July 2019

With unemployment at a near-record low and job openings at a near-record high, it's harder than ever to keep world-class talent in-house. It's never pleasant to lose an employee, but the current situation makes it worse than ever to watch a top performer leave and join a competitor. This unpleasant experience is also becoming more and more common. Gallup's most recent Employee Engagement survey found that a whopping 87% of Americans feel disengaged at work. Obviously, it doesn't take much for disengagement to turn into disdain and lave employees looking for the door. 

Worse still, the off-boarding process is rarely characterized by transparency. When employees leave unexpectedly, they're not likely to outline their reasoning and provide constructive feedback. We asked our Supply Chain recruiting expert why high-performing leave their jobs. Here's what he had to say. 

A uniquely diverse spend category, MRO is usually classified as a tactical spend area - though some aspects can be considered leveraged or critical. With so many products and services falling under the MRO header, companies can use multiple strategies in order to drive savings. Having clear goals and objectives when sourcing MRO will provide a smooth guide in guiding your companies market assessment, sourcing strategies, and its approach to supplier engagement. Below are six meaningful goals your company should keep in when going to market for MRO.

Cost Reduction and Supplier Rationalization
Many goals in an MRO-centric initiative can change as a project moves forward. However, it is important to remember that bottom-line impact should always command attention. A simple cost reduction can be achieved simply by transitioning from brand name items to more generic substitutes.
The chances of achieving savings on MRO products is usually high based on the sheer number of suppliers in the marketplace. This is especially true in organizations where Procurement has typically made purchases and built relationships at the site-level. A quick audit in the form of a spend analysis should point out opportunities to eliminate redundancies and establish an optimal collection of preferred suppliers.   

Ordering Process Efficiencies
A substantial amount of MRO products are considered tactical purchases. This often means that costs associated with acquiring an MRO product are greater than the cost of the product itself. Thus, a streamlined, simple ordering process will generate efficiencies for your buying team. The ordering process should make invoice reconciliation easy. This will save time and money and enable to Procurement to devote more attention to high-value, strategic initiatives.

Part Number and Specification Standardization
After performing a spend analysis, buyers may find that their company’s internal ordering system does not deliver reliable information. For example, let’s say several locations order the same product. While the product may be the same, the descriptions are likely to vary, thus data entry errors may exist. Cleaning up and standardizing data helps give buyers and management a clearer picture of what they are spending and where saving opportunities are.

Inventory Level and Lead Time
By its very nature, the MRO requires Procurement to keep a multitude of stock-keeping units (SKUs) on-hand. After all, the cost of an individual part is not nearly as expensive as the cost that comes with having a production line go down. However, the cost of managing and fulfilling MRO stockrooms at multiple locations can result in cash being tied up in on-hand inventory. One option that can help mitigate this is outsourcing your company’s stockroom altogether. Reviewing current inventory and identifying unnecessary parts can ultimately open up warehouse space.

Maximizing Equipment Uptime
Just like managing inventory levels and lead time, maximizing equipment uptime is a key goal when sourcing MRO. While most business realize that maximizing equipment uptime means having parts ready for when machines go down, few also realize that buying the right parts in the first place is equally important. Sourcing from a sub-par supplier could lead to poor quality parts, retro-fitted equipment, incorrect deliveries, and incorrect orders. Having the right supplier group or group of suppliers can assist in troubleshooting and resolving these issues (or, better yet, avoiding them altogether). 

Long-Term Supplier Relation Development
Most, if not all suppliers in the MRO industry are familiar with periodic customer turnover. This is why it is worthwhile for your company to evaluate a supplier’s overall service offering. Take care to identify those who are willing to go above and beyond, build partnerships, and provide additional value adds that their competitors might not.

In closing, the goals and objectives for the category help outline the framework for the initiative. As suppliers are engaged, make them aware of each goal and collaborate with them to achieve it. As your company dives into data collection and spend analysis, you will realize how much effort is needed to accomplish the goal of improving your MRO sourcing. Why not commit to doing it right the first time?  

ICYMIM: July 15, 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.
Public Spend Forum, Spend Matters, 7/12/2019
Selecting the proper suppliers is a crucial step in building your company's supply chain. Managers must ask the right questions in order to obtain the right match. Have you considered what your quality threshold is? Are you assessing each candidate's risk factors? All of them? This Spend Matters Blog breaks down the five phases of choosing the right supplier for your needs. 

How Supplier Diversity is Working in the Real World
Sarah Scudder, Future of Sourcing, 7/10/2019
Over the past few decades, supplier diversity programs have expanded their boundaries. Supply Management is embracing many different communities such as women-owned businesses, LGBT-owned business, and veteran-owned businesses. Not only does partnering with diverse suppliers promote corporate social responsibility, but studies are showing that productivity is on the rise thanks to supplier diversity programs. Sarah Scudder of RSN highlights current trends in supplier diversity programs and the "Six C's of supplier diversity. 

