Category Archives: Best Practices

Making BI Available to Everyone

A recent article in Information Week on “The Road to Making BI Available to Everyone” noted that, on average, only 25% of workers use BI. Considering that we’re in the information age, this is rather pathetic. Why is this?

According to the article, there are five major reasons for this:

  • The tools themselves … as most of them are not very usable
  • Company managers … that promote gut-feel decision making
  • Company cultures … that essentially promote information hoarding
  • Failure to convey the value … to business executives & decision makers
  • Lack of training … which promotes use of all-too-familiar Excel

Which are all-too-true, but I’d also add:

  • Cost … costs per user are often ridiculously high for many of today’s BI tools

So how can we change this? Good question. The author believes that several roads must converge before BI will get widespread adoption. Namely:

  • Businesses need to fully appreciate the data gold-mine
  • Vendors need to provide lower-cost ways to license and deploy BI
  • BI interfaces need to be upgraded to present data in a manner amenable to the user
  • BI tools need to be able to work on relevant data stores

These points are also correct, but what really needs to happen is:

  • The tools need to allow the user to build as many data cubes as they need, on as many data sources as they have available – as a stale data warehouse is not very useful to anyone
  • The tools need to be available on-demand – current tools overload IT resources and limit implementation
  • Users have to think outside-the-cube when it comes to recognizing what a BI tool is and how they can use it
    – and
  • Users have to understand that a few of today’s on-demand spend analysis tools can be used for more than just spend-analysis

For example, tools like BIQ can be used for more than just spend analysis. This post details how the tool was used to detect overspending, find fraudulent claims, determine when failed equipment under warranty is worth reclaiming, and detect questionable resource usage patterns. Plus, compared to traditional behind-the-firewall BI tools, they’re very affordable for massive deployments across your organization.

In other words, even though they’re not perfect, with their built-in ETL, cube generation, and pattern-based rules engine, they’re significantly more powerful than Access and Excel and would allow the vast majority of office workers who need BI to use BI today.

To Win the Talent War, You Must First Defeat the Enemy Within

As evidenced by my recent Talent Week series, and many posts on Talent here on this blog, a major war for talent is building, and you stand to lose your business if you don’t start preparing now. However, as clarified in a recent McKinsey Quarterly on “Making Talent a Strategic Priority” article, before you can win on the global talent battlefield, you have to first insure that you’ve defeated the enemy within.

The article notes that, to a considerable extent, executives should be blaming themselves for their talent woes. Although it’s true that shareholders and investment analysts are largely responsible for the obsession with short term performance, it is managers who too readily treat talent in a reactive, knee-jerk manner – by hiring additional sales and marketing people only after new products take off and by cutting discretionary spending on people development when performance drops. As Charles and Don were quick to point out in their posts, the best way to acquire the talent you need is often to develop it within. Furthermore, companies that cut talent are making the worst innovation mistake they can make. This failure to focus on talent creates a vicious circle: a lack of talent prevents corporate growth which creates additional performance pressures which causes executives to put even greater emphasis on the short term which starts the cycle again.

Furthermore, when companies do make talent a priority, they tend to fall into another trap where they adopt an overly narrow focus on HR systems and processes – which diverts attention away from the place where the biggest obstacles lie: their heads’. Systems and processes don’t create innovation – innovative people, with the right experience and training, do.

Then there’s the seven obstacles to good talent management:

  1. Senior managers don’t spend enough high-quality time on talent management
    People are the key to your success, so why aren’t they your top priority?
  2. Siloed organizations that do not encourage constructive collaboration and resource sharing
    Establish organizational wide goals and organizational wide teams and focus on common objectives. (And whatever you do, don’t tear all the walls down and build an “open environment” thinking that it will solve all your problems.)
  3. Line managers are not sufficiently committed to the development of people’s capabilities and careers.
    Which is not surprising, since they take their lead from the CEO who is consistently failing to put people as his or her top priority.
  4. Line managers are unwilling to differentiate their people as top, average, and underperformers.
    Differentiation is not necessarily a bad thing. If you don’t know who’s underperforming, than you don’t know who is the most desperately in need of training. And if you don’t know where they’re weak, how will you select the right training?
  5. CEO’s and senior leaders are not sufficiently involved in the shaping of the talent management strategy.
    Talent management needs to start at the top.
  6. Senior leaders do not align talent management strategy with business strategy.
    Talent needs to support the business. Shouldn’t the two be aligned?
  7. Line managers do not address under-performance effectively, even when chronic!
    This is a triple whammy. First of all, under-performers might not even realize they are (chronically) underperforming. Secondly, they are not getting the help they need. Thirdly, it’s sending a message to the rest of the organization that under-performance is okay.

In summary, you need to win the battle within before you’ll be ready to fight the coming war.

Do We Really Need a New Supply Chain?

A recent article in the Supply Chain Management Review outlined “A Plan for Building a New Supply Chain” because, according to the author, supply chains need to be redesigned from the ground up to remain competitive. Now, I wholeheartedly agree that the average supply chain lacks efficiency and needs to be improved – in some cases drastically – but I’m not sure that supply chains need to be redesigned from the ground up.

Most successful companies understand the basics of their supply chains – and have those basics in place. After all, the entire point of a supply chain is to move products from the manufacturing plants to the retail outlets where anxious consumers will buy the goods. And since your average reasonably successful company knows where the goods should come from, where the goods need to go to, and the means it has at its disposal to move those goods, it’s quite clear that not only are the fundamentals of a supply chain reasonably well understood – but that, at a high level, a more efficient supply chain will look similar to the current supply chain. And even though I’m all for supply chain streamlining, I don’t know if a new supply chain is necessary, at least not in the average case.

However, the article did have some strong points. First of all, the five S model appears to present a valid approach to reaching a good end-state as the five S’s appear to cover most of the key points. Once you’ve addressed Structure (physical and operating model), Scope (depth and breadth), Span (supply chain extent), Scale (degree of verticalization vs. virtualization), and Skills (both availability and impact), about the only thing missing is the sixth S: Shift – how innovative is the new supply chain?

The article also had a good short list of key people, process, technology, and global success factors that is worth repeating:

Process Success Factors

  1. Lean, but flexible, processes
    Don’t optimize to the point where it becomes tough to change and adapt to future demand, design, or technology shifts.
  2. 80-20 rule adherence
    Get the 80% right, and the process will adapt to the remaining 20% over time.
  3. “Adopt and Go” philosophy
    Don’t over-plan the implementation to the point where it takes forever to achieve the benefits.
  4. Design for Global Commonality
    Fewer distinct products means fewer distinct supply chains.

People Success Factors

  1. The right mix of strategic, tactical, and executional skills
    Successful supply chains require all three skill sets.
  2. Train and re-train regularly
    It’s all about sustainability – and that applies to people as well as processes. You can’t run a 21st century supply chain with 20th century skills.
  3. Focus on distributed process management and optimization
    The world is still round – but supply chains are flattening by the day.

Technology Success Factors

  1. Distributed Applications
    Monolithic applications are a thing of the past and must be avoided at all costs.
  2. Global Accessibility and Scalability
    The future calls for consolidation and global distribution across processes and functions.
  3. Repeatable, Limited Deployments
    Every iteration should reduce cost and cycle time.
  4. Discipline
    Minimize customization as to minimize total cost of ownership.

Global Success Factors

  • MEASURE, MEASURE, AND MEASURE
    You need visibility and accountability to remain at the forefront. This is the only way to ensure that it does.

Innovation IS A Growing Problem in Procurement

I was very pleased to see a recent article in the Supply Chain Management Review that said it will be necessary for procurement professionals to develop new ways to define and identify needs inside their organizations, to assess the capabilities of the organizations’ internal resources to meet those needs, and to match them against all available external resources.

