December 2019

As we finish up the holiday season by ringing in the New Year, many of us will come to the stark reminder that the New Year brings new company procurement initiatives, challenges, and goals. While many of those company goals don’t necessarily need to materialize for another 12 months, I’ve always felt that the start of a new year signifies a time where people are most ambitious both with their personal and professional goals. To capitalize on this new source of ambition and optimism, I’ve provided some proven procurement action items that work best at the start of a new year.

1.) Lend an Ear to your Suppliers
Procurement Departments often implement what I like to call the “take, take, take” approach – by continuously beating up on the suppliers in the form of additional demands or year-over-year (YoY) price reductions. What I suggest is starting 2020 by holding a meeting with your major/key suppliers and asking how YOU, the customer, can make their job easier. Often this may come to a surprise to the supplier, as the roles are often reverse. I like to ask the Suppliers about their internal procedures, any new technological enhancements and specifically the process of payment processing, an often overlooked area in terms of internal costs. I recently went through this activity with a client’s supplier and was able to reduce a client’s reoccurring Preventative Maintenance Service pricing by 12% by simply setting up an agreed-upon once-a-month, 12-month flat rate invoicing schedule. Before this, the supplier was sending up to 60+ invoices a month, each requiring a customer approval, oftentimes delaying the supplier receiving their payment. With these issues now resolved the supplier was willing to lower their service pricing as they were no longer wasting time and resources compiling, reviewing, and correcting numerous invoices.

2.) Review Supplier’s Metrics
The start of the New Year provides a good opportunity to review your key supplier’s performance metrics. One metric I like to discuss with Suppliers is their YoY sales growth/decline. Regardless if the supplier experienced a sales growth or decline, I like to use this metric to gauge a supplier’s interest in offering a Sales Growth rebate – a rebate percent (%) or dollar ($) amount tied to the supplier achieving a certain dollar amount or growth in sales. One thing Procurement Professionals tend to overlook is that Sales Reps/Account Managers are typically measured internally on their YoY Sales growth metrics - establishing a sales growth rebate clearly shows your suppliers you are willing to align your goals with theirs.

3.) Push back on New Price Increases
Generally during/before the holiday season, when most professionals are winding down from the busy year or finally utilizing their PTO, Suppliers will announce upcoming “price adjustments” or in other words - a price increase. Often these price adjustments are typically the result of inflation or manufacturer increases resulting in the price increase of a commodity. In the case of suppliers utilizing the argument of commodity price increases, I suggest requesting data about the commodity and time frame of the commodity increase. I’ve found that the simple act of requesting this data may deter the suppliers from increasing their pricing. In my own experience, I’ve been able to successfully argue that the price increases were not justifiable. Most notably, a Non-Destructive Testing (NDT) supplier came to a client of mine proposing a 5-10% increase due to their raw materials pricing increasing as the product (X-Ray films) was heavily reliant on the price of silver - along with the announcement they included a 1- year chart of the silver price/oz. of which conveniently presented a staggering upward trend. Before allowing the client to agree to the supplier’s price increase, a quick Google of a 5-year silver found that in the year prior to the supplier provided a chart, the price of silver dropped 33% yet the supplier did not lower pricing the following year, but in fact, increased pricing by 2-3%. Utilizing this argument, that the supplier failed to decrease pricing when the commodity pricing decreased, we were able to successfully eliminate the price increase resulting in over $100,000 in cost avoidance savings.

While the start of the New Year may seem like just the beginning of the road to your 2020 goals, implementing these actions early on in the year, may make for a little less stressful Q3-Q4.

On a recent trip to China I became more inquisitive about American companies’ reliance on sourcing materials and production overseas – especially in China. It is a commonplace now a days to offshore assembly of a final product or the entire manufacturing supply chain due to the cost efficiencies derived. Companies like Apple are notable in this space, designing in the U.S. but producing overseas, while others like Tesla are known for their U.S. based manufacturing. This got me thinking when did the U.S. become so reliant on Chinese labor to produce our goods? The interesting fact is that prior to 1970 the U.S. did not have a good business relationship with China. We relied more heavily on countries like Taiwan and even produced more onshore in the U.S.

Our reliance on China is currently being tested with tariffs recently imposed by the U.S. This trade war has come to a ceasefire on December 14th with a pause of sorts agreed to between the two superpowers. This temporary hold is contingent upon making a deal by March 2nd, 2020 to prevent a tariff increase from 10% to 25% on $200 billion of Chinese goods coming into the U.S. This would most likely cause a similar and equal imposition on U.S. goods entering China. All of this calls into question an uncertain future for supply chains that have been established abroad in China for decades. Other alternative nearby countries are being explored by large fortune 500 organizations such as Vietnam, the Philippines to name a few, however the level of technology expertise is limited in these areas as compared to China. This reality is causing U.S. companies to get creative with their suppliers. Operations are being set up outside of China with incumbent suppliers so procedural and technological expertise is not lost, but this results in a new workforce having to be hired with only a few experts coming from China. Having to set up operations and a new workforce even with the intellectual transfer of property is still not an easy task, one that involves considerable investment.

On the flip side of the coin, China is a big market for U.S. goods and organizations realize the impact this trade war may have on China sales. One company that is being proactive in this space is Tesla. Tesla’s have historically been made in their Fremont, CA factory in the U.S. but now a supplementary factory in Shanghai has been set up to produce Model 3’s. The thought here is that these Chinese produced Model 3’s will serve the Chinese market and not suffer from the same tariff a U.S. produced car would face at Chinese ports.

It will be interesting to see how the Tariff situation will play out between China and the U.S. We can see that companies are already thinking about the inevitable increase in Tariff’s and how to manage against those risks. Supply chains and the country of origin for raw materials will most likely start to shift as political factors change. One thing is for certain – a dynamic and adaptive approach must be taken to the outsourcing process to stay competitive on price in today’s market.

One of the biggest problems for logistics firms when they make new hires is that it can often take days or more to get those employees up to speed with how quickly and efficiently the rest of their operations work. Even when in-house training is completed, there's still plenty of learning on the job that comes as a natural part of working as smoothly as possible, but too often, that's because training efforts may not be as effective as they could be.

