Supply Chain Management Content

Sponsored Article

Big Savings in Small Spend — Tales from the Tail

In the world of strategic sourcing, realizing 5 to 8% savings is considered to be impressive. After all, these are the high-spend categories and are supposedly already well-managed and frequently revisited for improvement opportunities. In contrast, when our clients work with Simfoni on tail spend management or low-value spend engagements, we witness savings that can easily exceed 20% from time to time. This article explains how — with the right combination of subject matter expertise, leverage and technology — such savings are achievable.

In the world of tail spend, we typically pursue the following sourcing levers: Demand Challenge, Specification Alignment, Volume Leverage, Competitive Bidding, Alternate Solutions, Supply Chain Optimization.

I’ll explain each lever and illustrate how savings can be achieved in excess of 20%.

Sponsored Article

For CPOs, Life Is Getting Complicated

During a routine meeting with one of our clients, the Chief Procurement Officer at a large Fortune 500 company, we were struck by something this person said: “I feel like I’m wearing so many hats these days, I need a hat stand to keep them all in one place!” Our client’s observation encapsulated something we were starting to see more often: a dramatic broadening of the role of the CPO.

A mere decade ago, a CPO’s job, while often difficult, was relatively straightforward: Find the best deal possible when sourcing raw materials or setting up production. But increasingly, that’s a fluid concept. What’s more, the changing nature of both technology and the manufacturing workforce has pulled CPOs into decisions that were once outside their purview.

Intrigued, we wanted to delve deeper into this trend, and we decided that this would be a fascinating area of focus for our annual “Chief Procurement Officer Survey.” Every year Deloitte conducts this global, cross-industry study to take the pulse of sourcing and procurement professionals. So, this year we’ll be exploring the role of the CPO — how it is evolving, and how procurement leaders are navigating and mastering complexity in the areas of technology, workforce management, and both the business and political environment.

Why Well-Run Hospitals Need Tailored Technology to Care for Patients, Business

healthcare

As one of the nation’s largest nonprofit health systems, BJC HealthCare needs to provide consistent, high-quality patient care across all of its hospitals while maintaining operational efficiency. When the St. Louis, Missouri-based healthcare provider began its search to upgrade how it supplies its facilities, it found the healthcare marketplace provider Prodigo Solutions, which knows what hospitals of all sizes need because it provides online shopping and other services to more than half of the top 15 hospitals in the U.S.

Today, BJC uses ProdigoMarketplace to requisition a range of medical items that have been negotiated for price and vetted for compliance. To understand how the Marketplace helps, the staff at BJC answered some questions about working with Prodigo.

ISM 2019 Houston Conference: Highlights and Musings (Part 1)

A small Spend Matters team descended on ISM 2019 conference this year in Houston (next year is in Boston, where I live!) and I wanted to share some thoughts on the event and a few of the great sessions there.

Procurement Technology, Digitization Can Blunt Economic Headwinds, GEP Report Says

Although global GDP grew a healthy 3.1% in 2018, the year finished with a rocky fourth quarter. Against this backdrop, GEP has released its 2019 Procurement and Supply Chain Management Outlook, which predicts a tough business climate ahead, but one that can be addressed with advances in procurement technology.

Icertis Blockchain Framework: A Glimpse of CLM’s Expanding Footprint into the Supply Chain

blockchain

Icertis recently announced it has developed, in partnership with client Mercedes-Benz, a blockchain framework to address multi-tier supply chain visibility challenges. Called the Icertis Blockchain Framework, the new offering allows companies to deploy a permissioned, standards-based blockchain (using one of the ecosystem standards through Hyperledger) within the core ICM platform on Microsoft Azure, as well as record specific transactions based on rules and metadata. Icertis developed the framework as an initiative within Mercedes-Benz Cars to better enforce requirements for CSR and compliance obligations without compromising contract confidentiality.

Is Direct Materials Procurement a Separate Technology Market in North America? (Part 1: Introducing a Decision Framework)

Germany, Austria and some adjacent markets have something North America doesn’t — a distinct technology market for direct materials procurement. In Europe, Pool4Tool (now Jaggaer Direct), Allocation Network, SynerTrade, SupplyOn and a range of other solution providers succeeded in creating a distinctive European direct materials procurement solutions market that exists outside the generic source-to-pay realm.

But in North America, as these providers — also joined by Ivalua and SAP Ariba, and specialists like SourceDay and Supply Dynamics, as well as the offspring of the original MFG.com, LiveSource — attempt to reach customers, I question if all of these providers are selling to individual buyers rather than a clear market segment in which procurement organizations know they need a specialized solution set.

