Category: Commodity Management

Total Cost of Ownership Procurement Model Failure – What’s Missing?

The Single Point of Failure in Supply Chain – Semiconductor Fabrication!

Many businesses use some form of Total Cost of Ownership model to support their Procurement and sourcing decisions. In fact these models are not just used casually, but they often are designed to inform and make optimal sourcing choices.

But many dynamics that we have experienced in the last few years suggest that these models are less than optimal. From chronic global Supply Chain breakdowns during the pandemic through to disruptions caused by outsourcing and single points of failure, sourcing decisions have been exposed as being less than ideal.

What is the current nature of these Total Cost of Ownership models, and what needs to change to make their use more robust and responsive?

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What is the Best Supplier Vetting Process?

Strategic Supplier Relationship Management – Do’s and Don’ts

Does your business rely on at least one supplier? Or do you need multiple suppliers in order to perform your daily operations? Either way the quality, reliability, and value for cost of your suppliers and supplier vetting is crucial to your organization’s success.

On the other side, if your suppliers don’t live up to the standards you require, your organization can be damaged. 

Suppliers can tarnish your reputation by causing you to deliver unsatisfactory products to your customers.  A supplier with internal problems can delay your orders, making you miss deadlines and break promises.  Late or low-quality products could cause you to lose major customers or be forced to process refunds.

It’s vital, then, to use a consistent Supplier Management system to vet excellent suppliers and secure the ones that will help your brand to stay strong.

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Suppliers are Friends, not Food!

Strategic Supplier Relationship Management – Do’s and Don’ts

“Fish are friends, not food.” Similarly Suppliers are friends and not food.


Bruce, a great white shark, and his two shark friends gather alongside Dory and Marlin, taking a sacred oath, swearing off eating fish. This scene became an instant classic in the homes of the hundreds of millions that have seen Pixar’s mega-success, Finding Nemo.


If you’ve never seen the film, treat yourself by watching this clip below, and directly after you finish this blog, do yourself a favor and stream the entire film.

Now…
Is there something to be learned from this quote in Finding Nemo, that we can apply to procurement and sourcing? As buyer and suppliers aren’t we all living in the same ocean, existing in the same ecosystem, and working towards the same value creation?

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Strategic Supplier Relationship Management – Do’s and Don’ts

Procurement Don’t go to the Dark Side!

Shortly after I joined the Commodity/Category Management Procurement organization I was invited to attend the annual Strategic Supplier Awards event. It was all about Strategic Supplier Relationship management.

There were Executives from dozens of Suppliers in attendance. The event concluded with award recognition given to Suppliers based on their scoring and standing as being of Strategic value to the company.

Prior to joining the Procurement team I had neither understood nor appreciated the importance of Supplier Relationship management. But having seen how motivated and inspired these Suppliers were I started to understand.

But in the weeks, months and years to come I also became much more informed about the good and bad aspects of Supplier Relationship Management.

From company to company I came to develop a list of Strategic Supplier Relationship Management “Do’s” and “Don’ts”.

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Enable Spend Aggregation in Procurement!

Spend Aggregation Obstacle Course for Procurement!

Aggregating your procurement spend for the purpose of delivering greater value is a sound objective.  Theoretically you should be able to generate better service, better terms and conditions, and better cost.  Therefore you should enable spend aggregation.

Yet there can be many obstacles in your way to achieving this seemingly simple goal.  Loss of control, fear of job loss, questionable benefits, and a perceived loss of margin are some of the obstacles you may run across.  We discussed these in greater detail in our post Procurement (Part 1!) – The Spend Aggregation Obstacle Course!

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Differentiate With Supplier Relationship Management (SRM)!

Strategic Supplier Relationship Management – Do’s and Don’ts

Democratic institutions around the world promote the core doctrine that all people are created equally. This is clearly not the case in the world of supplier management. All suppliers are not created equally and they should all be managed with this distinction in mind. As such you can differentiate with Supplier Relationship Management.

This article on how to differentiate with Supplier Relationship Management will look at a model for stratifying and segmenting your supply base within the confines of a structured and formal supplier relationship program (SRP).

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Digital Procurement Ecosystem Creation in 8 Minutes!

What is the Digital Supply Chain?

I was in Paris last week, touring around as people do in Paris, and visited Fondation Louis Vuitton. What does that have to do with a Digital Procurement ecosystem?

If you’ve never been before and are a fan of art, architecture, and culture, I can highly recommend adding it to any future itineraries.

The museum’s collections are magnificent, and the building itself is a true masterpiece. Beyond the artwork, Fondation Louis Vuitton offers an experience to tour the multiple levels of decks that interweave themselves between the inside and the outside of the building’s structure.

On one of the decks sits a piece of artwork named “Where the Slaves Live”. It is a living organism, composed of inorganic and organic materials, forming a ‘living sculpture’ that is a small scale ecosystem- an ever-changing work of art.

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What is MRO and Why is it Important?

Indirect Procurement – It’s Time to Rise and Shine!
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In the world of Procurement and Operations one of the phrases that you will frequently come across is “MRO”.

But many people throw around the term without truly understanding what it means, and how important it truly is for the ongoing, and successful, operation of any company. Maintenance, repair, and operation is the process of MRO. From Content Rally, you will see how the industry is depending on this process.

If your production line stops dead because you are out of stock of an MRO item you will immediately develop an understanding and appreciation for this area.

So let’s try and provide some clarification.

What is MRO? And why is it important?

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Confessions of a High Priced Expediter!

Part Shortages? What is your Supply Line Strategy?

The CEO called.  “We’re out of Parts … I need your help!”  And so it began.  These are my confessions as a high priced expediter.

Every Supply Chain is going to have supply disruption and raw material shortages at some point.  So if you work in Supply Chain you are going to get involved in some fashion.  Maybe you are calling suppliers, qualifying new,  replacement parts, or maybe you are arranging for fast delivery of the shortages.

I have been involved directly or indirectly in resolving part shortages throughout my career.  Even as an Executive I still got pulled in to these situations and asked to personally get them fixed.   Once an Expediter, always an Expediter.

Here are my Confessions!

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Responsible Sourcing! Making Sustainability Happen for Real!

The Green Supply Chain: True Sustainability or Just a Marketing Stunt?

Sustainability and responsible sourcing.

The word with so much focus and buzz surrounding it, it has almost become difficult to speak or write about.

It’s become the keyword that you see in article titles and hit like or share when scrolling by — so your friends and professional network see you care about the future of the earth — but seldom click on the link to read.

Unfortunately, sustainability and sustainable development are beginning to turn from green to grey, considering its ever-increasingly washed-out idealistic applications in business and society at large.

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Business Practices Disrupting Procurement!

7 KPIs Your Procurement Team May Be Ignoring!

When I was a kid, my mom had a ’93 Ford Escort.

I remember that car as clearly as I remember banging with my fist on it’s ceiling singing Tom Petty’s Makin’ Some Noise.

Days and years went by, and eventually, the ’93 Ford Escort was living in the hybrid-dominated world of the year 2004. My mom decided that the Escort had seen better days, and started a new/used car hunt. She soon selected the Prius as her car of choice for its environmentally friendly features. The Escort joined its fellow junk metal comrades in an automotive-parts junkyard a few miles away from my childhood home.

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Procurement Integrity Breach – A Sure Way to Get Fired!

Could the CPO Be Replaced by the Chief Value Officer?

The following story about Procurement integrity is true; no names or companies will be mentioned.

“Hello, Rebecca. Great to hear from you this morning. What can I do for you today?” I said to my direct report on my cell phone.

“We have a situation that needs your attention.” Her voice foretold that this was one to pay extra attention to.

“What’s up?”

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The Future of Procurement!

The Future of the Chief Procurement Officer … Is Already Here!

There has been transformation in the Procurement function over the past decade. From the starting point of the traditional buy-sell, transaction-based purchasing, the practice has moved through stages of change that redefines most aspects of the business and the future of Procurement.

A typical Purchasing Function is limited to the transactional job of collecting information about the requirements of user departments and carrying out commercial checks and balances to finally procure the product & service based on cost reduction only and focused on supply continuity.

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Featuring Our 12 Best Procurement Articles!

Featuring Our 10 Best Inventory Management Articles!

Procurement is a core function in every single company. Whether purchasing goods or services to support the company’s product offering or purchasing goods or services to support the infrastructure and operation of the company, Procurement is key and featuring our best Procurement articles is more than appropriate.

Depending on the type of industry you are in the Procurement of goods and or services can be the largest, or one of the largest, expense areas. As such the ability to efficiently procure goods to meet all objectives of cost, delivery, quality, and more is essential for not only success, but for survival.

In this “Featuring” series article we are putting the spotlight on Procurement and Purchasing. We are presenting our Top 12 best Procurement articles with information, techniques and approaches which will have something for everyone to learn from and apply in their own situation.

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Manage Procurement Spend Like It’s Your Own Business!

Procurement and Procurement Spend. Purchasing. Commodity Management. Category Management.

They are all running their own businesses within their companies, or at least they should be, whether they realize it or not.

Goods and services spend in many companies is the largest, or one of the largest, expenses. And all of this is managed by Procurement personnel.

But do they manage this spend like it is their own business or do they manage it like it is just a functional job with transactional activities to be performed?

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