Monthly Archives: January 2008

Where Pinky and the Brain (Re)Define Best In Class

Pinky and the Brain
They’re Pinky and the Brain
Yes, Pinky and the Brain
One is a genius, the other is insane
They’re advertising guys
Their mind is on the prize
They’re dinky
They’re Pinky and the Brain, Brain, Brain, Brain,
Brain, Brain, Brain, Brain, Brain

Before each night is done
Their plan will be unfurled
By the dawning of the sun
Take over the sourcing world

They’re Pinky and the Brain
Yes, Pinky and the Brain
Their twilight campaign
Is easy to explain
To prove their sourcing grace
They’ll overthrow the space
They’re dinky
They’re Pinky and the Brain, Brain, Brain, Brain,
Brain, Brain, Brain, Brain, NARF!

Pinky Gee Brain, what are we going to do tonight?
Brain Same thing we do every night Pinky – try to take over the Sourcing World!
Pinky How are we going to do that, Brain? Narf?
Brain We’re going to implement another brilliant plan to market our strategy to take over the sourcing world!
Pinky What are we going to market again, Brain?
Brain Our strategy.
Pinky And what is it again?
Brain Don’t make me hit you again, Pinky!
Pinky But …
Brain The cheese, Pinky, the cheese!
Pinky Oh, I remember! Nog! The cheese trade! Yum!
Brain Yes, Pinky, the global cheese trade.
Pinky So, did you managed to recover the hypno-spend thingy?
Brain No, Pinky. It was destroyed.
Pinky So how are we going to take over the sourcing world this time?
Brain I don’t know, Pinky. I don’t know. Give me a few minutes to think.
Brain paces the floor for a few minutes in deep thought. He stops just as a look of evil inspiration crosses his face.
Pinky, are you pondering what I’m pondering?
Pinky Uh, I think so Brain, but just how are the two of us going to eat the world’s biggest cream cheese banana split all by ourselves? Narf!
Brain No, you imbecile! We are going to define best-in-class!
Pinky Redefine valedictorian?
Brain No, no, Pinky! Best … in … Class. We’re going to define what makes a great company great and take over the analyst mind share. With the recent flood of departures from the analyst firms downtown, the marketplace is just yearning for a new thought leader. We’re going to be that new thought leader! And, it goes without saying, that the thoughts we produce are the thoughts that are addressed by the solutions our company provides.
Pinky Um … er … and how precisely are we going to do that? Nog!
Brain We’re going to start with a simple survey!
Pinky How’s a survey going to make us thought leaders? It’s just a bunch of questions, isn’t it?
Brain Yes, Pinky, but with the right open-ended questions, you can, with a little cunning, present results that will cause the average reader to assume whatever you want them to assume.
Pinky Like a good statistician can use statistics to support whatever position he or she wants?
Brain Something like that, Pinky. But, instead, we surreptitiously confuse correlation with causation, since the average reader can’t tell the difference.
Pinky Syrup! Yum! Are we having pancakes, Brain? Narf!
Brain You twit! Surreptitiously means stealthily, not syrupy!
Pinky Oh. So we’re stealthily going to confuse coronations with castrations, but how are crownings and eunuchs going to help us?
Brain Not coronations and castrations, you fool, correlations and causations. Whereas a causation refers to something that produces an effect, a correlation refers to the tendency of two, or more, attributes, or measurements, to vary together.
For example, let’s say I drop this hammer from our toolbox on your foot.
Pinky Narf! Brain!
Brain Don’t worry, Pinky. I’m just trying to give you a hypothetical example.
Pinky A heretical? Nog! The last time we let one of them in here he jabbered all night long about salv … salv … hand-cream.
Brain Salvation, Pinky and it’s hypothetical, not heretical. Make-believe. May I continue?
Pinky So we’re going to just pretend you’re going to drop that hammer on my foot …
Brain As long as you keep quiet and let me continue. As I was saying, let’s pretend I dropped this hammer from our toolbox on your foot. Chances are, you’d yelp in pain and hop around on your other foot, like an idiot. Am I right?
Pinky Um, yeah, I think so.
Brain Let’s also pretend that the only time you hopped around on one foot yelping in pain is when something heavy was dropped on your foot. Then, by definition, there would be a strong correlation between having something heavy dropped on your foot, yelping in pain, and hopping around on one foot. Right?
