Monthly Archives: June 2009

Energy Efficiency Tips from Rockwell Automation

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A recent article in Information Week on getting started with your energy efficiency program had a few good tips that are worth sharing.

  • Identify current power usage
    Use real data which measures power utilization on an hourly basis. Contact your utility provider if you have to.
  • Understand how the bulk of your energy is consumed.
    Once you’ve identified the peak load times, identify the major culprits. Is it a production line or particular piece of production equipment? Air conditioning for your data center? Consider getting an independent energy audit.
  • Look for ways to minimize energy use at peak times.
    Set your charging units to kick in after midnight … not when the batteries are plugged in when people leave at 5:00 pm. Adopt a casual work environment and turn the thermostat up (to 25C) in the summer, down (to 17C) in the winter, and consider instituting a siesta. And if you run a data center, fight to bring back liquid cooling. Why try to cool an entire room when the only part of the machine in danger of overheating in a standard operating environment is the CPU?
  • Sniff the Air
    Compressed air, like electricity, is often a necessary evil in many industries, but it is not monitored closely and systems are typically laden with leaks. Every leak (exponentially) increases the energy required to maintain the pressure.
  • Mechanical Drive Trains Use Energy Too
    And just like variable rate motors can save energy, so can different types of gear reducers.

Overcoming Global IT Challenges in Your Supply Chain

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A recent article in Strategy + Business that discussed a recent survey that found that information technology is a neglected asset in joint ventures, besides unearthing a very disturbing trend, attempted to outline the major roadblocks to IT recognition and some ways to overcome those roadblocks. In Global Partnerships Unplugged, the authors do a good job of providing some good advice that can help you insure that your global sourcing projects don’t get sidetracked, or, even worse, fail due to poor information technology alignment or support.

The article covered a recent survey by Booz & Co on Keeping IT Relevant in a Hyper-Changing Environment that found that information technology was shortchanged on a disturbingly regular basis at overseas joint ventures. This had a significant negative impact on costs and efficiency. Cheap (and often used) computers and software that don’t fit in with the current infrastructure or business processes don’t save money … they cost money. Not only are people less productive, but it takes a lot more IT support to keep an ad-hoc jumbled network running than a well-planned homogeneous one. Not to mention the security concerns and losses as a result of IP theft that can easily be extracted from unpatched and unsecured machines that the primary IT department is unfamiliar with, if they even know the machine is on the ad-hoc network to begin with.

Trying to get to the root of the problem, Booz & Co discovered that IT, because of the up-front investment required, was often looked upon as a cost center to be cut, and not a source of cost savings. Done right, especially where supply chain management technology is concerned, good IT will pay for itself many times over in productivity improvements, insightful reporting, and, in e-Procurement, immediate identification of maverick spend or invoice discrepancies. But if you decide you can replace computers with typewriters (as one company in the survey did) at your offshore locations, those savings will NEVER materialize. One of the biggest costs, and sources of loss, in an Procurement department that has yet to be automated is paper invoices. They take time to enter, and even more time to process. Generally speaking, because of the effort involved just to confirm goods receipt, they’re usually paid at face value which may not be (and for some categories often is not) at the contracted rate. You need good systems to support good people. Period.

So how do you overcome the challenges that prevent IT from being seen as the productivity enhancing and cost saving toolset it really is? The article gave these tips for the three major challenges it outlined.

  • Cost Pressures
    Don’t tie IT funding to a site’s P&L. Manage it from a centralized IT budget established to support the entire operation, which allows for a meaningful calculation on ROIC.
  • Standardization
    Mandate that the entire business is to be run off of one set of standards and set up a global governance forum to insure that it happens.
  • Security
    Task Risk Management with IP management on systems. Once they understand the security risks posed by disparate systems across a non-standard network, they’ll become vocal proponents of good IT systems.

Does Your CFO Think All You Deserve is a Kick In The Face?

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I read a very startling article this weekend on A recent study across 550 financial directors and CFOs from large organizations in the US, UK, Scandinavia, Germany, Spain, Belgium, the Netherlands, Luxembourg, and France found that only 17% of CFOs believe procurement heads deserve a place on the company board.

That’s right, 83% of CFOs surveyed essentially believe — to quote Adrian Done, a professor at the Navarra IESE Business School and supply chain expert, that procurement deserves nothing more than a “kick in the face“. Ouch. At a time when their top priority is to save money, this is how they view procurement? Let’s hope their replacements, when they eventually get fired or laid off when company performance goes down the drain because they did the usual blind cut across the board which irreparably damaged the business, are smarter than this.

If It Takes 5 Pages to Explain e-Sourcing Is Easy, You Are Doing It Wrong!

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Last week, published a 5-page article on E-Sourcing Made Easy. Done right, e-Sourcing IS Easy, and if it takes 5 pages for you to make that point, you’re doing it wrong. Especially when you spend 5 pages explaining that:

  • among some people, e-Sourcing has a bad rap you’ll need to overcome
  • that you should start small and manageable and work your way up
  • that you should have buy in from key stakeholders before proceeding with an e-Sourcing event
  • that marketing spend is a prime candidate for cost reduction, but that you’ll have a turf war if you don’t approach it carefully and collaboratively
  • that temporary labour is another prime candidate for cost reduction, but that you’ll have to do a lot of preparation to understand the category before you can proceed with an event
  • that health care buying is another prime opportunity, but that you might get push back from professionals worried about quality
  • that many areas of professional services, such as legal, are also ripe

which I just explained in a paragraph, and then proceed to spend no time at all on the actual implementation steps that make it easy. So here is a simple 5-step process to make e-Sourcing easy:

  1. Identify your biggest opportunities.
    Bring in a consultancy that is an expert in spend analysis to help you identify where you have the most cost reduction potential.
  2. Identify the negotiation processes likely to give you the most savings.
    Multi-round sealed bid e-negotiation? Open Auction? Decision Optimization? e-Procurement with price enforcement?
  3. Select a best-of-breed SaaS provider that has those capabilities.
    And insure that it is supported by third party consulting firms with category experts.
  4. Bring in a cost reduction consultancy with category experts.
    Contract them to manage the projects for your top five savings opportunities and have them train you on how to use the system to implement the proper processes as the projects progress.
  5. Retain the consultancy in an advisory role on your next five to ten projects.
    That way you can be sure you learn the system, and processes, right.

That’s it. Then you’ll be ready to run your own projects and save every time.

The SSON’s Top Ten Tips for Talent Development

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The ultimate key to supply chain success is having a great team. More than anything else, supply chain is about people who implement the processes, use the technology, and use the physical assets you have to create value that consumers will buy. That’s why this blog keeps hammering on the importance of talent and why you should at least browse this article on the top ten tips for talent development from the SSON because, more than anything else, top talent is what is going to get you through this downturn.

So let’s get to them.

  1. Hire With Development in Mind
    The great thing about top talent is they want to be top talent, and they recognize that this means continued development and proving themselves every day (because Shift Happens). If you show you’re committed to workforce development, you’ll attract a much better pool of candidates from the start.
  2. Observe and Encourage
    Identify the star performers who are already within your organization and offer them the training and opportunities they need to shine.
  3. Provide the Bigger Picture
    Not only is the whole greater than the sum of its parts, but an employee who understands the whole will create a much better part.
  4. Create Uniformity throughout the Organization
    Make talent development an organizational effort, not just a spot-effort by individual managers.
  5. Create Development Centers
    This institutionalizes development in your organization.
  6. Acknowledge the Benefits of External Development
    Not all expertise is within your organization, in fact, most of it is outside the four walls. Taking advantage of external expertise is what really allows your organization to shine.
  7. Encourage Participation in Industry Events
    Not only will your employees learn, but they’ll meet people who can help them keep learning.
  8. Leverage Internal Events
    This gives more junior employees the chance to increase their skills and abilities and eventually take full advantage of the opportunities external events have to offer.
  9. Have the Right Trainers in Place
    The right trainer makes all the difference.
  10. Don’t Forget the Incentives
    That’s what incentivizes your employees to learn as much as they can and excel at their jobs … which is what provides the most value to your organization.