At the last Global Summit, we hit the jackpot in our keynote speakers. We had fighter pilots, CPOs, Ph.D.s and MBAs...we had practitioners, motivational speakers and authors...and we had people who have viewed things from the trenches and seen them from the sky. In each, we received pearls of wisdom...anecdotes to apply in our daily lives and corporate positions. In this series, I'll try to capture some of the key messages our general sessions provided. We kicked off the event with Carey Lohrenz, a former U.S. Navy Tomcat Fighter Pilot. Her session was inspiring and had the audience scribbling furiously, trying to capture her lessons from the flight deck that we could carry into the business world. As the first female fighter pilot, Carey learned to thrive in adversity. Some of the more poignant things I took away from her presentation...and my interpretation of how they apply to those of us in civilian clothing:
If I had asked people what they wanted, they would have said 'faster horses.' - Henry Ford It seems counterproductive to put Creatives in a box. They are meant to be thinking outside the box. Yet finding a way to work outside the box when it comes to sourcing the marketing function can be a challenge. At the SIG Global Summit in Fort Worth, I was lucky to be able to sit in on a session given by the Ultimate Fighting Championship (UFC) and LogicSource. UFC's marketing production team was in a grudge match with managing terabytes of digital assets while attempting to responsively support a rapidly growing global brand. With over 31 major events in 2012 alone, the vast accumulation of assets and dramatic increase in workload put the creative and procurement teams in a stranglehold. The UFC's internal marketing department took off their gloves and took up the fight partnering with LogicSource's OneMarket solution to create a system that automated the end-to-end process from creative requests complete to sourced services. Contracts and pricing on the backend for services were negotiated and monitored within the cloud-based system, greatly decreasing time and money spent on the bid process out of the marketing department. The deals were in place, the pricing locked in, and at the click of a button, video production or print work could be bought and executed seamlessly. By taking a year to fine-tune, document process and implement the system, the UFC put chaos into submission through the integration of digital asset management and eProcurement, cutting significant time out of the creative approval and procure-to-pay processes while enabling a lean buying team to more effectively manage its complex marketing production spend categories. This was a marketing driven project, however, and its success was driven by the fact that they had buy-in from the marketing side to begin with.
Although the US economy is improving, businesses remain focused on both increasing sales and minimizing or reducing SG&A costs. The "Order to Cash" (O2C) functions of a business continue to represent a significant part of a company's SG&A expenses and are under pressure to achieve long sought goals: to reduce costs and improve productivity, while maintaining or increasing customer service levels. Corbus regards O2C as including the functions of credit management, order processing, logistics/carrier management, returns processing, billing and collections, and reporting and analytics. Prior to the recent recession, these functions could be found sharing or spread across multiple functional areas and budgets. However, as the recession progressed, much of this changed. Businesses often adopted a strategy of separation and identification - that is, segregating these functions organizationally and financially as a way to apply management focus, create accountability and achieve goals for cost reduction/productivity improvement. In many cases these steps led businesses to greater clarity for measuring costs and productivity as well as to establish shared services centers and preposition for outsourcing. While cost savings can result from separation and shared services, cost optimization is best achieved by engaging with a compatible outsourcing partner. Under the right terms of engagement, an outsourcing partner is more easily held accountable for delivering results and attaining challenging goals to adopt efficiencies and improvements, and much more quickly. The partner needs to share mutually beneficial goals, provide intellectual property to add value, and have demonstrated experience in successfully performing the functions to be outsourced under similar conditions. The results can be staggering, with cost per savings on the order of 30% or more while achieving 2:1 productivity improvement and customer service gains.
Not long ago, rising labor costs sparked a trend among U.S manufacturers to seeking alternative sources in the Far East. But as many who moved production overseas have found, transportation costs abroad can quickly add up and be three to four times the amount of sourcing from domestic suppliers. Couple this with the time-to-market challenges related to suppliers being so far away, and unless there is a huge labor arbitrage, outsourcing does not make a lot of economic sense. Despite huge cost savings, companies have to worry about other problems like worker safety, child labor, and pollution, which can very quickly create significant risk and ultimately affect brand image. And that can have a potentially catastrophic impact on performance and profits. So a lot of companies are starting to bring production back and focusing where they should have in the first place, which is on managing risk. Whether companies are using domestic suppliers or overseas suppliers as part of their supply chain, a robust and programmatic approach to managing them is needed to reduce both supply and overall business risk. In today's global economy where time-to-market requirements are faster than ever, you need total visibility into supplier information alongside sophisticated analysis and data sharing that goes beyond traditional sourcing and supplier management. Having 360-degree visibility into supplier information and performance, for instance you can anticipate disruptions to supply and prevent them before they occur. Many companies are using innovative technologies to gain this view, tapping into business networks to syndicate supplier information and using predictive intelligence to uncover supply chain risks. When combined with the insights and intelligence that live in these networks and tools such as community ratings, and risk scores from firms such as Dun & Bradstreet and third-party sources, these technologies simplify the arduous task of managing suppliers.
