October 2019

Monthly Round Up: October 2019

Gain new Supply Management insights with these highlights from the last month. Want a monthly recap sent directly to your inbox? Subscribe to our newsletter today.

Popeye's Spicy Chicken Sandwich: Supply Chain Mishap or Marketing Tactic?
The all-internet famous “Chicken Wars” have fast food industry giants Chick-fil-A and Popeye’s battling for the ultimate spicy chicken sandwich. The social media feud was so effective that Popeye’s sold out of the famous sandwich in less than two weeks. Or did it? Arthur Piszczor suspects a hidden motive; how can a chicken restaurant run out of chicken? Was the “spicy chicken deficit” just a marketing ploy to increase demand?

What Impact will the Dawn of 5G Have on Your Supply Chain?
5G will be the next mobile network to revolutionize technology. The quick-fire internet speeds are likely to expand throughout global businesses faster than you may think. While the tech update will bring about endless opportunities for companies in any industry, the adjustment might not be that easy. How will supply chains keep up with 5G tech?

Holiday Sales May Not Be All that Jolly
Despite a healthy-looking economy, the 2019 holiday season isn’t shaping up to be a prosperous one. Sales projections are down by an alarming percentage and retailers are worried. According to economists, the recent trade war might be to blame and supply chains will take a direct hit. How will global businesses and consumer confidence be impacted? 

Market Intelligence: Part IV - Asking the Right Questions
Once you’ve established your rich sources for market intelligence, your team has to know what to look for. Each sourcing project comes with its own set of obstacles and mysteries. Siara Singleton explains the importance of a customized approach for each project and provides four key questions you should always remember to ask.  

The Efficacy of Postal Optimization in Print and Mail Services

As consumer awareness grows, food companies are under a bigger microscope than ever before. The growing need for fresh, wholesome, and ethically-sourced ingredients is pushing companies to find new innovative strategies to meet consumer needs. How can food producers use new technology to design supply chains that match society’s modern food standards?

One of the most common IT sourcing challenges our clients' face is how to optimally align sourcing objectives with operational and technical objectives, and vice versa.  That's not to suggest that it can't be done is is insurmountably difficult, or that expectations need to be low.  The root of the problem with making changes in an IT environment financially and operationally efficient is a lack of information.

Increasingly, what we've traditionally called "IT" has pervaded enterprises with little or no oversight or insight by the traditional IT gatekeepers.  Further, the nature of what we call "IT" today has become a more complex web of inter-dependencies than ever before.  To make matters worse, it's not just the infrastructure and applications running in the enterprise, but the suppliers and the relationships and contracts with them that need to be considered as well.  Even minor changes can be just the first domino to fall in a series of otherwise "unpredictable" concerns downstream.  Unpredictable, that is, without the right information and analysis.

The intuitive solution to a lack of information would be to close that gap.  To gather the needed information, analyze it, and plan for it.  But in most organizations, that's not practical, due largely to time and resource constraints.  Instead, the ambiguity is accounted for with ambiguous planning.  Timelines are setup around stage gates based on specific points in time.  While it could be worse, there's a lot that happens between each gate that's largely unaccounted for in a plan, which means room for unnecessary risk and cost.  

Instead, a good plan will factor current state and planned changes usually starting with the technical/operational priorities, and then factoring current, new, and changing costs and other constraints into the equation.  The latter being where the information gap typically lies.  However, investing the time and effort into uncovering and planning for these factors yields a significant return.  In doing so, often plans can be adjusted and prioritized with minimal or no operational impact.  In other cases, compromises may be made on the operational side to realize substantial financial benefits.  And what's more: more information allows for increases specificity.  This means that all of the time between stage gates can be meticulously accounted or and planned around.  Often, the timing of those stages may even shift as diligence reveals opportunities to begin certain activities sooner, or to hold off on others to shed unnecessary cost along the way. 

Optimal planning is challenging or impossible for most IT organizations to do on their own.  Their focus is on keeping the lights on and typically that's all they have time for.  Even given more time, other priorities need to come first and further, even with ample time and resource the skill set to efficiently complete the diligence and research required to form a long-term, complex plan.  All that said, this side of the planning process should be coming from Procurement.  In order for that to happen, though, a collaborative relationship is necessary, which, unfortunately, many Procurement organizations lack with their IT groups.  As best, there is reactive Procurement support of IT needs.  But, this introduces an opportunity for Procurement to do what it does best and develop a stronger relationship with IT that creates a proactive management approach that will extend months or years.  And if Procurement can't get a seat at the table, it's a perfect opportunity to bring in a partner who knows the IT space well, can speak IT's language, and can liaise between the business and the IT organization.  Doing so will open up dialogues and act as a catalyst to further, close collaboration for the future.  If you'd like to discuss how your Procurement group can collaborate and plan with IT, contact us.

Procurement and Supply Chain Management's role is growing more and more essential. Companies are well aware that they need a strong team if they want their business to flourish. Interest in the profession is growing as well. According to Supply Chain Dive, full-time enrollment in the top 25 supply chain programs rose by 43% from 2014 to 2016. With so much demand for Supply Chain professionals and so much young talent entering the workforce, why does it still feel like there’s a talent gap in SCM?

Elementrum suggests that, “The Industry is exploding faster than workers are becoming qualified”. With AI technology reaching maturity and global markets setting new standards for the field, supply chain management talent has to be—well—talented.  Sadly, the bulk of supply chain executives feel that the upcoming SCM generation isn’t skilled enough to lead the field. 

The Emerging Leader’s Committee of ISM-Chicago wants to help generate solutions. The Institute of Supply Management (ISM) is a not-for-profit organization that has been advancing the field of supply chain management for over a century. Their state and local chapters help host events all year for professionals at each stage in their career.  On October 30th, ISM-Chicago's Emerging Leaders Committee with host a panel discussion titled, “Bridging the Talent Gap.”

