Tag Archives: logistics

9 Ideas To Reduce Costs Using Supplier Relationship Management

At a time when costs need reduction but healthy Supplier Relationships are paramount, here are 9 ways to reduce costs using Supplier Relationship Management.


There isn’t a procurement pro on the planet right now who isn’t looking at ways to reduce costs.  But this comes at the end of a year where we’ve all been sorely reminded that strong supplier relationships are paramount … especially during a crisis.

Common practice is to look at procurement categories with large amounts of spend and start searching for ways to reduce that spend. One of the more routine approaches is to run an RFP, inviting incumbent suppliers along with potential new partners to help drive competition for your business, with the end-goal to ultimately reduce cost.

But what if your cost base has already bottomed out? What if you are buying a good or service that is difficult to come by, thereby putting the power in the suppliers’ hands? How are you able to reduce your spend in a category where all the signs are pointing to a cost increase?

In order to answer these questions, we must start at the beginning by looking at Supplier Relationship Management.

What is Supplier Relationship Management (SRM)?

Supplier relationship management is the discipline of strategically planning for, and managing, all interactions with third party organisations that supply goods and/or services to an organisation in order to maximize the value of those interactions. In practice, SRM entails creating closer, more collaborative relationships with key suppliers to uncover and realise new value and reduce the risk of failure.

Getting back to the initial goal of cost savings, the question becomes ‘when cost savings is a critical driver in supplier selection, how do you balance the collaborative relationship with low cost?’

The key is internal alignment between procurement and the business units. Supply Chain leaders must be able to explain why vendors who may not be the low-cost option for reasons like customer service, on-time deliveries, payment terms, reporting, etc. are actually the best overall value option for the business.

Category leaders must be able to explain how new suppliers versus incumbent suppliers will impact the company. There are too many cases where the grass appears to be greener on the other side. Sometimes, by selecting a low cost, new supplier, operational differences get lost in the shuffle and the transition becomes a disaster.

Why is Supplier Management Important?

In plain simple terms, it creates a competitive advantage. Whether you are the procurement or the supply chain leader for your organization, having a strong supplier management system will maximise cost-reduction opportunities, value driven services and overall systematic efficiencies, which otherwise would not be achieved. 

Supplier Relationships

As stated previously, a critical component to any company’s success is their ability to maintain strong working relationships with their suppliers and vendors. Supplier relationship managers should always look to avoid complacency. You should never be satisfied with the idea of “if it’s not broke, don’t fix it” and be always be looking for opportunities to improve the relationship, streamline processes or procedures, or change costing models. Relationship Managers should always be looking to challenge the status quo.

Another key to strong supplier relationships is to open the lines of communication and not be afraid to ask the question, “what we can be doing better?” Here are some quick ideas how you, as a customer to your key suppliers, can help enhance your relationship and make those suppliers want to compete for your business.

·   Trust and Loyalty (treat them as more than just vendors)

·   Improve technology and automation

·   Adhere to payment terms

·   Develop communication plans

·   Differentiate between price versus value

·   Have a dedicated Supplier Relationship Manager (SRM)

·   Internal alignment between Procurement and Supply Chain Category leaders

Putting Supplier Relationship Management to Practice

Now let’s look at a specific category – supply chain and logistics – and see how we can apply some of this thinking.

How to Become a ‘Shipper of Choice’ within your Supply Chain and Logistics Network

Logistics spend often plays a role in a company’s effort to reduce costs. Logistics spend can be a substantial percentage of accounts payable, at both the direct and indirect categories. When looking to reduce spend in shipping, taking the low-cost approach can potentially cause more headaches than the savings are worth.

What are some key goals of the shipper?

·   Avoid Disruption

·   On-Time Delivery

·   Low Cost

·   Damage Free

What are some key goals of a carrier?

·   Finding the right shipper

A carrier has a valuable commodity and finding the best shipper to partner with to utilize that commodity is very important for maintaining a good operating ratio. There is a finite amount of space within the global logistics network. What would make a carrier want to move your products versus someone else? Prior to any cost negotiations, a shipper should be looking for ways to make their freight something a carrier wants in their network. They will fight for your business because they value you as a partner, and vice versa.

What can a shipper do to ensure carriers will want their freight?

