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on Sunday, September 26, 2021 0



Finding the perfect supplier and solution to fulfill any business requirement can be cumbersome and stressful. However, leveraging a sourcing initiative such as a Request for Proposal or Request for Information (RFP,RFI) can help you effectively evaluate the market and its supply base and find the right fit partner(s) and program(s) to satisfy your business objectives. 

Depending on the commodity, service, and depth of the requirement one or multiple strategies can be used. As an RFP encompasses many elements to address and inquire about qualitative and quantitative aspects of supplier capabilities, I want to offer some insight into best practices for writing an effective RFP. 

The RFP should allow you to clearly communicate your specifications, goals and objectives, wants vs. needs, and what is and is not acceptable. Below are some of the critical areas of inclusion recommended that will result in obtaining the right information and therefore allowing you to make an informed decision.

  • Define your project: Explain your business and the reason for the release of the RFP. Brief suppliers on the current state and overall project requirement.
  • An introduction, business overview: What is your business (services or products provided) and what are your values? Is there something unique that should be part of the consideration and selection? You want to ensure bidders align with your vision and company values.
  • Outline the expectations: What are your business goals and objectives? What do you foresee the end state looking like? Make suppliers aware of any paint points you are looking to address or incumbent problems under consideration. This might be something straight forward like replacing old equipment with modern services or it can be more complex and strategic such as replacing workforce resources and services with an outsourced solution that requires various teams to be involved and requires a heavier investment from all parties involved. 
  • The format/style the suppliers should respond with: What are the expectations for the responses? Are there attachments to be populated or specific documents to be submitted? Will demos or POCs be expected?
  • What are the criteria suppliers will be evaluated on? You should look to be extremely specific and categorize each section elaborating on goals and metrics being used. This can help to guide the suppliers to be more explicit with responses and mitigate the sales fluff. 
    • If there are rules around using or not using 3rd party supplier assistance in the RFP make that a separate clear section.
    • If there is special consideration for women owned, veteran owned etc. suppliers, this should be outlined as well. 
  • Outline any potential roadblocks that might delay a decision or allowances for scope change during the RFP and selection process. 
  • State your budget: Although this might be a very conservative number, you should try to set some expectation to what value you have assigned to this project. There are going to be some suppliers who will talk around budget and total cost until they move into next stages, but those who really want and deserve the business will try to work within your confines or be honest early on if they cannot. 
  • Define all timelines and response processes: What are the timelines for each stage of the RFP? Do your best to set expectations for next steps including additional timing for demos and conversations, down-selection, and award. Make sure you provide clear instructions on where responses should be submitted and how all communications should be handled. Providing detailed information in this section can eliminate unnecessary and numerous follow ups from the bidders.
The above sections are just the tipping point to set the stage of your deeper dive inquiry. More to come in my next Blog in looking at the Questionnaire itself and how to ask the right questions and get the right answer in support of your overall decision making.

If you can include the above and be transparent to bidders, you are more likely to mitigate responses from those suppliers who cannot fulfill the request, minimize some of the sales jargon, and ensure responses are on time, within budget, and offer winning solutions. 

Your efforts will help to reflect your expectations for an effective response.

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on Friday, September 17, 2021 0



As offices across the country begin reopening, many organizations have begun the process of reengaging former facility service providers to reactivate programs that were disrupted as a result of temporary facility shutdowns.  Some examples of categories impacted by facility closures includes services such as water & coffee, food & beverage, security, and janitorial services.  While there is a lot to gain by establishing a go-to-market sourcing strategy for each of these categories, this blog will specifically focus on how to successfully source best-in-class janitorial and cleaning services. 


