April 2021

Most procurement teams understand the central role project management plays in running an RFP or sourcing event. Equally important is the nuanced approach to all interactions with stakeholders of any kind. This includes our suppliers, internal partners, and executive teams.

How we interact with other teams and organizations speaks volumes about not only our current reputation within our own organization, but also how we envision our team and role growing in the future. Optimize the “image” of your procurement team by,  

  • Positioning your team as strategic allies, and not burdensome bottlenecks
  • Focusing on total value and not just cost-cutting measures
  • Working with Executive Leadership Teams to set expectations

As Brian Seipel discussed previously, better stakeholder management leads to a reputational shift and improved relationships with stakeholders. Prioritizing these relationships is one of the first steps you can take to optimize all interactions with different stakeholder groups (both internally and externally). Applying this same school of thought, we must consider how we interact and collaborate with other teams.

Collaboration, Teamwork, and Reciprocity

While we can wax poetic how to better work with different teams and stakeholders, practical tips on how to interact with different teams can prove useful, if not necessary. Ways to improve relationships with different teams can be boiled down to a few basic tenets. 

  • Collaborate. Find ways to engage your stakeholders early and often, letting them know their input is appreciated and valued. Extend this even further by collaborating with suppliers. Negotiations are more than just redlines, demanding concessions, and moving on. Find ways to have open and honest discussions and see if there are opportunities you can extend scope to generate a better deal for you and the supplier. Ultimately, it’s about being flexible and willing to collaborate with everyone, not just internal partners.
  • Team Mentality. It’s important to emphasize the value of the team dynamic when working with your internal partners. We are all working towards a common goal, and procurement isn’t here to get in the way of internal initiatives. In fact, procurement is here to be a trusted advisor and a valued member of any team. Stress this by reminding everyone we are all members of the larger organizational team. 
  • Reciprocate. Let’s look at supplier negotiations as one example of when we can compromise and reciprocate. Look for opportunities to acknowledge any compromises a supplier was willing to make and extend concessions their way when allowable. We don’t need to be rigid on every clause or condition when dealing with suppliers and showing we’re willing to be flexible builds trust and a healthy relationship between our internal partners and their suppliers.  

Maximize the Value of our Interactions

It is easy to dictate how we as procurement professionals and organizations will interact and work with our stakeholders, suppliers, and executive teams, but taking advantage of the opportunities we have are crucial. A world-class procurement organization maximizes every opportunity with all stakeholders.

Corcentric’s Jennifer Ulrich will be speaking at the ISM World Annual Conference in May on how to do just this. Her session covers how procurement teams can build lasting relationships with key partners to success. She will present three case studies demonstrating challenges we’ve seen among our clients and the solutions we employed to solve these challenges.

Need help maximizing the potential of stakeholder interaction? Register today to attend.  


How is the COVID-19 vaccine supply chain holding up?

Especially as the various COVID-19 vaccines were first being rolled out of factories around the world, there was considerable concern that existing supply chains might not be robust enough to ensure all doses could get where they were supposed to go. But now that hundreds of millions of people around the world have received at least one dose of a COVID vaccine, it's worth considering how well things have held up, and areas where there have been some difficulties.

The vaccine manufacturer Moderna has already blown past some early expectations, announcing in late March that it had shipped its 100-millionth dose of COVID vaccine, about two-thirds of which had already been administered within the U.S. alone. In the first quarter of 2021 alone, Moderna had ramped up production and shipping to push out 88 million doses, and now expects to ship as much as 50 million more each month until it fulfills its initial contract with the federal government.

The company believes it will reach 300 million doses shipped by the end of July, according to its March 29 release.

How will COVID vaccine distribution fare in the months ahead?How will COVID vaccine distribution fare in the months ahead?

Ongoing issues
Meanwhile, it's worth noting that for many countries, the vaccine rollout has not even begun yet, and already "signs of strain" are emerging, according to Medical Xpress. While companies have ramped up production to previously unseen levels (with 10 billion total doses expected to be manufactured this year alone), it's not just a question of getting those doses shipped where they need to go, but also procuring the materials needed to produce and safely ship that many.

That may be especially true when it comes to the observed inequities between highly developed, wealthy nations — which have been loading up for vaccination for some time — and those where efforts have been minimal to nonexistent, the report said.

Other risks
Of course, just because Moderna, in addition to several other manufacturers worldwide, are having success with getting shipments out and shots into people's arms, that doesn't mean the vaccine supply chain is working as well as it could, according to Ship Insight. There is still considerable risk associated with this highly complicated process, not the least of which stem from theft and counterfeiting.

A number of illegal operations have already been broken up by authorities around the world, but the high value of the counterfeit pharmaceutical industry (estimated to be roughly $400 billion annually) means such efforts will no doubt continue unabated for some time to come, the report said. Indeed, this could include perfectly legitimate vaccines being sold at high per-dose prices over the dark web and similar channels, with no guarantees that they will be shipped or administered safely.

This is certainly something for those in the logistics industry to watch as the pandemic draws to a close and supply chains must be diversified to ensure everything can be shipped safely to all corners of the globe.

What value does Procurement bring to the table? I don’t mean the need to buy goods and services, or the collection of policies and SOPs that govern it. I mean you and your teammates. How important would senior leaders say your Procurement Team is to the organization? 

Every Procurement team is different, but they all fall somewhere on a continuum with these bookends:

  • They are either high-impact, proactive organizational leaders… 
  • … Or reactive, tactical followers that add plenty of process but little value. 

So, where does your Procurement team fall? More to the point, what can you do build a better vision to help your team mature?

