Monthly Archives: November 2007

the doctor Declares Open Season on Barney!

We all know about Barney – the “love“-filled purple dinosaur that could convince even the most gentle of pacifists to pick up a sawed-off and let loose a few rounds of buckshot. What we may not know is just how far the “barney deal” and the “barney presentation” has infiltrated our profession. How many conferences have you been to lately where the presenter talked about how the software implementation was a complete failure? That’s what I thought.

Over 70% of IT-related projects are at least partial, if not complete failures. So why aren’t conferences filled with presentations on “This is how we failed. This is why. And this is what we should have done.” Well, we know the answer. It’s because your average decision maker is too timid – or maybe that’s too stupid – to own up. Especially after millions of dollars have been spent. And even if he did, no conference organizer would want to headline a conference with a speaker from an organization that failed.

Everyone makes mistakes sometimes. And the reality is that most of us learn more from mistakes than from successes. And a mistake not communicated is one that is doomed to be repeated again and again and again. The reality is that no system works the first time – that’s why we have design cycles, release cycles, and quality assurance. The point is to learn from the failure and do it right the next time. Instead what we often get, as Alan Buxton pointed out, is:

  1. The decision is made to buy a tool that does X.
  2. An RFP, complete with a requirements list, is sent to a vendor.
  3. The vendor promises that the software can do everything and more.
  4. A consulting partner, and implementation specialist, who backs up the vendor, is found.
  5. Implementation Begins.
  6. Everyone realizes that the requirements in step 2 weren’t enough.
    Then they realize the software couldn’t even do what was promised in step 2.
  7. More money is spent for more modules and “customization”.
  8. The requirements are weakened.
  9. A “live” system is eventually declared.
  10. The system is benchmarked against original objectives. It performs miserably.
  11. The objectives are revised. The system now performs almost acceptably.
  12. Joint press releases are issued declaring the project a grand success!
  13. Everyone returns to step 1.

And it’s ridiculous. As a result there are dozens, if not hundreds, of vendors selling systems for hundreds of thousands, millions, and sometimes tens of millions of dollars everyday that do not meet their customer’s needs and buying organizations making the same mistakes again and again because no one is documenting previous failures and insuring the lessons learned are there for the next generation. But it stops now!

If you were involved with a project that was a partial or complete failure, you know why, and you want to tell the world about it (anonymously) – this will be your forum. I’ll be glad to publish your story so that others can learn from the mistakes of the past – and so that you can learn from the mistakes of others. There’s no crime in making a mistake if you didn’t know better. The point is to not make the same mistake twice.

Does Procurement Need to Be Saved From Itself?

Last month, Strategy+Business ran an article on Saving Procurement from Itself that started off by saying that it’s time for chief procurement officers (CPOs) to stop relying solely on functional depth and start increasing functional breadth.

According to the article, the emergence of strategic sourcing was a defining moment for procurement, with the potential to transform it from a primary administrative function to a powerful new force for competitive advantage, but that, as of today, the reinvention has stalled in many businesses. The article claims that CPOs today are increasingly focussed inward, implementing sophisticated ways of improving procurement itself but neglecting coordination with the wider organization. This focus on cost reduction fails to address the significant potential for creating value generated when procurement engages the rest of the business and its suppliers.

The article continues by stating that more complex business models requiring more sophisticated skills from procurement leaders are required to generate revenue and eliminate costs and that procurement, uniquely positioned to reach out across the organization, needs to step up. CPOs need to start the process by developing a close working relationship with finance, managing cross-functional trade-offs, collaborating on the joint supplier-customer value chain, gaining preferential access to innovation, and designing-in network resilience. This will make sure that they get invited to the table before major decisions have been made.

I have to agree that procurement needs to take a broader role as time goes on – it’s something I’ve been preaching for a while – but I’m not sure that procurement needs to be saved from itself or that depth can be ignored. In the more progressive organizations, the leaders of tomorrow already recognize that they need to do more and they are taking steps to do that. They may need a little help, but the point is that they make the first step along the journey of transformation. Furthermore, just how do you expect to develop and maintain a closer working relationship across the supply chain without solid collaborative technology? How do you gain preferential access to innovation without demonstrating a commitment to innovation yourself? And how do you design-in proper network resilience without best-in-class network modeling, simulation, and optimization tools?

It’s true that procurement needs to go broad, but this breadth cannot be achieved in any way that also sacrifices depth in key areas. Success lies in the proper balance between breadth and depth. It’s true that your average organization probably needs help achieving this balance, but I don’t think procurement needs to be saved from itself. I’d like to see faster progress, but the fact that you’re reading this means that you’re trying to improve yourself and your operation, and that tells me there’s some forward thinking going on. And that’s what it’s all about.

Now that the question’s out of the way, let’s focus on the tips the article had to offer that were pretty good.

  • Procurement needs the ability to report on performance in a manner that reflects the CFO’s definition of profitability. This will require the ability to provide timely and accurate spend data.
  • Procurement needs to facilitate sharing data up and down the chain to allow for the generation of better forecasts at each link.
  • Procurement needs to be the party that brings the economic insights required to build a picture of the joint value chain that all parties can agree, and work together, on.

