October 2018

Both applicants and employers would agree, the recruiting and hiring processes are often frightening.

Leaving the comfort of their current positions, candidates are forced to reenter the interview stage. Even the most accomplished, confident professional can find these conversations nerve-wracking. It's not always easy  to sell yourself. Employers face similar troubles. In a candidate-driven market, they've got to distinguish themselves as world-class and offer enticing incentives without breaking the bank. This all becomes more challenging when an organization's Human Resources team is understaffed or under-resourced.

That's where a dedicated supply chain recruiter like Andrew Jones comes in. He considers it his goal to alleviate the fears of applicant and employer alike. For the former, he works to familiarize them with the interview process and get them comfortable speaking to their accomplishments. The latter trusts Jones to pair them with qualified, dedicated candidates and save them from the headaches of a mismatched hire.

Though Jones' career has seen dozens of successful placements, he's lived through his fair share of horror stories. He shares several on this week's episode of the Source One Podcast.

Jones' hair-raising tales include:

  • A candidate who put the 'casual' in business casual. 
  • An applicant who thought she'd put her best foot forward in an all-too-literal way. 
  • An interviewee with a jaw-dropping inability to read the room. 
  • And more . . . 

Jones also gets in the spirit by offering some Halloween-themed best practices. On the subject of unmasking dubious candidates, Jones stresses the importance of listening over talking. "You've got to listen closely and insist that they focus on particulars," he says. This not only helps Jones weed out candidates who might be wearing a mask, but also helps the candidate practice for their eventual interview. After all, an employer is no more interested in unverifiable or unclear claims than a recruiter is.

He also advocates for the importance of non-stop communication. Halloween only comes once a year, but conversations between candidates and recruiters should occur every day. Jones considers open communication an essential component of his efforts and a valuable tool for identifying truly world-class candidates.

To hear more scary stories from a supply chain staffing specialist, subscribe to the Source One Podcast today.

Happy Halloween!
A thorough, well-designed RFP won't do Procurement any good if they can't interpret the results. Developing effective systems for scoring responses is an essential step in reaching the paradise of savings and process efficiency.

Many Procurement pros, however, make grave errors in this process. These mistakes leave their organizations trapped in an inferno of confusion, miscommunication, and disappointing results. Has your Procurement team committed any of these 13 Deadly Sins?

Happy Halloween!

In my last blog of the Myth Busters series, we broke down the common misconceptions of continuous improvement and how making a culture shift to view CI as a flexible ideology can benefit organizations.

Today—the topic of discussion is, the soon to be the largest work force in the world, Millennials! There are several debates around who are classified into this category, but popular consensus has named individuals born between mid-1980s and 1996. Millennials have a bad reputation in today’s workplace. As a Millennial myself, I understand the frustration this demographic faces daily. Being generalized and labelled as spoiled, lazy, entitled narcissists has been nothing shy of destructive. Books such as Generation Me or Not Everyone Gets a Trophy definitely don’t help the image of the Millennial either. Though I will agree that there are a few “bad eggs” that throw their legs up on their desks and make senseless demands, not all Millennials are the same. Many workplaces have created an environment where Millennials are forced to feel embarrassed to be a part of the supposed “handout” generation.  Research shows that discussions around Millennials amongst leadership teams across organizations tends to be more negative than positive—this has got to change. 

One could argue that Millennials face age discrimination. According to the EEOC, U.S. Equal Employment Opportunity Commission, age discrimination “involves treating an applicant or employee less favorable because of his or her age”. This includes work situations in any aspect of employment such as hiring, firing, pay, job assignments, promotions, layoffs, training, benefits, and any other term or condition. It is unlawful to make any offensive or derogatory remarks about a person’s age. Though many believe that simple teasing or offhand comments aren’t very serious, it can lead to an unpleasant work environment.  The act that stemmed from this concern, The Age Discrimination in Employment Act (ADEA), only protects people who are aged 40 and above, but some states now have laws that protect younger workers from the same discrimination as they are seeing how this unfair treatment is affecting younger generations.

So why all this bad blood? We are now on the cusp of a magnificent societal change and being propelled further into a digital-centric environment. The rapid transformation is being feared by many and understandably, change has been overwhelming to grasp. This is unfortunately resulting in the bitterness between the people that got us here and the people who will carry the torch forward. The slowed transitioned of older staff into retirement has resulted in a culture clash vying for the same prosperity but conflicted over how to share the opportunity. Through this clash, many unfair stereotypes of Millennials have tarnished their reputation. Let’s take a look at the top 2 and dive into what’s really going on.

“Millennials are entitled”— As the years go by, every successive generation has encountered an entitlement problem. Throughout history, we’re able to see the hard work of the previous generation resulting in the prosperity of the next. Take a closer look at home. I’m positive the lives of your parents were significantly different from your grandparents. It’s a natural desire to want more for the next generation.

So that brings me to the point, do Millennials expect and want more? Definitely, but they are not solely responsible for the mindset. The convenience they have isn’t their fault and you can’t blame them for wanting more, just like how the previous generations wanted more. This notion of “wanting more” is actually what sparks creativity and has caused revolutions in several industries throughout history. Millennials are also blamed for never being satisfied with their jobs. The bottom line is, Millennials are not willing to settle for mediocre careers, but who should in the first place? You have one life to live and you are responsible for your own happiness. This generation is willing to work hard to find work they are passionate about and gain financial security, even if that means taking on a side-hustle to make ends meet.

What’s often forgotten is that Millennials are faced with an economic situation that no other generation has endured. The cost of living continues to rise while wages taper off. The safety nets, legislation, and social services previous generations had are no longer guaranteed for this generation. There are far too many unknowns in today’s society than there were a few decades ago. The Millennial ambition comes from ensuring they are financially secure while investing their careers into areas they are passionate about.

“Millennials are job hoppers”—  Do Millennials switch employers often? Yes. One LinkedIn survey indicates Millennials do more job-hopping than any other generation. But what’s surprising is that the Bureau of Labor Statistics states Baby Boomers did just as much job-hopping in their respective 20s as millennials do these days.

