As we turn the corner into June, the pace of even virtual events has slowed back to what I would expect to see in the summer months of a ‘normal’ year, which this decidedly is not. One sign of light at the end of the tunnel is this: I added a live event (yes, live – in person and with people in attendance) for November of 2020. Time will tell if that is going to hold and what it will look like, but it feels like a glimmer of hope all the same.
We have another strong week of events this week – in fact, you may have noticed that there are several webinar series being hosted in the industry right now. The events this week from Tealbook and Corcentric are part of series where you can register once and receive sign in information for the entire series.
If you are planning your schedule further ahead, I’d love to have you sign up to join me on an event next week hosted by Fairmarkit and also featuring Jill Robbins, Senior Director of Global Indirect Procurement at Elanco, and Erin McFarlane, Head of Strategy at Fairmarkit, Click here to register.
BTW: If you haven’t already, sign up for our mailing list to be sure you get my weekly recommendations in your inbox each Monday.
It had been a particularly hard week for the whole team. Factory audits had been going on with the accuracy of a Swiss watch (plane, factory, hotel, plane, factory, hotel...). That Friday night we were isolated by a storm that had canceled our flight home and left us stuck in an airport hotel, not knowing what day it was or when we would get back. Our ‘batteries’ were very low.
Only Avi, our expert sales agent, strengthened by a thousand negotiations, seemed to be fresh as a lettuce.
Around the crackling of the chimney, while the storm whipped outside, we all tried to shelter ourselves in hot cups of coffee, seeking the strength to recover our spirits.
When you just look at a purchase from a pricing perspective, it would be reasonable to think that purchasing products directly from the manufacturer be an effective way to reduce unnecessary overhead and markup costs. While I generally find this to be true in practice, if it were that black and white the large number of distributors thriving in today’s markets would cease to exist. Manufacturers and distributors each have strengths and weaknesses, but in a strategic purchasing landscape you do not always need to choose between the two. In fact, developing a balanced relationship with manufacturers AND distributors often proves to yield the most value, particularly with high volume purchases.
You’ve invested a lot of time and money. You may even have staked your reputation on backing a supplier. So when is it time to replace them?
At a recent executive meeting, the subject of incumbent suppliers arose. The conversation reflected on both the personal and business investment that can occur when a supplier is selected, from a business stakeholder and a procurement perspective.
Buyers and suppliers, they make the commercial world go round.
- The POD Model, p. 1
The POD Model: The mutually-beneficial model for buyers and suppliers which enables an increase in profit through commercial collaboration by Michael Robertson strives to do something that we need a whole lot more of in procurement. It provides a framework for combining our philosophical objectives as collaborators and innovators with the inescapable need to measure our results.
Robertson looks at the messy reality of buyer supplier relations and breaks them down to a few major issues: cost, risk, flexibility, and incentives for mutual gain. He then looks to find a way to factor those into contracts in such a way that no one party benefits at the cost or loss of the other.
It’s a busy week in procurement with eight webinars on the calendar. I’m recommending two about intelligence and a third about the strategic positioning of suppliers. Click on the title of each event below to view the full description in our events calendar and to connect to their registration pages.
We have another ProcureCon event running this week – this time in Orlando, FL. For anyone not traveling to the Sunshine State, there are a full DOZEN webinars being held, half of which are on Thursday. I’ve recommended four below and provided my reasoning. Click on the title of each event below to view the full description in our events calendar and to connect to their registration pages.
In the first part of this two-part series, I established the reasoning behind establishing a diverse supply chain in the nontraditional sense. Emphasis on maintaining a supply chain that is diverse in geographical location, capabilities, and overall corporate values is vital in maintaining supply chain resiliency, sustainability, and adaptability. To achieve a supplier mix that fits these goals, the right questions must be asked during an internal supplier rationalization process, overtaking the traditional values of an RFx.
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.
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.
This week is ridiculously busy – there are 15 webinars taking place: five on Tuesday, one on Wednesday, and NINE on Thursday. Given the wide range of choices, it wasn’t easy to pick the best ones, but my recommendations are below. Click on the title of each event below to view the full description in our events calendar and to connect to their registration pages.
According to joint research done by Design News and Exploration and Insights in 2014, 67% of companies have design cycles of 3-12 months. The remaining 33% of survey participants are almost evenly divided between design cycles requiring longer than a year and those taking less than three months. Regardless of their length, we can be sure all of those teams are looking for ways to shorten them, without sacrificing quality or functionality, so that they can be first to market and get the greater share of customers.
While the need to speed up design cycles is top of mind today, it is not a new initiative. In fact, 20 years ago, Design News published what you might call a “multi-generational design engineering retrospective.” As stated in “Engineering Megatrends,” published on Aug. 28, 1995, “Since the first caveman decided to capitalize on his best idea for a new club, businesses have operated on the principle that the first to get to market owns the market — at least for awhile.” With increased competition from all corners of the globe, and the nearly universal consumer fascination with having the latest, most innovative products, cutting time to market is now a critical element of competitive advantage.”
Despite this pervasive emphasis on “faster, sooner, better,” the same organizations that have multiple design cycles a year only update their approved vendor lists (AVLs) on an annual basis.
In August the SEC adopted a measure that will require public companies to publish a CEO pay ratio in their financial statements. The ratio, which compares median worker pay to the CEO’s salary, is a provision of the 2010 Dodd-Frank act and it takes effect in January 2017.
Some of the early, albeit unofficial, CEO pay ratios seem to demonstrate an enormous pay disparity between the leadership and workers in a company. In other cases, it calls attention to CEOs with strikingly low compensation for the position they hold. For instance, Apple’s Tim Cook has a CEO pay ratio of 43:1, Ford’s Alan Mulally has a 113:1, and Goodyear’s Richard Kramer has a whopping 323:1 ratio. IBM and Intel have ratios of 25:1 and 30:1 respectively.
Any time procurement is evaluating a publicly traded company, we naturally make use of their financial statements and annual reports, which are valuable sources of information. But is this new ratio relevant to the evaluation of a supplier for financial stability, risk, and collaborative potential? Should procurement take this information into consideration when ranking and selecting suppliers?
This week our audio comes from Acquire Procurement Services, a consultancy based in Australia specializing in establishing and re-negotiating contracts across sectors. Their video is titled 'Why do we treat employees and suppliers differently?' and is available on their YouTube channel. In it, they draw a contrast between the information companies share with their employees and how they handle sharing with suppliers who might perform the same or similar functions on their behalf.