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.
This week’s webinar notes are from a December 1st event hosted by the Harvard Business Review. The speakers/presenters were Michael Porter (yes, that Michael Porter) and PTC CEO James Heppelmann. The event is available on demand here.
Organizations themselves present a major problem; they are stuck in an outdated approach to value creation that has emerged over the past few decades. They continue to view value creation narrowly, optimizing short-term financial performance in a bubble while missing the most important customer needs and ignoring the broader influences that determine their longer-term success.” (p. 24)
In November, Kate Vitasek and a team of co-authors released Strategic Sourcing in the New Economy: Harnessing the Potential of Sourcing Business Models for Modern Procurement. Vitasek is best known for her Vested Outsourcing series a books, which are responsible for helping professionals in all functions see the potential of outsourcing relationships aimed at accomplishing a new, more value-oriented type of result. While the Vested books naturally appeal to a procurement audience, you would hardly say that procurement is the main character. We appear in little more than an occasional walk on role – not central to the plot and not particularly memorable.
The contrast between procurement’s role in the Vested series and the fact that we now have a book dedicated to our perspective and objectives is striking. While the Vested Way is open to all, clearly we seized an opportunity that has now led to a book all our own.
Last week, Jon Hansen and I did the second in what will be an ongoing series of ‘Point – Counterpoint’ Blog Talk Radio sessions. Here is how these sessions work: we agree on a topic in advance and then I do my darndest to disagree with Jon for 30 minutes, after which he declares us in agreement. Trust me – the conversations are as entertaining as they are informative.
Another year done, another 11 book reviews added to the Buyers Meeting Point cache. When I reflect back on this year’s new titles it is the authors rather than the books themselves that really stand out. This is particularly important as procurement is well into a time of significant evolution. In that context, the authors we read are more important than just the content they share. Their experiences and their qualifications set the bar for the rest of us – and the higher that bar is, the better.
Sure, procurement is in the midst of a change that may render the function unrecognizable over the next few years. If we can continue to attract the minds and engage the imagination of people as bright and visionary as the ones spotlighted here, we’re going to be okay on the other side – no matter what.
Note: This post originally ran on Design News.
There’s an 800-pound gorilla in the room. It’s called Amazon. Yet not everyone sees it as inevitable that the e-commerce and distribution giant will dominate electronic component distribution.
In a recent interview with Tom Galligani, global vice president of supply chain for distributor Future Electronics, I asked for his views on Amazon’s invasion of the B2B space. Given the size and power of Amazon, you might expect distributors like Future Electronics to be prepared to be put out of business, but that is not the case. In fact, Amazon’s entry into the B2B marketplace creates a unique set of opportunities for buyers as well as suppliers or distributors.
Nevertheless, like others in the electronic components distribution industry and beyond, Galligani and his team are keeping a close eye on Jeff Bezos’ $90 billion e-commerce behemoth. Amazon may have gotten its start with an unbeatable B2C experience, but it has made inroads -- both organically and through acquisition -- into the B2B market.
This week’s webinar notes are from a November 19th event hosted by BravoSolution and presented by Mickey North Rizza, their VP of Strategic Services and former AMR Research/Gartner analyst. As of December 2nd, the event was not yet available on demand on their website. In the meantime, BravoSolution does have a whitepaper with the same title written by North Rizza if you are interested in more. Click here to download it.
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.
I recently had the opportunity to interview Robert Mason and Barry Evans, co-authors of the book ‘The Lean Supply Chain: Managing the Challenge at Tesco.’ It was published in September 2015 and you can read my review here.
Barry Evans worked as a Lean Process Manager at Tesco, developing ways for lean thinking to be applied to Tesco’s supply chain. He has also joined the Lean Enterprise Research Centre at Cardiff Business School as a Senior Research Associate. Robert Mason is a Senior Lecturer in Logistics and Operations Management at Cardiff Business School and has led many business research projects with Tesco as a partner. To read their ongoing blog posts, click here.
These webinar notes are from a November 5th event co-presented by Peter Smith from Spend Matters UK/EU and Daniel Ball from Wax Digital. The webinar is available on demand on Wax Digital’s site.
Peter Smith opened this event by offering up a powerful statistic from Wax Digital's own research: when asked, 44% of procurement teams said they have a close working relationship with the business. Unfortunately, only 18% of those business stakeholders agree. This amounts to a 25% ‘relationship leakage’ – or as Smith said in the event, self delusional procurement organizations. And that doesn't even touch on the 56% of procurement teams that DON'T think they have good relationships with stakeholders...
The idea of this event was to look at multiple kinds of integration that procurement has responsibility for. When Smith talked about the three models for procurement (see below), the focus was decidedly on information and communications flows rather than data and technology. In my opinion, that is fantastic because it expands the role and potential impact of procurement through our understanding of our own way of working.