With the economic transformation taking place in faster cycles, the need for organizations to constantly reinvent themselves to sustain is creating a challenging environment for all working generations. Specifically for Millennials, it has caused them to no longer see a long term path that lasts in one organization. The decade long notion is completely gone, which isn’t necessarily a bad thing. In fact, recruitment professionals state that changing employers is actually a good thing and keeps your skills competitive, diverse, and adaptable in today’s workforce.  With older generations hanging around longer in the work place, younger workers are less likely to be promoted into the same roles held by tenured folk, even though they may be fully qualified. The option to wait it out is less appealing when there are similar or better opportunities knocking on your door.

Can you really fault someone for taking the leap to better their life, career, and gain new experiences? Put yourselves in their shoes, you might do the same. In addition to advancement opportunities, Millennials tend to switch employers due to diversity, flexibility, treatment, and social concerns. A recent Deloitte study claims that diversity and flexibility is the key to Millennial loyalty. Attracting and retaining Millennials begins not only with financial rewards but also providing their employees with a diverse and flexible workplace culture that resonates with them. Those that are unsatisfied with their pay, degrees of flexibility, and diversity often leave within 2 years.

The negative rhetoric around Millennials in today’s workplace has also caused them to flee corporations and opt for startups, companies run by Millennials themselves, or progressive organizations. Why would anyone want to stick around when they feel unwanted or feel like they have to face a daily battle to prove the stereotypes wrong? Lastly, Millennials want to work for employers that share the same sentiments for similar causes and beliefs. Millennials are not likely to stick around if they feel their employers or colleagues take part in unethical business practices or lack inclusivity/tolerance. Social activism is a large focus for the Millennial generation and they are likely to choose and stay with employers that shares similar beliefs.

Supply Chain Consultants are often tasked with helping organizations face their fears or avoid scary situations altogether. Occasionally, however, their job is a frightening one. Outdated processes, neglected supplier relationships, and internal friction can all haunt the dreams of consultants and clients alike.

There's no denying that every supply management consultant has some horror stories of their own. To get into the holiday spirit, check out this terrifying tale from one our spend management specialists.

The Phantom Contract Management Plan

This was happening in the CPG industry, specifically within the Logistics department. Where are the contracts? That was our biggest question. Answers weren't easy to find.

A majority of the staff was not aware of where the contracts were located let alone what they looked like. Carriers would consistently hit the organization with various charges, fees, and costs. The department, for their part, would blindly approve them as they were not aware of what was acceptable and what wasn’t. Though there was a boilerplate contract for carriers, several expectations were made based on the existing carrier relationship which caused a lack of standardization and transparency in other relationships.

Contracts were not always signed by both parties. In certain instances, one party wouldn’t have the fully executed version to hold as proof for their claims. A majority of logistics agreement require the carrier to provide a form of a license, operating authority, w8/w9, and certificates of insurance. These items need to be updated, at least annually, but this organization didn’t bother to collect them, house them, or share them. This is potentially a major risk and can result in liability concerns if something were to occur in transit.

Contracts were being stored in a storage drawer (unlabeled) or scanned into an internal drive - again, unlabeled and unmanaged. There was absolutely no knowledge sharing or awareness that this was an area of concern that needed to be addressed. How was the organization to enforce rules or regulations when the company itself wasn’t aware of what their contracts looked like? There was no systematic way to check on expiration dates, clauses, rate schedules, fees, charges and so on.

Contract Lifecycle Management is key to maintaining vendor relationships. Typically a contract Management System (CMS) investment would be ideal to helping manage contracts and key components of them, but a CMS might not make sense for all organizations. If an organization doesn’t have the business case for a CMS system yet, they should create a governed procedure to manage contracts and carrier partners and house them in an area where they are accessible to all. There should be ample training for all resources to understand the agreements and what the partnership will require of them.

They should feel empowered to use contracts as a way of establishing standards and expectations with the suppliers.

All contracts should be reviewed every year and is a critical component of contract lifecycle management. As a best practice, you will want to review you agreements collaboratively with your suppliers/partners. This opens up two-way,  transparent communication to address concerns and enforce the contract by restating expectations. An organization should review contracts even if they are evergreen. These documents and their terms and conditions are not just useful for leadership. Rather, they are essential for all staff members that handle day-to-day business execution.

Contracts should manage relationships and guide business execution. They should be shared freely and managed though systematic procedures on a regular cadence. Failure to do so could lead to a number of scary situations for Procurement.

Happy Halloween!

The following blog comes to us from Megan Ray Nichols of Schooled by Science.

Warehouses provide the foundation for effective supply management in a number of industries. Far more than storage sites, they provide for timely deliveries and satisfied consumers. In spite of this, the warehouse is often under-served by leaders at the corporate level. As a result, the employee turnover rate is astonishingly high in warehouses across the country.

Before diving into potential answers for answers to the warehouse turnover problem, let's look at some of the underlying causes. What's leading so many warehouse employees to look for the exits?

Much warehouse turnover seems to result from inter-industry competition. One study found that Amazon plays a particularly instrumental role. When the eCommerce giant opened a distribution center in Lexington County, South Carolina, for example, the average annual salary for warehouse workers in the area dropped an astonishing 30 percent. Losing nearly $15,000 a year is enough to drive even the most dedicated warehouse employees out of their locale and industry.

This isn’t the only area where Amazon’s distribution centers have caused a drop in worker pay. Wages in Chesterfield, Virginia have dropped 17 percent since the online giant opened a warehouse there, and wages in Tracy, California have dropped 16 percent.

Warehouses that treat their employees like nameless drones, or don't provide room for growth or advancement will also drive employees away. For many people, working in a warehouse just starts out as another job – the goal, as Holly Courter, HR manager for Romark Logistics, says, is to “be committed to knowing the associate’s individual needs.”

