Is Your Procurement And Sourcing Function ESG Sustainable Ready?

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SIG University Certified Sourcing Professional (CSP) program graduate Sophie McNally shares how there is no one size fits all approach when it comes to ESG and that each company has to take a deep dive into what will ultimately work best for them.

This analysis attempts to explore how procurement and sourcing functions of publicly traded technology companies with market capitalizations between $15 billion to $35 billion (“Tech Company”) can evaluate, implement, and monitor emerging Environmental Social and Governance (“ESG”) regulations within their supply chain.

All publicly traded companies are required to disclose their ESG efforts and generally, Tech Company boards have ESG oversight. While Securities Exchange Commission (“SEC”) Reporting on the “S” and “G” components of ESG metrics has evolved and is standardized across industries, there is no single consistent baseline on environmental and sustainability reporting on the “E” component.

A survey of 2022 Proxy statements indicated that boards generally voted against proposals to manage climate risk through comprehensive science-based targets due to the potentially costly and burdensome target-setting process. This is consistent with the change in tone that ESG champions like BlackRock who once supported shareholder proposals pushing for lower emissions at public companies have taken.

Sophie McNally, Senior Manager Financial Reporting, CoStar Group

Maximizing the Potential for Cost-Savings and Risk

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SIG University Certified Sourcing Professional (CSP) program graduate Heather Frazer discusses how TCO is a great tool that will help capture the entire potential for cost savings and risk and how it is increasingly important for procurement organizations to secure reliable data.

Heather Frazer, Procurement Specialist, Blue Cross Blue Shield of Tennessee

Assessing Business Models

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SIG University Certified Sourcing Professional (CSP) program graduate Andy Perkins highlights the key foundation for driving excellence between supplier and client in the new market we live in.

Procurement is an integral part of the process of acquiring goods and services from external parties that help drive the goals of an organization. This essential function is a part of every business, and a company must develop sound business models that ensure the process is efficient and effective.

Assessing business models is a crucial step in determining the strengths and weaknesses of the overall Procurement strategy. Several factors determine whether a business model is efficient and effective. This essay will explore aspects such as supplier collaboration, transparency, risk, technological adoption, and sustainability.

The first step to assess the business model for Procurement is to explore the core components. Typically, this involves identifying the needs of the organization or team, selecting the suppliers, negotiating the contracts, and managing the relationships. An efficient and effective business model should address each component and provide a clear path forward.

One key factor to explore when assessing a business model for Procurement is the level of collaboration between suppliers and the organization. Collaboration is a critical aspect of supplier relations. Additionally, this can be a tremendous value-add considering that resources can be leveraged and used when identifying a proposed solution. As an organization, we see this as the most significant benefit to supplier collaboration, as this allows for a solution-agnostic approach and ensures organizational alignment throughout the process. This collaboration can be done through regular meetings or project-specific initiatives.

Andy Perkins, Senior Category Specialist, Maxar Technologies

Understanding A Risk Profile While Supporting It Through Negotiated Contracts And Governance

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SIG University Certified Third-Party Risk Management Professional (C3PRMP) program graduate Steve Williams provides a look through Johari’s Window, and how knowing what we know and don’t know can unlock our understanding of a company’s risk profile while supporting it through negotiated contracts and governance.

Procurement is such an interesting field because so many companies do it differently. This is especially true in the area of third-party risk management and the role that procurement practitioners play in that area, and I submit that most practitioners could be doing more to support their organizations when it comes to managing third party risk, from understanding the company’s risk profile, to helping stakeholders and business owners identify risk, to being part of the solution in terms of mitigating or preventing known risks.

To lean on Johari’s Window, I believe many practitioners sit in the you don’t know what you know, or you don’t know what you don’t know spaces. The pendulum needs to shift drastically and as procurement professionals we need to know what we know and know what we don’t know more than anything else– but how do we get there? Surely this is not something that happens overnight and developing the knowledge required to assess and address third party risk at a company takes time during the employee onboarding process and consistently throughout their career.

Steve Williams, Technology Procurement Manager, REI

Artificial Intelligence: The Positives and Dangers of AI

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SIG University Certified Sourcing Professional (CSP) program graduate Aaron Eleazer shares how the advancements of AI technology provide an exciting and innovative space that has an important place in how business is done and improved upon and also shares the concerns associated with it.

Artificial Intelligence was quite an exciting presentation. It’s such a big part of our daily lives that I wanted to write my final paper on the subject and hopefully bring a different light to it. I want to write a few paragraphs on the pros and dangers of artificial intelligence. I say threats instead of cons because this technology is moving so fast; not even the creators of it have any idea what could happen.  

The first SIG conference I attended was back in 2018 in Washington, D.C., and what I found intriguing was that the focus of all the speakers was on Blockchain and AI. I didn’t know much about either, but soon thereafter, my director started talking about AI capabilities in contracting. AI or machine learning is excellent for running mundane tasks like searching for specific contract clauses.

