Tag Archives: supply chain management

Three Reasons Why Procurement Has A Beautiful Future

Why should you be excited about procurement’s future? Three experts weigh in as we close out 2020 and look forward to a new year.


Now is the perfect time to be in procurement.

Think about it – when have we ever enjoyed so much trust, influence, and freedom to make changes?

We asked three experts why they’re excited about procurement’s future.

We can protect our companies 

Procurement is finally shedding its image as a support function. Now the c-suite is learning how much strategic value we can add.

Just ask Dr. Jonnie Penn, an artificial intelligence expert at the University of Cambridge and keynote speaker at the 2020 Big Ideas Summit.

He says the last 40 years of supply chain management were characterised by a push for efficiency.

“We see now that that’s too fragile a metric amid deglobalisation,” Penn says. 

“You need to start to incorporate other measures that give you security in the resilience of your system. 

“In the past you might have made a push for weekly or monthly planning. We’re now looking at a shift to continuous planning.” 

That puts supply chain management forward strategic leaders, able to prevent future disruption.

And the c-suite desperately needs that help.

Just look at one pharmaceutical CEO, who predicts the industry will move from global supply chains to more localised providers.

You have the opportunity to use data in a similar way to improve resilience.

But you might have to think about the way you see data, says Penn.

Great data meets three criteria:

  • Real-time
  • Structured in a way that’s easy to consolidate
  • Combines information from lots of different areas

Penn calls this ‘thick’ data, “which means that as opposed to just hiring let’s say a data scientist to crunch your numbers you’re also bringing in remote sensor engineers or ethnographers, sociologists.”

Those different perspectives are crucial to finding the best solutions.

We can drive innovation  

And that includes collaborating with your suppliers. 

Just look at Apple.

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

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

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

But Jobs insisted.

So Williams worked with speciality manufacturing company Corning to create damage-resistant Gorilla Glass in time for the launch.

Now every smartphone in the world uses Gorilla Glass.

It’s interesting to note Williams joined Apple as Head of Worldwide Procurement. He’s now COO and tipped to replace CEO Tim Cook someday.

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

He says every procurement function of the future will drive supply innovations – including saving our environment.

Dr. Penn agrees. 

“To go it alone is just not sustainable,” Penn says. “You need to look at building common frameworks and using standardisation.”

And that includes sustainability.

We can save our environment

After all, Penn cites McKinsey research that 80% of greenhouse gas emissions and 90% of the impact on biodiversity come from the way supply chains are managed.

Depressing, right? It’s actually great news. It means we can have a huge influence on creating a sustainable supply chain – together.

Penn uses the example of the 240 million packages sent daily. Of that, 40% is dead space.

But new technology can scan each object and use optimal packaging. 

“That means that you can reduce the 40% air and ultimately all the derivative effects, down the supply chain of the plastic use and shipping and storage requirements.”

Another example is monitoring factory emissions in real time by combining satellite imagery with machine learning.

Clearly, there are countless ways supply chain professionals can make the planet better, says Supply Chain Revolution CEO Sheri Hinish.

“Supply chains are the conduit for building a better world; designing a better world,” Hinish says.

“We can come from different backgrounds, different parts of the world but at our core, we fundamentally want the same things. 

“So, it’s real and when you think about collaborating within a global context… this is what wakes me up every morning – to create a world that’s bearable, viable and equitable.”

Our beautiful future

That’s why all three of our experts say procurement has a beautiful future.

Combine your skills with technology advancements, and you’ll have endless opportunities to lead significant change.

And if that seems daunting, don’t worry; you’ve got experts on your side.

“Feel free to be in touch as you develop your data strategy and your AI strategy to accomplish your sustainability and resilience goals, says Dr. Penn.

5 Ways To Separate The Successful Supply Chains From The Rest

New computers can analyse a million rows of data in minutes. So why not let the computer do the heavy lifting? As a supply chain professional of the future, you won’t be manually processing data.  You will have data you can trust at your fingertips, as well as meaningful insights.  The rest will be up to you! IBM’s Takshay Aggarwal explains.


In the future, what will separate the successful supply chains from the rest? 

Procurious Founder Tania Seary sat down with Takshay Aggarwal from IBM to get his take on where we are, and where we are going.



Everything has changed

In 20 years of supply chain experience, Takshay has never seen a supply and demand shock at the same time.

“It’s completely changed how supply chain planning is done,” Takshay says.

Before, people used historical data to project demand – usually with a 5-10% variability or 1-2% percent for really mature organisations.  

But even with a high level of accuracy, too many companies were unsure which supplies were coming when. 

“Processes were so monthly and weekly orientated,” Takshay adds. “There was no sense of response; it was all about, ‘We’re used to this stepwise process and will get to it when we get to it.”

The result? Slow response time and lost sales. And reaction time was seriously hampered by years of cost cutting.

“An easy analogy is that you can cut and cut the fat to the bone, but when you need to run, where is the muscle?” Takshay says.

Sensing the market

That’s not true for all organisations, of course. Some companies invested in the right technology to detect changes in the market, which enabled them to respond quickly.

