Sourcing and Procurement / Supplier Relationship Management How a company manages its suppliers makes a huge difference in profitability, performance, and the continuity . . .

Sourcing and Procurement / Supplier Relationship Management

How a company manages its suppliers makes a huge difference in profitability, performance, and the continuity/resilience of the business. Sourcing and procurement professionals have gone way beyond only chasing the lowest price (though they still do that) to looking at the total cost across the enterprise, managing risks and outcomes, improving supplier performance, and getting more value out of the treasure trove of spend data they are sitting on. Below are findings from ChainLink's research on what the best enterprises are doing and the technology they are using.

To learn more about how ChainLink Research can help you with sourcing, procurement, and supplier relationship management, please contact us via email or call us.

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This page is organized in two sections:

• Sourcing and Procurement Fundamentals and Best Practices
  
  
• Industry News and Happenings in Sourcing and Procurement
  
  

Sourcing and Procurement Fundamentals and Best Practices:

• The Rise of the Agile Networked Platform -- New networked technology platforms are co-evolving with new networked business models, together enabling companies to rapidly find, assess, and integrate with trading partners.
  
• Overcoming the Challenges of Moving to Centralized Procurement -- How one of the worlds largest mining companies, Anglo-American, transformed from a highly decentralized procurement governance model to a centralized model--and how they overcame the myriad human, political and change management challenges along the way.

Direct Materials Procure-to-Pay Series: (Parts 1-6)

• Spotlight on Direct Materials Procure-to-Pay -- Part 1 -- The procure-to-pay process (P2P) for direct materials resists standardization and automation. As the critical execution phase of source and procurement, it is where the rubber meets the road for inbound materials. This is the first in our series on direct P2P, based on recent research.
• Direct Materials P2P -- Part 2: Relationship-Intensity -- In our research on direct materials Procure-to-Pay (P2P) processes, we saw tremendous variation between industries or types of companies in how they execute P2P. One major difference is the 'relationship-intensity;' how much negotiation and dialog is required at each stage of P2P.
• Direct Materials P2P -- Part 3: Receiving, Invoicing, Payment -- Automation can be increased by developing deeper strategic supplier relationships. Automation on both sides (supplier and buyer), combined with a shared platform/Single-Version-of-the-Truth, can help companies get much closer to 100% straight-through errorless processing of invoices.
• Direct Materials P2P -- Part 4: Research Survey Findings -- Here are results from our survey and interviews with over 120 manufacturers about their level of direct materials P2P automation, why they automate, the KPIs they use to measure success for their direct P2P, and more.
• Direct Materials P2P -- Part 5: Solutions Landscape -- There is a tremendous variety of direct materials procure-to-pay solutions. Here we explore a framework for understanding the P2P solutions landscape.
• Direct Materials P2P -- Part 6: Solutions Examples -- A broad and diverse array of direct materials purchase-to-pay solutions are available to serve the different needs of various industries and companies. Here we explore examples of a variety of solutions available in the market.

Reinventing Supply Chain Finance Series: (Parts 1-5)

• Reinventing Supply Chain Finance--Part 1: Holistic Supply Chain Finance -- Procurement, supply chain, and finance professionals each have their own individual perspective on when, where, and how supply chain finance can be used. Here we take a broader perspective and approach, 'holistic supply chain finance' and discuss the potential it holds.
• Reinventing Supply Chain Finance--Part 2: Increasing Margins by Lowering Risk, Cost of Capital, and COGS -- How holistic supply chain finance improves margins for buyers, lowers risk for lenders, and lowers the cost of capital for suppliers.
• Reinventing Supply Chain Finance--Part 3: Continuity of Supply and Time-to-Market -- Here we discuss how holistic supply chain finance can be used to improve supplier's health, accelerate time-to-market, and enable postponement of differentiation.
• Reinventing Supply Chain Finance--Part 4: Foundational Requirements -- Earlier in this series we looked at a new holistic approach to supply chain finance. Here we describe the underlying core capabilities required to implement this new approach.
• Reinventing Supply Chain Finance--Part 5: Operational and Strategic Benefits -- Implementing a holistic approach to supply chain finance, with a connected trading partner network, can yield operational improvements (beyond the financial benefits). These include reduction in errors, chargebacks, and non-value-add communications, simpler supplier connectivity, streamlined process efficiencies, and improvements in supplier performance

Spend Analytics Series: (Parts 1-5)

