March 2018
Health care supply chains: Improvement needed

It's hard to think of more vital procurement operations than those at health care facilities. Access to the right equipment within medical organizations can be the factor that saves lives, and there's little room for error when creating supply chain links to hospitals and other care providers. The modern improvements sweeping other industries' sourcing operations can have a measurable and positive effect on health care, with advanced technology granting quicker and easier access to the necessary supplies.

While enhancements to medical sourcing may safeguard patients' lives, weaknesses and deficiencies in systems could do the opposite. Miscommunications or logistics breakdowns leading to a lack of necessary medical supplies pose a real risk to quality of care, and reduction of these failures should be a priority for hospitals and other medical facilities of all types.

State of the operating room
The recent Cardinal Health hospital survey detected major issues in operating room supply practices. Getting assets to surgeons as they treat patients should be a high-level priority, and action will be needed to close the gap between goals and service levels in the years to come. The report found availability of needed assets is a frequent problem, with two-fifths of respondents stating they've canceled cases in the operating room because supplies were missing. Even more - 69 percent - said they've delayed cases when needed materials were gone.

Clinicians and nurses, who witness the ill effects of supply chain breakdowns, are interested in taking a more proactive approach to decision-making in the supply chain. Cardinal noted that the sheer amount and variety of items needed to make an operating room run effectively put heavy demands on these professionals and the procurement departments that keep them supplied. Closer collaboration between sourcing professionals and frontline medical staff could be a ticket to a smoother and more productive operation in future.

The urge to save money doesn't have to be counter to improving quality of care within hospitals. Nearly half of the operating room personnel interviewed by Cardinal stated they benefit when their organizations cut costs, and three-fourths added that they can keep their practices strong even while new practices cut the budget.

An operating room team at work.OR doctors need more effective supply practices.
What's next for medical supply chains?
Issues with device availability are serious and in need of correction. It's worth delving into the priorities and objectives of relevant personnel going forward. Becker's Hospital Review conveyed the results of a recent Global Healthcare Exchange study identifying the goals and intentions of executives at the top 50 providers, according to GHX research.

When it comes to targeted objectives, these managers are most interested in analyzing their data, standardizing procedures, optimizing contracts, integrating processes and managing non-labor spending. Achieving these aims will take focused initiatives by industry leaders, and GHX highlighted a few of their main strategies.

When asked to describe the projects in place to improve their operations in the near future, respondents mentioned enhancing their inventory controls, driving cost savings by standardizing products, building their automation, adopting contract management systems and speeding up organization acquisitions. With clear objectives and strategic priorities laid out, these leading care providers are setting a model for their industry.

Ever too often companies find themselves 30 days out from a software renewal or net-new purchase with limited support or resources available for successful negotiations. Software negotiations can be complex, especially when it is heavily relied on by the business for continuity. This holds true for all variations of software and my intention with this blog is to relay some best practices that I have adopted to successfully negotiate these services, specifically renewals.
Plan ahead and gather appropriate information in order to make sure that you are fully prepared for the upcoming negotiation. My rule of thumb is to start prepping 90-120 in advance for software renewals that are not business critical. If it is a product from Microsoft, Google, or a larger OEM and it is relied on throughout the business, I recommend starting the process at least 6 months prior. Use this time to gather contract information, how many users are currently leveraging the software, what countries it is currently used in, active modules or potential modules end-users may want to adapt, determine the utilization rate, and any other data points that are key indicator of the products performance (think SLA violations, if applicable).
Create competition, now that you’re armed with the data from above, it’s time to start evaluating the market. More often than not, there is an alternative option to any software solution. Depending on the actual appetite or willingness for the stakeholders to make a move you will want to gauge whether you should issue a full RFP (meaning, yeah they’re ready to switch providers) or a quick RFI/RFQ to just get a pulse check of where other providers pricing is falling in relation to your current. It may make sense to request a renewal proposal from your software provider at this time to make sure you can evaluate each bid well in advance of needing to make a decision. If there is currently no desire to look into alternate suppliers, I would recommend auditing what’s already in the environment. If your company already engages with another software provider that has a similar suite of services, it would be beneficial to compare their prices to see if they can be leveraged.
Rally the troops; it’s important to make sure that your stakeholders are aware of what you are trying to do and how it may impact them, their budget, or their end-users. It’s critical that they are supportive and knowledgeable of the sourcing process, and I’ve always found that full transparency is the best model to gain their trust. This goes both ways though, make sure you are listening to what they need as well to make sure it does not disrupt your relationship with them or theirs with the vendor. You also want to make sure that the team is understanding of what information can and cannot be shared with the vendor to ensure your leverage is not impacted.

Control the negotiation by managing the renewal process. This includes outlining action items for your colleagues and the supplier, as well as defining the timeline. Regarding action items for the supplier, it is important to give them targets. Developing targets can be done by using pricing collected from the market (e.g. pricing in the market is 10% lower than current/renewal pricing) or put a dollar amount on any SLA violations or low utilization rates. Try to make sure that when you communicate the targets that you are doing so in a cohesive manor that has the full support of your stakeholders. In addition, hold the supplier accountable to a timeline for having answers back to you.

Finally, it is important that you are constantly in the know during the renewal process and you may want to consider joining any calls your stakeholders have with the vendor. This does not mean you need to be an active participant, but being present keeps you in the loop on any service related updates, especially anything coming in and out of scope. There are so many moving parts throughout the course of a negotiation that it is best to have as much information and interaction as possible to move it forward.