For the sake of argument, let’s define the “bounds” of direct materials procurement solutions as encompassing any or all of the following technology areas:

Cold Weather Offers Lessons on Supply Chain Risks and Climate Change

With nature dealing much of the U.S. an arctic blast of cold weather this week, it’s a good time to look at the supply chain risks created by severe weather and climate change. The distinction is that weather consists of the day-to-day events, like high and low temperatures, rain or drought that can fluctuate wildly. And climate is the long-term weather pattern for a particular region. When there’s climate change, a long-term pattern is altered and can affect the daily weather in different areas. So global warming can heat large areas of Earth, causing wild swings in hot as well as cold temperatures in areas that once had a more consistent climate. For this current cold snap, read about all the tips to mitigate supply chain risks.

Supply Risk Management in Mexico: Tips and Analysis For Multinational Procurement Organizations [Plus+]

Editor's note: This is a refresh of our 2015 briefing on supply risk management, which originally ran on Spend Matters PRO.

Supply risk management continues to be an important topic of not just debate but practice, too, within global procurement organizations. And on a more frequent basis, supply risk management efforts are extending “south of the border” for North American companies, as manufacturers continue to emphasize a more prominent role for Mexico and Mexican suppliers in their global supply chains. In this Spend Matters Plus analysis, we explore how Mexican companies are managing supply chain risk. We also share survey results from a study in the region and provide tips and lessons learned for multinational procurement organizations that are increasingly sourcing and manufacturing in the region as well as general supply chain risk management best practices.

Sponsored Article

For Hospitals Only (Part 3): How Prodigo Helps Pave Procurement’s Path to Clinical Integration

data

The hospital market in the U.S. is undergoing a significant transformation at all levels. Rapidly consolidating markets, declining revenues and a fundamentally new reimbursement paradigm that links provider payments to improved performance are the current headliners. The latter is a value-based form of reimbursement that holds healthcare providers accountable for both the cost and quality of the care they provide. It’s a data-driven payment system that will reward the best-performing providers and penalize those that don’t measure up. Almost by definition, it’s a system where data accuracy and transparency have become the essential currency for improved decision making.

Traditional silos are giving way to cross functional collaborations, as the clinically integrated supply chain compels it.

In this final installment of our three-part series on Prodigo Solutions, we not only address how the company is helping to solve healthcare’s data standards challenge, but how it has successfully positioned itself to directly support the industry’s drive to clinically integrate its supply chains.

North America, Europe Include Top Business Performers in Anti-Corruption Efforts

As companies become increasingly aware of their own corporate social responsibility (CSR) obligations, various watchdog groups are beginning to take stock of these indicators. While some companies might look the other way as conflict gold passes through their supply chains, others might be making efforts to do positive things with their power, such as donating to charitable causes. In a new EcoVadis study, “The Fight Against Corruption: Insights Into Ethical Performance in Global Supply Chains,” the company considers the issue of corruption and how prepared companies are to address it.

Beyond Supplier Risk Management: How Procurement Can Take a Leadership Role in Enterprise Risk Management (Part 2) — Aligning Enterprise Risk to Supply Risk [PRO]

risk

In Part 1 of this series, we described the process that most progressive procurement organizations use to relate enterprise risk to supply risk. Throughout such transformations, a single theme pervades: alignment. The premise here is that while value chains are, in fact, a chain of value that flows across multiple stakeholders, the “signal” often gets lost as the components of that value go across organizational and functional boundaries. We’ve written before about this concept of “supply performance management” (i.e., where the definition of supply and the supply scorecard gets translated from the customer-facing value chain all the way down to a supplier/contract level) in terms of measuring and managing supply value, but this same concept also inherently applies to risk management.

Risk management is about protecting those value streams, and therefore the commensurate investment in risk mitigation should align with the value streams themselves. Unfortunately, they often don’t, because stakeholders are not typically measured on risk management explicitly (although they can be measured on it implicitly).

Procurement itself faces this problem. Based on our research, only 8% of procurement organizations are formally measured on supply risk reduction. Instead, they’re measured on overt reward (vis a vis savings) but not on protecting those improved supply outcomes. So, if procurement wants to protect supply outcomes, it will need help and resources from the natural risk owners (i.e., those who are measured on the business outcomes affected by those risks) — and that help will not come unless there is visibility, commitment and action. As such, in this installment of this series, we’ll discuss two critical frameworks that organizations can use to gain alignment.