Aberdeen recently published a Global Supply Management Research Brief entitled e-Sourcing: The Art & Science of the Deal that indicated that procurement groups need to prepare for the oncoming challenges of future e-Sourcing waves now in order to maintain the momentum generated by maturing e-Sourcing programs.
In particular, the research brief advises the initiation of some or all of the following activities:
Develop advanced e-Sourcing capabilities: Your focus needs to move from lowest cost to highest value. Total Value Management is what it’s all about.
Centralize e-Sourcing capabilities: This further capitalizes on your move to center-led organizational structures.
Improve Supplier Discovery Capabilities: Also, pursue LCCS opportunities when appropriate.
Extend your e-Sourcing Solution: Invest in technology and/or services to make sure your program includes spend analysis, process management, and contract management.
They also created a nice KPI chart for analyzing strategic sourcing performance -
These things are all very similar to the message leading e-Sourcing vendors have been preaching and developing for years.
The research brief also notes that you have to shift from a single focus on cost savings/avoidance to a broader management of supply availability and risk while maintaining competitive cost structures, topics that I have been blogging about for some time. Aberdeen full report and findings on this topic will be available next week and I will be going in to more detail on the data at that time.
Recently, Supply & Demand Chain Executive ran an interview with Jim Varilek of Dow Chemical who opened up on what the supply chain function needs to do in order to ensure its seat at the executive table with it belongs.
In the interview, Jim Varilek made some key points:
As a function, we’re clearly driven by our corporate strategy. … We’re trying to get more business connectivity with the function. What I mean by “connectivity” is ensuring that we’re talking the same language as the business.
Having a strong supply chain is important for our existing business as it’s defined today. Clearly we’ve got a shifting competitive environment, and we have to maintain efficiency and cost advantage. … But there’s another element that’s becoming increasingly important, and that’s safety and security.
The challenges in elevating the importance of the function and having that seat at the table are that the skill requirements increase, the connectivity that you need to have with the rest of the organization increases and your accountability increases.
What I really liked about this article is that even though he didn’t say it, he clearly articulated the case for good e-Sourcing tools.
Tools can help you standardize on a common language across the business.
Tools not only increase your efficiency and help you optimize your award decisions (maintaining cost advantage), but they can also be used to collect safety and security information from all of your suppliers and supply chain partners to give you the visibility you need to insure you are meeting your corporate and governmentally regulated responsibilities.
On-Demand Web-Based tools can connect your global organization through a central portal, giving everyone the same access to the same information.
Tools can give you the insights and reports you need to demonstrate your value to the rest of the business.
Varilek was also quoted with the following:
You have to speak in terms of what’s going to bring value to the business. At the end of the day, companies are in business to make money. They are there to deliver a service or product to their customer base. If we always keep that in mind, then whatever we’re trying to do in supply chain, we have to create a value proposition. Because the supply chain doesn’t deliver value in and of itself; it delivers value through the businesses. And if we’re not effectively putting a value proposition in front of the businesses, we’re going to have a hard time getting that seat at the table ‹or, even if you have a seat at the table, you’re not going to get the influence. But if you can articulate and develop a value proposition based on the capabilities that you bring to the table as a function, if you can tell a business that you can help enable growth and create this competitive advantage versus another company, then you’re going to get people to listen. Or if you say, “I can optimize this supply chain and we can lower your costs by X percent and that will open up this whole new area and this whole new market,” that will get their attention. If you can create that value proposition, then you’ll get the recognition of what you can bring to the table.
All-in-all a great article and a great case for on-demand e-Sourcing tools!
Sometimes, I like to troll websites from respected educational institutions so I can feel like an “Ivy Leaguer”, instead of my rightful position, with the unwashed masses and a public degree. Doing this, I ran into research written by Tunay Tunca, a professor at the Stanford Graduate School of Business.
