Monthly Archives: July 2019

Still Looking for that Supply Management Usability Guide!

Long-time readers will know that there are a lot of guides out there as to what a good Supply Management solution for Sourcing, Procurement, etc. should do — including a lot of advice on this topic here on SI and over on Spend Matters, but not many guides. And while the doctor did write rather extensively on the topic of usability in Sourcing, Supply Management, Procurement, and P2P over on Spend Matters Pro, there are still very few guides for usability. (Searches in major search engines still come up few and far between, even after our first post on the topic here on SI seven years ago).

As per our last post, if the provided software was so obvious and easy to use that even a fifth-grader could figure it out, then the issue of “ineffective instructions” is a small one. But the reality is that, even with most platforms that are attempting to adopt consumer-style interfaces, most procurement and logistics software is still reasonably complicated due to the complex nature of what a Procurement or Logistics package capable of supporting global trade needs to do.

The thing is, even though the functionality is well understood, the best way to lay out the functionality, and underlying workflow, is not well understood in comparison and, unfortunately, if one company builds an interface that is too close to a competitor’s for some standard functionality, instead of the formation of a standard, in America, we get a frivolous lawsuit (courtesy of the patent pirates). So even though there should be design standards, there usually aren’t.

And even when the best-of-breed providers finally figure it out, since most of their UIs are built on decade(s) old technology, updating the UI is no easy feat. Especially when the new generation of employees, the millennials, are expecting consumer like interfaces. But who has anything close to this? Coupa with parts of the core platform (which has been built and re-built repeatedly to be easy to use around core Procurement functionality) and advanced sourcing (built on TESS 6 built from the ground up to be eminently configurable); Zycus is on the right path with their dew drop technology, but it will take a while to upgrade the entire platform; Vroozi with their mobile-first philosophy is quite usable for what it does; Keelvar with their configurable automation-based workflows; and GEP with their new user-centric UI vision are not just a few examples, but the majority of examples.

In comparison in the S2P game, Ivalua is getting close with their configurable workflows, but it’s still not obvious how to configure the platform to make it obvious to junior users; Wax Digital is one platform on one code base and pretty simple (but based on older Microsoft tech that takes time to upgrade); Determine, based on the old b-Pack platform is very configurable, but older technology and far from a modern look-and-feel; and Synertrade is really outdated (but very powerful).

And if we go beyond the big names, when it comes to the smaller vendors, except for a few of the newer best-of-breeds, like Bonfire and ScoutRFP, usability has always been a second concern and while a few of the smaller vendors are updating their UI (like EC Sourcing which should be much more modern with a year), most vendors are definitely not there yet.

Hence, since most platforms aren’t consumer like, and not likely to be figured out 100% by junior users without training, we still need that Supply Management Technology usability guide — especially since none of the platforms mentioned above with “modern” interfaces have the same workflows for the processes they support.

And what about the poor organizations who still have a mishmash of five generation one or two systems with inconsistent interfaces and workflows? What hope do they have of making sense of the full inter-related capabilities of their systems? Very little.

And while the doctor knows more than ever that the very nature of software, which is always evolving, makes such a guide difficult (and that this particular challenge is compounded by the fact that America still allows software to be patented so the pirates can plunder), but there should be at least some standard workflows and processes that all sourcing, procurement, and logistics software should attempt to follow in a reasonably standard way. It would make things easier for all supply chain partners, minimize unnecessary stresses and bumps, and help us evolve the profession as a whole. But alas, it will probably be another seven years before we get close to a real usability guide.

Forty Two Years Ago Today …

The world’s first Global Positioning System (GPS) signal was transmitted from Navigation Technology Satellite 2 (NTS-2) and received at Rockwell Collins in Cedar Rapids, Iowa, at 12:41 a.m. Eastern time.

That’s right! Forty two years ago, something we couldn’t imaging living without didn’t exist! No way to track our goods in real time. No way to even figure out where we are in real time. No mapping applications on your cell phone. No ride-sharing companies. Etc.

GPS hasn’t been around as long as many supply chain pros have, who couldn’t imagine a supply chain without it. Think about that!

Remember that Sustainability Requires a Shared Understanding

With raw materials getting scarcer, energy costs getting higher, environmental conditions getting worse, and people upset by this all around, sustainability is becoming more important to the supply chain not just from a brand perspective, but from a long term business survival perspective.  But it’s not enough to just say you’re going to be sustainable, only use sustainable resources when the option is there, and only use suppliers who accept your sustainability agenda.  You have to walk the walk as well as talk the talk and make sure all parties involved understand what sustainability really means.

