Future of Sourcing - Business Process https://futureofsourcing.com/topic/business-process en Innovations in Digitization: Municipality of Dubai https://futureofsourcing.com/innovations-in-digitization-municipality-of-dubai <div class="field field-name-field-image field-type-image field-label-hidden"><div class="field-items"><div class="field-item even" rel="og:image rdfs:seeAlso" resource="https://futureofsourcing.com/sites/default/files/articles/fos-announcement-video_fos-site_hero_Innovations-in-Digitization.jpg"><a href="https://futureofsourcing.com/sites/default/files/articles/fos-announcement-video_fos-site_hero_Innovations-in-Digitization.jpg" title="Innovations in Digitization: Municipality of Dubai" class="colorbox" rel="gallery-node-2239-293HxXjtnVA"><img typeof="foaf:Image" src="https://futureofsourcing.com/sites/default/files/styles/juicebox_medium/public/articles/fos-announcement-video_fos-site_hero_Innovations-in-Digitization.jpg?itok=7C4yEmeS" width="624" height="325" alt="Innovations in Digitization: Municipality of Dubai" title="" /></a></div></div></div><div class="field field-name-field-intro field-type-text-long field-label-hidden"><div class="field-items"><div class="field-item even"> <p><em><strong>This October, the&nbsp;<a href="https://futureofsourcingawards.com/?__hstc=215510152.344406f4865c40604cf6029be7e958e0.1543422516683.1570835886974.1570842947555.661&amp;__hssc=215510152.2.1570842947555&amp;__hsfp=847670889">Future of Sourcing Awards</a>&nbsp;will celebrate organizations and individuals that have shown innovation, leadership and transformation in categories that are critical to the sourcing industry. Interviews with the finalists provide helpful insight about their projects, the problem they sought to solve and the impact to their organizations.</strong></em></p> </div></div></div><div class="field field-name-body field-type-text-with-summary field-label-hidden"><div class="field-items"><div class="field-item even" property="content:encoded"> <div> <h3><em>Can you outline why your team embarked on this project and the problem that needed to be solved?</em></h3> </div> <div> <div> <div>Determining &nbsp;the &nbsp;Area &nbsp;of &nbsp;this &nbsp;Project &nbsp;came &nbsp;from &nbsp;highlighting &nbsp;crucial &nbsp;dilemma &nbsp;in executing &nbsp;procurement, &nbsp;analyzing &nbsp;bids, &nbsp;evaluating &nbsp;bids &nbsp;and &nbsp;issue &nbsp;service &nbsp;contracts through &nbsp;transforming &nbsp;day-to-day &nbsp;operations &nbsp;from &nbsp;manual &nbsp;works &nbsp;to &nbsp;best-adopted technology &nbsp;and &nbsp;systems &nbsp;used &nbsp;in &nbsp;procurement &nbsp;fields. &nbsp;Furthermore, &nbsp;the &nbsp;needs &nbsp;of &nbsp;this particular project was abstracted from different business units&rsquo; in Dubai Municipality reviews and feedbacks, employees&rsquo; suggestions to improve the daily work and make it easier &nbsp;and &nbsp;simple &nbsp;for &nbsp;them &nbsp;in &nbsp;order &nbsp;to &nbsp;increase &nbsp;their &nbsp;productivities &nbsp;in &nbsp;completing contracts on a daily basis as much as they can. Most compelling evidence of the need of this project that the number of service Contracts approved for 2018 is estimated 97 &nbsp;Contracts &nbsp;completed &nbsp;out &nbsp;of &nbsp;320 &nbsp;contracts &nbsp;request &nbsp;received &nbsp;(including &nbsp;Expense contracts &nbsp;Revenue &nbsp;contracts &nbsp;and &nbsp;others &nbsp;) &nbsp;for &nbsp;the &nbsp;value &nbsp;of &nbsp;more &nbsp;than &nbsp;+800 &nbsp;million dirhams. &nbsp;Comparing &nbsp;the &nbsp;results &nbsp;at &nbsp;the &nbsp;end &nbsp;of &nbsp;the &nbsp;project, &nbsp;the &nbsp;section &nbsp;received &nbsp;380 contracts requests with a 100% completion and under process. &nbsp;Adding to that, the need &nbsp;of &nbsp;this &nbsp;project &nbsp;was &nbsp;not &nbsp;to &nbsp;increase &nbsp;the &nbsp;number &nbsp;of &nbsp;tender &nbsp;officers, &nbsp;but &nbsp;to reengineer the procurement processes, eliminate the non-added value processes and transform the procurement &nbsp;processes into an integrated approach using integrated systems. Therefore, we successfully accelerated the procurement cycle time from 210 days &nbsp;to &nbsp;32 &nbsp;days &nbsp;by &nbsp;implementing &nbsp;best &nbsp;practices &nbsp;in &nbsp;the &nbsp;field &nbsp;of &nbsp;procurement &nbsp;and technology used.&nbsp;</div> <div>&nbsp;</div> <div>Another key point to highlight was the need to transform the procurement committee from physical meetings to online in order to ensure faster, governed committee and reduce the time spent by suppliers standing at DM corridors.Moreover, &nbsp;digital &nbsp;transformation of &nbsp;contracts &nbsp;will &nbsp;result &nbsp;on &nbsp;saving and securing &nbsp;the information and details of tenders in the system rather than saving it manually in files.&nbsp;</div> <div>&nbsp;</div> </div> </div> <div> <h3><em>How were things done originally and what was the inspiration to innovate the process?</em></h3> </div> <div> <div> <div>There &nbsp;was &nbsp;a &nbsp;huge &nbsp;waste &nbsp;of &nbsp;time, &nbsp;efforts &nbsp;and &nbsp;costs &nbsp;in &nbsp;procurement &nbsp;process. &nbsp;Likewise, stakeholders -Suppliers, business units, contract officers, finance departments etc -were not satisfied -overall satisfaction rate was 65%-with the procurement performance-210 days in average &nbsp; for a single procurement cycle-due &nbsp;to delays and weak response. This &nbsp;project &nbsp;brought &nbsp; &nbsp;dramatic &nbsp;improvements to the &nbsp;procurement process at Dubai municipality, through providing innovative solutions to complex problems and challenges and ensuring best possible outcomes for procurement performances.</div> <div>&nbsp;</div> <div>The &nbsp;innovation &nbsp;in &nbsp;this &nbsp;project &nbsp;is &nbsp;the &nbsp;size &nbsp;of &nbsp;changes &nbsp;that &nbsp;occurred &nbsp;in &nbsp;the &nbsp;procurement functions &nbsp;in &nbsp;DM, &nbsp;which &nbsp;we &nbsp;believed &nbsp;to &nbsp;be &nbsp;centered &nbsp;on &nbsp;providing &nbsp;solutions &nbsp;to &nbsp;complex problems &nbsp; and &nbsp; to &nbsp; ensure &nbsp; best &nbsp; possible &nbsp; outcomes &nbsp; by &nbsp; the &nbsp; effective &nbsp; procurement performances. The innovation areas the project touched are:</div> <div>&nbsp;</div> <div>Our project innovation was not about services or money. It was about people, ideas, and leadership. Now we have a better understanding of the unmet needs of our customers, and better targeting of those needs by resolving problems, improving value, and capturing enhancing outcomes.</div> <div>&nbsp;</div> <div>A simplified approach &nbsp;we crafted &nbsp;was &nbsp;the trademark of innovative solutions in DM, by implementing more than &nbsp;33 improvement &nbsp;practices and 4 best practices to &nbsp;make &nbsp;the &nbsp;use procurement meet business objectives, &nbsp;with clear timely &nbsp;and effective processes.</div> <div>&nbsp;</div> <div>The procurement culture in DM changed because of &nbsp;enabling innovation in procurement. The &nbsp;culture &nbsp;that &nbsp;encourages &nbsp;innovation &nbsp;and &nbsp;technology &nbsp;solutions &nbsp;to &nbsp;happen, &nbsp;it &nbsp;heavily relied &nbsp;on the creation of data warehouse and value technical excellence, technologies and systems we used, and focus and understanding of external customers, and internal client&rsquo;s needs. We had a better markets behave in different contexts. Therefore, it allowed us a better use the whole &nbsp;procurement &nbsp;cycle -from strategic planning to contract management.</div> <div>&nbsp;</div> </div> <div>&nbsp;</div> </div> <div> <h3><em>What KPIs did you use to measure success for this project? (For example: performance, customer satisfaction, revenue, sales or relevant financial gains?)</em></h3> <div> <div>Since &nbsp;initiating &nbsp;the &nbsp;planning &nbsp;of &nbsp;this &nbsp;project &nbsp;and &nbsp;preparing &nbsp;the road &nbsp;map &nbsp;for &nbsp;its implementation. The &nbsp;management &nbsp;of &nbsp;performance &nbsp;was &nbsp;one &nbsp;of &nbsp;the &nbsp;most &nbsp;critical success &nbsp; &nbsp;factor &nbsp;of &nbsp; &nbsp;our &nbsp;project, &nbsp;and &nbsp;managing &nbsp;these &nbsp;indicators &nbsp;according &nbsp;to &nbsp;a &nbsp;appropriated &nbsp;approach that &nbsp;helped in achieving the desired goals. The team has carefully defined the scope of the change as well as identified the critical success factors associated with the objectives.There were many of these elements on different dimensions, including:</div> <div>&nbsp;</div> <div><strong>Financial Target:</strong></div> <ul> <li>Achieving financial savings and effectiveness in contracting procedures</li> <li>Reducing wastes in operations &amp; processes</li> <li>Reducing procurement budget value</li> </ul> <div>&nbsp;</div> <div><strong>Non-Financial Target:</strong></div> <ul> <li>Accelerate service contracts processes cycle time</li> <li>Raise satisfaction rate</li> <li>Increase productivity</li> <li>Effectiveness &amp; efficiency in day-to-day operations</li> <li>Ensuring adoption of Governance framework</li> <li>Adopting new procurement culture</li> <li>Improving skills &amp; knowledge of Tender Officers</li> <li>Improve Customer Experience</li> </ul> </div> <div>&nbsp;</div> <div> <h3><em>How do you plan to ensure that the new model remains relevant and adapts to the future needs of the market?</em></h3> <div style="font-size: 13.008px;"> <div> <div>Dubai &nbsp;Municipality &nbsp;seeks &nbsp;opportunities &nbsp;to &nbsp;address &nbsp;any &nbsp;future &nbsp;gaps &nbsp;in &nbsp;procurement effectiveness, operational efficiency or sustainability. It is no longer business as usual for procurement. The scale and speed of transformation requires &nbsp; a continuous improvement strategy &nbsp;to &nbsp;address &nbsp;market &nbsp;disruption &nbsp;and &nbsp;to &nbsp;drive &nbsp;competitiveness &nbsp;and &nbsp;growth. &nbsp; &nbsp;We &nbsp; gathered &nbsp;various &nbsp;ideas &nbsp;and &nbsp;best &nbsp;practices &nbsp;during benchmarking &nbsp; &nbsp;phases &nbsp;so &nbsp;we &nbsp;have grouped those remaining ideas and best practices in different projects managed in order to support Dubai Municipality strategic plan. We have learned a many lessons from this practice &nbsp;and &nbsp;one &nbsp;of &nbsp;the &nbsp;most &nbsp;important &nbsp;lesson &nbsp;we &nbsp;learned &nbsp;is &nbsp;that &nbsp;reengineering &nbsp;and redesigning &nbsp;processes &nbsp;is &nbsp;a &nbsp;delicate &nbsp;mission, &nbsp;not &nbsp;an &nbsp;easy &nbsp;one, &nbsp;and &nbsp;it &nbsp;required &nbsp;effective actions and participation by stakeholders. Also, conducting in-depth studies helped us to &nbsp;understand the &nbsp;problem better and to &nbsp;formulate successful &nbsp;solutions &nbsp;and &nbsp;remarkable outcomes.</div> <div>&nbsp;</div> <div>Future &nbsp;improvements &nbsp;goals &nbsp;and &nbsp;plans: &nbsp;We &nbsp;have &nbsp;also &nbsp;designed &nbsp;strategic &nbsp;plan &nbsp;for procurement department for the coming years based on different levels of impact (little impact, moderate impact, significant impact and game changer) on procurement functions in &nbsp;order &nbsp;to &nbsp;sustain &nbsp;the &nbsp;achievement, &nbsp;competitiveness &nbsp;and &nbsp;growth. &nbsp;Therefore, &nbsp;our continues improvement &nbsp;plan was built on different future objectives with specific targets, such &nbsp;as &nbsp;: &nbsp;aligning &nbsp; &nbsp;procurement &nbsp;with &nbsp; &nbsp;core &nbsp;Dubai &nbsp;municipality&rsquo;s &nbsp; &nbsp; &nbsp;strategies, institutionalizing &nbsp; &nbsp;the &nbsp; &nbsp;implemented &nbsp;practice &nbsp; &nbsp;ideas, &nbsp;procedures, &nbsp;and &nbsp;policies &nbsp;, &nbsp;Enable training and capacity building, develop solid goals and strategies for driving and delivering improvement and establishing ongoing measurement processes to monitor and measure the &nbsp;strategic &nbsp; &nbsp;procurement &nbsp;performance. &nbsp;An &nbsp;overview &nbsp;of &nbsp; &nbsp;the &nbsp;procurement &nbsp;strategic &nbsp;&amp; sustainable plan.</div> <div>&nbsp;</div> </div> <div>&nbsp;</div> </div> <div> <h3><em>What advice do you have for those who may want to implement this innovative approach in their own organizations?</em></h3> <p>The revolution of technologies in the world of communication and information constitutes one &nbsp;of &nbsp;the &nbsp;prominent &nbsp;titles &nbsp;of the current &nbsp;historical &nbsp;stage &nbsp;of &nbsp;human &nbsp;history &nbsp;due &nbsp;to &nbsp;the massive spread of the use of the Internet. This has led to the development of the concept of &nbsp;electronic &nbsp;contracting &nbsp;through &nbsp;the &nbsp;use &nbsp;of &nbsp;electronic &nbsp;means &nbsp;via &nbsp;the &nbsp;Internet &nbsp;and technology. Which calls for&nbsp;<span style="font-size: 13.008px; font-weight: normal;">chang &nbsp;the concept of existing traditional &nbsp;procedures &nbsp;into &nbsp;dynamic, &nbsp;self-access procedures that allow frequent digital interactions and frictional dynamics to build deeper relationships &nbsp;with &nbsp;its &nbsp;internal &nbsp;and &nbsp;external &nbsp;customers than ever before, and to meet customer needs the moment they arise -and sometimes sooner.&nbsp;</span></p> <p>So, the golden advice for everyone who wants to make those changes is &nbsp;a preparation of &nbsp;strategic &nbsp;roadmap &nbsp;to &nbsp;improve &nbsp;procurement &nbsp; &nbsp;procedures, &nbsp;in &nbsp;order &nbsp;to &nbsp;achieve &nbsp;a &nbsp;broader participation in the procurement and supply operations and work on different dimensions with &nbsp;the &nbsp;aim &nbsp;of &nbsp;identifying &nbsp;weaknesses &nbsp;in &nbsp;the &nbsp;current &nbsp;procedures, &nbsp;and &nbsp;suggesting &nbsp;an operational &nbsp; strategy &nbsp; that is feasible and capable of raising efficiency by using transformational technologies.</p> <div style="font-size: 13.008px;"> <div>&nbsp;</div> </div> <div style="font-size: 13.008px;">&nbsp;</div> <div style="font-size: 13.008px;"> <div style="font-size: 13.008px;"> <h3><em>With innovations in digitization occurring very quickly in our industry, how do you see this specific project further transforming in the future?</em></h3> <div style="font-size: 13.008px;">Now, the &nbsp;procurement &nbsp;department &nbsp;can &nbsp;work &nbsp;according &nbsp;to &nbsp;the &nbsp;proactive &nbsp;service strategy goal. The goal can be achieved by presenting an innovative model that reflects the &nbsp;leadership &nbsp;and &nbsp;excellence &nbsp;of &nbsp;the &nbsp;government &nbsp;work &nbsp;system &nbsp;in &nbsp;the &nbsp;Dubai &nbsp;by providing proactive services and enhancing its sustainability, based on the aspirations of &nbsp;customers, &nbsp;to &nbsp;complete &nbsp;their &nbsp;transactions &nbsp;easily &nbsp;and &nbsp;quickly. &nbsp;This &nbsp;can &nbsp;be &nbsp;done through &nbsp;a &nbsp;prior &nbsp;understanding &nbsp;of &nbsp;customer &nbsp;needs, &nbsp;and &nbsp;provision &nbsp;of &nbsp;the &nbsp;necessary enablers to achieve this goal and start proactive procurement services phase at Dubai Municipality through block chain technology.