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"The Point" is written by BMP Editor Kelly Barner as well as a diverse group of guest contributors.

Perception vs Reality: The Real Root Cause of Procurement’s Challenges (UPDATED)

It’s been a good couple of weeks for research in procurement. Late last week, Proxima Group released their findings around how consumers perceive companies that find themselves entangled in supplier-related controversies. Then on Tuesday, Xchanging shared the first results from research they did with input from over 800 procurement decision-makers spread evently across the U.S., U.K., and mainland Europe.

While the complete research will be released one chapter at a time (starting with the New Role of Procurement), the high level findings suggest that the sources of procurement’s challenges aren’t what we previously thought.

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New Research Reveals Consumer Expectations for Supplier Management

Late last week, Proxima Group revealed the initial findings of research they commissioned into how consumers – American consumers specifically, feel about companies that find themselves on the wrong end of a supplier scandal.

According to the release, “The study of typical American consumers, commissioned by sourcing and procurement specialist Proxima, reveals that 74% of respondents stated they would be unlikely to buy products or services from a company involved in controversial supplier practices. Furthermore, nearly 66% would stop giving such a company their business even if that company was the most convenient and cheapest option.”

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Time to Speak up and Be Heard, Procurement!

In my PI Window on Business Podcast this week (listen here), I shared audio of Mark Hager, an author and a professor at Arizona State University, talking about why people join professional associations and how that is changing.

The interview was loosely based on a paper he wrote on the same subject (you can read it here) and which digs deeper into the idea of private (individual) versus public (collective) motivations for joining an association.

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New YouTube Video: A Positive Approach to Supply Chain Risk

This week at ISM, my Supply Market Intelligence for Procurement Professionals co-author Jeanette Jones presented a session on supply market intelligence specifically for risk. I couldn’t be in Phoenix this week, but I wanted to contribute to the session, so I committed to making a 10-minute intro movie. After all, I do a podcast every week - and I have a Mac - so how hard could a video be?

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Deem Shopping is Easy on the Eyes

If you are at ISM2015 in Phoenix this week, you may have seen Deem unveil their new Shopping application Monday morning. I got a sneak peek at it, and my primary take-away was that Deem Shopping is a highly visual experience. You can learn more on Deem's site

Shopping, which is primarily intended for use by the buying (rather than sourcing) colleagues in your organization, was designed to incorporate some of the key user-friendliness aspects of B2C shopping sites, including machine learning focused on tracking the frequency of use of templates and items. It also involves something I didn’t initially recognize the importance of – the space between graphics. Apparently, the amount of white space you incorporate into a display is connected to how user friendly an application is. And we all know what user friendliness leads to: ADOPTION.

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What’s good for the goose… Why NIGP’s ownership is not just a public sector issue

For the last couple of weeks, Jon Hansen has been covering the unfolding story involving Periscope Holdings/BidSync and Perfect Commerce. You can access the entire string of posts here, but I’ll give you the Readers’ Digest version now…

In early 2015, the State of Missouri, awarded a contract for an eProcurement provider. Perfect Commerce and Periscope Holdings/BidSync were both in the running, but Perfect Commerce was selected. On March 11, Perfect Commerce received a letter from NIGP saying that their sublicense agreement for NIGP (the public sector categorization system) was being withdrawn. The problem here is that Periscope Holdings owns NIGP. In other words, the categorization structure is owned by one solution provider in the market.

For those of us in the private sector, this may not seem terribly interesting, and it might seem even less relevant. But it is an important story for all procurement professionals in all sectors to pay attention to. And here is why:

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Surviving Natural Selection in the Procurement ‘Wild’

On Tuesday, we ran a guest post from keelvar’s founder and CEO Alan Holland. In the post, he challenges many of the traditional notions procurement practitioners have about the solutions they use, what to expect from those solutions, and how to select which solutions to implement.

It is natural to follow the developments at the larger solutions providers in the procurement space. Acquisitions, especially notable ones, always result in an interesting news cycle before dying back down to become part of the new status quo. But there have been equally interesting changes and developments taking place at smaller solution providers. We owe it to ourselves to be as aware of those changes as we are of the big shifts.

In my view, there are several niche companies deserving of attention, and they represent not only a new or alternative take on what we currently have available to us, but also a new way of looking at the solutions that support procurement. As long as there are visionary entrepreneurs who are willing to apply themselves to the procurement space, we should encourage them and do everything we can to support them in their efforts – because in the end, we are the ones who benefit.

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What negotiation skills does procurement need TODAY?

Listen daaahlings, let me tell you a little something about negotiating. Talking about money is so… GAUCHE. No no no, that won’t do at all. Today, enlightened procurement professionals collaborate. We innovate. We partner. We strategize. I do for you… you do for me… we have a relationship. No ugliness, no shoving. After all, there is no need to stoop to talking about dollars and cents. We have people for that. Right? Yes, well, have your people call my people: we’ll do lunch.