What can managers do to improve employee experiences and reduce warehouse worker turnover?

Offer Benefits
It might seem like common sense, but offering benefits for both full time and part time warehouse employees is hardly a constant. Often it's a crucial difference between the ways employers manage their white and blue collar employees.  The companies who've employed them most effectively include the expected business innovators. Amazon, for example, offers health insurance, retirement plans and shares in the company for its full-time warehouse employees. This makes it easier for their employees to save for retirement and creates a sense of mutual investment.

It is a little bit ironic that Amazon is so good at offering benefits for its employees, when the online giant has been in the news so much recently for their alleged poor treatment of their warehouse workers and delivery drivers.

Healthcare and insurance are fraught subjects and neither landscape is easy to navigate. It's hard to overstate how important it is to provide employees with a helping hand.

Improve Worker Safety
Warehouse injuries are more common than most people realize. Slip and falls, for example - which account for roughly 15 percent of warehouse injuries – result in 95 million lost work days every year.  Upwards of 20,000 people are injured in forklift accidents in the same amount of time, with 100 of those accidents resulting in on the fatalities.

Warehouse workers often work in teams, but employees that work alone are in a unique and sometimes dangerous situation. If a lone employee is injured on the job, chances are there won't be anyone available to help them, which can quickly make a bad situation worse. Creating a safe work environment for all of your employees, regardless of whether they are working alone or in a team, can create an workplace that is conducive to employee retention.

A number of jobs, even in a warehouse, might require that an employee work alone so it is essential to ensure that every worker has the proper safety training and the means with which to contact someone if there is an accident. Consider implementing a buddy system - assign solo workers a buddy that they check in with on a regular basis. If they miss a check in, their buddy knows that there's a problem and that they need to check in on them. The move will discourage workplace accidents and foster an atmosphere of collaboration.

Offer Training 
On-the-job training doesn't have to stop after your employees are hired. Offering ongoing education for your employees can both improve your existing talent pool and encourage employee retention by providing your employees with the tools that they need to advance in their current position and to advance to new positions in the future.

Training programs and ongoing education aren’t just good for improving your existing talent pool.  It an also tie into employee safety and help to prevent on-the-job accidents. Surveys have also suggested that safety training increases employee satisfaction as well – an employee that is satisfied with his or her job is likely to stay with the company rather than seeking alternate employment.
 Speaking of advancement...

Promote from Within
Historically, most people don't start a job looking to change it within a few months - they start a job looking for to make a long-term commitment. While millennials are gradually shifting our definition of  'career,' it's still best to plan for the future and view all full-time hires as potential career-long employees.  That means providing clear, actionable opportunities for advancement within the company. By offering training and other avenues to grow and advance, you're reminding employees of your investment in them. What's more, you won't need to devote time and resources to locating talent outside of the company.

If given the opportunity to advance, employees tend to be more loyal to their employer which will in turn reduce employee turnover and improve employee retention.

Change With the Times
The Baby Boomer generation is reaching retirement age - the last of them will reach 65 in 2029 - and millennials aren't terribly attracted to careers in warehouse work. Warehouses in general will need to change with the times.

Millennials are famous for breaking from trends and shattering precedents. Whatever changes they promise to bring, the fact remains that they make up the majority of the warehouse workforce. They're also proving particularly difficult to retain. As previously mentioned, millennial professionals have different attitudes toward their career than previous generations. Millennials are all about the work-life balance, so offering things like flexible schedules, 4-day work weeks, and vacation time can entice millennial workers to stay in warehouse jobs and work toward advancement within specific organizations.

One statistic in particular points to the challenge of retaining millennials. According to this year's Deloitte Millennial Survey, more than 43 percent of millennial workers are planning to change jobs in the next two years. Many are switching to the gig economy because it offers more flexibility and better pay than they are able to obtain in traditional workplaces. Clearly, some changes are in order.

The employees are the backbone of the warehouse industry, so it's up to managers to change the way that they work to create an industry that retains warehouse workers and turns the industry into a place where people want to work - and where they want to build their careers.

ICYMIM: October 29, 2018

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

Guidance for Addressing the New Talent Acquisition Challenge
Dennis Bouley, My Purchasing Center, 10/12/2018
According to a recent Labor Department report in March of this year, job openings have reached a new record high: 6.6 million. The demand for talent is certainly keeping HR and hiring managers busy. Candidates are now more in control than ever during the hiring process, forcing employers to get creative when it comes to attracting top talent. Dennis Bouley of My Purchasing Center explores the growing trend of contingent staffing. He explains how the supplemental support is an attractive arrangement for both candidates and employers. 

Michael Lamoureux, Sourcing Innovation, 10/25/18
Facing growing demands with less resources, Procurement leaders are often faced with two options: hire outside help or add full time employees to their team. This week, The Doctor explores the cost drivers of both staffing models. Acknowledging the consultant stereotype (expensive, sleazy practices), Lamoureux explains the value of hiring outside help for strategic and tactical support, and makes the case for the ROI consultants can deliver. 

7 Tips for Building a Robust Supply Chain
ThomasNet, 10/29/2018
Between security threats, environmental risks, and political uncertainty, global supply chains are constantly facing disruption. With consistency being the key to minimizing disruption and reducing spend, Thomasnet offers 7 pieces of advice for building a robust supply chain. They explore how to develop strong relationships with suppliers, leveraging data for improved decision making, how to balance flexibility with resiliency, forming contingency plans, and more. 

In spite of shrinking training budgets, people are everything in Supply Chain Management. That's why Source One's Staffing & Recruiting support team offers a full suite of services to help organizations identify world-class talent and maintain top-notch teams.

Recently, a leading insurance provider approached Source One in search of a new Director of Strategic Sourcing. Their list of highly-specific requirements had made finding a best-fit candidate challenging. This local professional would be required to build an entire Procurement function from the ground up. They trusted Source One's staffing team to fill internal knowledge gaps and support each step in the recruiting and hiring process.

