May 2019

President Trump announced last night, via Twitter, that the United States will impose a 5% tariff on all Mexican imports starting June 10th. Charging Mexico with complicity in the "Illegal Immigration problem," the President revealed that the tax will also "gradually increase" until a solution is proposed.

An official statement from the White House soon followed. "We have confidence," it reads,"that Mexico can and will act swiftly to help the United States." It also details the President's plan for increasing tariffs throughout the next several months. They will rise an additional 10% on July 10th, an additional 5% for each of the next three months, and remain at 25% indefinitely until Mexico has "taken action to dramatically reduce or eliminate the number of illegal aliens crossing its territory into the United States."

While the announcement - in both message and medium - is in keeping with Trump's stated policies, the news still comes as something of a surprise.

Over the last several weeks, the new United States, Mexico, Canada Agreement (USMCA) was seemingly approaching ratification. The United States lifted its tariffs on aluminum and steel, Vice President Mike Pence called on Congress to approve USMCA, and both Mexico and Canada's legislatures took similar steps. The agreement was intended to replace NAFTA, but it's future now looks uncertain.

While Acting White House Chief of Staff, Mick Mulvaney, has asserted that new tariffs "are absolutely not linked" to USMCA and its passing, members of Congress on both sides of the aisle disagree. Senator Chuck Grassley, for one, believes that following through on Trump's threats "would seriously jeopardize [its] passage."

The U.S. imported more $346.5 billion dollars worth of Mexican goods last year, more than all but one other country. A 5% tariff on these products would result in more than $17 billion in additional taxes. Automakers, many of whom rely on OEMs that trade with or reside in Mexico, could take a particularly large hit.

In a letter to President Trump, Mexican President Andres Manuel Lopez Obrador expressed his desire to "deepen the dialogue" and avoid a conflict. Whether or not his calls for a more peaceful resolution will stay Trump's hand remains to be seen.

Monthly Round Up: May 2019

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Can We Make Procurement Relate-able
Procurement professionals have all been there: glossy-blank stares and awkward smiles after you finish explaining what you do for a living. I’m sure we’ve all tried to explain procurement and strategic sourcing in many creative ways over the years, and somehow we still struggle with getting it to resonate. This blog explores that struggle and calls for a more human Procurement profession.

The United Kingdom (UK) is looking to depart from the European Union (EU) this October and that could be a big problem for the country's public health supply chains. The EU allows 28 member states to trade interchangeably with each other and has shaped UK’s trade since 1993. With a separation from the EU, the UK could become a ‘second tier’ state for pharmaceutical imports, potentially leading to a medication shortage for the country. To make matters worse, the European Medicines Agency (EMA) has relocated from London to Amsterdam due to the departure. The EMA has been forced to abandon key initiatives due to staffing since many employees left the agency after refusing to relocate. The exact state of the UK come October is uncertain, but costly consequences seem imminent.

Walgreens the Latest Company to Appoint Supply Chain Leader
Companies everywhere, from Walgreens to Macy’s are putting a focus on their Supply Chain Management. Acquiring over 1600 Rite Aid locations, Walgreens has filled at least three new executive roles this year to cover the rapid change in business areas, one of which was a Chief Supply Chain Officer.

The sweeping trend to eat clean is heavily influencing the fast-food and restaurant industry. Many restaurants like White Castle and Red Robin have already introduced Impossible Foods’ plant-based burgers—Burger King is the latest to include an Impossible burger on their menu. Fifty-nine Burger King locations are currently test driving the Impossible Whopper and assuming a positive embrace from customers, BK plans to optimize its supply chain to make the plant-based burger available to everyone in the country. While not many Americans have completely converted to a plant-based diet, about half have declared an increase in eating more fruits and vegetables. With this ongoing trend, the food industry will have to respond accordingly.

