July 2018

Over the last decade, British luxury retailer Burberry has earned recognition for its innovative approach to digital marketing and its efforts to develop an impactful, consistent brand identity. When its famous checkered design became associated with rowdy football hooligans in the early aughts, Burberry found their products banned from businesses across the United Kingdom. What was once a signifier of wealth and taste had, through decreased costs and rampant counterfeiting, grown popular with the exact opposite market Burberry hoped to serve. 

In 2006, new CEO Angela Ahrendts kick-started efforts to rebuild Burberry's brand identity. One of her first initiatives saw Burberry remove the recognizable checkered pattern from all but 10% of its products. Alongside Creative Director Christopher Bailey, Ahrendts also announced her intention to make Burberry the first fully digital luxury retailer. Ahrendts' efforts were largely successful. During her tenure, Burberry's value nearly quadrupled. What's more, her work to rehabilitate Burberry's image by embracing both tradition and innovation is often cited as a case study in effective brand management.

Not all of Burberry's efforts to maintain an air of exclusivity have gone over so well. Recently, the brand's annual earnings report revealed that Burberry incinerated nearly $40M worth of merchandise in 2017. The Times points out, "Even at [Burberry]'s notoriously high prices, that is the equivalent of more than 20,000 of its signature trench coats." While the practice is nothing new, Burberry is destroying more stock than ever. The value of wasted merchandise has doubled over the last two years and increased by six times since 2013. 

Burberry is hardly the first organization to attract scrutiny for destroying its merchandise. Just last year, the New York Times exposed Nike's practice of slashing 'obsolete' shoes from heel-to-toe. In a more bizarre example of this controversial practice, 2017 also saw Bloomberg report on H&M's unusual relationship with a Swedish power plant. The plant, committed to eliminating fossil fuel by 2020, had taken to incinerating trash, wood, and other recycled materials to drive its operations. Among these materials were over 15 tons of discarded H&M products. The retailer claimed these products had failed safety tests, but critics were predictably skeptical.

For H&M's detractors, destroying merchandise flew in the face of the retailer's commitment to sustainability. Offering a 'Conscious Collection' and encouraging its consumers to recycle clothing, H&M has become known as perhaps the most environmentally conscious 'fast fashion' brand. News that the Swedish retailer destroyed unsold merchandise led many commentators to question the brand's commitment to its supposed mission. The recent revelations surrounding Burberry have inspired similar speculation. 

In 2014, Burberry was one of the first brands to sign Greenpeace's Detox Solution Commitment. Beating luxury brands like Gucci and Louis Vuitton to the punch, they (seemingly) placed themselves at the vanguard of sustainability in fashion. A spokesperson from Burberry cited the organization's environmental track record in a response to this month's controversy. "Burberry," the statement reads, "has careful processes in place to minimize the amount of excess stock we produce.On the occasions when disposal of products is necessary, we do so in a responsible manner and we continue to seek ways to reduce and revalue our waste." 

Critics have responded by tagging Burberry's actions as wasteful, unethical, and elitist. Kristen Brodde, who leads the aforementioned Greenpeace campaign, wrote, "[Burberry] shows no respect for its own products and the hard work and natural resources that are used to make them." Brodde is not alone. Others have wondered aloud why an ostensibly green organization would destroy its goods rather than donating them or selling them to shareholders. 

Reporting on Burberry's troubles, Forbes' Olivia Pinnock suggests the practice of destroying unsold garments is largely ubiquitous and almost entirely unremarked upon. "It is incredibly difficult to calculate how much deadstock currently goes to waste," she writes, "as while there are incentives to do it, there's no legal obligation to report it." Today's consumers insist on visibility into their preferred brands' supply chains. They expect organizations to behave ethically and practice what they preach when it comes to issues like environmental activism. Couple that with a cultural conversation that's rethinking luxury and exclusivity, and it's clear something will have to change soon. No one is legally obligated to report on what happens to deadstock. I expect, however, that more and more people will soon feel personally obligated to do so. 
The food supply chain: Parsing tech progress

The food supply chain is an environment in drastic need of efficiency, and companies that can improve their technological capabilities may be in a prime position to deliver this level of effectiveness. In an industry defined by limited shelf life and volatile patterns of supply and demand, relatively small increases in speed can drive bottom-line value. The same tech breakthroughs that have made an impact on general retail and other corners of the logistics world are promising additions to food manufacturing and sales.

Supply chain departments around the world have been digitizing and otherwise modernizing at different rates. In some cases, inertia has set in and leaders are hesitant to change practices that still technically work. With so much to gain, however, there is ample reason to embrace the latest IT in the food sector.

An inside view
Speaking with Food Manufacture, SCALA Executive Director Dave Howorth explained the stakes of digitization, explaining companies may find it harder to move data than physical goods. He noted it's relatively easy to possess a large lake of information today, but more difficult to draw relevant insights from the data. Making that final connection between raw information and useful analytics will be a serious competitive differentiator within food logistics.

The pressure companies are feeling to become more data-centric and efficient comes directly from consumers, according to Howorth. People expect shipments to arrive nearly instantaneously, with the on-demand promises of online sellers such as Amazon becoming new baselines. To deliver such an experience, businesses have to become more savvy about drawing usable insights from their digital content.

Despite taking a favorable view of technology's grocery industry potential, Howorth warned against seeking easy or automatic answers from new deployments. He specifically mentioned one of the most hyped options in recent memory - blockchain technology. Companies are interested in using blockchain ledgers as transparent and tamper-proof logs that will increase traceability. Howorth noted that the impact of blockchain systems will likely affect some companies more than others, and that viewing any new solution as a cure-all is likely to lead to disappointment.

A produce aisle in a grocery store.The food supply chain is unique.
The future of recalls
When considering the tech-infused future of food retail, it pays to dwell on details and specific process improvements. Packaging Digest recently spoke with OSIsoft's Jeff Van Pelt about recalling goods. Recent years have seen a large number of mandated food recalls, and finding new and improved ways to complete these processes could be extremely relevant for companies at all levels of the food supply chain. Van Pelt stated the use of internet of things devices - smart, information-sharing hardware - will allow organizations to become more efficient in the way they recall goods.

