Monthly Archives: June 2011

Next Level Supply Management Excellence: Your Straight to the Bottom Line Roadmap

Leading analysts and practitioners have recognized for a while now that supply management practices and methodologies must be taken to the “next level” if supply management is going to continue to deliver the returns the organization expects.

But most professionals have had no idea how to accomplish this as there have been no manuals or guidebooks … until now.

Next Level Supply Management Excellence (by Robert Rudzki and Robert Trent) is the first book to not only define the foundations of a “next level” supply management organization, but to also provide a transformation roadmap that an organization can use to make the transition.

From advanced collaboration and negotiations management through idealized design and energy management to a detailed discussion of risk management and complexity, this is the first book that will help you understand where the untapped opportunities are, how to tackle them, and how to realize sustainable savings while identifying and managing risk from a bottom-line perspective.

The discussions of idealized design and complexity alone will have you looking at your supply chain in a whole new light.

So, don’t just read Next Level Supply Management Excellence, devour it! (And follow the link to order it today.)

Trade Extensions: No Rest for the Wicked-ly Powerful – Part I

It’s been less than five months since we last checked in with Trade Extensions, who had traded up to a Fact Sheet User Interface and added a slew of new features, including improved RFI support, multi-dimensional rankings in e-Negotiation, Google Earth integration, new incumbent rules, and an OLAP foundation to reporting, including the implementation of a new n-way comparison report. Since, then, it would appear that Trade Extensions have been working around the clock to add a host of new features in auctions, reporting, award management, scenario creation and analysis, and feedback mechanisms. They are advancing the platform so fast that only a few companies in the space are currently keeping up with their rate of development. And while nothing added in the last few months is earth shattering, Trade Extensions has again taken usability to a whole new level, which is the key to adoption, use, and, ultimately, cost avoidance and reduction in your sourcing organization.


Probably the biggest improvement is the new wizard-based interface that defines different types of RFX and Auctions, including Quick Quote and Simple Auction, that simplify event creation. In the new wizards, the user only needs to define the critical information necessary to create the event and can, if the user so chooses, define everything necessary to set up straight-forward RFXs and Auctions, including lots, on a single screen. While the workflow-driven wizards provided in many of today’s platforms are good, if you just need a quick quote or are auctioning office supplies, you just need to set it and forget it. The platform’s newfound ability to handle simple events with ease while simultaneously allowing for the creation of the most complex events one can think of is quite powerful for an organization that wants a single tool to handle the whole gamut of sourcing events. Now a user can define how much information is required to define an event and enter just that, whether it be a few pieces of information or a few hundred pieces of information. In addition, the new bidder UI is slick, clean, and quite easy to use.


Trade Extensions, which supports the Fortune 1000, has added new multi-project reporting which allows for the creation of (roll-up / drill-down) reports across projects. The user can select any set of projects and any set of scenarios in those projects and create a roll-up or comparison report across those projects on any set of dimensions and facts that they choose, which can be organized in a user-defined row-column format. One of the things that Trade Extensions noticed was that a number of users, even when their new OLAP reporting was rolled out product-wide in January, were still downloading reports to Excel for the sole purpose of reformatting them into a preferred or dictated format. So they built this capability, including pivot table functionality, into the tool. Combined with the ability for a user to create fields defined on just about any formula (macro) the user can imagine, there is now no need for a user to have to export to Excel for analysis or report formatting. It’s a very impressive leap forward in reporting and goes well beyond the reporting capabilities of most of the on-line sourcing and procurement platforms that SI has seen.

Award Management

Trade Extensions has created a new set of rules that allows a user to define a scenario that uses allocations from an existing scenario for any subset of the award that they want to fix. No longer does a user have to copy the scenario and define fixed award rules, which can quickly lead to unsolveable scenarios if the user has 20 rules and messes up one or two to create a conflict that results in an unsolveable scenario. Just point at an existing scenario where part of the award is acceptable, indicate that the award for items X and Y at locations A through M are acceptable, and the tool will fix those allocations and build a smaller model that will solve faster (instead of a bigger model with more constraints that solves slower).

Come back tomorrow for Part II which will address the rest of the cool new features in Trade Extensions’ new release.

Is It Social Software or Collaborative Knowledge Management That Gets Results?

A recent article over on Chief Executive on Tying Social Software to Business Metrics that Matter indicated that one of the biggest opportunities a company has to drive operating performance to new levels, run lean, innovate, and accelerate talent development is to tap the full capabilities of social software. As proof, it references “social software” deployments by OSIsoft, that realized a 22% improvement in average time to issue resolution through customer support’s use of Socialtext wikis, and Alcoa Fastening Systems, that reduced compliance activities by 61% using an internal collaboration platform.

Seems to me that the author is confused. “Social” software, at least in the common vernacular, refers to the social networks like Twitter, that makes a twit out of you, Facebook, that is contributing to the downfall of western civilization as you read this, and similar sites that have no real value and only provide you with ways to poke, prod, ping, and tweet your valuable time (and intelligence) away.

Wikis and similar platforms are really collaborative knowledge management platforms that allow users to collect, share, and create new knowledge that can help them advance themselves and the organizations they belong to, unlike social sites that only help them flitter their time away through pointless games and photo sharing. Yes there is a social aspect, but its about collaboration for education and innovation, not to see who can get the highest poke per minute count or follow the most twits who spend their days tweeting about how great Britney looks in her new outfit.

Social platforms only increase endorphins. In order to get results, you need to increase serotonin. That’s what collaborative knowledgement platforms do. Don’t get them confused.

We Need to Win the Battle for Share of Mind

A recent article over on TechCrunch on how you need to win the battle for share of mind makes a great point of how any organization that wants to grow over time needs to win mind share if it wants to survive, and thrive, over the long term. Not just start-ups. Just like a start-up has to do more than get people to play with its hot product for more than six months if it wants to be around next year, Supply Management needs to do more than just get people talking about some quick-hit cost savings if it wants to ingrain itself into the core processes of each of the business units it supports.

For Supply Management to truly become the central cog in the organizational wheel, and become the first organization consulted on any project, it has to gain permanent mind share among its stakeholders. Engineering has to think of Supply Management as the organization that can identify new potential sources of material and supply before that product is designed, not just the paper pushes who will execute the buy. Legal has to think of Supply Management as the organization in the best position to judge the potential of an M&A, not just the organization that sends the cheque to the external council. Marketing has to think of Supply Management as the organization that can help it understand the market dynamics of the new geographies it wants to expand into, not just the organization that buys the paper.

So how do we do this? We have to solve real problems and provide real value. This has to go beyond just saving 10% on a contract renewal, because high cost isn’t a problem, it’s a symptom. Either the right supplier wasn’t at the table, or the right logistics strategy wasn’t employed, or the right should cost models weren’t used, or the right contract wasn’t negotiated. If supplier discovery and management, network design and management, and contract negotiation and management were all done right the last time, there’d be no money to save (unless raw material prices dropped, but that would be immediately apparent from the should-cost models that used market indices and a pricing formula to capture index changes could be written into the contract to insure the organization gets to take advantage of lower prices immediately). In all but the rarest of situations, savings are only possible because the issue wasn’t addressed right last time.

The rest of the organization has to see Supply Management as the organization that can help their business unit get it right and prevent unecessary spending in the first place. The organization that will get supplier discovery and management, network design and management, and contract negotiation and management right the first time. The organization that will bring true value to their business unit. If we can do that, not only will we have our permanent seat at the big kids table, but we’ll be the central cog in the organizational wheel. We’ll finally be where we’re supposed to be.

So how do we do that?

We start, as pointed out by Lamar Chesney, CPO of SunTrust, and summarized in this Sourcing Innovation post, by learning what value is to our stakeholders and communicating that message. Then to get to value we align perspectives and work together towards the goal. Next we capture the value in an appropriate agreement that focusses on the required solution, not just tactical t’s and c’s. Finally, we help the stakeholder organization with execution because value doesn’t exist until it is realized, and if it’s not realized, we’ll get blamed and fail to capture our much needed mind share. And when all is said and done, we’ll be the secret agent of business improvement.

BioPlastics – Another Easy Way to Conserve Petroleum Supply

There are two easy ways to conserve petroleum supply by over 10% annually in the US (and higher still in countries where petroleum is used as a major energy source for electricity production). The first is to stop burning oil for electricity. There is just no need to be using petroleum (products) for electricity production given the plethora of alternate options available, including natural gas, (clean) coal, nuclear, wind, hydro, and waste. If we didn’t burn oil for electricity production, oil refinement, process heat, and heat for industrial buildings, a good 13% of annual usage could be conserved.

The second way is a full-out switch to bioplastics. Right now, plastics consume at least 1 of every 10 barrels of oil in the US every day. That’s a lot. And considering that we can now produce a 100% plant-based PET product made from fully renewable sources that has a molecular structure identical to petroleum-based PET products, there is no reason not to switch to bioplastics. The only reason they are currently more expensive than petroleum based plastics is economy of scale. If everyone started investing in them, the costs would come down as the resulting investment would fuel R&D which would, in turn, create better materials that can be synthesized quicker, easier, and more cost effectively.

But it’s not going to happen until, as the author of this recent article in Environmental Leader on turning plants into plastics hints at, one of two things happen:

  • Supply Chain Sustainability Catches On in a Big Way
    And the leaders decide to move to bioplastics en-masse before oil-based plastics become prohibitively expensive. Or
  • Government Mandates the Move to BioPlastics
    The tax credits suggested by the author won’t be enough. The government has to mandate it, because, unless the tax credits make bioplastics significantly cheaper, the average organization will hold off on the switch.

Personally, I’d like to see the government ban non-bioplastics for all common uses in industry and retail. Just like I’d like to see them ban the use of oil for electricity production. Reserving oil for transportation (where electricity still isn’t an option most of the time), agricultural and construction machinery, and (family) home heating, where it would cost too much to retrofit millions of homes, would decrease petroleum need by about 25%. That’s 1 in 4 barrels saved for future use. This would not only extend the life-span of our oil supply, but keep costs down as well.