June 2021

The past year-plus has provided a lot of challenges for businesses of all types, but there are few (if any) sectors where that's more true than in procurement. Supply chains were snarled, deliveries pushed back or canceled outright and headaches became increasingly common. Now, as the effects of the COVID-19 pandemic continue to wane nationwide, procurement pros need to consider how they can put their best foot forward for the second half of 2021 — and beyond.

The first thing you may want to think about on this front is which of your processes still rely on manual efforts, which have been automated, and how those efforts have worked out, according to Supply & Demand Chain Executive. If you've been able to seamlessly integrate automated processes into your long-standing operation in the past, now is certainly the time to look at what else you may be able to transition.

A great procurement department helps your entire organization get ahead.A great procurement department helps your entire organization get ahead.

Many supply chain executives say that they are planning to automate as much as possible within the next few years, so it would be wise to start tackling that initiative sooner than later, the report said. When you do so, you begin to realize the benefits of automation even earlier than you might have initially planned, meaning that your return on that investment starts building more quickly.

Finding the wiggle room
Of course, it hasn't always been easy to get the budget approvals to increase your automation efforts, but the COVID crisis seems to have created a unique opportunity on this front, according to EPS News. The supply chain slowdowns seen in the past 18 months or so drew a stark contrast for those outside the procurement department in terms of the value of your team's efforts, and you would be wise to leverage that new understanding into a bigger budget and more discretion in investments.

No one knows better than you what kind of technology will allow your procurement team to confidently step into the post-COVID world, and if you can make your case effectively — perhaps by focusing on the importance of transparency and collaboration — you'll be in great shape, the report said. When you can help other departments feel as though they really understand the procurement department in a new way, your goals are far easier to achieve.

Under one roof
Along similar lines, now is the time to consolidate the power of the procurement department, according to The Tech Report. Too often, companies may have a procurement team that is not in charge of all procurement efforts, leading to disconnects and inefficiency even beyond the lack of automated processes. If you can bring everything your company does on this front under the purview of a single dedicated team, everyone is in a better position to succeed.

When you can take positive steps of any kind toward a more cohesive and efficient procurement effort, you will be ready to take that next step forward with greater ease. That, in turn, will help to further highlight the value of your team and improve your standing within the company going forward.

For some time now, the freight industry has been sounding alarm bells about the potential impact of the growing trucker shortage across the U.S., and similar headlines have cropped up in other major nations as well. Simply put, the global appetite for e-commerce and other shipping needs is growing rapidly, but the number of drivers in the sector is shrinking.This is having a major effect on freight bandwidth.

Interestingly,  The American Trucking Associations have been decrying a trucker shortage dating as far back as the 1980s, while Todd Spencer, president of the Owner-Operator Independent Drivers Association, has been saying for some time that, "There is no shortage," according to National Public Radio's Planet Money. What's really happening to fuel this concern is that many truckers enter the industry each year, but roughly as many — and sometimes more — leave it as well.

Are there enough truck drivers to meet the supply chain's need?Are there enough truck drivers to meet the supply chain's need?

That leads to a disconnect between the number of people who are licensed to be truckers and the number who are actively engaged in doing the job, the report said. Many enter the field and leave just as quickly because the work isn't for them; the pay is solid for many parts of the country but not highly lucrative, and the schedule and demands of the job can easily cause burnout.

"We have millions of people who have been trained to be heavy-duty truck drivers who are currently not working as heavy-duty truck drivers because the entry-level jobs are terrible," says Steve Viscelli, a sociologist at the University of Pennsylvania who studies the trucking industry.

A bigger concern
In recent weeks, there were headlines about a potential gasoline shortage in the U.S., leading many to stock up (often in unsafe ways) even if the concerns dramatically overreached any actual issue. But according to Minneapolis television station KARE, the shortage that is really hitting consumers at the pump — and in the pocketbook — is more closely related to the number of drivers who are licensed to haul fuel.

Nationwide, as many as 1 in 4 tanker trucks that can haul 8,000 gallons of refined gasoline are going unused because there aren't enough certified truckers to operate them, the report said. That's not leading gas stations to run out of fuel, but it is leading to fuel prices spiking in recent months. The national average price ended June sitting at around $3 per gallon, the highest level observed since 2014.