Takshay uses the example of two big retailers during the early days of the pandemic.  

“One retailer had sensing and response capabilities,” Takshay explains. “They secured all the available supplies in the market. Their shelves were stocked and their sales were booming.”

On the other hand, the second retailer’s supply chain officer was slow to respond. “They had traditional ways of doing stuff and their shelves were empty.” 

The difference between the two? “One supply chain officer is now promoted to the board and the other is finding a new job.” 

That’s why it’s so crucial to have the tools in place to detect market fluctuation and respond.

Looking at data differently

Going forward, how will you prepare for disruption – not only for your suppliers, but your suppliers’ suppliers?

The solution is incorporating non-traditional data for demand planning, Takshay says.

“Let’s say a discretionary spend category like electronics or fashion; you need to understand how unemployment is panning out in certain areas because that determines the footfall in your store,” Takshay says.

Non-traditional data includes areas of demographics like looking at unemployment or how a disease is spreading.

“You will start seeing a lot of what we call demand sensing in the near term, and driver-based forecasting which is trying to understand larger drivers in terms of promotions, in terms of macroeconomic factors,” Takshay explains.

“I think that’s where we’ll see demand sensing capabilities, like trying to understand the near term impact of weather or demographics and how they affect demand.”

Spreadsheets won’t cut it

Technology will also change how you use that non-traditional data, Takshay says.

That’s because higher computational power creates the ability to process data at lightning speed.

“The basic math hasn’t changed, but what has changed is how fast you can ingest that data,” Takshay says.

Think of it this way. How long would it take you to analyse a million rows in an Excel spreadsheet? Yet for some of these new models, a million rows is nothing.

Artificial intelligence can quickly process large amounts of data, making it easier to extract meaningful data. 

It will also be easier to bring in different sources of data – as and when –  they’re relevant.

For example, data about the pandemic spread might be a big consideration now, but six months from now it might not be relevant (fingers crossed!)

Instead, you may be more interested to ingest data at scale about economic recovery. AI can help you make sense of a huge amount of data and understand correlations – something that used to take an army of data scientists to uncover.

Welcome to efficiency

That ability to analyse vast quantities of data will also make demand planning a lot easier.

“If you ask any demand planners, 60 to 70% of their work today is about cleansing and harmonising data, and 20-30% is figuring out what it’s saying,” says Takshay.

Now, technology can eliminate much of that manual processing. In fact, Takshay says IBM estimates around 40 to 60% of that work will be covered.

“Now imagine if you’re a demand planner and you don’t have to go through those daily tasks to get the data cleansed,” Takshay says. 

Making it personal

So what does the future hold for supply chain?

Takshay predicts consumer demand is moving toward mass personalisation. The challenge for procurement teams will be supporting that personalisation in production, without losing efficiency or driving up costs.

“Ten years from now, we will be talking more about how we can better understand the consumer,” Takshay says.

“Everything will be done by machine. Supply chain may become irrelevant. It all becomes about mass personalisation so that’s where we start putting our efforts.”

That’s why human empathy will be an even more essential skill. Quantum computing could eliminate 80% of today’s procurement tasks, so our greater contribution is using human emotion to meet customer needs.

Hear Takshay’s full talk with Tania Seary in our exclusive webcast series The Future of Supply Chain Now.

8 Ideas To Have In Your Procurement And Supply Chain Tool Kit

Supply chains are under intense scrutiny right now. That increases pressure on supply chain leaders, but also creates new opportunities to do things better for everyone: companies, customers, and the planet. Top influencer Rob O’Byrne gives his take on where we’re at and what’s coming next.


Procurious founder Tania Seary recently talked with Rob O’Byrne, CEO of Logistics Bureau, and a top 10 supply chain social media influencer.

Here’s his take on where we are, how we got here, and what’s next.  



“Now, everyone knows how toilet tissue gets from factory to store.”

Not long ago, many of us struggled to explain supply chain management to our friends and family.

Now? The pandemic hit and suddenly everyone’s a supply chain expert, says Rob.

“Now, everyone knows how toilet tissue gets from the factory to the store, and it’s really put supply chain in the spotlight,” Rob says.

With that extra awareness comes an expectation that supply chains should work more efficiently — and that will change the way we all operate.

“We lost touch with local markets.”

Before we can make impactful changes, we need to understand how we got here.

Rob says the two biggest trends that shaped the pre-Covid era are centralisation and rationalisation.

Increasingly, large global players were centralising their supply chains through regional or global hubs.

Why? To improve management, visibility, and consistency — all of which are important for optimizing supply chain operations. But centralisation comes at a cost.

“The challenge is [these companies] are a lot more remote from their markets and sometimes you actually need to have a finger on the pulse,” Rob says.

“[You have] headquarters in one part of the world trying to dictate what happens in a supply chain in another part of the world. Sometimes they lose touch a little bit.”

Rationalisation led to similar challenges.

For all of the cost savings and visibility benefits, rationalising led to less contact with markets.

“[Companies] are tending to rely a lot more now on AI-based communication systems to talk with customers,” Rob explains.