Walmart Plans to Roll Out One-Day Shipping, Too
Walmart responded to the pressure put on by Amazon's free, two-day shipping announcement with an announcement of their own. Breaking the news through Twitter, Walmart made an obvious dig at the fact that Amazon only offers such a service to Prime members paying over $100 a year. The retailer has a huge footprint and only needs to add eight more distribution centers to make next-day a reality, according to Bloomberg. 

When companies hire us, their rationale is typically substantiated by arguments for factors like our deep subject matter expertise, our sound experience, our market intelligence, etc., and while all those reasons hold water, we’ve consistently learned that companies don’t become fully aware of the real value we produce until we are executing and delivering. That value, in many cases, is less palpable than the ROI we produce or the savings we generate, but more in the finer details of HOW we engage.  

During a weekly huddle this week, an interesting conversation broke out. As we discussed a set of logistics projects we’re currently supporting for our client, a colleague said: “You know this client had tried doing this twice before and failed?... this time they are moving forward and you know what the only difference is between the last two years and this year? That we were involved. Period.” He was absolutely right, the project itself wasn’t substantially different and the only significant variant was our participation.

As much as I’d like to think that our winning personalities were the catalysts for this project’s success, the conclusion I ultimately reached was that the reason we enabled success for this project was the fact that “we spoke the language.” By that I mean we were able to translate the needs of business into procurement terms and provide a procurement-minded perspective back to the business.

See, this isn’t an easy thing to do and – frankly, it’s a harder thing to sell. But it’s true. When you look inside an organization you will quickly realize that each and every functional area of the business operates and performs at a certain level of sophistication; in our situation, when procurement departments communicate to the business in procurement terms, the business my disengage quickly. They might perceive that not only is procurement solely looking for “savings” and not attending to the deeper needs of the business, but, more importantly, that procurement is simply not savvy enough to understand the business and serve its needs.

A sophisticated procurement unit will be able to understand how each operational area quantifies and captures value and communicate accordingly. In the case of logistics categories, what procurement folks would typically consider “savings” may be very different from the way transportation people see or capture them. In fact, there is such a thing as “too much savings” in logistics, and it’s not a thing anyone would like to see. But we’ll talk about that on an upcoming blog…

Speaking the language entails a deep and wide knowledge of the category, and a clear understanding of how to carry out procurement and strategic sourcing best practices. Any profession can run a sourcing process, but only those who truly speak the language can maximize savings while improving services and keeping everyone happy. It’s similar to ordering a beer in a German pub versus attending Oktoberfest. Oh and by the way… we did help our client realize over a million bucks in savings on that project.

May 31, 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:
Finding the Right Fit and Function for Your Procurement Vision
Jennifer Ulrich, Spend Matters, 5/29/2019
Procurement departments in every organization all have a central goal, but each vary in progress towards that end goal. Our own Jennifer Ulrich, points out that driving momentum for your department, no matter the stage in progress, starts with changing the way other business units perceive and engage with your Procurement function. From establishing yourself as a full-blown category management structure, to a Procurement Business Partner. Ulrich explains the difference and benefits of each, and some in between, to help you identify which function fits your vision.

Momentum and Sustainability Create Impact: How Marketing and Procurement Can Deliver Business Growth (Part 1)
Kaitlyn Krigbaum, Buyers Meeting Point, 5/30/2019
Marketing is arguably the most complex spend category and Procurement must treat it differently than any other. Kaitlyn Krigbaum emphasizes the need for teamwork between marketing and procurement to devise the most increase in efficiency and effectiveness of spend. Krigbaum walks us through new ways to unite the two, often disparate, departments for the optimization of your organization as a whole. Feeling disparities between your marketing and procurement functions? Take a look a this article for fresh take on how to mend the relationship.

Michael Vu, Future of Sourcing, 5/30/2019
With over 260,000 new American jobs, employers are faced with the challenge of attracting and retaining top talent in such a competitive environment. Companies are expected to bring certain levels of compensation and workplace amenities. Michael Vu gives a list of alternatives to compensation and other methods to obtain the talent you need, like casting a wider net and promoting flexibility. Looking for ways to enhance your recruitment strategy? -- Visit the link.

