August 2018
One of the biggest challenges for a company can be the growth it experiences, especially if it is substantial growth in a short period of time. In many cases, companies do not have a well-established plan of attack for how to control and manage the growth. When developing a business growth plan, it is imperative to evaluate the company’s team, consider historical company data when assessing the current trends, and think ahead and strategize accordingly.

When significant company growth is on the horizon, a major starting place for evaluating the company’s capacity to take on the growth comes from the current resources. Evaluating the total number of employees throughout the company, as well as employees dedicated to the departments that are directly linked to the growth, which generally leans on the operations team. Ensuring that the team is comprised of enough resources is crucial, however it is a necessity to have an established training program in place. Employees can be capable of performing any task given to them, provided they have received foundational training as well as periodic development to enhance skills and evolve alongside the business. Although having enough resources, and consistently training and developing their skills is important, it is also a good idea to do the same with the company’s supply base. Many companies implement systems, whether it be an ERP system or another system, with their strategic suppliers. Companies can benefit from hosting periodic training sessions with their suppliers to ensure quality and compliance standards are being met during the growth period. Adjusting the company’s resources and size of the supply base will assist in monitoring costs and hands on deck when needed the most, and enforcing training sessions will only strengthen the company and its supply chain.

While evaluating the current team and supply base bandwidth, a step that can be performed concurrently involves reviewing historical company data to determine trends in the overall business growth. Any company can review historic data from last year, last month or even last week, however depending on the industry, the company may have certain variables to pay special attention to over others. For example, a company that sells winter sports gear will have a seasonal spike in demand, so they will want to compare their sales from the current fall or winter months to that of the prior year to have comparable figures. From there, the company can see how they are beginning to trend in comparison to the previous year, which will allow them to have better visibility and anticipation into their forecasting and demand planning for the remainder of the period.

To factor in the company’s growth, identify what percentage increase or decrease the company sees based off of the period being compared to the current state, which will provide more visibility into how business is currently trending. This then gives the company a more solid foundation to anticipate sales for that period of time. Reviewing historical company data is crucial in projecting sales at any given time, not just for periods of significant growth. However, it is still a necessary step to take to allow the company to stay ahead of the spikes and remain proactive in their planning and sourcing processes. With basing forecasts off of historical data, companies are able to give suppliers additional insight and more accurate forecast levels, ensuring business maintains consistency, especially during an increase in demand.

Though there are many ways in which a company can control and manage increases in business, it is important to make sure that the company not only has enough employees to handle the additional business, but that they are trained and their skills are consistently developing to strengthen the business overall. Additionally, looking back at historical data and sales figures can benefit the company’s anticipated business levels and identify trends. With improved visibility into the company’s trends, it will be easier to communicate increases or fluctuations in demand to suppliers, which will allow all sides involved to be proactive, rather than reactive. These two factors are relatively simple to keep in mind and assess, however they play a large role in controlling a growing business. If either or both of these factors are overlooked, it may cause tension within the business.

Data is everything for today's highly-strategic Procurement departments. Access to reams of real-time data helps organizations make more informed decisions, develop competitive advantages, establish effective supplier relationships, and realize their loftiest business goals.

Throughout the Supply Management space, experts suggest the function's relationship with data is a about to see some monumental changes. The advent of 'Big Data' promises to accelerate Procurement's value generation efforts and help the function enter the next stage in its strategic evolution.

Most organizations have a long way to go before they truly realize the value of Big Data, but that doesn't mean its too early to start thinking about what this value could look like. Here are some of the benefits on the horizon for Procurement teams powered by Big Data analytics.

August 31, 2018

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

New Whitepaper:
MRO Demystified: Repairing the Traditional Approaches to MRO Spend Management
Among the broadest and most essential spend categories, MRO presents a number of challenges for Procurement professionals. Organizations understand the category's importance. From the shop floor to the executive suite, no one would dispute that Procurement's relationship with MRO suppliers can make or break a company. Typical approaches to the category, however, are rarely effective in securing maximum value and efficiency. Many companies address MRO spend in ways that only exacerbate its complications. Source One's new whitepaper series exposes the flaws in these popular methodologies and offers guidelines for effectively managing MRO spend. Download it today.  

New Blogs:
Procurement & Cybersecurity: Best Practices to Safeguard Your Organization
Jaisheela Setty, My Purchasing Center, 8/28/2018
Cyber-attacks are constantly making headlines. Organizations ranging from Target to the United States government have learned the hard way that robust cybersecurity systems are no longer optional. Most organizations recognize that cybersecurity is an increasingly important spend area, but too few have enabled their Procurement team to accept its rightful risk management role. Setty suggests that closer partnerships between IT and Procurement could help organizations develop the proactive and strategic approach to cybersecurity that today's high-risk world demands.

5 Signs Your Analytics Process is Killing Your Procurement Workflow
Ari Markowitz, ThomasNet, 8/30/2018
Strategic Sourcing initiatives aren't carried out in a vacuum. Accurate, accessible data is essential to the long-term success of any organization. The process of collecting, organizing, and cleansing data is often a time-consuming one. Unfortunately, a number of common pain points compound this issue for many organizations. For example, organizations who've taken an inconsistent approach to vendor nomenclature will have their work cut out for them. Poor alignment across Procurement, too, can create extra roadblocks and hamper Procurement's savings initiatives.

MRO (Maintenance, Repair, and Operations) is among the broadest and most complicated spend categories out there. A diverse range of products and services, broad supply bases, and a history of poor spend visibility all make MRO a high-stress category for Procurement.

Certain complications are inherent to MRO sourcing. Broken machinery, for example, will always force organizations to make sudden, one-off purchases. These unexpected hiccups might not be totally avoidable, but organizations can reduce their impact by taking a more proactive and strategic approach to managing MRO spend.