A big part of an improved approach to training could come in the form of more integrated technology, according to Supply Chain Brain. While workers may learn the ropes of your operations with the help of supervisors or coworkers assigned to the task, that takes time away from what they have to do on a daily basis, leading to a loss of productivity a new hire was meant to address in the first place.

With voice-guided technology that tells workers where they need to go with a particular picked order or how to properly navigate a large warehouse setting, they may get the one-on-one assistance they need to hit the ground running after an initial training effort - without affecting your other workers, the report said.

Seeing the value
For major companies like Walmart, the need to quickly onboard more hires so that they can work more effectively at every step of the company's in-house supply chain led it to develop a training academy with a dedicated purpose, according to the Association for Talent Development. Currently,

Walmart has roughly 200 regional training centers - which have combined to train more than 1 million workers in recent years - but that simply isn't an effective model for the retail titan any longer.
Instead, it is opening a state-of-the-art training facility - measuring some 1.2 million square feet - near Dallas, the report said. This space will consolidate the efforts of 15 training centers in and near Texas under its roof, and Walmart plans to take similar measures to boil down its hundreds of current training centers to 10 or so larger facilities.

Getting the funding
For many organizations, the issue of increased new hire training is certainly a question of money, and to that end, it may be possible for some to seek outside help, according to Feed Navigator. The Grain Elevator and Processing Society Foundation recently reached a fundraising goal from numerous donors to create new training opportunities for those in the subsector's supply chain and bolster existing options.

The GEAPS Foundation helps generate funding for people working in the grain and oilseed supply chain, with online training and courses for industry professionals, the report said. Steve Records, the organization's executive director, said the company is looking into the best ways to invest the roughly $4 million in funding - provided by both corporate entities and individuals - in an industry that is evolving even as the scientific processes underlying it stay more or less the same.

Whether training is funded internally or with the help of industry organizations, companies may want to look into the efficacy of new approaches to get a better handle on their onboarding efforts.

Visibility has quickly become the watchword in the supply chain sector, and the reason why is simple: Technology now makes it far easier to track every shipped item from Point A to Points B, C, D and beyond. However, that level of visibility also poses some security risks because it requires data to be shared between multiple organizations, and more access means more chance of a security issue.

However, a recent survey of industry executives found that 93% of those polled believe integration of the internet of things into the supply chain has more benefits than risks, which is why 7 in 10 have at least some IoT projects in development or operation, according to PricewaterhouseCoopers. For that reason, nearly two-thirds of the earliest adopters in this field say they have tailored their efforts with security in mind.

Those efforts include roughly 55% of respondents that have created specific policies around the concern, the survey found. Nearly as many (49%) have put someone directly in charge of IoT security. In all, companies largely believe the security risks are worth worrying about, but the benefits - not just visibility, but also enhanced trust between business partners, customers and more - comes as a result of increased IoT integration.

What's the goal?
For companies trying to integrate the IoT into their existing supply chain operations, it's vital to identify what the goals with such an effort really are, according to Supply Chain Brain. For instance, supply chain security isn't just about preventing critical operations data from being intercepted, leaked, misused and so on. In addition, companies need to make sure there are no counterfeit items seeping into their supply chain, or legitimate items disappearing from it.

Here, too, this becomes an issue of consumer trust, as any issues around product quality can be a real point of concern for companies and customers alike, the report said. To that end, having real-time tracking data (or close to it) on various items throughout the supply chain is vital to physical security in addition to back-end digital concerns.

What's at stake?
By some estimates, as many as half of all large-scale retailers around the world were hit by some sort of digital security threat - such as a data breach - in 2018, and that's something for companies to consider no matter how large or small their operations are, according to Security Boulevard. Any given business in the supply chain likely has dozens of partners - or more - it relies on to keep the flow of inventory moving through their facilities, and it may be a big ask to have all of them integrated into their IoT efforts.

For that reason, all that can really be done is to keep one's own affairs in order and do all you can to ensure a successful implementation and rollout of supply chain technologies. That way, it's easier to address in-house security concerns and set a standard to which other partners can be held in the future.

ICYMIM: December 29, 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.

Christmas with family is priceless, but the turkey and ham dinners are pricier this year
Spend Matters, 12/24/2019
It looks like the meat industry is experiencing a price surge around the holidays this year. Christmas dinner costs increased by a generous amount and the turkey and ham prices are to blame. What are the other common Christmas dishes adding up to this year?

Your Workforce is Much Bigger Than You Think
Molly Spatara, Future of Sourcing, 12/27/2019
Chances are, you're underestimating the human capital really running your operations. You may be surprised to hear just how big of a chunk of your workforce spend is spent on external workers. Molly Spatara clues us in on just how much of an impact external workforces have on the average supply chain. 

Information Technology Procurement as a Service - Added Value to the Internal Procurement Teams
Rob Johnson, Future of Sourcing, 12/20/2019
The Procurement as a Service (PaaS) model is growing rapidly and for good reason. The sourcing method utilizes technology and industry-specific knowledge in a more efficient way than some traditional buying strategies. Rob Johnson breaks down some benefits to the PaaS model and how the procurement function is evolving because of it. 

When Procurement teams bring in outside consultants, they typically have a few benefits in mind:

  • They want fresh ideas and novel answers to challenges that their team hasn’t been able to crack.
  • They need some FTE flex to tackle a big project that current resources don’t have the bandwidth for while keeping the trains running.
  • They’re looking for outside-the-box thinking to identify new opportunities they are missing.

Whether your company has an established Procurement team in place or is just starting to build one out, a consultant can kick start your practice. That said, everyone has brought on consultants that didn’t end up working out. This can be an incredibly costly mistake that introduces disruptions that will leave you scrambling.
Yet the opportunities offered by consultants can be huge – So, what can we do to ID and root out bad consultants before bringing them in?