When organizations have accurate real-time readings of data points such as food temperature, they understand the risk factors facing their products. Van Pelt noted this will have a dual purpose: Businesses will be able to react quickly when something goes wrong and tell which of their goods were actually affected by a problem and thus have to be recalled. This is a practical example of effective data use making a supply chain more responsive.

ICYMIM: July 30, 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.

Nick Heinzmann, Spend Matters, 7/24/2018
As time has gone on, business has become increasingly complex, making it even more challenging to achieve greater results. A big part in a business's success stems from enhanced spend management, which can be approached in one of two ways. The first is to work on their current spend management processes, enhancing or automating the existing structure. The other option is to revolutionize their strategy, transforming it in a way that generates an entirely new way to go through the spend management processes. Organizations want a focus tailored to bottom-line results and active outcome participation. In analyzing the complexity that spend management has evolved into, there are multiple layers and factors to uncover in order to have a complete understanding. 

Procurement Vs. Purchasing
Kristin Manganello, Thomas Net, 7/20/2018
The terms "purchasing" and "procurement" are often used as synonyms. However, they are actually connected with different processes, making it very beneficial to learn and understand the proper definition of each. With the sector covering a lot of areas, procurement is often used as an umbrella term for various processes. Procurement's goal is to identify and obtain goods and services necessary for a company to operate, and to do so through a set of strategic processes. Purchasing, on the other hand, falls under the procurement umbrella, but works with the actual transactions that were established by that same procurement process.

Three Technology Trends to Watch that are Impacting Procurement
Dennis Bouley, 7/19/18
There are a lot of new technologies out there, many of which have a great impact on Procurement- edge computing, cloud computing, and artificial intelligence to name a few. Edge computing, a processing power that enables analytics and controls automation functions, brings the ability of data generation to devices. Cloud computing, boasting benefits such as easier customization and faster implementation time, has also sped up the collaboration process between suppliers and distributors. With Artificial Intelligence, computers can be programmed to complete specific tasks and use rules and information to make decisions. These computers can identify patterns and combine them with data to generate the next step, allowing human employees to take on other work. 

Empowering the supply chain with the industrial internet of things

The increasing digitization of the supply chain is taking many forms, all occurring simultaneously across industries and around the world. Automating data management and analysis processes that previously required laborious hands-on work is one of the key strains of modernization. Another concerns the way information is collected: The machines that power the supply chain are being networked together, with each becoming an automatic source of valuable real-time data. The industrial internet of things is made up of these connected devices.

The potential advantages of IIoT projects are easy to grasp. When data collection and sharing features are deeply embedded in essential machinery, there's never any shortage of content for analytics processes. A real-time stream of content is powerful fuel for decision-making engines, allowing businesses to know when they need to make precise adjustments to save time and money.

The status of the IIoT
While the potential of the IIoT is beyond doubt, the actual progress of the technology remains inconsistent. Not every organization has digitized its systems, and the clock is ticking for these businesses to make their move. Recent research by satellite company Inmarsat revealed both the tremendous upside of the IIoT and the various issues keeping supply chain organizations from completing their transitions into digital enterprises.

As for the potential financial impact, the Inmarsat report revealed companies expect they'll see an annual revenue increase of 10 percent due to the IIoT within five years. The operational efficiency gains that come from having intelligent machines communicating with one another are significant, and businesses are hoping to transform their supply chains to meet this streamlined model. To make these solutions work correctly, companies need to build data infrastructure.

The research also pointed to the specific challenges holding companies back from the more digital and effective operations they crave. The main culprit is security. Creating a linked network of new digital tools means generating potential new vectors for cybercriminals, and 56 percent of respondents stated they need more security. A comparatively small but still meaningful 34 percent of companies don't have the connectivity infrastructure they need to make the IIoT work within their supply chains.

A tablet with an "IoT" display.The IoT is finding its place in industrial settings.
Steady improvement
According to an industry overview by NelsonHall, the large companies working on implementing more intelligent solutions aren't necessarily planning to completely revamp their operations. Instead, they're interested in enforcing incremental change and making their current strategies better and more efficient. On the whole, big companies are keeping out of the "disruption" business. While there could be unexplored potential in transforming the way a supply chain works at a base level, corporate logistics departments would rather adjust their formulas than disrupt them.

In addition to the supply chain, NelsonHall found organizations changing their operations in related and complementary areas. For instance, manufacturing and industrial processes are also receiving the IIoT treatment. When factory machinery is capable of sending and receiving data, it can connect with shipping and warehousing systems to ensure each department expends the bare minimum amount of resources. Logistics transformation efforts will get further if departments other than the supply chain are equipped with the sensors of the IIoT.
Made up of countless sub-categories and featuring an inherently diverse supply base, Facilities spend is typically one of the most challenging categories for Procurement. Like MRO, the category is often addressed on a site-by-site basis. This approach can lead organizations down a dangerous road where poor communication, disorganization, and a lack of transparency become the norm.

Since 1992, Source One's spend management specialists have empowered their clients to take a more informed, strategic approach to their purchases in every category. Even the complicated Facilities space is no match for Source One's customized strategies and expert Procurement consultation. Check out some of our tips for reducing Facilities costs and driving greater value from Procurement's activities within the category. 

Want to learn more about approaching Facilities spend. Reach out to Source One's Category Management and Procurement Transformation experts today. Together, we'll develop sourcing strategies customized to your organization's unique cost reduction goals and objectives.

I’ll admit, I was a little hesitant when applying for an internship with a procurement and strategic sourcing company. Being a communications major recently entering a business program, I had a few semesters of business classes under my belt, but was not yet fluent in the language and realm of Procurement. Regardless, I saw this as a fantastic opportunity to learn more about an area that I hadn’t known much about- a chance to “expand my horizons.”