To summarize, he suggests that value can be driven further in complex sourcing projects by implementing a two-stage process of reverse auction. This means to execute an eRFx, short list the top bidders, add more specifications, and reverse auction. I also interpreted his explanation another way: run an auction first on simple specs, then discuss more issues in person or in an eRFx while going deeper on the contract negotiation.
Differentiating between simple lot/price driven projects and multi-stage events, they describe:
“..when things are a little more uncertain and complicated—when there are few suppliers, when those suppliers can easily fill the orders without any extra investments, and when buyers are not so sure of what suppliers’ actual costs are—then a simple reverse auction makes the purchaser more vulnerable to losing out on pricing. In this case, says Tunca, buyers are better off instituting a two-stage process, in which they hold an initial auction to identify the lowest bidders, but then add an additional contracting stage to negotiate further with those bidders.”
At Iasta, we do see this and some times will recommend or encourage these tactics, but only under the proper, tightly controlled conditions:
Communicate what is happening with the suppliers! Do not surprise them with an alert that “oh by the way, we are doing this again”.
Focus the specifications clearly at the appropriate stage but do not hold back important information for the second stage. You never want to introduce unwanted surprises in the process.
Know yourself. Does your company have the ability to throw weight around and make more work for the suppliers? This process will work better for larger companies and large spends than for mid-market companies trying to over-complicate a $500,000 bid.
Have plenty of time reserved. This process will extend the normal sourcing lifecycle and will increase the amount of work. This is normally fine when dealing with strategic and complicated sourcing events, but be aware upfront.
Incorporate e-RFx technology at each stage to have all the information tied into the same project system. This helps capture all the needed information in a single location and make adjustments on the fly if suppliers respond with interesting alternatives.
There are many ways to approach auctions to get the best results and I am always interested to hear opinions from other users. This article does not go into enough detail to really dissect the procedures that are being recommended and it would be nice to see the mathematical models that the Stanford team developed for evaluation.
Well, not really. According to Supply Chain Digest, which recently ranked its top 10 technologies and strategies for supply chain management, many aspects of eSourcing scored quite well. Drum roll please…among the highlights:
#1 eAuctions (1 Band-Aid and 5 $$$, an almost perfect score)
What: Use of technology tools to drive on-line contract bidding for a growing array of both indirect and indirect materials. Suppliers are first “qualified,” and then an on-line event (sometimes called a “reverse auction” because the bidders are hoping to sell, not buy) takes place in which the qualified suppliers bid against each other for the business.
Why: The scope of goods and services successfully being procured through e-auctions continues to grow. Once mostly limited to indirect goods, companies such as Hallmark and Rubbermaid have enormously expanded the reach of these tools into direct (production) materials, services and virtually anything that can be procured.
Pain: Relatively low, once buyers get their heads around the new approach.
Gain: Savings of up to 30% on purchased goods and services as a result of the auction process is not uncommon. Just think about it – why wouldn’t this work?
#3 Spend Management Visibility (3 Band-Aids and 5 $$$)
Huge financial benefits are virtually guaranteed but there is significant financial investment, change management, IT resources and time needed for success.
#8 Strategic/Global Sourcing (3 Band-Aids and 4 $$$)
What: Use of a more integrated, consolidated approach to supplier selection and procurement, including evaluating total supply chain costs, and consolidating purchasing power. Rapidly, strategic sourcing is also tightly tied to offshoring and global sourcing strategies. We probably could have moved this up on the list, but the opportunities vary dramatically company to company.
Why: Many companies have saved many millions through a more strategic approach to procurement. Global sourcing is becoming a nearly ubiquitous strategy, though for many the gains haven’t fully materialized. Still, as we’ve written, to succeed as a company today, when it comes to the global supply chain, you better be good.
1 commentJanuary 25th, 2007Sean Delaney - Iasta UK
Paul Snell in the 4th January edition of SM (that’s Supply Management!) discusses the merits of procurement outsourcing. There seems to be quite a storm brewing…..
