5 Best Practices for Raw Material Procurement

How do you leverage consolidated raw materials demand for best practice procurement? Here are five industry best practices.

This article was originally published on Supply Dynamics on October 22, 2020 and is republished here with permission of the author and website.

It takes tons – both literally and figuratively – of raw material to manufacture an aircraft. From fasteners to injected molded plastics and countless variations of metals, electronic components, and resins are needed to produce the millions of individual parts required to deliver a completed aircraft on-time and on budget. Case in point: An average commercial aircraft contains approximately 387 tons of metal alone!

If you’re an Original Equipment Manufacturer (OEM) in the aerospace industry such as Boeing or Airbus, raw material procurement and sourcing for countless parts can result in chaos. And this problem isn’t unique to aerospace. It persists across industries including oil & gas, automotive, industrial equipment, among others.

At Supply Dynamics, we estimate that our customers outsource on average 50-80% of product parts and components. This trend has resulted in complex, highly fragmented supply chains, reducing transparency for the OEMs, while increasing dependence upon contract manufacturers and their ability to manage their own complex supply networks.

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Raw Material Procurement

How many metals, plastics, electronics and fastener sources do your part suppliers purchase from? Five or 500? As long as you get your parts on time, does it even matter? Of course, it does.

As a procurement leader, you understand there are efficiencies in streamlining raw material procurement at all levels of the supply chain. What if OEMs could orchestrate the joint-negotiation and forecasting of such materials to eliminate waste and improve efficiency through a systemic process?

By value-stream mapping actual raw materials used in part production and linking that to the demand for those parts, Supply Dynamics can help you forecast consolidated material requirements and provide a dynamic snapshot of your sourcing strengths and vulnerabilities. Sharing this information with contract manufacturers and raw material sources then enables transformational collaboration.

After more than a decade of helping our OEM customers obtain and leverage this kind of information, we’ve learned a few things. In order to successfully leverage consolidated material demand across a supply chain, we recommend OEMs follow these procurement best practices:

1) Calculate and share detailed raw material demand forecasts at regular intervals with service centers and mills

By sharing what we call a “material demand profile” with the sources of the raw material, OEMs can reduce risk for their raw material suppliers enabling them to operate more responsively, while increasing the OEMs ability to control pricing and ensure availability. Sharing a top level forecast only, with no definition of order form preferences (i.e. sheet vs coil or bar vs plate), discrete sizes and specifications, is virtually useless to a Distributor.

With such a forecast, Service Centers avoid speculation regarding which materials will be purchased or to what sizes and specifications and which site or contract manufacturers in the supply chain will purchase it. Knowing this in advance ensures service centers can stock the appropriate inventory quantities of the correct materials at the right time. This also serves to reduce lead-times. Some of our customers see their lead time reduced by 50% or more.

2) Make sure that shared forecasts contain a level of detail that reduces risk at the raw material source

If you ask a mill, distributor or standard catalog part manufacturer what really drives material prices (whether you’re talking about metals, plastics, or printed circuit board components) the answer might surprise you. While the quantity of material purchased and number of releases over time is a factor, other factors may have equal or greater impact on price, including

  • What is the accuracy of the forecast?
  • Are there limited life considerations associated with the material?
  • Are there unique packaging requirements?
  • Are there processing requirements or unique specifications associated with the order?
  • Can the customer specify quantities required by specific user, over specific time frames, and by unique sizes and specifications?

This kind of information is the proverbial “Holy Grail” for a mill or distributor because it allows them to service your business more efficiently, reducing the risk of obsolescence and allowing them in some cases to level load production and better manage inventory levels over time.

3) Establish “directed-buy” or “right-to-buy” contracts with Mills and/or Distributors

Ideally, an OEM establishes standard raw material purchasing agreements with Mills and Distributors and allows its Contract Manufacturers to purchase off those agreements. Transparency is essential to ensure that such agreements are followed.

On the flip side, if a raw material supplier cannot fulfill orders placed down the supply chain, the OEM is aware of the situation in advance and can properly address any potential delays.

An aggregation program gives the OEM significant leverage over raw material suppliers and contract manufacturers. It goes without saying, the OEM could switch suppliers should suppliers fail to deliver the promised level of service. However, suppliers are also incentivized to participate in these programs because their costs are reduced through better planning – a win-win throughout the supply chain.

4) Enforce the agreed purchasing behavior

Aggregation programs provide considerable benefits to the OEMs, contract manufacturers, and to the raw material suppliers. However, reaping the benefits depends upon all parties within the supply chain doing what they have agreed to do and properly utilizing and executing upon the agreed “terms of engagement.”

If contract manufacturers fail to purchase forecasted materials from the agreed upon source, the value of the demand forecast is questioned and the service centers are left holding the proverbial bag when it comes to excess inventory. For this reason, it is imperative that the OEM have a robust means of monitoring and enforcing agreed upon terms of engagement (across Contract Manufacturers, Distributors and Mills.)

5) Provide a means to validate material sizes, forms and specifications while keeping bills-of material up-to-date 

No two Contract Manufacturers make a part the same way and therefore no two bills of material (even for the same part) are ever the same. For this reason, the OEM must provide a simple, easy way for Contract Manufacturers to update or “validate” bills of material.

For example: Say an OEM needs 1,600 pieces of a specific aluminum part in the coming year. The blueprint suggests that the optimal way to manufacture the part is to machined it out of an 8.0” long piece of aluminum grade 6061, 2.0” diameter round bar. However, the minute the OEM outsources that part to an external contract manufacturers, it loses visibility into the actual form and size of material actually purchased. For instance, one contract manufacturer may choose to purchase material in different form or size than another (2.25” vs. 2.0” for example).