The panel will provide insights from these five industry thought leaders:

Naseem Malik has gone from sourcing goods to sourcing talent. After gaining 15 years’ experience as a procurement practitioner, Naseem turned his full attention to something he enjoys most – leveraging his network, connecting the dots and finding the best talent in the profession. Spanning diverse industries, he has worked in numerous roles of increasing responsibility as a Director of Global Sourcing at both Terex Corporation and ACCO Brands, and his background includes working in management consulting for AT Kearney, as well as multiple start-up businesses.  As an active member of the Institute for Supply Management (ISM) and various Purchasing Councils, Naseem has authored numerous articles for Inside Supply Management and Supply Chain World magazine and presented on topics relating to talent challenges in the global marketplace.

Marie Mensah lives to transform organizations.  Marie is founder of Chicago-based, Mensah Consulting, which focuses on procurement and supply chain best practices, organization design, training and development and implementing major transformation projects.   Her passions include exceeding corporate performance targets by dramatically reducing total cost of ownership, managing business risk, and establishing long term, sustainable, competitive advantage.  Previously a Procter & Gamble Procurement executive, Marie held purchasing responsibilities spanning Contract Manufacturing, Packaging, Chemicals, and leading P&G’s Supplier Diversity efforts.  

Stuart Gonzales is leading a team of professionals to ensure a supply chain for direct, indirect, and professional services used by RR Donnelley. He has a wide range of experience in Supply Chain, Procurement, Sales, Customer Service, Product Logistics, Project Management, Human Resources, Labor Relations, Organizational Development, and Emergency Response. Stuart has been a Project Manager in a variety of business applications including system installations, upgrades, and migrations. He is particularly interested in business systems related to procurement, sales and customer service.


Leigh Barbeau is currently the Director, Indirect Procurement at Ace Hardware Corporation. She has worked in the Procurement arena for approx. 25 yrs holding various positions over the years within Global Hyatt Hotels, Laureate Education and, currently, Ace Hardware. Leigh has extensive experience and accountability in corporate operations (direct and indirect spend categories); commodity purchasing with strategic outsourcing expertise; creating dynamic vendor relationships; value engineering propositions; and superior project and team management.

Frederick Narolis is currently the Head of Sourcing for HERE’s America’s region. Scope includes IT Cloud/HW/SW/Telecom, Facilities, Fleet, Map Content, Real-time Data Content, Professional Services (Legal, HR benefits, Marketing Print, Consulting), and Contract labor. He has had executive-level experience and leadership roles in performance improvement for private equity, technology, and corporate firms which includes experience in Operations, Margin Management, and G&A.

Learn more about registering for the event here

This blog comes to us from Kelly Barner, the Owner and Managing Director of Buyers Meeting Point. It originally appeared on The Determine Blog.

We’ve all heard (or used) the expression that managing some groups of people is “like herding cats”. For cat people in the reading audience, this requires little explanation. Cats do what they want, when they want, only if they want. The expression wouldn’t have caught on if it weren’t true, which means there are plenty of feline humans out there too. If you’re in procurement, I’m sure you’ve met quite a few of them.

We put a contract in place, and the “cats” buy from someone else. We establish a process, and they do whatever they like. It can be infuriating. But, if we approach our internal cats with the right attitude, they also present us with unique opportunities to improve procurement’s performance, impact and influence.

Here is some advice for those days when you find yourself unavoidably herding cats:

Independence can cause friction or spark innovation.

The thing about cats is that, unlike horses, cows, sheep, or… well… lemmings, they aren’t hardwired to travel in herds. They naturally function as independent creatures. You may care for them, but you will never own them.

Similarly, in the world of corporate spend management, people who go against the grain rarely do so just to be difficult. Even when their efforts are misguided, they are acting in what they believe are the best interests of the organization (or at least their function).

These independent people are critical thinkers and often have a singular point of view that procurement can harness for their own objectives. It is important to identify and track “cats” and forge open relationships with them.

These are the people who will give us an honest opinion about a new program or provide an independent perspective on incumbent suppliers. In a world where requests for feedback and input are often met with unsettling silence, cats can be relied upon to help us focus on what is mission-critical for the organization. As long as they are widely recognized as having an objective voice, a word of public support from a cat is often worth more than a formal endorsement by someone who routinely follows the rules.

Cats keep procurement “honest” on enterprise alignment.

Procurement likes to think that we are doing the right things for the right reasons, but it is easy to lose perspective and start serving procurement’s needs first and the organization’s needs second. If this happens frequently, our performance metrics need to be revisited. If we can rely upon anyone to keep us on track, it is our cats.

Cats are indifferent to needs, desires, and priorities aside from their own. Buy from a new supplier to save less than a percent on an annual basis? That is unlikely to be worth the disruption to their routine. Endure a counter-intuitive approval process because it aligns better with the way our eProcurement solution works? You must be kidding. If cats are going to take a step, there has to be something in it for them – not just subjectively contributing to the greater good.

Feline humans are notoriously aloof, just like their animal counterparts. Non-compliance from them can be relied upon to spotlight existing problem areas in the procurement universe.

Even when procurement’s programs and recommendations are in the best interests of the enterprise as a whole, it can be immensely helpful to monitor the frustration level of cats. The potential consequences of their non-compliance remind us to communicate results and benefits in terms that carry meaning to internal stakeholders and people who will be affected by the change.

Working with cats (rather than natural herd animals) forces procurement to remember that we should be focused on sharing incentives and motivations rather than just insisting upon control. They may not make the job easier, but if you can win over a cat, you’ve really accomplished something.

Happy National Cat Day!

