Monthly Archives: February 2017

Visybl: Asset Tracking for the Modern Supply Chain

Every company has not one, but three, supply chains. The physical, that deals with the movement of goods. The financial, that deals with the payment for goods and services rendered. And, finally, the information, that controls the flow of the goods and money by way of messages between parties. While SI, and most Supply Management blogs, focus on the optimization of the information transfer and the financial costs, if the physical chain doesn’t flow as expected, the financial costs can skyrocket and the information can disappear.

For the physical supply chain to flow smoothly, there are two requirements. One, the obvious, goods have to flow from A to B as required to meet organizational and end customer needs. Two, the resources necessary to process those goods, both in terms of people and physical assets, need to be available and accounted for. This is often overlooked. If a forklift is needed at the warehouse to unload a shipment, and all of a sudden the forklift is not there, that’s a problem. If a raw material or chemical shipment has to be inspected for purity, and all of a sudden the mass spectrometer goes missing, problem. And so on.

So, today, we’re going to discuss a company that helps you keep track of those assets necessary to keep the physical supply chain flowing in a relatively new way, but at a very low cost compared to traditional methods. Traditional methods for tracking goods in the supply chain typically revolve around RFID, which requires each good to be tagged (which is not a problem, as RFID chips cost pennies) and requires readers at each waypoint, and GPS tracking. While RFID is great for tracking movement of goods, as someone just needs to scan the pallets at each waypoint, its poor for tracking goods in a warehouse as you need readers at least every 30 feet (as the max read distance of a Gen2 tag is a mere 12 meters). And while handheld readers are cheap, high-end UHF readers can cost up to 2K, with each antennae up to $200.

GPS tracking is not a good solution for individual good tracking either. GPS tracking requires a GPS device that can upload location data through a cellular network connection. And while you can bulk buy basic GPS units these days for $10 or less, each requires its own SIM card, and while SIM cards are also cheap, cellular providers charge a hefty price for access to their networks (relatively speaking), even if you buy in bulk. You’re easily spending over $100 (or $1,000, depending on where and the resiliency and battery lifespan of the GPS unit you need) a year to track an asset, so while this is very reasonable for tracking a truck carrying $100,000 (or more) of cargo, not so much for a $5,000 workstation that you’d rather not see carried out the door. Especially if you have 100 that you’d like to track and monitor and the odds of more than a couple being carried off are low.

That’s where Visybl comes in. Using Bluetooth Low Energy technology, it has developed low cost beacons that transmit an identifier and temperature that can be picked up by modern smartphones (that support Bluetooth LE) and local wi-fi enabled cloud-nodes that continually monitor their presence. And since Bluetooth has a range that is 10 times that of Gen2 RFID, an organization can not only monitor a wider area with less units (up to a factor of 10, depending on building layout), but do so at a considerably lower cost as these bluetooth LE wi-fi nodes don’t cost much more than a high-end router (which is around $200).

Moreover, since Visybl sells asset monitoring as an integrated hardware / software service, where you can track all assets through the interface in real time and get alerted when they leave or enter an area (and if temperature goes beyond an accepted norm), the only upfront cost is the cloud nodes. By adopting low-cost technology, they provide all of the standard beacons (and replacements on failure) free. And the cost is very affordable. Pricing starts at 2.95/month/asset (beacon) for the full service with considerable discounts at the 100, 1000, and 10000 level. This not only makes monitoring of lower cost assets (such as workstations, warehouse equipment, etc.) even in the $1000 range affordable (as it would generally be in the 1% per year or less range of asset cost at high volume levels), but advantageous as a company that was on-the-ball would be able to use this to negotiate lower insurance rates as the insurers that cover supply chain and physical assets like to see asset monitoring as part of the company’s operations.

However, insurance savings are not the only ROI of the Visybl solution. There are also considerable savings associated with:

  • manpower savings in auditsyou know which assets are on your premises, and where they are within 300 feet (which is the limit of Bluetooth range), and, since most buildings will have walls, floors, etc. that limit range, within 150 feet
  • manpower savings in asset location whenever a low-use asset is needed, there is always time spent looking for it, especially in MRO – many people fail to realize how much time is lost looking for even 300 hundred assets over the course of a year — if it’s an hour per asset, that’s almost 8 weeks of lost productivity
  • un-utilized or under-utilized asset identificationif an asset never moves from the range of its primary node, and that primary node is in storage, then the asset is not being utilized and should be evaluated for sale or replacement

