Last month I had the opportunity to speak with Dave Bowen, Xchanging’s US Country Manager and CEO of MM4. Xchanging has now released two parts of the research they conducted into procurement and supply chain. You can read my coverage of the first two parts here and here.
This week's guest audio comes from Dustin Mattison. His Future of Supply Chain podcast series offers weekly interviews with leading supply chain thought leaders. The podcasts can be seen on YouTube and his blog is part of the Kinaxis Supply Chain Expert Community.
In this podcast Mattison interviews Julio Franca, a Director at the global, boutique management consulting firm Spin Consulting. The excerpt we are about to hear is the first question of the podcast and in it Franca addresses where procurement should report in the organization relative to supply chain. The full interview can be heard on YouTube.
As we round the corner to Labor Day weekend, the number of weekly events is picking up. My recommendations for this week are below, but be sure to look at the rest of the month of September as it is already completely packed with great procurement and supply chain webinars. Click on the title of each event below to view the full description in our events calendar and connect to their registration pages.
In August the SEC adopted a measure that will require public companies to publish a CEO pay ratio in their financial statements. The ratio, which compares median worker pay to the CEO’s salary, is a provision of the 2010 Dodd-Frank act and it takes effect in January 2017.
Some of the early, albeit unofficial, CEO pay ratios seem to demonstrate an enormous pay disparity between the leadership and workers in a company. In other cases, it calls attention to CEOs with strikingly low compensation for the position they hold. For instance, Apple’s Tim Cook has a CEO pay ratio of 43:1, Ford’s Alan Mulally has a 113:1, and Goodyear’s Richard Kramer has a whopping 323:1 ratio. IBM and Intel have ratios of 25:1 and 30:1 respectively.
Any time procurement is evaluating a publicly traded company, we naturally make use of their financial statements and annual reports, which are valuable sources of information. But is this new ratio relevant to the evaluation of a supplier for financial stability, risk, and collaborative potential? Should procurement take this information into consideration when ranking and selecting suppliers?
This week's guest audio comes from a panel discussion moderated by Code for America. They create open source solutions and facilitate a collaborative community around their use. Code for America also hosts an annual summit that brings together public sector innovators and the organizations that collaborate with them – and that is where this particular recording was made: at a 2014 summit panel on public sector procurement.
In this exchange, the panel responds to an audience question about the politics of procurement and facilitating cross-functional communication for the sake of gaining buy in.
This week’s calendar filled up last week with some new additions. I’m leaning towards the first three as this week’s best bets for thought leadership and professional development. Click on the title of each event below to view the full description in our events calendar and connect to their registration pages.
These notes are from an August 18th webinar by the Institute for Robotic Process Automation (IRPA). The primary speakers were Barry Matthews Managing Director at Alsbridge, and Eric Shander, Vice President of Global Technology Services at IBM Global Services.
I’ve been covering all of the Robotis Process Automation (RPA) events based on IRPA’s recently released ebook meant to educate people about RPA. The most important things to know are that RPA is best suited to logic-based, repeatable tasks currently performed by in house employees or third party outsourcers. In some cases, robots can even provide governance or oversight of other robots. The other thing to know is that these aren’t mechanical robots – they are software robots: programs designed to handle tasks and learn over time.
The piece of this particular event that I found the most compelling was the potential for negative impact, or the ‘bad and ugly’ as they put it in the webinar. Let’s face it, as much as people decry the impact of offshoring, RPA’s cost structure and scalability raises a significantly larger concern about job loss. The honest truth is that RPA will have an effect on jobs, but it may not be quite what people think.
The supply chain may be the best organized in the world, but if trust and transparency are not there the commercial results will not materialize.
- The Lean Supply Chain, p. xxiv
The Lean Supply Chain: Managing the Challenge at Tesco (September 3, 2015, Kogan Page) by Robert Mason and Barry Evans is fascinating – for its timing as much as the overview it provides into one of the world’s most prominent retailers. The book’s timing is impressive (and critical) given the turbulent few years Tesco has had: including the horsemeat scandal in 2013, and an accounting scandal in 2014.
While this book is not solely about the scandals and their exact aftermath, it acknowledges them right up front and includes as many details as the publication timeline would allow – and probably a few more than that. The Preface is an absolute must-read and would stand as a B-school case study in its own right.
Procurement Perspectives Podcast: Trusting Internal Team Members and What That Should Teach Us About Supplier Partnerships
This week our audio comes from Acquire Procurement Services, a consultancy based in Australia specializing in establishing and re-negotiating contracts across sectors. Their video is titled 'Why do we treat employees and suppliers differently?' and is available on their YouTube channel. In it, they draw a contrast between the information companies share with their employees and how they handle sharing with suppliers who might perform the same or similar functions on their behalf.
Webinar Recommendations for August 17 - 21, 2015: RPA is Here to Stay, Supply Chain Index Update, Why Due Diligence Matters
This week there are seven webinars being run, and I’ve taken the opportunity to recommend three on topics that are very different from each other while all still providing access to compelling thought leadership. Click on the title of each event below to view the full description in our events calendar and connect to their registration pages.
Note: This post oritinally ran on the Procurement Insights blog.