Pinky Sure.
Brain However, whereas there are three correlation relations, specifically, the correlation between the hammer drop and the yelp, the correlation between the hammer drop and the hop, and the correlation between the yelp and the hop, there are only two causation relations, and they both go only one way. Specifically, the hammer drop causes the yelp and the hammer drop causes the hop. The yelp does not cause the hop and the hop does not cause the yelp, and, more importantly, the yelp does not cause the hammer drop and the hop does not cause the hammer drop. Following me so far?
Pinky I think so. If you drop the hammer on my foot, and please don’t, I yelp and I hop. And that’s called a causation. However, the relationship between the yelp and hop is simply coral-ation.
Brain Correlation, but that’s close enough. Anyway, let’s say we ask a well thought out series of questions and find out that 89% of best-in-class firms, that have 74% or more of spend under management, have a performance management tool. This is a correlation. But let’s say that, in the report, we state that we found that 89% of best-in-class companies have a performance management tool. It’s very easy to interpret that as a causation, isn’t it?
Pinky Well, I guess it is … but it’s not, right? It’s like the SpendFool said, isn’t it, when he said “did you know that Flavia coffee systems were used at 70% of these firms versus 40% adoption at low-performers? Clearly, using Flavia (winner of the Tweedleman award for worker caffeination) is a key predictor of supply chain excellence“.
Brain Yes, Pinky. It’s just like that. And you’re never to mention it again!
Pinky Why not, Brain? Narf!
Brain Because if people know better, our plan won’t work.
Pinky Oh. So I guess that means we need a survey.
Brain Not just any survey, Pinky. We need the perfect survey!
Pinky And how are we going to come up with the perfect survey?
Brain We’re not! That’s the beauty of this plan.
Pinky I don’t follow.
Brain I’m going to hack Skippy’s computer. If anyone has the perfect survey tucked away for safekeeping, you know it’s going to be Skippy! After all, he’s the most likely to have stumbled upon it in his journalistic (Brain makes finger-quotes) pursuits.
Pinky Are you sure you should be doing that? Nog!
Brain Don’t worry, Pinky. I know what I’m doing. … A-ha!
Pinky Where! Are they going to play “Take On Me”?
Brain Pinky!
Pinky Oh, that was just an expression, wasn’t it?
Brain Yes, Pinky. I think I’ve got it.
Pinky It? Narf!
Brain Yes, Pinky. The perfect survey!
Brain is silent for a few minutes while he begins to read the survey.
Pinky Pinky interrupts.
What’s it say, Brain? What’s it say?
Brain It’s incredible. With what I’ve read so far, it looks like it doesn’t matter what the respondents answer … it’ll still support anything we want it to. Just give me a minute or two to scan it!
Brain pages down to the second page.
All of a sudden the screen goes blank and a message-box pops up. It says “Please enter your password. You have 20 seconds.”
What’s this? No! … No! No! NO!
Pinky What’s wrong, Brain?
Brain A trap-door password trojan! If we don’t enter the right password within twenty seconds, it’s going to wipe the file … and probably the rest of the data on the system – including all of the data and tools I collected to hack Skippy’s system! Quick, Pinky. We might have only one shot at the password! What password would Skippy use?
Pinky Um, er, “stay the course”!
Brain Yes, Pinky! You’re right! Just a second.
Brain enter’s the password. The message changes.
The expression on Brain’s face shifts from relief to disappointed shock!
Pinky What’s wrong, Brain? What’s it say?
Brain It says. “Thank you. I will. Cordially, Skippy”.
Pinky Well, that was certainly thoughtful of him! Why the sad look?
Brain There’s more, Pinky. There’s more.
Pinky More?
Brain Yes. There’s a postscript. “Better luck next time, Brain.” How did Skippy know? HOW DID SKIPPY KNOW?!
Pinky So that means …
Brain It’s gone. It’s all gone. The survey, the information I used to hack the system, the toolkits. It’s all gone. How did Skippy know?
Pinky Know what?
Brain That … that …, oh, never mind. It’s time to return to the marketing cage.
Pinky Why, Brain?
Brain To prepare for tomorrow night.
Pinky What are we going to do tomorrow night? Narf!
Brain The same thing we do every night, Pinky. Try to take over the sourcing world!

