Category Archives: Best Practices

The Not-So-Wacky (Sourcing) Wiki

This is just a short post to remind you about the e-Sourcing Wiki [WayBackMachine] that I introduced to you last month in Veni, Vidi, Wiki. More content has been added, including a first draft of “Next Generation Sourcing: 21 Strategies to Innovate Sourcing” and an initial draft of “Center Led Purchasing” – and more is on the way in the near future. (An initial cut of wikis on Supplier Performance Management and Supply Risk Management are slated for the near future, as well as the e-RFx & Supplier Management and Next Generation e-Auctions in the Total Value Management Enablers series.)

Even though only seven wikis are available, it is already getting good coverage (which is not surprising since these first seven wikis constitute about 120 pages of content!), including a recent article in Supply & Demand Chain Executive. Furthermore, as pointed out in the article, even though Iasta has a hand in drafting a lot of the initial material (and the Total Value Management Enablers series in particular), in order to keep the site as vendor-neutral as possible, Iasta has lined up a number of top-tier supply chain departments at various universities to contribute content to eSourcingWiki. Furthermore, a significant portion of the content to-date has actually been drafted or edited by yours truly – and I can honestly tell you in this regard, I’m much more concerned about the content then I am on how it reflects on a particular provider’s solutions. (Furthermore, I think it important that every vendor have something to strive for, which, in Iasta’s case, includes fulfilling the eight innovative strategy for sourcing, “Guided Sourcing”, end-to-end, for starters.)

However, what really makes the site vendor neutral is you! This is a true wiki and any registered user can submit edits to existing wikis or define new wikis and new content designed to advanced the profession of supply and spend management and help their fellow sourcing professionals. So put on your thinking caps, grab your virtual writing instrument, and share the knowledge of your experience. Then it will truly be the community body of knowledge it is designed to be. Just imagine if a whitepaper on sourcing decision support was not written by a single vendor or analyst firm, but a collective body of the best minds in the market how good it could be.

AMR’s Search for Strategy

AMR recently released a two-part article where they noted that a supply chain strategy can be an elusive enigma, something every organization should know it needs, but something many an organization is uncertain on.

To help organizations out, AMR searched and searched and, after answering some basic questions, outlined what a strategy might look like, what some of the important elements are for success, and developed a framework for strategy development based on their demand-driven supply network (DDSN) world-view (no surprises here!).

AMR points out that before one can explain what a strategy is, one must first point out what it is not. To this end, AMR notes that a supply chain strategy is not:

  • focused solely on supply or company operations
  • inward-facing
  • focused only on your company
  • technology centered
  • point-in time based
  • a substitute for business strategy
  • a financial plan
  • buzzword bingo

AMR then points out that a good plan is realistic, clear, actionable, and approved by leadership and stakeholders. It is based on market performance, emerging market dynamics, and supports the strategy. Furthermore, it considers and defines the following elements:

  • holistic design
  • process evolution
  • talent
  • predicted power shifts
  • key relationships
  • network design
  • simulations

Furthermore, a good supply chain strategy supports the business strategy from start to finish. It supports the current and expected future states of the business and details relationship strategies and process for demand, supply and innovation over five to ten years.

Furthermore, the strategy addresses:

  1. business strategy
  2. supporting supply chain strategy
  3. supporting business processes

Each of these components are devised by starting with a proper goal and asking the right questions.

Business Strategy

Goal: What is the right direction to increase the value of the company?

  • What is the best way for the company to compete?
  • Which businesses and markets best support the strategy?
  • What events and market shifts need to be incorporated?
  • How are evolving technologies, customer preferences,product competition, and channel dynamics changing the ecosystem?
  • What is the true market opportunity?
  • To capture this market opportunity, should the company be a cost leader or a differentiator?
  • What is the brand?
  • What are the risks and how are they balanced?
  • How are assets and relationships aligned to win the market?
  • How does the business strategy translate into a financial strategy?
  • What is the role of technology?
  • How should award systems be aligned?
  • What is the necessary organizational culture?
  • Is the plan actionable?
  • What will success look like?

