Buyers Meeting Point procurement by Kelly Barner

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The Legacy Telecom Disadvantage

The Legacy Telecom Disadvantage

How often can you find 80% savings in your telecom bills? When it comes to legacy services, more often than you’d think!

In all industries there are mergers and acquisitions: Telecommunications and Technology being one where M&As occur more frequently than most. These changes can have significant impacts on the products and services customers are purchasing in terms of the actual technology being offered and the prices they are paying for it.

 

I recently completed an audit for a customer in the healthcare industry where I was asked to review their telecommunications invoices and look for more cost effective solutions than their current voice services. The first thing I noticed was how high their bills were for basic voice services - almost 480% higher than normal industry standards! The customer had not really looked at their bills for years and simply continued to pay the same monthly charges thinking all was right as rain. Understandably, patients are the priority for them - not the cost of their phone service. For this specific customer, the technology they had in place was a legacy service where the underlying carrier had recently been bought by a global industry leader, who had subsequently developed more cost effective products offering the same functionality at a much lower price. Unfortunately, carriers do not always offer up the insight into technology changes and lower cost options when it is in their best interest to keep the higher price bills in effect.

Presented below are some quick tips for reviewing your telecom bills to determine if a change in service is viable, beneficial, or more cost effective:   

  • Recurring Charges: How long have you been paying the same price? Pricing changes are common with technology-driven services. If you have had the same price for 3-5 years and under multiple contract terms, it is time to take a look at the market with fresh eyes. There are always compelling reasons or special circumstances for contracting a fixed price for longer terms such as newly implemented networks and systems; but for basic voice services…I don’t think so.
  • Time Passed Since Last Going-to-Market: As mentioned, most telecom companies are continuing to develop new innovative ideas and upgrades to their technology; most likely within 3 years of their current technology. If you have the same service in place for more than 5 years, it is probably time to take a look. I know “if it ain’t broke, don’t fix it”; but why not just get a feel for what is available and for a potentially lower cost? After all, it may be up to procurement to determine when something is ‘broke.’ 
  • Contract terms: When was the last time you looked at your contract? Do you (really) know what your current terms are? If you cannot answer these questions, chances are the answer is probably too long and you are month-to-month or under some ridiculous auto renewal clause. It is important to read the small print in your contract as you could be committing to an unrealistic term length with no out...unless of course you are planning to spend more money with the same supplier for an even longer term.

When we presented the opportunity assessment to our healthcare client, they were understandably shocked. We moved forward by leveraging the market-competitive offers to contract a new technology at almost one fifth of the current cost. The soft dollar costs of implementing the new service were eclipsed by the overall savings, making this a huge financial and technological success.

As I encourage you to review your bills more closely, let me add that the idea of tracking down wasted spend and going to market for legacy products and services is not limited to the telecom industry. It can be applied to any business commodity and begins with simply questioning the products and services you’re paying for. 

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Five Signs of a Logistics Leader

Five Signs of a Logistics Leader

Leadership is a rare and valuable attribute that will separate a good professional from a great one. A leader will possess a unique vision and the ability to transform this into a tangible reality. Most importantly, a leader should inspire others to do the same.

A united, forward-looking outlook is the best way to continue to propel the logistics industry forward. As a fast-growing sector affected by globalisation and advancements in technology, innovators must be a driving force. Having access to new ideas will play a fundamental role in building each leader’s influence and unique impact on the organization.

Check out these five key signs of a logistics leaders to enhance your own professional standing.

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Robots, Warehouses, and Fulfillment

Robots, Warehouses, and Fulfillment

According to TechInsider, there are warehouse robots currently in place that could potentially boost productivity up to 800%. Yes, you read that correctly: eight hundred percent. With huge boosts in productivity, it comes as no surprise that companies such as Amazon are taking automation to the next level, but what impact will it have on their employees? If the numbers stack up, the robot takeover could be imminent, but that does not necessarily mean human warehouse employees will become obsolete.

