Monthly Archives: February 2009

Anti-Trends from the 21st Century Supply Chain

Kinaxis on Response Management, on its 21st Century Supply Chain blog, recently published it’s anti-trends for the down economy.

  • Procurement practices will become more adversarial in 2009
    as cash-strapped buyers try to force suppliers to accept longer payment terms (instead of adopting good supply chain finance)
  • Integrated Business Planning will remain a wish
    due to a lack of incentives for Finance and Supply Chain to cross the divide
  • Western brand owners will lose market share
    as Asia emerges from the global slump sooner than the west, Asian contract manufacturers will establish their own brands to beef up production

These are certainly well thought. I urge you to read the original post in full.

You Need Trade Visibility

A trade visibility solution is a key component of a supply chain visibility platform that allows a company to track its products from the time they leave a supplier’s warehouse until the time they reach the end customer. Trade visibility is important for a number of reasons:

  • It helps you understand the factors that impact costs, cycle times, and service levels,
  • It helps you identify minor issues before they turn into major problems,
  • It helps you enforce compliance, and, most importantly,
  • It keeps you from flushing millions of dollars down the drain.

An average multi-national needlessly spends millions of dollars a year that it doesn’t have to as part of it’s global sourcing operation. Millions that could be identified, and saved, if the company implemented a good end-to-end trade visibility solution — which, today, would cost that same company well under a million dollars a year due to the low license costs of the new SaaS offerings on the marketplace, their quick set-up times, and the fact that additional personnel do not have to be hired to maintain them.

How much can you save? It depends on how much you are spending, and how bad your processes are, but consider the following:

  • A Global Data Mining study across 5 companies with between 3 Billion and 31 Billion in revenue found over 150 Million in potential duty savings alone just through better classification.
  • Prior to using the Integration Point Denied Trade Screening Solution, Eastern employees used to spend 15 to 25 minutes per shipment in an error-prone manual process. Now they can screen shipments in under a minute. That’s a process savings of almost 96%, and a savings of several hundred thousand dollars per year in needless labor.
  • Most companies spend hundreds of dollars in manual filing costs per shipment which can be processed for pennies by global trade management solutions. That’s hundreds of thousands of dollars of savings per year for your average multi-national.
  • Most trade cycles are at least 65% longer than they need to be. Since each day “in transit” has a cost that is roughly 0.5% of the total value of the goods, and since global trade visibility can shave up to 10 days off of the cycle for your average multi-national, that’s an average savings potential of 5%, or 5 Million on a 100 Million shipment.

And that’s just the tip of the ice-berg. Non-compliance costs can add up even faster.

  • Recent amendments to the IEEPA increased the increased the civil penalty for a “person to violate, attempt to violate, or cause a[n export] violation” to “an amount not to exceed the greater of (1) $250,000; or (2) an amount that is twice the amount of the transaction that is the basis of the violation.” This means that a 10 Million dollar shipment found in violation can result in a 20 Million dollar fine.
  • Violations of the FCPA, whether or not they are intentional, can also cost you millions of dollars.
  • U.S. Customs has historically collected $7 for every $1 spent conducting an audit when prior disclosures, underpaid duties, liquidated damages, and penalties are summed up.

And that’s not all.

For a full, in-depth discussion of Why You Need Trade Visibility, check out the latest Sourcing Innovation Illumination, sponsored by Integration Point. I thoroughly believe it’s worth a few minutes of your time.

On The Road to IBM’s Smarter Supply Chain of the Future

Today, IBM releases the results of its Global Chief Supply Chain Officer Study, The Smarter Supply Chain of the Future. This report summarizes the findings of an in-depth study that questioned 400 Senior Supply Chain professionals in 29 industries across 25 countries to determine the key challenges facing supply chain executives today.

The study, which identified the top five supply chain challenges, defined the three characteristics of the smarter supply chain as well as a roadmap for the CSCO of the future that centers around the challenges and core characteristics of the smarter supply chain.

The Top Five Challenges, which should be of little surprise to regular readers of the sourcing blogs, were:

  • Visibility
    collaboration, real-time data visibility, and decision support are all key concerns
  • Customer Intimacy
    customer behavior comprehension, service cost models, optimized forecasts, and collaboration are all key concerns
  • Cost Containment
    cost structures, inventory costs, fluctuating markets, and service costs are all key concerns
  • Risk
    predictive capabilities, risk adjusted inventories, compliance strategies, and product traceability are all key concerns
  • Globalization
    demand, supply, and distribution planning are key concerns

According to IBM, the three characteristics of a smarter supply chain are:

  • Intelligence,
  • Interconnectivity, and
  • Instrumentation.

So how do these three I’s come together to define the smarter supply chain of the future? Download the report and find out!

