May 2019
Less-than-truckload shipping is an infamously complicated spend category. That's due in no small part to the series of factors that help determine. These include cargo weight, pallet count, and - crucially - freight classification.

The National Motor Freight Classification standard includes 18 different type of freight classes. Ranging from high-density, low-value cargo to high-value low-density cargo, the system makes LTL spend management significantly more complicated than a system based on dimensional pricing would.

Want to learn more about the 18 different freight classes? Check out the infographic below.

The delivery war being fought between Amazon and Walmart, both of which recently committed to providing one-day shipping, has been good news for consumers and the United States Postal Service.
However, the continued growth in shipping and packages has not been enough to offset the decline in volume and revenue suffered by other USPS categories, such as first-class mail and marketing mail, according to the agency's most recent quarterly report.

The Postal Service reported total revenue of $17.5 billion for the second quarter of fiscal year 2019, representing essentially no change from the same quarter last year. The agency also reported a $2.1 billion net loss for the quarter, which is $747 million more than the $1.3 billion net loss posted in the same quarter of FY 2018.

Shipping and packaging lone bright spot in negative report

Amid mostly bad news for the agency, USPS took heart in volume for shipping and packaging increasing by 5 million pieces in Q2 FY 2019, or a 0.3% rise over Q2 FY 2018. To accommodate the increasing volume in this area, the Postal Service has extended Sunday service and added non-career employees during peak seasons.

The reported credited shipping and package growth to the agency's "successful efforts to compete in shipping services, including 'last-mile' e-commerce fulfillment markets and Sunday delivery, as well as end-to-end markets." However, the report also noted "the rate of growth is slowing."

USPS is looking for ways to cut costs and raise revenues as fist-class and marketing mail volume decline. USPS is looking for ways to cut costs and raise revenues as fist-class and marketing mail volume decline.
The tepid growth in shipping and package revenue was accompanied by steeper declines in other areas. First-class mail revenue was down by $217 million, or 3.3%, on a volume decline of 576 million pieces compared to the same quarter last year, and marketing mail revenue similarly dropped by $155 million, or 3.9%, down 959 million pieces.

"We continue to face challenges from the ongoing migration of mail to electronic alternatives, and we are legally limited under current law in how we can price our products and streamline our legacy costs," USPS Chief Financial Officer and Executive Vice President Joseph Corbett said in a statement.

Corbett also said that the agency was looking at ways to increase its revenue while cutting expenses, but declined to elaborate on those plans. On a recent finance call, though, USPS CEO and Postmaster General Megan Brennan said The Postal Regulatory Commission needs to issue its final ruling on the USPS pricing system that began three years ago, and called on the commission to eliminate the price cap that keeps the agency's "ability to generate revenue… constrained by law."

Because so many shippers and third-party logistics providers rely on the United States Postal Service for last-mile deliveries, the government agency's continued financial problems and inability to meet service goals is of significant concern to the supply chain.

May 24, 2019

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

New Whitepaper:
Building an Effective Procurement Organization
Our new white paper series is moving quickly: we're already coming up on our fourth release, Part 4: Tools! Thus far we've covered everything you need to know from People (and purpose), Metrics, and Processes, in order to build your procurement organization to its most efficient and effective state. We've included insights from our experts here at Source One, that have helped countless companies over the years build an effective procurement department. Learn how to inspire your team to purpose, move beyond simple cost-cutting and become a strategic advisor based on the metrics of your procurement team, how to develop the right procurement processes for your organization, and coming up, which tools and technology to leverage--stay tuned for Part 4: Tools!

New Blogs:
How To Select A Procurement Services Provider
Carole Boyle, Vendor Centric, 5/23/2019
If you're a late adapter to the evolving Procurement function, and therefor don't have the internal expertise needed to perform the way you'd like, a Procurement Service Provider (PSP) would be perfect for you. Carole Boyle helps you prepare yourself to find the best PSP for you and your organization's needs. There are certain things to consider before diving in like how are they paid, how supplemental/integral will they be to your organization, whether they rely on off-shore sourcing, and more--Boyle walks you through and gets you in the position to begin these conversations and have a better idea of what you're looking for in your PSP.

Retail companies continue to become casualties of the ongoing trade war between the United States and China, and some of the biggest players in the industry are warning that consumers will be the next victims.

Walmart, the world's largest retailer, recently sounded the alarms in predicting that U.S. shoppers will be forced to contend with higher prices if more tariffs are imposed on imports from China, echoing previous comments made by department store chain Macy's.

"We have mitigation strategies that have been in place for months," Walmart CFO Brett Biggs told Wall Street analysts during a recent earnings call. "But increased tariffs will increase prices for customers."

Macy's CEO Jeff Gennette expressed similar sentiments on a first-quarter earnings call, ominously referring to a proposed fourth tranche of tariffs placed on $300 billion worth of imported Chinese goods as "the big one," and admitting that such an increase "was not contemplated when we provided annual [earnings] guidance."

Furniture was already affected by the third round of tariffs, but the potential fourth tranche would impact home goods, shoes, clothing and accessories, cutting closer to the heart of Macy's product portfolio.

"Looking at all those categories and those brands that are included, it is hard to do the math to find a path that gets you to a place where you don't have a customer impact," said Gennette.

Walmart has been publicly critical of the trade war for many months now.Walmart has been publicly critical of the trade war for many months now.
In September, Walmart warned the White House that further tariffs would raise prices on products ranging from shampoo to bicycles to food, according to CBS News. The company also predicted that in addition to customers paying more, the tariffs had the potential to reduce profits for suppliers, lower retail margins or even force consumers to buy fewer goods or forego purchases entirely.

Macy's potentially can exercise more control over critical decisions, notes Supply Chain Dive, since approximately 20% of the company's affected products are private label brands. The American department store chain has for years been attempting to move production of these goods out of China, but according to Gennette, the People's Republic is "still an important piece of our overall mix." Macy's has also been consolidating business in an effort to reduce the number of manufacturers it must work with, giving the company greater negotiating power, which smaller retailers likely lack.

