Monthly Archives: November 2008

The Sourcing Maniacs 2008 Vendor Tour Part 14: Source One & ThomasNet

Today’s post is a little long, so I have broken it up into Prelude and Platform. If you’re short on time, you can go straight to the Platform and skip the comedy of errors.


Wakko MFG … it’s dynamite
MFG … it’ll win the fight
MFG … it’s the power load
MFG … watch it explode!
   air guitar
  presumably to the music of AC/DC’s TNT
the doctor Guys, if I might interrupt.
  silence … as I haven’t interrupted in a while, I think they’ve forgotten about me again
Wakko Whaaa …
the doctor Your story so far has been great, but I was wondering if we could jump ahead a little bit to a couple of vendors in particular.
Yakko Why?
the doctor Well, for starters, I think that given the current economy and financial situation of most companies, I think those that are looking to dip their feet in the e-Sourcing waters for the first time would be very interested in your visit to Source One to learn about their new ThomasNet Purchasing Tools offering, and I must admit that I’m a little impatient to hear about it myself. I’m also impatient to hear about your visit with Upside Software, one of the leaders in on-demand Contract Management, which is a very important element of good risk management these days, and one of the few Canadian companies in the space!
Dot But we were just about to tell you about our great visit with …
the doctor And I fully intend to let you. You can come right back to where you are now as soon as we cover these two companies. Okay?
Dot I guess so …
the doctor Great … take it away!
  a few seconds pass as the maniacs fast-forward their story in their minds
Dot So where are we now?
Yakko Still somewhere in Georgia, I believe.
Dot No, no. Who’s next?
Wakko Why.
Dot Why?
Wakko Yes, Why.
Dot But I’m asking who’s next!
Wakko Why is next!
Dot I’m asking a question!
Wakko And I told you Why!
Dot Why?
Wakko Yes, Why!
Dot What?
Wakko Not What, Why!
Yakko Where again?
Wakko Not Where … Why!
  The Abbott and Costello routine continues for about 10 more minutes until the maniacs get a most opportunely timed call …
Yakko ring, ring
Yakko’s Yuletide Yaks … Nature’s Lawnmowers are Your Friend!
the doctor Hello.
Yakko In his best Bugs Bunny impersonation, which is rather flawless:
Eeeeh, What’s up, doc?
Yakko activates the speakerphone.
the doctor That’s what I was going to ask you. I was wondering where you were on your tour.
Yakko Yesterday we just visited Servigistics.
the doctor Good. So you’re on your way to ThomasNet next?
Wakko Yes, Why!
the doctor They offer a free set of purchasing tools that give smaller organizations a great way to try out e-Sourcing in a cost and risk-free manner ..
Wakko Not They, Why!
the doctor Who?
Dot Yes, who?
the doctor What?
Wakko Not What, Why!
the doctor I told you why. Because …
Wakko Not Because …
Yakko He’s been doing this for the last 15 minutes. I can’t even find out where!
Wakko Not Where, Why!
the doctor I think I understand now. Do you mean Why Abe?
Wakko Yes, Why!
the doctor I’ve got it now. Wakko, I’m not calling you Abe. I know you like to answer to that name, especially when you’re wearing your black topper hat, but I’m not. When I said “Why Abe” …
Wakko Yes, Why!
the doctor … I was referring to the free commerce platform, sponsored by Source One, that underlies the new ThomasNet Purchasing Tools that I asked you to check out.
Yakko And where are they?
Wakko Not They, Why!
the doctor ignoring Wakko
Yakko, ThomasNet Purchasing Tools are in New York. Source One is in Willow Grove, Pennsylvania.
Wakko Transylvania?
the doctor still ignoring Wakko
You can go to whichever location is closest, but remember that you’ll want someone from Source One to give the demo, which will have to be web-based if you go to New York.
Yakko Well, since we just finished with Servigistics, we’re still somewhere in Georgia, so I think we’ll go to Pennsylvania.
Wakko Transylvania?
the doctor at this point, everyone’s ignoring Wakko
Great! I look forward to your report when your tour is done.
Wakko Why! Why!
Yakko & Dot Shut up, Wakko!
  The manicas take off towards Willow Grove, Pennsylvania. For once, they are silent!


