Supply & Demand Chain Executive May 2015 by Supply+Demand Chain/Food Logistics

Special Procurement Issue. Also , Meet More Pros to Know on P. 19 May 2015 ®

Global Solutions for Supply Chain ROI

Center-Led Procurement for Higher Education p.16

Jump on the Internet of Things Bandwagon or Get Left in the Dust

Procurement‘s Evolution Isn’t Slowing Down p.8

Procurement Industry research provides a view into the CPO’s office p. 6

p.11

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May 2015

INSIDE

table of contents Volume 16

Issue 2

6 COVER STORY

4 Executive Memo Time for a Change? Despite their importance, procurement professionals don’t always get the respect they deserve By Barry Hochfelder

8 The Future of Procurement Lighting Up the Procurement World An Oxford Economics study shows the evolution of procurement isn’t slowing down

Study Guide

By Barry Hochfelder

A view from the chief procurement officer’s office via a quartet of industry reports and conclusions

11 Procurement and the IoT Jump on the Internet of Things Bandwagon or Get Left in the Dust

By Barry Hochfelder

If procurement hopes to maintain a strategic partner within the supply chain, it’s time to dump its legacy systems and manual processes

In addition to being one of the most changing and challenging disciplines in supply chain, procurement also among the most studied. We’re going to take a look at four different examinations of procurement from four different organizations discussing four different areas that affect procurement: The Hackett Group, Next Level Purchasing Association, IBM and Consero Group.

By Carrie Mantey

13 Case Study The (Un)Paper Chase Streamlining invoicing and payment processes makes life easier and more profitable By Barry Hochfelder

14 Professional Development Solving the Talent Crunch

Among the topics: trust, risk, respect and building on the basics.

By William L. Michels

16 Professional Development Center-Led Procurement for Higher Education CFOs at academic institutions take a lesson from the for-profit sector By Steven Lutzer

19 2015 Pros to Know

Photo Credit: The Venetian | The Palazzo

As the skills gap widens, 2 million jobs may go unfilled

Meet Some More of our Pros to Know These men and women have what it takes to get the job done By Editorial Staff, Supply & Demand Chain Executive

22 Final Thoughts Shake Well Before Opening Maximizing the benefits of the Kraft/Heinz merger By Brian Lindenmeyer

To cut its carbon footprint, the procurement team at Las Vegas Sands Corp. participated in an R&D project to switch to LED lamps without having to retrofit the entire property. In addition to the sustainability achievement, the company’s annual spend on lighting has been reduced by about $2 million. For more on this project and a new study by Oxford Economics, turn to page 8. May 2015 Supply & Demand Chain Executive 3

May 2015 • Volume 16 • Issue 2

executive memo

Time for a Change?

Global Solutions for Supply Chain ROI

www.SDCExec.com Published by AC Business Media Inc.

Despite their importance, procurement professionals don’t always get the respect they deserve

elcome to our special issue on the ever-changing world of procurement. Why is it changing? One driver is the digital revolution that’s affecting all our lives; another is automation. One change that may be a bit under the radar is the migration of procurement, and its senior practitioners, into a more strategic partner in the C-Suite and the entire supply chain operation. One example is the elevation of Marcell Vollmer from CPO of SAP to COO of Ariba, an SAP Company. Procurement isn’t just the department that sources things anymore. It provides real business value because it touches every aspect of the enterprise. There isn’t a department that doesn’t buy things. CPOs have visibility into all of this, enabling them with a unique view into business operations, and an opportunity to add value and improve efficiency. As CPO of SAP, Vollmer gained insight into procurement’s role across an entire organization, learning how to take procurement past the tactical and into the strategic level of business. His experience bringing procurement into a strategic position within a company and integrating closely with the CFO positioned him for his new role. The relationship between a CPO and CFO can play a vital role in a company’s success or failure. “There’s a need for a more strategic relationship, and education on what value procurement can offer the CFO in terms of cost savings and efficiency,” Vollmer says. “CPOs have an

Barry Hochfelder

Editor Supply & Demand Chain Executive

barry.hochfelder@sdcexec.com 4 Supply & Demand Chain Executive May 2015

opportunity to add value by investing in business networks that lead to automated, cloud-based interactions that, in turn, result in cost savings. As the CFO asks, ‘Where’s my money?’ there must be a level of understanding of what procurement’s cost savings truly mean for the business. But I understand both sides. It really helps to know what the CFO needs, too.” In 2014, IBM conducted a study of more than 1,000 procurement leaders from organizations with annual revenues of $1 billion or more. It found that companies with highperforming procurement organizations have higher profit margins than those with underperforming procurement departments. The CPOs who drive top-line revenue bring innovation and improve competitive advantage. Vollmer’s talent was recognized, but that’s not always the case. The Next Level Purchasing Association’s annual salary report said over a third of respondents indicated that they received a bonus in 2014, but in most cases, the bonus was based on company performance, not their own. The conclusion was that companies still fail to recognize procurement’s influence on net income and reward top-performing procurement employees appropriately. The Hackett Group’s annual Key Issues study identified the top issues shaping the procurement executive agenda in 2015. Almost 75 percent of respondents ranked elevating procurement’s role to that of a trusted advisor as a priority in 2015. While becoming a trusted advisor and increasing agility are rated as important, organizations have a low ability to address them. That is not good. For more on these studies and related topics, please enjoy the issue. ■