In fact, although large chains like Walmart and Macy's have the biggest platforms for decrying these tariffs, it is the smaller retailers that will have less capacity for supply chain adjustments.

"Tariffs can mean lower wages, fewer employees, deferred investments and higher prices for consumers," the National Retail Federation complained in a statement earlier this month. "Small businesses are particularly vulnerable, since they don't have the resources and flexibility to quickly switch suppliers."

Artificial intelligence is now standard operating procedure in virtually every aspect of life, particularly within the consumer product and service space. In fact, according to Gallup, 85% of Americans regularly use equipment, devices or technology with at least some AI elements. Some have decried this new normal as a threat to individuals' gainful employment, the theory being that they could be replaced by the rise of the machines.

But the developers of a new restaurant reservation app are determined to show the naysayers why they're wrong.

As reported by Forbes, the app is called Allset, a touch-and-go mobile system that enables customers to not only reserve tables at more than 2,000 participating restaurants throughout the U.S., but also order and pay for the dine-in meal.

Stas Matviyenko, Allset CEO, told Forbes that the app is ideal for diners who are pressed for time or simply want to make the transaction process as seamless and straightforward as possible. It also serves as an assist to restaurateurs and their employees - particularly hosts and hostesses - when business picks up on weekends.

"We help busy diners save time and help restaurants provide quick service to their customers, and this way gain their loyalty," Matviyenko explained.
"Two-thirds of Americans view the restaurant industry positively."

Restaurant industry highly regarded
Similar to other industries, the restaurant sector is a customer satisfaction-driven business, as the better the food and service - assuming it's consistent - the more likely it is that diners will return in perpetuity. For the most part, eateries are doing fairly well in this respect, with two-thirds of Americans in a Gallup poll viewing the restaurant industry positively, tied with computers as the top rated sector.

But lengthy wait times and sticker shock - when diners receive their bills following a meal - can be tough to swallow, part of the reason why 7% of Americans view the industry in a negative light. Matviyenko says the app's AI and machine learning capabilities may help to resolve foodies' frustrations.

"For example, we analyze peak hours and capacity at restaurants to decide if we should send more or fewer orders," Matviyenko added. "Also, AI helps us identify profiles of potential free credit abusers and block them automatically."

He further stated that since the app is compatible with most point-of-sale systems, most restaurants won't have any issues with integration. In short, AI provides the means through which restaurateurs can optimize their supply chain, increasing foot traffic without creating unnecessary delays.

Few anticipate losing job to robotics
Will the rise of AI lead to net job losses? Americans seems to think so, with 73% of them stating as much in a recent Gallup poll. However, few think they'll be among those affected, with just 23% worrying about such a scenario in a separate Gallup survey.

While the mobile app isn't available everywhere just yet, the 2,000 participating restaurants are located in 11 cities, including Boston, Seattle, Los Angeles, Houston, Las Vegas, Chicago, New York and San Francisco, Forbes reported. Miami is believed to be the next metropolitan area where Allset will go live.

The popular clothing chain Old Navy is separating from its parent company Gap, and the parting of ways will mean a splitting of supply chains, as well.

Founded in San Francisco in 1969, Gap has since grown to become the largest specialty retailer in the United States, and today operates six primary divisions: the namesake Gap, Banana Republic, Intermix, Hill City, Athleta and Old Navy. The latter brand, which emphasizes affordable yet fashionable clothing for all ages, has outgrown the others in recent years, and in late February, Gap announced that it intended to spin off Old Navy as its own separate, publicly traded entity.

The separation will be finalized by some point in 2020. Until a new name is announced, the remaining five divisions will rebrand as "NewCo."

New companies may experience some supply chain separation anxiety

While industry experts seem to view the decision for Old Navy to leave its parent company as one that will ultimately prove mutually beneficial for both companies, some significant growing pains are expected as the newly estranged organizations are forced to split the supply chain.

"We're certainly doing the work to the back-end from a supply chain standpoint," Gap CEO Art Peck said on a fourth quarter 2018 conference call. "There has been an accelerating divergence between the businesses with the path for Old Navy and the path for other businesses, and that's also true on the backend with our vendors, where there is more alignment with Old Navy and less overlap with the other brands."

Peck also maintained confidence the move would "unlock significant value creation potential," yet also admitted there were "a lot of questions we can't answer right now."

Old Navy's responsive supply chain has given it an edge over other clothing companies. Old Navy's responsive supply chain has given it an edge over other clothing companies.
Simon Croom, academic director of the Master's in Supply Chain Management program at the University of San Diego, told Supply Chain Dive that Old Navy has enjoyed far more success with a responsive supply chain than Gap has in recent years. While the traditional model for apparel companies is to predict what fashions will be stylish in eight months' time, place orders in countries with cheap labor and then deliver product, Old Navy moves faster than the competition by spending less time on the development cycle, getting apparel in store more quickly and then updating on the next round.

"It makes sense to split out the supply chain operations," Croom said of Gap and Old Navy. "They basically had two different supply chain environments and were trying to respond to those with one approach."

However, there are many potential pitfalls when it comes to breaking up such a large supply chain, particularly when it comes to supplier relationships. It's likely that once the separation occurs, there will be some suppliers that only want to continue dealing with one or the other organization, leading to severed supplier relationships and cancelation clauses. In addition to new suppliers, one or both companies may also be forced to find need to find new logistics and transportation providers, new lanes and new routes.

Then there is also the question of what to do with Gap's current supply chain teams. The company could split them in half, or hire new talent to handle the new company, but either approach carries its own unique risks.

"Supply chains are really complex things that we think we may have a handle on, but there's always some unanticipated risk we didn't account for," warned Shay Scott, Executive Director of the Global Supply Chain Institute at the Haslam College of Business at the University of Tennessee, who was interviewed by Supply Chain Dive.