In their new whitepaper series, Source One's MRO Strategic Sourcing experts advocate for such an approach. Titled MRO Demystified, the series identifies the challenges of MRO sourcing, explores the shortcomings of typical approaches, and offers suggestions for optimizing each step of the MRO sourcing process.

"Everyone recognizes how important MRO spend is," says Associate Director and MRO Category Lead Michael Croasdale. "In my experience, however, too few organizations address the category as strategically as they ought to. Our hope is that reading MRO Demystified will help Procurement professionals recognize the shortcomings in their usual practices and feel empowered to make a change within their organizations."

The series' first installment provides an overview of MRO and its thousands of  sub-categories before diving into Procurement's usual methods for tackling MRO spend. Where most organizations err, the whitepaper suggests, is in making the assumption that there's a one-size-fits-all strategy for managing the category. Throughout MRO Demystified, Source One's spend optimization team advocates for customized spend management strategies informed by Procurement's unique needs and objectives.

Every organization needs something different from their MRO suppliers. That means every organization has to devise their own policies and procedures for ensuring these needs are met. Download Part 1 of MRO Demystified today to start approaching the category more strategically and effectively.

 Don't forget to stay tuned for more MRO Strategic Sourcing insights over the next several weeks. Future installments will discuss conducting spend analyses, managing vendor negotiations, and developing a framework for MRO category management.
Supply chain risk management must be ready to handle hurricanes

Severe weather has always been a critical threat to supply chain integrity. Recent years have seen organizations continue to grapple with the risk posed by nature, as the emergence of increasingly unpredictable and threatening storms has coincided with the development of new and more accurate models for prediction and mitigation. Organizations' supply lines stretch around the globe, necessitating complex systems of redundancy and backup strategies in case of disruption.

While there's never a bad time to consider risk management strategies, these calculations are absolutely essential during major storm seasons. As late-summer hurricanes give way to winter blizzards over the next few months, corporate leaders will have to ensure their businesses will survive breakdowns in communication, shipping or manufacturing at supply chain partners. Furthermore, weather anomalies create unique conditions for leaders to deal with in retail and beyond.

Dealing with weather-induced stock imbalances
Symphony RetailAI's Patty McDonald, contributing to Supply & Demand Chain Executive recently laid out the stakes for companies facing down hurricanes. In a retail context, storms tend to create imbalances in supply and demand, with shoppers going to their local stores to get ahead of the storm and companies potentially unable to move inventory in time to serve their needs. The systems needed to manage stock levels ahead of severe weather are extensions of the demand-forecasting tools used all year long.

McDonald noted that today's supply chain managers can turn to data analytics to deal with forecasting. Predictive algorithms give a highly accurate picture of issues that could become pressing in the near future, using weather information to help leaders plan for storms the way they would any other seasonal fluctuations in interest.

There is pressure on organizations to make adjustments before severe weather hits, rather than during such an incident. McDonald pointed out that by the time a hurricane makes landfall, it's too late to change the supply chain for maximum effectiveness. There may be shortages of essential goods that last for days unless logistics teams preempt the disruption and get shipments where they're needed.

A hurricane shown from an aerial view.Severe weather is one of the main problems supply chains must plan for.
Pulling data from a world of sources
How have artificial intelligence systems improved the art and science of weather preparedness? Supply Chain Management Review recently spoke with IBM's Tom Ward, who works with the company's in-house AI, Watson. Ward described the many sources of data that go into accurate and helpful weather projections. Official sources such as the National Weather Service and Global Disaster Alert and Coordination Systems are mixed with social media impressions. The latter sources give the kind of minute-to-minute updates that can give companies an edge in their planning and preparations.

AI is useful for taking calculations, projections and forecasts beyond a level of speed and detail attainable through human effort. This allows supply chains to make adjustments that would have been impossible through manual data analysis. When trying to deal with the effects of severe weather, the extra layer of speed and accuracy may be the difference between setting a supply chain up for success or suffering a costly disruption. To stay competitive in a tech-saturated industry, companies of all kinds will have to increase their disaster-related risk management capabilities

The pressure to improve supply chain performance has been mounting on departmental leaders for the past few years. Competition will naturally drive companies to new levels of efficiency and effectiveness, and some organizations within the industry have already begun reinventing themselves through strategic technology additions. As a variety of tech innovations pass from the realm of the theoretical into practical and widespread use, this pattern will only expand. Companies have to plan on their own future direction to keep up.

Investigations into the latest IT trends in the supply chain will have to take many factors into account, including the readiness level of each new solution, the fit for a company's particular needs and the way a fresh deployment will fit in with the other tools used by a particular team. Everything from back-office data management and communications to the physical transportation and storage of goods could radically evolve within a short span of time.

Look for synergistic pairings
Among all the goal-setting and assessments that go into upgrading supply chain technology, the match between the various new and existing systems may not receive enough attention. As Revelationship Inc.'s Scott Koegler pointed out in an article for TechTarget, each supply chain manager will have his or her own unique mix of tech tools. The differences between organizations' setups makes it important for departments to experiment with pilot projects and determine ideal ways to take their operations to the next level.

The value of each individual application isn't a discrete unit that exists out of context. Rather, these solutions are mainly valuable in the ways they intersect. Koegler explained that the true winners in the logistics-upgrade competition will be the organizations that generate unique internal systems based on maximally effective combinations of tools.

It's easy to see where some of today's top tech investments join up. For instance, the advanced algorithms and artificial intelligence solutions that make predictions based on unstructured data won't live up to their potential unless companies have someplace to store that information. Even blockchain technology, one of the most talked-about innovations in supply chain spaces, will require investment in related architecture to reach its true potential.