Quickly identifying or comparing two legal documents for similarities or contrasting clauses is a tremendous step forward in the evolution of process improvement, effectiveness, and efficiency. This same technology is used in invoice processing, where it can read, analytics, and process submitted invoices quickly, which eventually means the end or a considerable reduction in the resources needed from a BPO for that specific service which the AP function lends itself well to.  

Aaron Eleazer, Manager Procurement Services, Russell Investments

Recap of CPO & Executive Virtual Series with Productiv

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The recent CPO & Executive Virtual Series with Productiv, brought together industry experts to discuss critical topics in the world of procurement. Three keynote speakers, Amit Nath, IT Procurement Global Leader from American Honda Motor Company, Inc.; Dan Edwards, Procurement Director from Park National Bank; and Aashish Chandarana, Chief Information Officer of Productiv, shared valuable insights that shed light on the future of IT strategic sourcing, the significance of mentorship, and the latest SaaS trends in 2023.

Keynote Discussion on IT Strategic Sourcing - Amit Nath

Amit Nath, the IT Procurement Global Leader at American Honda Motor Company, Inc., began the keynote discussion by providing an overview of Honda's illustrious history. Having sold over 28 million units worldwide, generating a remarkable $132 billion in revenue, Honda has firmly established itself as an automotive industry leader.

Focusing on IT, Amit highlighted the company's vision to achieve fully autonomous products by 2026, underpinned by a $6 billion management portfolio. He also shared insights into Honda's evolution of the source-to-contract value chain process, which started as a 3-step process and has since grown to an impressive 7-step approach.

Beyond cost savings, Honda's procurement strategy centers on transformation and procurement excellence. Speed to market and ease of use are crucial factors for the company's North American operations, and they leverage a global procurement approach with a focus on awareness, investigation, and standardization.

Desmond Williams, Digital Marketing Manager

Connecting the Dots Between Legal and Procurement

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SIG University Certified Supplier Management Professional (CSMP) program graduate Lisa VanBuskirk shows how she connected the dots between legal and procurement and became aware of gaps to show how the two roles working together is so vital.

Before I took this SIG U course, I worked in finance and legal roles for the biotech industry. Much of what I have experienced involves the last few lessons in this course: How to protect our company legally and financially. I have never worked in a company that had a formal governance program from the start. Usually, an internal stakeholder would come to me saying, “We like this vendor. Please get them set up,” and I would make contingencies for the relationship’s failure. After this class, I now understand the importance of being involved even before the contracts are ever written and being involved with choosing each supplier.

I am very used to setting up legalese in master service agreements that cover things like performance metrics and termination clauses. This was a natural part of my day-to-day, which I always thought was enough. However, there was a part of me that thought, “Sure, the legal department understands our terms, but what is being communicated to the supplier project leads so they also understand?” This course helped me understand that, especially after recently terminating a relationship with a critical supplier. It would have been much less work from the beginning if we had a supplier governance program in place to lay out our expectations to all from the beginning to all stakeholders. Being involved with occasional meetings to stay aligned with the process would be very helpful for the continued relationship with each supplier.

Lisa VanBuskirk, Procurement Specialist, Sage Therapeutics

Implementing Procurement's Role in Third-Party Risk Management

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SIG University Certified Third-Party Risk Management Professional (C3PRMP) program graduate Anna Sgro shares how adding procurement roles into third-party risk management systems can be a very effective contribution to your team.

Across many organizations, there is an outstanding need to baseline what, if any, activities are taking place to manage third-party due diligence proactively. From my specific experience, Procurement's role is only sometimes well established and often has limited involvement in third-party risk management. The lack of engagement with the Procurement team introduces unnecessary risk and exposure for an organization.

Incorporating Procurement in third-party risk management and analysis will increase visibility, broaden awareness, and reduce risk by ensuring consistent sourcing, contracting controls, management, and monitoring processes. The standard practice for most Procurement teams includes evaluating new third parties, facilitating the sourcing and contract negotiations, and primarily being responsible for ensuring appropriate terms are in place. However, without a clearly defined path of communication and standardized processes, there's still potential for the organization to be exposed to unknown risks when bringing on a new critical third.

Anna Sgro, Procurement Category Manager of IT, Maxar

Gaining Positive Influence

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SIG University Certified Sourcing Professional (CSP) program graduate Ethan Slade shares how procurement and sourcing professionals can gain positive influence in their organization that helps encourage productivity and change. 

Ethan Slade, Intern, Sourcing Industry Group

A Systems Approach to Sourcing & Procurement

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SIG University Certified Sourcing Professional (CSP) program graduate Thomas Cooper describes how with the increasing pressures on supply chains and sourcing organizations lately, efficiency and effectiveness cannot be understated in an organization.

Thomas Cooper, Procurement Sourcing Manager, Blue Cross Blue Shield Florida