When the city of big shoulders hosted the Big Ideas Summit last week, the procurement executives at Procurious’ event in Chicago generated a lot of excitement and a powerful list of insights.
An array of speakers led thought-provoking sessions and imparted plenty of big ideas — from the latest in neuroscience to how procurement technology and policies affect issues like human trafficking and forced labor in supply chains.
Supplier relationship management (SRM) has grown from just sourcing the best deal to really evaluating suppliers for diversity, ability to innovate, value generation and their risk.
In this series on SRM, we’ve discussed how the development of supplier diversity has improved supplier management overall, and we’ve explored how companies can meet their goals to have a robust supply chain that’s diverse.
Businesses now know to get their spend data in order and should know how to measure the impact of that spend. They should be able to develop suppliers and drive innovation. Responsible businesses can protect their brand reputation by assessing their main suppliers (tier 1) and those deeper in the supply chain, as well as having a plan to mitigate risks, like unethical sourcing, forced labor in the supply chain or poor performance in the past. But, it’s also clear that lacking in supplier diversity or being weak in supplier information management (SIM) are risks themselves.
To learn more about these issues, we talked with SRM expert Daryl Hammett, the general manager of ConnXus, a provider that connects buyers and qualified suppliers.
Consumers expect brands and retailers to know much more about their products than in the past, such as where it was sourced, how it was manufactured, who was involved or what countries it passed through on its journey to the store. All this requires a deeper understanding of the supply chain.
While multi-tier supply chain transparency is challenging to achieve, it can reap serious benefits for businesses that invest the time and resources. Taking progressive steps to achieve visibility at multiple tiers can benefit businesses in five ways.
Supplier diversity connects to many trends occurring in supplier relationship management (SRM) these days, including developments like the rise of digital transformation, supplier networks and supplier collaboration.
As a business trying to start the supplier diversity process, it can be a daunting task to wade through-diverse supplier certifications and classifications to help you find a certified minority-, woman-, veteran- or LGBT-owned vendor for your company. But it can be worth it.
The methods that have made supplier diversity successful over the years now apply to other areas of procurement as well. Find out how.
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%.
Severe weather poses one of the greatest threats and the least predictable risks to global supply chains within our modern globalized economy. The summer hurricane season is a particularly problematic time because nearly half the planet, and a majority of the production capacity for many industries, are located in areas routinely struck by catastrophic weather — East Asia, the Northern Indian Ocean, and the Southeast and Gulf coasts of the United States.
DHL Resilience360 recently released Stormy Weather Ahead: A Global Outlook on the 2019 Season to compile information about the impacts that even small storms can have and discuss the short- and long-term implications of these systems on existing supply chains. And learn ways to mitigate that risk.
For many buying firms, the quality of goods and services are contingent on their suppliers. Suppliers can indirectly impact brand perception from business to consumer. While delivered goods can be inspected through quantitative metrics, there are a host of other metrics that firms should track related to their vendors, including risk and ethics.
Mid-market companies are at a significant disadvantage when compared to larger corporations — a key finding from Simfoni’s analysis of its customers’ procurement and savings delivery capabilities in mid-market companies.
It’s OK to obsess about top-line growth, but what lies beneath is a supply chain that eats into profit since it is not controlled and optimized. Mid-market companies are missing out on at least 5-10 percentage EBITDA points achieved through procurement effectiveness that their larger corporate peers routinely extract.
So why the disadvantage? Essentially the mid-market procurement challenge can be broken into three areas: resources, technology, leverage. Let’s look at each.
Spend Matters welcomes this guest post from John Callan, Senior Director at Coupa.
It’s no secret that businesses struggle with full visibility when it comes to spend management, with many still believing that it simply isn’t possible to find a comprehensive solution that is easy to implement but will also deliver value. Time and time again, we see the price that businesses pay when they lose control over the procurement process.
Spend that is fragmented across multiple categories and suppliers often leads to payments being incorrectly classified — or not classified at all — due to inconsistent and disjointed spend processes. This can render payments invisible, easily becoming the pocket where procurement fraud is concealed.
There are also many operational considerations. When spend is miscategorized, it results in poor, inaccurate data, potentially damaging the credibility of the procurement process. Business leaders need more comprehensive, effective and data-driven business spend management (BSM) solutions.
In Part 1 of AI in Supplier Management: Tomorrow, we began our discussion of some of the AI-enabled capabilities that you can expect to find in tomorrow's supplier management platforms, where we define AI as assisted intelligence (because, as we have discussed, there is no true artificial intelligence in enterprise platforms today and there won't be tomorrow either). AI is a buzzword, not a reality. But we don't need true AI to achieve software that can radically increase our productivity. Reaching assisted intelligence will add multiples to our efficiency and effectiveness.
In our last article, we discussed how tomorrow's supplier management platforms will offer smart, automatic, supplier profile update (suggestions) — taking the headaches out of profile maintenance that results in most profiles being out of date in a supplier management system shortly after they are created; market-based supplier intelligence that is more in line and reflective with reality — and not just the experience of an anomalous customer subset; and real-time relationship monitoring that paints a relatively full picture of the relationship, not just a point-based performance picture.
So what else will tomorrow's platforms do to help you focus more on the strategic side of supplier management? Let’s look at the next three areas:
— Automated resolution plan creation, monitoring and adjustment
— Automated risk mitigation strategy identification
— Optimized real-time resource re-alignment
Indirect spend often gets overlooked by businesses because the outcomes from buying those goods and services are not the company’s core product, which relies on direct spend. But the potential for lost money and increased risk is so great that businesses must find a way to manage indirect spend.
“The broad reach of indirect spend, coupled with a lack of visibility creates risk, so the key to gaining visibility and managing this risk is to prioritize indirect spend management within an organization and start assessing indirect supplier performance in a formalized way,” said EcoVadis, a risk mitigation provider that offers business sustainability ratings and intelligence.
EcoVadis joined us for a Q&A to explore the next steps to figure out how to identify weak points, prioritize areas to defend against and create a plan for mitigating risks.
As the digital transformation of procurement matures, relationships with suppliers are changing — in good ways and in challenging ways. To give us a close-up view of developments in supplier relationship management, we did a Q&A with Daryl Hammett, the general manager of ConnXus, a provider whose SRM solution helps buyers and suppliers work together to be efficient, responsible and sustainable.