I was thrilled when I received a phone interview, and ecstatic when I was given the opportunity to come in for an in-person one. When I entered the interview room, I noticed a pile of different hats on the table behind my interviewers. In their opening statement, they immediately brought up the different roles Procurement plays, and more specifically, the different roles I would play- or hats I would wear- as a Communications intern at Source One. I took right to the notion regarding Communications, as I figured this would be the case given the nature of the communications field- from filming promotional videos or even being on-camera to writing press releases and blog posts, the opportunities and responsibilities are endless.

What I did not realize was how the idea of wearing many hats pertained just as much- if not more- to the Procurement field. When going through the various collections of content generated by Source One’s employees, I had an eye-opening moment when I noticed all of the different categories the content covered, and in turn subcategories of each. Areas like Finance, IT, Logistics, MRO, Fleet, COMMUNICATIONS (hey- I like Communications!), and HR- some of which I would never have considered to fall under the Procurement umbrella.

Let’s take a closer look at the sectors that initially stood out as being quite foreign to me.

MRO: This category consists of maintenance, repair, and operations. It's considered an overarching category for tons of subcategories, causing it to often be misunderstood and in-turn, improperly managed. Components of MRO include products, services, and suppliers that are a vital part in the day-to-day operations of an organization, requiring extensive attention and understanding for proper function and implementation. 

Logistics: Each organization has specified locations and routing processes. Providing consultation for these processes means each one must be analyzed on an individual basis, taking factors such as suppliers, geographies and shipment methods into account. You need to know what is being shipped, how much of it, how large the shipment will be, in what conditions the product can be shipped- and that's just to start. Tackling the travel process itself is a whole other beast. 

Fleet: Different vehicles are designed and utilized for various business needs. Each vehicle comes with separate fuel and maintenance costs- let alone means of operation. It's one thing to know which vehicles are necessary, how many are needed, and required amounts of fuel and operators, but it's another to be well-versed in the area, knowing a variety of options for each factor, and to comb through every choice, generating the combination that brings the lowest cost for the greatest productivity level. 

These three categories are just a slim few compared to every subject a Procurement professional must encounter and have experience in, in order to properly provide an organization with the best possible outcome. The more hats they can wear, the greater depth of service Procurement professionals can bring to the table. 

July 27, 2018

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

New eBook:
Source One's recent Procurement Transformation whitepaper series is now available as a comprehensive eBook. Procurement Transformation: Industry Perspectives, the series, taps into the experience and thoughts of Supply Management's most celebrated leaders and thinkers. The five-part series includes the experts' views and ideas regarding the popular topic of Procurement Transformation. The leaders analyze the subject through numerous lenses, using their experience to provide insights, reflections and best practices. Download the eBook today for an informative, extensive look at the Procurement Transformation process. 
The Maintenance, Repair, and Operations (MRO) spend category is frequently a challenging one to manage. Comprised of thousands of sub-categories, the category is generally addressed at a tactical, site-by-site level. This approach, compounded by disorganization and poor communication, leads many organizations to miss out on MRO cost reduction opportunities. Given all of the various components requiring attention, Source One takes a specialized approach to driving savings and compliance in every MRO spend area.

Recent Blogs:
How to Maintain Your Seat at the Table (Even if you aren't there yet)
Jennifer Ulrich, Buyers Meeting Point, 7/25/18
Getting a 'seat at the table' sits at the top of most Procurement team's to-do lists. Long dismissed as tactical and low-value, Procurement is eager to see its peers acknowledge it as a strategic decision maker. Earning a seat at the table is quite an accomplishment, but doing so doesn't mean Procurement's work is done. They've still got to maintain that spot and earn their keep, so to speak. Source One's Procurement Transformation Lead suggests that maintaining a seat at the table comes down to leveraging metrics and data analytics to demonstrate Procurement's value.

Software Negotiations: How to Plan Ahead and Create Competition
Kevin Fraser, Outsource, 7/12/18
Fraser opens with a famous quote from Benjamin Franklin, "Failing to prepare is preparing to fail." That old piece of wisdom, he suggests, applies directly to software negotiations. To fully prepare for these all-important conversations, Fraser recommends getting things in order at least 90 in advance. For highly critical products, Fraser recommends a lead-time as long as six months. However long Procurement gives itself to prepare, it's essential they collaborate directly with all relevant stakeholders to guarantee alignment, mutual benefit, and efficiency. 

Check out the full conversation and subscribe to the Source One Podcast today.


This week, Dan Andrew, Corcentric's SVP of Sales, joined the Source One Podcast to discuss the considerable benefit of transforming Accounts Payable. Before describing the "Nirvana of paperless," however, he paints a dismal portrait of the department's current state.

What does AP typically look like? In Andrew's words, "It's slow, it's manual, you don't gain visibility, and your suppliers don't gain visibility." He goes on to suggest that dismissing AP to a silo does more than hamper the department itself. In reality, failure to invest in Accounts Payable limits the value-generating potential of the entire enterprise.

Though the Payables to Payment Revolution is underway, Andrew estimates that only an elite minority of companies are currently realizing AP's true potential. It's not lack of evidence that's holding them back. The proof is certainly out there. Automating AP means dramatic cost reduction, improved spend visibility, and speedier, more efficient processes. So, why isn't everyone on-board?

Many of the obstacles standing in the way of AP automation are similar to those standing in the way of Procurement Transformation. In Source One's recent Procurement Transformation eBook, numerous contributors emphasized the importance of company-wide alignment, visionary leadership, and a more open mind. Without each, they asserted, a Transformation is unlikely to succeed. Andrew argues that these are just as important for transforming AP.

To successfully move beyond paper, organizations require a visionary, collaborative leader for Accounts Payable. This individual will not only evangelize for the function, but highlight the synergies between AP and other departments. Their efforts will drive home the idea that optimizing AP is never a job for AP alone. By articulating that AP is not a tactical cost center but a "strategic weapon for the entire organization," they'll gain the alignment necessary to abandon paper and realize best-in-class value.

Though few organizations have fully made the switch the paperless AP, Andrew remains optimistic. "We're seeing companies realize five times greater savings. As the word gets out, more and more companies are taking notice and embracing the solution. The Payables to Payment Revolution is real, and it's happening right now."

