Category Archives: Sustainability

Supply Disruption Has Been The Top Procurement Risk For At Least the Past 15 Years

… and it’s too bad it took the worst global pandemic in 100 years, two wars, exacerbated natural disasters (including one of the worst global wildfire years on record), and Panamanian droughts for Procurement leaders to realize this. (Basically, the fact that a Gartner survey finally confirmed this should not come as a shock!)

When you go back to basics (i.e. the business 101 that it seems most business leaders have been skipping for the last couple of decades), there are two truths that all businesses are subject to:

  1. Profit = Revenue – Expenses, which makes the CRO and the CPO the two most important people in the business, and if market conditions prevent revenue from increasing, the CPO becomes the most important
  2. Business that sell product need to make or acquire product to sell. This requires supply and people.

This says that, when you abstract it high enough, your two three primary risks are:

  • supply (no supply, no product; no product, no sales; no sales, no capital)
  • talent (the skilled resources to acquire/make the product economically and run the company)
  • capital (you need money for supply, talent, and operations)

And when you dive in, you see that supply disruption is far and above any other risk because:

  • today’s supply chains are global and require multiple forms of limited transportation
  • with thousands of suppliers in dozens of countries and regions (across 4, 5, and sometimes even more tiers)
  • which are all exposed to the economic, environmental, geopolitical, and societal risks in the locales in which they operate
  • which means you are exposed to all of the economic, environmental, geopolitical, and societal risks in which they operate!

Thus, if your extended supply chain spans 30 or 40 countries, then you are exposed to every risk of those 30 or 40 countries at all times!

Given the drastic increase in multiple

  • economic,
  • geopolitical,
  • societal, and
  • environmental

risks over the past two decades, as well as the increase in cyberattacks, which makes the weakest unknown supplier in your supply chain your weakest link (if a hack into their system provides a backdoor into their buyer one tier up the chain, which then provides a backdoor into their buyer one tier up, until the hackers trace their way back to you through a chain of back doors).

Given that, right now, multiple risks in multiple risk categories are materializing every day on this planet, at a rate that exacerbates annually, we are at the point where no company is going to even go a year without a risk event impacting their supply. (This doesn’t mean they won’t get it, just that it will be late or cost more, and either could cause substantial loss.)

So if you’re not sourcing and procuring with mitigation strategies in mind at all time, start now. Multi-tier visibility is no longer enough. Advance warning is no longer enough if you are not ready to act with another option.

There are Many Key Elements of Sustainable Procurement Strategy — But Three Fundamental Elements that Must Be Present

A recent article over on Material Handling & Logistics on Key Elements of Sustainable Procurement Strategy outlined for key strategies for sustainable procurement that were on point:

  • A Holistic Approach
  • Data Integration
  • Pay it Forward
  • Stakeholder Engagement

But meaningless if you don’t have the basics in place:

  • trained talent
  • well defined processes
  • solution-oriented systems

Trained Talent

All of the above, and all of the other key elements of a strategic procurement strategy not listed, require talent to execute. Talent that is appropriately educated, experienced, and trained on all of the key elements appropriate to your organization. With respect to the above:

  • talent needs to define the right holistic approach
  • talent needs to identify the critical data, formats, and integration strategy — and make sure it is done effectively
  • only talent can handle delicate supplier relationships to make sure it is truly paid forward
  • shareholders need to be engaged effectively, and that requires real talent

Well Defined Processes

Statements, directions, and mandates don’t accomplish anything. Neither do people without an appropriately designed and detailed plan — which goes well beyond we’re going to engage supplier S or buy product P. Procurement success rates are high when there are well thought out and appropriately defined processes that can be followed by all those involved in a project or process, and generally low otherwise. Moreover, without well defined processes:

  • there is no holistic approach, it’s just a buzz phrase
  • data integration is just a one time pull into a system or push into a warehouse, and it gets outdated faster than fashion on Melmac
  • it takes more than smooth talk to pay it forward, it takes processes that ensure knowledge is transferred to, effort is minimized for, and real collaboration takes place with suppliers — it takes processes to make sure nothing critical is overlooked that could hamper the organization’s goals
  • while talent is the most critical to stakeholder engagement, good processes are critical to ensuring requirements and data is efficiently collected and retained (as a stakeholder should never have to make the same request or provide the same input twice) and no concern is overlooked

Solution Oriented Platforms

Sustainable Procurement ultimately relies on appropriately trained talent executing well designed processes with the help of platforms that help them do the jobs they need to do on a daily basis. Platforms that automate the tasks and solve the problems the organization has, not platforms that do nothing but act as fancy middleware or slap roll-the-bones AI-assisted conversational interfaces on top of software that never worked in the first place. Sustainable Procurement requires that the procurement department be able to get stuff done. That will rarely be AI, or spend orchestration, or the buzzword of the day.

  • orchestration may sound like it supports a holistic approach, but all those systems do is tie systems together that actually do the work through a common interface, which, in its attempt to homogenize everything, often weakens the solutions for the individuals that need to use them the most; a holistic approach is about getting things done with systems that get things done
  • you can’t integrate data without the right platforms that collect, process, and normalize the right data the right way
  • it’s a lot easier to pay it forward when you have the right platforms that support the processes and the people who need to pay it forward
  • it’s easier to manage stakeholder engagement on systems designed to support the stakeholders in question, in contrast to one-size-fits-all (but serves no one) “orchestration” systems

In other words, if you truly want sustainable procurement, start with making sure the foundations are in order. The rest will follow in a straight-forward manner once you have the basics right.

How Do You Say Bye-Bye to DEI Without Customers and Suppliers Going Bye-Bye

DEI is going a lot of blowback. Much of it deservedly so since

  • many initiatives are led by people, who’ve never read a dictionary, that confused “opportunity” with “outcome” (and they’re not the same thing at all),
  • many initiatives are led by people who are misusing DEI to discriminate against unrecognized groups (specifically, religious minorities, white candidates, etc.), and
  • it was so bad in some jurisdictions that it is triggering legal responses (not just board and investor responses).

But ripping it out without a plan or even a thought about the blowback is not a good idea.

First of all,

  • a properly defined initiative is NOT illegal, or even immoral,
  • not all are being used to illegally discriminate against religious minorities or non-minorities, and
  • education can help ensure that a well-defined program is tweaked to be perfectly in alignment with federal and state laws with respect to equal opportunity.

Secondly, just because you’re doing it wrong, doesn’t mean everyone is. As pointed out in this recent opinion article on Supply Chain Dive on how Harley-Davidson’s DEI rollback is a procurement mistake, Harley Davidson’s removal of their support for supplier diversity could be seen as going too far.

And it could be. Ripping out or killing a program that doesn’t work, and then publicly stating that you’re instead going to focus on complying with all state and federal equal opportunity legislation, especially if that’s what customers want is definitely a good thing. (If you’re not convinced, read Jason Busch’s article on why Harley Davidson Dumping Supplier Diversity is more-or-less a good thing.

But you want supplier diversity to the extent there are diverse suppliers that can support your business. It may be your right to buy from who you want, when you want, where you want, and how you want, but if it upsets your supplier base, that’s a problem. Especially if your best suppliers walk away, or, even worse, walk away and sue you. Just like you need happy customers, you need happy suppliers. Plus, a good policy encourages diversity, it doesn’t mandate it when one supplier is inferior to another.

Moreover, even if the DEI program is not working, killing it too fast can also result in customer blowback who might think that you are not about equal opportunity and diversity. It’s a tricky situation, and any action needs to be well thought out, including any potential blowback and how you respond to it in a matter that dispels it before it snowballs.

The Sourcing Innovation Source-to-Pay+ Mega Map!

Now slightly less useless than every other logo map that clogs your feeds!

1. Every vendor verified to still be operating as of 4 days ago!
Compare that to the maps that often have vendors / solutions that haven’t been in business / operating as a standalone entity in months on the day of release! (Or “best-of” lists that sometimes have vendors that haven’t existed in 4 years! the doctor has seen both — this year!)

