This is the third and last part in a Q&A series with Jason Busch on our fall conference, Commodity/PROcurement EDGE.
Sydney Lazarus: One of the sessions that you and Pierre Mitchell will present is “Segmenting the Procurement, Commodity Management and Supply Chain Landscape.” What are some of the linkages between these areas?
Jason Busch: Pierre recently completed an interesting piece of research focused on direct materials procurement based on survey data from over 200 companies. We’ll share some of it soon, and ISM members will be hearing more from us in this regard as well (we conducted the study with ISM and will be doing some joint promotion of the findings to their member base this fall). In the study, we surveyed Spend Matters, MetalMiner, and ISM members to look at trends in direct materials procurement, looking specifically at overlap between supply chain, direct procurement, sourcing, and commodity management—and some of the best practices companies are engaged in within those areas.
Consider multi-tier supplier management. In examining how we manage commodity volatility in our processes and supply chain, we see sourcing strategies linking Tier 1, Tier 2, and Tier 3 suppliers together. We see companies wanting to build visibility into the supply chain to reduce risk. We also see companies wanting to look at the total cost across the supply chain—not just for sourcing, but for a broader inventory-related standpoint as well.
SL: How important are these new "external" systems?
JB: When you talk about supplier networks, we are really getting into two distinct areas: business platforms (that exist between companies) and supplier networks which serve as on-ramps for connectivity. One of our big beliefs is that we’re entering an environment where a new type of system that existed between companies is going to become as important as systems to drive things like sourcing or supplier management. And these tools are coming out of many areas. They’re coming out of transactional interchange or invoicing and e-procurement. For example, sending a PO or invoice in a common data format back and forth between suppliers.
But these new external systems can do much more. They can help manage vendor file information, so suppliers don’t have to update their contact or banking details and other information multiple times. We’re really big on encouraging readers to think about external systems as well as internal systems. We’ll definitely discuss that at the event.
SL: Can you hint at how the economic and commodity outlooks will be presented?
JB: You know, we’re a bit bearish here in terms of the 2014 outlook. It’s very easy to throw darts at the wall and try to guess where the economy will go. But when you look at the news (for example, who might be the next Federal Reserve chairman?), the markets are jittery about Larry Summers taking over. Dr. Summers is the former president of Harvard, and he was in the economics department there. They’re concerned that he’ll take a more aggressive stance on controlling potential inflation and not maintain the loose monetary controls that we have right now. That would have a rippling effect across the economy.
We really need to consider where things are going next year. Some of us are bearish here (others are not -- recent ISM data suggests strength in manufacturing for example). But Lisa Reisman and I believe we're looking at a mild downturn for next year (however others on the team might give you a different answer). In terms of commodities, there’s going to be a significant impact on pricing given overall volatility, but the U.S. doesn’t really matter when it comes to pricing. In large part, China is the elephant in the commodities consumption room. We’re be sharing quite a bit on various commodities and metals within the outlook sessions at the event and look forward to interaction as we get into price trending, expectations and forecasts.
Interested in learning more? Register for Commodity/PROcurement EDGE and meet us in person!