Monthly Archives: August 2016

Technological Sustentation 91: Proprietary Madness

Not only do you have to deal with IP and Patent Madness, which we recently discussed, again, but you also have to deal with proprietary madness that is likely to drive us all mad (and may someday push the doctor over the edge, into the land of the crackpot, where at least one blogger in the space is already dwelling).

Just what is proprietary madness? It’s mega-corporations, especially in software and electronics, taking the rights of ownership to extreme. Started, and continued, by the current and former Technology heavyweights, including the likes of IBM, Microsoft, and SAP, it’s not only the creation of company specific standards for software and hardware interfaces, its the restriction of the specification of those interfaces to approved partners and suppliers, limiting the supply of support services and related products to a handful of vendors. This not only drives up the price of those products and services to well above the market average price for support services for software and products with open and published specifications, but can make it difficult, if not impossible, to get support when demand is high or related products if one of the few vendors who can produce products shuts down.

Those of you with SAP know exactly what we’re talking about. Unlike Oracle, which publishes its core schema, and does not change it between minor versions, SAP does not publish its score schema, does not guarantee any stability between bug updates between minor versions, such as between 4.7.1 and 4.7.2, instead requiring you to go through its proprietary NetWeaver interface, which you will, of course, have to acquire to actually support any customizations (and likely build applications in the Portal). And learning the portal is no easy task. One of the most complete books on it is 700 pages alone! And that’s just the beginning …

And while there is nothing wrong with proprietary technology, as a company needs some assets in order to survive, the lengths at which some companies go to keep it secret and protect it, in a world where data needs to be shared and products need to be utilized in conjunction with other products makes development (and the supply chains that rely on that development), a nightmare.

So what can you do?

1. Make Open Source / Open Systems a priority.

When doing your weighted evaluation of a provider, penalize any provider with proprietary systems, and severely penalize providers with highly guarded proprietary systems that cannot be maintained by anyone but the provider. Give this a weighting of three times more than your gut thinks it should be weighted.

2. Demand the ability to do full data dumps to an open standard, such as XML, or a text format, such as CSV, whenever you want.

And do them at least quarterly, if not monthly, and do incremental full data backups at least weekly, if not daily. If the system stops working for you, you need to migrate, and even if the system does work, you will still need to integrate that data into your (virtual) data warehouse to support analysis and other processes.

3. Migrate away from proprietary vendors at first opportunity.

It doesn’t matter how much you paid, or how bad you think you will look by trying to replace the solution that was the right solution when you bought it, because it will always cost you more in the long run — with costly maintenance, custom development, and manpower to manually integrate data dumps into third party solutions — and that’s worse than admitting there’s a better solution than what you have. Moreover, chances are when you bought that big, monolithic, proprietary solution, there wasn’t a more open alternative, so you didn’t really do anything wrong and a good Procurement department always looks for ways to improve processes and platforms.

So, Do You Throw Provider RFX Templates Out with the Packaging?

This post originally ran two years ago. (Link) SI is repeating this post because the majority of organizations still have issues with RFX templates of all shapes and sizes for all types of purchases.

So, do you throw provider RFX templates out with the packaging? That depends. If you have lazy, uneducated, or inexperienced Supply Management personnel (because your Procurement department was staffed like the Island of Misfit Toys), then you want to delete them as soon as you get them because, if a template exists for the product or service you want, it will be sent out more-or-less as is and you’ll get a specification that is two sizes too large, two sizes too small, or very irregular and not at all a good fit for your organization.

On the other hand if you have educated, experienced, go-getting Supply Management personnel who take the time to properly construct an RFX, going through the steps outlined in our many RFX series here on SI, then they do have a use. Specifically, as a check-list after the RFQ has been completely drafted to make sure that nothing was missed. Sourcing is complex these days and it’s hard even for an expert to include every relevant detail every time when time and resources are so scarce. There’s a reason that even hospitals and clinics use checklists, because it greatly decreases the chance of a (serious) error being made. If a vendor, that built a template as a result of analyzing dozens of events, included something in an RFX template, then, at least at one point in time, it was very relevant and, as such, should not be excluded from an RFX until a senior buyer confirms that the market or standard operating conditions have changed and that the question, cost component, or requirement is no longer relevant.

So, these templates do have their uses, as long as they are editable by senior buyers. Because, as explained in the last paragraph, over time, some parts of the template will become irrelevant and other questions, cost components, or requirements will become very relevant and need to be in all RFXs related to that product or category. If the senior buyers can completely customize the templates to the categories, products, and services of the organization and configure the tool so that no template is used out-of-the-box (until a senior buyer confirms that it is still accurate enough out-of-the-box), then the templates, and template features, have a use.

But as-is, the templates in many template libraries are probably still less useful than calling a supplier over the phone and saying you need a quote for customized circuit boards and doing three-bids-and-a-buy blind.

In other words, templates have a use, which is why the doctor encourages most vendors to have a library of templates that can be used as starting points, but their use, until customized by a senior buyer, and reviewed regularly, is that of a post-RFX creation checklist. Nothing more. And not understanding this can get your organization in serious trouble in its sourcing events.

Stop Blaming the Supplier! Melamine in the Milk is STILL Your Fault!

This article originally ran three years ago. (Link) It’s continued relevance is why we are repeating a slightly updated version of it.

