Vol. 31 | No.

2 March/April 2020

What
revolutionary ideas
will you come away with?
INNOVATION2020
Manufacturing With 3-D
Printing, One Part at a Time
A Community-Focused
Organization Powers With
Purpose
The Ingredients for
Delivering Procurement
Know-How

+ Plus
Addressing Talent Challenges The Procurement Issue That’s A Transportation and Logistics
Through Mentorship “Everyone’s Business” Contracting Map

00 Cov Mar_Apr20.indd 1 3/3/20 12:07 PM

 ck By
Ba lar
Popu nd!
em a
D

ISM2020 Innovation Hall

Get technology updates, tips and information, or schedule a one-on-one demonstration
with leading tech providers to help you spark your own digital transformation.
Bonus content features presentations from:
• Assent Compliance: Technology & Transparency: Leveraging Supply Chain
Data to Enhance Profits
• JAGGAER: Four Steps to Autonomous Procurement – Setting Yourself Up
for Tomorrow’s Success Today
• RSN: Keys To Successful Martech Procurement
• Synertrade: Practical Advice for Using RPA in Procurement

• tealbook: Supplier Data Crisis: The Importance of a Solid Data Foundation

00 Cov Mar_Apr20.indd 2 3/3/20 12:08 PM

 fromtheeditor

An Environment for ISM BOARD

®

OF DIRECTORS

Revolutionary Ideas Chair

Camille Batiste,
CPSM, C.P.M.
Thomas Edison said it simply: “There is a way to do it better — find it.” ADM
We are all, in our own way, on a quest to find better ways of doing things.
Many times, inspiration to make something better is fostered by our mistakes or George Chang
dissatisfaction with the status quo. But often, we are inspired by observing and GE Aviation
interacting with others as they share how to take a different approach. There is
no established recipe for generating revolutionary ideas, but the more knowl- Norbert Dean, CPSM
edge, diverse perspectives and trial and error we experience, the more likely Carnival Cruise Line
we will find success.
This issue of Inside Supply Management® explores revolutionary ideas, Thomas W. Derry
approaches and perspectives. From the reinvention of DTE Energy from the ISM
aftermath of the Great Recession into a thriving organization that has helped
Detroit’s revitalization, to the impact of 3-D printing on the supply chain in part Kimberly DeWitt, CPSM
through cost and down-time reductions, these stories examine how challenges CF Industries
became opportunities.
In addition, we dig into the ISM2020 Annual Conference, April 26-29 in Michelle Hawkins, PMP
Boston. Learn about the changes that are making this event an immersive Charter Communications
environment for exchanging ideas and inspiration and check out quick tips to
maximize your Conference experience. Howard Levy
Last (but not least), don’t forget to also explore Inside Supply Manage- Zimmer Biomet
ment®’s new columns: Sustainability, Talent, Engaged and Member Matters.
Learn about new trends and hot topics in the profession while gaining insights Hemant Porwal, CPSM
into your fellow member community. WESCO Distribution, Inc.
As always, we appreciate your feedback, so please send your comments to
editor@instituteforsupplymanagement.org. We hope to see you in Boston Kristopher Pinnow, CPSM
in April! Collins Aerospace
A United Technologies
Company

Stacey Taylor
MGM Resorts International
Angela Miller
Director, Marketing & Publications Jeffrey P. Wincel, MBA,
Institute for Supply Management®
D.Min.
AMD

Susanna Zhu
The Hershey Company

MARCH/APRIL2020 1

01-05 Mar_Apr20.indd 1 3/3/20 1:33 PM

 contents

ISM2020 + Plus
cover story
20 What Revolutionary Ideas Will 24 100 Days Can Be
You Come Away With? Game-Changing
 ith hackathons, workshops and other
W  he skills needed to make an immediate
T
interactive engagements, ISM2020 will impact will be spotlighted during the
offer attendees new content and activities ISM2020 Conference in Boston.
with takeaways to use on the job. By Sue Doerfler
By Sue Doerfler

features economics
26 Revolutionizing 38 It’s All in the Delivery ISM® Report On Business®
Manufacturing, One For procurement professionals
14 Manufacturing
and organizations, success
Part at a Time hinges on serving know-how PMI® and manufacturing indexes
Ideal for parts that can’t be to stakeholders and suppliers;
produced any other way, among these 10 concepts are the
other uses, 3-D printing is making ingredients for successful 15 Non-Manufacturing
headway as a tool for prototyping, relationships and business NMI® and non-manufacturing
product development and part outcomes. indicators
replacement. By John Paparella, CPSM, CPSD
By Sue Doerfler

16 Markets
32 Powering With Purpose International news and indicators,
In the wake of an economic crisis, plus a market trends report
a Midwestern energy company
transformed itself and became one
of the country’s leading community-
focused organizations.
By Lisa Bolla

social Follow Inside Supply Management ®

on social media

Twitter: @ISM // ISM Magazine: ismmagazine.org/blog // LinkedIn: linkedin.com/company/institute-for-supply-management/ //

Facebook: facebook.com/instituteforsupplymanagement

2 ISMMAGAZINE.ORG

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 ISM executive staff
Thomas W. Derry
Chief Executive Officer

Susan Marty
Chief Product Officer

Angela Miller
Director, Marketing & Publications

editorial staff
Sue Doerfler
Senior Writer
sdoerfler@instituteforsupplymanagement.org

departments Dan Zeiger

6 justintime
News, notes and quotes
— just when you need
them
18 sustainability
Spotlighting responsible
supply management
Senior Copy Editor/Writer
dzeiger@instituteforsupplymanagement.org
52 pointtopoint
Focusing on supply design & production
chain logistics James Cain
Senior Graphic Designer
54 member matters
advertising
 Exclusive ISM
Kelly Rich
announcements,
events and updates National Event Sales
krich@instituteforsupplymanagement.org

columns Inside Supply Management® (ISSN #1538-733X) is published six times a year
(January/February, March/April, May/June, July/August, September/October,
November/December) by Institute for Supply Management®, 309 W. Elliot Road,

5 voices 46 talent Suite 113, Tempe, Arizona 85284. Telephone: +1 480.752.6276, ext. 3014
(Editorial), ext. 3043 (Advertising). Copyright ©2020 by Institute for Supply
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must be approved by ISM®. Please send requests to the address above.
Preferred Periodicals Postage paid at Tempe, Arizona, and additional mailing

8 perspectives 48 research offices. POSTMASTER: Send address changes to Inside Supply Management®,
309 W. Elliot Road, Suite 113, Tempe, Arizona 85284 or email membersvcs@
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How to get better results The procurement issue 40048267. Send return addresses to Canadian Institute for Supply Management®,
in negotiations that’s “everyone’s c/o Global Prime Office Network, 130 King St. W Suite 1800, Toronto, ON, M5X
1E3. Inside Supply Management® is the official publication of the Institute.
business” ISM® members receive the publication as part of their membership fee which
represents $24 of their total fee. This fee is non-deductible from membership
10 competencies dues. Single copies are available for $15. The authors of the articles published in

Addressing talent
challenges through
mentorship
50 insights
A transportation and
logistics contracting map
Inside Supply Management® are solely responsible for their accuracy and content.
Opinions expressed in the articles and materials published herein do not reflect
the opinions of ISM® unless it is expressly stated that such opinions have been
formally adopted by ISM®. The publication of an advertisement by Publisher is not
an endorsement of the advertiser nor the products or services advertised. Publisher
assumes no responsibility for claims or statements made in an advertisement.

44 engaged
For a Bluebird Bio sourcing
leader, “no two days are
the same”
Institute for Supply Management®
309 W. Elliot Road, Suite 113
Tempe, Arizona 85284

ad index Phone: +1 480.752.6276

instituteforsupplymanagement.org

Apple, Inc. — 55 // Corcentric — 4 // GEP — 11 // ISM2020 — BC //

ISM2020 Innovation Hall — IFC // Jaggaer — IBC // Kearney — 43
// Manufacturing Talk Radio — 55 // RapidRatings — 13
MARCH/APRIL2020 3

01-05 Mar_Apr20.indd 3 3/3/20 1:33 PM

 Procurement and
Finance Solutions

Transforming the
way businesses
purchase, pay,
and get paid.

Corcentric helps companies reduce the cost of doing

business so they can do more for their customers, their
communities, and the world.

Learn more at corcentric.com or call our specialists at (800) 608-0809

4 ISMMAGAZINE.ORG

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2020-ISM-Corcentric.indd 2/14/20203/3/20
2:40:201:33
PM PM
 voices

Member Engagement
Makes ISM® a More
Effective Association
At Institute for Supply Management® (ISM®), we not only exist to advance the
practice of supply management, but to advance you, our members, as the
profession evolves by providing the tools, information and insights you need.
Susan Marty Whether it’s a webinar or blog post with the latest information, data and
Chief Product Officer strategies to help you mitigate such up-to-the-minute risks and issues like
Institute for Supply Management® the coronavirus outbreak; a Member Monday tool or template that makes
your job easier; an Inside Supply Management® magazine article about digital
transformation or sustainability practices; a self-paced educational course
that you can do on your schedule; or other insight or tool, we can help you
manage the complexities of today’s — and the future’s — supply manage-
ment profession.
To help meet your needs, we want to hear from you. We want to know
what information, tools and insights you want and expect from us. And we’d
like your engagement, whether it’s through answering a survey, attending a
webinar or course, volunteering for an ISM committee, participating in a local
ISM chapter or attending the ISM2020 Annual Conference in Boston.
Engagement enables you — and ISM — to hear different perspectives
about issues, learn new ideas and solutions, gain feedback and have possi-
bilities at your fingertips. Through engagement, you can help other members
as well as yourself. You can network with experts, practitioners and leaders.
You can learn from others who have experienced the same issues, concerns
or successes, and have a solution or an idea to help.
Your association — ISM — is where you can grow, learn, give back and
make a difference. Your participation and feedback help us develop the
content you need on the job and in the future. ISM

MARCH/APRIL2020 5

20 PM 01-05 Mar_Apr20.indd 5 3/3/20 1:33 PM

 justintime

#ISMDailyDigit

US 3.9 $
trillion
Projected worldwide information technology
(IT) spending this year, a 3.4-percent increase
compared to 2019, according to a report by
Gartner, the Stamford, Connecticut-based
global business research and advisory firm.
Enterprise software is expected to be the
fastest-growing IT market, with a 10.5-percent
increase to $503 million, and spending also
is projected to rise on IT services (5 percent),
data-center systems (1.9 percent), communi-
cation services (1.5 percent) and devices
(0.8 percent).
“Although political uncertainties pushed the
global economy closer to recession, it did not
occur in 2019 and is still not the most likely
scenario for 2020 and beyond,” John-David
Lovelock, research vice president at Gart-
ner, said in a statement. “With the waning of
global uncertainties, businesses are redoubling
investments in IT as they anticipate revenue
growth, but their spending patterns are
continually shifting.”

A Moment in Time

Creating a Diverse Environment: Having a diverse workforce can give organi-

zations a competitive edge. … (U)nderstanding and relating to a diverse customer
base gives the firm insight to provide the most appropriate products or services.
It’s like having a direct link to the final component in the supply chain. In addition,
customers are savvy to those organizations that reflect the community they’re
operating in and support it through community outreach.

— Inside Supply Management®, August 2003

6 ISMMAGAZINE.ORG

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 justintime

Asking Our Members

ISM2020 is coming; what
are your Conference
goals?
This issue previews the ISM2020
Annual Conference, April 26-29 in
Boston; the cover story on page 20
includes suggestions for attendees
to maximize the experience. Which
tracks, sessions, speakers and
CommOddities networking events are you anticipat-

Surgical gowns
ing most? What “revolutionary ideas”
do you hope to take back to your
organization?
Coronavirus adds to chaos: Wuhan, China, epicenter of the coronavirus outbreak To share your thoughts, email us at
in January, is a manufacturing hub for active pharmaceutical ingredients and medical editor@instituteforsupplymanagement.
supplies. That exacerbated quality issues and supply chain disruptions with surgical org, or leave a comment on our social
gowns, which were among the commodities reported in short supply in the January media pages (the addresses are on
Non-Manufacturing ISM® Report On Business®. page 2). Some entries will be featured
Where do they come from? Many come from China, including 9 million gowns under Supply Chain Reactions in
recalled in January by Cardinal Health. The Dublin, Ohio-based health-care services the May/June issue of Inside Supply
company discovered that production of some gowns was outsourced to facilities that were Management®. ISM
not registered with the U.S. Food and Drug Administration and could not assure sterility.
What are they used for? Typically made from a blend of polyester and cotton, gowns
protect medical personnel and patients from infection from liquid or solid material during
a procedure. They are available in four levels of barrier protection, the lowest for routine
basic care and the highest for long, fluid-intense surgeries.
And that’s a fact: The Cardinal Health recall involved Level-3 gowns often used during
heart and knee surgeries and in emergency-room treatment. The recall has led to
delays in surgeries: “You’re told, ‘We need to start this now,’ and then five minutes later,
you’re told, ‘Oh no, we can’t do that,’” the son of a Boston patient awaiting cancer
treatment told CBS News.

Supply Chain Reactions

GSS @GSSGov After six
years as the top priority for
state procurement, “leading
procurement strategy state-
wide” is again the number
one issue on the minds of
state procurement leaders
across the country according
to NASPO. #publicprocure-
ment #naspo #procurement
#stategov
Institute for Supply
Management We are excited
to announce that our own
Stephen McCaskill was
nominated and WON the FEI
(Financial Executives Interna-
tional) Controller of the Year
Award. Congratulations!
In response to “Asking Our Members: How Is
the Economy Affecting Your Supply Chain?”
Imports from Northern Ireland. Currency
uncertainty; however, the first part of Brexit
has brought a modicum of stability. (G)etting
meaningful trade simultaneously with the
U.S. and European Union in a minimum time
frame poses the biggest challenge.
Mike Ferrett
Owner, Benair Consultant Agency
Bromley, United Kingdom

MARCH/APRIL2020 7

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 perspectives
Kimberly A. Branch, CPSM
Global procurement manager
Axway Inc.
Scottsdale, Arizona
8 ISMMAGAZINE.ORG
08-09 Pers Mar_Apr20.indd 8
How can practitioners
approach negotiations to
yield better results?
Dealmaking is not a one-size-fits-all process.
Nevertheless, common themes exist in the
value-creating process. In your approach to
any negotiation, you’ll want to consider such
levers as relationship health, a supplier’s histor-
ical performance, criticality, market forces,
spend profile and opinion. Utilizing these levers
— and the data/intelligence behind them — in
preparation for a negotiation is essential.
Approach. Combining multiple facts into a
concise, aligned message can be tricky during
the planning phase. Ensure that (1) facts/
intelligence are valid and (2) the business and
procurement function are communicating as
one voice in delivering the message; other-
wise, the negotiation quickly loses credibility.
Use best alternative to a negotiated agree-
ment (BATNA) and zone of possible agreement
(ZOPA) as best practices. Remember, the
supplier wants to retain its margin as much as
you want to decrease the cost.
Levers. Many combinations of value levers
can apply to just about any deal. Is the prod-
uct being purchased in a declining market
(old technology)? Is the supplier or product
new or unproven? Is the supplier responsive
and receptive? Are there new entrants? What
is the relationship length? What is the histor-
ical spend and trajectory? Does the supplier
know it has competition? Is the supplier flex-
ible? Is risk being accepted or transferred? Is
the proposal cost competitive? Is the supplier
adding additional value, such as improved
payment terms, training, extended warranties,
freight, tooling or discounts/rebates?
Having multiple offers is beneficial, as each
supplier might bring something new to the
table. Depending on your organization’s policy,
a good supplier that has consistently delivered
cost, quality, service and flexibility may deserve
to be notified before the bid event. Or you may
consider simply negotiating with the incumbent
based on the market intelligence, if appropriate.
Persistence. The best negotiators are
persistent, polite, creative and humorous.
Never accept the first, second or perhaps
even the third bid. Rely on BATNA and ZOPA
as your compasses to indicate how much
more you can negotiate, then nudge more.
3/3/20 1:34 PM
 perspectives

How I describe my job in one sentence:

I reduce expenses and increase value by managing, analyzing
and leveraging transactions that involve spend and/or contractual
Ts & Cs changes with suppliers, using proven procurement prac-
tices, processes, strategy and influence.