This guest blog comes to us from Tom Rogers, CEO of Vendor Centric.

Companies often fail to see the full picture when it comes to negotiations. Far more than a single conversation, the negotiations process extends from the inception of a potential relationship to that relationship's eventual conclusion. Throughout this period, an organization might have to carry out the negotiation process hundreds of time. Successful or unsuccessful, internal or external, these will all contribute to the relationship's outcome.

Successful negotiations come down to identifying the appropriate style and employing it effectively. Professionals typically fall into one of two camps - they're either Positional negotiators or Principled negotiators. The former are characterized by a thirst for competition. They enter negotiations looking to win. Principled negotiators, on the other hand, focus their efforts on collaboration and aim to realize a win-win.

Let's take a closer look at both sides of the table:

Positional Negotiation

If you'e trying to dominate a discussion, you'll do well to employ a positional negotiation style. It is intended to intimidate the other party. Ideally, they'll feel so intimidated that they lose confidence in their own position and accept your demands.

The positional approach requires a person to adopt a position and arrive at an agreement that will adhere as closely as possible to that position. Typically, this means totally disregarding alternative options and input from the other party. Positional negotiations are, by their very nature, limited and predictable. In many cases, they devolve into something like an endurance test. Both sides will argue their case to the point of exhaustion in hopes that their adversary will give in first. 

Principled Negotiation

Principled negotiation is the style preferred by professionals who truly believe in the concept of win-win agreements. The approach is built on the assumption that both parties share common interests and that the outcome will improve if each participant can share their perspective.

While certain elements of a negotiation should be positional (delivery dates and data security, for example), the principled style will tend to drive most deals. 

Success in a principled negotiation is defined in terms of the long-term relationship it helps build. Professionals who prefer this style recognize that a signature is not the ultimate goal, but a milestone in building an effective relationship.

Do You Prefer One Style Over the Other? 

In all likelihood, you've got a preference for one style over the other. Experienced negotiators, however, know there's a time and place for both. It's important to familiarize yourself with both, practice them, and retain the lessons you learn along the way. 

Negotiations can get heated, but it's important not to lose sight of reality. The other party has goals and objective of their own. If possible, you should always aim for a win-win. These agreements are far more likely to result in mutual respect, mutual value, and a long-lasting, successful relationship.

Successful Procurement and a Strategic Sourcing initiatives are built on strong, collaborative relationships. When organizations let these fall apart - or neglect to build them in the first place - they place serious limits on their capabilities and greatly reduce the chance they'll deliver on their objectives. While there are countless reasons an initiative might stall or stop, poor stakeholder engagement is among the most common. Engaging stakeholders is an essential part of gaining buy-in, sustaining momentum, and ultimately making sourcing excellence a cultural imperative. All too often, however, organizations skip this vital bit of due diligence.

Is your organization taking the time to identify, engage, and empower each and every relevant stakeholder?


Broadly defined, a stakeholder is any person, group, or department with influence over a given spend category. In addition to end users and category owners, the community of stakeholders can include finance departments, executive management, shareholders, customers, and marketing agencies. 

Stakeholders play a number of roles throughout the sourcing process. As such, their involvement can often make or break an initiative. In addition to providing their insights into supplier relationships, quality standards, and specifications, they're also often an asset during the negotiations process

That's why it's so important to engage stakeholders early and often. As a best practice, include them in project kickoff meetings and hold regular interviews. These could yield valuable information regarding failed supplier relationships, common pain points, and untapped areas of opportunity.

Don't forget, there are a number of different stakeholder groups to keep in mind. Each demands their own approach and promises to support initiatives with their own unique perspective. Here's a quick guide to the stakeholders within your business. 

The Decision Makers

From finance department to operations managers, your decision makers exert a considerable level of control. It's ultimately their say-so that brings a project to a successful close.  Typically, the decision makers offer the most valuable input throughout the sourcing process. After all, it's their particular needs and specifications that your Procurement is trying to meet.

