Category Archives: Supply Chain

The Three Fatal Flaws In Supply Chains

The pandemic exposed three fatal flaws in the way companies manage supply chains. Hear from IBM’s Takshay Aggarwal on how to recognise your supply chain flaws and be ready for the next disruption.


In 20 years of supply chain experience, I’ve never seen a supply and demand shock at the same time.

Yet COVID-19 hit, and instantly the just-in-time strategy fell on its face. 

All those Informed predictions about stock levels and deliveries were suddenly obsolete. 

That’s because consumer behaviour changed overnight. And it hit retailers hard.

Instead of looking trendy, we sought comfort. Purchases of sweatpants were up 80 percent in April, according to the New York Times.

Time travel

And who could have predicted the mass shift to online shopping and remote working? McKinsey estimates US e-commerce jumped forward 10 years in just three months

No wonder we’re all a bit dizzy. 

And as volatility went up, people focused on the basics – paying off debts and stashing cash to weather the storm. 

Suppliers and consumers were equally frustrated by empty shelves, never knowing when the next shipment was coming in.

The truth is, we had this disruption coming. The pandemic exposed three fatal flaws that were otherwise laying dormant in supply chains. 

  1. Single sourcing

It’s no secret many supply issues during the pandemic stemmed from an over-reliance on Chinese suppliers. When major industrial cities in China went into lockdown, production ground to a halt.

Companies developed a reliance on Asia by wanting the lowest cost at all costs. It didn’t matter where material came from, as long as it was at the right price.

  1. Low inventory

Who wouldn’t love a just-in-time supply strategy? It works wonderfully well, as long as you stay within a certain degree of volatility.

It’s cost effective, and ensures you aren’t left with mounds of unsold product taking up space.

But then a pandemic hits and volatility skyrockets. The result? A huge unmet demand for basic staples like flour and toilet paper. 

  1. Reliance on suppliers to manage inventory

Someone has to keep an eye on all that stock. Since retailers don’t want to, they pass that responsibility to suppliers.

The issue is those suppliers are also relying on suppliers, and if you don’t know who they are, you don’t know the extent of your supply chain weaknesses and risks. That’s why so many companies were caught off guard.

So where do we go next?

We’re already seeing a monumental shift in the way companies approach supply chain management.

The first trend is multi-sourcing, to make sure a chain is not dependent on a single point of failure.

The second, is planning for a higher degree of volatility. Because the world will continue to experience volatile events, like natural disasters, with greater intensity and frequency moving forward.  

And the third, is becoming risk balanced. Rather than the absolute lowest cost, companies are looking for a better balance between delivering value and managing supply risk.

What successful procurement will look like

All of these fatal flaws – and the new strategies emerging as a result – all point to one crucial need: end-to-end supply chain visibility.

It might sound like a dream, but it’s actually possible.

The most resilient companies are using control towers to keep eyes on the entire supply chain, and gain advanced warning to avoid disruption.

And I don’t mean the spreadsheets that people call ‘control towers.’ I mean genuine systems that pull in essential data from across departments and across suppliers. Without that total oversight, you’ll never have the visibility you need to make informed decisions. 

For example, IBM’s global supply chain uses IBM Sterling Control Towers so that we’re alerted to potential issues far earlier than our companies.

That gives us time to react, and avoid much of the disruption. 

Control towers can help you understand the next steps to take, so you’re much more resilient to shocks.

Embrace technology

Investing in control towers is the right way to start improving supply chain visibility. But you also need the right tech infrastructure to match.

For example, I’ve noticed retailers making great strides in becoming omnichannel. Without that seamless experience in store and online, companies risk becoming irrelevant in the next decade. 

The fact is, there are tools out there to help your company survive and thrive during this crisis. It’s truly an amazing time to be a supply chain leader, and with the right partner you can offer the answers your company sorely needs right now. 

Invest in the right technology and gain end-to-end visibility across your supply chain. You’ll spot opportunities, and you’ll be prepared the next time an ‘unprecedented’ event hits. 

IBM’s Takshay Aggrawal recently sat down with Procurious Founder Tania Seary to discuss end-to-end visibility, and how supply chain management will never be the same. Listen to their full discussion now.

The Truth? Technology Might Make Your Supply Chain More Resilient

Technology will only make a difference in supply chain management if it’s tailored directly to your company’s needs.


Let’s get this straight: technology can’t fix everything. There’s no magic wand to solve every supply chain problem. 

But technology can make your processes better. That means more time, money, efficiency, happy customers, and happy bosses.

And who doesn’t want that?

I’ve seen companies of all sizes improve their process flow with technology and make huge savings.

But that only happens when two conditions are met:

1) They choose the right technology. What does “right” mean? It depends on a host of factors, but in essence it’s solving a need or filling a major gap. Understand the business need first, then find the tech that fits – not the other way around.

2) The system is used the right way. That means getting full use out of it without exceeding the intended purpose. You get the maximum benefit without depleting other resources. 

Don’t get wet

Consider this analogy: you need to go from one side of town to the other in the middle of a storm without getting wet. You know a motorcycle and a car can both get you there in time, but only the car would get you there dry. 

This is what selecting the right technology is about. To borrow another vehicle metaphor, don’t use a Ferrari when a Ford will do. An all-singing, all-dancing system might look flashy, but it might be way too much for what your company actually needs.

Procurement and Supply Chain work the same way; getting to the other side of town means nothing more than sustainable profitability, competitive edge and market share. And the storm? Well, that’s just risk mitigation in the business world.

Getting the job done

Here’s a look at how real companies are using the right tech to save money and be more resilient.

Automate processes 

From Purchase Order to Processing payments, streamlining a workflow within the supply chain allows for people to focus on decision making while facilitating resolution, eliminating paperwork, accelerating compliance, and managing exceptions.

Look no further than a global distributor of chemicals who recently chose a full guided-buying suite. They took away the manual labour by processing POs automatically. The result?  Increased supplier payment compliance, reduced tail spend, and more resources for tactical and strategic decision making.

