Buyers Meeting Point procurement by Kelly Barner

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Procurement Perspectives Podcast: IACCM's Tim Cummins on Contracts and Collaboration

Procurement Perspectives Podcast: IACCM's Tim Cummins on Contracts and Collaboration

This week’s guest audio is brand new – it was only posted to YouTube last week. In it, Tim Cummins, CEO of IACCM, addresses the NEC user group at a recent seminar. NEC is a provider of contracts used to bring effective project management and procurement to construction and public works projects.

The topic of Cummins’ presentation was ‘Collaboration: Why it matters, when it matters and what it means’ which is interesting because – as he observed at the beginning of the presentation – most people likely think collaboration happens despite contracts, not because of them.

He sets the stage by talking about how things have changed. We function in a world with more uncertainty, and a greater level of adaptability is required in response. There is more regulation, market volatility, and disruptive technology, and in combination these forces have contributed to the erosion of trust between people, companies, and government agencies.

You can listen to the podcast on the PI Window on Business Blog Talk Radio channel or on our Sound Cloud page.

 

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Book Review: Inventory Management: Advanced Methods for Managing Inventory within Business Systems

Book Review: Inventory Management: Advanced Methods for Managing Inventory within Business Systems

It is very important for businesses to be able to react to changes in the marketplace within their supply chains. This is possible where: there is a desire to make changes; there are clear market signals; there is good information available within the supply chain; and when optimum amounts of inventory are held. (p. 22)

Inventory Management: Advanced Methods for Managing Inventory within Business Systems by Dr. Geoff Relph and Catherine Milner (Kogan Page, July 2015) is accurately described by the authors in their introduction as achieving a balance between the philosophical and the practical. In fact, despite the complexity or maturity of their approach (appropriate given the ‘Advanced Methods’ designation in the title) all of the Excel-based tools for modeling inventory requirements based on the book are available for download. It doesn’t get more practical than that.

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Trans Fats Replacements: A Moment on the Lips, a Lifetime in the Sourcing Pipeline

Trans Fats Replacements: A Moment on the Lips, a Lifetime in the Sourcing Pipeline

On Tuesday, the Food & Drug Administration (FDA) announced that by 2018 all partially hydrogenated oils (the primary source of trans fats in the American diet) must be phased out of the food supply chain. The many costs associated with this change will give procurement an opportunity to have a positive impact at a time of transition. When you add up the costs of experimenting with replacement oils and reprinting/redesigning packaging and labels, Roger Clemens, a pharmacology professor at USC, estimates it could cost companies as much as $200K per product.[1]

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Book Review: Broken Windows Management in Business

Book Review: Broken Windows Management in Business

One of the most powerful things you can do with broken windows management is to empower your employees to fix their own issues whenever possible.” (p. 35)

In his fifth business book (seventh overall) Dr. Tom DePaoli takes broken windows theory and combines it with liberal doses of lean methodology and his own no-nonsense approach to process improvement. While this is not a long book, just 70 pages long, it is a working book. This is emphasized by the pages at the back that are specifically designated for “Doodles, Notes, and Ideas.”

 

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Guest Post on the Ivalua Blog: Looking at Procurement's Assets with Fresh Eyes

Guest Post on the Ivalua Blog: Looking at Procurement's Assets with Fresh Eyes

Sometimes the best ideas are right in front of us. This can be evident when you look at a situation with fresh eyes, much like what the United States Postal Service recently did.

The USPS is a large organization facing unprecedented changes that are challenging long-held assumptions about how to operate efficiently and effectively. Ideas to improve their declining financial situation were mostly variations on past strategies: closing branches, stopping Saturdaydelivery or raising prices. Not surprisingly, those approaches did little to improve the situation.

But the tide may be about to change. On May 21, the Inspector General of the USPS issued a report with some bold new ideas such as exploring ways to better leverage an under-appreciated asset: their national network of localized offices. Rather than pursue tired old approaches, they are exploring ways to increase the financial services they offer and create new revenue streams without making significant additional investments into infrastructure or personnel.