4 Tips for Creating a Reliable Inventory of Your Vendors
Josh Angert, Sourcing Innovation, 7/10/2019
Don't overlook the value of keeping detailed inventories of your vendors. Many companies are skipping this step and it's costing them. Third-party systems help to avoid misinformation and provide a speedy and simple reference guide when necessary. Josh Angert provides four key tips on how to implement an efficient vendor management system that tracks inventory and ensures efficiency.

In recent years, the ways in which supply chains operate has changed dramatically, as direct-to-consumer shipping times have been shrinking and the prevalence of e-commerce only continues to grow. With that in mind, it's likely that the revolution for every company in the supply chain will continue its progress unabated for some time to come.

While e-commerce's rise may seem like a relatively recent development, it actually began decades ago, when China was opened to the West and necessitated the fusion of massive industrial efforts on one side of the Pacific, and supply chain excellence that could bring its products over to the other as efficiently as possible, according to The Economist. But with the advent of advanced technologies like artificial intelligence and data analytics, the supply chain is picking up speed as never before.
Things could gain even more momentum in the near future, however, as telecom giants the world over are collaborating on a lightning-fast 5G cellular network that would allow download speeds currently unthinkable; perhaps as much as 10 gigabits per second, versus the current standard of about 300 megabits, the report said. That, in turn, could allow for broader and more effective implementation of the internet of things, among other potential benefits.

Companies will have to do more to react to supply chain changes.Companies will have to do more to react to supply chain changes.
Companies already gearing up
Of course, with so much demand for e-commerce and the shipping that facilitates it, many businesses in the supply chain have already dramatically shifted their operations, according to Supply Chain Dive. Effectively, the entire supply chain - from the initial source of materials to the consumer's front door - has effectively become an all-day, everyday affair. That wasn't the case even a few years ago.
While few would expect or need last-mile shipping efforts to run around the clock, more companies nonetheless have developed that option and all it may take for the demand dam to burst is one ubiquitous company to start offering it, the report said. At that point, much like low-cost or even free two-day shipping has become the norm for many companies, it might not be long before delivery times need to be expanded to meet customer expectations. Experts agree the framework now exists to accommodate whatever shifts come along.

Something to monitor
Of course, this all comes at a time when companies are increasingly dependent on an international supply chain, but international trade relations aren't as strong as they used to be, according to Bloomberg News. Global merchandise trade is about 16% below where it was in the early 2010s, and has only recently begun to recover from a trough seen in the past few years, but things are trending back down again as threats of trade wars loom overhead.

For these reasons, it's vital for any company in the supply chain to plan for both sunny and rainy days on an ongoing basis, reacting agilely to any new developments that may come along in the next several years. The benefit of having fallback plans and strategies to seize on the latest opportunities is that companies will always have an answer when the "next big thing" arrives.

The following guest blog comes to us from Brad Smith at #TurnOnVPN.

Internet of Things (IoT) devices are everywhere and this is only the beginning. By some estimates, we can expect 80 billion devices to be connected to the Internet in 2025. With the IoT industry soon to reach $520 billion, the skyrocketing adoption of connected devices is good news for manufacturers and software vendors. But is it so positive for the users?

It’s no secret that technology has a complicated relationship with privacy. But with IoT devices having direct access to the most intimate spheres of our lives, the question of privacy become impossible to ignore. Our homes and even our bodies can now transmit a never-ending stream of data. And some of the more dystopian scenarios are getting pretty close to becoming a reality…

When a smart home turns into a Big Brother 

Earlier this year, it was revealed that Amazon employees are listening to users' Alexa recordings. It’s part of the process to teach AI to better understand human speech and give more relevant suggestions in the future.Whether it's done in the name of science or not, it’s still creepy to know that someone might eavesdrop on you when you’re at your most vulnerable.

From Boston to Costa Rica, India to Romania, Amazon workers are meticulously sifting through millions of hours of recordings. They transcribe and annotate users’ interactions with Alexa “in order [to] improve the customer experience”. But according to employees in the Romanian office, things aren't exactly what the Amazon PR team would like us to believe. The more amusing recordings are shared with other workers on an internal chat room, so if you have a smart home device, your shower recitals are no longer safe.

Your entire life in one device

Data-hungry companies are not your only worry when it comes to IoT security. IoT devices are often reported to have security flaws that make them a relatively easy target for hackers.

Your smart home devices can be secured with an encrypted Wi-Fi VPN which protects the data stream from prying eyes and criminals trying to extract your personal data. Wearables like Fitbit or Apple Watch, on the other hand, are often used outside the safety of your home network which exposes them to a number of threats.

The fast-paced consumer market forces wearable manufacturers to produce new devices with lightning speed. Typically, fitness trackers would be developed in just six months, from planning to market release. Often when pressed for time, companies skip security testing in favor of faster roll-out. For example, researchers have demonstrated that hacking a Fitbit can easily reveal your location and other data.

