehle explained that sourcing processes can't assume their true potential unless companies digitize their operations. The "current form" of these departments is too mired in old-fashioned analog operations for them to act in the kind of leadership role Ruehle envisions. She specified that when procurement data is digital, it can be combined with information from outside sources to form more complex and effective calculations.

There are several areas for improvement under the general umbrella of the supply chain, and digitized operations are a key step toward making several of these advancements. For example, risk avoidance and regulatory compliance become simpler when companies manage their processes through automation. From targeting sustainability objectives to making end-users' daily tasks easier, a number of the top priorities within sourcing departments become easier - or possible - when information is being captured and shared automatically. Manual legacy processes have endured for years, but now they may just be slowing companies down.

ICYMIM: January 22, 2018

Source One's series for keeping up with the most recent highlights in procurement, strategic sourcing, and supply chain news week-to-week.  Check in with us every Monday to stay up to date with the latest supply management articles.

Nick Heinzmann, Spend Matters, 1/18/2018
Companies looking to effectively integrate contingent talent into their workforce need to look beyond traditional models.  The Labor Cloud could be the agile, innovative, tech-enabled solution these organizations are looking for.  These curated talent networks will bring freelancers, contractors, and all other talent together on a single platform.  For Procurement, the strategic benefit of a labor cloud will be both myriad and immediate.  They'll provide Procurement departments with a wealth of accurate historical data and enable them to self-source highly specialized and highly skilled individuals with ease. 
Michael Lamoureux AKA The Sourcing Doctor, Sourcing Innovation, 1/16/2018
It's no secret that effective sourcing is the key to long-term supply management success. Done correctly, it can add value in the form of lower costs, better quality products, and more strategic vendor relationships.  Three pitfalls in particular, however, often stop sourcing initiatives in their tracks before they even begin. A lack of market knowledge, lack of supplier knowledge, and a lack of e-Sourcing expertise can all lead Procurement professionals to make the wrong purchasing decisions and defeat their own value-adding purpose.  What can they do to avoid falling into these traps and hampering their savings efforts? The Doctor suggests leveraging a cognitive sourcing platform to quickly gather market and supplier knowledge.
Andrew Karpie, Spend Matters 1/16/2018
With the new year well under way,  Procurement groups are taking the time to reassess and their organization's key performance indicators and set their priorities for the future.  Berezowsky surveyed a number of supply management leaders to gain their insights on the subject of Procurement's essential KPIs.  One respondent, a healthcare purchasing expert says, "KPIs need to be constructed as SMART goals: Specific, Measurable, Achievable, Relevant, and Time-Bound."  An additional half dozen Procurement experts share their own strategies and best practices for effectively setting goals and measuring performance. 

January 19, 2018

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

New Whitepaper:

What's Next for Procurement: 8 Trends to Watch in 2018
2017 was another highly unpredictable year for Procurement and Strategic Sourcing professionals everywhere.  Natural disasters, political upheaval, and a wealth of new technologies all wreaked havoc on supply chains.  In spite of all its surprises, the year still saw a number of supply management trends continue as expected.  Leading companies are still embracing the benefit of more strategic purchasing and working to align Procurement with their enterprise-wide goals.  In what's become an annual tradition, the experts at Source One present their predictions for Procurement in the coming year.  Whatever shocks 2018 brings, count on the Procurement leaders to stay on top of the industry's emerging trends.

Recent Podcasts:

Procurement Independent Contractors: Separating Fact from Fiction
By 2020, experts predict that half of America's workforce will serve as freelancers or independent contractors.  Understandably, many leading companies are already leveraging these versatile individuals to help evolve and optimize their Procurement function.  Source One's Andrew Jones, a Procurement recruitment expert, joins the Source One Podcast to discuss the considerable benefit of independent talent.  Employing Procurement contractors, he suggests, could help companies avoid the risks associated with hiring full-time assets and help them ease themselves into unfamiliar business areas.  He also takes time to dispel a few of the myths that still keep certain companies from working with contractors.

SD-WAN, Cybersecurity and More: Telecom Trends to Watch in 2018
Telecom Procurement specialist Dave Pastore joins the Source One Podcast to discuss some of the category's emerging trends.  Last year, Pastore says, was an uncharacteristic one for Telecom.  Companies of all sizes implemented new technologies with uncommon speed.  Moving at a breakneck pace, they strove to set themselves apart as leaders by utilizing tools like SD-WAN technologies, managed cybersecurity systems, and cloud-connected services.  This trend shows no sign of stopping.  Count on these technologies to continue gaining momentum throughout the coming year.

Upcoming Event:

ISM-Philadelphia February Dinner Meeting
February 8th, Source One Associate Director Jennifer Ulrich will join the Institute for Supply Management's Philadelphia chapter for their monthly dinner meeting.  As the keynote speaker, Ulrich will deliver a presentation on the subject of sustainable category management solutions. Ulrich,  a recognized expert on Procurement Transformation,  will focus on optimizing Procurement talent, communicating the department's value internally, and building more strategic relationships with stakeholders. The networking event will provide yet another opportunity for the Strategic Sourcing experts at Source One to build their reputation as industry leaders.

Retail supply chains get cloudy

The presence of cloud computing has become a common theme across industries and corporate departments. The general reasons for adoption are easy to understand: Organizations value the flexibility of the cloud, scaling their operations up and down to save money. Add in the cloud's ability to make resources accessible at many locations, and today's far-reaching organizations are quick to sign up for services.

The supply chain in particular is a department where cloud-based tech tools can thrive. Companies are sourcing raw materials and finished goods from partners around the world, and they need flexible digital resources that will bring these wide-ranging networks together. Cloud-based software can link these organizations in ways that on-premise software couldn't.