A concept of a gear-based mechanism.Supply chain solutions should work smoothly together.
Focus on strategic priorities
Companies creating supply chain pilot programs should be guided in their thinking by a few top-level priorities. According to consultant Paul Trudgian, contributing to All Things Supply Chain, visibility and transparency are valuable areas of focus. He pointed to a culture of knowledge and improvement as a major goal for companies of all kinds. These organizations can start their transformation processes with tech deployments designed to illuminate every corner of their operations, then focus future initiatives on eliminating existing weaknesses.

Tech deployment in areas such as data analysis and communication are ways to get companies closer to where they should be in terms of transparency and visibility. Finding the right mixture of such solutions for a particular business is a great way to set that organization up for a profitable future. Highly visible operations are ideal because they set the groundwork for future improvement rather than being an endpoint in logistics evolution.

Subscribe to the Source One Podcast to listen to the full conversation today.


Procurement staffing and recruiting specialist Andrew Jones joins the Source One Podcast once again to comment on emerging trends in supply chain talent management. This time, Jones takes a predictably skeptical look at rapid digitization in the space.

Social media, online job boards, and the so-called 'Tinder effect' have already started to change the shape of recruitment in Procurement and other industries. Jones doesn't dismiss these changes outright. "LinkedIn," he remarks, "has mostly changed recruiting for the better." It's easier than ever, he suggests, for organizations to both cast a wide net and target highly-specific applicants. These tools, however, are far from fool-proof.

Organizations who've historically taken a hands-off approach to vetting supply chain talent will likely find that applications and online portals only exacerbate their worst tendencies. "It's a classic case of garbage in, garbage out," says Jones. "The talent an organization manages to attract and retain is only going to be as good as the effort they put into locating, assessing, and ultimately on-boarding that talent."

Sometimes going the extra mile in Procurement recruiting is as simple as picking up the phone, but even this is often too much for overworked and understaffed organizations. The right Procurement recruiter empowers an organization to consistently go the extra mile and put a human face on their efforts. Jones suggests that the importance of the human element in recruiting cannot be overstated. Relying on technology alone, he says, leaves organizations vulnerable and under-equipped.

He concludes, "Even the most advanced tool isn't going to eliminate the need for an effective Procurement recruiter. Technology might help you 'swipe left' on mismatched candidates before wasting time on an interview, but they can't help you decide between equally promising candidates." Like any emerging Procurement tool, recruiting technologies can only work to their full potential with help from dedicated experts willing to put in the necessary effort.

The subject of countless conversations and (presumably) more than a few nightmares, transparency and visibility are everything for today's Procurement professionals. Geodis' most recent Supply Chain Worldwide survey found that "Improv[ing] end-to-end supply chain visibility" ranked third among Procurement's priorities.

This places it above spend optimization, cost reduction, and technological innovation. Though visibility is a high priority for nearly every Procurement team, few have managed to make it anything more than that. The same survey found that only 6% of companies have achieved full visibility across their supply chain. On the other end of the spectrum, a disheartening 77% report highly-restricted visibility or a lack of insight altogether.

While Geodis' survey provides valuable insights into what Procurement considers strategically important, it also adds further confusion to the function's situation. Throughout the report, the terms "visibility" and "transparency" are used interchangeably. 

It's a common move. It's a forgivable one too. After all, the terms are certainly related. To conflate them, however, sets a potentially troubling precedent. Even an organization that boasts visibility across its supply chain can alienate stakeholders and consumers with opaque operations. Treating visible and transparent as synonyms could lead Procurement teams to mistakenly believe they've developed an optimal supply chain.  

So, what's the difference?

At the end of last year, Inbound Logistics posed that very question. Shay Scott, Managing Director of the Global Supply Chain Institute, provided a particularly illuminating answer. "Visibility," he writes, "provides a company with knowledge of activities across its supply chain; transparency is what and how it communicates that knowledge to customers, partners, and stakeholders."

If promoting visibility is about maintaining internal efficiency and efficacy, transparency is about how a company presents itself to the outside world. One depends on a company's ability to access and draw conclusions from its data, the other depends on a company's attitude toward disclosing this data and inviting consumers to draw conclusions of their own. More than ever, it's dangerous for Procurement to confuse the terms or pride one over the other.  

In addition to more strict government mandates, organizations are faced with a highly discerning public.To these socially engaged and politically active consumers, transparency is often a differentiator, and its absence is just as often a deal-breaker. They want to know their dollars are going toward dependable products that have traveled across a responsibly managed and maintained supply chain. When organizations fail to meet their expectations, they won't hesitate to make their voices heard. Businesses in countless industries have already learned this the hard way. The consequences can prove especially dire if consumers learn that poor transparency was not the result of a poor visibility. It's one thing for an organization to unwittingly work with unethical suppliers or engage in unethical practices. For that same organization to knowingly do these things while attempting to keep consumers in the dark is another, more problematic issue altogether.

Procurement can feel tempted to view transparency as a burden or a necessary evil. Looking to avoid boycotts and bad word of mouth, they fail to recognize the considerable benefit of a more transparent organization. In The Path to Supply Chain Transparency, Delotitte's David Linich encourages Procurement to recognize new regulations and consumer standards as an "opportunity to identify potential operational improvements, promote good corporate citizenship, reinforce the strength of their brands, and potentially minimize the impact of future events." Linich advocates for an approach to Supply Chain Management that not only recognizes visibility and transparency as intertwined, but also considers the latter something to strive for rather than something to be hectored into.