Identify current state vs desired future state

Before going to market it’s important to understand what’s working and not working with your current janitorial services provider.  Take the time to run an internal review and score the supplier based on factors that are important to your company, some examples may include: Is facility cleanliness acceptable, are staffing levels adequate, are response times for emergencies acceptable?  Understanding the pain-points with your current supplier will help naturally pivot the next crucial step which is updating and/or creating a Scope of Work to align with your desired future state.  The Scope of Work (SOW) should be created and included in your janitorial services contract to ensure supplier expectations are clearly established.  Any concerns regarding the requirements established in the SOW should be aligned on between both parties prior to contract execution to ensure your desired future state is fully understood.   


Request for Proposal (RFP) development

Prior to building your RFP to receive supplier pricing, it’s important to ensure you have the correct janitorial service providers invited to this sourcing event.  I highly suggest starting this process off with a Request for Information (RFI) with detailed questions submitted to a wide range of potential suitors to help identify suppliers that fit the needs and requirements within your newly updated SOW.  Once this list of potential janitorial services providers has been properly vetted, the RFP construction process can begin

When building your RFP, it’s important to arm bidders with the proper metrics to ensure an accurate bid can be delivered to help meet the requirements established within your SOW.  Some examples of metrics that will lead to a successful RFP may include: total locations in scope, cleanable sq/ft per location, supplier’s forecasted full-time employee (FTE) bid count per location, and FTE hourly rate per location.  While there are many other metrics that could also be included, these selected inputs shared by bidders will enable you to accurately understand costs by location as well as the total cost to service your janitorial services portfolio.


Holding awarded supplier accountable

Congratulations, you’ve successfully gone to market and identified your suitable janitorial services provider through a successful sourcing initiative.  While you’ve confirmed that the supplier’s price is acceptable, now is not the time to let up!  It’s important to establish processes during the contracting phase to help manage expectations of the supplier, and to ensure they are held accountable.  For instance, if you wish to establish a required cleanliness score minimum across your entire portfolio, apply language within the agreement that applies penalties associated with facility scores below a certain threshold.  Quarterly check-ins should also be a goal to ensure continuity is in place, this can be achieved by including language in the contract requiring Quarterly Business Reviews (QBRs) to be conducted.  While these suggestions may not seem like much, they can often mean the difference between a good program and a great program.  


Going out to market can be a daunting task at times, I hope this blog helps guide you and your organization along the way to successfully source best-in class janitorial and cleaning services.  


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on Friday, August 13, 2021 0

 



I recently needed to obtain a client relationship representative at five companies
for an RFP sourcing initiative I was executing.
I had no contacts in my on-line rolodex or direct connection through LinkedIn.
What a nightmare this simple task became.

My process:

Step 1 Reach out to people within the company I work for and inquire if anyone had contacts with the potential Suppliers. – No luck

Step 2, Look up each company website for a phone number to call –  the only option was  fill out a form and someone would get back to me – maybe… each website was seeking all kinds of information and there was no way to bypass this process and just state my request and press send…

I was not going to spend 10 minutes filling out fields for the supplier to decide if they wanted to engage in a conversation – how many employees, location, budget for the service etc.…

My frustration was building, Dang it – 
            All I wanted was a human voice to chat with and I would explain the purpose of my call.

Step 3, Go back to my email rolodex and reach out to former colleges that might have connections to any of these companies – No luck

Step 4, Go to LinkedIn and look up the individual companies to see if I could connect with a Client Relationship Manager or Customer Service Representative by sending a LinkedIn message – No luck. 

I was blocked!  I do not have a paid Premium Membership with LinkedIn which was required to contact members at 3 of the Suppliers the client wanted vetted.

             Of the two Suppliers where I could send a message to an employee… 
            one never responded (even though she did have over 300 connections).    

             The second person who received my message did respond 
            - with a link to fill out a form to see a demo – NOT WHAT I WANTED!

Do companies not want business??? My frustration was at a peak, plus I was baffled.

Have we become so automated that human interaction for business transactions has evaporated?

Every company website home page should have a phone number or contact us with direct contacts, 

this is my strong opinion… 

The result:

Two of the Suppliers that our client was interested in vetting for the RFP lost their chance to participate because I gave up…

Eventually through colleges inquiring to colleges they know in the telecommunications arena; I was eventually introduced to each supplier representative.  To obtain the correct contact person for the remaining three companies took over 8 hours of time during a week.  This is not a good business practice/face to present – it shouldn’t matter if you sell a hammer or managed security services or network hardware gear – a Supplier is a Supplier and all businesses need clients to survive…The doors must be open for a potential client to walk in and in my case the walk in required a telephone conversation.

The postscript: After my initial conversation with each supplier I asked for the CEO’s email address and sent a message.  Since receipt of my emails all three Suppliers have either added a phone number or way to write an inquiry through their website that does not ask vetting questions…

About Corcentric: Procurement Services are EASY to engage!  888-909-3894 or email me twankoff@corcentric.com and I will personally introduce you to the correct person in the appropriate department to answer your questions. www.Corcentric.com

Corcentric’s Sourcing team is made up of subject matter experts; covering areas from Telecommunications hardware/software/voice and data services, to Managed Security Services and IPaaS solutions.  Our strengths include providing real-time insights to the requirement building, carrier identification phase including but not limited to just the sourcing and negotiation phases.  We take a strategic approach in facilitating and managing a RFP process where we identify opportunities that align with both the short-term vision and long-term objectives of our clients.  

Corcentric leverages our proven process and best practices, keeping carriers engaged and motivated about the opportunity.  By managing the carriers throughout the process, we ensure our clients have visibility into all viable options for its requirements in terms of carriers, technologies, contract, and pricing approaches.   As an outcome of the sourcing process, we provide our insights so that our clients make informed decisions regarding which carriers are best matched to their specific requirements and future state growth.






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on Tuesday, August 03, 2021 0

During the last 16 months, the Covid-19 pandemic has plagued the supply chain. Specific industries, like construction with lumber shortages and the automobile industry with microchip, continue to slowly recover and still have a long way to go.

But the new variant of Covid-19, known as the delta variant, could stand in the way of a full recovery being around the corner. And it has yet to be seen how this variant, which has spread rather quickly over the last several weeks, could hamper this recovery in an already tightened supply chain.

How is the variant impacting supply chain?

While leadership, including Dr. Anthony Fauci, has claimed no lock downs are around the corner, the numbers are certainly worsening. According to the Washington Post, cases rose by 55 percent last week. Additionally, deaths rose by 29 percent and hospitalizations rose by 42 percent.

Last week, the CDC has made recommendations for mask mandates to be back in place for even those who are unvaccinated. These mandates have been put back in place in some spots across the country including Washington D.C. and Las Vegas, and implies the possibility of more potential restrictions around the corner.

At the moment, it does not appear that the delta variant will create shutdowns comparable to what was put in place at the onset of the pandemic in March. But, this does not mean there will be no measurable impact on supply chain.

According to Reuters, several countries in Asia saw a decrease in factory production in July that was specifically related to a surge in cases. Additionally, the delta variant’s quick rise has led to many countries not allowing access to sailors – a big problem, considering that 90% of the world’s trade is done by ships.

Just last week, Toyota had to stop production at plants in Asia because they were unable to get parts. U.K. factories were shut down because employees were forced to isolate to avoid the spread of the new variant. According to an executive at a South Korea auto parts producer, a rise in steel prices related to the higher transportation costs is having a negative impact on production.

While the delta variant might not lead to another full economic shutdown, its current impacts on the economy are undeniable.

What about other factors impacting supply chain?

But the delta variant alone is not the only thing that is impacting supply chain.

Domestically, workforce shortages are also having an impact that is preventing supply chain to get back to pre-pandemic levels. According to National Association of Manufacturers CEO Jay Timmons via CNBC, there are 851,000 open jobs in manufacturing – a figure that is expected to increase to over 2 million by 2030.

Globally, last month’s floods in Europe and China have had devastating impacts. Specifically, the floods in China have slowed importation of coal, which is needed for factory production.