Yakko I think we’re here.
Wakko Great!
out comes the mini-mallet
tap – tap
Proper Gentleman Hello. Can I help you.
Wakko Why …
Yakko cutting Wakko off …
We’d like a demo of Why Abe, the platform that underlies ThomasNet’s new ThomasNet Purchasing Tools offering …
Dot … and an explanation of why you decided to join up with ThomasNet.
Proper Gentleman Well, that’s easy. ThomasNet has over 3 Million users a month who need more than just supplier information. We have a great tool, that’s free to any buyer who wants to try it, that we want to make available to the mass market. It’s a perfect match. We get our tool out there, and better prepare buyers for strategic sourcing, and ThomasNet gives it’s users a way to interact with the 600,000 plus suppliers that it tracks.
Dot And what’s the big advantage? Can’t a buyer just use your tool, and then go to ThomasNet, D&B, CVM, or any other supplier information provider when they need more information on a supplier?
Proper Gentleman They could. But it’s not very convenient. And, more importantly, how do you know that they know what suppliers they need information on? The power of ThomasNet is it’s extensive classification hierarchy that allows a buyer to not only find suppliers for the products that they need, but to find suppliers that they never new existed, who are sometimes just one city over. ThomasNet also just released a “preferred suppliers” capability where it will extract those suppliers that are close to you and known to be capable of supplying the products you need in the quantities you require. Buyers have found this to be extremely beneficial. Since its introduction, the average number of suppliers invited per RFx has increased, the average number of responses per RFx has increased, and the average benefit the buyers have seen using the tool has increased. And that’s the point.
Yakko So the synergy works. But it’s just a simple CMS with primitive RFx capability, right? After all, it can’t be that good if you’re giving it away for free, considering we used to sell these platforms for six-figures a year.
Proper Gentleman Well we think it’s pretty damn good. We eat our own dog-food and use it ourselves. And I think it all depends on your definition of good. We designed a platform that would meet the needs of most small and mid-size organizations, who can’t afford, or don’t need, expensive enterprise systems that contain hundreds of “features” they’ll never use according to the 80/20 rule. All of the core functionality you need to do the majority (80%+) of your projects, the majority (80%+) of the time.

This means that it has all of your core RFx capabilities, although we do have some limitations on the number of attachments and sizes since it’s a pure SaaS application and we don’t have unlimited storage networks, your basic reverse auction capabilities, and your basic contract tracking capabilities that satisfies the needs of most small and some mid-size companies. You’re familiar with Coupa, right?

Wakko Oompa Loompa Doom-pa-dee-do
Yakko cutting Wakko off again
Yes, we’re familiar with Coupa.
Proper Gentleman Well, it’s like the sourcing version of the Coupa Express, the free open-source coupa platform. It’s not as extensive as the full Coupa platform, which itself is very affordably priced compared to some of the enterprise procurement platforms that run into the six figures, but if you’re just starting, or your needs are modest, it’s a great way to jump in and get most of the benefits of e-Sourcing without a hefty price tag.
Dot So it really is a fully-functional basic e-Sourcing platform? Even though it’s free? the doctor wasn’t pulling our leg?
Proper Gentleman Yes it is, at least at a basic level. And who are you?
Wakko Wakko.
Yakko Yakko.
Dot Dot.
Yakko, Wakko, & Dot We’re …
Proper Gentleman in a weary tone
… the Sourcing Maniacs. I’ve heard of you.
Yakko So you’ll give us a demo?
Proper Gentleman I take it you won’t leave until I do?
Dot That’s right!
Proper Gentleman ok. But you DON’T leave the conference room. OK?
Yakko, Wakko, & Dot looking rather solemn
glumly OK.
Proper Gentleman Let’s get started.

Here’s our main screen for RFX Management. It’s broken into three parts: Setup and Administration, RFX – For Buyers, and RFX – For Suppliers.

Dot Why is RFX – For Suppliers there? It’s a buyer’s tool, right?
Proper Gentleman Primarily, but it’s also a tool for suppliers to submit bids and other requested information.
Dot True, but shouldn’t that be a separate tool?
Proper Gentleman Most companies buy goods to operate and sell goods to make money, right?
Dot Right.
Proper Gentleman So a company operates as both a buyer of goods and a seller of goods, right?
Dot Right. But it’s usually two different people.
Proper Gentleman At big companies, yes. But not at small companies. Often, procurement falls under the inventory manager who is responsible for goods coming in AND goods going out. In our system, she has one login … where she can do everything she needs to do. Get it?
Dot I got it now! The right tool does what you need it to do in a manner that is as straightforward as possible. Multiple logins or interfaces to fundamentally the same tool is just confusing.
Proper Gentleman So may I continue?
Dot I’m ready …
Proper Gentleman On the set-up side, the user can set-up reviewers, block suppliers from quoting, and customize template distribution lists for current and future RFXs and Reverse Auctions. On the buy-side, a user can create a new RFX or reverse auction, bring up all active, closed, saved, or copied RFXs or auctions, and select winners. And when they are ready to issue a contract, they can click over to Contract Manager where they can define the contract meta-data and upload the contract, define reviewers, define time-based alerts that correspond to required actions or upcoming expirations, define owners, and specify the affected suppliers.
Dot That’s it?
Proper Gentleman Let’s say you’re a small company where the majority of your purchases are office suppliers and raw materials for the specialty gears that you make. In this situation, besides strategic negotation for key raw materials, how sophisticated is your procurement going to be the majority of the time?
Dot Not very.
Proper Gentleman So what else do you need?
Dot Well, in this case, not much.
Proper Gentleman Precisely. You have to remember that our goal is to take e-Sourcing to the masses. There are already enough tools out there for the Fortune 500 and Global 2000. What’s missing are tools for the hundreds of thousands of companies around the world that could also benefit from e-Sourcing, but who don’t have the complex requirements, or the bank account, that those tools require.
Yakko So is it easy to use?
Proper Gentleman The majority of users we’ve talked to say it’s the easiest sourcing and procurement tool they’ve every used. Because we don’t need complex workflows or bells and whistles, we’ve managed to streamline it to the point where it’s literally as easy as Amazon One-Click.

Everything is wizard-driven and guides you through what you have to do, when you have to do it, and in the manner you need to do it. It just asks you for the basic data, and let’s you decide what else you need – allowing you to upload attachments for anything specific to the event.

Let’s take the RFX creation process for example. You categorize the product or service, which allows ThomasNet to pull up supplier and preferred supplier lists that you can select from for ultimate distribution, specify RFP, specify the event duration, specify the currency and country, provide a description, optionally add line items, upload specification documents and an image, specify the listing type — public or private, invite reviewers to monitor the event, and distribute it. It’s literally a 5-minute process once you’ve written the RFP document you need to distribute.

Reverse Auctions are almost as simple. The only extra information you have to specify is whether you’re using rank or lowest-bid, whether duplicate bids are allowed, whether a minimum decrement is enforced, whether auto-extend should be turned-on to prevent bid-sniping, and, if it’s supplier rank, the ranking formula. The invites go out, the suppliers log in when the auction starts, and, presto, a few minutes later you have your award.

Yakko And contracts?
Proper Gentleman Just as simple. Define the basic data: the title, number, version, type, product(s), amount, physical location, signature date, start date, end date, renewal terms, commited amounts, committed quanities, searchable descriptions; upload the attachments; define the alerts; set-up some reviewers; and you’re good to go.
Yakko So it really can be that simple?
Proper Gentleman For small and many mid-sized companies, that we assist all the time in our roles as strategic sourcing professionals at Source One, it really is. We’re not trying to compete with the Aribas, Emptoris‘, and Iastas of the world … we’re just trying to provide another option for companies that don’t need the extensive e-Sourcing solutions those companies offer.