Air Freight is a highly complex category with fee models that differ by airline, by region and by service level. This makes evaluating an air freight program on a global scale an extremely difficult venture from an administration standpoint, but also from an analysis standpoint. A lot of times air freight customers will refer to brokers and to 3PL providers to manage and administer their air freight program; however, if self-managing your air-freight program it is possible to effectively manage and evaluate the competitive market via RFP.

When undertaking an evaluation of your carriers, wheather you are a freight forwarder and trying to firm up existing agreements or you otherwise have significant air freight volumes that would warrant an evaluation, you must be able to present your data in a way that makes it easy for carriers to quote. This starts at the most simplistic level by looking at your past 12 months of shipments, barring any large operational shifts that would impact last year’s profile, and summarizing that information for carriers to evaluate. This sourcing template should include the top 80% chargeable weight lanes and the associated origin and destination pairings. Each unique lane should be differentiated by not only origin and destination, but service level as well (expedited, general cargo, temp controlled, etc.). Each unique lane should also include your total chargeable weight and total number of individual pieces. This information, once aggregated, will provide airlines with enough information to give you a quote for the lanes they would like to bid on. Organizing the information by region and by service level also will help the airlines navigate your bid package information with ease. The columns (if using excel) are summarized below that should be shared with carriers:

·         Origin Region
·         Origin APC Code
·         Destination APC Code
·         Destination Region
·         Service Level (Express, Temp Controlled, etc.)
·         Total Annual Chargeable weight (in KGs)
·         Total Annual Shipment Frequency

With the bidding information squared away, you’ll now need a template for airlines to respond with their pricing and corresponding information. The most important information to collect is the minimum base rate, prices per KG (using applicable weight breaks based on your shipment profile), and surcharges. The most impactful surcharge is Fuel which varies with the applicable fuel index. Additional surcharges include security and handling surcharges. More granular/non-traditional information to collect includes flight schedules in order to gauge availability of flights in parallel with raw pricing. Close out time, recovery time and weather flights are direct or indirect also will help to evaluate if an airlines solution will work for time and temperature sensitive shipments. A summary of quantitative and qualitative information to collect from airlines is summarized below:

·         Bid Currency
·         Minimum Charge
·         Weight break charges, per KG (price for 0-50kgs, 50-100kgs, etc.)
·         Surcharges
o   Fuel
o   Security
o   Handling
§  Prices will vary based on handling being performed in house versus third party carrier
o   Leave space for carriers to include additional surcharges as needed

As previously mentioned airlines have varying pricing structures based on service levels, regions, and overall based on internal pricing strategies. This makes it of the upmost importance to evaluate carriers per each region and services level based on the total cost of shipment. For example it will be inaccurate to compare one airlines 0-50KG price per Kilogram to another’s since one airline could impose heavy surcharges and have more competitive weight break pricing, or they could not have surcharges altogether and blend all fees/surcharges into their per KG pricing per each weight break. Therefore when performing your quantitative analysis and comparing airline to airline a full calculation will need to be made and then the total costs compared against each other. This will yield the ever-allusive “apples-to-apples” pricing comparison.

Even in an age of rapid digitization and technological advancement, there's no tool more important than the right people. For Procurement teams to reach their full potential and become business leaders, they need to attract the perfect team of professionals and establish programs for developing their talents.

The right candidate isn't always the best educated or most experienced. What's more, the ideal candidate isn't necessarily the one with the most obviously impressive resume. Like athletes, world-class Procurement professionals distinguish themselves with intangible qualities. The business equivalent of hustle, these are those intangibles that coaches talk about so often.

You can't teach these qualities, but with a little digging you can identify them in your interview candidates. Source One's recruiting experts share some of the essential qualities they search for while assessing applicants.

1. Personality
Whatever their industry, hiring managers are constantly on the hunt for good 'culture fits.' While the term culture means something different for every company, a candidate's culture fit almost always comes down to personality. A candidate's personality should come across from their very first interaction with a recruiter. Are they engaged and engaging? Can they effectively hold a conversation? If so, it's likely they'll distinguish themselves as an asset to company culture and effectively build relationships with internal and external stakeholders.

2. Work Ethic
A recruiter or hiring manager can quickly assess this quality based on a candidate's responsiveness. If they're quick to follow-up, or take the time to reach out independently, it's likely they're a hard a worker who's excited about the position. This quality also reveals itself in the candidate's preparedness. An applicant with a good work ethic will conduct considerable research prior to an interview and come prepared with thoughtful, relevant questions.

3. Strategic Thinking
Strategic thinkers see a job opportunity as just that, an opportunity. The position they're interviewing for represents far more than a paycheck. They'll ask thoughtful questions about how they'll fit into the company's operations and how they can contribute to its future growth. The tone and relevance of their answers can also reveal this quality. A truly strategic thinking will answer questions directly and concisely rather than trailing off-topic or returning to rehearsed talking points.

4. Consultative Mindset
Training programs can help an employee mature into a good consultant. Great consultants, however, are born. You can recognize a born consultant based on how they speak to their weaknesses and past failings. No one likes answering these questions during interviews, but they've become standard for a reason. A run-of-the-mill candidate will fixate on problems without effectively speaking to their solutions. An outstanding one will do the opposite. They'll confidently describe their methods for turning negative situations into opportunities for professional development.