2. Every vendor logo is clickable!
the doctor doesn’t know about you, but he finds it incredibly useless when all you get is a strange symbol with no explanation or a font so small that you would need an electron microscope to read it. So, to fix that, every logo is clickable so you can go to the site and at least figure out who the vendor is.

3. Every vendor is mapped to the closest standard category/categories!
Furthermore, every category has the standard definitions used by Sourcing Innovation and Spend Matters!
the doctor can’t make sense of random categories like “specialists” or “collaborative” or “innovative“, despises when maps follow this new age analyst/consultancy award trend and give you labels you just can’t use, and gets red in the face when two very distinct categories (like e-Sourcing and Marketplaces or Expenses and AP are merged into one). Now, the doctor will also readily admit that this means that not all vendors in a category are necessarily comparable on an apples-to-apples basis, but that was never the case anyway as most solutions in a category break down into subcategories and, for example, in Supplier Management (SXM) alone, you have a CORNED QUIP mash of solutions that could be focused on just a small subset of the (at least) ten different (primary) capabilities. (See the link on the sidebar that takes you to a post that indexes 90+ Supplier Management vendors across 10 key capabilities.)

Secure Download the PDF!  (or, use HTTP) [HTML]
(5.3M; Note that the Free Adobe Reader might choke on it; Preview on Mac or a Pro PDF application on Windows will work just fine)

Keep Your Procurement On PACA with FSMA with Procurant!

We don’t cover specialist Procurement providers much here on SI because many don’t have much in the way of domain specific product functionality (and differ primarily on domain knowledge, terminology customization, and service offerings), but some, like Procurant, go beyond the basics and offer domain specific functionality of relevance that the market needs to take note of. Especially when such functionality can help an organization be compliant with current and, most importantly, incoming regulations they are not ready for.

Procurant, marketing itself as a strategic platform for perishables that does Procurement AND Food Safety, offers the following core functionality:

  • P2P (Procure to Pay) for Perishables
  • Inspections (recording and auditing)
  • Traceabillity that is mobile-enabled and FSMA 204 compliant
  • Market Intelligence
  • Food Safety (workflow and remote sensor integration) (not covered in this article)

It’s the one-stop solution for retail grocers, especially those with US operations, that need to manage their perishable supply chain in a manner that is both PACA and FSMA compliant. (And if you’re a grocery retailer that does NOT know what those acronyms stand for … Uh-Oh! Better find out and give Procurant a call ASAP — because failure to comply can not only result in fines but [supply chain] shutdowns.)

Procurement/Procure-to-Pay wise there isn’t much that’s unique in core functionality (as the uniqueness is with the integrated support for the perishable space), but it’s all there, and we’ll start with the core so you can be confident the core is on par with other best-of-breed Procurement solutions.

With respect to quote management, the platform contains integrated RFQ / price request that makes it really easy to not only request (updated) quotes from suppliers, but get a commitment on that price (for a certain time or volume; i.e. one week or 100 pallets). When you get a commitment, the system tracks orders against that commitment, and then lets you know when the quote has expired because the commitment has been used up (and if you still need more product, you need a new quote with a new commitment).

With respect to order management, the solution makes it easy to select products for orders from the built-in catalog, from order templates (guides), or from demand forecasts (which can pulled in from the forecasting/demand management system OR created natively in Procurant using weighted average outbound for the last 12 weeks, with more forecasting algorithms coming in a future release). The platform even supports the definition of automatic (replenishment) orders, should the organization choose that functionality. Once the order is assembled, it’s very easy to send it to the supplier for fulfillment.

Moreover, as Procurant ‘s P2P also contains integrated support for carriers and logistics (due to the need to monitor the entire produce supply chain and ensure food safety every step of the way), in Procurant, you can also assemble orders by truckload, as you don’t want to be under-shipping if not absolutely necessary (as it takes the same amount of energy to maintain the temperature when refrigeration is necessary whether the truck is almost full or almost empty) and it’s easier to trace when you decide who is shipping what, when, and on which truck. One great feature of the platform is that it’s super easy to assemble an order for a carrier. It’s just a matter of dragging and dropping order line items until the platform notifies you that the last line won’t fit in the truck (as you can encode a max # pallets, weight, and volume by truck and as soon as one limit is reached, the platform lets you know). No complex training on a sophisticated TMS required.