As an organization grows it will often have common business functions that sit in many different operating units. For instance, it might have multiple teams that handle business analytics across the organization. If these individuals are siloed then this will invariably lead to using different technologies and methodologies being used across the organization.

What is a center of excellence?

center of excellence (COE) is a team, a shared facility, or an entity that provides leadership, best practices, research, support, and/or training for a focus area. The focus area might be a technology such as Python, a business concept such as data analytics, a skill such as data visualization, or a broad area of a study such as spend analysis. Typically, leaders of an organization are responsible for the destination and managers are focused on the execution. A COE is responsible for discovering paths and improving existing ones that connect these things in the most efficient and effective manner possible. In their book Management of Portfolios, Stephen Jenner and Craig Kilford state that a COE can be viewed as a coordinating function which ensures that change initiates are delivered consistently and well, through standard processes and competent staff.

NOTE: Python is mentioned here because it is a common programming language used for cutting edge procurement analytics.

What does a center of excellence look like?

A typical COE brings together people from different disciplines and provides shared facilities/resources. For instance, you may have the heads of various procurement categories gather in a COE that focuses on implementing and maintaining best-in-class procurement. The responsibilities of this group would then be defined by its organizational objectives. For instance, it might provide training, best practices, and resources across the organization. In conjunction with this effort it would gather the data and learnings from the teams represented which will hopefully lead to a positive feedback loop. The ideal realization of a COE, as defined by Gartner, is that it should be “concentrating existing expertise and resources in a discipline or capability to attain and sustain world-class performance and value.”

What is the value proposition for a center of excellence?

A COE can drive innovation by ensuring that the knowledge gained across the organization through the parallel evolution of skills and capabilities (or the acquisition of these through M&A) is shared. Its important to note that a COE must be transparent and anchored in both the quantitative metrics of the business as well as the qualitative evolution of capabilities. Transparency and consistency will ultimately encourage members within the organization to measure and experiment together which will in turn accelerate the pace with which innovation and adoption occurs. Most importantly, a COE ensures that the organization is aligned around common business goals rather than individual departmental metrics.

What does a center of excellence look like as it relates to procurement and supply chain?

Typically the primary purpose of a procurement/supply chain COE is integration. Responsibilities may include designing, analyzing, implementing and monitoring new ways of doing business. This is accomplished through some combination of policy, process, technology, analytics/measurement and change management. Their focus is almost certainly on unlocking and sustaining potential rather than day-to-day tactical execution. If you are interested in understanding what a best-in-class procurement COE looks like, or deploying one within your organization, please contact Source One's subject matter expert Jennifer Ulrich to explore the topic further.

When embarking on a cost reduction initiative, one of the first and most essential steps to take is collecting and analyzing spend data. In a perfect world, organizations would keep strong records and freely submit their historical data. Obviously, however, things rarely go so smoothly.

In reality, all companies will at least keep track of their receipts. This means the diligent professional can determine an organization’s spend practices by requesting data from suppliers.

Data requests are sometimes easier said than done though. They'll typically result in one of three outcomes.

1. Acceptance – Where suppliers agree to pull the data for you, send it along, and go on to conduct business as usual.

2. Avoidance – Where suppliers agree to pull data for you, but then neglect to follow through. There are a number of reasons a supplier might drag their feet. Maybe pulling the data is difficult and time consuming, or maybe they've simply let it slide down their list of priorities.

3. Pushback – Where suppliers don’t agree to your request. Though an infrequent outcome, when it does arise, typically it’s because they may not know how to pull the data, they had trouble pulling the data and gave up, the relationship between you/your client and the supplier is bad, their pricing is not competitive (and they know), or - in a worst case scenario - the data simply might not exist.

In the latter two scenarios, here are a few tactics you can employ to cure a data collection headache:

Provide a template: Giving the supplier a template that details exactly what you are looking for will help strengthen the communication process. It will cut out any unnecessary back and forth and provide the basis for an informative discussion.

Provide a timeline: After submitting data requests to suppliers, you should provide them with a clear deadline so they can prioritize the request appropriately. Make sure to follow-up as well. In addition to holding the supplier accountable, it will remind them that you're serious about the request.

Work with internal users: Sometimes working with internal end users can be beneficial for finding a new contact within the organization who can help you. This could entail requesting a new primary sales rep or identifying a new point of contact from the same business unit as your initial contact.

Go to a higher level manager: If a supplier is difficult to work with, sometimes the best case scenario is to work around them by going to the next person up on the totem pole. Since this can cause friction with the original supplier contact, make sure you use this as a last-resort approach.

Pull the competitor card: Another workaround for difficult suppliers is to let them know that you’re considering other options. Inform them that their competitor would provide you with the data you are searching for, or that you may not renew the supplier contract due to the difficulties of working with the,. Since these conversations can instigate friction, it is best to reserve these tactics as another last-resort approach.

Ultimately, it is important to understand your supplier’s behavior before formulating your response. By understanding why they may choose to be easy or difficult to work with, you can tailor your interactions to receive the data you need and find the best path forward.

ICYMIM: May 20, 2019

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.

Best Procurement Solution Persona? Configurator!
Pierre Mitchell, Spend Matters, 5/20/2019
Admitting he believes comparing Procurement Solution Personas is like comparing a an introvert and an extrovert: each has its purpose and one is not necessarily better than the other, unless put in a particular context, Pierre Mitchell poses a new question: "which type of solution is generally most appealing to the most buying personas," to which he answers, "configurator."

Human Ecosystems: How to Achieve Breakthrough Performance in Partner Management
Will Harper, Future of Sourcing, 5/17/2019
They key to a successful firm, according to Will Harper, is a leader or leadership style that can successfully manage the interconnected web of relationships that the firm has, both internal and external. Harper displays diagrams of Integrated versus Technical Leadership styles as they related to human technical factors and goes into detail about the "Human Ecosystem," and the four steps to implement active management in your organization. Refresh your views on leadership and visit the article for more.