The way to a man's heart is through his IoT pacemaker

IoT privacy and security might sound a bit abstract until we talk about a very specific type of connected devices -- the Internet of Medical Things. Technology is transforming the healthcare system and IoT devices are a big part of it. They can administer life-saving medicine, monitor the patient’s health state or even keep your heart beating.

The problem is: these devices are not exempt from any of the threats I've discussed. In fact, researchers have already successfully hacked a pacemaker and insulin pump. What if a hacker took over a medical device and demanded a ransom? It’s a dark future, but not an unimaginable one.

What can we do?

In the US, there are no specific laws around IoT device privacy, although plans for legislation were just launched by the Digital Minister Margot James. The European Union is already there, with General Data Protection Regulation (GDPR) outlining stringent rules around the IoT in particular. Overall, IoT devices are advancing faster than the legal framework regulating them and the governments are catching up rather than staying ahead of the curve. 

For consumers, this means that we have to stay vigilant. The tech industry has a tendency for over-collection and over-retention of data. And as users, we aren’t always aware of what data collecting capabilities a device might have. Hiding behind blanket statements like “improving customer experience”, Amazon and other tech giants make the rules of the game we all play.
Brad Smith is a technology expert at TurnOnVPN, a non-profit promoting a safe, secure, and censor-free internet. He writes about his dream for a free internet and unravels the horror behind big tech.
#TurnOnVPN is a non-profit organization focusing on a free and unimpeded internet for all. We take part in numerous online events, aimed at promoting a safe, secure, and censor-free Internet. Learn more at www.turnonvpn.org/blog/.
Requests for Information are a valuable fact-finding tool for any Procurement group. Administered correctly, they provide valuable data and help establish mutually beneficial relationships. New to the RFI process, check out some best practices from Source One's experts. 

Want additional support? Consider reaching to our RFX design and RFX administration team today. 

July 12, 2019

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

New Blogs:
Procurement as Agents of Change
Brian Seipel, Sig Speaks, 7/10/2019
Time and money often stop businesses from risking a change. Nevertheless, growth and transformation are essential in an ever-evolving business world. Procurement teams are in the perfect position to set the stage for internal change. Brian Seipel discusses how to use procurement as a force for promoting new systems and ideas that will elevate the company.

15 RFP Responders Explain How to Craft a Winning RFP Response
Ken Gaul, RFPIO, 7/10/2019
RFP drafting is an under-discussed yet highly critical step of the strategic sourcing process. This blog from RFPIO highlights the perspectives of various thought leaders and offers advice for constructing the most mindful and productive RFP responses possible. Source One Director Ken Gaul is included. He offers up his advice on communicating expectations with clients.

Upcoming Events:
Webinar on End-to-End Supplier Relationship Management | ISM New Jersey | 7/17
You've found the right supplier and secured the contract... now, what will your team do to nurture this valuable relationship? Maintaining consistent communication will quickly open new doors of opportunity. Rather than employing the same strategies with every contract, you’ve got to recognize the variations between suppliers and use those details to both parties’ advantage. In an upcoming webinar, Jennifer Ulrich will illustrate the importance of supplier relationship management and segmenting the supply base.

Procurious Big Ideas Summit | Chicago, IL | 9/18
Source One has always aimed to encourage innovation and expand the possibilities of Procurement. The Procurious Big Ideas Summit is an impactful networking event that invites inventive conversations and welcomes new perspectives. Supply Chain Management experts will gather this upcoming September to discuss and support the future of their function. Register today.

Organizations fail to hit goals for plenty of reasons, and many business leaders are left in the dark wondering what went wrong. We’re collecting more data than ever before, and building expansive analytics practices to marshal that data to produce actionable intel – so why are we still so bad about using these resources to hit goals?

Part of the problem is a lack of understanding of key performance indicators compared to metrics, and the role each plays in staying on track.

Procurement teams have a wide array of metrics at their fingertips, and we would do well to figure out the best way to use them.

Defining These Terms

‘Metrics’ and “KPIs’ are used interchangeably as terms, although this is a mistake. Let’s start by defining both.

Metrics are measurements used to quantify activity, no more and no less. They don’t care about external factors, focusing only on a snapshot of the here and now. They’re objective statements without context, and they are everywhere – anything we do could tie back to dozens of metrics if we tried to map them out.

Alternatively, key performance indicators require context. We establish and track KPIs in order to speak to specific business goals, marking progress objectively and measurably. Anything can be a metric but very few things can be (should be?) KPIs – otherwise the “key” in “key performance indicator” is meaningless. If we go about focusing on every metric possible, we really aren’t focusing on anything and might as well be reading tea leaves when it comes to forecasting results.