</div> </div> </div> </div> </div> </div> <p>&nbsp;</p> </div></div></div><div class="field field-name-field-tags field-type-taxonomy-term-reference field-label-inline clearfix"><div class="field-label">Tags:&nbsp;</div><div class="field-items"><div class="field-item even" rel="dc:subject"><a href="/tags/outsourcing" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Outsourcing</a></div><div class="field-item odd" rel="dc:subject"><a href="/tags/innovation" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Innovation</a></div><div class="field-item even" rel="dc:subject"><a href="/tags/future-of-sourcing-awards" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Future of Sourcing Awards</a></div><div class="field-item odd" rel="dc:subject"><a href="/tags/awards" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Awards</a></div></div></div><div class="field field-name-field-addthis field-type-addthis field-label-hidden"><div class="field-items"><div class="field-item even"><div class="addthis_toolbox addthis_default_style " addthis:title="Innovations in Digitization: Municipality of Dubai - Future of Sourcing" addthis:url="https://futureofsourcing.com/innovations-in-digitization-municipality-of-dubai"><a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_linkedin"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_facebook"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_twitter"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_googleplus"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_pinterest_share"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_reddit"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_email"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_print"></a> </div> </div></div></div><div class="field field-name-field-region field-type-taxonomy-term-reference field-label-inline clearfix"><div class="field-label">Region:&nbsp;</div><div class="field-items"><div class="field-item even"><a href="/regions/global" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Global</a></div></div></div> Fri, 14 Oct 2022 15:24:25 +0000 Future of Sourcing Awards 2239 at https://futureofsourcing.com https://futureofsourcing.com/innovations-in-digitization-municipality-of-dubai#comments Don’t Outsource Your Processes, Outsource Your Results https://futureofsourcing.com/dont-outsource-your-processes-outsource-your-results <div class="field field-name-field-image field-type-image field-label-hidden"><div class="field-items"><div class="field-item even" rel="og:image rdfs:seeAlso" resource="https://futureofsourcing.com/sites/default/files/articles/Don%E2%80%99t%20Outsource%20Your%20Processes%2C%20Outsource%20Your%20Results.jpg"><a href="https://futureofsourcing.com/sites/default/files/articles/Don%E2%80%99t%20Outsource%20Your%20Processes%2C%20Outsource%20Your%20Results.jpg" title="Achieve the ultimate win-win scenario with your suppliers, drive out cost and increase value." class="colorbox" rel="gallery-node-2102-293HxXjtnVA"><img typeof="foaf:Image" src="https://futureofsourcing.com/sites/default/files/styles/juicebox_medium/public/articles/Don%E2%80%99t%20Outsource%20Your%20Processes%2C%20Outsource%20Your%20Results.jpg?itok=95gtHCnH" width="624" height="325" alt="Achieve the ultimate win-win scenario with your suppliers, drive out cost and increase value." title="" /></a></div></div></div><div class="field field-name-field-related-news field-type-entityreference field-label-above"><div class="field-label">Related news:&nbsp;</div><div class="field-items"><div class="field-item even"><a href="/prahalad-and-hamel-corporations-and-the-core-competency-concept">Prahalad and Hamel: Corporations and the Core Competency Concept</a></div></div></div><div class="field field-name-body field-type-text-with-summary field-label-hidden"><div class="field-items"><div class="field-item even" property="content:encoded"> <p>Having sold more than $980 million in outsourcing deals in my career and having played a key role in structuring more than $22 billion in outsourcing deals across every industry and virtually every process, it seems the more things change, the more they remain the same.&nbsp;</p> <p>I won&rsquo;t add to the dizzying array of endless terms Business Process Outsourcing (BPO) companies develop to differentiate their offerings, but in this article I&rsquo;d like to discuss some of the commonalities across all of them.</p> <h2>Introducing Value-Based Pricing</h2> <p>I started my career selling large ITO deals.&nbsp;But there was a certain sense that if we did not fix the core process that IT was supporting, we could be doing the wrong thing exceptionally well, or maybe just your mess for less.</p> <p>My employer was one of the pioneers of the BPO industry long before Forrester Research coined the term &ldquo;outsourcing,&rdquo; which has been in place for the last 30+ years, and long before India appeared on the scene back in the early 2000s. In the early 1990s, this company was instrumental in helping Cadillac win the Malcolm Baldridge Award for Quality through its BPO agreement, wherein they managed the Cadillac Roadside Assistance Program.&nbsp;</p> <p>With their win and success at the City of Chicago Parking Enforcement Authority, they ushered in the era of Value-Based Pricing, a sort of gain-sharing on steroids. To this day, this BPO contract is a textbook example of how to structure the mythical &ldquo;win-win&rdquo; contract for amazing results.&nbsp;</p> <p>The initial RFP was for newer, faster mainframes. The solution was an entirely new approach that netted the city hundreds of millions in unrealized ticket revenues, and for them, they were paid handsomely but appropriately for their role in developing and delivering the innovative solution. Kudos to the City of Chicago. They found the Holy Grail: Outsource for the result and let the provider figure out the best solution.</p> <h2>Contract Leveling</h2> <p>But that assumes one knows what the real problem is that needs to be solved.&nbsp;Usually, RFPs are about contracting for activities.&nbsp;These activities are reduced to the most basic component parts and auctioned like commodities.&nbsp;This is a process known as &ldquo;contract leveling&rdquo; in which the buyer assumes the suppliers are basically all the same and cannot add value other than expense reduction,&nbsp;so they have them do the pricing limbo dance.&nbsp; In quality circles, this is referred to as a &ldquo;sub-optimized process.&rdquo;&nbsp;</p> <p>I was SVP of Sales for the Outsourcing Division of the company that developed the RPO market as we know it today. My second day on the job, we received an RFP from the Card Services Division of a leading financial institution that wanted to reduce their cost of recruiting.</p> <p>Instead of having three suppliers of recruiting/staffing services on annual contracts to keep their call centers staffed, they wanted to award one contract to one supplier for three years with a declining tier structure on the cost per hire in exchange for the increased aggregated volume.&nbsp;</p> <p>Had we bid to the specs of the RFP, we would not have been helping them to address the REAL problem, which was attrition. Their call center attrition rate was 120% annually.&nbsp;</p> <p>As they structured the RFP, the chosen BPO supplier would have been paid no matter how many employees had to be hired, just less per head (so the supplier would make it up with volume).&nbsp;Metaphorically, the supplier would just have been pouring cheaper wine into a leaking wine cask.&nbsp;</p> <p>I proposed a different approach.&nbsp;At their current level of attrition, they would need to hire six people every five years to keep the seats filled.&nbsp;We would instead contract to fix the attrition problem (which would also lower a lot of other related costs).&nbsp;We proposed to set the attrition at three butts in the seat every five years. If we could do better than that, we pocketed the difference.&nbsp;If more than three were required in a given year, we were at risk to eat the cost differential.&nbsp;By sharing both the risk and reward, and focusing on solving the real problem, we avoided the &ldquo;your mess for less&rdquo; scenario.</p> <h2>Outsourcing for Results</h2> <p>Outsourcing for results, not merely outsourcing the process, is not as simple as it may seem.&nbsp;Many factors conspire to undermine the effort.&nbsp;Buyers need to be fully open and trusting with the bidders.&nbsp;Suppliers need to be willing to incur meaningful financial risk and share the pain with the buyer if problems arise.&nbsp;</p> <p>Compensation plans are a major inhibitor.&nbsp;Procurement is often compensated by how much cost they can drive out of the supplier compared to the current state.&nbsp;Yet, a value-based contract has many other parts to it that goes beyond a simple side-by-side comparison.</p> <h2>Reduce Operational Costs</h2> <p>Conversely, the people managing an existing customer process are compensated, as a cost center, to drive down costs.&nbsp;The supplier&rsquo;s account manager is also measured by his ability to keep costs down while meeting SLAs to increase profitability.&nbsp;Senior executives are often compensated on more broad metrics, and for this reason, this is typically where such deals need to be orchestrated for that very reason.</p> <p>As the godfather of quality W. Edwards Deming postulated, &ldquo;People will do what they are compensated to do.&rdquo; If you want to achieve the ultimate win-win scenario with your suppliers, drive out cost and increase value, then outsourcing for breakthrough results is not a process that should be delegated too far down.&nbsp;</p> </div></div></div><div class="field field-name-field-tags field-type-taxonomy-term-reference field-label-inline clearfix"><div class="field-label">Tags:&nbsp;</div><div class="field-items"><div class="field-item even" rel="dc:subject"><a href="/tags/business-process-outsourcing-bpo" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Business Process Outsourcing (BPO)</a></div><div class="field-item odd" rel="dc:subject"><a href="/tags/request-for-proposal-rfp" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Request for Proposal (RFP)</a></div><div class="field-item even" rel="dc:subject"><a href="/tags/datamark" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">DATAMARK</a></div></div></div><div class="field field-name-field-addthis field-type-addthis field-label-hidden"><div class="field-items"><div class="field-item even"><div class="addthis_toolbox addthis_default_style " addthis:title="Don&amp;rsquo;t Outsource Your Processes, Outsource Your Results - Future of Sourcing" addthis:url="https://futureofsourcing.com/dont-outsource-your-processes-outsource-your-results"><a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_linkedin"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_facebook"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_twitter"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_googleplus"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_pinterest_share"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_reddit"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_email"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_print"></a> </div> </div></div></div><div class="field field-name-field-region field-type-taxonomy-term-reference field-label-inline clearfix"><div class="field-label">Region:&nbsp;</div><div class="field-items"><div class="field-item even"><a href="/regions/global" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Global</a></div></div></div> Mon, 03 Jan 2022 17:00:00 +0000 Thom Mead 2102 at https://futureofsourcing.com https://futureofsourcing.com/dont-outsource-your-processes-outsource-your-results#comments How to Gain Agility in Your Purchasing and Contracting Processes https://futureofsourcing.com/how-to-gain-agility-in-your-purchasing-and-contracting-processes <div class="field field-name-field-image field-type-image field-label-hidden"><div class="field-items"><div class="field-item even" rel="og:image rdfs:seeAlso" resource="https://futureofsourcing.com/sites/default/files/articles/How%20to%20Gain%20Agility%20in%20Your%20Purchasing%20and%20Contracting%20Processes.png"><a href="https://futureofsourcing.com/sites/default/files/articles/How%20to%20Gain%20Agility%20in%20Your%20Purchasing%20and%20Contracting%20Processes.png" title="How to Gain Agility in Your Purchasing and Contracting Processes" class="colorbox" rel="gallery-node-2053-293HxXjtnVA"><img typeof="foaf:Image" src="https://futureofsourcing.com/sites/default/files/styles/juicebox_medium/public/articles/How%20to%20Gain%20Agility%20in%20Your%20Purchasing%20and%20Contracting%20Processes.png?itok=z1jnZTO_" width="624" height="325" alt="How to Gain Agility in Your Purchasing and Contracting Processes" title="" /></a></div></div></div><div class="field field-name-field-intro field-type-text-long field-label-hidden"><div class="field-items"><div class="field-item even"> <h1>How to Gain Agility in Your Purchasing and Contracting Processes</h1> </div></div></div><div class="field field-name-field-related-news field-type-entityreference field-label-above"><div class="field-label">Related news:&nbsp;</div><div class="field-items"><div class="field-item even"><a href="/5-challenges-faced-by-sourcing-professionals-and-how-to-solve-them">5 Challenges Faced by Sourcing Professionals and How to Solve Them</a></div></div></div><div class="field field-name-body field-type-text-with-summary field-label-hidden"><div class="field-items"><div class="field-item even" property="content:encoded"> <p>In today&rsquo;s business world, time isn&rsquo;t just money. Time is everything. To achieve a competitive advantage, procurement teams must complete their business objectives with more agility than ever.</p> <p>But what does more agility in purchasing and contracting practices actually mean? How can a business adapt its existing operations to keep pace with industry leaders and mitigate high-level risk without sacrificing quality, compliance or reliability?</p> <p>As today&rsquo;s business world changes rapidly, CFOs and procurement leaders must consider market volatility when it comes to their relationship with suppliers.</p> <p>So, to remain competitive as <a href="https://www.mckinsey.com/business-functions/operations/our-insights/jump-starting-resilient-and-reimagined-operations" target="_blank">the marketplace continues to evolve</a>, procurement teams must focus on more than cost savings as their core function. Of course, cost reduction remains an important business objective. But in today&rsquo;s fast-paced, technology-driven economy, purchasing leaders and procurement specialists must now develop the skills and tools needed to produce agile sourcing practices in more dynamic ways.