Monthly Archives: April 2010

Open Innovation Will Help Your Supply Chain Cope in Lean Times

A recent article in the Harvard Business Review’s spotlight on innovation on how open innovation can help you cope in lean times is just as appropriate to supply chain organizations as it is to R&D organizations. In a nutshell open innovation will help you move innovation from the inside out to get the greatest value from your initiatives. Specifically, it will help you:

  1. Become a Customer of Your Projects

    For example, if you require an important capability that you can neither afford to develop nor acquire on the open market, and it’s something that other organizations would also want, join with these other organizations to fund, develop, and launch the capability … and become the first customer. This is how a number of exchanges, procurement platform providers, and BPOs started in Supply Management. And there’s a good chance it will be how a number of future players in the space start. So if you have a brilliant idea, don’t miss out on your chance to be the one that brings it to market.

  2. Let Others Develop Your NonStrategic Initiatives

    Hopefully your business is in the midst of embarking on a project to focus on its core activities, and hopefully your supply chain organization is following suit. If you are, you’ve probably identified some activities that drain too much time and money for the value they return to the organization and classified them as non-strategic. You’ve probably also identified some activities that, if you had the right strengths, could return a lot of value and should be strategic, but aren’t in the hands of your current staff. In both cases, you should spin out the tasks to outside organizations who can do them efficiently and cost effectively. In the first case, you’d spin the tasks out to a tactical BPO and the second to a consultancy who can act as a strategic partner. Then, every effort undertaken by Supply Management will return value.

  3. Make Your IP Work Harder for You

    If you’ve developed a lot of Sourcing IP (category or commodity expertise, process expertise, etc.), but most of the time it just sits on the shelf and generates no direct financial benefit outside of cost savings on specific categories, then consider licensing the expertise to outside partners and/or spinning off an organization that generates and sells the IP at a profit. For example, if you have a strong market intelligence team in energy and metals, spin off a market intelligence organization which can do the research much more cost effectively, license the content back to you for a dollar, and make the organization’s investment arm a profit.

  4. Grow Your Ecosystem

    Look beyond your four walls, direct customers, and direct suppliers for innovation. Also engage with trade associations, analysts, and industry experts. You never know where the next big idea is going to come from.

  5. Create Open Domains to Reduce Costs and Expand Participation

    Once you have your ecosystem in place, you need to maximize it. Do that with open domains, exchanges, forums, and other knowledge network tools that will allow everyone to collaborate.

And when you’re done, you’ll be doing more for less and getting more for everything you do.

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Still Think Social Networks Are a Good Idea?

Especially networks with no value or knowledge like Twitter?

Well, it’s your choice … but you might want to think twice about how you use them if you have a job. Thanks to Teneros and its new Social Sentry, your employer can now monitor everything you do on Twitter, Facebook, and other social networks … in real time. Your employer can track everything you say and do and break it down into on-time and off-time, job and not-job related, and other categories of interest. If your company has a “wholesome image” policy and you post pictures of yourself drinking at the watering hole, a no-speaking-about-our-company negatively and you tweet that your job is boring, or simply spend too much time twittering when you should be working, you might not have a job for long. Just thought you should know.

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AECsoft: SIM-Powered e-Negotiation, Part II

In our last post, we discussed AECsoft‘s Supplier Information Management platform, which is one of the oldest and most mature solutions on the market (with R&D starting on some aspects five years before CVM Solutions hit the scene in 2002). It stacks up very well in terms of basic SIM capabilities, although some of its competitors like CVM Solutions and Aravo, which chose to stay SIM-centric and to integrate more data feeds (which may or may not have value to your organization, as these feeds will get very specialized after a certain point and have no value to the vast majority of businesses) or more customized program management around SIM-based programs (like compliance, sustainability, and risk), are deeper in terms of specialized SIM applications. However, it’s the only major SIM player that also offers a complete, tightly integrated, e-Negotiation management suite as well which makes it a compelling solution for the mid-market in particular who may not have the money for a best-of-breed SIM platform and a best-of-breed e-Sourcing platform and who can do without decision optimization (or do it on a project basis when needed with a vendor that has a project model) and a pricey data warehouse driven spend analysis solution. (And while I would argue that no-one can do without good spend visibility, for some companies, who don’t have the data and analysis skills in house, sometimes the best solution is a consulting firm who has access to the best spend analysis tools and who does an spend and opportunity assessment for you on a quarterly basis.)

As with most suites on the market, the entry point is a management dashboard that gives you the status of all of your RFX’s (draft, pending, open, closing), auctions (draft, pending, open, closing), vettings (AECsoft’s terminology for compliance [verification] projects), and projects (which is AECsoft’s terminology for any SIM or sourcing project).

The RFX is workflow driven, and guides you through the process. It starts with configuration (title, number, currency, standard payment terms, project dates, etc), description, details, and contact information; moves on to user (buyer representative) selection, supplier invitations, prerequisite definitions, and document attachments; then to actual RFI/RFP/RFQ construction (which can include internal components); and finally to supplier delivery, response evaluation, and (scorecard) summarization. The advantages of the platform is that it can automatically pull in all supplier and product information related to any invited supplier, which makes construction simple and minimizes the pre-qualification and supplier survey effort (as the supplier will simply have to verify that the relevant data is still current and accurate), and automatically push any updated information back to the repository or into an e-Auction if the RFX is being used as a pre-qualification for the reverse auction. The auction tool, which is basic, is similarly straight-forward. One of the big advantage that both tools have is that all RFXs and Auctions can be scheduled, repeated as many times as you like, and fully automated. Some of their clients hold in excess of 40,000 sourcing events a year! Every day they’ll automatically push out a group of items in a category to a pre-qualified set of suppliers (with which they have standing offers) for updated bids. Some items will be pushed out weekly, some monthly, and some quarterly … depending on the category and how often prices tend to change. This allows them to focus the majority of their time on those few dozen to few hundred events which are truly strategic. As you can imagine, this feature is particularly useful in a vertical which does a lot of spot-buys to get best market pricing in categories where prices tend to fluctuate regularly or where prices tend to drop continuously (such as in electronics and computers).

The platform also includes decent library management functionality which can be used to easily track and find projects, documents, templates, vetting groups, and currency exchange rates. The master document library, which tracks all of your documents through meta-data, supports versioning and full meta-data search, and also forms the basis for the limited contract management capabilities offered by the platform. The platform can track your contract templates, contracts, and all relevant metadata, associate the contracts with suppliers, and generate alerts at renewal time.

The platform contains basic scorecarding functionality, built on the same capabilities used to weight and score RFXs. Scorecards can be on suppliers, on buyers, and filled out by buyers or suppliers. They can be filled out by a single individual, or by a team, and the results averaged. Each section can be weighted separately to compute the final score.

Finally, the platform, which can be extensively configured by the AECsoft development team, supports a decent amount of configuration by the administrator within the product itself. Administrative buyers can define and alter workflows, system settings, (SIM) menus (and data categories), permissions, user accounts and roles, category and sub-category questions, commodity codes, dashboard displays, and basic report configurations.

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