Great for the bottom line, but frustrating for customers who often want to speak to an actual human instead of a bot.

“We can be in danger of alienating our market.”

“Companies still don’t understand the ‘cost to serve’ in their supply chain”

One of the greatest challenges right now in supply chain management is managing costs, says Rob.

And it’s more than “total cost of ownership.” It’s about knowing the end-to-end costs.

“So many companies still don’t understand the cost to serve across all the different channels in their supply chain. And that’s become even more critical during the pandemic because our distribution channels have changed,” Rob says.

“In the current climate, it’s really challenging because there’s so much expediting going on. We’re having to use different transport modes than perhaps we would normally.” 

Visibility is also a struggle.

“That really came to the fore during the pandemic because everything was moving so much more rapidly,” says Rob.

“Supply and demand peaks and troughs have been so much more severe. The visibility of that real demand was so important, so there’s a much greater need for improved demand planning and inventory management.”

“Forecasts are always wrong”

To illustrate that need, Rob points to the huge demand for one specific medication during the pandemic. 

Patients who used the drug to treat symptoms of a specific disease,  were stocking up, while other people were buying it because they thought it might fight the virus. Hospitals also stocked up because people who needed the drugs would need more if they caught the virus. Demand skyrocketed.  

“So I think that’s part of the challenge in terms of inventory visibility,” Rob points out. “It’s separating the true demand from the noise…that’s where we’re going to see much more sophisticated inventory management tools coming in the future.”

Although some companies still use spreadsheets for forecasting, “on the other end of the scale, there’s some really, really advanced tools being used and all of that is giving us much greater visibility of our supply chains.

“We can use the weather to predict food sales.”

One example is creating demand forecasts based on weather, not previous sales.

Companies can actually predict food requirements at a shopping mall food court by analysing parking spaces and the weather.

They harness data on parking space occupancy, (from those red and green lights) combine it with the weather forecast, and predict how many people will turn up at the shopping centre.

“That’s real forecasting,” says Rob. “It’s not looking at what we sold last month or the month before.”

“Less lean and more fat.”

Along with smarter forecasting, what does the future hold?

Rob says a rapid retreat from lean management might be on the cards for many businesses.

“Lean was all the fashion for the last 10 years or so,” Rob recalls. “And at the time it was probably the right thing to do for the right businesses and the right products.”

But that’s all changed now.

“I just wonder for a lot of supply chains whether it was a step too far when we’ve seen the fragility of our supply chains over the last six months or so,” Rob says.

Where you have the traditional supply chain like an automotive factory, lean and ‘just in time’ works really well, but where you’ve got volatile markets we’re starting to see the cracks appear.”

“I think we’re going to see a little bit more fat, certainly in terms of inventory, just to buffer for uncertainties.”  Because it will be a long time before market demand becomes anywhere near normal, and it may never look like pre Covid demand again, as alternative distribution channels become more popular.

Rob also says we can expect the decline of ‘traditional’ third-party logistics. 

“There are a lot of companies around that ‘uberised logistics’ – whether it be transport or storage, and I think we’re going to see third party logistics particularly moving much more towards the gig economy. There’s no reason why not.”

“There are people delivering to my home at the moment who are doing it a few hours a day, and that’s where third-party logistics is going.”

“Let’s not waste packaging.”

Rob also predicts swelling interest in circular supply chains.

“We’ve got to wake up and start making our supply chains much more sustainable in every element of the supply chain,” Rob says.

“We’ve paid lip service to it and there are companies around the world that we hold up and say, ‘Look what they’re doing; they’re amazing.’

“But I think generally as an industry we’re just not really very good at it. People think it’s about reverse logistics but it’s not. It’s about removing waste in our products too.” 

“Let’s not waste transport; let’s not waste packaging.”

“Supply chains aren’t competing against each other.”

Finally, Rob says supply chains have the opportunity to work together.

“We’ve been very slow in collaboration,” Rob says.

“I think in supply chain, a lot of companies have been fearful of sharing warehousing sharing transport – that physical end of the supply chain – because their competitors are going to see what they are doing.”

“We’ve had that mantra for years that supply chains compete, not companies. I don’t know that they do anymore.

“I think it’s more about brands and it’s about service. I really don’t see a reason why we can’t see a lot more collaboration in our supply chains.”

Rob O’Byrne is CEO of Logistics Bureau and one of the top 10 supply chain influencers on social media.

This interview is part of “The Future of Supply Chain Now” – a week of webcasts with the fresh opinions from the most influential people in supply chain. Brought to you by IBM Sterling Supply Chain and Procurious. Read more on Digitally Perfecting the Supply Chain and How Inventory Visibility will Drastically Effect the Customer Experience.

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.

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 >

Storm Warning: Where Is Supply Chain Risk Management On Your Radar?

If there’s one thing this crisis has taught us, it’s how quickly things can change overnight. Don’t think we are out of the woods, just because supply chain risk has declined. Our community has never been more vulnerable.


