Buyers Meeting Point procurement by Kelly Barner

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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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Procurement Delivering on Best Value

Procurement Delivering on Best Value

When our children were ready to buy their first cars, they had saved up enough to get something that was safe for driving around town and within their budget. However, they did not take into account the total cost of ownership so we outlined it for them. It was not just the purchase price of the car but also gas, insurance and repairs. They were not excited about those expenses. Buying new tires or fixing an exhaust problem was not high on their list of ways to spend money. Believe me, it is not high on anyone’s list no matter what age they are!

This week’s article by Kate Vitasek, “Use Best Value to get Your Best Bottom Line”, discusses the role of procurement and shifting to focus not just on cost but on the full cost of ownership. It emphasizes that while most professionals understand getting to the TCO is the best value, many do not employ that methodology.

It is often about so many other things such as how soon a new piece of equipment needs to be repaired and how much do the parts cost when a repair is needed. How far away are the service centers that could impact the length of time a piece of equipment is out of service? When it is time to dispose of the equipment, what is the cost of that or is there some ability to recycle or sell it?

What success stories do you have around procurement and the TCO or Best Value approach? Is it easier to apply in some cases and not in others?

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

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Webinar Notes: Defining Procurement’s Story to Inspire, Motivate, and Lead Change

Webinar Notes: Defining Procurement’s Story to Inspire, Motivate, and Lead Change

This week’s webinar notes are from an April 30th event hosted by Sourcing Interests Group and presented by Denali’s Alan Veeck and special guest Paul Smith from ‘Lead with A Story’, a coach, speaker, and author.

The webinar explored how professionals can leverage the techniques of storytelling to build influence and communicate an important message in an effective way. In Smith’s terms, storytelling is simple, timeless, contagious, and memorable, and it works across demographics.

Within the context of procurement, Denali has been incorporating storytelling into the training they provide to category managers. With the wide range of responsibilities being handled by category managers today, they have to function within an operating model that allows for proper division of labor. Coaching them is like cross training, bringing together a range of diverse skills that will help them become more strategic.

The lessons from this webinar combine to create something like ‘communication theatre’ that you can leverage to get your message through – as long as you are willing to put in the effort up front. What the speakers did not directly address in this event, but that should not be underestimated, is the time and planning required to apply storytelling. You have to know your audience, craft a story in such a way that it has the desired effect, and choreograph the execution carefully.

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New YouTube Video: A Positive Approach to Supply Chain Risk

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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How Consumers Influence Your Procurement Team

How Consumers Influence Your Procurement Team

Panera is in the news this week with their “No-No list”. They will be eliminating over 150 artificial ingredients from their recipes, beginning immediately with their salad dressings. This is in reaction to the increasing consumer demand to understand what they are eating and requiring heathier choices.

I was reading an article from Social Media Examiner, “5 Ways you can Influence Consumer Purchasing Decisions”. Obviously there are a lot of choices of where to eat and Panera is hoping to influence you to choose their establishment.

One of the suggestions is to appeal to millennials. Using social media, you can reach the millennials but it has to be done in the right way. They are not looking for generic messages but those that are tailored specifically to them. Being very aware of the environment, the move for Panera is more than likely to appeal to that age group so interested in sustainability and healthy choices.

So what does that mean for a procurement professional at Panera? It will require new supplier agreements, finding alternative sources of supply, including various lead times. The supply chain has been altered based on consumer demands. The purchasing group has to be consistently learning new marketplaces and sources for their organization.

Has consumer behavior changed your company’s direction and product offering? How did that impact you and your team? How did this impact your bottom line?

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

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Deem Shopping is Easy on the Eyes

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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Looking for Intelligence in the Risk Track at ISM2015?

Looking for Intelligence in the Risk Track at ISM2015?

If you happen to be going to ISM2015, be sure to mark your schedule to attend the breakout session being run by my Supply Market Intelligence for Procurement Professionals co-author, Jeanette Jones. She is in the risk track on May 6th – here are the details:

Supply Market Intelligence: Risk Assessment and Research Resources

Presented by Jeanette Jones, Founder of Cottrill Research 
Session JE | Audience Level: Experienced, Leadership
9:45 a.m. – 10:45 a.m.

The authors of Supply Market Intelligence for Procurement Professionals: Research, Process, and Resources, present an overview on how to design a supply market intelligence program, focusing on risk management and strategic sourcing initiatives. Various key third-party risk research resources will be covered, particularly those with supplier diligence/monitoring and geopolitical offerings.

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Building a feeder program for supply chain

Building a feeder program for supply chain

Many professions have minor leagues or feeder programs. In sports, it starts with kids playing sports in their schools or town leagues. Eventually some progress to college, minor league and perhaps event to the professional level. In academics, there is a feeder program for science and technology, called FIRST, the brain child of Dean Kamen. Utilizing a robotics game, students learn fund raising, marketing, communication, innovation, engineering and team work. It now is in thousands of middle schools and high schools all over the world.

In business, there is the Junior Achievement program that was founded in 1919. Their mission is turning the kids of today into the entrepreneurs of tomorrow. This program starts with 5 year olds and goes through high school, setting the students up to compete in a global environment.

For myself, I stumbled into a career in procurement and supply chain through a series of events. I know that is the same for some of my colleagues as well.

This week’s blog discusses a feeder program for supply chain. With a talent gap that is growing, it is exciting to see such programs exist. Robert Bowman, of Supply Chain Brain, writes an article titled “Teaching School Kids about Supply Chain”.

The program starts with students at the lowest levels and is planning to go through high school. They work with projects such as a lemonade stand, pizza manufacturing and paper airplane modelling. They learn about planning, customer service, problem solving, and math skills to name a few. It is really catching on and has the potential to become the feeder program for the next generation of supply chain professionals.

Did you do anything like one of these feeder programs in your early years? Are there any others that you would recommend?

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

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And now for a few words from ISM CEO Thomas Derry...

And now for a few words from ISM CEO Thomas Derry...

Next week, professionals will gather in Phoenix, Arizona for ISM2015, the annual conference that marks the 100th anniversary for one of the most recognized institutions in all of procurement. There will be impressive keynote speakers, informative breakout sessions, fun giveaways, and plenty of chances to network. All of the resulting ‘brouhaha’ and ‘ballyhoo’ may belie the fact that procurement is in a time of serious transition right now.

Companies are spending more with suppliers than ever before. Supply chains are longer (or shortening) and are full of risk. The fixed cost of a high headcount procurement organization is starting to look less and less logical as the type of project we manage becomes increasingly long term and one-off. Baby boomers are retiring and Millennials are bursting onto the scene with their work life balances and crazy new ideas. Dare I even mention Procurement-as-a-Service?

Does this fluid set of circumstances really lend itself to a Centenarian association and old school networking? A couple of weeks ago, I don’t know how I would have answered that question.

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

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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Social Media Intelligence for Real Procurement Professionals

Social Media Intelligence for Real Procurement Professionals

Last week, Coupa ran a three part blog series based on a conversation I had with their marketing team about the role social media plays in supply market intelligence creation. You can read them here, here, and here. This is a subject that Jeanette Jones and I touched upon in our book, Supply Market Intelligence for Procurement Professionals, but it was certainly not our focus.

While social media is a great tool for news gathering and intelligence creation, it isn’t something that was ever part of my formal training – either in procurement or otherwise. I learned how to leverage the power of social media purely ‘in the wild,’ driven by the need to grow the footprint and brand recognition for Buyers Meeting Point. I am so glad that I did, both because we have seen clear benefits in our traffic, and because now I am in a position to apply what I have learned to the work that must be carried out by practitioners.

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