Accelerate communication

The right technology enables and accelerates communication. Your ability to react effectively to market conditions relies heavily on promptness and clarity. Technology can link your business operations to your supply base so you never miss a beat.

Improve visibility

Suppliers need to know where things are at any given point. And equally, you need to know what is going on with your supplies, assessing all potential risks. That way, you can mitigate disruption in real-time.  

Take a US leader in food distribution for example. We recently led them through a full spend analytics effort to identify cost savings opportunities. The result? They saved USD $10M in one year.

Interpret and analyse data 

Data analytics is no longer a competitive advantage; it’s a core necessity. Even something as simple as spend analytics is a powerful tool that can inform strategic decisions at the top level.

Break down silos and bridge functions

From Procurement to Accounts Payable to Operations, technology can provide a collaborative platform that everyone can access and understand. Everyone has access to the full information across the board, taking what they need and staying aligned.  

That level of visibility across different functions can showcase how valuable you are to the company. Like a global leader of consumer products who recently leveraged a mix of eSourcing technology and advisory services. 

They were able to demonstrate savings on a multitude of sourcing and category events while tying them to the financial goals of the organisation, effectively impacting the EBITDA and Cash metrics.  

What CEO wouldn’t love to hear that?

Decrease redundancy, increase efficiency

Technology provides a platform for businesses to digest more, process more and err less. This alone saves significant resources, making the organisation and its suppliers more productive.

Enable compliance

Within the supply chain commitments, adequate performance and managed expectations are as critical as regulatory compliance. Technology can provide a platform for managing relationships, honouring commitments, and upholding agreements. All of that leads to better relationships.

Just look at a global pharmaceutical leader who implemented a supplier management module across the board. As a result, it can now classify its entire supply chain based on critical risk metrics. 

That means the global operations are adequately diversified and critical suppliers are handling processes and data with the highest security compliance, privacy, and environmental sensitivity.

The smooth road to resilience

All of the companies I mentioned had different priorities. That’s why you need to choose technology that meets your specific needs.

And as you can tell, there are infinite combinations of tools and applications that can be used to “get to the other side of town”. But the idea is to get to the other side not just in one piece, but also in sturdier conditions. It’s about learning in the way, enduring and increasing resilience.

The key to come up with a combination that balances needs with budgets and aligns with your strategic vision, starts with defining what success looks like for your supply chain and those entities who manage it. 

Modular, cloud based, and service driven technologies provide the needed flexibility toward the easiest and most yielding path to success.

The Dangers Of Dirty Data

Is your organisation working with ‘dirty data’? How would you know? And, what impact is it having? This article has everything you need to know about doing a quick spot check, spotting procurement problems, identifying savings, and more importantly, making sure your data has its COAT on.


We all think we know what dirty data is, but it can mean very different things depending on who you speak to.  At its most basic level, dirty data is anything incorrect.  In detail within procurement, it could be misspelled vendors, incorrect Invoice descriptions, missing product codes, lack of standard units of measure (e.g. ltr, L, litres), currency issues, duplicate invoices or incorrect/partially classified data.

Dirty data can affect the whole organisation, and we all have an impact on, and responsibility for the data we work with.  Accurate data should be everyone’s responsibility,  but currently across many organisations data is the sole responsibility of a person or department, and everyone trusts them to make sure the data is accurate.

But, they tend to be specialists in data, analytics and coding, not procurement.  They don’t have the experience to know when a hotel should be classified as accommodation or as venue hire, or what direct, indirect or tail spend is and its importance or priority.

How many times have you been working with a data set and noticed a small error but not said anything, or just manually corrected something from an automated report, just get it out the door on time?  It feels like too much of an inconvenience to find the right person to notify, so you just correct the error each time yourself, or you raise a ticket for the issue but never get round to checking if it’s resolved. 

These small errors that you think aren’t that important can filter all the way up to the top of an organisation through reports and dashboards where critical decisions are being made.  It happens almost every day.

How does this affect my organisation?

There are many ways, but one of the most widespread and noticeable impacts is around reporting and analytics.  If you’re in senior management, you will most likely receive a dashboard from your team that you could be using to review cost savings, supplier negotiations, rationalisation, forecasting or budgets.

What if within that dashboard was £25k of cleaning spend under IBM?  I can already hear you saying “that’s ridiculous” – well, it is obvious when pointed out, but I have seen with my own eyes IBM classified as cleaning.  It can happen easily and occurs more frequently than you might think.

Back to that dashboard that you are using to make decisions, you’ll see increased spend in your cleaning category, and a decrease in your IT spend, which could affect discounts with your supplier, your forecast for the year, monitoring of contract compliance etc…  It could even affect reporting of your inventory,  it appears you need more laptops, and unnecessary purchases are made. 

When there are tens or hundreds of thousands of rows of data, errors will occur multiple times across many suppliers.  And for the wider organisation, this could affect demand planning, sales, marketing and financial decisions.

And then there are technology implementations.  Rarely is data preparation considered before the implementation of any new software or systems, and there can even be the assumption that the software supplier will do this, which may not be the case, and if they do provide that service it might not be good enough.

It can be very far into the process of implementation before this is uncovered, by which time staff have lost faith in using the software, are disengaged, claim it doesn’t work, or they don’t trust it because “it’s wrong”.  

At this point, it either costs a lot of money to fix and you have to hope staff will engage again, or the project is abandoned.  In either case, this can take months and cost thousands, not millions of pounds/euros/dollars in abandoned software or reparation work.

You might also be considering using, or engaging with a 3rd party supplier that uses AI, machine learning or some form of automation.  I can’t emphasise enough the importance of cleansing and preparing your data before using any of these tools. 

Think back to the IBM example, each quarter the data is refreshed automatically with the cleaning classification, that £25k becomes £50k, then £75k the following quarter, it’s only when the value becomes significant that someone notices the issue.  By this stage, how many decisions have been based on this incorrect information?