5. Assertiveness
An assertive candidate won't talk over their peers, but they'll have no problem speaking their mind when necessary. Without getting cocky, they'll use an interview as an opportunity to succinctly and confidently describe their strengths and accomplishments. When discussing these, they'll take care to reveal the tangible results of their efforts and emphasize how their experiences have prepared them to accept this new position.

6. Accountability
In all likelihood, the candidate isn't interviewing for their first job. That means they'll need to discuss the reasons they left previous employers. If their answer focuses exclusively on what past managers did wrong or failed to do, the candidate lacks accountability. An accountable candidate will admit that they were ill-suited or unfulfilled in past positions. Without wallowing in negativity, they'll acknowledge past disappointments and describe the ways they've matured throughout their career.

Remember, these qualities won't jump off a resume. They can, however, make the difference when it comes to differentiating between two similarly-qualified and experienced candidates. Every Procurement team boasts smart and dedicated talent. Only the best possess the qualities listed above.

Source One's staffing and recruitment teams can understand that qualities that make for excellence in procurement because they've helped define excellence in procurement for decades. Reach out today. Together, we'll work to construct a world-class team.

3D printing and supply chain: Convergence coming soon

The promise of 3D printing has been in the background of manufacturing conversations for years. This technology's potential to let companies create items on demand, with minimal factory equipment and an extreme degree of customization, has kept it relevant as the necessary hardware and software have improved. The fact that there hasn't yet been a massive supply chain disruption due to 3D printing may be leading some companies to write it off. Leaders should keep their eyes open, however - further development could change the geography of manufacturing.

The use of 3D printing as a prototyping system, a behind-the-scenes option for product development, has kept it in the manufacturing ecosystem. Learning to produce finished goods with the same speed and ease currently used for in-development items could be the turning point for 3D printing's impact and ubiquity.

Examining the marketplace
Current supply chain practices such as producing a high volume of goods in financially efficient factories and shipping them en masse may become less useful in the era of widespread 3D printing. The Chartered Institute of Procurement & Supply recently examined both the transformative potential of 3D printing and the reasons why the technology hasn't yet had such an impact, despite being known and available for years.

With widespread use of 3D printing, companies of all kinds could see the types of gains unlocked by auto manufacturers. These businesses are cutting down on the standing inventory of parts kept in warehouses, according to CIPS. Holding onto massive amounts of inventory, especially for highly specialized components, can be a major drag on manufacturers' bottom lines. They are therefore interested in gaining the ability to create more specialized items on demand, and to potentially generate complex pieces as one, cutting out some assembly.

As for the forces keeping this kind of exciting new capability from entering mainstream use, CIPS named such barriers as a lack of personnel, materials and assets. While the concepts behind 3D printing are understood, the infrastructure needed to bring the technology into common use is lacking in some cases. With General Electric, Boeing and Nike coming aboard, the tide may be turning in favor of this new manufacturing method.

A rendering of a 3D printer.3D printing's ideas are understood, but the related hardware and experience are still works in progress.
Trend notes
Several analyst organizations are keeping a close eye on 3D printing, offering updates and waiting for the moment when the tools and techniques become fully absorbed into the supply chain mainstream. The recent Accuracy Research report on the topic declared that the time between 2017 and 2025 will likely be home to significant growth as manufacturers and other supply chain partners add the technology to their offerings and medical science benefits from the addition of 3D printed devices.

The sheer number of sub-verticals being tracked by Accuracy shows the many ways in which the new production method could make a mark. From fabricating electronics to generating food on demand, there are numerous ways to make 3D printing a viable part of a company's strategy beyond its roots in prototyping. Construction companies, military technologists and aerospace manufacturers are some of the organizations that may reinvent their operations in the years to come, providing exciting new opportunities.

The difference between forming a successful relationship with a secondary supplier and having to re-engage the market within a couple of months rests with identifying the core reason for the relationship, the main drivers of the decision process, and following a structured research and selection process to ensure all key criteria are satisfied.

To ensure a mutually beneficial and stable relationship with the secondary supplier they must be able to meet the core needs that prompted the search. The most common reason to seek and develop a secondary source relationship with a supplier is simply to alleviate the risks associated with production interruptions due to complete dependence on one supplier for a portion of the component materials or assembly services. However, manufacturing capabilities can also limit the current supply base and cause shortages in supply where the manufacturer or fabricator is not able to meet volume requirements consistently. This can also include variability in quality.

Another common motivation is the need for more competitive pricing. This can be caused by price fixing by a few large consolidated suppliers in a certain region or moving from research and development volumes to production volumes. Market pricing is also a key factor in evaluating new product introduction options and target pricing.

The research and selection process also needs to be adjusted depending on the type of supplier that's being sought. The most common supplier types can often be separated into raw material manufacturers, distributors, fabricators, and contract manufacturers. Raw materials manufacturers and distributors can include commodity and specialty chemicals, aggregates, and industrial products. Component distributors range from electronic and industrial supplies to PVF and hardware.

These two supplier types are in stark contrast to both fabricators and contract manufacturers. Here, fabricators can include machining operations such as milling and turning, sheet metal stamping and forming, casting, forging, and injection and compression molding as the main categories. While contract manufacturing can include encapsulated electronic manufacturing services such as cable assemblies and printed circuit boards to more complex electro-mechanical and optical sub-assemblies all the way through the manufacture of the complete finished product.

