Monthly Archives: December 2013

Are You Losing 2% of Your Revenue to Fraud? Are You Sure?

Between two thirds and three quarters of organizations experience fraud every year and the average organization affected by fraud loses 2.0% of revenue in the UK and EU and 1.7% in the US. This means that, even if your organization is not aware of fraud, there’s still a 66%, or more, chance that it is being defrauded. And it should know for sure, one way or the other. Because if fraud isn’t detected, dealt with, and discouraged quickly, you end up with headlines like this:

Alibaba.com CEO And COO out because of vendor fraud
involving over 2,000 suppliers and 100 staff members
Former Vodafone employee facing fraud charges
for the fraudulent requisition of €2.3 million of services
The great Sainsbury’s potato fraud:
Jail for vegetable buyer who took £5 million in bribes

Which all have one thing in common — each of these frauds involved the payment of millions of dollars to fake suppliers. Not over billings, not duplicate billings, fake billings from fake suppliers. A situation that can easily be prevented with a good supplier information management or supplier visibility system that validated the accuracy of the supplier information and the legitimacy of the supplier. If the supplier information management and visibility system cannot validate the existence and legitimacy of the supplier, then AP knows that a detailed manual investigation should be undertaken before the supplier is authorized to submit invoices, and that such authorization should require at least two sign-offs by high-level personnel. This simple process, which is yet another example of the value of supply chain visibility, would prevent fraudulent invoices from non-legitimate suppliers from ever getting in the system and greatly decrease the organization’s exposure to fraud.

And this is only one example of the many types of savings opportunities that good Supply Chain Visibility can bring your organization. For a deeper insight into the other ways in which Supply Chain Visibility can bring your organization recurring year-over-year savings, download SI’s latest white-paper on The ROI of Supply Chain Resiliency: It’s More Than You Think, sponsored by Resilinc. You might be surprised at just how much hidden value you can extract from your Supply Management operations with good visibility and resiliency.

MarketMaker4: The Mid-Market’s Market Making Mezzanine

Some of you might say the e-Sourcing space is too crowded. And that certainly was the case in the mid-zeroes — platforms here, platforms there, platforms platforms everywhere. But then came the acquisition frenzy where mid-sized players swallowed smaller players and start-ups before getting swallowed up in turn by the dominant players who, in the last couple of years, themselves were swallowed up by the massive enterprise software providers. As a result, there is an opportunity, especially in the NA (North American) market for a couple of new players – provided, of course, that such players bring new and innovative solutions to the table (that address the needs of a considerable market segment).

As a result, even though the EU (European Union) vendors are starting to enter the sourcing market in a big(ger) way in NA, there is still an opportunity for someone new if they go about it the right way. So, despite the fact that many thought the market almost dead at the end of the zeroes, it was not completely crazy that a small team of e-Sourcing market veterans, including Mr. Alan Buxton who was the CTO of of Trading Partners back in their heyday, decided in 2011 to start a brand new e-Sourcing software start-up and build a new solution from scratch.

Two years later, MarketMaker4 is a strong offering for the mid-market that needs a new, modern, e-Sourcing solution. In particular, those mid-market companies that are late to the e-Sourcing game, those that are still relying on third parties to manage their sourcing events and are ready to bring those events in house, those that are trying to use ERP sourcing solutions, and those stuck on platforms that, due to acquisition, are stuck in integration limbo and haven’t been upgraded in a while.

So what is MarketMaker4? It’s a four-part sourcing solution that consists of:

A modern e-Negotiation platform
with a best of breed e-Auction and RFX solution
with a built in supplier discovery engine
built on the entire D&B database which is augmented with your own supplier database
and market data indices that span commodities and currencies
that let a buyer know current prices, historical trends, and relative market conditions (when the data is available)
that is augmented with real-time product and sourcing support 24/7/365
through online chat that connects all of the global support representatives around the world that are currently online.