Supply Chain Strategy

Goal: What supply chain strategy is necessary to support the business strategy?

  • What organizational structure and talent is required?
  • What does success look like?
  • How many supply chains are required and how are they designed for success?
  • How are demand, design, and supply networks aligned to maximize the value of relationships?
  • What should be global and what should be local?
  • How should demand, supply, and product processes be synchronized to create opportunity?
  • What supply chain competencies are core and what should be outsourced?
  • How is risk to be mitigated?
  • What does global mean to the organization?
  • How is the profitability of relationships increased?
  • What is the right level of complexity?
  • What is the right IT strategy for the supply chain?
  • What are the right supply chain metrics?
  • How does the organization measure up to its peer group?
  • What is the execution roadmap?

Business Process

Goal: How do I do the right things right in the execution of the strategy.

  • What are the supporting business processes?
  • What are the gaps in process and organizational roles and responsibilities?
  • What is the best organizational structure?
  • How is continuous improvement best enabled?
  • How should network relationships be defined?
  • How should opportunity sensing, complexity, and risk mitigation be balanced?
  • How is demand best measured?
  • What is the right balance of assets?
  • Are there untapped opportunities in working capital or cash-to-cash efficiency that can improve cash flow?
  • What reliability is required to support the supply chain strategy?
  • How should manufacturing quality, logistics, and IT systems be aligned to support reliability?
  • How should shared-services organizations be aligned?
  • How should processes be designed to be outside-in and adaptive to the business climate?
  • What can be learned from leaders?
  • What must be measured?

Once all these questions are answered, then, provided that the end result is:

  • feasible from a physical capacity perspective,
  • feasible under a price / volume analysis, and
  • feasible from a profit perspective using activity-based costing

The organization should now have a decent, starting, supply chain strategy. (I say starting because a first cut should always be revised using input from all affected stakeholders and the plan should be reviewed every year for continued relevance in light of market changes and new knowledge obtained by the organization.)

All-in-all, not a bad pair of articles.

Disaster Management Lessons from the Private Sector

I’ve been harping about Risk Management a lot lately, but that’s because I know that your supply chain will be disrupted (and in the case of Imperial Oil, as pointed out by David Rotor in his recent “Yet Another Supply Risk Post” on Procurement Investor [WayBackMachine], it already has). It’s a statistical certainty outranked only by death and taxes. The only things I don’t know is when, how bad, or how much it will cost you. Hopefully it won’t be the result of a natural disaster that shuts you down temporarily, but it could be, and that’s why I’ve talked about Disaster Recovery Planning in the past and taken efforts to make sure you understand that Your Supply Chain is NOT Secure in my efforts to drive home the importance of good planning.

Recently, the Supply Chain Management Review published a great article titled “Disaster Management: Private Lessons for the Public Sector” that reviewed best practices used by private industry to weather the storm and included a great Disaster Management Checklist that is worth repeating.

According to the article, successful organizations weather the storm by working closely with suppliers, customers, and even competitors. Moreover, effective supply chain management is critical to disaster planning and response. Organizations need to understand the resiliency of their suppliers, identify their downstream points of vulnerability, and collaborate across internal and external organizational barriers in order to protect assets and deploy supplies in the face of a disaster.

Furthermore, disaster-management supply chain processes can be segmented into three primary foci: (1) sourcing, (2) warehousing and asset protection, and (3) staging and distribution. You need to determine what items you need to stockpile and where they should be stored. You need to set up standing agreements for emergency services with a resilient base of contractors. And you need to identify alternate sources of supply and supply networks for flexibility, especially for items that cannot be stockpiled. You also have to prepare for power loss and the resultant cash economy.

