Monthly Archives: March 2016

Keelvar: The Little Engine that Could

In case you haven’t guessed, this post is about The Little Engine That Could not only get up the big hill, but after scaling the hill, decided to follow the tracks up to Alaska, tackle, and climb, Mount McKinley (also known as Denali), which is the highest mountain in the United States at 6,190.5 meters (or 20,310 feet), and not stop until it reached the summit.

For those of you who missed our prior posts, namely Keelvar: Strange Name. Uncommon Results., Keelvar: Are They Right for You, and Re-introducing Keelvar, An Optimization-Backed Sourcing Platform, Keelvar, which is the newest, and still the smallest entrant, to the strategic sourcing decision optimization game, and one of the few (correction: two) vendors to provide a fully integrated optimization-backed sourcing platform (with integrated RFX and e-Auctions), has been making great strides since it spun-out of the 4C research laboratory (in the Department of Computer Science) at the University College of Cork a mere four years ago in 2012. Since then, it has been advancing faster than all of its peers except Trade Extensions, and has emerged to become a top contender for the provision of optimization-backed sourcing platforms. In fact, as hinted at in an upcoming Pro piece, the doctor expects that Keelvar will grow faster than 4 of its 5 five competitors over the next few years.

So what’s so great about this little upstart? The first thing to note is the ease-of-use of the platform. The platform, which embeds a simple-to-follow seven-step best practice sourcing platform, literally guides even the most junior of buyers through the most complex events the platform can handle, and the side-bar navigation makes it a breeze to quickly access any step in the process. (The tried-and-true best-practice methodology is strikingly similar to what MindFlow used back in the day, but it never had such an easy to use, clean, and modern interface.)

The second thing is the speed of improvement. Since SI last reviewed the platform last fall, a number of considerable of enhancements have been made that go well beyond usability. Extensive supplier self-service has been added (which allows the supplier to manage not only the response and bid process, but the team assigned to it – all the buyer has to do is invite one supplier rep, and that supplier rep can create the supplier organization’s records, add users, give them appropriate, fine-grained read/edit rights to the documents and bids, and manage all of their effort without any buyer involvement whatsoever). Single-sheet smart-load (which allows the platform to detect field-types, field-status, and other relevant information without a user having to define a lot of meta-data or use the cell-based encoding required by other platforms) has been developed. And parametric bidding is in quality assurance.

Parametric bidding is, in a world, cool. Often in the acquisition of fleets, computers, cell phones, etc., the buyer doesn’t precisely know the exact configuration details that are desired until the last minute. In this situation, the buyer has to either create a huge number of potential configurations for bidding, or pick a few and hope for the best. With parametric bidding, the supplier can bid on a base configuration and define all of the options they offer against that configuration as well as the price increments (or decrements) for that option. When the final configurations are selected, the system will automatically calculate the appropriate costs (and discounts) from the parametric sheet for the optimization model, with no effort at all required by the user. This is a feature that is jut not seen in first generation sourcing platforms. Watch for it.

Keelvar, which was first named as a SpendMatters company to watch last year (and which will soon be covered in depth on Pro by the doctor and the public defender), is a company that you should be keeping a really close eye on. Optimization-backed sourcing platforms are the future. and right now there are one of only two providers with a single, integrated, end-to-end, solution. We may see more in the future (with BravoSolution working on integrating its two product lines, SciQuest’s acquisition of CombineNet, and Determine’s acquisition of Selectica), but Keelvar (and Trade Extensions) have an early lead that gets larger every day their competitors work on integration (as opposed to innovation).

Now, you’re probably worried about adoption, because first generation platforms were, for the most part, so damn hard to use (to put it bluntly), but second generation optimization-backed sourcing platforms are actually quite easy to use and focussed around adoption. For more information on how to get Higher Adoption, check out the linked white-paper. And for more information on Keelvar, we recommend checking out their new, open, Keelvar support portal.

Geopolitical Sustentation 28: Customs Acts

As per our damnation post, customs is the agency, authority, or regulatory body in a country that is responsible for collecting tariffs on, and controlling the flow of goods in, and out, of the country. Customs is necessary, not just for keeping borders safe (which is often the rationale for their existence these days), but for keeping economies running. Customs levies are not only one of the oldest types of tax, but the foundation for the revenue engines necessary to keep most governments running.