</p> <p>Below are some of the key considerations for building more agile purchasing and contracting processes to help you achieve your top business objectives.</p> <h2>Why Agility Matters</h2> <p>CFOs and CPOs may understand the crucial role procurement plays in the overall financial health of their businesses, but they should also consider how purchasing and contracting agility can increase revenue and improve the ability to respond more rapidly to market changes.</p> <p>Moving beyond forecasting, <a href="https://www.industryweek.com/supply-chain/procurement/article/21962743/the-importance-of-procurement-agility-how-to-turn-volatility-into-a-competitive-advantage" target="_blank">agile procurement</a> means using processes that reduce the time it takes to reap the benefits of your business objectives. Agility also means being able to respond immediately to important changes with supplier relationships to keep a competitive advantage over rival companies.</p> <p>For procurement professionals, agility provides meaningful benefits in the following ways:</p> <ul> <li><strong>Seeking out and identifying potential risks,</strong> <strong>with the</strong> <strong>ability to react</strong>. When suppliers become too risky, agility allows a business to leverage alternative suppliers to mitigate the risk.</li> <li><strong>Using time to your advantage</strong> by acting faster than competitors and maximizing potential revenue through supplier relationships.</li> <li><strong>Thinking of business value first and foremost</strong>. There&rsquo;s more than one way to deliver value. Think of purchasing in terms of the ultimate potential value, without getting bogged down in the technical details.</li> <li><strong>Building supplier relationships with trust. </strong>High levels of trust and communication with suppliers will give procurement departments a better chance at maintaining agility. Strong-arming suppliers for discounts and making them jump through unnecessary hoops can only harm agility.</li> <li><strong>Considering value in terms of time. </strong>What is the cost of delaying a new product? Extra rounds of contract negotiation with suppliers can lead to delayed revenue and potentially falling behind the competition. The increased risk of waiting should be carefully weighed against any delayed revenue.</li> </ul> <h2>How Contract Lifecycle Management (CLM) Software Boosts Business Agility</h2> <p>To compete in today&rsquo;s volatile marketplace, procurement departments must not only be cost effective, but do so with built-in resilience and agility. Yet many businesses focus only on cost and risk, falling behind without the right tools at their disposal.</p> <p><a href="https://www.agiloft.com/blog/contract-management-best-practices/" target="_blank">Contract Lifecycle Management (CLM) software</a> allows businesses to streamline procurement supplier contract workflows and use multiple purchasing modes depending on the nature of the business requirement. This bolsters agility to better meet customer expectations. CLM allows the procurement function to act as sourcing advisors&mdash;helping you avoid roadblocks to progress against mission-critical business objectives.</p> <p>Here are three key areas where CLM can boost agility.</p> <h3>1. Supplier Information Management</h3> <p>A supplier information management system is critical for a business to achieve a high level of agility. Leading CLM platforms include supplier information management to streamline workflows, speed up the onboarding process, and give suppliers and buyers access to their progress and status in the contract management process.</p> <p>This allows you to simplify the onboarding process for contracts where agility outweighs traditional contracting needs, without sacrificing adherence to corporate policies and standards. You can easily supplement and update a supplier record as the relationship grows over time.</p> <h3>2. Sourcing</h3> <p>CLM greatly aids with agility during the sourcing process as long as the CLM platform is robust enough to handle strategically planned projects where suppliers must be vetted for certification, proper procedure and other qualifications. In some industries, sourcing can take months to complete, with multiple rounds of activities like RFIs, RFPs or RFQs. A CLM that offers agility in this process can be a crucial tool to make things simpler and faster while being able to respond to risk and deliver a competitive advantage.</p> <p>CLM software can also allow stakeholders to initiate and run RFIs and RFPs for specific projects. This reduces the possibility of procurement becoming a roadblock and further streamlines agile sourcing. Agile CLM can help procurement maintain oversight with configurable sourcing templates, processes, and permissions to ensure only the right people access these capabilities with a high level of transparency and accountability.</p> <h3>3. Contract Management</h3> <p>Agility in contract management is where the right CLM software tool can make all the difference. Some cutting-edge technology and innovations are often only available through small companies or startups, and CLM software&rsquo;s different modes can help achieve agility for these and other contract types.</p> <p>CLM offers contract templates that fit the needs of any contract type. Templates can be used for traditional contracts where negotiation may take weeks or months or can offer more agile templates when agreements may be more standardized and offer the end-user the opportunity to select alternative clauses to reduce the negotiation timeline.</p> <p>Legal departments can use CLM to create streamlined approval workflows and manage permissions and access to these processes and templates, reducing risk and improving contract turnaround times. Additionally, sales teams can accelerate deals with an agile CLM system that gives full control and visibility to the contract lifecycle, which boosts sales revenue and removes red tape.</p> <h2>Why a No-Code CLM Is the Most Agile CLM for Your Company</h2> <p>Though &ldquo;agile&rdquo; commonly refers to a particular software development methodology, an agile CLM removes the need to write software at all. In doing so, your CLM allows you to help your business perform better without becoming a coding or programming expert.</p> <h3>Agile Technology</h3> <p>No-code CLM gives you the flexibility to deeply customize your platform across your entire system solely through the admin browser. From key APIs and integrations to machine learning, process and data modelling, reporting, interface and communications, regulatory compliance, and security, truly adaptable CLM is built to integrate with a wide array of other tools and systems to ensure quality and efficiency.</p> <h3>Agile Implementation</h3> <p>The only thing that never changes is that things are always changing. Your business will scale, your industry will shift and new technologies will emerge. To turn challenges into opportunities, you need to be able to enact universal changes across your system with swiftness and precision.</p> <p>Agile CLM supports rapid prototyping and iterative design driven by user feedback, allowing you to refine requirements based on real experience, not just specifications. Your design iterations can be accomplished within a matter of days or even hours using agile CLM, which will allow you to reach a finished product faster.</p> <h3>Agile Evolution</h3> <p>Custom coding accounts for 80% of deployment time for traditional IT projects. Once the original developers are gone, custom code is even more expensive to maintain.</p> <p>No-code platforms mean you aren&rsquo;t locked into custom code. And some platforms offer free admin training that empowers your IT or contract management staff to update the system anytime without incurring consulting costs.</p> <h2>Agility Provides Meaningful Benefits</h2> <p>With clearer contract processes and clearly defined roles, you can increase your business velocity without compromising quality or risking noncompliance. Decentralized decision-making allows users outside of legal and procurement to participate in sourcing and automated contracting while keeping procurement specialists in an advisory role.</p> <p>Agile CLM gives your company the flexible edge it needs to thrive in the future. When your business needs to adopt new technology or find alternative supply sources on the fly, CLM lets you accomplish your immediate and long-term goals.</p> </div></div></div><div class="field field-name-field-tags field-type-taxonomy-term-reference field-label-inline clearfix"><div class="field-label">Tags:&nbsp;</div><div class="field-items"><div class="field-item even" rel="dc:subject"><a href="/tags/agility" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Agility</a></div><div class="field-item odd" rel="dc:subject"><a href="/tags/contract-lifecycle-management-clm" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Contract Lifecycle Management (CLM)</a></div><div class="field-item even" rel="dc:subject"><a href="/tags/agiloft" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Agiloft</a></div><div class="field-item odd" rel="dc:subject"><a href="/tags/supplier-information-management" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Supplier Information Management</a></div></div></div><div class="field field-name-field-addthis field-type-addthis field-label-hidden"><div class="field-items"><div class="field-item even"><div class="addthis_toolbox addthis_default_style " addthis:title="How to Gain Agility in Your Purchasing and Contracting Processes - Future of Sourcing" addthis:url="https://futureofsourcing.com/how-to-gain-agility-in-your-purchasing-and-contracting-processes"><a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_linkedin"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_facebook"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_twitter"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_googleplus"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_pinterest_share"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_reddit"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_email"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_print"></a> </div> </div></div></div><div class="field field-name-field-region field-type-taxonomy-term-reference field-label-inline clearfix"><div class="field-label">Region:&nbsp;</div><div class="field-items"><div class="field-item even"><a href="/regions/global" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Global</a></div></div></div> Fri, 17 Sep 2021 02:00:00 +0000 Andy Wishart 2053 at https://futureofsourcing.com https://futureofsourcing.com/how-to-gain-agility-in-your-purchasing-and-contracting-processes#comments 6 Areas Where Businesses Frequently Overspend and How to Address Them https://futureofsourcing.com/6-areas-where-businesses-frequently-overspend-and-how-to-address-them <div class="field field-name-field-image field-type-image field-label-hidden"><div class="field-items"><div class="field-item even" rel="og:image rdfs:seeAlso" resource="https://futureofsourcing.com/sites/default/files/articles/Key%20Areas%20of%20Business%20Overspending%20Explained.png"><a href="https://futureofsourcing.com/sites/default/files/articles/Key%20Areas%20of%20Business%20Overspending%20Explained.png" title="Key Areas of Business Overspending Explained" class="colorbox" rel="gallery-node-2050-293HxXjtnVA"><img typeof="foaf:Image" src="https://futureofsourcing.com/sites/default/files/styles/juicebox_medium/public/articles/Key%20Areas%20of%20Business%20Overspending%20Explained.png?itok=1OrGWIok" width="624" height="325" alt="Key Areas of Business Overspending Explained" title="" /></a></div></div></div><div class="field field-name-field-intro field-type-text-long field-label-hidden"><div class="field-items"><div class="field-item even"> <h1>6 Areas Where Businesses Frequently Overspend and How to Address Them</h1> </div></div></div><div class="field field-name-body field-type-text-with-summary field-label-hidden"><div class="field-items"><div class="field-item even" property="content:encoded"> <p>Any smart procurement executive knows that you need to spend money to make it. You might find people who believe you can start and operate your business without any significant investments. But that approach can lead to challenges of its own.&nbsp;</p> <p>The bottom line is this. If you own, manage, or operate a business, you&rsquo;ll always have expenses to handle. With that said, many companies spend significantly more than they need to on recurring costs. These spending patterns often fall into the same key areas. While it&rsquo;s true that you&rsquo;ll need to spend money during your company&rsquo;s development phase, having unnecessary expenses chipping away at your bottom lines is undesirable. Thankfully, this is avoidable.&nbsp;</p> <p>These are the six areas businesses most frequently overspend, and how you can address this expenditure.</p> <h2>1.&nbsp; Physical Office Space</h2> <p>Any business with a physical presence needs office space. But the costs of renting offices can be significant, especially if you are in a central metropolitan location. Many entrepreneurs also hire more office space than they realistically need.&nbsp;</p> <p>Moving out of your pricey office rental and into a co-working space could be <a href="https://www.uschamber.com/co/start/strategy/benefits-of-coworking-spaces" target="_blank">a workable alternative</a>. You and your team will still have all the resources required to work efficiently. Plus, like-minded professionals with whom you can collaborate, network, and brainstorm freely will surround you.&nbsp;</p> <p>Another viable option is to gather a remote workforce who can work and collaborate from home. You can still have meetings and brainstorming sessions at a physical location. However, allowing your employees to work remotely can save you huge sums on both direct and <a href="https://futureofsourcing.com/leaving-indirect-spend-unmanaged-means-dollars-left-on-the-table" target="_blank">indirect costs</a>.</p> <p><a href="https://www.mckinsey.com/business-functions/organization/our-insights/reimagining-the-office-and-work-life-after-covid-19" target="_blank">According to McKinsey</a>, 62% of employed Americans have been working from home since the COVID-19 crisis took hold, compared to just 25% before mid-2020. The same study found that 80% of the people surveyed noted that they enjoyed working from home, while 41% reported additional productivity because of the high degree of flexibility offered by remote work opportunities.