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Category Archives: Best Practices
Best Practices Must be Adapted for Maximum Benefit
In a recent article over on the Supply Chain Consultants site, Harpal Singh asks if “best practices are always best”. It’s a good question, because the answer is no, or at least not if you blindly follow the advice of your competitor.
While every company executes similar functions — HR, Legal, Marketing, Product/Service Development, and Supply Chain — every company has differences that make it distinct. As a result, no process or practice can be expected to work out of the box without some tailoring.
For example, company X’s cost saving strategy might be reducing the number of shipments by using the available storage space in buildings they own (and which would otherwise go unused) to achieve that goal while company Y’s cost saving strategy might be JIT shipments because they don’t own any storage space and rental costs in local warehouses are quite high. As a result, while both might be standardizing on the same inventory management system to achieve inventory improvements, the systems would have to be configured differently.
Similar scenarios can be imaging in supplier selection (depending upon the desired characteristics of the supplier), carrier selection, and joint product development. While there will be lots of similarities (as both should be using e-Sourcing, e-Procurement, modern web-based IMS/WMS applications, etc.), there will be lots of differences in the nuances of the implementation. However, that does not mean that you can sweep someone else’s best practices under the rug, because if they come from a big, successful, global corporation like Apple, GE, Sony, P&G, or Unilever, there’s a lot of meat on the bone and you just have to figure out how to get the right cut.
For more tips on how to make best practices work for you, check out Harpal Sing’s article.
Want to Know How Well You’re Doing – Ask Your Suppliers
A recent piece over on SupplyManagement.co on “commit to canvass” reminded me that sometimes the best way to figure out how well you’re doing is to ask your suppliers. While benchmarking is critical, it won’t always give you the full picture.
For instant, just because your benchmark says you “order on time 99% of the time”, that doesn’t necessarily mean you’re doing a bang-up job of getting your orders in on time in the supplier’s view. For example, let’s say the contract says you’ll endeavour to get your orders in 14 days early, but “rush” orders can be put in with only 7 days notice. Well, just mark every order “rush” and make sure it’s in 7 days early and you’ll hit your on-time order target. But if the contract says that you only expect 10% of orders are going to be “rush” but 70% of orders are “rush”, how happy do you think your supplier is going to be with you?
And how will you know if the supplier thinks your “cooperative” problem sessions are delivering value? For instance, if you have team members who always end up doing what they decided before the joint session anyway, it won’t be “cooperative”, the supplier will see no value, and they’ll be upset at you for wasting their time.
You need to ask your supplier how you’re doing once in a while. And, to get brutally honest answers, you should make an anonymous survey a regular communication mechanism. Thanks to modern technology, they are cheap and easy to design, administer, and amalgamate. So ask you’re supplier how you’re doing. I guarantee you’ll be in for at least one surprise.
Even Starbucks has to Benchmark
Considering it’s benches are always full of hipsters sipping their half-caf low-fat moccachinos, you might think that Starbucks would have no need for benchmarking, as many of its benches already have permanent rear-shaped impressions from long-time customers. But that’s not the case at all.
In a great case study in DC Velocity on the Starbucks Supply Chain, we find out that, as of 2008, costs had risen faster than sales for three years running (since you can’t grow fast in a market that’s already near the saturation point), there were no metrics to measure service performance and, once measurement criteria were instituted, less than half of all store orders in the United States and Canada were delivered on time.
However, once the company started benchmarking and focussed on revamping the supply chain to improve its performance, in a mere two years, Starbucks was able to increase on-time performance to almost 90% and results are still improving. So if you want to improve your supply chain, it starts with a good benchmark.
Has The Time for One Vision Arrived?
One man, one goal, one mission
One heart, one soul, just one solution
One Vision, Queen
Back in the early 1980s, somewhere on the Redwood Shores of California overlooking the San Francisco Peninsula, there stood a man who had a vision that was decades before its time. The man was Larry Ellison and his vision was that ONE system would power the entire global enterprise. Under his leadership, Oracle worked frantically to develop an end-to-end platform that would make his dream a reality, and in the mid 1990’s, Oracle had enough base functionality that each and every aspect of an entire global enterprise could be run off of one instance of Oracle. A significant number of Fortune 500 enterprises then started down the path of implementing Oracle across their enterprise, but due to the effort and costs involved, most of them abandoned the effort before reaching completion. As a result, even though 98% of the Global Fortune 500 use Oracle today to power significant parts of their business, you can count the number of business that run their entire operation off of one Global instance of Oracle (including Oracle itself) on your digits.
And it’s unfortunate. Even though Oracle, like any ERP or platform provider, will never compete against best-of-breed in any specific area of functionality, a pinpoint focus on best-of-breed ( BoB ) solutions can create more weaknesses in your platform then they claim to fill. Because without a solid, unifying platform:
- There is no common framework for application integration.
- There is no centralized data store.
- There is no single version of the truth.
It has taken a while, but thanks to the intensive efforts of the niche sourcing advisory practices and the spend analysis software and services providers, people are starting to realize that you can’t truly do proper sourcing, which must be based on a solid understanding of TCO, if you can’t even see all of your associated costs. And while most good data analysis tools will allow you to ETL/merge multiple sources into one cube, if you have conflicting data, which is right? (And to even get this far, you might have to define custom translations for each data source as each could be using a different coding and indexing scheme, as there is no common framework that connects the applications.)
Furthermore, how can you make fact-based decisions on the fly, which you often have to do in the real world, if your current spend report (or, more likely, dangerous dashboard) only contains partial information? And when you’re looking at a spend report, how do you make sense of $10 Million on Contingent Labour if you can’t dive into that data because it’s in a separate, BoB, solution maintained by your Managed Services Provider (MSP)?
We’re quickly reaching the point in time where there’s no way you can maintain a competitive supply chain operation if you can’t get to the right version of the truth in real-time when you need to make a decision. And the only way you’re going to do that is if all of your core procurement data — direct, indirect, services, contingent labour / Statement of Work, and T&E — is in one place. Even Coupa, a Procurement solution directed at the mid-market, realizes this. Not only have they built a solid Procurement platform that can capture all1 of your spend data, but they have worked heavily on exposing their APIs so that if you already have an ERP or central data store (or warehouse), you can easily integrate Coupa with the ERP (or central data store) and maintain one, consistent, version of the truth.
I’m not saying you shouldn’t use BoB, in fact, as I will argue in a future post where I ask if now is the time of niche, you should use BoB wherever and whenever it brings value, but only if you can integrate the BoB solution and, more importantly, the data it captures, into a central solution so you always have access to the full picture. Because, even if it costs more up front, the value it will enable year after year will be immeasurable.
1 I will submit that there are some types of spend data that their platform is much more suited for and that their platform does not handle all types of spend with equal adeptness, but that’s not the point.