In addition, any sustainable program will require a thoughtful and systematic way of accommodating changes in the supply chain such as:

  • New Part Introductions
  • Engineering changes to existing parts
  • Transitions of parts from on Contract manufacturer to another

So how does it work?

We understand – this sounds like an Industry 4.0 unicorn, right? Likely, you’ve been managing your raw material procurement data with a team of folks sharing a macro-crazy Excel spreadsheet. This is where Supply Dynamics can help. Our Part Attribute Characterization service and SDX multi enterprise platform enables OEMs to captures contract manufacturers’ raw material data for each part without asking the part supplier to do all the heavy lifting.

In this way, OEMs can accurately forecast raw material requirements and manage the timely purchase and supply of material requirements across the enterprise.. All of this allows for better pricing and contract terms, shorter lead-times, and higher levels of performance from the supply chain.

For too long OEMs, contract manufacturers, and raw material suppliers have relied on historical data or guesswork to forecast future raw material demand. By better understanding the raw materials used in its products and sharing information with the sources of those materials OEMs can achieve step-change improvements in their cost of doing business, and actively monitor purchases of program-related materials. In addition, they can improve overall supply chain efficiency and ultimately improve on-time delivery of more profitable products.

WARNING: Handling Dangerous Cargo

The lessons of poor transportation of dangerous or hazardous goods are obvious in hindsight. So what can be done about these supply chain failures?

This article was originally published on All Things Supply Chain on August 24, 2020 and is republished here with permission from the author and website.

On August 4th, 2,750 tonnes of ammonium nitrate – equivalent to approximately 6 million pounds – that were being stored in a facility at Beirut’s port caught fire and exploded. The human toll of the blast was enormous; the accident killed at least 163 people and injured 6,000 more. Tremendous damage was done to structures at and around the port and surrounding areas. The fact that the storage location was facing the sea is probably the only thing that saved the city of Beirut from total destruction.

The shipment originally arrived on a vessel from the country of Georgia in 2013. Although it was just pausing en route to Mozambique, it was seized and held in the port because of outstanding debts that were claimed in the Lebanese court system. The ship was deemed un-seaworthy in 2014 and the cargo was unloaded into “Hangar 12” where it would remain for nearly 6 years.

It is clear to supply chain professionals that this was a supply chain fail but rather than being one huge failure, the Beirut port explosion was the result of a chain of failures:

  • The ammonium nitrate was being stored in a large, unsecured warehouse; a highly dangerous situation given the lure of the material for terrorist groups.
  • The storage building had multiple structural and condition-based issues, including a dislodged door and a hole in its southern wall.
  • A significant quantity of fireworks was being stored in the same warehouse.
  • Workers were called in to repair the building and re-secure the doors, but they were not supervised or warned about the contents of the building.
  • Sparks from repair teams welding the hole in the wall shut are what created the fire risk. They raised the temperature in the building enough to start a fire among the fireworks, and within one hour that fire reached – and detonated – the ammonium nitrate.

It would be easy to look at what happened in Beirut and think it was an isolated string of unfortunate events. Unfortunately, the same mistakes and examples of mismanagement that led to the port explosion happen regularly in supply chains all around the world.

The lessons associated with moving and storing dangerous or hazardous goods usually seem painfully obvious in retrospect, but they have been made before, and – sadly – they will be made again. Each of these sad incidents has a different level of impact, and a range of different causes, but given the critical role that people play in supply chain operations, they almost always have a human toll.

Take the following example from the United States:

In 2018, a can of aerosol bear repellant fell off the shelf of an Amazon warehouse in New Jersey. 24 employees were sent to a local hospital, one in critical condition. Since the problem with bear repellant had happened repeatedly in the past, action had to be taken. In 2019, Amazon announced that they would build a specialized warehouse just for hazardous materials such as nail polish remover, bleach-based cleaners, and (of course) bear spray.

In recognition of the danger associated with these products – either on their own or in combination – Amazon designed the warehouse to be smaller, include additional safety mechanisms, and keep specific materials separate. They will also no doubt have to provide regular specialized training for anyone working in and around the warehouse.

While the bear spray incident pales in comparison to the explosion in Beirut, it was just as preventable. It took multiple bear repellant incidents to cause Amazon to take action, since thinking an issue is a one-time problem is the easiest mistake of all to make.

Supply chain managers need to be aware of the potential danger represented by the materials moving through their own supply chains or adjacent supply chains that share warehousing and logistics capacity. Some examples – like bear repellant and ammonium nitrate – seem like they would obviously justify additional oversight, but in a busy, distributed workforce, even the most dangerous situations can be overlooked.

Knowing what materials are being stored where, under what conditions, and with what concerns is a key safety measure. As we observed in Beirut earlier this month, it can be a lifesaver as well.

Is supply chain swallowing up procurement?

The pandemic thrust supply chain management and risk mitigation into the limelight. What happens to the procurement folks?

This article was originally published on Supply Chain Dive on October 22 2020 and is republished here with permission of the author and website.

Bonnie was quiet at dinner, and her father asked what was wrong. She said in school today, her 6th grade class was talking about careers and what their parents did for work.

Bonnie said her mother, Monica, was a senior buyer at a local electronics manufacturing plant. Other parents were small business owners, electricians, plumbers, teachers, members of local police and fire departments, and even a professional surfer. Bonnie’s friend Tyler’s father was a supply chain manager for an online marketplace, and the class voted his job “coolest and best.”

“Why can’t you get a cool job like Tyler’s dad, Mom?” asked Bonnie.

And that is one of the core problems in the procurement profession these days. The identity of the profession is changing, once again.

​Pandemic-related disruptions in consumer and industrial supply chains are making headlines, pushing the once relatively obscure work into the limelight. How companies manage their supply chains has become as important to a company’s success as financial health, market share and customer relationships.

