Browsing: Strategic Sourcing

Xuhua is a dropout from UCLA (PhD program) and has caused Lumber Liquidator’s (“LL”) to drop 2/3 – YES, 2/3 of its market cap (from $3bn to $1 bn) within a year!  He noticed a significant increase in their profitability compared to the industry, and in investigating why, discovered that their Supply Chain had a major risk exposure – mainly that LL had cut their supplier prices by buying flooring that violated safety standards – too much formaldehyde.  In addition to the loss of $2bn in valuation, LL was just featured on 60 minutes, the Senate has launched investigations, class action suits are being filed by investors AND consumers and their market share is diving….and the troubles have just started.  Ultimate survival of LL may…

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I came across an article in Crain’s Chicago Business entitled  “Why law firms are turning to non-lawyers for sales help”  where they talk about law firms hiring sales/marketing professionals to develop business.  In a profession where advertising was once banned, this is considered a radical move.  According to the article “law firms are reacting to customers who have learned how to strip out components of legal work and value them accordingly, an unbundling of services that echoes what hit the computer industry decades ago” and “what’s happened is that the buyers have become smarter than the lawyers.”  Score one for Strategic Sourcing.   But law firms are fighting back.  Many have moved toward hiring business development professionals to sell their services while others have provided…

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Last week we started exploring “Selling the Change” and approaching it from a sales perspective. We all recognize that change is hard. As professionals in a Shared Services environment (Procurement, Supply Chain, Strategic Sourcing) one of our primary roles is that of a change agent as we are trying to play a more strategic role within our organization. Getting suppliers to work with us under a more strategic context is the easy part.

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Who remembers the summer of 2011 when Netflix, Inc. raised its prices by 60% (“Netflix raises price of DVD and Online Movies Package by 60%” NY times 7.12.11) and lost almost one million customers? Fast forward to October 22, 2013 where Netflix reported adding 1.3 million U.S. customers just in the third quarter ( “Subscribers Fuel Netflix Stock” – WSJ) to eke out HBO by one million subscribers. In addition, its stock price is up 282% since the beginning of the year. How did they do it?

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As we are working “in the weeds”, every day, we often lose sight of how critical our function is. We, at The Mpower Group, do a lot of Strategic Sourcing and Supply Chain Management training as one of our service offerings because WE KNOW the value of a strong Supply Chain. I guess it has just taken the rest of the world a little time to catch up . . . . . .

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