Procurement-Based KPIs

The number of suppliers we work with is a simple metric. At any given time, you can measure this number and where it moves. However, does this metric tell us anything by itself? Stated another way, is there a “good” or “bad” number of suppliers to maintain relationships with? No. Where this metric gets interesting, however, is when we tie it into specific goals. For example:

  • Cost Reduction. Consolidating spend to fewer suppliers helps us build leverage when negotiating better pricing and terms.
  • Risk Reduction. Expanding critical component suppliers and the logistics partners that ship them helps ward off supply chain disruptions. 

Simply monitoring metrics around the number of suppliers in play doesn’t tell a whole story around either goal. So, what KPIs will help us achieve track against them? Tracking spend under management ultimately feeds into controlling costs. Tracking supplier availability and the ratio of emergency purchase needs speaks to reducing risk. Dozens of other metrics could serve as KPIs here, but the goal isn’t to shoehorn every one of them into our analysis. Instead, focus on identifying only those measures that speak to progress towards these goals.

This Distinction Matters

Procurement teams are scrambling to make sense of the influx of data available to them. Too often, they don’t see the forest for the trees and treat every metric as if it was the same as a KPI.
The difference is intent. Don’t try to track everything the data supports, track performance against a set goal. So, how well are you differentiating the two?

Don’t Read Tea Leaves

An interest in understanding KPIs is a good start, but confusing any random metric for a KPI could take a good intention down a bad path. Think about your high-level goals for the next 12 months. Then, bullet out a list of all the metrics you collect and review on a weekly basis.

  • How many of those bullets actually measure progress?
  • How many are vanity measurements that say very little (but look very good in a report)?
  • How many end up being completely unrelated to your goals for the year?  

Odds are good that we all spend more time worrying about irrelevant metrics than we recognize. This needs to change if we’re to improve ourselves and our organizations.

A number of organizations across the food and beverage value chain are recognizing the need to innovate with digital technologies and artificial intelligence. Companies are carrying out these transformations to generate savings, speed up processes, and ease their customers' ordering processes.

Some of the industry giants that are implementing new tools include Panera, Starbucks, and McDonald's. Panera was one of the first companies to take a risk on new supply chain solutions. In addition to online ordering, Panera has introduced kiosks into their restaurants and created a mobile app to change the way customers both order food and interact with the organization. Starbucks has taken things a step further. They've started to utilize Microsoft's machine learning capabilities for inventory-based order suggestions. McDonald's, for their part, recently acquired a personalization and decision optimization technology company in addition to investing in a mobile app developer.  These companies realize the importance of technology and are using it to their advantage to reap more profits and build better relationships with consumers.

Panera recognized the need to change their processes all the way back in 2012.  At the time most competitors took a "wait and see" approach rather than shaking things up with new tools. Panera took a step in a new direction by generating prototypes to fulfill their vision of a tech-enhanced customer experience. By 2015, new technologies and plans were rolling out across the organization.  Customers could now order online, order at an in-store kiosk, or use the mobile app. These new channels allowed the customers to choose the order method best suited to their needs. Panera's innovation - and the results they produced - inspired competitors to follow in the sandwich chain's footsteps.

Starbucks, too, has implemented technologies that speed up customer ordering and ensure equipment is utilized effectively. The Seattle-based organization has applied Microsoft Azure's reinforcement learning technology and Microsoft Azure's Sphere.  The purpose of Azure's reinforcement is to aid in the decision making process for their app users who participate in complex and unpredictable environments.  This technology provides individually tailored suggestions to customers based on factors such as the inventory of the nearby locations, previous orders the customer has placed, and time of day. While the reinforcement technology is geared toward consumers, the sphere targets the stores themselves.  The Sphere provides proactive maintenance on equipment by sharing real-time data.  This ensures that Starbucks is running as efficiently as possible by monitoring and informing the relevant parties when maintenance is necessary.  This allows Starbucks to stay ahead, rather than fall behind because of unreliable machines.  Starbucks is constantly finding more ways to satisfy their customers.  Recently, they have also used Azure to track their coffee beans from its initial pickup location all the way through to the customer's coffee cup.  The goal is to share this capability with the customers to increase transparency, provide piece of mind, and foster a sense of involvement.

Like Starbucks, McDonald's also wants to prompt its customers with suggestions. This is what influenced them into purchasing a personalization and decision logic tech company called Dynamic Yield early this year.  McDonald's has also invested in Plexure, which is a mobile app developer.  Many fast food restaurants now also have apps that customers can order from and either have it delivered to them or they can go to the store to pick up.  McDonald's looks to be following suit.  The tech company will work with McDonald's to create suggestions for customers on what to order based on other products in their cart, as well as the ingredients the McDonald's location has in stock.  One area in particular where McDonald's wants to utilize order suggestions is for their Pick Two. This is intended to speed customers through the drive-thru and ultimately increase satisfaction.