• Spend Analytics: Part 1 - The Evolution of Spend Analysis -- Companies that are good at spend analytics realize a sizeable competitive advantage. But it is not easy to do. In this first article in our series, we look at how spend analytics has evolved.
• Spend Analytics: Part 2 - Applications of Spend Analysis - Sourcing and Supplier Analytics -- The most common application of spend analysis is to identify potential cost savings. However, spend analytic systems can be and are used for much more than that. We explore here some of the common and novel ways that enterprises are using spend analytics.
• Spend Analytics: Part 3 - Applications of Spend Analysis - Parts, Product, Finance, Performance, and Cross-Functional Uses -- Spend analytics can go way beyond just analyzing spend or managing suppliers. We look at some of the more novel uses of these systems.
• Spend Analytics: Part 4 - Steps in the Spend Analysis Process -- Attaining value from spend analytic projects requires setting explicit goals, a good foundation of data hygiene, the right level of classification, great analyst skills, and last but not least - decisive improvement actions must be taken.
• Spend Analytics: Part 5 - Selecting a Spend Analytics Solution -- Architectural Considerations -- The architectural characteristics of spend analytics solutions can have a big impact on the types of analysis that can be done, the time and effort it takes to implement the system, ease-of-use, and other factors that significantly affect how much and how quickly the system delivers value to your organization. Here we consider some of those architectural attributes and their implications.
• Suppliers: A Proven Competitive Weapon You May be Overlooking -- Some authors have suggested that strategic sourcing is often done in a win-lose style, without true collaboration between buyer and seller. Nothing could be further from the truth, as a win-lose relationship is the antithesis to strategic sourcing done the right way. Strategic sourcing, done right, can become a real competitive advantage.

Co-Managing Supplier Risk: (Parts 1-2)

• Co-Managing Supplier Risk: Part 1 -- The Challenges of Managing Supplier Risks -- Managing the risks imposed by suppliers and third party service providers has become increasingly difficult and expensive. In part one of this series we explore the reasons why. In part two we'll look at a promising new approach to solving the problem without breaking the bank.
• Co-Managing Supplier Risk: Part 2 -- A Case for Co-managing -- A new approach offers the potential to manage risk across your entire supply base without breaking the bank. Your most highly paid resources can focus on strategic high-value work, while tactical tasks are co-managed by a third party.

2011 Supply Chain Orchestration Series: (Parts 1-3)


• 2011 Supply Chain Orchestration: Part One -- For some companies, managing only their immediate suppliers is not sufficient. Brand owners whose reputation and competitiveness is on the line for the performance and social compliance of the whole chain are increasingly taking on the role of Supply Chain Orchestrator, coordinating key activities across multiple tiers of their supply chain.
  
  
• 2011 Supply Chain Orchestration: Part Two -- One important way that Supply Chain Orchestrators manage multiple tiers is sourcing and buying on behalf of their suppliers. Learn how and why that is done.
  
  
• 2011 Supply Chain Orchestration: Part Three - Multi-Tier Procurement -- Throughout much of its history, Ford was a vertically integrated company, owning its supply chain assets all the way back to raw materials facilities such as steel mills and rubber plantations. And although they have transitioned to a highly-tiered virtual enterprise model, Ford has sought to "have their cake and eat it too," maintaining or regaining some of the benefits of their original vertically integrated model. Here we examine another aspect of Ford's attempt to get vertical integration benefits from a multi-tier supply chain - specifically, how they buy steel on behalf of their entire supply chain.


• Sourcing in Times of Uncertainty -- Sourcing and procurement professionals are used to dealing with large swings in demand and supply. But the highs and lows created by the recent bubble and recession were difficult for even the most adept sourcing practitioners. There are some best practices and innovations that can help deal with not just uncertainty in demand and supply, but supplier failures, commodity price volatility, and supply chain risk.
  
  
• Outcome Sourcing: Buying Results -- One of the most important developments in supplier relationships is outcome sourcing - moving from buying things to buying results or outcomes. This two-part article describes Outcome Sourcing in actual use, and how you can use it to motivate and tap the innovative power of your supply base.

• Larger Cost Savings Come from Total Cost Sourcing -- Sourcing and procurement spend-reduction strategies are frequently a central part of business cost-cutting initiatives. Most buyers understand that the lowest price option does not always yield the lowest total cost. But buyers' performance metrics (e.g. PPV), corporate policies, and lack of complete or accurate data often frustrate efforts to do true total cost sourcing. This two-part series explores how to overcome these obstacles.

• Supplier Performance Management -- How two top performing companies rate their suppliers, initiate and manage corrective action, and manage supplier performance across divisional boundaries.

• Contract Management: Negotiating, Creating, and Monitoring Compliance -- Skillful contract negotiation and management are vital to realizing a company's spend management and supplier performance goals. Here we explore how to negotiate better agreements with your suppliers, effectively manage contracts, and monitor compliance.