The New Consultant Wishlist

Don’t rely solely on a CV or resume - make sure you get insight on a few key elements of a good consultant that aren’t always evident in credentials.

Strategy Development

A consultant's ability to recommend hard-hitting strategies is a staple quality. As such,

  • Does their CV “walk the walk?” Consultants may tout a host of relevant experience, but ask yourself – how often do they cite that experience when discussing solutions? If a consultant doesn’t ground ideas in past accomplishments, how much value did they really bring those other organizations?
  • Are they differentiating your needs from past clients? Every organization is different, and one size never fits all. If consultants assume your organization is identical to other clients, you’re in for problems. Make sure to ask what  about a proposed solution may need to be tailored to your needs. If they haven’t thought this through, treat it as a warning that solutions might need rework later on.
  • Do they treat relationships the way you do? Are you looking to complete a specific, siloed project and have the relationship ends when the project closes? Or are you looking for a more general, wide-spectrum resource to grow with your team? Either may work. However, be sure that any potential consultant understands this desire and can fit within those parameters. You don’t want a one-and-done consultant when a longer-term relationship is needed.


A consultant's past accomplishments may look like a great fit. However, dig into how well that past will translate into working with you.
  • Are you hearing a lot of buzzwords or business speak? Don’t be fooled by flashy, long-winded descriptions that often hide a lack of ability or knowledge. Consultants that can’t explain concepts clearly may be floundering to make up for skill deficits.
  • Are their teaching skills on par with execution skills? When a consultant relationship ends, you want to ensure business can carry on without them. Make sure to discuss knowledge transfer and teaching members of your team how to carry on after the consultant leaves. 
  • Are they good listeners? Is the consultant so focused on their own ideas that they don’t hear you? Some consultants just want to reinvent the wheel without understanding the organizations they’re stepping into, which makes it all the more likely they will propose making the same mistakes you already learned to avoid.

Make Sure your Consultant is a Fit

Finding the right consultant is tricky. Think through these questions the next time you interview a potential consultant to make sure the right resource is brought in.
What happens when the wrong resource is brought in instead? Check back in the new year, as we’ll review a few key questions to ask to ensure any new consultant relationships stay on the right tracks as work progresses

Any time the end of one year approaches and another is about to begin, it's important to consider where your industry has been and where it's going. There are perhaps no sectors undergoing as much radical change today as those connected to the supply chain, and those changes are expected to keep coming fast and furious throughout 2020 and beyond.

Perhaps the biggest is consumers' preferences around shipping continue to evolve, as major companies like Amazon have effectively normalized the idea of free two-, one- and even same-day shipping, according to Supply Chain Digital. That means more consumers might be interested in buying directly from manufacturers and suppliers, cutting out third-party retailers so they can get their orders even more quickly.

Moreover, delivery turnarounds could soon become the most important way consumers make online buying decisions, at least on a similar level to price itself, the report said. Companies that are not responsive to these wants or needs may find themselves getting left behind as supply chains take the next step.

Get a better sense of what's happening in your warehouse.Get a better sense of what's happening in your warehouse.
Investing in technology
To help enable faster and more accurate shipping methods, many companies may need to digitize more of their processes both internally and externally, according to Supply & Demand Chain Executive. That means putting money toward the kinds of smart tracking devices that help you keep better tabs on items as they move into, through and back out of your warehouses, as well as connecting with your many different supply chain partners to make sure they're doing the same.

This takes a major investment in terms of money and time, but in the end, the benefits should become clear enough if the processes are implemented properly, the report said. As more companies get their efforts into the cloud, it will make for a more efficient supply chain overall.

Getting it right
Of course, all these issues mean companies shouldn't be pursuing technology or change purely for the sake of doing so, and as a result it's important to carefully evaluate next steps now, before the new year even starts, according to Material Handling and Logistics. That way, you can hit the ground running with planning and deployment and will have a little extra runway to meet your goals for company-wide evolution and ensure you're still fully engaged with the modern supply chain.

Here, too, it will be valuable to collaborate with your partners so you all know what your plans are and can get on the same page when it comes to implementation, the report said. As a result, all changes you make are more effective, and there are no surprises as to what certain partners will do at any point in the year.

Making these kinds of conversations and decisions an ongoing collaborative process is perhaps the best thing supply chain businesses can do to ensure they're keeping up with what the industry has coming for 2020 and beyond.
Experts recommend scalable steps for digitizing supply chain

Supply chain digitization is all the rage in many industries these days and for good reason: By putting as many data points as possible into the cloud, companies gain greater visibility into their own operations, as well as those of their various partners.

Of course, achieving these goals is often far easier said than done, and companies need to take a holistic approach to handling increased digitization if they want to get it right, according to Supply Chain Management Review. This all starts with the simple decision to make a small investment in digitizing the most important part of the business, whatever that may be, and expanding from there - both "up" and "out."

Horizontal expansion, which entails adding new aspects of the business to what is already being digitized, should go hand in hand with vertical expansion - improving the technology and structure of the systems themselves, the report said. Simply put, to truly achieve what you may want, it's important to continually pursue both types of growth in your own efforts, and it all starts with an assessment of where you stand today and what you will need going forward.

Collect as much data as you can - as soon as possible.Collect as much data as you can - as soon as possible.

Getting it right
There are a lot of moving parts when it comes to digitization, of course, and there's certainly no one-size-fits-all answer for how to implement it in every single warehouse, factory or other company at any given step of the supply chain, according to Freight Waves. It starts with planning and expanded visibility into your operations, but it also requires smarter and more efficient procurement and storage, management of "spare parts" in your processes, last-mile logistics and so on.

"Companies that can put together these pieces into a coherent and fully transparent whole will gain huge advantages in customer service, flexibility, efficiency, and cost reduction; those that delay will be left further and further behind," industry experts Stefan Schrauf and Philipp Berttram of PricewaterhouseCoopers Strategy wrote in recent findings.

It's worth noting, however, that no company in the supply chain is an island, and that's by design, the report said. As such, companies have to ensure their various partners are also following through on similar efforts; it's one thing to have full transparency for all your own operations, but if you have little to no idea what's going on outside your walls, the effort isn't going to be as valuable as you'd like.