Critical mass
Speaking with industry experts to determine the defining supply chain technology trends affecting companies today, Supply Chain Dive declared that the mass movement to the cloud has been particularly defining. Jim Barnes, CEO and president of Envista, told the news provider that the essential platforms used to process retail transactions are showing their age. Companies that need to exchange data with vast and evolving networks of partners are going into the cloud in search of connections that will link the whole supply chain, from business-to-consumer sellers all the way back to materials suppliers.

Kimberly Knickle, IDC Manufacturing Insights research vice president of IT priorities and strategies, explained to Supply Chain Dive that there has been a need for mass data transfers. Information on shipments and transactions must traverse the supply chain from one end to the next. Sending that data along through conventional technology would be significantly less efficient and effective than committing to new cloud-based models, making companies' choices easy for them.

The cloud's supply chain ubiquity is easy to explain.The cloud's supply chain ubiquity is easy to explain.
Essential visibility
Making data more easily available is a major objective beyond tech transformation in the supply chain. Materials Management & Distribution stated that cloud computing is one of the major ingredients in providing easy data access. Businesses are counting on partners around the world to provide raw materials and finished products, and having a quick and efficient way to view the relevant data has become a corporate differentiator. Staying ahead of global risks and disruptions becomes a reachable goal with this kind of visibility.

Organizations exchanging data through old-fashioned systems may find they are one step behind competitors that collaborate effectively in online environments. Visibility of data is a strategic tool because it enables better decision-making, according to Materials Management & Distribution. Getting such improved access to information isn't a yes-or-no scenario. It is possible for organizations to become incrementally better at tracking and managing their content across networks. Implementing cloud-based tools is an important step in such a progression.

A widespread change
Cloud-based resources are everywhere today, with good reason. Accessing data flexibly, from anywhere, is a game-changing capability for companies to possess. Better communication between supply chain partners is a critical capability in an era of wide geographic reach, varied risk factors and high expectations. From consumers to retailers, distributors to manufacturers, all the way back to materials suppliers, every participant in the supply chain can benefit from easier access to essential data. Putting that content in the cloud is the new default way to make it more reachable.

According to The Freelancer's Union, 42 million Americans (nearly a third of the workforce) are currently employed independently.  By 2020, they predict this number will rise to include half of working Americans.  Companies are widely enjoying the benefit of these versatile professionals as they work to develop more mature, strategic Procurement units.

Old misconceptions, however, still keep some companies from leveraging independent contractors.  Relying on outdated notions, they worry that contractors are untrustworthy or inflexible.  As a result, they miss out on the considerable value of a blended Procurement and Strategic Sourcing workforce.

Source One's Strategic Account Consultant, Andy Jones, recently sat down with the Source One Podcast to set the record straight.  An expert in recruiting and placing top Procurement contractors, Jones knows how valuable independent talent can be. 

How can companies be sure they're working with dependable Procurement contractors? Jones suggests employing the services of a recruiter.  A dedicated Procurement recruiter can take the burden of vetting candidates off of HR's back and ensure a top-notch staffing strategy.

Listen to the conversation today to learn more about what independent contractors can bring to your procurement operations.
Procurement's role: The great enabler

The changes in procurement approaches over the past few years have raised a few questions about where this essential department fits into the enterprise framework. Increasing automation has freed employees up to perform higher-level strategic tasks and has enabled them to take a more active role in the everyday determination of corporate direction. What is the best use of this newfound power, and how does a supply chain leader turn into an overall corporate decision-maker?

As companies close the book on 2017 and think about their approaches for 2018, they have a brief moment for reflection. This could be a great chance for sourcing leaders to take on new roles and improve their approach to vital everyday processes.

Chasing the same objectives
Spend Matters columnist Peter Smith recently laid out a sensible set of New Year's priorities for leaders in sourcing and procurement departments. He offered a reminder that these sections are designed to be an extension of the companies that employ them. Procurement leaders should ensure their processes, goals and operational styles are in line with overall leadership, applying their firms' approaches to their specific duties.

The defined role of procurement within a business is to act as its interface with a specific set of partners: third-party suppliers. If the department can do so in a way that is based on company objectives and helps further those goals, it is succeeding. Helping a business pursue its goals may sound passive and reactive, but recent advancements in technology have allowed procurement leaders to keep up with this general trend.

Smith specified that procurement doesn't achieve its aim of helping the organization by simply working on better sourcing contract language. Modern supply chain leaders are also constantly processing data from their many transactions, keeping a lookout for risk factors and presenting opportunities to perform better. Crunching numbers is a major way for procurement to improve the company performance due to the wide-ranging nature of the supplier contracts that come across supply chain leaders' desks.

Procurement's role within overall corporate strategy is increasing.Procurement's role within overall corporate strategy is increasing.
Welcoming a new generation
Carrying out the next step of the supply chain's evolution is a high-priority goal, and the employees who undertake this transformation may represent a fresh wave of young professionals. According to a Procurious report, 40 percent of procurement professionals plan to leave their current organizations within the next two years. Within five years, 70 percent of professionals will change employers.

Movement within the industry and retirees replaced by a rising young generation of workers will shake up operations in major organization's sourcing departments and set the stage for a new era.

Procurious added that the ambitious professionals who power the supply chain's vital and strategic next steps won't all be young. Rather than simply coming from one age group, the individuals set to usher the supply chain into the future are mainly defined by their ability to reach out and seize opportunities. With active and focused leadership, these employees could help companies transform their operations into decision-making contributors, rather than departments that will simply work on getting slightly better terms in contracts with suppliers.