Procurement professionals aren't lacking for things to fret over. Extreme weather, geopolitical tensions, trade restrictions, and the threat of sudden data breaches all mean that very few links in the supply chain are ever totally secure.

The greatest threat facing Procurement, however, may be something else entirely, something that doesn't look at all sinister on paper. Unemployment is at a near-record low. According to the U.S. Bureau of Labor Statistics, businesses are currently struggling to fill a whopping 6.7 million open positions. This all-time high figure reflects the negative side of this seemingly positive situation.

With few unemployed Procurement resources to choose from, large businesses are taking an aggressive approach to poaching their competitors' top performers. Discussing Amazon's hunt for leading talent, TYGES' Nick Lazzara and Naseem Malik write, "If you think you're safe as an employer, think again." Though go on to emphasize that Amazon is far from alone. Business behemoths like Wal-Mart, Google, and Apple have also made it clear that they will go to great lengths to secure top supply chain talent.

Competitors could be scoping out your star players at this very moment. Few organizations can rival the blue chip employers when it comes to name recognition or compensation, but that doesn't mean a small or mid-sized Procurement team should give up hope. Top Procurement professionals are motivated to succeed by unique benefits and incentives. Organizations need to identify the mix of recognition, reward, and responsibility that will not only motivate leaders to produce results, but also encourage dissuade them from seeking opportunity elsewhere.

Check out some of Source One's tips for retaining top Procurement professionals.

1. Take an Interest
Salary is an important factor in gaining employee loyalty, but a 2017 Gallup poll suggests it's not the most important one. 32% of respondents cited a lack if of "career advancement/promotional opportunities" as their primary motivation for jumping ship. Top-performing individuals are hungry for opportunity and eager to rise through the ranks. It's not surprising that they'll walk when these aren't readily available. Take the time to develop clear, realistic, and sustainable growth plans with your leading performers' input. Include clear milestones and supplement the process with regular assessments. Ensure these assessments are honest, transparent, and constructive. You'll likely find that top performers take notice of your engagement in them. In all likelihood, they'll repay you with a greater engagement in the business.

2. Pair them with Other Leaders
Leading Procurement professionals will feel motivated, engaged, and accountable if you surround them with their peers in excellence. Build this positive atmosphere by pairing your top performers with mentors within the organization. This'll promote open communication and allow for a valuable, mutually beneficial knowledge transfer. In time, your rising stars will mature into mentor roles of their own. The opportunity to engage with their peers in this way will ensure they remain engaged and help establish a system passing down Procurement best practices.

3. Know When to Step Back
Hands-on talent management is essential to ensure your Procurement leaders achieve their full potential. That being said, nobody likes a micro-manager. Top performers, in particular, find them stifling and unnecessary. It's important that managers recognize what their best employees can teach them about Procurement and Supply Chain Management. Instead of interfering in day-to-day tasks, managers should step back and observe their most effective team members at work. The best Procurement professionals earned that stature through uniquely efficient and effective processes. Wherever possible, managers should look for opportunities to leverage these processes to serve the organization as a whole.

Need help recruiting, training, or retaining top Procurement talent. Reach out to Source One's supply chain staffing experts today.

They're not the highest-paid supply chain professionals, but pizza delivery drivers are almost certainly America's favorite. It's estimated that every American eats 46 slices a year, and they couldn't do it without our distributors behind the wheel.

Recently, however, both Domino’s and Pizza Hut have made it clear that they’re not opposed to cutting this big slice out of their workforce. Partnering with Ford and Toyota respectively, the nation’s largest pizza chains are in fierce competition to make driver-less pizza delivery a reality. 

Domino's, for their part, has set up shop in Ann Arbor. Last year, the company's autonomous vehicles made about 100 deliveries over a month-long trial. Though a human employee rode along, the individual did not make contact with customers. After receiving their pizza, these customers were asked to fill out a short survey describing their experience. The Michiganders generally enjoyed the experience, but some expressed their desire to talk with the vehicle itself. Though Domino's has expressed no interest in developing talking vehicles, they do plan to conduct another trial in Miami. 

Pizza Hut expects to conduct their first trials in 2020. Whereas Domino's concept vehicles resemble traditional cars, Pizza Hut has unveiled plans for a van that's more toaster oven than car. The Toyota e-Pallete will not only deliver pizzas, but promises to feature an on-board kitchen that, according to Artie Starrs (President, Pizza Hut U.S.), "gets the ovens closer to the front door."

The e-Pallete was met with more than a little skepticism. Predictably, it also inspired questions regarding the elimination of jobs. Experts remain uncertain what the advent of autonomous vehicles will mean for the nation's nearly 4 million full-time professional drivers, but displacement looks likely. Pizza Hut met this speculation with the suggestion that driver-less vehicles will, in fact, create more jobs than they eliminate. Back in January, the brand's Twitter account made the following statement: "It actually could create more jobs by opening the pool of "drivers" to those who do not own vehicles. They might act more like servers, focusing on hospitality."

The Commerce Department predicted in 2017 that 1 in 9 American workers will find their jobs affected by this technology. They did not report on the possibility of job creation.

Domino's and Pizza Hut are just two of the many organizations looking to dig into the benefits of autonomous vehicles. Companies including FedEx, UPS, and Uber have already spent years perfecting their recipes. Though test-runs have produced mixed results (to say the least) business leaders remain dedicated to putting self-driving cars on the road.  

It’s not hard to see why. The Logistics industry, for example, is plagued by inefficiency and missed opportunities as a result of the human element. Truck drivers’ hours are monitored closely and strictly limited. According to Supply and Demand Chain Executive, this means that the average truck is only on the road 40% of the time. While this arrangement serves the drivers’ best interest, it’s far from ideal for their bosses. In theory, self-driving technology will enable them to keep trucks on the road at all hours and reap the considerable benefit.