Are you ready for what's coming?
Now is the perfect time to think about these issues, as we approach the end of one decade - which brought with it seismic change for the industry - and the start of one that promises even more upheaval, according to a separate Supply Chain Management Review report. Companies are likely to continue gaining increasingly valuable insights into their operations, and those that don't follow through on these efforts are likely to struggle as the industry continues to evolve.

Consequently, it's vital that you start evaluating your needs for adoption sooner than later or, if you've already begun that process, think about how quickly you can implement the change you need and what will be required to accomplish it.

Integrating the IoT into your supply chain

The internet of things is here to stay, with billions of devices already connected to this ecosystem and more being integrated into it every single day. However, the needs of any given company to adopt IoT-enabled tech into their larger operations can vary widely, and you may be wondering how to make it all work for you. That is, if it will work at all.

Some companies are still not convinced of the efficacy that the IoT would bring to their operations, but experts agree that if you're coming into contact with any aspect of the supply chain, adoption is probably a good idea, according to Retail Wire. No matter what kind of business you run, there's probably a practical application for IoT devices, such as optimization of your internal management (for things like inventory), as well as security, loss prevention and more.

Simply put, the amount of efficiency you can gain from even a relatively small-scale IoT adoption effort may be greater than you realize, and that could provide a significant return on your investment, the report said. In addition, having the kinds of data these devices can collect makes you a more valuable partner to others in the supply chain as well, increasing the chances other companies will want to do more business with you.

The IoT can take your operations to the next level.The IoT can take your operations to the next level.

An added benefit
When it comes to larger adoption efforts - for instance, if you start small but almost immediately like what you see - the impact on all aspects of your operations can be sizable, according to Datex Corp. The reason why is clear: The IoT gives you more insight into your own processes on both a micro and a macro level. You may think you have a good idea of things like inventory churn and turnaround times on fulfillment with manual tracking, but by automating tracking, you're likely to get a lot more granular information than you thought possible.

That data is instantly actionable and gives you the chance to not only be reactive to what you're dealing with currently, but also potentially proactive to identify future needs before they even arise, the report said. That's especially valuable when you get into business relationships that allow you to share important operational data with your partners, and get similar information from them, so the insights you glean are even farther-reaching.

Making the difference
A perfect example of how IoT tracking data is valuable to any company in the supply chain comes in the analysis: With legacy tracking efforts, you only get past information - and not even as much of it as you think, according to Inbound Logistics. However, if you can successfully integrate the IoT, that data becomes available to you in real time and gives you a clear picture of not only what has happened, but what is happening now. That, in turn, allows you to make more informed decisions or estimates about what's coming in the near future.

For all these reasons and more, it's vital for companies to look into the best practices for integrating the IoT into their current processes as soon as possible, ensuring long-term success and more fruitful relationships.

Group Purchasing Organizations (GPO’s) are gaining popularity amongst companies because of their role in increasing operational efficiency. A few GPO responsibilities consist of: aggregating the purchasing power of business in order to receive cost savings, solving procurement & sourcing concerns, negotiating for discounts & rebates from its vendors, & achieving lower cost per transaction for their customers. It’s essential to understand benefits from choosing a GPO, but companies must contain an introspective perspective before gaining membership. For instance, which type of GPO is suitable for your operations?

Here are three types of GPO’s that can best fit your company’s needs:

Vertical Market: Focused on one industry or vertical (examples: healthcare, food service, automotive, electrical, etc.). Allows organizations to purchase items specific to your industry at a significant discount.

Horizontal Market: GPO members in the horizontal market exist in different industries, but purchase similar goods and services. Membership grants savings on indirect spend, while freeing up time for organizations to focus on other strategic spend areas.
Master Buyer: Consists of a single buying organization that contains significant contracts in place with vendors and allows other companies to purchase off those current contracts.

All of which contain different benefits positively impacting the overall spend strategy. There are numerous other factors that companies should consider before selecting a GPO. Below will be factors that provide great insight into finding the correct fit:

Suitable Vendors Associated With the GPO

Does your GPO have the right vendors? Accessing a GPO’s vendor list, before gaining membership, provides proper time reviewing compatibility and avoiding any vetting required.

Customer and Advisory Services
An essential component of joining a GPO is the services and expertise behind managing contracts and driving cost savings. One important feature also revolves around support and advisory services that guide your operations in the right direction.

Supply Chain Savings

Organizations must know the cost they currently pay for products/services and the amount of savings a GPO can offer. A deep analysis of these costs also include: distribution, shipping, and other logistic expenses.

GPO’s require careful evaluation and thorough vetting to meet company needs that provide a significant ROI. Other factors that provide insight into suitability are integration abilities of the GPO with regard to procurement software, and the terms and conditions members receive. The factors listed above will help your company find the perfect GPO to join.

As a warehouse manager, you have no doubt heard many opinions about whether it's a good idea to invest in robots to make your operations more efficient. Workers are understandably concerned that these devices will replace them, or at least lead to reductions in their hours, while companies may be reticent to make such a large up-front investment in something they don't have a lot of assurances about.

There are certainly pluses and minuses to robot adoption, just like any other business decision, according to Geodis. However, increasingly companies are coming around to the idea of at least light adoption for a variety of reasons. Not the least of these is the number of errors that necessarily come with any human-focused operation; try as they might to hit 100% accuracy, employees are never going to be able to do it over a long enough timeline.

That may also be true of robots, but error rates are likely to drop with automation for picking processes, the report said. That also frees up employees to do other critical work that they might otherwise have to cram into their schedules between all the picking and packing they have to do, leading to increased productivity and a reduction in the manual labor these workers have to go through.

More warehouse processes could soon be automated.More warehouse processes could soon be automated.
Another aspect of adoption to consider

This all comes at a time when many companies throughout the supply chain find themselves short-staffed, to boot, according to DC Velocity. For that reason, many companies may be considering putting robots to work on a temporary basis when times get busy, such as around the holidays or other periods when their products are in high demand. Through a rental or leasing program, companies can assuage workers' replacement by using them only as a supplementary option when absolutely necessary. That might be especially critical as so many businesses strive to staff up in a low-unemployment job market.