Top 6 Benefits Of Local Sourcing
Team Thomas, ThomasNet, 5/13/2019
It's so popular to go global at this day and age, however, Thomas Net takes the liberty to highlight six of the main reasons procurement professionals might rather source locally from flexibility, reduced costs/more revenue, and being more eco-friendly. Take a look and maybe you'll rethink the next sourcing strategy.

Intern: Nicole O'Connell

Happy Monday! We've got a treat for you this week. We spend our Mentorship Mondays hoping to reach young aspiring procurement professionals to help guide them to the right path and choices. One of our own Analyst Interns, Nicole O'Connell as shared a bit of her own experience with us and what is helping her as she arrives at the inevitable crossroads of life, post graduation.

Nicole O'Connell is graduating from St. Joeseph's University as an Accounting and Business Intelligence and Analytics double major (pause for applause), and has decided to begin her professional career with us, here at Source One, a Corcentric company, as a Data Analyst Intern.

At the start of her education Nicole was sold on becoming an accountant, however, in her studies she developed an interest in the data anylitcs and consulting aspects of Business Intelligence and Analytics and decided to make that her second major. As O'Connell faces graduation she admits that she is at a bit of a crossroads between the two and is using this first position to help her make that big decision as to what path she'll take. When asked what she has learned thus far on her journey as an early professional, she responds:

 "Everyone tells you to ask questions, and they're right. You really don't know until you ask. Whether it's for advice, about a project, or even why someone decided to transition into or out of a field or position--you can learn from someone else's experiences, even if you don't have a ton for yourself already."

Finally, as these posts are meant to motivate and guide are younger professionals, Nicole would like to leave a message to her peers at the brink of their next chapters:

"Do what you enjoy! Don't be intimidated by that overwhelming feeling. Be confident that you know what's best for you."

From Cracker Barrel to Olive Garden, catering is a service that more and more restaurant chains are providing for their customer base, one that requires a well-maintained supply chain to pull off successfully. And it appears as though it was a fruitful amenity for the companies that offered it in 2018.

As reported by Restaurant Dive, the rate at which dining establishments participated in catering last year jumped 6%, Technomic principal Melissa Wilson noted at a recently held conference. Growth was so impressive, in fact, that it outpaced the industry as a whole by more than 50%.

"As brands and independent operators look for ways to increase same-store sales or generate incremental revenue, catering is definitely a conduit," Wilson explained, according to Restaurant Dive.

The uptick in catering doesn't appear to be a flash in the pan, either. To the contrary, 90% of restaurateurs consider it to be an important component to their business structure, based on a report that was released at the conference held April 30.

Although catering as a service is expected to level off somewhat in 2019, sales as a whole are projected to intensify potentially reaching $863 billion combined by year end, according to estimates from the National Restaurant Association. Supply chain optimization may help make this projection a reality.
Like Procurement, Accounts Payable has seen its reputation and influence improve considerably over the last several years. More and more, executives are recognizing that AP has the potential to serve as an essential strategic asset.

In their recent eBook, Ardent Partners and Corcentric report that 52% of organizations consider their AP function "very" or "exceptionally" important to their operations. That doesn't mean it's smooth sailing for Accounts Payable. In Ardent Partners' Accounts Payable Metrics that Matter in 2019, the research firm goes on to identify a number of challenges still facing the function.

Check out a summary below.

May 17, 2019

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

New Whitepaper:
Building an Effective Procurement Organization
Discover how Source One has helped countless companies over the years build an effective procurement organization with our series including a comprehensive list of the methodologies our experts have used time and time again. Explore the insights from our experts that will help you optimize your procurement department. Topics covered thus far include People, Metrics, and Processes in the first three parts of our whitepaper. Learn how to inspire your team to purpose, move beyond simple cost-cutting and become a strategic advisor based on the metrics of your procurement team, and how to develop the right procurement processes for your organization. Stay tuned for Part 4: Tools!

New Blogs:
Every Link is Vital: Avoid Age Discrimination in Supply Chain
Bennett Glace, EBN, 5/15/2019
Editorial lead of Strategic Sourceror, Bennett Glace, highlights another complaint of age discrimination by IBM and offers a new solution to the age gap in Procurement. Other than a complete overhaul, Glace suggests a well organized hand-off. There's no denying the issue of executing digital tranformation with employees that are "stuck in their ways," or fresh faces that are unable to innovate with outdated processes and a lack of veteraned support. Glace argues that "organizations cannot afford to let years of knowledge and experience walk out the door," but to rather leverage these veterans to guide the new talent as they develop skills and eventually mature into leadership roles. Visit the article for more on Glace's compelling arguement and IBM's latest age discrimination scandal.

To Effectively Prepare for MRO Unpredictability, Develop a "Market Basket" Approach
Mike Croasdale, 5/15/2019
Maintenance Repair and Operations (MRO) has an unpredictable nature, and Mike Croasdale presents an approach that can help us prepare for and hopefully avoid some of those sourcing challenges that could arise. A Market Basket approach ofen employs the Pareto prinicple, otherwise known as the 80/20 rule, and can help analyze the competitiveness of the supplybase and otherwise prepare for you for what may come. Croasdale explains the 80/20 rule and how it will be of help in preparation for an unexpected turn in the MRO process. Visit the article so you can better be prepared for your next MRO assignment.

How Do I Develop A Marketing RFP?
Megan Connell, Thomas Net, 5/16/2019
Marketing Requests for Proposals are often complex and Megan Connell recognizes the importance in the exchange of information and goes over some detailed tips to get you writing the perfect Markeitng RFP. Beginning with your company information and background, Connell explains why it is important to include information about your company in addition to the research the agencies conduct. Connell continues with what else to include from the background of the sourcing event, the scope of the work you want done, how to evaluate the agencies capabilities, requirements for pitches if presentations are necessary, questionnaires, and finally, pricing. Visit this article to get all the details on these categories for drafting your next Marketing RFP!