Both the core need for a secondary-supplier and the type of supplier determine the complexity and time frame of the supplier identification process, but can be captured within a five stage process.

The first step in the process is data collection. This includes identifying the regional scope and initiative drivers, collection, review and understanding of the technical needs and specifications, and determination of estimated annual volumes, order preferences, packaging and shipping requirements such as full container loads, and the final destination and frequency of orders.

Once all requirements are clearly scoped out the initial research phase can be undertaken to determine supplier limitations. This is driven by the team's technical subject matter expertise and utilization of internal knowledge bases and partner networks.

With an initial long list in hand each supplier can be contacted individually to determine if they're a good match for the stated need. Often the best approach is to compile a summary of each supplier’s capabilities for ease of comparison. This includes reported annual sales, financial stability, manufacturing facility location, size, and industry focus. An approval of the short list that results is a big part of making sure expectations are reconciled with need and everyone on the team is on the same page.

With a list of vetted suppliers determined, an RFP can be carried out to validate the initial conversations and gather line item pricing. This begins by executing non-disclosure agreements to protect intellectual property and gathering a full bid package of items and detailed product specifications for pricing evaluation. Key drivers include validating financial stability, and manufacturing capability along with equipment lists, partner lists, and secondary operations. Verifying certifications and standard operating practices such as ISO13485, ISO9001, ISO14001, OHSAS 18001, FDA, and ITAR is also important at this phase.

The RFP process continues by gathering and analyzing pricing per line item or product, conducting initial pricing negotiations, and preparing a market summary report for the team.

The final step in the supplier identification and selection process is qualification and contracting to ensure a stable long term relationship. This includes selecting a final set of suppliers based on qualitative capabilities and pricing competitiveness, requesting samples and conducting tests or qualifications, inspection of the manufacturing operations, legal review and finalization of the contract and follow-up quarterly review as part of the relationship management process.

Today’s consumers are inundated with marketing content on a daily basis through both digital (social media feeds, video ads, email, etc.) and traditional advertising channels (i.e. TV and radio commercials).  In an effort to create more meaningful and engaging interactions between brands and customers, companies are turning to experiential marketing to help bridge that gap. But what is experiential marketing?

Experiential marketing is a form of event marketing that uses brand experiences to engage with customers. More specifically, it is a way for customers to interact with a brand or product through real-world experiences, often referred to as brand activations. A brand activation can be anything from a pop-up event you are hosting to an activity at your company’s booth at a larger event.

Earlier this month, the annual South by Southwest (SXSW) festival took place in Austin, Texas and companies jumped on this opportunity to engage with customers and promote their brands. Brands like Facebook, HBO, DC Comics, and more offered event attendees the opportunity to partake in their activations. For example, the mattress company, BeautyRest, set up beds in a local hall for attendees to take naps in while attending the festival. Similarly, earlier this year at the Super Bowl, multiple brands used virtual reality to give fans the chance to partake in the events of the big game. You will be able to find brand activations at similar large-scale events where brands are able to take advantage of the increased foot traffic to interact with consumers, such as sporting events, music festivals, etc.

It should be noted, that experiential marketing is not limited to large-scale events and festivals. There are plenty of examples of brands leveraging experiential marketing outside of these events. For example, many television shows, like Friends and Gilmore Girls, have set up replica sets at different locations for fans to have a chance to visit their favorite shows. Other brands have taken to the streets of major cities to give people the chance to test their products in an environment they created. Recently, Samsung used a light display in London to give passerby’s the chance to test out the camera features on their new phones.

Regardless of the form of your activation, the objective is for your customers to have a meaningful experience with your brand by testing your product, displaying content tied to your campaign, or any other activity intended to leave a lasting impression with your audience about your brand/product. A key contributor to the success of an experiential marketing campaign is for the activation to be directly tied to your product, brand, or company in an authentic way. Just putting on a cool activity to draw an audience will not have the same impact as if it were linked to the purpose or use of your product. By leaving a lasting impression with your customers through these activities, they are more likely to give their business to you in the future and recommend your products to other people.

Experiential marketing agencies understand the complexities associated with gaining and keeping the attention of today’s consumers and will work with your organization to create an impactful activation for your brand. Contact our Marketing Sourcing experts to learn more about how we can help to support your brand’s next activation.

The MRO (Maintenance, Repair, and Operations) spend category includes a wide variety of products, services, and suppliers that are each crucial to a company's day-to-day operations. Containing everything from nuts and bolts to specialized engineering services, the category is often characterized by fragmented supply bases and high amounts of tail spend. When Procurement professionals source the category on a tactical basis, they leave themselves vulnerable to supply chain inefficiencies and miss out on considerable savings.

Source One's MRO category experts have spent years helping clients take a more strategic approach to this essential spend component. Check out their latest infographic for an overview of the industry. This market intelligence will help you take the first step toward optimizing your purchases within the category.

Looking to optimize your MRO purchasing? Want access to best practices for cost reduction, supplier engagement, and talent management? Contact the cross-category Procurement specialists at Source One today. 