That’s just the beginning. Traveling longer distances at more fuel-efficient speeds, autonomous cars and trucks will pave the way for expedited delivery, reduced labor costs, and a more efficient disbursement of distribution centers. Where pizza is concerned, the prospect of timely, round-the-clock delivery is perhaps less world-changing, but it's certainly an appetizing thought. 

While self-piloting delivery vehicles have a long road ahead, The Wall Street Journal’s Tim Higgins suggests it's a far less bumpy road than the one facing driver-less taxis. Deliveries are the safer bet, he writes, "because designers can optimize the vehicle for safety without worrying about things like hard braking making passengers uncomfortable." That's not to mention the "messy human interactions of a taxi service, such as passengers getting sick in the back seat." Artificial Intelligence should have no trouble delivering food to someone in a state of inebriation, but cleaning up after that person? That's another story. 

Whatever the future holds for autonomous vehicles, it's clear that pizza delivery provides a relatively low-risk test case. Without human occupants, Domino's and Pizza Hut's fleet of vehicles could help knead out some of the issues facing other organizations. Questions remain, however, as to whether the benefits of driver-less pizza delivery will outdo the bad taste employee displacement is sure to leave in consumers' mouths.  

The Procurement professional’s job is a challenging and often unpredictable one. In addition to providing hands-on support across multiple functions, they are forced to contend with a fluctuating demand pattern. Evolving, diverse, and inconsistent responsibilities make it tough for organizations to efficiently allocate their efforts and resources. 

Traditionally, Procurement organizations have turned to Business Process Outsourcing to gain additional support. Procurement's strategic and essential nature, however, means that outsourcing is rarely effective. Hiring Procurement professionals to meet surges in demand tends to prove similarly ineffective. That's why Source One introduced its flexible, on-demand Procurement Help Desk support model.
The model provides access to a spend management consultant team, market intelligence database, and proprietary sourcing technologies, all for about the same price as a single sourcing hire.

Source One's newest whitepaper, Enabling the Business with On-Demand Supply Chain Support presents the Procurement Help Desk as a customizable alternative to traditional support models and outlines a recent Help Desk engagement.

The spend management team put their Help Desk model to the test when they were approached by a large Medical Device Manufacturer. Though they hoped to reduce costs and boost efficiency by hiring a new supply chain professional, they soon realized they needed a new approach. After a series of discussions, both parties determined that the Procurement Help Desk would best serve their needs.

Over more than two years, the nearshoring project evolved into a comprehensive, multi-layered spend optimization initiative. The Medical Device Manufacturer collaborated with the Procurement Help Desk team on over a dozen strategic initiatives across numerous commodity groups, categories, and continents. Along with thousands in cost savings, the partnership provided the client with more efficient Procurement processes, greater supply chain visibility, and better, more strategic supplier relationships. They now possess the expertise and experience to make more informed decision across their supply chain.

Check out Enabling the Business with On-Demand Supply Chain Support to learn more about the Procurement Help Desk and gain a better sense of what Source One's flexible support model looks like in action. 

ICYMIM: July 23, 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.

Staff Writer, Thomas Net, 7/18/2018
Effective Procurement is one of the main pieces of the successful business pie. Therefore, it must be properly aligned with the specific needs and goals of the company. Procurement has the capabilities to directly impact an organization's bottom line and day-to-day functionality. This means it's critical to effectively manage its procurement process. ThomasNet identifies five main stages of Procurement, explaining and highlighting the importance to each one. 

Spend Management for Real World Complexities: Internal and External Perspectives
Nick Heinzmann, My Purchasing Center, 7/17/2018
In a constantly-changing world, many organizations face intricate financial and procurement challenges. Proper spend management must then come from solution providers able to offer flexibility, depth, breadth, and experience to completely tackle these complexities. Looking at capabilities, methods, and requirements, it's important to properly analyze the perspectives of internal stakeholders, particularly those who will use the spend management technology systems. Additionally, a complex supplier base must be handled by establishing a common platform for all supplier engagements, bringing every aspect of supplier interaction together. Developing organizational structures as such will enable an organization to achieve and sustain lasting success.

PYMNTS, 7/16/18
Automation of accounts payable (AP) provides great potential benefits to an enterprise such as moving away from paper, saving money, removing inefficiencies and providing more time for strategic tasks. Dan Andrew, senior vice president of sales at Corcentric held a digital discussion with Karen Webster- "The Payable to Payments Revolution," which was held Wednesday, July 18. The discussion tackled the subject of the daunting task of overhauling AP. Andrew holds that the space of AP can potentially cause a dramatic transformation of the enterprise overall, but the process is an intricate one, going beyond invoice automation and payment processing.

Happy Pennsylvania Day! That's right, July 20th means its time to celebrate everything that makes our nation's second state so great. From Erie to Easton, from Pittsburgh to Philadelphia, let's hear it for the Keystone State!

Pennsylvania officially earned its nickname in 1802. Honoring both its central position among the original colonies and its immense historical significance, the moniker identifies Pennsylvania as the essential piece in the American puzzle.

Despite the nickname, not everyone recognizes Pennsylvania's value. It's easily dismissed and often forgotten in comparison to states like New York, California, or Texas. Though Philly sports fans are recognized nationwide, the state hasn't managed to flip negative stereotypes into an identity quite like its neighbor New Jersey.

You might call Procurement the Pennsylvania of an organization. At their most strategic, Procurement departments are indispensable. They are well-equipped to manage risk, identify opportunity, and generate value across the business. Within many organizations, however, the function is still dismissed as a purely tactical entity. As a result, Procurement often occupies an obscure position and fails to reach its full potential. What ought to be a keystone operates likes any other brick.

Perception is reality. For Procurement to act as the value generating keystone of an organization it has to successfully present itself as valuable to earn the necessary buy-in. That'll mean working hard to establish and communicate a new, more impactful brand. Where should they start? Grab a hoagie and check out some of Source One's suggestions.

1. Align Internally
It's possible that even professionals within Procurement undervalue or misunderstand the function. Before Procurement can disseminate its value proposition, it has to ensure it's value is consistently recognized and articulated among its own ranks. Everyone within Procurement should work together to generate a mission statement that aligns with the entire organization's core values and will resonate throughout its various units. In developing this mission statement, Procurement should also take care to promote an innovative and proactive approach to technology. By framing itself as tech-savvy, forward thinking entity, Procurement will broaden both its internal and external appeal.

