June 2021

on Wednesday, June 30, 2021 0
As the economy begins to bounce back from the global health crisis, companies are working hard to rebuild and reassess how to drive growth. Procurement teams must adjust to a world focused on cost-centric measures as companies rethink the role of procurement to focus on cash management, savings, and supply risk mitigation to enable growth and agility.

As we build/ change our strategy, some key questions that arise are:
  1. Are we throwing prior strategies out of the window, making minor changes, or staying the same?
  2. What are the best practices for cash management in a cost-centric environment?
  3. How to set coherent savings targets aligned with corporate strategy?
  4. How should we manage supplier risk and uncertainty?
There’s much being said about post covid world and how it impacts the role of procurement. 

Procurement leaders were close to unanimous in agreeing that a re imagination of the procurement function will be required, both to succeed in recovery efforts and to transition to a new operating model that’s fit for the new normal. 

CIPS Procurement may need to renegotiate its relationship with finance departments, recognizing that a successful result should be determined by both qualitative and quantitative metrics. This is important because years of work applied to strengthening business relationships with suppliers can be quickly undone if the CFO dictates a refocus purely on achieving cost savings and improvements to working capital.

Is this going to be an inevitable mandate response by finance when emerging from the pandemic? If so, it will require a certain level of maturity for procurement to stand up to this dictate and demonstrate an alternative approach. 


Ardent Partners also conducted a survey in 2020 on Procurement Metrics that matter. Pre-Covid, the top concerns for a procurement organization revolved around driving digital transformations, improving processes and increasing agility. What is interesting is that prioritizing cash management seems to be top priority for organizations post-Covid. Increasing savings and improving visibility into the overall supply chain are the other areas of focus as per this survey.

In order to enable growth and build agility, focus on these 3 areas can guide and enhance your approach to any transformation plans.

Cash Management is at the forefront of every organisation’s agenda to drive performance. Some of the activities to focus on to gain traction include re-evaluating your business model, optimising your operational flexibility, capital availability market reach, accelerating decision making and strengthening your personnel/talent.

Savings has always been the biggest measure of a procurement organisation's performance and can play a key role in your big picture transformation plan.  It’s also important to refine policies, understand and define training needs for your team, gain stakeholder buy-in to drive results and establish a supplier relationship management process as you start building this roadmap. Understanding your supplier contracts in detail will help you narrow down on those potential quick wins and can act as a starting point for the roadmap.

Supplier Risk Management : Traditionally, Procurement focus on supplier risk management constituted of t continued efforts with existing providers to improve the relationship, multiple rounds of attempted negotiations based on negotiation strategy and working sessions to improve service and account management. Although these are great things to do, a better way to improve relations with supplier to minimise risks would constitute engaging incumbent in current scope and quality discussions, vetting alternate providers based on specific requirements, using sourcing process to refine understanding of emerging trends and technology and leveraging market data to engage incumbent in conversations around performance, process & innovation, and cost improvements.

The value of a procurement organisation lies in not only driving savings, efficiency and compliance but also delivering value-based strategic procurement that can translate into bottom line improvements to the corporation …to ensure that the Procurement strategy is aligned with, and that it rolls-up to, the overall corporate strategy.

All activities individually have value, but the sum of their parts delivers the best results (e.g. spend analysis without strategic sourcing doesn’t bring savings in the door).


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on Tuesday, June 29, 2021 0

The world of supply chain businesses was indisputably affected by the recent pandemic in ways that will have lasting effects, but the same is true for how consumers shop. That, in turn, will likewise continue to impact companies for many years to come, but the sooner businesses can alter their response to shifting customer preferences, the better off all involved will be.

First and foremost, it appears that consumers have largely come to expect free and fast shipping as a matter of course — but interestingly, they don't always mind paying for it, according to Inmar Intelligence. More than half of respondents said they would spend between $25 and $50 if it meant they would qualify for free shipping, and 85% said they would go pick up their packages at a local store to reduce shipping costs.