March 30, 2018

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

Recent Blog:

4 Contract Management Best Practices for Improving Supply Chain Performance & Quality
Jennifer Engel, ThomasNet, 3/27/2018
Automation expedites and simplifies the Procurement contracting process, but it doesn't eliminate the need for human investment. Source One Senior Project Analyst Jennifer Engel shares tips for optimizing contract management to reduce the various costs associated with auditing agreements and managing supplier relationships. She suggests that effective contract management plans begin with the development of a digital template library. These will not only make for smooth workflows, but also help to reduce paper costs and improve security and transportation. Additionally, she suggests that remaining proactive and engaging in consistent audits reduce inefficiencies and produce cost savings.

Nailing Down Managed Services Requirements: Building the Right Outsourced Structure for Your Organization
Torey Guingrich, Outsource, 3/21/2018
Comparing the process to building and insuring a home, Torey Guingrich offers best practices for developing a relationship with a managed IT services provider. Building the foundation, she suggests, begins with a thorough understanding of the agreement's scope of work. Your team's understanding of the SOW needs to go beyond day-to-day considerations to include less common service offerings. Before entering into a relationship, it's also essential to determine how your team will define success. Determining the appropriate metrics to assess performance will make for ongoing value and efficiency. Lastly, she suggests a careful approach to pricing. Failing to consider every potential contributing factor could lead to an ineffective or unsustainable agreement.

Recent Podcasts

ISM2018 Session Insights (Episode 6) - The Price of a Bad Procurement Hire
Procurement departments lose a lot more than money when they recruit, hire, and on-board the wrong person. Reputation, morale, client relationships, and productivity all take a hit when a mismatched professional joins the team. Andy Jones, an expert Procurement recruiter, joins ISM2018 Session Insights to discuss the consequences of a poor hiring decision and speak to the considerable benefit of working with a third party. He suggests that an outside perspective could provide the bandwidth and category expertise necessary to effectively vet and assess promising candidates.

ISM2018 Session Insights (Episode 5) - Rotational Programs for Procurement Talent
Millennials looks poised to drive Procurement's into its next era. They're educated, collaborative, tech-savvy, and flexible, but most lack the hands-on experience necessary to accept leadership positions. Managers throughout the industry are asking themselves how they can best optimize these young hires and provide for their professional development. Jennifer Engel suggests that rotational programs could be the answer. They'll provide the diverse experiences necessary to establish the skillsets that make for success in supply management. She joins ISM2018 Session Insights to discuss methods for optimizing these programs and guaranteeing their long-term value.

Reflecting on a risky supply chain year

Risk in supply chain situations is one of the major elements which leaders must plan around. Though companies always hope each new year won't bring too much in the way of disruption, the evolving factors around the logistics world don't let them take any time off. From changing climate conditions to unstable political situations, the threats to today's globe-spanning supply chains take many forms, each of which must take its place in an appropriate risk mitigation strategy.

While no two years ever have exactly the same set of supply chain risks and challenges, the threat landscape of 2017 is still largely relevant in the context of preparing for the rest of 2018. Last year's trends will cast a shadow over this year's strategies and point to the future direction of global logistics.

Nature, the internet and international incidents
The vast variety of events that can cause a supply chain disruption was on display in 2017, and issues in 2018 may cover the same spectrum. Supply & Demand Chain Executive reported that after compiling the EventWatch 2017 Annual Report on disruptive incidents, industry organization Resilinc pulled out a few categories of risk that deserve to receive some focus from planners this year.

For example, global organizations should make sure they're aware of any developments in the tense political situation on the Korean Peninsula. North Korea's ongoing contentious relations with countries near and far may lead to transport disruptions. The company also highlighted efforts by the Chinese government to get pollution under control. Some manufacturing methods that have thrived in the past may lose prominence. Shortages of high-tech components such as NAND flash chips is another potential disruptor. The global supply of those components received a temporary disruption in 2018.

To become effective international traders, companies must possess a great deal of digital infrastructure. That, too, presents its own kind of threat. A cyberattack on one company in the supply chain could slow that company down, or even put its partner organizations' data at risk.
Finally, there's Mother Nature. Resilinc explained that storms created a path of destruction in 2017, with U.S. businesses suffering major disruptions. Organizations should expect another unpredictable year of weather and be ready for anything.

A broken chain.One supply chain break can cause cascading delays.
Will AI help manage danger?
Organizations can deal with today's evolving risk landscape by using more advanced technologies and methods. Supply chain executives Christopher Caine and George Bailey, contributing to Supply Chain Management Review, suggested that artificial intelligence and machine learning are among this next generation of solutions. Armed with the right algorithms, companies will be better able to predict both market opportunities and potential escalating risk factors.

Bailey and Caine pointed out that organizations need better ways to predict changing factors in their markets, and AI may be the key. Today's organizations have access to more data than ever before, and if they can sense trends before they reach critical mass, they may become better at avoiding danger and disruption, as well as at pursuing better outcomes. The value of AI comes from the fact that its insights may be faster and more esoteric than human statisticians can deliver.