2. Broaden Procurement's Vocabulary
If anything has contributed to Procurement's middling reputation, it's the perception that the function is focused on cost reduction and cost reduction alone. The term 'savings' might look great on paper, but to Marketing or IT's ears it's likely to conjure images of sub-par products and disappointing services. Procurement must work to understand the goals, objectives, and values of its peers within the organization. Once the function has done its homework, it's got to encourage collaboration by presenting its value proposition in terms that resonate with IT, Marketing, Operations and other functions. That could mean, for example, tossing out the word 'savings' in favor of 'budget optimization.' It's not enough for Procurement to promote the value of its own work. It has to do so with a tone and vocabulary that will inspire and activate the rest of the organization.

3. Communicate Wins
Building a better brand for your Procurement function will take a time and a whole lot of effort. In that time and throughout those efforts, your organization will undoubtedly experience some setbacks. More importantly, however, you'll experience wins both big and small. It's essential that everyone within Procurement make it their business to advertise these successes. In time, no one across the organization will find it possible to deny Procurement's tangible impact.  Staffing your department with professionals who are eager to evangelize the function will not only make it easier to claim a seat at the table, but will also help attract a higher caliber of talent.

Need help building or refining Procurement's brand? Reach out to the Procurement Transformation specialists at Source One today. In the meantime, don't forget to check out Source One's new Procurement Transformation eBook. Capturing insights from nearly a dozen Supply Management experts, it covers Procurement's brand, the history of Procurement Transformation, and much, much more.

Across various industries, Procurement departments find themselves in an interesting transitional period. Supply Management veterans are retiring in droves, and an eager new crop of professionals is entering the workforce to take their place.

Unfortunately, many organizations aren't providing for an efficient passing of the torch. They're letting valuable supply chain knowledge walk out the door and failing to effectively prepare new hires for success. Chalk it up to stereotypes about millennial professionals or a simple lack of preparedness. Either way, most organizations could afford to better promote communication and collaboration within their Procurement teams.

Millennials promise to make up over half of America's workforce by 2020. Their success will depend upon their ability to work alongside the other half. Here are some of Source One's tips for developing a more communicative Procurement function. 

Whether it’s a simple spend analytics and contract management tool or a robust Source to Pay platform, eProcurement tools can help Procurement professionals tackle their jobs effectively and efficiently when properly invested in. At their worst, however, eProcurement solutions can simply act as a Band-Aid for deeper rooted issues with Procurement processes and policies – never being used to their full potential or even be successfully adopted by the entire team.

While the idea of rolling our eProcurement tools sounds enticing to companies looking to maximize the efficiency of their Procurement team and cut costs, jumping into the wrong toolset can prove costly.  To maximize the full potential of eProcurement, organizations should avoid these three simple mistakes:

Mistake One: Failing to Conduct Due Diligence
Due diligence means organizations must apply market intelligence and assess the eProcurement landscape before selecting a tool that matches their needs. This process may entail creating a scorecard for benchmarking eProcurement capabilities, along with scoring feature compatibility with their corporate culture in comparison to the available services on the market.

Mistake Two: Failing to Optimize Tools & Spend
These evaluations are paramount for supply chain firms, because without them, organizations may purchase an eProcurement tool that does not satiate their expectations. Even worse, firms may purchase an eProcurement tool that meets their requirements, yet comes with elaborate bells and whistles that they do not use. While added features may be a plus for firms looking to expand their core service offerings or eProcurement implementation, it can easily be a negative for boutique organizations looking to consolidate tool implementation and optimize their spend.

Mistake Three: Failing to Account for User Adoption 
User adoption is another aspect pivotal in the eProcurement selection process. Services that lack user-friendliness mean employees will be unlikely to utilize the service in their day-to-day operations since it can cost them time, incite frustration, and ultimately convolute simple processes. Firms should therefore consider solutions that concurrently optimize spend and drive value for employees frequenting the tool.

If organizations can effectively navigate these three eProcurement mistakes, success will materialize in no time.  Need help finding the tool right for your Procurement needs? Contact Source One’s Procurement Technology Advisory experts.

July 20, 2018

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

New eBook:
Source One introduces its new whitepaper series now as a comprehensive eBook. The series, Procurement Transformation: Industry Perspectives, picks the brains of Supply Management's most celebrated thinkers and leaders. The five-part series includes the experts' takes on the hot topic of Procurement transformation. Using their collective decades of experience, the leaders analyze the subject through numerous lenses, providing insights, reflections and best practices, driving the Procurement conversation forward. Download it today for an informative, detailed look at the Procurement Transformation process. 

Recent Blogs:

To Save Money on Office Supplies, Stick to One or Two Vendors
Leigh Merz, Staples Business Resource Center, 7/19/18
Encouraging the use of approved vendors helps office managers balance their colleagues preferences with the company's budget. Going even further, reducing the number of suppliers used to one or two can provide many benefits for an organization such as saving money and receiving a higher quality service level. Other perks of using the same vendor stem from getting to know the needs and wants of the office, allowing for consolidation of unnecessary items. See how an enhanced vendor relationship can help your office cut costs and improve quality.

Gain Procurement Excellence Through Supplier Relationship Management
Dejana Dosen, Next Level Purchasing, 7/18/18
Today's market is becoming increasingly globalized and competitive as time goes on. Following previous initiatives to speed up product availability, improve transaction accuracy, and rationalize the supply base, the next step is enhancing supplier collaboration. The topic of supplier management has been around, but hasn't been completely integrated into the procurement function. It's time for that to change- strong supplier relationships forges long term partnerships, providing continued value and savings. Check out the important steps to take when enhancing your supplier relationships.