Last Thursday, the Corcentric family had so much fun at its fifth annual Procurement Professionals Happy Hour in Chicago. The team was happy to have hosted its largest and most successful Chicago happy hour yet! New and existing members of Source one gathered to meet and mingle with the Chicago Procurement community. Professionals exchanged new ideas, shared industry insights, and discussed field-wise news such as new-age technology and building new supply chain talent. The cherished tradition has resulted in yet another rewarding night of drinks, apps, and provocative dialogue. 2020 is sure to bring even more intriguing news and ideas, see you next year! 

ICYMIM: October 28, 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.

Team Conflict: The Good, Bad and the Ugly
Kate Vitasek, Future of Sourcing, 10/22/2019
A procurement team must be cohesive if they want to succeed. Harmonious teamwork doesn't mean, however, that the team won't disagree and butt heads here and there. Kate Vitasek reminds leaders that while unhealthy conflict can bring your team down, productive conflict (and productive conflict resolution) can lead to positive consequences.

Reuse, Recycle, Re-manufacture ... Now!
Michael Lamoureux, Sourcing Innovation, 10/23/2019
There's a common misconception that its highly expensive for supply chains to go green. Several recent studies show that the greener option is, in fact, very often the more cost effective one. Michael Lamoureux provides insight as to how re-manufacturing efforts can help deliver on cost reduction opportunities and how a sustainable supply chain could mean better finances for your company.

How to Successfully Make a Career Change into Supply Chain
Thomas Net, 10/23/2019
Changing careers is inherently stressful, but it doesn't have to be quite so arduous. With so much demand, a transition into Supply Chain Management could provide exciting new opportunities to drive global businesses. Thomas Net spoke to 30 Under 30 Rising Supply Chain Stars to found out how these emerging leaders smoothly transitioned into their current careers. 

Emotional Intelligence refers to a person’s ability to recognize, understand, and manage emotions throughout their day-to-day activities. According to Daniel Goleman, there are five key elements of emotional intelligence: Self-Awareness, Self-Regulation, Motivation, Empathy, and Social Skills. Many believe emotional intelligence skills are directly linked to our overall success in the workplace and achieving happiness within our personal lives as well.

Someone who is considered emotionally intelligent has an ability to think rationally and clearly during times of frustration, excitement, anger, or distress. Developing this skill-set can improve your candidacy during an interview, ease the transition as a ‘new hire’, and welcome the opportunity for feedback. Critiquing, practicing, and enhancing this skill-set in the earlier stages of seeking a new career opportunity may put you on a higher pedestal in comparison to other candidates.

During the interview stage, hiring managers are seeking candidates that are motivated, self-aware of their current qualifications, and capabilities to improvise as a team. For example, if the company is a ‘start-up’ or possibly transitioning employees during a time of growth, the company will seek an individual able to empathize with the current state of the company and adapt as changes progress. Through the interview process, it is crucial to relay your relative strengths and articulate them to the hiring manager.

Throughout the first few months of your new endeavor, applying emotional intelligence within the workplace is beneficial to your team, supervisor, and other peers you’ll engage with on a daily basis. As a new hire, it’s important to manage your excitement and eagerness to welcome opportunity, while self-regulating these emotions under intense pressure. I reference the term ‘pressure’ because ultimately, you’re hoping to succeed and complete tasks perfectly within the first chapter of their new position. On the flip side, along with a new role inherently comes (what I like to call), the undeniable learning curve. The learning curve includes many features where emotional intelligence can be extremely useful in multiple ways, including social settings as well. If you’re emotionally intelligent, I’m assuming questions relating to culture within the workplace was a hot topic during the interview stage. Social skills are a key feature to becoming a successful emotionally intelligent candidate. During the first few months, applying these skills can be useful when defining what is appropriate within the new workplace. Typically, social patterns from your previous company carries over to your new role. However, it’s important to observe and articulate rules, norms, and culture aspects to adhere with company standards and respect peers.

Lastly, investing in your emotional intelligence will provide excellent skills to receiving, accepting, and responding to feedback. Emotional intelligent individuals have a solid view of themselves, granting access to their key strengths and weaknesses. An emotional intelligent person welcomes suggestions, recommendations, assessments, reviews, criticisms, and tips. They utilize this feedback as an opportunity for growth and to better themselves within the workplace.

Investing in your Emotional Intelligence while actively seeking a new position has numerous benefits. Most importantly, it sets you apart from other prospective interviewees right out of the gate. Once you've accepted a new role, it ensures an easy transition and welcomes the opportunity for growth.

Get Started Today!

Although restaurant chefs tend to earn more than their cook counterparts, employment among the former has fallen for the second straight year, according to newly released figures.
Based on a recent study from Chef's Pencil, the total number of chefs working full-time in the U.S. fell 4.3% in 2018, to 128,600, with some of the biggest losses realized in New York, Texas, Michigan and Tennessee on a year-over-year basis.

Meanwhile, and somewhat counterintuitively, the number of line cooks over the same period rose, reaching an all-time high of 2.4 million last year, Chef's Pencil reported, based on data from the Bureau of Labor Statistics.

Sharp difference in earnings for chefs versus cooks
There are a few reasons as to why the employment supply chain seems to be going in opposite directions among restaurant kitchen staff. One is salary. As noted by Restaurant Dive, while earnings are up for chefs as well as cooks, chefs earn considerably more than their subordinates, to the tune of $52,160, on average, versus $27,580 - nearly two times higher. Because of this discrepancy, eateries may be hiring line cooks at a more regular clip to save on operating expenses.

Another potential contributor to the divergent trend is a chef shortage. Hotels, casinos, corporations and highly compensated public figures have the capital to pay chefs a more generous wage, leaving cooks to vie for traditional restaurant positions.