Nor is there anything wrong with, or damning about, creating regulations and acts that clearly define the purpose of a customs agency, the authority it has, the documentation it requires, the taxes that can be levied, and the penalties it can apply for non-compliance. The damnation comes into play when the number of sheets of paper required to capture the rules, regulations, and constant updates to the regulations exceed the quantity of goods flowing into, and out of, a country. For example, in the US, an average importer/exporter has to be fully knowledgeable of half-a-dozen multiple-binder-thick acts as well as a dozen or so global acts. It really is damnation to the power of 100.

So what is Procurement to do?

1. Global Trade Document Management Solutions

That can not only help you with the (e-)paperwork and the e-filing, but also help you identify the acts you have to adhere to, the forms that need to be filed, and the times by which they need to be filed. Some have to be filed before you hit the port, and others before you even leave the port of origin.

2. Customs and Trade Act Monitoring

As per our post on Environmental Sustentation 15, Waste, RoHS, and WEEE, the last thing you want to do is become aware of a new act the day it comes into effect. By the time it is signed into law, even if there is a six month grace period before its enacted, that’s too late. You want to know about a piece of proposed legislation the moment it gets released for public presentation or, if it was drafted in private, the first time it gets red in a regulatory body. A good monitoring solution will not only let you know when acts are updated, but when news is made, you need to know.

3. FTZ Mastery

A FTZ, short for Free Trade Zone, is a zone that allows you to ship goods through country X on their way for sale in country Y without having to pay import taxes or that allows you to delay imports until the goods or materials are actually needed. This can be a blessing to an organization with a tight cash-flow. But more importantly, if country X all of a sudden bans your product or a material in your product, it gives you a way to get your product out of the country and into another where it is not banned, which is much better than having it seized and destroyed on import.

4. State-of-the-Art Logistics Management Platform

If, all of a sudden, due to strikes, trade embargoes, or new legislation that makes your product, or a component, illegal, you have to re-route a shipment in real time, you need a state-of-the-art logistics management platform that will let you identify an alternate route and accomplish the re-routing.

5. Multiple Manufacturing Locations

If something happens and you can’t export or import, and you still need to get a good to market, if you have a local manufacturing location that you can rev up, there’s no better way to meet a need that cannot be otherwise met.

6. Standardize its Design and Cost Structures to the highest common denominator

While it might be cheaper to manufacture different versions of a product for different markets, using the cheapest formulation possible that will get a product through customs, if a company manufacturers to the highest common denominator, and the good meets the regulatory requirements of a number of countries, and one market becomes unavailable, the good is easily redirected to a different market. This is a good lesson for automotive, where each state and province can have different requirements, as inventory can be quickly shifted as consumer preferences change.

SourceMap: Striving to Bring Supply Chain Visibility to the Masses

SourceMap is a supply chain mapping tool that is designed to help an organization map out their end-to-end supply chain to help them gain critical insight and understanding into their performance, costs, sustainability, and risk. Especially risk. Most companies don’t understand the risks hidden in their supply chain — the sole-source parts, the over-dependence on high-risk geographic areas, or the ability of a single port strike to knock out multiple shipping lanes. (Nor do most companies understand the cost of risk, which is discussed in detail in Sourcing Innovation’s upcoming white-paper on Playing With Fire, but that’s a discussion for another post.)

SourceMap, born as a research project at the MIT Media Lab to publish and measure the environmental footprint of all the products on earth, was launched as a public platform for supply chain mapping in 2009 that allowed individuals to see every aspect of a product’s life — the good and the bad. Then, in 2011 it partnered with the MIT Centre for Transportation and Logistics to pursue opportunities in automating supply chain visualization and risk management. Shortly after, the 2011 Tohuku tsunami hit and wiped out over 45,000 buildings, damaged over 144,000 more, shut down all of Japan’s ports (including 15 that were located in the disaster zone). All told, it did over $300 Billion in damages and sent shockwaves throughout global supply chains. Companies were scrambling to understand the impact on their supply chains, SourceMap was approached, an incorporation followed, and the private sector solution was born.