</p> <p>Not only can reducing your physical office space benefit your organization&rsquo;s finances, but it has the potential to benefit the mental and physical wellbeing and productivity of your workforce.</p> <h2>2. Untracked Essential Costs</h2> <p>It might surprise you to learn how many modern businesses still track their expenses on paper&mdash;if at all. Alternatively, many leave the task to their accountants, who will keep their finances in order but may not put in the extra work to reduce redundant costs.&nbsp;</p> <p>Tracking your essential costs is absolutely crucial if you want to identify areas of overspending within your business&rsquo;s operations. Investing in <a href="https://www.nytimes.com/paidpost/sap-concur/can-ai-release-us-from-the-nightmare-of-expense-reports.html" target="_blank">an AI-based expense tracing program</a> can accurately pinpoint your company&rsquo;s areas of over-expenditure and recommend targeted remedies without the risk of human error. Research now shows that predictive and prescriptive deep learning programs can outperform traditional expense tracking methods by <a href="https://www.mckinsey.com/~/media/McKinsey/Business%20Functions/McKinsey%20Analytics/Our%20Insights/An%20executives%20guide%20to%20AI/An-executives-guide-to-AI.ashx" target="_blank">achieving a 41% reduction in data classification errors</a>.</p> <p>Business experts also recommend using analytics software to identify which of your marketing efforts are contributing the most to your bottom lines. <a href="https://futureofsourcing.com/node/834" target="_blank">Cloud-based analytical solutions</a> can help you to improve your digital and land-based marketing activities in a way that best supports your income streams.</p> <h2>3. Suppliers</h2> <p>Technology may run the world in the modern age, but people still determine the prices that businesses charge for their goods and services. That means you can influence the costs levied by your suppliers, at least to a certain degree.&nbsp;</p> <p>If you have several suppliers, speak to them about striking deals that will keep your costs as low as possible. You can do this when you first partner, or once you have proven yourself to be a trustworthy, regular client. If they are not willing to offer you discounts or reduce your costs, you can always look for more flexible options.</p> <p>Supply chain visibility is another crucial prerequisite for effective cost reduction and enhanced ROI. Consistent, clean and connected data is needed to fuel supply chain and procurement operations and to achieve a clear view of services, suppliers, materials and products.</p> <p>Aligning your systems and supply chains with your suppliers will enable you to make informed decisions and to find new ways to reduce costs associated with production outputs. Considering that Deloitte notes that<a href="https://www2.deloitte.com/content/dam/insights/us/articles/2019_CPO-Survey/6267_CPO-Survey-Collection-Page/DI_CPO-Survey.pdf" target="_blank"> 60% of CPOs</a> have named poor data quality and standardization as their largest procurement barrier, ensuring supply chain visibility may be a non-negotiable step in your quest for expense reduction.</p> <h2>4. Employee Turnover</h2> <p>Employees are a vital resource for every business, and they come at a relative cost. However, hiring new staff members to replace employees who&#39;ve left is notably more expensive than retaining your current staff force.&nbsp;</p> <p>You can <a href="https://futureofsourcing.com/three-ways-to-deal-with-workforce-retention-issues-in-todays-hyper-uncertain-labor-market" target="_blank">increase your company&rsquo;s employee retention rates</a> and reduce turnover in several ways. Start by offering good salaries with benefits, and develop a healthy and supportive company culture where they can work effectively, and gain autonomy over day-to-day tasks.</p> <p>Assigning accountability at the correct level can be an effective approach to reducing staff turnover and ensuring that cost-reduction measures stick, according to <a href="https://www.mckinsey.com/business-functions/strategy-and-corporate-finance/our-insights/five-ways-cfos-can-make-cost-cuts-stick" target="_blank">research from McKinsey</a>. Many organizations have been able to redefine the ways they collect, report and utilize information to ensure that costs are broken out according to their producing organizational units. This approach assists managers to identify units and sales organizations rapidly that are responsible for significant cost increases, and to come up with a plan of action to control future expenses.</p> <p>Assigning cost accountability also ensures that the staff managing those costs are not the employees closest to the decision-making process. This helps to ensure that cost management does not hurt your business.</p> <h2>5. Financial Mismanagement</h2> <p>Your business might not have a finance expert on board just yet. This is not an inherent problem, but it&rsquo;s important to collaborate with someone who understands proper business financial management. This will avoid you losing money due to miscalculated, or poorly informed decisions.&nbsp;</p> <p>Companies who lack financial controls such as spending limits, vendor selection, and check authorization protocols can experience devastating uncontrolled spending. Many top executives kick off their cost reduction efforts with a broad, unspecified set of cost reduction targets, but unfortunately, this &ldquo;managing to a number&rdquo; approach often leads to delayed essential investments, shifting costs between accounting categories, and cutting costs in ways that directly undermine revenue generation.</p> <p>In this way, financial management techniques that are implemented with the best of intentions can actually lead to the same degree of financial mismanagement that was slated for addressing in the first place.</p> <p>A more sustainable approach would involve changing the way your people view costs by implementing policies and protocols that model desired behavior. Simple, actionable examples include eliminating catering for in-person meetings and using video-conferencing tools for conferences instead of requiring staff to travel to the office.</p> <p>Ultimately, your financial adviser should have a comprehensive understanding of how to review and interpret your fiscal statements and year-on-year performance, strategically minimize tax liabilities, apply reinvestment strategies to your business, and sustainably raise capital.&nbsp;</p> <h2>6. Annual Planning</h2> <p>Businesses who don&rsquo;t plan adequately for the year ahead are left open to the whims of their owners and staff forces. Sometimes this can lead to implementing creative and innovative solutions&mdash;but mostly, it simply leads to excessive expenditure that could have been avoided with proper planning.</p> <p>It&rsquo;s essential to have a business plan in place to organize your team, operational strategies, and resources. Having a plan is particularly crucial if your business needs to reach certain milestones on a tight budget, or if you need to <a href="https://www.freshbooks.com/tools/business-loan-calculator" target="_blank">calculate how big a loan you&rsquo;ll need</a> before approaching investors.&nbsp;</p> <p>A detailed plan can help your company to map and streamline its operations across human resources, finance, marketing, and admin, while setting an appropriate budget for each department. Without these plans in place, it may force you and your staff to make costly choices that fail to advance your business towards its long-term goals.</p> <p>Research shows that <a href="https://www.nap.edu/read/11344/chapter/5" target="_blank">benchmarks do matter</a> when it comes to reaching expenditure reduction objectives. Internal benchmarks for travel, catering and resource expenses, among others, can enable managers to compare performances across units and identify tangible differences and trade-offs that may not be aligned with your organization&rsquo;s strategies.</p> <p>Internal benchmarks are easy to access and provide valuable insights that can be used to create comprehensive and accurate annual plans for over expenditure reduction.</p> <h2>The Bottom Line</h2> <p>There are two main factors that can land a business in financial hot water: insufficient incoming cash flow, or expenditure rates that are just too high. When both of these factors come into play at the same time, the results can be catastrophic.</p> <p>Luckily, you can reduce overspending in your business and potentially improve cash flow by planning ahead, using purpose-built software to track your expenses, and by retaining your valuable skilled employees. You can also speak to your suppliers about securing favorable rates and slim down your physical office space rental costs, either by moving onto smaller premises, by sharing a co-working space with other professionals or by allowing your team to work remotely.</p> </div></div></div><div class="field field-name-field-addthis field-type-addthis field-label-hidden"><div class="field-items"><div class="field-item even"><div class="addthis_toolbox addthis_default_style " addthis:title="6 Areas Where Businesses Frequently Overspend and How to Address Them - Future of Sourcing" addthis:url="https://futureofsourcing.com/6-areas-where-businesses-frequently-overspend-and-how-to-address-them"><a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_linkedin"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_facebook"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_twitter"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_googleplus"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_pinterest_share"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_reddit"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_email"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_print"></a> </div> </div></div></div><div class="field field-name-field-region field-type-taxonomy-term-reference field-label-inline clearfix"><div class="field-label">Region:&nbsp;</div><div class="field-items"><div class="field-item even"><a href="/regions/global" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Global</a></div></div></div> Fri, 10 Sep 2021 02:00:00 +0000 Jill Goodwin 2050 at https://futureofsourcing.com https://futureofsourcing.com/6-areas-where-businesses-frequently-overspend-and-how-to-address-them#comments Why Work At Home Agent Processes Must Be Secure https://futureofsourcing.com/why-work-at-home-agent-processes-must-be-secure <div class="field field-name-field-image field-type-image field-label-hidden"><div class="field-items"><div class="field-item even" rel="og:image rdfs:seeAlso" resource="https://futureofsourcing.com/sites/default/files/articles/Why%20Work%20At%20Home%20Agent%20Processes%20Must%20Be%20Secure.png"><a href="https://futureofsourcing.com/sites/default/files/articles/Why%20Work%20At%20Home%20Agent%20Processes%20Must%20Be%20Secure.png" title="Why Work At Home Agent Processes Must Be Secure" class="colorbox" rel="gallery-node-2046-293HxXjtnVA"><img typeof="foaf:Image" src="https://futureofsourcing.com/sites/default/files/styles/juicebox_medium/public/articles/Why%20Work%20At%20Home%20Agent%20Processes%20Must%20Be%20Secure.png?itok=1luxh4qP" width="624" height="325" alt="Why Work At Home Agent Processes Must Be Secure" title="" /></a></div></div></div><div class="field field-name-field-intro field-type-text-long field-label-hidden"><div class="field-items"><div class="field-item even"> <h1>Why Work At Home Agent Processes Must Be Secure</h1> </div></div></div><div class="field field-name-field-related-news field-type-entityreference field-label-above"><div class="field-label">Related news:&nbsp;</div><div class="field-items"><div class="field-item even"><a href="/could-puerto-rico-become-the-next-big-tech-haven">Could Puerto Rico Become the Next Big Tech Haven?</a></div></div></div><div class="field field-name-body field-type-text-with-summary field-label-hidden"><div class="field-items"><div class="field-item even" property="content:encoded"> <p>Since the onset of the pandemic, many office workers have spent more time working from home. In the BPO sector, this has meant finding workable, advanced technological solutions for our agents, something that is setting apart the leaders in the sector from the rest.</p> <p>But central to this procedural shift is the security element. With <a href="https://www.theguardian.com/technology/2021/jun/14/age-of-the-cyber-attack-us-digital-destabilization" target="_blank">stories</a> of even the most sophisticated and secure information systems being intercepted, cybersecurity is increasingly becoming the predominant building block to life in the new normal.</p> <p>Indeed, the security element goes much further than technology alone. Security must be built end-to-end, starting from profile selection down to customer experience design, connectivity, surveillance and workplace design.</p> <h2>Building Technical Capabilities into Networks and Digital Processes</h2> <p>Undoubtedly, a certain element of ensuring a sufficiently secure remote working ecosystem will include having the correct technical elements. End-to-end encryption is the highest level of data security for communications between two parties and vital for any interaction with two or more parties involved, one of the crucial elements in the outsourcing sector.</p> <p>Agents, final customers, and front and backend systems must be covered, and ensuring their data is protected from third-party interception is vital, so that the message only reaches those for whom it is intended. A large part of reducing the risk to customer data being intercepted lies in providing only the essential end customer data required to deliver the service, but guaranteeing it&rsquo;s enough not to take away from the good customer experience element. It is the fine tuning and the combination of these two elements that can allow a secure business to thrive.</p> <h2>Safeguarding Hardware in the Home</h2> <p>Other seemingly simpler safeguards should also be put in place. Double-factor authentication requires adding a unique code sent to a mobile phone device as an additional barrier to access the device, which may also include facial recognition or fingerprint authentication. Facial recognition can also be used to block a session after a certain amount of downtime. In this instance, if the agent&rsquo;s face is not recognized or detected at any given moment by the workstation&rsquo;s camera, the session is automatically blocked and the agent cannot reaccess the information system until they log in again.</p> <p>These measures prevent other family members or cohabitants from accessing sensitive information, and also avoids those mishaps or accidents that are sometimes inevitable in these working situations. Regardless of these integrated security measures, agents should ensure workstations are blocked or disabled after working hours and during breaks for heightened security.