Foodies give A's to Chick Fil-A
Whatever the ultimate reason, restaurants - and the overall dining industry - are faring quite well these days. Quick-serve restaurants saw sales rise 20% in 2018 among the nation's 150 largest restaurant chains, and by close to 5% for the top 10, Restaurant Business reported, based on figures from Technomic's Top 500 Chain Restaurant Report. Chick-fil-A, which has received more customer volume in recent years due in part to rave reviews, pulled in $10.2 billion in 2018, a 13.5% increase compared to 2017.
Every organization is unique. They've each got unique cultures, unique organizational structures, unique goals, and unique definitions of what it means to change. More often than not, however, they share many of the same challenges and obstacles. The same old issues stand in the way of that change. Whether you're looking to carry out a Procurement Transformation, introduce a new solution, or just go to market for a key product or service - the same old concerns and complaints almost always come up. 

While there's no one-size-fits strategy for successfully driving change, these tips should help any organization looking to navigate around obstacles and keep initiatives on track. 

Throughout the second half of this decade, opinions of the business world have quickly gone from bad to worse. According to Deloitte's most recent millennial survey - the first to consult members of Generation Z as well - just 12% of respondents believe businesses are successful in "improving and protecting the environment." Only a slightly higher portion (16%) trust businesses to improve the livelihoods of their customers and employees. Fewer than half believe they're at all committed to ethical behavior.

At the same time, these convictions are more likely than ever to sway their purchasing and professionals decisions. 36% of respondents reported that ethical behavior is enough for them to "start or deepen" a relationship with a brand. Another 37% have "stopped or lessened" because of unethical behavior. And it's not just those pesky Millennials and Zoomers calling for a change. Back in 2014, Nielsen surveyed consumers of all ages and determined that more than half would pay more to do business with an ethical organization.

These sentiments have inspired protests and boycotts around the globe and put a new level of pressure of businesses. If they don't start taking a stand - and making a serious change - they're customers and employees won't remain loyal much longer.

What Issues are Consumers Concerned About?

Sustainability, responsibility, and ethics are all terms that continue to evolve. They don't just mean one thing. For companies to distinguish themselves as fully sustainable, responsible, and ethical they've got to prove they're committed to addressing a host of issues. These include:
  • Environmental concerns: climate change, pollution, water use, deforestation, etc.
  • Human rights concerns: Forced labor, child labor,  unsafe working conditions, workplace discrimination, conflict minerals, etc.
  • Animal welfare concerns: Product testing, fur and leather, inhumane conditions, etc.
  • Other ethical concerns: Bribery, corruption, etc. 
It's not enough for an organization to root out unethical practices and promote responsibility within its own operations. Truly discerning consumers - whose numbers are growing all the time - want to engage with brands that have thoroughly vetted their suppliers (and their suppliers' suppliers, and so on). 

What Can Procurement Do?

For Procurement, the world's new emphasis on responsibility presents a number of both challenges and opportunities. After all, ethical practices aren't established and maintained with forecasts in the boardroom. They're established and maintained through partnerships at each stage in the supply chain. Organizations that genuinely care about building an ethical, responsible approach will do everything they can to boost visibility and drive collaboration. Technology will certainly help, but it's never a magic bullet. Nestle, for example, has made great progress in the fight against deforestation thanks to its new satellite-based tracking systems. They have learned, however, that even near-total visibility won't solve these problems instantly. 

Whether through technology or other means, time is running out for Procurement to address the issue of visibility. According to Deloitte, 65% of organizations have limited (if any) visibility past their first tier of suppliers. This leaves them vulnerable to all manner of risk factors that could not only cost money but open them up to backlash, legal action, and boycotts. North Carolina-based Badger Sportswear, for example, learned last year that limited visibility can have broad consequences. The organization discovered that one of its Chinese suppliers - despite passing third-party inspection - was making use of slave labor. Taking visibility into their own hands might have made it possible to identify and address the issue more proactively.

Now is also the time to for businesses to embrace competitors as partners. The (especially high-polluting) fashion industry has already begun taking approach. Last year, more than 40 fashion brands and retailers signed the Fashion Industry Charter for Change. These include recognized industry role models like Stella McCartney and more beleaguered brands like H&M and Burberry. Other organizations should follow Fashion's lead and build a coalition to address these shared concerns.

Though the majority of Procurement groups still struggle to foster innovation or drive digital transformations, a growing number are trusted to serve as role models for the business. If Procurement embraces and evolves in this role, it could take the lead in winning back new generations of consumers and changing the conversation around business ethics. 

This guest blog comes to us from Megan Ray Nichols of Schooled by Science

Not every procurement officer has to deal with the water treatment industry on a daily basis. That’s why it can be useful to have some reminders of the practical (and even visual) issues that you can solve with the right piece of equipment. Some of the other reminders here have more to do with your company’s culture and your mission, and how you can come to the best decision possible for all parties involved.

1. Break Down the Costs Strategically
Water treatment systems and new equipment and projects influence several other facets of your company, and possibly even all of them. There are utility costs to consider, plus maintenance costs over the equipment’s lifecycle, contract costs associated with your vendor’s services over time, the labor for supporting personnel and more.

Many companies and municipalities who are strategic with their spending choose to engage in what’s called a “hybrid procurement approach.” This is where companies or governments use more than one delivery type according to what best fits each phase or project. The advantage can include faster delivery times as well as a more strategic way to transfer risk.

2. Include Facilities Personnel in the Decision-Making Process
When you’re tasked with buying water treatment equipment, it’s not just the cost of the equipment that concerns you. You also need to know what kind of service value is included in those costs.