Leveraging their deep expertise, Source One vetted candidates, drafted interview questions, and created materials for the on-boarding process. Learn more in the infographic below.

October 26, 2018

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

New Blogs:
Elizabeth Skipor, Thomasnet, 10/22/18
Unlike other indirect spend categories such as office supplies and MRO, sourcing a marketing agency isn't as black and white. Marketing Procurement professionals must identify agencies with the right capabilities, cultural fit, and brand vision. Ensuring the sourcing process runs smoothly and concludes with the on-boarding of an agency that will elevate your brand begins with a clear understanding of the task(s) at hand. Before diving into a marketing sourcing initiative, develop a clear Scope of Work to guide the process. Source One's Marketing Sourcing expert, Elizabeth Skipor delivers her tips for eliminating the risks of reworks and time sucks by developing an effective Scope of Work for the marketing category upfront. 

Brian Seipel, Future of Sourcing, 10/25/18
If you think telecom invoices are built like invoices in other categories- a handful of line items, along with quantities, and unit pricing all nicely listed in a neat row and reconciled against a total invoice cost: you'd be wrong. In fact, they are designed to be confusing. Fear not, however. Source One Consultant, Brian Seipel explains how to navigate the mazes that are telecom invoices so you can address cost reduction opportunities.

Upcoming Events:
Find Source One's MRO sourcing experts in Fort Worth, Texas for ProcureCon MRO! They're looking forward to engaging MRO category managers and purchasing professionals to share their insights for effectively approaching MRO spend management. 

More businesses are finding artificial intelligence is helping them establish a more predictable supply chain and improve operational excellence by allowing workers to fill roles that AI can't replicate.

However, a new study also warns that AI can lead to diminishing returns when left unchecked.
Among early adopters of AI, more than 80 percent say they've gleaned a positive return on their investment in the technology, according to a recent report released by advisory services firm Deloitte. Companies in the technology, media and telecommunications industries, have experienced the most ROI at 20 percent, well above the median return among all AI adopters at 17 percent.

Some of the most common uses are in enterprise software, with 59 percent of respondents to the Deloitte poll acknowledging as such.

However, AI adoption hasn't come problem-free. Within the last two years, for example, nearly 1 in 3 business entities said they'd felt the effects of a cybersecurity-related incident that derived from AI instrumentation, the report said. Additionally, 40 percent said they worried about potential legal and regulatory complications associated with AI technology.

David Rudini, chief analytics officer at Deloitte, said businesses must first identify the goals of AI adoption first and foremost and then observe the net result. In short, do the benefits outweigh the real or perceived costs.

"In order to achieve true ROI from your AI investments, it requires defining specific business outcomes, and understanding the costs, cascading impacts, and talent implications at the onset," Rudini explained.

Once considered a future technology, AI has exploded in current-day usage, shoring up businesses' supply chains so they're seamless and uninterrupted, while making consumers' lives more convenient and hassle-free. According to a Gallup survey, 8 in 10 Americans use between one and six devices on a regular basis that feature AI functionality.
4 Ways Blockchain Brings Social Accountability to the Value Chain

The following blog comes to us from Gabriela Julia of TechnologyAdvice.com

Blockchain has been around for nearly a decade. Originally created as a digital ledger to record transactions made in Bitcoin and other cryptocurrencies, this technology is best known for securely storing blocks of information. Widely  praised for being “incorruptible”, blockchain can record not only financial transactions but “virtually everything of value.”

It’s clear blockchain has made waves in the financial world. But it’s also making an impact in another area: sustainability.

Corporate social responsibility requires companies to evaluate their social practices, and consider how their businesses and employees interact with the environment. Many companies are realizing that blockchain may lead that change.

Blockchain is often associated with intense use of due to the massive computing power needed to work through the complex algorithms that power it. Bitcoin alone has been estimated to consume almost the same amount of electricity as the country of Ireland, according to a study by Joule.  This kind of power consumption, and the resulting carbon footprint it creates, can make it hard to convince the average person of any environmental benefits this technology might have.

Blockchain has the potential to shift our world’s sustainable development through use in the food and energy sectors, and many others.  Keep reading to see how.

Safe Food Transactions
Blockchain can be used in numerous ways other than cryptocurrency. One of the most interesting aspects is how it can be used to improve groceries and food safety.

A February 2017 EconTalk podcast dives further into this idea, discussing how blockchain can lower the cost of owning and transferring goods and property. Reporter Jim Epstein says in Latin America, it’s difficult to keep track of land ownership. When property changes hands, blockchain can capture and upload these transactions after a trade.

“The basic idea is that this database that everyone shares can bring the trust that is missing and is crippling to a lot of these economies,” Epstein says.

Blockchain can also improve a company’s ability to track products throughout their life cycle, according to a GreenBiz article, and it’s proven to be more efficient than traditional manual methods.
For example, Wal-Mart worked with IBM to develop and get blockchain-driven food safety applications up and running quickly. The partnership will try to improve food safety by taking immediate action when produce or other items have gone bad. Blockchain helps keep track of shelf life, and where the products originated.

"With blockchain, you can do strategic removals, and let consumers have confidence," Walmart’s food safety chief Frank Yiannis told Bloomberg. "We believe that enhanced traceability is good for other aspects of the food systems. We hope you could capture other important attributes that would inform decisions around food flows, and even get more efficient at it."

Along with IBM, Provenance is another company making use of blockchain in a sustainable way. The company started after founders were frustrated with “how little we know about the things we buy.” Their mission is to make information about products and supply chains more accessible.

Too, deep integration of blockchain with project management platforms can bring new levels of transparency and accountability to every step of the product lifecycle.

Changing Use of Energy
While blockchain has made tremendous impact in improving food safety, it’s also being used to change how energy is generated, stored, bought, and sold.

LO3 Energy has developed Exergy, a data platform that uses blockchain as part of its solution to make local energy marketplaces. LO3 has developed microgrids, which are ecosystems of connected prosumer and consumer energy assets. The energy is stored, generated, and transacted locally, creating more efficient, resilient, and sustainable communities, according to its website.