And that is why many companies have reshuffled leadership, appointing managers from other functions to run supply chain operations. These managers often have limited or no procurement, planning or logistics background. The logic is that if the talented finance or marketing manager is now in charge of the supply chain, it must be important.

In many companies, this expanded universe of supply chain management, with leadership from finance or marketing functions, is swallowing up the somewhat independent procurement function. Rather than actively driving the supply side of the business, the function may again be relegated into a subservient support role.

But we can change that.

Acknowledge the change in the business climate

Companies have finally discovered the importance of the supply chain and are adding resources to shore it up. Supply chain management is also more customer facing these days, so adding an existing customer-facing leader may actually be the best thing for the business.

Some procurement leaders may feel they have lost influence or leadership. But the increase in importance and scope of the supply chain function should lift all participants. Consumer-facing businesses must address questions and concerns about the origins of their products. Are they sustainably sourced? Free of forced labor? Fair trade? Procurement holds the answers and can shine here.

Procurement professionals are a resilient bunch. Embrace the change and get ready to contribute in an expanded scope with certainly higher visibility.

Own procurement’s core responsibilities

Sourcing, supplier performance and managing supply chain risk are procurement responsibilities that aren’t going away. If anything, these critical functions are becoming more important.

Those new to supply chain management, or in existing functions like planning, distribution or transportation, may not fully comprehend the complexities of the procurement process and how tough it is to manage a full range of global suppliers.

This is a perfect time to reinforce our reputation in an evolving organization by doing our jobs very well and teaching others about the nuances of supply management.

The Christmas Supply Chain – But Not as you Know it!

Airmiles on a sleigh? Elves and Modern Slavery? Sustainable fur for Santa’s suit? Industry 4.0 technologies could change the very fabric of Christmas supply chains…

If you’re anything like the team here at Procurious HQ, it doesn’t feel we’ve recovered from last Christmas, let alone be ready for this year! While the festivities kick-off, we can’t help but think about the key role Procurement and Supply Chain play in making the holidays have all the joy and cheer you could possibly need.

However, it’s impossible to fail to see how the traditional Christmas supply chain will be altered in years to come and it’s all down to innovation and Industry 4.0 technologies. And there’s one organisation that might really see some changes. That’s right, we’re talking about Santa.

Now, as none of us have been fortunate to venture into Santa’s workshop at the North Pole (not for the want of trying…), we don’t know what technology he already possesses. A veritable Christmas-load of magic, yes, but is it time for a Kringle 4.0 upgrade to make sure he’s staying up to date with current trends.

Let’s have a peer into the supply chain to find out…

Airmiles, UAVs and RPA

Global population growth may have slowed to around 1.05 per cent per year, but it is still on the rise and expected to hit 10 billion by the late 21st Century. What this means is that Santa is going to have to find a way to exceed the already blistering 650 miles per second he has to travel in 2020 to ensure that he completes his deliveries on Christmas Eve.

What does this mean for Rudolph and the other reindeer? After over 300 years of delivering presents, could reindeer be on the way out and be replaced by a more innovative solution to help Santa out? As technology develops further it might even be possible for the traditional sleigh to become an Unmanned Autonomous Vehicle (UAV), or perhaps for reindeer to be overtaken by RPA.

Both solutions come with their own drawbacks. The airmiles on the sleigh are gargantuan on an annual basis, though with it being powered by magnetic levitation (or magic) the carbon footprint is at least very low. There is a limit to the current technology on time in the air for UAVs, as well as how far away a pilot can be before the signal is lost. And if the sleigh is a UAV, who is going to eat all the mince pies and carrots and deliver all the presents?

Blockchain and Sustainability

There are few conversations around Industry 4.0 without some mention of Blockchain and traceability. But with the volume of gifts that are given around Christmas increasing exponentially, it’s something that is more important than ever to aid traceability of products, but also their source raw materials and the individuals who made or used them.

Now, we know that the Elves (more on them in a minute) make all the toys for Santa, but Santa still needs to source his raw materials from somewhere. When considering sustainability, we also need to look to a future where Santa’s suit is trimmed with sustainable fur and he’s using a sustainable, or Vegan-friendly, leather for his harnesses and boots.

Santa, of course, should be using blockchain to ensure that all his wood is grown in sustainable forests, all his electronics are free from conflict minerals, and his second, third and fourth et. al. tiers in his supply chain are free from Modern Slavery.

Which brings us back to the elves. We would hope that they are provided with the best of living and working conditions and countless sources have told us how much they enjoy their jobs. But we should still be able to request their employment contracts under a Freedom of Information request. Just to make sure…

Optimisation and Risk Mitigation

With the supply chain becoming increasingly complex, as well as the increasing number of deliveries, Santa needs to find a way to optimise his supply chain. He already has key stakeholders to provide input, as well as having access to the myriad data from global sources. Santa may be able to use technologies like IBM’s Resolution Rooms, which facilitate discussions and create references and knowledge for future problem solving.

A key risk in 2020 is COVID-19. Not only will Santa have to load his sleigh with presents, but he’ll need gallons of hand sanitiser and a face covering for each household. Crowdsourcing ideas or using Resolution Rooms would be a good way for him to set an effective strategy for how to handle this.

Finally, one key aspect of supply chain optimisation is focusing on your strengths and outsourcing other activities. Santa may well decide that his strengths lie in present delivery and bring in other stakeholders to provide logistical and technical support.

Who’s the Boss?

What has also become clear during 2020 is that organisations that don’t recognise gender equality are doomed to failure. You only have to look at the success of the Procurious Big Ideas Summit to recognise the role of successful female leaders in business now and in the future. Fortunately, Santa already has a female leader who can play a more critical role as the organisation’s CEO – Mrs Claus.