The restaurant industry is heavily impacted by the growing number millennial parents and their families. What innovations will this new generation inspire next?

With the recent victory of the United States Women’s Soccer Team in the 2019 France World Cup, soccer superstar Megan Rapinoe raises awareness on an important issue: unequal pay between male and female soccer. Megan Rapinoe crushed a penalty in the World Cup final, leading a 2-0 triumph against the Netherlands and co-captaining the United States in their journey to win their fourth Women’s World Cup title. As the squad of 23 players lifted up the trophy and celebrated their accomplishment with the American flag tied around their backs, fans chanted “equal pay”.

On March 8th, twenty-eight players of the U.S. women’s team filed a lawsuit in California against the United States Soccer Federation. The lawsuit is based on the fact that the USSF pays female soccer players less than male U.S national team athletes, a violation of Title VII and the U.S. Equal Pay Act. Title VII of the Civil Rights Act of 1964 prohibits employment discrimination based on race, color, religion, sex, and national origin. Additionally, the U.S. Equal Pay Act which was signed by President John F. Kennedy in 1963 made it illegal to pay women and men different salaries when conducting similar work in the same institution.

The lawsuit also argues that women’s soccer has brought more success and credibility to the U.S Soccer Federation and is therefore unjust to have differences in pay. The U.S Women’s Soccer Team has accomplished more than its male counterpart, as the men’s team has never won a World Cup and recently lost to Mexico in the Gold Cup final. The women’s team is currently ranked number one, according to FIFA’s Women’s Soccer Rankings, and the Men’s team is ranked number thirty.

However, the USSF refuted the squad’s claim by arguing that unequal pay is a result of differences in aggregate revenue generated by the women’s team compared to the men’s soccer team. Nonetheless, USSF’s statement is double sided. From 2016 to 2018, the U.S. Soccer Federation’s financial statements show that women’s soccer matches have raised around $50.8 million in event revenue for the USSF and men’s games only brought in $49.9 million. Although, ticket sales only make up for less than half of the USSF’s total revenue. A large chunk of the income generated by the U.S. Soccer Federation comes from sponsorship deals, such as broadcasting and merchandise sales. The USSF does not specifically state what percentage of their total sponsorship revenue comes from women’s soccer or from the men’s national team.

Members of the women’s U.S. national soccer team have a base salary of $72,000 with a winning bonus of $1,350 per game. Men, on the other hand, are given a winning bonus of $3,166. (New York Times) The USSF also grants each player daily travelling expenses for games. Women are given $60 a day, when playing games in foreign countries, and men are given $75. FIFA allocated roughly $38 million total for members of the winning team in the 2018 men’s World Cup. However, members of the women’s national team will only take home a total of $4,000,000 in prize money. These statistics show that the pay gap is not only present in the USSF, but in the entire Fifa organization on a global scale.

With influencers like Megan Rapinoe publicly speaking about the significance of the pay gap, Politicians such as Chuck Schumer have backed the U.S. women’s team’s fight for equality. However, other than raising awareness, one may ask themselves how this inequality can be eliminated. Companies such as Luna Bar are working towards progress. Luna Bar donated $718,750 so that each athlete of the U.S. women’s team will take home the same bonus as male soccer players for taking part in the World Cup.

A solution to the problem may lie in the hands of large companies adapting the way they market women’s sports. In order for women’s soccer to gain higher sponsorship revenue, companies must give more exposure and publicity to women’s sports. Lack of media coverage of women’s soccer does not allow female soccer players the opportunity to break through and become well-known enough to secure large endorsement deals. 

For example, if Nike were to spend as much money on marketing women’s soccer as they do with men’s soccer, recognition would increase. Additionally, it is up to broadcasting sports channels to stream more women’s soccer games, as other than during the World Cup, women’s soccer is rarely on television.

Data security has proven to be a huge issue time and again for consumers, businesses and government agencies nationwide. With more information than ever being stored in the cloud - and volumes increasing exponentially - it's vital for companies at every step of the supply chain to have concrete plans in place to increase the security of their sensitive data, and react properly if anything goes wrong.

After all, some data breaches aren't necessarily anyone's fault, but the fallout can be exactly the same as if the information is stolen in a malicious attack. Even a small amount of information that falls into the wrong party's hands - or simply gets exposed - can have a profound negative impact on your operations, according to Supply Chain Management Review. Taking time to address a minor data breach is likely to set a company back in some way, and the bigger the incident, the more time that will need to be allocated to solving the problems that arise.

Data security is a must for any business in the supply chain.Data security is a must for any business in the supply chain.
For that reason, it's critical that everyone within an organization be properly trained on how to handle sensitive data, and outside requests for such information, the report said. It only takes one weak link to break the strongest chain, and when companies can do more to head such threats off at the pass, they will be in a better position to avoid costly clean-up efforts.

