Archive for January, 2022

Balancing Deliberate vs Emergent Strategy

Friday, January 7th, 2022

 

Today’s post is from our archives at SafeSourcing

People can be unpredictable. Its part of what keeps life interesting. But when a project gets thrown a curveball by someone who missed a deadline, overlooked a requirement, or is just plain uncooperative, the complexities that emerge are not typically the kind of “interesting” we want to experience. Michael Porter and Henry Mintzberg were the originators of the concepts of Deliberate vs Emergent strategy more than 25 years ago, and their views are still relevant today. We can account for most of the variables rational players bring to the table, but human beings aren’t always rational, and therefore not always predictable. This is why a balance between deliberate and emergent strategies must be achieved for any project.

The aspects of your project that should be deliberate are things like financial goals, timeframes, logistical requirements, etc. High level criteria for success often do not change and should be deliberate, pre-planned, and static. When our expectations regarding the execution of this strategy collide with reality in a way that will not resolve without adaptation, our ability to develop emergent strategy is essential.

No two procurement projects have to be run the same, and in fact usually should not be. Often times the optimal strategy for achieving pre-determined goals will not be known until some insight has been gained about the supplier base; how many suppliers are capable of providing the product/service? What is the geographical availability of capacity? Is pricing market regulated? What service level guarantees are available? Is the market experiencing price increases/supply shortages? These variables should influence our strategy for execution, by changing things like baseline pricing, terms and conditions, SOW’s, and freight considerations.

Some managers believe that any form of adaptation is a weakness of strategy. It isn’t. The old way of thinking about strategy is to assume all outcomes can be known and predicted. That’s why most of the Fortune 500 Companies that existed 50 years ago don’t exist anymore. They believed their position to be a product of previous strategy that should never be changed. The companies that have thrived over the years have continuously adapted, reinventing themselves over and over again to stay relevant, and capable of exceeding their customer’s expectations.

For more information on how SafeSourcing can assist your team with this process or on our “Risk Free” trial program, please contact a SafeSourcing Customer Service Representative.  We have an entire customer services team waiting to assist you today.

We look forward to your comments.

Trains, Planes and Trucks oh my!

Thursday, January 6th, 2022

 

Today’s older repost is by Ron Southard, CEO at SafeSourcing.

This information still has some legs today in 2022 that may offer some guidance.

Oh well I tried, my title is almost like the title of the movie of a similar title, but in our case automobiles don’t provide much help. The question however is a good one and unfortunately many companies are not exploring what may be the least expensive alternative today. And that would be (Your guess was wrong) TRAINS. Surprised?

Companies that are looking to optimize their shipping lanes or even their entire logistics structure face significant hurdles.  Selecting the correct business partner  or partners is a huge challenge,   as vetting them includes so many different items that can include items like Track & Trace capability, shipment visibility, driver turnover, certifications, fuel surcharges and much much more. But don’t forget to take a hard look at Trains.

The price of shipping your freight by rail is relatively inexpensive and the volume of freight being shipped this way is projected to grow by half to $27.5B by 2040 according to an article in an dated issue of the Wall Street Journal titled Boom Times on the Tracks: Rail Capacity, Spending Soar. It’s even more true today in 2022.

This may be a surprise to many as most procurement professional tend to think of rail as old school. Well, while you may have been looking the other way, technology has been upgraded, infrastructure has been upgraded and total tonnage has increased across a broad number of categories.

Who are the major players in this space?  The names may be familiar. Union Pacific, BNSF, CSX, Norfolk Southern and Kansas City Southern to name a few.

If you like to learn more about how to optimize your shipping needs in 2022, we are assisting many companies with their shipping challenges.  To learn more, please contact a Safesourcing customer services account manager.

We look forward to and appreciate your comments.

 

Do you know how a price index plays into e-procurement best practices?

Wednesday, January 5th, 2022

 

Todays post is a repost by Ron Southard, CEO at SafeSourcing Inc.

Todays post is a little long in the tooth, but still relevant for sourcing professionals.

Being overly simplistic an index is a system used to make finding causal information easier! There are any numbers of indexes or indices available to help procurement knowledge workers insure they are sourcing products at the best possible pricing. The key word here is price as what we will be discussing are specifically price indices.

According to Wikipedia a price index (plural: “price indices” or “price indexes”) is a normalized average (typically a weighted average) of prices for a given class of goods or services in a given region, during a given interval of time. It is a statistic designed to help to compare how these prices, taken as a whole, differ between time periods or geographical locations.

Price indices have several potential uses. For particularly broad indices, the index can be said to measure the economy’s price level or a cost of living. More narrow price indices can help producers with business plans and pricing. Sometimes, they can be useful in helping to guide investment.

