Monthly Archives: September 2013

b-pack: Taking Root in Their Brave New World, Part I

When we first introduced you to b-pack in 2010, they were packing it in for a brave new world (Part I, Part II, Part III, and Part IV), hoping to spread some French Procurement bohemian revolution to the rest of the world.

Unlike other e-Procurement systems of the day, b-pack understood that e-Procurement was more than just requisitions, catalogs, and invoices. Good e-Procurement solutions take you from procurement through purchase through receipt, payment and supplier management to begin the cycle anew. To this end, b-pack brought with them a suite of solutions that take you from the start of a traditional sourcing cycle (RFx), through a contract, to a requisition (which may be from a catalog), against a budget, to receipt (which can include asset tracking information), and an invoice, to payment, reporting, and supplier management. In addition to these core e-Procurement modules, they also brought document management, expense and travel management, asset management, inventory management (which is integrated with asset management), fleet management, dispute resolution, a supplier portal and procurement business intelligence reporting in a solution that was extensively internationalized.

So what have they been up to since then? Quite a bit. In addition to (collaborative) contract authoring and advanced contract management (coming out in the next release next quarter), advanced requisitioning and services procurement, OCR (Optical Character Recognition) integration, project management and project support across requisitions and budgets, an enhanced collaboration portal, a GPO (Group Purchasing Organization) module, and enhancements across the board to all core and supporting modules, b-pack has been working hard to extend their out-of-the-box integrations with ERP (Enterprise Resource Planning) and AP (Accounts Payable) systems, increase usability, and take (RAD) rapid application development to a whole new level with respect to the degree to which the platform can be customized for a new client.

One of the things b-Pack has learned serving 100+ clients globally across 20+ industries in the public and private sectors over the past 13 years is that every single company is different when it comes to the Procurement processes that they use. Furthermore, not only are the procurement (inventory, and receiving) processes (just to name a few) different, so are the types of requisitions, budgets, and projects that they use. And if you try to meet their needs with a one-size fits all platform that doesn’t mimic organizational processes exactly, what ends up happening is that the employees, used to doing things a certain way, do everything they can to bypass the platform, no matter how easy it is to use or how consumer-oriented it is. And what ends up happening is that, instead of Supply Management getting their spend under management (SUM), maverick spend actually increases after the e-Procurement platform is implemented. In response to this realization, b-pack has been very heavily focussed on not only increasing the customization capability of their platform over the last few years, but in doing it in such a way that the platform can be custom configured through user-driven administration options. This achieves three very important goals in the enterprise software world. One — there is only one instance of the b-pack platform – which makes it very easy to maintain and update as every customer runs the same core code base. Two — every customer (administrator) can configure the platform themselves as their needs change. Three — a custom instance can be configured for even the most complex Fortune 500 in a matter of days by a b-pack product manager who sits down with the customer and walks through all of their Procurement processes with them.

In the posts that follow we will discuss some of the unique customization capabilities in the new b-pack solution in detail.

Why Aren’t We Dealing With Extra-Planetary Supply Management on a Daily Basis?

It’s a fair question, considering that we put a man on the moon forty-four years ago and fifty years ago General Dynamics promised us we’d be on Mars by now (see this post).

It’s not an easy question, given the challenges involved, but the doctor thinks he has the answer. But first, consider the following:

1) Putting a man on the moon cost 400 Billion in 1969 terms. (Source: The Cost of the Moon Race) That was roughly 9% of the US GDP in 1969. However, the effort really started in 1959 with Project Mercury, which had the goal of a manned earth orbit. In other words, the US put a man on the moon in 10 years using only 1% of GDP. NASA’s annual budget today is about 18 Billion, which is about 0.1% of GDP, or roughly 1/10th of what they were getting when the race to the moon was on. (With respect to the Federal Budget, in 1966 they had 4.41%. This year, they have less than 0.5%.)

2) Current robotic missions to Mars take about 8 months. Improvements in technology could probably shave a few months off of that. However, given that the orbits of Earth and Mars around the sun allow for opportunity’s to embark and return roughly every 26 months, even if the trip were shortened, it would just mean more time on Mars as one would want to minimize trip distances to ensure enough fuel. So that means over two years in space. Given that a Russian cosmonaut spent 1.2 years in the International Space Station, it’s obvious that humans could train, and endure, a mission of that length.

3) Damage from asteroids is a big concern, as they have an average orbital speed of 25 kilometers per second and we know of asteroids with orbital velocities of over 30 kilometres per second, or almost three times the estimated speed of the rocket. Large ones will be detected long before they reach the ship and enable it to make course corrections. Smaller ones could pose a problem.