As the organisation grows and so do the challenges of the global supply chains, Mrs Claus will play a pivotal role in the smooth running of operations, ensuring Santa has the freedom to focus on delivering presents. Mrs Claus brings a strong leadership to the North Pole, making sure strategic planning begins in plenty of time and that the right decisions are made. It’s high time Mrs Claus got the credit she deserves from the rest of the world!

The Future is Bright…

No matter what the future of the Christmas supply chain looks like, we all know it’s in good hands and (hopefully) making best use of the Industry 4.0 technologies available. Take time to consider all the work that goes into this when you wake up on Christmas morning and find your presents waiting for you (we’re assuming you are all on the nice list…).

It truly is a technologically driven Christmas miracle!

2020 Broke, Can We Get a New One?

2020 needs a reboot! Read on for tips on how to reframe the year from hell into a strategy to launch your career into success in 2021.

2020 – the one we all want to forget. It’s the year where we want to phone the universe’s IT department and ask if they can please push restart and download the new update, cos this ain’t working.

It’s a year of meme gold and one for the history books.

It’s been a year of heart warming collective connections and soul crushing defeats on a personal and global scale.

The highs were hard fought and the lows had you banning sweat pants on a weekend as they were reclassified as office wear.

The end of the year is fast approaching

Typically at this time of year we begin to reflect on the year we’ve had, what went well and not so well.  Plans start to form for the year ahead. What’s different about this year is that everyone is looking forward to seeing the back of it, like 2020 was some awkward uninvited guest.

Well this guest doesn’t have a curfew, it won’t just leave because we want it to. There seems to be a collective wish that if we just push through, when we wake up on the morning of the 1st of January 2021 everything will be different somehow.

2020 is not dirt on your shoulder

You can’t just brush it off. 

If we see 2020 as some embarrassing ex that we want to forget about, then we risk falling again. Because the truth is that this new place we find ourselves in is here to stay and by that I don’t mean the cliche of “this is the new normal”, but living with relative unpredictably and having things we took for granted (like being able to travel) still being out of our reach.

Opportunity knocks

2020 offers us a chance for growth. When people say “can we get rid of 2020 already! Am I right?” I actually struggle to join in with the 2020 beat up. It had definite lows, but 2020 offered a chance to work differently, innovate products and undertake self reflection and learn new resilience skills. There was no rhythm, predictive analysis or scenario planning that could prepare  anyone for this.

I noticed the people pushing through where the ones that were asking “what can I learn?” and “what is this bringing forward?”. As a team we found ourselves discussing how we can work with more heart and how can we stay connected.

COVID Linings

Resilience used to be about dealing with change. Traditional courses had an underlying agenda that if you prepared enough then you could handle anything, well how do you prepare for an international pandemic?  Resilience is now about vulnerability. Vulnerability is the only thing we have left when everything else goes out the window. It doesn’t mean you become weaker by opening yourself up to be picked apart (a fear response) but rather it’s the fuel for innovation.

A rebel mindset is important, one where we throw out the rules we’ve built for ourselves because heck – COVID has thrown our sense of security out the window so why stick to office platitudes and tired ways of doing things?

Try these tips to take the best lessons from your 2020 into the future:

  • Try something new and see how it goes. If an inner critic raises it’s head, banish it
  • Explain what motivates and drives you, shift your perspective from focusing on the details and the what and began to ask why and how
  • Don’t be afraid to pick a passion project and call it that, share it widely and recruit people to your cause
  • Open up to your colleagues about your struggles or blockages in your work and you’ll be surprised how many can relate
  • Stop thinking about all the things you can’t control or the things you can’t do and start thinking: if there are no rules and the shackles are off, what can you challenge, change or make?

2021 is going to be much like 2020 but hopefully we’re all a little bit more prepared. Rather than leaving 2020 in the dust, what can you thank it for?

How to Select a Marketplace Platform – What You Need to Know

Marketplace solutions will drastically improve end users’ experience, increase our own efficiency and revolutionise how suppliers and buyers engage with one another – so here’s what to look for in a Marketplace Platform.


Over the past two decades, we have seen an outstanding increase of B2C e-commerce platforms, now representing 30% of total trade1. As a result, it is no surprise that B2B e-commerce is also seeing significant growth in popularity built upon B2C e-commerce platforms’ success.  Until recently, B2B e-commerce platforms have been limited to a small number of indirect categories such as MRO or Travel & Transportation. However, we are now seeing companies expand their use of marketplaces across indirect categories due to an understanding that the path forward is to transform the Source-to-Pay process to allow end users to self-service their requirements.

Marketplace solutions will transform the overall Source to Pay (S2P) process in three ways:

1. Improve the end-user experience from search to buy, allowing budget holders to buy “in three clicks” as they are used to in their personal B2C shopping experience, thus increasing client satisfaction

2. Drastically reduce procurement teams’ time and effort responding to tail & tactical needs so they can focus instead on value-add activities and strategic supplier relationships

3. Improve the way suppliers and buyers engage with each other, with a focus on small and medium businesses — a move from “off-line” to digital offers via the marketplace reduces the visibility gap of products and services offered by large and small suppliers.

In this blog, I outline the transformation journey to prepare for a marketplace approach, as well as identifying how to select the right marketplace platform for your needs.

Transformative journey for end users, sourcing team and suppliers 

The Covid-19 crisis has accelerated S2P digitisation and the need for CPOs to propose new approaches that satisfy both end users and suppliers. These include improving end user satisfaction through self-sourcing, focusing the sourcing team on value-add activities, and complying with preferred supplier strategies.