The MarketMaker4 founders, who were involved in the space for over a decade and who worked for both software providers and services providers learned the following:

While some companies will start with services to get going, these companies will eventually decide that pay per drink is expensive and look for software.
The companies switching from services to software will typically select a best-of-breed software provider with little or no services or support beyond the product. As a result, due to limited sourcing and product knowledge on the in-house buying team, the product typically gets under-utilized and the company fails to achieve the ROI they expected.
When the license expires, the company will typically revert back to a pay-per-drink, but limited to high-value categories, or put its faith in a good e-Procurement system, that will reduce maverick buying and, hopefully, with limited RFX capability, lead to better buying habits.
But even if the company moves to a modern e-Procurement system, the company will typically have little insight into current prices or suppliers that they aren’t already buying from.

As a result, the team decided what was really needed for these types of companies was:

An e-Sourcing solution that was easy to use by the average buyer,
augmented with real-time support and guidance as new buyers get up to speed,
integrated with market index and currency index data (that could be linked into cost models), displayed in easy to understand graphical representations, that the buyer could use to understand current prices and likely trends, and
extended with a huge database of potential suppliers.

And that’s what they built. And in each component, they added some innovation to the mix.

The e-Auction product, which consumerizes the enterprise capability, is one of the most powerful on the market, with one of the most sophisticated, but yet easy to understand at a glance, interfaces out there.
While chat-based, they chose to build a support solution that connects all of their services and support personnel around the world who are currently available rather than use a call-center model. (And as they were just acquired by Xchanging, one of the big players in the Procurement market who are leaving MarketMaker4 as a stand-alone product and company, they now have a large network of support personnel around the world who speak multiple languages and can support their customers in their native language.)
Their market index solution is linked into the RFX/Auction module so that the buyer can see current component / raw material prices if there is a market index and can see current currency values as well as trends over the last year for every currency a supplier might bid in.
And they were the first e-Sourcing platform to integrate with D&B for the purposes of supplier discovery. Up until they did, most integrations were for risk data or data enrichment. As a result of their partnership and early efforts, they have one of the more powerful integrations and in addition to being able to search on name, location, etc. they can also filter on a variety of dimensions, including risk, size, diversity, etc. that even D&B can not filter on through their API.

MarketMaker4‘s e-Auction product and supplier discovery products in particular are quite innovative, and SI will dive into them in more detail in the new year.

The Future of Packaging is All About Labelling … At Least For Now

DC Velocity recently ran a short article on the 10 global trends that are shaping the future of packaging that was quite interesting, but for the near future, not that relevant — especially to Procurement and Logistics.

For example,

Big Science will continue to discover lighter and stronger substrates, which will eventually allow packaging to be reduced, but the time it takes between the time a new substrate is discovered until it is mass produced at a competitive cost is typically a decade. No big changes are coming in the next few years.

The eco agenda has been pushing environmental concerns for a couple of decades now. The eco agenda is not going away, but, unless your corporation is damaging the environment more than the competition, it’s not going to change its behaviour until it is more cost effective to do so with near-term results. In other words, until someone invents a significantly more environmentally packaging alternative that is stronger and cheaper than what is currently in use, no changes are expected as a result of the eco agenda.

Developments in Neuroscience will allow for the design of more enticing packaging, but that design will predominantly revolve around the graphics, colours, and messaging on the packaging, as you can’t securely ship a square item in an oversized round sphere without padding and adding undue cost to the process. As a result, regardless of what the still inexact science of neuroscience tells us, there will be no change to the packaging in the near future, just what is printed on it.

Demanding Consumers will always want more, but now that every smartphone has a free barcode scanning app, all you have to do is slap on a q-code or a barcode and, voila, they user can be taken to a dedicated web-page. Again, no changes to the packaging, just what is printed on it.

Unless your packaging contains dangerous chemicals, which should have been taken out years ago with the introduction of RoHS and similar acts around the world, More Legislative Oversight is only going to add more labelling requirements in the short term, especially in F&B and CPG. The oversight is not going to fundamentally change the nature of packaging for most products in most industries (unless a new chemical is deemed harmful and restricted for use in packaging).

SI could go on, but packaging is not likely to change much in the next few years, just like it hasn’t changed much in the last decade. Emerging markets, the rise of the BRIC, and new retail models will eventually spur a packaging renaissance, but not until there is a crisis or radical new breakthrough to drive it. In the interim, the focus will be on labelling — exceeding the legislative concerns to appease the more demanding consumer and doing so in a way that is attractive and calming.

Anyone have any good counter-arguments?