And while almost half of those polled indicated they expect deliveries to arrive within two or three days of placing the order, 87% said they would be willing to wait as long as a week if they didn't pay for shipping, the survey showed. However, that wasn't the case for all types of products; almost 4 in 5 said they expect to get free shipping when they order apparel or home goods online.

Is your company set up to handle the shifting sands of e-commerce?Is your company set up to handle the shifting sands of e-commerce?

Different kinds of shopping
It should come as little surprise to those in the logistics industry that online shopping increased across the board during the pandemic, and that was particularly true of groceries. Now, though, consumers are returning to pre-pandemic norms, a recent study from Brick Meets Click found. In April 2021, online grocery sales hit $8.4 billion, down 10% from March but still well above where it was in the same month last year.

That came as fewer households made such purchases, a drop of 12% to some 68 million, the report said. That may seem like a bit of a disconnect — there was a 12% drop in households ordering groceries online, but revenues on those purchases were up 16% — but this shows increased engagement among the people who found they liked this kind of ordering. Indeed, 78% of total online grocery sales in April came from a dedicated set of monthly active users.

Meeting expectations
If consumers are changing their habits when it comes to online shopping, companies may need to do more to meet them where they are. Recent polling from FullStory showed that 81% of people plan to shop online more often in the months ahead, despite the waning effects of the COVID-19 pandemic. However, just 12% say they are "very likely" to provide feedback when they run into problems completing a transaction, and the vast majority will instead abandon the sale.

"The rise of digital-first business brings great opportunity but also risk, as this survey correlates a poor digital experience with customer and revenue loss," said Kirsten Newbold-Knipp, chief marketing officer of FullStory.

As such, companies may need to do more to engage consumers to understand what they want from these e-commerce transactions and how the business can better meet those requirements.

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on Monday, June 28, 2021 0

 

In May, the prices of lumber reached historic highs. Now, they are dropping quickly, although there is still much further to go to return to pre-pandemic pricing.

On Friday, futures fell all the way to $774.00 – a sharp 53.7% decrease from the early May high of $1,670.50.

Suddenly, the bubble is bursting.

How did this bubble form?

Across several industries, shortages that happened as a result of the COVID-19 pandemic impacted development, supply, and price. This was felt in the construction industry, as prices for supply has risen along with a shortage of labor and increase in demand.

When the COVID-19 pandemic began, many lumber mills across the country shut down production in anticipation that there would be low demand for houses during the low point of the pandemic. Other factors, such as mills having to close out of precaution directly related to the pandemic, played a role as well.

This assumption that the housing market would suffer, however, was incorrect. During the pandemic, homeowners looked to do DIY projects around their home that involved lumber. And, as interest rates remained low, demand in the housing market boomed, causing a spike in demand for lumber.

Softwood lumber prices increased by 154.3% from May 2020 until May 2021, per May’s PPI report. In this same time, hardwood lumber prices increased by 36.4% and plywood increased by 70.4%. Other construction materials were impacted too – iron and steel scrap, for example, increased by 76.6%.

This increase in price coupled with a labor shortage that is impacting industries across the board caused a construction backlog that could not keep up with the demand for projects, specifically housing.

What caused the bubble to burst?

As the pandemic wore on and lumber mills remained closed or unproductive, some builders began to stockpile lumber.

At its May peak, the lumber reached a price point that was too high for most consumers. So, at its highest price, wood wasn't selling -- and the price turned.

This decrease in demand caused whose who stockpiled lumber to begin to sell off. So, the change in price of lumber the last few weeks have been a classic economics lesson. Demand decreased, supply increased and prices plummeted. 

What next?

While lumber prices are in a free fall, it does not appear that they are even close to returning to the pre-pandemic prices, according to Devin Stockfish, chief executive of lumber producer Weyerhaeuser Co who spoke at a conference last week per Ryan Dezember of the Wall Street Journal.