You may find yourself making a choice between two differently priced but otherwise similar pieces of equipment from two different vendors. You need your facilities managers and maintenance personnel to make their voices heard in the decision-making process. They’re better positioned than anybody to tell you whether the service value of one company justifies the price.

What do we mean by “service value”? It comes down to two things: which provider looks better prepared to support your own people? And which one looks more committed to consistency in all of your required benchmarks, with the guarantees to back up their claims? Trust your people not to steer you wrong.

3. Don't Assume Flat-Rate Water Treatment Is More Economical
Most of what we discuss here today relates to purchasing water treatment equipment. But what if you’re buying services or leasing equipment from a water treatment vendor instead? How does the mission change?

It’s possible you’ve heard about flat-rate water treatment services and wondered if they deliver a better deal overall. This is something you should be skeptical about, under many circumstances, for the same reasons you’d be skeptical about a fixed-rate electricity delivery plan.
There are some things a supplier can control. Other things are beyond anybody’s control, such as production fluctuations and the number of high-degree days.

Both of these impact how much water is needed for cooling and other industrial purposes and the cost to maintain the equipment. Keep your spending low (and your supplier accountable) by holding budget reviews quarterly and annually with your provider, whether they provide services, equipment or both.

4. Target Your Solutions to Known Problems
If your existing water treatment equipment isn’t solving 100 percent of your problem, it’s probably costing you money. But you need to be smart about how you apply your probably too-small procurement budget. That means beginning with known problems, rather than being sold a product that solves an ill-defined problem.

Think of deposits and foam in mixing tanks as one example. When surface aerators can’t deliver the controlled agitation over the volume of water you require, “dead zones” are the result. Dead zones are areas where vertical aeration creates localized areas of deposits, odors and foam. Your equipment is working harder in the long run than it should be and getting less done.

One way to avoid this is to replace inefficient and poorly-designed aerator systems. You’re procuring water treatment equipment for a reason. When you’re looking for a supplier, pay attention to how well they listen and how well they define the problem before they propose a “solution.”

5. Evaluate Your Vendor’s Expertise and Staying Power
There are a few other practical matters to consider while choosing and purchasing water treatment equipment and service providers and performing diligent research on their vendors. They are these:
  • Find suppliers with industry-certified components.
  • Be sure you’re dealing with suppliers and vendors with a regional presence. You don’t want to be left waiting for a part located a few states away.
  • Evaluate your suppliers’ talents for re-engineering existing parts when appropriate, but also how well they keep up-to-date with emerging water treatment technologies and trends.
This is another natural place to solicit feedback from the people in your company who have their hands on these systems on a daily basis. But it also means finding partners with strong roots throughout the region and good-looking business histories.

A Team-Based Approach to Water Treatment Procurement

You should feel a little better prepared to watch your procurement team come together with your maintenance team and other facilities specialists in pursuit of a common goal. You may also have a better appreciation for how many other systems and departments this kind of decision might touch upon.

The Strategic Sourceror has served as a resource for supply chain professionals since 2008 and covers anything from procurement transformation to packaging specifics. You can access any of our categories from our header, but we wanted to put a little something extra together for you. In this series, we're giving you a list of our top blogs of all time and we're going to give them to you per area of expertise. This is a perfect opportunity for those getting an introduction to Procurement and Supply Chain Management to familiarize themselves with the hottest topics in the space.

In this edition, we'll focus on is MRO.

1. MRO – An Industry Overview
The MRO (Maintenance, Repair, and Operations) category covers a wide variety of products and services that are often challenging to manage. It’s important to maintain a high level of visibility into all corners of the category and to take a strategic, center-led approach. This infographic outlines some of the terms and concepts you need to know for effective MRO spend management.

2. The Most Stupidest Contract Clauses
A poorly thought out contract could put you in an undesirable spot with the other party. Even the slightest error in wording could send your project in the wrong direction. Additionally, not paying attention to detail could result in an unhealthy, unbalanced supplier relationship. Joe Payne recalls some of the most senseless contracts and clauses he’s come across during sourcing projects and explains why they won’t work for you.

3. Predictive Analytics and The Future of Spend Management
You probably already know the importance of strong market intelligence, but the true power of data comes from what use it to achieve. Predictive analytics are highly valued data that can help companies skip a step and act proactively. Joe Payne highlights the potential of predictive analytics and how industries are utilizing the method today.

4. The Importance of the Market Basket in an MRO Sourcing Engagement
In many spend catefoeies, sourcing managers will put the top 80% of overall spend in a market basket in an attempt to source the bulk of materials together. Procurement can't afford to leave that other 20% out of sight. This blog offers insights for bringing all relevant spend under management through market baskets.

5. Can Amazon Business Really Compete With MRO, IT, And Office Products Suppliers?
In 2015, Amazon inserted itself into the manufacturing sector by offering Amazon Business, a service designed to provide industrial products and office supplies to other businesses. Will Amazon be able to compete with suppliers who have decades of experience and industry-specific knowledge? This infographic compares Amazon Business against its new competitors.

6. Will Amazon Impact Top Industrial Supplies Distributors?
Source One takes another look at the ways Amazon Business has affected the industrial distribution space. How has the eCommerce transitioned into this new market? How are competitors responding?

7. Amazon Business Vs. MRO Distributors
In this podcast episode, Source One Associate Director takes yet another look at Amazon Business and its competition with traditional MRO and Industrial Supplies distributors. Amazon, he suggests, has its work cut out for it.

8. IBM Watson and the Future of MRO Procurement
IBM has aired a series of commercials highlighting how predictive analytics can change the world. Mike Croasdale suggests it could prove especially useful for Procurement professionals in the MRO space. Professionals might predict, for a example, that a machine will malfunction and take action before it affects their business.

