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  • Book Review: Food Supply Chain Management and Logistics

    The food supply chain is, in actuality, multiple chains: produce, grains, meat/protein. Producers are in a difficult spot as ‘input suppliers’ (e.g. equipment providers) have significant power, uncertainty lurks in weather patterns and growing conditions, and the need for controls leads to complex regulation affecting both costs and prices. Ripple effects in these chains vary, with increased demand for processed foods leading to spending on and innovation in packaging, and increased demand for protein resulting in more demand for farming output. Food Supply Chain Management is a balance of in-depth food management specific concerns and more general supply chain content that undoubtedly has applications in the field (collaboration, supply chain risk, lead methodologies). The author’s knowledge reflects an understanding of the many perspectives that must align for optimal execution: Procurement: Inventory management is a critical effort (such as through the limitation of SKUs), track ...

    by Kelly Barner
    Friday, 22 May 2015
  • Perception vs Reality: The Real Root Cause of Procurement’s Challenges (UPDATED)

      Procurement’s Capacity Problem One of the key take-aways is that capacity, not talent capabilities, is the greatest obstacle to value creation. This is drawn from the finding that “80% of procurement decision makers identify ‘procurement team time pressures’ as a challenge, and 20% as a major challenge – implying that the majority of procurement departments are facing major capacity issues.” What is not immediately clear is if capacity is an issue because demand is so high, because (as it seems at first glance) that procurement headcount is too low, or because the in place team is so inefficient. A Diverse Set of KPIs My favorite finding is that when all the participants’ KPIs are compared, not one is shared as the top (highest priority) KPI by more than 47% of the departments. Realized savings is (expectedly) the most common top KPI but revenue impact (19%) beat out identified/negotiated savings (16%). Only 1% of procurement departments reported that CSR or Sustainability ...

    by Kelly Barner
    Thursday, 21 May 2015
  • 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 suggest ...

    by Cindy Allen-Murphy
    Wednesday, 20 May 2015
  • New Research Reveals Consumer Expectations for Supplier Management

    Although I have not yet read the actual survey findings (which are hopefully forthcoming), there are already a few points warranting further consideration for procurement professionals and organizations. One is that B2C businesses must meet a higher threshold of supplier management than B2B. The typical consumers targeted by the research are unlikely to be as affected by companies or brand names they do not know than those they shop with directly. Even if they don’t shop at a store, one third of the respondents said they would spread the news to friends and family. Bad news may or may not travel fast, but it sure does travel. The other is that the strong reaction by consumers is likely to drive the decisions of investors, shareholders, and the passage of regulations. While the short term news cycle moves a story in an out of the public consciousness with greater speed than accuracy, the longer term impact of that story is likely to play out in the longer term through investment dec ...

    by Kelly Barner
    Tuesday, 19 May 2015
  • Book Review: Business Operations Models: Becoming a Disruptive Competitor

    Carrying out such a change requires a single coherent value proposition for everyone in the organization – those who touch customers or finished product and otherwise. According to Braithwaite and Christopher, the power of operational excellence has been underestimated in practice and from the perspective of shareholders and the board. I struggled with this idea a bit (because how could leadership not recognize the importance of an effective operational model to their success?) until I read their observations of corporate strategy statements. “Strategy statements are most usually expressed in goal-driven terms based on market size estimates, competitive structures, price points in the market and high-level views of potential; their development is normally anchored in economic or competition theory. Practical operational capabilities are often taken as read, or not seen as a source for step-change performance.” (p. 3) This latent potential exists for organizations who see the struc ...

    by Kelly Barner
    Friday, 15 May 2015
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“When you are open to share what you know with other people, good things will happen for you.” –Soheila Lunney 

Throughout the month of May, Buyers Meeting Point is covering ‘The Procurement Game Plan’ through a series of interviews with Charles Dominick and Soheila Lunney – both about our questions in response to the book and the trends they observe in supply management as a whole. Our original intent was to interview them about the book, but as we got further into conversation, we found that it was impossible to separate the content of The Procurement Game Plan from their ‘day jobs’. This book is not a retrospective look back or an encapsulation of their careers, but a snapshot from two very dynamic contributors to the procurement community. I highly recommend it as an addition to your professional library.

Our review of the book is available, and last week we shared a Q&A with both authors specifically related to our questions about the book. This week we’ll share the first half of our interview with Soheila Lunney.

SLunneyIn addition to being an author, Soheila is president of the Lunney Advisory Group, a provider of coaching and mentoring for procurement professionals in various industries to improve their processes and practices, to significantly reduce the cost of acquiring products and services, and to contribute to the bottom line profitability of their organizations.

Buyers Meeting Point: As a procurement educator and coach, what is your perspective on the typical character or personality of purchasing/procurement professionals and how well that is suited to the future requirements of the role?

Soheila Lunney: As more and more universities are offering Procurement and Supply Management courses and degrees, I see the character of procurement professionals is changing with much higher caliber individuals in various industries.  Procurement employees are truly becoming a group of professionals who are gaining the respect of top-level management.  Leaders of the organizations must support creating an environment that their procurement staff can grow, learn new and emerging best practices, and expand their horizon.  As economy is improving allocating funds to provide training for procurement staff should become a high priority for management.

 

BMP: How did a background in the pharmaceuticals industry prepare you to help procurement professionals in other industries learn to manage supply chain risk?

Soheila Lunney: While it is true that pharma may be ahead of other industries in their assessment and handling of risk potential (due in part to government regulation), industry does not matter. What matters is interaction with the outside world, while includes the health and safety of customers and associates as well as the reputation of the organization.  Whenever possible, tap into tax, legal, and treasury (for example) for their guidance. Come up with approaches that bring safety, security, and contingency plans to the organization. Keep abreast of what other organizations are doing, benchmark against them, and implement practices that can safeguard your organization against unexpected events.

 

BMP: It seems that one of the barriers to procurement having an established seat at the executive table stems from a lack of financial knowledge. Do you see that in the companies that you work with?

SL: Yes – I do see groups and individuals struggling with their lack of comfort with finance. I think it breaks down to two issues: the first is a genuine weakness with financial topics. If this is your situation, you need to acknowledge the weakness and take a class that  can satisfy your needs. The other issue looks at negotiating cost savings v. reporting those savings to the rest of the organization. The most common mistake procurement makes is reporting project savings in one big number. It is critical to itemize results as much as possible to establish procurement’s credibility by creating opportunities for explanation and demonstrating knowledge of the product/service in question.

It is also important to understand the methodologies that your finance group or controller will buy into and structure results reporting to match them. Each company or industry is different, and contract results may change over time due to M&A activity or leadership’s decisions. It is also important to make sure that multi-year contract savings hit the budget for all applicable years. This will require a joint internal effort, but will bolster procurement’s relationships with other departments.

Next Thursday we will share the rest of our interview with Soheila, and on May 31st we will finish up our series on ‘The Procurement Game Plan’ with our interview of Charles Dominick.

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