After spending half of 2020 fighting off the virus in more ways than one, it seems as though we’re becoming immune to its detriments. Yet, as our Supply Chain Confidence and Recovery Index revealed, there’s still a great amount of looming uncertainty. Despite the recent universal decline in supply chain risk, our community has never been more vulnerable.

Publication of our Supply Chain Confidence Index, quickly followed by riskmethod’s Risk Report has created a “perfect storm” of data to show that now, more than ever, we need to be vigilant and proactively address supply chain risk.

Aside from the obvious pandemic outbreak risk increase, which riskmethods reports is 34.7 times that of 2019, changes are impacting virtually every aspect of business. Some of which include:

  • A major increase in cyber security risk-related warnings, stemming from the transition to working from home
  • Substantial growth in risk associated with labor practices and human rights, as well as employee stability
  • A 26% increase in natural hazard risk

And with lack of visibility into supplier and geographic risk topping the list of lessons learned from COVID-19, it’s clear our job here is not done.

Putting out the fire  

The lack of visibility, data and agility acted as an accelerant, enabling the disruption to spread like wildfire from supplier to supplier. Procurious found that:

  • The hardest-hit companies were more than 50% likely to have multiple key suppliers go out of business due to COVID-19  
  • 30% of CEOs had a supplier declare Force Majeure
  • 65% of organisations were forced to source alternative suppliers for affected categories

Consider all the ‘prepare for the second wave’ and ‘the worst is yet to come’ talk a storm warning. The weatherman may not be 100% accurate, but it’s almost always a matter of when and to what extent, then whether it will happen at all. We need to keep supply chain risk on our radar.

Not only did our research indicate supply chain and procurement leaders are still bracing for peak impact, the riskmethods 2020 Risk Report predicts more damage to come, as supplier financial distress risk was 105% higher in May than the beginning of the crisis.

Most economists expect a second wave of bankruptcies – with one recognised expert predicting the amount of large bankruptcies (at least $100 million) will challenge the record set after the 2008 financial crisis.

So, how do we avoid another disaster? This year, riskmethods reported a 34% increase in early supply chain disruption warnings compared to the same time period in 2019, including: 

  • A 151% increase in disasters at partner sites
  • A 100% increase in disasters at location
  • A 45% increase in instability in key employee positions

This urgency placed around supply chain risk management should not be viewed as negative. The newfound spotlight gives our profession the spotlight we need to expedite critical decision making and drive real change.

While the extent of the impact of COVID on our supply chains is no longer surprising, the disruption offers a clear and urgent call-to-action for global organisations to rethink and rebuild supply chain risk management strategies from the ground floor.

Our Index showed that failing to invest in SCRM was the No. 1 technology regret during COVID-19. The majority of respondents (73%) are planning significant procurement and supply chain strategy shifts. For many, this means increased investments in supply chain and procurement technology. The emerging and Industry 4.0 technologies that show the most promise for mitigating future supply disruptions include:

  • Predictive analytics
  • Machine learning
  • Robotic process automation
  •  Internet of Things
  • Additive manufacturing and 3D printing
  • Blockchain

We still have a long way to go before we even determine what ‘business-as-usual’ will look like—never mind reach it again. And when that happens, remember: the worst thing to do when it comes to supply chain risk management is nothing at all.

Join us and riskmethods on Tuesday, July 28 as we reflect on lessons learned and continue crowdsourcing confidence with fresh data from the frontlines. Register now.

The Spy Who Loved Me – To Track Or Not To Track? That Is The Question

Companies ‘spy’ on remote employees using tracking software. Great for productivity? Or a massive invasion of privacy?


Covid restrictions are starting to ease, and soon the global workforce will swap their comfy sweats for a morning commute.

It won’t happen overnight, however.

Leaders like UK Prime Minister Boris Johnson want people to stay spread out, staggering shifts and working remotely where possible.

And some companies may even adapt policies to give employees the option of permanently working from home.

That leaves managers with the task of keeping staff productive from afar.

There are all kinds of ways this can be done, but one method stands out for its rising popularity (and sheer invasiveness): tracking software.

Here’s a look at what the software does, why companies use it, and its effectiveness.

Employee surveillance

Staff tracking software gives employers the ability to keep close tabs on employee.

Features vary, but this kind of software lets companies track everything a staff member does on a company computer.

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

Virtual monitoring isn’t anything new; IT and HR teams have used such tools for years. What’s new is the huge uptake in surveillance software subscriptions since the pandemic started.

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

Enforcing productivity

Is it overkill to record everything an employee does?

Not at all, says Courtney Cavey, Hubstaff’s Marketing Director. In fact, she welcomes being monitored with Hubstaff’s own software.

“The freedom it ultimately grants is priceless,” Cavey says. “[My boss] knows I’m working when I say I am because he can see that I’m tracking time and activity levels, and completing tasks, so he doesn’t have to look over my shoulder and constantly ask for updates.”

It’s certainly one way to make sure staff are productive. But it isn’t the only way.

Trust over anxiety

With all the other productivity tools for remote teams, including Slack and Zoom, why is surveillance software so popular?

It’s all about control, according to executive consultant Lloyd Bashkin.

“It’s perfectly understandable that CEOs will feel anxious at a time like this,” he says.