And now that you know that e-Sourcing doesn’t have to be very complex or involved for the vast majority of companies out there, it’s time for you to move on. I have sourcing events to oversee. Good day.

The Executive shows the maniacs the door.

Dot So, e-Sourcing is really simple at its heart.
Yakko And for many smaller and mid-size companies, a streamlined tool will often suffice.
Wakko It’s wakko!
  Silence again ensues as Yakko and Dot decide there’s no reasoning with Wakko today.

Supplier Management Works … Even in the Public Sector

One of the presentations at the 6th Annual International Symposium on Supply Chain Management was a Supplier Management Case Study by Canada Post. Canada Post, which is the 6th largest employer in Canada, employs a workforce of 71,000 that has to deal with 40 Million items a day that can originate from 24,000 points of access (including 7,000 retail outlets), and that may need to be delivered to any one of 14 Million locations across ten million square kilometers. As a 7 Billion dollar organization, over 4 Billion dollars flows through Procure to Pay annually, with over 2 Billion dollars of that spend managed. Major categories include transportation (350 million plus), professional services (300 million plus), information technology (250 million plus), facilities (200 million plus), and mail operations (100 million plus). Approximately 80% of invoices are electronic, and approximately 64% of payments are through electronic transfer.

Given the magnitude of dollars that are at stake, Canada Post has implemented a score-card based supplier management system in an effort to reduce costs and increase value for money. It did this because a number of recent studies, including a study by Aberdeen, found that organizations that include supplier measurement and management in their sourcing programs save an average of 8% more than those who don’t, have an on-time-delivery performance that is twice as good, and a quality of product or service that is four times better. Furthermore, without a good supplier management program in place, an organization can expect 75% of sourcing savings to erode within 18 months.

To date, Canada Post has placed 60 of its 176 large (volume/spend) active suppliers on scorecards, and it intends to add 20 more by year end, with a goal of eventually having the majority of large (volume/spend) active suppliers on scorecards in the next couple of years. It’s goal is to increase value for money by implementing a common measurement approach that will allow for a comparative measure of of supplier performance within a commodity group, improve sourcing decisions, provide a foundation for supplier relationship management, and drive improvements.

It uses a multi-part scorecard that measures different aspects of on-time delivery, defect free delivery (of a product or service), continuous improvement, and value for money that rates a supplier on a 1 to 10 scale. Anything under 8 is unsatisfactory, anything between 8 and 9 needs improvement, 9 is on-target, and anything above 9 means that the supplier has exceeded expectations. The goal is to get as many suppliers as possible exceeding expectations because this is where savings and value materialize.

As part of their supplier management initiative, they did two case studies. The first case study was on a supplier who was perceived to be a poor service provider with major problems in invoice accuracy on a regular basis and unsatisfactory service. Over two quarters, the scorecard identified poor performance that ranged between 5.5 and 7.1. This got the attention of the supplier’s senior management who, committed to fixing the problem, performed a root-cause analysis, identified corrective actions, and implemented them. After the senior management implemented their corrections, overall performance improved to 7.7 over the next two quarters and the supplier is now trending to an 8.8 within the next two quarters, which is a considerable improvement.

The second case study was on a supplier with a history of excellent service who consistently exceeded expectations. The question was whether or not supplier management could be used to edge out even better performance. After implementing the scorecard, the supplier reduced spending by 3.5% over the next 6 months and identified and implemented a number of Joint Performance Initiatives that are expected to yield even further savings in the future.

In short, Canada Post found that a good supplier performance management initiative, which in this case was built on a variation of a common scorecard where both parties agree on the metrics and the supplier is tasked with maintaining the scorecard (which has to be signed off by a buyer before it is accepted), can save considerable money even in the public sector.