In addition, these rental periods may also give companies some insight as to whether robots would work on a longer-term basis and help them iron out potential issues before they become bigger stumbling blocks, the report said. That includes the human/robot interactions that are inevitable.

"You have to have your workers be ready to interact with the new robots," Melonee Wise, CEO of Fetch Robotics, said at a recent industry conference, according to the site. "The fear is no longer losing their job, but being competent enough to work with the robot. So if you can disarm that as soon as possible, they transition to embracing their robot co-worker. And then they go from fear to curiosity."

A growing market

While robots are still relatively rare in warehouses now, that might not be the case over the next few years, according to Grand View Research. By 2025, the global market for these robots is projected to grow to $6.46 billion annually, at an average compound annual growth rate of about 11%.
With that in mind, companies have to start looking at their options for adoption and make decisions sooner than later to truly ensure long-term success.

Your procurement organization needs to go through transformation activities. It may be something small, such as re-organizing your staff’s roles or updating your policies, or much larger, like rebuilding the entire organization from the ground up across people, process, and technology. The first step to success is establishing the answer to a simple question: Why?

What do you hope to get out of it?

Transformation without well-defined end goals will likely achieve sub-optimal results. Each decision is made on its own and it becomes tough to see the bigger picture. Defining the goals beforehand and using them as a guiding light when it comes to decision support is key to a successful transformation. We like to refer to these as Target Business Outcomes.

What is a Target Business Outcome?

Target Business Outcomes (TBOs) enable groups to make decisions based on which choice will best align with one or more TBOs. A TBO is NOT ‘implement technology’ or ‘strengthen procurement policies’, those are potential means to an outcome. You need to determine why you want those to begin with. When you start asking why you want to do those tasks, you get TBOs. A TBO defines the end goals. Maybe you want to implement technology to increase reporting capabilities, or you want to strengthen procurement policies to reduce maverick spending.

This also ensures you are making decisions for the right reasons. A Target Business Outcome of ‘implement technology’ when the real goal is to increase reporting capabilities will often end with decisions going against the true end goal. Once the TBO is properly defined, decisions can be made to support it.

Imagine if the decision is whether to require all requisition line items to have a required commodity tree selection. A TBO of ‘increase reporting capabilities’ would mean the answer is "definitely". A TBO of ‘streamlining the user experience’ would likely make the answer "no".

A key part of strong TBOs is whether you can define success and report off of it to show data-driven evidence that you were successful. Continuing the example above, increasing reporting capabilities can be demonstrated at the end by the types of reports you can generate, how much time it takes to clean up the data, or new insights that can be gleaned.

Transformation can get off the rails quickly if you don’t keep your eye on the prize. Target Business Outcomes not only ensure you know what your end goal is, it helps you make decisions all along the way.

As I turn 40 and another decade comes and goes, I am starting to flash back to the various trends of past. Of course being a fashionista I reminisce of the fabrics and styles of the 80’s with big hair, fluorescent spandex, and shoulder pads to the now skinny jeans, animal prints, and suits for women. You can buy all of your clothes online from all over the world without ever leaving your house; although where is the fun in that compared to a shopping spree like Julie Roberts in her 90’s classic Pretty Woman.

Another area of interest to be both socially and professionally is the shift and innovation of Communications and the technology supporting it. Remember in the 90’s in high school when you would send coded messages to your friends, like 07734 for hello, 143 I love you, or 121 I need to talk. Then you would have to find a payphone to actually make sense of it or to talk to the person. Today, nobody texts in full sentences and all messages are full of emoji’s and acronyms that most people pre- my generation have no clue what they mean or at least how to respond to them. We look for ways to express ourselves or communicate without every talking or being present. It is amazing how far we have come and at the same time a little scary but exciting for where we are going.

Here is reminder of what Generation X might remember from our past and a highlight of what is to come:


The first 1G cellular systems were created in the early 80’s by Nordic Mobile Telephone. I remember my dad had this big wired phone in the car, probably like 10-12 inches, with big buttons and pretty obnoxious to use. Of course I thought we were so cool and I pretended to call my friends from it all the time!

In January of 1983 the Internet was born with network control protocol standards changing to TCP/IP, Transmission Control Protocol/Internet Protocol. Of course, we did not have our first computer in my house until the late 90’s.


A wireless revolution emerged bringing with it cell phones, pagers, wireless computer networks and wireless Internet, with the technology shifting from analog to digital. This really opened the flood gates for how people connected with one another. For me, the impact was mostly around improving my ability to do research for school work, explore the world outside of text books, and expedite writing papers. Up until that point I was using an old electric typewriter with a very small screen and a horrible correction function.

For scientists and other worldly off the beaten path traveler, the late 90’s produced satellite mobile phones allowing its user to pretty much use the phone all over the Earth with no disruption from covered cell towers. So if you are stuck in the North Pole this holiday, you should be ok if you brought your sat phone with you!


I think we would all agree that a major impact in the past 20 years has been the ongoing expansion and technological innovation of the Internet and everything that touches it. Voice over IP, although technically experimented with in the 70’s, has become a standard for many businesses and consumers especially as people look to consolidate and optimize technologies and forms of communications. Making calls, placing orders (faxing), holding voice conferences is easy and affordable allowing for a truly unified and converged ecosystem. VoIP has improved the ability to integrate Web services, social networking platforms, data exchange systems, and most types of collaboration tools that have made doing business today more effective and efficient. Consumers can share their lives with family and friends in such a way you do not miss a moment. My mother can look at her granddaughter every day via FaceTime to watch her grow.

The future will only continue to hold more amazing transformations of technology and communications allowing for improvements to how we operate our business and lives ensuring we are prepared for mostly anything. We can look forward to continuous emergence of:
  • Artificial intelligence
  • Portable computing devices
  • Autonomous driving
  • Personalized and predictive medicine with real-time sensor data
I do not want Robots to take over the world or become The Borg, but am hopeful for finding ways to improve ourselves and make our precious time during the life we live the best it can be.

