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.
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.
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.
“The whole is more than the sum of its parts.” – Aristotle
We believe we have good data… but is it complete?
I’ve had many conversations with Travel and Procurement managers about how much addressable travel spend the company has. This is a critical number as it validates a company’s volume, and dictates the sourcing strategy and execution. In most cases, I’m immediately presented with the Travel Management Company’s report of phone and online bookings. While this data is helpful and telling, there is an average of another 55% of travel spend that is not being accounted for in those data sources*.
It’s no secret that when a company is looking to solicit bids for a project, opening up a Request for Proposal (RFP) offers a simplified, standardized, and centralized means to compare diverse bidders. A well-crafted RFP separates the best-fit from the less qualified. A poorly executed request, on the other hand, will shut out even the most qualified providers before they have a chance to shine.
I recently read an op-ed piece on the Sourcing Journal by Sigi Osagie that stood apart from other procurement perspectives I’ve come across recently. It observed that soft issues — issues based upon the fundamental mindset of employees — are holding businesses back from realizing their full potential. Although procurement practitioners often have a desire to better their effectiveness, they do not always recognize that these soft issues are the answer to their desire for increased influence and prominence. So how can procurement improve in line with existing performance metrics without loosing perspective of the larger organizational perspective?
Along with corporate services, capital procurement is often the last part of the procurement organization to mature.
It’s an opaque category that doesn’t immediately get attention for a number of reasons. It’s usually non-repeatable spend. It’s often decentralized and managed by folks at the site level. It’s sometimes assumed by management that these folks know this technical category best and meddling in their business will cause problems.
Because it’s often the domain of engineering, procurement must sometimes wedge themselves a seat at the capex table.
Sustainability is a word you seem to hear everywhere today, as consumers become more conscious of the environment. As you would expect, sustainability plays a significant role in the food supply chain. As an example, the commercial fishing industry has ramped up their focus on providing a more sustainable product. Sustainable seafood suppliers employ methods that simultaneously reduce bycatch, promote both small and large business distribution, and improve seafood quality. All seafood harvested within the United States is, in fact, sustainable, as the U.S. has developed a comprehensive process to ensure quality as well as monitor and improve the programs fisheries have in place.
There are approximately 80 million people in the United States between the age of 18 and 30, a group known as the millennials. Many believe that millennials bring a unique perspective to business as compared to other generations because of their tech savviness. Technology is one of the biggest drivers for globalization, but it also allows disparate locations to connect and communicate on various topics such as current events, special causes, and marketplace trends. Millennials have already started to drive major changes in the sourcing and procurement industry, such as green purchasing, the push for free and collaborative information, and updated workplace abilities.
This is second in a two-part series. Part 1 can be found here.
Purchasing leaders must not only be great at managing the complex functions of their department, but they must also become savvy communicators who know how to demonstrate the strategic value that the department lends to their organization. In a world of competing budgets and the struggle to hang on to resources, knowing how to market your purchasing organization to power stakeholders is a skill that you must have.
This is the first in a two-part series. Part 2 will run on Thursday, September 11th.
These days, with tightened budgets and enlarged job expectations, it’s important for CPOs, purchasing managers, and buyers to know how to prove their strategic value to the organization. This can be a huge challenge for most people. Knowing how to market yourself is extremely important, particularly if you want to move up in your career. We’ve all seen less talented people get promoted, simply because they are better at managing their image to supervisors and internal stakeholders.
Editor's note: on July 24th, I wrote a post 'On Storytelling and Procurement' in response to an executive leadership and communication post by Chip Scholz. Dr. Tom DePaoli, an author and management consultant, offered up some comments based on his own experience that were far too good to leave buried in a comments string. They are as follows:
One of the oldest methods of passing down knowledge is oral storytelling. Usually an ancient sage would be the keeper of the stories and pass them down to other tribe members. I highly recommend this method for supply chain professionals.
Supplier diversity programs have been a hot topic for some time now. While the need for minority-owned and diverse supplier programs at most companies has only recently begun to take shape, the growth has been astronomical. In fact, a study done by CAPS Research states that 71.79% of organizations expect their total supplier diversity program spend to increase greatly within the next two years. ('Measuring Supplier Diversity Program Performance', March 2012)
Even though support for diversity programs has been rising, there is still some hesitancy from businesses to develop them. This reluctance is often due to inaccurate perceptions regarding the value they can offer a company, but these myths are often easy to debunk.
It is often challenging, sometimes nearly impossible, to gain access to real time market intelligence that can provide you with insight into your industry or supplier relationships. Without access to this information or knowledge of best practices, it can be difficult to ensure your company has a competitive advantage. When delving into benchmarks it is important to understand the components of benchmarking, its benefits, and how the involvement of the spend owner is critical for the benchmark to provide the most value.
Editor's Note: On May 1st, Buyers Meeting Point issued an Open Call for predictions about the future of procurement as part of the #FutreBuy project I am working on with Jon Hansen (Procurement Insights, PI Window on the World). We welcome all predictions, either as comments to our posts on the subject, guest submissions, or posts on Twitter flagged with our #FutureBuy hashtag.
This guest post is a team effort from Source One Management Services. If you would like to comment, you can do so by posting below, contacting them on Twitter @GetSavings, or contacting them directly here.
The outlets for procurement and supply chain news have no shortage of recommendations for improved business processes, new ideas, and technologies your department should implement to “modernize” or “optimize” or any number of other “-izes”. If you have read any of Source One’s contributions – here, on other publications, or on our own blog – we make just as many recommendations.
In a recent Buyers Meeting Point guest post Bryan Robinson asked What if the US Government Embraced Strategic Sourcing?
Cynically upon reading the title my first thought was... "Nothing."
The issue isn't FAR and it isn't the people doing the sourcing, like nearly all things it comes down to incentives.
Editor's Note: The application of strategic sourcing and strategic procurement in the public sector have generated a significant amount of discussion from practitioners, thought leaders, and solution providers. If you are interested in reading more about the opportunities that may exist, we recommend Generating Economic Benefit and Growth Through Smarter Public Sector Procurement, a white paper by Colin Cram.
There has been a lot of focus in the past year on Supplier Relationship Management, and rightfully so. As the efforts of Strategic Sourcing initiatives begin producing diminishing returns, SRM is heralded by most to be the next step: focusing more on delivering value to the organization and developing relationships that can produce competitive advantages in the market. However, an SRM policy is only effective if the proper suppliers are in place, which is why it is routinely classified as the next step after strategic sourcing. There is little value in curating and managing relationships with suppliers that are not firmly aligned with your organization’s strategic goals.
This is the last in a series of posts on performance reviews and objective setting for the start of the New Year. Click here to read my recent posts on performance reviews from the manager’s and employee’s perspectives, as well as objective setting for procurement managers.