Tag Archives: supply chain management

5 Best Practices for Raw Material Procurement

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

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

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

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

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

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Raw Material Procurement

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

4) Enforce the agreed purchasing behavior

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

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

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

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

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

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

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

So how does it work?

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

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

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

WARNING: Handling Dangerous Cargo

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

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

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

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

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

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

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

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

Take the following example from the United States:

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

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

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

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

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

Is supply chain swallowing up procurement?

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

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

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

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

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

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

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

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

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

But we can change that.

Acknowledge the change in the business climate

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

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

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

Own procurement’s core responsibilities

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

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

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

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.