In spite of shrinking training budgets, people are everything in Supply Chain Management. That's why Source One, a Corcentric company's Staffing & Recruiting support team offers an end-to-end suite of services.

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

Read the full case study  to learn more about what world-class staffing support could mean for your organization and its approach to Procurement.

A big part of operating in today's supply chain is being able to trust the many different companies you rely on to send and receive products on a daily basis. Just as important, a big part of that trust is being able to communicate effectively with those partners going forward, so no one is ever left in the dark about what's going on.

However, the effort to improve communications throughout the supply chain often starts internally, according to The Packer. Typically, businesses of many different sizes simply don't have enough insight into what their employees are doing on a day-to-day basis and may therefore find themselves not being on the same page if they're not tracking as much as they can internally, from employee movements to inventory and beyond.

"Many of our customers struggle to keep everyone on the same page in the yard, the office and at the docks, which holds back productivity," Tim Kubly, business development manager at the employee tracking tech firm Dok-Vu told the site. "But fundamental change in communication processes can also be challenging."

Take a look at in-house communications first.Take a look at in-house communications first.
When managers have a better idea of what's going on in their own facilities, they may also get more actionable information that leads to better communication, the report said. That effort, in turn, could result in better understanding where your internal communication falls short.

Taking the next step
Once you have a better idea of your internal communication needs, you can begin sharing the key details with your supply chain partners, while simultaneously asking them to do the same for you, according to the Oxford College of Procurement & Supply. It's critical, however, to know whose information is important to receive, and whose doesn't necessarily need to be prioritized. When you identify the most important stakeholders and get them more involved, you're far more likely to find success in bolstering your supply chain.

There's no reason constructive feedback can't flow from all sides to make sure companies are doing their best to provide transparency and security at each step of the supply chain, the report said. The more you can do to get your ducks in a row, the better off you will be when it comes to helping your partners do the same.

Codify it
Perhaps the best way to go about these efforts is by making sure to put a communications plan in writing so all involved know what's expected of them, whether they're the head of one of your partner companies or an in-house entry-level employee, according to River Logic. These are issues that can all be updated and amended as time goes on and the needs of your organization (or those of your partners) evolve. But having something to refer back to as needed will help ensure your wires don't get crossed.

Just like any other chain, a supply chain is only as strong as its weakest link, and you certainly don't want that link to be under your roof. Getting your own operations in order before turning your attentions elsewhere is a must.

Let's take a quick look back to Christmases long, long ago. In those days, opening up a box to find an unappealing sweater was just an unfortunate reality, a reminder to be more specific on next year's wish-list. Itchy, gaudy knitwear was something you pretended to love, something you endured to spare a family member's feelings. Maybe you'd toss on an ugly sweater once a year to appease Aunt Ethel, but otherwise it sat in the closet unloved and unremarked upon.

Today, ugly sweaters are an industry onto themselves. Irreverent party-goers can celebrate their favorite meme, honor a beloved sitcomand (where permitted) get a little raunchy with their choice of jumper. And they're only getting more popular. An analyst at Edited, a retail-focused analytics platform, reports that sweater sales have gone up 42% since last year. With entire websites devoted to all things ugly, shoppers don't even need to visit the mall (or support that eCommerce company) to get in on the holiday cheer.

Many of these sweaters are a lot of fun, but Teen Vogue reports that they're almost all "terrible for the planet." Like most novelty items, mass-produced ugly Christmas sweaters are cheaply made and quickly discarded. Studies by UK-based environmental charity Hubbub found that a whopping 95% contain plastic and 40% are worn just once before they're tossed in the bin. Since these sweaters aren't built to last (or wear in earnest) that's rarely a donation bin.

Even shoppers who hold onto their sweaters for several years' worth of chuckles aren't doing the planet any favors. Acrylic, the most common plastic in mass-produced ugly sweaters, releases 730,000 microfibers with each wash. That's more than five times the pollutants produced by a polyester-cotton blend garment. Scientists have found these microfibers in everything from polar ice to human excrement. In a sense, even the Ebeneezer Scrooges among us are forced to take part in this destructive holiday tradition.

While your Baby Yoda sweater won't single-handedly send the world deeper into its climate crisis, Hubbub suggests it's most definitely part of a growing problem. So-called "fast fashion" - which promotes rapid production and even more rapid waste - is anathema to both the planet and those trying to protect it. Hubbub considers the annual tradition of buying and discarding cheap, plastic-based clothing "one of the worst examples of fast fashion." That's saying something.

In addition to the environmental costs of cheap seasonal laughs, there's the immense human toll. After all, it's not Aunt Ethel knitting these sweaters, but employees in countries where "cheap labor, lackluster worker protections, and worse oversight" promote exploitation.

Taking a more sustainable approach to holiday parties doesn't have to mean forgoing ugly sweaters altogether. Second-hand stores are always chock-full of castoffs from Christmases past. If the holidays find you in a particularly creative mood, you might even consider sewing an ugly sweater of your own. Preferably, Teen Vogue concludes, "out of natural fibers, which are more likely to degrade when they escape into the environment."

Happy Holidays!

The question remains: how and when should you begin a procurement transformation? However, the fact is that the procurement function, at whatever maturity level is operating, it is either adapting or changing as a reaction to major shifts taking place globally and accelerated growth - organic and inorganic. As markets continue to become more complex, volatile and risky, the procurement function may choose to be reactive while operating in a status quo or become proactive to gain a competitive advantage for their organizations. This includes organizations that have plateaued and are in need of innovative ideas and approaches to create new sources of value. In other words, Procurement is in a continued state of transformation, the question is whether companies choose to own and control their own transformation efforts.

Where to start?