“[I]t’s a basic human need to want to feel a certain amount of control, and when that is stripped away, bingo – anxiety spikes.

“So rather than see [computer surveillance] as paranoia, for most CEOs it’s just a natural inclination to feel a certain amount of control.”

As CEO of management consultancy Lloyd Scott & Company, based in New Jersey, Bashkin says times of crisis only intensify a person’s leadership style.

“The perception of inescapable fear, such as COVID-19, will amplify a CEO’s behaviour – so untrusting CEOs become less trusting (as a way to relieve anxiety) and more mature, trusting CEOs become more trusting,” he says.

Loosening the reins

As an example, Bashkin points to a recent client – a CEO who clashed with his head of procurement.

The CEO had a long running dispute with the head of procurement, accusing him of having a negative attitude and of letting quality slip. Then the pandemic hit and remote working only made the conflict worse.

The CEO’s solution was to monitor the head’s computer activity closely. If that didn’t work, he’d simply fire him.

Luckily, a conversation with Bashkin helped the CEO realise the problem was his own trust issues. So the CEO gave the head of procurement more freedom to do his job without interference, and the problems disappeared almost overnight.

Output over input

That’s because staff realise when they aren’t trusted by their manager, and close monitoring can be demotivating.

“If employees feel their manager is looking over their shoulder at every moment, trust goes out the window immediately,” says Corporate Rebels’ Pim de Morree.

He thinks surveillance software is ‘micro-management gone wild.’

“Apparently, employers don’t feel the staff they hired are capable of doing a job without them tracking their activities,” he says. “It’s the workplace equivalent of a prisoner’s ankle bracelet.”

Instead of focusing on how work gets done, he says the real measure of productivity is what gets done.

“Figuring out how to measure that is the real problem to solve,” de Moree says.

Legal barriers

However, not all surveillance stems from mistrust or control issues.

There are vital reasons for monitoring staff computer use, like protecting networks from malware or other viruses.

In fact, some companies are required to track employee activities to meet legal obligations. The key to doing it well is transparency.

Employers should let employees know what information they collect and why, says Ashwin Krishnan, tech ethicist and COO of UberKnowledge.

He advises companies to explain staff monitoring “not in legalese terms, but in actual terms of what this means for [the employee].”

He says companies need a clear ethics and privacy policy for data ownership – like how long it’s held and what happens when it isn’t needed anymore.

“When employees can see the full extent of the responsibility and diligence shown by leaders, it breeds trust,” says Krishnan.

Be empathetic

That said, it takes more than transparency to increase productivity, Krishnan says.

Remote staff are far more productive when they feel supported – especially in these unusual times.

“Suddenly, the employee’s home life needs to become part of the manager’s discovery process,” he says.

“Not every employee may be willing to share this but letting them know that they have a supportive ear if they need it is crucial. [A]dapting previously scheduled work meetings (adjust timing, duration, frequency) to deal with this at-home reality shows empathy.”

Such empathy can also help customers be more patient with a company’s employees. 

Kristy Knichel, CEO of Knichel Logistics, a shipping logistics company in Pennsylvania, recently wrote to customers explaining her team’s new work situation.

Many of her staff are working remotely for the first time, and some even need company internet hotspots since they don’t have Wi-Fi at home.

“We understand that our employees are accustomed to the ease of communicating with one another in person in the office, so this has been quite a change to adjust to,” she writes.

“[O]ur team has made the transition smoothly and we hope that you have not experienced any disruption.”

Destination, not the journey

It isn’t easy to manage a remote team – especially during a pandemic.

It requires trust and empathy, while letting go of the need to control every employee move.

That’s why the best way to improve productivity is following de Morree’s advice and focus on what an employee delivers – whether in the office or not – instead of how they delivered it.

Want to keep up with the latest coronavirus and supply chain news? Join our exclusive Supply Chain Crisis: Covid-19 group. We’ve gathered together the world’s foremost experts on all things supply chain, risk, business and people, and we’ll be presenting their insights and daily industry-relevant news in a content series via the group. You’ll also have the support of thousands of your procurement peers, world-wide. We’re stronger together. Join us now.

5 Cost Levers To Pull Right Now With Your Outsourced Services

At times of enormous disruption to global supply chains, it’s easy for procurement only to think about direct spend. But it’s just as critical to ensure value is delivered in outsourced service contracts.


“Today’s health and economic crisis, as a result of coronavirus, means that typical approaches to cost management will need careful consideration as business’ key focus has to be staying in business” Lorna Brown, Former CPO, Global Financial Services

We live in an ever-changing world, where what had been predicted as a prosperous year for a business could turn into a fight for survival thanks to something that it has no control over. As the world pulls together to combat COVID-19, businesses face the challenge of reduced revenue forcing them to tighten their belts and search for further savings.

In times of crisis, most organisations will fall into the same pattern and focus their cost reduction effort on direct spend categories. After all, your first thought in a crisis or risk management situation is more likely to be ensuring the stability of your production supply chain, rather than identifying the cost savings you can secure from the organisations delivering your HR or IT Support services.

