The Sourcing Maniacs 2008 Vendor Tour Part IX: Global Data Mining

When we concluded part VIII of the Sourcing Maniacs Vendor Road Tour, the Maniacs were in Chicago visiting FieldGlass, a provider of contingent workforce management and services procurement. We join them a few days (or so) later, somewhere in Colorado.

(But you can skip the mischief and jump straight to the mining* if you wish. [* indicates content])


Dot The Rocky Mountains. Awesome!
Wakko I can go rock sliding!
Dot I think we should keep going.
Wakko Where?
Yakko To GDM.
Wakko Who?
Yakko Global Data Mining. the doctor recommended we pay them a visit.
Dot What do they do?
Yakko I guess they do data mining, globally.
Dot That’s not very Web 2.0. It sounds… passe.
Yakko Well, we thought “spend analysis” was dull too, then we talked to BIQ and we found out differently.
Dot That better be the case. I love the Rockies … but it’s been an awfully long trek from Chicago … mostly through the middle of nowhere … with no shopping!
Wakko Why have we stopped?
Yakko I’m not sure which way to go.
Wakko We were in Chicago, Illinois, We’re headed toward Denver, Colorado, so we have to go slightly South and to the West.
Yakko temporarily stunned by the fact that Wakko just had an intelligent thought
…. OK!
Dot (singing)Off to the Global Data Mine
Yakko To see what we can find
Wakko When we start to dig
  we join the maniacs a few hours later
Yakko I think we’re here.
Dot Looks kind of small. Is this another one of those micro-operations organized as a virtual organization?
Yakko I believe so.
Wakko I’ll knock!

Wakko breaks out his new mini-mallet, a “friendly” replacement to the traditional mallet he used to use, which had a tendency to leave large dings, and flared tempers. As Wakko raises his mallet, the door opens … a somewhat contemplative looking gentleman, looking somewhat hurried, steps out.

a contemplative looking gentleman, looking somewhat hurried, steps out.

Yakko Is this GDM?
Dot Can we ask you a few questions?
Gentleman You’ll have to make them quick … on my way to the airport …
Editor’s note: presumably in preparation for GDM’s next webinar on its new Web-Based Classification and Data Management System, taking place on November 6, 2008, with online registration.


