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For example, if I improve the cost structure in transportation, procurement, manufacturing and sales independently, what decision support framework decides the right trade-offs? In today’s architectures and functional metrics, value optimization does not exist. Align functional metrics to reliability to deliver value.
The DOE is still issuing large federal loans to startup companies, Novonix a synthetic graphite startup just received a $755 million loan to support its mission and reach its goal of producing 31,500 metric tonnes of synthetic graphite.
Now the writing follows the research. I mix the quantitative research with my observations and interviews, and the posts seem to roll from my fingers. If you would like to participate in a current research study, we would love your help and participation in the contract manufacturing study. (If It was a struggle!) Figure 3.
Functional Metrics and the Lack of Alignment to Strategy. Process-based companies continue to focus on manufacturing efficiency (OEE) and discrete on procurement (PPV) without designing the supply chain to balance transportation, manufacturing, and procurement to a balanced scorecard. The Lovefest with Shiny Objects. Guess what?
In this type of environment, traditional procurement software and manual processes are insufficient – and many procurement teams are looking to artificial intelligence (AI) for answers. Key Takeaways Understand the potential impact of AI – including Generative AI & AI Agents – in procurement.
Enterprise procurement teams face growing pressure to deliver strategic value – managing supplier risk, ensuring compliance, and supporting sustainability – all without sacrificing speed or control. This blog explores the most common challenges in digital procurement and the capabilities that matter most.
Traditionally, procurement has been a process weighed down by manual tasks, fragmented systems, and endless paperwork. Today, procurement is undergoing a transformation. While procurement teams have long worked to add strategic value, Artificial Intelligence (AI) amplifies their impact.
According to my research, top-performing supply chains possess three very different qualities. To help the reader, let’s start with definitions used in our research: Efficiency. In Table 1, from our research, I share ten tactics to consider. Reward teams for cross-functional metrics. Customer-Centric Supply Chain.
In my research, I find that the lack of alignment has a direct impact to value (operating margin and market price to book value). In the supply chain team analysis, note the 21% gap between procurement and manufacturing teams, the 35% gap between sales and operations and the 21% gap between finance and operations. Functional Metrics.
We recommend leveraging these workstreams, based on Gartner’s 4 Workstreams for Successful Implementation of Any Procurement Application to maximize the impact of your next large-scale procurement implementation: 1. Ivalua Spend Management Insights [ivory-search] Get Ready for Success!
It is exciting to have two years of research, nine months of writing, and four months of editing to become crisp, fresh pages. While Joe is trying to balance the feedback from Filipe and Frank, he is often asked to change his metric targets by his CFO named Lou. Achieving Balance in Metrics. The smell of ink is intoxicating.
Procurement and Supply Chain Management are essential functions that can help companies navigate these challenges, but they are often siloed and operate in separate departments. Their metrics are often misaligned as well – supply chain focuses on service and procurement focuses on the cost of acquiring materials and services.
In this area of research, I find that companies are like dogs chasing cars. At each company, there is a relationship between the metrics of growth, margin, inventory, customer service, and asset strategy. For the purpose of this article, I will use Return on Invested Capital (ROIC) as the proxy metric to discuss asset utilization.)
In research study after study, we see that the greatest challenge to achieving supply chain excellence is the understanding of the supply chain by the leadership team. Closing the gaps happens when there are aligned metrics, clarity of vision and aligned planning processes. Metrics Alignment. They lack cohesion.
Supply Chain Improvement is based on the work that we completed with an Arizona State University Operations Research team to determine the Supply Chain Index. Attending the conference was Alexia Howard, Senior Research Analyst – US Foods for Sanford C. Aligned Metrics. We find that this is true of too few companies.
Interview for Metrics That Matter. My kitchen table is piled high with interviews for the upcoming book, Metrics That Matter. The research is the fun part of the process. He is responsible for manufacturing, procurement, supply chain planning, logistics, quality, social responsibility and final product engineering.
In recent years, the overall state of Procurement has been bolstered by increased proficiency, expanding engagement, and a growing direct impact on operations. And they’re not the only ones—other department heads are also increasingly budget-conscious, creating a new opportunity to partner with procurement for better budget management.
Integration of corporate social responsibility metrics in planning. There is a lack of clarity on what drives value and metrics are functional. Inventory is often focused on as a singular metric, not as part of a complex supply chain system. Procurement. Procurement programs are implemented as standalone processes.
In August 2020 Gartner published this report “4 Tactics Procurement Can Use to Sustain Influence as Economic Conditions Improve” This blog summarizes the key points of the report which you can read in full, here. Procurement Teams Step-up. A Blueprint for Demonstrating the value of Strategic Procurement.
This landed me in front of the Vendor Review Board at Gartner to defend my research. <This In the height of the e-commerce craze, the marketplace offerings started with a focus on e-procurement. The widely-held view was that the e-procurement market would fuel the next generation of marketplace applications.
This week, at Supply Chain Insights LLC, we published our 11th report in the series titled Supply Chain Metrics That Matter. To write these reports, I work with Abby Mayer (twitter: @indexgirl ), Research Associate at Supply Chain Insights. When companies look at singular metrics (labor costs or inventory), they have moved backwards.