The web-based solution is very easy to use, allows tags with associated asset details to be bulk uploaded in a spreadsheet, and supports map-based display if you store assets across different geographic locations. Beacons and nodes can be added, configured, and re-configured as needed (if you change the position of a node or reassign the beacon to a replacement asset), and the alerts easily customized to your needs. Plus, the technology has the advantage that all beacons can be read by all nodes, so if you and your supplier, that you lend assets to for special projects, both use Visybl, you will not only be alerted when the asset leaves your premises, but when it enters the supplier’s premises — no need for RFID. (And since the beacons only transmit an id and signal, there is absolutely no privacy concerns — only Visybl and the owner of the tag know who owns the tag and what is attached to.) [Or, if an asset walks out the door and ends up near a location with a cloud node, you'll at least have an approximate location to give to the authorities and insurance company when you file your report and claim.]

Visybl also offers an API that allows the data to be pulled directly into your inventory or asset management application, and even supports Amazon echo for simple status queries. It’s a great low-cost asset monitoring solution whose value increases as more customers adopt it, and it will do great things towards pushing monitoring technology costs down across the supply chain.

Do You Need a Spend Cube to Identify Top Underperforming Products?

No, you don’t. But that doesn’t mean you shouldn’t have one!

Let’s face it, if you have an n-step process that can theoretically be done in a spreadsheet, then it can be done in a spreadsheet — but how long will it take to do it in a spreadsheet vs. doing it in a modern spend analysis solution?

If sub-steps of the process consist of:

  1. researching and accumulating industry specific data
  2. comparing your data to industry averages
  3. repeating the comparisons with selected competitors, putting your place in their shoes
  4. looking for anomalies
  5. selecting top categories outside industry average
  6. selecting top underperforming products within those categories

How long is it going to take without a proper spend analysis product?

Industry data is going to come in many different forms, in many different tables, and will initially need to be stored in many different sheets. It will take a lot of manual effort and data formatting to get the data into a consistent format that will allow it all to be compared apples to apples. In contrast, a good spend analysis platform with ETL will allow for data to be automatically mapped to the right format will easily save hours or days of manual effort, as most good data tables will be detailed and large.

Comparisons in spreadsheets require lots of formulas and calculations, which can be tedious and error-prone to implement. Modern spend analysis packages come with lots of standard reports and templates that will allow for comparisons with industry averages and available competitor data out of the box. Again you will be saving hours, if not days, with a good package.

Anomalies are really easy to see in appropriate scatter plots, but very, very hard to spot in rows of data. If you have thousands of rows, how do you detect outliers with a manual scan? Sure you can pivot on volume or distance from average and so on, but is it really an outlier? Careful inspection and analysis is required on each potential row — but a visual glance at an appropriate scatter plot gives you results in seconds.

So no, you don’t need a modern spend analysis product or a spend cube to identify good potential opportunities, if you don’t mind dedicating a back room full of people for days or weeks to do an analysis that can be done by a good spend analysis product in a few hours.

And that’s why modern spend analysis solutions can deliver an ROI of more than 10% year over year as the expected value of analysis is typically above water, vs. under it, as it is when you do it manually. (See this classic post on .)

So while you don’t need a spend analysis solution, it’s akin to saying you don’t need modern technology for sourcing either. There’s nothing you can’t do with pen, paper, and telephone, but do you really want to remain in the dark ages?

As far as SI is concerned, there are only three reasons someone trying to sell you a sourcing suite would tell you that you don’t need a modern spend analysis solution (based on proper spend cubes):

  • they don’t have it and they don’t want you to use another vendor in case that vendor also has, or implements, a comparable sourcing solution (and they fear competition);
  • they want the services revenue (there’s a lot of billable hours to doing it manually); or
  • they truly don’t understand what modern spend analysis can do

And none of these reasons are good reasons. In fact, they are all reasons to be wary of the provider! There are only two cornerstone technologies that set leading sourcing organizations apart, and analytics is one. (The other is optimization.)

Precision is Contextual, But How Can You Get Precise?

Late last year, over on the public defender‘s blog, Pierre Lapree penned a post that asked how many decimals of π does Procurement really need? In short, the answer was, it depends on the context — some situations don’t need very precise calculations, and others need precision down to 1/100th of a decimal point. In his post, Pierre notes that in some situations, like savings, rounding can be to the closest power of 10. In others, like RFP, rounding to the dollar is more than enough, sometimes the closest hundred or thousand is enough. But in spend analysis, sometimes you need to match those financial statements down to the penny to get it right.

But how do you do that?

Your data is a mess, across multiple systems, in multiple formats, with varying levels of detail.