But why is this the case? Organisations may consider their direct categories as more business critical, or believe that they can release greater value from them with closer management of their global supply chain.  For an increasing number of organisations, however, outsourced services form the core of their business. And by focusing on the right cost levers, review of these service contracts  could deliver just as much in terms of savings as direct spend.

Pulling on the Cost Levers

Structuring a contract for the procurement of services is can appear to be a different beast to one for the procurement of goods. Many procurement professionals will go their entire careers without creating a single RFQ, tender or contract for an outsourced service.

The reality is, however, that there isn’t a great deal of difference beyond what is delivered by the supplier. Procurement still needs to know that suppliers are able to meet an organisation’s requirements. A robust contract needs to be put in place to ensure that services are delivered efficiently and effectively.

And when it comes to cost levers, there’s no need to start with a blank sheet of paper when proven procurement strategies will still fit the bill. Everest Group, a consulting and research company with an established history in the outsourced services space, has conducted extensive research on this topic. Amy Fong, Vice President in Everest Group’s strategic outsourcing and vendor management practice, is clear that this research has highlighted five key cost levers for procurement to use right away when it comes to their outsourced services: “we see a lot of common themes where buyers can do a better job.”

1. Pay the Right Price

Former CPO in Global Financial Services, Lorna Brown, believes that organisations need to be “a bit curious and engage with the supplier to understand how they are delivering the services.” This will allow for a greater understanding of how the service is built up, but also what is driving the costs, and consequently the price in the market.

Services in high demand, but with a lower supply where there are fewer people capable of providing a quality service will cost organisations a premium.  In the  IT services market, this premium has been charged for everything from basic digital skills all the way up to large-scale, highly complex data analytics over the years. The availability of labour with these skills is the key cost driver.  With each ebb in the requirement for these skills, rates for outsourced services will come down.

Being clear about how the cost of labour has influenced your price is a great way to pull this particular cost lever.

2. Understanding Total Cost

Procurement’s consideration of cost needs to go beyond the ticket price that is paid. There are other factors to take into account such as quality of support and adherence to Service Level Agreements (SLAs). It’s all about Total Cost of Ownership.

Got a great price for your basic service agreement? Great! But did you discuss and agree a price for ongoing support? Or agree how many people are assigned to your contract? Or how much you are paying for secure data storage? It’s critical to understand the whole picture beyond the basic price.

If you are just looking to drive savings on the bottom line price by whittling down your supplier’s margin, they will look to move or hide costs elsewhere. No matter how good a deal you think you have at the outset, if you aren’t tracking TCO you’re probably losing any savings you may have initially achieved and leaving this cost lever un-pulled.

3. Find the Right Deal Structure

One of the key decisions an organisation will have to make regarding its services is which model or structure their deal is going to take. In outsourcing of services, a fully Managed Service can be very attractive to an organisation with day-to-day operation provided by an external specialist, with the business free to focus time and effort elsewhere.  

However, organisations using a Managed Service have to accept the fact that they will hand over a level of control, which in turn raises their risk.  Procurement still needs to understand what’s happening throughout the outsourced service provider’s supply chain.

Organisations may also choose to use on-demand outsourcing, where they pay for support based on the number of times it is used, or a ‘Break/Fix’ service where it pays for just the work that is done. There is no right or wrong answer as this will differ from organisation to organisation. What’s important is picking the right option.

4. Innovation

When it comes to cost savings, innovation is a key part of the puzzle that cannot be missed. And when it comes to pulling the innovation cost lever for outsourcing services, the focus should be on “Big I” Innovation (i.e. digital transformation), rather than “Little i” innovation (i.e. continuous improvement activities).

As with the other cost levers we have shown, innovation that is being looked at in other areas of the business can just as easily be applied to outsourcing too. Consider all the current industry favourites such as Robotic Process Automation (RPA), AI and Machine Learning – these can have an impact on costs.

However, despite the fact that there is increasing importance placed on innovation in outsourcing, many organisations are still missing the mark. There’s a lot that can be achieved from deploying this cost lever in the right way at the right time.

5. Financial Engineering

Cost lever number 5 takes the modernisation and digital transformation found in the innovation space one step further: when it comes to the concept of innovation not just about the business scoping out activities for different areas of its categories, but more about how it modernises the entire solution.

It’s important to use financial engineering to have the impact on profit that is required as the initial outlay or investment across the board will be significantly higher than a service that doesn’t include these types of outcomes.  Organisations may choose to look at alternative sources of finance, assess potential Joint Ventures or Managed Services with flexible margins (in line with traditional Financial Engineering). Using this cost lever is about getting creative and perhaps walking the path less travelled for success.

Pull the Levers with Care

The 5 cost levers for outsourced services represent an individual and collective strategy for cost savings in the outsourced services space.  Pulling one alone would be effective, and using all of them in some way could deliver also deliver great results.

To find out more about these cost levers, and to access expert advice on how to use them, register for the Everest Group sponsored webinar 5 cost levers to pull right now with your outsourced services, to be broadcast on Thursday May 7th 2020 at 2:30pm GMT. To find out all the information you need, including how to sign up, visit the Procurious website or click here.

