Managing Relationships with Suppliers through Brexit Wins Loyalty and Trust for Procurement

By Nikita Saharia Chaturvedi

It came as a shock to the world, when on June 24, 2016, citizens of the United Kingdom voted to leave the European Union putting an end to a  40-year relationship. Known as “Brexit,” the aftermath of this step showed its mark in the money market, with the pound falling against the dollar. The repercussions of Britain’s exit from the EU, will be felt worldwide, as it’s the fifth largest economy in the world.

My Purchasing Center digs deeper into the much talked about exit of the UK, with Bindiya Vakil, Founder and CEO of Resilinc in a new podcast in which she examined the supply chain implications of Brexit.

Today we live in a globalized world where merchandise is multi-national and raw materials and parts used to make them originate in nations all over the world.  “For example, a typical car may have parts originating from as many as 30 countries,” Vakil says. “The rules and regulations that govern international trade are a critical element of supply chains and of particular interest to procurement professionals who manage these complex relationships.”

The Brexit vote could have quite an effect on the overall supply chain impacting each and every aspect of it.

As one of the more globalized economies, the UK makes up 4% of world GDP. In 2014, was the ninth-largest exporter ($503 billion in 2014) and the fifth-largest importer ($802 billion in 2014). As such, some serious issues  could arise for companies headquartered or manufacturing in the UK

From a procurement angle, more than 50% of the UK’s $500 billion in exports are bound for the European Union. With present account shortfalls at record levels, this fundamentally implies that the UK-based supply chain is profoundly reliant on access to the EU single market to sustain its vigorous financial health.

Qualms about the pound could bring procurement challenges, which will vary with a company’s dependability on the resources they source from  the UK. Deutsche Bank has cautioned that the pound could drop further, and threaten inflation levels may get to a 25-year high of 5.2%.

Suppliers manufacturing within the UK that don’t import raw materials, but export finished goods should be able to offer price reductions to customers.   At the same time, those that import materials and export may suffer monetary losses and falling gross margins as they may end up paying more for imported goods due to currency devaluation.

No wonder Brexit poses challenges. Acquiring affordable skilled labor is another concern. It may become more costly to hire, further squeezing margins for struggling businesses. As Vakil sees it, limited movement of labor is expected to play a large role in the availability of cheap and affordable labor and is a deterministic factor in Reslinc’s prediction of the decline of manufacturing activity within the UK. “In coming months, we expect most global companies with manufacturing facilities in the UK to consider plans to relocate operations in anticipation of upcoming labor shortages” she says.

On the other hand, UK exporters may no longer enjoy fast clearing through Customs.

“Brexit put trade deals into question, and what this means for many companies, is that their total landed cost will now be substantially different, if higher tariffs get imposed by the UK as a non EU member,” Vakil says.  “Once the new rules are implemented, in the mid-term, logistics professionals could expect greater customs clearance timeframes on products exported to the EU.”

Brexit Opportunities and Risks for Supply Chain

The vote presents opportunities and risks for supply chain. Key risks being the following:

• Component prices going up.

• Landed cost of products increasing medium term with new tariffs going into play.

• Cost of labor and other essentials increasing in an inflationary scenario.

• Suppliers going into financial distress.

Brexit may also open doors for supply chain and procurement professionals who understand the supplier base and supply chain mapping. For instance, some may now find EU markets more accessible, with minimal tariffs, as low currency rates might prove to be very advantageous to exporters. They can use this opportunity to lock in lower prices with suppliers, if possible and applicable, particularly for high spend components originating in the UK, Vakil says.

Wealthy companies with the financial wherewithal to withstand a few years of uncertainty are likely to find that many basically solid and vigorous UK businesses are abruptly excellent acquisition targets while the currency is  so favorable. Many Chinese, Indian and U.S companies on expansion sprees across Europe could benefit.

In summary, one must have thorough knowledge of the supply chain to sustain resiliency. To track performance, companies must know their tier 1 suppliers located in the UK and UK-based sub-tier suppliers they depend upon. Vakil suggests procurement professionals keep an eye on U.K.- based supplier and sub-tier supplier operational and financial metrics,  watching for early indicators of problems, particularly weak financials.

