Monthly Archives: May 2014

We First Rocked Around the Clock 60 Years Ago Today …

… but how long have you been rockin’ your supply chain?

As Christopher Sciacca insists, supply chains don’t have to be boring. You don’t have to sing the blues. You can twist and shout.


Put your glad rags on and join me, hun,
We’ll have some fun when the clock strikes one
We’re gonna save some money tonight.
We’re gonna save, save, save ’til broad daylight

Modern e-Sourcing Technology allows you to identify savings you never knew existed.
Spend Analysis and Decision Optimization identify year-over-year savings in excess of 10% when properly deployed.
New market intelligence solutions identify changing commodity prices in near real time.
Six Sigma and Lean solutions allow you to improve processes to reduce manpower costs.


When the clock strikes two, three and four,
if the float goes down we’ll save some more
We’re gonna rock around the clock tonight,
We’re gonna add value ’til broad daylight

Visibility solutions identify potential risk and allow for mitigation and prevention.
Sustainable options increase brand value and minimize long-term costs.
Recognized brands add value to your own.


When the chimes ring five, six and seven,
we’ll be right in seventh heaven.
We’re gonna rock around the clock tonight,
We’re gonna innovate ’til broad daylight

Collaboration tools allow for joint product design.
VMI allows for joint inventory management.
e-Document Management allows for procurement and sales support.


When it’s eight, nine, ten, eleven too,
I’ll be goin’ strong and so will you.
We’re gonna rock around the clock tonight,
We’re gonna start again at broad daylight

Savings, Value Generation, Innovation is a continuous process — and supply chains support it!


We’re gonna rock, gonna rock, around the clock tonight!

The Board Gamers Guide to Supply Management Part XIX: The Gnomes of Zavandor

You’ve been working your way through the series and honing your strategic planning, negotiation, and even payment skills, but you still haven’t found the right game because you are in the raw material supply chain and work for a jewellery buyer and distributor. You’ve searched and searched but firmly believe you’re not important enough to get your own game.

Great news! You are. In The Gnomes of Zavandor, you are a gnome with two great passions: sparkling gems and wondrous machines (and are thus likely displaced from Warcraft where gnomes are a short, intelligent, and inquisitive race with aptitudes in both the arcane and mechanical crafts or from Dragonlance where they are the ancestral race of dwarves who are constantly thinking of new inventions and defined by their life quest). Your goal is to become the most successful gem trading mogul in your community and the first to achieve the wealth that gives you this status (which is measured in victory points).

In The Gnomes of Zavandor you gain victory points by acquiring mining rights, jewelry made of precious gems, and inventions. You acquire mining rights, jewelry, and inventions if you can afford the cost, which is paid in precious gems. You acquire gems by buying them on the market for gold or by mining them with mining rights that you have managed to acquire. You start the game with 23 gold, come into a small inheritance of more gold at the start of the second round, but then have to trade and mine your way to success to survive, and win, the game.

The game consists of a sequence of alternating action rounds and mining rounds and continues until one gnome achieves victory. In an action round, each gnome has 3 actions, taken sequentially, where he or she can:

  • buy up to 4 gems of a single gem type on the market
  • sell up to 4 gems of a single gem type on the market
  • draw 2 cards from the face down jewelry or artifact pile and keep one (which only that gnome can buy or build)
  • buy a mining rights tile
  • buy a face-up jewelry or artifact from the market
  • take (or exchange) a trader (that allows you to trade one gem for another one-to-one regardless of market price)
  • use a trader card
  • earn 4 gold

Sounds simple right? Not really. First of all:

  • market prices go up when you buy gems, buy mining rights with gems, or buy jewelry with gems (as demand for the gems has increased) and go down when you sell gems for gold or mine gems (as supply has increased)
  • you can only maintain exclusive buying rights for one item (which is a piece of jewelry or useful artifact) at a time (as the market won’t allow you to have more than one call at a time)
  • you can only buy mining rights in certain regions in a given round, and unless you pay for a a “soil sample” you have no idea what type of gem you are going to be able to mine
  • while every artifact gives you an advantage, some advantages are only temporary and they don’t always outweigh the opportunity costs of doing something else
  • you can only have one trader in your employ at any one time, which means you can only trade one of the six possible pairings of gems one-to-one at any one time
  • if prices are low, earning more gold to buy more gems looks like a good idea, but the prices can skyrocket before you get a chance to buy

And then, just to make things a little more complicated:

  • while market prices for gems only go up 1 gold when you buy, when you embed gems in jewelry (or artifacts) or buy mining rights, they go up by the number of gems used (as they are removed from the market) or paid (in expectation or surging demand)
  • while market prices for gems only go down 1 gold when you sell, they go down by the number of gems mined (as the market has just been flooded)
  • while you only mine 1 gem of a given type for a single mine that produces gems of that type, each additional mine for gems of that type produces 2 gems of the type (as you get efficiency gains)
  • if you acquire the rights to a mine in gem-rich Diamantina (which is one of six mining regions), and are lucky enough to secure the rights to one of the gem-rich mines, you produce one gem of your choice in addition to one diamond every time you mine
  • only 3 of the 6 artifact types are available at any one time, you might buy one only to miss out on something better
  • if you don’t scoop up a trader that you know you will need later when you have the chance, the trader might be scooped up into someone else’s employ

And, finally, you can only buy mining rights in the district currently occupied by the wandering gnome, who wanders around looking for new mines to sell the rights to, or Diamantina. (He’s like the travelling gnome, but prefers mines to tourist destinations and transfers deeds instead of sending postcards.)