Wakko No problem. What’s Global Data Mining?
Gentleman Excuse me? Why would you be looking for GDM if you didn’t have some idea what it is?
Yakko Well, we know that data mining is the art of searching your data for patterns and insights, and we know that global means world, which tells us that global data mining should simply be searching your data sets from around the world for patterns, but we don’t get how it’s any different from what you do with traditional business intelligence or spend analysis systems and why a company like yours would even exist.
Dot We were told we needed to check you out, but we don’t know why.
Gentleman By who?
Yakko the doctor
Gentleman And you are?
Dot The ‘Ribas! I’m Dot!
Yakko I’m Yakko.
Wakko And I’m Wakko!
Gentleman Well, here’s the rub. Global Data Mining is exactly what you think it is … mining your data for patterns and insights that you can act on to make good business decisions that will cut costs, increase revenues, and keep you compliant with government regulations. What you need to know about Global Data Mining is that it’s not about the technology … you can use existing off-the-shelf technology to do what we do (though not as quickly or efficiently, but that’s beside the point) … but about the understanding of what data you need, how you look at it, and how you find opportunities that traditional, canned, analyses miss.
Wakko I don’t get it.
Gentleman Ok. Let’s start with something simple. Taxation. Do you know how much you’re paying?
Yakko With a good spend analysis tool, the calculation is a snap.
Gentleman Correct. But do you know how much you should be paying?
Dot What do you mean? It’s just added to the bill.
Gentleman But is it the right rate?
Wakko What do you mean? Isn’t it just a flat rate.
Gentleman Yes it is … usually … but how much do you know about HTS codes and other import tariffs?
Yakko Doesn’t the supplier or 3PL take care of that?
Gentleman Often they do, but you’re the one who should be worrying about it!
Dot Why?
Gentleman Because a misclassification can often cost you a couple of percentage points, which can translate into hundreds of thousands of lost revenue on a large order.
Yakko How does that happen?
Gentleman The consumer goods world moves at a fast pace. For example, how often do you replace your cell phone?
Wakko Well, I replace mine every few days …
Yakko That’s because you do zany things like taking it with you for a swim … whereas I usually get almost a year out of mine.
Gentleman And how often do you think the HTS is updated?
Dot Uhm … well …
Gentleman Major updates only happen once or twice a decade. But it’s often a judgment call by an ill-informed packing clerk that dictates whether a product falls under code X or very similar code Y. If the product is classified as code X, and should be classified as code Y, and code Y is 2% cheaper and no one catches it on a million dollar order … how much do you lose?
Dot 20,000 … or enough for 10 new top-of-the-line Prada bags …
Wakko or a new Prius!
Gentleman Precisely. Given that the HTS is extensive … with well over 20,000 basic classifications, and that your average clerk might not know the difference between an iPod, an iTouch, and an iPhone, you should be able to see that the average company makes numerous errors each year … anywhere from a few dozen for a small importer to thousands for a large global multi-national. Those misclassifications add up fast.
Wakko How fast?
Gentleman Not that long ago, we did a study for a three billion dollar global apparel company and found that they were overpaying $161.5 Million a year in duties and taxes. That’s 5% of their revenue. Wasted.
Dot I could buy my own high-end fashion company for that!
Wakko And I could finally buy a lifetime supply of baloney!
Yakko So, you help people find tax savings.
Gentleman Yes, but that’s just part of what we do. As per our messaging, we help companies with high-value global trade-business build effective trade databases and conduct comprehensive auditing of their global trade processes that they can use to detect savings opportunities above and beyond simply volume-based leverage and reclamation of overpayments.

For example, we’re currently working hard on helping companies prepare for 10+2. Without a game plan, that’s going to cost companies a lot. A recent Supply and Demand Chain Executive article estimated that the new 10+2 program, which I discussed in a recent article on Sourcing Innovation, is going to cost importers between 390 million and 690 million dollars. And this is just the start. Did you know that if you fail to comply with the Importer Security Requirements that you have to pay liquidated damages equal to the value of the merchandise in default? So, if you’re importing $250,000 worth of goods, and don’t file properly, that could be an automatic $250,000 fine. And it doesn’t matter whether you made the error or the freight forwarder you employed to handle the shipment for you made it.

Yakko Yikes!
Gentleman Indeed. And we also offer a host of other services, like two-way matching audits where you can identify potential discrepancies between invoices and actual receipts; forensic supply chain analyses to help you determine your global trade options — and whether proposed FTZs, SPPs, and re-routings can help you save money; and compliance reviews … which are described in detail in the numerous publications and articles that are freely downloadable from the resource library on our website.
Wakko You just give that information away? For free?
Gentleman Of course. If you don’t know that you have a problem, you don’t know you need a solution. And if you don’t understand the complexity of the problem, you don’t know why you need our solution, which is more than just consulting. We’ve developed custom tools, based on best practices that we have evolved over our collective decades and decades of experience, that streamline the process and go beyond what standard BI and spend analysis solutions do out of the box. We’ve tailored our solution to global trade needs. That’s what we’re all about. And with that, I must bid you adieu as I have a plane to catch.
The gentleman, now more hurried than before, rushes off to his vehicle.
Dot And I always thought EDI was enough for global trade!
Yakko And that there was no way to find savings in the tax department.
Wakko Maybe global sourcing is as whacked as I am!
Yakko I don’t know about that … but it’s certainly more complex than we thought it was … and I’m starting to realize that just one solution might not be enough to fully address global sourcing!
Wakko I guess my mallet isn’t enough anymore!

Editor’s note: Wakko’s right. The days of
the mallet and the carrot are over.

At this point, we’re going to break again.  When we continue, we’ll discuss the maniac’s excursion to Indianapolis and what they learned from Iasta.