Pinky and the Brain
They’re Pinky and the Brain
Yes, Pinky and the Brain
One is a genius, the other is insane
They’re advertising guys
Their mind is on the prize
They’re dinky
They’re Pinky and the Brain, Brain, Brain, Brain,
Brain, Brain, Brain, Brain, Brain

Before each night is done
Their plan will be unfurled
By the dawning of the sun
Take over the sourcing world

They’re Pinky and the Brain
Yes, Pinky and the Brain
Their twilight campaign
Is easy to explain
To prove their sourcing grace
They’ll overthrow the space
They’re dinky
They’re Pinky and the Brain, Brain, Brain, Brain,
Brain, Brain, Brain, Brain, NARF!

the doctor Exposes A Few More Elephants

As the doctor mentioned in his last post, there are a lot of elephants hiding in the sourcing and procurement war room! There are so many, in fact, that the doctor is having problems figuring out how they all fit! However, as the doctor was in-depth scanning and reviewing some vendor web sites (and no, the doctor‘s not going to list names – since he’s sure most of these vendors are still upset with him for the X-emplification series, which is going to be followed by an X-asperation series in the next month or so thanks to some really great questions and suggestions the doctor received in private e-mails), he caught a glimpse of the data enrichment elephant hiding behind the door, spotted the compliance elephant under the boardroom table, and found the performance management elephant hiding in the closet.

The Data Enrichment elephant would have us believe that your data is “enriched” if it’s processed by a spend repository that applies repeatable data cleansing and categorization rules to make sure it is always in a form that can be analyzed by the solution that you have. Although accurate cleansing and categorization is important, and a necessary part of any spend analysis project (whether done by a central data administrator or an analyst on the fly using a real spend analysis tool), it’s not data enrichment. Enrichment, by definition, means that additional data, culled from other third party sources, is added to your data so that you can do analysis above and beyond what you could just with the data in your organization. For example, this could be using Equifax Austin-Tetra to append financial risk and diversity information so that you can determine how much spend is really going to diversity suppliers (versus how much spend you think is going to diversity suppliers) and how many suppliers you are dealing with have a risk of failure in the next 12 months. In other words, what the Data Enrichment elephant is selling you is important, it’s just not enrichment – it’s basically what you should be getting with any tool you buy that promises accurate cleansing and categorization.

The Compliance elephant would have you believe that just because the vendor sells a complete suite that is capable of fully automating your processes and work-flows, storing all information and award decisions in a searchable centralized repository, and managing your contracts with a solution that alerts you whenever a transaction is found off of contract or a contract is coming up for renewal, that you are compliant. the doctor would like to say he’s sorry, but he isn’t, but compliance is much broader than this. Compliance is not just compliance with internal processes, but whether the system is always being used (because automating the processes is irrelevant if the system is not being used), whether it is collecting the data required by your organization to meet the requirements of Sarbanes Oxley and the accounting standards being used, whether or not you are awarding to a company on the denied party list, whether or not the carrier who is bidding is licensed to operate in the countries that you are shipping from or two, whether or not the products you are sourcing comply with regulatory requirements such as REACH, RoHS, and WEEE, and so on. This goes well beyond the offerings of any sourcing or procurement solution on the market. Well beyond. If the vendor is telling you that they enable compliance with respect to SOX, REACH, etc., and being very specific about it – that’s great! Sourcing and procurement solutions can enable compliance. But, considering the breadth of regulations that need to be adhered to in global trade, a sourcing or procurement solution alone, by itself, will not make you compliant. So, in short, this is an elephant that likes to considerably over-promise and under-deliver.

