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For as long as I have known, procurement organisations have been measured by its efficiency - this could be determined by the savings they produce, quicker turn around times and efficiency in approvals ("Where is my PO stuck?", "When will my goods arrive?", "When will my supplier get paid?" are terms everyone is familiar with).

As described in my previous article, Covid-19 has changed the way procurement functions and works! After all, what's better to do in the aftermath of a crisis than to learn from it and change the way we work. Resiliency is the need of the hour.

In July 2005, I was working for a large company in Mumbai that was in the process of implementing a data center for its customer. Everything was going great. Goods were being delivered by the suppliers on time, the installation and implementation was in full swing. We had ordered tape drives (DL-380 if my memory serves right) from a supplier in Finland. The tape drives arrived at the customs office on 25th. We cleared them from customs (there are a billion forms involved) and brought them into our warehouse on the 1st floor of our facilities in the outskirts of Mumbai - which also housed warehouses and logistics facilities for a lot of companies. The installation was scheduled to take place on the 28th (as there was some pre-work - cabling etc. that needed to be completed). If you are familiar with what happened next - it was a nightmare that one couldn't have fathomed. The Mumbai floods impacted each and every inch of Mumbai like never seen before. By the evening of the 26th, the tape drives(along with a lot of other equipment and most of Mumbai really) was submerged in water. 

So we now had procured a tape drive that was expensive, not delivered to the customer and hit not only the looming data center installation deadlines but as anyone in supply chain is painfully aware, the insurance did not cover natural disasters and hence it hit our costs as well. As luck would have it, the supplier did not have another one ready for shipment either. Not surprisingly, we quickly then had to fold the costs within the margin of the whole project leaving us with absolutely no more room for error or delays. Needless to say, it ended up being a project where the cost was higher than the sale!

In the aftermath of this event, we quickly went about building more strategic long term relationships -ones focussed not just on the money aspect and efficiency(SLAs) with our suppliers that were just collaborative in nature.

I think the Covid-19 situation has brought about a number of similar challenges. How can we ensure resilience in the procurement organisation that will help meet the challenges if and when the next wave of Covid-19 happens or in the aftermath of this pandemic? What about resilience in wake of Brexit? 

Focus on long term relationship fostering with your suppliers - Treat them as partners. Remember that great relationships are built are trust - this applies to your suppliers too. What this means is that you are no longer measuring your suppliers on efficiency alone but you create meaningful gain share contracts that lets them play a strategic role in the way you do business. Contracts are not just about how much savings you can deliver, but what is the right price to do business at which keeps the supplier motivated equally.

One of the key changes that we see taking place in the aftermath of Covid-19 and rightly so - is organisations taking stock of their risks and assessing if it is indeed wise to have single source supply bases for critical items especially when you consider:

1. Due to companies having focussed before on reducing costs and building efficiencies, the single source suppliers more often than not tend to be based in Asia or other low cost countries. 

2. For those suppliers based in such countries, deliveries are still delayed and challenging considering not just the amount of restrictions on trade per se that have been imposed by individual countries but also the logistical nightmares in terms of transport that Covid seems to have created.

The pandemic also seems to have created a volatile demand of goods - for instance, there was a spike in toilet paper purchase, which we all know will lead to a lesser than expected demand in the coming months for toilet paper and other such commodities. Costs for raw materials are also increasingly volatile owing to region specific shutdowns.

The point I try to make is this: Sometimes, it is not easy to to balance efficiency and resiliency. But the cost of doing nothing will also be very significant. In summary, here are some of the steps an organisation can take towards being resilient:

1. Build a strong partnership with your suppliers.

2. Diversify your partner ecosystem.

3. Ensure sufficient capacity buffers in your inventories/stock/forecasts.

4. Take stock of your procurement function, now!!!    





The Covid-19 pandemic has shown how resilient and effective procurement organisations can be. But how can we ensure that we are spending correctly? 

What are the opportunities available to improve efficiencies, deliver with greater speed, build an even more resilient supply chain and be adaptive to other changes that could come our way - such as another wave of the pandemic or Brexit??

When we look back the way this pandemic changed the way we procure and interact with our suppliers, there is an opportunity to understand how spend analytics could provide better visibility into the spend through transparency, provide decision points, monitor and improve spend, identify demand-supply gaps and help us respond to these challenges in a quicker and a more effective manner.

