Monthly Archives: June 2008

Three Bloggers and Beer

the doctor will be in Chicago, Illinois next Friday (July 11, 2008) and will be joining Jason Busch of Spend Matters fame and Lisa Reisman of Metal Miner fame at Wilde (3130 N. Broadway, Chicago, Il 60657) between 8:00 and 10:00 pm, EDT. We’ll be in the “back bar” area.

This is an open invitation to bloggers, procurement and supply chain practitioners, consultants, vendors, and anyone else with an interest in supply management and sourcing innovation that would like to meet the bloggers. However, please note the rule of thumb for technology or service vendor representatives is that if you plan to pitch us, you have to buy the group one drink and sponsor some appetizers. The alternative, as Jason Busch points out, is to do two shots of Jager or, if you prefer, single malt whiskey, yourself (in front of us) before starting the pitch. ( In other words, if you’re not going to feed and water us, you have to entertain us. )

If you think you can make it, drop Jason a line at (jbusch <at> spendmatters <dot> com) or post a comment to his announcement.

A Supply Manager’s Introduction to e-Discovery

Although I’ve blogged about how procurement can help marketing in The Creative Challenge (I and II) by way of a bit of Magic & Logic (I and II), I’ve yet to tackle the subject of e-Discovery, even though David Bush has a great 3-part series on e-Discovery last year (I, II, and III) over on e-Sourcing Forum.

However, a recent article over on SIG by Ted Ardelean of Oce’ Business Services, which was the first part of a three part series reminded me that this is an important topic and one that Sourcing Innovation needs to cover because, when bids for a given project can often range by as much as a factor of 10, this is one cost that a business really needs to get under control and one area where you have to understand the needs of legal in order for them to accept your help, which they obviously are in desperate need of in many companies.

So what is e-discovery? As per Wikipedia, “e-discovery”, refers to discovery in civil litigation which deals with information in electronic form. And as per e-Sourcing Forum, in recent years, the everyday use of e-mail and other forms of electronically stored information (“ESI”) has radically changed the discovery process, materially increasing its scope, complexity, and expense which has resulted in e-Discovery muschrooming into a multi-billion dollar a year industry. It’s important because amendments to the Federal Rules of Civil Procedure (FRCP), effective 12/01/06, move the adversarial discussion of E-Discovery right up to the preliminary stages of these cases. One emerging byproduct of this clarity from the Courts is the potential for E-Discovery costs to almost immediately dwarf the cost of whatever it is that is in dispute. Needless to say, this is quite troubling for corporate legal departments which can potentially have thousands of these cases going on at any point in time as per a Fulbright Survery.

And it’s not an easy process, especially if you want to be involved (and you do want to be involved, because it represents a huge saving opportunity, and gives you a chance to be an even bigger savings superstar than you already are), but if you follow the basic rules (laid out on e-Sourcing forum) and follow a good process, it is a manageable process. The basic rules are:

  1. You must be as non-disruptive as possible to Legal’s deliberative process and you must demonstrate complete and utter discretion.
  2. You need to understand how the e-Discovery market works.
  3. You need to know what questions you need to ask of Legal.
  4. You need to know how to communicate with the principals of Legal in a way that is meaningful to them.

In addition, as pointed out in Ted Ardelean’s article, you should also:

  • familiarize yourself with the FRCP
  • familiarize yourself with the EDRM (Electronic Discovery Reference Model) that standardizes the process of exchanging ESI in a manner that reduces associated costs
  • start a dialog with your in-house council early, and communicate often

And you should review the case study detailed by David Bush in parts II and III of his series. It contains a basic process that you can use as a starting point for building the in-house process that’s right for you.

Stop the Presses! Sourcing is its own Profession!

Who would have thunk it! Even though purchasing was recognized as an independent function by many railroad organizations in the 1800′s, apparently it wasn’t a legitimate profession until this year! At least according to the IAOP (the International Association of Outsourcing Professionals) and a recent article in Global Services.

And you know what else? Apparently, sourcing professionals play the key role in making sourcing engagements work and the management of an outsourcing relationship is also getting more strategic. And we do more than just manage people … we manage outcomes! Wow! I never knew! And yes, I’m being sarcastic as all get out!

I must say, as great as it is to see the profession recognized outside of the small select group of publications dedicated to the space and a handful of blogs, it’s very discouraging to see what’s probably the world’s third oldest profession (and I’ll let you guess the first two) consistently getting the shaft, which is what happens every time sourcing / supply management / spend management is introduced as a brand new function or one that only now can have a tremendous effect on the bottom line.

And do we really have to be introduced again and again? Every business that sells also has to buy. Even if you produce raw materials, you have to buy finished tools and machines to create those raw materials. You have to buy office supplies and computers to create the bills of sale and track your receivables and cash. Business have needed to buy since they started selling.

But what really stings is the fact that no one outside of purchasing seems to realize how hard it is to buy well versus how easy it is to sell. To sell, all you have to do is part some fool from his money. But to buy, you have to get what you need while still retaining enough cash on hand to cover all of your other expenses. And if you want to stay in business, you have to find a way to get more value than the other guy – when the seller only has to do one thing: part you from as much money as he possibly can.