·   Effectively label freight

·   Safely and adequately package freight

·   Provide accurate descriptions of the freight

·   Use standardized dimensions when possible

·   Use quality pallets

·   Provide ample lead-time when possible

·   Be flexible on your end while remaining consistent in your process

·   Provide a clean, safe and overall attractive driver facility

Achieve Supply Chain Savings: Cost Reduction Negotiations

Once the proper groundwork has been laid and a solid foundation is in place, the relationship developed between a procurement and supply chain organization and its suppliers is now, finally, ready to discuss cost optimisation. By going through the Supplier Relationship Management process, you are now well equipped to conduct cost negotiations. Here’s 9 talking points to reduce costs and build the relationship with your suppliers:

·   Contract length

·   Reduced future cost increases with caps

·   Better discounts or incentive tiers

·   Rebates

·   Volume Thresholds

·   Delivery Costs

·   Payment Terms

·   Ancillary Charges

·   Everything Else (Better reporting, more transparency, communication plan)

One of the keys to entering these negotiations is to come to the table prepared to discuss these types of cost savings opportunities. If your main goal is to just hammer down the unit price, then there is a good chance your supplier will not be overly receptive to that approach. Listen, collaborate, compromise and develop a partnership that will ultimately be a win-win for all those involved.

In conclusion

Top suppliers are always looking to do business with companies who value the partnership and are willing to make improvements in order to make the relationship smooth and efficient.

This type of partnership will lead to your suppliers offering the best possible discounts and pricing and give you the peace of mind that you are getting the most out of your supplier.

Supplier Relationship Management is key to developing a long-term PARTNERSHIP with your key vendors!

What key insights and strategies have you taken from 2020? Share your experiences and hear from the most innovative thinkers on the planet at the Global Big Ideas Summit on November 18.

5 Reasons Why Santa is the Ultimate Procurement Professional

Think you’re at the peak of the procurement and supply chain profession? Think again – Santa is the ultimate procurement professional (festively speaking…).

santa
Photo by Ylanite Koppens from Pexels

We’re fast approaching the end of 2019. It’s a time to reflect on the past year and consider what we have all achieved. We can look at all our successes, the lessons we have learned and everything that we will do in 2020. Perhaps there’s even a plan for how to take the next big step to that coveted leadership role in the profession.

But at this time of year, we all need to remember that our efforts pale in comparison to one individual. As we start thinking about the office party season, holidays and general festivities, this individual is only just revving up into top gear. Their whole year is driving towards this moment, but they are as prepared as they ever are.

And, while displaying all the skills we seek as a top procurement professional, they’ll deliver on all the wishes and promises that have been made. We are, of course, talking about…Santa. Father Christmas. Pére Noël. Svaty Mikolas. Kris Kringle.

Of course, there are other brilliant procurement professionals out there. But, at least in a festive setting, there’s none like Santa Claus for getting the job done. Here are my 5 reasons why:

1. Santa always has the right specification

Working tirelessly with his external (children, parents) and internal (elves, Mrs. Claus) stakeholders, he makes sure the specification is right. It can’t be a coincidence that children get exactly what they ask for, year after year. It all comes down to knowing your customers and then passing on the full specification to your manufacturing department/elves.

2. His Logistics operation is second to none

The global population is currently 7.7 billion people. Of this, an estimated 1.9 billion are children. Let’s assume then that the average household contains 4 people – this means Santa will visit 1.9 billion homes.

If there are 2 presents per child, this is a whopping 3.8 billion presents, delivered at a rate of 158.3 million per hour, 2.6 million present per minute. All of this with a team of 9 reindeer and one sleigh. Without the best logistics division and the latest technology, there’s no way all the presents are delivered to the correct child!

3. Belief, Influence, Leadership

Santa wields influence that most procurement leaders can only dream of. A following of magical, semi-magical and mortal people and creatures all follow him willingly. They work for the entire year to prepare for one day, then start again for the following year almost immediately.

Forming part of this leadership is belief. As we all know well (or at least we should) Santa’s sleigh and reindeer don’t fly without the belief in him and the Christmas spirit. And given he’s not missing deliveries to your house, it’s safe to assume this belief is still going strong!

4. Santa can always get the right price

Short of being some form of crazy, benevolent trillionaire (with superlative investments), Santa needs to be a dynamite negotiator or run the best RFQs. How else could he source all the toys or raw materials without bankrupting himself each year?