We all saw how NHS scrambled its forces together to assemble the essential PPE kits required for its hard working staff and how the decentralized nature of this mammoth organisation did not really help with the leverage it could have otherwise had. 

We all faced empty shelves when we went to the local supermarket to stock up on flour, bread and even toilet paper!

We all realised how little equipped our retails chains were to respond to the huge demand in items such as hand sanitisers.

So how then do companies ensure they get the balance right (if and when such a situation arises in the future) between recognising opportunities to generate savings, meeting the demand-supply gaps that arise and above all, keep focus on a sustainable supply chain?

Its important that we stop and ask ourselves:

1. Do we have visibility into our spend? Where, how much and what are we spending on?

2. Do we have the skill set and more importantly tools to perform analytics that can show us where the opportunities are?

3. How quickly can we perform such analysis to not only create plans in wake of such situations but also deliver on low hanging fruits?

4. How do we identify savings levers specific to each category/sub-category and implement these quickly and effectively?

5. What metrics can we track beyond spend, savings and cost?

6. How do we work collaboratively with suppliers whilst supporting them with data that is available and visible to us?

Spend Analytics is key to identifying answers to all these questions. It not only helps you build a road map on category sourcing but also helps identify savings, tail spend, procurement KPIs, behaviours and provides visibility as well as action points to track spend.

Understanding and analysing spend has helped organisations succeed by identifying levers that help unlock savings and value. What further helps identify and implement strategies or tactics to manage spend during a crisis such as the pandemic is an effective digital platform or tool that is capable of raising alerts without the need for a resource intensive process. The fact that most of us have had to work remotely and will probably continue doing so while collaborating with colleagues and suppliers across the world only builds a stronger case for a digital strategy. If you have not considered a digital platform with spend analytics as a part of it, now is the time to do so.

Applying spend analytics can help a procurement organisation make better and informed decisions by providing a better control over your spend and can help navigate crisis situations more quickly and effectively. Spend analysis can enable competitive advantage, enable better supplier relationships, you may even want to see it as the most exclusive secret weapon at your disposal.

Diego summarizes the importance of spend analytics in his podcast here.




Navigating the job marketplace is a challenge that continues to evolve. It used to be that you could apply to a job posting in a local listing or simply show up in person for an on-the-spot interview. But now there are so many more options, and in all that possibility - it's not always easy to land on the winning strategy. 

Recently, the Strategic Sourceror covered how executive recruiting experts Naseem Malik and Aaron Cleavinger have partnered to launch Vitalize Talent - more specifically the Procurement Spark and Supply Chain Spark Job Boards.  These two job boards offer job seekers and hiring managers a dedicated career hub for the procurement, purchasing, strategic sourcing, and supply chain management disciplines. 

We asked Aaron and Naseem to make the case for Procurement and Supply Chain job seekers to use their platforms:

Why should job seekers be using your platform, when there are already a lot of recruiting avenues?

Our vision behind Procurement Spark and Supply Chain Spark is to make the hiring process more efficient and improve the outcomes. Having a robust feature set, active users, and a business model that caters to just procurement and supply chain will undoubtedly improve the velocity and quality of our new platform. The most prominent hiring platforms in the market today, like LinkedIn or CareerBuilder, are "horizontal" marketplaces. They cut across industries, job types, disciplines. Our platform, on the other hand, has a very specific functional focus on Procurement and Supply chain "verticals."  This gives a depth and weight that other job boards by their very nature just aren’t capable of having. 

So where does that depth and weight come from?

We (Aaron and Naseem) spent our careers as practitioners, building and leading Procurement and Supply Management capabilities in industry before we each launched executive recruiting firms. We've seen time and again that procurement and supply chain professionals want to connect directly with employers. They want to avoid the typical roadblocks (membership fees, expired postings, duplicate jobs, etc.), and let their expertise speak for itself

What else should Procurement and Supply job seekers know?

As we continue to evolve, we’ll adopt an open-source approach to enhancing our offerings and improving our services to both companies and professionals. We have no qualms about being in a constant state of work-in-progress because we’re all about continuous improvement. Our goal is to make our job boards the ultimate conduit for companies and their next great hire.