“I don’t think $1,000 lumber prices are the new normal. But that being said, when you think about the amount of housing that we’re going to have to build in the U.S. over the next three, five, 10 years, that’s just a significant amount of demand for wood products.”

Interest rates remain low, so demand in the housing market is not going anywhere. Per Dezember, others at the conference thought that the price of lumber would hover between $700 and $800 – clearly well below where it was this May, but still above the pre-pandemic pricing.

The ever-changing lumber market over the last 16 months is just one example of how COVID-19 has changed the market in a significant way. It’s

And while prices are returning closer to normal, it is clear that the construction industry will continue to feel the effects left by the pandemic's original impact.

How does this impact sourcing?

The current freefall in prices changes the procurement strategy from even a month ago and serves as a reminder of the importance of evaluating your sourcing strategy as situations change.

Sourcing for lumber in this tumultuous scenario may be complicated in an RFP process. Lumber mills may now be inclined to just sell to the highest bidder, especially as prices quickly plummet. On the demand side, it may serve best to find the lowest price as mills try to unload as quickly as possible rather than settle on a long-term agreement before prices return to a steady price.

Turning to Corcentric to help source through the after-effects of the pandemic can pay dividends, with service offerings that can help to navigate these fluctuating prices and find the best value for your company.

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on Thursday, June 24, 2021 0

The global COVID-19 outbreak set many industries on their ears over the past year-plus and certainly, the logistics sector bore a particularly heavy brunt in terms of disruption to normal operations. However, many individual companies within the field did not sit idly by and just accept these conditions as unavoidable — instead, they pivoted to an increased reliance on digital processes to help shepherd them through the crisis.

Indeed, 97% of businesses in the supply chain recently told ToolsGroup that they suffered at least some kind of disruption because of the coronavirus. Of that number, almost half (42%) said this led them to put their plans for digitizing various processes into a higher gear. Of course, roughly 90% had already found themselves at some stage of that path.

More than half of the companies that categorized themselves as "reaping the benefits of digital transformation" said their efforts around COVID uncertainty were going "very well." Most often, companies reported they were digitizing to keep up with customer or partner expectations, just ahead of trying to increase automation that frees up staffers for other work. Nearly as many were simply trying to improve business performance. Other popular answers included prioritizing improved customer service, navigating around unexpected disruptions or increasing the resilience of their overall supply chain.

Is your supply chain business ready for the post-COVID world?Is your supply chain business ready for the post-COVID world?

Digging in on customer experience
The ability of supply chain businesses to meet customer demand was front and center in the past 12 months or so. To that end, it should come as little surprise that Supplyframe recently found more than 2 in 5 organizations in this sector have launched a new customer experience or digitization effort during that time. However, potential difficulties arising from the pandemic were nearly as likely to derail these efforts; 39% of respondents told the company this was the case.

"This research illustrates that the global electronics industry is still in an early stage of digital customer engagement maturity," said Steve Flagg, founder and CEO of Supplyframe. "The good news is that there is plenty of room for growth."

This comes as 56% of those polled categorized themselves as being "relatively immature" when it comes to gaining access to customer insights through business data, the report said.

What does it take?
As companies continue to get these efforts off the ground, decision-makers need to keep in mind that they should start by understanding what they need to look at in the first place, according to DC Velocity. It's all well and good to have full digital insight into your operations, but if you don't know what data is important, you might end up looking at or even prioritizing information that won't help you get ahead.

As such, you need an understanding of both what you want to achieve with digitization efforts and what data ties into those aspects of your business. Once you can separate and analyze that information more effectively, your operations — and your ability to meet partner expectations — will likely improve markedly.

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on Monday, June 21, 2021 0

Improving procurement efforts is important in every industry, but too often, education is one sector where its important can be overlooked or even ignored. However, if you work in this field, you already know that tight budgets are always an issue, and a better procurement strategy can help improve the bottom line without sacrificing strategy, insight or effectiveness.