I went into my review of Fashion Logistics: Insights into the Fashion Retail Supply Chain by John Fernie and David Grant (Kogan Page, November 2015) with pragmatic acceptance of the fact that it would contain more logistics than fashion. I could not have been more wrong. Far from being a dry, flat examination of the global garment industry, this book is a well rounded representation of an industry that is facing not only challenges but an increasing pace of change. The case studies and historical context are as indulgent as many of the brands the authors cover.
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.
I recently interviewed Magnus Carlsson, the author of Strategic Sourcing and Category Management: Lessons Learned at IKEA. You can listen to our conversation on demand on BMP Radio.
Although the book centers around the how and why of IKEA’s approach to procurement and supply chain, its content is not limited to large multi-national corporations or companies in the furniture and home goods industries. IKEA is a company that competes on brand and low costs, which makes its approaches to spend and supplier management absolutely critical to its ability to operate.
IKEA has been able to accomplish many things that other companies have not because it is necessary for them to remain competitive. As a result, their team members – and former team members, for the sake of including Carlsson – approach complex and strategic procurement with a striking clarity of purpose. There is no other way for IKEA to work, and therefore there is no reason to resist or bemoan the uphill strategic path.
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.
I recently had the opportunity to interview Phillip Ideson, the founder of ProcureChange, a new Procurement-as-a-Service (PaaS) provider. You can listen to the entire interview on BMP Radio.
My first reaction to PaaS – one that I think is quite natural – is concern about what it will mean for today’s procurement practitioners if it catches on. Will we be outsourced the same way we have outsourced so many other formerly in-house capabilities?
As it turns out, however, the news is better than I expected. PaaS, far from being a threat to procurement, may be one way for us to achieve the strategic status we crave.
I recently had the opportunity to interview Mark Larson, the vice chairman of electronic component distributor Digi-Key Electronics. The company was founded in 1972, and Larson joined only four years later to what is now one of the largest such companies not only in North America but the world. He led the company as president for an astounding 39 years, just recently stepping down in July.
In the four decades during which Larson ran Digi-Key, there was considerable change -- in the electronics being sold, in whom the products were sold to, and in the supply chains the products traveled through. The other thing that has changed is the way Digi-Key interacts with different points of contact at each customer. Although it has always aimed its marketing efforts at design engineers -- and continues to do so -- it has had to adapt to the growing role of centralized procurement in managing purchases.
Since the interactions between engineering and procurement have not always been naturally easy, the insertion of a third party into the electronic component purchasing process has brought some benefits. When looked at from an outsider’s point of view, the two teams may have more in common than they realize.
In September, Procurement Leaders ran an article by Tyler Chamberlain, Coupa’s global head of spend management, on the benefits of getting a solid procurement function established earlier in a company’s growth curve.
As he stated in the article’s title, “If it ain’t broke, don’t wait until it is.” The premise is that making investments in procurement talent and technology before problems arise prevents many problems from ever arising. Supplier records that are managed well from day one never need a massive clean up. Processes that have been in place as long as anyone can remember don’t have to overcome compliance hurdles. Spend that is managed centrally never has the chance to break between direct and indirect.
Perhaps more importantly, and as I had an opportunity to discuss with Chamberlain (click here to hear the conversation on BMP Radio), procurement has control of their internal image from the outset and can build their brand around positive results rather than problem resolution. When we hear Chamberlain’s message from this perspective, all organizations and procurement teams benefit from his recommendations, not just the start-ups.
These notes are based on attending an October 13th webinar hosted by HfS Research. The event can be viewed on demand here.
The panel included two HfS team members (Phil Fersht and Charles Sutherland) and two executives from Cognizant: Robert Hoyle Brown and Matt Smith. I listened to the event end to end twice – once live and once on demand. The topic of automation is fascinating and it was well covered and discussed in this webinar. My challenge was to figure out what this growing trend means for procurement.
Conversation with the Author: Jonathan O'Brien on Why His Revised Editions Add but Don't Remove Information
Jonathan O’Brien, CEO at Positive Purchasing, has written a number of weighty books for procurement and supply chain professionals: Category Management in Purchasing, Negotiating for Purchasing Professionals, and Supplier Relationship Management make up the ‘big three.’ Not only has he written these books, he regularly revises them – I know because I’ve reviewed all of the originals and many of the revisions.
I write all the time (including two books of my own), and yet the sheer volume of content O’Brien has pulled together in these books makes my head spin. In fact, I once asked someone at his publisher Kogan Page if they had him locked in a room somewhere hunched over a laptop.
What that suggests to me, is that there is something about the process of writing, and his relationship to the content, that is important for him as a practitioner and thought leader. Somehow, O’Brien inexplicably maintains a successful consulting practice in addition to his writing habit.