Hands-down, SourceMap is the best visualization of the supply chain to hit the scene since Resilinc, which is, in Sourcing Innovation’s view, is still the leader in Supply Chain Risk Management solutions, but if all an organization needs is visibility and Supply Chain Visualization, SourceMap is now a leading contender in that arena. SourceMap has the ability to use an organization’s ERP data, public data sources, and survey data from the organization’s suppliers, the suppliers’ suppliers, down to the raw material suppliers, to create a complete point-to-point map of the supply chain that an organization can use to trace it’s products from source-to-sink on a (Google Earth) Map and visually see what is happening. This is a very powerful feature that allows an organization to gain insights into their supply chain that they never knew before. And just like an organization is typically shocked the first time they run a spend analysis (we spend that much with who?!?), they are typically just as shocked when they run a map and see that a number of distributors and tier 1 suppliers are using, or outsourcing a significant portion of, spend to the same tier 2 supplier and just pushing the single-source point of failure an organization is trying to avoid one step further down into the Supply Chain.

And the SourceMap solution, which only needs common location data points, can quickly import and combine all data sources an organization can get its hands on and SourceOne can often create a starting supply chain map for an organization in less than an hour. It’s not complete or perfect, but it allows the organization to quickly drill into the supply chain and see where the data, and focus, is needed.

SourceMap is quickly becoming the new supply chain visibility solution to watch, and for a real in-depth analysis, Sourcing Innovation would recommend the in-depth write-up that the doctor and the prophet collaborated on over on Spend Matters Pro (membership required) that provides four pages of deep insight into the solution.

Environmental Sustentation 15: Waste, RoHS, & WEEE

As per our damnation post, waste, dangerous chemicals, and unnecessary disposal is bad and legislation that requires waste to be minimized, dangerous chemicals to be avoided, and perfectly good materials to be reclaimed is good — unless new legislation comes in faster than your supply chain can keep up.

And while the US may not be as advanced as the EU in terms of legislation to this effect, some states, like California, are making a push for a plethora of new legislation and some countries, once expected to be behind the times in such legislation, are now attempting to lead the way (like India and China which are considering much more restrictive environmental legislation akin to European RoHS than one ever thought they would consider).

More legislation is coming, and your product supply chains are going to be hit hard if you are unprepared. Getting a good bill of materials system in place, a better trade document management system, and an online collaborative design solution, as discussed in our damnation post, is a good start, but it’s not enough. In addition to the basics, in order to maintain compliance with the ever increasing amount to environmental legislation in effect, and coming into effect, around the globe, the organization also needs:

1. Drill-down Bill of Materials Capability

A complete bill of materials is a good start, but many items will be components, made of subcomponents, each of which uses a number of sub-subcomponents and raw materials. Complete drill down visibility is needed to ensure 100% compliance with environmental legislation.

2. Regulatory Compliance Monitoring (by product by country)

So that the organization knows at all times the requirements for each product by country as well as any restrictions or bans for each component or raw material by country.

3. CSR Monitoring

This is the best way to get early warning of current issues and future legislation coming down the pipe. You don’t want to know about a new piece of legislation that is going to require a partial (or complete) raw material formulation the day after it is signed into law, which could only give you a few months to get in compliance, but the day it is first drafted and released for public consultation (or, if drafted in private, first brought to a legislative body for review). To stay ahead of the game, you have to get ahead of the pack.

4. Design for Sustainability

All new designs should not only use as few hazardous or restricted substances as possible, but should also use as many renewable, or at least abundant, resources as possible. Sustainability is the name of the game, as environmental sustainability is becoming a key component of business sustainability.

5. Design for Reclamation and Reuse

Metals and rare earth minerals are becoming in increasingly short supply, but, when a product is appropriately designed, becoming increasingly easier to reclaim. Plus, in many complex systems, not all parts wear out at the same rates, and if the system is designed for component-based upgrades, it can be used, and re-used, for a much longer lifespan. (The same way that servers designed for memory, storage, and processor upgrades can be used twice as long as integrated laptops.) Or, components with a significant life-span left, can be easily extracted and re-used in refurbished systems.

This is not necessarily everything that can be done, but it’s a great start, and when you get there, you will be considerably in the lead.