Keeping decision makers in the dark is a huge, all-too-common mistake. When a Procurement team waits until the last moment to engage with decision makers, they often learn they've failed to consider key criteria. In worst case scenarios, weeks and months of work can go to waste and Procurement can find itself alienated from other units within the organization.

The Influencers

In addition to your actual decision makers, it's essential to identify and work alongside any people or departments who can influence a spend category. This isn't always easy. Influencers are diverse, they're often elusive, and they aren't always eager to work alongside Procurement. 

Numerous types of people might qualify as influencers. For example, an employee who has transitioned out of a category but still maintains a relationship with a key supplier could qualify. In the non-profit sector, major donors might also fit into this category. An influencer's actual level of influence and interest can vary wildly. Some are eager to participate in initiatives, others are content to let Procurement go about its business. In either case, it never hurts to loop them in.

The End Users 

An end user is any person or group of people who feels a direct impact as a result of a particular purchasing decision. Effectively, they are the people who actually leverage the products and services your organization buys. Since these people are affected by the results of your strategic sourcing project, their feedback is indispensable. They'll know very well, for example, whether or not an alternate product and service will gel with existing workflows. 

On the surface, the end user's role can look insignificant. It is imperative, however, that they have a voice and visibility throughout the life of an initiative. They're the ones who'll have to live with the decisions you make, it goes without saying that their input is essential. 

If nothing else, bringing stakeholders into the sourcing cycle is an effective good will gesture. When they're treated as valued allies, stakeholders will feel compelled to treat Procurement the same. 
If Procurement professionals are known for one thing it’s their affection for a finely-tuned process. 

Procurement’s fondness for procedure has certainly annoyed some stakeholders over the years, but it’s also helped set the function apart as a dependable, strategic entity. No business unit is better equipped to get the trains on track and ensure they stay there in the long-term. 

Remember, there’s no one-size-fits all strategy for implementing processes and enforcing compliance. Your particular operations will vary based on organizational maturity, geographic distribution, headcount, and the complexity of Procurement’s technology. 

Though a number of variables will impact Procurement’s processes, it’s essential that the department not accept any variation once these processes are established. To optimize workflows, reduce cycle times, and avoid rework, organizations must insist on consistency in the way goods and services are sourced, procured, and contracted. Even isolated exceptions will send the wrong message and undercut Procurement’s efforts to gain executive respect

Push-back is possible – even likely, but the well-appointed Procurement department shouldn’t consider this an obstacle. Rather, it’s evidence that they’re doing their job.

Want to refine your Procurement team's approach to everything from spend analysis to relationship management? Check out the infographic below. For additional insights on the what, how, and why of Procurement's essential processes download Part 3 of Building an Effective Procurement Organization today. 

Tariffs are real, and they are making a real impact. If you look through most major news outlets you will see them discussed, a lot. Even with all that information out there, a lot of procurement professionals are still looking for an answer to one question, “what can I do about it?”
Before I go any farther, I would like to add a caveat: this is not a political post. I am not going to argue for tariffs, or against them. I am not going to pretend to know whether or not they are a short term issue, or a permanent and lasting part of the global economic landscape. 

Back to it. Before you can actually do anything about tariffs, it’s important to have a rough understanding of the nuances between the different tariffs. Here is a quick illustration to help:

301: List 1
301: List 2
301: List 3
301: List 3 Escalation
301 List 4 Addition
Effective Date
Raw Materials
Finished Goods; 25%
Finished Goods; 25%
Finished Goods; 10%
Finished Goods; 25% (Additional 15%)
Estimated Impact
$34 Billion
$16 Billion
$200 Billion

The initial 232 tariffs were unique in two ways. First, they were not levied on individual items, but on raw materials- Aluminum and Steel. Second, it impacted more countries then just China. These can be verified by looking at raw commodity markets. If you would like more information on the 232 tariffs, click here.

