Category Archives: Best Practices

Could You Run Your Supply Chain from Another Country for A Month?

A recent post over on the HBR Blog Network on why we’re relocating our HQ to Dubai for one month about Starwood’s one month move of their HQ to Dubai for one month brings up an interesting question:

 

Could you run your supply chain from another country for a month?

 

It’s an important question. Because if you can’t, you’re not prepared for a disaster. And given that the likelihood of a disaster shutting down your primary location is increasing as the number of natural disasters rise each year (thanks to global warming), you should be. While the risk of a disaster shutting down your Supply Management headquarters is likely small compared to the risk of a significant disruption impacting your supply chain (which is approaching 85% for many companies), the risk is there. And you have to be ready.

Furthermore, if you have the right supply management infrastructure, you should be just as capable of running your supply chain from another country as you are of running it from a temporary location fifty kilometres away. If you have a true visibility solution, you just need an internet connection and you know where everything is. If you have a good sourcing and procurement platform, you can source and order whatever you need from anywhere. And if you have a good e-payment solution, you don’t need to pick up a check from a PO Box. Good distributors have their own on-line visibility and transportation management systems, and all of your 3PL and Import/Export Brokers can be connected with an e-Document Management solution. Plus, if you truly are global, you should be able to set up quickly near a major supplier who wants to help you out in the local country to keep you as a major customer.

In other words, if you couldn’t pick up and temporarily relocate your Supply Management headquarters at a moment’s notice, you probably don’t have a modern Supply Management office running on a modern Supply Management platform. And you should. Especially since there might be no better way to really learn a major market that you are sourcing from.

So What Are You Doing For Your Drivers?

As per our post on Sunday, where truck drivers are concerned, working conditions are bad, getting worse, and you’re on the fast track to not being able to move 10% of your shipments on time as you’re going to be short 10% of the drivers you need within a decade unless you do something to change things.

So what can you do?

1. Make sure you do everything you can to give drivers good working conditions.

According to this post by Peter Moore over on Logistics Management, some distribution centres force drivers to stand in a 10-foot painted circle on the floor near the loading docks while the trailer is being loaded. No restroom, no cell phone signal, and no chair. Are you serious? People charged with crimes get treated better.

2. Make sure your carrier does what they can to give drivers good working conditions.

The carrier should pay them better than average, minimize waiting time by always using dropped trailers for TL, optimize routes to minimize partial loads and stops, and make sure all long haul truckers on routes without an adequate number of safe rest stops have sleeper cabs. In addition, routes should always be planned to ensure that legislative limits are not breached, which will give the driver adequate rest.

3. Make sure the drivers have good medical coverage and care.

Drivers should have a schedule that gives them at least one weekday off a month to schedule a regular doctor’s check-up and should have a plan that allows them to visit a doctor whenever they need to. (In US terms, this means that they should have PPO or POS coverage.)

4. Make sure you support any effort to prevent rest stop closures.

More rest stops are needed. We’re at 90% capacity every night and things are only going to get worse. Support any effort to not only prevent more closures, but to (re)open more rest stops to make trucking safer for all drivers.

And while all of this may not be enough to make a driving career attractive to younger drivers, it should at least stem the surging turnover and buy us the time we need to come up with a better solution.

SIM Powered Recovery Will Take Your Recovery to the Next Level!

Every year, corporations are at risk of losing significant dollars due to transactional errors such as: over payments, duplicate payments, missed rebates, missed discounts, lost credits, and fraud.

The money is lost with no chance to reclaim it unless a recovery audit is performed. Most recovery audit service providers claim on their websites and marketing material that they can recover between $500,000 and $1M per every $1B that a company spends on an annual basis.

Even under the most conservative estimates, this problem is costing mid-sized and large companies millions of dollars every year.

Unfortunately, the recovery audit industry relies heavily on manual processes which focus almost entirely on a client’s historical transactional records. Manual processes are time-consuming, inconsistent, expensive, and focus too heavily on client records. The methodologies, while they do add value, leave a large portion of the recovery opportunity unexplored.

Over the last several years, some service providers have developed technology-enabled recovery processes that are accurate, complete and deliver claims in real-time. Even more recently, some recovery solutions have seen the incorporation of a supplier information management (SIM) application and have drastically improved audit results.

The combination of recovery audit technology and SIM drives more supplier compliance, significantly out-recovers manual recovery methodologies and improves the organization’s working capital situation as a result of the recovery process. In addition, even when delivered separately from any recovery product, SIM is a powerful tool that offers significant benefits to a financial organization by driving lower costs, streamlining supplier on-boarding, reducing working capital, improving strategic supplier management and decreasing payment fraud.