Supplier Motivation, A Key Component of Supplier Management

Motivate your suppliers rather than merely manage them


As we have already seen in a former blog, enterprises often fail at maximizing the value of collaborating with smaller companies. Convinced that their sizes and brands will attract suppliers anyway, they entrench themselves behind the gates of rigid procurement processes. They miss the huge opportunity of co-innovating with these businesses, especially startups, by failing to take a differentiated approach. This multi-channel strategy tailored to suppliers’ capabilities is what differentiates best-in-class from a peer group as a report from The Hackett Group reveals.

On the other hand, let us not forget a wise piece of advice from Procurement Management expert, Natacha Trehan, in her keynote last year at Ivalua NOW –  every customer wants to collaborate with the best suppliers, which means that, eventually, the supplier chooses who they want to work with. This translates into a powerful lesson learned for Procurement: motivate your suppliers rather than merely manage them.

This is a method medium-size companies have already integrated in their supplier innovation strategy.

I was lucky to attend an inspirational presentation on the subject by Virginie Favray, Urgo Healthcare’s CPO, at a Procurement roundtable event, before the lockdown. Urgo is a leading international healthcare group which specializes in advanced wound care and self-care. Their €640m turnover qualifies them as a medium-size company, especially if you compare them to pharmaceutical giant Sanofi with its €35b revenue.

Even taking a cautious approach to comparing figures, I cannot help but notice that Urgo’s revenue growth rate is more than double some of its larger peers. Is a strong supplier innovation strategy the key to additional growth points? It certainly contributes and we will dig into Urgo’s methodology.

This methodology was new to most Procurement peers attending due to both its philosophy and the way it translated into concrete actions.

When it comes to the philosophy, Urgo decided to play a different tune compared to its larger peers. They cannot leverage the massive spend volumes that the pharmaceutical giants can. Additionally, if their brand awareness is strong in France, it has limited traction on international markets. That is why, the group fully plays the trust card.

How do you build such an asset and how does it turn into better innovation?

It all starts with building up a transparent relationship. What are they transparent about? They share Urgo’s business strategy, how it drives Procurement objectives and finally how strategic suppliers are valuable stakeholders of it. As I have often highlighted, there is a prerequisite for that to happen: Procurement practitioners must enlarge their focus to embrace the full strategy of their company, which often they do not. At Urgo, they do.

Establishing trust in a relationship is a safe place to start. However, it will not last long if no long-term relationship management is applied. This is something Urgo has perfectly understood. As most Procurement organizations do, they evaluate their suppliers. Nevertheless, they do not satisfy themselves with this one-way view. In fact, they ask suppliers to assess Procurement too. Due to this 360-degree assessment, their relationship trust index reaches high scores. The postulate here is that detecting and solving inevitable business frictions on a regular basis allows a healthier relationship on the long run.

In order to turn this healthy relationship into a thriving partnership, they have developed a supplier award program which recognizes suppliers’ efforts. In the HR realm, expressing gratitude is widely acknowledged as a powerful means to foster motivation. Why would it be different for suppliers? Each year, Urgo acknowledges three suppliers for direct and for indirect spend. They are rewarded with a “best supplier of the year” certificate, some Urgo products and a personal note from the CPO.

Once such a favorable environment has been set up, initiatives aiming at capturing co-innovation with suppliers can be implemented. Urgo employs a wide range of tools to do so.

First, they have a suggestion box concept for suppliers to submit. This is a method that is proving more and more efficient to boost innovation according to procurement consulting group AgileBuyer. On Urgo’s suggestion form, suppliers may recommend new products or improvements to existing ones. They must be as specific as possible about their idea (investment cost, timeline, potential savings…). If the idea generates savings, these are shared between Urgo and the supplier. Buyers receive about a thousand forms per year and commit themselves to responding in a reasonable period of time.

Second, every two years they organize a supplier-buyer speed dating event, focused on indirect spend. As a result of these encounters based on a specific theme, two or three new processes are designed. For example, last year’s topic was about digital marketing. They created a commercial through a crowdsourcing process instead of using traditional communication agencies. Indeed, some preparation is necessary before this innovation event: fifty new suppliers were sourced and only ten were selected for speed dating.

Third, they have an annual two-day innovation workshop which mixes stakeholders from Urgo as well as direct suppliers and even tier 2 and tier 3 suppliers. These workshops focus on specific topics that are prepared ahead to get the most of this workshop. Last year, sixty concepts emerged from the discussions which eventually shortlisted into three projects.

Finally, buyers also spend time on their strategic suppliers’ premises. This is not to discuss day to day operations or business or pain points but rather serve as a vehicle to discuss long term strategy, find synergies in situ and foster innovation ideas.

Obviously, this is not an approach you can replicate with every supplier you work with. This is why, Urgo applies a supplier attractivity matrix which identifies the partnerships they really want to nurture. Only strategic suppliers are part of this matrix. A supplier becomes strategic when it ranks high in a wide range of criteria: margin level, market share, supply chain criticality, procurement annual review score, ethics and innovation rating. Suppliers are then positioned against a second axis: the maturity of the relationship with Urgo. Combining these two filters brings to focus the suppliers that are core to the business and which innovation proposals can truly be beneficial.