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Print and Digital Staff Publisher Jolene Gulley Editor Barry Hochfelder Associate Editor Carrie Mantey Assistant Editor Eric Sacharski Art Director Kayla Brown and Greg Miller Ad Production Manager Cindy Rusch Sr. Audience Development Manager Wendy Chady Audience Development Manager Tammy Steller Advertising Sales (800) 538-5544 Jolene Gulley, jgulley@ACBusinessMedia.com Stephanie Papp, spapp@ACBusinessMedia.com Editorial Advisory Board Lora Cecere, Founder and CEO, Supply Chain Insights Tim Feemster, President, Foremost Quality Logistics John M. Hill, Board of Governors, Material Handing Industry of America William L. Michels, CEO, Aripart Consulting Julie Murphree, Founding Editor, Supply & Demand Chain Executive Andrew K. Reese, Former Editor, Supply & Demand Chain Executive Bob Rudzki, President, Greybeard Advisors Raj Sharma, CEO, Censeo Consulting Group Kate Vitasek, Founder, Supply Chain Visions Circulation & Subscriptions P.O. Box 3605, Northbrook, IL 60065-3605 (877) 201-3915, Fax: (800) 543-5055 Email: circ.sdcexec@omeda.com List Rental Elizabeth Jackson, Merit Direct LLC (847) 492-1350, ext. 18, Fax: (847) 492-0085 Email: ejackson@meritdirect.com Reprint Services Jolene Gulley, jgulley@ACBusinessMedia.com AC Business Media Inc. Chairman Anil Narang President and CEO Carl Wistreich Executive Vice President Kris Flitcroft CFO JoAnn Breuchel VP Content Greg Udelhofen VP Marketing Debbie George Digital Operations Manager Nick Raether Digital Sales Manager Monique Terrazas Published and copyrighted 2015 by AC Business Media Inc. All rights reserved. No part of this publication may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopy, recording or any information storage or retrieval system, without written permission from the publisher. Supply & Demand Chain Executive [USPS #024-012 and ISSN 1548-3142 (print) and ISSN 1948-5654 (online)] is published five times a year: March, May, June, September and December by AC Business Media Inc., 201 N. Main Street, Fort Atkinson, WI 53538. Periodicals postage paid at Fort Atkinson, Wisconsin and additional entry offices. POSTMASTER: Please send all changes of address to Supply & Demand Chain Executive, P.O. Box 3605, Northbrook, IL 60065-3605. Printed in the USA. SUBSCRIPTION POLICY: Individual subscriptions are available without charge in the United States, Canada and Mexico to qualified individuals. Publisher reserves right to reject nonqualified subscribers. Oneyear subscription to nonqualified individuals: U.S., $30; Canada and Mexico, $50; and $75 for all other countries (payable in U.S. funds, drawn from U.S. bank). Single copies available (prepaid only) for $10 each. Return undeliverable Canadian addresses to: Supply & Demand Chain Executive, P.O. Box 25542, London, ON N6C 6B2. The information presented in this edition of Supply & Demand Chain Executive is believed to be accurate. The publisher cannot assume responsibility for the validity of claims or p erformances of items appearing in editorial presentations or advertisements in the publication.

cover story procurement overview

Study Guide

A view from the CPO’s office via a quartet of industry reports and conclusions By Barry Hochfelder

n addition to being one of the most changing and challenging disciplines in supply chain, procurement also among the most studied. We’re going to take a look at four different examinations of procurement from four different organizations discussing four different areas that affect procurement: The Hackett Group, Next Level Purchasing Association, IBM and Consero Group.

The Trust Factor In its Procurement Key Issues research, the Hackett Group has found that procurement may face challenges because becoming a trusted advisor, while an important goal, is one of the areas where procurement organizations have a low ability to meet objectives today. “The continuing signs of economic recovery, combined with increased volatility, are driving companies to lace new demands on procurement, including a renewed focus on helping the business be more agile,” said Chris Sawchuk, Hackett Group Principal and Global Procurement Advisory Practice Leader. “But the capability gaps in procurement, particularly for becoming a trusted advisor and in improving business agility, are daunting. It will take significant time and effort for procurement organizations to achieve their transformation goals in these areas.” 6 Supply & Demand Chain Executive May 2015

To address these new goals, The Hackett Group recommends that procurement organizations invest in new capabilities, particularly in the areas of talent management and analytics or “big data.” In talent management, the research found that procurement organizations are planning major initiatives in 2015. Many companies scaled back training and development programs to reduce cost in recent years, but they are now being widely reinstated. Mastery of analytics or “big data” is a key enabler as procurement evolves

toward being more of a trusted business advisor, the research found. Procurement has the opportunity to drive insights and powerful strategic advantage if it can improve its ability to capture and analyze both information generated internally and also data from suppliers and other external sources. But taking advantage of advanced analytics requires procurement

organizations to create new technology competencies, realign agendas, and elevate their overall technology knowledge. Today, while most procurement organizations have implemented basic reporting and data access capabilities, use of next-generation analytics such as multidimensional analysis remains

limited. Sophisticated techniques such as predictive modeling, risk analysis, and data mining are being used by only a small minority of organizations. The Hackett Group’s study, “Procurement’s Key Priorities in 2015: Harnessing Big Data and

cover story procurement overview Renewing Training Programs to Promote Enterprise Agility,” is based on research conducted with executives from over 170 large companies in the US and abroad, most with annual revenue of $1 billion or greater.

Getting Some Respect The Next Level Purchasing Association’s annual salary survey revealed that about a third of respondents receive bonuses but, alas, most were based on company performance, rather than rewarding those procurement professionals whose individual efforts resulted in cost savings. It’s easy to infer from that data that companies still are failing to recognize procurement’s influence. “Cost savings is arguably a procurement department’s most tangible contribution to an organization’s financial success, so it’s looking like companies are still failing to recognize procurement’s specific influence on net income and reward top-performing procurement employees appropriately,” said Megan Nicol, Director of Business Development & Operations at NLPA. The survey also revealed that the average salary is up only 2.9 percent over 2014. NLPA concludes that employment picked up as evidenced in part by the improvement in the United States unemployment rate, that rate has slowed. This indicates that employment capacity may be leveling out and salaries are following suit. Another disheartening result of the survey is that the gender salary gap has not narrowed much at all. This year’s data showed a minor improvement in the salary

differential, said Nicol. “I think that’s going to take a lot longer to accomplish, unfortunately.”

Risky Business Risk is not going away; in fact, it’s only getting more severe. And CPOs understand that, according to the 2015 Global Procurement & Strategy Sourcing Data Survey compiled by Consero Group. Almost half (45 percent) of those CPOs from Fortune 1000 companies surveyed named supplier risk as a top concern. “With businesses increasingly relying on third-party suppliers, Chief Procurement Officers are more important to their companies than ever,” said Paul Mandell, Founder & CEO of Consero. “CPOs will need to lead their organizations in thoroughly vetting new suppliers and improving supplier relations, both of which are essential to the efficient sourcing of goods and services for today’s global businesses.” In addition, nearly two-thirds (64 percent) of Chief Procurement Officers surveyed do not believe they have enough access to the resources necessary to manage their operations effectively and 72 percent do not see a sufficient pool of trained procurement talent available to support their hiring needs. CPOs must remain focused on talent acquisition and retention, Mandell added. Finally, 49 percent believe their company has achieved tangible cost reductions through the use of a sustainability program, an increase from 33 percent last year.

