Category Archives: Global Trade

A Sourcing Advisory Checklist

Sometimes a sourcing advisory firm can save you untold millions, and sometimes, as in the recent cock-up exposed by Jason Busch over on Spend Matters, the engagement will lead to a total disaster. So how do you make sure you’re the superstar who brokered the agreement that saved your firms millions of dollars and not the fall-guy who takes the blame for a multi-million dollar cock-up? You manage the process from end-to-end, and you start by making sure you have the right firm as an advisory partner. What should you look for when searching for the partner who will help you succeed when others have failed? Although the specifics will depend upon your needs and the sourcing projects in hand, the following checklist, first put forth by Phillip Fersht, blogmaster of Horses for Sources, in this Global Services article is a great start!

  • Internal Knowledge Management
    The firm should be taking advantage of the latest technology to share their intellectual property internally in a manner that will allow any of their employees to take advantage of the knowledge available to benefit their customer. You should be getting more than just the experience of the reps on your account — you should be getting the experience of the entire firm.
  • Depth of Experience
    Harvard MBAs look good on paper, but you want a significant amount of deep operational work conducted at real customers in industry, not theoretical research projects conducted in the safe confines of the ivory tower. In addition, make sure at least one of the reps on your project has deep experience in the categories you will be sourcing.
  • Mix of Experience
    A breadth of experience is important, especially when market conditions change and new sourcing strategies need to be derived. In addition, make sure the firm has employees who have crossed the breadth of operational roles, including sales and customer service.
  • Ability to ‘Advise’
    The ability to ‘consult’ is good, but you need specific advice that is going to allow you to succeed beyond what you could do in-house or with the lowest-bid consulting firm.
  • True Independence Where YOUR Outcome is Concerned
    They must be focused on YOUR best interests, and not theirs’. Make sure their interests don’t lie in relationships that force them to use, or compensate them to use, particular tools, processes, or staffing agencies. Just because something works for the majority of their current clients, it does not mean it will work for you. It might, and if it does, that’s great, but if it doesn’t, they should have the freedom to put together the best solution for YOU.
  • A deep focus on IP, Benchmarking, and Research
    No one knows everything … and, more importantly, if they don’t benchmark, they won’t know how good they should be able to do.
  • Operational Business Focus and Advisory Experience Beyond Simple Negotiation
    The best advisor can offer services that guide you through the sourcing lifecycle and beyond. In addition, sometimes just having an independent party available can help you build consensus and support in complex and sensitive situations.
  • A Sensible, Proven, and Flexible Methodology
    If their method of negotiation methodology selection starts with “eenie, meeniee, minie, moe … “, simply put, you’ve chosen the wrong advisor.
  • Respected in the Market
    You want an advisor that oursourcers and suppliers respect … because if they don’t bid, you don’t save.
  • Multiple Customer References You Can Talk Too Directly
    The ultimate proof of their capability will be in their success with their other clients.

Out in Front: Jon Miller, Strategic Sourceror

As per my last post, Bob Ferrari was first out of the gate with his initial contribution to the Seven Grand Challenges to Spend and Supply Management. Hot on his tail-pipe were Jon Miller of Gemba Panta Rei with his Seven Grand Challenges and the Strategic Sourceror of the Strategic Sourceror with his introductory post on the topic.

The Strategic Sourceror, who’s keeping his final list a secret for now, started off his post by noting that the shift has already left the harbor is the perfect metaphor for the globalization of a peak functioning supply chain. International supplier integration has gone from innovation to a competitive necessity in what seems like the blink of an eye in a global marketplace where overseas shipment costs are rising by as much as 170% and some carriers are slowing speed by 20% to conserve fuel. But the effect of petro-economics is only one component of the international sourcing equation. Other challenges are rising fast and furious, and, as noted by Strategic Sourceror, these include:

  • Currency
    Certain currencies, like the US Dollar, have been up-and-down faster than a yo-yo in the hands of a master.
  • Quality
    How many more PR disasters and deaths have to happen before people wake up as to how important this issue is?
  • Redress
    All you have to do is leave the state and the laws that your supplier are subject to might be different than the laws you are subject to. This only magnifies as you leave the country – and continent.
  • Trade Barriers
    It’s not even as simple as the import and export documentary requirements anymore … you have burgeoning denied party lists to deal with now.
  • Political Instability
    Political instability exists in numerous Asian and Euro-zone countries – not just in the Middle East and Venezuela.