How can this be resolved?

Truthfully, it’s with a lot of hard work.  There’s no magic bullet or miracle solution out there to improve the accuracy of your data: you have to use your team or an experienced professional to get the job done. Get your team to familiarise themselves with the data. If they are reviewing and maintaining it regularly they will soon be able to spot errors in the data quickly and efficiently.

If you think about data accuracy in terms of COAT, this will help to manage your data.

It should always be Consistent – everyone working to the same standards; Organised – categorised properly; and Accurate – correct.  And only when you have these things will it also be Trustworthy – you wouldn’t drive around in a car without a regular inspection would you?

How to spot procurement problems and identify savings

Accurate data is important, but in its raw state, it’s not the whole story.  As a procurement professional you’re tasked with ensuring the best prices for products or services, as well as ensuring contract compliance on those prices, along with cost reductions and monitoring any maverick spend … to name but a few!

Accurate data alone will not help achieve this, I strongly recommend supplier normalisation and spend data classification to help quickly and efficiently manage spend and suppliers, monitor pricing and spot any potential misuse of budgets.

How do I get started?

With a spreadsheet of spend transactions over a period of time such as 12 to 24 months, the first step should be Supplier Normalisation, where a new column is added to consolidate several versions of the same company to get a true picture of spend with that one supplier.  For example, I.B.M, IBM Ltd, I.B.M. would all be normalised to IBM.

Data can be classified using minimum information, such as Supplier Name, Invoice/PO line description and value. To get more from the data, other factors can then be added in, such as unit price. Where unit price information is not available, the quantity can be divided by the overall value.

A suitable taxonomy will then need to be found to classify the data.  It can be an off the shelf product such as ProClass, UNSPSC, PROC-HE, or a taxonomy can be customised so it’s specific to your organisation or industry.

This initial stage may take months if you are working with large volumes of data. It might be worth considering outsourcing this initial task to professionals experienced in this area, who will be able to complete the project in a shorter time, with greater accuracy.

Avoiding common pitfalls

There are a number of ways to classify the data> However, to get started, look for keywords in the Supplier Name and then the Description column.  The description of services could include ‘hotel, taxi, cleaning services, cleaning products, etc., however, it’s important to carefully check the descriptions before classifying, or errors could be introduced.  A classic example is “taxi from hotel to restaurant”, depending on which keyword you search for first, it could end up being misclassified as transport, or venue costs.

I wouldn’t advise classifying row by row, as it could take more than twice as long to complete the file using this method.  Start with keywords, followed by the highest value suppliers which you can get from a pivot table of the data if you’re working in Excel.

Identifying opportunities

Once classified, charts can be built to analyse the data.  The analysis could include, ‘top 80% of suppliers by spend’; ‘number of suppliers by category’; ‘unit price by product by month’;  ‘spend by category’; or ‘spend by month.’

Patterns should start to emerge which could reveal unusually high or low spend in a category, irregular pricing, higher than expected use of services, or a higher than expected number of suppliers within a category. 

Why you should strive for data accuracy and classification?

Data accuracy is an investment, not a cost.  Address the issues at the beginning: while it might seem like a costly exercise, you will undoubtedly spend less than if you have a to resolve an issue further down the line with a time-consuming and costly data clean-up operation.  And by involving the whole team or organisation, it will be much easier to manage and maintain the most accurate data possible.

Spend data classification shows you the whole picture, as long as it’s accurate.  You can get a true view of your spend, allowing improved cost savings, better contract compliance and possibly the most important – preventing costly mistakes before they happen.

So, does your data have its COAT on? What does ‘dirty data’ mean to you? Let me know below!

Susan Walsh is the founder of The Classification Guru, a specialist in spend data classification, supplier normalisation and taxonomies.  You can contact her at [email protected] https://www.procurious.com/professionals/susan-walsh

5 Barriers To Achieving End-To-End Supply Chain Visibility

Is it possible to get real-time, end-to-end visibility across your supply chain? Absolutely. But only if you have the right tools.


Since the term “supply chain” was first coined, we’ve all been searching for the holy grail: end-to-end supply chain visibility.

Now, as we recover from the initial shocks of the pandemic and manage through ongoing challenges, we need it more than ever.  But is total visibility actually possible? 

That was our question for Takshay Aggarwal, Global Lead Digital Supply Chain Partner at IBM Global Business Services.

Takshay and Procurious Founder Tania Seary recently talked about building resiliency in a disruptive environment.

A flawed strategy

Prior to the pandemic, a “just in time” inventory management strategy worked wonderfully well for most supply chains, but “just in time is only able to respond to certain fluctuations,” Takshay said. 

When the pandemic drove large-scale disruption, the strategy unravelled. Retailers, for example, were left with empty shelves, late deliveries, and no warning about shipping delays.

And it wasn’t just retail. Industries across the board lacked critical products because companies didn’t have visibility into their tier 2 to tier 10 suppliers – where 40% of supply chain disruptions occur.

Suddenly, companies were scrambling to change supply strategies. 

“The companies who have started on transformation journeys before COVID have fared much better,” Takshay said.

In fact, IBM’s visibility of its own internal supply chain meant it could predict the supply chain impact from the pandemic much sooner than most. 

Path to resilience

So how do you get that same level of visibility and resiliency across your supply chain?

It starts by asking the right question.

“[People should be asking] ‘what kind of supply chain do I need to have?’” Takshay said. 

That’s why the smart companies are re-balancing their risk appetite. 

A real control tower

A resilient supply chain is a transparent supply chain. And the only way to get that crucial visibility is having a smart control tower.

The concept of a control tower isn’t new. It’s a place to pool data from across your supply chain, and use it to make informed decisions.

The right tower helps you see problems a long way off, so you can minimise disruption and maximise profitability. 

But Takshay noted a worrying trend in procurement where any sort of dashboard is called a “control tower”. 

That’s a problem, since most inventory control towers are seriously limited. And you can’t make excellent decisions without knowing the full picture.