For critical suppliers, Vakil suggests preparing robust extenuation strategies and timeframes to implement them. Furthermore, “a very significant discipline in possibly rough times is to invest in strong supplier relationships: Resilient suppliers equate to continued supply. Customers who work closely with suppliers during tough times win their loyalty and trust”.

Listen to the My Purchasing Center podcast, Brexit Risk and Opportunity: Understand Supply Chain

One Version of Truth Enhances Supplier Relationship Value

By Nikita Saharia Chaturvedi

Contract life-cycle management provides procurement with one version of the truth, and, as such, helps organizations to see the real value of relationships with suppliers.

So says Samir Bodas, CEO of Icertis, in a podcast interview with My Purchasing Center.

In the podcast, Bodas recounts a list of challenges procurement runs up against as it partners with IT on certain corporate initiatives, such as contract lifecycle management. These are:

Fragmented systems and data
User adoption
Lack of integration
Lack of insight from analytics
Bodas also discusses the benefits gained from implementing and using contract lifecycle management systems by providing a quick sketch of principal processes used by organizations: sourcing, contracts and procurement. Contract management, he says, “bridges the fragmentation and brings together data across the enterprise.”

Finally, Bodas offers a series of success tips for procurement professionals:

Think of CLM globally.
Make sure the CLM system is easy to use, adopt and deploy.
Make sure the CLM system is integrated and receives support from the c-suite.
Listen to the My Purchasing Center podcast interview, Contract Management Systems Bridge Fragmented Data.

-See more at: http://www.mypurchasingcenter.com/technology/technology-blogs/one-version-truth-enhances-supplier-relationship-value/#sthash.ZF8G4BIP.dpuf

How to Get to Cleverer Purchasing Decisions

By Nikita Saharia Chaturvedi

Effective and efficient automation of supply management and Procurement functions can yield fruitful results. Automation facilitates supply management and procurement professionals to make wise decisions through enhanced tools and visibility. It is definitely a reliable substitute for time consuming and costly manual tasks.

ISM Services Director for the Institute for Supply Management and ADR North America Jim Barnes talks about technology and automation of supply chain and procurement and the interesting trends that follow in an interview with My Purchasing Center.

Accurately forecasting is almost unreal in today’s volatile market. Procurement and supply chain organizations are immensely pressurised with the burden of providing purchased materials and assemblies on time, all the time, in order to meet customer demands. Faced with sometimes uncertain market forecasts; procurement frequently over buys requirements creating excess inventories. And here comes the role of technology in the day to day responsibilities of supply management professionals.

Technology has traditionally been a productivity enhancer by taking paper transactions and digitizing them which can help professionals to buy as per need and avoid surplus inventories. “This has occurred in Procure-to-Pay processes for many years and recent trends of supplier portals are furthering the progress of P2P applications, Barnes says.   “Today, the ability to leverage emerging technologies such as Big Data, 3D printing and the Internet of Things (IOT), is giving brand new insights into supply chain performance improvement and the ability to make step changes to manufacturing efficiencies. All these emerging technologies can have a positive bottom-line impact.”

Technology has so far changed the way supply management professionals accomplish their objectives to a great extent. When it comes to old-fashioned procurement and payables jobs, some specialists believe that nearly half of those jobs will evaporate in the next five years due to the automation of Procurement and Supply Management functions. The significant skills for supply chain professionals, and organizations in general, to exhibit now and in the future will be far more than merely processing requisitions and purchase orders. Organizations will need to focus more on how their procurement and supply chain professionals can add value to their respective supply chain.

Barnes further tells My Purchasing Center that, “Skills such as business acumen, sales and operations planning and supplier relationship management are critical right now to the ISM clients we serve. These are not new in supply chain and procurement but there is a greater emphasis on them now.  “For example, when it comes to business acumen, one of the questions that came up is whether the focus would be more on skills needed before you start working in the profession, or skills you should be gaining after starting in the profession that will help your team moving forward,” he says.