I’m much more pragmatic about all this. Having come from retail buying this is nothing new. M&S often relied on suppliers to design and develop new product. In fact supplier appraisals would be partly based on their design ability.
The outsourcing of procurement is an enabler allowing lower skilled tasks to be outsourced to organisations, which with economies of scale they can lower the cost of each transaction.
One of the contributors to the article argues that many buyers are concentrating on more “high-value” procurement activity and neglecting indirect spend. Although this comment maybe true I believe that the indirect spend will not be the first to be out sourced. My current understanding is that many organisations are still currently trying to understand the spend data within indirect. I really do not believe businesses will outsource areas of their business they do not understand!
I think the furore about this whole issue lies closer with the individuals within the procurement function. I have often read comments from senior buyers suggesting that Procurement should be main board role. Whilst I do not disagree I cannot see businesses promoting individuals to a board role who have only procurement experience.
Having CIPs qualification, whilst admirable and an excellent base to start from, will only advance you so far within an organisation. Any Sales experience? Marketing? HR? It is worth noting that you will often see retail buyer’s advance to main board positions why? Well because they have skills like sales development, marketing, sourcing and distribution. The exact skills for board recognition (BTW - I have never met a retail buyer with a CIPS qualification!).
So what is my point? Those individuals with broader experience are more likely to embrace outsourcing allowing them to advance their position within an organisation. Those individuals who feel threatened by this process are likely to have less broad business experience.
Procurement Outsourcing should be welcomed with open arms. It will enable buyers to concentrate on more strategic issues. It will also put buyers higher up the food chain however to get all the way to the top, buyers will need to have more diverse experience.
The debate should be more pragmatic and less about job protection.
Supply Chain Management Review recently summarized Accenture’s research in high-performance businesses in industrial products, automotive and related industries that determined these businesses are masters of five procurement-related capabilities. Specifically, high performance businesses:
Source more direct materials globally and in low-cost countries.
Combine low-cost manufacturing and “buy-brand-sell” strategies to cut costs on low-margin products and extend complementary product lines.
Elevate procurement to a strategic function to increase overall supply chain reliability and minimize total landed costs.
Integrate purchasing earlier into the product-development process to take maximum cost out of product design.
Deploy consistent processes and tools across business units and operating companies to aggregate and standardize spend data and improve compliance.
One of the two key capabilities here is obviously procurement as a strategy with procurement part of cross-functional team. The article points out that leading companies dedicate a small but highly skilled team of managers to take responsibility for a specific commodity. These managers, who know all about the manufacture and use of the commodity, lead efforts to standardize the grades and codes of the commodity used in the firm’s products. This concentrates the buy and gives it greater leverage in negotiations. In addition, the benefits can be extended to suppliers and contract manufacturers to lower the cost of finished products.
The article also points out that strategic procurement can drive component and module standardization and that high performance businesses maximize not only their use of standard components but also their strategic partners’ and suppliers’ use of these components. In addition, procurement can drive more supplier involvement in the design process, and suppliers who understand your needs better are in a better position to deliver.
The other key capability is the use of consistent tools and processes across business units and operating companies. This allows companies to aggregate spend data, centrally manage projects, maintain all relevant product, price, and contract data in a central repository, manage bids, auctions, and negotiations consistently, and use best-of-breed tools to determine optimal award allocations. The tools can also track orders and make sure the right product from the right supplier is bought at the right time.
So, Wal-Mart is not typical on any level or relative to any comparable, but I did find a recent article in Apparel Magazine interesting, nonetheless. Check this data from the retail giant:
Wal-Mart reports that it will save nearly $26 million, will conserve 10 million gallons of diesel fuel and will prevent 100,000 tons of carbon dioxide from entering the atmosphere as a result of its “no idle” policy for its trucks and the new high-efficiency generators with which they were retrofitted. Also, as part of its sandwich bale program, 150 truckloads of shrink-wrap plastic were collected and recycled in the first quarter of 2006 alone. This kept the plastic out of landfills and generated $1.1 million in recycling revenue.