Transparency and Traceability
As noted before, one of the biggest issues consumers have with distribution is not knowing products’ origins. BlockchainHub recently listed ways blockchain’s transparency and traceability has had a positive impact on the environment.

In one standout example, blockchain is instrumental in monitoring and reporting  on diesel pollution from trucks idling at shipping ports as they await loading and unloading. Blockchain can also be used in systems that trace the sea life trapped or improperly fished from false fishing equipment.

BlockchainHub points out that blockchain has the potential to create increased corporate accountability by powering systems that monitor factory worker safety, child labor law compliance, employee toxin exposure, and more.

Giving Awards for Sustainable Behavior
Another interesting aspect of blockchain’s sustainable impact is its use of the reward system. BlockchainHub noted a few ways these applications have started incentivising behavior by offering purpose-driven tokens. When a corporation acts in a sustainable manner, value is added to their corporation and they receive a private profit. Examples include:

  • CO2 emission reduction
  • Riding a bike, walking, or taking public transportation
  • Saving energy by turning off lights, etc.
  • Planting trees and recycling
  • Staying in environmentally-friendly hotels

It’s clear that despite blockchain’s significant energy consumption, its application has great potential in powering and promoting sustainability efforts. Whether through tracking food safety, holding corporations accountable for labor regulations, or offering rewards for sustainable behavior, this digital ledger has the power to transform our environment.
Gabriela Julia is a writer for TechnologyAdvice.com. She is a multimedia journalist and graduate student based in Central New York. You can connect with her on LinkedIn.

How do I know if I have enough spend detail?

That's a question that comes up often in the early stages of a spend analysis. On this week's episode of the Source One Podcast. Spend Analysis Lead Brian Seipel suggests a more constructive question might be, "how do I know if I have too much."

When it comes to granularity, Seipel suggests, "less really is more." Just because an organization can collect massive amounts of data doesn't mean the exercise is productive. Seipel suggests looking at a spend analysis like a map. "Consider the topographical map," he says. Though it offers a considerable level of detail, it's not at all useful for something like navigating from one city to another.

Spend granularity isn't so different. There's a time and a place for detail, but the early stages of an analysis is neither. Siepel concludes by suggesting that detail-oriented dives into spend are better suited to sourcing events.

Subscribe to the Source One Podcast to learn more.
Domestic oil production reaches September all-time high

September can be a worrisome month for professionals in the oil industry. Typically the most active stretch for hurricane activity, natural forces' effects on sourcing can come into play when the combination of damaging winds and drenching rains cause production issues at refineries.

But instead of Mother Nature logging a record month for hurricane development, the industry set a new record for oil production - fueling the properties, vehicles and machinery that Americans use every day at home, on the road and on the job.

Indeed, on average, refineries produced approximately 11 million barrels of crude oil per day in September, according to newly released estimates from the American Petroleum Institute. A daily increase of 2.2 million barrels year over year, crude oil inventories also rose from the previous month.
Dean Foreman, API chief economist, indicated that production totals were so good, refineries were able to deliver on the various supply chain demands that come from foreign countries.

"The United States has continued to lead the world in oil production growth this year," said Foreman. "And that growth is helping to meet growing energy needs at home and abroad, despite production losses by some [Organization of the Petroleum Exporting Countries] nations. As a result, consumers have continued to enjoy affordable fuel prices that also are a key advantage for the U.S. economy."

U.S new leader in crude oil production
At one time, the United States was a net consumer of oil - meaning it utilized more crude oil than it produced. But that's no longer the case. According to preliminary figures from the Department of Energy, the U.S. is the world's largest developer of crude oil, topping both Russia and Saudi Arabia for the first time since 1973, CNN reported. In fact, over the previous 10 years, domestic oil output has more than doubled.

Bob McNally, president of Rapidan Energy Group, told the cable news outlet that refineries are operating at peak capacity, which is excellent news for the production supply chain in particular and the energy industry in general.

"It's an historic milestone and a reminder: Never bet against the US oil industry," McNally explained.

Oil barrels with rising arrow. U.S. oil production in September more than met expectations.
Demand dwindled slightly from August
The summer months tend to be pressure packed for refineries, given that it's a busy period for traveling activity among vacationing Americans. But motorists eased off their gas pedals in September compared to August, with petroleum demand slowing to approximately 20.1 million barrels per day, down from 20.8 million the previous month, based on the API's calculations. In response, refinery throughput also eased, causing oil prices to edge higher. For example, West Texas Intermediate oil - otherwise known as Texas light sweet - averaged around $70.23 per barrel over the 30-day period. That's up $2.17 from August. International Brent crude oil, meanwhile, jumped to a per barrel per day average of $78.89, a $6.36 increase over the same period
Experts attribute the notable contrast in prices to geopolitical and economic uncertainties in the Middle East particularly in Iran.

Oil prices are in a near constant state of flux due to supply chain dynamics and strategic sourcing. On Oct. 23, for example, light sweet crude for December delivery fell to $66.43 a barrel, The Wall Street Journal reported. Down 4.2 percent from the previous day, the dip represented the largest one-day loss since July. On the month, crude oil prices are down 13 percent from its high point in October, due primarily to questions about the degree to which demand will curve in 2019 should economic output weaken as is expected.

What isn't expected to diminish is U.S. oil production. To the contrary, the EIA fully anticipates the U.S. to remain at the top of the crude oil development class through 2019, well ahead of Russia and Saudi Arabia, according to CNN.
It isn’t uncommon to meet with a client only to hear just how well they have spend under control. Telecom and IT spend? Got it covered. Marketing agencies? Just taken care of. These are three common examples, but not the only ones. It sometimes doesn't matter which category gets mentioned – the answer often boils down to one case-closing assessment: Our team has done due diligence and that spend is under management, nice and clean and tidy.