Software Acquisition Insider Tips, Part II

Chuck the Checklist
Although I understand the temptation to line up competing products side-by-side so that you can compare features, as most business analysts will tell you that you should compare “apples-to-apples” and “oranges-to-oranges” and follow the common practice of the trade rags which publish page after page of tinted paper that “goes deep” on comparing product A to B to C, I also understand that you should resist this temptation and not do this. There are too many problems with this approach, including:

  • It’s impossible to sum up a feature in one sentence, or even a short paragraph.
    Product differences are never as simple as a “yes/no” in a 400 line grid. For example, when comparing two ERP systems, it’s much more intrinsically important to understand that one product gives you direct access to its internal schema while the other does not. Without direct access, you’ll have to hire an outside integrator to “fix” your application interfaces on every upgrade, as you won’t have the information you need to do it yourself. And at $1,500 to $2,500 per consulting day, this will add up very quickly.
  • No piece of software can do everything.
    A vendor might say that “we can do XYZ” and be correct in principle, but leave out that it will take days of effort, that it’s a non-repeatable process, that the results are only available on a static, non-downloadable, HTML page, or that it will cost you $2,000 a day in consulting services every time you need it. Will these subtleties show up in the matrix? Of course not!
  • Trade Rags and Analysts Give you Bad Lists.
    If you use a matrix generated by a trade rag, or analyst firm, which items will show up on the list out of the multitude that could be selected? The items promoted by the big vendors with the most marketing people (who get the most face time with the analysts and trade rag editors), of course. But are those items really the important items? Maybe to their legacy customers, but not necessarily to you! You need to remember that the majority of innovation comes from new start-ups and small firms that the analysts and trade-rags don’t even cover yet!
  • RFP Templates are Poison Pills
    I’ve said it many times before, and I’ll say it again. If you use, or modify, an RFP template that a vendor makes “freely available” to you, you’ve dug your own grave. Those templates are filled with “must have” irrelevant features designed to make the vendor look good and their primary competition look bad. That’s why the doctor gave you questions you need to ask in his X-emplication and X-asperation series and not useless matrices. Although there are a few common elements that every customer will need in a solution for X, the specific feature lists are different for every customer and depend on their current processes and platforms.

Instead of a checklist, hire a consultant (like the doctor) who can help you understand what your true needs really are, what the relevant differences are between the software solutions you’re considering, and which features are most important to your company. This endeavor, which will likely only cost you a few thousand, could save you hundreds of thousands of dollars.

Wait for the Blush to Leave the Rose
Although testimonials and references from customers who have recently implemented the software product will usually be sincere, they will always be useless. Why?

  1. New customers are highly motivated to say the software is great.
    They just spent a bundle on the product and they are under great pressure to justify the purchase to their CFO. They’ll blindly see it as a success even if it’s not for quite some time.
  2. Almost all software solutions are better than no software solution at all.
    Software automates tasks, simplifies processes, and ultimately solves some problems. There will almost be some initial euphoria over the fact that at least part of a task has been simplified. Wait for the euphoria to die down and for people to start complaining about the annoyances. Only then do you find out if it’s worth the money or not. If they worst complaint is “the UI is ugly”, then it’s probably worth the dough, but if many users complain “I can’t even requisition a stapler through this gawd-awful piece of cr@p”, then you know it’s definitely not.

For a testimonial to be of value to you, it should be from a customer who has used the software for at least a year, and preferably two. Then you get a fuller, more balanced story about what’s good and what’s not so good. (But that’s why software vendors ask for reviews and testimonials while the blush is still on the rose. They don’t want you to see the thorns.)

Of course, the best testimonial or reference comes from a customer who has not only been using the solution for at least two years, but also left a company, moved to a new company, and bought the exact same software again. This person has been through the wringer with the product, warts and all, understands exactly what she’s getting, and wants more. That’s a testimonial. Or from a user who wasn’t the original purchaser of the software but inherited it, such as a new CPO taking over, and who has no history with the company. If the new user is excited about the product, that’s also a testimonial. But you won’t get either if you don’t let the blush leave the rose.

Recent Additions to the Resource Site

The recently redesigned Sourcing Innovation Resource Site, always immediately accessible from the link under the “Free Resources” section of the sidebar, continues to add new content on a weekly, and often daily, basis. Unlike many “resource”, “best of”, or “portal sites” that are abandoned almost as quickly as they are thrown together, the resource site is actively maintained (and dead links are removed on a regular, usually weekly, basis).

In fact, there have been over 45 resource additions in the past week alone.

The total number of unique, active resources now exceeds the 2,000 mark, which breaks down as follows:

And includes the following recent additions, among many others:


Dates Conference Sponsor
2009-Feb-16 to


National Conference on Operations & Fulfillment

Las Vegas, Nevada, USA (North-America)

2009-Apr-19 to


Meeting Regulatory Challenges in Turbulent Times (NCBFAA Annual Conference)

Rancho Mirage, California, USA (North-America)



Dates Seminar Sponsor
2009-Mar-5 to


JDA Innovation Forum

Cape Town, South Africa (Africa)

2009-Mar-17 to


Category & Space Management Innovation Forum

Stockholm, Sweden (Europe)

2009-May-11 to


Wind Energy

Bordeaux, France (North-America)


Archived Webcasts

Original Date Webcast Sponsor

00:00 GMT/WET

Gaining Control Over and Reducing Indirect Spend ISM

14:00 GMT-05:00/CDT/EST

Coordinating Outsourced Manufacturing: A Win-Win Proposition for OEMs and CMs Kinaxis

00:00 GMT/WET

Realizing Savings through a Global Contract Management Strategy ISM

00:00 GMT/WET

Supply Chain Management: How Do I Manage What I Can’t Control? Lawson

00:00 GMT/WET

Managing Profitability: From Margin Erosion to Margin Explosion Lawson

00:00 GMT/WET

Achieving Real-Time Supply Chain Integration Supply Chain Digest

00:00 GMT/WET

Is Contract Management A Critical Process? Next Level Purchasing

Which are all readily searchable from the relatively new Site-Search page. So don’t forget to review the resource site on a weekly basis. You just might find what you didn’t even know what you were looking for!

And keep a sharp eye out for new content and new content categories which will be coming on-line shortly!