In addition, Wal-Mart estimates that it saved 5000 trees and 1300 barrels of fuel by changing the size of the package on a private label toy. It also reduced the amount of fuel used in the transportation due to higher unit quantities per full truckload.
Of course, these numbers are staggering when you have revenue that outpaces the economy of entire countries such as Belgium and Ukraine. I do think these advancements in green policies and purchasing are fascinating, however. Gone are the days of having to make huge sacrifices in efficiency and cost for the sake of environmental responsibility.
Between a newborn in need of a personal milk tanker (aka Mommy) and a long awaited Super Bowl trip, today will be a space eater day. However, I would like to personally thank Tobias, Eric, Jason and especially Michael - for pinch hitting a couple late posts. I think shaking up the content was very well received as the traffic for ESF exploded. It is very normal for this site to experience 10-20% per month in unique visitor traffic; however, last week spiked 31% over the previous highest traffic week. Needless to say, the content was fantastic and provocative and I plan to develop more external series that people will find interesting, in the future.
Back in November, the Supply Chain Management Review ran a great article on Design for Supply: An Evolutionary Path which noted that design for supply involves more than just part and supplier re-use and that leading companies are achieving benefits from simulation and modeling before and during product launch. I agree completely. (I also wrote about Design for Supply, which is also known as Design For Sourcing, in my multi-part Procurement Innovation series over the summer in the post Transforming New Product Development).
A recent AMR Research study quoted by the article found that New Product Introduction (NPI) is the number-one influencer of supply chain demand and a National Science Foundation and Michigan State University study also quoted by the article found that material costs could be cut by 10% by applying design for supply and total cost of ownership analysis at the concept and assessment phases of NPI. Therefore, it is worth pursuing Design For Supply (DFS) as it can avoid design practices that drive supply chain complexity such as part number proliferation and supply base expansion.
Design for supply is not a new concept, and many manufacturers have been applying fundamental DFS strategies such as part reuse and cross-functional collaborative product design for a while. Furthermore, the manufacturers with the most successful DFS initiatives are those that have applied standardization.
However, it can be argued that current initiatives are only first generation and the future of Design for Supply is optimization and simulation of DFS trade-offs. Reuse reduces variability and improves volume pricing, but places a constraint on innovation when applied too rigidly. To truly design for supply while also developing new and exciting products, companies need to look at the trade-off between the benefit of a new innovation versus the cost of supply.
You need to look at the business and cost impact of every decision. One example is the analysis of the cost-benefit trade-offs associated with different product options to optimize customer revenue, time-to-market, and supply cost. Another example is product-cost modeling using a virtual production environment and what-if analyses based on alternative design decisions to accurately predict cost before product launch. (And this is more-or-less exactly what aPriori does, whom I just blogged about over on Sourcing Innovation.)
Supply chain modeling during NPI can move a company beyond first generation reuse and product-cost analysis to understanding the product’s potential impact on the entire supply chain network, allowing procurement to design the optimal network and, when good forecasts are available, predict required inventory levels up front.
The article concludes with some suggestions for DFS improvement:
Identify the person or team that will enforce accountability.
Understand product segments and global distribution methods.
Define the metrics to measure a design’s impact on inventory, reuse, lead time, and other cost drivers.
Understand the organization’s position on the DFS maturity curve before defining the next evolutionary step.
According to an article in the Outsourcing Journal back in March titled Suppliers Face a Changed World As First Generation Outsourcing Deals Expire, 43% of annualized outsourced contract value that is up for renewal over the next two years face a medium risk of getting restructured. Traditionally onshored deals will be offshored, mega-deals (that included infrastructure, applications, maintenance, and development work) will be unbundled, and individual transactional business process outsourcing will be merged into larger multi-process deals, for example.