Additionally, contracts are not “one The biggest professional

and done.” You can negotiate through-
out the life cycle of the relationship;
as industries, indexes and entrants
change, so should the contract.
Finally, don’t give in to supplier
pressure tactics.
The most helpful career advice
I’ve received:
• Don’t be afraid to negotiate; the
worst answer you’ll receive is no.
• If someone says no, you are speak-
ing to the wrong person.
A supply chain concern that
keeps me up at night:
Where are we spending too much?
Are we being taken advantage of? Why
did we spend money on that? Why
didn’t procurement get the opportunity
to negotiate?
The biggest challenges for the
profession:
Some companies not only refuse
procurement a seat at the table; they
don’t allow the function in sacred areas
of the business. As a result, other units
manage significant spend and relation-
ships. These practices do not allow
the organization to reach its full poten-
tial in maximizing economies of scale,
administrative efficiencies, and/or
relationship building.
challenge I’ve overcome: Three phrases I find myself
Buy-in. It is often difficult to gain
entrance to new business units,
saying almost every day at
especially when new to an orga- my job:
nization. This is particularly true if
procurement discipline is not woven
in the culture, consistently practiced “We are under an executive
throughout and backed 100 percent
by executives.
order to reduce expenses
At one company, many busi- and hope that, as a longtime
ness-unit owners held information partner, you will assist us
close to the vest. It was difficult to ask
them about projects, upcoming spend
with our initiative.”
decisions, contracts and the processes
they followed to make fair and impartial “Given our history and
decisions. Information was not easily
handed over, nor required. I deployed
long-term relationship,
a grassroots endeavor and established we expected more value
rhythms with key stakeholders. In
recurring meetings, I listened, collected
from your company.”
requirements, and brought clever strat-
egy ideas and other data to the table. “We are under tight
I saw this as a strategic opportunity
to showcase evidence of procure-
budget constraints; a more
ment’s capabilities, value and purpose. compelling offer from your
Melding facts with proven, effective company may improve the
procurement processes, methods
and know-how is an essential and
chances of you being awarded
surefire way in acquiring eventual the business.”
widespread buy-in with new or
reluctant stakeholders. ISM

A business-oriented book that has made an impact on my career:

212º: The Extra Degree by Sam Parker and Mac Anderson helped me realize that giving just 1 more percent of your time,
energy, effort or passion can make the difference in yourself — and, if everyone else gave just a little more, the company.

MARCH/APRIL2020 9

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 competencies
ISM Mastery Model® Core Competency: Business Acumen

Maximizing Mentorship to
Address Talent Challenges

Author
Sam White
is head of content for Argentus,
a Toronto-based boutique
recruitment firm specializing in
supply management.
Over the years, the supply management
profession has gone through tremendous
change. It’s emerged from a back-office
transactional function to become a key
strategic differentiator for companies in a
diverse set of industries. It’s become more
cross-functional, with organizations working
to integrate supply management into more
aspects of business operations. It’s become
more digital, with technologies like automation,
robotics, cloud computing, the Internet
of Things and blockchain.
As a result, the skills profile has changed.
In building a world-class supply management
organization, it’s no longer enough to hire
emerging supply management employees
only for their analytical skills. More than ever,
companies need individuals with the busi-
ness acumen to break down silos and affect
organizational change in an era of constant
disruption — not to mention people with the
skills to deploy technologies coming down
the line.
It’s a tall order. In recent surveys like Char-
lotte, North Carolina-based MHI’s 2019 MHI
Annual Industry Report: Elevating Supply
Chain Digital Consciousness, executives listed
hiring and talent development as their great-
est challenges — bigger than rising customer
expectations, forecasting and supply chain
transparency. Baby boomers are retiring,
and there aren’t enough young people enter-
ing the profession to replace those workers.
These factors make it more important than
ever for organizations to revisit their hiring and
talent-development strategies.

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 MARCH/APRIL2020 11

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 competencies
A Two-Way Benefit
A two-pronged approach can help
supply management organizations meet
the immense talent challenges: work to
hire the best employees, then provide
cross-functional educational opportu-
nities to quickly further their knowledge
and broaden their experience. The more
career fulfillment junior supply manage-
ment employees experience, the better
strategic outcomes they will create for
their companies.
Over the past 18 months, execu-
tives have identified one key factor in
talent-development strategies that’s
getting more discussion but not enough
action: mentorship.
A formal mentorship program
can pay huge dividends for rising
junior employees, who can benefit
from leaders’ expertise. Many supply
management leaders recognize the
importance of breaking down business
silos, and mentorship is a great way
to help equip junior employees for that
task. For example, a director who takes
on a bright inventory analyst as a mentee
can expose the employee to other parts
of the business, from logistics to fore-
casting to procurement.
Mentorship also has benefits for lead-
ers. Rather than just an act of goodwill
to junior employees, it’s better viewed as
an investment in the organization’s long-
term health. It’s a chance to learn by
teaching and challenging assumptions.
In fact, “reverse mentorship” can be just
as valuable as a traditional mentoring
program, giving digital natives a chance
to share their skills with senior leadership
and help drive cultural change within an
organization.
Mentorship can help transfer skills
and institutional knowledge up and
down an organization. It can improve
employee retention and lead to greater
career satisfaction — addressing many
of the goals that today’s top supply
12 ISMMAGAZINE.ORG
10-13 comp Mar_Apr20.indd 12
management leaders share in their talent
strategies.
Getting the Most Out of
Mentorship
Like with any transformational initia-
tive, setting up a successful mentorship
program is easier said than done. It’s
easy to create or assign mentor/mentee
relationships, but more difficult to make
them stick in the long run. Supply
managers are used to fighting daily fires.
They might recognize a need for more
mentorship in the organization but find it
difficult to prioritize it over the many other
demands they face.
These tips can help organizations
get the most out of mentorship. For
mentees:
Make sure the match meets your
goals. When asked to participate in a
mentorship program, communicate what
kind of mentor is best for you. Make it
clear whether your goal is to broaden
your subject-matter expertise into differ-
ent supply management disciplines or
drill deeper into one discipline. Make
sure to establish a culture fit between
you and your mentor: Do you share a
commitment to work/life balance? What
motivates him or her? What excites your
mentor most about the field, and do you
share that?
Only commit when you’re ready.
Having a mentor can be a major boost
to your career, so it might seem like
a no-brainer to accept. That said, it’s
important to ask yourself whether you
can commit to the extra time and energy
involved, or if you need more time.
Strive for open communication
but respect your mentor’s time.
Mentorship relationships work when
communication is open and frequent —
twice-yearly check-ins don’t make for
fruitful matches. However, streamline
your communication, so your mentor
can provide feedback in an effective way.
Avoid open-ended questions in emails. If
the mentor is commenting on your work
product, allow a generous response
time.
Don’t be afraid to offer direction.
Some mentorship relationships languish
because a mentor is unsure how to
provide the most value to the mentee. It
can help to offer guidance so the mentor
understands where his or her expertise
and advice will be of most value to you.
For mentors:
Set expectations early. The
best mentorship relationships have a
tendency to evolve, but it’s valuable to
define the parameters early to get off on
the right foot. What will be the frequency
of communication? What are you both
looking to get out of the relationship?
A regularly scheduled check-in call or
meeting can help ensure the relationship
stays active.
Consider working with a team.
While executives are often too busy
putting out fires to dedicate time to a
one-on-one mentorship relationship,
they have the most to contribute — and
plenty to gain. One workaround is to act
as a “primary” mentor in concert with
one or two other “secondary” mentors
who can offer subject-matter expertise
and support.
Humility is crucial. As a mentor,
your skills, knowledge and experience
translate to leverage in the relationship
— but that’s all the more reason to be
humble. Make sure a mentee has time
to prioritize his or her work. Avoid taking
undue credit for a mentee’s ideas, and
always be open to what you can learn.
A structured mentorship strategy
can provide significant benefits — to
a mentor, mentee and the supply
management organization. The skills
development, organizational alignment
and sense of shared purpose are well
worth the time investment. ISM
3/3/20 1:35 PM
 ®®

Your supplier’s
financials are critical.
Build a stronger supply chain and focus on
supplier collaboration.

Bookmark the must-attend session

on supply chain risk at ISM2020:

The ROI of
Supplier Risk:
A Practical Toolkit to
Demonstrate Program
Success

Monday, April 27
10:00 am

MARCH/APRIL2020 13

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 reportonbusiness
Analysis by
Timothy R. Fiore, CPSM, C.P.M.,
Chair of the Institute for Supply Management®
ISM® Report On Business®: Manufacturing Business Survey Committee
Manufacturing

PMI at 50.1%
Economic activity in the manufac-
turing sector grew in February, and
®
the overall economy grew for the
130th consecutive month, say the
nation’s supply executives in the
latest Manufacturing ISM® Report PMI
On Business®. Manufacturing expanded in February, as the 2018 2019 2020
The February PMI® registered PMI® registered 50.1 percent, a 0.8-percent-
50.1 percent. The New Orders age point decrease from the January reading
Index registered 49.8 percent, a of 50.9 percent. The PMI® expanded in
decrease of 2.2 percentage points February, but at a slower rate. Four of the big 50.1%
from the January reading of 52 six industries expanded, at similar rates as
percent. The Production Index January. Four of the PMI®’s 10 subindexes 50% = Manufacturing Economy
Breakeven Line
registered 50.3 percent, down recorded expansion, down from six the 42.8% = Overall Economy
Breakeven Line
4 percentage points compared previous month. A reading above 50 percent
to the January reading of 54.3 indicates that the manufacturing economy is generally expanding; below 50 percent indicates
percent. The Backlog of Orders that it is generally contracting.
Index registered 50.3 percent, an
increase of 4.6 percentage points
compared to the January reading
of 45.7 percent. The Employment
Manufacturing at a Glance
Index registered 46.9 percent, an
increase of 0.3-percentage point Feb Jan % Point Rate of Trend*
INDEX Direction
from the January reading of 46.6 Index Index Change Change (months)
percent. The Prices Index regis- PMI® 50.1 50.9 -0.8 Growing Slower 2
tered 45.9 percent, down 7.4 New Orders 49.8 52.0 -2.2 Contracting From Growing 1
percentage points as compared
Production 50.3 54.3 -4.0 Growing Slower 2
to the January reading of 53.3
Employment 46.9 46.6 +0.3 Contracting Slower 7
percent. The New Export Orders
Index registered 51.2 percent, a Supplier Deliveries 57.3 52.9 +4.4 Slowing Faster 4
decrease of 2.1 percentage points Inventories 46.5 48.8 -2.3 Contracting Faster 9
as compared to the January read- Customers’ Inventories 41.8 43.8 -2.0 Too Low Faster 41
ing of 53.3 percent.
Prices 45.9 53.3 -7.4 Decreasing From Increasing 1
Of the 18 manufacturing
Backlog of Orders 50.3 45.7 +4.6 Growing From Contracting 1
industries, 14 reported growth
in February — listed in order — New Export Orders 51.2 53.3 -2.1 Growing Slower 2
are: Wood Products; Furniture Imports 42.6 51.3 -8.7 Contracting From Growing 1
& Related Products; Plastics Overall Economy Growing Slower 130
& Rubber Products; Printing &
Manufacturing Sector Growing Slower 2
Related Support Activities; Paper
Products; Textile Mills; Primary *Number of months moving in current direction.
Manufacturing ISM® Report On Business® data is seasonally adjusted for the New Orders, Production, Employment and Inventories Indexes.
Metals; Food, Beverage & Tobacco
Products; Computer & Electronic
Products; Miscellaneous Manu-
facturing; Electrical Equipment, Commodities Reported
Appliances & Components; Fabri-
cated Metal Products; Machinery; Commodities Up in Price: Capacitors; Crude Oil* (2); Resistors; Steel — Hot Rolled* (4); and Steel Products.
and Chemical Products. ISM Commodities Down in Price: Aluminum; Aluminum Products (2); Copper; Corrugate; Crude Oil*; Natural Gas
(3); Polypropylene (4); Scrap; Steel — Hot Rolled*; and Steel — Stainless.
Commodities in Short Supply: None.
‡Miscellaneous Manufacturing (products such as medical
equipment and supplies, jewelry, sporting goods, toys and
office supplies).

Note: The number of consecutive months the commodity is listed is indicated after each item.*Reported as both up and down in price.
14 ISMMAGAZINE.ORG

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 reportonbusiness
Analysis by
Anthony Nieves, CPSM, C.P.M., A.P.P., CFPM,
Chair of the Institute for Supply Management®
Non-Manufacturing Business Survey Committee ISM® Report On Business®:
Non-Manufacturing