Takshay pointed to the IBM Sterling Supply Chain Control Tower as a huge development that finally gives companies the end-to-end visibility they crave.

Here’s how the sophisticated tower can help you overcome the five biggest barriers to visibility.

Problem 1) Most inventory control towers don’t work across silos.

A huge frustration is most control towers can’t handle all the siloed systems of today’s complex enterprises.

It’s a bit like depending on an air traffic controller who can only see part of the runway.

Takshay noted IBM’s control tower works seamlessly with ERP systems, warehouse management, demand planning, order management, e-commerce platforms, and logistics. 

You get one version of the truth across your entire inventory.

Problem 2) Most control towers only show you an inside-out view. 

It’s a big task to monitor operations across the supply chain. But you’re severely limited if your systems won’t sync up with your suppliers’.

That’s why the IBM Sterling Inventory Control Tower makes it easy to work across business partner network.

The result? You can make decisions with confidence, knowing you have all the external information you need.

Problem 3) Most tower controls can’t get into the nitty-gritty detail.

A crucial flaw in most control towers is they lack granular detail. That’s a pretty big issue when your job hinges on knowing the right details.

So instead of depending on people to enter the right data in the right place at just the right time, there’s a smarter way.

IBM’s control tower gives you the microscopic detail you need to make confident decisions. 

Problem 4) Most tower controls are inflexible.

A major drawback for most inventory control towers is the rigid structure. 

There’s only one way to input data, and don’t even dream of changing the architecture. But the pandemic showed us how fast everything can change and how flexible and agile your supply chain needs to be to respond effectively.

You need a control tower that can keep up with the reality of supply chains today. That’s why the IBM Sterling Supply Chain Control Tower is ideal. It adapts to fit your business needs – no matter how quickly they change.

Problem 5) Most control towers predict the future based on past events. 

If you don’t have real-time visibility across your supply chain, you are making decisions based on past events, Takshay said.

At the very least, a control tower should give you current information. But IBM takes it a step further with predictive capabilities.

The control tower looks for patterns in your data – flagging possible issues before they happen. That way, you can quickly adapt and avoid disruption.

Don’t wait for perfection

Control towers go a long way toward visibility and resiliency, but they aren’t a silver bullet, Takshay said.

So instead of waiting for perfection, start bringing your systems together now. 

“The more visibility and the more integration, the more resilience,” Takshay said. “You’re able to bounce back much faster.”

If you want greater supply chain resiliency, you need greater visibility.

And you’ll get that level of visibility if you choose a control tower that actually gives you control. 

Watch the full webinar – Building Resiliency in a Disruptive Environment: How Control Towers Make a Difference – for free >

Beyoncé And Supply Chain Diversity

Are our supply chains tunnel-visioned, or do they support a diverse range of ethnic minorities, women, military veterans, people with disability, or ex-offenders trying to build a new life?


A few months ago, Beyoncé dropped a surprise new single. Hang on, what’s that got to do with Procurement with Purpose (PwP), I hear you say?

Well, apart from the fact the sing is really rather good, Black Parade is linked to her wider initiatives around charitable work (through her BeyGood initiative), black empowerment and consciousness. Revenue from the track is being used to benefit BeyGood’s Black Business Impact Fund – administered by the National Urban League – to support black-owned small businesses in need.

She has also launched a directory of black-owned businesses ranging from art & design, restaurants, beauty products, lifestyle, wellness, bookstores and more. It’s a fairly basic site, and pretty much all the firms listed there appear to be B2C (consumer focused) rather than B2B. But her move may raise more questions about how organisations approach their corporate buying, in particular when it comes to minority-owned businesses that could be used as suppliers. Recent events and the Black Lives Matter movement have made many of us think about racism and bias in our lives, and that applies in the supply chain as much as it does anywhere. So, that takes us back to procurement with purpose.

Diversity (broadly speaking now) in the supply chain is actually one of the most fascinating topics within the whole PwP world. For a start, there are any different types of diversity. Should you buy more from firms owned by people from black and other ethnic groups? What about female-owned businesses? Or those owned by folks with disabilities or health issues – or maybe those firms that employ such people? What about firms that are owned by support military veterans, or ex-offenders trying to build a new life?

Or maybe it’s not the ownership that matters. What about SMEs (smaller firms)?  Some would suggest that those businesses drive successful economies and by supporting them at an early stage, buyers can capture innovation and also promote wider social and economic benefits. Others, particularly in the public sector, look to support local business, on the grounds that this will keep the money flowing in the local economy rather than being sucked up to some distant head office.

All these options mean it can be hard to know where to start. But in many countries, it is clear that minority-owned businesses in particular do have a tough time as they have to overcome all the usual hurdles faced by start-ups anywhere, plus they face the bias (conscious or unconscious) that does exist.

We’re  not going to solve that problem in one article today,  but as well as highlighting that this may develop into a high-profile issue, a few suggestions for now.

·         Firstly, take a look at how easy it is for any new or small firm to become a supplier to you. How can they put themselves forward? Are your supplier qualification and selection processes designed for huge firms, rather than start-ups? Do you put accidental barriers in the way, demanding onerous contract terms, expensive insurance and so on? Too many large firms are virtually impossible to break into, which is not good for the agility and dynamism of their supply base, never mind the difficulty for minority-owned suppliers.

·         Secondly, if you haven’t looked at these issues, seek out organisations that can help you work out an approach. MSDUK has done good work in the UK to promote minority owned businesses, WEConnect International does the same with female owned enterprises, and there are others covering different groups and issues and across different countries.  The good news is that large organisations don’t have to move very much of their spend into supporting these causes to really make a difference.

·         Thirdly, there are some good case studies around. Accenture has been one of the leaders in this area with their supplier inclusion and diversity programme, and there are others who have made strides in this field.

·         And finally, how about Beyoncé for US Vice-President?

This article was originally published by Procurement With Purpose on 20 June 2020 and is republished here with permission.

Suppliers: Who And Where Are Your 1%?

You might think that your most strategic suppliers are the ones you spend the most with. But supply chain crises may shine a light on which suppliers are actually strategic.


Modern-day supply chains are truly global, highly complex and getting longer and longer. 20 years ago, most of a company’s suppliers were probably within a very short radius. Today they could be on the other side of the world.

The reality is that organisations have more difficulty than ever keeping track of their entire supply chain – from Tier 1 all the way down to the smallest supplier organisations. This poses enough challenges for organisations when it comes to issues like environmental performance or modern slavery, let alone with supply chain efficiency or continuity of supply.

With so many suppliers to keep track of, organisations have to make decisions about who their strategic suppliers really are. Traditionally, organisations (and their procurement departments) have fixated on the suppliers with the largest spend volumes. In reality, they should be most concerned about a supplier’s risk profile.

This risk profile is thrown into light at times of crisis in global supply chains. This may come from volcanic eruptions disrupting global flights and travel, or from a global pandemic, such as COVID-19.

What Does the 1% Look Like?

All suppliers are unique, bringing different things to an organisation beyond the goods and services they provide. When assessing which suppliers to manage as ‘strategic’, procurement departments have traditionally focused on their visible suppliers. This usually is defined by spend profile and determined using traditional methods such as the Pareto 80:20 principle.

However, it’s the less visible, hidden suppliers that are often the most strategic. These are the 1%.

This group is made up of the suppliers who are easiest to ignore as they supply something low-cost and apparently trivial to the organisation. In truth, this trivial component may be manufactured from an expensive or rare raw material, be a proprietary item, or come from a supplier who has a monopoly or dominance in the market. Despite this item costing very little, the likelihood is that it is difficult, if not impossible to replace. This makes the potential impact on the supply chain huge should the supplier fail to deliver.

Assessing these suppliers using another procurement favourite, the Kraljic Matrix, they would fall into the ‘non-critical’ or ‘bottleneck’ categories (see below).

Figure 1 – Kraljic Matrix via Forbes.com

However, in many cases, the risk aspect of supply is downplayed or removed entirely, leaving the focus solely on profitability. This is where the issues with your 1% lie.

The Role of Technology

In times of supply chain crises, every supplier – even your ‘transactional’ and ‘bottleneck’ suppliers – need the same attention in order to ensure you’re not missing something. What may have once seemed like an impossible and highly inefficient task has been aided considerably by the advancements in procurement solutions and technology.

Organisations have gone from a reliance on their transactional systems, such as their ERP, and the knowledge and experience of their procurement teams to manage their suppliers. This has left organisations exposed through a lack of data to define and manage strategic suppliers, as well as the loss of knowledge when people leave to join another organisation.

Procurement technology and solutions have developed to the extent that they can help provide the necessary foundation for tracking an entire supply base. This has moved the profession from a position of weakness, to a position of strategic responsibility. In the current climate, people are now actively talking about supply chains and procurement’s role now and in the future.

Therefore, the profession cannot undermine itself by failing to manage its 1% effectively. Even big organisations, with highly developed supply chains can be caught out, as we can see below.

Real World #1 – Keeping Supplies Zipped Up Tight

The fashion industry has taken some very public, very high-profile hits for its supply chain. Organisations have a uniquely complex situation to contend with – finding suppliers who are flexible, reactive and usually low cost on one hand, while on the other ensuring that the highest ethical standards are still achieved.

Suppliers can frequently be small, family-owned and geographically challenging too. However, you might consider an everyday item on many items of clothing a product of a 1% supplier – the zip.

You might overlook it, but a zip is a critical item for manufacturers and designers. The market is dominated by two major suppliers, YKK and SBS, but there are other players there too. However, the majority of these are geographically focused in Asia – specifically Japan and China. Switching supply is unlikely to be easy, so all it takes is a supply chain crisis in this region, say a lack of key raw materials or alloys for production, and supply could be disrupted, without viable alternatives.

Low value compared to other items in the fashion design process, but very high risk.

Real World #2 – Bearing the Risk

Manufacturing is another industry with highly complex and multi-layered supply chains to manage. In automotive manufacturing, supply chains have moved towards the ‘Just-in-Time’ method pioneered by Toyota, making continuity of supply and supplier reliability critical at all times. It’s no use having 99% of the parts available to use, when the 1% is stuck in its factory, two tiers down your supply chain.

As such, a greater focus on quality over price is required, but even this is not fool proof. Fiat Chrysler announced in February that it was halting production at one of its factories in Serbia as it couldn’t get parts from China. Manufacturers who would traditionally hold minimal stock to remain competitive and agile are faced with a situation where that very strategy could pose a huge risk to their organisation.

As the impact of COVID-19 related factories closures around the world continues to grow, even large manufacturers may actually stock out before there’s a chance to re-align. And these items could be as simple as ball bearings for wheels – very low value, but huge risk at this time.

De-risking the 1%

Is there a solution that overworked procurement professionals can take advantage of in the face of a supply chain crisis? When it comes to supplier risk, there are a number of actions that may be taken immediately in order to reduce this.

According to KPMG, these can include setting up a response team to manage the flow of information across key stakeholder groups, reviewing key contracts with customers and suppliers to understand liability in the event of shortages, and conducting a full risk assessment to provide a list of actions to take, which may include shortening supply chains and assessing alternative options.

In the long-term, however, the focus needs to be more on supplier management and the creation of truly ‘strategic’ relationships, built on risk profiles rather than value. This should be done across the entire supply chain and aim to go down through the various Tiers that exist in it. This is defined as ‘Holistic Supplier Management’, a concept explored in more detail by JAGGAER in their latest whitepaper.

JAGGAER’s research uses a similar model to the Kraljic Matrix for supplier positioning, but with the key difference that it focuses on risk and cost to the business (rather than cost of supply) in the event of supplier failure.