As with most technological advances, employees must adapt.  Remember when basic computers were introduced to the workplace? Let’s take a look at some of the robots being used today, how they’re being utilized, and most importantly, what it means already or is going to mean for their human ‘coworkers.’

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The Contract as Catalyst for Cultural Change in Procurement

The Contract as Catalyst for Cultural Change in Procurement

Scenario 1: The supplier contacts you in writing to state they have submitted the wrong pricing in the bid…what is your first response?

 - Tough luck you submitted it

 - That’s typical of suppliers, always trying to trick you

  - Expect the price is going to increase

 - Interested to see if they are submitting a lower price

Scenario 2: The supplier approaches you and states they think they have a solution to deliver the contract more efficiently...what is your first feeling?

 - They are looking to upsell

  - I don’t believe them

  - They are trying to make me look bad

  - Want to discuss in a supportive and engaging manner

Scenario 3: The business reduces its requirements 2% in the contract and understandably do not want to pay for what is not required. Do you;

 - Tell the supplier to “suck it up” and not re-negotiate the contract

 - Re-negotiate the contract to ensure they are fairly compensated

 

Unfortunately we all know the responses because it is an attitude that is the default towards suppliers; confrontation & mistrust. For many within procurement it is a justified attitude because in the past any leniency has been abused by suppliers.

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How Millennials will Influence a Shift in Procurement Technology

How Millennials will Influence a Shift in Procurement Technology

Millennials are known for many things, and while there is no one ‘Millennial profile”, they are unquestionably natural with technology. Business technology is changing because providers are seeing demand trends from these digital natives. Since Millennials will make up 40% of the workforce by 2020, they are a group that will improve our current solutions because they have high expectations for technology. The challenge is to meet their expectations and bring more experienced users along with them.

 

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Continuous Cost Reduction for Direct Materials

Continuous Cost Reduction for Direct Materials

Continuous cost reduction in the manufacturing industry is a supply chain best practice, but all too often it is mistakenly seen as unsustainable by strategic sourcing and procurement departments. For many companies the question is, ‘how can I reduce costs while limiting the impact on quality?’ Before jumping right to substituting materials, there are other options for delivering cost savings - yes, even over time.

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Making the Case for a More Diverse Supply Chain Part II – Supplier Evaluation

Making the Case for a More Diverse Supply Chain Part II – Supplier Evaluation

In the first part of this two-part series, I established the reasoning behind establishing a diverse supply chain in the nontraditional sense. Emphasis on maintaining a supply chain that is diverse in geographical location, capabilities, and overall corporate values is vital in maintaining supply chain resiliency, sustainability, and adaptability.  To achieve a supplier mix that fits these goals, the right questions must be asked during an internal supplier rationalization process, overtaking the traditional values of an RFx.

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Making the Case for a More Diverse Supply Chain

Making the Case for a More Diverse Supply Chain

Supplier diversity is a concept with multiple definitions.  Most commonly, a supplier diversity program focuses on the utilization of women owned, minority owned, and else certified diverse businesses within your supply base.  There is, however, another interpretation of supplier diversity – a diversity of geographical location, sourcing practices, and overall organizational structure.  Evaluating these factors in a meaningful way when evaluating suppliers can be an important factor in managing supply chain resiliency, sustainability, and adaptability.

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How to Successfully Break-Up With Your Incumbent Supplier

How to Successfully Break-Up With Your Incumbent Supplier

Anyone who has ever completed a Request for Proposal (RFP) has had the unfortunate experience of informing all but one or two suppliers they have not been awarded the business.  It may be difficult and at times uncomfortable, but when the unchosen supplier is the incumbent, there is more to manage than just this conversation.  How this transition process is handled can either help or hinder the success of moving to a new supplier relationship. There are a few steps you can take to smooth the transition and ensure all parties are as satisfied as possible.

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Best Practices to “Futureproof” Telecom Services

Best Practices to “Futureproof” Telecom Services

With the increased pressure to offer viable advantages over their competition, telecom giants like AT&T and Verizon have recently placed greater emphasis on how well equipped their networks are for the rapid increases in data consumption by consumers. While carriers show promising advances in “future proofing” their networks’ ability to accommodate such changes, it ultimately depends on how well their new network is designed to adapt to the rapidly changing technology available to meet increased demands. 