NMI at 57.3%
® Economic activity in the non-man-
ufacturing sector grew in February
for the 121st consecutive month,
say the nation’s purchasing and
supply executives in the latest
NMI (Non-Manufacturing) Non-Manufacturing ISM® Report
In February, the NMI® registered 57.3 On Business®.
2018 2019 2020
percent, 1.8 percentage points higher The NMI® registered 57.3
than the 55.5 percent in January. This is percent. The Non-Manufacturing
the highest reading since February 2019, 57.3% Business Activity Index decreased
when the index registered 58.5 percent. to 57.8 percent, 3.1 percentage
The non-manufacturing sector grew for the points lower than the January
121st consecutive month. A reading above 48.5% = Non-Manufacturing Overall
Economy Breakeven Line
50% = Non-Manufacturing Economy
Breakeven Line
reading of 60.9 percent, reflecting
50 percent indicates the non-manufactur- growth for the 127th consecutive
ing sector economy is generally expanding; month. The Employment Index
below 50 percent indicates the non-manufacturing sector is generally contracting. increased 2.5 percentage points in
February to 55.6 percent from the
January reading of 53.1 percent.
The Prices Index of 50.8 is 4.7
percentage points lower than the
Non-Manufacturing at a Glance January reading of 55.5 percent,
indicating that prices increased in
Feb Jan % Point Rate of Trend* February for the 33rd consecu-
INDEX Direction
Index Index Change Change (months) tive month. Most respondents are
NMI® 57.3 55.5 +1.8 Growing Faster 121 concerned about the coronavirus
and its supply chain impact. They
Business Activity 57.8 60.9 -3.1 Growing Slower 127
also continue to have difficulty with
New Orders 63.1 56.2 +6.9 Growing Faster 127
labor resources. They do remain
Employment 55.6 53.1 +2.5 Growing Faster 72 positive about business conditions
Supplier Deliveries 52.4 51.7 +0.7 Slowing Faster 9 and the overall economy.
Inventories 53.9 46.5 +7.4 Growing From Contracting 1 The 16 non-manufacturing
industries reporting growth in
Prices 50.8 55.5 -4.7 Increasing Slower 33
February — listed in order —
Backlog of Orders 53.2 45.5 +7.7 Growing From Contracting 1
are: Accommodation & Food
New Export Orders 55.6 50.1 +5.5 Growing Faster 4 Services; Management of Compa-
Imports 52.6 55.1 -2.5 Growing Slower 2 nies & Support Services; Mining;
Inventory Sentiment 59.3 54.9 +4.4 Too High Faster 272 Finance & Insurance; Real Estate,
Rental & Leasing; Other Services;
Overall Economy Growing Faster 127
Construction; Health Care & Social
Non-Manufacturing Sector Growing Faster 121 Assistance; Public Administration;
*Number of months moving in current direction.
Wholesale Trade; Transporta-
Non-Manufacturing ISM® Report On Business® data is seasonally adjusted for the Business Activity, New Orders, Prices and Employment Indexes. tion & Warehousing; Educational
Services; Professional, Scientific &
Technical Services; Utilities; Infor-
Commodities Reported mation; and Retail Trade. ISM
Commodities Up in Price: Beef Products (3); Construction Contractors; Diesel Fuel*; Labor (2); Labor —
Construction (2); Medical Supplies; Personal Protective Equipment (PPE); Pharmaceuticals (2); and Professional
Services. ✣Other Services (services such as Equipment & Machinery
Commodities Down in Price: Cheese; Dairy; Diesel Fuel* (2); and Gasoline. Repairing; Promoting or Administering Religious Activities;
Grantmaking; Advocacy; and Providing Dry-Cleaning & Laundry
Commodities in Short Supply: Construction Contractors (4); Construction Subcontractors (26); Labor (17); Services, Personal Care Services, Death Care Services, Pet Care
Services, Photofinishing Services, Temporary Parking Services
Labor — Construction (47); Labor — Temporary (8); Medical Supplies; Personal Protective Equipment (PPE); and Dating Services).
Professional Services; Surgical Gowns (2); Surgical Masks; and Surgical Packs.
Note: The number of consecutive months the commodity is listed is indicated after each item.*Reported as both up and down in price.
MARCH/APRIL2020 15

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 markets

UNITED STATES BRAZIL FRANCE

Boosted by growth in streaming services,
wireless earbuds and speakers, 5G
connectivity and artificial intelligence
(AI)-enabled devices, the U.S. consum-
er-tech industry is projected to earn
US$422 billion in revenues this year,
according to the U.S. Consumer Tech-
nology Sales and Forecasts report by the
Consumer Technology Association (CTA).
If realized, the annual revenue would be a
record and 4-percent increase compared
to 2019. Among the biggest consumer-
spending growth categories are video
streaming (a projected $24.1 billion, up 29
percent), music ($9 billion, up 15 percent)
and video gaming ($38.3 billion, up 5
percent). “The last decade was about the
Internet of Things — but now, we kick off
a new decade defined by the Intelligence
of Things,” Steve Koenig, CTA vice pres-
ident of market research, said in a press
release. “Connected intelligence defines
today’s device ecosystem, from consumer
favorites such as smartphones and TVs
to an expanding universe of smart home
solutions, making intelligent living spaces
a reality.”
Increased demand from China helped
pushed Brazilian crude oil exports to
8.7 million tons in December, a monthly
record, according to research by the
Baltic and International Maritime Council
(BIMCO), a Bagsvaerd, Denmark-based
shipping association. For calendar year
2019, export volumes grew by 5 percent
over the previous year. The previous
monthly record for Brazilian crude oil
exports was set in July 2018, when 41
percent was sent to China; in December,
that figure was 64 percent. “Brazilian
crude oil production has risen steadily
over the past decade, (and with) future
production estimated to follow the same
growth rate, Brazil could increasingly
become a driver of crude oil tanker
ton-mile growth … especially if China
sustains its (demand),” BIMCO chief
shipping analyst Peter Sand said in a
press release.
Ethanol sales in France reached a
record high in 2019 and are expected
to continue rising thanks to ethanol’s
wider availability and a decline in diesel
demand, according to the Association
of French Alcohol Producers (SNPAA).
French consumption of ethanol, which
is made mostly from sugar beets and
grains, is projected to reach about 12.8
million hectoliters this year, up from an
estimated 11.4 million in 2019 and 10
million in ’18. France is the European
Union’s (EU) biggest producer of the
crop-based alcohol used in ethanol,
and the EU’s second-largest ethanol
consumer, behind Germany. Nearly half
(49.7 percent) of the gasoline sold in
France last year contained up to
10 percent ethanol, and this year’s
sales are expected to rise by 50 percent
as more petrol stations sell the blend.
“Industry players will use all capacities
to meet demand,” SNPAA secretary
general Sylvain Demoures said in a
press conference.

Supply Issues and Rising Demand

Send Palladium on a Sharp Price Climb
By Riley Mallon

Palladium, a lesser-known precious metal, had a breakout at
the beginning of the year, causing headaches for supply chain
managers. In January, the price of palladium increased by an
estimated 22 percent — surpassing that of gold — to a record
high of US$2,400 per ounce.
An insufficient global supply of palladium and growing
demand across industries appeared to be the forces moving
prices higher. However, Norilsk Nickel, a Russian mining
company that is one of the world’s largest palladium producers,
claimed that the price rally was due to a bubble driven by specu-
lators entering the market.
Regardless of the cause, there is no sign of the price
rally abating, which could have implications for supply chains
across the U.S. and the globe. Understanding the forces
moving the market is critical as supply chain managers and
procurement professionals develop strategies to deal with
volatile palladium prices.
Demand is Growing
Palladium is a component in consumer electronics, medicine
and jewelry, and it is also used in chemical manufacturing, water
treatment, dentistry and hydrogen purification. But it is best

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 markets

UNITED ARAB EMIRATES INDIA

The Barakah nuclear power plant was
(as Inside Supply Management® went to
press) readying to begin operations amid
concerns over safety and security at the
first commercial nuclear power station in
the Arabian Peninsula, according to an
Al Jazeera news agency report. An oper-
ational-readiness assessment confirmed
that the first of four 1,400-megawatt
reactors was ready to start up at the
Barakah plant, which has been plagued
by delays and warnings from analysts
about the safety of a nuclear facility in a
region known for geopolitical turbulence.
The plant is in Abu Dhabi and operated
by Masdar City, United Arab Emir-
ates-based Nawah Energy Company.
Loading of fuel assemblies into the
reactors is projected to begin during
the first quarter, and after that process
completes, Nawah will raise power-gen-
eration levels over a period of months
before beginning commercial operations.
With 152.5 million shipments last year,
India passed the U.S. to become the
second-biggest smartphone market
in the world behind China, according
to research by Framingham, Massa-
chusetts-based International Data
Corporation. During the fourth quarter,
36.9 million smartphones were sold, a
5.5-percent year-over-year increase.
E-commerce drove most of the Q4 sales,
accounting for 43.3 percent of total
shipments, an 11.2-percent year-over-
year increase. Online sales made up a
record 41.7 percent of purchases for all
of 2019. “The online growth momentum
(was) due to deep discounts, cashback
offers, buyback/exchange schemes and
complete protection offers clubbed with
attractive financing (options),” Upasana
Joshi, associate research manager,
client devices at IDC India, said in a
press release.

resources
Al Jazeera — aljazzera.com // Association of French Alcohol Producers — alcool-bioethanol.net/en/histoire //
Baltic and International Maritime Council — bimco.org // Consumer Technology Association — cta.tech //
International Data Corporation — idc.com

known as an important input in catalytic converters that reduce Possibilities of Platinum

emissions from gas-powered and hybrid cars. (This may explain
increased reports of catalytic converter thefts in recent months.)
As the automotive industry continues to face public and
regulatory pressure to reduce emissions, car manufacturers are
using greater volumes of palladium as they manufacture more
catalytic converters to meet tighter emission standards in Europe
and China. Although growing demand places upward pressure
on palladium prices, supply issues are the biggest factor.
In 2019, global production of palladium — the U.S. Geolog-
ical Survey has not released an official number, and estimates
on mining output range from 10 million to 12.9 million ounces
— was far below demand for the eighth consecutive year, giving
way to increasing prices. Palladium is generally a secondary
byproduct of platinum and nickel mines; therefore, producers
do not have flexibility to increase palladium output.
Platinum is the most viable precious metal to substitute palla-
dium in catalytic converters; however, supply chain managers
are wary of switching to platinum because palladium mining is
more evenly dispersed around the world, thereby reducing the
risk that a shortage in any one region will disrupt total supply.
Despite the availability of a substitute, automakers are willing to
pay more for palladium to meet tightening emission standards
— for now.
If car manufacturers switch to platinum, palladium demand
from the automotive industry, which makes up an estimated 80
percent of total demand for the metal, will likely wane signifi-
cantly. That might bring prices down. ISM
Riley Mallon is a business research analyst for ProcurementIQ, a division
of IBISWorld, in Los Angeles.

MARCH/APRIL2020 17

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 sustainability
Brittney Manzagol
is senior category activation manager at
Danone North America in Denver
and a member of Institute for Supply
Management®’s Sustainability,
Social Responsibility and
Ethics Committee.
18 ISMMAGAZINE.ORG
18-19 Sustainability Mar_Apr20.indd 18
Business and Procurement
Success is Redefined
The Fourth Industrial Revolution has gotten
new legs as the definition of business success
has expanded to include social and environ-
mental sustainability. In August, the Business
Roundtable, the association of leading U.S.
companies, redefined the purpose of a corpo-
ration beyond creating value for shareholders
to delivering value to all stakeholders — not
only shareholders, but customers, employees,
suppliers and communities.
The Business Roundtable justified this
change as necessary to ensure the future of
large corporations. It warned, “If companies fail
to recognize that the success of our system
is dependent on inclusive long-term growth,
many will raise legitimate questions about the
role of large employers in our society.”
The following month, 19 major corporations
representing US$500 billion in revenue acted
upon this vision during the United Nations
Climate Action Summit in New York. They
launched the One Planet Business Coalition for
Biodiversity; its mission is to restore biodiversity
within the value chain. Positioning themselves
as champions of transformational change, the
19 organizations committed to engage insti-
tutional and financial decision-makers and
develop and promote sustainability policy.
In January, the theme of the World
Economic Forum’s 50th annual meeting in
Davos, Switzerland, was “Stakeholders for
a Cohesive and Sustainable World.” There,
the Davos Manifesto set of ethical principles
was revised for the first time in 40 years. The
new manifesto states that corporations must
“responsibly manage near-term, medium-term
and long-term value creation in pursuit of
sustainable shareholder returns that do not
sacrifice the future for the present.”
As employees and bosses, we are the
drivers of corporations. How do the new defini-
tions change our purpose? What can we do to
increase shareholder value? Let’s see what the
next few months bring.
3/3/20 1:36 PM
 sustainability

ESG Spotlight

38%
Sustainability Stat
Turning Up the Boardroom Heat
Boston-based fund manager State Street Global Advisors (SSGA)
announced in January that it will take “appropriate voting action” against
boards of companies that lag on environmental, social and governance
(ESG) standards. SSGA is one of the world’s largest index fund providers
and a major shareholder in many big companies, so its warning shot packs Share of Standard & Poor’s (S&P)
significant financial punch. Global 1200 companies that disclose
“Ultimately, we have a fiduciary responsibility to our clients to maximize information related to climate-change
the probability of attractive long-term returns — and will never hesitate to risks, according to the Sustainability
use our voice and vote to deliver better performance for them,” Cyrus Tara- Practices: 2019 Edition report by The
porevala, SSGA chief executive, wrote in a letter to company boards. “This Conference Board, a New York-based
is why we are so focused on financially material ESG issues.” Meanwhile, nonprofit business research organiza-
SSGA strategists have identified ESG-investing trends to watch. tion. Up from 25 percent the previous
Among them: year, the increase was the biggest
• With investors and companies seeking a consistent ESG reporting regarding disclosure in the survey.
framework, the Sustainability Accounting Standards Board’s (SASB) The highest disclosure rates by
standard will become the top preference. sector came from energy companies
• ESG-standards compliance will be considered a fiduciary responsibility. (71 percent) and utilities (65 percent).
• ESG strategies will become more complex as investors set more objec- The S&P 1200 index covers 31 coun-
tives, including limiting or eliminating exposure to underperforming tries and about 70 percent of global
companies and sectors. stock market capitalization.
• ESG will become a regular agenda issue in corporate boardrooms,
leading to better infrastructure and disclosure by companies.

Research Spotlight
Index Provides Look at Companies’ Inclusion Levels
The rate of a company’s gender-equality change could
be based on who is at the top, according to Bloomberg’s
2020 Gender-Equality Index (GEI). Data provided by the
325 companies in 42 countries in this year’s GEI indicate
that organizations with a female CEO have more women in
(1) senior-management positions, (2) the top 10 percent of
compensation and (3) revenue-producing roles than those
with a male CEO.
The GEI measures gender equality through five crite-
ria: female leadership and talent pipeline, equal-pay and
gender pay-parity, inclusive culture, sexual harassment
policies and pro-women brand. The number of companies
that met Bloomberg’s index-inclusion threshold is up from
230 last year. “This level of transparency into how compa-
nies are tackling gender equality in the workplace and their
local communities is fueling financial decision-making (and)
supporting the business case for an inclusive corporate
environment,” Bloomberg chair Peter T. Grauer said in a
press release.
Among the other findings, women make up 43
percent of the workforce, 6 percent of CEOs, 28 percent
of corporate board seats and 44 percent of new hires at
GEI companies. There is a median gender-pay gap of 19
percent among the companies. Sixteen percent of organi-
zations have an action plan to close pay gaps. ISM

MARCH/APRIL2020 19

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 What

you
will
come away with?

20 ISMMAGAZINE.ORG

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 With hackathons, workshops
and other interactive
engagements, ISM2020 will
offer attendees new content
and activities with takeaways
to use on the job.

