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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:

  • 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 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 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)

    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: