Is inflation on your mind? You’re not alone. Rising costs lead to rising overhead—and rising stress about sourcing.
Not only is it more expensive to get crucial goods and services today, but supply chain issues and labor shortages create extensive delays. These disruptions significantly affect large and small companies' production and inventory.
Plus, rising fuel costs mean that getting everything from hand soap to building supplies requires an even bigger financial commitment, which could be going toward marketing, R&D, or expansion.
And yet, despite all the talk about the financial impact of inflation on sourcing, there’s an important point missing.
Inflation, at its core, isn’t really about money. It’s about uncertainty.
This is good news because organizations that solve for uncertainty can maximize value and thrive despite economic change.
How to Mitigate Uncertainty
There are five key factors that are crucial to navigating sourcing uncertainty when inflation, supply chain issues, fuel shortages, and labor issues mean certain goods and services are in short supply.
First, companies that can see what’s available and act quickly have a significant edge. Agility and increased visibility are key competitive advantages.
So is having the right partners. Solid relationships with a variety of vetted and trusted suppliers not only make it easier to purchase what’s needed. These relationships also significantly mitigate risk, reducing the likelihood of overcharging or receiving poor-quality goods and services.
Third, having the ability to easily participate in community buys can dramatically increase leverage, reducing costs and increasing purchasing power.
If you've been to the grocery store in the last couple of months, you may have noticed that your total costs are far higher than before. Prices on items like food, housing, gasoline, and utilities have risen by over 9.1% over the last 12 months – a 40-year record, according to the U.S. Consumer Price Index.
Why is everything so expensive?
A lot is working against the global economy:
Covid-19 continues to affect manufacturing and logistics around the world.
The war in Ukraine continues to have an impact, especially on grain production for much of Europe.
The U.K. is facing unprecedented increases in energy price caps.
These combined events are the perfect recipe for supply chain shortages and drastic price increases.
All eyes on procurement
Businesses are facing uncertainties unlike ever before, causing CEOs to look closely at what is happening behind the scenes. Procurement is under scrutiny with central purchasing being pushed into organizations' spotlight.
One such question being asked of procurement is, "Do we have approved alternative sources of supply in place?" Building a diverse supply chain is key but not always easy.
You might source goods or ingredients from various vendors for a product you manufacture. Still, all it takes is one ingredient to be delayed because of rigorous testing, approval processes, or even that supplier's supply chain for the whole operation to halt.
After a reorganization within his company, a SIG University graduate applies lessons learned in the Certified Supplier Management Professional (CSMP) program to facilitate a people- and culture-driven change management approach to bring his company into regulatory compliance.
The CSMP program exposes students to leading-edge training on contract administration, compliance, risk mitigation, performance, governance operating models, talent management support, transformation and more to help companies put effective governance programs in place.
The Certified Supplier Management Professional (CSMP) program from SIG University discussed the importance of GR&C and provides samples of governance models with roles and authorities, its relationships, and communication structures in relation to the procurement or sourcing strategies of an organization. I was glad to see these topics discussed as it confirmed the need for reorganization within my company, which now has clearly defined roles and responsibilities between governance and third party risk management and the sourcing department.
David E. Romo-Garza, Director of Business Risk and Controls
Your workforce is larger than you think. Look beyond your employees and contingent workers and you’ll realize there’s another large, powerful force at play. One that probably isn’t on your radar.
Services providers, such as consulting firms, marketing agencies and IT outsourcers, play a crucial role in helping organizations get work done. They are a vital part of today’s workforce, comprising nearly one-fifth of workforce spend, and bringing much-needed skills to the table. They carry out mission-critical work, often operating at the heart of the enterprise.
In the oil and gas industry, services providers play a major role in shutdown/turnarounds, which cost millions each day and must therefore be completed as soon as possible. Many organizations rely on consulting firms to help them build and execute their strategies – particularly around digital transformation. Banks engage IT consultancies to improve their online and mobile banking platforms and call centers to support their customers.
In many organizations, services providers operate as an invisible workforce. How can management ensure that this often-unseen workforce consistently delivers maximum value? And how can organizations make sure that workers’ access to confidential data and systems is turned off at the end of the engagement?
Molly Spatara, Global VP, Brand Experience, SAP Ariba and SAP Fieldglass
Wow, who would have thought that I would leave a conference hosted by a supplier and feel better about the world and the impact we can have on it? That is exactly the way I felt not once, but twice, at SAP Ariba Live in Texas and in Barcelona. While I adore Tifenn Dano Kwan’s influencer team, particularly Amisha Gandhi, who is the Vice President of Influencer Marketing, and Gale Daikoku, the Global Communities and Ambassador Program Lead, the person who struck a chord most deeply with me was Padmini Ranganathan. She’s the Global Vice President of Sustainability and Risk with SAP Ariba. What first struck me as odd was the combination of “sustainability” and “risk” in her title.
Often when people think of sustainability, they think of one of these two definitions:
In the global supply chain landscape, cybersecurity threats are increasing exponentially. Fortune 500 companies’ sensitive information is leaked because hackers target their vendors and business partners, and organizations that might not be as secure as their corporate buyers. Every supplier and business partner can become an added risk. Working with global companies big and small, one of the most significant opportunities that I've observed is managing multi-tier suppliers and mitigating risk. We can support all our suppliers through secured technology and the principle of “unconditional procurement.”
Daryl Hammett, CSMP, CSP, C3PRMP, General Manager/Chief Operating Officer, ConnXus
Given the intensity with which companies today are focusing on innovation and profitable growth, it is imperative that procurement teams drive strategies that support enterprise-level business goals. Beyond traditional sourcing approaches, strategic category management delivers a collaborative way of developing solutions that support both business and category objectives. Category management maximizes category value to the organization, delivering on critical parameters such as total cost of ownership, risk and performance, to name a few.
While procurement organizations around the world realize the significance of building an advanced category management program, getting there isn’t simple. In a number of organizations today, category management is still at a nascent stage, perhaps indicating that though there is an organizational structure for category management, it is not quite aligned with the business strategy. For many though, exhausted sourcing strategies turn out to be their biggest hindrance.
To address this issue, GEP and SIG have teamed up for a webinar with Biju Mohan, vice president of GEP Consulting, to discuss the latest trends influencing strategic category management program design and implementation by global, market-leading procurement organizations.
Key topics include:
Edie Sachs, Senior Marketing and Content Manager, GEP
The month of June is a time for reflection. As you approach the halfway point in the calendar year, it is a good time to consider what you've learned in the past six months and how you can apply those learnings going forward. Some changes will be easy, such as process improvements, but changes in partnerships or relationships will require more stakeholder support. Reflection coupled with bold action can make for transformative change at the end of the year.
SIG has a variety of resources, thought leadership and crowd-sourced best practices and benchmarking studies to help you navigate any challenge you encounter so you don't have to reinvent the wheel every time something pops up. Here's a rundown of how SIG can help you meet your goals in June.
Summer Enrollment Savings
SIG University's summer programs begin July 16. A dedicated member of our team will help up-skill you or your team, with options to enroll in a five-week Certified Supply Management Professional program or a twelve-week Certified Sourcing Professional program. Enroll in our summer programs now and you’ll be ready to implement what you’re learning as early as Q3. While you are planning ahead, consider enrolling in our new Risk curriculum and earn a Certified Third Party Risk Management Professional designation. This eight-week program launches September 24.
These comprehensive programs provide professionals with principles that can be immediately put into practice, including:
The relationship between buyers and providers can be a tricky one, especially when operating across multiple continents. Speaking during a podcast interview with Dawn Tiura, Sean Delaney, Vice President of Sales for cloud platform Determine, draws on his experience as both a buyer and provider to share best practices for relationships that are sustainable and strategic.
WORK ON YOUR SOFT SKILLS
Technical expertise is valuable, but your ability to establish a rapport with customers is important for sustainable relationships. “Candor is important because there's a large degree of personal credibility that buyers are putting on the line when selecting a vendor," says Delaney. "That needs to be understood as a seller and we need to make sure that we don't break that trust. That's our role.”