Monthly Archives: January 2007

Collaborate, Collaborate, Collaborate, Collaborate (II)

Collaborate, Collaborate, Collaborate, Collaborate

Collaborate, Collaborate, Collaborate, Collaborate

Collaborate, Collaborate, Collaborate, Collaborate

Collaborate, Collaborate, Collaborate, Collaborate

Yesterday we discussed how “Supply Is Where It’s At”, as per a recent issue of Inside Supply Management, that “Winning Together”, in the last issue of CPO Agenda is “Where It’s At” (as per the e-Sourcing Forum, [WayBackMachine]), and that “The Reward for Good Relations” (on the European Leaders Network [WayBackMachine]) is worth the effort, as described in a recent issue of the European Leaders Network. Today we are going to talk about flow, strengthening the weakest link, and how collaboration helps avoid the cost of inefficency.

Over the last few months, Supply & Demand Chain Executive has published a pair of articles that together serve to emphasize the importance of collaboration in sourcing. In “Applying Flow Principles to Collaboration”, we are told that improving supply chain performance is improved by focusing on improving flows – material, information, and money – throughout the supply chain, which is no longer bounded by the four walls of the enterprise. Collaboration is thus paramount due to the absence of centralized control.

The article recommends the creation of trust and interdependency at three different levels to get past the “us vs. them” mindset that is all to common in today’s relationships and detrimental to overall success:

  • operational: there should be a minimum level of coordination and visibility between stakeholders
  • tactical: there must be a basic desire to create a win-win relationship where value is created through shared processes with expanded scope
  • strategic: the highest level of collaboration where value is created results from the long term alignment of business strategy

In “Supply Chain All the Way: Strengthening the Weakest Link”, the notion that shared strategies, competencies, and trust, along with the sharing of information, can provide the edge required to ensure success in your efforts to aggressively capture market share and ward off competition in a tight market where success often depends on demand visibility and negating “the bullwhip effect“.

Finally, in “Avoiding the Cost of Inefficiency: Coordination and Collaboration in Supply Chain Management” from Knowledge @ Wharton, which tells us that supply chains in many industries suffer from an excess of products and a shortage of others owing to an inability to (accurately) predict product demand, you need to build a supply chain based on sound strategy, good consistent data, and empowered people and make sure it is comfortable with uncertainty and that this requires collaboration based on trust, not just information sharing. Furthermore, be sure to take a holistic view in your efforts since its the global optimum, not the local optimum, that counts.

Collaborate, Collaborate, Collaborate, Collaborate (I)

Collaborate, Collaborate, Collaborate, Collaborate

Collaborate, Collaborate, Collaborate, Collaborate

Collaborate, Collaborate, Collaborate, Collaborate

Collaborate, Collaborate, Collaborate, Collaborate

I said before that Collaboration is Key and then I said Collaboration is Key again. And now I’m shouting it, backed up by a chorus.

In the past few months, a barrage of articles have surfaced on the Inside Supply Management, CPO Agenda, Supply & Demand Chain Executive, European Leaders Network, and Knowledge @ Wharton publication websites promoting the benefits of collaboration.

According to the article “Supply Is Where It’s At” published in Inside Supply Management back in October, new forms of supplier collaboration are some of the last strategic forms of competitiveness left to exploit. Buyers should consider going back to the drawing board with supplier quality training, meetings of the mind, and “new” old approaches that fight price inflation and promote supply reliability tactics like those last used in the seventies. When you get right down to it, do you really want to be the next Ford or GM?

The article also highlights three key points for continued growth:

  • supply chain professionals need to enhance the organization’s overall performance, not perform narrow administrative buying services
  • contributions must be measured across a spectrum that includes price, wider margins, lower overhead, reduced cycle times, faster time to market, reduced asset bases, and collaborative value
  • supply chain professionals need to take the initiative to identify and seek mutual product or service enhancements and organizational performance improvement

The recent article “Winning Together” in CPO Agenda stresses that successful buyer-supplier partnerships require deep understanding and joint problem-solving and that it is collaborative partnerships that provide breakout results in procurement.

It also states that changing the classic approach requires a new paradigm that is based on concentrating efforts on making major improvements with a few, carefully selected, suppliers and on major development and transformation on a select set of smaller suppliers that have been identified as “high future potential” suppliers. Suppliers in the first group are usually large suppliers where improvements can be leveraged over large volumes and suppliers in the second group are typically good, low-cost production suppliers with restricted capacity, a high ambition to grow, and the right attitude.