As a result of this deep support for logistics and carriers, purchase orders can be incredibly detailed and include shipping dates, carrier, load reference number(s), and even cross docks.

Also, order management is multi-state and the system will track and notify if there is an:

  • order modification by the buyer
  • order modification by the supplier
  • order cancellation by the supplier
  • order reconciliation by the supplier (on being notified the goods received didn’t match the PO)

and all changes by any party are maintained in a secure, unalterable, audit log.

With regards to order management, the buyers can choose whether or not the supplier can split orders, remove items, or add substitute orders. Whether or not they can change prices (or just quantities to match availability), and even when modifications will be accepted. Similarly, the administrator can determine the order creation capability the buyers have access to … whether or not they have (to use) guides, whether they can create cross-dock orders, etc.

With respect to invoice management, it’s super easy for a supplier to flip a PO to an invoice. All they have to do is enter the actual quantity shipped by line item and submit. The invoice then goes into a wait state until a receipt is entered, at which point if there is a discrepancy, the invoice is sent back to the supplier for correction before it goes into the normal processing queue, where it would be held up until the discrepancy was resolved, which could delay payment considerably if the organization has long approval chains for corrections and exception processing.

The platform also tracks supplier fill rates, so you can quickly see which suppliers are fulfilling the POs they accept and living up to your expectations and which suppliers are not. It also has price watch capability, and can alert you whenever PO or quote prices exceed current (or historical) prices by a certain percentage.

And, of course, there’s a dashboard which summarizes current tasks and open orders and great search and filter functionality to find just the orders, invoices, or quotes you are looking for.

The platform also integrates the inspection reports from their inspection app and, for any fulfilled order, you can quickly bring up the full report that summarizes the inspection (packaging, appearance, condition, flavor, and quality) on each item delivered as well as the number of items rejected. Also integrated with the Procurement platform is the Inspection Module that contains the overall inspection summary dashboard, dill downs by supplier, scorecards by supplier, and other key reports and data points on inspections. The inspect application is a mobile app that workers can use at the warehouse on or the dock to inspect the quality of goods as they come in and, if necessary, reject them on the spot.

What’s really cool is the Track and Trace capability where, for any item, you can see the entire journey from the source lot to the warehouse or the store shelf, as appropriate. You just need a GTIN, lot number, order number, SKU, or product description and, optionally, a date range and you see the store shipments, receivings at your warehouses, vendor shipments, and base lots. And you can click into each store shipment, receiving, vendor shipment, or lot and see complete details (such as the ship to, date, and receiver for a store shipment; order #, sales order, Lot, shipper, shipment date, and cases for a vendor shipment; etc.). And with their next release, the (default) output report formats will be usable for FSMA compliance. (Again, if you do grocery retail and you don’t know why this is critical, you better find out soon!)

Finally, their Market Intelligence Capability in Procurant Connect provides Commodity Pricing, Weather, and Transportation analytics and tracking. The commodity pricing tracks price movements across all commodities by region; the weather pane integrates forecasts down to the county level; and the transportation analytics tracks average load fees by lane (defined by city pairings), as well as price changes and shipper / transportation availability (surplus, slight surplus, adequate, slight shortage, or shortage).

Procurant can integrate with your ERP and AP (payment) system, your TMS (or onboard carriers natively, which is something not many P2P systems can do as carrier management is critical in perishable supply chain management), and your supplier master (for supplier onboarding) if it’s not your ERP.

All-in all, Procurant is a fantastic solution for the perishable supply chain procurement and one that absolutely has to be on the short list of any grocery retailer that needs to get a handle on their perishable supply chain in a manner that will allow them to be fully PACA and FSMA compliant.