The industry response
As with any supply-and-demand issue around labor, there's one great way for freight companies to overcome the driver shortage: Paying more. Transport Topics notes that this has been a standard for the industry for the last few years, but because demand continues to increase, so too do wages and, nearly as often, signing bonuses. The more experienced the driver, the better the pay, and this is clearly aimed at getting licensed drivers who are no longer practicing the trade to get back into the industry.

This is an issue that anyone working in the supply chain will have to monitor carefully in the months and years ahead, because in all likelihood, the driver shortage is likely to grow more strained as time goes on.

In the early days of the ongoing pandemic, there were extreme difficulties in getting all kinds of goods shipped not only around the world, but also within the U.S. — and in some cases, these problems persist. One sector of the logistics sector that was staggered briefly but made a quick recovery was the food supply chain, but now a new challenge is emerging as the effects of the outbreak continue to recede nationwide.

A significant emerging issue is more restaurants are returning to pre-pandemic operations and food demand is rising as a result, according to The Wall Street Journal. That is once again stretching suppliers and shippers thin, as they spent months adapting to the "new normal," and now have to re-adapt to the "old normal" in short order as well. Economists call this the "bullwhip effect," and other supply chains are likely to experience it in the near future.

Competition for fresh produce and animal products is on the uptick these days.Competition for fresh produce and animal products is on the uptick these days.

What's the effect?
As with many other industry supply chains these days, food companies say there's not enough raw material (meaning fresh meat or produce) to meet everyone's needs, so restaurants and supermarkets are competing with one another in many cases, the report said. That, in turn, is driving up prices that will eventually be passed on to consumers. For example, with more pizzerias opening in recent weeks, the price of pepperoni has climbed 60% in a period of a little more than a month.

And that's if companies can get their hands on product; there are voluminous instances of companies getting fewer orders fulfilled than they received at the height of the pandemic, or having to make do with relatively small percentages of what they would normally order, the Journal noted. Moreover, labor shortages on the supply side means it may be some time before these issues can be resolved.

Indeed, that comes after a year of marked growth in food prices. MLive recently reported that between March 2020 and the same month this year, food costs rose 3.3% — the largest year-over-year increase in 10 years. And experts say this is a change being felt for basically every kind of foodstuff popular with consumers and restaurants alike. Beef prices are up nearly 10%, pork north of 6%, poultry by more than 5.5%, and fresh fruit also by 5.5%.

Laying the groundwork
While all this is going on, those in the food supply chain say now is the time for companies to start building new contingency plans that will allow them to more effectively weather future storms, according to Chuck Conner and Daren Coppock, the presidents and CEOs of the National Council of Farmer Cooperatives and the the Agricultural Retailers Association, respectively, writing for Agri-Pulse. More coordination will go a long way toward ensuring ongoing success for all involved.

This is a lesson that can be applied to all aspects of the supply chain. The more that can be done to insulate against potential risk factors, so that companies can pivot regardless of the obstacle, the better off all will be going forward.

How a digital supply chain can help transform the future of logistics

The world is moving from physical to digital, from wasteful to sustainable, from delayed to instantaneous, and from manual to automated. This faster pace of commerce and the disruptions force us to re-think how we do business. As a result, this
innovation provides an opportunity in disruption. It creates fertile ground for innovation and partnerships that deliver new products, services, and business models to an industry that is in dire need of re-inventing itself to keep pace.

The future of logistics benefits from the data provided by multiple systems, advanced analytics, and the automation of intelligence. As information is provided through the many different sources, the digital supply chain connects technologies, assets, systems, and locations to enable real-time analysis, smarter decision making, and informed actions inside the supply chain.

The data provides predictive analytics that helps shape new strategies for transportation and logistics. It takes into account all variables inside the supply chain, as well as traffic, weather, and social trends, to create an accurate plan. It also allows for flexibility. For example, instead of creating monthly plans, strategies are set weekly or daily to meet inventory volatility and customer demand.

While this breaks the traditional steps between fixed processes, it opens the door for continuous improvement. It allows for better placement of inventory in warehouses that drives quicker order fulfillment. The data, connectivity, and analytics provides the foundation for automation and smart warehouses.