The Maturity Scale

First, let’s add a couple points to our scale and define four stages of Procurement maturity:

  • Laggard/Transactional. These teams are highly reactive and focused on tactical purchasing. They exist to “check boxes” and have stakeholders jump through hoops for the sake of policy. Transactional teams generally have a net negative organizational impact.
  • Traditional/Shared Services. As teams mature, their view starts to expand. Teams in this group look beyond the transaction and start assessing the market. However, they’re often limited to three-bid-and-a-buy thinking. Focus is on reducing unit costs and managing PO processes more than anything else.
  • Augmented/Supplier Management. Teams eventually become proactive, value-adding functions by engaging in strategic sourcing initiatives and focusing on spend visibility and opportunity assessment.
  • World-Class/Supply Management. At the highest levels of maturity, Procurement teams help guide supplier relationships in a way that moved the organization forward. These teams have a seat at the decision-making table, helping senior leaders shape the direction or the organization.

Where a team lands is largely based on the strength of their vision – the ability to set a path forward that aligns with organizational goals and follow through on it.

Moving Along the Maturity Scale

How can immature teams move up this scale to become world-class? There’s no checklist that ensures this will happen (and that kind of thinking is “laggard thinking”). However, there are several questions Procurement must ask and answer along the way:

  • What metrics and reporting are we delivering to organizational leaders? Beyond churning out reports, we need to ensure we’re developing information that defines and helps solve for organizational challenges.
  • What tools and technology do we have at our disposal to enable us to operate efficiently and effectively? We can’t manage strategic work if we’re mired in the tactical.
  • How do we ensure our process has value? We need to design policy and SOP in a way that benefits the organization without adding unnecessary bureaucracy to the equation.
  • How do we define our role beyond buying tasks? We need to understand where and how to support stakeholders in achieving their goals – this often means moving beyond helping them find the best price for a purchase. 

Managing Complexity & Risk with Vision

Leading organizations keep on eye on the future. They look for ways to pivot and expand their products and services to keep up with demanding markets. This change often results in a more efficient and capable organization. However, growth also leads to complexity and risk. All teams must learn to manage this complexity – or risk hampering greater organizational goals. Procurement is no different.

Corcentric’s Jennifer Ulrich will be speaking at the ISM World Annual Conference in May on this topic. Her session covers how Procurement can build a vision to move beyond the tactical. Three case studies demonstrate the challenges and solutions for doing so that we’ve seen among our clients.

Need help getting your vision off the ground? Register today to attend. 


Walmart highlights shift to local supply chains

One of the big trends many supply chain experts projected as the novel coronavirus pandemic wore on was more companies shifting to hyper-local suppliers. For the most part, this prediction seems to be coming to pass in a big way, and a recent announcement from the world's biggest retailer underscores this point.

Walmart announced that in addition to its $250 billion investment in buying American-made products, which began back in 2013, it is now rededicating itself to that mission with an additional $350 billion. This new massive effort is going to be focused on several key types of products or services: plastics, textiles, small appliances, food processing, pharmaceutical manufacturing, medical supplies and goods not for resale.

What does a strong supply chain look like for your company?What does a strong supply chain look like for your company?

"U.S. manufacturing really matters," John Furner, president and CEO of Walmart's American operations, said in announcing the plan. "It matters to our suppliers, to entrepreneurs and to the environment. It matters to our customers - more than 85% of which have said it's important for us to carry products made or assembled in the U.S. And most of all, because of the jobs it brings, it matters to American communities and the people who live in them."

What's the impact?
As Furner mentioned, localized supply chains can have a major effect on the carbon footprint of even small companies, so for an industry titan like Walmart, this could have an even more appreciable impact, according to BusinessWorld. In particular, international shipping methods, such as sea and air freight, produce more carbon than even overland driving. While it is sometimes unfeasible or even impossible to source domestically or locally, the more companies can do to create options for themselves can be hugely advantageous.

Many companies aren't necessarily trying to reduce their carbon footprints for altruistic reasons, but rather because the pandemic highlighted the importance of doing something they had been trying to attain anyway: efficiency and flexibility, the report said. Of course, the smaller carbon footprint produced by any firm's supply chain isn't purely a happy accident, but the benefit is the same no matter why it's being sought.

Pros and cons
When it comes to local sourcing, companies have a lot to consider, according to Alibaba. Much like a smaller footprint, it can be a PR win, but it also provides more transparency in terms of costs, ship times and more. That, in turn, can translate into more predictable operations on your end. However, when sourcing locally, you might not always be able to find the kinds of products you need in a timely fashion, or they may not be of the highest quality. Moreover, your costs could rise.

For these reasons and more, it's important for companies to look at all their options and determine what will become their primary plans, what should be held as a contingency, and when to pivot to ensure smooth operations. The more you do to lay out these efforts, the better off you are likely to be.


With the surge of working remotely combined with the increase in leveraging unified communications technologies over the past year, there has been enormous pressure put on business owners and their IT teams. Now more than ever there is a demand to improve network and communication connectivity, security, and overall functionality as businesses look to migrate both voice and data services to the cloud or minimally roll out hybrid solutions. The search for resilient, scalable, available, and cost effective solutions and partners can be challenging and quite time consuming leaving no room for error and requires oversight when it relates to the critical requirements. 

As a Telecommunications & IT procurement professional, I strive to identify efficient, effective, and competitive solutions while bringing to the table strategic partners and providers who can fulfill my client's needs. Often, the current situation I walk into does not consider their future growth or the businesses current needs with a holistic view. There are typically too many stakeholders involved or those with both limited "vision" and decision making capabilities. It is common to work with client teams that are just too focused on keeping the lights on and their customers happy. Time is a commodity and by default limited; mixed with lack of resources the result is a lack of "vision" dedicated to the long term planning process.

My goal is to help identify that "vision" to address both the immediate and long term need while establishing the contingencies to address the unknown; essentially planning for the what ifs.  