Editor’s Note: I wrote this before my colleague posted his take over on Spend Matters last month, but decided to delay it as a reminder to readers of both our blogs that good SPM programs achieve results. Jason’s posts can be reviewed here:
Supplier Performance: Lessons from Canada Post (Part 1)
Supplier Performance: Lessons from Canada Post (Part 2)

A Field Guide to Green Sourcing II

In our last post we noted that environmental responsibility is no longer merely a regulatory burden, but a business imperative. As noted by Earl Sun, Jayanth Iyengar, and Max Goralnick of Deloitte Consulting in their Practical Guide to Green Sourcing, recently published in the Supply Chain Management Review, not only can going green can save you green when your sourcing process capitalizes on sustainability opportunities, but it can make you a leader in the eyes of the self-conscious consumer who cares about sustainability.

In this post, we’re going to review the six-step green strategic sourcing process being advocated by Deloitte. It’s very similar to the traditional sourcing process, but each step has been modified to take into account relevant green criteria. The revised process is as follows:

  1. Spend Analysis & Opportunity Assessment
    In addition to a review of material and logistic costs, direct and indirect environmental costs are also considered. It’s important to understand volatility and trends of green cost drivers — such as the impact of recycling, industry demand expectations, and technology shifts. Be sure to go on “energy hunts”, because, in some types of manufacturing, energy is the most significant cost and even a small reduction will have a big impact on total production cost.
  2. Internal Supply Chain Assessment
    In addition to a mapping of current processes and an identification of process opportunities, environmentally sound products and services are identified and compared. Be sure to define specifications that call for reduced raw materials and/or energy requirements. Don’t forget to include regulatory and disposal costs in your assessment. Set goals – such as a minimum of 90% recyclability, more than 25% recycled content, or 0% waste.
  3. Supply Market Assessment
    In addition to the identification of potential sources of supply, an intense effort is made to identify and assess vendors who specialize in sustainable products and services. Don’t overlook the smaller, nimble, vendors, as they are often innovation leaders on the forefront who can offer insights into the latest technologies, methods, and processes above and beyond what your large, legacy, manufacturers may be able to provide.
  4. Sourcing Strategy Development
    Desired outcomes are defined and the corresponding process is identified. Sustainability considerations are included in the identified process, be it an auction, RFX, or optimization. Be sure to gather feedback from the entire stakeholder group before committing to a process and sending out an RFX package to insure all business requirements are satisfied.
  5. Strategy Implementation
    The analysis quantifies the cost/benefit of sustainability attributes and selects the best buy from a total value management perspective, where a value is placed on environmental friendliness and sustainability directives.
  6. Strategy Institutionalization
    Sustainability attributes and metrics are closely tracked as part of supplier relationship and performance management. Identifying the right set of metrics might be a time-consuming process the first time around, but since choosing your metrics appropriately is key to your success, take the time to get it right.

Simply put, it’s your traditional sourcing process, but green costs and benefits take center stage. As such, it shouldn’t be hard to transition to. So consider making the modifications offered up by the article. It’s the right thing to do.

A Field Guide to Green Sourcing I

Environmental responsibility is no longer merely a regulatory burden, but a business imperative. As noted by Earl Sun, Jayanth Iyengar, and Max Goralnick of Deloitte Consulting in their Practical Guide to Green Sourcing, recently published in the Supply Chain Management Review, going green can save you green when your sourcing process capitalizes on sustainability opportunities. Energy and commodity costs may be soaring, but there are new product opportunities out there that save energy, water, and raw materials — and companies that use a green strategic sourcing process can not only identify these opportunities, but also achieve their margin improvement goals.

In their paper, the authors present a six-step green sourcing approach that is specific, actionable, and measurable in achieving financial objectives. The approach is not only designed to reduce costs, but to enhance a company’s image — which can result in increased sales from green-conscious consumers. Costs are reduced by replacing inefficient equipment and processes that, when combined, reduce energy, water, and input requirements at each step of the production process. Sales are increased by aligning a company’s corporate sustainability policy to what consumer’s want — “green” products and sustainable business practices.