The more impactful tariffs are the 301 tariff lists. Unlike the 232 tariff, these are all specific to China. These were announced with 3 different lists (so far), and they all apply to finished goods. The first 2 lists came in at the 25% level. Meaning, if a supplier was paying $1.00 to import an item, going forward they would be paying $1.25.

List 3 is different from the first 2 lists in a few ways. First off, it is much bigger. In fact, the amount of goods impacted is substantially larger than the first 2 lists combined. Second, it came in two pieces. Initially, goods on this list were tariffed at a 10% level. More recently, that tariff was escalated to 25%. Third, while the escalation became effective on 5/10/2019, it came with a delay clause. Any goods that were already on the water, were not subject to the tariff.

Finally, there is 301: list 4. This tariff list has not been enacted yet, nor has a date been given. But the US Government has threatened to impose it. The estimated impact is not yet known, but it is expected to exceed that of 301: list 3.

How do you know if an item is tariffed? That’s where Harmonized Tariff Schedule Codes, or HTS codes, come into play. Whenever you import an item, it falls under a very specific HTS code. These 301 tariffs are called lists because that is essentially what they are, a list of HTS codes. If an item’s HTS code is on one of these lists, and it’s coming from China, then it’s being tariffed.

Now, as a responsible procurement professional, how do you handle this? First, you’ve got to take a look at how you are getting your items. Are you buying them on a direct import basis? By this I mean, do you become the owner of the goods as they enter the US and are you responsible for paying the tariffs? If so, here are your options:
  • Option 1: Pay the tariff
  •  Option 2: Switch to a supplier based outside of China. Many companies are reviewing nearshoring options as a means of cost reduction.
  • Option 3: Work with your Chinese supplier to help share the burden of the tariff. Some suppliers are willing to do this, as it lessens the chances of them losing the business. Others, especially those who bid on a strict net/net basis, are probably unable or unwilling to cover any of the tariff costs.
If you are buying from a domestic supplier who is importing the item, things become even murkier. Since you are not the one directly paying the tariff, it’s difficult to judge the exact dollar impact it will have. But from a high level, your options are still more or less the same. Pay the tariff, switch suppliers, or work out a plan for sharing the burden.

Option 3 should be more effective when working with a domestic supplier. First off, there is a lower cost of change as the impact on your international logistics is minimal. Here are a couple other tips to help you in negotiating a burden sharing plan with domestic suppliers:
  • Trust, but verify. If a supplier claims that an item is being tariffed, ask for its HTS code. You can do a quick look up here to verify that it is in fact being tariffed.
  • Understand what the percentage is based off of. The tariff is not based off the invoice price you pay. It is based off the supplier’s Cost-of-Goods from China. The transportation, overhead, and margin that is included in that invoice price, are not being tariffed. Therefore, increasing the invoice price by the full tariff percentage isn’t entirely fair. If they do apply the full tariff percentage to your invoice cost, they are effectively increasing their margin dollars.
    • This type of conversation can be an awkward one to have with a supplier. However, if you want to mitigate your cost impact from tariffs, it’s one you’ll need to have.
There is a lot going on in this crazy world of ours. I do not know if tariffs will be a part of it in the long-term. But hopefully this post helped shed light on how exactly the tariffs are impacting you, and provides some guidance for ensuring you’re only paying what’s fair. Thanks for reading.

Starbucks recently announced that it has completed issuance of its third and largest sustainability bond to date, which will be used to support ethical coffee sourcing and the company's Greener Retail initiative.

The new $1 billion sustainability bond follows the company's $500 million U.S. sustainability bond issued in 2016, and the yen-denominated sustainability bond it issued in the Japanese market in 2017.
As with the two previously issued sustainability bonds, the recently raised funds will support Starbucks' ongoing work to ensure its supply chain is built on ethically sourced coffee.

$1 billion to support coffee farmers and a greener retail chain

The sustainability bond's funding purposes include purchasing coffee verified by Coffee and Farmer Equity Practices, continued development and operation of Farmer Support Centers and agronomy R&D centers in various coffee-growing regions and new and refinanced loans to coffee farmers made through Starbucks' $50 million Global Farmer Fund.