Normally an index reflects the current and historical price of a variety of commodities ranging from metals to grain. A common index used in sourcing petroleum products is OPIS or the Oil Price Information Service which you can learn more about by visiting www.opisnet.com.  However in order to drive the best possible fuel pricing there are other dependencies such as whether you are doing spot buys or bulk purchases and these strategies will determine what specific index you would want to review as well as it’s relation to other product information sources such as Platts or the Gulf Coast spot assessments.  This will put you in a better position to determine how to bid the product and also earn a discount relative to the lowest common denominator.

All other commodities have similar sourcing issues dependant on what the highest cost item is in their product makeup. An example here might be the cost of grain in the feeding of cattle or poultry.

Ask you solution provider to explain these tools to you and to recommend how you might use them toward the best outcome.

If you’d like more information, please contact a SafeSourcing Customer Services Account Manager.

We look forward to and appreciate your comments.

Why do our procurement resolutions fail?

Tuesday, January 4th, 2022

 

With the New Year here we tend to use the occasion to set resolutions for ourselves surrounding changes we want to make in our lives. These changes are not isolated from the workplace, in fact millions of 2022 resolutions will directly apply to people’s jobs/careers. Many procurement professionals will look at their decisions and direction and begin to plan changes in those processes as well. Unfortunately for as many people who will try to make changes, many will fail to reach their goals and in today’s blog we will look at a few reasons why that happens.

People don’t know how to get there: There are many places in this world I want to go, some of them are not that far from my home, and yet without preparing directions, or in today’s world, loading a GPS device, I would have no idea how to get there. I may be able to head in a general direction but in time I would get lost and frustrated and head right back home. New changes to your procurement processes are no different. They require a plan of action, directions on where you are going, in order to get to where you want to be. This, of course, assumes a knowing of where you want to be and how to measure whether you actually got there which is all part of the plan.

People forget to take the baby steps: So many resolutions fail because people set goals of losing 50 pounds by June or quitting smoking or managing stress better with the perception that getting there is just a matter or wanting it bad enough or having enough willpower. Willpower like anything that is exercised takes time to get in shape you wouldn’t get off the couch and run a marathon the first day and neither should expect lofty goals and resolutions to be achieved on the first day. Starting with short term achievable goals that can provide momentum is the key. Instead of focusing on a lofty reduction of costs by 20% this year, focus on how you can reduce the time from project start to actual realized savings by 3 days or on including one extra supplier in the process to help you make better choices leading to higher value for the company.

People don’t really want to change: Some resolutions fail because we subconsciously want them to fail. The truth is many of us like to eat food that is bad for us and indulge in habits that are bad for us. Many others are afraid of bettering ourselves in our career because it may someday mean stepping out of our comfort zone into a world with different responsibilities and expectations. This can be especially difficult for people with more introverted personalities. One of your goals may be to increase new projects with new departments within the organization by 15%. In many cases this is going to require selling your department’s service and expertise to those departments and this can be a scary place for some professionals who are fine taking orders. To be successful in types of goals start by knowing where your strengths and weaknesses of your team are and whether you will be able to do the things necessary to achieve the goals/resolutions you are creating.

For more information on how SafeSourcing can help you with your projects, or on our Risk Free trial program, please contact a SafeSourcing Customer Service Representative. We have an entire customer services team waiting to assist you today.

We look forward to your comments.

We Can Source Anything Part I

Sunday, January 2nd, 2022

 

 

Today’s post is by Dave Wenig, Senior Vice President of Sales and Services at  SafeSourcing Inc.

Usually when we start talking to someone about eProcurement, they think of commodity items like copy paper or other somewhat boring examples of what they think you can source with a reverse auction. Do not get me wrong, if you are buying copy paper for your enterprise, there is no better way to get a better price than to use an online bidding event like a reverse auction. You will be glad you did.

What is often underestimated is just how many different areas within your spend you can use this process. Here is a first look at a couple of examples of how we have taken that to new heights.

I would bet that when you think of SafeSourcing and eProcurement, you probably do not think of aviation. Yet our services have been successfully employed to get deep discounts on our customers’ aviation needs. Sure, we have managed travel services and booking, but that is not really that interesting.

Believe it or not (believe it, it is true) we’ve separately sourced both jet fuel discounts and chartered jet services. So, whether your company manages its own fleet of jets, or you find it more economical to go the chartered route, we are proud to report that we can get you a really great discount on either using our eProcurement tools.

The point is that SafeSourcing’s services should not be limited to mere supply categories. We do so much more than that. Check back in the future for part 2 and I will share more examples of some out of the ordinary sourcing activities.

For more information on how SafeSourcing can help your procurement efforts, or on our Risk

Free trial program, please contact a SafeSourcing Customer Service RepresentativeWe have an entire team ready to assist you today.