The article puts forth a change management process that begins by selecting approximately five key suppliers and ends with agreements with your chosen suppliers that centers on shared objectives. The process contains the following five steps that are detailed in depth in the article:

  • Visits/Interviews
  • Questionnaire
  • Network Mapping
  • Summary
  • 3rd-Party Facilitator Workshop

The article concludes by noting the very important point that the maxim “the customer is always right” is just not so, and, more importantly, that suppliers are often reluctant to tell customers when they are wrong or be the messengers of bad news. Lean supply chains require that all problems be identified, acknowledged and addressed. Moreover, when the customer is willing to admit that they are perhaps responsible for at least half of the problems, the authors have found that there is a significant increase in goodwill and enthusiasm for collaboration and joint efforts from the supplier.

The European Leaders Network [WayBackMachine] published the outcomes of a recent SRM roundtable in their article “The Reward for Good Relations” which featured commentary from a number of industry professionals including Matthias Gramolla, Paul Lucas, David Marchant, Jim Robinson, Mark Simmons, and Phil Reeves. These commentators made a number of important insights that revolved around the importance of collaboration as a key tool to address supply risk management.

One of the key points in the article is that managing the health of the relationship is a bigger priority than managing the risks associated with the relationship – since this collaboration will allow you to identify, address, and solve problems much more quickly than in a relationship without collaboration. The partnership approach is critical, relationship skills are crucial, and success relies on an objective focus with clear roles, responsibilities and measurable goals.

A Public Nomination (for Jason Busch)

Those of you in the know will know that Supply & Demand Chain Executive‘s annual Pro’s to Know list is coming up and that it’s now nomination time. Nominations are due in two weeks, so please make sure to do yours ASAP. (I’ve made mine!)

In hopes that you would join me in not overlooking one individual who has made a significant contribution to the space over the last two years, I’ve decided to make one of my nominations public, exactly as I submitted it, here on this blog. If you agree with me, please join me in my nomination. Although it is Supply & Demand Chain‘s prerogative to choose whomever they want to, I’m sure it would be very hard for them to overlook an individual who received hundreds (or thousands!) of nominations.


Name    of nominee: Jason Busch
Title   of nominee: Editor
Company of nominee: Spend Matters

In 250 words or less, please describe how the nominee has personally helped raise the profile of Supply Chain and increase the recognition of the importance of Supply Chain as a strategic function within the enterprise; why the nominee personally believes that it is important for Supply Chain to be recognized today as a strategic function within the enterprise; and what, in the nominee’s opinion, technology’s role is in enabling Supply Chain to achieve a more strategic role within the enterprise.


For over two years, Jason Busch has been diligently blogging multiple times a day on issues, events, and best practices in the sourcing, procurement, and supply chain space and working hard to raise the profile of the space as a whole.

 

 

Jason Busch personally believes that it is important for Supply Chain to be recognized as a strategic function within the enterprise because he has spent over ten years working in the space, first as a service provider (at FreeMarkets, a pioneer e-auction powerhouse) and then as an independent consultant and analyst (at Azul Partners), and has seen first hand the transformative effects that good supply chain management best practices can have on an organization.

 


Having worked for a technology provider, Jason Busch knows first-hand what enabling supply and spend management technology can do for the enterprise – that’s why he spends time on a weekly basis talking to people at major software companies in the supply chain space and posting their solution profiles on his blog so that everyone can be informed of the latest technology offerings and how it can help them transform their operations. Jason Busch’s opinion is that technology will continue to help business transform their supply chain operations and become more efficient and more productive as time goes on.

For our selection committee to better evaluate each candidate, we ask that you please cut and paste below a current bio for the nominee.


Jason Busch is Founder and Managing Director of Azul Partners, a marketing consultancy that advises software and services companies. Prior to launching Azul Partners, Jason spent five years at FreeMarkets (acquired by Ariba) leading a range of efforts and initiatives. Jason has also served as a consultant with Northeast Consulting (acquired by Nervewire) where he helped clients with technology and strategic planning decisions.

 

 

Jason has authored over one hundred columns and whitepapers on technology and economics. His work has appeared in leading trade and business publications in the US, Europe, and Asia. Regarded for his forward thinking opinions, Jason has been quoted in numerous articles, books, and academic papers and is a frequent speaker and panelist at industry conferences. He has also served as a guest lecturer at US and European universities.

