Daily Archives: September 7, 2009

New and Upcoming Events from the #1 Supply Chain 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 — and it will continue to do so.

The following is a short selection of upcoming webinars and events that you might want to check out in the coming weeks:

Date & Time Webcast
11:00 GMT-04:00/AST/EDT
Coordinated Effective Logistics at Saab Using the SCOR Model
  Sponsor: SCC
14:00 GMT-04:00/AST/EDT
Study Finds Mobile Applications are Key to Productivity: Featuring a Case Study with PPG Industries
  Sponsor: Industry Week
11:00 GMT-07:00/MST/PDT
Troubled Outsourcing Arrangements: Strategies and Tips for Managing Difficult Issues
  Sponsor: SIG
9:00 GMT-05:00/CDT/EST
Global eInvoicing Beyond VAT Tax
  Sponsor: Ariba
11:00 GMT-04:00/AST/EDT
Pre-Quantifying Green Initiatives with Supply Chain Modeling
  Sponsor: SCC

Dates Conference Sponsor
2009-Sep-20 to
   Washington, D.C., USA (North-America)
2009-Sep-21 to
SCM Chem 2009
   Atlanta, GA, USA (North-America)
2009-Sep-21 to
LogiPharma 2009
   Philadelphia, PA, USA (North-America)
2009-Sep-21 to
European EXPP Summit & Forum
   Amsterdam, The Netherlands (Europe)
2009-Sep-23 to
The Logistics & Supply Chain Forum
   Southhampton, England, UK (North-America)
Richmond Events
2009-Sep-23 to
The Procurement Forum
   Southhampton, England, UK (Europe)
Richmond Events
2009-Sep-23 to
Growth & Innovation Forum 2009
   Miami, Florida, USA (North-America)
Consumer Goods
2009-Sep-23 to
Supply Chain Optimization: Mission Possible
   Atlanta, Georgia, USA (North-America)
2009-Sep-23 to
ePayables Summit
   Charlotte, North Carolina, USA (North-America)
Paystream Advisors
2009-Sep-24 to
Strategic Outsourcing Conference
   Dallas, Texas, USA (North-America)
The Conference Board
2009-Sep-28 to
13th Annual North American Shared Services & Outsourcing Summit
   Chicago, Illinois, USA (North-America)

They 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 you were looking for!

And continue to keep a sharp eye out for new content!

e-Leaders Speak: David Bush of Iasta on “Strategy for Success in e-Sourcing: Sourcing Execution”

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Today’s guest post is from David Bush of Iasta.

As any one who has been around e-Sourcing technology for any amount of time knows, the greatest sourcing and procurement successes are directly tied to properly managing adoption and continued usage by both the sourcing and stakeholder communities. The best software in the world is only marginally effective if only a tiny fraction of spend is under management and being executed through a strategic sourcing process. To be truly successful, companies must bring more spend under management.

In this Sourcing Innovation series which highlights strategies companies can utilize as the global recession slowly releases its grip, I will focus on a critical strategy that consistently drives success. It is not a theoretical concept that requires the use of the latest-and-greatest functionality, but one that works in the real world with tools most companies already have in place.

The critical strategy I refer to is Sourcing Execution, the tactical operation of strategic sourcing performed by a third party for a procurement organization. Most people are familiar with procurement outsourcing from years of experience with very large entities such as IBM or Indian BPO providers handling the P2P process in a remote call center. What a number of organizations are beginning to learn, however, is the same tactic can be done within the sourcing department. Automating transactional driven functions within the sourcing process increases the efficiency and impact of sourcing teams which will, in turn, increase spend under management and savings.

AMR Research has covered this topic very well, specifically in their latest research on The 2009 Supply Management BPO Landscape: Short-Term Body-Shopping Trumps Business Transformation. They have built a nice example of this process contained within the Spend Analysis model summarized below.

Offshore Operating Model

As clearly outlined in the example, there are very distinct areas labor can be divided. The outsourcing of tactical data management can increase the effectiveness of the local resources. Another compelling strategy for Sourcing Execution is to identify and outsource the “block and tackling” of the competitive bidding process. Companies can use different methods to achieve this goal:

  1. Tactical Execution:
    Support from the partner is generally remote and process oriented. Internal stakeholders prepare the bid data and deliver it to the partner to be executed in a pre-determined way as designed by the procedure team/steering committee. For example, taking the RFP elements and building the online sourcing project and inviting suppliers to participate. The third party makes no sourcing decisions, but the time line is dramatically compressed, thus allowing the organization to focus on the more strategic objectives of the category.
  2. SME Assisted:
    The next level of “on-demand” support makes Subject Matter Experts (SMEs) available on a short term basis, to offer strategic input during the most critical phases of the sourcing process. These SMEs might be experts in supply markets, risk/financial analysis, e-Sourcing or specific category expertise that is valuable. For example, developing a complete RFI/survey or relevant lotting strategy.
  3. Category Implementation and Compliance:
    A sourcing project is only as good as the implementation rate. If a company identifies 20% savings for a category and implements 5%, the actual delivered savings is zero. Category compliance services provide tactical support for tracking and following the implementation of awards by managing reports that highlight compliance areas that need attention. The service can also distribute repetitive information to suppliers and stakeholders as it relates to new contracts.
  4. Category Management:
    Full blown sourcing advisory services at a category level where a qualified sourcing professional manages the most of the sourcing lifecycle — from spend data collection through award analysis and negotiation. This is the traditional X-step process, depending on which management consulting firm got their first. The SME is an extension of the procurement team for 8-14 weeks on average. This period can be extended if implementation and compliance are required.

A shared service approach to outsourced strategic sourcing delivers numerous benefits. A normal sourcing lifecycle can be reduced to 2-6 weeks from a standard 2-6 months. This allows internal category managers to focus on strategic initiatives, supplier development and core Tier-1 sourcing opportunities. Allowing indirect and “C” Level items to run through collaborative management, increases the amount of spend under management and reduces costs dramatically without adding head count.

Two resources on this topic that are worth exploring in more detail are the previously mentioned AMR Research (specifically Phil Fersht and Mickey North Rizza) and TPI. Bill Huber at TPI is very wise in these topics as he has implemented and researched outsourcing for years.

Simply outsourcing for the labor arbitrage is a short term plan which will not have sustained results. Simultaneously leveraging a technology, process and people strategy enables you to realize sustainable objectives.

Thanks, David!