</p> <p>Implementing new infrastructure systems, such as virtual hubs, can help apply advanced across-the-board security features by allowing clients to have a global understanding of any function from a central point. By housing several business processes on one hub clients can have a global view of their operation at a click of a button, giving them a 360-degree view and ensuring that nothing slips through the net, allowing them to &nbsp;safeguard at an additional level.</p> <h2>Recruitment and Training</h2> <p>Being able to implement effective solutions relies on having the correct talent to do so. That goes without saying. And this means ensuring the recruitment of specialized professionals with the know-how and capabilities to scale large-size projects and carry out due-diligence exercises to guarantee that all bases are covered. Alternatively, providing the correct training to encourage in-house key workers with the potential to encompass the necessary roles will retain talent that otherwise might start looking for work elsewhere.&nbsp;&nbsp;</p> <p>But the training must also go beyond the IT department. It is crucial for business owners to take time to address the changes to new remote or hybrid working measures with their other employees. Advising and educating agents on best practices for working from home is just as important as installing the technology and equipment in the first place. Supervisors also play an essential role here given that they help provide service quality and secure agent engagement. Ensuring that they have the training and support they need to do this is vital.</p> <p>All of this may mean needing to adapt codes of conduct or introducing new materials to formalize these ways of working. In order to do so, a common approach set at the corporate level will ensure that these values become deeply rooted as a business-wide goal, establishing them as a corporate value in its own right.</p> <h2>Success for Security</h2> <p>Forward-looking companies are turning to new integrated solutions using multiple channels to cater to their customer experience needs. Customer experience has been thrust to the fore over the recent months and is therefore now more comparable from one provider to the next, meaning service providers need to have watertight processes and deliver an impeccable performance.</p> <p>BPO providers need to show their commitment to supporting their clients&rsquo; changing needs. By taking the time to understand these requirements and finding innovative, swift and effective solutions, they can prove both their effectiveness and productivity in the virtual workplace.</p> <p>And let&rsquo;s face it, one of the main challenges to a distributed workforce is encouraging agents to remain both engaged and productive during their shifts. Overcoming this task will require offering workers the means to make good use of idle time, providing them with the correct tools to make wise decisions when dealing with customers and empowering them by ensuring their KPIs are clear. All these factors can contribute not just to a happy agent, but one that is ultimately more likely to comply with security measures and be more productive while working remotely.</p> </div></div></div><div class="field field-name-field-tags field-type-taxonomy-term-reference field-label-inline clearfix"><div class="field-label">Tags:&nbsp;</div><div class="field-items"><div class="field-item even" rel="dc:subject"><a href="/tags/business-process-outsourcing-bpo" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Business Process Outsourcing (BPO)</a></div><div class="field-item odd" rel="dc:subject"><a href="/tags/call-center" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Call Center</a></div><div class="field-item even" rel="dc:subject"><a href="/tags/atento" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Atento</a></div><div class="field-item odd" rel="dc:subject"><a href="/tags/it-outsourcing" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">IT Outsourcing</a></div></div></div><div class="field field-name-field-addthis field-type-addthis field-label-hidden"><div class="field-items"><div class="field-item even"><div class="addthis_toolbox addthis_default_style " addthis:title="Why Work At Home Agent Processes Must Be Secure - Future of Sourcing" addthis:url="https://futureofsourcing.com/why-work-at-home-agent-processes-must-be-secure"><a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_linkedin"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_facebook"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_twitter"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_googleplus"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_pinterest_share"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_reddit"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_email"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_print"></a> </div> </div></div></div><div class="field field-name-field-region field-type-taxonomy-term-reference field-label-inline clearfix"><div class="field-label">Region:&nbsp;</div><div class="field-items"><div class="field-item even"><a href="/regions/latinamerica-caribbean" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Latin America/Caribbean</a></div></div></div> Thu, 02 Sep 2021 02:00:00 +0000 Carlos López-Abadía 2046 at https://futureofsourcing.com https://futureofsourcing.com/why-work-at-home-agent-processes-must-be-secure#comments Checking on Supplier Compliance in Challenging Times https://futureofsourcing.com/checking-on-supplier-compliance-in-challenging-times <div class="field field-name-field-image field-type-image field-label-hidden"><div class="field-items"><div class="field-item even" rel="og:image rdfs:seeAlso" resource="https://futureofsourcing.com/sites/default/files/articles/GettyImages-1273010021%20%281%29%20%281%29.jpg"><a href="https://futureofsourcing.com/sites/default/files/articles/GettyImages-1273010021%20%281%29%20%281%29.jpg" title="Procurement’s role within an organization has changed dramatically over the past few decades. " class="colorbox" rel="gallery-node-1881-293HxXjtnVA"><img typeof="foaf:Image" src="https://futureofsourcing.com/sites/default/files/styles/juicebox_medium/public/articles/GettyImages-1273010021%20%281%29%20%281%29.jpg?itok=fGyXUd8N" width="1024" height="683" alt="Procurement’s role within an organization has changed dramatically over the past few decades. " title="" /></a></div></div></div><div class="field field-name-field-intro field-type-text-long field-label-hidden"><div class="field-items"><div class="field-item even"> <h1>Checking on Supplier Compliance in Challenging Times</h1> </div></div></div><div class="field field-name-field-related-news field-type-entityreference field-label-above"><div class="field-label">Related news:&nbsp;</div><div class="field-items"><div class="field-item even"><a href="/meta-skills-what-are-they-and-how-are-they-relevant-to-the-procurement-function-of-the-future">Meta-Skills: What Are They and How Are They Relevant to the Procurement Function of the Future? </a></div></div></div><div class="field field-name-body field-type-text-with-summary field-label-hidden"><div class="field-items"><div class="field-item even" property="content:encoded"> <p>Procurement&rsquo;s role within an organization has changed dramatically over the past few decades.</p> <p>Once primarily considered a tactical function focused on pricing and inventory management, procurement has now taken on a much more strategic role. Pricing is still an essential part of the job, as is managing inventory; however, the role has expanded to include oversight of asset utilization, confirmation of supplier compliance, and provision of&nbsp;data and analytics-backed&nbsp;insights to senior management. Risk assessment has also become a major concern, which is now being tested as never before.</p> <p>We need diversity in the supply chain and COVID-19 is presenting unique challenges to fulfilling that goal. But what obstacles does the pandemic pose for procurement&rsquo;s regular oversight of the supply chain including shortages, regulatory compliance, forced or child labor, and any product-borne illnesses or defects? Conducting this oversight globally while working from home rather than in an office presents an additional set of challenges.</p> <p>Fortunately, the emergence of digital supply networks has enabled procurement professionals to perform their tasks anywhere they might be. Nonetheless, despite where one works, this significant crisis has proven that procurement must reconsider a number of long-standing beliefs and behaviors.</p> <h1>Considering Supply Chain Challenges</h1> <p>Regardless of the situation, procurement still needs to focus on the core issues of pricing, inventory management, contracts and advantageous terms. Yet, faced with &ldquo;black swan&rdquo; effects (an unpredictable global event with potentially severe consequences), the legacy linear procurement practice is no longer viable. We need to be more flexible than we may have been in the past and should build both resilience and agility into our supply chain.</p> <p>It is so easy to become complacent, and that can mean that when a catastrophe occurs, we are not prepared to react quickly.</p> <p>Digital supply networks help us address the many hurdles we face, both as part of the normal global supply chain and in unforeseen events, from pandemics to terrorism, to demand spikes to supplier bankruptcy, and more. This technology, which provides end-to-end visibility and enables collaboration, allows procurement to optimize the supply chain. Yet there are practices that still need to be undertaken. Procurement can never minimize the oversight role it carries when it comes to supplier compliance.</p> <h1>Supplier Relationships</h1> <p>There are few relationships more important for an organization&rsquo;s success than that between procurement and suppliers.</p> <p>Maintaining solid partnerships with suppliers does more than simply guarantee good service in good times; it also can give the buyer priority positioning when it comes to disruptions and shortages (think PPE, Lysol, antibacterial wipes and paper goods such as toilet paper).</p> <p>A healthy supplier-procurement relationship involves a high level of mutual transparency. When procurement has a strong understanding of the challenges and obstacles a supplier may encounter, educated decisions can be made regarding the relationship.</p> <p>By understanding potential challenges, procurement can modify upcoming order schedules, control internal demand and avoid the mad rush to find a substitute in the event of a shortcoming by the supplier. Likewise, it is vital for a supplier to understand their client/procurement challenges. For example, if a company&rsquo;s policy requires long lead times before placing an order, the supplier should know and understand these requirements to reduce the roadblocks this could cause for either party.</p> <p>It is also important to understand how your suppliers are set up to respond to disruptions. This is where a risk assessment comes into play. Risk assessments are essential for developing a supplier profile. That doesn&rsquo;t mean your supplier is necessarily doing anything wrong; it just may mean, through no fault of their own, they cannot meet your demand in times of a disruption.</p> <p>If the risk assessment discovers areas of concern, procurement has several options:</p> <ul> <li>Option 1:&nbsp;Remove the supplier and find a reasonable substitute with an improved risk rating</li> <li>Option 2:&nbsp;Collaborate with the supplier to accurately identify the cause of the risk and work to correct it</li> <li>Option 3:&nbsp;Create contingency plans for a disruption event, such as alternative supply chain routes and sources</li> </ul> <p>More on expansion later. The best results are typically derived from a combination of these options. Professionals may elect to keep a supplier with a high-risk score while pledging to reduce the impact a disruption could cause to the company. Alternatively, they could terminate relationships with any high-risk strategic suppliers.</p> <p>It is essential to identify the weak links in your supply chain. Although we are now in the midst of a crisis, this is a practice you should undertake when times are good&hellip;just to not be caught unawares the next time a crisis arises. This can lead to&hellip;</p> <h1>Supplier Expansion</h1> <p>Procurement usually focuses their greatest attention on tier 1 suppliers. However, due to the crisis, many companies are now exploring their relationships with tier 2 and tier 3 suppliers as well, with the intent of pushing more business their way.</p> <p>Besides their own supply base, procurement is looking to expand that base, both nearshore and offshore. That&rsquo;s a bit counter-intuitive to the direction procurement had been taking over the last five years when it prioritized consolidating the supply base, especially in the area of indirect spend.</p> <p>However, COVID-19 has shown that you can consolidate too much. On that same thought, there are suppliers that also have a highly diverse supply chain. Procurement should understand how their suppliers receive that supply. With many suppliers operating in several countries, each location will be impacted with a different level of severity. These suppliers with diverse supply chains may still prove to be high-performing partners during a pandemic.</p> <p>In the same sense, suppliers with limited supply chains and operations could be the most dangerous to rely on. Adding in new suppliers can put an extra burden on procurement, especially when it comes to compliance. The response should be&hellip;</p> <h1>Better and More Frequent Auditing</h1> <p>When evaluating new suppliers, procurement professionals research how those suppliers not only fulfill their obligations but also how they handle issues including fair labor practices, complying with government and industry regulations, and maintaining safe and clean workplaces. To illustrate the last point, one only has to remember how the Coronavirus impacted the produce and meat industries, shutting down processing plants throughout the U.S.</p> <p>During times of a pandemic, it is reasonable to assume there has been a loss of human capital in the workforce. Worldwide, unemployment rates rise and businesses are getting by with fewer employees. On the other end, there are businesses that can&rsquo;t fill their vacant positions due to population drops.</p> <p>Procurement must ensure suppliers are not violating any labor practices due to resource changes. It is vital to monitor news stories and business updates of each strategic supplier during the relationship and take action when concerns arise.