Monthly Archives: November 2016

MBAs, Sourcing Innovation Feels Your Pain!

MBAs, let’s address the elephant in the room77. You’re drinking from a firehose65 right now while burning the candle on both ends60. It’s a perfect storm31. Profits are down, your visibility into the quarter is a little fuzzy37, and you don’t want to get thrown under the bus71. The organization is going through a re-org84 in an attempt to right-size16 and correct the perception, right or wrong, that there were too many Chiefs and not enough Indians56.

By way of housekeeping22, you know you need to increase mind-share with the customer85, but you don’t have enough boots on the ground20 to scale your marketing efforts. You need to treat the big deals as one-offs40, but you are facing some headwinds39 with the COO who wants to standardize. You need to put your game face on69 and manage expectations52, but you don’t know what to do and you don’t want the R33. But if we take the 30,000 foot view50, unless you want to be re-org’d out, you better take the R33.

Hope is not a strategy46, but you think that’s all you have. You don’t know the next steps73 or the competition killer76 that will allow your organization to move up and to the right83 and regain its profitability and its fame. You don’t have a go-to-market64 strategy, any paradigm shift1 would be outside your core competency38, and you don’t know what your next deliverable81 is.

But it doesn’t have to be that way. If you eliminate the ready, fire, aim45 approach, put a stake in the ground35, remember the old 80-20 rule51, put aside the basic blocking and tackling68, and do a level-set67, you’ll realize there is a radical solution. Procurement.

And while it’s good to put a face to the name49, it’s even better when you realize that it is the next-generation, turn-key, plug-and-play17 solution that will finally deliver the ROI5 you’ve been searching for. Sure you will get some push-back66 when you suggest it for the first time, but Procurement has it covered from soup to nuts70. Of course you should do a little more due diligence there43, but Procurement really is the cash cow25 you’ve been searching for.

And while you can expect that Marketing will sound like a broken record55 when you bring this up and continue to push their agenda, you need to circle back to that9 later, push your agenda, and loop them in82 when they are ready to cooperate. Once you’ve done your research and identified leading organizational best practices80, you’ll know that Procurement is the way to stop leaving money on the table44 and close the loop72 on organizational success.

There’s a reason that strong Procurement support has gone viral59 in leading organizations and that’s because Procurement’s constant quest for value-add63 increases profits. And while previous business fads have failed, this time its different79 because Procurement has to eat its own dog food28 and is very incentivized41 to buy premium.

MBAs, be sure to come back tomorrow as we explain, in your language, why you have to support procurement.

Virtual Procurement Centers of Excellence: The Next Level of Complex Direct Procurement

We have already discussed Value-Based Sourcing in Complex Direct Supply Chains and how it can generate an ROI well beyond what cost-savings focussed Procurement can generate on its own. We also indicated that a key requirement of success for value-based sourcing was a platform designed for complex direct procurement, and outlined the basic requirements for such in previous posts.

However, the right platform not only allows Supply Management to extract more value from every event than it would otherwise, but, when properly implemented, also provides the foundation for a Virtual Procurement Center of Excellence — a VP-COE if you will. A VP-COE is the next phase of Procurement Evolution for leading Procurement organizations that have evolved from decrentralized models through centralized and center-led models but which now need another evolutionary transformation to excel in today’s increasingly sophisticated global supply chains.

Today’s leading Procurement organizations are center-led. These Centers-of-Excellence are focussed on the identification of appropriate supply chain strategies, strategic categories, best practices, and knowledge sharing and often leave individual buys and tactical execution to the individual units in an effort to get the best of both worlds.

These centers of excellence typically build cross-functional teams to tackle strategic categories that represent all of the key divisions and business units, allow for the creation of flexible supply chain processes and commodity strategies through collaboration, and find ways to fully leverage strategic category spend across the enterprise. They, theoretically, give the organization the best of both worlds and many organizations that employ this model have evolved to be leading Procurement organizations, often recognized in the Hackett Group Top 8%. But is this as good as it gets?

Not even close. The view painted by consulting organizations offering to transform your Procurement organization into a COE is one shared through rose coloured glasses. First of all only high dollar “visible” strategic categories will make the cut due to the limited manpower and additional time required to manage global communications and project teams. A lot of spend will go unmanaged, and a lot of opportunities left untapped. This does not sound like the definition of a true center of excellence to us. Does it sound like a true center of excellence to you?

The long and short of it is, in order to get all spend under appropriate management in a large, distributed, global organization, a virtual procurement center of excellence is required.

