Author Archives: Guest Contributor

Shipping Rates in the Near Term: Weak Demand, Oversupply, and Post-Panamax Ships

The shipping markets have been depressed over the past few years, reflecting a combination of persistent weak demand and over capacity. In order to succeed or even survive against this backdrop, carriers have repeatedly tries to implement general rate increases (GRIs). However, most of these have failed to hold, due to the intensive competition in the market and weak price discipline among carriers. Consequently, carriers have shifted their focus to the challenge of how to cut costs. One approach has been to build bigger ships to achieve cost competitiveness. In particular, the growth of large, so-called Post-Panamax ships has been accelerated by the expansion of the Panama Canal project

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What Do You Mean, a Coed Sauna? On Sourcing Activity Synchronization and Customers

Screen Shot 2014-07-23 at 5.03.41 PM Art van Bodegraven, managing principal of Van Bodegraven Associates and founding principal of Discovery Executive Services, is back with another essay for Spend Matters. As we look for better ways to integrate and synchronize sourcing and procurement activities intelligently within the greater supply chain, it is easy to become confused about who and where the customers are. You know, the ones we are supposed to be delighting? This is a burning question in both the B2B and the B2C worlds. And the obvious answer is not always the complete answer. For example, when a company's customers are the ones actually paying the bills, and the sales and marketing mission is to get them to buy as much as can be rationalized, plus some extra “just in case,” we cannot afford to overlook sales and marketing as an internal customer, whose needs and demands we must at least recognize.

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How to Cut Software Maintenance and Support Costs (and Fund IT Innovation)

- July 23, 2014 2:39 PM | Categories: Guest Post, Spend Management, Technology

The cost just to “keep the lights on” in IT has grown exponentially over the years. Recent studies show that an average of 72 percent of the enterprise IT budget goes to this area, leaving only 28 percent to fund new projects. A big chunk of the 72 percent goes to maintenance and support – and that reality isn’t expected to change anytime soon. Here are four of the best ways to cut maintenance and support costs.

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Managing Complexity – A Reevaluation of Energy Procurement Strategy

There are few areas of corporate spend that invites as much fierce debate in strategy as the area of energy. The sheer number of purchasing mechanisms and strategies available can be overwhelming, and the advice of consultancies and subject matter experts is often contradictory. The combination of electricity, natural gas, and fuel oil is frequently one of the top five areas of indirect spend, and some organizations with energy-intensive manufacturing processes build energy expenditures into standard costs. Such a critical and complex category requires a clearly defined management strategy that is flexible enough to evolve with changing internal and external conditions.

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European Olive Oil Prices Rise Over 30% Since Start of the Year

- July 21, 2014 2:43 PM | Categories: Commodities, Guest Post

Prices for olive oil have risen sharply in Italy, up 32 percent since the start of the year and 15% year-over-year. Spanish prices had been falling since September 2013 due to a record production year; however at the start of June prices started rising and are currently over 10 percent higher than a month ago. This rapid price acceleration has been driven by the weather. There was above average dry and warm weather throughout the Mediterranean olive-growing belt in May and June. This dry heat hit the olive trees during the blooming period when moisture is vital to ensure maximum olive growth and the eventual oil yield.

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Tips for Making Your Financial Close Count

- July 17, 2014 2:46 PM | Categories: Finance, Guest Post

At many companies, most of the time effort and scrutiny of the close process is sharply focused only on its final stages—"last mile of finance"—and then only on specific steps within it. Organizations use multiple ERP features that assist with consolidation, software packages that perform some reconciliations, and workflow monitors that provide checklists. However, spot automation like this at the very end of a profoundly corporate-wide activity—such as the financial close—can only offer so much.

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Buying VMware? Demand Transparency in Contract Terms

Transparency has always been an issue in IT sourcing. Not only is there no “Kelley Blue Book” for pricing, the degree of detail provided in one customer’s agreement terms compared to the next (even with the same vendor) is often inconsistent. Let’s take VMware for example. Many IT buyers don’t take into account the extent of detail that VMware or its resellers can or will furnish in quotes and contracts. Some wonder if they’re getting enough detail but have little understanding of what a healthy amount of detail looks like. Lately, we’ve seen several common “transparency pitfalls” in enterprise VMware purchases. Here are a few ideas to guide you through your next VMware transaction.

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Procuring the Brazuca: The Complexity of Sourcing a World Cup Football

The Adidas “Brazuca” was the official ball of the 2014 FIFA World Cup. Over the last month, more than a billion people watched this ball from more than 200 countries (talk about sensitive procurement categories). To add to that, the last World Cup’s “Jabulani” was mired in an “aerodynamics controversy,” resulting in even more pressure to get this one right. Read on to see how procuring a Brazuca is a good case study in managing suppliers down your supply chain.

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Fish Meal Prices Rise 11 Percent Since Beginning of 2014

- July 14, 2014 2:33 PM | Categories: Guest Post, Industry News, Price Forecast

Fish meal is a globally traded commodity principally used as feed for shrimp, salmon, and other farmed fish. Despite fish meal in the US being mainly used as feed for pigs and chickens, global fish meal prices still affect the price of fish in the US. That’s because over 90 percent of fish consumed in the US is imported, of which roughly half is farmed. The price of fish meal has increased sharply since the beginning of June and could be set to rise further as the world prepares for a possible El Niño.

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Who Put The Supply In Supply Chain Management, and Why?

- July 14, 2014 2:27 AM | Categories: Commentary, Supply Management, Supply Networks

Spend Matters recently brought attention to that very question: Who put supply in supply chain networks? The question is a fair one, and yet it may lead to the follow-up question of how it is that this attention suddenly becomes necessary. Look, it is wonderful that the sourcing and procurement employees from the supply tent are peeking through the flaps of the supply chain management tent. The relationship between the two worlds has been reminiscent of members of Congress linking arms to sing “We Shall Overcome.”

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Mobile Procurement and the Interior Designer

- July 11, 2014 8:17 AM | Categories: Guest Post

With mobile procurement, Eugene can input all of the varied furnishings and finishes that Eleanor and David request into a single platform to help them determine the most cost-efficient way to proceed with ordering. The mobile procurement platform allowed Eugene to filter all of these items into requests from multiple suppliers, all of which he has pre-approved. This way, he can best group things into orders that maximize supplier discounts and minimize shipping costs.

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Designing Your Purchasing Card Program: What Makes Sense for Your Business?

- July 10, 2014 2:34 PM | Categories: Guest Post, Purchasing

Businesses use purchasing cards in different ways and for different reasons. When implementing or updating a p-card program, it is important to define your goals and have a plan for reaching them. The Hackett Group's Laura Gibbons looks at common motivations for using a p-card and the different options out there -- as well as which option would be best for your company.

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