However, we have the technologies to produce titanium-based metal alloys up to four times as strong as steel, exceeding 2 GPa, carbon fibres that approach 6 GPa, and lonsdaleite, an allotrope of carbon with a hexagonal lattice that is commonly called a hexagonal diamond, but which is 58% harder than diamond and able to resist pressures of 152 GPa (GigaPascals), which is a pressure that is roughly equal to 1.5 Million times atmospheric pressure. Given that standard atmospheric pressure is roughly 14.7 psi (Pounds per Square Inch), lonsdaleite can withstand an impact of up to 22 Million psi! That means we can make mighty strong spacecraft.

In other words, it’s not a question of money, trip duration, or the ability to create a space ship that can safely withstand the dangers of intra-solar system travel. So why aren’t we dealing with extra-planetary supply management on a daily basis?

Come back next Sunday for Part II and the answer.

3 Easy Steps to Take Up To 7% Off Of Your Organization’s Bottom Line Costs!

  1. Mandate Organization-Wide Cooperation with Supply Management on all Spend.
  2. Implement an e-Procurement/P2P solution and Mandate that 100% of Your Spend Goes Through the Platform.
  3. Give Supply Management the Talent it Needs to Apply the Appropriate (Advanced) Sourcing Techniques to all Categories.

It’s that simple. Why?

  1. 70% of revenue is spent on non-labour costs
    as per Proxima’s recent Corporate Virtualization Report
  2. 100% of spend through a single system gets all 70% of the revenue being spent on non-labour costs under management
  3. (Advanced) Sourcing saves an average of 10% to 12% across-the-board on all spend being addressed (as per back-to-back studies from Aberdeen) and 10% of 70% is 7%!

That says an average 1 Billion organization could add up to 70 Million to its bottom line at the end of a year with a proper focus on Supply Management. Supply Management truly is the organization enabler!

Supply Chain Finance: A European Bank Perspective

Late this spring, the Euro Banking Association (EBA) released their Supply Chain Finance European Market Guide. This gives us some insight into the European Bank Perspective on Supply Chain Finance.

The guide defines Supply Chain Finance (SCF) as the use of financial instruments, practices and technologies to optimize the management of the working capital and liquidity tied up in supply chain processes for collaborating business partners. It then goes on to state that SCF is largely ‘event-driven’ and that each intervention (finance, risk mitigation or payment) in the financial supply chain is driven by an event in the physical supply chain.

The EBA then goes on to state that the key categories of SCF are:

  • Buyer-Centric Accounts Payable
    Also known as “Approved Payables Finance”, “Reverse Factoring”, “Supplier Finance”, or even “Confirming”, it’s generally based on discounted payment of accounts payable in favour of suppliers by accessing a financial institution’s liquidity. “Dynamic Discounting” is a related instrument.
  • Supplier-Centric Accounts Receivable
    Also known as “Receivables Finance”, “Receivables Purchase”, and “Invoice Discounting” or “Invoice Factoring”, it’s where a supplier finances their operations by factoring their invoices or taking loans against the receivables.
  • Inventory-Centric Finance (PO/Inventory Finance)
    Which can be used by the supplier to gain financing based on a PO or a buyer to gain financing based on inventory.
  • Bank Payment Obligation (BPO)
    As described in this recent post on how it took 40 years, but BPOs are now truly SWIFT, a URBPO (under ISO20022), provides an irrevocable payment guarantee in an automated environment and enables banks to offer flexible risk mitigation and financing services across the supply chain to their corporate customers. An alternative to L/Cs (Letters of Credit), it is a new middle ground between L/Cs and Open Account finance which can be used to offer pre- and post-shipment finance.
  • Traditional Documentary Trade Finance
    Letters of Credit and related trade loans.

In other words, supply chain finance is simply

  • a bank or third party lending the buyer money based on inventory;
  • a bank or third party lending the supplier money based on POs, invoices, accounts receivable, or BPOs; or
  • the buyer paying the supplier early for a discount.

And the primary mechanisms by which a supplier gets financing is:

  • receivables, BPO, or L/C financing from a bank,
  • discounting or dynamic discounting from the buyer, or
  • factoring from a third party.

This is a traditional supply chain finance definition and these are, with the exception of the new SWIFT BPO, the traditional mechanisms, so the guide is good in this respect. And it also has a good discussion of risk. However, when it comes to a discussion of automation, it is pretty much limited to e-Invoicing and this is a problem. e-Invoicing is just the foundation — technology has to go beyond just e-Invoicing if SCF is going to not only take off but become a pillar of supply chain support. But that’s a topic for a future post.