Category Archives: Guest Author

45 Million People Are Blind today!! Cheesecake Factory Might Be the Answer? (Part 2 of 2)


Today’s guest post is from Dalip Raheja, past contributor to Sourcing Innovation and CEO of The Mpower Group, Inc.

Would You Go to McDonald’s for Surgery? What if I Added the Happy Meal Toys?

Atul Gawande just wrote a piece in The New Yorker in which he applies The Cheesecake Factory (TCF – restaurant chain) model to the healthcare system. He cites soaring costs, mediocre service, unreliable quality and significant variability in outcomes/results as the dominant attributes of the current medical system in the USA. Sounds like the typical Supply Chain/Sourcing issues that almost all of us are trying to deal with on a daily basis.

Why did Atul choose The Cheesecake Factory as a model? Because they are a chain with 160 restaurants with 308 dinner items and 124 beverage choices serving more than 80 million people a year. And they manage to do it with very high quality, every entre cooked fresh, reasonable prices, etc. etc. Oh by the way, they put out a new menu every 6 months! I will let you read why TCF is highly successful but mostly it’s all the stuff that you and I are so used to dealing with in our professional lives. Size gives them buying leverage, centralized common functions, demand forecasting integrated with inventory management, etc. etc. They aim for no more than 2.5% waste in an industry where the shelf life is very short. (Editor’s note — this is only 6.25% of the average food waste in America! See yesterday’s post … )

In addition, there are some things about TCF that are quite intriguing. They’ve laid out their kitchen like a manufacturing production line. They have a very good POS system integrated with their kitchen to track “manufacturing” and “delivery” times. They make sure that their staff is well trained and provided with all the tools necessary. They have a well-defined oversight process that provides positive and negative feedback at the end of the manufacturing line.

An immediate challenge is that doctors have been historically paid for effort, and not results. While Hammurabi dictated that a surgeon’s hand be cut off if the patient died, we have apparently moved away from that as I don’t see too many one handed surgeons out there. Healthcare reform is now starting to link compensation to outcomes. Standardization has long been looked at very suspiciously by the medical community.

Gawande discusses an attempt at standardizing knee replacement and how it impacted his mother’s surgery — reducing recovery time in the hospital by more than half and reducing rehabilitation time by 3/4ths! And did I mention all at lower costs and better outcomes? The doctor has gathered best practices and then standardized them — an unheard of phenomenon. All the way from anesthesia to rehabilitation, including cutting down on the number of options for prostheses surgeons could order. It is a fascinating must read for ALL supply chain/sourcing people as it reads like a classical case study.

The challenges that Gawande lays out for the medical community are very significant. The first and biggest challenge is the incredible amount of time it takes for this profession to adopt (AEIOU) new ideas — decades for new protocols and guidelines to be adopted. This should come as no surprise to readers of the doctor‘s blog and our numerous discussions on this topic. Competency Development in the medical community is still not focused appropriately — “In medicine, we hardly ever think about how to implement what we’ve learned“. An example he cites is Dr. Armin Ernst who is essentially the Chief Adoption Officer. Ernst does not deal with patients — but works with the doctors at their 10 ICUs in ensuring that best practices are being adopted. He provides the same kind of oversight that was found at TCF. Do you have a Chief Adoption Officer?

The transformation in the health care sector is underway and it will borrow heavily from our profession. Supply Chain/Sourcing can and will contribute significantly. As Dr. Gawande points out, “We’ve let healthcare systems provide us with the equivalent of greasy spoon fare at four-star prices, and the results have been ruinous. The Cheesecake Factory model represents our best prospect for change“.

Thanks, Dalip.

Relative to Procurement Tools TCO

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Rant on buddy till the day is through
Rant on brother, sister too
Rant on momma like I asked you to do
And rant on fellow blogger, rant on (Rant On!) 


Today’s guest post is from Ron Southard, the founder and CEO of SafeSourcing Inc, a provider of SaaS e-Procurement solutions.

The single most significant obstacle to improvement, whether personal or professionally, is indecision, so my rant this month is relative to companies that suffer paralysis through excessive analysis when it comes to making a decision about using e-procurement tools. Too many times companies spend excessive amounts of time trying to understand or figure out procurement tools and their TCO, ROI, and CBA etc. instead of just making a decision to try something.

It really is that simple to just DO something! Make a decision already!

It is just so easy to get started with these tools today, that the above will become obvious almost immediately.

There are way too many buzz words and acronyms being thrown around when trying to decide on an e-procurement platform. As such, companies waste way to much time and money trying to understand the complexity of these tools rather than the simplicity they create in helping you and your team in executing your job.

Way too many retail companies spend way too much time meeting, talking, planning, evaluating, designing, trying to implement and then complaining about their procurement solutions. They also spend way to little time DOING. Many of these companies do not have the procurement tools, personnel or the collective capacity driven by both in place in order to compete with the big category killers in any industry (you already know who they are). So here’s a unique chance to DO SOMETHING, ANYTHING. Because the more you talk, plan and evaluate the more behind you will get. And here’s another unique thought, KNOWING is not DOING! Just make a decision.