It sounds simple and silly, but it’s actually quite involved and smart. If you try to take advantage of a down market and buy too many units of a cheap gem, but no one increases demand, you become cash poor and unable to do anything but sit on what is essentially a declining stock portfolio until the market swings again. If, on the other hand, your opponents trade their gems en-masse for artifacts, mining rights, or valuable jewelry and their value sky-rockets, you can sell en-masse while prices are high, buy multiples of other gems, trade them for mining rights and jewelry that generate victory points, and take a clear lead. It models the real world conundrum of supply vs. demand in mineral, rare-earth, and gem supply chains — mine too little, and you don’t have enough to sell to pay for your costs, but mine too much, and you can’t sell at a high enough price to recover your costs.

The Gnomes of Zavandor is a great game for sharpening your mineral, rare-earth, and gem market making — and breaking — skills — simple to learn, but hard to master, just like the base market skills. The rules are simple to learn, but the real world timing and execution is very hard to master.

And The US Government is Letting the Patent Pirates Plunder Away …

With the exception of Nova Scotian Pirates, Sourcing Innovation is quite negative where pirates are concerned. But not all pirates are created equal – some are much more pernicious than others. And the most pernicious of all the pirates are the Patent Pirates who should be made to walk the plank as soon as possible.

But thanks to the slow movement of the Senate Judiciary Committee, which broke for April Recess before finishing what would have been a historic deal to curb the scurrilous practices of patent trolls, as per this recent VentureBeat article on how Waiting for Patent Reform is Costing Us Billions, they are taking bigger hauls than ever. If the pirates of old had known how profitable it would be to plunder patents, they would have used their black magic to put themselves into a Rumplestiltskin sleep for 300 years so that they could wake up to the richest haul in history. (Even the haul of the richest Columbian drug lords pale in comparison to the haul of the patent pirates.)

To put the problem into perspective, the U.S. Economy loses approximately $1.1 Billion to the patent pirates for every two week delay! Imagine what it could do with $1.1 Billion. Not only do we need a “loser pays” bill for patent lawsuits, but we need a bill that prevents patent trolling in the first place! Patent plundering kills innovation – not something the US economy can afford right now.

One Week … to Uncovering Savings You Never Knew Existed!


It’ll be one week ’till you’ll look at me
Cock your head to the side and say “I’m listening”
Five days and you’ll look for me saying
“Get that together come here and teach me”
Three days and the lecture room
You’ll realize you’re too early, but yet not too soon
Next day I’ll have swayed you
but it’ll still be two days till you say I’m spot on!

That’s right, one week until the doctor gives the keynote at Vinimaya’s User Group Workshop on The New Archaeology of Spend Management: Uncovering Savings That You Never Knew Existed. So, if you’re part of the Vinimaya community, you might want to answer that invite.

Cost Savings – It IS The Whole Package!

As per yesterday’s post and a recent article on Inbound Logistics, when Finding Cost Savings: It’s the Whole Package! Sometimes the only way you can save money is to first spend money.

The article, which says this is counter-intuitive (although it really isn’t), gives the example of an electronics manufacturing company that had a relatively low 2% damage rate, but needed to reduce shipping damage even further due to the high value of it’s products. They decided to work with their pallet provider to reduce the strength of, and add strength to, their pallets and boxes. The new packaging cost more to produce, but the smaller footprint reduced their LTL shipping costs and their reduced damage rate of a mere 0.1%, which was 20 times better than their previous damage rate, saved them considerably more than what they spent on improved packaging.

This goes back to yesterday’s post where true, sustainable, savings only come from the perfect order. If anything screws up, any cost savings you identified earlier in the process are more than negated by any screw-up that comes later. But even getting the order perfect from the supplier isn’t enough if you’re buying products for resale and then they get damaged when you ship the product from your facility to the customer’s location. The perfect order isn’t just from the supplier to you, it’s from the supplier to the end customer. The perfect order crosses the entire supply chain from the initial obtainment of the raw materials for the product three tiers down until the final product arrives in the hand of the end customer.

The other issue, as pointed out by the article, is sustainability. Your brand reputation might depend upon your commitment to sustainability and Corporate Social Responsibility – ignoring it to cut a few cost corners could result in a consumer backlash that will take significantly more off of your bottom line than the few pennies you save buying non-fair trade coffee or conflict diamonds.

Moreover, true sustainability always delivers cost reductions, especially where the consumption of natural resources is concerned. While there will be an upfront cost to install new technologies that reduce water and energy consumption, or to build new solar arrays and wind turbines to produce more sustainable power, which will be stored in a battery array for dark and calm times, this is a one-time up-front cost. Ongoing costs will be significantly reduce as the sun and the wind is free – unlike coal and oil which gets more expensive by the year. As the article says “any wasted money is wasted over and over again” and even if it takes three to five years to recover the investment made to prevent money being wasted, a company in it for the long haul will make it up four times over in the following twenty years.

So always look at the big picture – then true cost savings opportunities will emerge!