Beyond the Basics In its latest study, the IBM Institute for Business Value surveyed more than 1,000 CPOs, to determine why only 10 percent, relative to their peers, were in the top 20 percent in revenue growth and in the top 15

percent in profit improvement. Role models, the study concludes, think about procurement in broader terms than their peers; they are more likely to embrace priorities that serve more strategic enterprise objectives; they seek to extend procurement’s value through collaboration; and they adopt leading-edge, procurement-related technologies and solutions to further simplify the mundane-but-important aspects of transaction support. In contrast, underperforming procurement organizations chart a very different course. Although they focus more on traditional procurement priorities and basic capabilities, they often do not stretch beyond these basics. These organizations concentrate more on spend savings and corporate profitability and getting involved in purchasing decisions early—the table stakes of procurement—but do not place a high priority on more strategic priorities or innovative initiatives. Excelling at traditional procurement capabilities is important, but the hope of most CPOs is to influence and improve the way the business operates. In this regard, priorities seem to matter, as procurement role models have a very different focus than their underperforming peers. Fully 38 percent of respondents from topperforming organizations say that introducing innovation into the enterprise from suppliers and other sources is among their top three priorities. This compares to just half as many (20 percent) of procurement underperformers. Similarly, 42 percent of procurement role models say revenue growth and increased competitive advantage are among their top three priorities, while only 28 percent of underperforming respondents share this view. ■ May 2015 Supply & Demand Chain Executive 7

the future of procurement

Lighting Up

the Procurement World An Oxford Economics study shows the evolution of procurement isn’t slowing down

By Barry Hochfelder

hey say that the neon lights are bright on Broadway, but that street’s got nothing on the Las Vegas strip and other casinos around the world. For example, the Venetian and Palazzo, owned by Las Vegas Sands Corp., features convention and meeting rooms that span 340 distinct venues and more than 2.25 million square feet of flexible space, including the 85,000-square-foot Venetian Ballroom and the Sands Expo. The carbon footprint of all that incandescent and halogen lighting was massive. To cut that footprint and save money, the Las Vegas Sands procurement team worked with GE on a research and development (R&D) project to switch to lightemitting diode (LED) lamps without having to retrofit the entire property, said Michael Merlin, vice president of global procurement at Las Vegas Sands Corp. The result was that halogen bulbs in the Venetian and 8 Supply & Demand Chain Executive May 2015

Palazzo meeting rooms were replaced with more than 5,700 12-watt GE LED lamps with lifespans of 25,000 hours, which means fewer change-outs. They also use 108 fewer watts per fixture and reduce the resort’s annual electricity use by more than 4 million kilowatt hours, saving more than $400,000 in annual lighting costs. Combined with an earlier installation of LED lighting in more than 7,000 guest suites, the company’s annual spend on lighting was reduced by about $2 million. This is where procurement is going. It’s not just cutting costs and seeking the best prices anymore. A new study by Oxford Economics, in collaboration with SAP and presented at Ariba Live! 2015, points to five key findings. Oxford surveyed 500 executives and 500 procurement employees in 18 countries in North and South America, Europe, Asia and Scandinavia. The survey actually is a follow-up to one conducted five years ago called Vision 2020 to see how executives responded to the trends outlined in that earlier version; to determine what new challenges and opportunities executives and practitioners consider most important; and uncover where the gaps in understanding are between executives and practitioners.

There are five basic areas covered: ■■From here to where? Changes in the procurement function drive sharply different views of what the future may look like. ■■Procurement gets collaborative. Executives and practitioners are spending more time collaborating with other lines of business and external partners. ■■Goodbye to business as usual. These new ways of working are forcing change on the way procurement operates—and on the way success is measured. ■■The technology agenda. Procurement today is focused on automation and collaboration through social platforms—but executives and practitioners do not see eye to eye on every single issue. ■■The human challenge. As the nature of work changes and technology advances faster than most workers can keep up with, attracting and recruiting the right workers is a growing challenge for the procurement function. “What was most interesting was the different perspectives of the executives and the practitioners,” said Edward Cone, the technology practice lead and deputy director of thought leadership at Oxford

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the future of procurement Economics. “I think that it’s telling. It will be interesting to see the regional and industry breakouts [later in the process].” For example, their differing views on procurement’s future are powerful: ■■Procurement will maintain its current structure while becoming more strategic and absorbing other functions: 28 percent of executives agree, while 22 percent of practitioners agree. ■■Procurement will maintain its current structure and level of strategic influence: 53 percent of executives agree, while 28 percent of practitioners agree. ■■Procurement will consist of a smaller team performing only core functions: 11 percent of executives agree, while 26 percent of practitioners agree.

“What was most interesting was the different perspectives of the executives and the practitioners.”

■■Procurement will be completely absorbed into other areas of the organization: 9 percent of executives agree, while 23 percent of practitioners agree. There also is a revealing difference between the way executives and practitioners view key performance metrics (KPIs) to measure procurement success. There are a wide variety of measurements, including inventory turnover, supplier performance and stakeholder satisfaction. Those in the C-Suite ranked cost savings and avoidance at No. 1 (72 percent); inventory turnover/inventory activity at No. 2 (50 percent); and supplier quality/ performance at No. 3 (49 percent). Now, compare Strengthen supplier relationships that to the & turn every invoice into a practitioners’ responses. They revenue opportunity. cited number of touchless transactions as the No. 1 measurement KPI (56 percent); cost savings and cost avoidance at No. 2 (52 percent); and order cycle time as No. 3 (52 percent). Innovation in Procurement starts here. Another conclusion that taulia.com/CPO is surprisingly different from the 2010 survey is that the flexible workforce is 10 Supply & Demand Chain Executive May 2015

Edward Cone

having an impact on the way procurement works. Well over half of the executives say that the use of nonpayroll workers (estimated at as much as 50 percent) is changing the way procurement operates. Procurement also is increasingly automating contingent workforce management, pointing to its growing importance. To the question, “To what extent are you automating contingent workforce management today?” the executives said 60 percent and the practitioners claimed 56 percent. When asked about two years hence, the responses were 83 percent by executives and 63 percent by practitioners. The same question asked about numerous other categories (spend analysis, strategic sourcing, operational procurement, supplier risk management, supplier performance management, etc.) showed that executives and practitioners were pretty much aligned today, but in two years, there was a significant difference between the two groups, with executives seeing much more automation. Oxford’s Cone also points out that macro concerns still are top of mind for both executives and practitioners when asked which economic and technology trends they expect to have the most significant impact on procurement over the next three years. Globalization, commodity pricing and geopolitical issues are at the top of the list. Coming up rapidly are mobile technology, business networks, cloud computing and regulation. The talent issue, both skills and filling shortages, and big data also are on the radar. ■

procurement and the internet of things

Jump on the Internet of Things Bandwagon or Get Left in the Dust If procurement hopes to maintain a strategic partner within the supply chain, it’s time to dump its legacy systems and manual processes By Carrie Mantey

he term, the Internet of Things, started its upswing in 1999 and since has become one of the buzzwords hawked by, well, nearly everyone. But what does it really mean and what are its implications for procurement? More importantly, how can procurement prepare for these implications? Generically, according to Wikipedia, “The Internet of Things (IoT) is the network of physical objects or ‘things’ embedded with electronics, software, sensors and connectivity to enable it to achieve greater value and service by exchanging data with the manufacturer, operator and/or other connected devices. Each thing is uniquely identifiable through its embedded computing system, but is able to interoperate within the existing Internet infrastructure … The interconnection of these embedded devices (including smart objects) is expected to usher in automation in nearly all fields.” Is IoT going to affect the role of procurement? The answer is a resounding yes. The IoT is going to affect procurement by reducing some replenishment requests to signals and automation. These signals may say “I’m empty” or “I need more.” After these signals are transmitted, the processes that the procurement function managed before still need to go through the same cycle—the difference being that

it is more streamlined—but the same cycle philosophically of getting the replenishment approved.