Figure 2 – JAGGAER Supplier Positioning Matrix

A concept is all very well but being able to deliver Holistic Supplier Management and manage suppliers on risk and cost requires being able to access data on current performance, the impact of an individual supplier on your organisation, as well as the value that they deliver. This is where technology comes to the aid of procurement and it’s what is offered within the JAGGAER Supplier Management solution.

The solution not only provides the data and analysis that is required by procurement for key decision-making, but also gives a deeper understanding of suppliers to help construct better contracts that deliver greater value to the organisation. By using technology like this, procurement can effectively and efficiently de-risk their supply chains, keeping them better prepared for managing crises when they inevitably hit.

Don’t Get Caught Out

The key message, as every procurement professional knows, is that good communication is key to maintaining a strong and stable supply chain. However, as supply chains grow more and more complex, geographically dispersed and multi-tiered, individual procurement professionals and departments need to make use of all the resources at their disposal.

Holistic Supplier Management can help procurement be better prepared, mitigate risks and start to understand what strategic procurement and strategic suppliers really are. You can find more information on the JAGGAER website, or by downloading their latest whitepaper, ‘How To Achieve Holistic Supplier Management: Orchestrating Supplier Management for Maximum Benefit’.

No matter how safe you think you are, how stable you believe your supply chain is and how strong your links are with your strategic suppliers, there is always an inherent risk within that 1%. By being better prepared and truly understanding your supply chain, you can avoid being caught out in time of crisis.

From The Backroom To The Boardroom: Procurement & Supply Chain Leaders Step Up

Procurement and supply chain leaders are experiencing newfound appreciation and opportunity following their response to COVID-19.


COVID-19 hit supply networks hard. So hard, in fact, that 97% of organisations experienced a related disruption. Still, there’s more to the story than disruption and chaos.  

Insights shared by over 600 procurement and supply chain professionals actually paints a positive and inspiring picture: supply chain and procurement leaders were prepared – and responded brilliantly – when faced with a global pandemic that literally brought the whole world to a sudden halt. Now they have an opportunity to reset the procurement agenda.

A Look Beneath the Surface

Consider the data beyond headlines. While nearly every organisation was impacted, only 17% said the supply chain disruption was severe. On the other hand, almost half agreed the impact was minimal or moderate.

Similarly, despite the macro economic turmoil, the impact on supplier payments has been relatively modest. Most contracts and supplier relationships survived the chaos, showing the strength of existing relationships and strategies. According to our research:

  • 58% of organisations are still operating and paying their suppliers per contract,
  • 14% are speeding up payments to suppliers,
  • 6% are providing direct financial support.

When the pandemic affected supply chains directly, procurement responded quickly and effectively. The majority of organisations (65%) were forced to source alternative suppliers for affected categories. As of early June, 79% of those surveyed had already found alternative suppliers for affected categories, with 53% locking down new suppliers in less than three weeks. Amazingly, 18% were able to find new suppliers in only a weeks’ time. This response has not gone unnoticed.

The Spotlight Shines Bright

The agility shown by procurement and supply chain leaders, along with their ongoing criticality in managing the crisis, has been a boon for the function with executives and board members. 

“The crisis has put procurement in the spotlight,” commented Ian Thompson, Regional Director, UK and Nordics at Ivalua, a source-to-pay technology provider. “There are a lot of talented executives now getting the attention of the c-suite for the first time.”

When we asked how leadership leveraged procurement and supply chains teams during the crisis, only 16% of survey respondents said they were still being viewed tactically. On the other hand, 40% said their recommendations are solicited more than usual and 22% said they now have a seat at the executive table with input on key decisions.

“For as long as I remember, the question has always been how do we make the C in CPO a real part of the c-suite?” said Thompson. “It’s finally happening, and procurement needs to capitalise.”

According to Thompson, the key is taking advantage of the new platform. “Now that you have the attention of the c-suite, you need to have an agenda, and use the platform to properly set the record straight for what procurement is all about, and what’s possible. When called upon, you can fix the problem, or, you can fix the problem and reframe the conversation internally.”

The heightened attention has also led to renewed interest in procurement and supply chain careers. As a result of the crisis, nearly 62% of all respondents and 71% of millennials said their interest in procurement and supply chain has increased.

“The interest is very high. Procurement has become an essential function during the crisis, especially on the direct side. We have procurement teams that are fueling the food supply chain, sanitising the country and ensuring the flow of essential services across the globe. More people are recognising the importance of procurement and supply chain,” said Thompson.

The current dynamic should lead to fresh career opportunities for Generation Next. The function’s performance during the crisis sets the stage for increased investments in talent development and technology, a bigger seat at the executive table, and new opportunities for ambitious practitioners to make their mark.

What Are The Most Valuable Tech Skills In Procurement Right Now?

The future of procurement is digital. Experts share the tech skills you need to thrive in that future.


The future of procurement is digital. How can you make sure you’re part of that future? By understanding what your company needs from procurement, then using the right digital tools to meet those needs.

Here are the most valuable tech skills in procurement:

Supplier risk management

Companies want better supplier risk management, especially in the wake of COVID-19.

Our recent Supply Chain Confidence Index showed 27% of respondents didn’t have the tools they needed to act quickly in the crisis.

That’s why supplier risk management technology is top of procurement leaders’ list of digital priorities.

Employers now expect procurement teams to move faster and mitigate risk long before another crisis hits.

End-to-end supply chain visibility

A by-product of proper supplier risk management is increased visibility, according to Hau Lee, Professor of Operations, Information and Technology at the Stanford Graduate School of Business.

“You need end-to-end visibility about your supply network (capacity, inventory, disruptions, production yields, lead time, bottlenecks, social and environmental performances, their financial conditions, etc.), and your demand network (orders, demand forecasts, backlogs, channel inventory, promotion plans, and disruptions),” Lee says. 

There are a host of tools out there to improve visibility. One is IBM Sterling Inventory Visibility, which is a cloud-based Software as a Service (SaaS). It compiles all of your inventory information from different platforms so you can see available product in real-time.