A portion of the funds will also go towards a $20 million equity investment in responsAbility Investments AG, which will become a new partner of the Starbucks Global Farmer Fund. Loans will be offered to farmers in Latin America, Africa and Asia, to help them pay for newer and more productive trees, new equipment and any other materials or actions needed to enhance their coffee crops' quality and productivity.

Starbucks is using the $1 billion to assist coffee farmers and improve the company's overall sustainability. Starbucks is using the $1 billion to assist coffee farmers and improve the company's overall sustainability.
The bond will also be used to help fund Starbucks' Greener Retail commitments, including the previously announced Greener Stores initiative to design, build and operate 10,000 Greener Stores globally by 2025. These Greener Stores will be constructed with an emphasis on energy efficiency, renewable energy, water stewardship, waste reduction and other key sustainability goals that

Starbucks developed in partnership with the World Wildlife Fund.
Finally, portions of the $1 billion sustainability bond will be put towards investments in greener cups and packaging, including the global rollout of strawless lids and the creation of new recyclable and compostable cups.

'Oversubscribed' sustainability bond breaks new ground

In addition to positioning itself as an industry leader in supply chain sustainability, this third bond also marks Starbucks as something of a pioneer in the use of sustainability bonds.
Sustainability bonds are still fairly new and practically unheard of in the restaurant industry, and the International Capital Market Association database presently lists Starbucks as the only restaurant brand to issue one, let alone three to date. Clearly, the unique offering has proven to be a hit with investors, though.

"We are very pleased to see that our new sustainability bond attracted significant investor interest and was oversubscribed," said Starbucks CFO Patrick Grismer. "The bond demonstrates Starbucks' commitment to meaningful, continual progress toward our aspiration of sustainable coffee, served sustainably. It also illustrates a trend toward heavier interest from investors in our socially and environmentally focused projects - in this case supporting coffee farmers and leading in green retail."
Starbucks also seems to be reassuring investors by providing a high degree of accountability. The sustainability bond requires the company to report on how the funds are spent and what impact they have, and also publish annual updates on its public-facing website.
Whether you're pursuing an analyst internship, a contractor position, or a CPO role, interviews can be nerve racking! 

Goodness knows, I've gone in to my fair share of interviews both breaking a sweat trying to make sure I present myself as the perfect candidate, as well as on the other side of the table trying to make a little bit of small talk to calm the nerves of my interviewee. 

The whole process can feel like a test as opposed to a fluid conversation. 

"Tell me about this experience on your resume." 
"How would you describe your expertise in this area?" 
"What are you looking for compensation-wise?"

The pressure is on to provide the best possible answer. Unless you're an expert / frequent interviewer, it's understandable to go into the interview with a bit of anxiety - which is why whenever I'm asked, my biggest piece of advice is for candidates to shift their mindset towards the process. Rather than putting the pressure all on yourself, consider the interview a two-way conversation for you to gauge your potential employer. There's an inherit sense of confidence that comes with knowing what you want in any situation, the same is true when it comes to pursuing a new career opportunity.  

Rather than looking at the process as entirely a test of your experience and skills, enter the interview with the goal of determining if the role is also a fit for you and your goals. Absolutely be prepared to discuss the lessons learned and skills gained during school and in previous roles, but also leverage the time with your interviewer to learn more about the role and company. The interview is just as much of an opportunity for the employer to vet you as it is for you to vet them. This means doing some homework. Really reflect on what type of experience you're looking for whether you're seeking an internship for the first time or pursuing a promotional role and be prepared to articulate that during your discussions with the hiring manager. 

