Procurement May Need to Buy a Clue

Procurement May Need to Buy a Clue

November 5, 2018

The procurement function should reduce its focus on cost cutting and place more emphasis on supplier collaboration.

Supplier collaboration can lead to shorter new product development, potentially discover value added opportunities for all parties, and potentially lead to new product development itself.

The key is shared data and analytics in a collaborative environment.

This post is based on the Supply Chain Digital article, From periphery to driving force – procurement tech is enabling innovation, by Alex Saric, October 6, 2018 Image source: Shutterstock / Syda Productions.

Discussion Question:

1. What happens to new product development within a company if key suppliers’ only concern is cost reduction?

Guidance: Students should review new product development and sourcing.  What happens to quality if there is excessive cost pressure on suppliers?  Is there incentive for suppliers to provide knowledge and help if costs are the only concern by the buyer?  The students should see that a cost reduction focus on sourcing can lead to many poor outcomes if not coupled with long term partnership arrangements.

2. Will sharing data and analytical outcomes with key suppliers be dangerous to the company? What incentives could be put in Continue reading

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Is Walmart Dropping Drop Shippers?

Is Walmart Dropping Drop Shippers?

September 29, 2018

Walmart is experimenting with its policies for online orders involving items that are drop shipped directly from the vendor to the customer.  Specifically, it is considering changes to products called “everyday consumables.”

In the past, Walmart would pay for UPS ground shipping to have the item shipped from the vendor directly to customers.  However, as the retail giant searches for increased profitability in the fourth quarter, it has dropped this policy on lower-priced items (items with a wholesale price of $28 or less).

Many vendors have seen their items on Walmart’s web site display as “out of stock,”  even when these items show as “in-stock” in internal Walmart databases.  This has resulted in zeroed sales from the Walmart web site for many vendors with lower-priced items in the everyday consumables category.

This post is based on the Talk Business & Politics article, Walmart.Com Tests New Fulfillment Protocol for Consumables, Some Vendors in Limbo, by Kim Souza, August 30, 2018. Image source: creativenature © 123RF.com.

Discussion Questions:

1. Why is Walmart changing its policies?

Guidance: This relates to the problem that many online retailers are facing—the last mile delivery.  Free shipping (for 2 Continue reading

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Microsoft Pushes Paid Family Leave Down the Supply Chain

Microsoft Pushes Paid Family Leave Down the Supply Chain

September 13, 2018

Offering better employee benefits is now a requirement for Microsoft’s suppliers and business partners.

The benefits include a minimum of 12 weeks paid leave for new parents in addition to providing 15 days of paid sick or vacation time.  The policy demonstrates Microsoft’s commitment to investing in the people who work for the company and its supply chain partners.

This post is based on the CNBC article, Microsoft will start requiring partners and suppliers to offer paid family leave, and it will help cover the costs, by Sara Salinas, August 30, 2018. Image source: © travellinglight / Alamy.

Discussion Questions:

1. What are the reasons for Microsoft requiring its suppliers and business partners to implement a better employee benefits policy?

Guidance: These reasons include: recognizing people as the key to Microsoft’s success; ensuring companies that are doing business with Microsoft also place the same value on its human capital; increasing Microsoft’s competitiveness with a healthy workforce.

2. What are the costs and benefits of the new paid parental leave benefit requirement for Microsoft’s suppliers and business partners?

Guidance: Paid parental leave increases labor costs but increases productivity, increases morale and lowers turnover rates.  It Continue reading

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