Visit the Procurement Spark or Supply Chain Spark boards to get started!



Hiring Managers – where do you currently look for Procurement and Supply Chain talent? 

That's the question being asked by recruiting gurus Naseem Malik and Aaron Cleavinger, who recently partnered to launch Vitalize Talent - more specifically the Procurement Spark and Supply Chain Spark Job Boards.  These two job boards offer job seekers and hiring managers a dedicated career hub for the procurement, purchasing, strategic sourcing, and supply chain management disciplines. 

Back to the question - where do you find talent to fill your open Procurement and Supply Chain positions?  If your answer is, "We outsource talent search to HR and don’t get too involved," - then you may not be interested to read on.  

But for those that take an active role in their recruiting, there’s now a new service to help streamline this process. We talked to Aaron and Naseem about the Procurement Spark and Supply Chain Spark job boards. Here's what they had to say:

There are plenty of job boards out there. Why launch one for Procurement and Supply Chain?

We both share in the quest to enhance value across the talent chain.  In thinking about the things that challenge both companies and job seekers alike, we asked ourselves a series of questions:

  • Why is it, that with the growing significance of these critical functions, we don’t have trusted, niche procurement/supply chain job boards and career portals? 
  • What if you no longer had to post a job on multiple job boards or sites, and wait passively with the "post and pray" strategy?  
  • What if you no longer do you had to merely rely on the traditional, "horizontal marketplaces" that are out there serving every kind of company and job?
To put it simply, what if there was a better way to hire?

What do hiring managers need to know about the Procurement Spark and Supply Chain Spark Boards?

It's a better way to hire! These boards are places where procurement and supply management professionals can facilitate and engage on all things related to jobs, career advice, and communicating with fellow like-minded practitioners. We are convinced that our specialization is one of most important value-add and differentiators with other methods out there. As evangelists of both procurement and executive recruiting, we are creating an online and exclusive talent support community: We know procurement practitioners are zealots when it comes to networking and collaborating. And Procurement & Supply Chain Spark is the place for them.

How can Hiring Managers become part of this Community?

Head on over to the Procurement Spark or Supply Chain Spark boards to learn more!


Most organizations deal with a large number of suppliers on a daily basis. We’ve examined three different groups of these suppliers throughout this series – check out the links below for any you may have missed:


  • Non-Critical Suppliers – Procurement can cut costs if we can avoid wasting time on high-volume, low-spend purchases. These purchases cost more in our time and energy than the price of the buys, themselves.
  • Bottleneck Suppliers – Procurement can cut costs by taking back negotiating leverage held by these suppliers (but should more likely attempt to reinforce the supply chain here).
  • Leverage Suppliers – Procurement can cut costs by fully leveraging our stronger position at the negotiation table to drive down prices.

Together, these three categories contain the vast majority of our suppliers. The final category is significantly smaller than any of the others – yet is much more important. Today, we’ll review our Strategic Suppliers. These suppliers sit at the upper right-hand corner of our Kraljic matrix (shown below for the last time in this series), the highest point of supply risk and profit impact:


Up to this point, much of the cost-cutting strategies we’ve discussed take place in the short- to medium-term. Impacts to this quadrant, however, can have a lasting impact on our organizations for years to come.

Strategic Supplier Relationships

Suppliers in this quadrants all share some big ticket commonalities:

  • First and foremost – the products we buy from these suppliers shape our organizations. The way we conduct business and the final product we offer to our own customers rely on these suppliers.
  • There is a natural scarcity in the market. Not many suppliers can deliver these products, and there will likely be significant variation between offerings. Replacing suppliers will not be “plug and play.”
  • Relationships here last years, sometimes decades.

Examples here are simple. If you make cars, this is your engine. If you build computers, this is your processor. If you’re Kenny G, these are the smooth, buttery sounds flowing out of that sax and into your local elevator or weather channel playlist.

A huge part of the products we buy from these suppliers is the subject matter expertise held by their teams. As talented as a Procurement team may be, we will not match the insights these suppliers can provide. Instead, we should do what we can to leverage this SME.

Promote Integration with Suppliers

Points of negotiation leverage are much more fluid and balanced here than in other quadrants. Buyers don’t have a lot of options in the market and would have trouble substituting a competing product. Likewise, suppliers often can’t risk losing big ticket customers.
Rather than trying to think in terms of leverage (or a lack thereof), we’ll need to shift focus towards developing a partnership.