What can you do?

The delta variant, in addition to workforce shortages and last month's floods, serve as a reminder of how quickly the supply chain can change. It is important for companies to remain flexible because of this, and to have contingencies in place as the availability and price of raw materials ebbs and flows.

Some materials are better sourced in an RFP process. The best strategy for other products that are seeing rising prices that may soon again fall could be to search for the lowest price on the market. Turning to Corcentric to help create a strategy to source your needs will help combat the consequences of this tightening supply chain.

 

 

 

 

 

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on Monday, July 12, 2021 0


During the first half of 2021, we have seen a record number of ransomware attacks with unprecedented impact across the economy. Before this new wave of attacks, hackers often limited their targets to large corporations and international businesses. Now, government agencies/public institutions and small/mid-sized businesses are the primary victims.

In this article, we will focus on the key actions a Procurement Department can take to prepare, prevent, respond, and recovery when it comes to ransomware attacks.

First, what is ransomware?

According to the U.S. Government’s Cybersecurity and Infrastructure Assurance Agency (CISA(opens in a new tab)): “Ransomware is an ever-evolving form of malware designed to encrypt files on a device, rendering any files and the systems that rely on them unusable. Malicious actors then demand ransom in exchange for decryption. Ransomware actors often target and threaten to sell or leak exfiltrated data or authentication information if the ransom is not paid.”

A few recent examples:

-        Colonial Pipeline: DarkSide, the company behind the attack, targeted
the billing system and internal business network of the Colonial Pipeline in the United States. The impact was widespread gasoline shortages in multiple states. The FBI covered a significant amount of the $4.4 million paid as ransom.

-        Brenntag: DarkSide also targeted Brenntag in a similar way, receiving a ransom payment of $4.4 million as well (not yet recovered.

-        CD Projekt Red: Attacked by HelloKitty hackers. The result was encrypted devices and threats of leaked source code.

Other companies that experienced a major hack:

-        Acer

-        JBS Foods

-        Quanta

-        National Basketball Association

-        AXA

-        CAN

-        Kia Motors

 

The methods hackers use are constantly becoming more complex and agile. Cybersecurity experts learn new ways to fight these threats each day. The most prevalent methods are 2-factor authentication, strong and effective firewalls/antivirus/anti-malware software, limited access to information for each employee, and routine backups.

What role can Procurement take in contributing to security success?

First, Procurement, Risk Management, and IT need to collaborate when onboarding strategic partners. The strategic sourcing process is integral in establishing the right tools and actions to protecting a company. We can break this down into 4 major sections. Each is in relation to vendor interactions, contractual requirements, and policies.

Prepare

Prevent

Respond

Recover

Prepare:

The safest way to prepare for a malware/ransomware attack is to assume it is inevitable. The security organization will more likely have an infrastructure in place to handle this. We should work this same mindset into our partner relationships.

Procurement is encouraged to require vendors to prepare for an attack in the same ways as their own organization. Partners can be mandated to routinely backup client data, have safeguards in place, and have a full redundancy plan in the event an attack occurs.

Prevent:

Procurement, Risk Management, and IT should collaborate on choosing the best IT Security Partner (or in-house solution) to prevent a malware/ransomware attack. When procurement facilitates strategic sourcing projects, they can effectively collect the requirements from across the company and ensure effective communication. Getting the right contract in place requires cross-team functionality. Procurement is best equipped to make this happen.

During supplier selection, an IT vendor assessment/questionnaire should be worked into an RFP. This assessment aims to test the partner’s cybersecurity strength and redundancies.

Respond:

Paying a ransomware attack is highly discouraged. Payments often influence “copycats” and more malicious behavior.

As this becomes more common, contracts with vendors should explicitly address how vendors should respond to ransomware attacks. The cost of the ransom and the cost of not paying should be compared. Contracts should aim to build every possible outcome and even stipulate who will be responsible for the actions taken and how those impacted will be made whole.