Inventory management can be a costly and daunting task for many organizations. The ultimate goal of inventory management should be to get the right product to the right place with minimal expense and effort. This can be a difficult task, especially for MRO, or Maintenance,Repair and Operations, which is the goods and services that keep a facility running. These products would include items such as repair components, lubricants, lighting fixtures, safety supplies, janitorial products and other consumables that are not directly tied to the core products. In many organizations, MRO inventory accounts for a significant amount of the annual procurement budget, but is still not managed with the level of thoroughness typically applied to production inventory. Taking the time to manage MRO inventory effectively can lead to cost reductions and savings. Three best practices to consider when developing a plan to manage MRO inventory are shown below. 
·        Central location of MRO inventory
The first step is to identify a central location for MRO inventory. Storing MRO supplies in one central location per facility instead of having multiple unidentified locations will increase overall efficiency. Additionally, it is important to utilize computer systems to track, manage and control inventory. Utilizing usage data and transaction costs can help an organization right-size their MRO inventory in accordance with the supply chain performance standards.

·        Vendor-Management Inventory
Vendor-Management Inventory (VMI), is an approach where the supplier is onsite managing the MRO inventory. This would allow the staff to focus on their core functions, with the assurance that the MRO inventory is being managed properly by the supplier. This may bring in additional saving opportunities, as the supplier will have greater visibility of downstream demand and may be able to offer additional volume discounts. The VMI approach can also reduce paperwork and the number of transactions on the customer side since the customer is paying for the material as it is used. The invoicing process can then be scheduled on a weekly or monthly basis to streamline the payable process to reduce overall transaction costs.

·        Key performance indicators
As with any management of an operation, key performance indicators (KPIs) should be established in order to measure key factors such as savings, costs, and obsolescence in an MRO project. It is important to measure how effective the organizations MRO inventory management is so that upper management can not only understand the progress, but to see its benefits. A few measures to consider might include the number of stock outs, days or months of on-hand inventory and the ratio of rush orders to replenishment orders. These measures should be tracked and posted in order to ensure those responsible can see their performance and are in a position to act to improve performance as needed.

Utilizing these three best practices for managing MRO inventory will help reduce cost and bring in greater efficiency. Many organizations are currently expensing MRO materials at the time of purchase, meaning that they are accountable for what they buy and not what is typically used. The actual consumption of MRO materials is typically less than the anticipated demand, which means that companies are spending more than what it needed on MRO materials. Ultimately the effort to implement an effective MRO inventory management systems is worth the return.

Welcome to the Emerging Tech Monthly Beat Blog!
While we continue explore new technologies in this series, there is also a need more and more to focus on trends in the sectors and rate of adoption as well as practicality of implementation. This is where business efficiencies truly lay.
Call to Sourcing and Business management professionals: lets stay afloat of all this or we risk going by way of terms like 2011 Charlie sheen’s “winning”… 
As is proverbial said: “If you can work remote you can be automated” (also, personally, I'd like to add  "and at the very least be outsourced.")  In all clichéd sort of sayings that we find in corporate/business world, we rarely take the time to scratch much deeper than our meme culture and 6 second attention spans.  
In this case like in many others, there is value staying on the topical trend longer than six seconds meme that gets shared and goes viral. (side bar rant: anyone else getting annoyed by the triviality of the business generic and esoteric sayings that go viral on LinkedIn, while articles with actual content goes stale.. ugh, another issue for another day.)
Back to the point: The Driving force of this quote is the increasing ease of programming via the introduction of new higher level languages open doors to increased cost reduction and this can enable new opportunities.  
Programming languages have gone through a new dawn, a genesis of technological sorts, to where the adoption curve that have been pretty much tailored to each specific type of language per its specific purpose: php, java, and python etc. But what is particularly worthy of note is the wave of languages that have been easier to learn and read. 1 and 0’s lowest to Python and SQL ( practically readable text). AKA a High Level Language. This trends over-layed with easier and faster ways to code and of course the "git."   
As these languages become easier to code the cost benefit calculation to build an algorithm or certain type of command moves itself into relevance for the business manager to take note of certain operations.  
COST REDUCTION NOTE:  Sourcing/Business Professionals vigilance of the language tech to increasing efficiencies with other business practices and overall trends – can free up a lot of operating capital and in this case too time….

This blog is the second in a series discussing cross-generation collaboration in Procurement. Be sure to check out the first installment 'Building Interpersonal Skills in a Technologically Enhanced Workforce' from Source One Associate Director Jennifer Ulrich.

I was always deathly afraid of phone calls. Whenever my cell phone rang and displayed an unfamiliar number, I usually watched it vibrate and cursed the sound. Sometimes, I even went as far as to sit on my phone to muffle it, hoping it would stop. I admit that, even now, I am still a little apprehensive when it comes to talking on the phone. It’s a very common fear for people of my generation.

Millennials have been dubbed socially awkward and earned the nickname Generation Social Isolation, thanks to our dependence on technology. BusinessInsider even claims that we are losing our social skills thanks to social media. It’s no wonder. For many of us, technology allows us to communicate in controlled environments. We can take our time crafting responses and connect exclusively with our peers. We have control over how others may perceive us and can stop conversations whenever we wish. During in-the-moment conversations at work, we are definitely forced to approach chats differently, exercising more care and – often – displaying more clumsiness.

Our unique approach to social interactions is not, however, always worthy of criticism. While we lack the social skills that many professionals have always possessed, I believe Millennials provide certain advantages to their employers. With efficiency and forward-thinking, we lend a hand in the following ways:

Our penchant for simplicity

  • When posting to social media or crafting a text, Millennials tend to keep it short. Too much information can be overwhelming. Going from written to verbal and nonverbal (e.g. body language) communication, Millennials may struggle to bridge the gap; it’s much easier to focus on the objective of the interaction. This can be extremely useful, especially in the workplace. Favoring concise interactions, Millennials display their skills for critical thinking and distillation.  Both enable them to transfer information efficiently.