  • Bring suppliers into company activities. For example, train their personnel on your team’s processes and brainstorm how they could be more supportive of any weaknesses. Where along your workflow could they be better ingrained to build process efficiencies?
  • Develop joint partnerships. Your organization is heavily invested in the products these suppliers offer – further investment in joint R&D for product redesign or new service offerings will take an already key product and tailor it to your organization’s specific use while further orienting the supplier to better serve your needs.

Monitor the Relationship

Long-term relationships tend to lose our attention over shorter periods. If a supplier appears to be delivering consistently, why check up on them every month considering they’ve been a supplier for a decade, right?

This is a slow moving trap that many organizations fall into. Think about the story of the boiling frog. Put a frog in a pot of boiling water and it jumps away – put that same frog in cool water while slowly raising the temperature and it won’t even notice. At the end of the day, issues that build up incrementally grow into big problems that all too often fly under the radar until too late.

  • Watch your SLAs and KPIs like a hawk. Now is the perfect time to take a look at your supplier’s obligations and make sure they’re living up to them. If you haven’t developed any KPIs or monitoring processes, start thinking through what measures define success or failure, and how Procurement can go about confirming a supplier stays on track.
  • Stay rigid with scheduled check-ins. It is common for quarterly reviews to get pushed back, shortened, or skipped altogether years into these long relationships. Don’t let it happen. Likewise, stick to the agenda even if it feels “done to death” over the years: These meetings are to reconcile today’s performance, not recounting the good years of the past.

Move Beyond the End Point

It is too easy to consider suppliers in terms of their product delivery. In fact, this makes sense for some other quadrants – not so for Strategic suppliers. Procurement should fully consider these critical supplier’s operations.

  • Know what their BC/DR strategy is, know what understand their risk level. Your organization likely spend plenty of money making sure operations aren’t interrupted if and when disaster strikes. However, can your supplier say the same? A chain is as strong as the weakest link – and strategic suppliers are a very important link. Review business continuity and disaster recovery plans with suppliers. If your organization is much stronger here, work to have your own resources help guide the supplier in revising policy and procedure.
  • Understand where the product you rely on fits within the supplier’s portfolio. Sure, this product is critical for you to buy… but is it just as critical for your supplier to sell? Are they planning to make changes to better serve the market… but to your organization’s detriment? Are they pivoting their business away from your product and towards another entirely? If either ends up being the case, we can help our organizations align our own business to either shift alongside these changes…. Or begin the process of finding a replacement. Given the large influence these products have, however, we can’t do either if we don’t see this change coming. 

Bring in the Whole Organization

The key to successfully improving Strategic relationships is bringing the whole organization into the initiative. Procurement, alone, can’t have a big enough impact to move needle. The importance of these relationships, and the wide-reaching impact they have, requires buy-in and commitment from upper management on down to the front line stakeholders who directly work with these products.
As we wrap up this series, I’d like to extend this notion to all four quadrants – “business as usual” can often be a euphemism for complacency. Our organizations may have spent years approaching procurement activities and supplier relationships in the same tried-and-true way. Trying to move from autopilot to thoughtful, deliberate decision-making will be met with resistance. Why? Because we’re asking for more time spent and more attention paid to something that stakeholders don’t even see as an issue.

Yet this is what Procurement must do. This is a monumental task during the good years when business hums along – however, 2020 is not shaping up to be one of those years. If we can take just a small silver lining from everything happening in the world, perhaps it is that Procurement has a direct example of just how much uncertainty we face – and how we can work to address it.