Procurement and Supply Management professionals recognize that their business unit has the potential to make a game-changing impact. How could they not? Blogs like the Strategic Sourceror have emphatically made this argument for more than a decade now. Sometimes, however, other business units feel differently. 

Finance, Marketing, IT, and executive leadership aren't likely to take Procurement at its word. Simply reminding them that Procurement can (and has) made an impact won't inspire them to collaborate with the function or place their confidence in it. Procurement needs to make a more persuasive argument, one that's supported by accurate, compelling data.

A dashboard might tell a story, but a data report delivered directly to stakeholders has the potential to do much more. Presented effectively, it could inspire stakeholders to look at Procurement differently and join them in composing the story's next chapter. Looking to make an impact and foster a new sense of collaboration? Check out some best (and worst) practices for presenting Procurement's data.

Do: Speak Your Audience's Language

It's no secret that Procurement sometimes gets a bad rap. The function has long contended with a reputation for taking a 'my way or the highway' stance and pursuing cost savings at the expense of service levels and product quality. These misconceptions often come down to misaligned priorities. While a Procurement professional's ears might perk up at the word savings, someone from Marketing's hackles might rise instead.

Before putting a together a report, Procurement needs to make an effort to learn which metrics are mostly likely to inspire its audience. It's never enough to simply point to data. Procurement needs to present its findings or results in such a way that other stakeholders are eager to join them as partners. Ironically enough, this could mean tossing out the metrics that Procurement values most.

Don't: Overdo It

There's a fine line between a presentation that's eye-catching and a presentation that's an eyesore. With all the fancy tools out there, it can get tempting to load a presentation with colors and effects. Resist the urge. A presentation like this might be fun to make, but it'll prove exhausting to sit through. Instead of retaining information on Procurement's recent successes, your audience will likely find themselves shielding their eyes or looking at the clock.

Take the same approach to the data itself. Too many numbers is often as bad as too many colors and effects. If you're doubtful of the impact a chart or graph will make, don't hesitate to leave it out. Still unsure? You can always conduct a test presentation with a few colleagues to ensure your findings have the desired effect.

Do: Be Prepared to Back Up Your Findings

Any good report or presentation will lend itself to a discussion. Without inviting conflict, Procurement should come prepared to address push-back from stakeholders and support its claims. After all, you probably wouldn't have to present this data if everyone was already on board.
Addressing questions and concerns with honest, insightful answers will help build the sense of trust and mutual investment that Procurement needs to meet its objectives.

Procurement loves to talk about how important it is to build contingency plans and consider every possible risk factor. This isn't just something to do before going to market. The function should exercise the same care and take the same precautions before delivering a report on its performance.

Don't: Expect too Much

In an ideal world, Procurement's data would effectively speak for itself. The function would rely on simple charts and graphs and enjoy instant recognition from its audience. We don't live in an ideal world. Sometimes, more complex representations are unavoidable and stakeholders won't quickly connect the dots.

You can't afford to leave your audience to draw connections or conclusions on their own. Without insulting their intelligence, be prepared to do some explaining (maybe more explaining than you'd like to). When putting together reports and delivering presentations, try to reach the perfect balance between showing and telling.

What metrics should Procurement track? Why? Learn more about effective tracking and reporting in Part 2 of Source One's latest whitepaper series. Titled Building an Effective Procurement Organization: Metrics, it's got the insights your team needs to run at maximum efficiency and generate buy-in across the organization. Download it today
How to Prepare for a Procurement Internship
Like many students this time of year, you're probably getting ready to start your summer internship. If you're headed into a role within Procurement, chances are this is an entirely new experience for you. Let's face it, Procurement is a very niche function. It's not exactly glamorized like positions within Marketing or Information Technology, but Supply Management is a unique business function that collaborates with a variety of business units in a wide range of categories, and has the potential to make a major impact within their organizations.  

As a Procurement Consulting firm, our analysts and consultants are constantly solving interesting supply base challenges for our clients- from sourcing unique products and services, supporting companies in their reaching sustainability goals, to re-shoring entire supply chain operations. Everyday can be something entirely different. So, how does one prepare for an internship experience in a field that's both broad and specific like Procurement? As with any internship experience, come to the role ready to learn and absorb as much as possible. An open mind will be helpful in hitting the ground running and getting the most value from your experience. 

As you're gearing up for your Procurement internship, here are a couple of ways to prepare: 

1. Ask the right questions during the interview: 

Just as the interview is a way for the employer to vet candidates and their skillsets, it's also an opportunity for you to learn more about your potential internship experience. Be sure to treat the interview process as such by asking the right questions to gauge whether this experience will ultimately help you grow. Consider asking: 
  • What does the day-to-day look like? 
  • What projects will you be supporting? 
  • What skillsets does your potential employer recommend for success?
Use this conversation as a way of learning if the experience is going to support your goal of landing your ideal job when you graduate. 

2. Check out Industry Publications: 

Mitigating supply chain risks, managing supplier negotiations, enabling supplier-introduced innovation, there's no shortage of responsibilities for supply management professionals. Luckily, there's also plenty of knowledge sharing happening within the space. Understand different categories and learn procurement best practices by reviewing industry publications: 

3. Familiarize Yourself with Industry Associations: 

Whether you're looking to secure a certification, network with other professionals in your field, or pursue continuous learning opportunities, professional associations are fantastic career development opportunities. While there are costs associated with joining, many of these groups host networking happy hours which are a great way to learn more about their programs and meet other professionals in the space. Procurement and supply chain professionals have a number to choose from, here are a few: 
Check out their calendar of events to see free and/or low cost ways to get involved. Often, they offer discounts to students. Take advantage of these associations to get a better understanding of the profession and the career opportunities. 

Internships are a great way to test the waters of a potential career path, but they're not the only outlet for learning the profession. Take advantage of this time to really immerse yourself in the field, learn more about the career options, and absorb the information necessary to set you up for success. 