 


Jason holds an MA in history from the University of Pennsylvania. He also completed his undergraduate studies at the University of Pennsylvania, receiving a BA, cum laude, with departmental honors, in history and English literature. In addition, Jason has completed coursework in the Wharton School.

Defeating Uncertainty (in Demand Planning)

As part of my recent innovation week, I posted Measuring Innovation which provided you some metrics that you could use to measure your innovative progress – since you can’t manage what you can’t measure is as true with innovation as it is with any other business activity. But the importance of measurement goes deeper than you may recognize, as pointed out by recent articles in the Supply Chain Management Review and Knowledge @ Wharton.

According to Wharton, supply chain measurement is a mission critical element but many companies lag when it comes to measuring how well they are doing when implementing new supply chain initiatives. Considering that procurement and supply chain departments are under continual pressure to get better results without increased resources, it’s vital that you use metrics that identify how the strategic needs of the company are being met.

Wharton recommends using the “efficient frontier” to gage capability where you plot points along a trade-off curve between multiple the performance metrics and look for a position that protects your interests and those of your customers simultaneously. For you technical folks, you’re finding the optimal point on a multi-objective pareto curve based upon the relative weightings of the metrics you are using.

However, as the SCMR points out, there are many challenges in supply chain measurement that you have to solve to effectively manage your supply chain and find the optimal point on that multi-objective pareto curve. Old data, too many metrics, constantly changing metrics, and endless debate over metric definition are just some of the difficulties you need to overcome.

The key is to know what to measure, decide on some industry standard metrics to measure it, and have a program in place to measure it that focuses on quality and not quantity. This program should be based on best practices and avoid the common pitfalls of excellence addiction (constant improvement is good, but you need to take it one step at a time), missing data (the right stuff isn’t enough), ingrained inertia (resistance to change), and analysis paralysis (don’t overanalyze or fail to act on the results).

The metric definition best practices outlined in the article are great:

  • design different metric portfolios for different goals
  • keep it small (avoid the “mushroom effect”) as each portfolio must be of a manageable size
  • address the basics: balanced, cross functional, and practical (with respect to cost, quality, time, & effectiveness)
  • align execution and strategy
  • understand the interdependencies
  • balance the need for standards versus customization (every chain should measure demand-forecast accuracy, perfect order, total chain costs, and cash-to-cash cycle time)

Finally, remember to set targets, work hard to achieve them, and retain them once you have reached them.

The Talent Series IX: You Will Lose Your Top Talent

In my last update, I told you how Aberdeen had raised the alarm and that rumblings were starting to appear over on Supply Excellence [WayBackMachine] and the Purchasing Certification Blog [WayBackMachine].

Now that a new year is upon us, it appears my fellow bloggers have finally accepted that a Talent Crunch is upon us and that an all-out Talent War is about to break out.  Just in time too.  Even CNN is reporting that employers cannot find the skilled workers they need.  (The article quotes Jeff Summer of Deloitte Consulting who says “I’m hearing across the board, across industries, companies indicating they can’t exploit market opportunity because they can’t find people with the right skills” and Mark Vitner of Wachovia who says “With this level of unemployment, the only way they [companies] can find the workers they need is to hire them away from someone else“.)

Over on Spend Matters, in “Assessing and Building Spend Management Talent”*, Jason lets us know that the talent question is popping up first and foremost in every discussion he has these days and that Supply & Demand Chain Executive just ran a piece bylined by Anne Kohler (The Mpower Group) on talent development, which includes a tactical approach you can use to develop and manage talent within your procurement and supply chain organizations.

Over on Supply Excellence, Tim outlines his five top challenges that supply managers will face in 2007 and one of these challenges is that you will lose your top talent. According to Tim, his personal interactions with supply management executives validates Aberdeen’s finding that recruiting and keeping top talent is the top risk facing CPO’s (Chief Procurement Officers) today.

And over on Eric Jackon’s Breakout Performance blog, he tells us that even highly successful companies are realizing that their continued success depends on being able to select, retain, and motivate great people, but that these companies acknowledge that they don’t really know what to do.

So what can you do? Eric tells us that you that you have to develop sophisticated programs that actually address the problem of keeping your best people and finding more to further accelerate your growth. Tim gets more to the point when he tells you that you have to pay competitively, provide a clear career path, provide ongoing training, and invest in technology and my previous posts in the talent series compile a host of recommendations for you to chew on.