Proactive planning should incorporate failover plans, intuitive and alternative call routing paths, redundant services and suppliers. The vision should include looking at on-premise versus remote and hosted options. When creating contingency plans some considerations to help identify root causes for error are:
  • What if there is a power outage?
  • What if the carrier or supplier has a network outage or service issue?
  • What if my equipment goes bad?
  • What if we do not have access to our facilities?
Nowadays lack of available resources or unanticipated situations can immediately create a direct impact to the everyday working environment. 

Here are a few examples of both unforeseen challenges and lack of proactive planning; although in some cases understandable given the Pandemic driven rise in remote working and video conferencing: 

I was jumping on a Microsoft Teams conference call with one of my customers consisting of 5 people. Unbeknownst to us all, during the month of March, Teams had been experiencing many outages causing inability for its users to hold scheduled conference calls. The client scrambled sending emails back and forth to figure out how to get us all together face-to-face in a cohesive manner, not really wanting to use cell phones. Fortunately, after about 20 minutes, my customer remembered they had one WebEx license remaining that was about to be decommissioned end of the month. We held the call and instead of talking about the project at hand, reprioritized to focus on immediate actions to prevent future impacts to conferences. 

With a different client, a call center located in a large corporate building where several neighboring businesses caught fire, my client was required to leave the building for many days. With no automated call routing in place, numerous trouble tickets needed to be placed with the carriers, and eventually critical numbers were re-routed, tested, and managed. Additional tickets were placed to remove the forward once the client was allowed back in their offices. Post this event, we implemented emergency plans for all critical and client facing offices to mitigate downtime and automate activating redundant processes.   

These examples can and did cause everyone to scramble, meetings to be pushed out, delays in decision making, and overall generated lost sales opportunities. Hence, proactive and continued planning must be implemented to ensure survivability of business operations and profitability. 


The novel coronavirus pandemic had a major effect on the global supply chain over the course of 2020, but another factor that continued to have a sizable impact was the progression of the UK's withdrawal from the European Union. Brexit has been a notable hurdle for many companies around the world and it's expected that this will continue for some time to come.

Indeed, a recent poll of industry leaders conducted by the Executive Network Group and Avetta found that while Brexit is expected to have a positive long-term impact, 72% thought the supply chain could see some major changes. Some of them, in fact, are already starting to come to the fore, with shortages of raw materials and hurdles in procurement that used to go relatively smoothly.

As such, executives polled said their companies need to identify and reduce the effects of supply chain disruptions to their operations, be more proactive about long-term procurement and sustainability strategies, and develop new talent pipelines with changing rules for international hiring, among other things. Right now, though, only 11% of respondents say they have taken necessary steps to bolster their teams in accordance with new Brexit-related rules.

International trade could change a lot thanks to Brexit.International trade could change a lot thanks to Brexit.

Rules of the road
In addition to simply affecting the way suppliers and their customers do business around the world, Brexit has also impacted how goods travel from one place to the next, according to Global Trade Magazine. This affects not just overland trucking, but also air and sea freight. Of course, truck drivers account for most freight shipments in the U.K., and in fact, before the nation pulled out of the European Union, it accounted for 8% of all haulage in the EU.

But now that rules are changing, it's expected that there will be delays at ports, international borders and elsewhere that didn't exist before — at least for the foreseeable future, the report said. As such, it's likely that air freight will become a much more integral part of shipping to and from the U.K.; already, there was a 200% annual increase in its use from January 2020 to 2021.

"Manufacturers I've spoken to at the start of this year have explained that their main issue was, of course, the changes in documentation and how not providing the correct information causes huge delays, and in some cases, penalties from customs which is affecting businesses massively," Will Annand, a manufacturing account manager at Trident Worldwide, told the publication.

Other considerations
Obviously, the U.K. isn't the only big part of international trade that is seeing its import/export rules changing, according to Material Handling & Logistics. With a new presidential administration in the U.S. and China continuing to evaluate its rules and regulations, it creates an even more complicated patchwork for companies in the supply chain with which to contend.

Consequently, it's vital for any businesses in the world of logistics to have strategies, contingency plans and then contingencies for those contingencies. The more options you can give yourself, the better off you and your partners will be.








When introducing the Pillars of Procurement (Role of Procurement, People & Organization, Processes, Tools & Technology, and Metrics & Reporting), I make sure to explain how each of these core elements interact with one another. It is important to note that without factoring them all in holistically you are likely to develop gaps in your approach, no matter how big or small the scope is. 

  • The People & Organization pillar covers those who support the business including their development, structure, and engagement model, as well as the suppliers and stakeholders that interact with them. 
  • Process captures anything that Procurement designs, sources, buys, contracts, and manages. 
  • Tools & Technology enable Procurement to operate efficiently and effectively. 
  • These three core pillars make up the main body of procurement, however the Role of Procurement sits at the very top. This position is crucial and intentional, because you can have the best talent in the industry, the most streamlined process, and best of breed technology, but without a solid Role of Procurement all of that goes to waste.
  • Finally, once all of the above are working in concert and designed as envisioned, it is important to validate the value of procurement through hard Metrics & Reporting. After all, to effectively become a trusted advisor, you need good data.

Procurement’s Shifting Role

The Role of Procurement will naturally shift as an organization matures through the stages of maturity defined as Laggard, Traditional, Augmented, and World-Class. At Laggard, the Role of Procurement is likely to be seen as a low-value, reactive function. Traditional procurement teams might be viewed as a necessary function offering tactical support only, not leveraged by stakeholders in a strategic manner. When procurement evolves into Augmented, the Role of Procurement is seen as adding value and beginning to play a critical role in the supply chain well beyond contract negotiations. Finally, at World-Class Procurement is strategic, a trusted advisory to stakeholders and leadership, and has a permanent seat at the table. As you can imagine each of the pillars will need to be managed differently as procurement matures. It’s important to keep the end state in mind as procurement grows.