Can We Stop Calling Cost Avoidance "Soft Savings"?
Torey Guingrich, Sourcing Innovation, 7/18/18
"Soft savings" value beyond unit cost and volume reduction. Recently, many organizations have given soft savings an overly broad definition spanning to include cost avoidance, budgeted-cost reduction, and other value-adding practices Procurement brings through their sourcing and negotiation. Torey takes a deeper look at situations in which Procurement professionals tend to struggle in generating savings and may see an increase in bottom line cost. These areas include new recurring purchases, capital purchases, increased volume, dynamic requirements, and market changes. In order for Procurement to support an organization's evolving needs, the two must transform and collaborate on their vision of sourcing and negotiation value.

As AI approaches, supply chains double down on the basics

There's a tension at work in supply chain operations at companies of all sizes. While new technology is rapidly appearing in the workplace and changing everyday dynamics, this IT evolution can take the focus off of the basic best practices that make these departments such an important part of their respective organizations.

The question of how best to make use of new systems such as big data analytics and artificial intelligence requires an answer as these tools seem to be on the brink of ubiquity. Fortunately, there are plenty of rewards waiting for companies that successfully match their particular needs and operational styles with the potential advantages of improved tech tools. The road may be bumpy, but it's leading to potential value.

Between the future and fundamentals
PYMNTS recently spoke with Zycus' Richard Waugh about the state of procurement departments as they approach the transformative technologies just beginning their useful lifespans. This group includes blockchain systems and robotic process automation, alongside advanced analytics methods such as machine learning and artificial intelligence. Users are excited about the potential these processes have to transform their own operations for the better, as well as move departments toward an overall more strategic role.

Waugh told PYMNTS that procurement officials have taken a sensible approach to the impending changes that come with improved tech tools, resolving to "get our house in order" internally before fully committing to the latest wave of solutions. This means setting up the infrastructure that will power the truly transformative innovations on the way. An AI algorithm can only sift through data and find insights if it has access to streams of digitized information.

Rather than using technology to become strategic, companies will have to shift their thinking and approach, setting up the IT that will serve as a baseline for the next stage of their evolution. Then, the new tools will become available, improving the potential effectiveness of departments and allowing employees to be more efficient in their day-to-day processes. Waugh noted that value will have to come from internal improvements because the classic source of monetary savings - improved agreements with suppliers - has its limits.

A digital mind full of data.What does AI really mean for procurement?
Making AI matter
Gartner went into detail about what kinds of processes procurement departments will have to put in place to make the most of AI. E-sourcing will become a must-have, because departments heavily split between digital and offline transaction tracking aren't equipped to turn their data into fuel for better decisions. Gartner specified not every category of spend will be suitable for e-procurement, but companies should still do their due diligence to make sure every relevant department has been digitized.

One of the other considerations with modernization is the need for organizational knowledge and training. AI algorithms are powerful tools, but using them effectively isn't automatic - it's a skill that has to be learned. According to Gartner, preparing human employees to work alongside new tech tools is a potentially underrated part of preparation. Analytics skills are essential to extract value from the latest IT developments, no matter how impressive those solutions seem in the abstract.

Source One's new Procurement Transformation eBook is here. Spread over nearly fifty pages, Procurement Transformation: Industry Perspectives sees nearly a dozen Supply Management thought leaders offer their reflections on Transformation and present best practices to today's organizations.

Procurement Transformation is a huge topic. Every organization defines the term differently and goes about refining Procurement in its own unique way. "When we initially published Procurement Transformation: Industry Perspectives as a five-part series," says Associate Director Jennifer Ulrich, "one of our primary goals was to communicate the enormity and complexity of the topic. We also hoped that capturing a diverse range of perspectives would help demystify Procurement Transformation and inspire organizations to pursue Transformations of their own."

Predictably, Procurement Transformation: Industry Perspectives is positively loaded with insights and supply chain wisdom. We can't describe all of them here, but here are a few key takeaways from this comprehensive look at Procurement Transformation.

1. We've Been Discussing Procurement Transformation Since At Least The 1980s

Jim Baehr (Sourcing Strategies Group) opens Procurement Transformation: Industry Perspectives with an overview of Procurement's decades-long evolution. The shift from tactical obscurity to strategic prominence, he suggests, began in earnest with an article in the Harvard Business Review. Penned by Peter Kraljic, "Purchasing Must Become Supply Management" laid the groundwork for our present-day understanding of Procurement's strategic role. Though it took years for Kraljic's wisdom to truly take hold, his essay was immediately popular. Even today, Baehr believes, Procurement professionals can learn a great deal from giving it a read.

2. Procurement Transformation Could Use a New Name

In Part II, the Art of Procurement's Phil Ideson suggests that more Procurement Transformations would succeed if they went by another name. The term "transformation," he suggests, is at once misleading and potentially frightening. He writes, "Think of the word . . . It suggests a complete overhaul, a total revamp, a metamorphosis." Even bold organizations might feel scared at the thought of starting completely anew. What's more, "Procurement Transformation" suggests that Procurement is the only department who will benefit from such initiatives. Procurement Transformations aren't really transformations at all. Nor are they really about Procurement. "It sounds like a paradox." he concludes, "but the most successful Procurement Transformations are those conducted without a strict focus on Procurement or Transformation."

3. Talent Still Beats Any Tool 

Naseem Malik (TYGES) opens his contribution with a question. He asks, "What's the most important tool for constructing an effective Procurement department?" If you're a firm believer in the hype surrounding new technologies, his answer might surprise you. "Even in the days of consistent innovation and endless forecasting," he writes, "people are still what separates world-class Procurement departments from the pack." He suggests that every Procurement Transformation should aim to refine the department's approach to talent management. With more strategic techniques for recruiting and retaining talent, Procurement will stand out within the organization and secure its more prominent seat at the table.

4. Buzzwords are Dangerous
Everybody wants to stand on the cutting-edge. Procurement, long dismissed as a tactical function, is particularly eager to set itself apart by identifying the next world-class technology. Maybe that's why industry blogs are so fond of speculation and hyperbole. JAGGAER's Kristian O'Meara discusses this situation and advocates for curious skepticism throughout his contribution to Procurement Transformation: Industry Perspectives. Any and all buzzwords, he suggests, are potential stumbling blocks for the department. They fuel unrealistic expectations and - at their worst - lead Procurement to waste time and resources on tools that will only exacerbate their inefficient practices.