Improve end-user satisfaction through self-sourcing

For a certain level of need, under a certain spend clip threshold, it can be onerous for end users to follow company guidelines, be trained on ERP or e-sourcing platforms and to try to find the products or services they want. The risk of this burdensome process is that end users may go “off-line” (outside of Procurement’s visibility), select their preferred vendor, then issue a retrospective PO to their organization.

Whereas, embedding a marketplace platform into the company’s ERP or e-sourcing platform will transform the “procurement end-user journey,” giving the power of sourcing and selecting vendors to the end-users to suit their needs and leveraging the natural “best buy” environment of the marketplace platform to improve savings.

Focus the sourcing team on value-add activities

Once the traffic of spot buy and tactical needs is funneled through a marketplace environment, the sourcing team can focus on the strategic needs of the organisation. They will also gain visibility to the tail and tactical needs of their organisation thanks to the analytics capabilities embedded into the more advanced marketplace environments. With this view, they can analyse the marketplace traffic and supplier revenues and consider switching some relationships from tactical to strategic.

Comply with preferred supplier strategies

In an “off-line,” non-digitised environment without means to track spend, it can be difficult to push tail and tactical spend to preferred suppliers such as minority vendors, corporate social responsibility (CSR) suppliers and small to medium suppliers.

The degree of supplier digitisation and ability to offer products and services “on-line” clearly allows procurement organisations to put those highly digitised suppliers and offerings in front of their end-users more easily than suppliers who are not as digitised. Marketplaces level the playing field for smaller suppliers.  And, marketplace ranking capabilities linked with supplier performance (such as EcoVadis ratings, on time delivery, minority spend, etc.) gives Procurement Sustainability Managers the ability to build preferred supplier lists directly into the marketplace environment and funnel end-user demand to those suppliers.

As companies decide to invest in marketplace capabilities, there are some key criteria to consider before selecting the platform that best fits your organisation’s needs.

How to select the right platform

Public vs. private B2B marketplaces

Public B2B marketplaces are the most developed solutions across the platform industry today. They follow the same principles of the B2C environment where suppliers and their associated products, services and pricing policy are fully managed by the platform owners. Platform owners may decide to provide their own products vs. those provided by suppliers invited into the marketplace, with limited visibility to alternative suppliers for the procurement organisation.  Consider the following key benefits and limitations of public marketplaces:

Public Marketplace benefits for Procurement organisations:

·  Content is fully managed by the platform owners

·  Onboarding of vendors is driven by the marketplace

·  Integration within current procurement platform is easy

Public Marketplace limitations for Procurement organisations:

·  Limited categories are available

·  Limited ability to integrate with legacy supplier base to offer products and services that the organisation has a history of buying

·  Payment process is often managed directly in the platform and control of spending is more difficult

·  Inability for an organisation to monetise their own supply chain

Given the limitations of public marketplaces, we are seeing a rapid rise in private marketplace platforms.  In some industries, the use of private marketplaces is quite natural. The hospitality industry, for example, was among the first to build procurement private marketplaces to propose to their franchisees and agents the ability to leverage their combined buying power, thanks to the digitisation of their needs both on the product and service side.

Before deciding to build your own private marketplace, a procurement organisation will need to size the effort required to build and maintain such an environment.  Consider also the following key benefits and limitations of private marketplaces:

Private Marketplace benefits for Procurement organisations:

·  Procurement organisation is fully in control of the suppliers onboarded

·  Historical vendors and associated content will help end-users buy-in

·  Fully aligned with internal procurement process including vendor payment

·  Organisation’s ability to monetise their own supply chain

Private Marketplace limitations for Procurement organisations: 

·  Content critical for marketplace adoption is managed by the procurement organisation

·  Potential lack of supplier competition on the marketplace

·  Time and effort required to set-up the environment vs. a plug and play public marketplace

Other critical aspects to consider when evaluating marketplaces

Products and services

Marketplaces are developed and implemented mainly to reduce the effort of managing tail and tactical spend. Within that spend remit, services are often as important as products. However, if a marketplace environment is optimised for products, it can be a challenge to add services.  Customisation and specification refinements are typically required to handle both.

Today, some platform providers have dedicated their platform to services while others to products — the end-user has to select one or the other environment based on his or her needs.

Collaboration capabilities

When selecting a private marketplace, if the procurement organisation has a say in the functionality, be sure to look at the platform’s collaboration capabilities between the end-users and suppliers. Collaboration bots can refine user needs and are a key enabler to self-source. 

RFQ capabilities

One of the first objectives of a marketplace is to control tail and tactical spend.  But next, we can expect the marketplace environment to manage much larger spend. To be successful in with larger spend and to differentiate further from e-catalogue providers, marketplaces need to increase the average spend clip levels while keeping a “best-buy” environment. Having “three quotes and a buy” capability within the marketplace will allow end-users to manage small RFQs directly for both products and services and will push upwards the level of spend transacted on the platform.

Analytics

Analytics capabilities are important for both the sourcing team and the suppliers. It will bring to the sourcing team a clear view of the organisation’s needs and potential missed savings reporting (such as when end users do not select the best available prices). For the suppliers, it is equally important that they understand how they are positioned in term of pricing, but also that they understand the most popular products and services to continue providing them and increase their revenue while participating in a “best-buy” environment.

With all of their benefits, whether public or private, we can expect B2B marketplaces to continue their rapid expansion into procurement organisations.  Marketplaces can dramatically improve user experience, enabling end users to self-serve when buying.  They can free up procurement staff to focus on more strategic activities.  And, marketplaces help connect buyers and suppliers and give more visibility to SCR suppliers and their offerings. 

Please comment or reach out to me to further discuss the value of marketplaces.  For more information, register for an upcoming webinar sponsored by IBM.

