Monthly Archives: March 2009

Spend Matters in Procurement

Yesterday, over on Spend Matters, JB brought up two very good points.

  1. Every dollar spent on procurement will generate a 300% to 600% ROI
    As noted in beyond shedding the deadweight in procurement and operations, the last place you want to cut budget is procurement. When Hackett data continually finds that average performing companies get a 300% annual return from procurement-focusssed dollars and best-in-class performers get a 600% annual return from procurement-focussed dollars, in these tough economic times, you should be increasing your procurement budget. Many products, especially SaaS offerings where you pay by the month, will generate a return before the second payment is due. Plus, most of the better service providers are willing to wait until the project is completed and you document a return before invoicing you. That means you can actually make the money to fund your operations before you even spend it!
  2. It’s never been a better time for a make/buy analysis
    Not only will this help you turn on a dime if you have to turn on a dime because your current supplier goes under, a natural disaster takes out a key raw material (and you need a replacement product that uses an alternate raw material), or cost increases force a new business model, but it could also help you save a bundle. In addition to the e-Sourcing and Decision Optimization vendors that JB lists, whatever you do, don’t forget the should-cost experts at Akoya and Apriori. You don’t want to make a sourcing decision based solely on price quotes alone. Otherwise, you might accept a low-bid that is unsustainable by the supplier who is so desperate for your business that they effectively bid themselves out of business.

Tips on Drafting a Truly Unbiased RFP (Software Acquisition Insider Tips VI)

It’s not hard to draft an unbiased RFP, even though you might think otherwise when you consider the truly large numbers of RFPs that hit the wire every day. Many of them are biased toward a specific provider. The fact of the matter is that it doesn’t take much to bias an RFP, and it often happens without the intent of the author. But it doesn’t have to happen to you. Here are some tips to keep your RFPs unbiased.

  • Don’t use a (free) RFP template
    I’ve told you again and again. These are created by vendors to achieve one goal, and one goal only: to make their product, and only their product, look good.
  • Ignore the feature lists
    This is a free RFP template favorite; namely, features selected for their “differentiating” capability, that you’ll never use. It’s not the features that matter, it’s the functions. Specifically, the functions you need the product to perform for you.
  • Don’t use an interested party.
    That means no vendors, no solution providers who’ll be bidding on the business, no consultancies with partnerships or known relationships with vendors or solution providers who’ll be bidding on the business, and no one with an obvious agenda that’s not yours.
  • Describe the process you need to automate or support in your own words.
    The minute you use a vendor’s terminology is the minute you give them the edge to exploit the RFP and, in the public sector, ramrod the solution down your throat, whether or not it’s right for you.
  • Describe the goal state, not the current state
    You get what you ask for, and if you ask for a solution that supports the current state, which you presumably want to improve, you’re not going to end up with much of an improvement.
  • You’re probably not a technology expert, so don’t put technology in the RFP.
    Don’t make the error of assuming that you know what technology would be best.
    If it’s software you’re buying, be wary of opinions from your IT department.
    IT people are most likely not
    software developers, so they have at best a limited understanding
    of the technologies that software developers use. Even software developers tend
    to know only the technologies with which they are currently working, and they are
    often deeply biased toward a particular technology, for no rational reason. You are looking for a solution, not
    a technology. So spend your time focusing on the solution and what it does for you.
  • Make sure you control your data.
    If it’s software you’re buying, then no matter what solution you choose,
    make sure part of your RFP includes a requirement to get
    the data that you pumped
    into the product, back out of the product, easily and quickly, in a format that’s understandable to you (not
    XML or a proprietary database file, or some other idiosyncratic format that will cause pain — rather, an ordinary flat file,
    or set of related flat files). Your relationship with the vendor is not likely to be “until death do us part.” The
    software world moves extremely quickly, and a much better solution could present
    itself down the road. You want the ability to jump on it without a backwards glance.
  • Unbundle all the extras.
    Vendors will almost always muddy the water by “including” A with B, proposing some special deal that’s available
    for a limited time only, and so on. Make sure that your RFP unbundles maintenance from license fees or purchase price; clearly spells out the cost to upgrade; and clearly disambiguates services from product.
  • Demand multiple sources for services.
    Just because you’ve committed to Oracle ERP, for example, doesn’t mean that you have to use Oracle resources to
    implement the system. The same is true for other software products, and for many other commodities as well.
    The cost of services can dwarf the cost of the product; and the best deal for services is achievable
    when there are multiple services providers. When vendors are bundling services, and no matter who you choose it’s a one-stop shop,
    you will be helpless the moment you sign the deal. Would you buy a car that could only be serviced at one
    dealership?

Your Search Traffic is Headed to Sourcing Innovation

Sourcing Innovation gets thousands and thousands of hits per day. A significant amount of that traffic consists of thousands of new visitors directed to SI from search engines like Google — spend management professionals who are searching for real information, not just reading blogs for entertainment.

Why are these visitors coming to SI?

Is it because the doctor knows some magic Search Engine Optimization (SEO) techniques? No.1.

Is it because Sourcing Innovation manipulates traffic with aggressive ad-word campaigns? No.5

Is it because Sourcing Innovation has a deep content archive consisting of almost 1,200 content rich entries and 866,000 words? Yes!

Simply put, when a supply management professional enters into a search engine one of the common spend management search phrases, Sourcing Innovation is where he’s directed.

SI not only has more search phrases in the top 10, 20, 30, 50 and 100 than any other leading supply management blog, but it also has more search phrases in the top 10, 20, 30, 50, and 100 than any leading supply management publication. That’s right; new buyers are more likely to find Sourcing Innovation than any other blog, and they’re also more likely to find Sourcing Innovation than Purchasing, Supply & Demand Chain Executive, or the Supply Chain Management Review.

But I don’t expect you to take my word for it. Here’s the method, and the results.

I started with a list of about 30 search phrases that cover the topics that are normally written about on Sourcing Innovation, Spend Matters, Supply Excellence, and e-Sourcing Forum (the top four blogs focused on supply management, as per third-party traffic estimation sites). I then used eight common methods of search phrase generation (including competition research, search phrase discovery, Google suggest, Yahoo! search assist, and Ask type-ahead search suggestions) until I had a corpus of 99 search phrases that I believe (1) accurately cover the range of topics that supply management blogs and publications discussed, and (2) reasonably cover the search terms that would be entered by a supply management professional. (see the Complete Corpus).

Then, on Friday March 13, I retrieved the search engine rankings for Sourcing Innovation and Spend Matters for each of these search phrases in Google (59%), MSN (6%), Yahoo (15%), and Ask (3%), which together represent 83% of the search engine market share. I verified that the other search engines did not differ materially from Google, so thenceforth I focused solely on Google. I then retrieved the Google search ranking for each of the terms in the Corpus for each of the top six supply management blogs and the top five supply management publications. In terms of the number of search phrases in the top 10, top 20, top 30, top 502, and top 1002, Sourcing Innovation was first in every category. The top blog only had 4 search phrases in the top 10 and 6 in the top 20 compared to Sourcing Innovation‘s 9 and 13. The top publication fared better, but not much better, with 6 phrases in the top 10 and 8 in the top 20. (Blog Rankings | Site Rankings)

So what does this mean? Let me summarize.

SI is the only supply management blog that is currently ranked by all of the “big five” traffic ranking sites (Alexa, Compete, Quantcast, Ranking, and Traffic Estimate). SI is the top ranking supply management blog on Quantcast and Ranking, and the next-to-top ranking supply management blog on Alexa, Compete, and Traffic Estimate3. Furthermore, Sourcing Innovation is nearly twice as likely to be found though a search engine than Supply Excellence and more than three times as likely to be found through a search engine than any other supply management blog.4 SI is also, on average, three times as likely to be found through a search engine than any of the traditional print publications.4

And that, my potential sponsors, is why your traffic is coming to Sourcing Innovation. So… why aren’t you here?



1 There are no magic search engine techniques. Any SEO company that gets you a top 20 ranking overnight uses “black hat” search engine optimization, which is a big no-no. If their shenanigans don’t get your site banned from the search engines altogether, which is a very real possibility, you can at least be assured that your ranking will disappear overnight the next time the search engines adjust their search algorithms to combat the latest black hat techniques.
2 Although very few surfers go beyond the third page, top 50 and top 100 rankings are relevant because a continued effort to add quality content around these search phrases will result in a progressively higher ranking over time.
3 Spend Matters wins on these ranking engines, though not by much on Compete. Note that Sourcing Innovation and Spend Matters tend to trade off the number one spot on Compete and, for better or worse, Traffic Estimate tends to parallel Alexa.
4 Assuming a random search term, which you have to assume because you never know a priori what a supply management professional is going to search for.
5 Sourcing Innovation does no advertising of any kind. It doesn’t need to. And now you know why!