</p> <p>To safeguard compliance, procurement must not think the task is completed once the negotiated contract is signed. Circumstances can and do change, especially when a supplier does not have the infrastructure, policy and processes in place to handle an emergency (again, think processing plants). This makes it increasingly important for procurement to perform ongoing audits of how its supply chain is performing.</p> <p>The pandemic has forced us to re-examine the way we do business; however, many of the changes we have made should become part of our normal business practices in good and challenging times.</p> </div></div></div><div class="field field-name-field-tags field-type-taxonomy-term-reference field-label-inline clearfix"><div class="field-label">Tags:&nbsp;</div><div class="field-items"><div class="field-item even" rel="dc:subject"><a href="/tags/supplier-relations" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Supplier Relations</a></div><div class="field-item odd" rel="dc:subject"><a href="/tags/supply-chain" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Supply Chain</a></div><div class="field-item even" rel="dc:subject"><a href="/tags/covid-19" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">COVID-19</a></div><div class="field-item odd" rel="dc:subject"><a href="/tags/digital-supply-networks" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">digital supply networks</a></div><div class="field-item even" rel="dc:subject"><a href="/tags/procurement" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Procurement</a></div><div class="field-item odd" rel="dc:subject"><a href="/tags/risk-assessment" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">risk assessment</a></div></div></div><div class="field field-name-field-addthis field-type-addthis field-label-hidden"><div class="field-items"><div class="field-item even"><div class="addthis_toolbox addthis_default_style " addthis:title="Checking on Supplier Compliance in Challenging Times - Future of Sourcing" addthis:url="https://futureofsourcing.com/checking-on-supplier-compliance-in-challenging-times"><a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_linkedin"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_facebook"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_twitter"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_googleplus"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_pinterest_share"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_reddit"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_email"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_print"></a> </div> </div></div></div><div class="field field-name-field-region field-type-taxonomy-term-reference field-label-inline clearfix"><div class="field-label">Region:&nbsp;</div><div class="field-items"><div class="field-item even"><a href="/regions/global" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Global</a></div></div></div> Thu, 19 Aug 2021 22:30:03 +0000 Brandon Hummons 1881 at https://futureofsourcing.com https://futureofsourcing.com/checking-on-supplier-compliance-in-challenging-times#comments Pursuing Data-driven Insights? Start With Your Supplier Data https://futureofsourcing.com/pursuing-data-driven-insights-start-with-your-supplier-data <div class="field field-name-field-image field-type-image field-label-hidden"><div class="field-items"><div class="field-item even" rel="og:image rdfs:seeAlso" resource="https://futureofsourcing.com/sites/default/files/articles/FoS%20Graphic%20%288%29%20%281%29.png"><a href="https://futureofsourcing.com/sites/default/files/articles/FoS%20Graphic%20%288%29%20%281%29.png" title="Supplier Data" class="colorbox" rel="gallery-node-1922-293HxXjtnVA"><img typeof="foaf:Image" src="https://futureofsourcing.com/sites/default/files/styles/juicebox_medium/public/articles/FoS%20Graphic%20%288%29%20%281%29.png?itok=hX_W6hKq" width="624" height="325" alt="Supplier Data" title="" /></a></div></div></div><div class="field field-name-field-intro field-type-text-long field-label-hidden"><div class="field-items"><div class="field-item even"> <h1>Pursuing Data-Driven Insights? Start With Your Supplier Data</h1> </div></div></div><div class="field field-name-field-related-news field-type-entityreference field-label-above"><div class="field-label">Related news:&nbsp;</div><div class="field-items"><div class="field-item even"><a href="/why-transparency-matters-to-us-all">Why Transparency Matters to Us All</a></div></div></div><div class="field field-name-body field-type-text-with-summary field-label-hidden"><div class="field-items"><div class="field-item even" property="content:encoded"> <p>For years, experts have <a href="https://hbr.org/2016/11/how-artificial-intelligence-will-redefine-management">urged business leaders</a> to prepare for the coming AI disruption. Realizing the amazing potential of these emerging technologies, <a href="https://tdwi.org/articles/2019/08/16/diq-all-ai-and-bi-data-preparation-tasks.aspx">they argued</a>, would require businesses to overhaul how they manage data. Yet with the economy booming, many found it easier to push tricky data questions into the future.</p> <p>Fast-forward to 2020. The COVID-19 pandemic and trade conflicts have upended entire business models. <a href="https://www.nytimes.com/2020/09/22/business/luxury-fashion-september-coronavirus.html">Across</a> <a href="https://www.mckinsey.com/business-functions/mckinsey-digital/our-insights/how-six-companies-are-using-technology-and-data-to-transform-themselves">industries</a>, the most resilient businesses are those with a strong handle on their data, using real-time information on consumer behavior and inventories to make strategic pivots. Investors have taken notice, as<a href="https://www.bloomberg.com/news/articles/2020-08-25/stock-market-warns-workers-that-they-re-the-problem-for-business?sref=GX0WPFvK"> research on the S&amp;P 500</a> shows stock prices are increasingly correlated with the value of &ldquo;intangible assets,&rdquo; such as proprietary data.&nbsp;</p> <p>In response, many companies are <a href="https://www.wsj.com/articles/cloud-startups-experience-wave-of-pandemic-fueled-investments-11601026201">fast-tracking</a>&nbsp;what had been long-term plans for digital transformations, hoping advanced data capabilities will secure their place in a technology-fueled economy. Yet many would be wise to first improve their data practices to ensure the fundamentals are in place for transformation success.</p> <h2>Data Management for (Enterprise) Beginners</h2> <p>To reform data quality, many businesses are turning to the <a href="https://www.industryarc.com/Research/Master-Data-Management-Market-Research-500874">growing</a> market for Master Data Management (MDM) solutions. MDM aims to improve uniformity, accuracy and governance of attributes relevant to an enterprise&rsquo;s stakeholders. Essentially, this means creating a master record for data on the critical aspects of a business. However, MDM only brings full benefits when rolled out across the entire enterprise &mdash; a potentially daunting prospect.</p> <p>A more accessible strategy would prioritize business functions that stand to gain the most from improved data standards, such as procurement. With Supplier MDM, a sub-discipline of MDM, companies can upgrade their supply network practices while providing a starting point for broader data management endeavors.</p> <p>By creating processes, establishing accountability and setting standards for data integrity, Supplier MDM creates a &ldquo;single source of truth&rdquo; for all essential supplier information. When done right, Supplier MDM can improve supply chain visibility and streamline reporting. Facilitating connections between data points also creates the conditions for successful implementation of new technology such as automation.</p> <h2>Verified Data at the Source</h2> <p>Traditionally, finding supplier data has often meant time-consuming manual searches, with results often undermined by language barriers, outdated database records, or human errors or bias. AI methods now use millions of data points to bring together up-to-date product data, financials, corporate and geographic news, corporate sustainability data, active certifications, etc. The overall result is that supplier management can now be sustained with optimal quality data at all times.</p> <h2>The Perils of Mismanaged Supplier Data</h2> <p>Why is supplier data so critical? In many cases, businesses underestimate the complexity that underlies seemingly basic information like addresses, contact information, bank details and certificates. Often, inaccurate and outdated records are held in various databases across multiple departments, with no clear ownership over either the data or the maintenance process. This results in flawed reporting, impaired analytics and lost trust with stakeholders.</p> <p>Even slight errors can lead to serious headaches. For example, misspelling a vendor name creates duplicate entries in a supplier database, making it difficult to assess spend analysis at a glance. At best, rectifying this mistake will require extra effort to consolidate the information. More worrisome is the possibility that leadership makes critical business decisions based on incorrect numbers &mdash; all because of a wrongly placed keystroke.</p> <p>Lack of coordination around data also leads to missed opportunities. Consider departments within an organization that use the same supplier on different contracts, instead of leveraging volumes for better pricing or payment terms. Innovative solutions to these communication problems face their own data hurdles; while there are AI tools that could flag such cost savings, they require correctly labeled data for proper analysis.</p> <h2>5 Steps to Effective Supplier Master Data Management</h2> <p>Clearly, the risks of poorly governed supplier data are severe and growing. How, then, can companies pilot successful Supplier MDM initiatives?</p> <h3>Build Your Team</h3> <p>Supplier MDM is not the sole province of procurement. As a process with touchpoints across the entire enterprise, it must be overseen by a cross-functional team of dedicated data stewards.</p> <p>These data stewards will set standards for quality and integrity at every stage of the supplier lifecycle from data entry to output, including setting uniform data fields and formats and establishing processes for reporting, updating and verification. Dedicated members of this team will also oversee supplier onboarding procedures, direct data maintenance approvals, and determine how to address irregularities or missing information.</p> <h3>Conduct a Self-Assessment</h3> <p>First, the data governance team should review current supplier management processes and assess how well they fit the organization&rsquo;s evolving needs. The team should document which metrics are being measured and how data is being recorded and used for reporting, especially for growing priorities like sustainability. From the beginning, it is critical to engage every domain that has a touchpoint with suppliers, like finance.</p> <h3>Prioritize Supplier Onboarding</h3> <p>The start of a new business relationship provides an opportunity to lay the groundwork for later success. This is due to the complex but routine work involved at this stage of the supplier lifecycle, including reviewing compliance practices, risks and certifications. Effective Supplier MDM streamlines these tasks by, for instance, pinpointing if the supplier requires a new setup or if there is an existing relationship elsewhere in the organization.</p> <p>Before any business line collects new supplier information, the request should be reviewed according to the data governance team&rsquo;s approval process, followed by another level of review before entry into enterprise resource planning, procure-to-pay or other systems.</p> <h3>Simplify Updates</h3> <p>Typically, various teams make ad hoc updates to internal records as soon as they hear of product or personnel turnovers or other supplier changes, without considering the downstream impacts. For this reason, control processes are a core component of a Supplier MDM structure. Designating responsibility to specific users from each function for their data records ensures the appropriate review occurs.</p> <p>The best Supplier MDM frameworks incorporate both internal and external reviews. This can be done by delegating accountability in vendor contracts or establishing dedicated data portals.</p> <h3>Deactivate, Never Delete</h3> <p>Disengaging with a partner is a natural part of doing business. Yet deleting a record can interrupt data flow to other stakeholders, such as hiding information on dashboards or removing data needed for audits. The supplier data process should involve multiple stakeholder approval levels before deactivation or access to internal portals is revoked. It is equally important to document why a relationship was terminated to inform any future due diligence.</p> <h2>Future-Proofing With Supplier Data</h2> <p>Supplier MDM is an ongoing process. As companies come to view their data as a core business asset, the data governance team will face complex questions around data governance and domain-specific issues like regulatory compliance. Once procurement data governance teams are up and running, they can support the rest of the organization&rsquo;s larger MDM platform. With experience under their belts, these leaders will be well-positioned to instill a culture of data awareness and openness to innovation across the whole organization.