The ongoing spread of the novel coronavirus, Covid-19 has continued to impact the global economy and business operations in ways many are still fully trying to assess. While nearly every corner of the world is facing the effects of a global pandemic, organizations have now been challenged with the task of keeping their Procurement and AP departments running as normal when life has become anything but. Recent events have pushed many companies to start thinking and working more strategically, either by re-examining and tweaking their current policies and procedures, or utilizing technology and the talent of their workforce in different ways. With the amount of uncertainty increasing every day, organizations must focus more now than ever on their bottom line, as materials still need to be purchased and invoices still must be paid. Below is the first part of a two-part series, where we will explore areas where source to pay and S2P adjacent technology can be utilized to keep business flowing as smoothly as possible.
 Leverage technology that allows for increased automation
Finding opportunities to automate processes by leveraging technology is critical in a time where a large percentage of offices and operational departments have shut down. Many AP departments still highly rely on manual processes to pay invoices, so the work-from-home measures that organizations are taking can bring those procedures to a crawl. Automation reduces the amount of manual touches needed for invoices. Invoices can flow seamlessly through with automatic approvals, providing AP departments more time to work strategically under challenging conditions. 
Collaboration tools that allow for remote work 
In an effort to promote social distancing, offices around the world have switched from on-premise operations to remote based work. This can certainly bring challenges to organizations that have been used to a centralized, office-based work stream Now more than ever organizations should be taking a deep look at any processes that cannot be automated, and determine if they are using their technology’s tools to their fullest potential to enable remote collaboration. Many AP automation tools provide functionality to communicate through either departmental or company wide notifications, or via collaboration and discussion tools at the document level. Cloud-based SaaS technologies allow for the ability to work from anywhere, with some technology suites allowing for mobile functionality, allowing users to approve and collaborate on financial documents from their mobile devices.
Utilize vendor management and risk tools
With current disruptions elevating the need to quickly register new suppliers and determine incumbent suppliers most at risk, it’s important that organizations invest in vendor management and risk technologies to preserve business continuity. These tools can help identify high-risk vendors across your supplier base and determine if any partners have any practices or procedures that could be deemed unsustainable during current disruptions. Fraud is also an important factor to take into consideration, as there is an increased risk of malevolent groups using the crisis to take advantage of overwhelmed and vulnerable organizations. 

Please check back shortly for part two, where we will dive deeper into suggestions previously discussed and take a look at additional technologies that can mitigate risk and preserve business continuity . For more information about how Corcentric technology and services can provide solutions during the Covid-19 Pandemic please visit our website.



Last October, I had the pleasure of presenting at the 2019 IMPACT Manufacturing/Research & Development Summit in Schaumburg, IL. My presentation was titled Surviving the Next Recession with Help from Procurement. After I completed my presentation, there was the normal question and answer portion.  During that portion, there was one comment in particular that stood out to me. A gentleman stated: “I have been with my company 4 years now, and we have never discussed a recession”. This startled me a bit, largely because it wasn’t in fact a question, but also because several other audience members were nodding their heads in agreement.

While I cannot speak for that gentleman today, I would imagine his company is having that conversation now. We are still in the midst of a trade war, and now our world has been shaken by the Coronavirus global pandemic. With this next recession looming, I aim to outline 6 things procurements can do, to best position their organizations to withstand it.

Before diving into that, let’s take a look back at the most recent recession. This took place roughly between late 2007 and mid-2009. This recession, as I know most remember, hurt a lot of people and a lot of companies. However, that was not this country’s worst recession. Judging by change in GDP and Peak level of Unemployment, the Great Depression was far worse. In fact, it is in line with the recessions America has seen almost every decade since the Great Depression.




I am not suggesting that we are about to witness another Great Depression. However, I do believe that companies should prepare for a recession that is as bad, or worse, then the one we lived through in the late 2000s. With that being said, there are some lessons that can be learned from past recessions, for procurement professionals to better prepare themselves and their companies for the next one.

1.     Understand True Demand 1

90% of organizations saw a decrease in demand last time around. Because forecasting demand is the first step in developing any strategy, it’s essential to see past speculation and recognize true demand. Even a slight over or under-reaction could prove harmful. Establish a process for monitoring the probability of order cancellations. Increase direct communication with customers, identify new channels, and insist upon an ongoing exchange of information. Prepare multiple demand scenarios, and plan your actions accordingly for a series of potential scenarios.

2.     Monitor the Supply Chain

Obviously you’re not the only company that’ll feel the effects of the incoming recession. You run the risk of losing suppliers, even entire supply chains, to bankruptcy. Identify your critical suppliers. Monitor their health and lead times, and understand what alternatives are available.

3.     Focus on Flexibility

Proactively address demand uncertainty and create supply chains that are flexible to a wide range of demand. Understand the effects of demand fluctuations and identify what actions should be taken for each demand scenario. Push for smart contracts that account for potential fluctuations in demand.