And like the best procurement professional, he doesn’t pass any cost increases on to his customers but works out the best deals to keep costs down so his end customers (the parents, of course!) don’t have to foot the bill.

5. He’s got the Nice-Naughty List on blockchain

How else do you create a fully traceable, immutable record of who has been naughty and nice in any given year? Santa needs to be able to trust the information he has on all behaviours, without the possibility that it has been compromised. Plus, it’s also handy for making sure that all the sourcing he does is ethical and sustainable…

So, if you have ambitions for a higher office in 2020, you’d do worse than looking at Santa as a good example to follow. And if all else fails, at least you’ll have a sunnier outlook on life! Ho, ho, ho!

IIoT: Tomorrow Thinking for Supply Chain

The Internet of Things (IoT) is designed to make our data more useable. What opportunities and concerns does it present within logistics, where it is referred to as Industrial Internet of Things (IIoT) ?

The trends of Supply Chain technology are shaping the future of logistics management.

The common thread is the push toward hyper-interoperability, where technology, people and process collaborate to create true visibility, accurate orders, and happy customers.

It is impossible to ignore the pressure on retailers and distribution centre (DC) to re-engineer operations to meet the Omni-channel fulfilment mandate. The evolution of the Internet of Things (IoT), designed to make data more usable, is quickly becoming a reality across global supply chains.

The Industrial lnternet of Things

Definitions of IoT spin around connecting sensors, programmable logic controllers, and RFID data with the internet so that other systems or analytical software can respond to or make sense of the data. An RF gun, voice recognition, and RFID in the warehouse all provide IoT–style sensor data; it is called the “Industrial Internet of Things” (IIoT) to differentiate from consumer applications.

The order management system needs to orchestrate the fulfilment by interacting with inventory allocation, warehouse, management, transportation, and workforce scheduling systems using user-configurable business rule. The overall goal for Omni-channel is to satisfy more consumer demand with acceptable profit margins.

Logistics management in the warehouse

Many opportunities for improvement through smart forklifts, diagnostics of the equipment, speed controls, anti-slip technology, collision detection, fork speed optimisation, promoting new process flows, autonomously trip to a shipping dock for unloading, etc., are some of the applications and possibility a multi-channel system provides for the improvement of the overall process.

Transportation management

Tracking trucks based on RFID, GPS, RF scans, temperature, sensors embedded in the freight -all of these fit the definition of IIoT, the benefits being: improving network-based routing, the use of a smart phone for routing to determine congestion and better alternative routes.

Security

Security is the number one concern around IIoT, working hand in hand with public cloud solutions. It helps to detect Cyber attackers’ techniques quickly and avoid being tricked by them.

Inventory Management

This is a  hidden key to success. A major application of Omni-channel is a customer ordering a product and the retailer fulfilling the order from within their store network versus a distribution center. This introduces the requirement of advanced information systems to provide awareness of inventory throughout the store network. The omnichannel system would identify the stores with the right inventory and determine the most cost-effective location to fulfill from to provide the promised service level. Retailers challenge is the implementation of new order of management systems, to build a single view of inventory availability – foundation of Omni-channel fulfillment – and to recognize the new consumer’s expectation, the goal being to optimize inventory deployment so that the required inventory is where it should be to satisfy consumer demand at a lower cost.

Ordering

The first step is for the retailer to understand the Omni-channel strategies and how the customer’ buying patterns have changed (ordering an item online, by a mobile, from a store and picking it later, the item being shipped to the customer’s home, the customer calling to a call centre, etc. A fully-functional technology Omni-channel fulfilment operation has to be integrated according to the various selling systems.

Shipment and Delivery

Omni-channel technology, as the one IIoT provides,  plays a vital role in this environment by enabling store employees to efficiently navigate the store floor to find the ordered inventory. Once the item is retrieved, store employees utilize packaging stations to prepare order for shipment and utilize small parcel carriers to pick-up and deliver the orders. Using the same trailers scheduled for normal store delivery, however, separating these pre-ordered items on the trailer is the critical piece in this strategy. Loading these items at the front of the trailer, labeling them with special tags utilizing barcode-scanning technology, and using colored totes are a few ways to flag the inventory.

Returns processing

Returns processing is still an improvement opportunity for many Omni-channel retailers. The goal is to allow a consumer to return purchases to either stores or a central returns facility regardless of where the sale originates.

The top three priorities identified are inventory planning, fulfillment capabilities and returns processing. Retailers have to keep working on the enterprise-wide visibility of available inventory. Inventory must be deployed differently in an Omni-channel world; many retailers are beginning to address that challenge, developing flexible fulfillment capabilities that leverage stores, DCs, and vendors to fulfill consumer demand. However, store fulfillment processes are not as efficient as they are in a DC where conditions are more controlled. Omni- channel is having a profound impact on supply chain organizations-especially logistics across all levels of maturity, being better equipped to embrace Omni-channel from a people, process and technology perspective.

So what new approaches are you applying to your Supply Chain? Let us know in the comments below.

This article was first published on LinkedIn

The Glass Ceiling For Women In Procurement and Supply Chain – Myth or reality?

If the glass ceiling is a figment of our imaginations, why do so few women make it to the top? 

Hyejin Kang/Shutterstock.com

Procurious’ new group, Bravo, celebrates women in procurement- Join the conversation here.  

This article was originally published on Jennifer Swain’s LinkedIn profile

There’s a lot of talk about the glass ceiling for women. Do they really exist and what can be done about it? I decided to really give this situation some thought to try to understand WHY there are so few females in Head Of or Director level roles within supply chain, procurement and logistics.

Traditional Logistics

Up until fairly recently there were certain industries / vocations that were considered either man’s work or women’s work. The stereotype twenty years ago that girls want to grow up to be Nurses and boys to work as Engineers is now very outdated to most.  But it’s legacy does still live on in some businesses.

Logistics definitely comes under the former stereotype of being a “man’s job” and still to this day this view point can be found in the culture of some warehouse operations.  Granted, the page 3 girls plastered on the walls may have disappeared for the main.

But, I have witnessed on occasion women with more talent being overlooked for opportunities, with an extreme case where I was asked by one company owner how old the woman was as he was concerned she was going to go and have children in the next 12 months and he would have to pay maternity!

Numbers game

Possible due to the lingering perception of point one, it is a fact that far fewer women than men enter into a profession in Logistics and Supply Chain in the first place. Obviously then, it stands to reason that if the ratio of men to women in entry level positions is heavily-weighted to the male of the species, that as you move up the career ladder this ratio will still apply.

Biology

 I preface this by saying that I am possibly the biggest feminist I know (to the chagrin of my other half sometimes) but I am also pragmatic and, having had 2 kids myself, do believe that, for most women, having kids brings with it a reassessment of what is important and the need to have a work / life balance.

I have a number of male counterparts who I worked with earlier in my career who reached Director level before me – not because they were better than me, but because they hadn’t taken 2 years out to have a family. Of course, there are  stay at home dads too but it is less common. Crucially, it should be a woman’s choice how they manage family and working life and society needs to make this easier.

Lack of Applications

When I advertise on ANY platform, the ratio of male to female applicants can be as much as 40:1.  Now I appreciate that part of this is down to point 2 above, however I also feel there is much more inertia on the part of women to push their careers forward.

I feel that some women believe it is not worth applying for certain roles as they think it would be a pointless exercise and their application would be overlooked if there is someone with very similar experience and skills also applying and who also happens to be male.

It has also become apparent to me that men and women view a job description in very different ways.  A man will look at a job specification and highlight all the things he CAN do, and apply for the role on the basis that he may tick 70 per cent of the boxes.  A woman will look at the same job description and look at all the things they CANNOT do and NOT apply because they don’t tick 30 per cent of the boxes.

Now this I know comes across as a sweeping generalisation – something I am always very wary of, but I personally cannot come up with any other explanation as to the lack of applications I get from women and I know you are out there as we are connected on LinkedIn!

So, these are the main reasons why I feel there may be restrictions in place to women achieving the upper echelons in business.  More importantly, what can we do about it?

Improve the Talent Pipeline

We need to get more women into procurement and logistics.  We need to raise awareness to young talent at college or university as to what an amazing career in procurement and supply chain can be.  If more females take entry level roles, it stands to reason that there will be more females climbing the career ladder.  Secondly, equalling out the gender ratios can only help eradicate any sexism still lingering in the industry, which again will assist in creating equality in promotion.