Only it isn’t. Not always.

That cover on our telecom spend gets blown right off when we ask the follow-up question, “when was the last time you went to market?” Most common answer? Somewhere between three years and never. The same holds true for Marketing agencies. Enough time may have lapsed that multiple brand-wide strategies have come and gone without even searching for the agency best suited to see them through (perhaps that’s why those strategies keep coming and going). I've written before about elevating suppliers to strategic partners, something Procurement pros sometimes ignore to our detriment.

Don’t get me wrong, I’m OK with all this. If all that spend really was well under management, then I’d be out of a job. However, considering what an important metric spend under management is (or at least is touted as), I think we should take some time to step back and consider: How well are we really managing our spend?

Spend Under Management Defined
To figure out what’s going wrong, we need to put a definition behind the term. This need, in and of itself, should start to clue us into the problem we collectively face – a lot of definitions are a bit ambiguous. A general definition is “any spend under active control by Procurement.” This sounds nice and simple. The term “active control” has a nice ring to it, too. The problem is the vague notion of what it means to actively control something. How consistent and ubiquitous does activity need to be to constantly be considered active? How deeply involved in a process must Procurement be before we’re in control?

These terms are incredibly open to interpretation. Yet we all too often take these subjective characteristics and tie them to highly specific, objective sounding goals – “You aren’t a top performing team without at least 85% of spend under management. If you have less than 25% of spend under management, you’re in trouble!” Toss me out to sea if you wish, but throw me a flotation device!

Worry not, for that’s exactly what I intend to do.

An Actionable Definition to Spend Under Management
I prefer definitions that include a call to action. In this case, there are four calls to action that I think define when spend really is under management. To that end, let’s consider spend to be under management when:

  • It has been properly sourced. Procurement has gone to market recently to review the supplier landscape.
  • It is covered by the terms of a contract. Once sourced, all pricing, terms, and SLAs are codified in an agreement.
  • It is regularly audited. Procurement actively tracks purchases against pricing and SLA agreements.
  • It is analyzed. Within the context of our organization, suppliers are reviewed to ensure they support and advance our goals.

These are the elements of our life-saving flotation device.

To begin with, I don’t believe any spend can be considered “under management” if we haven’t recently gone to market to test our suppliers against their competitors. We simply don’t know what we don’t know, minimally in terms of competitive pricing. Again, price is only one key element. The solution we have in place today may not be the best possible solution. Certainly the solution from several years back won’t be as good as a more recent one… especially true in the IT and telecom world. You should consider at least some of your suppliers as partners who can bring fresh solutions to you in order to build and improve your organization beyond simple cost reduction.

After we’ve confirmed our supplier is best-in-class and price competitive, we want to get that in writing. I’ve seen companies grow frustrated and resentful of supplier relationships held together through years of unwritten agreements. They’re often surprised when these suppliers start missing time lines or delivering a lower quality product than at the beginning of the relationship. If there are service level terms that are important to us, they need to be codified in an SLA. Otherwise, there may be no clear foundation for improving a supplier who is slipping. What is the minimum level of service you should expect? If a supplier drops below that level, what recourse do you have? What penalties does the supplier face, and how long do they have to fix an issue before those penalties are incurred? You aren’t likely to find clear cut answers unless you have them in an agreement.

The third point ties in with the establishment of these SLAs. It’s one thing to know you have an established, executed agreement. It is another to claim with any certainty that your agreement is being followed. I’ve seen organizations burned on both sides of this one – externally, suppliers will slip and start missing service level goals if not held to task while, internally, buyers may ignore competitively priced on-contract items in favor of pricier purchases from a second, unmanaged supplier. The best written agreement counts for nothing if either or both sides don’t abide by it.

We’ve reached a point by now where we’re keeping the trains running efficiently. That said, we need to keep in mind that our point of origin (our sourcing events and resulting mix of pricing and SLAs) are based on a single snapshot in time. What was “right” for our organizations yesterday may not fit where our organizations will be tomorrow. As a simple example, if our spend with a supplier increases dramatically year over year, then we may command more leverage to lower pricing than we had when we first went to market. I see this with acquisitions – an organization’s spend doubles or more and moves into big fish territory, yet they haven’t negotiated with an incumbent vendor since the early days of being small fry. This issue goes beyond costs. Simply put, your organization and its goals may outgrow an incumbent relationship or, on the other side, that incumbent’s business may shift away from the offerings that you rely on them for. In either case, we need to evaluate how a supplier fits into our overarching strategy months or years after the ink dries on our contract.

Rinse and Repeat
The final mistake is to misinterpret these activities as occurring in a straight line. Make no mistake, this needs to be a cyclical process. Although the length of time will vary from category to category and product to product, Procurement is never done with these phases.

We need to cap any review of our supplier relationships with a single question: Kill switch style, “can we think of any reasons not to go back out to market… right now?” At the end of the day, if we can’t identify valid reasons the cycle shouldn’t start again, odds are good that it is time to go back out and reevaluate how our incumbents stack up against any new, hungry competitors in the market.

Retailers expect a flurry of buying activity during holidays

There's no season quite like the holidays for retailers, the period in which earnings losses on the year can turn into profits, given the pace at which customers file through store doors between Thanksgiving and Christmas. Due predominantly to a robust economy, purchase activity is expected to intensify once again in the coming weeks, necessitating stellar supplier quality management to keep store shelves stocked.
"Holiday sales could reach over $720 billion for retailers."

Not including car and restaurant sales, the holiday buying blitz is forecast to produce receipt totals of between $717 billion and $720.9 billion for retailers, both brick-and-mortar as well as e-commerce. That's according to newly released estimates from the National Retail Federation.

NRF President and CEO Matthew Shay said this earnings range is indicative of how the industry is performing as a whole, despite closures affecting major department store retailers such as Toys "R" Us and Sears, both recently filing for bankruptcy protection. Tariffs on imported goods have also threatened the supply chain.