The Performance Management elephant tells you that if you have a sufficiently complete technology platform, than you achieve supplier performance management. One vendor in particular is stating that a combination of project management, collaboration technology, assessment, and monitoring technology is everything you need for supplier performance management. Although this is likely everything you need to monitor and measure your suppliers, and thus a good foundation, there’s a big difference between measuring something and doing something about the result! The nature of performance management is that it can’t be a purely technology solution – because performance comes down to people. Technology is good at tracking tasks and, by way of benchmarks, pointing out where there are inefficiencies or problems – but you need people to identify the root causes and work with suppliers to identify the solutions and insure that they get implemented. Furthermore, for this type of platform to be truly useful, it should have an expert-system module that can be customized to each vertical to help the individual responsible for performance management to diagnose possible errors and resolutions. Without this, then it’s just an open source project management tool combined with an RFX tool for surveys and assessments and a BI tool on an ERP to produce metrics and generate alerts when something falls outside of an acceptable range. In other words, the Performance Management elephant has a really good cause, but is a little confused how to actually go about getting results.

For those of you counting, this brings the total number of elephants we’ve discovered in this room to date to twelve. In addition to the data enrichment, compliance, and performance management elephants, previous posts identified the optimization, e-Procurement/EIPP, and spend analysis elephants; the supplier enablement, contract management, and hidden cost elephants; and the RFX, e-Payment, and technology RFP elephants.

the doctor hopes you enjoyed this post, and the brief return of the blogologues, because this will be the last regular blogologue for a while. There are two reasons for this. The first reason it takes a lot of time to craft and edit a post of meaningful content (versus the first half-formed thought that comes to mind), and given that this blog is generating zero income at the present moment, the doctor, unfortunately, can only afford to dedicate so much time to it. The second reason is that the first cross-blog series of 2008 on Sustainability starts next week, and given the importance of this topic, the doctor does not want to detract from what he hopes will be a very popular, and very prolific, cross-blog series.

Your Sourcing, Procurement, and Supply Chain Event Guide for 2008

In case you forgot, the doctor is going to remind you that he also maintains a free resource site, that is always accessible as the first link on the right-hand sidebar, that happens to include, among other things, the largest event guide for the sourcing, procurement, and supply chain space that you are going to find anywhere!

the doctor‘s event guide currently has over 100 conferences and forums catalogued and indexed for 2008. (The event guide does not contain seminars, workshops, or training classes since there are now hundreds of event planning, consulting, and training firms offering thousands of these a year.) To make it even easier for you, the doctor is including them all, in chronological order, in this easily accessible and bookmark-friendly post.

To your future!