Sales and operation planning is always going to be important because this can lead to cost savings. And with better relationships with suppliers, procurement can improve its collaborative efforts with them to provide better value. The companies that work to improve their suppler relationship can be light years ahead of the competition.

When asked what a does a future marked with 3D Printing has in store for procurement, Barnes says that, though 3D printing impacts the conventional procurement process, it is likely that shipping, trucking and logistics in general will continue to be just as important as it is today.   For some companies will find that 3D Printing is the answer to components or tools that have a long leadtime or unpredictable availability.

But the problems that 3D Printing creates in intellectual property rights cannot be ignored. Besides that, quality is one of the biggest concerns. “You can also lose your intellectual property easily when the design is distributed prior to manufacturing, resulting in a hit to your brand,” Barnes says “Any perception of poor quality can permanently damage a long-term relationship with a client.” Big Data is another innovation that’s affecting supply management.

For Big Data, it is about the capability to leverage in-memory computing to analyse plant performance in a fraction of seconds; and then applying those insights regarding best practices across the enterprise.  The challenge is that many companies struggle with cleaning up the data and governance going forward, so sorting through a mass of garbage can produce less than optimal results.

In an industry where profits are tight and manifold departments often requisition items numerous times a day, it completely makes sense to automate procurement and supply management. An automated solution helps to reduce costs, save time, improve accuracy, enhance supplier performance and ensure compliance. The consequence is more streamlined manoeuvres, cleverer purchasing decisions and augmented control over the supply chain. Download the My Purchasing Center podcast, Deciphering 3D Printing for Supply Management Professionals

My Purchasing Center Recognizes the 2015 EPIC Rising Star Award Finalists.

By Nikita Saharia Chaturvedi

Presentation of the 2015 Excellence in Purchasing Indirect Categories (EPIC) Awards is just around the corner. The ceremony takes place at a luncheon held during ProcureCon Indirect East in Orlando on February 12. A colloboration of ProcureCon Indirect and My Purchasing Center, the EPIC Awards recognize professional brilliance in indirect procurement.

My Purchasing Center recently interviewed the three finalists for the 2015 EPIC Rising Star Award: Marissa Gilbert, Senior Buyer, Marketing Services, at Campbell Soup Company;  Megan Russell, Procurement Buyer at Unum and Lance Sprague, Strategic Sourcing Representative at American Financial Group. We recorded the interviews which are available as podcasts for listening on demand in our Media Center.

For the Rising Star Award, we ask procurement professionals to nominate an individual who is fairly new to indirect and shows promise in his or her career. A panel of judges of leaders in procurement selected the finalists, and ultimately, the recipient of the award.

Marissa Gilbert, Campbell Soup Company

Marissa Gilbert began her career as an intern at Bristol-Myers Squibb supporting the R&D Sourcing function. “I was interested in challenging myself to understand the research process and costs that go into developing a product as a solid basis for a future career in marketing,” she says.

Throughout the course of the internship, “my interest and respect for the procurement discipline grew,” Gilbert continues. “I was drawn to the broad company visibility and exposure, the ability to provide strategic thought leadership, the focus on internal/external relationship building, and last, but not least, the art of negotiation.” All this led her to pursue a career in Procurement with a focus in Marketing Services. Gilbert was nominated by Campbell Soup’s Vince Borzillo and Chris Constable.

Two years into her tenure with Campbell Soup, Gilbert  was sought out by the Chief Marketing Officer and Vice President of Insights to lead several strategic projects. She managed a multi-million dollar project, from developing the service scope through to contract negotiation and implementation. This effort delivered more than $3.5 million in savings and will, most important, provide faster, more granular insights via data platform upgrades and a multitude of new services that enable a more focused approach on the company’s strategic growth areas, Gilbert tells My Purchasing Center. She has now  taken this effort to the next stage by implementing a Supplier Relationship Management (SRM) program which has delivered additional cost savings and has re-positioned the partnership from transactional to strategic.

“The key is to carefully listen to the needs of the internal stakeholders and fully understand the strategy of the business,” says Gilbert. “You have to find a healthy balance between collaborating with your stakeholders and challenging them when necessary.  It is imperative to ensure that you are always striving towards the best outcome for the company.”