So, although we need to thank each and every publication that gives the profession the nod, at some point we have to say hey, give us a break! Stop overplaying the fact that we’re still under-recognized and jump right to the part about how much of an impact we can have on the bottom line. Then you’ll really be doing us a favor!

Things Just Keep Getting Worse For The Oompa-Loompas

When we last checked in on the oompa-loompas late last year, they were facing tough times with massive layoffs at Cadbury and Hersheys, dealing with the backlash of salmonella contamination, and having to deal with their reputations being scarred by counterfeiters in China who were stuffing their fake Ferrero Rocher chocolates with ants. Bleak times indeed.

And in the first half of this year, things continued to get worse. Campbell succeeding in selling Godiva chocolates. And although there’s been no report of massive layoffs yet, it has been the trend in recent years. An expose in Fortune in February exposed the fact that child workers, many as young as 10, are everywhere in the Ivory Coast, which supplies 40% of the world’s cocoa. Then a chemical accident at the Blommer Chocolate factory in River West, in Chicago, killed one worker and injured two others. And just when it looked like things couldn’t get any worse, a CNNMoney.com article pointed out that nearly eighty (80) lawsuits were being brought against The Hershey Co., Mars Inc., Nestle SA, Cadbury Schweppes PLC, and ITWAL Ltd. for price-fixing were being merged into a massive class-action lawsuit to inquire into multiple instances of alleged price-fixing in Canada and Europe.

All I can say is, the way things are going, I hope that they’re going back to school and learning how to sling code, like I recommended last year

IT : The Biggest Threat to our Energy Future

I’m normally not alarmist, and I’m usually not one to bash IT, especially since it’s the foundation of my living (no IT, no internet; no internet, no web-based software or blogs – and not much for me to do besides go back to academia and do philosawfical research), but, whereas environmental sustainability is concerned, the biggest threat to our future is not pollution from coal based factories, not the (over-exaggerated) dangers of nuclear energy, and not the continually impending shortage of oil – but computers! And I’m not talking about the bleak future painted by Arthur C. Clarke in his Space Odyssey, William Gibson in his groundbreaking Neuromancer, or any other bleak picture of the future where automated intelligence takes over the world and either tries to enslave or kill us, but the very real future where the crushing energy demands of data centers bring down the grid as their energy demands exceed what we’re able to produce.

The fact of the matter is that a single data center requires more energy to run than a small city of 40,000 people (The Greening of the CIO). And that’s just a small data center built two years ago. Today’s large ware-house size data centers (like those that would be required by companies like Google and Microsoft), which pack even more machines into the same amount of space, thanks to Moore’s law and continually decreasing hardware size, can require as much energy as a city of 100,000 to run! According to this recent article in PhysOrg.com, U.S. Data Centers cosume 45B kWh annually, and this is is expected to grow by 40% by 2010, according to another recent article in Environmental Leader. That’s over 70B kWh by 2010!

Now, it’s true that this is still a small fraction of the total energy consumption of the US, but it’s a fraction of use that is growing rapidly – and it doesn’t take into account all of the energy sucked up by computers which usually outnumber employees in an average office these days, or all of the energy sucked up by computers in the home. With over 200,000,000 computers in the US, sucking up 300-plus watts of power per hour, often around the clock (as many people don’t turn their computers off and many (backwards?) companies have policies that network computers must be left on around the clock, even when not in use, to enable network-based updates), even assuming they are only on half the time, that’s roughly another two hundred and sixty five (265) Billion kWh of energy, which is also increasing annually by a considerable percentage (as the number of computers continues to multiply like Fibonacci’s rabbits). This means that, in the US alone, IT is sucking up over 310 Billion kWh of energy annually, and that’s a very significant percentage – closing on 20% when you consider a a 1999 Green Earth Society study that found that computers consumed 13% of the entire electricity consumption of the US in 1999, and that this power consumption was expected to increase to at least 35% by 2020! (Source: Wikipedia.)

The reality is, as pointed out in a recent post by Tyler Shears on Gimmie the Scoop, every time you search Google you could power an 11-watt light bulb for an hour. But that’s nothing compared to the energy utilized every time you access YouTube (which takes up 10% of Internet bandwidth). It’s not just your computer, your ISP’s infrastructure, and the YouTube data centers that consume power to fulfill your request – but every computer and network device in between! The reality is that we’ve left the information age, and entered the energy age – an age where we need more energy every day just to function in our ultra-connected lives. (So think about that next time you think you’re doing good by accessing your Green social network every waking hour of the day!) I don’t know about you, but you should be startled by the fact that Google is using 1.8 Billion watt-hours of energy a day just for basic search queries. Believe it or not, that’s just a fraction of internet traffic!

So again, just like I pointed out in Ten Green Ideas That Work – I, it’s not your SUV that’s the problem, it’s your computer (and your internet addiction), and the fact that almost 19%, or one fifth, of power in the US is generated by the burning of petroleum products (oil) or derivatives (gas and diesel). (In comparison, natural gas accounts for over 29% and coal roughly 31%. Nuclear is about 10% and clean sources such as wind, solar, hydroelectric, geothermal, and biomass combined account for barely 11%.) So what can we do about it? I’ll address that in upcoming Green IT posts.