The first order of business should be to understand and map the procurement footprint of the organization, this includes processes/policies, systems/technology, and its workforce. This will help companies understand the role of the current procurement organization and to rethink a new Procurement governance model. The goal for the procurement organizations is to become valued business partners and sourcing experts, as opposed to becoming gatekeepers or administrators. Furthermore, gaining the stakeholders' perspective and understanding their business needs will begin to open up doors into the business operation and increase the understanding of the company’s goals and objectives. Additionally, engaging with a handful of key or major suppliers, as may be determined by high spend or business-critical activities, can identify quick-wins that can help demonstrate the procurement value to the business and start to gain stakeholders' support.

What is Your Approach?

Procurement leaders must clearly define the direction of their organization and design a communication plan that will resonate across the enterprise and become the mantra for the new Procurement organization. Most companies announce procurement transformation that will deliver an $X amount of savings and while this is certainly a measure of success, it may translate to budget owners as a constraint and a cumbersome process to achieve these cost savings. The focus needs to be on designing a procurement engagement model that is attuned to the company culture, fosters supplier relationships and defines a technology roadmap that eliminates, automates or outsources procurement tasks that do not add value. If done right, cost savings will follow.

Key enablers for Procurement Transformation

The procurement function in itself is a key enabler to achieve corporate goals by contributing to an assurance of supply, accelerating innovation and time to market, driving company standardization and optimizing working capital and cash flow. Therefore, procurement enablers are necessary to support these corporate goals and to successfully design and operate the procurement organization. However, key procurement enablers are on the eye of the beholder, so let’s focus on defining value, cultural shift and success indicators, which are instrumental for defining a clear vision for any transformation initiative.

Value to the company may have had a different meaning to the various business units, whether it is manufacturing operations, sales and marketing, research, and development, as well as the support functions. However, in the big picture procurement may define value as providing solutions to stakeholders that deliver better quality, lower cost, and improved experience for the end customer. In manufacturing operations this may mean identifying the right suppliers to gain speed to market or for the marketing team, creating a differentiator in the market. Therefore, getting closer to business operations will help design sourcing strategies that are aligned with corporate objectives.

A cultural shift is inevitable with any organizational change therefore, new behaviors need to be recognized and induced to facilitate transformation. This can include seeking stakeholders' feedback on procurement performance, establishing outcomes-based metrics, and building powerful relations that allow the business stakeholders to tell the stories. Additionally, the right procurement talent will be needed to complement the partnership with the business.

Measures of success will need to be mutually defined and aligned with mutual business performance objectives to ensure the right business focus. Procurement will realize they are adding value when the business seeks their support and solutions.

Therefore, value, culture and performance measures are necessary to successfully address the procurement enablers, as well to support operational procurement processes. As a minimum, key procurement enablers can be identified as procurement analytics, supplier relationship management, staff, and technology.

Procurement Analytics to capture and use data to support fact-based decision making and procurement strategies to gain stakeholders' buy-in.

Supplier Relationship Management efforts to drive a consistent and structured approach of interacting and managing suppliers, while creating opportunities to uncover additional value.

Procurement Staff development and training
is key to ensure people are placed in the right position with the skill set required to engage with procurement influencers.

A technology roadmap
for sequencing and developing underlying technology enablers is paramount to gaining procurement efficiency and to free up the staff from tactical activities.

Performing an initial assessment of the procurement organization will provide the information needed to define the strategic direction for the procurement organization and the role that it will play to contribute towards the company's business objectives. As a result, the benefits will be identified and prioritized to serve as the basis for building a business case for the company’s procurement transformation.

ICYMIM: December 16, 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.

Brexit and U.S. -China Trade Deal Gain Steam
JP Morris, Spend Matters, 12/13/2019
The two most relevant global happenings for American business: Brexit and the U.S.-China trade war. It's unclear whether China and the Trump administration will soon come to an agreement and the first phases of Brexit will begin shortly. JP Morris updates us with some happenings of both foreign affairs. 

This Isn't Your Father's Outsourcer
Carlos Meléndez, Future of Sourcing, 12/13/2019
IT Outsourcing is no longer and one-and-done deal-- there are a lot of moving parts. With the complex web of tech tools companies are using, you need experts with both tech-smarts and industry knowledge. Not to mention expertise in the emerging applications of tech such as AI and modern cybersecurity. Carlos Meléndez reminds us of the complexity of IT outsourcing and provides few things to consider when building "a complete ecosystem of providers".

How We Are Doing Total Talent Management Wrong (And How We Can Do It Right)
James Simmons, Future of Sourcing, 12/10/2019
Total Talent Management (TTM) is a staffing model that allows different workers to perform more cohesively in the workplace and produce the best possible product for the company. While the concept has evolved over the years, TTM has lost some of its main virtues along the way. James Simmons breaks down exactly what TTM is, how to implement it, and how NOT to implement it. 

Security in your supply chain is a must, whether it's physically safeguarding the items you ship and receive to keeping the data you and your partners generate protected. However, with such an interwoven relationship between so many businesses at every step of the chain, security is far more said than done these days. That's especially true because it's not always easy - and sometimes it's impossible - to control what your partners are doing.

Case in point: When it comes to setting up cybersecurity systems, you can't tell who at another company has access to those platforms, according to Threat Post. A recent study found that the average company has as many as 4,700 partners that have access to at least some of their sensitive data, and no business could possibly keep tabs on all of them. That is broadly understood, as only about 1 in 7 companies are confident they could track all those third-party firms.

Third-party data security should be front of mind in the supply chain.Third-party data security should be front of mind in the supply chain.
Risks from something as simple as targeted phishing attacks that weren't intended to affect more than one company could compromise massive amounts of your data, the report said. Less malicious issues, such as someone accidentally sharing data they were unauthorized to reproduce, can have similar effects, and you would have no way of stopping it.

What can be done?
For all these reasons, companies would be wise to create as many contingency plans as they can to deal with these issues, and that should start with a careful examination of who has access to what data, according to HelpNet Security. For instance, such an effort may find that you're still sharing data with a third party you no longer do relevant business with, or that you've granted access to another company inadvertently.

