Tag Archive for Supply Management

Transforming Indirect Procurement, With or Without Strategic Sourcing?

Amidst the buzz surrounding an oncoming transformation within the field of procurement, a recent post on supplymanagement.com suggested that a different viewpoint be taken on how to spark this heavily anticipated and highly foreshadowed change.  The crux of this contentious outlook, taken up last week at ProcureCon Indirect in London, by Paul Alexander (BP‘s Director of Indirect Procurement) was this: that “procurement cannot be transformed by implementing global strategic sourcing.”  Although Alexander did openly admit that this train of thought would most likely be met with some degree of resistance, he offered three supporting arguments to help defend his claim.

Briefly summarized, he first claimed that global supply markets are actually few and far between in the world of indirect procurement; next – that “most sourcing” is not exactly strategic, and is more akin to simple purchasing; and then finished by describing the infinite complexities involved in this type of innovative, field-changing transformation, and how it cannot and will not Read more

Changing Course

Supply Management reports that “poor contract management led just under a quarter of public sector organizations to bring outsourcing contracts back in-house last year to save money and improve quality.”

Thirty-eight percent of the outsourcing contracts were shut down because the value expected from the outsourced supplier simply just did not materialize, according to a survey of 100 human resources executives by totaljobs.com and Step Ahead Research. The survey also found that the primary cause of contract failure was lack of skills – particularly project management acumen – on the buy-side.

A spokesman for the study said, “the debate over public sector outsourcing is far from over. However, it is clear that public service reform will mean a change in the skills that are needed amongst people involved in commissioning and delivering services. Good public services have always relied on having people with the right experience and attributes, but this needs to extend to the skills to manage contractors if we are to achieve the essential savings to the public purse.” Read more

JVKellyGroup CEO Named a 2012 Supply Chain ‘Pro to Know’

Jim Kelly Leads Team to Manage Spend Through Applied Business Intelligence

HUNTINGTON, N.Y.–(BUSINESS WIRE)–Jim Kelly, CEO and founder of JVKellyGroup, Inc., has been named to the 2012 Supply & Demand Chain Executive list of ‘Pros to Know’. This marks Kelly’s sixth consecutive appearance on the prestigious list.

“In this past year, since JVKellyGroup spun out from D&B, we’ve redoubled what we do best – working closely with businesses to help them apply intelligence to create a bottom line impact.”

As procurement departments are squeezed tighter every year, Kelly draws from his 30 years of experience in procurement to help clients make decisions holistically, and root out areas of inefficiency. Kelly and his team deliver tailored strategies for  procurement officers in any industry – public sector, financial services, retail, pharmaceuticals – to make intelligent sourcing and supply management decisions that strike the right balance between cost-cutting and risk-mitigation.

“Smart spend analysis and sourcing isn’t about following the path to the greatest cost savings. It’s about creating a plan that creates the most value to the organization, and truly understanding the data that makes the difference between business impact and status-quo,” said Kelly. “In this past year, since JVKellyGroup spun out from D&B, we’ve redoubled what we do best – working closely with businesses to help them apply intelligence to create a bottom line impact.” Read more

Services Procurement Success Tips

In an article entitled “CPOs reveal how to succeed in services procurement,” Supply Management – reporting from the Institute of Supply Management (ISM) 97th annual conference in Baltimore – describes the ways in which three CPOs say positive services purchasing outcomes can be achieved.

Supplier and stakeholder communication and category innovation are the keys to attaining success in the services arena – particularly, according to the CPO executive panel, in marketing, facilities and temporary labor. They also stressed the need to add value to their businesses, not merely cut costs. Read more

Concentrate On Total – Not Unit – Cost.

Business Finance Magazine recently published an article entitled “Top 4 Supply Management Trends Impacting Finance.”

The article sees the following trends as having an impact on corporate finance:

-Shifting Focus from Unit Cost to Total Cost

-Moving from Risk Reaction to Risk Avoidance

-Staying a Step Ahead with Compliance

-Taking Productivity Up a Notch

We will address the first one regarding life-cycle cost analysis in today’s post.

Focusing on total cost of ownership (TCO) is nothing new for the sophisticated purchasing professional. Also known as “cradle to grave” cost analysis, life cycle cost analysis is the study of all costs that enter into the purchase and use of a product or service over its expected lifetime. Read more

As It Should be

Supply Management reports that most professional purchasing people recognize the importance of paying suppliers on time.