Winning over the CFO is key to becoming a critical player on the senior management team, an in-sync chain is less costly and more profitable than an out-of-sync supply chain, and only procurement is capable of seeing the full picture. Good advice.

the doctor Does Not Believe In Self-Nomination

Supply & Demand Chain Executive is at it again – collecting nominations for their 2008 Pros To Know. According to the article, you can go to the nomination form and either nominate yourself or another candidate for consideration as a 2008 Pro to Know.

There are a few individuals the doctor would like to nominate, but it seems the form is only set up for individuals to nominate themselves. According to the first page, you must either be “a Supply Chain Executive working at a manufacturing or supporting organization” or “an executive working for a Supply Chain Solution or Service Provider, Software Company, Consultancy, or Research Advisory Firm“. Now, one might assume that they just forgot the “or I am nominating a” clause, but if you go to the next page, it only has six fields: “Nominee Name”, “Nominee Title”, “Nominee Company”, “Nominee Representative”, “Representative Phone”, and “Representative e-Mail”. There are no fields for nominator.

I’m starting to wonder how relevant such a list is. How do we know that it is nothing more than an arbitrary selection of individuals who take the time to nominate themselves. It would explain why in any given year only some of the individuals I think deserve to be honored make the list. (After all, the alternative would be that the doctor is not always right.) It would be nice if this was the year S&DC Executive raised the bar and only considered individuals who received at least one third party nomination. What do you think?

The Future is Coming!

As my loyal readers will know, I started the “Future of Sourcing” craze right here on this blog last August. By bringing all of the bloggers together and focussing them on one topic, I’ve managed to organize over two dozen of the leading minds in the sourcing space on one very important issue – your future. And when that many thought leaders speak out, it’s bound to be noticed. (As the bandwidth stats for this blog will confirm!) And then when it happens again, as it did again this fall, people start thinking. And once you start thinking, if you’re like me, you can’t stop.

And if you’re inspired, you’ll want to publish something about it – just as the Supply Chain Management Review did – twice! That’s right – they were so inspired, that not only did they publish Robert Monczka and William Markham’s “The Future of Supply Management – Part I: Category Strategies and Supplier Management” back in September, but they also published Joseph Carter, Thomas Slaight, and John Blascovich’s “The Future of Supply Management – Part 2: Technology, Collaboration, Supply Chain Design” last month. Looks like I’ve started a trend that you’re going to benefit from!

Anyway, in their paper, Carter, Slaight, and Blascovich predict that in the sourcing world of tomorrow, demands will be more diverse and complex, companies will have multiple – complex – supply chains, internal and external collaboration will be more important, and technology will become a key enabler in managing diversity and complexity. And you know what – they’re right.

Let’s face it – today’s average purchaser isn’t sourcing staplers, iron ore, and drums of bleach. They’re sourcing iPods and servers and GPS controllers and temporary labour services. Demands are becoming more diverse and complex everyday and you have to be ready. Furthermore, it’s not just the inbound supply chains that are important, but the outbound supply chains, because you have to be ready for reverse logistics when products break and you have to take them back and either fix them or dismantle them and then charge your supply base according to warranties and agreements in place. When most of the work is done by contract manufacturers, internal collaboration with the R&D team and external collaboration with supply partners become more critical. And with product life-cycles shrinking every year, technology is going to become critical to managing the complexity.

The article points out that, in the sourcing world of tomorrow, competitive advantage will require agility and supply chain excellence will be defined by the ability to:

  • anticipate changes in customer requirements, product offerings, supply conditions, regulations, and competitor actions
  • adapt to changes by deftly reconfiguring existing supply chains
  • accelerate implementation of change to capture new opportunities

When it comes to collaboration:

  • internal collaboration and integration must advance further if companies are to capitalize on future needs
  • external collaboration will signal a shift from pure competition to partnership for some segments of a company’s supply base
  • technology will be required to enable an increase in collaboration
  • the tension between the potential for strategic advantage through supplier collaboration and the concerns about managing risk and protecting IP will not be resolved easily

As for technology, the authors asked what supply executives wanted, and what they answered was ease of access, both internally and externally; visibility through web-based tools; collaboration platforms for everything from product development to operations to schedules, tracking and simulation; newer and more powerful tools for risk, compliance and supply market analyses; and user interfaces that can be grasped as intuitively as they experience personally as consumers. Not a bad start.

the doctor Shall Remain Faceless

It looks like the Facebook craze is starting to hit the sourcing nation. This is a bad thing. Unlike Linked In and Plaxo (Basic) which fulfill a useful business need, and are so boring that you don’t want to waste any time on the sites, Facebook is nothing but a big productivity zapper full of security holes that effectively share all of your personal information with the entire world. And now, to top things off, they’ve introduced new creepy advertising [CNet] that is much spookier than any crawler hiding beneath the leaves on the rain-forest floor. I have to agree with Mr. Rosenberg – do you rally want to know if someone you went to school with is buying a book or adult diapers [ValleyMag] on Amazon?

I don’t get Facebook. I don’t know about you, but I don’t want to spend my day being poked, prodded, pinged, nipped, bitten, tagged, ragged, tracked, hacked, smacked, or dealing with any of the dozen other annoyances that you have to put up with on what is really a faceless site. Besides, isn’t a facebook what police use to track criminals and other suspicious persons?