Category: Savings
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The Hidden Costs of Change Orders—and How Supply Chain Can Mitigate Them
Ah, change orders. While it is often necessary to change a project (and therefore change pricing) while that project is ongoing, change orders are frustrating for everyone involved. Large change orders can cause a blame game where everyone in a company blames everyone else for cost overruns. So how can a supply chain professional help… Read more
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Contract Negotiation Deep Dive: Contract Exhibits
Disclaimer: I am not an attorney and cannot give legal advice. This series is from a supply chain practitioner’s perspective on negotiating contracts and is simply offering my perspective on common contract clauses. Seek professional legal advice for your own contracts. In our continuing series on contract clauses from a supply chain perspective, last week… Read more
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Contract Negotiation Deep Dive: Pricing Control and Quality Clauses
Disclaimer: I am not an attorney and cannot give legal advice. This series is from a supply chain practitioner’s perspective on negotiating contracts and is simply offering my perspective on common contract clauses. Seek professional legal advice for your own contracts. Last week we started a deep dive series on contract clauses from a supply… Read more
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Bonded Warehouses and FTZs: Your Guide to Import Optimization
I first encountered Foreign Trade Zones (FTZs) and bonded warehouses while working for a manufacturer who was getting many components out of China. Before that point, most of my employers were getting the majority of their shipments domestically, either from US manufacturers or through distribution. FTZs and bonded warehouses are a fascinating approach to importing… Read more
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From Tactical to Strategic: Why Procurement Needs to Chase Value, Not Just Savings
The inimitable Mathew Schulz posted on LinkedIn last week about how the best procurement pros chase value instead of savings. This got me thinking about savings vs. value, and the differences between a procurement team who thinks tactically vs. one who thinks strategically. One reason I left a previous employer was that a change in… Read more
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Do You Have Vendors or Suppliers?
Language matters. Early in my supply chain career, my supply chain leader sat across his desk from me and told me, “Vendors sell hot dogs. Suppliers are partners.” I think I was implementing a supplier scorecard program at the time and was constantly referring to our suppliers as vendors. Since that moment, every time someone… Read more
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Supply Chain Tools: Index-linked Pricing
One of the best tools to share price risks between buyers and suppliers is index-linked pricing. Most procurement professionals have heard of and used commodity indices to tie pricing to the wider market, but in short they are a third-party tracking tool for commodity pricing. The consumer price index is a common and popular index,… Read more
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Are Supply Chain Rebates Evil?
I first encountered supply chain rebates a few years into my supply chain career, and confess they baffled me. How could a savings mechanism where a supplier cut their customer a check retroactively ever be sustainable? Yet one of my suppliers was using them consistently, and successfully arguing for their value with my supervisor and… Read more
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Why is Supply Chain Management Important?
Why is Supply Chain Management important? I stumbled across this question recently, and it got my wheels turning on why my chosen profession matters. While people I talk to now generally know what supply chain teams do (we get you the proverbial or literal toilet paper), there’s more to it than that. I’ve worked for… Read more
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Hidden Tax Trap: How Shipping Costs Are Costing Your Business Money
Sometimes in the supply chain we need quick wins. One potential source of a quick win is in paying sales taxes on shipments. While this may seem to be the responsibility of the tax department, how the supply chain structures agreements and invoices has a big impact on whether a company pays freight taxes. Taxable… Read more