Another day, another major announcement from e-commerce giant Amazon. In what will likely come as good news for the Denver economy, the e-retailer said it intends to create 400 new high-tech jobs in the city in various subdivisions under the tech industry umbrella, including hardware engineering, cloud computing, advertising and software.

Additionally, Amazon stated that it's doubling down on its investments in the Mile High City by doubling its tech force in the metro area and opening a new office space in downtown Denver.
Dave Wood, site lead for Amazon Denver's Tech Hub, said that the Denver community has welcomed the company with open arms ever since it arrived in 2016 and couldn't be more thrilled about what the future holds.

"We're excited to continue to grow and invest in the Denver area," Wood explained in a press release. "Our new office will offer our teams the convenience of a downtown location with an array of outdoor adventures just up the road."

While the actual building process has not yet begun, Amazon says the new office space will span approximately 98,000 square feet and be located in the heart of Denver's lower downtown neighborhood.

17 tech development centers in US and Canada
It's nothing short of remarkable the extent to which Amazon has increased development, after beginning as a relatively little-known startup online bookstore in Seattle back in 1994. Twenty-five years later, Amazon operates 17 North American tech development centers - which the company refers to as "Hubs," including the one in downtown Denver.

Colorado Governor Jared Polis said he too is delighted by the investments Amazon has made in the Centennial State, with the expected 400 new high-tech jobs representing just the tip of the iceberg.
"We have a terrific workforce that continues to attract the ideas and businesses that thrive in a knowledge-based economy and we are a great place to do business," Polis exclaimed. "Amazon's current Colorado presence spans from distribution centers to robotics, corporate and operations. It's wonderful to see their continued investment in our community."

Roll out of one-day delivery for Prime members
Now the largest internet company by revenue the world over, Amazon continues to raise the stakes in its bid to grow even further and compete with other multinational retail corporations, such as Target, Walmart and Costco. Its success wouldn't be possible without effective supply chain management and optimization. In what many describe as a game changer, Amazon is doing away with its two-day shipping guarantee for Prime members, and in its stead, promising one-day delivery. The company's massive footprint and rapid installation of distribution centers has helped make this once-unthinkable capability possible. In the past seven years alone, the e-tailer has spent north of $160 billion in development, research and order fulfillment infrastructure.

Alex Valdez, who represents Denver's 5th district in the Colorado House of Representatives, said there's a lot to love about the Mile High City.

"As a growing, thriving tech city, it's no surprise Amazon has chosen to expand their Denver workforce," Valdez intoned. "Our people and quality of life are second to none. We're excited to see more quality tech jobs coming to our great city."

Denver was recently named the third-best city in the country for entrepreneurs by, further evidence of the metro area being an ideal locale for organizational adaptability.

Organizations with facilities spread out across the country often struggle with the concept and/or execution of supplier consolidation.  In many instances, facilities are utilizing identical items at multiple locations while purchasing them from different sources.  Left unaddressed, this lack of cohesion and standardization often creates a negative impact on the bottom line.  The bullet points below will help highlight the benefits of supplier consolidation from both a monetary and operational standpoint:

Savings Opportunity:
The value of savings found within supplier consolidation cannot be stressed enough, especially for companies with a large footprint across the USA.  Let your data do the negotiating for you here – presenting a potential sole supplier with information highlighting your overall company-wide usage from both a quantity and spend standpoint will pave the way for deep category discounts and rebates.  Use this information to your advantage to help secure the best deal possible! 

Ad-Hoc Spend Control:
In today’s world of Amazon Prime and “same-day delivery” many employees at the plant level tend to search Google for their needs and make purchases with their corporate card. Once again, this can prove costly if left unaddressed. Consider on-boarding a supplier capable of implementing a punch-out system, this will restrict facility purchasing to pre-approved sources and help control rogue spend.  In addition, each time an order is placed with your pre-approved supplier that additional spend contributes to the rebate savings referenced earlier.

Consistent Pricing:
Many variables influence how items are priced by suppliers.  Consolidating spend to one supplier within a set category helps limit these through leverage gained via negotiations.  Most importantly, the utilization of one supplier will now eliminate pricing inconsistencies within your organization when the same items are purchased from different suppliers.  Additionally, this price will be competitive in terms of savings due to the additional category discounts built within the supplier contract.

Centralized Account Management: 
Supplier consolidation creates a positive ripple effect with benefits well beyond cost savings.  Other departments within your organization - from Accounting, to safety officers and plant managers - will benefit greatly from this decision.  Accounting will now work with one central group for invoice reconciliation between all locations, as opposed to numerous, disparate suppliers.  At the local level, safety officers and plant managers can work together with a sole supplier to create company-wide safety and fulfillment initiatives for all facilities to follow.  What’s more, the high spend being funneled to the supplier will create greater visibility which will lead to dedicated account managers assigned to your organization to assist with tracking and reporting.

Change from incumbent local suppliers to new sources can be intimidating, but if executed properly implementation and compliance across all facilities can be quite manageable.  Properly vetting a supplier with an account management team capable of properly servicing each facility is vital for the success of this initiative.  Secondly, buy-in at each local facility is important for the overall long-term sustainability.  This will mean maintaining consistent, clear communication. With the right amount of effort, you’ll succeed in building a strong relationship with a capable supplier. Ultimately, the benefits produced through this initiative will be far greater than improvements to your organization’s bottom line.

Source One is introducing a new series of blogs focused on logistics and transportation and covering a variety of themes. This blog will address LTL data collection and how specific data points are used to determine cost.

A common first step in any traditional sourcing exercise is to collect data. Less-than-truckload (LTL) is no different. But it can’t just be data; it needs to be quality data capable of representing the true freight profile of a shipper. LTL transportation is generally perceived as complex compared to other shipping modes.