(1)   Brohan, M. (Dec 1, 2020). Gross sales on B2B marketplaces will finish strong in 2020 Digital Commerce 360.  https://www.digitalcommerce360.com/2020/12/01/gross-sales-on-b2b-marketplaces-will-finish-strong-in-2020/

The Year That Changed Everything

As 2020 comes to a close, let’s take a moment to reflect on the year that changed everything and prepare for what comes next.


Close your eyes. Breathe in… breathe out. And again: Breathe in, breathe out.

The chaos of 2020 is nearly over.

Back in February, we knew that COVID-19 would represent a watershed moment for procurement and supply chain professionals everywhere. But little did we know just how severe and lasting the impact would be. Our own research found that 97% of the world’s supply chains were disrupted. Fast-forward nine months, and procurement and supply chain management has changed forever, and so has our world. 

2020 was, simply put, difficult, stressful and disruptive. Everything we did and experienced was in the backdrop of a global pandemic – which affected how we think and interact, to how much we work and see our friends and family. But amidst the craziness, the pandemic also created new opportunities for our profession to shine, make a difference and get the recognition we deserve. And we delivered, in a big way.

Regardless of how you are feeling right now, there’s no turning back. The new year is around the corner. As 2021 approaches, what matters is how we adapt, move forward and chart our next course.

Unfortunately, and despite our best hopes, the first half of next year likely promises more of the same stress. But if we’ve learned anything in 2020, it’s that we are remarkably resilient, capable and in many cases, supernormal. We have everything we need to thrive and rise above the challenges, regardless of what is thrown our way.

Procurement Reflections on 2020: Super Heroes and Change Makers

While it’s easy to harp on the chaos of 2020, we prefer to think positive – and you should too. Consider all that we accomplished. In less than a year, our profession:

  • Overcame the biggest supply chain disruption this world has ever seen
  • Kept supply lines for critical goods and services operational
  • Used our influence to make a big mark on sustainability, diversity and social issues
  • Supported our supplier and small business partners, often during their hardest hours
  • Stepped up to lead and strategically contribute amidst crisis
  • Digitised and modernised the way we operate and collaborate  
  • Helped our colleagues make connections and find new jobs
  • Played an essential role in helping our organisations navigate the financial crisis

We also experienced a crash course in supply chain risk. We got knocked down, picked ourselves up and made seismic changes to the way we think, plan and operate. In the process, we created a more secure, reliable and sustainable supply chain than ever before.

As a profession, we should be proud. Sure, we have battle scars, but those scars make us stronger and prepare us to tackle whatever is thrown our way. That’s key – because 2021 promises to be another watershed year. Along with the ongoing financial crisis, many procurement and supply chain leaders will be tasked with protecting and accelerating the COVID-19 vaccine supply chain – and all the supporting elements that come with it. For those that play a role, whether big or small, it will be one of the most important initiatives they ever take on. Thankfully, after the year we have just experienced, we can be confident that our profession is ready and prepared.

Your New Year’s Resolution: Gratitude and Reflection

If you’re like me, there’s a million things you want to do next year. There are goals to set and plans to make. Everything can and should be made better in 2021. 

Instead of obsessing about all the things you want next, give thanks for what you have right now. Be proud of what you have accomplished. Celebrate with all those who helped you along the way.

I’ll go first. I am profoundly grateful and appreciative of our entire community. Thank you for reading and contributing. Thank you for sharing your strategies and experiences. Thank you for lifting each other up and lending a helping hand to your peers in need. Our community was all-in in 2020 – and we helped thousands of people and companies along the way. For that, I am both grateful and amazed.

Now it’s your turn. We have another big year ahead of us. But before we get caught up in it, let’s take the break we deserve. Let’s reflect on all the good we have done. Let’s spend more time with friends and family. Let’s celebrate our successes.

And let’s remember to breathe. In and out. Over and over again.

The Best Defence Is A Good Offence

Worried that your job may be on the chopping block? How to play offense & save your job!


“The best defense is a good offense.” No doubt you’ve heard this phrase. It’s been attributed to many different leaders, Michael Jordan, Knute Rockne, George Washington. But it’s an adage that’s just as old as war. This idea is also shared in business. Get out ahead of the problems. Anticipate. This is a great idea, especially if it’s starting to look like you might get fired or laid off.

First off, I think it’s fair to share that employers don’t always do an excellent job of firing people; they wait too long, do a really bad job at documenting reasons that would lead to firing people, look at emotional rather than rational reasons for letting someone go. HR is usually the fall guy – giving the manager an excuse for doing something they’ve likely wanted to do. Supervisory or management training doesn’t always include how to make good hiring decisions or how to provide constructive feedback in a way that encourages a good employee to improve or help them make a graceful exit if the position isn’t a good match for the employee’s skills.

Yet, even knowing all of that, it doesn’t make it any better to feel like your job is on the line. Even if you really don’t like your job. 

What choice have I got?

Most people I’ve talked to about this had a bit of a fatalistic attitude about it – much of the advice was preparing for what’s next: get your things together, fix up your resume and start looking for another opportunity. And honestly, take it at face value: this may be the chance you didn’t realize you were waiting for!

Which, let’s be honest, this may be what your organization is hoping you’ll do (if they are planning to fire you). Firing someone is hard. It’s uncomfortable. People are upset. Most leaders don’t like doing it and will do almost anything to avoid it. It’s not much different if you are going to be laid off.

But what if your job isn’t that far gone yet? Let’s talk about things you can do NOW to protect your job. Go on the offense so you aren’t looking for that “hail Mary pass” in the final seconds of the game. For those not familiar with American football, this is a long-shot pass, with very little chance of success. But it doesn’t stop teams from trying it, or fans from rooting for it.