Recover:

Speaking of being made whole, procurement can foresee this by building in cybersecurity insurance requirements into each contract. This insurance is specific and often not included in general insurance requirements. Setting limits and requiring proof of insurance must become the standard moving forward. As seen before, some attacks could require millions of dollars in ransom, or even more when trying to recreate or deal with the ramifications of losing authentic data. Having financial protection against this is key for a company’s survival. Ensuring vendors can survive an attack is a key to business continuity.

In addition, when contracts ensure vendors/partners must back up and store data securely, recovery is much less costly and difficult for the clients. Procurement and Vendor Management can request vendors stress test their systems and practice for if/when an attack occurs.  

 

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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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Anonymous 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 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 Thursday, April 22, 2021 0

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

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

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

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

Collaboration, Teamwork, and Reciprocity

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

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

Maximize the Value of our Interactions

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

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

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


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on Thursday, April 08, 2021 0


 5 step process to improve supplier diversity in your IT organization

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

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

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

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

  1. 1.      Evaluate your IT Spend

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

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

  1. 2.      Once identified, set a goal

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

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

  1. 3.      Make a plan and prepare

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

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

  1. 4.      Execute/support the sourcing teams

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

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

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

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

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

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

  1. 5.      Metrics and continuous improvement/marketing

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

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Anonymous on Wednesday, March 31, 2021 0

The need for an extended time and resource commitment usually separates a contract manufacturing (CM) Request For Proposal (RFP) from a similar initiative with a distributor or fabricator.

With a contract manufacturer, what you're really asking for is the formation of a partnership to both review and evaluate all parts at the component level and the assembly of those parts into a fully working product. In that sense, the CM is not providing a component to be used by your manufacturing team, but a fully assembled and tested working finished device through their own supply chain, fabrication partnerships, and manufacturing processes.

During an initiative with a distributor the request centers around the review of a parts list that contains the manufacturer and manufacturer's part numbers along with a qualitative questionnaire to ascertain the distributor's financial stability and ability to consistently provide the minimum order quantities (MOQs), on time, and with the most competitive market pricing.

Similarly with a fabricator, the process centers around component level manufacturing. For example, if you're sourcing machined components the process will include the quantitative questionnaire, but is more time intensive due to the technical nature of the review of part drawings. This may include the review and identification of manufacturing processes, materials, complex geometries, key tolerances, and tolerance stacking considerations.

For machining and milling initiatives a PDF file will usually be sufficient to facilitate initial conversations with the supplier's team and a quote. For initiatives involving injection molding, STEP files with the 3D geometries are usually required to allow for mold and volume of material calculations required for the quote.

For Electronic Manufacturing Services (EMS) for Printed Circuit Board Assemblies (PCBAs) or cable harnesses the supplier will combine the roles of the distributor with the assembler. Thus, managing the supply chain for off the shelf components, fabricating the circuit board, and completing assembly and testing of the circuit board and components. Gerber files and fabrication specifications are also included in these initiatives.

The CM combines the roles of the distributor for off the shelf components and manages the supply chain, with the fabricator to manage production and quality of all components, and the critical role of assembly and testing. They must make sure all components are not only supplied on time and fabricated to specifications, but are also easy to assemble into the final product and function consistently, dependably, and to the designated performance criteria.

Therefore, if we consider a typical medical device, the manufacturing processes may involve supply chain management for off the shelf components, machining, plastic injection molding, PCBA manufacturing, cable harness assembly, assembly of sub-assemblies, and finished device assembly and testing. CMs will also manage certifications and registrations with regional regulatory agencies as well as return and repair services for components and assemblies for the original equipment manufacturers (OEMs).

In our example, the CM is required to provide a substantial time and resource commitment of 7 separate divisions within the company to provide a response to the RFP with a costed Bill Of Materials (BOM). Some CMs will provide a rough order of magnitude quote without resource commitments on their part, but this is notoriously incorrect in most cases.