Why it's a challenge
For many companies, a lot of the strong security posture required to properly handle data is easier talked about than actually realized, according to Tech Republic. The big reason for that is smaller businesses just don't have the resources - in terms of people, time or money - to devote to the full-scale readiness that might be necessary. However, that lack of resources is no excuse not to pursue the best possible data security processes.

This risk might be especially acute if companies share their data with supply chain partners, because then the breach risk spreads and becomes even less predictable and controllable. For that reason, businesses of all sizes need to not only develop plans to manage whatever data they share, but also to get rid of out-of-date information that could still be used to negatively impact their processes or bottom lines.

Every vulnerability must be addressed
Of course, it's more than just your supply chain partners that can present a cyber vulnerability, according to Supply Chain Digital. In 2014, Target was actually hacked through the company that provided their HVAC services, showing just how pervasive the risk is, and that even the biggest companies with billion-dollar bottom lines can be vulnerable. For that reason, any effort to redouble security not only internally, but externally as well, is a must.

The biggest mistake for smaller companies in the supply chain would be to think an incident like this couldn't happen to them because of their size. Data breaches, whether targeted or unintentional, happen every day and can have a massive negative impact on a company's processes, finances and relationship with customers or clients.

It’s no secret that utilizing technology provides tremendous upside for corporations. However, having a sense of direction and capitalizing on the right venture is the challenge. The modern age of business involves an increase in computer application. Automation, automation, and some more automation. Take control of your business practices and understand the advantage of software competency. 

Essential capabilities are listed below:

1)      Analytics

Interpreting and communicating data aids decision makers in generating insight into their operations. Taking a proactive, data driven, approach to supply chain processes promotes a positive outlook for your projected scope. Interpreting data evaluates the current situation as well as room for opportunity. The Procurement industry is a perfect example for offering analytical support. Strategically evaluating current spend and areas for improvement discovers additional savings for corporations. Who doesn’t like extra capital in their pockets? Servicing your Procurement operations allows for internal divisions to focus on other core competencies. In addition, containing an introspective outlook for your corporation entails the following:

  • Investigating necessary improvements required for current processes. 
  • Locating opportunities for growth/expansion
  • Promoting collaborative communication among members of each department

The next important capability related to dashboard features.

2)      Software Savviness

Monitoring select reports from your dashboard offers insight into individual categories of your choosing. Below are just a few examples of what utilizing software can do for your company.

Analyzing products/spend based on quantitative or qualitative data is a prominent component of implementing innovative computing. Does your company produce majority of its income in a particular area? In which you’d like to capitalize more on. Are their multiple suppliers that incur similar expenses that can be consolidated? These are just a couple questions that can be answered by growing your dashboard. There is a true advantage in evaluating your in-house process, granting your organization a leg up compared to competitors. It develops quality products/services by first understanding each feature of the internal workings. Soon companies will be utilizing AI for their day to day functions that predict future market trends, or areas of opportunity. Shifting your focus domestically is actually the competitive advantage gained by using these features of technology. The likelihood of making quality decisions increases as the total visibility expands, which is a feature of using a dashboard for extensive reports.

We live in a day and age where technology takes an innovative role in conducting business operations. Getting a head start and creating a solid foundation in computing is an asset that provides benefit. A creative genius of our time, Steve Jobs, stated that “You can’t just ask customers what they want and then try to give that to them. By the time you get it built, they’ll want something new”. Take into consideration where your software capabilities are now and dive deeper into what its potential consists of. As mentioned previously, utilizing technical advances provides a predictive analytical skill set as well as the capacity to automate business processes.

The direct cost of packaging is a very small % of your logistics spend, but it impacts every part of your business, so choosing packaging purely based on its direct cost is a surefire way to either cost your business money or to leave savings on the table. Over the upcoming weeks, we’ll be exploring the cost drivers of packaging, including:

o   Transportation
o   Product Protection
o   Warehousing
o   Handling

There are some softer impacts as well that matter, but are more difficult to dollarize:

o   Branding
o   Administration
o   Environmental


Improving packaging design in order to optimize shipping through dimensional improvements, stacking strength, weight reduction, etc… can drastically reduce your total cost of logistics.  Here’s a simple example using increased stacking strength (Note that pricing used below is for simplicity):

Overview: Company X ships 60 products per day.  Products can ship in a 48x40x50 Corrugated Box + Die Cut PE Foam solution.  Product ships from Chicago to Indianapolis and an agreement has been made for a fixed $700 FTL (Full Truck Load) rate.  The buyer has 2 options for corrugated + foam solutions. 

Option A:  32C Corrugated + PE Foam.  Product weight is too heavy to be stacked 1+1.  Company X can fit 30 products per truck: 2x15x1.  Solution Cost is $20 EA.

Option B: 48BC Corrugated + PE Foam.  Product can be stacked 1 + 1.  Company X can fit 60 products per truck: 2x15x2.  Solution Cost is $25 EA.