Robotics such as autonomous forklifts, transporters, and assembly line vehicles provide a safe, efficient, and reliable solution for the movement of goods in a warehouse, while improving productivity, visibility, and customer service levels.

Wearable technology gives managers and employees the capability to exchange data between devices and the network. Wearables support core processes such as shipping, receiving, routing, inventory management, picking, and replenishment.

Outside of the walls of warehouses and distribution centers, advanced vehicle technology that includes everything from in-cab systems to engine and trailer diagnostics, and from electric and hydrogen fuel systems to autonomy is transforming the supply chain. Connected trucks have the ability to provide a plethora of data that translates into business intelligence and key predictive analytics with the right people utilizing it.

Having all these pieces in place – technology, data, analytics, warehouse automation, advanced vehicles, and infrastructure – a connected digital supply chain can be adaptive and responsive to the demands of consumers. It gets products to assembly lines quicker and when needed. It strategically maps warehouses and distribution centers for inventory placement, and eliminates waste inside the supply chain. It drives accurate, efficient, and accelerated e-commerce fulfillment and last mile delivery.

The digital supply chain connects everyone involved from suppliers to the consumer. Products can be seen moving through the supply chain, fleets can maximize uptime, and consumers can better predict the delivery of their products they purchased. Companies can meet sustainability regulations, digitize records, and forecast better.

At least in the U.S. and other highly industrialized countries, the grip of the novel coronavirus pandemic is finally loosening after more than a year. For many businesses, that means a return to more traditional operations, including an increase in in-person work and, for some companies, more business travel. This, in turn, could represent big changes not only to your procurement department's operations, but also its budget.

Indeed, a recent survey of travel buyers and procurement managers conducted by the Global Business Travel Association revealed that 3 in 4 companies have employees who are more willing to travel for business these days. That included 1 in 6 who indicated those workers were eager to hit the road again. On the other hand, it's no surprise that roughly 20% of respondents said their workers were not yet comfortable with the idea of travel for safety reasons, and many of those concerns arose because employees in their departments had not yet received the COVID-19 vaccine.

At the same time, many respondents said they had concerns about staffing levels in their procurement departments that had been created by the pandemic, but 3 in 5 planned to add more workers within the next six months.

For many CPOs, it's time to start planning for business travel again.For many CPOs, it's time to start planning for business travel again.

Back into the swing of things
Of course, vaccination rates are gaining steam in many parts of the country (though some are faring better than others) and that's leading to an increase in business travel, according to CNBC. For instance, Hilton CEO Christopher Nassetta recently told the network that his company has seen business travel reach 50% of pre-pandemic averages worldwide, and even higher in major countries where the recovery effort is surging ahead. This can be taken as an indicator that things are returning to normal — and doing so quickly.

"As businesses are starting to reopen offices and an expectation of in the fall kids going back to school, people start to travel for business again, and they start to congregate in meetings," Nassetta said in an interview in early May. "In fact, if you look at markets even in the U.S. and certainly China ... where they're further along, we already see business travel back to effectively 75% of volume levels that we saw in [2019]."

Along similar lines, other major companies indicate they expect to see work return fully to pre-outbreak norms by the fall, perhaps no later than October, the report said.

Added flexibility
Of course, business travel was largely replaced by video conferencing over the past year-plus, and for some veterans of the business travel game, it was a major problem, according to NBC News. However, as things return to normal, many companies are still wary of what the coming months look like, but it seems that the increase in leisure travel now being booked for the summer is assuaging those fears. Put another way, if people in the wider world are now more comfortable traveling for pleasure, there should be similar growth in willingness to travel for work.

This is something procurement managers will need to consider in the months ahead, and adjust their budgets accordingly. These changes may not be easy, but for many, they will be highly necessary as the world returns to normal.


 In the past, the sole function of an RFP was to engage with the best supplier with the best pricing.  

Today, it isn’t just about functionality and price; the pandemic raised awareness around financial stability and diversity qualifications that should be included when it comes to the down selection process.

Is your company classified as any of the following?