Year Month Day Event Location Sponsored By
2008 Jan 21-22 Supply Chain Management Forum Mumbai, India Marcus Evans
2008 Jan 23 CSR Supply Chain Summit Shanghai, China Chaina
2008 Jan 24 SRM 2008 Geneva, Switzerland WBR
2008 Jan 24-25 2nd Annual Leadership Summit on Healthcare Supply Chain Management Las Vegas, NV, USA World Congress
2008 Jan 28-30 Procure to Pay Orlando, FL, USA IQPC
2008 Jan 28-30 ProcureCon Indirect USA 2008 Atlanta, GA, USA WBR Research
2008 Jan 28-30 The 2008 Risk Management Summit Arlington, VA, USA ASMI
2008 Jan 29-30 Strategic Sourcing for Indirect Goods and Services Singapore IQPC
2008 Feb 3-5 Performance Management Analytics San Francisco, CA, USA CFO Conferences
2008 Feb 4-6 Reverse Logistics Association Conference Las Vegas, NV, USA RLA
2008 Feb 4-7 ARC Advisory Group Forum Orlando, FL, USA ARC Advisory Group
2008 Feb 7 Green Supply Chain Forum Miami, FL, USA FL International University
2008 Feb 7 4th National Public Sector Procurement Conference 2008 Manchester, England, UK CIPS
2008 Feb 11-13 Talent Management Solutions 2008 Arlington, VA, USA ASMI
2008 Feb 12-13 e-World Purchasing & Supply London, England, UK e-World
2008 Feb 13-15 SAP Insider Europe Nice, France SAP
2008 Feb 14-15 Australian Logistics Council Annual Forum Canberra, Austrailia ALC
1008 Feb 17-20 NextLevel 2008 Orlando, FL, USA SciQuest
2008 Feb 25-26 Contract Performance Management Auckland, New Zealand Conferenz
2008 Feb 25-27 SAP Insider USA Orlando, FL, USA SAP
2008 Feb 26-28 EcoBuild London, England, UK —
2008 Feb 27-1 Logicon Europe ? WBR Research
2008 Feb 28-29 8th Annual Talent Management Strategies Conference New York, NY, USA Conference Board
2008 Mar 3-4 Exteneded Supply Chain London, England —
2008 Mar 3-4 CSCMP Southern Africa Johannesburg, South Africa CSCMP
2008 Mar 3-5 Gartner Compliance & Risk Management Summit Chicago, IL, USA Gartner
2008 Mar 3-7 Global Supply Chain Management Program Atlanta, Georgia, USA CSCMP SCL
2008 Mar 4-5 Trade & Supply Chain Financing Conference – Asia Hong Kong, China Euromoney Seminars
2008 Mar 4-6 Warranty Chain Management Conference San Deigo, CA, USA ALG Associates
2008 Mar 5-7 CAPS Executive Roundtable Scottsdale, AZ, USA CAPS
2008 Mar 5-7 Category Spend Management & Spend Optimization Amsterdam, The Netherlands Marcus Evans
2008 Mar 6-7 Supplier Relationship Management Conference Atlanta, GA, USA Conference Board
2008 Mar 9-11 PurchasingNet Client Forum Las Vegas, NV, USA PurchasingNet
2008 Mar 11-12 Growth and Innovation Conference New York, NY, USA Conference Board
2008 Mar 12-13 China Sourcing Summit Shanghai, China Chaina
2008 Mar 13 Government Procurement 2008 London, England, UK CIPS
2008 Mar 13-14 Ethical Sourcing Forum (NA) New York, NY, USA Intertek
2008 Mar 13-14 8th Annual Talent Management Strategies Conference San Diego, CA, USA Conference Board
2008 Mar 13-14 Category Management Forum Sydney, Australia CIPS Australia
2008 Mar 17-18 Fundamentals of Supply Chain Management Atlanta, GA, USA CSCMP
2008 Mar 17-19 Supply Chain World North America Minneapolis, MN, USA Supply Chain Council
2008 Mar 18-20 SCM Logistics India 2008 New Delhi, India Terrapin
2008 Mar 25-26 SaaScon 2008 Santa Clara, CA, USA SaaScon
2008 Mar 25-28 Logicon USA Las Vegas, NV, USA WBR Research
2008 Mar 26 National Sustainable Procurement London, England, UK BiP Solutions
2008 Mar 31-4 Shared Services Week Orlando, FL, USA IQPC
2008 Apr 10-11 2nd Supplier Management Forum Las Vegas, NV, USA EyeForProcurement
2008 Apr 14-16 ProcureCon Indirect Europe 2008 Amsterdam, The Netherlands WBR Research
2008 Apr 15-18 The Logistics & Supply Chain Forum New York, NY, USA Richmond Events
2008 Apr 20-24 Effective Buyer Dubai IIRME