CLICK HERE TO READ THE REST OF THE POST

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Book Review: Supply Chain Management & Logistics in Construction

Book Review: Supply Chain Management & Logistics in Construction

Done well, the use of supply chain companies brings technical superiority and innovation to the project, and their specialist knowledge and experience brings enhanced efficiency, quality and consistency of delivery. However, there can also be increased risk if the strengths and weaknesses of the third party companies are not fully understood and managed.” (p. 78)

Supply Chain Management & Logistics in Construction: Delivering Tomorrow’s Built Environment (Kogan Page 2015) contains the collective knowledge of seventeen highly qualified contributors representing a number of roles within the industry – including its suppliers. Greger Lungesjö, listed as the book’s author, serves a double role as contributor and editor.

It is important to clarify that logistics has a different meaning in the construction industry than it does in others. Logistics is the term used to describe the movement of materials, people, and supporting services around a project site – not getting the materials, equipment, and people to the building site. You might even think of logistics as the ‘indirect spend’ of a construction site/project. It is absolutely critical, but it does not become part of the final structure. Fear not however, supply chain is still supply chain – an area of investment from which the industry is just starting to realize the potential for benefit.

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Guest Post on the Social Contracting Blog: Whole Foods Markets Shifts Their Cost Model as They Target Millennial Shoppers

Guest Post on the Social Contracting Blog: Whole Foods Markets Shifts Their Cost Model as They Target Millennial Shoppers

In March, I wrote a post for this blog about the Whole Foods grocery chain in which I asked the question: "How Much Can Procurement Change on Their Own?" I looked at how Whole Foods has defied the low margins commonly seen in grocery retail by employing an operational strategy that merges brand reputation, consumer identity, and high-quality products in justification of higher prices. Their procurement team is part of a top to bottom approach to creating the right value proposition for their customers.

Although they have been successful to this point, Whole Foods has found it difficult to expand their market share beyond their existing customer base. Whole Foods has never professed to be the supermarket for all shoppers, or even for most shoppers. They choose their markets carefully, making sure that the demographics in each area fit their business model. They do, however, need to find a way to build loyalty in other shopper segments that can later be channeled into the primary chain.

CLICK HERE TO READ THE REST OF THIS POST ON SELECTICA'S SOCIAL CONTRACTING BLOG

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Insights from the Cutting Room Floor: The Source One Podcast Series and the Unknown Unknown

Insights from the Cutting Room Floor: The Source One Podcast Series and the Unknown Unknown

This week we’ve been sharing a series of podcasts based on a recent conversation I had with Source One’s Diego de la Garza. Here are the links to Part 1 and Part 2.

The funny thing about podcasts, or any content based on creative interaction, is that there is always more good content than you get to use. Sometimes the most interesting detail or insight ends up buried deep in a less-consequential part of the dialogue. I had exactly that experience with Diego. There was a lot of back and forth in preparation for the podcast. In one revision of the notes we were all working from, a single statement jumped out at me:

“Although it may seem obvious, it is not until recently that many companies realized that their supplier base can propel them to the next level (strategically speaking) or be their demise. The reality is that more frequently than not, suppliers are given a lot of power by their customers, and unfortunately many times companies’ simply don’t know it, or they don’t understand how much they rely on some suppliers, who may or may not be looking after their best interests.”

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Webinar Notes: A Primer on Robotic Process Automation

Webinar Notes: A Primer on Robotic Process Automation

“The bigger you are, the more likely you are to fail because of the change required in aggregate.” – Thomas Young, Founder and Managing Partner of RUMJog Enterprises

“This is real.” - Frank Casale, Founder of the Institute for Robotic Process Automation and the Outsourcing Institute

 

These webinar notes are from a May 28th event run by the Institute for Robotic Process Automation (IRPA), which was founded by the Outsourcing Institute’s Frank Casale. Casale was joined in the event by a panel of Robotic Process Automation (RPA) experts: Raheem Hasan (CMO, IRPA), Pat Geary (CMO, Blue Prism), and Thomas Young (Founder and Managing Partner, RUMJog Enterprises).