In order to stay the course towards that goal and meet your long-term objectives you will need to consider the four primary factors of the Role of Procurement: Vision, Interaction, Perception, and Function. 

I am fortunate enough in my role to have the opportunity to educate others on all the amazing things that Procurement can do for an organization. I get to interact with individuals at all levels from the C-suite to emerging professionals and open their eyes to a world of value beyond cost savings and transactional support. 

I was also recently invited to speak at ISM World in May 2021 about some of the work Corcentric has done to elevate the Role of Procurement in two separate sessions, and I could not be more excited to share my experiences and collaborate with some of my customers. To ramp up excitement for the rest of the world, some members of the Corcentric Advisory team have put together a multi-part blog series that we will release over the next few weeks as ISM World 2021 approaches on the topic of the Role of Procurement, which will be covered in one of the sessions I am presenting in.

In this blog series we will discuss the four primary factors that define the Role of Procurement: Vision, Interaction, Perception, and Function. Stay tuned for the next blog in our series on setting the Vision of procurement.


Many procurement professionals understand the complexities of supplier relationships, best in class sourcing and negotiation strategies. These fundamentals make the procurement world go round. Technology however has not always been top of mind and has been adopted spotty at best. Many organizations could benefit from adoption of procurement technology, bringing attention to blind spots and further optimizing processes.

I have recently been involved in a large scale implementation of a P2P tool. I want to share some perspectives of what has gone well and some challenges we have dealt with along the way. My hope is that it will bring to light the value technology brings to the procurement world. Change is never easy but is the key to staying competitive and cutting edge. Good technology cannot be supported without the proper processes, change management and people. All of these are critical components to the process and help uncover pain points that exist in an organization to drive operational efficiency.

First off when I say P2P tool, I am referencing a few capabilities. First is cataloging and content creation. This allows end users to requisition/purchase negotiated items through preferred suppliers. Second is sourcing. Many times, RF(x) events are run through email and excel sheets. This is a largely inefficient process and will be considered a stone age tactic at some point in the future. An Esourcing tool can help streamline the bid process, keep you organized and able to focus on more strategic elements of the event instead of the tactical components. Third is payments. Technology can help enable the end to end process flow and cut down on payment processing time. It is important to note that you need the right technology to create a seamless end to end procure to pay process.

Many times, a procurement team is involved with national and preferred agreements with little sight into other tail spend in the organization. Technology helps to uncover those blind spots in spend and creates more visibility across the board. Opportunities are identified through this process in how to better manage the current supply base, consolidate suppliers, process payments more seamlessly and ensure contracted prices are honored. What I have seen through this process is a typical category management role gets elevated and becomes more strategic. This is a win because the more strategic we are able to get, the more potential opportunities for future growth.

Many challenges faced with technology implementation include resistance to change and user adoption. A P2P technology is no different. There is constant education that needs to take place to drive new behaviors in an organization. Driving compliance is great for operational efficiency and the bottom line, however many times compliance is not met with the best reception.

All in all, technology can be a very powerful tool in the arsenal for procurement professionals. It allows for optimization and better compliance while making the lives of everyone it touches more seamless. Additionally, it can help elevate the roles of those who employ it, making their day to day less tactical and more strategic.


As a business in any part of the supply chain, you likely know just how important your procurement efforts are to your overall organizational success. With that in mind, it's important to make sure your department is set up for success on an ongoing basis and will be able to continually put its best foot forward. This is, of course, far more easily said than done, but there are ways to go about it.

Perhaps one of the best is to shift your perspective on suppliers, according to Supply Chain Dive. In the past several years, with rapid delivery times becoming the norm with personal and business orders, it can be easy to fly off the handlebars and get upset when a shipment is more than a day or two late, but the  supply chain functioned effectively for years with long-tail shipping times, and a delay of a few days won't destroy your business by any means.

Don't let a bad experience derail a solid procurement plan.Don't let a bad experience derail a solid procurement plan.

Often, shippers promise fast turnaround times because that's what people want to hear, even if they can't always deliver on those promises, the report said. For that reason, it's important to have a more open and honest relationship with your partners, and try to increase your options, so you can determine which suppliers will be able to get you what you need on a timeline that works for you. In all situations, you should feel that you can trust your suppliers, and that they will do the right thing for you — just as you would do for them.

Getting it right
With that having been said, one or two delays are just the cost of doing business, but when it becomes persistent, that's an obvious problem; you need to be able to approach a solution with confidence as well, according to Daily Commercial News. That may mean you have to be increasingly proactive about collecting and evaluating data for and from all of your shipping partners. That way, when issues arise, it becomes easier for all involved to understand why, and find ways to address them.

After all, some of the problems with a specific shipment could have arisen as a result of mistakes made on your end of the transaction, and getting to the root cause is always a good idea, the report said. That way, with more transparency, you can make better determinations about every decision you have made, and will make in the future.

Look internally
The odds are that your company has not perfected procurement, nor mitigated all the problems that arise outside your organization, according to Spend Matters. For that reason, you need to look at things you've done well and where you've fallen short, finding ways to lean into the former and avoid the latter. You may be surprised at the number of things you can improve upon if you have better data collection.

The point of improving any aspect of your procurement effort is to improve business function and the bottom line, and that starts with having all the high-quality data you need to make better decisions.


 


Introduction

Its crazy to think that it has been over a year since the US went into lockdown and quarantine began. With it came a massive push for social distancing. The portion of the workforce who could, shifted almost immediately to working remotely. With most having remained that way since. Those who could not work remotely either lost their jobs, or were forced to work under less than ideal circumstances. Fortunately, with the accelerating rate of vaccination in the United States, the immediate economic impact of COVID could be in sight. The larger question is the level of permanent economic damage caused by the pandemic. While the total impact is unknown, Q1 trends provide mixed answers. To see this, one needs to only look at Unemployment levels and Consumer Confidence indices.