According to the authors, the key to success is to translate the six-step strategic process for green sourcing into a sequence of tactical steps that can be executed successfully by your organization. This requires a focus on the keys to green sourcing, which they define as:

  • a broad focus on sustainability across all affected stakeholders
  • a recognition that complexity may increase and that the initial payback period may be longer in the short term
  • a data-driven cost-and-benefit modeling approach is required

The result of this focus is a green sourcing process that can create sustainable wins for your organization, which will result in (drastically) reduced costs in the long term, like those achieved by companies such as Adobe, Honda, HP, Interface Inc., Toyota, and Walmart. (See previous posts on Sourcing Innovation as well as Supply Excellence and 2 Sustain for details.)

Dumb Company

Two weeks ago I brought you CIRCUIT, “Corporate Intelligence Rating Calibration Under Inflationary Times”, where, I’m sure, many of you (who work for, and run, intelligent companies gifted enough to recognize the genius you display as a regular reader of Sourcing Innovation) asked “Can a company really be that dumb?”. The answer is, an unfortunate, yes. And in recessionary times, dumbness spreads like a disease. (Although it’s a meaningless statistic, it is interesting to note that a search for “dumb company” in Google brings up 16 Million hits. That’s almost Christina Aguilera level of popularity … in fact, it’s only dwarfed by the popularity of Britney Spears and the Circus she is due to unleash on the world on December 2.)

So today, helped by Google, I decided to bring you a starting list of other things that dumb companies do. Feel free to add your own in the comments, to help your fellow reader stay on the straight and narrow.

  • Brochure Mania
    As highlighted in this Remarkable Communication article, you can’t afford to print 10,000 brochures and then dump 9,950 in a toilet. (And the environment can’t afford it either!) If you feel you need a brochure, this there’s neat little technology called word processing that can generate industry standard formats, like PDF, that every computer can read.
  • N-Tuple Opt-In Everyone who E-mails You
    Just because someone emails you to say they like, or don’t like, your product, that doesn’t mean they want to be added to every single e-mail list your company has.
  • Assuming all of your customers are hip 25 year-old caucasians who listen to i-Pods, drink Starbucks, and hug trees in their Gap outfits.
    Chances are the majority of your customers aren’t who you think they are. In the enterprise space, assuming all of your customers run SAP and think it’s the greatest gift to man since sliced bread isn’t a great assumption either.
  • Lawyering Up …
    And suing everybody who might be infringing one line of a 100-page patent that should never have been issued in the first place. Only money-grubbing lawyers win in patent wars. If you were smart, you’d lobby for the US to go the way of the EU and abolish software and business process patents. They’re just stupid. There are laws for copyright. There are laws for espionage. There are laws for theft. Beyond that, if you can’t compete fairly, maybe you shouldn’t be competing at all.
  • Forgetting the Customer
    Maybe the customer doesn’t know the best way to solve his problem, but he knows more about it than you do. Don’t assume that only you can solve it, or that you know more about it than he does.
  • Forgetting Value
    Cost matters when money is tight, but so does value. If it sucks, it doesn’t matter how cheap it is. Once word gets out it’s a piece of trash, very few people will buy your product.
  • Cutting back on Customer Service
    When a customer is irate because you sold him something that doesn’t work … putting him on hold for hours or promising a solution “in next year’s release” isn’t going to win you any brownie points. It’s going to make him look for an early exit from your relationship.
  • Forgetting Your Employees are People, not Chattle
    They’re not resources to be reallocated, or liabilities to be released … they’re your dedicated employees who are there to help you through tough times.
  • Forgetting Sustainability
    You can always afford to go “green. Maybe you have to be creative. Maybe you have to do it in baby-steps. But you can always afford to go green.
  • … and many, many more.

Now it’s your turn. What are the dumbest things you had the opportunity to experience in the corporate world (and that led you on the path to your current job, where your intellect and dedication is appreciated). Alternatively, if you are among the unlucky few who joined a company that masterfully hid its ineptitude during the recent mini-boom, and that is now showing it’s true colors (and causing you to search for a smarter company), what dumb things are you seeing?