You need to find the balance between stockpiling in anticipation of the surge in demand for critical supplies against the cost of maintaining inventory and storing it in a potentially vulnerable location. You also have to consider how you will protect assets in potentially exposed area, balancing the cost of added protection against the value of the goods. You have to figure out how you are going to get stockpiled supplies to an affected region quickly. You need to have processes in place for operating in an offsite location if necessary, often shifting your entire operation out of a potential disaster zone before the disaster hits. You need to be prepared.

The disaster management checklist provided is very handy. In short:

  • strengthen supplier relationships
  • collaborate with suppliers
  • diversify suppliers
  • plan for power loss
  • plan for a cash economy
  • build backup plans
  • find inventory equilibrium points
  • distribute resources
  • batten down the hatches
  • locate disaster-recovery staging areas

Veni, Vidi, Wiki

In case you missed it, the eSourcing Wiki [WayBackMachine] launched today. Sponsored and launched by Iasta (acquired by Selectica, merged with b-Pack, rebranded Determine, acquired by Corcentric), the goal of the site is to publish information of best practices on topics within supply management. The wiki is devoted to building a knowledge/resource center for both Iasta clients and global purchasing professionals.

In the words of the spend evangelist Jason Busch, Wikis like eSourcingWiki allow readers to actually contribute to a collective body of knowledge and research. Imagine, for example, if a whitepaper on sourcing decision support was not written by a single vendor or analyst firm, but a collective body of the best minds in the market. And think about how that whitepaper could become a living document that was continuously evolving based on reader input and criticism. That’s a Wiki. And that’s the framework that David has created which allows others to come in and modify and contribute content as they see fit (with a few restrictions, at least in some areas of the site).

Although only three mini-wikis are live now, the site is set to explode over the next few months. Not only have Wikis been drafted for each major stage of the strategic e-sourcing process (as the reader will see on the main Wiki Series page), but wiki drafts on a significant number of related topics are already under development. (Look for a wiki on Cost Reduction and Avoidance, inspired by the original weekend series (I, II, and III) on e-Sourcing Forum [WayBackMachine] last summer, next month.) Iasta’s goal is to pump them out as fast as the editor-in-chief can get to them (and once their User Conference is over in May, I’m sure a few more will hit the wire in rapid succession).

Finally, you can read the full launch announcements over on Spend Matters and eSourcing Forum.

100 Top Supply (Management) Tips

Yesterday, Procuri (acquired by Ariba, acquired by SAP) and Supply Excellence released the mini e-book “The 100 Greatest Supply Management Tips of All Time” on their new “Top Supply Tips” website.

As Tim says in his announcement post on Supply Excellence [WayBackMachine], the tips found in this book are not complex. They don’t require a huge budget, top executive support, or years to deploy. Instead, they are practical, easy-to-understand approaches – most of which you can implement today. Furthermore, they’re not new tips either … they are all examples of simple best practices that the major supply chain blogs have been promoting for the last couple of years. However, this is one of the few collections you will find with such a broad set of recommendations, and one of the largest collections of simple best practices I’ve seen. Therefore, it’s worth a download and a read. Some of the recommendations are so simple, you probably dismissed them as “too simple” the first time your heard them and forgot about them, even though they could be valuable to you.

Some of my favorites, which might just be because they have a cool title, are:

  • #14 Hang out with losers
    Take the time to debrief suppliers that fail to win your business. The best suppliers will use your advice to develop new capabilities and bidding tactics to meet your future needs.
  • # 24 Fire Your Best People
    Remove your best team members from their day jobs and put them in charge of your most important supply management improvement initiatives. This ensures program success and helps retain talent.
  • # 45 Make it Personal
    Ensure senior executives understand supply management’s contribution to your company’s profits, performance, and competitive edge by illustrating how supply management affects their personal lives.
  • # 67 Don’t be afraid of commitment
    Assess future pricing and supply market implications to determine when to engage in long-term supplier or hedging agreements. This will assure supply and lock in preferred pricing, which is particularly wise in the face of rising metals, plastics, and energy prices.

For more best practices, check out random posts in the Best Practices category.