5. Procurement Technology Still Has a Long Way to Go 
While he avoids the dreaded buzzwords, Sourcing Innovation's Michael Lamoureux sings the praises of emerging technology throughout his installment. Many organizations, he writes, believe they've already transformed by embracing eSourcing. To say these companies have a lot to learn constitutes a major understatement. While there's nothing wrong with existing solutions, Lamoureux is quick to remind readers that they provide only a fraction of what the future promises. Advanced sourcing tools, he writes, will provide next generation savings and efficiency thanks to predictive analytics, Should Cost Modeling, and decision optimization. For the tech-savvy Procurement professional, the future certainly looks bright.

6. For Procurement, Perception is Reality 
In one of the eBook's final chapters, Source One's Diego De la Garza explores the aftermath of a successful initiative. A successful initiative, he reminds readers, is only the beginning. He writes, "I'm a firm believer that perception is reality." By this he means that Procurement can only produce value if leaders from across the organization perceive it as a strategically valuable entity. Proving itself valuable, he says, often means translating Procurement's wins into the 'language' of other departments. With an emphasis on 'enablement,' Procurement needs to take the lead in communicating what it can bring to every individual unit within a company.

That's just a tiny sampling of the insights included in Procurement Transformation: Industry Perspectives. Download this must-read supply chain eBook today.

Back in 1994, no one could've predicted that Jeff Bezos' fledgling organization would transform the retail space. These days, however, their every move is met with anticipation and trepidation. When the e-commerce giant announced their new Amazon Business service back in 2015, responses were predictably speculative. Could Amazon really compete with Industrial Supplies distributors?

According to Source One's Michael Croasdale, the conversation still continues nearly three years later. He joins the Source One Podcast to offer his insights. The Senior Consultant and recognized MRO Strategic Sourcing expert is skeptical. "Personally," he remarks, "I think it's going to take quite some time before [Amazon] cracks the list of top MRO distributors."

Relationships with MRO distributors are formed over years of successful collaboration. Buyers are unlikely to transition away from relationships that have proved fruitful for years. This is true when the transition is from "like-to-like," and Croasdale expects it to prove doubly true when Amazon Business is presented as the alternative.

"Ease of ordering," Croasdale suggests, is Amazon Business' primary selling point. What the service lacks, however, is the hands-on attention that MRO distributors typically provide. He concludes by noting that MRO is a uniquely relationship-driven spend area. Large companies, he believes, are unlikely to take Amazon Business seriously unless the organization refines its services and provides the personal touch that MRO buyers have come to expect.

Listen to the full episode today.

It's no secret that Procurement's role and responsibilities are evolving. It's equally well-known that many Procurement leaders see emerging digital solutions as the fuel that'll drive further evolution. In 2017, a Hackett Group report suggested that 84% or organizations aren't just pursuing digital transformation, but also fully expect to realize one within the next five years.

You can't blame organizations for expecting a lot of emerging technologies. The providers know their audience. They know that Procurement leaders are eager to stand set their function and their organization apart with cutting-edge solutions to everyday problems. Leveraging buzzy keywords and promising world-class results, they're often too effective in selling the benefits of their solution. Coupled with Procurement's urgency, this salesmanship can easily lead Procurement down the wrong digital roads.

Before Procurement looks out into the market, the function should look inward and make an unbiased assessment of its current needs and capabilities. What's more, this process of soul searching and honest questioning should continue throughout the selection and implementation process. Procurement cannot hope to find the answers its looking for without first asking the right collection of questions.

Where do we stand?
Too often, Procurement pursues a digital transformation without reaching an understanding of its current state. Failing to take stock, they enter into initiatives with poor visibility into what their team actually wants and needs in a new solution.

To effectively shop for a new tool, Procurement needs to understand how its current solution is performing. Surveying your internal team will provide a sense of what's working well and where your team is hoping to observe improvements. These short conversations will keep you from chasing a tool that's poorly suited to your organization's needs.

Take care to interview everyone who will come in contact with the tool - particularly those who will participate in implementation. It's entirely likely that many of the options out there won't prove compatible with your existing systems. By engaging with IT and other internal stakeholders, you'll better understand how compatibility should play into your decision making. You will also gain an idea of your team's capacity for change. This will provide for a manageable timeline and reasonable expectations.

Why are we pursing a digital transformation? 
The list of popular wrong answers to this question is a mile long. Procurement should never pursue a digital transformation because it's what their competition is doing, because a salesperson told them to, because a blog suggested it, or for lack of anything better to do.

Procurement organizations tend to take a short-sighted approach to developing their digital transformation goals. New technologies are so enticing, their implementation so potentially arduous, that introducing a tool often feels like a worthy goal in itself. This should never be the case. Treating digital transformation as an accomplishment to be ticked off a list is the absolute wrong way to go about evolving Procurement. Digital transformation is an ongoing process. It's characterized by consistent effort, regular assessments, and measured pacing. If you're not prepared to work hard for an extended period, you're not truly prepared for a digital Procurement transformation.

What's Next?
The answer to this question should coincide with your previous answer. Your technological investment should serve your organization's future goals and objectives and play a role in a broader change management program. However your organization defines 'change,' ensure you select a tool capable of promoting it. That way, you won't find yourselves struggling with an outdated tool five years down the road.

Taking the opportunity to level-set across the organization and discuss the future won't just make it easier to select a tool. The extra effort will have added benefits across your various change management initiatives. Your team will better employ your new technology and - more importantly - they'll understand your company's vision and their part in seeing it through.

Procurement solutions are a big investment. Depending on the tool, it's entirely possible you could be making a once-in-a-career purchase. Don't make that decision lightly. Reach out to Source One's Procurement Technology advisers today. We know that even making sense of the market is often overwhelming. We'll support you in assessing, selecting, and implementing the tools you need to transform Procurement and realize world-class results.