To cultivate trust and credibility among stakeholders, Gilbert works to become an expert at the category she’s supporting. “This allows me to build strong relationships and provide value both strategically and financially,” she says.

For example, as the lead for the market research category, Gilbert expanded her knowledge by proactively working on a consumer market research project side by side with the Market Research team. “This helped me fully understand the consumer research process from contract execution to project completion,” she says. “Co-leading this project has enabled me to take a more informed and effective approach to negotiating these types of services and build stronger, more credible relationships with the supplier base and internal stakeholders.”

Megan Russell, Unum

Unum’s Megan Russell was nominated by William Bagley, Vice President, Global Procurement. In his nomination, Bagley says Russell  plays a key role in several important procurement initiatives, including  the launch of a new ERP system, Workday.

“I helped test the system to ensure that procurement functionality was ready to go live,” she tells My Purchasing Center. “I also led training sessions for business partners across the enterprise to ensure a smooth transition for our internal and external business partners.”

A great line on Russell’s resume reads, “I am a productive member of any team and willing to go the extra mile to get the job done on time and within budget,” which is justifiable in every respect.

She is currently working closely with her business partners to ensure she understands their needs and to establish a collaborative partnership. Doing this, she says, allows her to source with suppliers for the greatest value at the best cost.

“I am also making sure to spend extra time with each business partner once the agreements are in place with the supplier to help them with the Workday process,” Russell says. “With the implementation of Workday our business partners now have to enter requisitions for services. As this is new to them, I am doing my best to make this transition easy as they familiarize themselves with the new procurement process.”

Lance Sprague, American Financial Group

As a strategic sourcing representative at American Financial Group, Lance Sprague’s role is to drive process efficiencies and help the company leverage its enterprise purchasing power, by aggregating spend throughout the various lines of business.

“One way we achieve this is through strategic sourcing, including our structured competitive bidding processes,” Sprague tells My Purchasing Center. “We work with our lines of business on their strategic projects and initiatives to help them achieve the optimal balance of quality, service, availability, and ultimately value for their third-party expenditures.” Ruben McMillan, Senior Sourcing Manager at American Financial Group, nominated Sprague for the EPIC Rising Star honor.

“As a non-mandated procurement department, we have to provide as much value as possible to our internal customers,” Sprague says. “Whether that’s through cost savings, improved contractual language/business terms, legal protection, or project management, we constantly seek to exceed our customers’ expectations. If our customers don’t see value in the services that we provide, then they don’t have to use our services. This keeps our team hungry to wow our customers and provide the best service possible.”

Congratulations and good luck, all!

Listen to podcast interviews with our 2015 EPIC Rising Star Award finalists

– See more at: http://www.mypurchasingcenter.com/purchasing/blogs/my-purchasing-center-recognizes-2015-epic-rising-star-award-finalists/#sthash.GWztlmY8.dpuf

Procurement Role in Risk Management Growing

By Nikita Saharia Chaturvedi

Organizations–particularly procurement teams–are relying more and more on technology to manage data. They are using technology to assess, analyse and have full visibility into their suppliers.  “Many of our clients are making investments in technology to help support these needs,” says Rose Kelly-Falls, Senior Vice President, Supplier Risk Management at Rapid Ratings International.

“In addition, we are hearing more and more about the regulatory and compliance requirements many industries are facing.” This can be a drain on resources internally as organizations need to familiarize themselves with new requirements as well as implement and manage them – it is becoming overwhelming. Another emerging trend in 2015 is that procurement is now playing a much bigger role in risk management. In the past it seems that just attending risk-related meetings was the expectation, but now procurement is being asked to provide more guidance and insight to the business.

In fact, CPOs are being asked to act as an advisor as the risk strategies are being developed. This is a significant change compared to what we have seen in the past. Kelly-Falls tells My Purchasing Center in a new podcast interview, “We are being faced with more and more regulations and compliance requirements that we have not had to deal with in the past. This is new to us as professionals. This was typically something that another department handled.” Supply chain professionals are being looked to as the experts. “Yes, we have dealt with SOX but now with Dodd Frank and conflict minerals reporting, the OCC guidelines for financial institutions and even with drug supply chain security, we are knee deep and being required to take a much bigger role in risk and compliance,” Kelly-Falls says.