The following tips should help you get a better handle on education procurement on an ongoing basis:

1) Always make the financial case

Again, many decisions in the world of education are about dollars and cents, and there's rarely wiggle room of any kind — so when you're pitching new strategies, it's vital to spell out how it helps your organization financially, according to Education Executive. The more you can do to show why your proposal would end up having a net positive impact (especially in the long run) could help you sell something that requires a larger up-front investment.

A great education procurement effort starts with a clear strategy.A great education procurement effort starts with a clear strategy.

2) Keep all the right people in the loop

In the education realm, there are a lot of stakeholders who may have to sign off on financial decisions large and small, and you should be sure to include everyone relevant to your efforts on every step, Education Executive noted. That way, everyone can be on the same page from the get-go, and more fully align the entire organization to ensure your new procurement efforts go off without a hitch.

3) Start small if necessary

Because education departments don't often have a lot of money lying around, you may not be able to enact your entire procurement vision in one fell swoop, according to Kodable. For that reason, you will have to be content (and able) to take a more piecemeal approach to this effort, and ensure that you can slowly but surely work toward your ultimate goal.

4) Plan well in advance

With that in mind, it's important to have both a short-term and long-term procurement strategy that you can work on for your "big picture" goals, according to Tenet Services. When you do so, you are hitting smaller goals with regularity and also continue working toward an overarching endpoint.

5) Keep great records

Finally, it's a great idea to ensure that you are keeping detailed records of basically every aspect of your procurement efforts, Tenet Services added. From logging contact details and maintaining a database of agreements you have with various suppliers to maintaining financial data that shows a strong return on investment, there should be a great collective approach to better recordkeeping.

With the budgetary constraints that anyone working in education has to deal with on a regular basis, being able to make the business case for a grand procurement strategy is vital. The more you can do to ensure this is an effort you prioritize at all times, the better off your entire organization is likely to be as time goes on.

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on Monday, June 21, 2021 0

Supplier relationship management is a key contributor to the success or failure of the partnership formed between the purchasing team and the supplier network, but can also be a vital component for the sourcing team to ensure accurate and competitive pricing is maintained within the supply base.

The supplier/client relationship can be though of as a one time process during the initial sourcing process, or a partnership with regular checkpoints and coordinated efforts that benefit both parties.

The advantage of establishing a pricing agreement with a supplier and not actively checking in with the supplier is the low cost of maintaining the relationship. This is often best for very low spend accounts when a large number of suppliers are used, and when the purchases from the supplier are very irregular. However, if the supplier provides key components or provides a large number of products, the spend justifies the cost of regular checkpoints and sourcing initiatives to ensure the supplier stays competitive with the market.

For these key accounts, the supplier may have coordinated efforts during product design or maintains the relationship with manufacturers for key components. Often there is a reluctance to engage with the supplier until there is a problem, but a proactive approach will ensure the availability of the items and the management or reduction of lead times to maintain a healthy relationship with the production team.

This can be as straight forward as quarterly review meetings with a scorecard which includes not only on-time delivery, but pricing and qualitative relationship metrics. This will highlight missed deliveries or expected shortages and allow for active conversations during the expected semi-annual or annual proposed pricing increases. For items stocked by multiple distributors challenging pricing increases can be performed with a quick RFQ/RFP with the other suppliers, but for exclusive distributors the process needs to include a contract where the price increase process is addressed.

For exclusive distributors we strive to include both service level agreements as well as limitations on price increase with requirements of documentation from the manufacturer or index tracking reports in the case of raw materials or chemicals. Therefore, by limiting the term of contracts and actively challenging price increases, spend fluctuations can be managed and minimized.

Two other components can be often considered less crucial, but contribute substantially to the overall spend with the supplier. These components include managing the purchasing process, and logistics and delivery.

By managing the purchasing process you can ensure the pricing and discount structure that was negotiated was implemented and is actively maintained by the supplier. Items such as punch-out and static catalogs also provide advantages since the teams across different facilities have access to the same items at standardized price points and purchase from the preferred supplier as opposed to a wide range of local or online suppliers.

A separate contract with a logistics company can remove the often confusing component of including delivery in item level costs for direct comparison between distributors and result in more competitive pricing, since the spend can be combined from multiple suppliers under one carrier. This will result in a higher volume and spend for the preferred carrier, and allow them to offer lower pricing to increase the overall savings opportunity.

As the relationship with a supplier grows in both number of products and overall spend, instituting a supplier relationship management program can present advantages to both parties. It can prevent shortages of supply and high price increases for the client, and ensure a steady growth and compliance with respect to purchasing patterns from multiple facilities for the supplier. Therefore, establishing and maintaining a mutually beneficial partnership.

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on Friday, June 18, 2021 0

The COVID-19 pandemic negatively affected many different industries and the supply chains that support them, but a few stand out among the rest as having significant knock-on effects. For instance, factory shutdowns in Asia and the U.S. led to a severe shortage of microprocessors that power all kinds of electronic components, from computers to appliances to automobiles. That, in turn, resulted in production delays for all those popular and highly necessary consumer products.

A similar pain point emerged in recent months relating to reduced lumber production. Indeed, softwood lumber prices rose sharply over the past 12 months, resulting in an increase in costs for newly built homes to the tune of tens of thousands of dollars on average, according to the latest data from the National Association of Home Builders. This shortage largely arose because sawmills that produce lumber have been struggling to fill open positions; in fact, employment in the industry was down 0.8% on an annual basis in March.

Lumber shortages are driving home prices to new highs.Lumber shortages are driving home prices to new heights.

Meanwhile, sawmill output has largely remained the same for most of the last five years and, if anything, has trended slightly downward, the NAHB said. At the same time, single-family home starts have risen appreciably — by roughly 33% — over the same period, meaning there's less supply but significantly more demand. As such, the price of softwood lumber has increased roughly by 5.5 times its 2016 dollar figure since then.

Understanding the impact
Even on a near-term basis, lumber price spikes are highly volatile, according to Supply Chain Dive. Industry data suggests lumber futures contracts slated for delivery in May climbed to an average price of $1,645 per 1,000 feet of board, up 8% from less than a week earlier, 60% from a month prior, and almost 375% annually. This marked the largest increase in lumber prices since the explosion in domestic housing construction in the aftermath of World War II.

Some of the issues that led to these increases aren't just related to labor supply, however, the report said. In some cases, tariffs from the last few years aren't helping, nor is the rise in devastating wildfires in the Western United States. And while there was a sharp decline in home building in the early days of the pandemic, which gave sawmills increased confidence they could slow production, there was shortly thereafter a dramatic increase in home sales as people sought to move to properties that would be friendlier for work-from-home arrangements.

Supply and demand
As the headlines piled up in recent weeks, many industry observers noted that the increases were unsustainable, and that certainly seems to be the case, because those record highs have come crashing down again more recently, according to the Atlanta Journal Constitution. Between the end of May and mid-June, the price of lumber had once again fallen — by 41%. Prices remain well north of pre-pandemic norms, in some cases more than triple what they used to be, and volatility is expected to continue.

While perhaps not specific to lumber or fuel shortages, supply chain hiccups reverberating from the pandemic are certainly issues procurement and fulfillment professionals will have to monitor for at least the next several months, if not longer.

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on Thursday, June 17, 2021 0

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.

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on Wednesday, June 16, 2021 0

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.

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on Friday, June 11, 2021 0

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.

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on Wednesday, June 09, 2021 0

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.

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on Wednesday, June 09, 2021 0

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.

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on Monday, June 07, 2021 0


 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.

 

 

 

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on Friday, June 04, 2021 0

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.

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on Thursday, June 03, 2021 0

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.

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on Tuesday, June 01, 2021 0


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.

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on Tuesday, June 01, 2021 0

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.

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