That’s just one example. Lee recommends educating yourself about other available tools that improve visibility. These harness technology like the Internet of Things (IoT), machine learning, and deep data analytics.

Reduce complexity in global sourcing

Professor Lee says understanding the intricacies of global trade, and how technology can reduce complexity, can make you an extremely valuable asset.  

“Today, you need to be aware of the tens of thousands of bilateral trade agreements that exist between some key trading countries for products and components that may affect you,” Lee says. 

And not just for minimising disruption. Where and how you source products can have a major impact on your bottom line.

Lee uses the example of breaking up a product and sourcing parts from different countries, like sourcing frames from Cambodia while the other parts from China. That way, you can use Cambodia as the country of origin instead of China, which can save you a great deal in taxes and custom duties. 

“As countries start to gradually recover from COVID-19, attention will be shifted back (it has already started) to trade wars, tariff frictions, and protectionism,” Lee says. “Databases from WTO, for example, should be useful. Some experts call this “tariff engineering,” and there can be big differences.”

Conduct due diligence on suppliers for complete transparency

Ethical sourcing is already a hot topic, and it’s even more scrutinised now. Your company’s reputation is on the line, and you are held accountable for how and where you source materials.

It’s certainly a top concern for your company’s executives. They desperately want assurance that suppliers are reputable. Luckily there are digital tools that help you do your due diligence for potential suppliers, Professor Lee says.

“For example, many big brands have already been using IPE, the Chinese website that captures environmental violations in China, as a source of data to do due diligence of their prospective suppliers,” Lee says.

In fact, companies like Nike use apps to connect with the factory workers and educate them, Lee says. “[That] allows them to have better visibility of the conditions of the factories (instead of just relying on imperfect factory audits to monitor), and at the same time help to improve productivity there.”

Interpret data in a meaningful way

Being able to understand and interpret data is sorely needed in procurement.

This is especially true before you bring in new tech systems, says Susan Walsh, Founder of The Classification Guru.

“An area that’s often neglected is data preparation or cleansing before the implementation of any new software or systems,” Walsh wrote in a recent blog. “By the time it’s discovered there are errors in the data, staff have lost faith in using the software and are disengaged, claiming it doesn’t work, or they don’t trust it because it’s wrong.” 

Research from Deloitte shows CPOs struggle with an organisation’s data complexity. If you can untangle data and whip it into something meaningful, you’ll have a job for life.

Step away from the admin

The beauty of procurement technology is cutting out admin and simplifying processes.

The ugly side of that same technology is displacing people who currently handle that admin. That’s why you need to gain useful skills beyond manual data processing if you want a future in procurement.

But where do you start, especially if new technology seems overwhelming?

Craig Carter, Professor of Supply Chain Management in the W. P. Carey School of Business at Arizona State University, says start with the basics.

“Supply management professionals need to have a general understanding of all of the technologies that are being adopted or are on the horizon – AI, blockchain, descriptive analytics, and predictive analytics,” Carter says.

But don’t panic, as Carter adds that understanding does not mean mastery. You don’t need to become an expert overnight.

Technology is coming

Don’t be surprised if this future tech is on your desk a lot sooner than you think. The pandemic has only accelerated the adoption of technology, as shown by our Supply Chain Confidence Index.

When asked which technologies show the most promise for helping to mitigate future pandemics and supply disruptions, 49% said predictive analytics and 38% said AI/ machine learning.

Ultimately, companies will do anything they can to minimise risk. Which is why procurement is so perfectly placed to contribute.

All you need to do is prove you have the answers they need, says Professor Carter.

“What is necessary is a demonstration of a procurement professional’s strategic value,” Carter says. 

“Procurement professionals who can critically analyse, think strategically, and build relationships will continue to be in demand.”

Join Procurious to connect with 40,000 other ambitious procurement professionals and get free access to networking, industry news, training and much more. 

Do You Agree? 4 Supply Chain Influencers On What’s Changed Since COVID-19

In supply chain and procurement, what has changed since COVID-19? Find out what 4 influencers think here.


In every industry, there’s a few powerful individuals who drive the conversation. These fortunate few are the ones that propel industries forward; they are the ones who decide what’s trending, what’s next and what our future might look like. They’re influencers, and within the procurement professional, we’re blessed with many whom we all aspire to. 

And this year, with COVID ravaging our supply chains (and not to mention lives) as we know them, we’ve needed industry leaders and influencers more than ever to help guide us through and tell us what’s next. So that’s why, recently, we sought out the opinions of 30 of procurement’s top influencers. They shared some of their most profound and intriguing insights into what the COVID experience has been like for them, what they’ve learnt and what they expect to see in the future. 

Here’s what they told us: 

Inspiring supply chain stories 

There’s no doubt that the past few months have been challenging for procurement professionals worldwide, with many stories of interrupted supply chains, logistics issues and much more. Yet in among the mayhem has been some truly inspiring stories. Here at Procurious, almost daily, we heard of businesses, teams and people that were going above and beyond to help. 

This was something that our influencers noticed, too. One thing that caught the attention of Supply Chain Queen Sheri R. Hinish is the incredible generosity of suppliers. She explains: 

‘I was particularly impressed by Under Armour’s (clothing brand) sister company, Sagamore Spirits. They provided thousands of units of hand sanitizer for local businesses, communities, and residents.’ 

Indeed, there were hundreds of suppliers who, seemingly overnight, transformed their production from items such as high fashion to scrubs. But for Kelly Barner, Managing Director of Buyer’s Meeting Point, the inspiration came not from suppliers, but from the extraordinary efforts of procurement professionals who previously may not have been noticed: 

‘Businesses everywhere are sorting out tough problems. But behind those problems are armies of unlikely characters self-organising to make things happen.’ 

‘Business leaders should pay attention and notice who runs toward the fire. It might not be who they expected.’ 