“Without a good mental model you won’t survive in business for long.” – M. Hugos, SCM Globe
At the end of 2014, I came across an extremely interesting use of modern supply chain modeling. Michael Hugos, author of Essentials of Supply Chain Management and co-founder of SCM Globe, applied interactive supply chain modeling and simulation to the supply chains of ancient Rome – the olive oil supply chain to be specific.
I’m a history buff, so this was right up my alley, but trust me – it is worth your time to read the three part series. The case study is set in the Roman Empire in 300 A.D. Olive oil is in high demand because it can be used for cooking, light, cosmetics, and healthcare. Its value is second only to gold. Between demand and value, the conditions are right for exporters in the remote corners of the Empire to innovate, and they do not disappoint. Using the Romans’ expertise in water management, they alter the conditions of previously unfarmable terrain and make it both productive and profitable.
These notes are from a June 23, 2015 webinar hosted by Sourcing Industry Group and presented by Louis Ferretti, a Project Executive at IBM. While only SIG members can view the recording on demand, you can catch Ferretti at their Global Executive Summit in October.
I knew I wanted to attend this event as soon as I heard Watson, the artificial intelligence computer that competed against two of the best ever Jeopardy! contestants in 2011 and won, would be featured. If that kind of AI could be applied to supply chain risk management, just think of what might be possible! In this case, IBM presented from the buy side perspective, although many companies are familiar with them on the sell side. Watson was applied in the management of IBM’s own spend.
Procurement Perspectives Podcast: Procurement Career Development - Is MBA vs. Certification a False Choice?
This week our audio comes from a Financial Times conversation with Ian Clark, Dean of the University of Edinburgh Business School.
The core question behind their conversation is whether MBA programs provide professionals with the skills and knowledge they need to have competitive careers in today’s business environment. The full video is available on YouTube.
You can listen to the podcast on the PI Window on Business Blog Talk Radio channel.
After a drought last week, the procurement and supply chain calendar of events returns to normal this week with six webinars. Click on the title of each event below to view the full description in our events calendar and connect to their registration pages.
These notes are from an event that originally ran on July 28th. If you are interested in viewing the entire webinar on demand, it is available on the Proxima Group’s site here. The panelists were Mark Simester, Marketing Director at Warburtons, Charles Ping, Chief Executive at Fuel, and John Butcher, Marketing Specialist at Proxima and the moderator was Jonathan Cooper-Bagnall, Proxima’s Commercial Director.
While the focus of this event was how procurement can play a role in better managing digital marketing spend, the insights shared during the panel discussion provided plenty of insight about how procurement can improve our dealings with marketing in general. Since marketing is often one of the last hold out functions, we can use all the advice we can get.
Just over 18 months ago I reviewed the second edition of Category Management in Purchasing by Jonathan O’Brien. (You can read my original review here). When I recently learned there was to be a third edition, I was unsure what I would be able to say in a new review that would add to my earlier observations.
I found it interesting to read O’Brien’s commentary, not only on the progression of this title, but on how he sees it fitting in with his other work. I don’t personally know of anyone who has written more substantial procurement books than O’Brien, and knowing that he sees a subset of them as being connected is an interesting idea. Category Management in Purchasing, along with SRM and Negotiation for Purchasing are seen by the author as his ‘trilogy’. Knowing that changes how I would approach any of the books in the group.
If your company closes its books with the calendar year, there is a good chance the budget review process is quickly approaching. With it come the games departments play – and they are not child’s play by any means. The annual Budget Games are at minimum a contact sport, and at their most extreme a blood sport.
The rules are timeless and well known:
- The largest budget carries with it the most influence in the organization. We are expensive, so therefore we are valuable.
- Requests for increases indicate big plans and are intended to communicate vision, while a group that can do the same or more with less lacks ambition and imagination.
- Perhaps the most dangerous rule for procurement is: if you don’t spend it, you lose it. This unfortunately equates realized savings with a loss of influence, a frustrating indication of how our efforts are often perceived.
Procurement’s role in the process varies greatly from company to company. As cutthroat as the Games can be, there is no such thing as a bystander and each role has its own advantages and liabilities.
These event notes are based on a webinar presented by Supply Chain Insights on June 25, 2015. The webinar can be viewed on demand without any registration requirements here. I advocate seeing it for a look into some of Supply Chain Insights’ research on trends in supply chain talent development as well as to hear the stories shared by the panelists.
Along with moderator (Supply Chain Insights founder and CEO) Lora Cecere, the event panelists were Andrew Byer, P&G’s Associate Director of Supply Network, and Fran O’Sullivan, IBM’s General Manager of Systems, Strategy, and Operations.
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.
Strategic Sourcing and Category Management: Lessons Learned at IKEA by Magnus Carlsson (KoganPage, August 2015) is not a case study, although I didn’t need the note from the author in the introduction to know that. The author may have spent 25 years at IKEA, working in strategic sourcing, but this is less a story of one company and more the learnings gained by one professional over 2.5 decades in a competitive environment.
Like any other book I review or event I attend, my focus in reading this book was to cull out the important ideas: what are the few take aways that really stand out as unique? There are quite a few in this book, any of which will improve the maturity and results of your procurement organization. I think this book is fantastic – full of great new ideas and ways to implement them.