Sourcing and Categories Content

Commodities Roundup: LME Nickel, Auto Sales Down in China and Oil Price Sliding

Chinese demand

For the buyers and category managers out there, especially those of you deep in the weeds of buying and managing commodities, here’s a quick rundown of news and thoughts from particular commodity markets. From price movements to policy decisions, we scour the landscape for what matters. This week: Surcharges fall on LME nickel and stainless steel, auto sales stall in China and oil prices drop after a peak in September.

Focus on Supply Risk Management Can Aid Supplier Relationships, State of Flux Reports

supplier management

Positioning supplier relationship management (SRM) programs as a way to ensure broader supply risk management is an untapped opportunity for businesses looking to address sustainability challenges, according to a recent State of Flux report.

As we’ve reported on the “Sustainable SRM: Nurturing Growth in a New Climate” report from State of Flux, sustainability is becoming a greater consideration when it comes to supplier relationships, due to increasing demand from consumers for ethical products and pressure from governments and investors to consider environmental factors in production. The report highlights a number of challenges facing organizations as they integrate sustainability into their procurement goals, including buy-in up and down the organization, proper segmentation of suppliers and others.

While setting up a proper governance structure, getting buy-in throughout the entire organization and deepening relationships with suppliers takes time, companies can also assess their level of SRM, determine how they manage risk, evaluate their staff’s skills and resources, and ensure their technology is working for them.

Disrupting the Source-to-Contract Cycle: Putting Contract Management at the Start of Sourcing

contract

The sequential source-to-contract cycle is an accurate representation of how most procurement organizations identify and select suppliers. But it’s not necessarily the best way to approach this process. The typical sourcing cycle begins by searching for and evaluating suppliers on two key criteria: capability and price. Yet evaluating suppliers on these criteria alone does not provide a complete picture of whether that company can and should win the business. For many reasons, contract management should not be considered a final step in the sourcing process. Instead, procurement should include contract compliance at the beginning of the cycle, defining it as an essential reason alongside capability and price.

Study: Conflict gold from Africa may be in U.S. markets, passing through major companies

An October 2018 study released by a watchdog group that focuses on Africa has highlighted concerns that gold mined from conflict areas in the Democratic Republic of Congo (DRC) is making its way into international markets and becoming integrated in the supply chains of major U.S. companies. Documents reviewed and interviews carried out by The Sentry, a team of policy experts and financial auditors co-founded by George Clooney, raise concerns that the corporate network controlled by Belgian tycoon Alain Goetz, director at the Belgian gold refinery Tony Goetz N.V., has refined illegally smuggled conflict gold from eastern DRC at the African Gold Refinery (AGR) in Uganda and subsequently exported it through a series of companies to the U.S. and Europe. The study lists companies like Amazon, General Electric and Sony as possibly being ones that conflict gold may have been sold to.

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Can the New NAFTA Fix the Low Milk Price Problem in the U.S.?

diary cow deaths

Since the start of 2017, U.S. milk prices have declined 27%. Concerns over international trade and an oversupply of milk have put downward pressure on prices. Global trade tensions have slowed demand for U.S. exports, and a weakened Euro has stimulated demand for European dairy instead. Meanwhile, milk production has been increasing, driven by favorable weather and pasture conditions, and continuous improvement in farming methods. This is a concern for U.S. dairy farmers whose margins and profits have been squeezed by low prices. However, in light of the recent renegotiation of the NAFTA deal, is there a ray of light for the U.S. dairy industry?

The Freelance Frontier: How the Future of Independent Work is Happening Now

On May 15, we will be joining the Freelance Frontier webinar to contribute our own perspective on emerging, alternative sourcing channels and ecosystems for independent-freelance contract workers.The webinar will also feature three young, innovative solution providers — IC PreCheck, Bunker and Genesys Talent — that have started their journeys across the Freelance Frontier.

In addition to developing their own digitally enabled solutions, these providers have chosen to partner and configure themselves as part of an ecosystem that can bring together organizations and independent-freelance workers in an efficient, fast, compliant and mutually beneficial way. In the webinar, the providers will discuss their own solutions as well as how they work together.

Ask Spend Matters: Is a Group Purchasing Organization (GPO) Right for Me?

A reader recently wrote in with a question about how to find group purchasing organizations (GPOs) or purchasing consortia. This individual is a U.S.-based sourcing manager at Heidelberg, a multinational company that provides equipment and services for the print media industry. The reader told us that his company is thinking about bidding out for copiers next year, and he became interested in looking into GPOs after hearing about them at a local ISM meeting. However, a casual internet search for GPOs yielded no shortage of results.

Is Strategic Sourcing the Best Route to Smarter Bunker Procurement?

Spend Matters welcomes this guest post from Gaurav Singh, consultant at GEP.

Since the internet became commercially popular in the early 2000s, companies have made attempts to change the way the market trades bunkers. We’ve come a long way since 2000. Now we’re used to conducting transactions online in our everyday lives and have seen the rise of the “digital ship.” But although shipping was expected to be among the first industries to embrace technology, it has ended up as the last one to adopt new ways of doing business.

Cutting BigLaw Down to Size: New Alternatives for Legal Services Procurement (Part 3)

The dramatically changing legal services industry discussed in Part 1 and Part 2 of this series ultimately provides both challenges and exciting opportunities within legal services procurement. Alternative legal services providers (ALSPs), a main focus of this series, are just one component of these changes and still an emerging one in legal services procurement strategies and practice priorities. Growth in the corporate use of ALSPs, however, is expected.

Building Supply Market Intelligence: Which Data Sources are the Best?

Often, it’s all about how quickly one can digest something. No, I’m not talking about Joey Chestnut’s eating-champ prowess. I’m talking about market intelligence. In a procurement professional’s day-to-day, that sentiment has certainly become more widespread than ever. In fact, with time at a premium, the majority of procurement pros — from junior buyers all the way up to CPOs — are faced with this issue every day. However, it can pay dividends to approach supply market intelligence in a strategic way.

Centralized, Decentralized or Hybrid Sourcing Structure: How Do We Decide?

Today’s Ask Spend Matters question came from Piyush Shah, a PhD student of supply chain management at Arizona State University: “Centralized, decentralized or hybrid sourcing structure? How do we decide?” This is a classic question and one that has sparked decades of passionate debate. Proponents of centralization point to the potential for higher savings. Defenders of decentralization argue that regional procurement teams can bring about better supplier relationships.

The easy answer is “It depends” or “A hybrid of the two.” But what does a hybrid structure look like? And how do factors like purchasing category, industry and stakeholders play into the assessment?

State of Risk 2017: Procurement Needs to Be More Proactive About Supply Chain Risk Management

risk

That procurement is shedding its origins as a back-office function is old news. As organizations become more advanced, their role in the overall company is evolving into a more strategic one compared with its tactical past. And a crucial component of this strategic transformation is taking responsibility for mitigating supplier and supply chain risk. But how many procurement organizations actually have a comprehensive risk management strategy in place? RapidRatings and ProcureCon Indirect East teamed up to conduct a risk-focused benchmark survey of 88 procurement executives, the results of which are published in a report titled “The State of Risk.”