2008 Apr 22-24 Supply Chain Strategy & Management Forum (Spring Meeting) Knoxville, TN, USA University of Tennessee
2008 Apr 23-25 CSCMP Europe Brussels, Belgium CSCMP
2008 Apr 24-25 Best Practices Conference Atlanta, GA, USA The Hackett Group
2008 Apr 27-1 Effective Cost Management In Purchasing Dubai IIRME
2008 Apr 28-29 Fundamentals of Supply Chain Management Dallas, TX, USA CSCMP
2008 Apr 30 – 2 i2 Planet Phoenix, AZ, USA i2
2008 May 4-6 Creating a Resilient Supply Chain Toronto, ON, Canada SCL
2008 May 4-7 93rd Annual International Supply Management Conference St. Louis, MO, USA ISM
2008 May 6-9 Sourcing 2008 Newport Beach, California SIG
2008 May ??12-??14 reSource ’08 Indianapolis, In, USA Iasta
2008 May 12-14 Ariba Live 2008 USA Las Vegas, NV, USA Ariba
2008 May 13 Lean Supply Chain Strategies and Implementation Garland, TX CAPS
2008 May 13-14 The Seventh Annual Responsible Business Summit London, England, UK Ethical Corporation
2008 May 13-15 10th Annual European Supply Chain & Logistics Summit Dusseldorf, Germany WTG Europe
2008 May 14-16 Ariba User Group Conference Las Vegas, NV, USA Ariba
2008 May 18-20 Enterprise Procurement Exchange Pinehurst, NC, USA —
2008 May 18-21 USMA Annual Conference Scottsdale, AZ, USA Utility Supply Management Alliance
2008 May 18-21 FOCUS 2008 Las Vegas, NV, USA JDA
2008 May 20-21 Global Lean Supply Chain Optimization London, England, UK IQPC
2008 May 20-22 Green West Expo Los Angeles, CA, USA —
2008 May 21-22 Public Sector Procurement Forum Canberra, Australia CIPS Australia
2008 May 21-23 PMAC National Conference St. John’s, NL PMAC
2008 May 27-31 CeMAT Hannover, Germany —
2008 May 28-30 AMR Research Supply Chain Executive Conference Scottsdale, AZ, USA AMR
2008 Jun 5 Supply Chain Leaders Conference San Francisco, CA, USA GSCLG
2008 Jun 10-11 Procurement Solutions London, England, UK OGC
2008 Jun 10-11 Ariba Live 2008 USA Brussels, Belgium Ariba
2008 Jun 12 CIPS New Zealand Strategic Procurement Forum Auckland, New Zealand CIPS Australia
2008 Jun 17-19 3rd Low-Cost Country Sourcing Conference Chicago, IL, USA EyeForProcurement
2008 Jun 28-2 IFT Food Expo New Orleans, LA, USA IFT
2008 Jul 2-4 European Procurement Summit Montreux, Switzerland Marcus Evans
2008 July 26-30 NIGP Annual Forum Charlotte, NC, USA NIGP
2008 Aug 19 CIPS Australia Strategic Procurement Forum Adelaide, Australia CIPS Australia
2008 Aug 20-21 InterMat Miami, FL, USA —
2008 Aug 21 CIPS Australia Strategic Procurement Forum Perth, Australia CIPS Australia
2008 Aug 25-28 Strategic Purchasing & Procurement Forum Stockholm, Sweden IQPC
2008 Sep 8-11 NASPO 2008 Annual Meeting St. Louis, MO, USA NASPO
2008 Sep 10-12 2008 CODA Conference Bermuda CODA
2008 Sep 14-16 APICS International Conference & Expo Kansas, MO, USA APICS
2008 Sep 17-18 Low Cost Country Sourcing Prague, Czech Republic EyeForProcurement
2008 Oct 5-8 CSCMP 2008 Denver, Colorado, USA CSCMP
2008 Oct 8-9 Chief Service Officer’s Summit Boston, MA, USA Aberdeen Group
2008 Oct 13-16 SCM Logistics World 2008 Singapore Terrapinn
2008 Oct 13-17 Executive Retreat Miami, FL, USA Supply Chain Council
2008 Oct 14-15 4th CIPS Australia Annual Conference Melbourne, Australia CIPS Australia
2008 Oct 15-16 Procurement Outsourcing & New Solutions for Procurement Summit Philadelphia, PA, USA EyeForProcurement
2008 Oct 21-23 Green East Expo New York, NY, USA —
2008 Nov ??-?? Supply Chain Risk Management 2008 The Netherlands —
2008 Nov 4-7 ProcureCon Europe 2008 Geneva, Switzerland WBR Research
2008 Nov 5-7 Reposition 2008 Winnipeg, MB CITT
2008 Nov 9-13 Pack Expo International Chicago, IL, USA Pack Expo
2008 Nov 10-13 ProcureCon USA 2008 Las Vegas, NV, USA WBR Research
2008 Nov 18-19 2nd Green Purchasing Summit Dallas, TX, USA EyeForProcurement