For example, using recycled materials where the recycling process takes more energy or creates more carbon than creating new materials from renewable resources is not a smart move.  Sometimes you want to create reusable materials or containers and not just recyclable ones. Etc.

And while it can be easy to state the goals, it can be difficult to communicate exactly what those goals mean and how they should be addressed.  And, more importantly,  why it is important if the sustainable way costs more, takes longer, or displaces traditional suppliers if they don’t change their core business.

And if people don’t accept the why, the how won’t materialize.  So how do you address the how?  Point out anciliary benefits that could be worth more in the medium and long term than the short term (switching costs).  For example:

  • brand reputation
    if it makes customers want to buy from you, especially those that will spend 5% to 10% more to feel sustainable, that’s good … and while most people don’t want to pay more for sustainability, if a rival brand does something unsustainable or politically incorrect and gets a media backlash, all of a sudden your brand becomes favoured
  • risk management
    if the new material is (more) sustainable, easier to produce, more widely available, overall supply risk is lowered and that’s a good thing since every risk that materializes causes a disruption that is very costly to the organization
  • supplier engagement
    if you can find a supplier who lives and breathes for sustainability, they might be much more willing engage with you on joint-development projects for joint-benefit than a supplier mass-selling the same old widget to a wide supply base, especially if it is a widget that hasn’t changed in five years and it’s now high profit and the supplier has become fat and lazy because it gained a large market share that allowed it to be less aggressive in its offering
  • long-term savings
    if, after the switching costs are covered, the longer term cost projects are lower, than it’s worth the up-front investment

And make sure to point out how the decision stacks up with respect to concrete sustainability factors such as:

  • raw materials
    are the materials you are using renewable and can they be extracted with minimal harm to the environment
  • energy requirements
    are the energy requirements associated with your purchase (for production, storage, and transportation) minimal and can they be met with renewable resources
  • waste products
    are waste products minimal and/or reusable and/or reclaimable? can the food waste be used to feed livestock? can the metal waste be melted down and reused?
  • worker treatment
    are all workers who take part in your supply chain treated ethically, responsibly, and fairly, using standard guidelines

If a supply management decision would increase brand reputation, reduce risk, contribute to medium and long term value, enhance supplier relationships, use renewable (and non-environmentally harmful) raw materials, reduce energy requirements, or minimize (or eliminate) waste in production, and do any of this in the context of ethical worker treatment, then, regardless of what definition of sustainability each individual on a cross-functional sourcing team is partial to, it should be easy to agree that such a decision, at least in the mid-term, is sustainable.

Optimization: Is it at least time to move beyond logistics and indirect sourcing?

A big focus of this blog is, of course, Strategic Sourcing Decision Optimization (SSDO), one of the few advanced sourcing methodologies guaranteed to save your organization, on average, 12% if correctly applied (as demonstrated in two back-to-back studies by Aberdeen last decade and discovered over and over again by organizations applying it properly) and the doctor‘s specialty.

But it’s not the only place you can apply optimization in Supply Management to save money. Another area, as covered a number of times on SI, is Supply Chain Network Optimization (SCNO). And, of course, some companies just focus on the intersection and do Logistics optimization. But this is not everything that can be done, or should be done, especially in an age where many industries now see The End of Competitive Advantage and don’t actually own physical assets, leasing them as need be to create the products and services desired by their prospective customers.

In this situation, what matters is Asset Optimization, where you optimize a one-time dynamic network to minimize sourcing, network, and logistics costs to minimize the total supply chain costs associated with the product you wish to produce. This is easier said than done. In sourcing, you are mainly considering bids, lanes, and associated costs to compute the optimal TCO (Total Cost of Ownership), and if lifetime costs and metrics are available, or TVG (Total Value Generated) with respect to a fixed situation. In network optimization, you are optimizing the location of owned factories, supplier production centers, warehouses, and retailers to optimize the distribution costs. But in asset network optimization, you have to simultaneously consider the network and associated distribution costs, the sourcing requirements and associated production costs, and the costs of using, or not using, the resources you already have available and contracts you have already negotiated. In addition, you have to consider the risks associated with each potential supplier and location, the sensitivity of the overall asset network to each supplier and location (and is there a single point of failure), and the ability to dynamically alter the network should a failure occur or customer demands change.  And track all of that information.