9. MRO Sourcing & Contracting Tips
While the MRO sourcing best practices haven’t changed much, the category's contracting and price models have. MRO Sourcing managers must evolve to continue sourcing the category strategically. Ken Ballard provides some best practices for sourcing and managing MRO spend. 

10. Strategic Sourcing Pro Tips: That Dreaded MRO Category
Don’t make the huge mistake of overlooking your MRO spend. Though it's often complicated, MRO can provide generous savings opportunities and a solid approach to MRO sourcing can help your team reach its full potential. Here are some key tips your procurement team should remember when managing MRO spend.

Check out some of our other "Greatest Hits" lists:

One of the most persistent problems in the American economy over the past several years is that demand for shipping bandwidth is seemingly always on the rise, but freight companies simply can't meet it. Often, the issue arises because professional truck drivers just aren't as common as they used to be, and rising wages don't seem to have done much to curtail years of attrition.

Today, drivers make less on an inflation-adjusted basis than they did in the 1970s and '80s, leading to a driver shortage that harms the entire supply chain.

Indeed, the latest data from the American Trucking Associations shows that through the end of 2018, the entire freight sector needed almost 61,000 more drivers than it actually had, just to meet existing demand. Moreover, as demand for freight services grows in the years ahead, and more current truckers retire due to age and other factors, replacement rates aren't going to be strong enough to keep up. By 2028, the industry could be as many as 160,000 drivers short.

"Over the past 15 years, we've watched the shortage rise and fall with economic trends, but it ballooned last year to the highest level we've seen to date," said ATA Chief Economist Bob Costello. "The combination of a surging freight economy and carriers' need for qualified drivers could severely disrupt the supply chain."

The freight industry is changing quickly as the driver shortage wears on.The freight industry is changing quickly as the driver shortage wears on.
What's the impact?
While it's difficult to quantify exactly how much the trucker shortage will affect the supply chain as a whole, these issues are likely to lead to challenges for many companies, regardless of industry, according to AgWeb. For freight companies themselves, they're likely to face higher costs related to labor, not only in the form of rising wages, but also when it comes to providing better benefits like improved health insurance, more vacation days and the like just to attract and retain talent.

Experts note some smaller freight companies likely won't be able to keep up with their bigger competitors in this regard, and may struggle to hire or hold onto enough drivers to stay afloat, the report said.

All this added expenditure is, of course, likely to be passed on to freight customers in the form of higher per-mile shipping costs, which may change the calculus when it comes to meeting their own needs for financial flexibility.

Understanding the problem
Perhaps not surprisingly, the trucking industry writ large seems to be able to identify the shortage as the single biggest issue it's now facing, according to a new survey from the American Transportation Research Institute. The shortage has held that top spot for three years running, just ahead of tightening rules around hours of service (which play their own role in raising prices), as well as driver compensation, which came in third.

With all this in mind, companies that rely heavily on trucking services as part of their overall supply chain will need to continually evaluate how their needs align with the realities in the freight sector. Given that issues are likely to change a lot in the coming years, having a nimble strategy will be a must for finding long-term success.

There’s a seismic shift happening in the real estate market. The Millennial generation has become the most dominant market segment in the home buying arena. It may have taken us some time to get here, but now that we are – we’re changing the way it’s done.

Our lateness to the home purchasing party isn’t because we prefer the comfort of living in our parents' basements over the prospect of having our own place. Rather, for a bulk of my generation, it's the affordability of owning a home that presents the biggest barrier to the real estate market.

Competing Priorities

Our status as the most college-educated generation comes at a cost - Student Loan Debt. Fun fact: there are more than 45 million borrowers who collectively own $1.5 trillion in student loan debt - that's right Trillion. According to the Federal Reserve, a "$1,000 increase in student loan debt causes a 1 to 2 percentage point drop in home ownership rate for student loan borrowers during their late 20s and early 30s." The Fed attributes student loan debt to the 20% drop in home ownership. So, while we would absolutely love a beautiful home with a nice big yard for our dogs, we simply have to prioritize paying off our debt before making a property investment. This is especially true when you consider just how expensive it is to buy a home.

Short Supply

If you’ve ever watched the shows Fixer Upper or Property Brothers, you’re probably familiar with the real estate term: Starter Home. A Starter Home is usually the first house that a family or individual can afford to buy. In the real estate industry, it commonly denotes a small one- to two- bedroom home that is older and may require a bit of renovating. As it turns out, Starter Homes are actually in short supply in many U.S. cities. According to a report by Realtor.com, the number of homes listed at $200,000 or less (the range at which many first-time buyers with a limited budget tend to shop) has dropped over the past year. The number of homes priced over $750,000, however, grew by 11% last year. Additionally, the rate of single-family home construction is also lagging. With a limited supply, would-be first-time home buyers are stuck renting.

Revolutionizing Real Estate

For those of us that are breaking out of the rental cycle, we’re changing how real estate is done. Our captivation with technology has revolutionized many industries and aspects of our lives - house purchasing is no exception. While past generations would find their homes through personal referrals to realtors, flipping through the Yellow Pages, or simply wandering into an open house. Millennials do not (and simply can’t) afford to rely on a stroke of luck.

According to the National Association of Realtors, 81% of older Millennials found their home through a mobile app. That's right, we're swiping left and right for our houses, too.The real estate world has caught on and is leveraging technology to continue capturing the youngest generation of home buyers.