(photo tribute to Star Tribune)

Be indispensable

First, let’s review my last post on how to make yourself indispensable. Do something better than others in your organization: be reliable, share information, be curious about your role and your organization. By making yourself indispensable, it will be harder for them to find a reason to either fire you or lay you off.

Share your successes

Keep track of your successes. Share your successes with your manager. Don’t assume they already know. Learn how to tell your story, and tell it often. Help your supervisor be able to tell your story to those higher up. Your success stories will confirm to others that you belong with this organization.

Explore all avenues

Maybe you are seeing the signs of a layoff. The economy, especially in America, is in a recession and lots of people are losing their jobs. If your job is at risk due to a layoff, you can still use being indispensable and successful to help you keep your job. But if it’s bigger, maybe your entire department is about to go! What else is available in your organization? Talk to your boss about opportunities to use your skills in a different area of the organization. Most skills have a level of transferability and if you are at a large organization, there may be a chance to try out something new. The healthcare organization I work at offered staff the opportunity to reskill into an area of direct patient care. Think about what else you can do.

Losing your job sucks. And I’ve been there – fired, laid off and on both sides of the coin! But the work you do now can help you keep your job, assuming that’s the end goal. Or, the work you do now, can help prepare you for that next, awesome opportunity. Good luck!

Digital Goats And Virtual Drinks: 7 Bizarre Procurement Tech Learnings In 2020

Wish you could erase 2020 from your memory? We don’t blame you. But before you write it off, take a look back at the wonderfully bizarre things we learned in 2020.


Many of us wish we could forget 2020. But that would be a mistake!

We learned so much last year about procurement’s influence in the world – both good and bad.

So before you erase your memory, take a look back at the top 7 bizarre things we didn’t know before 2020.

People track Mongolian goats with an app

This gem came from Sally Guyer, Global CEO of World Commerce & Contracting. She explained Mongolia produces nearly a fifth of the world’s raw cashmere. 

And even though cashmere is considered natural and sustainable, soaring consumer demand is fueling overgrazing and damaging the land. 

So Toronto-based Convergence.tech and the UN teamed up to create an app for Mongolian farmers, backed by blockchain technology. 

Now the UN is able to interact with over 70 different herders and eight cooperatives through a simple app – meaning cashmere production can be tracked from end-to-end. 

Read more in her full article >

And managers track staff with an app

With so many employees working remotely for the first time, some companies went totally overboard on surveillance. 

Features vary, but tracking software lets companies monitor everything a staff member does on a company computer. 

This ranges from recording all websites visited, to taking screenshots every few minutes and sending them back to the boss. 

In fact, one surveillance software company, Hubstaff, saw a 95% increase in new customers during March 2020.

Great for productivity? Or a total trust destroyer? You decide.

Read more about companies making sure staff are ‘productive’ >

Nothing attracts liars like a global crisis 

One woman was caught selling illegal pesticide on eBay, claiming it could provide immunity from the virus. Seriously.

And one man allegedly tried to sell 100 million facemasks to the US government, despite not actually having any.

Counterfeit products were plentiful, with one NHS healthcare provider in the UK reporting 95% of the N95 masks she was offered were fake.

“When I informed one supplier that I knew their certificates were fake, they said to me, “Ok, if I give you real certificates for other products will you place an order?’” the NHS provider said.

Oof.

See the full run-down of COVID-19’s dark side >

Networking still matters, even if it’s virtual

It doesn’t matter if you usually lurk in the corner at networking events. Or if the word ‘networking’ makes you break out in hives. You were built to network – even during a pandemic. 

That’s because you’re already a natural at creating partnerships across supply chains and stakeholders, said Tania Seary, Founder of Procurious.

“Procurement professionals are united by the need to be agile, to be savvy, to be bold,” Seary said. “We can do that alone, but we can do it even better by reaching out to colleagues and contacts to fill the gaps.”

So pour yourself a glass and enjoy a good virtual mingle. Or keep watching “The Crown” on Netflix. Your call.

Read the full article on how to network your face off >

Sweatpants are work attire

When COVID-19 hit, the just-in-time strategy fell on its face, said IBM’s Takshay Aggarwal. 

“All those informed predictions about stock levels and deliveries were suddenly obsolete,” Takshay said.

“That’s because consumer behaviour changed overnight. Instead of looking trendy, we sought comfort. Purchases of sweatpants were up 80 percent in April, according to the New York Times.

“We learned that lean management works wonderfully well, until it doesn’t. It’s one of three fatal flaws in procurement exposed by the pandemic.”

Watch Takshay’s must-watch interview with Procurious founder Tania Seary >

We can predict demand based on weather

Instead of basing predictions on past sales, we can now forecast demand based on weather. 

“Companies can actually predict food requirements at a shopping mall food court by analysing parking spaces and the weather,” said supply chain social media influencer Rob O’Byrne.

“They harness data on parking space occupancy, combine it with the weather forecast, and predict how many people will turn up at the shopping centre.”

“That’s real forecasting.” 

See all 8 ideas Rob says you need in your toolkit >

iPhones originally had a plastic screen

When Steve Jobs unveiled the first iPhone in 2007, the screen was plastic. 

Yet the next day, Jobs noticed the screen was covered in scratches and called his VP of Operations, Jeff Williams, demanding a glass screen for the official release. 

Williams said it couldn’t be done in just six months. Every glass prototype they tried had smashed, and it would take years to create a shatter-resistant, thin glass. 

But Jobs insisted. So Williams worked with speciality manufacturing company Corning to create damage-resistant Gorilla Glass in time for the launch. Now every smartphone in the world uses it.

That proves procurement teams can meet specific business needs by working with suppliers to innovate, said Dr. Marcell Vollmer, Partner and Director at Boston Consulting Group. 