</p> <p>&nbsp;</p> </div></div></div><div class="field field-name-field-tags field-type-taxonomy-term-reference field-label-inline clearfix"><div class="field-label">Tags:&nbsp;</div><div class="field-items"><div class="field-item even" rel="dc:subject"><a href="/tags/supplier" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Supplier</a></div><div class="field-item odd" rel="dc:subject"><a href="/tags/data" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Data</a></div><div class="field-item even" rel="dc:subject"><a href="/tags/supplier-data" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">supplier data</a></div><div class="field-item odd" rel="dc:subject"><a href="/tags/procurement" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Procurement</a></div><div class="field-item even" rel="dc:subject"><a href="/tags/sourcing" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Sourcing</a></div><div class="field-item odd" rel="dc:subject"><a href="/tags/master-data-management" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Master Data Management</a></div></div></div><div class="field field-name-field-addthis field-type-addthis field-label-hidden"><div class="field-items"><div class="field-item even"><div class="addthis_toolbox addthis_default_style " addthis:title="Pursuing Data-driven Insights? Start With Your Supplier Data - Future of Sourcing" addthis:url="https://futureofsourcing.com/pursuing-data-driven-insights-start-with-your-supplier-data"><a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_linkedin"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_facebook"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_twitter"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_googleplus"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_pinterest_share"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_reddit"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_email"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_print"></a> </div> </div></div></div><div class="field field-name-field-region field-type-taxonomy-term-reference field-label-inline clearfix"><div class="field-label">Region:&nbsp;</div><div class="field-items"><div class="field-item even"><a href="/regions/global" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Global</a></div></div></div> Fri, 06 Aug 2021 02:00:00 +0000 Ophelia Otto 1922 at https://futureofsourcing.com https://futureofsourcing.com/pursuing-data-driven-insights-start-with-your-supplier-data#comments Benchmarks Versus Best Practices: A Case for Both https://futureofsourcing.com/benchmarks-versus-best-practices-a-case-for-both <div class="field field-name-field-image field-type-image field-label-hidden"><div class="field-items"><div class="field-item even" rel="og:image rdfs:seeAlso" resource="https://futureofsourcing.com/sites/default/files/articles/Copy%20of%20FoS%20Header%20Images%20%287%29.png"><a href="https://futureofsourcing.com/sites/default/files/articles/Copy%20of%20FoS%20Header%20Images%20%287%29.png" title="Benchmarks Versus Best Practices" class="colorbox" rel="gallery-node-1717-293HxXjtnVA"><img typeof="foaf:Image" src="https://futureofsourcing.com/sites/default/files/styles/juicebox_medium/public/articles/Copy%20of%20FoS%20Header%20Images%20%287%29.png?itok=scHEHVXg" width="624" height="325" alt="Benchmarks Versus Best Practices" title="" /></a></div></div></div><div class="field field-name-field-related-news field-type-entityreference field-label-above"><div class="field-label">Related news:&nbsp;</div><div class="field-items"><div class="field-item even"><a href="/benchmarking-procurements-next-big-competitive-advantage">Benchmarking: Procurement’s Next Big Competitive Advantage</a></div><div class="field-item odd"><a href="/4-major-procurement-trends-to-watch-for-in-2020">4 Major Procurement Trends to Watch for in 2020</a></div></div></div><div class="field field-name-body field-type-text-with-summary field-label-hidden"><div class="field-items"><div class="field-item even" property="content:encoded"> <p>A topic that comes up time and time again in discussions with clients is the idea of benchmarks as a means to drive high performance. <a href="https://blog.thesmartcube.com/inside-procurement-benchmarks-best-practices" target="_blank">Are benchmarks valuable</a>? How much emphasis should we place on them as we think through what we want to get done in our function?</p> <p>This topic isn&rsquo;t specific to procurement. It&rsquo;s relevant across the board, regardless of function. But it&rsquo;s an especially acute debate on the General &amp; Administrative side of the house, where procurement plays a significant role.</p> <p>Benchmarks come up regularly in discussions about functional and corporate performance. Senior executives like to use them to quantify both financial and operational performance, providing a measure of current levels and a comparison to peers, as well as guidance as to where the function could potentially be.</p> <p>In fact, it&rsquo;s difficult to have an executive conversation without the term coming up, and executives spend a lot of time benchmarking. They labor over the relevant benchmarks to add to their plans, the right metrics to report on, and the best explanations for where they are and are not. Entire companies have sprung up to service this need. &nbsp;&nbsp;</p> <p>My take? Benchmarks are useful tools but within constraints.</p> <h1>The Good and the Bad of Benchmarks</h1> <p>Understanding metrics such as functional spend as a percentage of total spend, the number of transactions conducted per FTE, or costs tied to any one category, in comparison to appropriate peer groups, have real value. They help provide a level of quantitative granularity and sharpness to the discussion around performance optimization that you wouldn&rsquo;t otherwise get.</p> <p>But they can also lead to problems.</p> <p>During my consulting days, every time we&rsquo;d use benchmarks in our analyses, a huge amount of debate with client stakeholders would ensue. What was the basis of the numbers? Why did the numbers show what they showed? Why did that area fit in a specific quartile versus another? And why was this relevant &ndash; or not?</p> <p>The problem was that discussions around benchmarks often diverted the focus to the details of the numbers and not the substance of the conversations.</p> <p>I would also argue benchmarks are often used by senior management to drive changes that aren&rsquo;t necessarily right for the business. Particularly with functions such as procurement, unless the CPO reports into a C-level executive with a long term, strategic focus, benchmarks can be easily used to justify cost reductions that don&rsquo;t make sense &ndash; and in those cases, they become a means to a predefined end.</p> <p>So benchmarks must be used judiciously.</p> <h1>The Case for Best Practices</h1> <p>It&rsquo;s far more meaningful, I believe, to focus on best practices &ndash; or as I&rsquo;ve heard them referred to, better practices. That&rsquo;s because the word &ldquo;best&rdquo; varies based on the context.</p> <p>Best practices are qualitative in nature, but they spell out what should be done to move up any given performance quartile ranking. Placing focus on what we are or aren&rsquo;t doing relative to best-in-class is much more useful guidance. It allows us to concentrate the conversation on the specific changes that need to be made to improve performance.</p> <p>Further, we can visualize how different these changes are relative to the current state. We can quantify the level of change and investment that would be needed to get to the next-level performance state (and whether there is the appetite, and/or ability, to make that investment).</p> <p>Finally, and equally importantly, we can properly assess whether there is even a need to achieve &ldquo;top quartile&rdquo; performance in a given area. For example,we might be happy to forego being in the top quartile for that area because it would require a level of automation that isn&#39;t appropriate for the business or would reduce service levels beyond what&rsquo;s necessary and suitable for the business.</p> <h1>Sourcing Best Practices</h1> <p>So, where do we get these best practices from? There are a range of external third-party sources &ndash; from general consulting firms to specialist intelligence and analytics firms. Be sure you&rsquo;re thoughtful and comprehensive in where you look. Consider not only what your peers are doing within your sector, but also companies outside your sector. Get a handle on what similar category managers are doing in industries different from your own.</p> <p>You should also look to your supply base &ndash; and this doesn&rsquo;t just mean the larger established businesses, but also the startups,the high-growth firms and the emerging players. They&rsquo;re the ones typically pushing the envelope in what can be done.</p> <p>Finally, look internally across the company, especially if you are global and/or decentralized. So often, we miss a trick by not looking at our own colleagues across the firm to understand what they&rsquo;ve done well and how they&rsquo;ve done it.</p> <h1>Best of Both Worlds</h1> <p>In closing, benchmarks have value, but they&rsquo;re not the be-all and end-all. They serve as directional indicators but are not an exact science. They provide guides that must be underscored by best practices &ndash; the &ldquo;what&rdquo; and &ldquo;how&rdquo; of the work to be done.</p> </div></div></div><div class="field field-name-field-tags field-type-taxonomy-term-reference field-label-inline clearfix"><div class="field-label">Tags:&nbsp;</div><div class="field-items"><div class="field-item even" rel="dc:subject"><a href="/tags/benchmarking" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Benchmarking</a></div><div class="field-item odd" rel="dc:subject"><a href="/tags/best-practices" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Best Practices</a></div></div></div><div class="field field-name-field-addthis field-type-addthis field-label-hidden"><div class="field-items"><div class="field-item even"><div class="addthis_toolbox addthis_default_style " addthis:title="Benchmarks Versus Best Practices: A Case for Both - Future of Sourcing" addthis:url="https://futureofsourcing.com/benchmarks-versus-best-practices-a-case-for-both"><a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_linkedin"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_facebook"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_twitter"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_googleplus"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_pinterest_share"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_reddit"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_email"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_print"></a> </div> </div></div></div><div class="field field-name-field-region field-type-taxonomy-term-reference field-label-inline clearfix"><div class="field-label">Region:&nbsp;</div><div class="field-items"><div class="field-item even"><a href="/regions/global" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Global</a></div></div></div> Fri, 23 Jul 2021 02:00:00 +0000 Omer Abdullah 1717 at https://futureofsourcing.com https://futureofsourcing.com/benchmarks-versus-best-practices-a-case-for-both#comments Julian Nyarko: Stickiness and Incomplete Contracts https://futureofsourcing.com/julian-nyarko-stickiness-and-incomplete-contracts <div class="field field-name-field-image field-type-image field-label-hidden"><div class="field-items"><div class="field-item even" rel="og:image rdfs:seeAlso" resource="https://futureofsourcing.com/sites/default/files/articles/Julian%20Nyarko%3A%20Stickiness%20and%20Incomplete%20Contracts.png"><a href="https://futureofsourcing.com/sites/default/files/articles/Julian%20Nyarko%3A%20Stickiness%20and%20Incomplete%20Contracts.png" title="Julian Nyarko: Stickiness and Incomplete Contracts" class="colorbox" rel="gallery-node-2024-293HxXjtnVA"><img typeof="foaf:Image" src="https://futureofsourcing.com/sites/default/files/styles/juicebox_medium/public/articles/Julian%20Nyarko%3A%20Stickiness%20and%20Incomplete%20Contracts.png?itok=puHzVgoE" width="624" height="325" alt="Julian Nyarko: Stickiness and Incomplete Contracts" title="" /></a></div></div></div><div class="field field-name-field-intro field-type-text-long field-label-hidden"><div class="field-items"><div class="field-item even"> <h1>Julian Nyarko: Stickiness and Incomplete Contracts</h1> </div></div></div><div class="field field-name-field-related-news field-type-entityreference field-label-above"><div class="field-label">Related news:&nbsp;</div><div class="field-items"><div class="field-item even"><a href="/prahalad-and-hamel-corporations-and-the-core-competency-concept">Prahalad and Hamel: Corporations and the Core Competency Concept</a></div></div></div><div class="field field-name-body field-type-text-with-summary field-label-hidden"><div class="field-items"><div class="field-item even" property="content:encoded"> <p>Julian Nyarko, assistant professor at Stanford Law School, has researched an interesting concept he calls contract &ldquo;stickiness.&rdquo; His findings? Once a contract&rsquo;s terms or covenants is written into a contract it &ldquo;only rarely&rdquo; gets changed or improved &ndash; hence the concept that contract terms are sticky.</p> <p>Nyarko&rsquo;s research analyzing covenants in corporate and government bond agreements led to his 2019 paper, &ldquo;<a href="https://chicagounbound.uchicago.edu/cgi/viewcontent.cgi?article=6227&amp;context=uclrev" target="_blank">Stickiness and Incomplete Contracts</a>.&rdquo; Nyarko argues that economic and legal theory assumes that &ldquo;sophisticated&rdquo; parties will routinely write agreements that optimize their joint expertise or &ldquo;surplus.&rdquo; But Nyarko&rsquo;s research found that theoretical good practice does not make it into real practice. Rather, people tend to use the same clauses over and over again &ndash; even if they don&rsquo;t make sense for a particular agreement.</p> <p>Why? The stickiness comes from over-reliance on templates and whether a contract includes a forum selection clause driven by the template used in the first draft. Nyarko found there is a &ldquo;distinct apathy&rdquo; among transactional lawyers that perpetuates contractual gaps, and that &ldquo;sticky&rdquo; drafting practices characterize the most fundamental aspects of commercial transactions across a wide range of contexts.&nbsp;</p> <p>Simply put: Organizations get lazy when they use contract templates.</p> <h2>Review Your Contract Templates</h2> <p>Nyarko tested the stickiness hypothesis in several steps. He examined whether the law firm is a relevant actor in the decision whether or not to include a &ldquo;choice-of-forum provision.&rdquo; He investigated that question by considering the degree to which these clauses vary with external counsel, holding the parties to the agreement (and other observable characteristics) constant.</p> <p>After establishing that the hiring decision of external counsel significantly influences whether or not parties have a choice-of-forum clause in their agreement, he studied the influence of the law firms&rsquo; template on the presence of choice-of-forum provisions. He did this by identifying the law firm that proposed the first agreement draft, as well as the template the draft is based on. He then considered whether or not law firms bargain over the presence or absence of forum selection clauses as found in the template.</p> <p>Finally, Nyarko considered whether law firms can be induced to make changes to their drafting practice with respect to choice-of-forum provisions in response to external shocks that change the costs and benefits of including the clause.