Lean Problem Solving: A Great Fix for a Down Economy

As clarified by Jamie Flinchbaugh of the Lean Learning Center in a recent Industry Week article on problem-solving through the lean lens, lean is about problem solving. It is the never ending process of solving the problem that prevents us from getting to the ideal state where every need is met on time and with zero waste.

When trying to solve a problem, it’s important to note that waste is caused not just by processes with major problems, but by processes with minor problems as well … and that minor problems add up and multiply the total waste. Sometimes a wasteful process will have a dozen little inefficiencies that multiply into one big efficiency. That’s why a lean approach is needed — it looks for deviations from optimal at every step of a process, no matter how small at each stage of the problem solving process.

Lean attempts to identify the purpose of a process in identifying the root cause of a problem, not just the intended end result. Consider the example of cycle timing marks in the assembly process brought to light in the article. Viewed through a traditional lens, the purpose is to help the operator keep pace and speed up if he falls behind. But viewed through a lean lens, the purpose is to identify a potential problem with the process. Work should keep its own pace and the lines should spot problems as they occur, not (well) after the fact. If a task is problematic, because parts don’t quite fit or machinery isn’t performing at spec, it should be immediately identifiable from the lag in cycle time and provide an immediate opportunity for quick intervention.

Lean also trains us to engage problems, and not assume that they will be addressed by others. Most organizations work in fire-fighting mode and allow a problem to select them, rather than selecting a problem and dealing with it. Other problems, of seemingly lesser importance, are dismissed as insignificant or “typical” and ignored. Resources need to be allocated to a problem as it occurs, not after the fact.

Finally, lean tells us that a solution is not a solution unless it makes the new way easier or the old, problematic, way impossible. Lean doesn’t force-fit a solution — it develops one that fits just right.

For more information on the basic problem solving process (which you should embed a lean lens into), see the following posts:

For more information on lean, see the following posts:

Recent Additions to the Resource Site

The 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 50 resource additions in the past week alone, including:

The total number of unique, active resources exceeds the 2,200 mark, and breaks down as follows:

And includes the following recent additions, among many others:

Conferences

Dates Conference Sponsor
2009-Mar-17 to
  

2009-Mar-20

 Governance, Risk, & Compliance
  

Las Vegas, Nevada, USA (North-America)

 SAP
2009-May-18 to
  

2009-May-20

 Front End of Innovation
  

Boston, Massachusetts, USA (North-America)

 PDMA
2009-Jun-15 to
  

2009-Jun-17

 National Retail Federation Loss Prevention Conference & Expo
  

Los Angeles, California, USA (North-America)

 NRF
2009-Nov-1 to
  

2009-Nov-4

 Canadian Public Procurement Council Annual Forum
  

Victoria, BC, Canada (North-America)

 CPPC-CCMP

Webcasts

Date & Time Webcast
2009-Mar-19

14:00 GMT-04:00/AST/EDT

 Using Performance Metrics to Do More with Less: A 7-Step Action Plan for Operations Managers
  

Sponsor: PureShare
2009-Mar-20

10:00 GMT-04:00/AST/EDT

 Spend Analysis Demonstration : The First Three Important Steps to Savings
  

Sponsor: Enporion
2009-Mar-25

8:00 GMT-07:00/MST/PDT

 Financial Health of a Life Science Company Starts at Managing Rising Costs
  

Sponsor: QAD
2009-Apr-1

16:00 GMT-07:00/MST/PDT

 Best Practices in Spend Management for Law Firms
  

Sponsor: Aderant
2009-Apr-8

8:00 GMT-07:00/MST/PDT

 Explore Revenue and Margin Growth in a Recession
  

Sponsor: QAD
2009-Apr-8

8:00 GMT-07:00/MST/PDT

 Measuring World-Class Finance Performance
  

Sponsor: The Hackett Group

Archived Webcasts

Original Date Webcast Sponsor
2008-Jan-1

00:00 GMT/WET

 Turning Risk And Compliance into a Competitive Advantage QPR
2008-Jan-1

00:00 GMT/WET

 Five Dangers to Avoid in Your ePayables Project — Ways to Reduce Risk and Plan for Success PurchasingNet
2008-Jan-1

00:00 GMT/WET

 P2P Supplier OnBoarding: Finding the Best Approach for Your Organization PurchasingNet
2008 -Oct-22

00:00 GMT/WET

 Building and Maintaining a Successful Quality Management System QPR

which are all readily searchable from the comprehensive 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 continue to keep a sharp eye out for new content and even more new content categories which will be coming on-line in the future!