However, by now you’re probably so overwhelmed that you’re wondering Where do I begin?. The first step is keeping your best people. Improving your chances of holding on to your top talent is really a lot easier than you might think. In many cases it comes down to simply ensuring the following three conditions hold true.

  • Your pay scales are *very* competitive.Today’s surveys that tell you that money is not the most important consideration in the minds of today’s top talent are a double edged sword. They are good in that they open your eyes to the fact that money alone will not solve your problems and that having deep pockets no longer guarantees success, but they are bad (very, very, bad) in that they lead executives into a false sense of security that “paying market average” is enough to keep your top talent. They’re right in that if you are paying market average, it’s not likely to be the number one source of disgruntlement (or the problem you need to fix to keep your top people), but they overlook the fact that it is still, more often than not, the top reason your people will go somewhere else. Let’s say market average is believed to be 70K – 80K for a commodities purchasing manager, you’re paying Bob 70K, and Bob’s not complaining (or even asking for a raise). You might think Bob is happy with his salary, Bob, who sees the survey, might think he is relatively happy with his salary, but then Joe comes along from your competition and says “Bob: we desperately need you. We’re prepared to pay you 82K a year.” Do you really think Bob’s going to say “Sorry, I’m happy with my 70K a year” and turn down a 15% raise, especially if his perception of the job offer and overall benefits package is roughly equivalent to what he’s getting now? I don’t think so. Since today’s talent wants more than just money, the surveys are right in that its true that your failure to pay more than your competition is not going to be in your employees top “pet peeves” with their current job, but ultimately wrong in that an offer for significantly more money will not lure them away. (“For 20% more a year, I can buy my own health club membership and add a golf club membership on top.”)
  • Every employee has a rewarding job.This will mean different things to different employees. Some employees will want to be challenged daily. Others will want to feel a continual sense of accomplishment. Some will want a detailed career path. Others will just want security. Make sure every manager in your organization spends time listening to each of his or her reports and working on ways to increase their job satisfaction. Too much paperwork? Invite them to brainstorming sessions. Too many long term projects with no chance to feel a sense of accomplishment on a regular basis? Let them substitute for your resources that normally work on “the little things” when they go on vacation. They don’t feel challenged? Brainstorm a new initiative and let them devote one day a week to it (like Google) and see if it pays off. Get creative. Let’s face it – most surveys agree that the number one factor that keeps an employee on the job is “they like it”. If they like the job, and your pay is ultra-competive, it will be very, very hard for your competition to lure them away. That being said, there’s still one more quality you should have.
  • You are generous and creative with benefits.Let’s face it – everyone wants perks, and many perks are a lot cheaper for you to buy than the employee (especially group plans). The key here is to not offer what you think the employees want, but what they tell you they want (so don’t be afraid to ask!). Of course you need to have the basics covered (health, disability, and life), since it is still the case that most of your employees will want or need these, but beyond that, understand that there might not be an across the board solution. Just because the sales guys want a club membership doesn’t mean engineering will. Just because your your purchasing guys like the gym doesn’t mean finance will.

    Create a benefits fund and be prepared to sponsor those activities that significant groups of employees want, and make sure that every time you add a benefit for one group, you add a benefit for another group. Create categories, and let employees manage them. For example, a professional development category and a health category would be a great start. Developers can go to tech conferences, sales and marketing can go to seminars, and your purchasing managers can take training courses and have them partially sponsored by the professional development fund. Some employees can get gym memberships others can get massages and have it sponsored by the health category. Also, be sure to work out corporate discounts for any activity that a significant portion of your employee base wants (if a lot of people want a gym membership, arrange with the local gym for a corporate rate). Help your employees with their personal needs that affect their work life and, in addition, if you are a mid-size company, consider hiring a concierge in HR to do just that. If you are a large company, then you could have a significant number of employees with children who often need help finding daycare. You could maintain a register of local day cares, and if you are large enough, reserve a certain number of slots at the local day care for your employees.

    Let’s face it, paying top dollar and making each and every employee’s job rewarding is a great hook and line – since it will be tough for many of your competitors to beat that – but flexible and personalized benefits is the sinker, since this is usually the trio that attracts someone to a job, or causes them to leave it.

    * All posts prior to 2012 were removed in the Spend Matters site refresh in June, 2023.