Oh please!

We can’t say that procurement no longer needs strong negotiating skills just because many spend categories are now being managed in a more relational way. Making that assertion demonstrates a fundamental lack of understanding about what it means to negotiate. Negotiation is a phase, not an action. There are a myriad of skills required to be an effective negotiator, and they are different for each set of circumstances.

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Keelvar’s Ability to Handle Complexity Based on Clarity and Simplicity of Purpose

Earlier this week I had the opportunity to speak with Dr. Alan Holland, CEO of Keelvar. Based in Ireland, this relatively small company reminds me of the way CombineNet used to fit into the overall solution space – before they were acquired by SciQuest that is. CombineNet was never intended to be the solution that addressed 80-90% of categories, but rather to be high performance enough to handle the requirements and scale of the largest or most complex 10-20%. But I think, to be fair to both companies, that is where the comparison must end.

Holland and I spoke about the Keelvar solution, not in terms of the number of line items it can handle, or the combined data points it can analyze as a result of the umpteen suppliers, items, and bid fields of a large event. We mostly talked about how it might change the way procurement thinks about optimization. After all, there are many more opportunities than just freight or location-based retail that would benefit.

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Manufacturing & Millennial Barometer Reading: High and Rising

Right at the end of 2014, I received a copy of report based on ThomasNet’s Industry Market Barometer (IMB) survey. As you might expect, given ThomasNet’s long-standing relationship with the manufacturing community, a large focus of the report was the recent trend towards reshoring. In some cases it is for the sake of moving final production closer to the source of demand, in others to shorten supply chains, trading cheap labor for reliability and agility.

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Who is not being honest in your supply chain?

There is a famous children’s story about Pinocchio. Whenever he would lie, his nose would grow longer.

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Looking in the mirror for organizational self-assessment

“I’m starting with the man in the mirror, I’m asking him to change his ways……Take a look at yourself and make a change”.

 

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Implementation of new suppliers

As a child at the dinner table, we were expected to try at least a bite of something. Like anyone, we often did not want to try something new. It was not comfortable and it was easier to skip it or default to what we knew we liked. There is an old commercial for Life cereal where Mikey tries it and the famous tag line – Try it, You'll Like It.

 

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More Strategies for Supply Chain Resilience

A few years ago we were hosting a holiday gathering for 7 family members. As the holiday got closer, more and more of the family had their plans change. The four days before the holiday we were expecting 7 and then it became 30 by the day before the event. Needless to say, we had to be flexible and resilient in order to make it work.

 

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What do you do just in case?

 We have a small closet at home in a spare bedroom that acts as our overflow pantry. It is not anywhere near as organized as the picture above. In some ways it is our ‘just in case’ inventory. Usually it is stocked with staples that were on sale so we got two. Some of it however is ‘just in case’ we want to bake a cake or cookies or had an urge for some salsa and chips. This past Halloween we bought candy for 200 and only had 30 visitors. Oops!! I am sure it will get consumed somehow!

 

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Building Stronger Supply Chain Relationships

The saying goes that you know who your friends are when the going gets tough. Those are the ones that show up when there is work to be done, visit when someone is sick, or to just be around for support. That is a test of a strong relationship.

 

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Is underdog Deem ready for a Cinderella story?

I do love a good story – and fortunately, in the case of Deem, I get to enjoy the ride knowing in advance that it has a happy ending.

I recently had the opportunity to speak with Deem’s VP of Product Management Roger Blumberg. He took me back through the journey Deem has been on and where they plan to go from here. They started as Reardon Commerce in 2000, acquired Ketera in 2010 and rebranded as Deem in 2013.

I feel fortunate that I was not asked to predict the outcome of this story back in 2010, when a legal injunction prevented Deem from doing anything more than maintaining their current customers. I am sure I would have made the wrong call. Four years is a very long time to survive without customer base growth. The fact that Deem is still around to tell their tale demonstrates not only perseverance, but validates their value proposition. They announced their re-launch yesterday (read the press release here).

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Supply chain risks and chocolate

Halloween was a few days ago. We have quite a bit of candy around the house due to that holiday. In our weekly blog, Protect your supply chain like it is your last piece of chocolate, we spoke about the supply chain risk for the candy industry involving cocoa.

 

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Electronic regulations around the globe

We live in a technology age. That is not big news. In some areas, the electronic record is considered official and binding. For example, for the last 4 or 5 years we have filed our taxes electronically and that has been adequate and official. In other areas, they still want an original signature on a paper, with multiple copies. I know when we have gone to refinance our house, the banks require paper copies.

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Sarbanes-Oxley for Dummies

I love the “For Dummies” books. We have used them many times. What a wonderful way to simplify everything from travel to home improvements to technology. Obviously it has become quite successful along the way so they must be doing something right.

 

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