See why Dr. Vollmer is enthusiastic about procurement’s future >

To 2021 and beyond

There’s no question 2020 was a hard year in our industry. We saw first-hand how a crisis can bring out the ugly side of supply chain. 

But mostly, we learned how procurement can change the world for the better.

As Supply Chain Revolution CEO Sheri Hinish put it: “We can come from different backgrounds, different parts of the world but at our core, we fundamentally want the same things. So, it’s real and when you think about collaborating within a global context…this is what wakes me up every morning – to create a world that’s bearable, viable and equitable.”

Onwards and upwards, then.

5 Things 2020 Taught Us About Our Procurement Careers

After 2020, it’s back to the drawing board as far as career advice goes! Our expert sources reveal their top career tips moving forward.


As procurement evolves as a profession, so too does the career advice associated with it. Most years, we learn a thing or two more that we’ll need to implement. This year though? Not so much. 2020 has been the year that career advice has not just evolved, but changed entirely. It has been the year where we have redefined what ‘success’ might look like, grown an appreciation for the small things, and valued the people around us even more. It has been the year where we’ve challenged assumptions about not only how we work, but also where we work and why we do what we do. 

So what, exactly, has 2020 taught us about our careers? Given the now monumental importance of the supply chain and procurement profession, many experts have weighed on what the very best career advice of 2020 has been. Here’s a round up of the five most important things we’ve learnt this year: 

1. We don’t need to be ashamed of being laid off 

It’s one of most people’s greatest fears for good reason: no one wants to get laid off. Being laid off (especially in this economic environment) can feel overwhelming, frightening and humiliating. But what is perhaps even worse is contemplating how to explain being laid off to future employers. Won’t they think that it was a problem with you? 

No they most certainly won’t, says Imelda Walsh, Manager at The Source Recruitment. Even before the millions of redundancies that happened this year, it was always best practice to be honest with a future employer about why you left your last role. 

And especially this year, Imelda says, the stigma around being laid off has all but been put to bed. Being honest about what has happened helps protect your personal brand: 

“If you’re honest, it shows you have integrity. If you’re not, it casts doubt over your whole personal brand. It takes an entire career to build a positive personal brand, but only a few minutes to destroy one.” 

You can read more of Imelda’s brilliant advice here. 

2. Looking after your people is integral to your success

In the past, many have thought of a career as an individual pursuit. In fact, in days gone by, an autocratic management style and having sharp elbows were considered a requisite to success. 

But not anymore. 

If 2020 has taught us anything, it’s that if our team doesn’t succeed, neither will we. Being a gracious and empathetic person (and leader and team player) has never been more important. In fact, if you want to succeed, this is the exact advice that Ian Holcroft, Director at Murphy, gives all aspiring CPOs: 

“No matter the technological advancements we have now and into the future, people will still be at the centre of everything we do. In strange and challenging times, it’s even more important to look after your people – understand what drives them, what challenges they have outside work and the status of their mental health.” `

Ian has much more excellent advice, here. 

3. Crisis can help build our leadership skills 

One piece of advice that doesn’t change year to year is that we all need to cultivate our leadership skills. This is so important, in fact, that it is considered the number one skill required to succeed in your career, regardless of your profession. 

Usually, a combination of training, experience and a great mentor can help us develop these leadership skills. But a curveball that 2020 has thrown us is that these aren’t the only ways to develop leadership skills. In fact, a crisis can be fundamental in helping us to develop the ability to lead through uncertainty, which is an essential part of leading. 

Mark Holyoake, founder of Holyoake Search, believes that 2020 has provided us all with a unique opportunity to lead, and this is something that companies look for when hiring senior procurement professionals: 

“Leading through uncertainty and adversity has certainly been required of late. As a CPO, you’ll always face uncertainty – so leading in this way is a great skill to be nurturing now.” 

Mark knows more than a thing or two about what skills companies look for when hiring CPOs. You can read his compelling advice here. 

4. Connect inside – and outside – of your industry 

For as long as we’ve been offering career advice, we’ve said one thing to all procurement professionals: building your connections is key. In fact, building connections is the reason we created Procurious in the first place. 

But this year has made the need to connect with others – both inside our team and industry, and outside of it – even more important. With the nature and complexity of some of the supply chain disruptions we’ve seen, connecting and collaborating with all manner of people is now not just a nice to have, but a need to have in order to problem solve and keep our organisations functioning. 

Ian Holcroft, Director at Murphy, believes there’s been no better time to remember one particular old, yet critical adage: 

“It isn’t about what you know, but rather who you know.” 

Ian has much more captivating advice when it comes to connecting. 

5. Be expansive in your thinking

In procurement, we like to think we’re excellent problem solvers. We’re also (usually) excellent risk managers, organisers, and creators of seamless processes. 

But this year basically obliterated our assumptions about almost everything we do. It is no longer possible to use old solutions and to solve the new problems we’re experiencing. 

They key to solving for this, says Mok O’Keefe, Chief Officer at The Innovation Beehive, is to be expansive in our thinking. He says: 

“To be expansive in your thinking, you need to suspend your judgement and forget about assumptions. Say to yourself: how else could this work? Then, when ideas come to mind, ignore the voice that says ‘this is a crazy idea and it won’t work.’ Instead, ask yourself: ‘Under what circumstances could this be possible?’” 

It’s fair to say we all need to be a bit more innovative with our careers this year. Mok’s got a great formula for this, which you can read here.  

2020, the year careers as we know them changed forever 

Like most things after 2020, our careers will never be the same. But could different mean better? Many experts think so. Let’s head into 2020 with a fresh set of advice, a renewed way of looking at things and even higher aspirations for ourselves and our profession.