LTL’s reputation for complexity persists for a number of reasons:
  • Shipping characteristics like cargo weight, pallet count, and freight classification affect pricing.
  • Each shipper is unique. Benchmarking the mode can be challenging because it is not easy to make direct comparisons between different shippers’ operations.
  • There is a tendency to accept LTL for what it is, and not take the time to gain a deeper understanding of its cost drivers. Freight networks are constantly changing and shippers need to keep up with shifting patterns of supply and demand.
Traditionally, LTL shipments are rated according to tariffs. Carriers normally publish tariffs – also known as rate bases – on an annual basis. A tariff is a rate matrix that defines hundred weight (CWT) rates for all classes and weights for all zip code combinations.

When rating an LTL shipment, you need to know the origin and destination zip codes as well as the shipment’s weight and the classification for each product it includes. Classifications, or classes, are published by the NMFC (the National Motor Freight Classification is a standard that provides a comparison of commodities moving in interstate, intrastate and foreign commerce).

What are the 18 Different Types of Freight Class?

The NMFC issues an item number for each commodity. This number is assigned for the purpose of applying class along with governing rules and regulations. There are 18 different classes, ranging from class 50 to class 500.  Classes are based on a number of factors including product density, liability, handling, packaging, value, and stowability. Lower classes are less expensive, representing very dense and/or low-risk freight.  A high class indicates lighter freight that typically takes up more space. The higher the class of the freight, the higher the rate charged.

Until the LTL industry decides to convert to dimensional pricing instead of the classification system, LTL pricing will continue to depend to be based on using the National Motor Freight Classification (NMFC) system.

So, how does a carrier determine what a LTL shipment costs?
  • Origin Zip = 60654
  • Destination Zip = 33140
  • Class = 75
  • Weight = 2000 lbs or 20 CWT
  • Tariff rate for class 75, 2000 lbs = 79.86
  • 20 x 79.86 = $1,597.20 (the full freight rate without discounts)
Rates for the same lane can vary from tariff to tariff.  For example, the tariff published by a regional carrier may reflect better rates on short haul lanes than long haul.  Likewise, a national carrier’s tariff may reflect better rates on long haul lanes than short haul.  Large carriers often use the Czar Lite® tariff because it is a neutral nationwide rate base that does not favor either long or short haul lanes.

LTL carriers offer discounts off of tariffs. These discounts are negotiable, and often correlate directly with the amount of freight volume/revenue tendered to the carrier.  In addition to discounts, minimums are also negotiable. Minimums represent the absolute lowest amount charged per 

The calculation set out above is a basic representation; when determining a line haul rate other factors such as shipping FAK (Freight All Kinds), deficit weight rating, and lane specific strategies, can add layers of complexity.

It is very important to capture the actual class when computing an LTL price. Often shippers are given an FAK cargo designation on invoices, a blanket classification that obscures the actual classes –there may be multiple types of goods involved – and introduces inaccuracies that can have a significant impact on price. The shipper has no way of knowing which specific classes of cargo are being shipped if everything is lumped under the FAK designation.

The most common obstacle to performing accurate LTL analyses, running procurement initiatives, or introducing new carriers, is missing or incomplete data – particularly the data elements that are critical to tariff calculations (such as the actual freight class). If these data elements are captured correctly, all parties involved will avoid having to make flawed assumptions throughout the process.

As a helpful tool, here is a list of the essential data fields required when collecting LTL data:
  • Origin city, state, and zip code
  • Destination city, state, and zip code
  • Shipment date(s)
  • Weights
  • Freight class
  • Historical costs (line haul, accessorials, fuel)
  • Length of haul (mileage)
In conclusion, when working with LTL data, class is king. The ability for a carrier to gain clear insight into an accurate shipping profile is critical for vendor relations and proper pricing.

For retailers, supply chain optimization isn't just important, it's pivotal, a make-or-break task that often entails an entire team devoted to the job's execution. Its with this reality as a backdrop that the nation's second-largest pharmacy store franchise has appointed a new point person to head up the
company's supply chain optimization efforts.

Walgreens recently hired Colin Nelson to the position of global chief supply chain officer, a role that is a first for the wellness products, prescriptions and over-the-counter medicine chain, Supply Chain Dive reported.

Formerly serving as head of industrial operations for Bunge Global, a food processing and agribusiness headquartered in White Plains, New York, Nelson's main responsibility will be end-to-end supply chain optimization, Walgreens told Supply Chain Dive via email. Known as E2E for short, end-to-end supply chain management refers to each component of the chain seamlessly flowing to the next through enhanced interoperability.

Company acquired 1,600-plus Rites Aids in 2018
Walgreens has been in the news lately, as the company recently expanded its footprint in the pharmacy store retail space through the acquisition of over 1,600 Rite Aid locations. Perhaps in light of the chain's expansion, Walgreens has not only increased its hiring of store clerks and associates, but made moves in the front office as well. In a recent earnings call, Walgreens CEO Stefano Pessina said the company made four executive hires earlier this year.

"We are acting quickly to address select areas of operational weakness with a number of senior appointments, choosing new talent with new ideas and new approaches to drive more rapid change in a number of areas of our business," Pessina explained. "We are also strengthening and refocusing our operational management to ensure the increased focus on driving operational excellence."

The newly appointed positions include a global controller and chief accounting officer. A chief digital officer and global chief marketing officer were also announced in early 2019.

As to the company's most recent appointment, that of global chief supply chain officer, a Walgreens spokesperson said the hire will serve as the foundational element to building a single global supply chain leadership team to help further improve day-to-day operations and provide more options for customers, whether in store, drive-thru or online.

Macy's hired supply chain officer in April
Walgreens is only the latest to enhance its focus on supply chain management through personnel moves. In April, Macy's hired its own chief supply chain officer. Dennis Mullahy, who formerly worked as executive vice president of supply chain management and IT at Michaels Stores, is charged with overseeing the product development and transportation process, including direct and indirect procurement, sustainability and supplier diversity.

"Dennis is an exceptional leader with more than 30 years of experience in retail operations and supply chain management," Lawton noted at the time in a press release. "I am confident that he is the right person to lead the newly formed supply chain organization at this pivotal time."

ICYMIM: May 13, 2019

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.