All these are smart and actionable ideas which can easily be replicated into any large enterprise. Let’s get started!

Source-To-Pay 2020: The New Normal

What can be done by procurement and supply chain management professionals NOW and SOON to stay ahead of this challenge?


With COVID-19 still spreading across the globe, it’s clear the economic costs will have a huge impact on organisations.  It was reported back in February that 94 percent of Fortune 1000 companies were already seeing supply chain disruptions due to coronavirus. (1) We can’t help but notice the vulnerabilities of a global supply chain, with procurement on the “organisational front line,” so to speak. Adapting to disruption and trying to predict risks through such actions has become the new normal.  

Although at first, organisations went into an intense reactive mode, we now see some shifting from reacting to the crisis to recovering and re-purposing their businesses. Adapting to disruption and trying to predict risk has become the new normal. But, we should not lose sight of our overall source-to-pay strategy to include what’s next, and how to ensure we can be resilient on an ongoing basis.  It’s not enough to simply react to these unpredictable situations, we need to be ready for the next inevitable disruption.  In other words, we need to incorporate “the NOW,” “the SOON” and “the ONGOING” into our source-to-pay strategy. 

In this blog, we focus on what can be done by procurement and supply chain management professionals NOW and SOON to stay ahead of this challenge

Strategy for the NOW: Strategic Payables

For many countries at the time of this writing, the worst is yet to come. In many industries, organisations are experiencing revenue reduction at much faster rates than the costs to run their business.  For those organizations and their suppliers, reducing operating expense, optimizing and protecting cash flow and right-sizing bought-in cost-to-revenue, is critical NOW to withstand weeks or months of economic downturn and supply chain disruption.  

There are a number of ways organizations can use “strategic payables” to increase cash flow quickly.  Outsource category management of non-core suppliers and commodities: Experienced Category Leads can identify opportunities to take cost out of third-party bought-in content either as a one-time service or through continuous category management services. Outsourcing partner-run operations for such scope can effectively become a “middle office,” leaving Category Leads more time to focus on revising and implementing category strategies.

Digital middle office: Provide an integrated service desk as a single point of entry for intake and requests to automate user and supplier interaction.  This will drive simplification, efficiency and compliance through transactional processes and can significantly reduce operating expense associated with manual processes.

Advanced insights: By reviewing historical spend, as well as industry pricing trends and other market intelligence through AI-based solutions, organizations can identify spend savings on both indirect spend and direct spend.  Inventory optimization insights can further reduce carrying costs.

Trade payables financing: By outsourcing spend end-to-end with a service provider who works with preferred commercial integrators and supply chain financing partners, they can provide supply chain financing for earlier and debt financing for extended payment terms. This will allow organizations to optimize annual cash in as few as one to three months.

Strategy for the SOON: Optimize OPEX

Most industries are looking to further optimise their operating expenses (OPEX) soon as central in their recovery plans.  A primary way to do this is to convert capital expenses (Capex) to OPEX, such as to engage a service provider, in order to increase deductions and reduce taxes for the near-term, as well as to reduce maintenance cost longer term.  Other ways to affect OPEX are to optimize where work gets done; reduce risk and improve compliance; and improve the efficiency and effectiveness of how work is done, such as through automation.

The objective for the NOW and SOON phases is to gain upfront savings to fund transformation activities and ensure resiliency in the ONGOING phase.

Strategy for ONGOING OPERATIONS: Transform to deliver value and plan for resiliency

Although the near-term concerns are increasing cash flow and optimising operating expenses to “get over the hump” during the crisis, organisations should continue to prioritise transformation programs that deliver sustainable value over time.  It is still crucial to re-engineer workflows to use cognitive capabilities for insights and connected experiences for longer-term advantage – we call these “intelligent workflows.”  It is also crucial to curate high quality, proprietary data proactively for insights to deliver value ongoing.

Lastly, we can expect resiliency of workforces, workplaces and IT systems to get renewed attention in ensuring continuity for ongoing operations.  As stated in the IBM Institute for Business Value COVID-19 Action Guide, “perhaps the most resilient course of all may be teaming up with supply chain partners to establish a coordinated crisis-support system.  In these sorts of situations, partners will likely rise or fall together, and sharing information and ideas in that climate becomes highly valuable.” (2)

For more information on Cognitive Procurement and Intelligent Workflows, read “Cognitive Procurement: Seizing the AI Opportunity” or visit ibm.com/process/procurement.

(1) Fortune Magazine, “94% of the Fortune 1000 are seeing coronavirus supply chain disruptions: Report,”  Feb 21, 2020 https://fortune.com/2020/02/21/fortune-1000-coronavirus-china-supply-chain-impact/
(2)  IBM Institute for Business Value COVID-19 Action Guide, Mar 2020, https://www.ibm.com/thought-leadership/institute-business-value/report/covid-19-action-guide