By Sue Doerfler

MARCH/APRIL2020 21

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 What
will you come away with?
he theme of ISM2020, Revolutionary
Ideas, is a twist on Boston’s ties to the
American Revolution. But more impor-
tantly, it’s a two-word description that
sums up what attendees will experience at
Institute for Supply Management®’s 105th
Annual Conference, April 26-29 at the John B. Hynes
Veterans Memorial Convention Center in Boston.
At each event, “there is going to be a takeaway or
idea — something that people walk away with,” says
Jessica Boyd, MBA, Director, Events and Communi-
cations at ISM®. It could be a new connection through
networking or a takeaway from a workshop or hack-
athon. Or it could be a new best practice, strategy or
solution to implement on the job, she says.
Capitalizing on ‘Interactiveness’
The Revolutionary Ideas theme helped shape the
content offered at the Conference, which once
again features informative learning sessions featur-
ing thought leaders and subject-matter experts, as
well as networking events with peers. In addition,
Monday’s and Tuesday’s agenda includes inter-
active hackathons in which attendees will work
together to solve supply management-related
challenges. Hackathon topics, which are reflec-
tive of the six Conference learning tracks, include
“Making an Impact in the Next 100 Days,” “Dealing
Directly with Indirect” and “Getting Real with Digital
Transformation.”
“At each event, attendees can talk with and learn
from each other about how to handle specific prob-
lems,” Boyd says. “There’s a lot of power within that
mindsharing. When attendees are looking at different
perspectives to a given problem — especially consid-
ering their different roles and levels of attendees — it
should provide powerful takeaways.”
The hackathons aren’t the only interactivity at the
Conference. Wednesday’s agenda features three
concurrent hands-on workshops — four-hour deep
dives on risk, talent of the future, and supplier capabil-
ities, the latter with a focus on innovation and supplier
development, Boyd says. “The workshops will have a
tell-show-do-review flow,” with small-group breakouts
and group discussion, she says.
22 ISMMAGAZINE.ORG
20-25 ISM2020.indd 22
At each workshop, attendees will:
• Learn about the topic
• Experience an interactive activity pertaining to it
• Review the issue as a team
• Get a takeaway.
ISM CEO Thomas W. Derry notes, “The ISM
Annual Conference has always been the best source
of education on leading practices in supply manage-
ment. We’re building on that legacy in Boston, by
incorporating hackathons and other opportunities for
attendees to apply the knowledge they acquire to
real-world business problems. This is one way we’re
incorporating key principles for adult learning into the
Conference experience, by providing opportunities to
apply learning to situations they encounter at work.”
Action on Track
The six learning tracks are action-oriented. Offer-
ing something for everyone, whether an emerging
professional or vice president, buyer or CPO, supply
manager or operations manager, each track kicks off
with a Signature Session and offers learning sessions
spread over the Conference’s first three days.
The six tracks are:
• Making an Impact in the Next 100 Days.
(See article on page 24.) Attendees can learn
tools, insights and strategies that they can use
immediately. Topics include becoming empow-
ered to onboard and upboard your career
success, as well as gaining traction and taking
charge in new roles.
• Getting Real with Digital Transformation.
Digital transformation is fostering change — but
organizations must take charge of that transfor-
mation, not the other way around. Attendees will
hear how other companies have transformed
digitally and learn how to embrace technology to
successfully move forward.
• Becoming a Value-Chain Superhero. The
value the procurement function brings to the table
goes far beyond cost. Sessions cover case stud-
ies and best practices and tools for driving value
and aligning with business needs, as well as
advanced category management.
3/3/20 1:37 PM
 ISM2020
• Dealing Directly with Indirect. Value also
is key when dealing with indirect catego-
ries. Session topics that include driving IT
procurement through strategic influence and
end-to-end supply chain excellence will impart
best practices and tools necessary to create
value beyond cost savings.
• Tackling the Talent Challenge. Talent is a hot
topic among supply management organiza-
tions, and this track offers strategies and other
insights on attracting and retaining talent to
remain competitive.
• Today’s Win-Win Negotiator. In this track,
attendees will learn negotiation strategies
instrumental in helping supply management
professionals deliver beyond price. Topics include
dealing with deception and how personality and
communication style can influence a negotiation.
Conference keynote speakers offer other oppor-
tunities for attendees to learn insights, skills and
tools that can be used or translated to their compa-
nies and career. The keynotes, with biographies
provided by their speakers bureau:
Nikki Haley, who served as the
U.S. ambassador to United
Nations from 2017 to 2019.
Embracing teaching through
storytelling, Haley imparts lessons
in leadership, negotiating and decision-making
through firsthand anecdotes from her career in
public service. Using candor and sharp insight,
she shows audiences that America is truly the land
of opportunity — and that if you work hard, you can
fulfill your full potential and achieve your
highest aims.
Retired Marine Gen James
Mattis, Secretary of Defense
from 2017 to 2018. Mattis, a
patriot who always puts country
above self, steeped himself in
the history and tradition of the military and dedi-
cated himself to the Marine Corps. He speaks with
candor and thoughtful analysis about the threats
20-25 ISM2020.indd 23
that face our nation and military. Humorous,
compassionate and strategic, he also offers
insightful lessons in leadership, with a deep focus
on the art of empowering individuals.
A big hit at last year’s Conference in Hous-
ton, the Innovation Hall will again be the place
where industry experts and service providers
share information on cutting-edge digital technol-
ogy, procurement trends and the latest product
innovations.
Also at the Conference:
• Attendees can find out about products, services
and more at the Exhibit Hall, which will feature
more than 100 exhibitor booths of supply
management-related products and services.
• Network opportunities abound. The Welcome
Party and multiple networking receptions enable
attendees to get to know their peers.
• Registration will have a new look and feel, with
kiosks for self-check-in.
• Interactive electronic signage will help guide
attendees to sessions and activities.
Tailor the Experience
In addition, as in previous Conferences, ISM2020
offers special programs that cater to (1) emerg-
ing professionals with up to eight years of supply
management work experience and (2) leaders at
large companies.
Emerging professionals can attend a kickoff
session geared to them, plus other networking and
learning opportunities like the ISM 30 Under 30
Supply Chain Stars reception and mixer.
The invitation-only ExecIn, a “conference within
the Conference” designed for supply manage-
ment leaders of non-consulting organizations
with annual revenues of US$1.2 billion or more,
features executive-level sessions and an oppor-
tunity to attend exclusive sessions with keynote
speakers. ISM
Sue Doerfler is Senior Writer for Inside Supply
Management®.
MARCH/APRIL2020 23
3/3/20 1:37 PM
 100 DAYS
CAN BE GAME-CHANGING
The skills needed to make an immediate impact will be
spotlighted during the ISM2020 Conference in Boston.
By Sue Doerfler
our first 100 days at a new company or
in a new role can set the stage for the
impact and value you’ll bring the orga-
nization. The time period is an “invisible
benchmark” for affecting change.
“The first 100 days are when you make
your mark,” says Mercedes Romero, vice pres-
ident — sourcing and supply management at
Ryder Systems, Inc. in Miami. She is one of three
ISM2020 Conference Leadership Committee (CLC)
members helping coordinate the Making an Impact
in the Next 100 Days track. “It’s when you create
your reputation and establish your leadership style.
It’s when things happen for better or worse. If
you’re ready and prepared for those first 100 days,
you will make a big impact.”
The Making an Impact in the Next 100 Days
learning track sessions at ISM2020, presented
by Institute for Supply Management® (ISM®)
April 26-29 in Boston, will provide you with the
tools, insights and strategies you’ll need to make
that impact. It’s one of six tracks offered at the
Conference.
“The first 100 days can apply to every change in
our careers,” says Romero. “It applies to changing
a role, industry or company, or even changing your
overall career. It can be embracing a new technol-
ogy or process, or even digital transformation.”
24 ISMMAGAZINE.ORG
20-25 ISM2020.indd 24
Sessions That Impart Skills
The track’s sessions feature an array of topics and
presentations, including:
• Case studies. One session, “Porsche: Driving
Process and Tools to Power Shift Procurement,”
delves into how the German auto manufacturer
transformed its procurement team through growth
and development.
• Career success strategies. For example, in
“You ‘InPowered’: How to Onboard and Upboard
Your Career Success in the Next 100 Days,”
presenter Ann Farrell, a certified master executive
coach and founder/CEO of Quantum Endeavors
in the Chicago area, will present strategies, many
based on her own experiences.
“Her approach includes how to create a better
LinkedIn profile so it reflects what you should
be doing in the first 100 days of your career,”
Romero says. “It’s an efficient approach that will
help enhance our strengths and better sell our
experience.”
• The importance of planning. “If you go to
your first day on the job, and you’re not prepared
and don’t have a plan, you’re late,” says Romero,
who is presenting “The 100-Day Game Plan — The
Importance of Gaining Early Traction and Taking
Charge in a New Role” session with Naseem Malik,
CPSM, managing partner at MRA Global Sourcing
in Chicago.
3/3/20 1:37 PM
 “That is exactly how we want to approach the
session. Regardless of whether it’s a new company,
a new role or transformation, you must have a plan.
You should also do your homework way before day
one; preparation is everything.”
• Interactivity. For example, in the hackathon
session, which will be presented by Michael
How to Make the Most of ISM2020
Forrester, vice president — business development
To get a maximum ROI from your ISM2020
at AdTrav Travel Management in the Chicago area,
experience, plan ahead:
attendees will take a deep dive into a common
challenge: How to ensure buy-in on travel programs 1. Pencil in keynote sessions and review
in the first 100 days. Signature Session topics. Register early
“The idea will also be to provide the tools to for Signature Sessions, as seating may be
attendees so they can get buy-in from their stake- limited. If you’re a younger professional,
note times of networking and events.
holders,” Romero says. “We’ll be showing the
significant benefit of getting that buy-in — some- 2. Peruse hackathon and workshop topics.
times you can easily get double-digit savings and Be sure to choose ones that can enhance
overall value if you do it right.” your knowledge of the profession, as
well as help you on the job and in your
career. Are there particular tracks that are
The Rewards of Preparation
of interest?
It can be easy to underestimate how influential the
first 100 days are, Romero says: “The reason is we 3. Create your schedule, filling it with hack-
live in such a rush that we don’t take the time to athons and learning sessions. Select one of
the workshops as your Wednesday event.
look at what’s coming.”
Attend each session and learning event
Additionally, the supply management profes-
focused on finding solutions to current
sion is in a constant state of change, she adds,
issues, problems or challenges on your job.
and professionals must be prepared. “That is why
4. Round your schedule with networking
I believe it’s important for everyone to consider the
sessions, visits to the Exhibit and Innova-
first 100 days of anything they will be doing,” she
tion halls, and such events as the Welcome
says. “I have been in a new role for four months,
Party and Exhibit Hall receptions.
a role I prepared significantly for — and I am now
seeing the results.” ISM
For more information, visit ISM2020.org.
Sue Doerfler is Senior Writer for Inside Supply
Management®.

MARCH/APRIL2020 25

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 Revolutionizing
Manufacturing
One Part at
a Time
By Sue Doerfler

The goal of a pilot program between Daimler,

Premium Aerotec and EOS was to reduce costs
through the 3-D printing of replacement parts
like a truck diesel engine retainer.

Photo courtesy of Daimler

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 Ideal for
parts that can’t
be produced
any other
way, among
other uses,
3-D printing

g is making
headway as
a tool for
prototyping,
product
development
and part
replacement.

MARCH/APRIL2020 27

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 F
inding available replacement
parts for classic cars like
the 1950s Mercedes-Benz
300 SL coupé can be almost
impossible. So, Mercedes-Benz
Classic, a division of Daimler, 3-D
prints such parts for the sports car
as its rearview mirror base and spark
plug holder. Daimler, the German
auto, bus and truck maker, has been
using the technology for 30 years; it
also 3-D prints replacement parts for
Daimler buses and Mercedes-Benz
trucks, among other parts.
Needing a metal turbine blade that
can withstand tons of force, Siemens
Oil and Gas, the energy division of
German industrial giant Siemens,
turned to a manufacturing method it
has used for more than 10 years: 3-D
printing.
Long considered a tool for
prototyping, 3-D printing, also called
additive manufacturing, has become
a valuable technology in the design
and manufacturing of spare and
replacement parts, as well as small-
scale production. It’s making inroads
in new product development and
parts consolidation. It’s also being
used as a tool to fabricate parts for
production-line machines.

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Siemens has a three-tiered approach to additive manufacturing that includes a service-provider
company, Materials Solutions.
“It’s reshaping the prototype industry
— and its future is production,” says Tony
Lancione, co-founder and vice president
— supply chain solutions at IndustryStar, a
managed services and software technology
company in Ann Arbor, Michigan. The tech-
nology has forged into such sectors as oil
and gas, automotive, aerospace, construc-
tion, consumer products, medical and dental.
“Anything that can be molded from plastics
can be 3-D printed, depending on its size,”
Lancione says. “Early on, one of the disad-
vantages was part strength — you weren’t
able to get the strength you could get with
injection-molded parts — but those concerns
seem to be subsiding as the technology
advances. With high-strength applications,
it’s virtually limitless what we can do with it.
3-D printing is a mainstay, definitely in the
automotive as well as other industries.”
The technology, however, is still in its
infancy: The percentage of companies using
3-D printing is small, says Ryan Martin, a
principal analyst at ABI Research. He leads
the Oyster Bay, New York-based advisory
firm’s manufacturing, industrial and enter-
prise Internet of Things (IoT) research area.
Only about 1 percent of products are devel-
oped additively versus reductively, he says.
Nevertheless, he says, there is no ques-
tion that 3-D printing offers companies a
competitive edge.
Daimler’s ‘Product Advantages’
Every year, at Daimler AG’s Sindelfingen and
Untertürkheim sites alone, about 100,000
prototype parts are produced using 3-D print-
ing. Daimler has long used the technology
primarily to produce models, visual aids and
prototypes; in 2016, the company started 3-D
printing select plastic vehicle parts, followed
by metal spare parts the following year.
26-31 3D Printing.indd 29
Photo courtesy of Siemens
René Olma, who heads the company’s
global communications for the Mercedes-
Benz cars and vans, vehicle R&D and
sustainable-mobility division, says that
because of 3-D printing’s potential in proto-
type construction, the company is looking to
expand its use of the technology. “Through
these prototypes, construction and new
concepts can already be presented and
tested at a very early stage with a high
maturity level,” he says.
Pilot projects also help Daimler realize
3-D printing’s value. “We want to help shape
the possible use of 3-D printing technol-
ogy for aluminum and its alloys for various
applications at an early stage, as well as
introduce automotive-industry standards
for series production components,” Olma
says. The company also wants to explore
the potential for motor-vehicle application,
particularly involving reduced process times
and costs, he says: “This is why optimiza-
tion of the entire 3-D printing process chain
and the optimal component design play a
key role for us.”
In a pilot with commercial and military
aircraft supplier Premium Aerotec and
German 3-D printing technology provider
EOS, Daimler set out to demonstrate
the potential for 3-D printed aluminum
replacement parts and series production
components in the automotive and aero-
space industries. The goal of the project,
begun in 2017 and called NextGenAM,
was to reach up to a 50-percent reduction
in cost. While the resulting cost savings
was about 30 percent depending on the
part, Olma says, “we believe an additional
20 percent might be achieved by using
more printers in a parallel-scaled setup or
by implementing more production lines to
increase the output.”
MARCH/APRIL2020 29
3/3/20 1:38 PM
 The first replacement part manufactured at Premium Aerotec ease of redesigning the part, Martin says. On the production
— a bracket for the cold start valve of a diesel truck engine — side, “it is often cheaper and easier to ship data — so the design
is already in use, Olma says. “For the future, we want to make can be produced through additive manufacturing — than it is to
greater use of the degree of freedom and design possibilities of ship a part,” he says.
3-D printing in order to achieve product advantages,” he says. As a result, 3-D printing can have a ripple effect on other
“We are currently dealing with this topic in the design, calculation parts of a company’s supply chain, like logistics and transporta-
and evaluation of various components in the exterior, interior and tion, Beardslee says. “Say you’re ordering a part that has to be
powertrain areas. However, the number of units will initially be put on a ship and exported. That could easily take 30 days from
low and in special-purpose vehicles with smaller quantities.” port to port,” she says. “But if you could make it, even if it took
you four hours, that is an exponentially huge difference.” And
Maximizing Benefits with production localized, shipping and logistics needs change,
As Daimler has experienced, 3-D print- she adds.
ing offers companies a host of benefits that
include cost savings, parts consolidation, Design Flexibility
weight reduction, small production capa- 3-D printing also allows products to be
bilities and flexible design. Consider weight designed in virtually any shape. “The new
reduction, a concern in the aerospace
Anything that trend in product design is automated
industry. Lighter-weight parts that can be can be molded design, where you determine the function of
designed to carry out the same purpose as
from plastics can the part and software determines what the
their production-made counterparts can add form ought to be,” says Pete Tiernan, direc-
tremendous value through cost reduction. “In be 3-D printed, tor of market development for Siemens’
aerospace, every pound you send into space depending on additive manufacturing program. “You’ve
costs about (US)$10,000,” Martin says. “So, likely seen additive parts that look almost
weight reduction is a huge benefit.” Other its size. ... With organic in shape — parts that couldn’t
benchmarks are about $1,000 per pound high-strength have been manufactured any other way.
for commercial aviation and about $100 per You scratch your head and wonder how
pound in automotive, he says.
applications, it’s somebody came up with this shape. That’s
The parts-consolidation capability virtually limitless the additive manufacturing-design software
can enable organizations to reduce their what we can do with coming into play.”
supplier base as well as streamline the The software enables users to input
parts-assembly process, says Susan it. 3-D printing is a such factors as the dimensions of the space
Beardslee, ABI Research principal analyst — mainstay, definitely the part must fit into, the load constraints,
global intelligent transportation and e-freight the part’s necessary strength, the way air
research coverage. “You may be able to go
in the automotive should flow over it, and the optimum weight
from 15, 10 or five parts down to one part” as well as other and cost, Tiernan says: “It sort of turns
that serves the same purpose, she says.
industries. engineering on its head.”
Parts consolidation results in another In the past, organic shapes that can
benefit, Martin says: “Fewer moving parts — TONY LANCIONE
now be made additively couldn’t be manu-
means less wear and tear, and better life in IndustryStar factured, he notes. The shape might be
the field. So, it improves the cost — the TCO constrained by several factors, and design-
profile — of a given part for products.” ers would have to take those things into
The technology is a boon for small- consideration, he says: “A milling machine,
scale applications — like replacement parts for instance, can turn only certain ways — it
for out-of-production components or for can’t get deeply into a cavity, especially if
customizable parts, such as the special that cavity is twisting and turning all around.
customer requests that Daimler receives for individually designed But with additive manufacturing, you don’t have to worry about
interior trim parts of the company’s touring coach. that.”
Having only a few pieces produced traditionally through injec- Tiernan says that designing a part to be 3-D printed in metal
tion molding is costly, Martin says: “A metal injection molding involves other considerations. Among them:
provider isn’t going to entertain a conversation unless you’re • The best way to fit the part into the machine. A part that lays
going to produce several thousand units. If you’re a startup, horizontally, depending on load restraints, might break more
that’s an incredibly high barrier to entry, so you’re unable to get easily than if it had a different orientation, he says.
your parts produced.” • A support structure must be designed so the part doesn’t
Additive manufacturing also can impact supply chain respon- distort during printing. Software is available to help designers
siveness. As a prototyping tool, it can cut lead times due to the create that optimum design and support structure, he says.