 

Unemployment

Despite unemployment falling, it is still nearly double what it was a year ago – and the labor force participation rate has quickly stagnated, its nearly 2% below where it was a year ago.  Of the 10 million people unemployed in January, about 4 million had been out of work for over six months.

The unemployment rate does not tell the whole story. A large number of workers continue to file for unemployment compensation. For most of the year, claims have hovered between 700,000 and 1,000,000 per week. For the week ending March 20th, claims were at 684,000. While this number does indicate a positive shift, it is still below pre-pandemic numbers. 1


Consumer Confidence

On a more positive note, after three months of consecutive declines in the consumer confidence index through January 2021, February and March have both seen improvements. To quote Lynn Franco, the Senior Director of Economic Indicators at The Conference Board: “This course reversal suggests economic growth has not slowed further. While the Expectations Index fell marginally in February, consumers remain cautiously optimistic, on the whole, about the outlook for the coming months. Notably, vacation intentions—particularly, plans to travel outside the U.S. and via air—saw an uptick this month, and are poised to improve further as vaccination efforts expand.” 2

As the country turns the corner on COVID, especially with vaccines, consumers are going to becoming increasingly confident in the economy being able to jump back. Barring a major disruption in vaccine rollout, there is every reason to believe this confidence should continue to grow.


Impact on Procurement

Economic activity in the manufacturing sector grew in February, with the overall economy notching a ninth consecutive month of growth. At the same time, raw materials prices continue to rise steadily. The ISM price Index is at the highest level it has been in nearly three years, with expectations being that it could continue to rise. 3 Levels of growth are going to differ based on industry. But procurement teams should be aware of rising prices, and taking that trend into account when executing their sourcing strategies.


In summary, there are still a lot of unknowns. Businesses face many difficult decisions. There are uncertainties surrounding COVID-19 itself, and this uncertainness brings forth difficult questions regarding operations, customers, and costs. But Unemployment is (albeit slowly) falling, while Consumer Confidence and Industry is growing.  Procurement professionals should continue to protect to be risk conscious, while starting to execute on a plan for a more positive future.

If you enjoyed this brief Economic, please be on the lookout for part 2, coming in Q2 2021.


 



1 https://fred.stlouisfed.org/series/CIVPART

2 https://www.conference-board.org/data/consumerconfidence.cfm

3 https://www.ismworld.org/globalassets/pub/research-and-surveys/rob/pmi/rob202103pmi.pdf

 




You’ve probably already read countless think pieces about remote working and its lasting prevalence after Covid. So I’ll spare you the long intro, and let’s instead take a more tactical view and address a specific problem with remote working – how do we provide our remote workforce with the supplies they need in a structured way, and how can we control cost while doing so? Specifically, how can we get our employees items like office supplies? Furniture? Even cleaning supplies? Companies are facing the prospect of a permanent and increasing remote workforce, and now must develop infrastructure and processes to supply and support those employees on an ongoing basis. 

When the remote workforce exodus started, a lot of companies were not set up to manage their remote employees and had to adjust on the fly, which has led to some loose procurement practices. Employees may have been tasked with buying their own supplies, and that free-for-all mentality comes with problematic after-effects. For example: 


Lack of control of suppliers, items, and purchase thresholds 


Without clear direction on where to purchase items, and without a mechanism to direct those purchases, employees may be purchasing items from any available source – whether the largest national retailers or the convenience store down the street. This lack of control extends past the supplier level to the individual item level. In these circumstances, employers have no control over the item, the brand, or the price at which purchases may be made.  


Poor data and lack of visibility into purchase patterns


A consequence of purchases being made from various sources is that data is also scattered.  Without robust SKU and supplier-level data, procurement organizations do not have the scale or visibility to negotiate adequate discounts and incentives. Consolidating purchases to key suppliers allows you to negotiate preferred pricing and terms, which also identifying preferred items and brands. 


Wasted time and company resources to review and approve expense reports


AP teams may be processing individual invoices and/or approving individual expense reports across these disparate sources. Consolidating purchases to preferred suppliers and utilizing a punch-out catalog system opens the opportunity for automated approvals, e-invoicing, and summary billing that reduces churn for internal finance teams. 


Undue financial burden on employee


In some cases, employees may be asked to purchase supplies on their personal credit cards and submit for reimbursement, which places undue financial burden on those employees. 


So what tools are available to manage this problem, and how can companies ensure they’re getting the best deal for their remote workforce? First, leverage an e-procurement platform such as Corcentric’s Procurement Management Software to develop punch-out catalogs. These punch-out catalogs can onboard multiple suppliers into a single ordering platform, and integrate preferred pricing while guiding purchases to preferred items, suppliers, and brands. 

In addition, Corcentric’s sourcing consulting team has as worked with major suppliers to negotiate competitive pricing in key categories such as office and janitorial supplies. By leveraging the consulting team’s expertise, companies can ensure they are receiving best-in-class pricing and program management through the punch-out catalog systems.  

Remote working comes with new challenges to manage employee spend habits, but it also creates new opportunities to address new spend patterns and adapt with the ever-changing landscape. With remote working seemingly here to stay, now is the best time to implement tools to improve these processes. 



 5 step process to improve supplier diversity in your IT organization

When procurement leaders are tasked with planning their annual goals and objectives, supplier diversity milestones are often at the bottom of the priority list. This is especially true in the IT category. In the past, achieving IT supplier diversity goals appear as a daunting task, as there are very few diverse suppliers that occupy the arena.

Let us break down the myth that surrounds IT Procurement and Supplier Diversity with these 5 steps that you can take to reach and surpass your SD objectives.

To begin, we must align on the definition. A Supplier Diversity Program is defined as a “proactive business program which encourages the use of minority-owned, women-owned, veteran-owned, LGBT-owned, service disabled veteran-owned, historically underutilized business, and Small Business Administration (SBA)-defined small business concerns as suppliers.”

So how can you bring this to life in your IT organization?

  1. 1.      Evaluate your IT Spend

The first step may be the most obvious. To make improvements, you need a starting point. Begin by building a cohesive database of all current IT spend. Start with the easily identifiable areas. These would be your Tier I suppliers. Tier I suppliers consist of suppliers that have an active contract in place. Develop an accurate depiction of each supplier profile to capture which suppliers are diverse. You may be surprised by who this includes. Contact your Tier I IT suppliers with a list of questions that will help you build a supplier portfolio and segment each supplier into the relevant category. For the purposes of this exercise, the main objective is to build a supplier diversity database that is easily accessible with visible spend data.

Next, dig deeper. Administer a survey to these suppliers that allows you to capture Tier II suppliers' diversity status. Often, this is an area that is overlooked. Tier II includes suppliers of your Tier I suppliers. Organizations are adopting the methodology that Tier II supplier spend should be included in the overall performance metrics of the SD program. Without these Tier II suppliers, Tier I activity comes to a halt. It can be argued that Tier II suppliers are just as important to the business as the suppliers that they support (Tier I). By incorporating this next level, your SD spend can potentially drastically improve as you unlock more data.  In the IT world, this could be expansive.

  1. 2.      Once identified, set a goal

Now that you have a general snapshot of SD spend, assign a goal that your organization should achieve. This goal should be attainable, but not easily. Consider developing multiple goals/milestones that push your organization to new heights. First, a near-reach goal. This is a goal that should be easily attainable within the year and not require much effort. Consider 5% of the total. Then a target goal. This goal should require some effort, but is still attainable with the proper procedures in place. Perhaps 10%. Lastly, a stretch goal. This goal is possible, but not entirely likely without valiant effort and many champions pushing the cause. 15-20%.

Utilized benchmarks in your industry to set these percentages. Research what other similar companies have established as their supplier diversity spend goals. Solicit feedback from department heads and leaders in the organization to determine what is truly feasible.

  1. 3.      Make a plan and prepare

Now that you have data and objectives in place, plan your execution. Consider including supplier diversity requirements in all relevant performance goals. If possible, make it a requirement that procurement professionals involve diverse suppliers in their sourcing initiatives as often as possible.

Consult with your senior management to capture a holistic view of what the organization can act upon. This will allow you to gather champions of the cause and improve employee involvement in your initiatives. From there, you can develop a cross-function team or council to guide/influence the plan as you develop synergy throughout the organization.

  1. 4.      Execute/support the sourcing teams

Once you have the support, ensure that you put the cross-functional team in place and make progress on putting the plan into action. The team’s function is to carry out the plan with your facilitation. To do this, you should provide a web-based database that contains supplier information and resources. You want to make including diverse suppliers in upcoming opportunities as easy as possible for your procurement professionals.

The goal here is to improve ease of use with your newly established SD program. Making change hard for the end-user only complicates the process and stifles your ability to reach your SD goals.

In addition, consider mentoring diverse suppliers and providing education and training. This could include RFP coaching, improving on key supplier scorecard metrics, and providing funding for growth and expansion, allowing the diverse supplier to improve the overall service and offering to your organization. This is a win/win scenario for all involved.

By establishing the proper supplier diversity infrastructure in the procurement organization, you increase awareness throughout the company while building the right partnerships that contribute to the bottom line, effectively improving profits and efficiency.

Another helpful action to the teams you support would be to recommend and qualify diverse suppliers to the sourcing team. Once again, make their job easier, not harder, when introducing new requirements.

Lastly, be sure to monitor new and existing business, contracts, and bidding opportunities for diverse supplier participation. This ongoing supplier management will ensure that you continue to bolster and expand the supplier diversity program.

  1. 5.      Metrics and continuous improvement/marketing

Finally, you can marvel at the success story you created. Design, install and maintain metrics to measure and report the performance of diverse suppliers throughout the process. Monitor progress toward meeting goals and objectives, measuring success, and recommend directional changes or actions. Develop communications plans, marketing tools, and rewards/recognition systems to promote supplier diversity. Plan, organize, conduct, and participate in organization-sponsored diversity presentations and events.

In recent years, the state of U.S. infrastructure has been a topic of much debate, and the impact it has on the national or even global supply chain could end up being significant if things don't improve. If the country needs to be able to get things from Point A to Points B, C, D and beyond at a growing rate, the decaying bridges, roads and tunnels from sea to shining sea may be in critical need of an upgrade.

It's worth noting that things are improving in large part due to the national conversation that has been ongoing for some time. There is a broad recognition that things were getting bad, and now steps are being taken to fix the situation.

American infrastructure is in need of a lot of investment.American infrastructure is in need of a lot of investment.

With that having been said, the latest Report Card for America's Infrastructure released in March by the American Society of Civil Engineers, doesn't exactly paint a rosy picture.

The latest overall grade for the national infrastructure is C-, a mark that's certainly on an upward trend, but there are many areas of concern left to address, the Report Card said. For instance, the national transit infrastructure earned a D- rating; roads, levees, dams and stormwater infrastructure all garnered Ds. A number of other things were rated with a D+, including aviation, hazardous waste, inland waterways, public parks, schools, and wastewater.

Only three types of national infrastructure were graded with something higher than a C, which indicates an average rating: Solid waste infrastructure (C+), ports (B-) and rail (B).

What's the issue
As with so many things in the U.S., the problems that lead to decaying infrastructure come from a lack of comprehensive funding, according to Supply Chain Digest. For instance, the state of the U.S.'s bridges earned a "C" from the ASCE, and in most cases their upkeep is funded by state or even local governments, sometimes with the help of toll collection. Likewise, rail infrastructure tends to be funded by carriers, inland waterways receive federal funding, and so on. This patchwork creates a broad disparity in how well infrastructure is maintained, and especially where roads are concerned, that's a big issue for logistics.