"Thanks to a healthy economy and strong consumer confidence, we believe that this holiday season will continue to reflect the growth we've seen over the past year," Shay explained. "While there is concern about the impacts of an escalating trade war, we are optimistic that the pace of economic activity will continue to increase through the end of the year."

Extra day for shopping
While customers can conceivably start their Christmas shopping at any time, it's the day after Thanksgiving - Black Friday - through Dec. 24 that retailers and factories circle on their calendars, needing to bring their "A" games to achieve operational excellence. They'll have an additional day to deliver on their retail procurement promises, as the fourth Thursday in November this year is Nov. 22. Although it may only be 24 hours earlier than 2017, an extra day can make all the difference in the world in terms of earnings.

Big box and small business owners have a lot to live up to, however, as holiday sales have risen annually for 10 straight years, from $501.5 billion in 2008 to nearly $688 billion in 2017, according to the NRF's analysis.

NRF Chief Economist Jack Kleinhenz said he is optimistic the streak will reach 11 years, given the economy's growth and consumer confidence levels at almost 20-year highs.

"With this year's forecast, we continue to see strong momentum from consumers as they do the heavy lifting in supporting our economy," Kleinhenz stated. "The combination of increased job creation, improved wages, tamed inflation and an increase in net worth all provide the capacity and the confidence to spend."

How to keep supply chain on track
These encouraging predictions are largely for naught, however, when the distribution and production supply chains are out of sorts.

A simple way to avoid worst-case scenarios derives from connecting with multiple carriers, advised Dan Clark, president of transportation management system solutions firm Kuebix. Speaking to Material Handling & Logistics, Clark noted given the thousands of carriers out there, it only makes sense from a cost management perspective to price and compare rates. Online tools help to make this possible. In addition to what carriers charge, distribution teams should also be mindful of when goods will be delivered.

Additionally, Clark recommended utilizing internal integration systems, such as enterprise resource planning software, with transportation management platforms. This makes the procurement process more seamless by eliminating steps that used to be par for the course but are no longer, such as paperwork and administrative annoyances.

As for what stores will need to be operating at their level best over the holidays, a case can be made for food and beverage operations as well as electronics retailers, at least if history is any guide. Indeed, holiday sales reached $128 billion and 122 billion, respectively, in 2017, the NRF reported.

Ride-share giant Uber may have inadvertently unveiled ambitious plans for the future of UberEats. The Wall Street Journal reports that a job posting (since removed) on the San Francisco company's website makes their hopes for drone-based food delivery clear.

The open position called for an operations executive capable of making delivery drones viable as soon as next year and putting them into practice across numerous test markets by 2021. According to the listing, this executive will "enable safe, legal, efficient, and scalable flight operations." It refers to the evolving project as UberExpress. The company has, for some time, used this name internally when discussing the drone-based extension of its UberEats delivery service.

The listing was taken down following questions from the Journal. A spokesperson for Uber replied by suggesting the listing "does not fully reflect [the] program, which is still in its early stages.

Though Uber's response casts doubt on any particular timeline, it fits the forward-looking narrative presented by CEO Dara Khosrowshahi back in May. In an on-stage interview with Bloomberg, Khoshrowshahi joked, "we need flying burgers." Adopting a more serious tone, he expressed his hopes for the company's evolving service offering. "Uber can't just be about cars," he said. Rather, "It has to be about mobility." He went on to suggest that food deliveries in as little as five minutes would soon become a reality for Uber's customers.

UberEats has already proven itself a decidedly big win for the scandal-prone organization. The fastest-growing meal delivery service in the country, it has expanded to several hundred cities since 2014. With its sights (potentially) set on a 2019 IPO, Uber has reported a valuation of $120 billion. UberEats alone accounts for around $20 billion of that figure.

However aggressively they pursue drone-based deliveries, Uber still faces a number of what the Journal calls "technical challenges and regulatory hurdles." For example, the Federal Aviation Administration, will need to formally develop rules for drones flying over occupied areas and out of their operator's line of sight. Federal Aviation Administration-backed tests over the last few months have seen drones surpass both of these crucial milestones. Industry observers, however, do not expect any new regulations until Q1 of 2019 at the earliest.

Amazon, among Uber's chief competitors in the race for delivery drones, has seen its fair share of setbacks. Their struggles provide a case study in the dangers of inflated hype. Though CEO Jeff Bezos predicted delivery drones were just a half-decade away back in 2013, his company was recently shut out of the aforementioned test-flight program. Uber - alongside Google, Microsoft, Qualcomm, and six other organizations - made the cut.

By next year, consumers should know if Khoshrowshahi can see the future any more clearly than Bezos. Within three, they'll know if the company that disrupted transportation can do the same for food and beverage delivery.

We've all been there. Stuck working under a manager who swings a big stick and boasts an even bigger temper. Shaking in our boots from 9 to 5. Yes, sometimes our bosses seem to take a perverse thrill in reminding their underlings what's what.

It's not hard to see why someone in a position of power might get a kick out of this behavior. In all likelihood, they probably really believe it works. After all, what's the most frequently quoted advice on leadership? You guessed it, "It is better to be feared than to be loved."

Machiavelli's 'best practice' has certainly stood the test of time. Politicians and business leaders alike love to trot it out whenever they need to justify an unpopular, unscrupulous move. Anyone who's ever encountered such a leader, however, knows this 'wisdom' is far from wise.

1. Fear Distracts from What Really Matters

When they're led by fear, employees aren't focused on what's good for the business. They're similarly distracted from the customer experience and even their own professional development. What they're fixated on, instead, is whatever's going to keep them from stepping on toes. Holding on to their job - however much it haunts their dreams - becomes their sole concern. This could mean neglecting to speak up during a meeting, ignoring opportunities to win new business, and forgoing all semblance of a work-life balance.