To find out how SIM-Powered Recovery can improve your recovey results by a factor of 3, 5, or even 9, and maximize your return, download the latest Sourcing Innovation Illumination, sponsored by Lavante on Taking Capital Recovery to the Next Level. When you find out how you can save hundreds of thousands while recovering millions, you won’t be disappointed!

Adoption a Problem? Incentives are the Answer!

Just make sure they are the right incentives.

As per this article by Mitch Free on Forbes.com on the Best Advice a CEO Ever Received, your incentive plan works. You will get the results you incentivize, so be careful of and monitor for unintended consequences.

As per the article, Mr. Free couldn’t understand why, when he took his car in for a wash, the attendant was so insistent in fixing a “pitting” on his windshield that he couldn’t see that the attendant even offered to do the fix for the same price as the wash and give the wash for free, which did not make much sense. So Mr. Free emailed the owner, who stated that he was paying a $5 commission on window repair sales, and none on car washes, in an effort to increase window repair sales and that Mr. Free’s e-mail explained why there was a big spike in people getting their windshields’ fixed but not getting their car washed. It was an unintended consequence of the incentive plan.

The same holds true where Supply Management software is concerned. Adoption will depend on the incentive plan. A proper incentive plan will go a long way to getting utilization, but an improper one will go even further to jeopardizing your supply management returns. For example, if you made a worker’s bonus contingent on using the new e-Procurement system, and then calculated a certain percentage of his bonus based upon total spend put through the system, you might find that, at the end of the year, that worker put as much spend as he possibly could through the system. And while you might think this is the intended consequence, you might also find that spending overall on indirect categories such as office supplies, computer and electronics equipment, and temp services increased 10% year over year. Why? Instead of doing quick RFXs and then negotiating bulk purchases with the lowest bidder, the buyer bought everything he could through the vendors already integrated (via EDI, punch-out, etc.) with the e-Procurement system, even though most of the purchases were for off-contract items that were, on average, 10% higher than rates that could have been obtained with a new sourcing contract with another vendor.

In this scenario, the right incentive plan would be to incentivize buyers on achieved year-over year savings on spend under management, where spend under management is that spend that is negotiated or managed through a supply management system, whether it is the e-Procurement system, the e-Sourcing system, or the Contract Management system. This way, the system will be used when it’s appropriate, and the buyer is only rewarded when savings are achieved.

What are the keys to a successful supply chain?

In a recent article over on Inbound Logistics on three keys to a successful supply chain trading partner network, Christopher Mazza, SVP of Business Development at IAS (International Asset Systems) claims that the three keys to a successful supply chain trading partner network are connectivity, visibility, and optimization. And those are definitely the fundamental requirements of a trading partner network.

But since a supply chain goes beyond a trading partner network, it leads one to ask what are the keys to a successful supply chain. This is a bit harder to answer in general because the depth and breadth of supply chain required is different for every vertical, and every company, and it can be argued that the most critical success factors are different across verticals and companies, but there are some common fundamentals. In this post we will attempt to identify some of them.

  • Analysis
    The first step is figuring out what is needed, when it is needed, and how much it should cost.
  • e-Document Management
    Then you need to find suppliers, send specs, get designs, get quotes, send responses, make awards, cut contracts, send orders, get invoices, process payments, etc. — all e-Documents.
  • Collaboration
    You need software that allows you to interact online with your suppliers and partner and customers virtually and in real-time. (Connectivity in this day and age is a given — but it’s not enough unless there are collaborative elements to the connectivity).
  • Optimization
    Bid analysis, awards, logistics management, inventory management, real-time order management, etc. all require optimization to keep costs down and value up.
  • Visibility
    Knowing what is, and is not, where all the way back to suppliers of critical raw materials and sub-components, is key to avoiding devastating disruptions in today’s supply chain. If a raw material doesn’t reach a component supplier on time, then the component is not going to reach the tier 1 supplier on time, and your product is not going to reach you on time.
  • Risk Monitoring
    Hand in hand with visibility is near real-time risk monitoring. This involves monitoring significant global events (so that you know an earthquake has damaged a tier 2 supplier’s plant when it happens, not 60 days later when the product doesn’t ship), monitoring supplier’s financials and/or brand (as irresponsible corporate practices such as the use of child labour could be more damaging then to your organization than if they went bankrupt), and monitoring shipments and inventory for risk of loss or theft for starters.
  • Innovation
    The supply chain needs to be progressive, constantly on the look-out for new processes and technologies that can improve it, and forward moving when opportunities arise.

Furthermore, these requirements hold true across the board. And if you have trouble remembering them, think of the fact that when you bring these needs up, you are A VOICER of truth.