Learning from COVID-19 

One quick Google search will reveal hundreds, if not thousands, of articles dedicated to what the supply chain profession should learn from the coronavirus pandemic. There’s been discussions of everything from the need to move manufacturing from China to Mexico, to better managing cash, dialling down just-in-time operations and everything in between. 

Dr. Marcell Vollmer, Chief Innovation Officer at Celonis, a process mining software company, believes that the pandemic has been a reminder of what we all already knew, but may yet to have embraced: 

‘The number one lesson I think we all need to learn from COVID is to prepare and leverage technology to get full transparency and control over your end to end processes.’ 

‘We all need to be using technology to prepare ourselves for unforeseeable events as much as possible.’ 

Marcell’s learning here is sound – for years, we’ve all known that Industry 4.0 is coming, yet COVID may have accelerated its onset. 

For another influencer, Diego De la Garza, Senior Director of Global Services at Corcentric, the COVID learnings were about the way we worked. Specifically, Diego thinks that the pandemic has made us more productive: 

‘Working from home, it has impacted productivity, for the better. My team has been able to dedicate more time to critical tasks, while at the same time balancing work with family.’ 

‘Still, it’s remained ultimately very possible for everyone to collaborate and perform efficiently.’ 

Aspirations for procurement post-COVID 

For seemingly as long as the procurement profession has existed, many of us have wanted more and better. We’ve wanted to be strategic, to have a voice and influence, and to finally add the value we know we’re capable of delivering. 

Will the pandemic represent the ultimate opportunity for us to do so? 

Sheri R. Hinish, Supply Chain Queen, thinks the answer is a big, fat resounding yes: 

‘Supply chain has never had as big a seat as the table as they do right now.’ 

‘My hope is that we embrace a paradigm shift from “lowest price” to shared value and responsibility. Everyone now sees that supply chains are the conduit that power the world.’ 

The performance of procurement throughout the crisis 

It may be true that we’ve never had as big a seat at the table as we do now. But how have we actually been using that seat. Kelly Barner, Managing Director of Buyer’s Meeting Point and one of the world’s most influential supply chain professionals, believes that procurement has done a great job: 

‘Procurement professionals have done an exceptional job of keeping the lights on, despite periods of great uncertainty and concern.’ 

‘Whether we were locating replacement suppliers with little to no notice, or identifying new suppliers so our operation could switch from clothing to PPE, we have been getting the job done.’ 

Do you think procurement has done a great job throughout the pandemic? Do you think a lot will change after the pandemic is over? Let us know in the comments below.

For more game-changing insights and inspiring stories from key players themselves, check out our COVID-19 Gamechangers whitepaper.

Supply Chain Globalisation: Is this Seismic Strategy Shift Possible?

59% of procurement and supply chain professionals say the Fortune 500 should reduce globalisation by bringing manufacturing back home. But is it practical?


The best way to describe the supply chain disruptions caused by COVID-19: pervasive and severe.

Our research found that 97% of the organisations experienced a supply chain disruption. Let that sink in for a second. We knew the supply chain impact of COVID-19 was extensive. This finding takes it up another level – indicating the disruption was near ubiquitous.

So what’s next? The majority of procurement and supply chain professionals (73%) are planning seismic strategy shifts post-pandemic – and rightfully so. Changes under consideration include expanding supply bases, adjusting inventory strategies, increasing financing for key suppliers and localising supply chains. The latter is the most ambitious, and will be the hardest.

Obstacles to Bringing Manufacturing Back Home

The idea of reducing globalisation in response to COVID-19 is both popular and logical.  Nearly 60% of those surveyed believe the Fortune 500 should reduce globalisation by localising supply chains and bringing manufacturing back home.

But as every industry veteran knows, doing so is easier said than done. Modern supply networks and production strategies were built to be global. Reversing this will require fundamental strategy, technology and financial changes.

Consider the core drivers of supply chain globalisation. First and foremost: it’s about costs. The never-ending race to the bottom has made low-cost country sourcing the norm for procurement. At the same time, products – especially smart technologies – are getting more innovative, complex, personalised and sophisticated by the day. This forces manufacturers to outsource critical components to other manufacturers, who outsource to sub-suppliers, and so-on. The sheer expertise and technical capabilities needed to produce smart and connected products (consumer electronics, cars, healthcare equipment, etc.) goes well beyond what one manufacturer could reasonably provide on their own.

As Harvard Business School professor Willy Shih puts it: “A consequence of these complex interdependencies is a deep tiering of supply chains, with manufacturers dependent on their first-tier suppliers, which, in turn, are dependent on a second tier, which are themselves dependent on a third tier, and so on. Visibility into third, fourth, and more distant tiers is challenging, making wholesale replacement of anyone in the chain, let alone the entire chain, extremely difficult.”

In other words: reversing decades’ worth of low-country sourcing strategies, supplier specialization and network expansion will be complex, time-consuming and costly.

While organisations will take the necessary time to evaluate the brand, supply chain and product ramifications of such a change, the national implications are more urgent. Nations across the world – including Australia, the UK and the U.S. – are making big investments to bring manufacturing, especially for critical healthcare supplies, back home. This problem erupted early in the COVID cycle due to global shortages of masks and ventilators, and has become more pronounced as countries prepare to develop vaccines, once approved.

The issue: According to the Financial Times, World Bank data shows “manufacturing’s share of the economy in the US, UK and Australia has shrunk to its lowest level in more than 30 years to 11 percent, 9 percent and 6 percent respectively.” In a time of crisis, where life-saving equipment is needed as soon as possible, the delays creating by strained, outsourced supply chains are highly limiting, to say the least.

What’s Next for Procurement and Supply Chain Leaders?

The pandemic was a wakeup call. But what happens next remains uncertain. Will enterprises invest to reconstruct supply chains, or decide to make more targeted strategy and resource tweaks? Will they see this pandemic as a black swan event or a fundamental course-changer? Only time will tell.

We want to hear what you’re planning. Share your thoughts below.

For more insight, download the How, Now: Supply Chain Confidence Index today.