Why Is Procurement Reluctant to Jump on the IoT Bandwagon? Wikipedia foreshadows that the IoT is going to be nearly ubiquitous at some indiscernible point in the future, so why is procurement lagging behind manufacturing in implementing IoT now? Paul Noel, senior vice president at Ivalua, thinks, “It’s not as evident to procurement folks that there is a human element here that they need to fix. It is evident in manufacturing. We can see people grunting and sweating and keeling over doing stuff, then machines are put in to place to do that, and we see the immediate benefits, including savings over time. “For procurement folks and the procurement process, people saying ‘I need something’ can be an annoyance because it means more work, and so, if you have machines doing that, it

“Procurement done well doesn’t do procurement.” doesn’t help and, in the worst-case scenario, it [can seem like] it just creates more work. I would say that the inputs to the procurement process where IoT would be, which is on the input side, is not something that procurement owns, it’s something that they have to serve. That may be

part of the issue.” Noel offers an example: “Pretend there’s a vending machine in the cafeteria that, when it gets low on a certain specialty drink, it sends a signal to replenish it. And somebody set up the vending machine initially for two things: When it gets down to a certain replenishment level (like it only has two more of those drinks left), [the IoT sends a signal to] replenish 50 drinks. There are two numbers there: two, which is the trigger, and the 50 that’s the quantity of replenishment. So while that’s a relatively simple example, it’s possible that nobody’s taking those drinks over the two- or three-year period, and the vending machine finally gets down to two and orders 50 more.” The crux of the situation (and what possibly worries procurement professionals) is that the vending machine is not going to cycle through another 50 specialty drinks for two years based on the last throughput. In that case, procurement would maybe adjust the replenishment to only 10 to save money (not to mention potential expiration date issues) and because consumers aren’t demanding that inventory anyway. Noel says, “You would want a human to make those choices, and some people in procurement are afraid that locking and loading it in the IoT would make them undisciplined in continually looking at those things, and making adjustments that they deem as necessary.” May 2015 Supply & Demand Chain Executive 11

procurement and the internet of things IoT: Mitigating the Mundane

the procurement area where things get used up or broken. When the machine itself sends signals through the ether, it takes a human out of the equation and out of the mundane. We don’t get rid of the humans, therefore, but we have to find something else that they can do that is really using what our brains are made for, so I think that’s the biggest implication here.” Theoretically, as the IoT becomes more established in the procurement field, its professionals may eventually focus on exception management, and setting up and monitoring the procurement IoT. “Basically, the ability to become an exception manager is that you don’t do the mundane, you do the exceptions to the mundane. That’s where you jump in as a human, and start to look at the factors and context, and think more globally about things.” Noel acknowledges that unless you have data management and processing software optimizing and helping with that operation and workflow, “the IoT can drown the procurement folks if they’re not careful.” In other Gartner words, the IoT Top-Rated may exacerbate E-procurement Solution the issue of big Provider “A powerful addition to nancial data wherein the infrastructure, the system’s easy-to-use problem lies with web interface helps to manage OUTSTANDING: not gathering data, • EASE-OF-USE • expenditures, create visibility and • TECHNOLOGY • PLATFORM but processing, provide internal controls” • TIME TO VALUE • CIO Review interpreting and • CUSTOMER • CUS SATISFACTION acting on it. After implementing www.erequester.com/easy the IoT, the procurement Noel believes that the IoT means an acceleration of the processes that procurement professionals are performing manually, and that one of the most mundane things that the procurement function is in charge of is measuring and decision-making about replenishment. The IoT can mitigate these kinds of simple tasks, in turn, freeing up human capital to concentrate on less mundane tasks. “Procurement done well doesn’t do procurement. The procurement process is in a long cycle of trying to get to the point where the mundane is not something that humans are doing. The IoT has great potential and it’s a generic potential of making things communicate rather than having humans do it,” continues Noel. “That extends to

AWARD-WINNING E(ASY)-PROCUREMENT

12 Supply & Demand Chain Executive May 2015

function may get inundated with many signals demanding action as opposed to one aggregated request of many demands from a human. According to Noel, “If the IoT is automatically saying ‘I need something’ 50 times a day from all those machines for that month, you don’t want a process that requires you to spend the same amount of time on each one of those requests as you did for that one request that you manually did before. You have to have a different process or some automation around that” to make the IoT more viable.

Preparing Procurement for IoT In order to best prepare for the IoT onslaught, procurement professional should properly set up and maintain the IoT inputs, says Noel, and the best way for an organization to prepare for the IoT entering the procurement function is by implementing standard procurement software as an overlay on this. “The signals that are coming from the IoT need to be understood in their context and ongoing maintenance makes sure that you make those adjustments for those 50 drinks from our example. “The IoT is not doing procurement, it’s things requesting replenishment and similar activities. If it was doing procurement, we wouldn’t be calling it the Internet of Things, we would be calling it artificial intelligence. We’re talking about individual machines talking about their status. So procurement, in order to be helped, is going to need to be tooled up or be in shape for the quantity of new signals that are going to be sent to it. And that’s going to be a necessary requirement. So keep plugging away and trying to make your processes as efficient as possible just to be ready for the world that’s coming toward you.” ■

case study modernizing procurement

The (Un)Paper Chase Streamlining invoicing and payment processes makes life easier and more profitable By Barry Hochfelder

very successful international chemical and textile company is a leader in its field, with almost 10,000 employees, 40 manufacturing plants, and the knowledge and innovative approach to accumulate thousands of patents. Still, there were problems that afflicted procurement and accounts payable (AP). AP, for example, needed to streamline its invoice and payment process, which was predominantly paper-based. The staff had to scan and review them, once received via postal service or email, to determine which purchase order (PO) they posted against, a time-consuming, labor-intensive effort that cost time and resources. This, in turn, led to procurement having to resolve invoice and payment inquiries because AP wasn’t able to do the information match. The procurement team had to spend its time trying to chase down a PO or correct pricing information. Needless to say, all of this affected the company’s many suppliers who required better visibility into the payables process for the company to reduce operating costs and inquiry calls. Discount opportunities were missed because suppliers couldn’t automatically request to be paid early at any time; they needed to have a pre-negotiated discount term with procurement. Finally, only one-third of suppliers enrolled in the previous portal after 10 years, with very few of them actually active.