Less formalities, more engagement

  • With the rise of chat apps and other platforms, Millennials interact with each other 24/7. They encourage flexibility, allow for multitasking, and create an informal but proactive setting. This aspect of Millennials’ cultural influence can already be seen in the workplace. Consider the professional chat app Slack. Technology-savvy individuals are immediately aware of new conversations on their hand-held devices and can immediately respond without going through the formalities of writing an email.

Transparency and Openness

  • When it comes to finding suitable work environments, Millennials value honesty and transparency. We want to understand the contexts and importance of everything in the workplace by asking (sometimes candid) questions. With open lines of direct communication and consistent teamwork, trust and collaboration naturally improve.

I believe interpersonal communication is a vital life skill and something that everyone actively and passively works on all their lives. I also find it very funny that it has become a defining trait for people in my generation.

Throughout my time with Source One, I’ve grown professionally and met some wonderful people. It’s inspiring that so many members of the team are fellow Millennials. I particularly admire how easily they can handle difficult conversations, from expertly dealing with client crisis calls to persuasively pitching a service offering. My work at Source One has also allowed me to recognize the impact of human exchanges in all our projects, from contractnegotiations to managing suppliers (for more examples, visit

Adding a new manufacturing partner brings supply chain complexities

Companies launching new products depend on a huge number of variables going their way to ensure those items are successful. Their choice of a manufacturing partner is one of the most pivotal decisions in the planning process. The relative effectiveness of the chosen company's processes and the quality of its finished goods will play a significant part in determining how consumers react to a new offering, and whether it catches on in the marketplace.

While there have been plenty of technological innovations relevant to sourcing and the supply chain over the past few years, the key element of partner selection remains simple decision-making. Rather than drastically changing this process, new intelligent technology increases the amount and quality of data leaders have at their command when they make major decisions.

Finding the right factory
Writing for Supply Chain Management Review, Pivot International CEO Mark Dohnalek gave a few vital hints for companies hoping to set up manufacturing partnerships that deliver great results and last for a long time. He stressed the importance of companies that have strong internal audits and quality-control processes. Manufacturers that have worked with leading brands in the past and have a
track record to fall back on may be the surest bets for future business.

The connection between factory and corporate leadership is also important. Businesses that get their products fabricated overseas may have trouble overseeing production unless they dispatch an official in person, whether to strike up important relationships at in-person meetings or to bridge a business culture gap. Working with a manufacturer that is geographically closer to home may be essential for firms that are planning to release several products over a short span of time, with the inherent speed limitations of global transit slowing down an international contract.

Dohnalek also noted that forging production relationships that last involves thinking ahead. Companies that only think about their present needs may end up working with organizations that are ill equipped to escalate their level of activity as the organizations increase their global reach or the variety of their product lines. If one big order could destabilize a manufacturer, the business may soon be a supply chain liability.

A factory's conveyors move at high speed.What makes a great manufacturing partnership?
Dealing with the latest technology
Some of the variables affecting manufacturers' relative effectiveness may involve their choices of technology. Systems just entering everyday use are powerful agents of transformation within factories, and the latest solutions may even help them keep in touch with partner organizations. Manufacturing Global contributor Roberto Bursin pointed to a few of the main types of technology improving the effectiveness of manufacturing facilities today, such as "smart" operations and improved communication.

Manufacturing operations management software is powering factories' day-to-day processes by combining previous solution types and giving a unified view of operations. Visibility and connectivity of data is a great help to decision-makers within industrial settings, and it doesn't end at the facility walls. Digital systems that integrate supply chain partners' systems with one another have the potential to create more responsive and agile connections. When real-time data flows freely between organizations, the whole production process can benefit.

Working in an industry that is brimming with talent, both young and old, you learn a lot about what makes and breaks a career in consulting. As we continue to grow as a company, we look for individuals that can grow with our organization, people that not only have the right skillset but also the right personality for a career in consulting. This lands us in the position of hiring emerging professionals that we can help mold as they begin their careers. Naturally, that means we are hiring talent from the millennial generation. I can honestly say that some of our best consultants have been from this emerging talent pool and have grown tremendously during their time with us.

During my tenure, I have learned some new skills and been fortunate enough to teach others what I have learned. While we have a robust training program to ensure our consultants are thoroughly prepared to handle any situation thrown at them, there is one skill gap that is particularly common among new talent. It is something that ten or twenty years ago was a given – interpersonal relations. This blog is the first in a series where I will share my perspective on this topic as an individual from the previous generation, a generation whose members did not grow up with the level of technological exposure as those today do. The second perspective will be from the viewpoint of an emerging professional at the tail end of the millennial generation.

When training new team members, particularly those that are new to consulting or the professional workforce in general, we work especially hard to develop their interpersonal communication skills. In procurement and strategic sourcing consulting, these are among the most essential skills a professional can possess. Every consultant needs to develop strong relationships with suppliers and develop partnerships with other organizations to build their firm’s portfolio and brand. This sometimes means interfacing directly with C-level executives. In order to succeed, our consultants not only have to communicate effectively, but they also need to be able to quickly adapt to any situation. Successful communication comes down to getting your message across effectively, clearly, and concisely while tailoring your message to the particular audience. Even the savviest consultant can find this challenging.