Three years ago, research revealed that only 6% of procurement managers and directors have ever been made aware of unethical activity in their supply chain. (Source: This was a surprising statistic since we know that supply chains in certain verticals run rampant with unethical behaviour, including violations of workers rights, child labour, and even human trafficking. However, when you think about it, it’s not all that surprising as E&Y’s recent 14th Global Fraud Survey found that 42% of executives could justify unethical behaviour to meet financial targets! Who would want to stand up to the CXO who could fire you if you know the CXO probably authorized the unethical behaviour in the supply chain in the first place!

The reality remains that as much as we’d like to believe that only 6% of supply chains have unethical activity, given that almost 86% of North American companies have a supply chain reliant upon China alone for key parts1, and 42% of CXOs will turn a blind eye, that’s a pipe dream. Depending on how rigid you want your definition of ethical to be, I’d guess that the number should be closer to 60%. Or more!

So why is it your fault if your supplier does it? Simple. As per the original survey, it’s because less than half of your organizations do any due diligence in their supply chains! Only 48% of UK firms do any due diligence at all! Even worse, 14% of respondents to the original EY survey did not even know what third-party due diligence meant, for crying out loud! You have to do due diligence and you have to ask tough questions and someone who can be trusted has to do a site visit to major suppliers at some point. If you do all this, and the supplier lies through their teeth, then, while your company may still be held financially responsible, it won’t be held criminally responsible and ethically you will know you did all you could (except cut the supplier loose before they did the unethical act, but at least you can cut them loose as soon as they do).

This is why you need good supply chain visibility, document management, and CSR monitoring. There are companies that do this, including Resilinc, Integration Point, and Ecovadis. (See the Vendor Post Index for more.) Reach out and get these types of solutions if you don’t already have them. They will be worth it.

And if you want more information, Ecovadis recently sponsored a trilogy of white papers by Sourcing Innovation on the importance of sustainability and social responsibility monitoring in your supply chain, the first two of which are available for your reading pleasure:

and the following is coming soon:

  • 5 Key Questions to Ask When Selecting a Multi-Criteria Supplier Sustainability Monitoring Solution

1 Supply Chain Disruptions, Ted Landgraf, Above the Standard Procurement Group, July 15, 2012.

When Are We Going To Wake Up and Stop Wasting Food!

Recently, Italy introduced a new law designed to reduce food waste which is being celebrated by farmers and restaurant owners as it simplifies the donation of excess food that ends up becoming food (or field) waste. Approximately 100 Million tonnes of food across the EU is wasted each year. (Source: European Commission) That amount of food would sufficiently feed at least at least another 100 Million people annually (as the amount of food a person needs in a year varies between 0.5 and 1 tonne depending upon diet, weight, etc.). This is just in the EU. In the US, recorded food waste exceeds 30 Million tonnes, and is probably much higher. (Source: Feeding America) That’s at least another 30 Million people that could be completely fed. Putting these numbers together, and assuming the average amount of food consumed by a person a year is 0.75 tonnes (and not 1), that’s about 175 Million completely satiated. There are almost 800 Million undernourished people in the world. If we assumed that they were surviving on only half the food they needed (which is not reasonable, as that’s barely sustenance, and a lot of these undernourished people are in developed countries and still eating enough to work), this says that the recorded food waste in 1/7th of the world’s population could cut the number of undernourished people in the world by half! By Half!

Italy is only the second country in the EU to adopt such laws (following a similar move by France earlier this year – Source: The Guadian), so let’s hope that at least in the UK, sanity reigns. Because in North America, and in the US in particular, it does not. It’s illegal in many cities to feed the homeless (Sources: NPR and MIC), even if the food is not passed its expiration date and untouched, or you are a Pastor (Source: The Daily Signal)!. In some states, game meat donated to shelters is burned (Source: Daily Caller). And even if you can donate food without getting fined and arrested, and someone gets sick because, while it was still good when you donated, by the time it was prepared and eaten it wasn’t (or it was contaminated when you received it with e-Coli and you didn’t know), then you can get sued for millions of dollars, so why take the risk?

This is why, as per our post from August, 2012 on why it’s Not Criminal, But it Should Be, America Trashes 40% of its Food Supply. It’s insane!

Food reserves have not recovered from the all time low, over 800 Million people, including almost one third of children in developing countries, are malnourished and the two richest economies in the world (the US and the EU) are collectively wasting enough food to solve over HALF of the problem. All this in a time when agriculture produces 17% more calories per person per day than it did 30 years ago. This is enough to provide everyone in the world with at least 2,720 kCal per day, which is 30% more calories than an average person needs. Instead, the cost of staples is rising, access to food by the lower class and malnourished is falling, and, because of stupid, stupid laws made by stupid, stupid lawmakers, the situation is getting worse. When it should be 10 times better!

As per our research from four years ago, there is no excuse for wasting more than 4% of food. (That’s still too much, but the 100% solution is always difficult to achieve right away. And when the 90% could be achieved tomorrow, let’s start there!) Not only would sanity (and laws mandating food donations and feeding the homeless instead of laws preventing this) reduce costs by $150 Billion and methane emissions by 22.5% (as rotting food makes up 25%), but the US would NOT have anyone undernourished! (14% of households in the US are food insecure! Fourteen Percent! The US is the richest country in the world, how can this be???)

Bravo France and Italy for finally doing something right! Let’s hope the rest of the EU follows suit so at least some people won’t go hungry!