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 Siemens’ Approach
Siemens has a three-tiered approach to additive manufacturing:
as a (1) user, primarily through Siemens Oil and Gas, (2) service
provider and (3) software developer. As a user, Tiernan says, the
benefits have included:
• Better performing parts
• Parts that couldn’t have been produced otherwise, due to
the shape, design or weight
• Cost reduction
• Increased responsiveness.
“Some of our power and gas customers are out on oil rigs,”
Tiernan says. “If a part breaks, traditionally we would have had
to go to the service provider to have it manufactured, which
could take a long time. Now, however, some rigs have 3-D print-
ers on site and are conducting performance analytics.” Through
IoT technology and sensors, they can tell if a part is about to fail,
he says: “They can then 3-D print the replacement part and have
it ready before the part even breaks.”
As a service provider and software developer, Siemens is
helping customers achieve the same benefits, he says.
Barriers to Adoption
Despite its advantages, companies interested in implementing
3-D printing technology face numerous challenges. One is a lack
of standardization in the printing process, Lancione says: “When
you 3-D print, the next part might not be exactly the same as the
first part — there are minor differences.” While companies are
used to dealing with this issue with injection molding processes
and can set up a tolerance range for a part or specification, “in
3-D printing, it’s harder to standardize that process as of right
now. It will get better as machines get better,” he says.
Other challenges:
• Overcoming knowledge gaps, skepticism and a “we’ve
always done it this way” mindset
• Intellectual-property issues relating to trademarked and
patented designs, and the potential for copying and copyright
infringement
• Sustainability and environmental issues, particularly with use
of plastics and polymers.
“I think that as 3-D printing becomes more widely adopted,
people will bridge knowledge gaps and there will be more
standardized processes pertaining to the intellectual property
element of these designs,” Lancione says. “But right now, it’s
kind of like the wild, Wild West.”
Another issue is that some of the materials used in 3-D
printing “are not always at the level we are accustomed to from
other manufacturing processes,” Olma says. “Therefore, every
new material used must be tested, qualified and optimized if
necessary.”
High equipment costs associated with additive manufactur-
ing are one of the biggest challenges to adoption. “Historically,
it’s been capital-intensive to work with additive, because for a
legitimate production-ready system, you need to spend upwards
26-31 3D Printing.indd 31
Photo courtesy of Siemens
Siemens Oil and Gas 3-D printed a metal turbine blade that can
withstand tons of force.
of $500,000 — and in some cases, more than $1 million — to
have a fully integrated system,” Martin says. “Today, there are
companies that offer service-based models, where users pay an
annual subscription fee that covers everything except the mate-
rial you use.”
This is an attractive option for companies, especially ones
that are just starting to implement 3-D printing capabilities, he
says: “I would expect more companies to go in this direction.”
And, as with other technologies, the cost likely will decrease
over time.
Looking Ahead
As additive manufacturing technology advances, it will get more
applications. “The future for 3-D printing is bright,” says Lanci-
one, who forecasts a bigger interest in metal 3-D printing as
companies realize the advantages it can provide. “The tech-
nology of 3-D printing is going to increase in terms of higher
strength and better materials,” he says.
Beardslee expects 3-D printing to eventually enable supply
chain consolidation, particularly in the transportation and logis-
tics industry. “Think about a fulfillment center,” she says. “Why
would you carry that high level of inventory when you can make
things in relative real time while being closer to your customers?
Over time, these multi-football-field-sized fulfillment centers will
be replaced.”
For Tiernan and Siemens, the ultimate vision is to use addi-
tive to create what the company calls autonomous innovation.
“You’ve heard the term autonomous robots — robots that can
think for themselves. That’s the goal with additive and innovation
in general,” Tiernan says. “People will define the functionality of
their parts or products, saying, for example, ‘I want this car to
go this fast, to withstand this type of force, and for the brakes to
be able to break this fast.’ You define the functionality and let the
software determine what the optimal parts are, whether it’s an
individual part assembly or the entire system.
“You can only do that with additive. (In) traditional manufac-
turing, you can design the ideal part — but you can’t produce it.
Now, you can almost automate the entire process.” ISM
Sue Doerfler is Senior Writer for Inside Supply Management®.
MARCH/APRIL2020 31
3/3/20 1:38 PM
 Powering with
PURPOSE By Lisa Bolla

In the wake of an economic

crisis, a Midwestern energy
company transformed
itself and became one
of the country’s leading
community-focused
organizations.

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 MARCH/APRIL2020 33

32-37 DTE Mar_Apr20.indd 33 3/3/20 1:39 PM


With DTE executives pledging to use layoffs
only as a last resort, the company’s 10,000
employees aimed to become more efficient.
Thousands of innovations helped streamline
work, eliminate waste and develop synergies.
34 ISMMAGAZINE.ORG
32-37 DTE Mar_Apr20.indd 34
D
TE Energy CPO Tony Tomczak knows
what it’s like to spend the holiday season
at the epicenter of a global economic
crisis. He and other DTE employees lived
through the experience in 2008.
A diversified energy company with busi-
nesses including electric and natural gas utilities,
DTE serves millions of people in Michigan. The
company is based in Detroit, which has strug-
gled with a decline in American manufacturing
jobs, especially in the auto industry. Detroit’s
jobless rate in 2008 was more than 40 percent.
The average home price was US$7,500, and the
city was hundreds of millions of dollars in debt.
Elsewhere in Michigan, families and communities
dealt with escalating layoffs and foreclosures.
In the weeks before Thanksgiving that year,
more than $200 million in DTE revenue evapo-
rated as a result of lower electric and natural
gas usage caused by the economic down-
turn. “At the time, things looked pretty bleak,”
Tomczak admits.
However, DTE survived the crisis and, in
the process, shifted its aspirations beyond
DTE Energy transformed a
once-vacant dirt lot in the
shadow of its headquarters
complex into Beacon Park,
which attracts nearly a
million visitors each year.
Photos courtesy of DTE Energy
3/3/20 1:39 PM
 providing power — to be a force that
powers growth and prosperity in the
communities it serves.
Climbing Back from Rock Bottom
The economic casualties stemming from
the 2008 crisis left DTE in a difficult posi-
tion. “We hit bottom on just about every
front,” Tomczak says. “In a short time,
everything we worked on relative to our
business plan disintegrated. But, when
you hit rock bottom, that’s when you
begin to climb.”
With DTE executives pledging to use
layoffs only as a last resort, the compa-
ny’s 10,000 employees aimed to become
more efficient. Thousands of innova-
tions helped streamline work, eliminate
waste and develop synergies. By work-
ing together, employees offset the $200
million revenue loss and implemented
improvement initiatives so successfully
that leaders double- and triple-checked
accounting systems to make sure the
financial statements were correct.
Although 2009 was a harrowing year,
DTE emerged from the Great Recession
in better shape. Thousands of Mich-
igan residents, however, were not so
fortunate. “Our employees had friends,
neighbors and family members in crisis,”
Tomczak says. “It left us wondering what
more we could do, and we engaged in
deep thought into how we could help
Michigan and Detroit.”
Within this context, DTE formulated a
new objective: to be “the best-operated
energy company in North America and
a force for growth and prosperity in the
communities where we live and serve.”
Local Spending Commitment
After his election in 2010, then-Michi-
gan governor Rick Snyder asked DTE
to redirect its external spending toward
businesses located in Michigan. However,
this endeavor’s success was hard to
predict, given the state’s economy and
the tumultuous business landscape.
“At the time, we were spending $450
million each year with in-state busi-
32-37 DTE Mar_Apr20.indd 35
nesses,” Tomczak says. “We set a goal
of increasing that by $50 million annually.
I didn’t know if we could make that goal,
but we promised to do our best.” After
DTE made this commitment, the compa-
ny’s supply management team launched
a search for Michigan-based suppliers.
There was one ground rule: no compro-
mising on cost or quality.
“Meeting the $50-million goal turned
out to be more achievable than we initially
estimated,” Tomczak says. “We deliv-
ered on our pledge and then some. Our
people took hold of this program with
energy and passion, because they knew
it was a chance to help our state and
make a difference.”
Today, DTE spends more than
$2 billion a year with Michigan-based Our employees had
businesses — four times the amount it
spent in 2011. According to data from friends, neighbors
the Michigan Economic Development and family
Corporation, this four-fold increase is
estimated to have created and supported members in crisis.
14,000 sustained jobs — more people
than DTE directly employs. Because DTE It left us wondering
has millions of customers in Michigan, what more we
new jobs and businesses laid a founda-
tion for the company’s economic growth. could do, and we
Last spring, DTE doubled down on
this success by pledging to spend $10 engaged in deep
billion with Michigan-based suppliers over thought into how
the next five years. “This is just our way
of doing business now,” says Tomczak. we could help
“Our local spending has increased every
year since 2011. We’ve learned that we Michigan and
need to be intentional about growing this Detroit.
commitment. There are a lot of great,
competitive companies in our state, but
we have to put in the work to find them.” — Tony Tomczak
DTE requires at least two Michi- DTE Energy
gan-based suppliers on new contract
bids. The company also encourages
existing and new suppliers to open
offices in Michigan, if they haven’t
already. Internal local spending targets
for the company’s largest business units
are among the biggest drivers of overall
spending goals.
The company also is building on its
supplier diversity initiatives by committing
MARCH/APRIL2020 35
3/3/20 1:39 PM
 to spend $500 million with
women- and minority-owned
businesses over the same
five-year period. To facilitate this
commitment, a team of employees
seeks diverse entrepreneurs and offers
education, mentoring and outreach to help
their companies grow.
DTE hosts seminars to explain its bid
process to business owners and provide
information on open-bid opportunities.
Networking events enable entrepreneurs
to meet company buyers and leaders.
High-potential suppliers receive training and
opportunities to develop relationships with
buyers and other company officials. Initially,
the supply management team provides
guidance. Then, armed with knowledge and
Michigan Minority encouragement, local business owners take
Supplier Devel- the reins and begin to blossom, generating
opment Council jobs and opportunity
president and in the process.
CEO Michelle “We have one supplier who grew from
Sourie Robinson employing a few people to employing 300.
presents DTE Another vendor grew from himself and a
part-time helper to 50 employees,” Tomczak
Energy CPO Tony
says. “We’ve replicated this success over
Tomczak an award
and over again — and that’s how we’re
for supplier diver-
generating thousands of jobs.”
sity excellence. The success of its local spending
initiative helped DTE earn the Civic 50
Award from the Points of Light charita-
ble foundation for being one of the most
community-minded companies in the U.S.
in 2018 and ’19.
to a report by the Brookings Institution, a
Washington-based public policy organization.
With millions of miles of overhead power
lines, DTE depends on tree-trimming suppli-
ers to keep branches off wires to reduce
power outages. These suppliers have been
faced with a chronic shortage of qualified
workers.
The program addresses both problems.
DTE partnered with the Michigan Depart-
ment of Corrections (MDOC) to develop and
launch a program to train returning citizens
for careers in tree trimming. In the six- to
nine-month program, students learn how to
safely climb trees, use trimming equipment
and obtain a commercial driver’s license.
Last summer, the first class completed the
program. DTE worked in partnership with
the MDOC, a Detroit chapter of the Inter-
national Brotherhood of Electrical Workers
Union and tree-trimming equipment suppli-
ers to establish a pathway to employment
for program graduates.