As I mentioned, I come from a generation that was slowly introduces to technology like the internet and home computers. I still very fondly remember having to use the phone line to dial into AOL. In those days, unless you had multiple lines, no one could use the phone during internet time. I remember sitting in front of the Gateway computer (a major purchase for our household) that the whole family had to share. I remember having to use actual books to do a research paper in high school. It was a total pain at the time, but I’m still sad my kids will likely never share the experience.

We didn’t have the world at our fingertips. We had to go out there and get results the “old-fashioned” way. We had to talk to people to get answers. Email was a thing, but picking up the phone was far more natural. It was something we just did automatically. In fact, I spent hours on the phone in my teen years. It was a milestone for our generation to tie up the phone line long enough that our parents purchased separate landlines.

These different historical experiences are what help to bridge the generational gap in today’s workforce. We often hear about how the baby boomers are on their way out and the millennials are taking over. While this might be the case, this transition will likely take some time. With that in mind, it is up to the two generations to learn from one another. Both the aging workforce and the incoming upstarts need to adapt to survive and embrace innovation in how they perform their roles. We can’t forget the art of interpersonal communication, but we need to refine our techniques and strategies to fit the needs of emerging professionals and the client base they’ll serve until the next generation arrives to shake things up all over again.

The big debate between centralized vs. decentralized procurement seems to be heating up without one side edging the other in the discussion. As Procurement keeps gaining relevance within organizations and increases its stature as a strategic operation, organizations have been trying to decide the right fit Procurement model to adopt for achieving sustainable value.

Here’s where the debate stands; on one side we have the argument on Centralization, which focuses on keeping procurement under a single location where all supply management decisions are made, almost emulating a shared services function. The arguments pro-centralization focus on strategic alignment and standardization, in which procurement sets goals and targets based on the company’s growth enablement or cost cutting strategies, and governs the deployment of the corresponding initiatives from top-down that typically represent embracing a sweeping approach across departments. What favors this approach is that it supports standardized purchasing patterns and consolidates volumes wherever possible, it also increases controls and facilitates reporting that can easily tie to cost cutting metrics across the organization. The problem with a fully centralized approach is that it’s harder to adopt than one might think, particularly because it does not take into account the idiosyncrasies and needs of every department, business unit, distribution center, facility, etc. which creates resistance. Although it promotes volume consolidation, it removes the flexibility individual departments/units may have to negotiate better pricing with local vendors or even create synergies that may optimize their operation. Full centralization is a cost-cutting focused but low-value delivery approach.

On the other side, we have the argument on Decentralization, which you can imagine is in many ways opposite to the centralized approach. Larger organizations tend to like decentralized procurement functions because they are easier to handle, in a global company why would the facility in Germany care about who the plant in Mexico is using. A regional approach is as deep as they would go from a centralization perspective and even then it may be ad-hoc category driven. Companies that undergo rapid growth may have issues trying to centralize and operational integrations may be more critical than consolidating volumes for cost-cutting purposes. The problem with decentralized procurement is that it can easily turn into a free-for-all operation in which opportunities are missed – simply because nobody knows they exist as units operate in a vacuum, or because there’s a lack of governance to share, implement best practices and/or tie to a common goal. Stakeholders are free to engage and negotiate suppliers to their best of their – strategic sourcing – knowledge and establish good supplier relationships, but the company may be bleeding money.

So let’s resolve this conundrum once and for all and implement a “Hybrid” model right? A flexible approach where we do some centralized categories and some decentralized stuff too, and everyone is happy! Well, no. A Hybrid model may mean many different things but for the most part it will mean poor alignment, an alienated supply base, and many stakeholders’ battles lost (which BTW simply having to fight a stakeholder is already a lost battle). Hybrid procurement could go as far as some categories being addressed globally, where others are local or regional focused, or that some business units negotiate centrally while others segment out based on location, or a mix of local, regional, category negotiations that aggregates volumes when possible but that exceptions get in the way all the time. Confused yet? How and where do you even start?

So what’s the answer? What companies really need, especially those who find themselves having this argument is a procurement department that: 
1) aligns with the strategic goals of the organization, 
2) considers the sourcing profiles and nuances for all categories, 
3) understands each business unit and stakeholder requirements, 
4) provides visibility to the entire organization and leverages best practice sharing across categories and business units, 
5) leverages data analytics and tools to identify, roadmap and execute on actionable sourcing strategies that would maximize value with minimum stress while adequately generating reports, and
6) enables organizational culture; in such a model all sourcing activities are centrally led and reported into but execution and tactical deployments is category driven and left to the sites and business units, which would enable volume consolidation while maintain a healthy supply base balance to support local or regional concerns. 

This is called Center-led procurement, and as you can see, it operates as a center of excellence that entails a much more comprehensive structure, one that leverages the blessings of data management, as much as it does cultural alignment, or category management modeling. Center-led procurement maximizes savings without causing disruption, it enables superior supplier relationship management, aligns the businesses to the strategic goals of the organization, and provides key insights and visibility into the organization’s purchasing behavior.

We are fortunate to have helped many corporations move towards this model with great success, where not everything needs to be done at once, but rather done strategically so adoption follows a natural cadence that gains momentum rather that a swift paradigm shift and a headache.