This is not going to go away. She suggests embracing the change but be prepared for more regulations as we move into 2015. In 2015 procurement should also be aware that they  may need to have more and more visibility and transparency into the supplier base. “However, in order to achieve this and gain information you are going to have to continue to build very strong relationships with your suppliers,” Kelly-Falls says.  And, perhaps more important, determining critical suppliers should not be done by spend.

“Organizations need to be thinking about the revenue impact that suppliers have on the bottom line,” she says. “That’s a paradigm shift for many organizations.” Kelly-Falls is active with the  ISM Supply Chain Risk Management Group and, in the podcast, talks about what is on tap for in 2015.  “Cathy Herr just finished 2014 as the chair, and we accomplished launching our new website which is hosted at My Purchasing Center,” she says. “Mickey North Rizza of BravoSolution is the 2015 chair. Mickey and the Board will be planning the 2015 Risk Conference which is scheduled to take place in Washington D.C. in June.

“That will be our major initiative this year. We are very excited about the speakers and topics, which we are about to finalize and release,” Kelly-Falls continues. “I can’t give away too many details but I promise there is more to come on this in the coming weeks.”

Download the My Purchasing Center podcast, Procurement: Embrace Change, Be Prepared for More Regulation – See more at: http://www.mypurchasingcenter.com/electronics/blogs/procurement-role-risk-management-growing/#sthash.er8fjr1O.dpuf

What Do Suppliers Think of Procurement?

By Nikita Saharia Chaturvedi

In one of our more recent podcast interviews, we talk with Jon Baklund, President of Baklund R&D, a small innovative tool and die shop in Hutchinson, Minnesota. In the interview, Baklund tells us what it’s like working in a family business and his experience growing up with procurement as customer.

As he explains, Baklund R&D is a progressive tool and die shop. That means the company builds progressive dies for a variety of industries. Baklund has nearly 30 years experience, receiving his early training from his Dad, who made tools and dies for 50 years. His Dad now works for him. “I learned everything I need to know from him,” Baklund tells My Purchasing Center.  In his role, Baklund works with procurement and has seen some changes over the years.

One of the more important is that lead times have gotten shorter. Leads that were 12 weeks when he first started out have shrunk dramatically. He even sees some leadtimes down to two weeks even for big projects.  “Time to market is quicker these days,” he says. “This raises concerns from procurement about quality.”  Baklund has also observed some changes in procurement’s role in the organization.

He says that procurement “used to be very connected with multiple parts of the company. Now, they operate more stand alone, apart from manufacturing and engineering.” Yet Baklund is working with engineers in procurement. “We work closely with them to understand our role so they will learn about our capabilities and accurately call on us when they need us,” he says. “If they want training, we bring them into our facility so they can see what we do. This will help build trust that we will get the job done correctly for them.”

What changes have you witnessed in the procurement/supplier relationship? Let us know! Listen to the My Purchasing Center podcast, A Supplier’s View of Procurement: Quicker Leadtimes – See more at: http://www.mypurchasingcenter.com/purchasing/blogs/what-do-suppliers-think-procurement-we-go-source/#sthash.mdWWGang.dpuf

Students Passionate about Supply Chain Eager to Learn from Practitioners.

By Nikita Saharia Chaturvedi

The Global Supply Chain Management Program at Bryant University in Smithfield, Rhode Island, started a few years ago when some management, operations, and marketing faculty who have had industry experience in supply chain developed the curriculum determined to teach this important field of study.

Since day one the faculty has been involved and supportive of the supply chain students and are always finding new ways to bring the program further and further each year.  The supply chain program started as a minor at Bryant and transformed into a major as more classes were approved. Last year was the first year that students were able to graduate with a major in global supply chain management; 34 students graduated with the major and 14 students graduated with a minor.  Of those 34 students, all are employed and many of them even had full-time job offers before entering their senior year of college.