So which option is better?  If you look at only direct packaging cost, you’ll choose option A as option B is 25% more expensive, however, let’s look at the total costs annualized.

Option A
Option B
Packaging Cost
 $ 312,000.00
 $ 390,000.00
Transit Cost
 $ 364,000.00
 $ 182,000.00
Total Cost
 $ 676,000.00
 $ 572,000.00

Option B Savings
 $ 104,000.00

As you can see option B is $104K (or 15%) less expensive than option A because although the packaging in Option B is 25% more than option A the freight is 50% less.

In this blog we examined just one of the ways that packaging impacts transportation, but there are several others to consider, such as the impact of corrugated stacking strength in ocean shipments, the impact of dimensional weight on air shipments, etc... Transportation is one of the main drivers of cost that packaging impacts.  Making sure you truly understand the impact your packaging is going to have on your transportation costs is critical when sourcing packaging.

In the next blog of this series I'll examine the impact of Product Protection and Optimizing Packaging Design

Rapidly evolving technology has helped to improve the supply chain a lot in the past decade and will likely continue to do so for some time to come. With that in mind, it's important to understand that effectively managing the supply chain is hardly a "set it and forget it" proposition; in fact, companies need to continually evaluate their own positions within it to ensure they remain nimble and adaptive.
Indeed, businesses at every step of the supply chain are now utilizing the latest and greatest tech to make sure they remain dynamic and engaged, according to industry strategy expert Yasaman Kazemi, writing for Forbes. With demand for shipping on the rise - thanks to the convenience of e-commerce - more is being done to streamline delivery processes so that orders can be filled and completed within two days or less in many situations. Some believe that we may just be a few years away from automated delivery becoming the norm for larger industry participants.

Companies are always looking for ways to tighten up their supply chains.Companies are always looking for ways to tighten up their supply chains.
Many companies are increasingly using other technology like artificial intelligence and the blockchain to better identify weaknesses in their supply chains and craft effective decisions about how best to deal with those issues, the report said. Even small tweaks can help make everything from stocking to picking and packing more efficient on an ongoing basis, potentially saving even small shippers massive amounts of money over time.

It starts with procurement
At just about every step of the supply chain, a company needs supplies from another business, and procuring them as efficiently as possible helps ensure everything runs smoothly from there, according to Supply Chain Management Review. The problem for many companies is that they might recognize issues with their procurement processes but not always know how best to address them without negatively impacting other aspects of the business, such as costs or efficiency.

With that in mind, a thorough review of every process from procurement to getting materials back out the door may be necessary to make sure there is no disruption when working to address any part of a company's operations, the report said. Once reviews are completed and processes are formalized for a modern supply chain, it becomes vital to uphold those standards even as new reviews are conducted on a regular basis.

Digitize everything
Another reason for common inconsistencies and operational hiccups is that many companies continue to use a mix of analog and digital tracking within their operations, according to Supply Chain Brain. Even companies that then take the analog data and put it into digital systems may lose something in the translation, whether it's accurate information or simply efficiency. As such, industry executives continue to urge adoption of all-digital processes to ensure even the slightest speed bumps get smoothed over, and the entire supply chain gains efficiency and momentum.

The more decision-makers can do to identify and address their companies' inefficiencies, the better off their bottom lines will be. Simply put, even an issue that costs businesses a few minutes here and there may see hundreds of lost man hours build up over the course of a year.

Every company in every industry has a vested interest in tightening up its supply chain because doing so provides greater cost certainty and efficiency in operations. But one sector where this kind of effort is even more important is in food production and distribution, because even the slightest hiccups lead to food that's less fresh and, therefore, less desirable.

Indeed, the supply chain could be responsible for as much as 39% of all food waste in North America, according to the World Resources Institute, in an analysis of data from the Food and Agriculture Organization of the United Nations. That percentage can be significantly higher in less developed areas. As of 2009, about 32 percent of all the foodstuffs produced worldwide were lost to waste. Some of that is unavoidable, as byproducts like skin, bones, peels and the like are naturally unusable in many situations.

Food waste is a major issue around the world.Food waste is a major issue around the world.
Food waste in the supply chain can come through distribution, processing, handling or storage and the production of the food itself, the report said. In Europe, waste accounts for 48% of food consumption, as well as 54% in industrialized Asia. In all other parts of the world - North, West and Central Africa; Latin America; South and Southeast Asia; and Sub-Saharan Africa - waste ranges from 66% to a stunning 95% of consumption.

Modern technology plays a role
The good news for food producers and consumers is that there is more or less industry-wide recognition of the problem, according to Forbes. After all, companies and consumers alike have a vested interest in ensuring as much food as possible goes from the fields where it is grown to a person's plate. To that end, more companies are utilizing tracking technology so that they have as good an understanding as possible of where things may go wrong in the supply chain, whether that's in the fields because there is no one to harvest it or in the shipping process because it is being handled improperly.