The RFP with contract manufacturers is therefore focused on building a relationship with the supplier and convincing his/her team of the business opportunity in order for them to substantiate the costs associated with the time commitments in order to provide a response. This requires careful preparation of the technical bid package with the client to make sure all drawings and specifications are included and well organized for each of the CM's teams and an upfront time commitment of the sourcing and procurement team to conduct multiple introduction and review calls with the teams to ensure the opportunity is presented correctly and the CM understands the necessary requirements to provide an accurate and best in class pricing with their RFP response.

 

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on Friday, November 13, 2020 0


The request for proposal (RFP) process is critical to making successful business decisions and investing in the future. The RFP process allows IT stakeholders to determine which vendors are best qualified, cost-effective, and able to meet the companies desired end-state. The first step to carefully selecting vendors to participate in the RFP is to gather the appropriate vendor selection criteria. I have outlined key factors to consider before finalizing whom to invite to participate in an RFP.

Discovery:

The discovery process should encompass discussions with key stakeholder(s) to identify specific business goals, establish budget, and ensure the current state is clearly defined. It is important to understand the current state of spend, account management, usage, bandwidth, licenses and subscriptions, contract terms, etc., as it applies to the category under evaluation. To ensure the current state is accurately captured, I’d recommend gathering any required data collection items that may be valuable, such as a copy of the contract with their incumbent, pricing agreements, quotations, usage reports, current invoice(s), and any other important information that may be useful. Additionally, the documentation within the discovery process should help to define challenges, priorities, and encompass the stakeholder(s) wish-list for the desired end state.

Research, Analysis, and Identification:

Once the information has been received, analyzed, and reviewed with all appropriate parties, the next step is to identify suppliers who meet the specified criteria. First, additional due diligence must be performed to understand the suppliers that are currently being leveraged in the marketplace for the specific category at-hand. Based on the category under evaluation, there may be many suppliers that are capable of meeting the client’s needs. To winnow down the pool of suppliers to align with the organization’s needs, I have outlined a few key areas to consider below:

  • Key offerings and capabilities
  • On-going support (if applicable)
  • Experience, certifications, and relevant partnerships
  • Year company founded
  • Total Revenue
  • Global / National presence
  • Typical Client Size (e.g. Small vs. Large Corporations)
  • Size of the company (Total number of employees)
  • Customer reviews and current new updates

In most cases, it is standard to include the incumbent as a participant in the RFP. Nonetheless, launching an RFP gives insight into the current market and supplier offerings as it evolves. This insight can be utilized as negotiation levers if the client wishes or selects the incumbent to continue services for a desired term.

Through the information described above, this will help to exclude specific vendors based on the information gathered in the discovery process and additional knowledge revealed in the due diligence phase. By advancing only those suppliers who meet the defined criteria, this will limit the amount of time spent in future processing and maximize the chance of finding the best match.

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on Wednesday, September 30, 2020 0

Getting a new Procurement Technology implementation set up is a daunting task, with implementation generally taking months. A large part of that implementation is building a new future state, and that is where the biggest mistake for most Procurement Technology implementations occur.

Most Procurement Technology implementations start at kickoff. In other words, the contract is signed with payments for the SaaS technology beginning that day, and then the vendor begins initiating the implementation process. During that, the vendor will ask seemingly endless amounts of questions around specific individual items depending on the modules you purchased: Approval flows, Purchase Order formats, required fields in supplier profiles, etc.

While there are many obstacles that can trip up an implementation, the biggest mistake companies can make in a Procurement Technology implementation is starting that future design at kickoff. Doing so means no time to see the entire design holistically but rather as individual requirements for each area as they come up. Doing it this way forces the company into performing a 'lift-and-shift' with little changes from the previous model, and that may not be the best way to execute it.

Some employees may have a change or two they would like compared to their current process, but haven't done much with it beyond some vague idea of what they would like. When implementation begins, there simply isn't enough time to go through and make major changes to the process without risks from not being able to fully think through the revisions.