The way we do business is changing rapidly. Workplaces are virtual – with employees working flexibly: at any time, from any location, and using many different devices.  In the face of such continuous change, it is important to ask if your network infrastructure truly “futureproof.”  Whether your organization is national or global in scale, it is imperative to execute any infrastructure related improvements based on both immediate and future goals.

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Techniques for Accurately and Efficiently Forecasting Demand

Techniques for Accurately and Efficiently Forecasting Demand

This post was written by Michael Hinkley, an intern at Source One Management Services. If you are interesting in hearing his perspective on procurement as a career and as a part of the larger business, click here to listen to our conversation on BMP Radio.

Whether you’re preparing for a sourcing engagement or looking to improve supplier relationships, effective forecasting and planning is key to staying ahead of your supply chain and formulating a procurement blueprint. When buyers and sellers aren’t on the same page about expected volumes, usage schedules, and run sizes, both may experience surpluses or shortages. This, in turn, can lead to dire consequences for operational efficiency and the bottom line – yours and your suppliers’. For instance, the over unitization of warehouse space, as a result of a constant excess of inventory, will lead to increased effective unit prices. However, with accurate forecasting and improved supplier communication, you not only optimize your internal processes but allow your suppliers to run a more efficient operation with better turnover rates and proper resource allocation.

 

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A Deep Dive into the Cost Drivers of a Direct Mail Program – Part 2

A Deep Dive into the Cost Drivers of a Direct Mail Program – Part 2

Direct marketing is not a new advertising strategy, but the associated tactics often change with the latest trends and technologies. Direct mail is one tactic under the direct marketing umbrella that has stood the test of time despite the shift to digital in most other areas of the advertising space. This post is the second in a series of two that discusses direct mail as a tactic and the cost drivers that impact the cost of executing one of these programs. You can read part 1 here.

As we described previously, there are four main cost components of a direct mail program: mail lists, creative and design, print and lettershop, and postage. There are different strategies for each of these and managing the costs of some are more complicated than others. Mail lists and postage are the two components that require more than a standard sourcing process in order to identify areas of cost reduction.

Previously, we took an in-depth look at gaining access to mail lists as a cost driver for direct mail campaigns and the strategies that can be executed to manage those costs. This post will take a deep dive into postage as a cost driver and the different postage optimization strategies that can be implemented to reduce costs.

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A Deep Dive into the Cost Drivers of a Direct Mail Program – Part 1

A Deep Dive into the Cost Drivers of a Direct Mail Program – Part 1

While some may believe that direct mail programs have gone out of style similar to print advertising, industry trends indicate quite the opposite. According to the Direct Marketing Association (DMA) Statistical Fact Book, the spend associated with direct mail has been increasing over the past few years from approximately $44.3B in 2012 to $44.8B in 2013, and a decent leap to $46.0B in 2014 – and for good reason. The average response rate for a campaign targeting recurring customers was 3.4 percent for direct mail, compared to 0.12 percent with email. In addition, the average cost per lead for a campaign targeting new customers was $51.40 for direct mail; whereas email was $55.24, meaning that the cost to generate a qualified sales lead or order was about $4 less with direct mail than email.

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3 Things that Keep Global Procurement Execs Up at Night

3 Things that Keep Global Procurement Execs Up at Night

If there was any doubt that managing the supply chain is also an exercise in managing risk, just ask someone who works in procurement – particularly the world of direct procurement. These professionals patrol the front lines of the manufacturer-supplier relationship, overseeing their company’s purchasing activity, executing purchase orders, and working with multiple stakeholders to ensure the right materials make it to the right place at an optimal cost.

It would seem procurement leaders thrive on a steady diet of pressure and caffeine. But even the most experienced professionals have their limits. Several experts weighed in on the topic this spring at the University of Tennessee Supply Chain Forum.