Furthermore, it's vital that you do what you can to make sure whatever data you collect and share is stored both on the cloud - whether others can access it as needed - and in-house so that you cannot have your operations crushed by a ransomware attack or a partner being compromised, the report said. It's also vital to rely on encryption so even if someone does gain unauthorized access to your data, it would be useless to them without the right keys.

Getting it right
Finally, as supply chains evolve and more technology comes into them as everyday tools - for instance, something like sensors connected to the internet of things - your security plan will need to be reimagined, according to Supply Chain Beyond. Each new device on your network, and those of your partners', is another point that can potentially be compromised, so all involved must strive to properly safeguard them on an ongoing basis. Crafting a plan for integration in advance is perhaps the best way to go about this.

None of these steps may be easy - or cheap - to deal with, but they are certainly critical to ensuring none of your sensitive data is compromised.

The procurement organizations continue to evolve as a core function within the top 500 Fortune companies and as world trade dynamics continue to challenge the supply chain, companies will need to focus on enterprise cost management to create added value that will contribute to the bottom line. As a result, companies announce transformation initiatives across organizational boundaries at all levels of their business as a reaction to market conditions, cost pressures, and regulatory requirements. A wide array of terms are used to describe change - transformation, optimization, lean, operational excellence, restructure, re-engineer, re-organization - however, inevitably most companies would agree that the ultimate goal is to gain business efficiency and improve operational effectiveness. Having achieved this, it will naturally yield sustainable cost reductions throughout the business operations lifecycle.

To this effect, the procurement function plays a key role in any organization transformation initiative, as cross-functional core processes are redesigned to link activities, functions, and policies in ways that will achieve breakthrough improvements in cost, quality, and timeliness. Together, these three forces represent the fit-to-purpose that the company must achieve to be successful. Nothing new under the sun, however, the question remains how to embark on a transformational journey that will balance and integrate these three forces into a cohesive transformation program. Hence, enterprise cost-management techniques can be applied to align corporate strategy and functional area execution to reap additional benefits such as: enhanced spend analytics to accelerate analysis, category-based sourcing strategies to leverage spend, risk-sharing to promote partnership, the total cost of ownership (TCO)-based decisions making and supplier network rationalization. Furthermore, as companies use hybrid systems to support the day-to-day procurement process, it becomes increasingly important to align people, process and technology to formalize goals, establish accountability metrics and drive external collaboration with partners and suppliers.

Among the external factors impacting the business are the nature of the market and supplier competency. This creates an opportunity to identify a supplier base that can become a strategic asset to the business and integral to achieving business goals. Suppliers are becoming a driving force behind innovation, capable of identifying innovative solutions through their broader business network across multiple industries. New ways of collaboration with suppliers are needed to develop suppliers into better future relationships. Therefore, categorizing the supplier base and establishing a Supplier Relationship Management (SRM) program is critical to a sourcing strategy that ensures continuous business alignment throughout the relationship life cycle. It also drives a disciplined approach and consistent way of interacting and managing suppliers which results in continuous improvement from the supply base.

As companies seek to transform their procurement function to radically improve the benefits to their organization, an integrated business strategy in a structured manner must be designed to optimize the acquisition of goods and services. This can be accomplished by an initial assessment of the organization purchasing maturity to design a tailored program that will deliver a competitive advantage by eliminating waste and inefficiency through detailed analysis, careful planning, strategy implementation, and continuous improvement. A transformation program needs to address fundamental issues related to internal processes, technology and spend data while conducting an evaluation of the procurement staff's knowledge, capability, and capacity. Using this coordinated approach will revolutionize the procurement function and allow companies to capture untapped value.

A new vision for procurement organizations will make them become a major driving force within their companies. But this is just a starting point, a comprehensive approach coupled with intelligent spend engines and advanced analytics solutions are key to successfully transform the procurement function.

For some time now, concerns have been brewing about how the international supply chain would be impacted by a full-scale trade war between the U.S. and China. While some volleys have been passed back and forth between the countries, with the potential for more to come, things have been relatively muted to date. With that in mind, companies are nonetheless adapting so that they're prepared for just about any eventuality.

Just in case a more significant trade war erupts, a number of companies based in the U.S. with manufacturing or production centers in China have at least begun shaking up their current supply chains so they can make their products in other foreign nations as well, according to CNBC. However, it's worth noting that in most cases, those companies are unlikely - at best - to withdraw operations from China completely.

There's a simple reason for that situation: Some materials or components that cannot be sourced anywhere else, at least not at a price that makes sense for manufacturers and, by extension, their customers or partners, the report said. Moreover, the fact is that the supply chains these companies have invested massive sums of money setting up can't just be uprooted and moved to entirely different countries with any sort of ease.

A U.S./China trade war requires a lot of vigilance from companies.A U.S./China trade war requires a lot of vigilance from companies.
It's not so simple
At the same time as some firms are being proactive about setting up contingencies, a recent poll from DHL Resilience360 shows just how much of a challenge of these efforts. Nearly half of all companies in the engineering and manufacturing sectors with operations in China say they have no backup plans in place if the trade war escalates, and the same was true for about 2 in 5 companies in the automotive sector.

Overall, there are companies in many industries that would face little to no effect from such a situation, but manufacturers and automakers are among those that have likely already taken a hit, the report said. Indeed, it may simply be easier for them to take the hit than find new solutions on relatively short notice. As such, 43% of respondents with long-running relationships with Chinese suppliers and factories cited cost and time as major factors behind their decisions. This despite the fact that 92% expect the tariffs in such a dispute to linger long-term.

Reason for hope
While some companies are fretting for obvious reasons about the implications of a protracted trade war, experts now say the strength of today's supply chains are actually part of the reason why this might not last as long - or be as significant - as some believe, according to Knowledge at Wharton. It's not as though companies on the other side of the Pacific aren't facing the same issues as those based in America do now, and it appears as though the complicated nature of establishing and maintaining those chains will keep the trade war from becoming a sort of "deep freeze" for all involved.

Nonetheless, companies should still make sure they at least have the flexibility to react to new developments as they happen so nothing takes them by surprise.