The article makes two interesting observations. First, that executives in industries such as automotive and pharmaceutical, where R&D expenses are rapidly rising and where returns have been steadily decreasing, have started looking to their suppliers for innovation in component designs, in quality processes, and in manufacturing processes. Second, that R&D managers who try to utilize seeker-solver networks often make costly mistakes with poorly constructed challenges. (Either the challenges are too tightly defined, with inherent biases that lead to the same dead ends, or their definitions are too loose.) In both cases, R&D managers are “reinventing the wheel” in procuring services and making expensive mistakes as a result. And even when they make slow headway, they lose process capability when managers retire or transition out of the R&D organization.

The article suggests that firms use knowledge brokering and procure solutions by finding them instead of creating them. They indicate that the knowledge brokering cycle – where you capture good ides, keep them alive, and imagine new uses for old ideas – has been used successfully used for years by contract design firms (such as IDEO and Frog Design). The argument is that since knowledge is unevenly distributed, reusing mature ideas in different contexts is more cost-effective than inventing the same ideas from scratch.

The article also endorses “open innovation” – the use of purposive inflows and outflows of knowledge to accelerate internal innovation and expand the markets for external use of innovation, respectively – as the internet has added a powerful twist to the open innovation concept that can significantly reduce the cost of innovation by pairing corporations (seekers) with R&D challenges and external scientists (solvers) who can approach problems from many different angles. Since somebody “out there” may already have solved your problem (or at least have the wherewithal to do so easily), and might be willing to do so at a fraction of what it would take to replicate the solution in-house, it pays to take a shot at seeking them out.

Then the article points out that there is a persistent limitation to knowledge brokering and open innovation – they do not engage the procurement professionals whose job it is to help define make-or-buy parameters. In addition, even though procurement is charged with managing the inflows and outflows of goods and services, they are traditionally not tasked with managing the inflows and outflows of knowledge. Furthermore, procurement is still charged with price reduction, and not revenue generation.

The answer, of course, is to recognized procurement as drivers of revenue through innovation – and not just drivers of cost reduction – and to forge links between procurement, R&D, and HR. Then, procurement needs to start launching experiments, track results and build bridges, and begin to lay the foundations for an innovative culture.

Putting McKinsey’s Business Technology Trends into Practice Part II

The McKinsey Quarterly recently published an article on “eight business technology trends to watch” that was not only quite good, but a good summary of the trends that you should be implementing, appropriately, in your supply chain. In this second part of this two part series, we are going to review the remaining trends and give you some examples of how you can apply them to improve your sourcing and supply chain practice.

Expanding the Frontiers of Automation

More and more systems are becoming interconnected through common standards for data interchange and more and more business processes are becoming automated at larger and larger scales. This information exchange can be used to automate even more activities, with a little thought and proper planning.

For example, you’re probably using multiple systems for sourcing and procurement, and in e-procurement in particular, there are probably considerable improvements you could make to not only increase efficiency with automation, but reduce overspending and maverick spending. Let’s consider the process – requisition creation, requisition approval, supplier acceptance, goods receipt, invoice generation, review, and payment. You’ve probably heard a few of the more progressive vendors say that you should have 2, or even 3, way match at the invoice review stage – but the reality is that you should have m (where m is equal to the number of data points you have) at each step of the process. When the user creates a requisition, items should be checked to see if they are under contract, and if not, if there are contract equivalents and prices should be compared against contract pricing. If an item is being bought under contract, but the price is wrong, it should be corrected (and the user notified), and if the item is not under contract, but there is an item that is, the user should be notified and if the user insists on requisitioning the off-contract item, the user should be forced to enter a reason as to why he or she is seeking permission for maverick spend. When a supervisor goes to approve a requisition, the prices should be re-verified and the supervisor should be immediately alerted as to whether or not the requisition contains any maverick spend requests. Before the invoice is approved, it should be matched to the purchase order that was generated from the requisition to make sure each item was ordered, the goods receipt to make sure everything was delivered, and the contract to make sure the prices are right. In this way, a supervisor can quickly spot requests for off-contract spend and focus attention where it is really needed, and invoices from approved suppliers where everything is verified can be automatically scheduled for payment, allowing users to focus their time only on those invoices that need to be manually investigated.