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Telecom Contracts: Know What You’re Paying For

Telecom Contracts: Know What You’re Paying For

Over the past few years, the Federal Trade Commission (FTC) has been cracking down on unethical billing practices at major telecom carriers like Verizon and AT&T. This past October, Verizon paid as much as $64.2M in cash and phone credits to settle a class-action lawsuit for over-charging subscribers of their Family Plan[i].

The case against Verizon accused the telecommunications giant of charging Family Plan subscribers for “in-network” minutes that were supposed to be free, or charging customers with additional phones on the plan $0.45 per minute going over the allotted minute allowance (instead of the $0.25 that was charged to the primary phone on the plan).

The FTC also filed suit against AT&T for throttling data for unlimited data plan subscribers when they used over a specific amount of data during a billing cycle. They explained that AT&T failed to adequately inform customers who had signed up for the unlimited data plan that their speeds would be slowed if they used more than a certain amount of data. Even worse, “When customers canceled their contracts after being throttled, AT&T charged those customers early termination fees, which typically amount to hundreds of dollars,” the FTC said in a statement.[ii]

Telecom contracts aren’t designed to be easy to read and understand. As a result, customers frequently end up paying more than they should for their carrier’s services. While the cases of Verizon and AT&T are the result of dishonest billing practices, customers often fall victim to subpar contract terms and conditions, including overpaying or even paying for services they don’t actually need.

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Savings from Tesla’s Powerwall? I don’t think so…at least not in the US

Savings from Tesla’s Powerwall? I don’t think so…at least not in the US

The long term plan of Tesla CEO Elon Musk to establish a widespread energy solution might finally be coming to fruition. After the public adoption of his electric cars, the Tesla Model S and Roadster, Musk has now moved on to the release of both a battery for residential use and a larger battery for industrial application, called the Powerwall and Powerpack, respectively.

Powerwall is a rechargeable lithium-ion battery designed for energy storage for residential consumers. According to Tesla it is primarily designed “for load shifting, backup power and self-consumption of solar power generation.” Two variations of the Powerwall have been released: a 10 kWh model which is listed at $3,500 and a 7 kWh model listed at $3,000. Their big brother, the Powerpack, is expected to be released in 100 kWh capacity blocks and is designed to be scalable from 500 kWh to 10 MWh.

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Death of a Software Salesman

Death of a Software Salesman

Arthur Miller’s 1949 play ‘Death of a Salesman’ is often listed as one of America’s finest and most influential stage dramas of the twentieth century. It was a tale that conveyed the American Dream but was interlaced with flashbacks that betrayed the contrast between illusion and reality. The Enterprise software sector echoes this drama in numerous ways and shares its inevitable ending.

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3 Reasons Why You Should Consider Dual Sourcing Your Product Or Service

3 Reasons Why You Should Consider Dual Sourcing Your Product Or Service

We’ve all heard the saying, “Don’t keep all your eggs in one basket.” Choosing to dual source a category means using two (or more) suppliers to provide identical copies of a product or service. Many companies choose to dual source a product to maintain quality levels of service to their customers and mitigate potential supply chain issues.

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Why it is Not Worth Preventing Every Disruption in Your Supply Chain

Why it is Not Worth Preventing Every Disruption in Your Supply Chain

Supply chains are similar to humans—imperfect. Their successes within business plans are a product of accurately forecasting how to survive crises and minimize damage in high-risk scenarios. Balance is the key to surviving most situations. In a supply chain, the accord between supply chain efficiency and risk mitigation can be difficult to achieve.

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Predictive Analytics in Procurement: The Logic Behind The Hype

Predictive Analytics in Procurement: The Logic Behind The Hype

Wouldn’t it be nice to know the future for certain? There are few fail-proof ways to see shifts in the business landscape before they occur, but there are ways to ensure your goals stay on the correct path regardless of what direction the future takes. Procurement departments, for instance, have objectives that require analysis of factors beyond historic trends—considerations like supply market volatility, supply chain disruption, regulatory changes, and a whole slew of other unpredictable situations. Unless corporations start adding fortune tellers to the payroll, successful procurement groups will continue to optimize their function from the insight gained through predictive analytics.

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