However, as per the Supply Chain Outsourcing article in the current issue of the Frasers/PMAC article, more choices are only making decisions tougher for the buyer. With so many functions being outsourced and so many third party providers to choose from, it’s now harder than ever for a buyer to align structures, requirements, strategies, and capabilities with a prospective third party’s offerings. Although I’ve written a fair amount about procurement outsourcing in my procurement outsourcing series (I, II, III, IV, and V), I liked this article as it concisely addresses the three questions a buyer should be asking, and answering, before she starts down the outsourcing path.
Am I a good candidate for outsourcing?
The only guidelines or clues for answering this question are internal problems, pressures, or shortcomings, such as insufficient planning, alignment, or control; limited visibility; poor process integration; or lack of coordination across multiple supply chain channels.
What function(s) should be outsourced?
The challenge is to know which function(s) would perform more effectively in an outsourced environment and how the outsourcing of one or more functions would benefit the entire supply chain.
What kind of organization should handle outsourcing function(s)?
Outsourcing options used to be limited to third-party logistics providers (3PLs), most of which developed solutions to complement their assets. But another kind of provider has emerged: integrated-services coordinators. These global, ìasset-agnosticî organizations manage clientsí supply chains by synchronizing the services of 3PLs, functional providers, and internal business owners.
I had a quick call the other day with a procurement executive at a large company you’d probably recognize who asked me a question which I’m hearing more and more of these days. And that’s: what is the best course of action to take given a short-term solution need — in this particular case, it was contract management — but an IT-driven emphasis over the long haul on standardizing on their ERP providers procurement capabilities. In this case — as in many — the ERP provider in question had an inadequate answer with their current solution (despite their positioning).
I tossed out a few names including the usual contract management suspects to consider including Upside, Nextance, Procuri, Ariba, Emptoris, and even Iasta (with their new capability), but suggested that the solution he would chose might end up being a long-term one after all. And that’s because there’s a good chance that ERP will not catch up to the level they require, and even if they eventually did, why would you want to rip out a solution that was faster, better, and cheaper — not to mention completely separate from ERP in focus?
Seriously, I’ve had enough of companies wanting to standardize all buy-side technology on ERP because IT thinks it’s the easy thing to do. Sure, HR is a logical extension of payables. But Spend Management is not (because it touches so many points outside the enterprise, in addition to the system of record).
Going forward, in an ideal world where bloggers like me get their way, ERP will need to compete on its own merits in sourcing and procurement, rather than simply delivering a 60% (or 80%) solution that’s just good enough (good enough for whom, should be the question to ask). In my view, this level of achievement might be good enough for transaction processing. But it’s not when it comes to driving value through better sourcing and procurement where domain expertise, solution depth, and category knowledge are all critical to drive results.
It’s easy to construct a data warehouse to answer questions that don’t deviate from its pre-defined structure. But what about all the other questions?
Within most organizations there are three groups of consumers for spend data:
* Group I: those interested primarily in reports;
* Group II: those who drill around a spend dataset, occasionally, to explore specific areas of interest, or to track down individual payments;
* Group III: power users who are using the spend data to locate, drive, and monitor the next level of savings initiatives — initiatives that are aimed past low-hanging fruit that has already been harvested.
Satisfying all three of these groups is beyond the reach of most of the current generation of spend analysis products. The issue is related to the essential difference between a data warehouse and a data analytics product. It’s very difficult to be both, and putting the word “analysis” in the product name doesn’t make it so. A data analytics product has to be able to change data, dimensions, and rules, instantly and easily, on the fly, to support whatever ad hoc analysis is required. Contrariwise, a data warehouse cannot change frequently — by its very nature, it is shared by dozens, even hundreds of users. It has to remain static for weeks, if not months. Data warehouse-based analyses therefore have to be done with whatever data structure was in place when the warehouse was published. Much of the time, that structure is either useless (a committee decision, for example), inappropriate for the analysis at hand, or obsolete. That’s why the concept of using a data warehouse to do ad hoc data analytics is flawed. Imagine a spreadsheet whose structure cannot be changed — it may be useful for a specific purpose, but it is useless for any other.