Workforce Development
DTE has expanded its community efforts
beyond helping suppliers and other busi-
nesses. A recent example is a creative
solution to equip people released from
prison, known as returning citizens, with
skills for and connections to an in-demand
job: tree trimming. Studies have found that
up to a year after being released, between
60 percent and 75 percent of returning
citizens are unemployed — that’s more
than 15 times the overall Michigan state
unemployment rate. Without stable employ-
ment, roughly one-third will end up in the
criminal justice system again, according

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 DTE is also striving to improve career from eight large Detroit companies,
prospects for a broader group of Mich- led by Tomczak, facilitated the hiring
igan’s population. Tomczak is leading of 2,000 local residents through Octo-
DTE’s main suppliers in an initiative ber. The group held its first career
designed to improve career skills and fair last summer, which was attended
opportunities for Detroit residents. A by more than 1,000 job seekers and
decade after the disastrous economic featured 40 companies with 2,300
meltdown, Detroit is blooming with new available positions.
business and construction, yet many
citizens have been left out of this revital- Expanding on Community
ization. Nearly half (46.1 percent) of the Involvement
city’s adult (age 16 and older) popula- Realizing that the company could do
tion is not participating in the workforce, more for communities than supplier
according to the U.S. Census Bureau development and employment, DTE
— leaving hundreds of skilled-trades leaders have spearheaded other
jobs unfilled. projects, including:
“We have the opportunity — and the Urban revitalization. The company
responsibility — to provide people with transformed a once-vacant dirt lot in the
on-ramps into the workforce,” Tomczak shadow of its headquarters complex
says. “In the process, we are rebuild- into a year-round entertainment desti-
ing the middle class and revving up the nation for residents. Called Beacon
engine of our local economy.” Park because it brings light, energy
A team of procurement officers and motion to west central Detroit, the
1.2-acre space has become a magnet
for the community and new develop-
ment. The park features a restaurant
and hosts concerts, food trucks,
children’s activities and other events
year-round.
“Beacon Park has succeeded
beyond our wildest dreams,” Tomczak
says. “It now draws over a million visi-
tors a year and has really transformed
the neighborhood.”
Environmental preservation.
In addition to creating more urban
green space in Detroit, DTE is working
to create a greener future. In Septem-
ber, the company set a bold goal to
significantly reduce carbon emissions:
By 2050, DTE aspires to have net zero
carbon emissions in its electric business.
DTE Energy employees logged nearly 70,000
volunteer hours last year by working in community
gardens, food banks and other locations.
32-37 DTE Mar_Apr20.indd 37
As Michigan’s clean-energy leader,
DTE is on pace to triple its renewable
capacity in the next 10 years and has
developed the largest wind and solar
installations in the Midwest. To date,
the company has invested $2.9 billion
in Michigan-made renewables and
expects to double that figure in the
next five years. 
“In Michigan, the wind doesn’t
always blow, and the sun doesn’t
always shine,” Tomczak says. “So,
we also need additional, affordable
power-generating sources that we
can rely on 24/7.” To that end, DTE is
building the Blue Water Energy Center,
a natural-gas-fueled power plant that
will replace three retiring coal plants
and provide enough energy to power
850,000 homes beginning in 2022.
Volunteerism. DTE’s community
advocacy is amplified by employees who
volunteer their time and talents at orga-
nizations around the state. Employees
work at community gardens, homeless
shelters, food banks and thousands of
other locations. DTE employees logged
nearly 70,000 volunteer hours last year;
they view volunteerism as an opportunity
to increase engagement and make a
difference.
According to Tomczak, these
volunteer hours and DTE’s broader
community focus are grounded in the
philosophy that solutions to complex
problems require participation from
every corner of society. “We believe
that the private sector — work-
ing together with governmental and
nonprofit organizations — must take
responsibility for solving society’s tough-
est problems,” Tomczak says. “We want
to be more than just an energy provider.
We want to be a resource for the
communities we serve and become a
transformational force for good through-
out the state.” ISM
Lisa Bolla is senior communications
strategist at DTE Energy in Detroit.
MARCH/APRIL2020 37
3/3/20 1:39 PM
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 For procurement professionals and
organizations, success hinges on
serving know-how to stakeholders
and suppliers; these 10 concepts
are the ingredients for successful
relationships and business outcomes.

It’s All in the

Delivery By John Paparella, CPSM, CPSD

E
very business professional has a definition or understand-
ing of what the procurement function is about. Some call it
a team sport or group effort, others consider it a showcase
for individual performances, while still others identify it is a
job in which purchasing activities help attain overall organizational
objectives. And others say procurement is just an administrative
function, with little or no impact to the organization’s success.
The most-frequently asked question about procurement is,
“Is procurement tactical or strategic?” That raises other ques-
tions, like, “Can’t anyone in an organization buy commodities and
services? Do procurement professionals really need a certain skill
set and knowledge — know-how — to be effective and make a
difference?”
These and other perceptions, questions and doubts about
the procurement function’s role and purpose within organizations
are prevalent across multiple industries. Indeed, I have met many
“Priceline” negotiator types who want to hammer out their own
agreements, as well as those who ask, “Can’t you just create a
PO for this and move on?”
Thus, when given an opportunity to save the company money
and reduce risk, our first instinct is to break down these stigmas

MARCH/APRIL2020 39

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 It’s All in the
Delivery
and communicate procurement’s value
and know-how to stakeholders. But
what you say is not as important as how
you say it. The “how” — your approach
— is a crucial element that will (1) set
the foundation for your relationship with
stakeholders and (2) help you establish
your unique role for them.
You’ll want to start by learning their
impressions of what procurement is and
does. Then, educate them by filling in
the gaps in their understanding of the
profession. Not only will this approach
help convey the true and full spectrum
of a procurement professional’s capabil-
Communication extends beyond stakeholders.
Nothing is more important than your entire organization
recognizing the role and impact procurement can
have in the company’s overall success.
ities, but it can also make the case that
you — not the stakeholder — should
lead the project.
The following 10 “know-how” concepts
can help you craft an effective delivery.
1) Communication is Key
How you communicate with stakehold-
ers can make or break a project. The
first steps:
• Use soft skills to make points. Be
aware of your manner, tone and
body language, which can influ-
ence how you start the journey with
stakeholders.
• Talk about project objectives — with
an emphasis on listening to stake-
holders’ thoughts — and learn their
40 ISMMAGAZINE.ORG
38-43 Delivery.indd 40
vision for making those objectives a
reality.
• Understand and accept the role you
are asked to play and use that as
your starting point.
Next, begin building or expanding
the level of trust stakeholders have in
you. Relationship building is a contin-
uous exercise. Let stakeholders know
you are an ally and that you want the
same successful outcome for the proj-
ect. In doing so, you create the space
for the relationship to grow.
Additionally, allow yourself to be
friendly, informative, inquisitive and —
when you need to be — authoritative.
Be indirectly direct and vice versa.
Provide clear guidance and straight talk
to keep the stakeholders on track. Steer
clear of unnecessary jargon, acronyms
and buzzwords that can misdirect or
confuse.
Communication extends beyond
stakeholders. Nothing is more important
than your entire organization recogniz-
ing the role and impact procurement
can have in the company’s overall
success. Ineffective communication
can put procurement in constant
marketing mode, instead of serving as
an integrated and leading driver of a
company’s supply chain.
3/3/20 2:46 PM
 2) Face and Address Challenges
Each project presents unique challenges,
at any time — and procurement practi-
tioners need to juggle and address such
situations quickly with stakeholders to
keep them on track. This will prevent the
project from taking a potentially disas-
trous trajectory.
Ideally, projects would follow a stra-
tegically mapped-out plan to reach the
most beneficial outcome for the orga-
nization — but that doesn’t always
happen. Regularly performing situational-
management assessments can help
you gain and maintain control of a proj-
ect that has the potential to go down a
particularly dangerous path.
Situational management requires
procurement professionals to wear many
hats and move quickly into action. For
example, say you have two simultaneous
projects — one with a newly hired stake-
holder to your organization, the other
with a longer-term employee. The project
dynamics will likely be different in that the
new employee will offer fresh ideas, while
the established employee will adopt a
“business as usual” mentality. In each
scenario, you can demonstrate not only
your know-how, but your value to the
organization: You have the opportunity
to provide important guidelines, advice
and optimization for the project and your
company — showing stakeholders what
procurement does every day.
3) Make an Impact
Though the circumstances and complex-
ity level can vary across projects, the
concept used to address each one
should be the same. A formula that
includes common sense, unbiased
fact-gathering, innovation, creativity and
progressive thinking can help procure-
ment professionals arrive at a sound
approach to make an impact.
The elements — the how — necessary
to make an impact include:
• Forecasting the optimal project
outcome
38-43 Delivery.indd 41
• Assessing the project’s starting
conditions, as well as stake-
holder expectations, roles and
responsibilities
• Planning a project roadmap to the
solution
• Designing the steps, tasks and activi-
ties needed to reach the objective
• Coordinating, directing and leading
the project plan
• Communicating to all parties to
ensure project alignment.
4) Solve Problems and Innovate
With any project, a consistent business
process-improvement mentality and
the courage to innovate across the
entire organization can serve
professionals well.
This approach will also help you add
value, find savings and help lead your
company forward in the high-stakes
business arena of bigger, better, faster
and stronger. Thinking of, identifying
or creating a better process that saves
the company time and money not only
gets you noticed, it can polish procure-
ment’s reputation by demonstrating that
the function is a true and valid source
of innovation that can drive organiza-
tional success.
Discovering duplication by differ-
ent departments, collaborating with a
supplier to redesign a part, or reducing
waste without reducing productivity, for
example, are just some of the activities
that will help the procurement organiza-
tion earn a company-wide reputation as
a problem solver and innovator.
5) Defend the Digital Revolution
The key to managing multidimensional
projects is to remain focused and disci-
plined and use the technological tools at
your disposal. Like an orchestra conduc-
tor, you must produce a harmonious
and appealing sound for your audience
— in this case, a message for stake-
holders — that commands attention and
participation.
For example, many sourcing tools
have a collaborative functionality for
RFP. Introduce and use these tools with
stakeholders to help them buy into their
time-saving capabilities. Use the tools’
functionality to present information in
a user-friendly manner that highlights
dynamics stakeholders care about, like
supplier capabilities, experience and
competitive advantages that streamline
the decision-making process.
6) Be Practical Regarding
Technology
While you need to tap the digital revo-
lution, you also don’t always need “an
app” — software or another technology
— to fix every problem. Doing more with
less is always an option to be consid-
ered with stakeholders. If you continue
building and layering IT systems with-
out interfaces and reporting functions
between them, you will create a host of
other inefficiencies down the road.
Also, it’s prudent to pick and choose
technologies, which are expensive. While
we should stay on top of current and
emerging technologies, we don’t neces-
sarily have to invest company dollars in
all of them.
Another value driver of procurement
is being strategic, so work with your
IT departments strategically to under-
stand compatibility issues as well as
maintenance, hardware and software
implications of technologies of interest to
your stakeholders. Ensure your organiza-
tion has a well-managed IT governance
structure before procuring soon-to-be-
obsolete technology.
7) Be Agile, Flexible and Prepared
Given the constant evolution of business
needs, risks and challenges, an agile,
flexible mindset can bring you success.
While leading all of your stakeholders’
procurement projects from day one can
be a pipe dream, it still is a noble target
to strive for. Businesses brainstorm their
next moves and objectives and change
MARCH/APRIL2020 41
3/3/20 2:46 PM
 It’s All in the
Delivery
course multiple times before deciding on
a way forward with a project — includ-
ing when to involve procurement. This is
where the relationships you’ve worked
to build and maintain can pay off. If the
business knows procurement can add
value, you might be invited to a project’s
first brainstorming session, a ground-
floor opportunity to guide stakeholders
to a successful conclusion.
Even though the supply management
profession is filled with subject-matter
experts, we are constantly asked,
“What have you done for me lately?”
Demonstrating agility, flexibility and
preparedness in varying situations will
help you and the procurement organiza-
tion gain trust.
8) Tailor Your Approach
It’s also important to establish a consis-
tent format for introducing procurement
to a project, whether through a meet-
ing, personal referral or a simple email
request. Then begin your approach to
align everyone for success: Define roles
and responsibilities, formulate a project
charter, establish a RACI (responsible,
accountable, consulted and informed)
responsibility-assignment matrix, discuss
a timeline and agree on the project
objective.
Business environments differ among
organizations, so tailor your approach.
Some organizations have or are in the
process of developing a mature, strate-
gic structure in which business, finance,
procurement and other stakeholders
come together to kick off projects as a
unified team. Others need to break away
from a reactive mindset. A business
cultural change is difficult and will not
happen overnight, if at all. So, be flexible.
9) Add Value
Savings realized at the end of a project
42 ISMMAGAZINE.ORG
38-43 Delivery.indd 42
draws attention. However, it’s import-
ant to emphasize the hidden value the
organization gained from procurement’s
know-how. While that value might not
result in dollar savings, it can trigger
a change in behavior or direction, or
spark a new approach that improves the
organization.
A formula that
includes common
sense, unbiased
fact-gathering,
innovation,
creativity and
progressive
thinking can help
procurement
professionals
arrive at a sound
approach to
make an impact.
For example, say you’ve worked
with a supplier for many years but decide
to issue an RFP for the same product
or service to new suppliers. The bids
you receive might be similar, but through
the process, you’re able to identify a
new supplier that can provide a
technology or methodology to improve
the efficiency of data gathering and
processing, thus increasing your
organization’s productivity.
Cost avoidance can be another
example of a value-add solution.
Consider a supplier that offers a product
package at a certain price. If procure-
ment negotiates to buy only the parts
of the package it needs at a reduced
cost, the difference between the origi-
nal package price and negotiated price
is considered cost avoidance at some
companies.
10) Secure Win-Win Negotiations
When the nine other elements of the
how come together, the 10th happens
organically: You will be in sync with your
stakeholders and suppliers, giving you
a much better chance of negotiating
successfully.
As a procurement professional,
you must be knowledgeable in many
business subject areas to be effective
and successful. These 10 “know-how”
concepts can be used as guidelines
to deliver maximum value to your
organization.
Without know-how, dynamics involv-
ing you, the procurement organization,
stakeholders and suppliers can quickly
become contentious and difficult. By
applying your experience to these
concepts, you will be in a better position
to ensure that all parties have a satisfying
win-win experience.
So, before starting your next project,
remember to ask stakeholders and
suppliers: Are you in the know? Then,
show them how. ISM
John Paparella is senior category
manager — procurement at United
Airlines in Chicago.
3/3/20 2:46 PM
 Photo by Seda Acikoz
Kearney, Istanbul
When the
company just
feels right
kearney.com

kearney.com

MARCH/APRIL2020 43

38-43 Delivery.indd 43 3/3/20 1:40 PM

 engaged

Amanda Kachinsky In Biotechnology Sourcing,

‘No Two Days Are the Same’
Title: Head of global indirect and
commercial strategic sourcing

Company: Bluebird Bio

Location: Cambridge,
Massachusetts
Pet: I have a cat, which is somewhat
different from a pet — it’s still not
clear which of us is in charge.
Favorite food: Homemade pasta
and tomato sauce.
Favorite pastimes: Spending time
with family and friends, exercise and
being outdoors. It’s especially great
when these activities overlap.
Describe your job in one sentence.
I partner with internal business stakeholders
and suppliers to ensure strategic alignment
of goals and business needs — establishing
strong relationships to mutually achieve posi-
tive outcomes.
How long have you worked for your
company?
I’ve worked for Bluebird Bio for three years,
with my role evolving and scaling to best fit
the needs of the company.
What one word describes you best?
Leader.
How do you approach change?
I embrace and encourage change in the
workplace and my personal life. I aim to
inspire others to be open to change and