The Solution The company turned to Taulia, a San Francisco-based provider of cloud-based invoice, payment and supplier financing solutions. The solution, which took 16 weeks to implement, was three-fold, covering supplier financing, e-invoicing and an improved supplier portal. On the supplier financing side, Taulia introduced Dynamic Discounting and Supply Chain Finance Plus, allowing the suppliers to choose to fund their early payment program with their own excess capital or the capital of a third-party financial institution. Supplier financing allowed the company to increase profitability, offer uninterrupted early payment discounts to the entire supply chain and, when a priority, eliminate any days payable outstanding impact from paying their suppliers early. Aside from saving time and effort, the conversion to e-invoicing offered a number of electronic ways to get POs delivered, including full delivery via Taulia, as well as options for suppliers to submit non-PO based invoices. The revised supplier portal allows 24/7 access to invoices and POs directly in the Taulia portal so suppliers can communicate with the company on those transactions to assure they are correct, confirmed and processed accurately. Suppliers can submit their invoices electronically, and track the approval and payment status, eliminating the most common

Taulia provides cloud-based invoice, payment and supplier financing solutions.

sources of friction between the company and their suppliers: “Did you receive my invoice” and “When am I going to get paid?” The portal also allows suppliers to easily make vendor master changes. Invoices now are processed in less than one day (instead of seven). After a year, the company enrolled almost 80 percent of its supplier base (as opposed to 33 percent in the prior 10 years with the previous portal) and paid more than $51 million in invoices early, giving suppliers access to cash when they need it most. In addition, the company realized a 50 percent improvement in its discount capture and nearly doubled its overall discounting with suppliers. Changes of this magnitude often cause problems within a company, however, this one had executive buyin to make things easier. The project was led by the chief procurement officer who collaborated closely with AP, making its acceptance run smoothly because of well-defined vision at the top. And having procurement lead the way also helped the overall success because the procurement team has the best relationships with suppliers and was able to easily communicate the solution benefits. ■ May 2015 Supply & Demand Chain Executive 13

professional development finding new talent

Solving the Talent Crunch

As the skills gap widens, 2 million jobs may go unfilled By William L. Michels

he predictions for 2015 are optimistic for manufacturing. The International Monetary Fund (IMF) expects global economic growth of 3.3 to 3.8 percent and U.S. economic growth of 2.2 to 3.1percent, and anticipates the manufacturing sector to grow by 3 to 4 percent. So why is manufacturing management losing sleep? While the outlook is good for the economy, it is not a promising outlook for manufacturers looking to staff up for the anticipated increase in manufacturing. This is not a new issue. Many CEOs report that they are unable to find and recruit the talent that they need to keep operations running, especially if they grow. When I met with a CEO and president of a packaging company recently, it was experiencing significant business growth, which was now taxing the capacity of the plant. The company president said, “Our customers are promising more growth and volume, and they expect the company to invest in a new facility” in a different region of the country. In the conversation, he indicated an unwillingness to invest in a new facility because he fears

14 Supply & Demand Chain Executive May 2015

there is limited talent to run the facility. Another CEO in the printing industry located in a remote area of the Midwest simply could not find the right skills locally and found it extremely difficult to recruit the right people at any price, since there is reluctance to relocate to a remote location. There is no doubt that the skillset shortage in the manufacturing sector can compromise the future competitiveness of manufacturers in the United States. Deloitte and the Manufacturing Institute conducted a skills gap study, The Skills Gap in U.S. Manufacturing 2015 and Beyond, and the findings are astonishing. They report that the skills gap is widening. “Nearly 3.5 million jobs need to be filled and the skills gap is expected to result in 2 million of those jobs going unfilled.” This is a talent crisis. As the Baby Boomers leave the workforce, replacement workers do not find the manufacturing sector attractive and manufacturing plants are typically not located in the hot spots that attract Millennials. As we look at the jobs to be filled, they are changing as manufacturing facilities are becoming more automated and moving to lights-out factories. Due to advances in technology, manufacturers are

looking for blue-collar tech workers who can run computers, robotics and automated machines. These new jobs pay three to four times the minimum wage, according to a Deloitte analysis based on data from the U.S. Bureau of Labor Statistics and a Gallop Survey. It is a well-known fact that every job in manufacturing creates two and a half jobs in local goods and services. For every $1 invested in manufacturing, another $1.37 in additional value is created in other sectors. The Manufacturing Institute reports that the hardest jobs to fill are those that have the biggest impact on performance. “Shortages in skilled production jobs—machinists, operators, craft workers, distributors, technicians and more—are taking a toll on the manufacturer’s ability to expand operations, drive innovation and improve productivity.” While the manufacturing segment of the market recognizes the need for talent, it is relying on word of mouth, personal recommendations and other outdated methods of recruitment. The five keys to success for talent management in manufacturing are: ■■Document the talent needs now and in the future. Identify the key players and create active succession plans.

professional development finding new talent ■■Work with local community colleges to create programs that can train, motivate and build specific talent for your company. ■■ Participate in high school career days to motivate people to make manufacturing a rewarding career choice. ■■Develop a college intern recruiting program to connect with engineering and technical students, offering them the opportunity to have real-life experience in manufacturing— sort of a two-way try and buy. ■■Build career path plans, and make your company a fun and attractive place to work with incentives for productivity, innovation and stability for years to come.

Jay Timmons, president of the National Association of Manufacturers, explained, “Growing a talented workforce helps ensure manufacturing will continue to be the bedrock of our economy and competitiveness.” What this all means to supply chain professionals is that, since we experienced a series of natural disasters causing supply chain risk over the past several years, our strategy is changing to a model in

which we achieve the best-landed cost. With slow steaming ships, increased fuel costs and other mitigating factors, we are moving from low-cost country sourcing to reshoring and manufacturing close to the point of use. This means a supply chain talent strategy must also be implemented to assure business success. To remain an industrial leader, U.S. manufacturers must find a solution to the manufacturing talent crisis. ■

About the Author: William L. Michels, CPSM, C.P.M., MCIPS is CEO of Aripart Consulting, which he founded to use his knowledge and experience working with the world’s top companies to deliver value and competitive advantage to his clients. Aripart focuses on building sound procurement and supply chain strategies, leading companies to realize cost and value improvement, innovation, optimization, risk mitigation and transformation through high-performing procurement and supply chain management. Michels, a member of the Supply & Demand Chain Executive Editorial Advisory Board, consults with global companies in regulated and non-regulated industries across a wide spectrum of business sectors .

