Daily Archives: July 28, 2010

Where Are The Extreme Supporters?

A recent Vision Statement in the Harvard Business Review on why a business should Behold the Extreme Consumers, the 5% of customers so infatuated with the brand that they spend more than 10% of their lifetime income on it that many brand managers fear, had some impressive statistics:

  • 100% personally identify with and say they gain meaning from a favourite brand
  • 98% have defended the brand against perceived attacks in the media or from other firms or individuals
  • 96% describe their favourite brand as “part of the family”
  • 94% display their extreme behaviour in relation to just one brand
  • 94% agree strong that “more often than not, buying cheap is expensive”
  • 94% never even consider buying a brand that rivals their favorite

Which leads one to ask, where the extreme supply chain supporters? Imagine how much more respected (and successful) the supply management organization would be if it could find the 5% of company employees in other business units who:

  • personally identified with supply management and gained meaning from its involvement
  • defended supply management against unjust attacks, no matter where they came from
  • described supply management as “part of the team”
  • displayed extreme support for supply management and supply management alone
  • agreed that any buying decision was multi-faceted and should be left to the pros
  • never even considered making a major purchase without the involvement of supply management

What a wonderful world it would be.

Share This on Linked In

A Hitchhiker’s Guide to e-Procurement: Goods Receipts, Part II

Mostly Harmless, Part IX

Previous Post

In the last post, the goods receipt was defined and some of the complexity around the requirements thereof were discussed. This post will address some of the challenges associated with the goods receipt, some of the associated best practices, and some of the benefits that could be expected from an appropriate e-Procurement solution that effectively handled goods receipts.

Common Challenges

  • m-Way Matching

    The goods receipt needs to be matched back to the appropriate purchase orders and/or contracts and forward to the appropriate invoices. This can be very difficult without a good system.

  • Issue Tracking & Dispute Initiation

    As soon as a potential problem is detected, it has to be documented and reported as a supplier’s liability is often greatly minimized, if not released entirely, if an issue is not reported in a timely fashion.

  • Inventory Management

    If the goods are not appropriately logged and tracked, they could be lost in the system. Or, even worse, the inventory management system might think there is not enough stock when there is too much and automatically reorder more, causing inventory management nightmares (as well as huge write-offs down the line).

Best Practices

  • Line-Item Matching

    Since a single shipment can relate to multiple purchase orders, contracts, and / or invoices, matching should be done at the line-item level of the goods receipt.

  • Dispute Management Integration

    The goods receipt should be automatically sent to the dispute management system if any issues are noted and the e-Procurement system should be capable of importing any modifications output by the dispute management system, as a result of an agreement.

  • Inventory Management Integration

    The goods receipt should be automatically sent to the inventory management system, and the inventory management system should send back an error message if any of the SKUs are unrecognized (which would be captured by the e-Procurement system).

Potential Benefits

  • Faster Dispute Resolution

    If issues are immediately tracked and reported from the time the goods are received and the goods receipt issued, a formal dispute can be initiated faster — and solved faster since accurate information will be immediately available.

  • Faster Payment

    The issuance of a goods receipt that is free of disputes can trigger payment approval for an invoice (that is issue free), which is then more likely to be paid on time, or early if a(n attractive) discount is offered.

  • Significant Savings

    First of all, because no issue goes untracked, losses from damaged or spoiled merchandise are considerably reduced. Secondly, because shipments are automatically tracked and reconciled and because disputes are resolved faster, the buyer is more likely to be able to take advantage of any early payment discounts that may be offered to save even more.

Once the goods receipt is issued, an invoice can be expected in short order (if it is not issued upon shipment). This is the subject of the next post.

Next Post: Invoices, Part I

Share This on Linked In