"We are focused not only on tracking data but on also making that data accessible and functional for the growers we work with," Allison Kopf, CEO and founder of Artemis, a food-focused enterprise management software platform, told Forbes. "Users can track all of their operations and production data remotely from a desktop, tablet or smartphone."

Indeed, the ability to monitor produced food at every step of the supply chain may allow companies to identify and address inefficiencies more effectively, the report said.

Not just addressing waste
The ability to more effectively manage the supply chain isn't only good for curbing food waste, but also increasing its safety, according to QSR Magazine. After all, if foodborne illnesses in a region's produce output can be identified more quickly, the likelihood of people being infected is reduced, and companies also have an easier time recalling the impacted food products.

The more companies can do to get a handle on food waste in the supply chain, the better off their customers and their bottom line will be in the future. That's especially true if these efforts are being redoubled on a regular basis, with companies always striving for more efficiency and transparency.

The current trade war between the United States and China has floated the ocean freight industry directly into the spotlight.

But aside from the ways in which it has been impacted by competing and escalating rounds of tariffs, the shipping sector deserves attention simply because of the technology revolution that has been going on in recent years, which has featured remarkable trends in tracking technologies and blockchain platforms like TradeLens, the digital platform jointly developed by Maersk and IBM.

The container shipping consultancy service SeaIntelligence believes that this trend is heating up now both because the technologies are becoming increasingly scalable, and because customers are developing an expectation of real-time information and transparency on their shipments.
Shippers and carriers appreciate real-time tracking because it provides them insight into where shipments are going, what condition they're in and how to optimize efficient delivery by rerouting them. That's why SeaIntelligence predicts that demand for the service will grow so great that real-time container tracking will be standard in 600,000 containers worldwide by 2025.

"If this adds the value everyone believes will become the case, we are clearly past a point of no return where competitive pressure will compel all carriers to eventually provide this feature as a matter of course," read a SeaIntelligence report recently emailed to Supply Chain Dive.

Real-time tracking of shipping containers will soon be standard, according to industry experts. Real-time tracking of shipping containers will soon be standard, according to industry experts.
In the words of SeaIntelligence CEO and Partner Lars Jense, the "dam has burst" on the digitalization of container shipping, as more inexpensive and scalable tracking technologies have come on the market and led more carriers to announce container digitization projects at scale. Case in point, CMA CGM promised in May to add 50,000 container trackers to its fleet, and the following month, Hapag-Lloyd announced it would implement trackers in 100,000 of its containers.
"It will quickly shift from competitive differentiator to 'must have' qualifier," Jensen explained to Supply Chain Dive.

The continued expansion and ever-increasing complexity of global supply chains all but mandates increasingly intermodal, real-time tracking and digitalization, which obviously benefits carriers' operations and their competitiveness.

The TradeLens platform has already started to remove the need for time-intensive paper-based transactions between international carriers, and simultaneously began making contracting and pricing easier by maintaining records on a transparent yet secure blockchain ledger.

The future of ocean freight will likely be strongly impacted by these trends, though for the time being the main challenge for firms remains maintaining these networks of trackers and related systems.
Tracking sensors, like all other component parts, are subject to wear and tear, cybersecurity issues and glitches that can make it more difficult for them to accurately relay information to carriers and their customers. Companies will not only have to invest in this technology to remain competitive, but will also need to spend more on maintenance in order to make the tech worthwhile.

ICYMIM: July 8, 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.
Spend Matters Team, Spend Matters, 7/2/2019
After already $21 million tariffs are announced this past April, the U.S threatens to inflict an added $4 billion on EU goods in the thick of U.S.-China trade war. Supplier relationships are put to the test as companies must use innovative strategies to bypass export losses. The pork industry demonstrates how entering new markets can aid in negating the effects of the trade war.

Announcing Spend Matters Nexus -- Where Capital and Strategy Converge
Jason Busch, Spend Matters, 7/2/2019
Furthermore, Spend Matters announces the rollout of Spend Matters Nexus, their new research, and advisory organization to launch later this year. The organization will serve private firms, corporate teams, and investors to provide procurement and financial solutions. Hear more about what the Founder of Spend Matters, Jason Busch, has to say about what Spend Matters Nexus has to offer.

SIM? IS it Old News or a Shiny New Pair of Shows? Part I
Michael Lamoureux, Sourcing Innovation, 7/3/2019
Supplier Information Management (SIM) surfaced in the procurement industry a couple of decades ago with early adopters such as CISCO and GE. SIM helps you attain valuable supplier metrics to help you better manage your sourcing strategies and relationships. Do you want to find out if your suppliers comply with international regulations? Or who your riskiest suppliers are according to the hard numbers? Lamoureux discusses the valuable but not-so-new use of SIM to help analyze company interests such as risk management and social accountability.