Help to Stamp Out Sexism and the Glass Ceiling

I do appreciate that sexism in the workplace is a rare occurrence these days. Most professionals of both sexes are accepting, progressive individuals who judge people on their skills and experience, not their gender. However sexism DOES still exist.  I have experienced first-hand and I know my experiences are not unique.

It can feel like a scary thing to do to stand up to those who display sexist behaviour but there are procedures in place and help available to assist anyone experiencing this type of discrimination.  At the risk of sounding like a self-help guru, if you don’t bring it to the attention of those who can do something about it, the glass ceiling situation will never get better, not just for you but for your successors.

Positive Mental Attitude

Cheesy maybe, but true!  This probably applies more to us ladies who are in male-dominant environment because we have to feel confident in our ability to push ourselves to move forward in what can sometimes feel like a hostile environment because of our minority status.

I welcome any application from people of any colour, race, religion or gender and if there are question marks around your suitability for an opportunity, this is something I will be happy to discuss with you and either put to bed any fears.

Procurious would love to hear your thoughts and comments on Jennifer’s article.  Is your procurement career being haltered by a glass ceiling?  Join the Bravo group  here to take part in the discussion. 

Trade War Against China? A Supply Chain Perspective

Comments made by President-elect Trump last year sparked talk of a trade war with China. But what impact will this have on supply chains?

his article was originally published on My Purchasing Center.

The Chinese government recently raised a “tit for tat” challenge to new U.S. President-Elect Donald J. Trump over a potential trade war against China, in an editorial published on China’s international state news outlet Global Times.

The op-ed states that “[a] batch of Boeing orders will be replaced by Airbus. U.S. auto and iPhone sales in China will suffer a setback, and U.S. soybean and maize imports will be halted…” if Trump decides to impose a proposed 45 per cent trade tariff.

A Special Trade Relationship

To overstate the significance of the U.S.-China trade partnership is quite difficult.

In 2015, they accounted for $659.4 billion in bilateral trade, of which $161.6 billion were Chinese imports of U.S.-produced goods. As the largest, and yet still one of the fastest-growing consumer markets in the world, China is vital to the strength and prosperity of America’s export economy.

Most notably, of the American-made products included in the Global Times statement, agricultural products ($20 billion), aircraft ($15 billion), and vehicles ($11 billion) are amongst the highest value U.S. export categories. They are therefore critical to the success of American companies operating in these industries.

From China’s perspective, it is no longer the emerging market economy of decades past. It can instead rely on its own considerable production capabilities, rather than sit by the wayside as the U.S. attempts to push a trade agenda through its considerable economic muscle.

iPhone Impact

Amongst the multi-billion-dollar trade categories, the iPhone may seem like a curious inclusion. However, despite FY2016 sales of nearly $50 billion in China market, Apple’s Chinese revenues are still projected to grow.

Beyond the obvious consequences of an iPhone sales freeze, or a 45 per cent trade tariff on Apple’s top line, there are also significant economic implications behind China’s statement from a supply chain perspective. In particular, from the viewpoint of a procurement specialist.

As the most valuable company in the world, Apple’s tremendous growth in recent years has primarily been driven by sales of the iPhone. The device made up over 63 per cent of Apple’s FY 2016 revenues.

Analyst estimates of the iPhone’s profit margins have put it at over 70 per cent of retail value. This makes it by far the most lucrative amongst Apple’s products, and likely across the spectrum of consumer technology products.

According to a recent report by BMO Capital Markets, the iPhone took an astonishing 103.6 per cent of smartphone industry profits in Q3 2016. What enables the iPhone to reap such staggering margins is largely due to Apple’s global supply chain. It entails near end-to-end cost minimisation, and an integrated procurement strategy from its hundreds-strong global supplier network.

Value Chain Activities

Apple’s value chain, from its inbound logistics and manufacturing through outbound logistics and marketing, all go through China in one way or another. Procurement plays a central role in providing each activity with the necessary resources to operate efficiently and at low cost.

A proposed 45 per cent Chinese trade tariff would fundamentally alter how, and from where, Apple procures the majority of these resources. It would also significantly drive up costs and logistical complexities throughout the whole of its global supply chain.