44 ISMMAGAZINE.ORG

44-45 Engaged Mar_Apr20.indd 44 3/3/20 1:41 PM


adopt a mindset of continuous improve-
ment. As sourcing professionals, we are
change agents fostering new and more
efficient ways of working with people,
processes, tools or technology.
What do you like best about what
you do?
Two things: That no two days are the
same, and that I am ultimately working to
make a difference for patients. The ability
to collaborate cross-functionally on new
engagements that support company
goals and contribute to improving a
patient’s quality of life is rewarding.
How did you get into the supply
management profession?
Although my first procurement position
was as an undergraduate intern at Pfizer,
I didn’t think of the function as a career
path until my tenure at Liberty Mutual
Insurance. There, I was introduced to
procurement and sourcing best practices
before transitioning to the department’s
strategic sourcing side, a shift that led
me to opportunities of greater responsi-
bility in sourcing, supplier management
and supply chain. At Bluebird Bio, I have
applied those learnings to the biotech
industry and introduced the strate-
gic-sourcing process to the company
through establishing strong partner-
ships with my internal stakeholders and
preferred suppliers.
How do you define work/life
balance?
Having fulfillment in the work I do, pride
in the company I work for and time to
enjoy my personal life. If you love what
you do and the people you do it with,
then it’s all the same thing.
Why is contributing to the profes-
sion so important to you?
I believe it’s important to encourage
44-45 Engaged Mar_Apr20.indd 45
and teach young professionals through
mentoring and to sharing the great
opportunities available in supply
“
Through mentoring,
I hope to excite,
inspire and develop
the profession’s next
generation of talent.
The benefit for me is
that I am ‘mentored’
in return — with every
experience, I learn
and grow as well.
“ become a supplier coach, legal and
management. Through mentoring, I hope
to excite, inspire and develop the profes-
sion’s next generation of talent. The
benefit for me is that I am “mentored”
in return — with every experience, I
learn and grow as well. I enjoy giving
engaged
back to the procurement community
that mentored and coached me along
the way, which helped me achieve my
successes in the profession.
What is the biggest challenge
facing supply management
organizations?
With the rapid growth in the economy,
many companies have scaled faster
than they could have imagined. This has
necessitated accelerated timelines for
building supply management and strat-
egy teams to handle the sharp increase
in corporate spend that comes during
high-growth periods.
The biggest challenge supply
management organizations face is the
ability to (1) move quickly, (2) innovate
and (3) leverage machine learning to
better understand data trends and gain
efficiencies that support this hyper-
growth. Furthermore, the profession’s
need for a robust talent pool is becoming
more evident, as demand is greater than
available resources.
What is your vision of the future
of the profession?
The supply management role is shift-
ing from that of a business partner to
a strategic innovator. This transfor-
mation is requiring professionals to
financial expert, risk adviser and internal
consultant.
Supply management profession-
als will adopt these roles and more,
exhibiting a behavior of boldness and
innovation that will positively drive
change and impact business objectives
more significantly than ever before. ISM
MARCH/APRIL2020 45
3/3/20 1:41 PM
 talent
Author
Naseem Malik, CPSM,
is managing partner at MRA Global
Sourcing in Chicago and a member of
Institute for Supply Management®’s
Talent Management Committee.
46 ISMMAGAZINE.ORG
46-47 Talent Mar_Apr20.indd 46
Data Comes to the Rescue for
Strategic Talent Management
“Candidate A met all our requirements on
paper, but I got a really great vibe from candi-
date B in the interview. So, let’s go with B.”
In an era where workers at every level of an
organization are expected to justify decisions
with facts and figures, it’s peculiar to note that
the talent acquisition (TA) realm seems to be
lagging in this area.
You won’t find a CPO making a major
procurement decision based on a “gut feel”
or a CEO shifting a company’s strategic direc-
tion due to a personal preference. But hiring
authorities regularly make off-the-cuff deci-
sions without using the most important tool of
21st-century business: data.
Data can enhance four key steps of talent
management: identifying needs, hiring, skills
development and retention.
Identifying Talent Needs
One of the differences between tactical and
strategic recruitment is talent managers’ ability
to proactively anticipate hiring needs. Shifting
from reactive to proactive hiring starts with
access to historical data. Say, for example,
your organization’s procurement team has a
10 percent annual turnover, and that typically,
employees tender their notices in first quarter
of the fiscal year, after annual bonuses are paid
out. Armed with this information, there’s no
reason managers should scramble to replace
staff when people leave.
A proactive talent manager would begin
engaging the pool of active and passive
candidates well in advance of first-quarter
departures to ensure a viable short list of inter-
ested candidates. Tracking yield ratios will
3/3/20 1:41 PM

provide an understanding of how many
applicants are typically needed to make
one hire.
Leveraging “people data” will also
enable organizations to allocate their
hiring budgets more intelligently, track
the sources of hire — as in, where the
best candidates are recruited from —
and unearth hiring issues that cause
them to miss out on quality candidates.
Hiring
Managers can move from subjective to
objective hiring by selecting candidates
based on assessment scores (including
from sample work tests) and sticking to
a structured interview to ensure candi-
dates are asked the same questions.
While it may be more interesting to
freestyle with interview questions —
especially when you’re talking to dozens
of candidates — this makes it much
harder to make an objective decision
during the selection process.
Think about other data points that
you could potentially capture during the
hiring process that will ultimately help
improve the quality of hire while decreas-
ing time and cost per hire. For example:
• Track the hiring team’s productivity
and efficiency. Where are bottlenecks
in the hiring process?
• If you have an online-application
process, find out how many prospec-
tive candidates complete it. If there’s
a conversion issue, discover exactly
where the process is abandoned. Use
this data to improve the candidate
experience.
• If top candidates decline your offer,
ask why and, if possible, find out
where they end up working.
• Track retention and hiring satisfaction.
Skills Development
An integral part of talent management,
skills development helps businesses
optimize talent, increase performance
levels and improve retention. But skills
development is also where budgets are
wasted with training programs that are
one-size-fits-all or teach workers skills
46-47 Talent Mar_Apr20.indd 47
they already have.
Data-driven learning is about making
your training effective, tailored and rele-
vant to the learner. It involves:
• Understanding each learner
• Personalizing skills development
through tailored courses
• Identifying why training doesn’t “stick”
• Improving engagement
• Measuring training programs’
success.
Retention
Put people data to work to (1) identify
employees who are most likely to leave
One of the differences
between tactical and
strategic recruitment
is talent managers’
ability to proactively
anticipate hiring needs.
your organization, (2) understand why,
and (3) take steps to re-engage them.
While an exit interview is a time-honored
way to learn why an employee leaves,
that’s when it’s too late to do anything
about it. Instead, regular employee
surveys can identify pain points and
rectify them where possible. CIO.com
provides an example of an employee-
polling tool that asks: “What is one
process that, if eliminated, could make
you more productive?”
Survey your employees to under-
stand the value they place on the typical
tools companies use to drive retention:
better leadership, training programs,
talent
career paths, financial bonuses and
other perks, and endeavors that promote
work-life balance.
Finally, think about how you can use
applicant data to hire people who are
more likely to stay at your organization
for longer than the average tenure. While
the stigma associated with job-hop-
ping has diminished with the rise of the
millennial workforce, the data in an appli-
cant’s employment history can be used
to predict how long he or she might stay
at a company.
If your organization has a significant
retention problem, the human resources
(HR) department can use its gathered
data to make a business case for imple-
menting hiring-process improvements.
Again, it’s about eliminating guesswork
and making evidence-based, high-quality
decisions that are more likely to pay off.
Other Considerations
Two final points:
• Whose job is talent management,
anyway? Is it up to the HR team,
external recruiters or hiring manag-
ers? Current wisdom is that talent
management is a shared responsibil-
ity, which is why everyone must be on
board with the concept. Recruiters
and HR representatives can set the
agenda and unearth relevant data,
but their most critical task is equip-
ping business managers with the
information necessary to make better
decisions around hiring, training,
engagement and retention.
• The amount of data can feel over-
whelming, but technology is here to
help. Research talent management
systems on the market — espe-
cially the data they capture, how it is
captured, and how it is used to guide
fact-based decision-making.
Without data, getting strategic about
talent management will be an uphill
battle for businesses. There are deep
pools of people-data insights for any
organization to tap, but it’s up to talent
managers to capitalize on it. ISM
MARCH/APRIL2020 47
3/3/20 1:41 PM
 research
Neglecting ‘Everyone’s
Business’ Is Unsustainable
Author Sustainability issues present complex chal-
Mary Siegfried lenges for supply management organizations
is a freelance writer based that must address such evolving environmental
in Chandler, Arizona. and social topics as supplier diversity, conflict
minerals and fair labor practices. Supply chain
leaders are acutely aware that sustainabil-
ity is growing in importance as customers,
consumers and shareholders take note of how
companies are handling this important area.
Whether a company is “just dipping its toe
in the water” or is deep into measuring and
evaluating sustainability practices through-
out its supply chain, it’s evident that a solid
sustainability program is a smart and essen-
tial business practice. A recent Critical Issue
Exchange (CIE) by CAPS Research, the organi-
zation jointly sponsored by Institute for Supply
Management® (ISM®) and Arizona State Univer-
48 ISMMAGAZINE.ORG
48-49 research Mar_Apr20.indd 48
sity (ASU), delved into the topic of sustainability,
discussing supply management’s role, mapping
ways to drive sustainability practices into the
supply chain, and evaluating programs to
measure and report progress in sustainability.
Three companies also detailed their sustain-
ability journeys as well as the policies and
programs used to address environmental and
social issues throughout their supply chains.
Working with Suppliers and Partners
CIE participants agreed that supply manage-
ment plays a key role in driving, managing
and measuring sustainability because of the
function’s close link to the supply base. But
as sustainability grows in importance, it’s no
longer the siloed issue it was a few years ago.
Responsibility for a sustainable supply chain
3/3/20 1:42 PM

has become “everyone’s business,”
so it’s an endeavor that supply chain
executives are working on closely with
business partners and suppliers.
Key focus areas identified by CIE
participants include:
Driving sustainability into the
supply chain. Sustainability goals
within a company can be met only with
the help of a supply base committed
to strong environmental and social
programs and policies. Participants
talked about ways to expand the impact
of sustainability by working closely with
strategic suppliers on their sustainabil-
ity goals and taking the next step of
measuring success. An important first
step is gathering information about what
suppliers are doing in various areas of
sustainability by using supplier assess-
ments and audits.
A 2018 CAPS Research benchmark-
ing survey found that topics covered in
supplier assessments still focus most
heavily on quality and financial health,
but such issues as sustainability and
social responsibility are growing in
importance. A 2019 follow-up survey,
Transparency and Collecting Supply
Chain Data, identified the most common
sustainability data gathered from supply
bases, such as country of origin, supplier
code of conduct, conflict mineral report-
ing and disclosures involving child labor
and anti-human trafficking policies.
Supplier diversity is an example of
how supply management organiza-
tions can work with the supply base to
advance sustainability goals. Procure-
ment professionals noted that supplier
diversity successes in recent years came
about by clearly defining a strategy,
making it a company-wide focus and
using technology tools to measure and
evaluate progress.
Relying on the experts. Noting
that there’s “no need to reinvent the
wheel,” supply management leaders
suggested partnering with universities
48-49 research Mar_Apr20.indd 49
and organizations that conduct audits,
educate consumers and design supplier
assessments on an industry-wide basis
as they build and grow their sustainabil-
ity programs and policies. Academic
researchers reported that they are study-
ing such areas as (1) business modeling,
(2) sustainable strategies and measure-
ment techniques and (3) best practices
in environmental and social responsibility.
A supply management leader from
one CAPS Research member company
detailed how the organization is working
with the Electric Utility Industry Sustain-
able Supply Chain Alliance (EUISSCA)
in building its sustainability program.
EUISSCA offers collaboration and sharing
of best practices, a supplier survey portal
and utility company benchmarking.
Seeking C-level support. The
commitment to environmental and social
issues must be a company-wide initia-
tion with upper management support.
Several participants said their programs
were unable to gain traction until (1) stra-
tegic goals were set by top management
and (2) sustainability became a focus in
every department.
Understanding the Trade-Offs
As with any initiative, trade-offs
and unintended consequences can
result from sustainability policies and
procedures. Craig Carter, the John G.
and Barbara A. Bebbling professor of
supply chain management at ASU, is
researching trade-offs and unintended
consequences in sustainability.
The intended consequence of a
sustainable supply chain is “movement
toward the goal of achieving improved
social and/or environmental perfor-
mance,” Carter explained. However,
the unintended consequence is “an
unanticipated change in social, and/or
environmental performance” outside or
within the goal.
Some popular supply management
trends illustrate how unintended
research
consequences and trade-offs affect
well-meaning sustainability measures.
For example:
• Just in time, designed to reduce
production time and response time
from supplier to customer, has the
unintended consequence of an
ever-growing carbon footprint.
• Outsourcing overseas is part of a
company’s regional strategy and
touted a labor cost-savings move.
However, its social, environmental,
health and safety consequences have
come to light in recent years.
• Centralizing distribution centers and
warehouses helps lower inventory
costs but has the unintended conse-
quence of a larger carbon footprint.
Carter is working to help supply
chain leaders recognize the unintended
consequences rooted in sustainability
measures, identify the trade-offs that
often must be made, and move to find
the synergies to address them. “The key
is finding the sweet spot,” he explained.
Because the impetus for a sustain-
able supply chain is coming from many
sides — the market, consumers, busi-
ness partners — there is a “renewed
and re-energized” focus on sustainability.
Also, brand protection and risk manage-
ment play key roles in a company’s
sustainability objectives. Supply manage-
ment and business leaders recognize
that sustainability is an issue that will only
increase as a business priority. ISM
CAPS Research is the premier source for
supply management research, metrics
and events. For more information, visit
www.capsresearch.org.
MARCH/APRIL2020 49
3/3/20 1:42 PM
 insights

A Map for Transportation

and Logistics Contracting

Author
Jonathan Todd
is a partner with the transportation
and logistics practice group at Ben-
esch, Friedlander, Coplan and Aronoff,
a law firm in Cleveland.
Businesses of all sizes are increasingly devot-
ing attention and resources to supply chain
services procurement, and transportation- and
logistics-related offerings are a key opportunity.
Involving any mode, asset deployment and
service level, these services include motor, rail
and ocean carriage; brokerage and non-vessel
operating common-carrier service; ocean-
freight forwarding, indirect air carriage, customs
brokerage, warehousing, distribution and fulfill-
ment, and last-mile delivery.
The inherent supply chain risk that can
occur with these outsourced services is acute
— and can include interruption due to (1) delay,
damage, contamination or loss of goods,
(2) customer-service failures and (3) regulatory
compliance violations. When developing
best-in-class procurement strategies to handle
these risks, active supplier management and
strong provider diligence are crucial.
However, when there is a serious service
failure, one of the first places professionals look
for answers is the applicable contract. Often,
that’s a supplier-favorable form — an outdated
contract that doesn’t address modern busi-
ness-practice and industry trends, or a poorly
written template that provides no relief and
leaves more questions than answers.
No Two Contracts Are Alike
Procuring transportation and logistics services
requires building a strategic network of provid-
ers, lanes, nodes and services in a highly
tailored, fact-intensive world. Unfortunately,