  • Small Business
  • Small Disadvantage Business (SDB)
  • Women Owned Small Business (WOSB)
  • Veteran Owned Small Business (VOSB)
  • Service Disabled Veteran Owned Small Business (SDVOSB)
  • Hub Zone Small Business (Hub Zone)

    Then there are now additional “legal” questions being presented in RFP’s

  • Is your company involved currently in litigation with any company or entity?
  • Does your company have any debarment by governments or any regulatory bodies?
  • Is your company a subsidiary of another company? If yes, what company?

 Beyond the signed NDA or MNDA prior to the RFP release, there now the trend of questions/requirements in the RFP re:

    3rd Party vendors

Proof that there is an NDA between the Potential Supplier and the 3rd party vendor which includes a clause to cover confidentiality regarding work performed for any client of the Potential Suppler. 

  • Proof of any required licenses
  • Proof of insurances

 The RFP should clearly state if 3rd party vendors are allowed or not allowed to be part of the installation and or support of the product or service.  The RFP should be clear if 3rd party vendors are acceptable that they report to, are the responsibility of and paid by the contracted Supplier… there should never be invoices received directly from the 3rd party vendor.

    RFP “Company Questions” around internal employee volunteerism:

  • Does your company promote volunteering? 
  • Does your company allow employees paid time to volunteer?  If yes, how much time each year?
  • Does your company support any non-profits and if yes, which ones?

    Then there are the political related RFP questions:

  • Does your company support any political party? 
  • How does your company provide support?
  • Does your company publicly advertise your support?

     And don’t forget the company stability questions:

  • What us your company’s employee turnover rate? 
  • What has been the employee growth or decline as it relates to revenue?
  • How many acquisitions has your company been part of in the past 5 years?
  • Is your company private or publicly traded? (If public read the stock news/releases.)
  • What is your D&B (Dun and Bradstreet) number? (check it)

    Miscellaneous items to investigate about the Potential Supplier:

  • YouTube content
  • Facebook Page
  • LinkedIn Company page
  • LinkedIn page for representative, and upper management (is there a lot of company hopping by the folks that will be connected to your account?)

Depending on the type of service, you might also want to check their on-line reviews

 I had a client years ago who didn’t do this type of due diligence, signed the engagement with the supplier to only discover during roll-out their insurance policies had lapsed AND all the vendor employees on site were actually subcontractors/3rd party providers.

 When writing an RFP, the above information which has nothing to do with the service or product being sourced is of value.  No stakeholder wants to be called to the rug for a preventable situation.

If you have questions or are interested in having an RFP Sourced please contact me, twankoff@corcentric.com.

 

 

 

Cybersecurity has been a big issue for as long as computers have existed, but in recent years, hackers have become increasingly aggressive in targeting businesses. That's certainly an issue for any organization with a procurement department, because even small, temporary disruptions to normal operations can be quite costly.

It's for this reason that the Biden administration recently issued yet another executive order designed to secure the national supply chain, this time specifically aimed at defense against cyberattacks, according to National Public Radio. In particular, the order spells out what companies that are in business with the federal government have to do in the event that they are hit with an attack, including investigating the causes and upholding standards around software development.

Stringennt data security is a must for procurement pros.Stringennt data security is a must for procurement pros.

Effectively, this allows the government (and its partner businesses) to have a better understanding of the security landscape on which they are operating, up and down the supply chain — and appointing a date by which everyone will have to be compliant, the report said. Anne Neuberger, the deputy national security adviser for cyber and emerging technology at the White House, told NPR that this initiative was kicked off because of the attack suffered by SolarWinds, which cascaded into problems for dozens of companies nationwide. This attack clarified a lot of the issues that had been swirling over the sector for some time and led to an overarching solution issued from the highest echelons of federal government.

Looking at unique issues
Of course, threat vectors are evolving and springing up all over the place these days, for organizations of all shapes and sizes, according to the latest Verizon Mobile Security Index. That is particularly true when it comes to the emergence of remote work, which many expect to continue well beyond the pandemic's end. About half of all businesses surveyed said that a remote workforce has done damage to their cybersecurity posture, and 2 in 5 believe the use of mobile devices has become their biggest organizational security threat.

The problem for many businesses: There is a recognition that mobile and BYOD policies are a security issue, but 45% have been forced to simply live with that risk because they need to hit their goals and meet various deadlines. This creates a potentially unique problem, as well, because 57% of respondents did not have an Acceptable Use Policy governing their data use and retention.