Given these challenges, I’m anxious to see what the Strategic Sourceror’s seven grand challenges shape up to be!

Jon Miller decided to jump right in with his seven grand challenges, which, and this should come as no surprise given Gemba Panta Rei’s focus, had a distinctively lean orientation, with a smattering of green. Getting right to the point, Jon’s seven challenges were:

  • Putting Safety First
    It’s not just about price.
  • Getting Serious About Zeppelins
    Are they the 200 mph method of travel and transport of the future?
  • Waiting For It
    Do we really need new laptops and cell phones in 2-3 days from the day we make the decision?
  • Eating Fruits in Season
    Eat local when you can.
  • Paying to Waste
    Overpacking is costly as well as wasteful. Why do we do it?
  • Spacing Out
    Do we really need warehouses in space?
  • Beaming It Over
    The internet changes anything.

 

It’s quite an interesting list, and I highly recommend that you check out Jon’s post for the details, and rationale, behind his decisions.

the doctor’s Seven Grand Challenges for Supply & Spend Management

Seven deadly sins
Seven ways to win
Seven holy paths to hell
And your trip begins

Seven downward slopes
Seven bloodied hopes
Seven are your burning fires
Seven your desires….
  Adrian Smith / Bruce Dickinson

In my last post, which announced the cross-blog series that this post is officially kicking off, I reviewed the seven grand challenges for IT over the next twenty-five years, as laid out by Gartner back in the spring. Although they ranged from the ridiculous to the sublime, and contained a fair amount of overlap when closely analyzed, it’s a worthwhile exercise to undertake every now and again, because in order to develop a useful solution, you need to identify what is needed and the path you should be on.

This inspired me to propose a set of “seven grand challenges” for supply and spend management, in the hopes that it would get you, dear reader, to think about what is important, what problems should be solved, and where we should go. Considering how important supply management is in these troubled times, I hope that all of my fellow bloggers chime in with their ideas on what’s good, what’s bad, and, what’s downright ugly in supply chain today — because the first step in solving a problem is properly identifying it.

So, without further ado, to kick off this cross-blog series, here are the doctor‘s proposals for the seven grand supply and spend management challenges:

  • Optimization
    There are a number of challenges here. The first challenge is getting people to use solutions that are already out there. There are currently a number of offerings that address strategic sourcing decision optimization, distribution network optimization, and freight optimization quite well, and that, when properly applied, can save the average company up to 12% above and beyond the best solution obtained with auctions. The second challenge is integrating the different problems (sourcing optimization, freight optimization, network optimization, etc.) into a common framework that allows the tradeoff effects of each decision to be adequately modeled and understood in the big picture. The third problem is addressing the emerging non-quantitative regulatory and compliance requirements such as RoHS, WEEE, and GHG emission limits in a consistent and value-oriented manner within the optimization model.
  • Supplier Enablement
    This is something we still don’t have a good handle on. Beyond “supplier enablement is the provision of technology based solutions that enable the supplier to be more productive and better serve the buyer”, there isn’t yet a general consensus of what this technology needs to be, as most companies have not yet embraced B2B 3.0. I’ve argued before that, today, it’s a combination of catalogs, networks, e-Document exchange and management, and supplier portal technology, and I still think that is a good start, but enablement should go beyond enabling the exchange of information, it should improve the supplier’s operations overall.
  • Integration of the Physical, Information, & Financial Chains
    For most companies, these are three different chains. Some companies that have embraced RFID, GPS, and e-document management have taken the first steps to integrating the physical and information flows, but the technology is still emerging, the integration isn’t smooth without extensive integration and customization between a number of different solutions (and only Fortune 500 companies can even afford to consider this), and we have only started to look at the financial supply chain and how to best integrate it with the information supply chain. I think it will be a while before solutions that truly support a holistic view will emerge, especially considering that even the gorillas in the space don’t have end-to-end sourcing and procurement.
  • Solution Globalization
    Let’s face it … supply chains today are truly global, but the solutions are not. Most “internationalized” solutions are only available in a smattering of languages, most “internationalized” solutions are not plugged into real-time currency exchange feeds — and few developers have thought about the need to maintain/display multiple conversions (including the rate at the time of purchase, the projected rate, the current rate, etc.), and most “internationalized” solutions don’t help you understand how to do business with the country of interest.
  • GHG Tracking and Reduction
    Most enlightened countries have woken up to the fact that, even though we don’t know precisely how damaging each ton of GHG and / or carbon we emit is, we do know that it’s damaging and that we have to reduce our emissions. The first step is to get a baseline of the emissions produced by your operations, but for many companies, this is a multi-year effort. Better product and service solutions are needed. Also, although there are multiple proposals on the table to reduce emissions, there are few total value management models out there to help us select the right ones.
  • Risk Prevention
    Not only is risk not going away, but it’s getting worse by the year. Supply chains are getting more complex by the year, and the likelihood of something going wrong is steadily increasing. Solutions that can help a company identify risks, in real time, and identify possible mitigations and actions required to implement them, are desperately needed.
  • Opportunity Analysis
    Costs are skyrocketing, but consumer discretionary spending is stagnant at best. They key to a successful supply chain is cost reduction and avoidance, and this requires continual opportunity analysis. I envision this starting with modern spend analysis, but it needs to go beyond true spend analysis to continual innovation, since the greatest cost reductions will come from true revolutions, and not just the shrewd identification of category-based overspending. I envision that this will start with the integration of PLM with Life Cycle Analysis and Next Generation Analytics and then morph into something that none of us can envision today.

Now, I realize that these are pretty much the same problems we have been facing for the last five to ten years, but I suspect that it will be quite a while before they are solved due to the overwhelming complexity of today’s supply chains.

When the series is done, I’ll compile the “master list” of challenges and, if any of my fellow bloggers can convince me there are bigger challenges out there, revise my list.

Are you an Import Genius?

I recently had the chance to check out Import Genius, which made the top ten list of the most innovative and exciting start-ups on KillerStartups.com, and I must say that it is impressive. Billed as a site that provides timely, detailed shipment data for every ocean container that enters the United States, it appears to live up to its promise. In addition, the search interface is fast and the export to CSV allows search results with up to 40,000 rows to be exported to a CSV, which can be downloaded in an automatically generated zip file for faster transmission.

With an ability to search by product, consignee, consignee address, shipper, shipper address, notify name, US port, foreign port, bill of lading, carrier code, and vessel name for any date range, it’s quite powerful for a new offering. Testing it out, I found that Apple Computer Inc. received 42 shipments between June 1, 2008 and August 18, 2008, 30 from Amtran Electronic Co. Ltd. and 12 from Quanta Computer Inc No. 68. The Amtran Electron Co. Ltd shipments were for “LCD Monitor For PC” and the Quanta Computer Inc No. 68 shipments, all on June 1, were for “GENERAL APPLE ACCOUNT PAYABLE BY”. Take a guess as to what those shipments were for. In addition, 37 were from Shanghai and 5 were from Tokyo, 24 went to Long Beach, and the remaining 18 went to LA. The average number of LCD monitors per shipment was 539 CTNS (containers) while the average number of mystery products per shipment was 501 CTN (cartons). The country of origin varied between the Bahamas, Greece, China, Liberia, Singapore, Japan, Liberia, and the Marshall Islands for the monitors while the mystery product was sole sourced from China. Eight different vessels were used: the Hanjin Praha, Concord Bridge, Xin Yan Tai, CSCL Seattle, Dong Hai Bridge, Clifton Bridge, CSCL Hong Kong, and the Long Beach Bridge. Additional information available for export includes the shipper address, consignee address, party to notify, party to notify address, bill of lading, arrival date, weight, container, and other marks and numbers. If I’d been watching carefully, as Import Genius was between mid-March, 2008 and mid-May, 2008, I’d have noticed that Apple Computer Inc. and its logistics partners imported 188 ocean containers of a product type never before declared on its shipping manifests.