the doctor Wants to Remind You It’s Sourcing AND Procurement

I’m reminding you of this because it appears that there are still some vendors out there that would have you believe it’s e-Sourcing or e-Procurement, or some fractured combination of both – because that’s what they have and they want all of your business.

e-Procurement and e-Sourcing are not the same thing. They’re too halves of a whole, one tactical and one strategic. Alone they bring value, but combined they bring much greater value. The best way to see this is with a picture. (Click on the image below to enlarge it.)

As you can see from the image, sourcing leads into procurement, usually off of a contract, and procurement leads into sourcing, through the analysis step. Without procurement, the organization wouldn’t have a large transaction database and extensive visibility into spend, the key to a successful spend analysis effort, which is the first phase of e-Sourcing. And without sourcing, there would be no strategically negotiated contracts to buy against, and procurement managers would be spending willy nilly, making the current level of maverick spending that you have to deal with pale in comparison.

Furthermore, as you can see from the picture, e-Sourcing is more than just e-Auction and Contract Management (even though they are the solutions offered by the largest number of providers), and e-Procurement is more than just order management, invoice management, and e-Payment. Each step is important, and the most important steps, particularly from a savings perspective, are the steps that most solution providers don’t have solutions for – true spend analysis (not static reporting on a data warehouse), decision optimization (not monte-carlo simulation – leave that to the casinos), reconciliation (since the only way you realize the negotiated savings is to make sure you’re paying what you’re supposed to, and not paying for anything you didn’t actually receive), and, in global trade, tax reclamation (Global Data Mining hasn’t found billions of dollars in savings for their customers because they got lucky).

After all, even though these are crude, inefficient, poor man’s solutions, you could, if you were brave (or is that masochistic) enough, you could use office documents and e-mail to achieve core RFX functionality, you could do basic contract management with an open source content management system (or an Access data base and a college programmer if you were really daring), hold your auctions using a conference call service, manage your purchase orders and invoices with a basic accounting system, and pay with P-cards.

Now, as I pointed out last week in the doctor would like to remind you the one system solution is still a pipe dream, you’re not going to get all of this from one vendor, and that’s okay. The key is to assemble a complete solution that meets your needs, subject to your process and goals. And, as I have previously pointed out, as long as you adopt platforms that use common architectures and standard protocols for data interchange, it’s not too hard to build a complete end-to-end solution that will generate the value you want – as it’s there for the taking.

Supply Management in the Decade Ahead XIII: Challenges & Recommendations

This series has been examining the joint study by the ISM, A.T. Kearney, and The Center for Advanced Purchasing Studies released late last year that addressed how a company might go about Succeeding in a Dynamic World. To date, it has reviewed the eight major forces identified by the report (part I and part II), the impacts to business models and strategies, some of the missions, goals, and performance expectations, and the seven critical strategies (category, supplier development, supply networks, technology, collaboration, talent, organizational enablement). In this final post, we’re going to review some of the challenges and recommendations brought to light in the final chapters of the study.

