SIG University Certified Sourcing Professional (CSP) program graduate Silver Chaudry discusses how category management takes sourcing initiatives out of silos to create shared objectives and continuous processes across business units that drive efficiency.
Category management is a strategic and collaborative approach to procurement involving the segmentation of related goods and services to proactively manage and consolidate spend, track savings and identify areas of improvement. Category management was first developed in the 1980s, evolving from strategic sourcing but differing as it is an end to end process where the analysis is continuously refreshed to keep up with changing market trends. (Strategic sourcing was typically reactive in nature, conducted for immediate requirements and taking place as a one-time event.) Category management also places emphasis on supplier development, where category managers work closely with suppliers to foster innovation and achieve superior outcomes.
COVID-19 has created a ripple effect of disruption through supply chains across the world, causing many companies to assess their weak spots and reevaluate their operations to ensure future resiliency and continuity.
Rebounding from the current crisis with more solid resilience is itself creating immense value. Forward-thinking companies are looking a step further, perhaps with the climate crisis clearly in view. They are leveraging sustainability and purpose – with an upside creating long-term value across a wide range of business levers, from competitive differentiation, grow sales revenue, supplier innovation to support future circular business models, talent recruitment and retention.
Procurement’s Key Role in Turning Purpose into Profit
With momentum growing toward stakeholder capitalism, businesses have made a greater commitment to sustainable purpose through reducing emissions of greenhouse gas, limiting plastic use, providing decent working conditions and more. The recent COVID-19 pandemic has brought risk mitigation and resiliency top-of-mind – and we’re seeing clear proof points that sustainable procurement is the answer.
It’s been a long year and we’re only halfway through it. Many of us have scrapped our plans, both personally and professionally, retooled our strategies and reprioritized our resources. It’s frustrating to make drastic changes with no clear forecast on the horizon, but growth comes from being uncomfortable and taking risks. Instead of dwelling on what could have been, let's take a look at what’s to come.
Summit Presentation Anthology
Following each Summit, we release our Summit Presentation Anthology that offers a snapshot of each presentation along with the presenter’s contact information. The inaugural Spring Procurement Technology Summit was supposed to be an in-person event in April, but the global pandemic upended our plans and we had to pivot our strategy to go digital.
While we missed catching up with old friends and making new connections at the Summit, we welcomed over 1,100 delegates from all over the world to our digital platform. The best part? Every single session is recorded! Not only can you get the presentation decks, but you can watch any sessions you missed or revisit sessions to dive deeper in the subject matter. The Anthology is only available to SIG members. If you’re not a member and want to join, reach out to us.
COVID-19 Resources for Procurement, Sourcing and Workforce Management
When we switched our spring Summit from in-person to virtual due to the global pandemic, many Summit presenters also changed their topic given the current events. What we are experiencing now is historical on many fronts, not the least of which is the role of procurement in a global emergency.
SIG is always asking our event attendees, current and future members, and readers about their current issues and concerns. I have been tracking and analyzing their responses for almost 10 years now. While cost savings and value-add remain consistent and strong priorities, there's no doubt many are very concerned about meeting pandemic-related needs.
We are blessed to have a community of thought leaders and generous, experienced professionals who are willing to share their experiences and describe their wins.
We offer the following resources in your quest for COVID-19 related items specific to sourcing, procurement, and workforce management. SIG members can continue to search for related articles here.
In the resources listed here, you can learn how to set up crow's nest and a war chest, hear how Sprint/T-Mobile are managing the crisis using AI for their spend analytics, specific procurement best practices for today's market, how technology enhances continuity in your workforce and what happens if and when this is "all over." Plus, so much more.
The inaugural SIG Procurement Technology Summit was unlike any other industry event. As COVID-19 swept across the globe, my team and I had to pull off something we’ve never done before: turn our in-person Summit into a completely virtual event.
While the circumstances were less than ideal, it was a humbling experience and a good reminder that to stay relevant, you must be flexible and agile when disruption strikes. Admittedly, a global pandemic was not in our risk scenario playbook, but you can bet that it will be going forward.
New Concerns for Procurement
In order to provide SIG members with the most up-to-date and relevant content, we ask for your feedback to find out what’s top of mind for you, your colleagues and your organization. For the first time in six years, the economy is a top business issue. This is markedly different than what you told us was a top concern just six months ago. Now, most people are concerned with how the crisis will impact:
Income and business opportunities
Negotiations in a virtual world
Business resiliency and continuity
Resiliency of their organization and the talent they support
Addressing risk – in the supply chain, in supplier negotiations, in online business operations and transactions
Many of our Summit presentations pivoted to reflect these new realities, and our upcoming events will feature practitioners and thought leaders sharing how their organizations responded to the disruption with flexible, proactive measures. The common thread in all of this is advanced technology and strong leadership.