  • Research: Like they would for countless other purchasing decisions, Millennials are doing their research when it comes to home buying. With the rise of real estate apps and sites, Millennials have the ability to understand the market before they go through the purchasing process. 
  • Match Making: Realogy has partnered with TurnKey Home Purchase Service to create a unique home-buying experience. By simply asking a few questions online, the potential home buyer is matched with an agent who is best suited to help them in their home search. 
  • Real-time Updates: American real estate database Zillow keeps potential home buyers well-informed on properties of interest by offering regular email alerts. When users opt in for updates, they’ll receive notifications when properties change in price or status. 
  • Social Media: Pinterest, Instagram, Facebook, and even LinkedIn are go-to sites for Millennials searching for a home. Social Media Marketing, as a result, has found a place in the real estate market. 
The bottom-line: Millenials are faced with an economy that's far different from that of past generations. Our life choices and purchasing habits point to those differences. Our captivation with technology and growing purchasing power continue to disrupt industries.Our pursuit of a place to plant our roots is no exception.

Procurement's evolving, essential role is a double-edged sword. The function has earned the respect and executive buy-in it needs to drive organization-wide change, but it's numerous talent gaps have grown ever wider. More than half of CPOs doubt their teams have the skills they need to deliver on their goals. Faced with evolving technologies and emerging risk factors, this talent gap could soon grow even wider.

Skills and expertise aren't the only things most businesses are missing. Many lack the internal resources to close these gaps on their own and get Procurement headed in the right direction. They're reliant on over-worked HR departments and struggling to update age-old processes. What can they do? They might consider working with a dedicated Procurement and Supply Chain recruiter.

Job seekers know that recruiters are valuable resources for the (often long and difficult) application process. They're often just as useful for organizations looking to supplement their efforts and bring leading talent into the fold.

Here are just a few of the ways a recruiter could benefit your organization.

Recruiters Save You Time, Money, and Effort

As mentioned above, your Procurement and HR teams already have their hands full with day-to-day responsibilities. HR doesn't have the resources to familiarize themselves with the ins-and-outs of Procurement, nor does Procurement have the resources to become a full-fledged hiring function. Keeping a position open is costly. With the time and resources to focus on open positions, recruiters keep you from wasting money and help you quickly move best-fit candidates through the hiring process. 

They'll streamline that process from end-to-end by vetting candidates and reducing the workload for your internal team. Once you've on-boarded a new hire, a recruiters efforts will continue to pay off in a big way. You won't need to break the bank training them and preparing them to succeed because your recruiting partner will ensure they're ready to hit the ground running on Day 1.

Recruiters Engage Passive Candidates

Unemployment is the lowest its been in decades. That means the pool of active candidates is about as small as its ever been. To fill the talent gap, organizations need to cast a wider net and seek out more passive candidates. These are candidates who aren't currently sending out resumes and searching on job boards. A recruiter will extend your search by connecting you with candidates that might not realize what a great fit your organization could make - or how much they're looking for a change. They'll inspire these professionals to take action, present your Procurement team as the best possible fit, and provide for long-term, mutual benefit.

Recruiters are Marketplace Experts

Recruiters are out in the trenches every day. If they're any good at their job, they've developed a through understanding of what it takes to succeed in your industry. What's more, they know where to find those top-notch candidates and what your organization can do to win them over and welcome them aboard. They'll ensure you're putting your best foot forward - by offering the right incentives and benefits - and prepare candidates to do the same by familiarizing them with your organization's approach, expectations, and unique culture.
Are you struggling to identify candidates and welcome them onto your Procurement team? Learn more about Source One's end-to-end approach to recruiting. From internal capabilities reviews to on-boarding support, they provide everything you need to build a best-in-class team.

While it's usually a good sign when the unemployment rate hovers at or near historic lows, it can also create a problem for many companies within the supply chain. With the holiday season approaching, many companies that usually staff up heavily for much of November and December may suddenly have difficulty doing so.

Many of the biggest names in shipping and retail - not only nationwide but around the world - have announced plans to hire tens of thousands or more workers ahead of the holiday season, according to Supply Chain Dive. However, that all comes at a time when unemployment nears lows not seen in half a century. Some experts believe joblessness could  be the lowest ever recorded when accounting for other factors.

Companies are already putting in huge seasonal hiring efforts.Companies are already putting in huge seasonal hiring efforts.
This means, however, that companies looking to hire heavily in the months ahead will be competing in a relatively shallow pool to hire the most qualified seasonal candidates, the report said. Simply put, hiring at a high volume in a short window - given the current industry constraints - could prove difficult.

"That's a huge undertaking," Lucas Hiler, director of strategic sales at recruiting and staffing agency Aerotek, told the site. "It makes me wonder, how are they able to hire a quality employee? Or are they just bringing in somebody that is not qualified for the job?"

What's being done?
As with many supply-and-demand scenarios like this, when unemployment drops, the cost of labor necessarily has to go up, so companies are doing more to appeal to would-be hires than ever before ahead of the 2019 holiday shopping season, according to Penn Live. Some also started their searches for seasonal hires as far back as August to get ahead of the pack.

Included in many of these upgraded offerings are on-the-spot hiring decisions, higher pay, flexible scheduling, eligibility for retirement savings plans, employee discounts and, perhaps most crucially, the ability to be hired on full-time at the end of the holiday rush, the report said. All of this may be critical for companies at every step of the supply chain to figure out as soon as possible so they don't find themselves shorthanded come November and December.

Taking the next step
Companies don't want to get pulled into a cycle where they must continually staff up every holiday season, so a transition program that allows part-time hires to become full-time is often seen as a must, according to Logistics Management. Not only should companies be screening for people who can do the short-term work, but also look at all applicants to see if any are future leadership material. With the right approach, seasonal hires can become effective managers that make next year's efforts easier to handle.

When companies are offering top dollar and great perks for seasonal hires, their difficulties in finding talent - even when the marketplace is incredibly competitive - are likely to be relatively minimal. That may be just what they need to get ahead this holiday season.