Go Deep or Go Home: A personal essay on my favorite SolutionMap persona
Jason Busch, Spend Matters, 5/13/2019
Spend Matters has identified seven personas in their SolutionsMap, including "Nimble, Deep, Turn-Key, Configurator, CIO Friendly as well as Optimizer for sourcing providers and Global for CWS vendors." Jason Busch defends his choice of Deep for his personal favorite persona group. Busch admittingly notes that the Deep persona is "going in the way of the compact disc," but goes on to explain the importance of this persona, as he sees it. The Deep Pesona is a continuous learner, someone willing to dive deep and push the boundaries for the sake of improvement, and in comparison to the masses yearning "instant gratification," the results speak for themselves, accoridng to Busch. Visit for the details on his argument. 

CRO-to-CRO Video Series: Episode 5 Helps Procurement Organizations Drive Business Value
Tara Berezowsky, Spend Matters, 5/13/2019
The final episode! Michel Janssen and Pierre Mitchell have covered every inch of where digital tranformation is today, over the first four episodes. In the fifth and final episode, chief resarch guru of Everest Group, Michel Janssen, and chief research officer at Spend Matters, Pierre Mitchell, discuss how to drive business value from the innovative ecosystem they've been talking about through getting a deep knowledge of the intelligence and leveraging that infromation. Visit the article to get access to the final video.

The April ISM-New York Report on Business: Lofty Long-term Expectations
Kelly Barner, Buyers Meeting Point, 5/2/2019
Barner gives a report rundown covering Current Business Conditions, Six-Month Outlook, Employment, Quantity of Purchases, Prices Paid, and Revenues of April for New York. She continues with further considerations about the report and what this means for business. Visit her article for more about the April ISM-New York Report and to view the report for yourself.

For Amazon, the year 2013 may as well be an eternity ago. The last several years have seen the eCommerce giant establish a second North American headquarters, offer 1-day free shipping to Prime subscribers, and make its CEO the wealthiest person in modern history.

They've still failed, however, to reach one key milestone. Though Jeff Bezos promised an imminent move to drone-based deliveries back in 2013, the company's ambitious plan as yet to leave the ground.

Here's what we know about the program (and what's still mysterious) more than half a decade later. 

May 10, 2019

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

New Whitepaper:
Building an Effective Procurement Organization
Discover how Source One has helped countless companies over the years build an effective procurement organization with the comprehensive list our experts have pulled together of the methodologies used over time. Explore the insights from our experts as they list tips, tools and best practices to help you optimize your procurement department.
Part I of Building an Effective Procurement Organization is about the people and purpose of your organization, including key considerations for structuring and ultimately inspiring your team to meet the challenges of spend and supply. It's available for download today!
Part II of Building an Effective Procurement Organization is about the utilizing metrics in your procurement operations to move beyond just cost-cutting and into strategic advising for the entire enterprise! Part II on Metrics is also available for download today!
Stay tuned for Part 3 Processes!

New Blogs:
Job Burn Out
Jaisheela Setty, Future of Sourcing, 5/7/2019
Our jobs have the possibility of stressing us out to the point we not only feel it emotionally, but physically as well. Setty describes to us in great detail "Job Burn Out" so we can identify it in ourselves and how it started. She then lists a few solutions to fix this prolonged exhaustion including making use of your vacation days and switching up your routine. Feeling exhausted or on your way? Be sure to visit the article for useful remedies and support.

Supply Chain Management Strategies These Women Used to Rise Up the Ranks
Alexandra Levit, American Express, 4/30/2019
There has been a healthy representation of women Supply Chain leaders, and Alexandra Levit took the time to ask a few of them what they are doing to advance their profession. Jill Keto, CMO of Easy Metrics, speaks about leveraging the interplay of smart analytic tools like Big Data and the Internet of Things. Melanie DiSalvio, founder of virtue + vice, describes her sourcing methodologies from now and before when she managed product development and production for major fashion brands. Visit the article for insights from these and more influential women in Supply Chain Management, find out how you too can rise in the ranks.

Imagine you’re in London and you head to your favorite pub for a Späten. Unfortunately, you find that it’s out of stock. The bar is out of Späten because their shipment is stuck at the border in Dover after being exported from Germany. Most would find this to be a minor annoyance.

Now, imagine you’re a chronically ill person in the same city and you can’t access your medication because a shipment from Aesch, Switzerland is delayed at the border. This carries far more weight.  For someone who suffers from epilepsy, it might be a matter of life and death.   These complications could be a daily reality for many if the United Kingdom departs from the European Union (EU) on October 31, 2019 without a trade agreement deal. Right now, the EU is made up of 28 member states and allows them to trade interchangeably within the EU.

To simplify further, it is the equivalent of a strawberry farm in Georgia sending their crops to a produce wholesaler in Oregon without the need for customs agents to get involved. This type of transaction takes place every day and barely any thought is given to it at all. We just assume our goods will be available when we need them to be. It is also, remarkably the premise that has shaped the UK’s trade economy since the inception of the European Union in 1993.

The logistical complexities associated with the UK’s departure are merely the tip of a supply chain iceberg. Perhaps one of the most enormous problems that has yet to be fully addressed is the process of actually importing pharmaceuticals into the UK.

Long wait times at ports of entry will leave temperature-controlled vaccines susceptible to expiration before ever making it into the country for distribution. According to the UK’s Parliament, the country risks becoming a ‘second tier’ state for pharmaceutical imports (Commons, 2018). This poses a vast public health concern and many are fearing a medication shortage. Some have already reached out to the European Medicines Agency (EMA) for assistance. The EMA was previously headquartered in London, but it was forced to relocate to Amsterdam because of the imminent departure from the EU. This resulted in many employees leaving the agency after refusing to relocate. The agency is diligently attempting to stay operational in its full capacity but has had to abandon key initiatives due to staffing.

So, what exactly will happen in October when the UK finally, officially leaves? Right now – it seems that no one really knows for sure, but the consequences could be costly.