May 2015 Supply & Demand Chain Executive 15

professional development academic institutions

Center-Led Procurement for Higher Education CFOs at academic institutions take a lesson from the for-profit sector

By Steven Lutzer

he financial leadership at universities and colleges is increasingly seeking an innovative organizational model of procurement that can drive reduction in cost while maintaining high internal customer satisfaction. The hybrid model of center-led procurement caught the attention of chief financial officers (CFOs) at academic institutions. The forprofit sector many years ago learned that center-led procurement is often the most effective model to achieve savings in an environment of highly decentralized spend. This model seems tailor-made for higher education. The center-led approach enables financial leaders in higher education to aggregate categories of spend across the institution through the use of strategic sourcing initiatives and centers of excellence. With this approach, the execution of 16 Supply & Demand Chain Executive May 2015

procurement transactions can continue to remain embedded in the decentralized units (schools) within the university. This enables internal customers to retain a degree of autonomy on the tactical side of procurement. At for-profit organizations, the pressure to increase profit and earnings per share often creates implicit reasons for reducing cost. Since this climate does not exist in higher education, internal stakeholders often approach procurement transformational change with the lingering question: Why are we doing this? This doubt can be even stronger at universities or colleges with large endowments. Center-led procurement can only flourish if there is a systematic cultural shift in the attitudes toward reducing cost and the payoffs that reducing cost can have for internal stakeholders. The following four phases are required to successfully implement

center-led procurement: ■■ Laying the groundwork. ■■ Building a center-led procurement organizational infrastructure. ■■ Building bridges to internal customers. ■■ Launching strategic sourcing initiatives.

Laying the Groundwork Center-led procurement can take root only if there is significant buy-in on the part of the senior executive leadership. The senior leadership also needs to establish financial targets for procurement savings and promote the mission zealously. An initiative without a quantifiable financial goal is likely to be perceived as an endless journey without any tangible benefits. Also required is buy-in on the part of the financial and business operational leaders of the decentralized schools (for example, business, law, medical and other schools). The operational leader of

professional development academic institutions these schools may be a school CFO or chief business officer (CBO). The business leaders at these schools are important ambassadors of change. Without their support, the mission is likely to be interpreted as another hollow initiative of central administration without any tangible benefits. University researchers can often be a challenging group of internal customers because there is often a perception that the external funding that they secured is their money. A chief procurement officer (CPO) or director of procurement may sometimes defer initiatives with researchers until there is a demonstrated track record of success at the university.

Building a Center-Led Procurement Organizational Infrastructure A tactical procurement team can frequently get bogged down in operational or transactional purchasing problems. If strategic sourcing is added to the tactical team’s responsibilities, it often gets sidelined. Therefore, if the existing purchasing team is primarily tactical, it is important to create a new branch solely dedicated to strategic sourcing. Since aggregating spend by category is integral to the DNA of center-led procurement, it is vital for category managers to possess content knowledge in a specific category or cluster of categories of spend. In some cases, it may be possible to retrain a tactical team member for a role on the strategic sourcing team for specific categories. In other cases, it may be necessary to recruit outside talent that is skillful in strategic sourcing. This is particularly the case if there is a knowledge gap for a particular category of spend. If the CPO intends to initially commence aggregating a particular category of spend, then it may be logical to look for external talent in the particular category of spend. There are cases whereby the CPO may tap into category knowledge or centers of excellence from internal stakeholders embedded within the school who are seasoned in purchasing a particular good or service. The ideal long-term goal is to build out a robust team of strategic sourcing category managers with deep knowledge in various categories.

trust. The following fundamental messages need to be conveyed earlier on: ■■ The procurement organization’s primary goal is to improve customer service and customer satisfaction. ■■ Procurement is there to be a trusted adviser, not the police. ■■ The institution can do a better job of procuring goods and services collectively than the individual decentralized units or schools. Some larger universities create a marketing function within the procurement organization to communicate the new mission and listen to the needs of internal customers. It can be beneficial to elicit consent from stakeholders to communicate all of the ongoing activities of procurement through a quarterly bulletin. Such a bulletin can outline new strategic sourcing contracts that were launched, as well as report the savings achieved. If procurement leaders can develop this relationship as a trusted adviser to stakeholders, then the path of transformational change can be a lot smoother.

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Building Bridges to Internal Customers Internal stakeholders frequently perceive procurement as simply a bureaucratic function without any value or benefit. In the initial stages of procurement transformation, the procurement team needs to gradually build credibility and

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professional development academic institutions Launching Strategic Sourcing Initiatives The proverb “slow and steady wins the race” applies to transformational change in higher education procurement. If a procurement leader attempts to make an overly ambitious or overreaching strategic sourcing

initiative, he or she is likely to achieve only marginal results. At large universities with multiple campuses, selecting one of two campuses for pilot sourcing initiatives is often advantageous. It can frequently be easier to engage additional campuses after a record of

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early wins was established with one or two of the campuses. A strategic sourcing initiative needs to be developed in conjunction with the maximum number of stakeholders possible across the institution. Stakeholders are far more likely to use a contract if they have input on supplier selection. Internal customers are frequently more concerned with vendor performance and reliability than price. If procurement leaders consider only price during vendor selection, they are likely to end up with agreements that stakeholders choose not to use. For internal customers, ease of use can be an important motivator in terms of using a blanket agreement. If an internal customer can search on a university’s e-procurement platform (in a way similar to searching on Amazon), he or she is more apt to order from the vendors with whom the university has strategic agreements. The universities and colleges that remained steadfast on the journey of implementing center-led procurement are starting to see payoffs in savings. There is, however, no shortcut to a gradual approach that incorporates senior leadership buy-in, stakeholder engagement and an infrastructure specifically created to leverage the benefits of center-led procurement. ■

About the Author: Steven Lutzer is the president of Lutzer Global Inc., an executive search firm that specializes in procurement, strategic sourcing and supply chain management. Lutzer had a 20-plus year career in supply chain management and global sourcing before founding Lutzer Global. For more information, please visit www.lutzerglobal.com.

2015 PROS TO KNOW

Meet Some More of our Pros to Know These men and women have what it takes to get the job done As you know, the March issue of Supply & Demand Chain Executive is devoted to our Pros to Know. Unfortunately, due to a confluence of issues, a number of the winners who were to receive expanded listings did not get them. What follows gives them their due. We apologize for this serious mistake, and already have put into place a number of checks and balances to ensure it doesn’t happen again. We deeply regret this error. Barry Hochfelder, Editor

By Editorial Staff, Supply & Demand Chain Executive PRACTITIONER PROS TO KNOW Jake Barr, CEO, BlueWorld Supply Chain Consulting Barr spends a great deal of time consulting with companies and demonstrating how following three simple tactics can be game-changing to their results: ■■ Drive visibility of the supply chain across the enterprise (both what is owned, and what is supplier or partner managed). ■■ Implement the capability to leverage visibility into potential demand and supply exceptions in near real time for trade-off decisions on cost, cash, service and margin. ■■ Redesign the organizing model to eliminate lag time in decisionmaking and conserve precious capital (human and monetary). He stresses that aligning the supply chain strategy to that of the business objectives is vital.