This blog highlights key strategies from these recent forums on sustainable procurement and practical tips to achieve impactful results. Procurement teams have a particularly important role in supporting companies’ sustainability goals. As such, procurement is the biggest lever companies can use to control greenhouse gas emissions.
So much so, that three years ago, I founded a research company to focus on understanding supply chain excellence. In our work, we tie research from quantitative and qualitative studies to financial results to drive new insights. When all functions are jointly focused on improving these metrics, then we can have one team.
Companies often push aside procurement compliance to focus on more pressing issues. No wonder—procurement often gets tedious and burdened with time-consuming processes. However, ignoring procurement compliance is like ignoring a ticking time bomb. Scroll down to find out: What is procurement compliance?
The class discovers the current blackholes of the supply chain (direct procurement and contract manufacturing. In the research, we find that deploying an outside-in model always beats an inside-out model, reducing process and data latency while improving the organization’s ability to make decisions at the speed of business.
While consultants know the answers (or believe they do), I believe my goal as a research analyst is to unearth new questions that should be asked (and answered together openly in the supply chain community) to improve value. Optimization engines to improve functional metric performance resulted in an exploding number of planners.
The research that I have conducted has enabled me to look at this holistically. When I left AMR Research I invested over 400K in building a database of supply chain financial ratios to correlate supply chain results. After three years of research, I have just refined the methodology to start to pull the trends. I am an old gal.
I am a big believer in procurement getting involved as early as possible in new product development based on all the market knowledge available. The worst-case scenario is product engineering developing a new product, selecting a supplier and then telling procurement to get on with negotiation.
In this volatile world, efficient procurement led by a CFO is not the answer. The low Return on Invested Capital (ROIC) and the growth below the industry average comes from the lack of network design and organizational alignment between new product development, manufacturing, and procurement. What is the issue? Conclusion.
Supply chain management typically does not fit very well with procurement, which is a challenge at the best of times, and can be a disaster in difficult times. It is now a matter of planning the procurement system and the supply management system outside-in and then look at the true demand to minimize the latency.
The Approach to Effective Freight Procurement by LSCMS Shippers’ Council Container shipping procurement faces a multitude of challenges shaped by global events, industry shifts, environmental mandates, and technological advancements. At the heart of it all, an effective procurement strategy remains paramount.
PO Collaboration involves close coordination with suppliers to procure materials based on order specifications, tracking delivery timelines, and aligning production schedules to meet customer delivery expectations. Make to Order: Here, products are manufactured based on specific customer orders.
Logistics Procurement – Performance Management by LSCMS Shippers’ Council Shortly after the outset of COVID, in early 2020, supply chains have been disrupted across the globe. Freight procurement is the mainstay of any supply chain professional but price is not the be-all and end-all.
In the research conducted by Supply Chain Insights , only 35% of the respondents rated their S&OP process as effective or extremely effective in 2019 compared to 65% for the same in 2016. A close alignment between Procurement and Supply Chain can also yield several very interesting use cases that will help turbocharge your business.
While CPI is normally used within project management and earned value analysis, it has significant application and importance within supply chain contexts, particularly in procurement, logistics and warehousing. According the research paper by Winanda et. The research paper by Winanda et. A CPI of 0.83
However, based on the research for the book Bricks Matter , I now sadly know that only one of these statements is true. I love the process of research. I have discovered the truth through the research for Bricks Matter. I also believe that it is because the organization is not incented to manage cash-to-cash metrics.
What does this mean for the operations and supply chain management (OSCM) research community? Once again, only the following OSCM journals were classified in category 4*: Journal of Operations Management , Management Science and Operations Research. This is good news for both logistics and procurement scholars.
To deal with the new challenges in managing and planning the supply chain , the procurement department is one of the functions that should look at changing. It is no longer sufficient for procurement to focus just on supplier costs, placing orders and ensuring goods are received. The situation changes with a larger number of suppliers.
According to McKinsey & Company, procurement accounts for 50% to 80% of a company’s cost base. That’s why organizations zero in on strategies to achieve procurement cost reduction. The key thing to remember is that cost reduction in procurement isn’t just about slashing expenses.
Our research shows that the projects failed to deliver value in 75% of companies.) The primary investments are in networks of limited capabilities based on EDI, and indirect procurement spend management. Traditional planning taxonomies focus on the optimization of functional metrics. Can we supercharge this? I think maybe.
A Peerless Research Group (PRG) report indicated that up to 44 percent of supply chain entities do not actively have plans in pursuing or using a transportation management system (TMS), such as the Cerasis Rater. Approximately 54 percent of companies actively run metrics on inbound freight, but these metrics may be lacking.
My search for truth led me to research. What is research? This thing called research in the supply chain market has many arms and legs. In academia, research focuses on the citation of past work. Juried (review by peers), the academic research process is slow and deliberate. The issue?
Snow fell last night as I worked on my last Supply Chain Metrics That Matter report. The concept of the Effective Frontier is that best in class companies align functional metrics to balance growth, cost, inventory and Return on Invested Capital (ROIC) performance while balancing customer service metrics. The Effective Frontier.
Before I started doing this research, I believed procurement and manufacturing were aligned. While this is the case in 50% of the organizations, there are many organizations with large alignment gaps between finance/operations and procurement/manufacturing. I was wrong. Executing a strategy requires closing these gaps.
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