4.     Manage Inventories to Free Up Cash

Reducing inventories while meeting service-level requirements is a challenge in the best of times. During a recession it’s even harder. However, you should aim to avoid surplus inventory wherever possible. Review all orders against demand scenarios, and understand cancellation opportunities within contracts. Align your inventory policies, changes in demand necessitate that you review and rethink your inventory policies.  For example, you might consider reducing your typical order size to align with the new demand reality. 

5.     Drive Down Costs Strategically

Review your most recent spend analysis, or run a new one if none exists. If there are any quick wins, take advantage of them. Understand where your major cost buckets are, and strategize how to cut down on them without impacting the business. Prematurely cutting off a supplier to meet a corporate mandate on cost reductions, could mean paying more in the long run. Consider where moving spend through a Group Purchasing Organization (GPO) makes sense. GPOs leverage the combined purchasing power of their members to obtain the most advantageous pricing. You can click here to learn more about Corcentric’s GPO offerings.

6.     Prepare for the Better Days

Don’t wallow. Planning for a sunny day could mean seizing on opportunities that other organizations don’t recognize. Develop and retain talent. Lay-offs were an unfortunate fact of the last recession, but organizations that could afford to, should focus on optimizing the talent they’ve got. You should also keep an eye out for potential hires that your competitors have let go. Prepare long-term initiatives. In boom years, it’s often challenging to think big picture. During a recession, you could enjoy opportunity to focus on planning long-term initiatives. A little planning could go a long way when things get better.


In summary, modern procurement teams empower a company to see the sourcing process from end-to-end, and gain new insights into the supply chain. They’ve got flexible category and business unit expertise, and can provide the insights companies need to make their entire organization more adaptable. So while things could go from bad to worse any day now, today’s best in class procurement teams can help their companies make it through to the other side.



1 Lessons For Supply Chains from the Financial Crisis - Supply Chain 24/7; Kai Hoberg and Knut Alicke
In offices across the globe, people are working from home, companies have instituted hiring freezes, and for Procurement and Accounts Payable teams, the workloads have been lessened as fewer things need to be ordered or invoiced at the moment. If you are seeing a bit of a lull in the workload, this is the perfect time to review your policies and processes to review and fix your organization's pain points.

Policies
When was the last time your policies were reviewed beyond needing to add requirements coming from other departments, such as internal audit? Odds are, there are policies that haven’t been touched in years or decades but have been made obsolete. If AP is printing out every invoice to meet a policy requirement, look at updating that if the invoice is being saved in a robust, cloud-based P2P (Procure-to-Pay) program. 

Process
If you are spending less time putting out fires due to reduced Purchase Order & Invoice levels, use the time to brainstorm with your team about manual tasks and pain points. Are there better ways to do it? Does the policy that process is done for still exist? Is it even necessary? 

Last year, I worked with a manufacturer that required staff attach a screenshot of the inventory level in every order they placed in their MRP (Material Resource Planner) for the internal audit team to verify in spot checks. It was something they’ve done for years and needed to be done for thousands of orders per year. After some process review, it turns out that a couple years ago they had an auditable report of their inventory levels saved daily and the screenshot was no longer needed but time was still spent attaching it to every single order.

There are other areas to look at as well: Does the process align with your policies? What pain points could you invest time in reducing if you weren’t spending all day putting out fires? This is the time to look at those. Design the changes now, and when people arrive back to the office, transition to new processes before they settle into their previous bad habits.

Reporting
The best way to know if changes to the process and policies are working is reporting. Employee feedback is important, but a robust reporting structure would let you know exactly how certain items have changed, such as productivity, cycle times, etc. Understand what your executive team cares about and make sure you have solid reporting around those metrics. It also leads into the final part of the puzzle...

Demonstrating Value
Cost reductions will be happening at companies big and small over the next year as revenue projections are adjusted and we better understand the scope of the coronavirus impact. If Procurement or AP at your organization isn’t doing a good job at demonstrating value, now is the time to show it. If there is room to add value for the business, use this time to make changes: Automate your manual processes, attack pain points in the organization, and ensure you have solid reporting + KPIs to back up the value you’ll need to show senior leadership in the company. Changes now will help demonstrate your organization’s essential value once we all get back in the office.