PROVIDER PROS TO KNOW Dave Lindeen, Senior Vice President of Sales, Corcentric Lindeen has long understood that

what goes on behind the scenes is a vital part of making the entire supply chain function at its highest level. To this end, he has worked closely with procurement professionals and their suppliers to accelerate and ensure accuracy in the entire procure-topay process. His involvement has given supply chain executives the freedom to focus on more strategic issues, confident that all necessary information, data and payments are communicated between parties. Peter Edlund, Senior Vice President of Global Marketing, DiCentral Over the past 14 years, Edlund, a founding member of DiCentral, has helped transform the firm from a small electronic data interchange (EDI) company to a robust supply chain solution provider with a global presence. The greatest challenge facing customers today, he says, is meeting and exceeding their demands for collaboration in the supply chain. Companies are struggling to effectively collaborate with their business partners, both large and small, but those that choose this route become rapidly scalable and able to accommodate their customers’ ongoing business-to-business (B2B)

integration requirements with relative ease. This, in turn, allows them to focus on other critical supply chain items like sourcing and transport. Thuy Mai, Founder and CEO, DiCentral A good supply chain is comprised of tools that provide speed, efficiency and flexibility. Companies of all sizes need these tools to achieve and enjoy the best supply chain. From Mai’s perspective and an EDI standpoint, DiCentral develops these tools to enable its clients to act quickly with increased insight, efficiency and flexibility. So it’s a matter of developing the right tools for the right companies that do the right job at the right time. And that is what Mai and his team strives to do to ensure the best possible supply chain experience for clients. Geoff Annesley, General Manager, Semiconductor, E2open Every company is trying to improve quality and reduce costs, which has been the same mantra for the last 40 years. But, many companies keep making the same mistake, Annesley says, making it next to impossible to achieve this objective. They build their supply chain without thinking about suppliers. As a result of this May 2015 Supply & Demand Chain Executive 19

2015 PROS TO KNOW one-sided approach, the company provides. Lykken has there’s a major disconnect also successfully expanded customer between the customers and bases in past roles at icon-scm and their suppliers, and they’re simply Agile Software, where he led solution out of sync. Overcoming this hurdle positioning and pre-sales activities, means having the right tool in place built and maintained customer to bring both of these key players into executive relationships, and built alignment or processes aren’t going to market awareness. be manufacturing-friendly. Gavin Murphy, Executive Vice Pawan Joshi, Vice President of President and General Manager, Strategy, E2open Entercoms Throughout his career, Joshi has As a supply chain professional, helped companies deploy innovative Murphy sees the value in supply chain models and leverage collaborating with clients at multiple technology to support them. By levels—from people working on the utilizing his product and technology shop floor to the C-Suite. He has experience, and his supply chain training, Supply chain leaders are among the Joshi is extremely only employees in a company with effective at bringing true insight into all lines of business. information technology (IT) and operations The relationships they develop give teams together to address them unique strategic insight. complex supply chain needs and develop a roadmap for continuous innovation. a keen aptitude for understanding He has worked in diverse industries their unique needs, challenges and with companies like Avon, Celestica, pain points. His inclusive approach Seagate, Vodafone, IBM, Lenovo, HP, not only ensures a greater depth Motorola Solutions and Cisco, and of knowledge about his clients’ excels at engaging with customers and businesses, but it also lays the prospects, quickly diagnosing both foundation for their confidence and the challenges and opportunities in participation in their mutual quests their supply chains. to address the increasingly complex Steve Lykken, Vice President of supply chain challenges businesses Customer Solutions, E2open face today. With a wealth of knowledge in Rahul Singh, Ph.D., Co-Founder, supply chain management, Lykken and Chief Strategy and Solutions has the ability to quickly identify Officer, Entercoms the crux of a complex problem Singh and his technical staff, the and formulate pragmatic solutions. world’s largest concentration of His peers regularly credit him as a service supply chain analytics experts, major contributor to their respective routinely engage with Fortune 100, companies’ rapid growth. He is oil and gas, high-tech and industrial committed to helping customers equipment companies to deliver an develop solutions that gain visibility end-to-end process for aftermarket into and control over their trading supply chain management enabled networks through the real-time through a proprietary control information, integrated business tower platform. The control tower processes and advanced analytics that synchronizes disparate data and uses 20 Supply & Demand Chain Executive May 2015

predictive modeling techniques to provide visibility across functional lines, increasing the velocity of decision-making and delivering improvement in operational to financial metrics. Sergio Retamal, President and CEO, Global4PL To quote Retamal: “In my opinion, supply chain is already at the core of the strategy of most companies. The current challenge of the supply chain function is that it has not reached the C-Level as much as it should have. The COO position is a natural position for the ranks of supply chain management, thus it is not just a problem of aligning strategies, but rather that supply chain professionals have the capacity and experience to set sound and effective strategies for their company. Global4PL’s challenge is to make sure that companies understand the raw upper management—C-Level management—on their own supply chain operations.” Meredith Marshall, Procurement Implementation Manager, Puridiom Key challenges for customers in the coming year include gaining respect, bringing in more spend under management and building key online relationships, Marshall believes. Respect and relationships are developed over time through positive relationships and experiences, but bringing spend under management is a primary component in making these happen. A customer recently contacted her to begin the implementation of incorporating operational expenses into its Puridiom application. It was discovered that this spend was being completed by multiple means, some just on a piece of paper. By consolidating all employees’ requests to one platform visible to