First, I’d like to encourage you to seriously consider downloading and reading this excellent report, which gets the doctor‘s stamp of approval. (And if you’re a regular reader of this blog, you’ve probably figured out by now that there’s not a lot of literature out there that would get the doctor‘s stamp, or at least not without some serious improvements and edits.) Clocking in at over 100 pages of solid content (as opposed to the fluff that fills many of the longer reports that you’ll stumble across), it’s definitely worth it – especially since it’s Free (with registration, if you haven’t already registered). Although I have done my best to summarize the key points, my posts collectively are less than 20 pages in length – which says that, at most, I’ve covered one fifth of the material – and all of it is worth reading – some of it more than once. And once you’ve read it, you’ll be able to use these posts, which will always be indexed in the Sourcing Future category archive, to remind yourself of the key points.

The pace of change in supply management is more likely to increase rather than the decrease in the future, as evidenced by changing market factors, globalization and the ongoing march of technology. (After all, Shift Happens.)

These forces of change will include:

  • Market Demand
  • Rapid Advances in Information and Materials Technologies
  • Global Growth (in Developing Economies)
  • New Supply Market Dynamics (More Aggressive and Powerful Supplier)
  • Consolidation of Traditional Suppliers
  • Downstream Movement of Suppliers

Each of these forces will present challenges for tomorrow’s supply management organization. But we are moving into a new era of great expectations, which will present additional challenges, as it is also the :

  • Era of Dynamic Value Acquisition Strategies
    Agile, dynamic, category strategies that are easily reconfigurable as conditions changes will be “must haves” for all key purposes.
  • Era of Customer-Centric Supply Base Strategies
    Suppliers will be expected to be innovators and collaborative value-based sourcing that leverages suppliers’ innovative capabilities will be required to meet the increasingly demanding customers.
  • Era of Complex & Dynamic Supply Networks
    Physical assets will need to be reconfigured for mobility, flexibility, and resiliency and positioned or repositioned in response to business dynamics. Different chains will be needed for “innovation push” versus “demand pull” products and services.
  • Era of Collaboration without Boundaries
    Technology that allows suppliers, stakeholders, and customers to “sit together” at a virtual table on an ad-hoc basis will be the price of entry.
  • Era of Networked Analytics
    Knowledge management and decision support tools will be a basic need of supply management.
  • Era of Killer Talent
    The demand for experienced supply talent in developed countries is certain to outstrip supply. Global talent acquisition, management, and succession strategies will be required to survive in the supply chain centric world of tomorrow.
  • Era of Empowerment and Adaptation
    A tipping point where the average enterprise rethinks supply management processes and structures is fast approaching. Will you be ready?

And now you know why the strategies discussed in parts VI through XII are the seven critical strategies for succeeding in a dynamic world.

So what are the key takeaways, as summarized in the report?

  • The CEO Will Ask More of Supply Management : Broader Scope, Higher Performance and Increased Value
  • Supply Chain Complexity Will Increase : Driven by Globalization, Market Dynamics, Customer Demands, & Regulation
  • Collaboration Will be a Major Source of Value Creation : Internal and External Collaboration Alike
  • Technology : Will Transform Supply Management Strategies and Processes
  • The Supply Management Organization Structure Will Continually Change : To Fit Business Models and Strategic Needs
  • Global Talent Management : Will Continue to be a Major Challenge

So what are some of the main recommendations?

  • For Supply Executives :
    You’ll need to interrelate successfully with other members of the senior management team, experience living and working in international locations, master collaborative and competitive spend categories, and succeed in building a global program for talent management – so be ready.
  • For Supply Practitioners :
    You’ll need to improve working relationships with strategic suppliers and functional stake-holders, develop international and leadership capabilities, and master the fine art of collaboration.
  • For Business Unit Leadership :
    You’ll need to be equally familiar with key customers and suppliers, supply channels and sales channels, and understand the opportunities as well as risks.
  • For Suppliers :
    You’ll need to know exactly where you fit in each customer’s supply strategy, become a “supplier of choice”, and improve relationships with the senior executives in your customers.
  • For Service and Outsourcing Providers :
    Outsourcers will have to learn how to serve their customers and add value in addition to just landing the contract.