What can be done?
Clearly, then, the first step to getting a better handle on procurement data security is to establish policies if they don't yet exist, or reevaluate the ones you've had in place for some time to see what may need to be tweaked, according to Ryzex. It will also be vital to train employees on best practices and your unique standards, as well as make it simpler for them to connect to your networks.

Once you have a strong security standard in place, it becomes easier to uphold a strong posture because everyone will be on the same page when it comes to taking the right steps, individually and organizationally. That way, you can proceed under new federal guidelines or feel more confident that when an attack attempt takes place, you will be able to stand up to it.

The novel coronavirus pandemic changed many aspects of American life, when it comes to both work and personal time, but some of the changes that accompanied it seem like they may be here to stay. One of the biggest, regardless of industry, is people got a taste for working from home — and it made them more productive. And despite what many within this specific industry might expect, procurement pros are likewise intending to keep up their remote-work habits for some time to come.

Indeed, more than half of procurement professionals say they will continue to work remotely on at least a part-time basis, with almost 1 in 3 saying they would do this for the majority of any given week, according to the recent Public Procurement Priorities and Strategies for 2021 from Bonfire Interactive. And for the most part, this seems like something most within the industry are comfortable accommodating.

Is remote work here to stay in the procurement sector?Is remote work here to stay in the procurement sector?

The three most commonly cited priorities for procurement organizations in the year ahead are cutting costs, improving processes and getting a better handle on evaluating their digital transformations, the survey showed. The latter will, of course, be highly important to companies that keep allowing part- or even full-time remote work.

"Many procurement teams are utilizing FEMA reimbursements or federal stimulus like CARES and ARP to help modernize processes, bring them online and become more efficient," said Omar Salaymeh, Bonfire CEO. "It's imperative that they continue to innovate and embrace digital solutions that meet these priorities in the months and years ahead."

Getting it right
With the above in mind, experts agree that it's time for organizations to start laying the groundwork for processes around sharing data and training, because procurement departments can be an intricate ecosystem in which everyone has to be on the same page, according to American City & County. If your organization does not have a solid plan in place on this front, but plans to keep allowing remote work for the foreseeable future (or even permanently), it's likely that things will be lost in translation as time goes on and more workers are onboarded. That, in turn, disrupts business continuity and can knock your organization off course.

Investing wisely
The good news is many organizations, both public and private, seem to recognize the opportunity before them and are strategically investing to ensure they can keep up with the demands of modern and future work, a recent Focus NJ/Brother International survey showed. In the Garden State, businesses have invested an average of $34,000 in their tech infrastructures to ensure they can keep up productivity even in the face of highly disruptive events such as a massive public health crisis. Perhaps this is why nearly two-thirds of respondents say they are at least considering allowing the continuation of remote work even after the pandemic has finally ended.

Certainly, any changes your organization can make to potentially improve productivity and flexibility in a post-COVID world are at least worth exploring, and that may begin by looking at your bottom line and talking to your employees about the things they value in work.


Supply chains of all types, touching just about every industry around the world, are still very much in recovery mode post-pandemic, and it's an issue that isn't going to resolve itself anytime soon. One sector where this is a problem on multiple fronts is automaking, because a host of issues have come together in recent months to create unique challenges for companies large and small.

The issue starts well before even reaching an auto assembly line, too, because even the companies that make components for those vehicles are experiencing issues when it comes to supply chain transparency, according to Auto News. And, like vehicle manufacturers themselves, they also experienced shutdowns early in the pandemic that, in turn, created backlogs that were difficult to work through.

Automakers are still trying to get back to pre-recession norms.Automakers are still trying to get back to pre-recession norms.

Meanwhile, this industry (among numerous others) has suffered through a global shortage of microchips that made it far more difficult to manufacture automobiles at high volumes, and unfortunately, this problem is expected to last at least through the end of 2021, the report said.

"I think suppliers are navigating more than they ever have," Julie Fream, CEO of the Original Equipment Suppliers Association, said at a recent industry panel, according to Auto News. "Surprisingly, 2021 has become a more challenging and difficult year for suppliers than even 2020 was. At that point, the industry went down and then we came back up. But it is such a challenge to navigate all of these individual areas that are causing concerns and problems for suppliers."