Accordingly, come to the interview equipped with questions that will help you decide if this is a company you want to work for, such as:

  1. What does the day-to-day look like in this role? 
    Aren't you curious about what you're daily routine or lack thereof will look like? Find out by asking your interviewer about how they envision you spending your time. Their answer will give you insight into the projects you'll be supporting, the breakdown of your day and who you'll be working with on a daily basis. 
  2. What is the company culture like? 
    Beyond your workload, ask about the company atmosphere. What does the company value or strive for with the people they hire? Aim to get an understanding if you'll be surrounded by other individuals who are as motivated and bright as yourself. Even further, ask about the story behind the company? The company's history and leadership will tell you a ton about the characteristics and mission. 
  3. What does success look like in this role?
    This should be a standard question for all interviewees. Find out what the hiring manager is ultimately looking for and understand if it aligns with your own goals. Is the hiring manager looking for a change agent and are you eager to take on a role that will challenge you to take initiative and charge of a project? The answer to this question will provide a ton of insight into whether this role aligns with the skills and results you're looking to achieve in your next position. 
  4. What are the opportunities for growth?
    Of course it's great to know what the existing role looks like, but what's beyond that? In some cases, a hiring manager might not be able to tell you explicitly how you'd progress up the company org structure. Depending on your own go-getting attitude, this might be a good thing. This could mean you get to forge your own career path as your continue to grow. It they can't tell you what the next role will be or how you'd move up the ladder, ask about the tenure of other employees. How were they able to grow and progress their career at the company? What made them successful? The answer to this question will give you insight into not only your future roles but also let you in on the company's position on career development and progression in general. 
  5. What do you enjoy most about your job?
    Every employee is motivated by something different. Some team members will be interested in a position strictly for the job security and compensation. Others are motivated by the ability to lead people or are passionate about the company's mission and how they contribute to the bigger picture. If you're interviewing with a potential team member, getting their answer will give you insight into what they're motivated by and give you more insight into the company culture in their perspective. 

Interviews are an exciting opportunity - make the most of them by asking critical questions about your potential employer and team. Whether you end up accepting an offer or continuing your search for the perfect role, the process will give you perspective on the company's values, employees, and your potential career path. Use these questions as a starting point to help you guide the discussion in a way that will ultimately support your decision. In doing so, you communicate to your employer your own values and that you've thought about the position beyond the job description - both of which increase your desirability as a candidate! 

What is The Big Ideas Summit?

The Spend Experts at Source One, a Corcentric company, are excited to announce their sponsorship of Procurious' 2019 Big Ideas Summit this Septemer in Chicago, IL. We're excited to join other thought leaders in the industry and share insights of our own during a special keynote session.

Procurious is a partner with a fresh take on Supply Chain Management. The social network site targets the future of the industry by focusing on  empowering the newer generations of Supply Management professionals. The Big Idea's Summit is designed to garner cutting-edge insights from all over the globe through thought provoking sessions, networking opportunities, and forward thinking discussions. This year the summit will be held in four locations: London, Melbourne, Zurich, and Chicago.

This year's theme is consistent with the mission of offering innovative insights and solutions from companies that are making world-wide impact using forward thinking methodologies. Among the experts who joined us for last year's Big Ideas Summit, from organizations including IBM, Dell, and GlaxoSmithKline, we discussed trending topics and concerns of Supply Chain from risk factors that are on the rise, evaluating value of outside perspectives, and going greener with sustainable packaging.

We Don't Take This Opportunity Lightly

As mentioned, we took notice of Procurious' mission to "change the face of the [Procurement] profession from the inside out," by providing access to innovative solutions that bring impact with the first and only digitally-led Procurement event for the leaders of tomorrow. Our Vice President of Professional Services, Joseph Payne, gives a few words on our careful decision to work together with Procurious on this event.

"We're proud to sponsor Procurious' Big Idea Summit. Procurious and Source One share a common goal. We're committed to elevating Procurement by empowering professionals to think bigger and make a bigger impact both within their organizations and throughout the world at large. Our team looks forward to hearing from cutting-edge CPOs and sharing our own big ideas for the future of the function."

Source One has a line-up of events for the latter half of 2019. As thought leaders in the industry we welcome opportunities to engage with other industry leaders and glean from one another. We look forward to connecting at our own Procurement professionals happy hours and events with Consero and others.
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.