Unbundling Production from Delivery

Technology helps companies to utilize fixed assets more efficiently by disaggregating monolithic systems into smaller, loosely coupled, systems. It’s not one big production line, but a set of smaller lines that work on individual components, some specialized to a single task. Improvements in information and communication technology not only enable the new models, but enable the use of each resource to be monitored and metered separately. This allows companies with free capacity to lease their resources to other companies which need to gain access to assets quickly to scale up businesses but keep their balance sheets in check.

There are a number of ways you can implement this concept in your sourcing and procurement organization, and the best way to start is to simply unbundle product (production) quotes from delivery (shipping) quotes and then use a strategic sourcing decision optimization platform that can optimize your allocation to minimize total cost of ownership and total value delivered in ways that you will not achieve with e-Auctions alone. The next step is to contract for additional capacity as you start scaling up operations or need a new technology that you don’t have, and don’t take on any fixed assets until you have proven the market and demand. Then, you if you’re truly innovative, you’ll identify other organizations with similar supply chains whom you are not in (direct) competition with and take on management of their third party logistics requirements to increase the volume of your logistics requirements to negotiate even better deals with your 3PLs.

Putting more Science into Management

The article notes that technology is available to help managers exploit ever greater amounts of data to make smarter decisions and develop the insights that create competitive advantages and new business models. The article notes that from “ideagoras” (e-Bay like marketplaces for ideas) to predictive markets to performance-management approaches, ubiquitous standards-based technologies promote aggregation, processing, and decision making based on the use of growing pools of rich data. It also notes that leaders should get out ahead of this trend to ensure that information makes organizations more, rather than less, effective, and the doctor agrees with this wholeheartedly!

The best way to start is to acquire a real spend analytics platform (which is more than boxed reporting on a data warehouse, but you know that) and a real strategic sourcing decision optimization platform, if you don’t have them already. This will help you target the spend that has room for improvement and make optimal award allocations, keeping spend down. Then, acquire some collaborative PLM software to enable you to monitor NPD from the inception stages and insure that the best decision is made by the organization at each stage of the process.

Making a Business out of Information

The article points out that accumulated pools of data captured in a number of systems within large organizations or pulled together from many points of origin on the Web are the raw material for new information-based business opportunities, and while that may be true, the doctor thinks that the trend you should be focusing on is running a better business on timely information.

Not only do today’s organizations have access to more data than they have had access to in the past, but those with visibility enabled supply chains (that use RFID and XML or EDI interchange with partners) have access to this information faster than their peers. Those companies that are able to make use of this information quickly and appropriately will be able to outperform and outmaneuver their competitors, and respond much quicker to events that could cause supply chain disruptions and re-engineer around them. For example, a pizza chain that monitors expected tomato crop yields and any natural events that could significantly diminish those yields, after finding out that a hurricane wiped out a large crop, could move to quickly lock up future supply at today’s prices, putting it in a much better position than its competitor that will be forced to fight for a much smaller supply at higher prices. A 3PL that keeps on top of all news that relates to major ports as well as where its trucks are at all times through GPS could immediately divert all trucks, en-route, to a different port as soon as it discovers that a tsunami just wiped out a dock and shut the port down for a week. Let’s face it, supply chains are not in the information business, and shouldn’t be looking to create new businesses around information when they can instead use that information to execute their business much more efficiently then their competitors, giving their firm a strategic advantage that could enable it to grab more market share with less dollars, which is a contribution to the bottom line above and beyond the significant savings they are able to achieve.

As the article states, creative leaders can use a broad spectrum of new, technology-enabled options to craft their strategies. These trends are best seen as emerging patterns that can be applied in a wide variety of businesses. Leaders will reflect on which patterns may start to reshape their markets and industries next – and on whether they have opportunities to catalyze change and shape the outcome rather than merely react to it. As the doctor has demonstrated, each of these trends can be co-opted by your sourcing and supply chain organization to literally get more for less. the doctor hopes that you have enjoyed this two-part mini-series.