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the off-the-shelf agreements used by
service providers were designed for each
service provider or industry on one hand,
and the multitude of enterprise customers
on the other. But this isn’t optimal for
companies with strong supply manage-
ment practices.
When procuring transportation
and logistics services, developing
reasonable yet finely tuned template
agreements is the No. 1 strategy for
maximizing performance, minimizing
risk and managing spend. However, a
surprising number of companies still use
paperwork that is unreasonably favor-
able to the provider, often thinking that
their volumes aren’t high enough for a
provider to negotiate, or that negotiating
contracts is detrimental to the relation-
ship. These concerns are typically not
justified. Service providers generally look
to strengthen the supplier relationship by
considering and negotiating a company’s
service contract — provided it is suitable
for the desired service.
Buy-in from stakeholders is neces-
sary for procurement strategy execution.
Internal stakeholders are increasingly
diverse, representing a variety of depart-
ments and personalities, each with
strong views and goals relating to supply
management matters. Those with the
strongest opinions on the contractual
side of logistics outsourcing often sit
in legal, risk-management, trade-
compliance and tax departments.
Internal alignment will increase the
speed of bid, negotiation and onboard-
ing processes. It will also present an
opportunity to update bid planning and
RFQ, as well as gain critical input for
template agreements with maximum
effect and minimal surprise. Effective
use of contract templates must ultimately
serve the interests of stakeholders and
the unified strategy.
Contract Considerations
Contract templates meet unique
needs and establish expectations.
Developing contracts is about alignment,
50-51 insight Mar_Apr20.indd 51
not force. Operational details of
contracts highlight what services will be
performed, how they will be performed,
how they will be priced, and the course
of events if something goes wrong. A
healthy perspective facilitates provider
selection during bid processes by allow-
ing for apples-to-apples comparisons
while achieving reasonable certainty that
services and costs are well disclosed. It
also lends clarity to one of the elements
of the commercial exchange that is so
simplistic, it is often overlooked: What is
it that we are buying, and how?
KPIs and service-level agreements
(SLAs) are tools used to further align
expectations without overburdening
performance. Additionally, when used
wisely, tools like established manage-
ment-meeting schedules, escalation
plans and required root-cause analysis
yield opportunity for strong partnerships
while respecting the buy and sell sides of
the relationship. Management commu-
nication of issues, both positive and
negative, can incentivize correct behav-
iors. However, contract tools do nothing
if they are not exercised.
Negotiation can be a win-win
when both sides are focused on
priorities. Balancing time, risk and
return is critical to avoid getting bogged
down in contract negotiation or accep-
tance of detrimental terms. A firm
understanding of best practices and
prioritized risks can make a difference
of weeks — even months — when it
comes to closing out bids. Modern
electronic contract-negotiation tools
and contract-management software
can provide an organization and work-
flow edge. Risk-based perspectives
can help narrow the range of key issues
by focusing on relative risk, value and
the potential supply chain impact of a
service provider failure.
In the heat of negotiation, three
options are available to all sides:
(1) accepting present terms, (2) finding
common ground and problem-solving or
(3) walking away. Playing the right card
insights
will always require knowing what each
side is playing to achieve.
Remember that contracts and
their relationships do not quietly
end upon signing. The ongoing refine-
ment process survives bid seasons.
When a contract is implemented well,
it yields a real impact on corporate
performance in response to internal
and external challenges.
Tailored agreement templates ease
contract administration and provider
management (1) by clarifying expecta-
tions for renewals, updates to services
and rates, and continuous improvement,
and (2) because similarly situated provid-
ers will be working from the same or
nearly identical terms.
Agreement templates also can help
manage the impact of incidents. For
example, a transportation and logistics
template can align with internal contin-
gency plans by addressing required data
feeds and event notices, business conti-
nuity and disaster recovery, termination
rights and post-termination assistance,
escalation procedures, and dispute reso-
lution requirements.
Supply chains are growing more
complex, and contracting must rise
to the occasion. Companies across all
industries seek to maximize the potential
and spend of their transportation and
logistics operations. The impetus for this
focus is a recognition that these services
are no longer the realm of lumping or
another old-fashioned pejorative term.
They are now a significant part of enter-
prise value propositions. They lay at the
heart of operational efficiency and, for
some supply chains, are fundamental
to end-user buying decisions. They may
even serve as the personified “face” of
an enterprise through residential last-
mile delivery.
Transportation and logistics procure-
ment can better meet companies’ needs
with strategic vision, advanced planning
and thoughtful crafting of service-delivery
terms. ISM
MARCH/APRIL2020 51
3/3/20 1:42 PM
 pointtopoint

Logistics
Hours of service
Definition: The U.S. Department of Transportation’s
(USDOT) Federal Motor Carrier Safety Administra-
tion’s (FMCSA) hours of service rules specify how
long commercial truck drivers are behind the wheel,
how long they sleep between driving shifts, and when
they take non-driving breaks. In August, the FMCSA
proposed five major revisions to the rules, which were
first adopted in 1937.
Field guide: The revisions: (1) altering the mandatory
30-minute break after eight hours of driving time to be
in the form of on-duty, non-driving status, rather than
off-duty, (2) splitting the long-haul 10-hour sleeping
requirement into two segments, (3) allowing drivers a
break of up to three hours to pause a 14-hour driving
window, (4) extending the 14-hour window by two
hours in cases of “adverse” driving conditions and
(5) increasing the short-haul radius from 100 to 150
air miles.
Factoid: In a press release, the USDOT stated that
the new rules were designed to increase safety and
driver flexibility, as well as lead to US$274 million in
savings. The department received more than 2,700
public comments on the proposed changes. The
FMCSA and the U.S. Office of Management and
Budget must approve the changes, and a ruling
could come as soon as this month.

Freight Scorecard

Trucking Intermodal Air Ocean

American Trucking U.S. railroads originated WorldACD Market Data’s The Drewry Global
Associations’ advanced 1,165,733 carloads in air cargo yield was US$1.80 Container Port Through-
seasonally adjusted January, a 20.1-percent in December, down 5 cents put Index was 128.8 in
For-Hire Truck Tonnage increase from December, from November and a November, a 2.3-percent
Index was 118.2 in according to the Associa- 9.7-percent decrease from decrease from October.
December, a 4-percent tion of American Railroads the same month the previ- The index was up 0.1
increase compared with (AAR). Traffic for calendar ous year. For 2019, global percent from Novem-
November’s figure. The year 2019 was 12,972,404 revenue fell by 11.7 percent ber 2018. All six regions
index for 2019 was up carloads, a 4.9-percent compared to the previ- had month-over-month
3.3 percent — the 10th decrease from the previ- ous year, and chargeable decreases; North Amer-
straight annual increase, ous year. weight dropped by ica (6.7 percent) had the
but half the gain in 2018. 4.4 percent. biggest drop.

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 pointtopoint

78 %
Data Point

Projected global increase this decade

in the number of urban last-mile deliv-
eries to satisfy consumers’ burgeoning
e-commerce needs, according to
The Future of the Last-Mile Ecosys-
Research Spotlight tem, a report by the World Economic

Report Finds Warehouse Market Forum. Many cities’ infrastructure

will be “severely challenged” by this

to Get No Breathing Room in 2021 demand, states the report, which

analyzed such last-mile technologies
as drones, droids, drop boxes and
Last year, the warehouse market finally had the space to surpass the growing demand locker systems, as well as non-tech-
created by the e-commerce boom, and supply is expected to keep up that pace over nology-based solutions like changes
the next two years, according to 2020 North American Industrial Outlook, a report by in delivery shifts and traffic flows.

“
Cushman & Wakefield, the Chicago-based commercial real-estate services company.
However, vacancy rates are expected to remain at historic lows, the report states.
Warehouse-space availability is expected to reach 573.4 million square feet in
2020-21, but vacancy, which was 4.6 percent in 2019, is projected to barely increase
While the public sector has started
to 5.2 percent by the end of next year. The report states, “Robust consumer spending to pilot and run various initiatives
supported by stable inflation, wage growth and low unemployment bode well for indus- on a city basis, systemic change
trial demand, not to mention structural changes related to e-commerce.” and harmonized regulatory frame-
North American industrial rents are expected to rise by 6.8 percent, to US$6.95 a works have not yet been fully
square foot, by the end of 2021. Among cities projected to see the steepest rent hikes,
implemented.
the top three are in Canada: Toronto (27.9 percent), Montreal (25 percent) and Vancou-
ver, British Columbia (21.9 percent). Las Vegas and Ottawa (both at 12.1 percent),
Providence, Rhode Island (11.1 percent) and Boston (10.4 percent) are next on the list.
“
— The Future of the Last-Mile
Ecosystem report

Logistics grade: With such assets as
a railway system that has long been a
source of national pride, an abundance
of ports on the Pacific and Atlantic
coasts, as well as a large and compre-
hensive trading relationship with the
U.S., Canada ranked 20th in The World
Bank’s Logistics Performance Index
in 2018.
Infrastructure: More than 30,000
miles of railways have been vital to
connecting citizens in the vast coun-
try, and the system originated a record
number of carloads (6.1 million) in 2018,
according to the Railway Association
Passport: Canada
of Canada. However, the Canadian
Energy Research Institute estimates
that $5 billion (US$3.75 billion) of railway
improvements are needed to keep up
with increasing oil shipments.
The customs house: One of Cana-
da’s biggest logistics problems cannot
be negotiated — weather, especially
during the winter. Storms are especially
problematic on Ontario Highway 401,
often called the busiest freeway in North
America; the Canadian reality show
“Heavy Rescue: 401” details the recov-
ery of trucks and other large vehicles
on the road. ISM

MARCH/APRIL2020 53

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 member matters

Members Making News

Camille Batiste, CPSM, C.P.M.
In Case You Missed It
Coronavirus
Response Insights
Due to the coronavirus outbreak’s
potential impact to member organiza-
tions, Institute for Supply Management®
(ISM®) held a bonus webinar in February,
“COVID-19 Coronavirus Outbreak: The
Case for Planning, Preparedness and
Proactive Action.” You can catch the
on-demand version at instituteforsupply
management.org by navigating to the
“Current Members” section and selecting
“Webinars.”
Also, several Inside Supply Manage-
ment® blog articles about the coronavirus
are available at ismmagazine.org. News
impacting the profession can be deliv-
ered to your email inbox every Tuesday
Institute for Supply Management® Board of Directors Chair Camille Batiste, by subscribing to our weekly e-news-
CPSM, C.P.M., recently became president, global supply chain for ADM, the letter. To do so, visit go.weareism.org/
Chicago-based food processing company. She was previously president, enews_subscribe.
nutrition optimization at ADM, with responsibility for development and
execution of supply management strategy. INSIDE
Prior to joining ADM, Batiste spent 20 years at Honeywell International, start- SUPPLY MANAGEMENT
ing in manufacturing in the performance materials and technology business unit
— where she was certified as a Six Sigma Black Belt — before moving on to lead- WEEKLY
An Institute for Supply Management ® Newsletter

ership positions in procurement and the aerospace business unit. In Honeywell’s

procurement organization, Batiste oversaw teams in maintenance, repair and
operations (MRO), capital projects and functional excellence.

Member Monday
Supplier Diversity Webinar Invitation
On March 16, the Member Monday benefit is an invitation to a member-exclusive
webinar, “The Economic Impact of Supplier Diversity.” In the March 25 interactive webi-
nar, Frantz Tiffeau, director of supplier diversity and development at Nationwide Mutual
Insurance Company, will share how an economic impact report became a strategic tool
to elevate the value and ROI of the company’s supplier diversity program.
Member Monday is designed to boost the start of your work week with an
invitation to member-exclusive events, tools, research and more. Do you know of
others who could benefit from ISM membership? Refer them to Member Services
(+1 480.752.6276, opt. 8) or instituteforsupplymanagement.org/membership/overview.

54 ISMMAGAZINE.ORG

54-56 Mem_news Mar_Apr20.indd 54 3/3/20 1:43 PM

 Apple Inc. has multiple positions available for the following job opportunities in Cupertino, CA:
1. Supply Demand Planner (REQ#4191396) Pln srvce prt spply for assgnd cmmdtes.
2. Strategic Sourcing Manager (REQ#8643422) Dtrmne spply chain details incl prchsing, pricng & cntrct
ngtiatns, invntry lvls, & capcty & spply plnning at the Contract Manufacturer.
3. Commodity Specialist (REQ#1070436) Coordinte the csts, contrcts, & escalatns of servce material supliers.
4. Project Coordinator, Client Services (REQ#3239426) Coordnte spply chain & channl servcs
systms implementatns.
5. Supply Demand Planner (REQ#6606457) Forecst demnd, invntry, & multi-chnnl sell thru.
Refer to Req# & mail resume to Apple Inc., ATTN: D.W., 1 Infinite Loop 104-1GM, Cupertino, CA 95014.

Apple Inc. has multiple positions available for the following job opportunities in Cupertino, CA:
1. Supply Demand Planner (REQ#SDP2020) Frcst dmnd, invntry, & multi-chnnl sell through.
Refer to Req# & mail resume and transcript(s) to Apple Inc., ATTN: D.W., 1 Infinite Loop 104-1GM,
Cupertino, CA 95014.

Apple Inc. has multiple positions available for the following job opportunities in Austin, TX:
1. Engineering Project Specialist (REQ#6789396) Prfrm busnss anlys for AppleCare orgnztn to dsgn systms
& prcdrs & anlyz cmplx busnss prblms to sggst enhncmts w/n automtd systms.
Refer to Req# & mail resume and transcript(s) to Apple Inc., ATTN: D.W., 1 Infinite Loop 104-1GM,
Cupertino, CA 95014.
Apple is an EOE/AA m/f/disability/vets.

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 member matters
Board Meeting Highlights
February 2020
Institute for Supply Management®’s
(ISM®) Board of Directors and the
ISM Finance Committee held meet-
ings February 19-20 at ISM’s office in
Tempe, Arizona.
The Board accepted the ISM
Finance Committee’s recommenda-
tion to approve the audited financial
results for the fiscal year ending August
31, 2019. The Finance Committee
also reported on the performance of
invested reserve funds, retirement plan
fiduciary oversight and the financial
forecast for the 2019-20 fiscal year.
Share Your Stories With Us
If you have news on your chapter or know a member worthy of recognition, email us at
MbrPubs@instituteforsupplymanagement.org.
56 ISMMAGAZINE.ORG
54-56 Mem_news Mar_Apr20.indd 56
Also, the Board:
• Discussed the Nominating Commit-
tee’s progress on ISM governance
updates and the recruitment of
director candidates
• Received an update from ISM staff
leadership teams on strategy and
activities related to marketing, public
relations, chapters, global distribution
and strategic account management
• Provided guidance on the execu-
tion of strategy and future program
development
• Approved chapter dissolutions.
ISM Chapter Check-In:
ISM—New Jersey
Location: Manahawkin, New Jersey
Chapter president: Deborah Augus-
tus, CPSM, C.P.M.; senior category
manager, corporate and professional
services at Mallinckrodt Pharmaceuticals
Number of members: 508
About: ISM—New Jersey is recognized
as a center of excellence in establishing
and promoting best-in-class standards
for supply management. The chap-
ter holds two annual conferences and
such monthly events as breakfast and
dinner meetings, webinars and all-day
seminars.
Copies of meeting minutes and
appendixes are available at institute
forsupplymanagement.org — select
“About ISM,” then “Governance” —
within 90 days of the meeting. They
are also available by emailing Kristen
Moreno at kmoreno@institutefor
supplymanagement.org.
The next meeting of the ISM Board
of Directors is April 26 at the Sheraton
Boston Hotel, during the ISM2020
Annual Conference in Boston.
On October 21-22, ISM—New Jersey’s
12th annual Women & Leadership
Conference will focus on various leader-
ship and supply management themes.
Other upcoming chapter events:
March 18 — Supply Management
Forum 2020: Digital Transformation
April 15 — Breakfast Meeting & Tour:
FedEx facility at Newark Liberty Interna-
tional Airport
May 7 — Supplier Diversity Night
June 10 — Crystal Awards ceremony
honoring New Jersey’s most outstand-
ing supply management executive. ISM
3/4/20 3:07 PM
 The Future of
Procurement
Driven by data. Powered by experience.
Visit us at Booth #507 or at jaggaer.com

00 Cov Mar_Apr20.indd 3 3/3/20 12:08 PM

 Learn About Workshop Wednesday
Included with your ISM2020 registration. Save your spot today!

ISM2020

There comes a time for

big ideas.
New Conference
Content! Today’s business environment calls for different ideas
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The goal: Each attendee walks out with a least one new
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