In order to ensure a smooth implementation that addresses gaps from the current state, design needs to begin before supplier selection, and preferably even before sending out RFPs to suppliers. This way you not only know what the organization's future state design should be, you now have a list of requirements that go beyond feature functionality. That ensures your RFP is truly thinking about your organization rather than just a long list of features that may or may not actually be utilized. Those judging the RFP or seeing demonstrations from specific vendors know what to be looking for and the right questions to ask.

There are additional benefits. I hinted earlier at this, but when you sign on the dotted line for most Procurement Technology, you start paying for it from day 1. Depending on the vendor, modules, your company size, etc., that can cost anywhere from $5,000 to $50,000 per month. Hitting 'pause' at that point to figure out your future state will incur more charges and potentially additional change orders if your requirements have changed beyond the scope stated in the vendor's SOW.

This isn't only beneficial to making changes during the initial steps of the implementation. Having the major design ready before kickoff allows the design/architect phase of the implementation to speed up considerably, and can speed up future phases as well if the vendor has fewer follow up questions during the build phase.

From the many clients we've worked with on Procurement Technology implementations, we think it is a mistake to wait for the vendor to start kickoff before you design your future state. Doing so ahead of time allows for a shorter implementation cycle that reduces risk of delay, can save tens of thousands in SaaS payments, and enables a faster time-to-value for the Procurement organization.
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Gabriella Bittner on Monday, June 08, 2020 0


The print category is a very unique category within the marketing space. The broad range of specification details and production requirements combined with the fluctuating market conditions results in a tremendously complex category to manage. Our experience within the print material space has lead us to understand the nuances and develop a systematic approach to identifying the optimal solutions that meet and exceed your organization's various print needs. Our approach effectively manages the print material sourcing process and involves:

1.       Understanding the current state of the category
·       Collect the specification details relating to the category and discuss the print profile, frequency, and sizes.
·       Take the time to listen to both the stakeholder and supplier team members, and understand the challenges, behavior drivers, and future plans.
·       Assess relationships with existing incumbent print suppliers by understanding how the supplier relationships came to be and how the relationship has evolved over time. Identify what capabilities are being utilized and what offerings remain untouched.

2.       Developing a scope of work
·       Gather all specifications and technical details regarding the print materials including job volumes and expected turnaround times. Truly understand the value-adds that cannot be quantified.

3.       Identifying opportunities
·       Print what you need when you need it and save on warehousing and bulk printing costs by switching to print on demand services to eliminate overages.

4.       Decoupling the paper portion of the scope and leverage a paper brokerage
·       Paper may constitute 50% of your total invoice. Take the time to understand the components of print material and limit time spent negotiating with individual vendors.
·       Eliminate unnecessary costs by leveraging volume for preferred pricing and combined shipping services.

5.       Identifying potential supplier alternates who are able to support the scope of work
·       Ensure potential solutions address the evolving needs of the marketing category within the stakeholder organization and are able to provide high-quality services and value-adds.

6.       Establishing RFX documents and supplier bid packages
·       Leverage the scope of work to describe the print job or jobs to ensure accuracy. Incomplete print specifications lead to not only misunderstanding and uncertainty but ultimately inaccurate bids and false savings.
·       The Request for Proposal documents should include scope details based on historical and/or forecasted job volumes, in addition to capability and capacity requirements involving the print management supply chain and qualitative expectations.

7.       Gathering participant proposals and analyze responses
·       Assess bids based on the breakdown of pricing details to ensure all cost components are captured.
·       Scorecard participants qualitative and quantitative responses based on predetermined selection criteria to identify supplier finalists and total opportunity.

8.       Negotiating pricing with Print suppliers
·       Leverage the RFP responses to ensure you're getting the very best prices for the print services and materials.

9.       Establishing supplier agreement
·       Include contract best practices and provisions to effectively measure performance (including Service Levels), as ongoing performance drives the success of a relationship.

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