Not only does that mean difficult travels, it also increases costs for infrastructure users: Poor road conditions means the vehicles that use those highways and byways take more of a beating than they otherwise would, the report said. The combined cost of auto repairs stemming from rough roads? It stretches into the nine figures on an annual basis, affecting both individuals and businesses.

A lot of ground to make up
Analysis of the ASCE's report card notes from manufacturing expert Deborah Wince-Smith, published by Forbes, notes that over the next decade, the U.S. will likely have to spend nearly $2.6 trillion to ensure everything is up to the level that is needed to ensure a strong ongoing infrastructure. Without it, not only will roads continue to be in rough shape, but it could mean companies will end up struggling with timely deliveries, and even their ability to even innovate and keep up with the rest of the world could be threatened.

Oftentimes when we are engaged by clients to work with their stakeholder teams, these individuals may not be familiar with the Procurement process, especially if they are not a frequent buyer. I can sympathize; when I first began my career in Procurement, I had no background in Supply Chain and had never heard of the “Procure-to-Pay process”, let alone what a best in class P2P workflow looks like. I spent the first few weeks of that summer internship Googling all of the phrases and acronyms used during meetings to understand what everyone was talking about. Therefore, one of the first steps in any project is making sure that the project teams understand what is required to complete the project, whether that is reviewing internal policies and procedures or educating on the general Strategic Sourcing process.

In this blog series, I will review some of the critical documents and milestones in the Procure-to-Pay process, explaining what each steps means and how they impact the business.

Once a purchase need is identified, one of the first steps in the Procure-to-Pay (P2P) process is to secure an approved Requisition.

What is a Requisition?

A Requisition (or Purchase Request) is an internal document used to approve a purchase. The purpose of a Requisition is to make sure that buyers/end users have all of the necessary approvals from their managers, finance, etc. to complete a purchase before a commitment is made to a supplier.

Each organization will have their own defined approval process for Requisitions based on the purchase type and total cost. For large spend purchases (i.e. multi-million dollar piece of equipment), this may mean collecting approval from the executive team before proceeding. Alternatively, small purchases (i.e. new office chair) may only need sign off from your manager.

Why is a Requisition important?

The Requisitioning process is an essential step to make sure that you have the proper sign-offs from your internal team to engage the supplier(s) in purchasing goods or services.

Recently, I was asked by a client to help review and improve their Requisition workflow to ensure that the company was not engaging suppliers when there wasn’t an approved budget. While this company was using Requisitions, it was more of an afterthought by many stakeholders in their quest to identify a supplier for their purchase needs. As the client looked to strengthen financial and budget controls across the organization, they identified the Requisition workflow as an opportunity to quickly address this issue.

In their current process, a contract could be fully executed with a supplier without an approved Requisition and, at times, work may have already begun with that supplier. In the new process, they simply changed the order of steps in their current workflow so that an approved Requisition must be submitted to Legal before they will execute a contract and subsequently issue a PO.

What can you do to improve the Requisition process?

One of the main issues we hear from clients about their P2P process is that it takes too long – there are too many approvals and requests just sit in a queue for extended periods of time. There are many ways to help diagnose what is causing these delays in the turnaround times, but one way to help speed up the process is to introduce technology.

There are many solutions that automate the P2P process by establishing electronic requests and automated approvals. The tool will have built in workflows that will circulate your request to the necessary approvers based on the value, your department, the purchase category, and any other parameters defined by your organization. As individual in the workflow receives the request, they are able to easily approve through the tool and that request will then automatically send to the next person in line. Many of these tools also offer functionality to alert/remind approvers if requests are pending to help minimize delays.

Before you introduce technology, it is important that you first review the process in place to understand if the issues may be tied to the policies/procedures. By reviewing the approval workflow, signature authority levels, and purchase thresholds to ensure that these still align with the current state of the business, you may be able to address many of the challenges faced today.

In future posts, we will review the additional steps in the P2P process to provide insight into documents, approvals, and best practices to ensure that your organization has the right controls in place to effectively monitor purchasing activity.

Corcentric’s Advisory experts can help to review your current P2P process to identify opportunities to drive efficiency and help you achieve your Procurement goals. Similarly, Corcentric offers solutions to help automate your P2P process. Contact our Procurement experts to learn more about how we can support your business objectives.

 


Over the past several months, many companies at different steps of the supply chain have taken a harder look at bringing their manufacturing efforts back to the U.S., or partnering with more localized suppliers. The reason for this is simple: The COVID-19 pandemic made it obvious that relying solely on a truly global supply chain had some shortcomings, and diversifying sourcing efforts was a must for many companies.

There's good news for U.S.-based businesses that made it easier for themselves when it comes to domestic sourcing: They will likely find that even if there are higher costs, consumers will be interested in what they're selling. Why? A recent Reuters-Ipsos poll found that 63% of Americans wants to see the federal government buy more things that are made in this country, even if it costs more than usual.

People say they're willing to pay more for American-made products.People say they're willing to pay more for American-made products.

Likewise, nearly 7 in 10 respondents to the poll said that buying an item made in the U.S. is important for them personally, and only 37% said they wouldn't actually pay a premium for doing so, the report said. However, that 37% is outstripped by the 47% who said they would pay a higher price for American-made goods; more than a quarter indicated they would be willing to pay 5% more for an American-made product, and more than 1 in 5 said they would pay up to 10% more.

What's the difference?
Obviously, there is a big gap between people saying they'll pay 5-10% more for American goods and actually making good on that assertion, but a recent study by PhD students at Chicago Booth examined how far people would actually go on that follow-through, according to the Chicago Booth Review. In eBay listings for 900 different low-cost U.S.-made cellphone screen protectors, products that were prominently listed as being "Made in USA" sold for 28% more than the counterparts without those prices.

However, the average price of all good sold was just 26 cents, meaning that the bump in price amounted to only 7 cents, the report said. The researchers acknowledged that if more expensive items, such as laptops, were put up for sale, it was "unlikely the premium would have been 28%."

The financial reality
Despite the perception of significantly higher prices for U.S.-made goods, it doesn't actually seem to be as much of an issue as it used to be, according to the Rodon Group. It certainly used to cost notably more for American goods than those made in China, for example, but the gap has closed considerably in the last decade-plus. In 2004, an item that cost $1 to make in the U.S. cost just 86.5 cents to manufacture in China. But even as far back as 2014, the difference has dwindled to just 4.4 cents ($1 versus 95.6 cents). Obviously, at an industry-wide scale, that's a significant difference, — $100 billion versus $95.6 billion, for instance — but for relatively small orders by individual companies, it's not nearly as much of an issue.

These are all things for companies within the supply chain to monitor closely, examining all their procurement options on an ongoing basis, but also crafting contingency plans that allow them to pivot to other options as needed.


Ask just about any person who works at a high level — when it comes to procurement or the supply chain as a whole — what their biggest problem is, and they're likely to tell you it's "lack of insight." Simply put, most companies don't have as much data from their supply chain partners as they truly want — or need — to take the next step as an organization or just run that much more efficiently.

Despite the fact that the novel coronavirus pandemic had a massive impact on pretty much every business even tangentially related to the supply chain and forced a lot of realizations about what was and was not working for them, data sharing still isn't a top priority for many organizations. In fact, the recent Tealbook survey from Wakefield Research found that even now, nearly 3 in 4 procurement leaders are "very concerned" that they still don't have the insight they need into their suppliers' operations to more fully mitigate supply chain risk.

Ensure you're setting yourself and your partners up for supply chain success.Ensure you're setting yourself and your partners up for supply chain success.

Likewise, almost 3 in 5 said their organizations still relied on manual data entry, and suffered other issues stemming from lack of modern data collection and sharing, the survey showed. This included not taking advantage of the latest innovations, getting beat to the punch by competitors and not being able to understand their return on investment, all cited by at least 22% of respondents.

What does it take?
Of course, for many companies, these issues may stem from the fact that they "don't know what they don't know," and it's vital to get a clearer understanding of both where they stand and what their partners need from them, according to Supply & Demand Chain Executive. These might be things that are spelled out in their supplier contracts, such as the need to obtain certifications each year of the agreement, or the ability to monitor performance. All too often, however, these things go unenforced for any number of reasons, and it could be a detriment to the overall performance of not only one business, but several or more.

For this reason, it's important to understand the language of any such agreements and make sure all involved are meeting their contractual obligations on an ongoing basis, the report said.

Getting back on track
The pandemic knocked everyone for a loop and now that recovery seems to be fully underway in more parts of the world, it's the perfect opportunity to regroup and find a new path forward together. A separate report from Supply & Demand Chain Executive notes that the procurement game is likely to change considerably for many organizations, and that will require new strategizing to meet what businesses see as new necessities for their operations.

When putting those plans into place, it should entail careful collaboration across your internal departments, and then with your various supply chain partners, to ensure that everyone is on the same page and getting what they need to excel.


In late March, the world watched with keen interest as the cargo ship MV Ever Given ran aground in the Suez Canal. The vessel effectively blocked a huge percentage of global trade for several days, to the extent that many other ships opted to sail around the Cape of Good Hope en masse for the first time in more than 150 years.

However, because of how backed-up things became, experts quickly turned to discussing the cost of the Suez's blockage in terms of dollars and productivity for the entire global supply chain. Suffice it to say, that impact was significant, with nearly 400 ships stuck behind it — especially considering that, according to the BBC, roughly 12% of all daily global trade typically passes through the Suez Canal.

By some estimates, the average value of that trade is as much as $9.6 billion on a daily basis, because up to 3.3 million tons of cargo goes through the canal every single hour, the report said. And in terms of the time it cost other ships, it's more than significant: When the canal is open, a trip from Taiwan to Rotterdam takes about 25.5 days and spans some 10,000 nautical miles. Any ships that chose to go around the Cape of Good Hope would have seen those trips expanded to 34 days and 13,500 nautical miles.

The Ever Given caused delays of more than a week for many ships.The Ever Given caused delays of more than a week for many ships.

Beyond the immediate impact
As with many other things in the global supply chain, the effect of the Ever Given crisis is something that is expected to have rather a long tail, according to NBC News. While the canal itself is finally open again and ships are streaming through it as usual, the backups at ports around Europe are expected to persist for some time, meaning that these delays may be unwinding weeks from now.

Beyond that, however, any perishable goods that were held up in the course of the saga are now that many days closer to expiring or spoiling. By the time they're unloaded from their ships, they may be entirely worthless, the report said. As a result, many companies are likely to have to file insurance claims for these shipments, and may not see their initial investments recouped for months or more.

Determining liability
The other thing to consider here is the impact the blockage will have on the entities specifically involved in the Ever Given and the management of the Suez Canal, according to USA Today. It is still not fully understood what caused the vessel to run aground in the first place, and there is sure to be a lengthy investigation into the issue in the days, weeks and months ahead.

After that, there will likely be years' worth of litigation surrounding the findings (in no small part because of the financial fallout), which may be especially complicated, the report said. The Ever Given is flagged in Panama and owned by a Japanese company, but the shipper was based in Taiwan — and of course all this occurred in Egypt, which adds another complication.

Certainly, this is an incident that highlights the importance of companies having contingencies for their contingencies when it comes to global shipping.