News of the Trump presidency was arguably the largest trade (and policy) shot heard round the world in decades. Earlier this week, we discussed a range of issues that can potentially affect the broader economy –– not to mention procurement and supply chain organizations and, in particular, manufacturing. Yet two additional areas warrant additional study, not as standalone policies per se (at least for one of the two areas) but in situ conditions arising from a Trump presidency: infrastructure spending and the U.S. dollar.
In addition to the previous considerations explored in Part 1, our analysis considers these additional items in the context of three concrete procurement tactics organizations can take: improving their capability to support total cost modeling/landed cost models; investing in supply chain risk visibility; and approaching commodity strategy and commodity management in new ways. This Spend Matters PRO analysis provides key analysis, talking points and actions steps for procurement and supply chain organizations to understand the impact of a Trump presidency on their firms and where they can start 2017 from a position of knowledge. It also offers recommendations for technology areas and technology vendors for consideration given these broader issues, including direct procurement technology suites, commodity management solutions, supplier network/connectivity solutions (direct spend), analytics, and supplier and supply chain risk management.
The election of Donald Trump will undoubtedly have an unexpected impact on the domestic and international procurement, supply chain and trade communities. Perhaps the even bigger surprise will be in how much of the grassroots rhetoric from the campaign actually becomes reality in 2017 when President-elect Trump takes office. Reversing previous executive orders and issuing new ones, as opposed to pursuing a legislative approach to change, is a faster route to creating shorter-term impact, but also potentially less effective in the long term.
This Spend Matters PRO analysis provides an overview of some of the most important trade, policy and commodity inputs to what a Trump Presidency may bring. It provides a procurement and supply chain perspective on likely changes that we need to be aware of as practitioners, as well as select wild cards that are important for consideration. The second installment of the series will also include suggested strategies, tactics and technologies that organizations can deploy to minimize business risk and disruption moving into this expected area of change.
What should procurement and supply chain professionals be thinking about when it comes to Brexit? This is the question we grappled with most of the weekend. We’ve grouped our Brexit analysis into two categories: obvious and less obvious considerations. And a big hat-tip to Peter Smith at Spend Matters UK/Europe, who has been covering Brexit and some of these ideas already (see some his posts on the topic here, here and here).
Toyota's supply chain is much revered for its lean Toyota Production System that it deploys internally and at its suppliers. It does help drive out waste and improve product quality. Yet it’s “necessary but not sufficient” in running an end-to-end supply chain. This was evidenced by several recent events. Most recently, Toyota faced the threat of production line shutdowns in Japan due to a fire at an Aichi Corp. steel plant, which, given the incident occurred back on Jan. 8, makes the potential shutdown all the more shocking to hear.
It’s nearly impossible — that is, if done right — to separate out direct materials procurement strategy from commodity management (inclusive of commodity, raw material and ingredient sourcing). Yet far too many procurement and supply chain organizations we see take a less-than-scientific approach to commodity buying strategies. (And no, for those technology-centric organizations, simply buying a commodity management solution to manage exposure and positions is not a strategy — it’s merely a tool.) This two-part Spend Matters Plus series takes aim at a lack of standardization in strategy development for commodity buying by urging procurement organizations to ask — and answer — four core questions necessary to develop a commodity buying strategy.
When it comes to indirect and services procurement strategy, we would argue that that the “gospels according to savings,” as we might describe cost reduction strategies, are largely standard. In each of these areas, and even subcategories within them, there are specific processes and technologies that can guide the way to putting organizations deeper into the black while also reducing all sorts of organizational and third-party risk and compliance concerns. Yet the world of direct materials is different — very different. There is no one strategy or technology solution to follow. Here at Spend Matters, we’re hoping to change this with four key questions that we believe every direct materials buyer and commodity manager should ask. This two-part research brief shares these four questions and explains why they matter when it comes to setting strategy, building organizational alignment, putting in place the right short and long-term strategy and managing suppliers who buy commodities, raw materials and ingredients on your behalf.
Earlier this week, more than 20 states and a host of industry groups officially filed suit against the Environmental Protection Agency (EPA)’s Clean Power Plan. Before that, a U.S. Circuit Court of Appeals stayed EPA’s new “water rule” in all 50 states. Both of these developments came after a late June ruling in which the US Supreme Court struck down EPA-directed regulations for limiting mercury and toxic emissions from coal and oil power plants – known as the MATS (Mercury and Air Toxics Standards) rule. From a procurement and supply chain vantage point, that ruling was arguably the most important decision the nation’s highest court has made in the past decade. Not only does it cut to the very heart of procurement’s mission to manage costs, but it has direct linkages with energy sourcing and category management. This Spend Matters Plus brief analyzes the implications of these three EPA-driven regulations for procurement practitioners and supply chain organizations and provides recommendations for both manufacturers and non-manufacturers on how to take action around policy and regulations.
We were recently asked the question: "If you were advising sourcing and supplier management professionals in the manufacturing industry, what external data sources would you suggest they look at acquiring and integrating into their tools and processes?” While we could write a book on the subject, we’ll keep our answer short and sweet today, exploring 3 areas.
There are a number of priorities that manufacturers need to consider from a core procurement strategy perspective as we enter the final quarter 2015. Procurement and commodity management technology can play a role in this, but tactics and resourcing – of the people and idea kind – must come first. We recommend focusing on these 5 areas.
We recently received a note from a reader with questions regarding the latest China currency devaluation and how sourcing professionals ought to engage with their Chinese suppliers. The questions included: 1) Should I be approaching all of my Chinese suppliers for a 3.5% price reduction? 2) Should I expect to get it? There are several ways to answer that question. This Spend Matters Plus article begins with the narrow answer and then expands into other aspects of China’s currency announcements.
Spend Matters’ Pierre Mitchell and MetalMiner’s Lisa Reisman offer their perspectives on how a supplier’s cost structure has changed over the past decade. From regulatory impacts to labor productivity gains and volatile commodity environments, these shifts have dramatically impacted the notion of the “supplier’s cost structure.” Learn how these 2 experts consider several factors and chime in with your own questions to take the discussion further.
Policy Meets Procurement and Category Management: Analysis and Implications of the Supreme Court Striking Down EPA Regulations
In a late June ruling, the US Supreme Court struck down Environmental Protection Agency directed regulations for limiting mercury and toxic emissions from coal and oil power plants. From a procurement and supply chain vantage point, the ruling is arguably the most important decision the nation’s highest court has made in the past decade. Not only does it cut to the very heart of procurement’s mission to manage costs, but it has direct linkages with energy sourcing and category management. The decision also highlights the need for procurement to work more closely with public affairs and public policy teams inside their organizations. This Spend Matters PRO brief analyzes the implications of the ruling for procurement and supply chain organizations and provides recommendations for manufacturers and non-manufacturers alike on how to take action around policy and regulations.