The financial reports are typically created from spreadsheets, which, even though they were output from the organization’s accounting systems, are typically riddled with errors.

And any hopes of matching, despite the fact that each system should be the checksum for the other, are as fantastical as J.K. Rowling’s beasts.

So how do you get precise?

You get out of the data and into the real world. When you don’t know where you are in the real-world, you geo-locate. How do you do that? In today’s world, you tri-angulate your position by taking measurements with respect to cell phone towers and/or satellites and using mathematics to estimate your position as close as possible – the more readings, the more accuracy.

In other words, you take measurements. Lots of measurements. And correlate them. The financial statements are just one set of checks.

Another set of checks are inventory levels. You’re paying for physical goods — you should have payments and invoices for the majority of physical goods and vice versa.

A third set of checks is the accounts receivable system — every part or good that was bought for (re)sale should not only have a corresponding inventory entry but an invoice, and vice versa.

In other words, every enterprise system that tracks goods and services is a data point for correlation, and should be used as such. Don’t just focus on the dollars and cents, as trying to balance erroneous totals can lead you down the wrong path — use all the data at your disposal to get it right — and precise.

Seal Software: Breaking the Seal to Identify Contract Value

Seal Software is a provider of contract discovery and contract analytics software that is different than your standard CLM (contract lifecycle management) module built into your e-Sourcing or e-Procurement suite (which is designed to negotiate and track contracts, awards, milestones, and related documents). And unlike many CLM providers that just focus on Procurement, Legal, or Sales, Seal Software is designed to support Legal, Procurement, Sales, M&A, and IT — making it a fuller enterprise CLM solution than many of its peers. In fact, in large organization with tens of thousands of contracts, Seal Software is often used in conjunction with a traditional CLM solution.

This is because Seal’s strengths of contract discovery and contract analytics are quite unique. Seal’s contract discovery capability can automatically locate existing contractual documents wherever they may reside, automatically extract key contractual terms and clauses, and automatically populate other corporate solutions including Customer Relationship Management (CRM) and Contract Lifecycle Management (CLM).

The discovery engine can handle multiple file format types (text, doc[x], PDF, jpg, etc.) and work across local hard drive, network drives, file shares, and even cloud-based repositories — anything with a UNC path or API is accessible. It then uses advanced semantics and machine learning to analyze the contracts and identify the clauses and critical information that the organization has deemed to be of interest.

It does this by comparing all files discovered to standard contract templates and identified organizational contracts to find contracts. It then determines the type, category, and whether or not it is a (potential) duplicate. Finally, it runs all (unique) contracts through descriptor templates that identify and extract the clauses, terms, and date elements of interest.

But the power of Seal only starts at discovery. Once the contracts and elements are identified, the analytics solution not only allows the user to access all contracts that meet a specification or search; filter down based on timeframe, search, or other elements of interest; and create reports, but to also identify all contracts that contain clauses or terms of interest that were not previously of interest. If all of a sudden a new regulation comes into effect and the organization now has to determine whether or not all of its contracts are compliant with a new privacy requirement or contain clauses to ensure compliance. All the organization has to do to find all contracts with a relevant clause, paragraph, etc. is find a few contracts with clauses and sentences of interest, define any additional phrases or terminology of interest, and tell the system to re-process all contracts and it will find all contracts, structured or otherwise, that contain associated phraseology. The semantic engine can learn from examples and key-phrase definitions.

And the analytics can be used during negotiation and review too. The platform allows for the definition of policies that will auto-detect clauses and phrases in suggested revisions that can alter the intended meaning of the actual contract and bring them to the attention of the reviewers. It can also highlight contract areas using non-standard language or language identified by legal to be (high) risk. And this review can be done in the contract creation platform of choice. Seal’s newly released Analyze this Now capability allows links to be embedded that send the contract to seal which sends back a marked-up highlighted docx file that highlights everything of interest and concern. (In Microsoft Word, it’s a simple plug-in.)

It’s a very powerful solution for large (global) organizations that often have well over 10,000 or even 100,000 contracts that need to be tracked, analyzed, maintained, and negotiated in accordance with a plethora of business rules and industry (and government) regulations. When you consider that even enterprises with revenues below $250M have an average of 8,000 Procurement contracts (as per Aberdeen Group), most of which are not in the e-Procurement system (and not effectively managed and tracked), the importance of discovery and analytics cannot be underestimated.

For a deeper dive on Seal Software, and its capabilities, see the recent Pro series by the doctor and the prophet over on Spend Matters (Part I, Part II, and Part III) [membership required].