Plus you have all of the difficulties associated with each type of optimization. With respect to the network, there will be many alternatives for production site, each site will have multiple, and different, asset lines, and each asset will be qualified for a certain operation with respect to a certain product. In addition, some assets will be more efficient and cost effective, and unqualified assets will have a qualification/certification step, which will require limited manpower – a variable that does not need to be modelled in traditional sourcing or SCNO models. It’s a very difficult problem that requires modelling of multiple types of variables and constraints at multiple levels at multiple times. And this last requirement makes the model even more complex.

Plus, in a traditional sourcing model, you don’t really need to consider “time”, as it doesn’t matter how often the trucks deliver your product, just how many trucks are needed to deliver your product as you are billed FTL or LTL by the delivery. And it doesn’t matter what production schedule the supplier(s) use(s) as long as your products are ready on time, so only the total volume need be considered. But when you are dealing with production models, especially when trying to dynamically construct and optimize an asset network, production schedules are significant. If a certain location only has 30% of capacity left available and can only schedule it during a given time-frame, that has to be taken into account. If some of the products have to be delivered before they can complete the first production run, then there has to be a location that is able to do so. And if a continual supply is needed over nine months, the production cycles should more or less line up with minimal overlap as, otherwise, inventory costs would soar.

It’s a complicated problem, but one that is becoming more and more important in fast moving industries such as fashion and consumer electronics — and one that most SSDO providers can’t address. Why?

First of all, they don’t track the necessary data.

Secondly, they don’t have the right underlying optimization platform.

Third, they don’t have the skills to build the right model.

But recently, a few of the bigger players with optimization have started not only tracking all of the direct (material) sourcing requirements, but assets as well.  So the data is there.

Secondly, a few of the optimization platforms have become significantly more powerful and flexible (and now have the necessary computing power under the hood to support them) and could, at the very least, run a series of optimization models (according to different time-spans, which minimizes the need to consider complex timing constraints in a single model) to tackle problems such as this.

Thirdly, there are independent experts with decades of experience who can help design the right model.

So why are none of the big players doing it?  It seems logical, and soon necessary, if an organization wants to continue to identify, and capture, new sources of value year-over-year.

Enterprise Software Companies Do Need Media Relations (Re-Post)

This post initially ran five years ago, but since the PR frenzy is back (as a result of the M&A frenzy), this needs a re-post!

In yesterday’s post, we insisted that Enterprise Software Companies DO NOT need Public Relations, because they do not. Why? Simple. They DO NOT sell to the public. They sell to big corporations. Big corporations are not the public.

Also, the messaging that you need to sell to a CFO is nothing like the message that you need to sell to an impulsive consumer. Good business is all about productivity, progress, and Return On Investment. Good public relations is all about feeling, connection, sexy, environmental responsibility, or anything else that happens to be the buzz of the day. Good enterprise relations is all about results. Public relations, like consumer advertising, is in constant flux. But the basics of good business never change.

However, the advertising channels through which business advertising have exploded, not only as a result of the rapid expansion of the ubiquity of the world wide web, but of social media as well. As a result, the complexity of media management has increased dramatically. The fundamentals haven’t changed, but the amount of work required to coordinate and manage the effort has. Not to mention the knowledge required to strategically place your advertising and messaging to stand out amidst the noise, which consists not only of a constant stream of advertising and messaging from your competitors but analysis, third party reviews, and random comments. It’s a media jungle, and unless you have a team of full time pros to manage it 24/7, you need help. Even if you do have a team, you probably need guidance.

A good Media Relations Team will help you:

  • Identify the Right Channels
    Which traditional print and online web publications are right for you?
    What are the right channels to advertise your coverage?
    Who are the right people at these outlets to reach out to?
  • Tailor the Message
    While you need to craft and own your message, you also need to recognize that different individuals at different publications who control different channels are interested in different parts of the message you have to deliver. To get your message heard, sometimes you have to focus in on the part that will get a crier’s attention.
  • Spread the Message
    Parts of your message have to spread through others, but thanks to the social media revolution, other parts have to be spread by your organization through social media channels. Managing these can be a full time job, and not the best use of your limited resources. This is best left to an expert.

In other words, you need help, but the help you need is not Public Relations. It’s Media Relations.

And if you really need someone to talk to in order to help you elicit your messaging in a collaborative fashion, hire a subject matter expert (SME) whom can also offer you project management, product development, or thought leadership consulting services. This will jump start those efforts as the subject matter expert will not only be fully familiar with your messaging, but with your modus operandi as well. As a result, there will be little to no learning curve for the SME when it’s time to start the project management, product development, or thought leadership creation. This will pay off in spades as you’ll get your project, product, and/or thought leadership done faster, hit the market faster, and see a significant return faster.

So when it comes to getting help, get the right help. Even if you don’t thank me for it.