In a post entitled “Prompt payment a priority for most purchasers,” Supply Management says a recent survey found that a vast majority of buyers – 84% – claim that “ensuring prompt payment (within or faster than agreed terms) to suppliers is a priority at” their organization.”  

Buyers clearly recognize the importance of paying within agreed terms with most agreeing that “paying suppliers on time is vital to maintain good relationships with suppliers and to preserve the reputation and credit rating of your business.”

Here is a link to the Supply Management post:

http://www.supplymanagement.com/news/2012/prompt-payment-a-priority-for-most-purchasers/?utm_source=Adestra&utm_medium=email&utm_term=

 

“40/40/20.”

We’ve already got the song “25 or 6 to 4” thanks to the musical group formerly known as Chicago Transit Authority.  The song title is inspired by a late night party question as to what time it was.

For those of us more historically-minded, there’s good old “Fifty-four forty or fight,” the slogan on which James Polk ran in his successful presidential bid in 1844. It was a pre-sound bite sound-bite describing his intent to go to war over the latitude of the United States’ Oregon country border. President Polk backed down a few degrees and settled on our current border with Canada at the 49th parallel.

Now we have “40/40/20” courtesy of energy giant Shell. According to an article today in Supply Management, “40/40/20″ is “based on the concept that 40 per cent of the value delivered to the business comes through demand management, 40 per cent from management of the specification and 20 per cent from the price.”

Here is a link to the article. Spend Navigator welcomes your comments.

http://www.supplymanagement.com/news/2012/40-40-20-approach-cuts-shell-consultancy-spend/

Sony Mobile VP Regrets Lack of Comprehensive Sourcing Contingency System

In a Supply Management article entitled “Buyers must invest in contingency planning before it’s too late,” Sony Mobile’s head of engineering and materials management laments that “a failure to follow through on dual sourcing plans hurt Sony Mobile when last year’s earthquake and tsunami in Japan caused severe disruption to their production.”

In an address to participants at the Extended Supply Chain 2012 conference in London – billed as “Europe’s summit for supply chain leaders – helping the industry’s decision makers to further enhance their organization’s agility, responsiveness and competitiveness.” – Sony’s Patrik Jansson spoke about the huge cost which results from the lack of proper disaster preparedness.  Particular focus, according to Mr. Jansson, needs to be placed on “quickly assessing the impact on the supply chain, establishing communication with suppliers and implementing emergency backup solutions enabled operations to respond to the disruption.” Read more

Commodity Risk Management at Unilever

British consumer goods giant Unilever has an interesting take on commodity risk management.

Supply Management reports that Unilever sees risk wherever there is the potential for price volatility in regard to the individual commodities used in the production of the final product.

This means, according to Mark Taylor – Unilever’s vice-president of procurement and commodities – that anything Unilever sells which has a commodity in it is itself considered a commodity.  Readers will note that “commodity” is the term used to describe a type of good which, while in demand, has no distinguishable differences when compared to a competitor’s offering.

In a speech at the Extended Supply Chain 2012 conference in London last week, Mr. Taylor explained that eggs are viewed as a commodity at Unilever. Mr. Taylor explains his viewpoint: “When you see eggs you don’t really think about it that much but how do you produce eggs? You feed grain and seed to chickens so the price of grain and feed is a big determinant in the ultimate price of eggs. My reality is that anything that has a volatile pricing component in it can be classed as a commodity because we can apply our commodity risk management processes to handle the volatility that comes out of it.” Read more

Is Shell Showing Enough Teeth in Supplier Code Enforcement?

Not really, at least according to a post in Supply Management entitled “Shell discovers more supplier code breaches, but terminates fewer deals.”

The European energy giant, officially known as Royal Dutch Shell, filed 226 violations in 2011 of “Shell Supplier Principles,” – its supplier code of conduct – and cancelled 11 contracts in response. The ratio of cancelled contracts last year is significantly less than similar activity in 2010 when 40 contracts were killed as a result of 205 violations. The violations in question have to do with “forced labor, building local supplier capability, and criteria covering health and safety and the environment.”

The Shell situation puts in focus the ever present fine line between ensuring an uninterrupted supply of the goods and services needed to ensure the viability of a firm and, equally or more importantly, doing the right thing in regard to supplier ethical considerations.

It’s a delicate dance to say the least and Spend Navigator is interested in your views on how to successfully walk this fine line.

Here is a link to the Supply Management post: http://www.supplymanagement.com/news/2012/shell-discovers-more-supplier-code-breaches-but-terminates-fewer-deals/