2015 PROS TO KNOW procurement, the customer is now better able to utilize spend on office supplies using the resources with qualified, preferred online suppliers for purchases. John Costanzo, President, Purolator International Since becoming president in 2001, Costanzo has taken Purolator International from a small U.S. freight forwarder to a leading provider of cross-border services that offers expedited and economy parcel and freight services, transportation management, customs brokerage, warehouse and returns management, and more. He has also successfully built Purolator’s U.S. growth and brand outside of Canada—opening 20 new regional branches in the U.S. since 2001, giving Purolator International a presence in 30 U.S. markets. While investing in this market expansion, Purolator International has maintained profitability and increased revenue by 40 percent (since 2011). He has also been instrumental in the development of new products and services to meet evolving customer needs. Cliff Otto, CEO, Saddle Creek Logistics For ipsy, an online beauty company, Saddle Creek customized a scalable solution to accommodate the increased complexity of the company’s rapidly growing business and handle orders for all of its sales channels. To ensure that hundreds of thousands of subscribers nationwide receive their Glam Bag each month, Saddle Creek instituted a complex, customized order fulfillment process that is conducted within a tight delivery window. The Saddle Creek team typically creates more than 30 different configurations to suit subscribers’ beauty preferences, and assembles and ships more than 400,000 bags within a four-day

period each month. To accommodate this tight timeframe, Saddle Creek ramps up production by adding lines and staff. Dawn Tiura Evans, President and CEO, Sourcing Interests Group (SIG) Evans feels strongly that, for the supply chain to better align with a company’s broader strategy, it must have a seat at the table. As such, she has worked hard to bring executives from all departments together to hold frank discussions on cross-functional issues. Four years ago, Evans and her team created an Executive Roundtable program to provide a venue for CPOs to interact with CIOs, CFOs, general counsel, human resource executives and BPO leads so issues could be shared crossfunctionally and dialogs could be started. She maintains that we must learn to present sourcing decisions from a strategic benefit standpoint to the office of the CFO, which guarantees CEO backing. Sarah Holliman, Vice President of Marketing, Sourcing Interests Group Supply chain leaders are among the only employees in a company with true insight into all lines of business. The relationships they develop give them unique strategic insight. Holliman believes that CPOs and other supply chain executives must do a better job of communicating their successes to the broader organization so the value they bring is not only better understood, but more importantly, regularly sought out. SIG has found ways to open these doors and start dialogs by facilitating C-Level discussions at crossfunctional executive roundtables. Mary Zampino, Director of Sourcing Intelligence, Sourcing Interests Group Working closely with SIG

members, Zampino has found that supply chain leaders often do not have the executive support they need because there is little consistency in where the supply chain lives in their companies. Sometimes these professionals report up to a CFO, but other times, they are far removed from that type of influence. As costcutting and compliance continue to be priorities for CFOs, and indeed CEOs, the role of the supply chain gains in value. To best align, she believes that this group needs to hold a seat at the boardroom table and maintain a deeper relationship with the office of the CFO. Whether or not it reports to finance, the supply chain group must make its strategic activities widely acknowledged and understood. Joey Benadretti, President, SYSPRO USA In the small to medium business market, enterprise resource planning (ERP) buyers have choices of reasonably equitable software. Typically, specific functionality and the relationship with the supplier are major differentials. Success is often intertwined with having a synergistic long-term relationship based on commitment and trust. Benadretti and the executive leadership at SYSPRO set the vision and are responsible for building trust throughout the value chain. Customers, partners and SYSPRO blend into a single vital ecosystem. While some customers are local, others have regional, national or global operations. Some are singlesite environments, while others span across borders with multiple facilities, and are either public or private. These complexities and challenges drive the company to aim higher to meet expectations. ■ May 2015 Supply & Demand Chain Executive 21

final thoughts

Shake Well Before Opening Maximizing the benefits of the Kraft/Heinz merger By Brian Lindenmeyer

he announcement caused quite a stir in the food and beverage industry: Kraft Foods and H.J. Heinz Co. are merging, according to an agreement reached by investors 3G Capital and Berkshire Hathaway. From re-imagined snack-food favorites to talking-head commentary, all eyes are on the two companies as the details begin to unfold about their pending union. Here’s what we know so far: ■■ Kraft experienced a 36 percent surge in its share price surrounding the announcement. ■■ The new entity, Kraft Heinz Company, will have a combined revenue of $28 billion and will become the fifth largest food company in the world. ■■ The companies are targeting savings of $1.5 billion in operational costs. But what does the merger mean for the food and beverage industry supply chain? How can the companies maximize the opportunities borne out of the merger? There is plenty to consider as the dust settles.

Supply Chain Management Best Practices With a merger this size, the integration and sharing of supply chain best practices are critical to short-

and long-term success. 3G Capital and Berkshire Hathaway evidently see real value in the combination of the companies. To achieve the most synergies, however, the companies must critically evaluate how to reduce costs while increasing service levels in their distribution environments.

The Right Technology Often in such mergers, one company’s technology subsumes the other; alternatively, system integration takes place—a custom approach when one technology does not surpass the other in functionality or quality. To achieve a merger return on investment (ROI), however, the companies should consider re-evaluating all their processes and finding the requisite solutions. Many times, there are better solutions available that meet the new needs and vision of the joint company, without making sacrifices trying to salvage old systems.

Maximizing Order Fulfillment The elimination of duplicative product lines and distribution channels creates opportunities for substantial savings on transportation and delivery costs. While it may take time to realize these efficiencies, the new company needs to determine the

most strategic locations for warehouses and distribution centers.

Envisioning a New Brand With their iconic brands, Kraft and Heinz must give careful thought to how their new brand will take root. Packaging decisions and marketing plans hang in the balance, and a wellthought-out master brand concept will be needed to retain customer loyalty in an industry in which consumer interests and preferences are increasingly shifting. The brand is strengthened by a strong supply chain and having the right supply chain management procedures to support an evolving brand from procurement to delivery will help convey a positive customer experience moving forward. From supply chain best practices to branding decisions affecting marketing to manufacturing and everything in between, the Kraft/Heinz merger is poised to be an important merger and acquisition (M&A) case study. It can be successful if the new company keeps the aforementioned considerations in mind as it plots its course. ■ Brian Lindenmeyer is a principle solutions consultant at IBS, a provider of ERP and WMS business applications. Contact him at brian.lindenmeyer@ibs. net.

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G.T. Nexus..............................................9 www.gtnexus.com

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Emirates SkyCargo.............................24 www.skycargo.com

Puridiom...............................................15 www.puridiom.com

TradeStone Software.........................17 www.tradestonesoftware.com

22 Supply & Demand Chain Executive May 2015

2015

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Risk Management

Procurement

Part II

Wednesday, June 24, 2015

Wednesday, August 19, 2015

Have You Thought Out Your Strategy?

Procurement and Your Suppliers

Risk is all around us, of course. To head it off, or to mitigate it once something happens—and it will—requires a well-thoughtout strategy with plans that are both proactive and nimble. How do you build that plan? What goes into it? And what keeps risk management professionals up at night?

Treat your important suppliers like partners. How do you work with them to develop future strategies, market and technology needs, and opportunities? What do you do to create a beneficial, long-term and profitable relationship?

Part III

Wednesday, October 21, 2015

Safeguarding Your Data Big Data! How do you identify what information you need to protect and how high a level of protection is required? What investments, both financial and in resources, are required? Sponsored by: