Monthly Archives: March 2013

Seeking Spherical Supply Solutions? Succeed in the EU! Part I

Alliteration aside, the reality is that if you are looking for a modern sourcing or procurement solution, not only should you not exclude the EU, if you truly want to go global, and install global, you should probably focus in on the EU solution providers before making any decision. Here’s why.

They’re already multi-lingual!

There are twenty-seven (27) member states in the EU, speaking close to two dozen languages. To do business across the EU, you need to support close to a dozen languages, and most European sourcing and procurement providers do, and have supported multiple languages since their first release. In contrast, most North American providers built up their suite supporting only one language, English, and added other languages as an after-thought. This means that only the bigger names can support multiple languages, and your selection of global providers in the US is limited.

Plus, multi-lingual is more than just translating the UI. It’s having people who speak the language – natively – to support the product and local references in the appropriate countries. If you ask ten random EU providers for a reference in Poland or Malaysia, nine will probably be able to name three off of the top of their head. In contrast, ask ten random NA providers for a reference in Poland or Malaysia, and you are likely to get a blank stare from nine of them.

They understand the importance of locality.

And the bigger providers are global. The first thing they tend to do when they want to enter a new market is open a local office. In contrast, an average North American firm will try to serve the new locale from an existing office first, and a US one if possible, with only the help of one or two local employees to assist them.

Secondly, they understand that since most transactions involve money and legal contracts, that it’s very important to localize not only the language, but the terminology in order to come off as being a professional solution put forward by a professional company. For example, in Europe it’s “article” instead of part and “position” instead of bid.

Thirdly, localization of the supplier enablement process is very important as it is often a critical factor to supplier adoption. Each locale has it’s own business and technical challenges. For example, in addition to language and terminology on the business front, an understanding of local culture is often critical to convince an uncertain or wary supplier to get onboard. An organization that is already established in the region typically has a much better understanding of culture than one that is not. Secondly, even though there are often multiple connectivity options at an organization’s disposal, some options are not applicable to some regions. Example: punch-outs in Asia.

These are just two of the reasons. Turn in tomorrow for Part II.

Intesource – A Strong Sourcing Solution for Mid-Market Supply Management

When we last covered Intesource almost three years ago in 2010 in this post about intelligent sourcing through Intesource, we noted that this full-service offering eSourcing provider had a fully-featured e-Negotiation platform with SIM, document/contract management, and a relatively unique integration with Microsoft Sharepoint for those clients that ran on a Microsoft back-office and wanted to use these solutions to collaborative author documents and track changes.

Besides integration with the Microsoft platform, which is very common in the mid-market that can’t always afford, and often doesn’t need, the massive ERP solutions found in the Fortune 1000/Global 3000, other unique differentiators at the time were their massive template library for e-Negotiation events, integrated feeds from over 160 market exchanges for up-to-date raw material and commodity price information, and hands-on experience running tens of thousands of events. This put them in a restricted group of providers.

Since then, they have continued development work on the platform and added additional functionality that not only enhances the end-to-end strength of the platform, but narrows the group of competitors that can say the same. Three particular enhancements stand out — award analysis, market price centre, and mobile interfaces. We will describe each in turn.

Intesource has added an award optimization component that, while not true strategic sourcing decision optimization, is a very useful analytic component that will allow a buyer to determine a near-optimal, if not optimal, award for non-complex sourcing events. In the new component, buyers can create multiple award scenarios based on pre-defined rules, such as low-quote (which selects, for each item, the supplier with the lowest bid), low-group (which selects, for each group, the supplier with the total lowest cost for a group, or bucket, of item), or low program (which selects the supplier(s) with the lowest cost based upon a program specification, which could be to select suppliers with the highest quality, shortest-lead time, or MWBE specification where possible); or by hand-picking suppliers for each item and/or group. Then, the buyers can compare each scenario side-by-side to see how the different scenarios compare and what is gained for each price sacrifice.

Intesource‘s award optimization module is not true optimization in that there is no underlying model, it doesn’t support cross-item / group rebate / discount bids, specification of capacity is currently limited to the event level and the specification of macro-qualitative constraints is limited, and you can’t yet re-run a scenario to see what would change if a supplier increased/decreased prices/quality/etc across the board by 5%, but as SI pointed out five years ago in it’s post on (Spend) Analytics vs. (Decision) Optimization, if your organization had a spend analysis product that allowed you to build a spend cube any time you wanted – on any data you wanted – on any dimensions you wanted – and then throw it away when you’re done then there would be nothing to stop you from building a cube on your RFP or Auction data, building cross tabs and tree maps, and then changing the cube to look at the data a different way. You’d find that you wouldn’t need optimization or a plethora of deterministic reports to find out who the lowest cost supplier was, who the highest quality supplier was, who the lowest cost supplier was relative to your quality metric, or any other query that can easily be answered by rank and cross-tab queries. And, as a result, you’d be able to solve many simple scenarios without optimization — and this is what this tool is attempting to do. Intesource realizes that many supply management organizations, especially in the mid-market, don’t have the advanced sourcing and modelling skills required to build complex optimization models and is endeavoring to build a tool appropriate to its user base. And while it’s not perfect, the reality is that, for an average (smaller) mid-size organization, continued development will allow Intesource to approach an 80% solution as many sourcing events and models of a (smaller) mid-size organization aren’t that complex and this type of solution will get such an organization much further than just e-Negotiation alone.  And on those 80% of events, the results will be near-optimal, if not optimal. 

