Procurement News from the US – Weekly Round-Up

The Cost of Staying in Shape

As it’s (finally) freezing outside, I’ve become more and more addicted to hot yoga. And you can also read about the terror I felt when I found out I’d been spending $3,750 a year on eating breakfast and lunch out every day. Spending. Habit. Officially. Curbed.

In case you haven’t heard, we’re putting on a conference in March!

5 Reasons to Attend Commodity Edge: A Spend Matters/MetalMiner Event in March 2012 (Part 1) -- Someone asked me this week: "Why should I go to Commodity Edge when I'm already committed to a bunch of events this Spring?" I responded that the event, taking place March 19th and 20th at the Intercontinental at Chicago, O'Hare, is probably not for everyone in procurement (especially those entirely focused on areas like P2P systems). But I also noted the content and takeaways would be absolutely invaluable for those in a category/commodity management or sourcing role, not to mention those that they report to.

Coupa did well last year (and Jason likes it).

Coupa's Stellar 2011 Growth is Proof That P2P Fresh Thinking is Thriving -- But when it comes to certain vendors, overall growth can transcend existing market segments and trends. Coupa clearly falls into this class, given their fresh thinking in P2P. Its our view that their downright exceptional (for a SaaS/cloud business model) results for 2011 are merely an outgrowth of this. In my personal view -- which does not necessarily represent that of my colleagues -- the simple genius of Coupa is that they came up with a usability philosophy designed to maximize the transactional capture of spend throughout an enterprise through a single system -- indirect, direct, services or otherwise. It's that simple.

VENDOR WARS.

When Suppliers Won’t Hold the Price (or Honor Contracts): Prepping For Chinese Vendor Wars (Part 1) -- From a relationship and negotiation perspective, the best Chinese suppliers are candid and upfront, especially when it comes to structuring agreements they can honor. I hesitate to use the word "contract" here because in China, the notion of a contract does not typically have the same real-world ramifications as it does in the West, even if there is officially a legal document. I have head about numerous circumstances in the past year where Chinese suppliers have failed to hold prices based on a contract (e.g., pricing for six months) given underlying changes in their cost structures. For many Spend Matters readers, this is old news. But why has this occurred and what can we do about it?

Twinkies no more 🙁

Questions to Ask Beyond Labor Costs: Did Commodity Volatility Drive Hostess Into Bankruptcy? -- Our sister site MetalMiner recently did a bit of research on Twinkies -- but not the type that require a workout to burn off. Specifically, MetalMiner took a look the questions to ask in evaluating how commodity prices and related costs may have played a role in the ultimate demise of Hostess. It does not take a rocket scientist to consider the volatility we've seen with ingredient prices in the past twenty-four months. Sugar, wheat, corn -- you name it. Just as the costs of Midwestern farmland have gone through the roof, so have the commodities that you can plant in the fertile soil of the nation's bread belt. At Hostess, challenges extended far beyond just labor, and we strongly suspect that commodity management and procurement were not helping the cause, at least not at the level they needed to. (Editor's note - Twinkies are strange US "snack cakes"!)

Some strategic sourcing thoughts from Alvarez & Marsal.

Corrugated Packaging Cost Reduction Strategies: Some Tips from Alvarez & Marsal -- Containerboard prices in the United States have remained relatively unchanged since April 2010, which, according to RISI, represents one of the longest periods of price stability in this market since 1970. Most analysts in the paper industry expect a continuation of stable prices early in 2012. Downward pressure will likely occur in the first quarter due to weakening export demand in the US, which will drive an overall decline in recycled containerboard prices.

And I’m off to complete undo all the hard work I’ve done with yoga with a large, lovely dinner with plenty of wine and cocktails and dessert at Perennial Virant this evening!

- Sheena Moore

First Voice

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