Which is why the target user for spend analysis vendors has usually been the Group II user. It’s relatively easy to construct a data warehouse that can be used to answer questions that don’t deviate from its pre-defined structure. But what about the other consumers of spend data, and all the other questions? Attempts have been made to build suites of static reports to satisfy the Group I users, but static reports are flawed, simply because they are static. Everyone is acquainted with a report that doesn’t do “quite” what one wants, or a report that rolls up the wrong way, or provides totals that have to be imported into another tool (perhaps manually transcribed, even) in order to derive meaningful numbers. And, unfortunately, it’s not possible to point a standard reporting package at an OLAP database and expect anything but hours-long delays, because relational reporting systems simply don’t work on voluminous datasets. A reporting facility has to be adaptable to dataset changes and requirements changes, and it also must leverage OLAP power to generate its results — without requiring its users to be IT experts. Custom reports from the vendor, or reports built by hand, by in-house experts, are therefore typically the only “solution” — an expensive and frustrating one, to be sure.
Group III power users are usually the first to realize that a spend analysis system isn’t providing value. After an initial burst of enthusiasm of the “I didn’t know that” variety, it becomes apparent that fixed hierarchies and fixed dimensions are of little use for ad hoc analysis. The power users’ response, because they are more proficient with data manipulation than other consumers, is to work around the tool by downloading raw transactions from the warehouse directly onto their desktops. Then they hack at those transactions manually with Access and Excel to produce reports and analyses in the same way that they’ve always done. The value of the spend analysis package to them is minimal — they think of it merely as a cleansed transaction store.
At the end of the day, then, what is the look-back on a typical spend analysis project? Often an enormous expenditure has been undertaken; a spend dataset has been made generally available, with great effort; but after a brief period of cherry-picking and high value, the static reports generated from the system are only marginally useful. In some cases, usage of the system actually drops to zero, other than a brief spike of activity after every refresh period, during which the Group III users download a fresh set of raw transactions to feed to their hand-built offline reporting tools.
One can hardly expect a frustrated organization that has gone through the above process to expend even more time and money on the creation of dozens of new commodity-specific spend datasets — yet this can be key to the next level of value in the spend management process (see Spend Analysis: MacroMap and MicroMap).
After a long hiatus I am finally posting some further results from our reverse auction and bundling research. In an earlier post, “Bundling for Reverse Auctions — what is it, and why is it important?”, I provided a definition of bundling and substantiated its importance. In this post today I would like to provide further insight into some of our research findings. In particular, I will summarize some of the most interesting insights gained in a study which was published in the International Journal of Integrated Supply Management (Schoenherr, T. and Mabert, V.A. (2006) ‘Bundling for B2B procurement auctions: current state and best practices’, Int. J. Integrated Supply Management, Vol. 2, No. 3, pp.189–213). This study relied on interviews with 30 case study companies, as well as a small exploratory survey. In our studies ‘bundling’ is defined as the aggregation of two or more products (SKUs) and / or services by the buyer into a bundle that is put up for bid to potential suppliers as part of a single RFQ.
Conditions impeding the use of bundling
Not every company practices bundling in reverse auctions, so in a first research question we tried to identify reasons that may impede the practice of bundling. The following explanations were provided, illustrating that bundling may not be beneficial or feasible in all instances:
Lack of resources (time and money)
No significance attributed to bundling
Low importance of purchasing
High perceived risk of single sourcing
Lack of bargaining power
Not much volume combinable in a bundle
Items belonging to different decision makers
Complex or highly engineered items
Specific customer requirements
Desire for flexibility
Fixed price schedules
Structure of the supply base
Legal constraints (especially in government purchasing)
Favorable characteristics of bundled items
If bundling is practiced, care must be taken to combine the right items together into a group. The following item characteristics were identified as contributing to the overall success of the bundle. If items possess these characteristics, then they are more likely to result in a successful outcome. Together with the specific characteristic we provide an illustrative example.
