Daily Archives: December 1, 2009

Why You Need Visibility

The simple act of placing data in front of people changes their behaviour.

For example, as per this recent blog post from Andrew Winston’s Harvard Business Blog, if you put an energy meter inside a home and show people total usage in real time, a miraculous thing happens: they use about 10% less energy. This is because data makes people smarter and inspires them to make small changes to save money.

So get yourself a real data analysis solution. And by this, I don’t mean a “spend visibility” system that gives you a high-level spend report once a day that isn’t useful to anyone. Nor do I mean a “spend analysis” system that doesn’t allow you to drill down and re-dimensionalize your data on the fly to find out not only which departments are spending more money on telecommunications or energy than they should, but why. Knowing that marketing is driving up your phone bill is useless if you can’t find out it’s because they never switched to your new long distance carrier. Knowing that a particular manufacturing plant has a 30% higher than average energy bill isn’t very useful if you can’t pinpoint when they are using the energy and who they are buying the energy from at that time. Maybe they are buying too much energy from the back-up supplier at a higher rate, maybe one of their machines is drawing too much power, or maybe they are just inefficient. You’ll never know if you can’t drill into the data and provide the plant manager with the information he needs to track down the reason.

You need a solution that lets you do analysis … anything else is just flash without substance. And, as David Bush astutely notes in this dead reckoning post over on e-Sourcing Forum, unless you’re shopping for lemons, beware the Purchasing Magazine list. At least half of the “solutions” on this list are not spend analysis solutions as far as the doctor is concerned.

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B2B Connex: e-Document Management for Small & Mid-Size Manufacturers

B2B Connex provides a web-based sourcing and procurement document management solution that is a great fit for all types of small and mid-size manufacturing organizations that need simple e-Sourcing and e-Procurement functionality at a low price tag. It’s basic portal solution, that plugs in to your existing ERP & MRP solution, can be acquired for as little as $30,000 (plus 20% annual maintenance) for a small operation. Mid-size operations are generally priced by the number of locations and users, but even their larger customers don’t pay much more than 100K. (Pure SaaS configurations and pricing are also available, but most of customers with traditional on-site ERPs/MRPs generally prefer on-site installations.)

Designed to fill the niche in the small and smaller mid-sized business market left by the big end-to-end e-Sourcing and e-Procurement suite vendors whose solutions often come with a big price tag, the B2B Connex solution allows you to easily manage the following e-Document types (among others) and efficiently conduct your day-to-day procurement operations.

  • RFQs
  • Purchase Orders
  • Kanban Orders
  • Shipment Notices
  • Payment Inquiries
  • Invoices

In addition, it can also handle the CRM side of your business and allow you to manage the following e-Document types (among others):

  • Inbound RFQs
  • Sales Orders
  • Inbound Shipment Inquiries

It’s implemented as a simple web-based portal solution, that can be accessed as needed by your procurement personnel, and it integrates with your back-end ERP and/or MRP systems. (Right now, they support about a dozen ERP/MRP systems with no or minimal configuration work, including SAP, Oracle, JDE, Intuit, Avantis, and Mapics.) And since it handles all the key document types, it allows you to do m-way matching and insure that the invoices are accurate (and represent actual shipments and agreed upon pricing) before you pay them. Since the lack of this capability is one of the two biggest reasons that up to 60% of negotiated savings never materialize (with the other being maverick spending), it’s a good one to have!

In addition to document status (such as new, acknowledged, reviewed, accepted, etc.), the system also supports state management, and a supplier can, for example, accept, reject, or mark each line item for negotiation on a purchase order. This is a useful feature for spot buying, which is common for MRO, SG&A, and low dollar spending in smaller organizations. Also, each e-Document can have an unlimited number of e-Document attachments, so your RFQs can contain detailed item descriptions and sample contracts and your purchase orders can contain detailed specifications and shipment terms and conditions, etc.

If you’re a small or smaller mid-size manufacturer still on EDI and holding off on an e-Procurement system because you think it’s too extensive for your needs, or you think it won’t integrate with your ERP/MRP, or you think you’re too small for such a solution, it’s certainly a system you should check out. Plus, they have an ROI guarantee. If the system does not pay for itself in a year, they’ll refund the purchase price. However, considering the implementation of even a basic e-Procurement e-Document management system such as this generally comes with at least a 25% productivity improvement across your Procurement department, it’s pretty hard not to see savings (especially since the automatic matching will reduce payment errors and the built-in e-Negotiation capabilities on spot buys will help you get price reductions).

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