So what, precisely, is it and what, precisely, do you need to enable it? Good Questions! And you will find the answers in Sourcing Innovation’s latest white paper The Benefits of a Virtual Procurement Center of Excellence for Complex Direct Procurement, sponsored by Pool4Tool. Download Now! [registration required]

Freightos: Still Flippin’ Freight Quotes Faster than a Fleet-Footed Feline on Guarana

When we last checked in on Freightos a year ago, they were serving up real-time freight quotes for global shipping and were just launching the marketplace where buyers could search by “lane”, see public freight quotes from shippers serving those “lanes”, compare them, and book quotes. (And a buyer can define a lane by zip code or city, and the software will automatically identify all relevant [air]ports.) Since then, the Freightos marketplace has been growing, and a few noticeable improvements have been made:

More, and bigger, carriers.

Now that big global companies have publicly announced their adoption of the platform — including Sysco, Marks & Spencer, and Panasonic US — bigger forwarders and carriers are signing up and there are a plethora of good, competitive, economical options for all major lanes between Asia and North America — which includes complete multi-modal options from just about any zip code to any zip code in the regions of interest (and almost all major ports and major distribution centers are covered).

More refined cost tracking and rate comparison. 

Upon launch, Freightos provided buying organizations the ability to upload all of their contracts and associated rates. The UI has been improved and it’s easy to compare the contract rate against the current market rate of a carrier as well as the market rates of other carriers side-by-side and to see the relative delivery times that correspond to the rates. (The models break down the cost and delivery time component of each leg of the journey. Truck to port, ocean or air cargo from port to port, truck to distribution center, etc.)

The detail provided on quote breakdown is incredible compared to most platforms that simply collect an all-in-one delivery free for each segment and the government tariff rate(s). If relevant, the platform will break out delivery fee (per unit), fuel surcharges, messenger charges, e-document charges (at origin and destination), lift gate charges, manifest system charges, customs charges, each export and import tariff, SOLAS administration fees, docking fees, temporary storage fees, freight station fees, pier pass fees, cleaning fes, chasis fees, handling fees, and local charges.

Immediate Online Payment with Booking

Since Freightos can now collect payment immediately upon booking through the marketplace, this provides two major advantages over the initial version of the platform where a buyer requested a quote, a supplier replied, and then a booking was made at a later time. The buyer gets the booking they need when they need it, no fear of the lowest cost or preferred carrier maxing their quota (and the option disappearing because someone else selects and pays first). Secondly, since all marketplace payments flow through the platform, Freightos is able to offer the service free for buyers and at a low cost to service providers, who pay a small transaction fee (which should cost them much less than it does to hire multiple sales people to respond to offline RFQs all day with the same quotes cut-and-pasted into multiple Excel sheets of various formats).

More Powerful and More Responsive Drill Down Filters

Not only can you select/deselect ports, modes, forwarders/carriers, intermediate routings, and intermediate ports/distribution centers, you can also include or exclude additional requirements such as lift gate, cross-docking, etc. in your search and comparison. The platform is effectively doing hundreds of searches across (potentially) thousands of carriers with dozens of options in real-time.

Streamlined Document Management

The platform can store, index, and cross reference all contracts and documents (such as insurance certificates, compliance certificates, etc.) related to all carriers used by an organization and they can be easily retrieved when a quote is accessed or easily managed through a carrier management interface.

A Full Featured API

You can include the power of their marketplace in your sourcing application. You don’t have to use their web-interface, you can embed the search functionality in any platform you are currently using to get worldwide shipping estimates and available carriers in real-time.

Freightos is getting very close to becoming the powerful freight management solution that will not only be Supply Management’s best friend but the default platform for all logistics tenders and spot buys performed by the organization. Stay tuned. We’re sure we will be hearing more from Freightos in 2017.

One Hundred and Seventy Seven Years Ago Today …

The American Statistical Association (ASA) was founded in Boston, Massachusetts (which makes it the second oldest continuously operating professional society in the US).

If you were ever wondering why there are so many experts so adept at manipulating statistics to support whatever viewpoint they are selling, it’s because you’ve had the best professionals working together to improve the art for even longer than you have had professionals working together to improve science and engineering. (The IEEE is only 53 years old, and the associations that formed — namely the American Institute of Electrical Engineers and the Institute of Radio Engineers — would only be 132 years and 104 years, respectively.)

And for those of you relatively new to Sourcing Innovation, particularly those who would like more insight into lies, damn lies, and statistics, we’d like to remind you that, in the archives, Pinky and the Brain (back in the days when they were locked in the basement of a building in Massachusetts that was the headquarters of a major sourcing company before it was acquired) gave us a lesson in statistics that exposed some of the, well, lies. Enjoy!