Sundar Kamakshisundaram, Senior Director, Global Solutions Marketing, Ariba, an SAP company
The weeks following a Summit are always kind of sad. The euphoria of the event is over...the anticipation of seeing colleagues and friends behind us. But the things we take away from the event--the new peer relationships, the insightful things we learn--carry on for years to come. I attended some incredible sessions on topics I knew little about previously. One such session was with Ernst & Young (EY) and Caterpillar on Conflict Minerals. In the sourcing world, the term has become fairly well known, but for those unfamiliar, conflict minerals are minerals--namely tantalum, tin, tungsten and gold (aka columbite-tantalite, cassiterite, wolframite and gold)--that, much like "blood diamonds," are mined in conditions of armed conflict and human rights abuses, most namely in the Congo and adjoining countries. To me this was still a little ethereal until I dug a little deeper and learned that the "miners" are often hired by gunpoint or physically forced to do this work to protect themselves or their families. The work conditions are horrific and in themselves may result in death to the miners. In fact, more people have died in Congo Civil Conflict than in the U.S. Revolution, Vietnam War and Korean War COMBINED. Without more transparency in the supply chain, consumers don't have any way of knowing if their purchases, primarily in industries like electronics, aerospace, industrial products, automotive and jewelry, are funding armed groups that are widely known to commit human violations and mass atrocities unfathomable to most people. To address this, Section 1502 of the Dodd-Frank Wall Street Reform and Consumer Protection Act was written that requires companies to identify where the minerals used in their products originated from. The Dodd-Frank Act has successfully reduced the amount of revenue militias are receiving by around 65% by dissuading companies from engaging in trade that supports regional conflicts.
It's that time again...the final leg of the race...the last hurrah...the end of an era...the week before a Summit. Dawn summarized it nicely last spring when she talked about the elves busy at work preparing for "the big event." It is a lot of work...but by the time we get to this point, we know that right around the corner, we get to just enjoy the fruit of our labors. Unlike the holidays, the SIG Summits roll around twice a year, so we don't get twelve months to work off the extra weight gained from the ice cream sundae breaks. In fact, between this Summit and the one last spring in Amelia Island, we've had a mere FIVE months to prepare. But all the nagging we’ve done for presenters to turn in their abstracts and decks...all the emails we've sent reminding you to register...all the phone calls we've made asking for you to use your seats have paid off! We have an INCREDIBLE line-up of companies and speakers coming to our Summit next week. Once the Summit begins, we can sit in sessions and hear the amazing presentations we've read about for several months. We can meet the members we've communicated with by email. And we can enjoy learning about new issues our members are facing and hear the latest concepts to address them. The agenda is so rich, it will be difficult to do it any justice. The list of companies presenting is, in itself, a reason to attend...
Two weeks ago my daughter was diagnosed with Type 1 diabetes. It rocked my world. We've been blessed with four healthy and happy children and frankly haven't had many concerns when it came to their well-being. But there we were at a regular doctor's appointment, being told that our daughter, Hayden had blood glucose levels that were so high that we needed to go directly to the hospital. It doesn't run in my family, so it wasn't a condition I would have ever thought would "happen" to us. But it did. And now for the rest of her life, my little girl will be dependent on insulin to do what her pancreas cannot. For several days, I wondered what I could have done to prevent this diagnosis. But in the case of Type 1 diabetes, the answer is...nothing. It is non-preventable and currently non-curable. But it did make me realize that I could become more aware of the risks associated with it. I could tap into every person I know with first-hand experience, including one of the best resources I could find, my own CEO Dawn Evans whose daughter has been diagnosed for 10+ years. Through Dawn and every contact, website, blog and organization I could find, I could educate myself on the possibilities associated with a Type 1 diagnosis, and prepare myself for what MIGHT happen down the road. In much the same way, companies that engage in global sourcing strategies must also be aware of the risks and understand how to mitigate them. At our upcoming Global Leadership Summit in Fort Worth, we have many sessions focusing on this topic. Companies engage in global sourcing because the benefits are thought to be greater than the risks. But understanding the risk categories, weighing the possible outcomes and coming up with a risk mitigation plan can help companies find the balance between lower cost and higher risk.