Other issues
At the same time, a number of companies are dealing with labor shortages that make the kind of production goals they need to hit with all this backlog even more difficult to reach, according to Freightwaves. This is true not only when it comes to actually producing the goods needed to get more cars rolling off the line, but also when it comes to delivering those components in a timely fashion that allows supply chain partners to keep hitting their goals.

Addressing the issue
With the above in mind, some federal lawmakers are now trying to bolster the automotive supply chain through new legislation, according to the Detroit Free Press. U.S. Sens. Debbie Stabenow and Gary Peters, both Democrats from Michigan, recently worked to set aside an extra $2 billion in funding to boost domestic semiconductor production. While the benefits are likely to take some time to come to fruition, the idea here is to buttress supply chains and processes so that future shortages have a potentially diminished impact within the U.S., and to the wider world overall. Stabenow also told the newspaper that it's important for manufacturing in Michigan (and beyond) to not only keep improving automotive output, but also to boost manufacturing of other items such as furniture and appliances.

The more companies can do to forecast their production needs several months or more in advance, based on all the high-level data they can generate and interpret, the better off they will be when it comes to weathering supply-chain storms going forward.

Many companies in today’s world are driving organizational growth via the acquisition of businesses and competitors that operate within the same marketplace.  This concept allows for rapid growth and an immediate uptick in current market share of the industry being serviced, as opposed to an often slower organically executed strategy.  While many positives come as a result of the immediate growth realized from acquisitions, many hurdles also exist.  One of those hurdles this blog will address is the process of successfully implementing acquired companies into your organization’s sourcing and contracted supplier programs.   


Identifying Acquired Company’s Supplier Spend & Trends

As soon as the acquisition is closed, it is important to gain an immediate understanding of how spend has been flowing, and to what suppliers within the newly acquired group.  Running an internal report showing high-level General Ledger spend broken down by categories should help easily identify the key suppliers being utilized.  Once this spend is categorized and filtered by highest annual supplier, begin identifying any contracts tied back to these high spend suppliers.  If you are unable to identify the most up-to-date contract internally, reach out to the supplier directly for this information.    

Once the contracts are on hand, review them in-depth to identify any penalties or clauses related to early termination.  Often times contracts have buy-out clauses within them related to early termination, which depending on the total spend identified may be in your best interest once the total cost of ownership is fully realized.   

Also, if this acquired organization happens to use one of your contracted national providers, a simple amendment to your national agreement can be executed in a matter of days to immediately roll the acquired group’s locations into your program with minimal downtime and oversight required.  Always be on the look-out for these quick wins when running through the supplier identification phase of an acquisition.


Implementation 

Once legacy contractual obligations have been sorted through, the next step is to ensure the newly acquired organization understands the proper purchasing programs that should be utilized.  Depending on the size and complexity of your purchasing programs, the roadmap that often leads to success is through hosting program introductions and training sessions.  These trainings often include the distribution of buying guides, a demonstration of online purchasing portals, and Q&A portions at the conclusion with each supplier’s national account manager to talk through any specific questions.


Monitoring Progress & Compliance

The compliance tracking portion of major implementations is a critical piece of the process that is often times understated by many organizations.  Establishing effective processes to help monitor implementation and buy-in at the local level will enable your organization to easily pivot towards corrective action to ensure long-term success and buy-in.  This crucial step will immediately help identify and eliminate bad habits at the local level as soon as possible.

This part of the process is where you can begin to lean on the effort and accountability of your contracted supplier’s national account manager.  The account manager may even have personal incentives tied back to sales performance volumes with your organization, use this to your advantage and begin establishing a weekly or bi-weekly cadence early on to track the program’s progress and purchasing levels.  Creating a document such as a “compliance tracker” that the account manager oversees will help monitor each location’s actual vs forecasted spend.  During these meetings if any locations are trending in the wrong direction, a combined communication effort from your organization as well as the national account manager should help establish strong messaging to the local level regarding the importance of this program.  

If these steps shared above are executed in a consistent manner throughout the acquisition process, the groundwork for a long-term successful purchasing program will be established.