</p> <h2>Status Quo Bias</h2> <p>Nyarko&rsquo;s research supports what behavioral economist call the &ldquo;<a href="https://www.behavioraleconomics.com/resources/mini-encyclopedia-of-be/status-quo-bias/#:~:text=Status%20quo%20bias%20is%20evident,of%20the%20decision%20is%20great." target="_blank">status quo bias</a>,&rdquo; which means that people prefer things to stay the same by doing nothing or by sticking with a decision made previously. However, Nyarko&rsquo;s article is significant because it is the first to provide comprehensive evidence for the stickiness hypothesis across multiple types of commercial agreements. It is also the first to demonstrate that even contractual gaps, rather than written clauses, can also be sticky.</p> <p>His conclusion? &ldquo;The stickiness of contractual gaps is the result of a heavy reliance on templates by external counsel during the drafting process, suggesting that default rules are more important than is traditionally assumed. A better understanding of how law firms form their preferences and how these preferences diverge from their clients&rsquo; can greatly increase the predictions generated from theories of contracting and guarantee that they remain practically relevant.&rdquo;</p> <p>Nyarko&rsquo;s article illustrates the danger inherent in blindly adhering to old contract templates. It is also an impressive demonstration of the existence of contract stickiness. This is one reason why I am fan of <a href="https://www.vestedway.com/wp-content/uploads/2016/10/Unpacking-Relational-Contracting_v19.pdf" target="_blank">relational contracting</a>. Relational contracting allows the parties to sit down and challenge the status quo as they co-create what is right for their business relationship &ndash; not just taking the fast path to adopt contract clauses from a template.</p> </div></div></div><div class="field field-name-field-tags field-type-taxonomy-term-reference field-label-inline clearfix"><div class="field-label">Tags:&nbsp;</div><div class="field-items"><div class="field-item even" rel="dc:subject"><a href="/tags/contract-development" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Contract Development</a></div><div class="field-item odd" rel="dc:subject"><a href="/tags/julian-nyarko" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Julian Nyarko</a></div><div class="field-item even" rel="dc:subject"><a href="/tags/relational-contracting" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Relational Contracting</a></div></div></div><div class="field field-name-field-addthis field-type-addthis field-label-hidden"><div class="field-items"><div class="field-item even"><div class="addthis_toolbox addthis_default_style " addthis:title="Julian Nyarko: Stickiness and Incomplete Contracts - Future of Sourcing" addthis:url="https://futureofsourcing.com/julian-nyarko-stickiness-and-incomplete-contracts"><a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_linkedin"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_facebook"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_twitter"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_googleplus"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_pinterest_share"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_reddit"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_email"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_print"></a> </div> </div></div></div><div class="field field-name-field-region field-type-taxonomy-term-reference field-label-inline clearfix"><div class="field-label">Region:&nbsp;</div><div class="field-items"><div class="field-item even"><a href="/regions/global" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Global</a></div></div></div> Wed, 14 Jul 2021 02:00:00 +0000 Kate Vitasek 2024 at https://futureofsourcing.com https://futureofsourcing.com/julian-nyarko-stickiness-and-incomplete-contracts#comments Three Ways to Deal with Workforce Retention in Today’s Hyper-Uncertain Labor Market https://futureofsourcing.com/three-ways-to-deal-with-workforce-retention-issues-in-todays-hyper-uncertain-labor-market <div class="field field-name-field-image field-type-image field-label-hidden"><div class="field-items"><div class="field-item even" rel="og:image rdfs:seeAlso" resource="https://futureofsourcing.com/sites/default/files/articles/Workforce%20Retention.png"><a href="https://futureofsourcing.com/sites/default/files/articles/Workforce%20Retention.png" title="Workforce Retention" class="colorbox" rel="gallery-node-1751-293HxXjtnVA"><img typeof="foaf:Image" src="https://futureofsourcing.com/sites/default/files/styles/juicebox_medium/public/articles/Workforce%20Retention.png?itok=wRZxLe5k" width="624" height="325" alt="Workforce Retention" title="" /></a></div></div></div><div class="field field-name-field-intro field-type-text-long field-label-hidden"><div class="field-items"><div class="field-item even"> <h1>Three Ways to Deal with Workforce Retention in Today&rsquo;s Hyper-Uncertain Labor Market</h1> </div></div></div><div class="field field-name-field-related-news field-type-entityreference field-label-above"><div class="field-label">Related news:&nbsp;</div><div class="field-items"><div class="field-item even"><a href="/how-to-find-calm-in-the-midst-of-chaos">How to Find Calm in the Midst of Chaos</a></div></div></div><div class="field field-name-body field-type-text-with-summary field-label-hidden"><div class="field-items"><div class="field-item even" property="content:encoded"> <p>With unemployment claims skyrocketing to almost 10 million at the end of March and expected to jump by millions more, COVID-19-driven economic jolts have quickly shifted the labor environment to the most volatile we&rsquo;ve seen &ndash; well, ever.</p> <p>For some employees<span style="font-size: 13.008px;">&nbsp;&ndash;&nbsp;</span><span style="font-size: 13.008px;">especially those with tenure, or high performers in essential business functions</span><span style="font-size: 13.008px;">&nbsp;&ndash;&nbsp;</span><span style="font-size: 13.008px;">the natural instinct will be to hunker down and weather the storm. Others, spooked by their current organization&rsquo;s readiness to navigate this hyper-uncertainty (especially those with relevant and in-demand skillsets), will start exploring their options in search of more stable opportunities.&nbsp;&nbsp;</span></p> <p>This greater openness to external job opportunities, and as a result, unsolicited recruiting messages, raises the risk of workforce turnover. And while many organizations are furloughing and laying off workers to address pandemic-related cost concerns, areas of the labor market are surprisingly still tight, making it harder to find and source talent for in-demand roles.</p> <h1>Talent Is Key For Navigating Chaos</h1> <p>Data shows <a href="https://www.hrdive.com/news/tie-talent-to-business-strategy-to-bolster-performance-study-says/571010/" target="_blank">72% of an organization&rsquo;s value</a> is tied to its employees &ndash; and this link is even more imperative for maintaining business performance in tough times. No organization can afford to lose their best workers right now. Holding onto talent that may be considering leaving requires organizations to implement targeted, proactive retention programs.</p> <p>The industries, locations, and job functions most at-risk according to a recent <a href="https://www.datanami.com/2020/04/03/how-covid-19-is-impacting-the-market-for-data-jobs/" target="_blank">labor market analysis</a>:</p> <ul> <li>Recruiters (115% above national volatility average), software engineers (+105%), marketers (+82%), and finance professionals (+77%), all <a href="https://www.cnbc.com/2020/02/14/workers-in-these-5-fields-are-most-likely-to-quit-their-jobs.html" target="_blank">typically categorized as highly volatile</a>, are even more so today. Given these functions are some of the most competitive, it&rsquo;s crucial to check in with these workers internally and identify and address any underlying attrition risk factors. &nbsp;</li> <li>Companies based in the greater San Francisco (50% above average) and Washington D.C. (+41%) areas tend to face above-average worker volatility levels. Organizations across every industry and size located in or around these cities should make retention their top priority, especially given how much this crisis will hit startups.</li> <li>Historically stable roles such as teachers (now 101% above average), skilled trades (+97%), construction (+83%) and healthcare staff (+77%), specifically nurses and doctors (+54% each), are <a href="https://www.workforcelogiq.com/2020/03/23/covid-19-analysis-impact-on-the-u-s-labor-market/" target="_blank">among the most volatile</a> considering the pandemic. This spike points to future talent risk with these workers on the frontlines of our COVID-19 response.</li> </ul> <h1>Strategies And Best Practices To Get Retention Right</h1> <p>Programs will look different for every organization given each has unique needs and objectives, but there are tried and true ways to boost retention. During these challenging times, when many companies are strapped for time and resources, it&#39;s especially important to implement very targeted strategies.</p> <p>Predictive insights offer a huge advantage in finding the best candidates and attracting them with the right recruiting messages. This intelligence also enables companies to identify the risk of attrition before it manifests, and high-value talent resigns.</p> <p><strong>1. Keep your employees engaged by making them feel heard.</strong></p> <p>Over <a href="https://www2.deloitte.com/global/en/pages/about-deloitte/articles/millennialsurvey.html" target="_blank">75% of millennials</a> &ndash; who make up the largest percentage of the workforce<span style="font-size: 13.008px;">&nbsp;&ndash;&nbsp;</span>feel businesses focus too much on corporate agendas, and not enough on contributing to society. While running a profitable business is important and will require even more attention in light of today&rsquo;s reality, companies can&rsquo;t ignore the societal implications of the pandemic and must demonstrate a commitment to the well-being of their employees and communities. On a broader scale, it&rsquo;s important that employees of all generations feel heard. One of the best ways to engage, and subsequently retain, your workforce is to understand what encourages staff to perform at their best and create cultures that prioritize those motivators.</p> <p><strong>2. Foster a supportive work environment and community.</strong></p> <p>Some studies show <a href="https://exclusive.multibriefs.com/content/how-leaders-can-stop-loneliness-and-create-community-at-work/mental-healthcare" target="_blank">loneliness in the workplace</a> was already a pervasive issue before the pandemic &ndash; and the gravity of today&rsquo;s situation will likely add fuel to the fire. When employees feel lonely, they&rsquo;re often disengaged from their work, making them less productive, and more apt to explore new roles and company cultures. Making people feel part of a community while at work is important &ndash; especially while most are working remotely. Virtual happy hours or team lunches over video where folks order from a local restaurant can boost morale, establish a sense of community and facilitate team bonding. It&rsquo;s also important to recognize employees&rsquo; contributions, increasing their overall confidence and incentivizing them to do good work not only in the interest of the business but also for their own satisfaction and motivation.</p> <p><strong>3. Tell them what <u>they</u> need to hear.</strong></p> <p>Employees jump jobs for a variety of different reasons, but today, fears over job security, company resiliency and business stability top the list. When employees feel they could lose their jobs or career momentum, they&rsquo;re more apt to explore other opportunities that will fuel their professional development. Employers need to understand the workplace characteristics their employees value and prioritize them accordingly. Today, for example, employees are putting more weight behind company resiliency (<a href="https://www.workforcelogiq.com/2020/03/23/covid-19-analysis-impact-on-the-u-s-labor-market/" target="_blank">up 12% from December</a>) followed by business stability, which means reassuring staff of the company&rsquo;s performance and financial health in this challenging time, and clearly communicating what you&rsquo;re doing from a resiliency perspective, is key.</p> <p>While undoubtedly more difficult today, with the right best practices, strategies, and market intelligence, employers can still source and sustain a reliable talent pipeline to thrive despite the uncertain employment environment.</p> </div></div></div><div class="field field-name-field-tags field-type-taxonomy-term-reference field-label-inline clearfix"><div class="field-label">Tags:&nbsp;</div><div class="field-items"><div class="field-item even" rel="dc:subject"><a href="/tags/workforce-management" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Workforce Management</a></div><div class="field-item odd" rel="dc:subject"><a href="/tags/talent-management" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Talent Management</a></div><div class="field-item even" rel="dc:subject"><a href="/tags/talent-sourcing" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Talent Sourcing</a></div><div class="field-item odd" rel="dc:subject"><a href="/tags/workforce-retention" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Workforce Retention</a></div></div></div><div class="field field-name-field-addthis field-type-addthis field-label-hidden"><div class="field-items"><div class="field-item even"><div class="addthis_toolbox addthis_default_style " addthis:title="Three Ways to Deal with Workforce Retention in Today&amp;rsquo;s Hyper-Uncertain Labor Market - Future of Sourcing" addthis:url="https://futureofsourcing.com/three-ways-to-deal-with-workforce-retention-issues-in-todays-hyper-uncertain-labor-market"><a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_linkedin"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_facebook"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_twitter"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_googleplus"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_pinterest_share"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_reddit"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_email"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_print"></a> </div> </div></div></div><div class="field field-name-field-region field-type-taxonomy-term-reference field-label-inline clearfix"><div class="field-label">Region:&nbsp;</div><div class="field-items"><div class="field-item even"><a href="/regions/global" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Global</a></div></div></div> Mon, 28 Jun 2021 02:00:00 +0000 Joe Hanna 1751 at https://futureofsourcing.com https://futureofsourcing.com/three-ways-to-deal-with-workforce-retention-issues-in-todays-hyper-uncertain-labor-market#comments