In certain cases, organizations have no choice but to maintain a highly-transparent supply chain. California's Transparency in Supply Chains Act, for example, requires large manufacturers and retailers to conduct audits into their operations, verify their suppliers' compliance with anti-slavery laws, and publish the results of these supplier audits. Even without the pressure of a government mandate, however, taking a proactive approach to transparency can do much more than preserve a company's reputation.

Procurement Technology already plays an important role in promoting both visibility and transparency in the supply chain. Assessment tools are reducing costs and expediting supplier audits, blockchain solutions are improving traceability, and social media is encouraging organizations to better educate and inform their customers. As these technologies continue to emerge and evolve,  it's important that organizations work to integrate new tools with their existing IT infrastructures. By conducting a thorough assessment of its current solutions and the visibility and transparency they provide, Procurement can avoid making inefficient investments and target key areas for improvement.

If your organization is involved in planning or carrying out a Procurement Transformation, transparency and visibility should be top of mind. Pursued together, they'll provide for more efficient, risk averse, and cost effective processes while helping build a more positive brand identity. Reach out to the Procurement optimization specialists today to start building a visible, transparent, and world-class supply chain. 

Category Management is considered by many a vital approach when it comes to strategic purchasing. It is a tactic which organizes various Procurement resources in order to focus on specific spend categories. Such focus allows managers to analyze their market with a close eye, making decisions with the entire organization's needs and capabilities in mind. Proper application can bring your organization cost reduction in the buying process, risk reduction across the supply chain, and enhanced value from the supply base. Its focus falls on the majority of your organization’s spend, but must be implemented throughout your entire company as a whole- not just in the “main sectors.” 

Every area must be on the same page and have the same goals in order to generate an accurate overall target and forecast. Once the goal is in place, both external suppliers and internal resources must be brought into the process. You need to identify suppliers that can cater to your needs and develop internal resources to be able to facilitate the tasks and objectives. The various sectors also need to have the ability to work with one another, which can help speed up the adoption and implementation of new products, technologies, strategies and services. 

Category Management is not a one-size-fits-all system, nor is it a one-and-done process. 

It is a continuous initiative that requires frequent evaluations and adjustments relative to the needs of the specific category. Typical categories handled in the management process include areas such as Marketing, Finance, Human ResourcesFleet, Freight, MRO, Facilities Management and Maintenance, and IT and Telecom, but this is, of course, relative to the organization. While the same overall makeup and steps of the process are applied to every category, specifications must be made to tailor it to each subject. This particularly becomes the case when you are dealing with various customers and clients; a clothing retailer is not going to have the same MRO needs as an industrial organization. Additionally, in order to succeed, it’s important to stay on top; you need to keep an eye out for competitors’ innovations and other trends within your industry, adapting as needed. 

Implementing new strategies, technologies, and tactics every so often, and doing so throughout every sector of your organization, is key in order to utilize Category Management techniques to your greatest ability. 

For more support with managing your spend categories, contact Source One's Category Management Experts.

Supply chains may be limited by software inertia
"If it isn't broken, don't fix it." That motto may be common thinking in supply chain operations, where leaders are concerned with preventing any breaks or disruptions in their routines. While it seems prudent and wise on the surface, taking such an approach can have harmful long-term effects on logistics operations. The present era is a time of rapid change and development, especially in the technological sphere, and sticking with "old faithful" IT operations could weaken companies' future prospects.

Reaching a next-generation of supply chain effectiveness will require some traits that depend on modern technology, such as interoperability and high-speed communications. While IT should be regarded as a means to an end rather than an objective in itself, organizations that hang back on upgrades may find themselves outpaced by competitors.

Many businesses cling to older software
One of the most persistent cases of using old technology may involve everyday office software. While newer and more specialized systems have advantages over basic spreadsheet applications such as Microsoft Excel, the latter category has been remarkably persistent in logistics back offices. Supply Chain Dive reported that recent Adelante SCM and BluJay Solutions research revealed the extent to which old-fashioned spreadsheets remain present.

In fact, according to the survey, more than two-thirds of respondents still have Excel spreadsheets as part of their tech lineups. The presence of the old-fashioned Microsoft application was more notable at late-adopting supply chain tech users than organizations on the cutting edge, with rates of 78 percent and 56.3 percent, respectively.  With that said, it's worth mentioning that more than half of businesses in each category use Excel sheets.

As for what parts of the company are employing these outdated tech solutions, the results show a variety of answers. Some logistics professionals work with supplier assessment and rate forecasting in Microsoft Excel. In the warehouse, leaders can operate many spreadsheets, tracking disparate parts of the operation. As Supply Chain Dive noted, the operation of spreadsheets is problematic because Excel is heavily manual. When users stick with old-fashioned software instead of purpose-built enterprise resource planning and warehouse management systems, they may be limiting their speed and leaving themselves open to errors.

Data displayed on a tablet screen.Supply chain technology can do better.
Information is moving to the cloud
Treating data in the same way it has been used for decades - keeping it in local, manually updated spreadsheets, may be a liability today. That raises the question of what companies can accomplish with their information. Supply Chain Management Review pointed out the importance of the cloud in the future of operations. Companies are using cloud-based storage to communicate information instantly and work with both external and internal stakeholders effectively.
The products that have been presented as replacements for Excel - WMS and ERP - are being run in the cloud, according to Supply Chain Management Review. Organizations are using these cloud-based sources of data truth as building blocks for their overall operations. Using promising future-focused tech tools such as artificial intelligence algorithms or internet of things sensors will be difficult to accomplish unless there is a central repository for the data, namely one located in the cloud.

ICYMIM: August 27, 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.

IT Sourcing in 2018: Best Practices That Companies Need to Know
Sydney Lazarus, Spend Matters, 8/20/2018
Lazarus provides key takeaways and statistics from Spend Matters' recent webinar with NPI's COO Kim Addington. Both agree that IT sourcing has evolved considerably in recent years. Organizations are not only spending more money on their IT resources, but they've evolved in what they hope to gain from IT purchases. Whereas cutting spend was once Procurement's focus, more and more organizations are now in search of ways to spend more wisely. As Addington puts it, "Organizations are moving from a cost savings model to a business case model." Introducing an end-to-end integrated lifecycle framework, she suggests, is a must for organizations looking to leverage their dollars effectively moving forward. 

e-Procurement Benefits - What's the ROI? Part II 
Michael Lamoureux, Sourcing Innovation, 8/23/2018
The Sourcing Doctor takes a closer look at the considerable benefit of an effective e-Sourcing solution. These tools, he suggests, do much more than cut costs. Even a relatively inexpensive solution can pay huge dividends for Procurement organizations. While bigger, more costly tools produce ROI in the form of contract management support and centralized supplier databases. He reminds organizations, however, that these investments should only be made once Procurement has done its due diligence and adequately prepared itself for integration. Failure to do so could leave an organizations struggling through a complicated and costly implementation process.

Making Emotional Connections Through Data
Team Thomas, Thomas Net, 8/22/2018
Emotional appeals go a long way in influencing a consumer's purchasing decisions. Though some companies worry that technology will make their marketing efforts more impersonal, Team Thomas suggests that technology could actually make it far easier to reach consumer's on an emotional, personal level. Big data analytics, for example, will make it easier to assess how a customer or potential customer interacts with certain emotional motivators. Leveraging their data-backed insights, organizations should find it easier to shape emotionally resonant marketing campaigns. The advent of social media, too, makes it far easier for organizations to reach a broad audience, start a conversation, and forge meaningful emotional connections. 

This week, members of Source One's Strategic Sourcing team lent a helping hand at the Cradles to Crayons' Giving Factory. Cradles to Crayons is a non profit organization with the mission of providing children from birth through age 12 in low-income situations with the essential items they need to thrive. For free of charge, they supply items such as clothing, shoes, school supplies, and toys.

To help Cradles to Crayons prepare for the back-to-school season, Source One's team members volunteered at the Giving Factory to help organize donated clothing that will be sent to children all over the Philadelphia area. As a consultancy focused on optimizing supply base relationships, working with Cradles to Crayons seemed the perfect opportunity to give-back to the Philadelphia-area, Source One calls home. Cradles to Crayons operates by connecting communities that have with communities that need.

“Cradles to Crayons always provides rewarding volunteer experience, as well as a valuable opportunity for team building,” shared Source One's VP of Operations, William Dorn. “Working toward a common goal outside the office helps foster a sense of a camaraderie throughout our company.”
Next-generation supply chains: Technology services objectives

Evolution in the supply chain is the subject of constant discussion, whether the conversation is about specific developments or the general movement toward more intelligent and connected systems. Technological advancement is the common thread between all theories of logistics' future. New introductions such as blockchain ledgers and evolving tools such as big data analytics will empower departments over the coming years, allowing goods to move more smoothly around the world and between organizations of all kinds.

There is one note of caution to be sounded in this discussion, however - too much dwelling on IT-based advancement may take some of the focus off of other kinds of progress. Seeing technology as the only lens to view the supply chain risks making the industry seem more one-dimensional and transactional than it truly is. The other side of the supply chain, the high-level objectives driving processes, are essential to understand.

What's the strategy?
Bryant University associate professor of marketing and supply chain management Michael Gravier, contributing to Inbound Logistics, recently offered a reminder for department leaders to think of strategic considerations when becoming more technologically enabled. He noted that the overall trends guiding the next generation of logistics aren't fundamentally dictated by IT. Rather, these processes are enabled by tech, with individual implementations creating synergistic answers to the big challenges facing companies.

Gravier placed the latest tech trends into categories based on the objectives they can help companies achieve rather than letting them stand alone. For instance, businesses want to have cause-and-effect visibility into all levels of their supply chain networks. The way to get closer to this goal isn't purchasing a single high-tech tool. Rather, organizations can and should combine updated solutions such as cloud data access, blockchain ledgers and analytics engines to create flexible approaches to processes such as risk management.

Synchronicity is another of the primary goals companies today should seek from their supply chains. Gravier explained that truly next-generation supply chains will be able to respond adaptively to the problems and potential disruptions they face. To get to this objective, leaders will combine data from many advanced IT tools rather than adopting a single, one-stop technological solution.

A "supply chain" word cloud on a tablet screen.Supply chain technology helps companies make progress, and isn't an objective unto itself.
Granular objectives for today
On top of the general areas in which logistics leaders hope to improve, there are a few targeted and specific goals on the table for supply chain operations in 2018. According to Hackett Group research presented in Supply Chain Digital, today's organizations' top priorities include such important moves as improving relationship management and measuring procurement value more accurately. Organizations are aware of areas where they can approve, and simply need to find strategies that will get them to their goals.

Technology remains a key element in achieving the aforementioned objectives. With supplier organizations becoming more tech-savvy and connected, procurement departments merely have to meet them halfway to engage in more rewarding and collaborative relationships. Furthermore, IT enhancement may prove essential in proving value and effectiveness to internal departments outside of the supply chain. When procurement is digitized, it's easier to track the exact role and purpose of logistics teams. In such moves, IT and objectives align perfectly.
Procurement is transforming. Across countless industries, the function is abandoning its tactical, paper-bound past and entering a strategically valuable future. 

Source One's Procurement Transformation consultants have spent years helping clients refine their operations and realize the considerable benefit of an optimized Procurement department. Recently, they leveraged these experiences to publish a comprehensive Procurement Transformation eBook. Offering insights from nearly a dozen Supply Management thought leaders, Procurement Transformation: Industry Perspectives has something for everyone. 

Check out the infographic below for some key takeaways from this detailed overview of Procurement Transformation. 

August 24, 2018

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

New Whitepaper:
Today's Procurement departments have a lot on their plate. Tasked with performing an essential, strategic, and multi-functional role they often require additional support to meet their organization's needs. Traditional support models, however, are rarely effective in providing Procurement the flexible assistance it requires. That's why Source One introduced its Procurement Help Desk model. Providing access to a veritable arsenal of spend management resources, the Help Desk empowers Procurement teams to optimize their performance without breaking the bank. Source One's new whitepaper outlines the Procurement Help Desk and provides a case study in its effectiveness and versatility.

New Podcast:

Investing in Procurement's People
Even in an era of constant technological innovation, well-trained people are still Procurement's most valuable resource. Many organizations, however, fail to invest properly in developing their teams. Source One's Procurement Transformation Practice Lead, Jennifer Ulrich, joins the Source One Podcast to call for a more strategic and hands-on approach to talent management in Procurement. Tedious, classroom-based sessions won't cut in anymore. Instead, she encourages Procurement's talent managers to develop dynamic micro-learning sessions to teach the strategic skills that make for truly impactful Supply Chain Management.

Simplifying the Sourcing Process 
Nearly every  Procurement professionals would agree that needlessly complex documents and convoluted processes hamper the sourcing process. As a Procurement Transformation specialist, Jennifer Ulrich has witnessed first-hand the roadblocks many organizations create for themselves. On this episode of the Source One Podcast, she advocates for a simplified, streamlined approach to developing and distributing RFx documents.

Ports' Path To The Future Is IT-Intensive
Improving the port ecosystem around the world will prove to be an essential building block in the smoother supply chains of the future. Despite nations' increasing pressure on imports and cross-border commerce, shipping traffic remains the backbone of worldwide logistics. The question now facing stakeholders in the world's ports is how they can facilitate a more efficient and smooth operational style when their practices have become so ingrained over the decades. The answer, as with so many other supply chain matters, will likely involve modern technology.

Leaders in the shipping industry will have to spend time over the next few years finding IT-based paths to achieve overall objectives, at and beyond ports. Considering the importance of effective and quick transfers of both information and physical shipments between various levels of the supply chain, there can't be any weak points in networks. To make global transportation of goods smoother, advanced and connected systems will be necessary.

Ports set their objectives

To avoid becoming sticking points in the faster, more connected supply chain of the future, ports have set a few goals. According to a Port Technology eBook entitled The Path to Intelligence, leaders are considering using solutions such as artificial intelligence algorithms to gather, use and transmit data more effectively in the months and years ahead. This information is the lifeblood of logistics, and the increasing presence of digitized systems will only become more useful as the tools spread to stakeholders of all kinds.

According to the Port Technology report, organizations such as the Port of Rotterdam are setting the model for this new age of hyper-connected and intelligent port operations. That Dutch city has its own centralized system to make sure operations at every stage are handled optimally. Data transfer is an essential step of moving goods through ports, and the information can't just go between companies - government authorities also need accurate logs to get items through customs. Looping regulators into any advanced data system is a valuable consideration.

The eBook also recommended port managers invest in risk management solutions as they enter a more digitized age. Collecting, storing and transferring more content than ever are worthy goals, but the creation of vast data reserves presents an opportunity for breaches or theft. Companies should make sure they're not overextending themselves as they become more IT-driven.

A cargo ship unloads in a port.More intelligent, effective ports are on the docket for global transportation.
Authorities realize their role

The government of Canada recently announced a plan to review and update its Port Authority operations, striving to become more attuned to the present and future shipping industry, rather than stuck in the past. These moves on the part of federal agencies are important, as it's possible for these large entities to become the bottlenecks in modern logistics if they don't become more efficient.
The Canadian project is part of an overall infrastructure modernization effort targeting 2030. The ambitious strategy is meant to be an overall lift on Canada's trading economy and environmental well-being. Considering the continued impact and importance of global seaborne trade, port operations will be an essential part of this project. The specific goals for ports include governance and operational innovation, meeting corporate interests halfway in their quest for modernization.

Listen to the full conversation on the Source One Podcast today.


If you've ever worked in Procurement - or any field for that matter - you've likely suffered through a training experience like the ones Jennifer Ulrich describes on this week's Source One Podcast. While many organizations are moving away from classroom-bound Procurement training programs, a troubling amount still favor this antiquated and ineffective approach.

An expert in Procurement Transformation, Ulrich suggests tedious, hours-long training programs are just one symptom of a much larger problem. For all its emphasis on innovation, the Procurement function still hesitates to change its approach to training and professional development. While Procurement's people aren't necesarilly more important than its tools and processes, Ulrich believes they're at least an equally important component of a best-in-class function.

Why does Procurement neglect to invest in its people? Ulrich offers a few possibilities. Perhaps Procurement is too quick to believe the hype surrounding emerging technologies. With the promised benefits of Artificial Intelligence looming on the horizon, spending money on people can become an afterthought. Ulrich cautions organizations against this kind of thinking. "Whatever these tools are ultimately capable of," she says, "they'll never fully replace Procurement's people." If anything, Procurement should take care to update its training programs and begin developing teams capable of effectively leveraging these tools.

Outdated perceptions around Procurement's value, too, hold the function's training programs back. "Many organizations," Ulrich remarks, "still think of Procurement as a purely tactical function." As a result, they're hesitant to invest the proper amount in developing and retaining its people.

She calls for a more dynamic approach to training that emphasizes Procurement's more strategic and multi-functional role. While it's tempting to dismiss "microlearning" programs as a concession to shortening attention spans, Ulrich suggests they're tailor-made for Procurement's next generation. Millennials in particular want flexibility in the workplace. A self-led, gradual training program provides this flexibility from day one.

Ulrich concludes by acknowledging that it's hard to tie an ROI to professional development. She reminds listeners, however, that investing in Procurement's people certainly does pay dividends. Procurement's emerging leaders want to work for companies that are committed to professional growth and presenting hires with new responsibilities. "Investing in Procurement's people doesn't have to cost thousands of dollars," but it could help an organization earn far more from a dedicated, engaged, and well-trained team.

Streamlining supply chain processes at hospitals and other health care facilities has been an overriding objective for years, as leaders have attempted to increase their efficiency and cost-effectiveness while not sacrificing quality of care. The same trends that have made a mark in general logistics operations - primarily dealing with increasing digitization and the new possibilities unlocked by automation - can create major benefits in health care settings, provided departments can find ways to make them work within the highly regulated medical world.

Checking on projects that are already underway can provide some direction for health care providers considering new technology deployments and help illustrate the potential benefits of upgrading, as well as the roadblocks slowing the pace of progress. In a few years, digitization may be considerably more widespread in the medical sector, and now is a critical moment for health providers hoping to be the first to reap the benefits of new systems.

Zooming in on UCSF
A recent Supply Chain Digital report delved into the modernized procurement practices at University of California San Francisco Medical Center. This hospital ranked No. 5 in the nation in the latest U.S. News & World Report survey, and its operations are a model for other medical facilities. The supply chain team has embraced the automation of transactional and basic tasks, meaning employees are free to work on practices that will improve not only material logistics, but also the connection between internal departments.

Supply Chain Digital explained there are close connections between clinical staff members and supply chain "ambassadors," independent team members who communicate with clinicians about procurement needs. This relationship allows the supply chain to become an effective delivery method for essential patient care supplies, with availability customized to suit the unique needs of each individual receiving care.

In addition to tightening up practices within the health system's three hospitals, UCSF's supply chain department has used digital systems to create more precise agreements with suppliers. Carefully orchestrating the deliveries of the 78,000,000 products used by the medical center every year has allowed the logistics team to build efficiency and consistency, despite the imposing scale of the organization.

A hospital entrance from outside.What does it take to keep a hospital supply chain moving efficiently?
The industry looks ahead
There's plenty of work to do for hospital supply chain leaders. Becker's Hospital Review recently highlighted the current top priorities of management teams at the top 50 care providers, according to the Global Healthcare Exchange. The most popular targeted outcome for these departments, felt by 59 percent of executives, is improved analysis and decision-making. After that come standardization of practices, optimizing contracts, boosting integration and broadening management of non-labor spend.

Becker's reported that GHX also discovered the means supply chain teams are using to pursue the aforementioned goals. They are focusing on areas such as improved procurement and inventory control, greater standardization, system integration, contract optimization and quicker addition of new systems after performing a merger or acquisition.

While supply chain upgrades aren't easy or straightforward - especially in a high-stakes field such as health care, these results indicate that managers have set worthy targets for their efforts. The next few years may see rapid and meaningful change in practices.
Whether you’re a market intelligence luminary and can predict the rise of manufacturer pricing before the announcement letters arrive, or you’re blindsided during a period of already high pressure to generate savings, managing cost increases is a sensitive but necessary part of any purchasing department.  Dependent on the category, supplier relationship, and overall spend leverage, there are a few ways of dealing with these increases that can result in cost increase avoidance, and even at times, additional cost savings.

When to negotiate directly with your supplier:

Typically a client’s first instinct when undergoing a period of cost increase is to outright refuse to accept the pass through costs.  While negotiating directly with a supplier, leveraging moving business elsewhere should an increase be incurred, has certainly been effective, it can also damage the relationship.  The risk of this approach is the supplier finding other ways to increase costs outside of unit price, a reduction in service quality, and at worst the supplier terminating the relationship and disrupting your supply chain.  To minimize these risks, this approach should only be taken under certain conditions.  One condition is that you are in the top 5-10% of the supplier’s customer base.  This meaning that you are one of, if not the largest customer they service, and they rely on your business for a large sum of their revenue.  You should also ensure that the remainder of your costs are fixed, meaning freight is included in the unit of measure cost, any service pricing is stated and held firm, and surcharges are not able to be added.  Lastly, the standoff approach should not be taken with a supplier that provides, mission critical, custom, or niche products.

When to go to RFP:

Should any of the above conditions not hold true, that may be signal that it is time to survey the market.  Engaging alternate suppliers in a competitive sourcing event will open up opportunity to drive competition, identify lower cost substitute products, and establish a relationship with a vendor more suited to your organization’s size.  An RFP should also be the primary strategy if there is a large amount of tail spend in a particular category which can be cleaned up and leveraged in a new contract with a new vendor, or if there are overlapping categories (i.e.: hoses and PVF) which can be leveraged under a conjunctive supplier for additional synergies.

When to engage in a tri-lateral agreement:

In the event that all of the criteria were in place for a direct negotiation, yet results were not desired or substitutions are not acceptable for a particular product, there may been an alternate strategy that can be used to prevent the cost increases.  If spend is significant with a particular manufacturer, organizations can enter into a tri-lateral agreement with the manufacturer and distributor, negotiating set pricing through the manufacturer that the distributor must pass through.  This special pricing allows the distributor to continue to provide the service as expected without them having to personally take a loss to hit the targets.  It also drives more transparency within the relationship, and will establish a direct line of contact with the manufacturer for communication regarding new products, emerging technologies, or market forecasts.

Occasionally, especially during periods of significant raw material pricing spikes, absorbing a partial increase is inevitable.  To manage this risk, agreements should have shared pass-through costs between the distributor/supplier and customer, supply base rationalization should be ongoing in categories with high tail, and purchasing volumes and practices should be optimized.  Otherwise, adopting one of the aforementioned approaches will ensure that you maintain a competitive advantage during period of market uncertainty.

Last week, the US Patent & Trademark Office published an application from shipping giant United Parcel Services. The documents, initially filed in February, make it clear that UPS is interested in leveraging blockchain technology to optimize its business on a global scale.

When UPS joined the Blockchain in Trucking Alliance late last year, the organization became one of the first 3rd-Party logistics providers to take part in the conversation around industry standards and education. Calling for "intercompany collaboration," UPS enthusiastically outlined the technology's benefits in a press release. Linda Weakland, the company's Director Of Enterprise Architecture and Innovation, wrote, "[blockchain] technology has the potential to increase transparency and efficiency among shippers, carriers, brokers, consumers, vendors and other supply chain stakeholders."

The decision sent a clear message. In joining the BiTA, UPS confirmed for customers and competitors alike its belief in blockchain technology's industry-altering potential. FedEx, DHL, and other 3PL leaders soon followed UPS' lead. The alliance now includes over 300 members and operates under a more inclusive name - the Blockchain in Transport Alliance. 

Initially, UPS suggested it would focus its efforts on its customs brokerage business. Membership in the BiTA, the organization said, would allow "one of the world's largest customs brokers" to eliminate paper-heavy processes and improve visibility into its transactions with customers and government customs agencies.

UPS' recent patent application, however, reveals plans for far more ambitious integrations of blockchain technology. "Shipping consumers," it reads, "are constantly looking for new shipping services providing enhanced shipment unit shipping/tracking visibility while minimizing costs." UPS hopes blockchain technologies will enable such services by making it easier to track shipments involving multiple carriers and geographies.

The application goes on to suggest that blockchain solutions will not only enhance visibility into shipments and transactions, but also provide decision support through "automated determination." UPS expects its blockchain-enhanced infrastructure to develop optimal shipping routes for every package and even carry out any necessary transactions along the way. Intriguingly, the application also indicates that UPS may soon accept cryptocurrencies as payment for its services.

Concluding its patent application, UPS notes, "It is to be understood that the invention is not to be limited to the specific embodiments disclosed." Even through a thick cloud of legalese, it's obvious that UPS is thrilled by blockchain technology's potential and that even their most detailed forecasts can't articulate what the future could hold. 

When utilizing an external supplier, it is very important to practice proper supplier relationship management. One way to do so is to enact a supplier scorecarding process. Scorecarding is a method that frequently evaluates or "scores" the supplier based on their performance. It helps focus your suppliers on what areas matter most to your organization, and gives them an awareness regarding how they should work with you. Applying these best practices can help make your scorecarding process more beneficial. 

Know What You Want

When embarking on the supplier journey, you need to know what you want, specifically in terms of business goals. Develop a baseline understanding of what you want done, how you want it done, and how soon you want it done by. Use this baseline to establish performance expectations for your supplier. Making these clear right away increases the likelihood that you will find the right supplier match. 
When it comes time to generate performance metrics and key performance indicators (KPIs), apply the rule of quality over quantity. You want your specific goals accomplished the right way, there is no need to rush the goals through subpar work, or take extra time to complete additional, unrelated tasks. While doing so, remember to align the KPIs with your business goals- outlining them in the initial contract- and to establish a timeline in which the supplier is expected to operate and complete tasks.

Establish a Performance Evaluation Review Process 

Once the proper metrics are incorporated into the scorecard, you must generate processes to communicate performance to suppliers. This covers situations such as positive recognition and reward, granting new business to existing suppliers, and cutting ties with underperforming ones. Evaluations should be conducted on a continual basis, and can be incorporated into the timeline. 

Communication and Action

When you complete the evaluations and communicate the results to the supplier, it's important to then identify areas of needed change and even more so to take coordinating action. Constant communication between managers and suppliers provides for stronger relationships and ideas to be shared. 

Share Information Internally

All stakeholders within your company, even those outside of Procurement and Supply Management, need access to supplier performance information. Further, the scorecard evaluation needs to be easy to use and understand for any stakeholders requiring access. In short- if someone could potentially be impacted by supplier performance, they need to be able to have in idea of the suppliers' performance levels. This will help create cohesion and mitigate risk throughout the entire organization. 

Ensure Alignment Across all Parties

When implementing anything, its important to ensure that everyone involved is on board with and in support of it. The supplier needs to know that they will be monitored, what they will be evaluated on, and in what time frame they are to produce and will receive evaluation results. Make sure your vendors are happy with the process, and allow for feedback throughout, being flexible and willing to make reasonable adjustments as you see fit. This will help improve your potential to attracting more vendors in the future, and possibly harvest innovative ideas. 

Other stakeholders within the organization also need to feel comfortable with the scorecarding and evaluation process. If they do not understand or agree with its measures, they are less likely to utilize the tool, therefore lessening the value of even having the process. 

Establishing an optimal scorecarding process aligned with business goals and timelines and coordinating it with all stakeholders can bring a great deal of value to your organization. Utilizing a proper system can enhance current performance as well as setting the scene for future improvements- it allows you to identify strengths and weaknesses in current suppliers, giving you a detailed picture of what you should be looking for externally and reaching toward when moving forward.