Intesource has centralized all of its raw material and commodity price feeds into a market price centre that integrates the feeds with additional graphing and reporting functionality, monitoring and alerts, and statistical modelling capabilities. In the market price center, users can view historical trends and price fluctuations, focus in on any particular period of time, extend trend projections into the future, monitor prices, cash, and futures contract specifications, set watch lists to monitor key categories, set alerts to immediately inform the user if a price threshold is reached or a price fluctuation exceeds a certain threshold, and even pull up all of the information associated with the exchange(s) a commodity or raw material is associated with.

Finally, like a few other providers, it is tackling mobile, but it is doing it in a smart way. The reality is that, while you might want mobile access because it sounds really cool, in practice it’s typically not very cool because you can’t do really do anything useful on a 3″ to 4″ screen, and what you can do is limited on even a 9″ to 10″ screen. Realizing that all you can really do is retrieve critical pricing and status information, Intesource is building a customized read-only interface that will allow you to determine current event status, bid information, and whether or not there is anything you need to to do or respond to when on the go.  And it’s working with its customer base to develop an appropriate interface that they can use effectively. 

Other improvements since 2010 include an improved contract centre with more (user-defined) meta-data, search, and alert functionality; an improved vendor management (SIM) capability with embedded Q&A, enhanced search, attachment management, compliance, and watch-list capabilities; more milestone and scorecard management capabilities; an RFI question library with thousands of questions indexed by category, commodity, and other attributes (built on an analysis of 12 years worth of RFI data) to allow for quick definition of templates and RFIs; and a roles-based public event calendar. Intesource is constantly developing new modules, functions, and features with a roadmap largely driven by its user community as all requests are reviewed quarterly by an advisory committee and prioritized based upon overall demand and usefulness.

Intesource is a solid player in the eSourcing mid-market that should be included in the candidate pool by any company that does most of its business in North America.

Fresh Pup of Bel Air!

I have to give kudos to The Pet Collective. While there’s a lot of parody and satire on Youtube these days, the reality is most of it ain’t that great, and that’s being polite. (When a normally serious PhD blogger can pen something better in 5 minutes half asleep, you know it ain’t good.) But some of it is quite good. And some of it is a cut above. Set to a classic, this video falls into that category. The lyrics are really good — and clean, the rhythm is on the mark, and the message is an important one — don’t buy your pet at a pet store and encourage the pet companies to breed more pets than we have homes for when you can adopt a loving animal* from a shelter instead. Like the Fresh Pup of Bel Air, they need a new home.

And if you can’t get to the West County Shelter, the Pasadena Humane Society is also open for business. You can even join them in their annual Wiggle Waggle Rock in the fall, where you’re likely to meet Wil Wheaton, the mastermind behind The (Board) Gamer’s Guide to Supply Management and TableTop.

FYI – Yesterday was National Puppy Day!

* LOLCats too!

Are Your Supply Chains Prepared for Riots?

Last August, SI pointed out that food costs are still spiking and asked if you were ready for the risks. At the time, food riot fears were on the rise around the globe, including in developed countries like Japan, Canada, and the UK, where riots DID take place.

Well, it looks like the risks are coming back again. A recent article in The Financial Express that notes that the supply chain of essential items faces disruption in Dhaka, Bangladesh, as the supply chain was shutdown for 48 hours countrywide earlier this week amid fresh fears of commodity price hikes. Truck owners in rural and suburban areas refused to drive due to fear of vandalism and arson before, during, and even after strike hours.

As a result of the strike, poor people, and day labourers in particular, have been hit particularly hard – as per a front page article on the daily sun. The two day shutdown enforced by the Bangladesh National Party (BNP) (which is Bangladesh’s opposition political party to the governing Bangladesh Awami League) ended up paralyzing normal life as many people stayed inside due to panic triggered by hartal (strike) violence. As a result of the strike, the fears of price hikes have come to pass as the prices of essential commodities have risen.

It doesn’t look like this is a situation that’s going to end well. Especially since a recent article over on the Guardian has proclaimed that food riots are likely to become the new normal as a result of intensifying inequality, debt, climate change, and fossil fuel dependency. Since 2008, global food prices have been consistently higher than in preceding decades, despite wild fluctuations. This year, even with prices stabilizing, the food price index remains at 210 – which some experts believe is the threshold beyond which civil unrest becomes probable. Food riots are still a regular occurrence in Egypt, Tunisia, and Libya — and have been ongoing for over a year in some of these places.

What’s going to happen when prices rise again as a result of tight grain stocks from last year’s poor harvest (which was down 3% from the 2011 record harvest due to adverse weather conditions)? Of if rice yield, which has decreased 10% to 20% in key food-basket regions due to droughts exacerbated by global warming, keeps worsening?

Riots are coming across the globe. Is your supply chain ready?