No or low degree of customization (Example: MRO supplies; custodial services)
Common input material(s) (Example: Steel tubing, forgings, castings and fittings)
Logical combination (Example: Production machinery with maintenance services)
Internal uniformity and cohesiveness (Example: Different domestic road transportation services)
Similar application (Example: Office products; packaging material)
Similar technical requirements and complexity (Example: Several simple sheet metal parts)
Similar production processes and/or capabilities (Example: Various molded plastic tubes for different purposes; travel services)
Standard, off-the-shelf (Example: Chemical cleaning supplies)
Low dollar value (Example: Different sizes and types of fasteners; small machined parts)
Specifications common, known or easily obtainable (Example: Various travel services)
Bundling benefits and challenges
There are several benefits associated with bundling that primarily address spend level expansion and a decrease in transaction costs. The most frequently stated benefits included the following:
Increased leverage
Increased efficiency
Simplification of supply base
Increased supplier commitment
Simplicity for reverse auctions
However, there are also a number of challenges connected to bundling. For example, firms indicated that bundling items was often more labor-intensive and challenging than activities associated with purchasing the items in the bundle individually. This additional upfront work and effort consists of classifying items into groups that are as attractive to suppliers as possible, while at the same time fulfilling the objectives of the firm. In addition, the following challenges existed for many of the companies interviewed:
Bundling process
Change management
Limitation to large suppliers
Lack of resources
Unique material
Quality
Over the next few weeks I will be posting additional insights from this study, so keep coming back to the E-Sourcing Forum! Also, if you have any questions, comments, suggestions, opinions or ideas, please do not hesitate to contact me (tobias.schoenherr @ emich.edu).
In my ongoing effort to advance my quest for world domination, I will be out next week on paternity leave. I am not sure how my wife talked me in to this again, but Monday I will be trading in my life of semi-consistent sleep and relative predictability for inconsolable fussiness, insatiable hunger, tantrums and general loss of faculties…and I am referring to myself. Hopefully by Monday morning, we will have some names agreed upon, but I am not holding my breath. But seriously, I am really looking forward to it, adding #2 is just getting me that much closer to efficient chore distribution and modern indentured servitude.
How does this affect ESF?
I have been trying to get a nice group of diverse posts lined up from outside writers to fill in the week. I think it will be a refreshing change for the blog and I am sure many are getting tired of me any way. Look for some quality content from many industry experts that I am lucky enough to consider friends.
Looking through an article on World Trade Magazine, which had a section written by PRTM partner - Steve Pileggi, I noticed a description of six predicted supply chain trends:
Continued growth in air freight as the standard way of managing global logistics;
Broad national pressures in the U.S. for greater regulation on trucking for safety reasons;
Push for customizable distribution that takes more touch points out of factory-to-consumer distribution;
Greater emphasis on cargo security/screening as well as a push for security measures in public transportation;
Further consolidation in semiconductors, network equipment, storage—essentially, those technologies that are becoming more commoditized;
Continued erosion of middle management due to baby-boomer retirements that drive the market for professional management services (contracted expertise).
Following that up, was an additional item added:
Strategic sourcing gets, well, strategic. Smart companies get serious about sourcing from fewer vendors and the focus is not just cost. Vendor considerations such as time to market, quality, and technological sophistication move to the head of the list. Companies stop talking about collaboration and actually do it.
This is where a good sourcing process which includes an e-RFx product can be hugely beneficial. Collection and collaboration of large amounts of data can streamline the process of supplier evaluation and ultimately consolidation.
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