Naseem Malik is a Managing Partner at MRA Global. With over 15 years of supply chain management and logistics experience, he now focuses on recruitment function in the space. He'll share his tips for developing the right skills, seizing the right opportunities, and growing as a professional later this month. He's just one of several thought leaders who'll serve as panelists during Closing the Talent Gap on October 30th.

Check out some of the insights Naseem as shared with Source One in the past:

Discussing Procurement’s Talent Gap with Naseem Malik
As Procurement's role grows more diverse and essential, its various talent gaps continue to widen. It's more important than ever that businesses change up their talent development processes to serve a new generation. They'll also need to refine their recruitment practices and place a new emphasis on retention. He shares his thoughts on this episode of the Source One Podcast. He advocates for an aggressive approach and encourages organizations to seek out both hard and soft skills.

ExecIn Spotlight: A Conversation with Jami Bliss & Naseem Malik
Back in 2017, Naseem Malik and Jami Bliss served as moderators for the ExecIn CPO Roundtable. They preceded the event by recording a conversation on the Source One Podcast. They discussed some of the issues facing CPOs as well as the recent strategic growth Procurement has seen throughout the last decade. 

Source One’s IT and Telecom team has spoken, written, and generally waxed-poetic about the challenges with - and benefits of - building a strong IT and Procurement partnership. But similar to the procurement function as a whole, before you can start applying these best practices, it's important to take a step back and examine the maturity of the current (if any) IT procurement support. As with general procurement operations, there is not a quick fix to get to “best in class” and starting with incremental improvements can go a long way in advancing the value that Procurement brings to IT.

To assess IT-specific procurement maturity, we'll leverage the Procurement Maturity Model that was introduced by Source One in 2018 and understand how that model applies to IT Procurement:

Laggard (Tactical): When we talk about “Laggard” procurement teams it’s those that are stuck in the function's tactical past…Cutting costs and making purchases on a reactive, as-needed basis, they're helping keep the lights on…

When IT Procurement is tactical within an organization, they are typically working in an extremely reactive nature to IT spend management. Typical activities may be simply processing renewals or purchases, pushing paperwork without adding value to the process, and generally just reacting to what IT and its suppliers are pushing. Tactical IT Procurement does very little to understand holistic IT supplier relationships and the criticality of those suppliers on the organization’s infrastructure and systems.

Traditional (Operational): Traditional Procurement is where purchases are still made on a largely reactive basis with little thought to anything other than hard dollar cost...Managing inventory, processing purchase orders, and renewing contracts constitute the bulk of their daily workload...

When applied to IT, operational procurement may have a sense of when larger software or maintenance renewals are due, have a role in managing and maintaining POs, and take on maintaining hardware and software inventories, but little strategic or long-term value is being added. I think of these groups as “record keepers” – they’ve started gathering and maintaining the information and inventories to make strategic decisions, but they don’t have the time, resource, and/or capabilities to turn that information into proactive supplier, contract, and service management.

Augmented (Strategic): These Procurement departments enjoying a good level of executive support and buy-in, employ a strategic sourcing process that takes into account far more than price alone. It's earned internal respect by optimizing supplier relationships, providing for greater spend visibility, collaborating with other business units and perhaps, most crucially, gathering metrics to report on its success.

For IT Procurement, strategic work begins when procurement teams turn their “record keeping” information into actionable strategies and discussions that inform and define a holistic IT category plan. Strategic IT Procurement works with the IT department to understand the organization’s technology roadmap, anticipating where and when sourcing, negotiations, and supplier/contract management can benefit and support IT’s short, mid, and long term goals. By shifting from a reactive to a proactive approach, IT Procurement starts to add value and become a true partner of IT. This is where Procurement should begin expanding the IT areas/subcategories it supports. Where tactical or operational IT Procurement may have an eye on hardware and software purchases/renewals, strategic IT procurement understands and supports oversight of managed service providers, staff augmentation, infrastructure and hosting needs, and project-based products and services - all the while seeking opportunities for optimization and consolidation, and establishing a framework for KPIs and metrics around supplier performance.

Consider that many IT suppliers do not sit in silo-ed subcategories as we may see in other areas of indirect spend – many service providers within IT can resell hardware and software solutions, and many “traditional” hardware and/or software suppliers offer services and are expanding vertically within their own supply chains. Given the range of products and services that IT suppliers can provide, it’s important for someone (read: Procurement) to have a holistic view of spend and service performance to inform negotiations and long-term relationship planning.

World-Class (Innovative): These Procurement teams occupy a fully-strategic, highly-valued role within their organization. They have the ear of the C-suite and are trusted to drive organization-wide strategic initiatives. Change is not merely a goal, but a cultural imperative for everyone across the business. A culture of continuous improvement enables them to stay on the cutting edge of emerging technologies and consistently refine their own internal processes.

Innovative IT Procurement teams are in lock-step with IT and are applying procurement best practices with consideration for the IT department’s performance goals and technology roadmap. These procurement folks understand and are able to balance optimizing costs, mitigating technology risks, and supporting IT as they look to innovative solutions/suppliers and are actively engaged by IT based on the value they provide to vendor selection and management processes. Similarly, Innovative Procurement ensures IT is brought into sourcing events and supplier selection decisions within other areas of the organization to ensure alignment with IT’s current and future requirements.

It’s worth considering that the level of maturity that any IT Procurement team can achieve is going to be dependent on how mature the IT function is within your organization. By asking the right questions, Procurement can help IT to be more proactive in anticipating and meeting the changing needs of the organization and developing a longer term vision for the technology roadmap. Consider where your IT Procurement team is on the maturity curve and take active steps to strengthen the value proposition to IT. For many, the first step is having a conversation with IT and beginning to form collaborative working relationships with key stakeholders. Simply start by engaging stakeholders with the goal of understanding their priorities to form a solid foundation for longer term IT and Procurement collaboration!