The issue of Supplier Risk Management has been in the news recently. In January, Wal-Mart released its 'Ethical Sourcing Update,' wherein it announced, amongst other changes, a new zero tolerance policy for suppliers that used unauthorized subcontractors. The new policy was in response to the fierce criticism that Wal-Mart received in November 2012 after a fire in a Bangladesh garment factory claimed the lives of 112 workers. In that case, Wal-Mart claims that the factory in question was used without its knowledge and that it had stopped authorizing production there. The rise of highly fragmented and global supplier networks has necessarily lessened the amount of control that any company has over its supplier network. Accordingly, Supplier Risk Management is a growing discipline that is receiving increased attention. Current globalization trends only serve to reinforce the need for a dynamic, fluid and strategic Risk Management program. A recent but already classic example of poor Supplier Risk Management involved the hard disk drive industry. The industry was highly concentrated in Thailand, with over 1,000 factories operating in the sector. In late 2011, the country experienced a particularly strong monsoon season that caused widespread flooding. The flooding set back hard disk drive manufacturing for months and caused global prices to increase approximately 10%, affecting PC sales worldwide. It was almost a full year before production returned to pre-flood levels. The classic methodology utilized in approaching Risk Management hinges on three core work streams: Risk Analysis, Risk Assessment and Risk Mitigation. At the highest level, the goal is to determine the probability of a negative outcome, determine the impact of such an event and introduce measures which will lessen the impact.
Patrick Reymann, Director, Strategic Sourcing Operations, Corbus
Who's watching you? What do they know about you? Are you worried your record in the Big Data database is wrong? Would you correct it if you could? What if you had a tool to manage your big data like you manage your spend? Around SIG, we've been talking a lot about Big Data, as you can tell from Sarah's two posts (which you can access here and here) and my earlier post on the topic. This morning I started a firestorm of emails when I blasted the team with a note about a new tool I just discovered. Although in beta, Acxiom, a company that supplies marketing data to organizations, has published an online tool that allows you to access your personal "Big Data" record. I decided to try it. For a few moments, I stared at the screen, convincing myself to input the necessary information required to produce my report. Naturally suspicious when prompted to enter any kind of sensitive information (from weight to address to social security number), I hesitated to experiment with the tool. I decided I wasn't giving up any personal information that wasn't already public, and for the sake of this blog, I'd try it. After a very quick login, the tool presented me with several categories of information, including data on my characteristics, home, vehicle, economic, shopping, and household interests. Once I click on these categories, I can view the data that this company has about me, and I can actually edit it. For example, I can change my gender, and then configure my data record so that my gender characteristic will be excluded.
Mary Zampino, Senior Director of Global Sourcing Intelligence, SIG
Don't let anyone tell you differently. To be great in a sourcing role, you need a special combination of skills. Good sourcing professionals have the unique ability to execute flawlessly, and the personality to sell their ideas internally. Back "in the day" people thought of procurement/sourcing professionals as order takers. Never mind the fact that that description was never accurate...but it is most certainly not true now. Today's sourcing person must be passionately interested in learning. They must be full of curiosity and very observant about the world around them. Current events are filled with things that impact the supply chain—crowd sourcing, the cloud, conflict minerals, sustainability in Asia...every one of these things can have an effect on a sourcing person's role. At SIG we see hundreds of sourcing professionals every year in person. It is very obvious why some of them are successful and why some of them are not. If I were writing a job description for a new sourcing person, I would look for someone who is flexible, passionate about learning, interested in mentoring and very intelligent. In the past, people "fell into" sourcing careers. Today, they are highly-sought after and people often enter them from the most unlikely of paths. We have lawyers, accountants, engineers, and many other hard science professionals that have moved into sourcing by choice. This unique hard science background combined with the other talents seems to be the most successful combination for sourcing leaders. While an engineering or law degree is something that anyone who successfully pursues one can get, coupling that degree with interpersonal skills produces a special breed of person that is not that common. You can't underestimate the importance of being "a people person." Although it seems counterintuitive, this is one area that I feel can actually be taught. When I went into sourcing I was a CPA with a Masters in taxation.