“This year we’re expecting 44 majors and now have over 100 students enrolled in the supply chain program,” says Emily Socha, Vice President of the student group the Society for Global Supply Chain Management at Bryant, in an interview with My Purchasing Center. “We’re constantly expanding and the number of students majoring in SCM at Bryant continues to increase as they begin to recognize the tremendous advancements and opportunities in SCM.”

Expressing her thoughts about SCM as a career, Socha says that when she chose her major she selected one she knew was going to be a solid investment for the future. “In our briskly budding global economy, the value of supply chain is increasing  each day,” she tells My Purchasing Center.

Bryant University’s Society for Global Supply Chain Management is an academic association on campus for students which facilitates the student in learning more about supply chain management, besides classroom studies, aiming at providing significant practical knowledge as well. The society is open to which is an added benefit as some students attend events to learn more about supply chain and how it may impact them in their field of study. The group is designed to help its members nurture and grow as young professionals and make connections in the supply chain industry.

The group also takes up several activities to train students as professionals by infusing activities like looking at career opportunities and trends, networking with professors, resume workshops, interview prep, and more. In addition, the society also helps the students make connections through corporate relationships, like it currently has with ISM-Greater Rhode Island, as well as arranging off-site company tours at local supply chain manufacturing plants/businesses and having guest speakers visit Bryant to speak to students, Socha says.

Meanwhile, the group also carries out member meetings generally once a week. The board makes an effort to make its members feel welcome and keeps the meetings fun and engaging with gift card prizes for attendance.

“We want members to enjoy coming to enhance their supply chain knowledge and not have it feel like just another obligation,” Socha says. The board gives students the opportunity to take on leadership roles and, as it continues to grow, it offers sub-committee leadership positions where general members can take on extra responsibilities for a project and report to the board, if they need support to accomplish a job. The society has 25 consistent members at its meetings, which has been growing considerably. A membership campaign has been designed for the spring semester to attract more members so that students can reap the benefits of the events and explore their horizons.

What’s more, the student group is thrilled to have built a relationship with ISM-Greater Rhode Island, the Institute for Supply Management’s local affiliate. Craig Colsen, former ISM-GRI President and current Board member, is the college liaison between ISM-GRI and Bryant, and his support to this relationship should not go unnoticed.

“Not only do we as students see the value in building our connection with ISM, Craig and his team also see the value which was the key to get this whole relationship started,” Socha says. “As students we are looking for career advice and knowledge in the field we want to go into from people who wake up, get in their cars, and go do it every single day. Working with ISM-GRI, students are able to network with SCM professionals and learn about different paths, in order to make it through different stages in their career. A strong SCM background and sound advice really helps point us in the right direction.”

Socha believes that the Society for Global Supply Chain Management is fortunate in that not only did they get the opportunity to network with some ISM-GRI members at an October meeting, but also met Jan Miller, Vice President of Membership for ISM. Miller presented a great deal of information about the benefits of ISM membership as well as the necessary requirements to become a CPSM (Certified Professional in Supply Management) and/or a CPSD (Certified Professional in Supplier Diversity). For most of the student attendees who recently signed up for their ISM student membership these certifications happen to be brand new meanwhile making them aware that just how valuable the certificates can be in the workplace.

In the podcast interview, Socha offers up some advice for other students interested in forming similar groups on campus. “It takes a considerable amount of time and effort to manage an academic association, since students have other commitments and a heavy workload,” she says. “So the passion and desire to be part of something and make substantial changes is what’s going to set a great society apart from a decent one. The key is to get the members involved early, as members want to have hands-on involvement and something to show that they’re active and valuable members to the group, besides attending meetings; while learning about supply chain. This also sets up the group to have good leadership year after year.”

Also see the My Purchasing Center article on the October member meeting of ISM-GRI and hosted by the Global Supply Chain Management program, Certification, Networking Help Advance Procurement Careers

ISM-GRI and the Global Supply Chain Management program at Bryant hosted Rod Sherkin, President of ProPurchaser at an event on campus this past spring. Sherkin’s presentation to the group of students and supply managers was recorded and is available as an online training video at My Purchasing Center, Achieve Competitive Prices without Bidding.