It is important to note that very few companies possess the in-depth supply chain practices of Apple. Therefore, integrating a centralised procurement structure into such companies’ supply chains becomes even more critical.

The prevalence of global supplier and distribution networks, like Apple’s, across modern manufacturing companies relays the important role of procurement specialists in the development of integrated strategies. These strategies must not only generate value, but also mitigate the multitude of risks associated with maintaining international supply chains.

In the event of significant geo-political and economic shocks, such as a potential U.S.-China trade war, procurement can work closely with companies to ensure manufacturing processes are harmed as little as possible.

This means that across affected countries, companies can rest assured that their sourcing, manufacturing, distribution and sales activities can be substituted quickly and cost-effectively through alternative sources, while maintaining similar levels of cost and operational efficiency.

Ultimately, no one can say for sure whether President-elect Trump will initiate a trade war with China. Or to what extent Apple and companies like it will be affected. However, companies with an established supply chain and sound procurement practices can sleep in comfort knowing that they will be prepared to face similar challenges that may come their way.

The logistics behind Zurich 2014 European Athletics Championships

This guest post was penned by Sarah Robey. Sarah represents a UK-based logistics finding service.

22nd European Athletics Championships - Day Three

Making the magic happen

The 22nd European Athletics Championships in Zürich last month was a splendid success, both in terms of attendance and their overall social goals. The CEO of Zürich 2014, Patrick Magyar, said that in the final analysis they managed to increase children’s and young people’s interest and participation in athletics. Equally important, at least from a financial perspective, the games were an excellent opportunity to increase the visibility of Zürich in general, and assist in the marketing of the 2000 year old financial centre as a tourist destination and as a place of business.

As you surely know, staging an event such as this with world-wide aims and aspirations is no small feat of logistics. Six large evening and afternoon events, ten stadium sessions (and just shy of 81 per cent of sold out at that), six-figure crowds at the road races and a City Festival with nearly a quarter million attendees – Zürich 2014 was no small exploit, and the organisers should be proud.

CEO Magyar thanked his volunteer team for the hard work they did rising to the logistical challenge, as well as the local police, the City and Canton of Zürich, the Protection and Rescue Service and the Swiss Armed Forces. A few very important organisations were left out of the spotlight though. An event of this size could not take place without thousands of hard working logistics specialists and dozens of 3PLs and other logistics organisations. I’d like to give just one example of a company that helped make this event happen.

Organisation of one particular logistics company 

Conceptum Sports Logistics, a German logistics company, was Zürich 2014’s official logistics partner. Over the course of the games, more than 1400 athletes and thousands more coaches and personal support personnel converged on Zürich. Conceptum was there to get participants, coaches, gear and equipment where they needed to be and when they needed to be there. Organising chaos is a logistics organisation’s bread and butter, and Conceptum Sports Logistics performed at least as well as the winning athletes. Maybe CEO Magyar could have spared a bit of praise for them?

Then again, the perfect logistics professional is a bit like the perfect butler – out of sight and out of mind, managing events behind the scenes and only visible when they are needed. Perhaps the fact that Conceptum didn’t feature is another testament to their skill. If so, I have no doubts that their performance at Zürich this year will keep them in clients for some time to come.

So what about your logistics needs? Perhaps you won’t be spending £23 million putting on a sports festival this year. Perhaps you only need to find a better LTL carrier for the extra orders you expect this Christmas. Perhaps you need a better place to store inventory. Britain boasts thousands of 3PLs and logistics companies that would be thrilled to help.

Sarah Robey represents www.whichwarehouse.com. Whichwarehouse offers a logistics finding service that carries listings of many logistics providers from all over the UK.

Walmart pimped-up its fleet – capable of massive loads

Now that’s what I call a truck…

The Walmart Advanced Vehicle Experience concept truck is the latest in the retailer’s fleet efficiency program.

The one-of-a-kind prototype offers a whole package of firsts. The tractor boasts advanced aerodynamics and is powered by a prototype advanced turbine-powered, range-extending series hybrid powertrain. It certainly sounds impressive, even if we’re not 100 per cent sure what it does…

The trailer is made almost exclusively with carbon fiber, saving around 4,000 pounds that can then be utilised to carry more freight.

Would this transform your transportation services?