• Comprehensive Auctioning: Broadening the Scope of Reverse Auctions -- Reverse auctions can generate double-digit savings year after year. Companies can build on those savings, including things that might normally not be considered auctionable, by defining completely and exactly how they want to be served.

• Centralized vs. Local Sourcing and Procurement Governance Models -- Large or divisionalized companies face the conundrum of how much power and decision-making to give to a centralized sourcing group vs. to the local procurement teams at each division, region, or business unit. The right decision is definitely not one-size-fits-all. We explore some successful models that have been deployed.

• Education: The Key to Continuity and Cohesion in Sourcing and Procurement -- The people in an organization make or break it. A solid education program is one key strategy to sustain supplier relationships and maintain human expertise through periods of organizational flux.

• Contract and Supplier Management Lessons -- Distilled insights from ChainLink's recent research on managing contracts, supplier performance, and reverse auctions.

• How a Legal Department Can Add Value -- Cisco's legal department has taken steps to move from being a gatekeeper slowing things down to being a business enabler of faster cycle times for contract approvals and greater operational efficiencies. Read how they did it.

• Managing Supply Risk - Quantifying and Predicting Supplier Risk -- How companies ensure continuous affordable supply by measuring supplier risk and anticipating potential supplier problems. Early warning gives companies a much broader range of options to deal with potential problems in a systematic way.

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Industry News and Happenings in Sourcing and Procurement:

• Ariba as Innovation Engine--Observations from Ariba Live -- These are dynamic times for Ariba, as SAP figures out its Business Network strategy. Ariba Live provided a chance to see the key role Ariba plays in driving innovation forward for SAP.
  
  
• PrimeRevenue Partnership Delivers New Supply Chain Finance Capabilities for Ariba -- Ariba's recently announced partnership with PrimeRevenue provides customers with a multi-funder supply chain finance capability, integrated into the Ariba platform.
  
  
• Reinvention at Ariba -- At Ariba Live, we saw big changes in Ariba's architecture, openness, UI/UX, agile development cadence, and more.
  
  
• Concur-SAP Symbiosis -- How Concur is both changing SAP and leveraging SAP’s strengths.
  
  
• GT Nexus Bridges 2015 -- Insights and updates from the GT Nexus user conference.
  
  
• Why Selectica + Iasta? -- Selectica (a contract management/configuration solution provider) recently announced their acquisition of Iasta (a sourcing solution provider). Here we discuss the fit and some of the reasoning behind the deal.
  
  
• Customer Stories from Ariba LIVE 2014 -- The journey and lessons from three engaging customer stories-- how they moved to centralized procurement, achieved sustainable savings, understood cost drivers, used cost modeling in negotiations, and more.
  
  
• Highlights from Ariba LIVE 2014 -- Last week's Ariba LIVE conference clarified SAP's cloud strategy, highlighted the importance and future plans of Ariba's Business Network, and further cemented the central role of HANA as the foundation for SAP's future.
  
  
• Panjiva Announces Global Search -- Panjiva launched 'Global Search' for its existing supplier search capabilities, providing additional supplier information for millions of suppliers worldwide.
  
  
• Supplier Risk and Compliance Management in Practice: Part One -- The ability to manage supplier risk and compliance has become a critical competence for organizations. Our research shows why and how to manage and reduce supplier risk--what actually works in practice.
  

Baker Hughes Automates Procure-to-Pay: (Parts 1-2)

• Baker Hughes Automates Procure-to-Pay: Part One -- How this major oilfield service firm automates the interactions with its suppliers.
  
  
• Baker Hughes Automates Procure-to-Pay: Part Two -- Read how this major oil field service firm ramped up to high volumes of spend under its automated procure-to-pay system automating its interactions with suppliers.
  
  
• Sapphire 2011 Highlights: Part One -- Among the many sessions from SAP's annual conference, we highlight SAP's new Supplier InfoNet and one of their customer's implementation of SRM 7.0.
  
  
• B. Braun's Implementation of SRM 7; Sapphire Part Two -- B. Braun's implementation of SAP SRM 7.0 demonstrates that results need not take a long time when you allow opportunities for contribution wherever the talent exists across the organization.
  
  
• 2011 Ariba LIVE -- Ariba LIVE 2011 in Nashville was well attended, with over 1600 attendees. Here are some highlights from the show.

SAP Making Strides in Procurement and Supply Chain: (Parts 1-2)

• SAP Making Strides in Procurement and Supply Chain: Part One -- Highlights from the SAP Insider conference on interesting and innovative new developments in their procurement and supply chain capabilities.
  
  
• SAP Making Strides in Procurement and Supply Chain: Part Two -- New developments in SAP's procurement portfolio, an inspiring use of their technology in rural South Africa, and Services Procurement-related enhancements, and more.

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