2. Fear Poisons Workplace Culture

Employees stuck in fear-based workplaces aren't likely to air their grievances to the higher-ups. They'll take their ill-will home, let it fester, and return to work ready to bombard their peers with negativity and pent-up frustration. When fear permeates the culture, rumors and ceaseless gossip soon follow. Rather than collaborating or working to build a sense of camaraderie, employees focus on who's up, who's down, and who could face the chopping block next.

3. Fear Stifles Creativity

If an employee believes termination or a public dressing-down could come at any moment, the last thing they'll do is rock the boat. By stoking anxiety and leveraging intimidation tactics, fear-based leaders create a workplace in which creativity, innovation, and change are outwardly discouraged. Perhaps the most dangerous fear for any professional is the fear of failure. Those that feel it wind up stuck in survival mode. Carrying out the same low-value processes day after day, they keep their companies stuck in the past - all in the name of appeasing a tyrannical manager.

A fear-based leader is no kind of leader at all. Those that thrive on fear have elected to function as what Masha Malka calls a "commander" rather than a "coach." The author of The One Minute Coach, Malka encourages leaders to abandon scare tactics and instead focus on leading through personal empowerment. Employees working under a fear-hungry commander, she suggests, go about their work because they have to.  Working with a coach, on the other hand, "motivates, inspires, makes an employee feel that he or she wants to complete that task."

It all comes down to respect. Machiavelli's name might not hold such negative connotations if he'd amended his famous quote slightly. A more constructive piece of advice? Why not, "It's better to be respected than to be loved."

Leading with affection as an end-goal can prove as destructive as leading through fear. If a manager's sole purpose in the workplace is winning people over, they'll likely see performance suffer as team members start to walk all over them. Strive to show and gain respect, however, and they'll foster a constructive environment. Employees won't fear failure, but they'll do everything they can to succeed and earn the respect of a respectful, effective manager.

With formal origins dating back to the 1930s, continuous improvement or CI has been around for almost 90 years now. The story began with Sakichi Toyoda, founder of Toyota, who manufactured automatic looms at the time. Sakichi began making small, continuous improvements adding up to major benefits for Toyota. By the 1950s, Toyota implemented quality circles leading to the development of Toyota’s unique, Toyota Production System, that focused on continuous improvement within quality, technology, processes, company culture, productivity, safety, and leadership. He claimed their CI efforts would result in faster delivery, lower costs, and greater customer satisfaction—and they did! In the 1980s, Masaaki Imai introduced the concepts of CI to the western world. His book, Kaizen: The Key to Japan’s Competitive Success, became a world-wide phenomenon. At the philosophy’s core, the primary objectives of CI are to identify and eliminate “muda” (waste) and “kaizen” (literally translating to “change good”), improve/standardize processes by re-engineering work flows thus making a task simpler, easier to perform, while accommodating demands, increasing speed and efficiency, improving product quality, and maintaining a safe work environment and excellent company culture. 

Though there is a plethora of information for organizations to learn about CI and its techniques, professionals are still struggling to grasp the concept of CI and its benefits. What’s even worse is that there have been several preconceived notions or myths about CI in the industry that’s affecting organizations to shy away from the initiative. So, here I am today, busting those myths for you!

“Continuous Improvement is only for manufacturing organizations”—No way!
You don’t have to implement CI methodology word for word. It’s not a crime to tailor CI techniques to your organization. Many professionals assume CI has a rigid methodology that doesn’t make sense for their organization. While some Lean Six Sigma and quality techniques do make more sense in a manufacturing environment, that doesn’t mean they can’t be customized for transactional processes. We need to begin to make a culture shift about CI and think about continuous improvement in a more subtle, flexible approach that can be adapted in any environment.

“Management does not understand/support Continuous Improvement” – Unfortunately, sometimes…
Management teams typically tend to support/respect CI initiatives in public. Why? Because it paints a pretty picture! While some may initially be fired up about implementing CI, many leaders will admit that the support does tend to yo-yo or drop at times. This is because management is generally concerned about the bottom line and day to day business execution. They are typically impatient and unable to see the prize in CI as its benefits aren’t always quick wins. My recommendation? Understand CI and its full range of capabilities and your organization’s current state thoroughly. If you decide to implement CI techniques into your organization, start small and asses how’s it working while keeping in mind that CI will not always be a proponent of instant gratification. With the right knowledge and expertise of implementing and maintaining CI initiatives, any organization can reach a new level of maturity and performance capability.

“My area does not need process improvement” –Are you sure?
Many times both the staff and or leadership team aren’t aware of their own internal issues. This could be for many reasons ranging from: lack/poor communication throughout the organization, KPIs/metrics are not being tracked/reported/analyzed correctly, sheer denial a problem exists, or they are simply operating on a baseless assumption that their organization is performing at its peak. There is also a possibility the staff/leadership is opposed to or uncomfortable with change. They could be accustomed to running the business a certain way and don’t want to change it. Before you rule out a CI initiative, big or small, understand your organization at all levels. I suggest a “Gemba” (direct translation, “the real place”) walk. A gemba walk essentially involves taking the time to watch how a process is done and talking with those who do the job. This will allow you to talk to the people in the front lines of your business. They are such a critical part to any work force and more likely than not, you will discover the pain points in your organization after speaking with them.

Continuous Improvement is only for large organizations” –Nope!
Many professionals assume that CI isn’t needed for small organizations—that it’s too big of an investment for a small or mid-sized company. This assumption is derived from the thinking that companies need to have a designated department/budget to take on these initiatives and that’s not true at all. All organizations may not have the business case for a CI or operational excellence resource/department but that doesn’t mean they can’t implement a CI culture or work stream within their existing teams. Creating a culture of CI will allow your workforce to develop professionally and empower your staff to find efficient solutions to everyday problems. You’ll be surprised at how innovative and strategic a tactical staff can become when you create a conducive environment for them to blossom.

“Continuous Improvement is too expensive” – False!
Effective CI should pay for itself or in the long run yield you benefits far more beneficial than the upfront investment. The goal is to implement activities that are sustainable and can ensure you long term savings while reaching the pinnacle of performance.