As partially highlighted in this Washington Post article, which calls Import Genius The Disruptive Shipping Database, there are numerous uses for Import Genius’ service, which include:

  • Penetrating your competition’s business strategy
    Analyze your competitor’s import activity, identify their suppliers, and discover new endeavors before it hits the news.
  • Keeping your suppliers honest
    Watch the inbound shipments of your suppliers, identify threats and opportunities, and catch cheating factories who are counterfeiting your goods or stealing your IP in the act!
  • Identify new competitors before they emerge
    Find out who else your suppliers are supplying to – if they are supplying similar products to companies you don’t know, there may be new competitors on the horizon.
  • Identify new suppliers
    Find out who your competitors are using before their new products hit the stores!
  • Find out your leverage with your suppliers
    You can figure out what percentage of US business you represent by tracking all shipments against what percentage of shipments are yours.
  • Find new customers.
    Find out who your competitors are shipping to.
  • Identify new customs brokers, importers of records, and similar third party services.
    All of this information is available in the import records.
  • Make your patent infringement suit bullet-proof.
    Upon discovering a patent violation, use Import Genius to trace the goods back to their source overseas.
  • Perform due diligence on privately held companies in emerging markets
    By examining detailed records of a company’s US exports, you can reduce the risk for investors in markets where available data is scarce.
  • Stock Market Predictions
    A detailed snapshot of a company’s imports can serve as a leading indicator for new product releases, revenues, and key performance indicators.

So check out the company that, according to Freakonomics blogger Justin Wolfers, offers Amazing New Trade Data that may enable bright economists to fine tune our understanding of the dynamics of international trade. It’s certainly worth a few minutes of your time, especially when enterprise access (which permits up to 300 searches per day across the entire trade database) is less than $5,000 per year!

Simplifying Global Trade Management Systems

Recently, Industry Week ran a piece by Melissa Irmen of Integration Point (acquired by Thomson Reuters), a company I covered not too long ago in this post, that offered 10 suggestions on how to make the implementation of a new Global Trade Management (GTM) system as painless as possible. Since some of the suggestions were quite good, I’m going to summarize them for you in this post.

  • Consider SaaS
    As discussed in my e-Sourcing Wiki Paper [WayBackMachine], SaaS has a slew of advantages that traditional behind-the-firewall systems do not. Plus, in addition to being a low-cost way of getting started, it’s an operating expense.
  • Buy Only What You Need
    Find an extensible system that can be upgraded later as your needs mature. (Another reason to look at SaaS.)
  • Check References
    Ask current users of the provider about usability and weaknesses. Also, I’d include references the GTM provider doesn’t provide if you know about them!
  • Inform Your Supply Chain Partners
    Not only can they help you acquire the right data for the system, but they might be able to collaborate with you through the system.
  • Get Buy-In From Upper Management
    GTM crosses organizational boundaries. Without a mandate from upper management, it might be hard to get other teams to buy in to the system.
  • Ensure Access to Transactional Information
    Make sure all affected parties can access the information they need when they need it.
  • Insure the Solution Contains E-Document Management
    This saves time, effort, and money and insures documents are not “lost” when they are needed.
  • Evaluate Adaptability
    New GTM systems will generate a number of “false positive” alerts on the black-and-white rules of global trade embedded in the system — but some of these will not apply to your company’s particular situation. Make sure that the system can not only accept authorized overrides but that the rules can be updated to handle these situations by a system administrator.
  • Determine How You Will Stay Up To Date
    If you go SaaS, the vendor will take care of updating not only the system, but the critical data that includes free trade agreement amendments, denied party list updates, etc. But if you go installed, you will either have to update this data yourself or subscribe to a service that does it for you.
  • Check for Governmental Connectivity
    If the relevant government body can accept electronic documents, the system should support it.