In previous blogs, SIG has covered the basic concept of sustainability, including an overview of its various dimensions. In this post, I will touch on the role that sourcing professionals can have in meeting corporate sustainability goals.
Why should sourcing have a role?
Sourcing is uniquely positioned to contribute to meeting a corporation's sustainability goals because sourcing typically has expertise in:
Creating alignment to corporate goals
Building frameworks to measure success
Researching market conditions and supplier capabilities
Conducting strategic negotiations
Designing innovative methods for value creation
Ranking the priorities of stakeholders with supplier offerings
Identifying risk and mitigating responsibly
The reduction in costs after implementing a sustainability program can exceed the costs of implementation – in other words, you’re spending money up front but in the long run, you save more than you spend. For example, if an organization were to target the spend category of corporate services and facilities management (FM), capital may be invested in working with a supplier to install a new system that reduces energy consumption at the company's North American headquarters, but in the long run, the reduction in energy costs saves the company money – which of course, can then be reinvested.
In this example, procurement and sourcing are uniquely positioned to make this happen. Most likely Sourcing negotiated the original FM contract, understands the innovative capabilities of suppliers, has heard many recent pitches on new products, and is adept at performing the analysis that proves an investment can have a significant return in hard costs, and even soft costs.
Mary Zampino, Vice President – Content, Research & Analytics
Third-party risk management in the financial industry requires careful consideration when developing an operating model. It is essential to consider the regions and regulations that govern. In most of the banking industry, your internal risk culture allows you to easily implement a third-party risk program that methodically measures inherent risk, provides time to assess third party controls and negotiates contracts that enforce controls and mitigates residual risk.
Internal vs. Third-Party
The internal risk culture changes once you enter the world of capital markets where decisions are made quickly, risk is a way of life and patience is a rare quality. Now add the risk of a trade execution platform failing during a stock market dive and counterparties not having the ability to trade for several hours. The outage would be noticed and gain publicity, potentially causing Regulators to investigate. Should this occur and the necessary due diligence steps that would have highlighted this vulnerability were skipped, the repercussions could be costly. Your firm's reputation would be at stake and you most likely will face regulatory scrutiny that could result in fines. Striking a balance between satisfying your firm's need to generate revenue and mitigate third-party risk is an interesting challenge. If your operating model is too slow and cumbersome, your business will most likely attempt to circumvent the process. Careful consideration needs to be taken when aligning your control assessments to the true inherent risk.
So how do you get from tactical procurement metrics to more powerful spend/supply measures that help build new capabilities and favorably impact critical business outcomes?
We have mentioned some of the more expansive sets of metrics that organizations use to measure several areas:
● Spend/cost management and savings
● Supplier/supply performance
● S2P process metrics for process performance
● Underlying capabilities in talent management, digital, etc.
● Stakeholder-specific metrics related to the above
In this third installment, we’ll dive a little deeper into some example metrics, but the first order of business is to provide a framework giving the backdrop on the KPIs and use it to hone in on metric types before listing individual KPIs.
Pierre Mitchell, Chief Research Officer, Spend Matters
The concept of sustainable sourcing, also known as green purchasing or social sourcing, is nothing new. Sustainable sourcing is impacting nearly every area of corporate business and the consumer’s mindset. Everything from sourcing materials, talent attraction and consumer purchasing habits are changing because of the growth of sustainable sourcing. However, the term gets thrown around in the procurement industry quite a lot and is often misunderstood or misused. So, here’s a guide with all the basics you need to know about sustainable sourcing.
WHAT IS SUSTAINABLE SOURCING
First and foremost, we have to define the term. Sustainable sourcing is the integration of social, ethical and environmental performance factors into the process of selecting suppliers. It includes purchasing sustainably preferable products and services (products made from recycled or remanufactured materials), as well as green purchasing guidelines that might pertain to certain products or commodities.
SIG University Certified Sourcing Professional (CSP) program graduate Diane Bradley discusses how CSP modules on vendor relations and category management improved her vendor management and negotiation skills.
I would like to start my essay by saying "thank you." BNY Mellon has invested in its employees and is providing us with this training. I feel that is something that should be recognized, and I do appreciate the opportunity to expand my knowledge, which will ultimately increase my value with the bank. With that said, the SIG University training has provided me with a lot of valuable information and has also given me guidance, which I have started applying in my day-to-day activities.
I feel the units focusing on vendor relations have been extremely helpful. As I continue to negotiate more and more contracts, I have reminded myself to go into the call with my goals established and I have them written down in bullet points, so they are easy to refer to while on calls. I have also made sure to have internal calls with the stakeholders prior to reaching out to the vendor. So when the call is conducted, I am confident that we are on the same page and present a consistent and concise dialogue. I feel this preparation has given me confidence, and I strongly feel that it is represented in the call. I am also very focused on the partnership that we are building with our vendors. I realize I am an essential aspect of the partnership. My dealings with the vendor will make a significant impact on the success or failure of the relationship.