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Book Review: Global Supply Chain Ecosystems

Book Review: Global Supply Chain Ecosystems

…today’s supply chains encompass complex webs of interdependencies, frequently spanning the globe, designed and deployed to optimize critical attributes – such as speed, agility, and resilience – that drive competitive advantage. (p. 11)

 

Global Supply Chain Ecosystems: Strategies for Competitive Advantage in a Complex World by Mark Millar provides a multi-dimensional look at supply chains. The ecosystem concept was originally used by the Financial Times to describe the increasingly complex nature of business in general. When it is applied to supply chain operations, it provides us with the idea that chains are more spherical than linear and non-consecutive.

 

One of the things I realized early in my reading of the book is that Millar is writing from a much different perspective than the authors we am used to hearing from. His biography lists him as a speaker, presenter, and board member. His view of supply chains in general, and their potential value contribution to the modern competitive enterprise, is more elevated.

 

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Webinar Notes: Elevating Procurement: The Evolution to Trusted Business Advisor

Webinar Notes: Elevating Procurement: The Evolution to Trusted Business Advisor

These webinar notes are from a May 19th event sponsored by GEP and presented by the Hackett Group’s Kurt Albertson. If you are interested in viewing it on demand, GEP has it up on their site, accessible after a free registration.

This event was very ‘man-moment-machine’ in its approach to procurement’s current status and future potential. Albertson opened the event by talking about the facts that net margins have not returned to their pre-recessionary (2007/2008) levels and revenue growth is down. While this sounds like bad news and more bad news, it is really a confirmation that procurement’s search for something new is right on target. Companies as a whole are going to have to make changes in order to be successful going forward. Innovation and expanding into new markets have become the priorities as companies strive to improve their growth rates and potential.

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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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Procurement depends on the honey bee

Procurement depends on the honey bee

We have several very large rhododendron bushes in our yard. In the spring they are beautiful with pink and lavender flowers. There are thousands of blooms. What we have noticed over the years is that the honey bees are fewer and fewer. It seems impossible for what seems like less than a dozen to be able to hit all the areas they should be covering.

Of course no one likes to get stung so fewer bees is a good thing right? WRONG! They are desperately needed to pollinate all the fruits and vegetables that we have in our food supply. The impact on the economy is in the billions of dollars.

The article this week from The Strategic Sourceror is “What’s the Buzz? Honey Bees in serious danger”. It reveals in simple terms why we need to pay attention to this and solve the problem. We have created this issue with the increased use of pesticides and the planned crops instead of wildflowers. Apparently the wildflowers sustain the bee population better than other crops.

Published in June 2014, the US White House has issued a fact sheet,  “The Economic Challenge Posed by Declining Pollinator Populations”. Here are a few facts stated in the document:

  • Honey bees pollinate 90 of the North American crops and 87 of the leading 155 food crops, representing 35% of the global food production.
  • Honey bees account for more than 15 billion dollars to the US economy

How does that impact procurement? The law of supply and demand could cause prices to increase on a something needed for your business. All the supermarkets, restaurants and food services will be impacted if the price of food increases. When the consumer has less disposable income, less is spent on clothes, cars, travel and entertainment. There is a ripple effect that will cause procurement to seek alternatives in order to contain costs.

How has your organization been impacted by the honey bee? Perhaps not at all but do you have something similar? Is it something that seems minor but has the potential to cause a major shift in your industry?

Share your thoughts by commenting below or tweeting us @BuyersMeetPoint.

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Guest Post on Design News: Strategic Sourcing Processes are Designed to Ensure Good Decision Making

Guest Post on Design News: Strategic Sourcing Processes are Designed to Ensure Good Decision Making

While people may talk about the procurement process, the procurement discipline actually encompasses a number of different processes. They include spend analysis, supplier relationship management, and contract management, just to name a few. If you have ever worked with procurement, there is a good chance that it was during the strategic sourcing process. Strategic sourcing touches many other stakeholder groups in an organization, such as engineering, as well as supply partners -- both current and prospective.

For engineers, if you are asked to be part of a strategic sourcing project team, you will probably learn early on that there is a standard, defined project management approach just like any other discipline would have, including product design and development. The process that guides this approach may include six steps or more, but it clearly divides the project effort into phases such as the identification of a need through the contract award as well as supplier performance management. Starting at a very high level, the process gradually narrows down the potential outcomes as more is learned and the company better understands the requirements that will ultimately guide its final supplier and sourcing decision.

TO READ THE REST OF THIS POST ON DESIGN NEWS, CLICK HERE

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Book Review: Food Supply Chain Management and Logistics

Book Review: Food Supply Chain Management and Logistics

Supply chains that are governed well will also protect the environment and create ethical behaviour not only between the transacting partners but hopefully across the network. However, developing the supply chain and the relationships requires effort and commitment from partners and help and support from governments. (p. 93)

Food Supply Chain Management and Logistics: From Farm to Fork by Professor Samir Dani is an eye-opening look at the complexity and criticality associated with feeding people the world over. Right from the outset, the book considers each topic in the context of a balance between advancements and opportunities and the consequences of failure, corruption, and manipulation.

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

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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Boomers vs. Millennials in the Marketplace

Boomers vs. Millennials in the Marketplace

Recently, we were at a hotel and happened to meet the resort president as we waited for our table. We had a wonderful conversation and explained we were celebrating our anniversary. Several hours later, we arrived in our room to a bottle of champagne and chocolate covered strawberries. We were so surprised and found it was compliments of the president. That was amazing customer service and truly they have gained our loyalty.

How do retailers or any organization for that matter gain your loyalty? For decades, the marketing was focused on the Baby Boomers (b. ’43-’64) as they were such a force in numbers and buying power. While that is still the case by spending power, The Millennials ( b. ’76 – ’92) are coming on strong in numbers and soon will be reaching their peak spending years.

This study, by Synchrony Financial, Balancing Multi-Generational Retail Strategies, reviews some of the different approaches and how organizations could benefit from utilizing them. As the subtitle suggests, you want to win over Millennials without losing the Boomers.

The similarities in the two generations are not surprising:

  • Both love coupons and discounts and bargains
  • Both use social media to share recent experiences
  • Both use online shopping
  • Both own tablets and smart phones

The article then goes into some of the differences and suggestions on how organizations should stay current in order to attract the future generation and buying power.

Millennials are more price conscious and make their purchasing decisions accordingly. Boomers are also price conscience but have brand loyalty based on customer service.

While Boomers and Millennials both own tablets and smart phones, they use them quite differently. Boomers have to think and ‘work’ their devices while Millennials use them as an extension of themselves, almost as simple as breathing. The mobile experience has to be fast, helpful and productive for Millennials as a given, not an exception.

With all that in mind, how do these generations and their preferences impact you as a procurement professional? What factors are you considering as you plan your assortment and your go-to-market strategy? What is your approach to the "bottle of champagne" surprise?

Share your thoughts by commenting below or tweeting us @BuyersMeetPoint.

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New Research Reveals Consumer Expectations for Supplier Management

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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Book Review: Business Operations Models: Becoming a Disruptive Competitor

Book Review: Business Operations Models: Becoming a Disruptive Competitor

The big idea behind this book is that the way a company configures its operations to deliver this brand experience to customers – while delivering viable financial performance – is an opportunity for significant competitive advantage and marketplace disruption.” (p. 2)

Business Operations Models: Becoming a Disruptive Competitor by Alan Braithwaite and Martin Christopher (Leading Procurement Strategy, Humanitarian Logistics) is a book that sort of sums it all up on its own with the ‘big idea’ quote above. Changing the configuration of an operation to get a different result is a straightforward enough idea. Why, then, do you need to read beyond page 2? The answer to that question lies in the many case studies and visuals in the book. Needing to reconfigure your operating model for competitive advantage might be an easy concept to accept, but the execution is likely to be difficult.

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Time to Speak up and Be Heard, Procurement!

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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