Just because you have heard about all of the tools available to you today in the form of SAAS, IAAS, PAAS or AAAS (also none as XAAS) all delivered via the CLOUD, does not mean you know how to use them or the strategies required to make them a recurring part of your sourcing strategy and tactics. That is why they all end in the letter (S) which stands for service. And you better believe that service is defined differently by almost every solutions provider in the e-procurement space. The tools are at least 80% the same across the board, and will all drive results. The best results however will come from the companies with the best services attached to those tools. Tools that make customers say, “No one else will do the things you do for us”. The good news is that the CLOUD and all of the AAS’s mentioned above simply means that you can begin as soon as tomorrow. And, there is very little risk. So why do all of the analysis? Just make a DECISION to do something.

It’s really not that hard. Here’s what you need to do. Find a cloud based e-procurement solutions provider with all of the AAS procurement solutions and ask for three references (CEO or CFO). If the references come back as excellent, give the provider a category or two to source for you ASAP. They will probably agree to not charge you if you don’t save at least the cost of the event (cost neutral). The chances are you will see significant results in less than two or three weeks and the payback (see title) will astound you. If it doesn’t, you can turn them off (a benefit of the cloud) and begin with another immediately (another benefit). Perhaps you could even have a bake off with two or more solution providers. It’s just that easy.

If you don’t use e-procurement tools today, you are way behind the curve. The early adopters have done moved on to more sophisticated offerings. This is now a regular part of how they run their business. The good news is you can catch up quickly (another benefit of the cloud and XAAS). Don’t let the clouds and financial acronyms and all the AAS’s get in the way of a decision. Just make a decision.

See. It’s really pretty easy.

Thanks, Ron.

The Lost Art of Account Management


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Rant on buddy till the day is through
Rant on brother, sister too
Rant on momma like I asked you to do
And rant on fellow blogger, rant on (Rant On!)


Today’s guest post is from Dan Kane, a Project Analyst at Source One Management Services, LLC.

In today’s information age, businesses are gaining unparalleled access to data from their suppliers. However, this new focus on a customer’s ability to access account information on their own has had an unexpectedly negative effect on the quality of supplier account management, and the ability for customers to get assistance from their account management team. This issue is especially prevalent in the technology, and financial industries, where complex issues can require multiple points of contact, and significant end-user involvement before they can be resolved. In part, this can be attributed to increasingly complex products; however a large part of the blame rests with the organizations themselves, and a new-found reliance on automation, and customer self-service. While it is understandable that not every supplier representative is versed in every aspect of these specific solutions, it is imperative to the management of a customer relationship that businesses are provided a single point of contact with whom issues can be addressed.

Problem resolution can often take the form of education, by making sure that customers have the knowledge required to access information on their own, and understand the products and processes involved with their partners. This method has yet to be widely adopted, and account managers tend to refer questions to complicated service guides, or online portals, without the instructions on how to interpret these complex, customer-facing tools.

Some functional separation is fine, and many suppliers are attempting to provide account representatives who can completely manage services provided to national organizations, however it is important to note that a single “contact” should not be SINGLE PERSON on whom organizations are completely reliant on, Situations out of the individual’s control, such as sickness, can arise and leave an organization with no recourse to solving their problem.

Few things are more frustrating to businesses than calling for support, spending 10 minutes on hold waiting to get connected, finally reaching an operator who refers them to a single person for help, and happens to be out of the office.

The necessity of accessible information should not be a reason to diminish the functionality of account managers. Even if the information that a customer wants is available to them, the purpose of management is to identify solutions to problems, and assist customers with the tools that they may or may not know are at their disposal. It is counter-productive to decrease the level of live, human support in exchange for automation, and the self-serve environment that many organizations are migrating to.

What ever happened to the delicate, human touch, and a little thing called customer service?

Thanks, Dan!

45 Million People Are Blind today!! Cheesecake Factory Might Be the Answer? (Part 1 of 2)


Today’s guest post is from Dalip Raheja, past contributor to Sourcing Innovation and CEO of The Mpower Group, Inc.

45 Million People Are Blind today … and 80% of them could be cured through surgery (36 million if you’re looking for your calculator). Oh, of course, most of these people cannot afford the surgery, don’t know about it, cannot physically be where eye care is available, and so on and so on. The answer? Reverse Innovation (RI) — a term coined by Jeffrey Immelt and Vijay Govindarajan. The basic premise of RI is that all innovation cannot flow from the developed to the developing world. There is a lot of innovation going on in the developing world that can and should be adopted here. According to Govindarajan, one can and should argue that the paradigm in the developed world is “spend more to come up with innovation,” while in the developing world the exact opposite is true, “spend less to come up with innovation.”

Let’s look at some comparative facts first:

India US
Aravind surgeries 2,000 a year 125 a year
Average Cost $30 $1,000
Complications 1 / 2 Double

So, what’s the secret? It must be that they are performing a procedure that is not even accepted in the developed world. Not true. What they perform is called Phacoemulsification (considered the gold standard in cataract surgery).

What they have done is reimagined (not just reengineered) the entire conceptual framework with a different set of assumptions and come up with some innovations that are staggering. They have created an assembly line mentality that allows surgeons to focus on what they do best — perform the actual surgery. Not the prep, not the paperwork, not anything else but that which leverages their specialized skill set the most … allowing a surgeon to do 30 to 40 surgeries a day!! There is no time wasted between surgeries — the next patient is prepped, draped, and ready to go. With no degradation of quality! Oh by the way, Aravind performs about 300,000 of these procedures a year … WITH HALF OF THEM FREE!

Because they are offering the latest procedures with exceptional quality, half of their patients pay them full going market rates which then subsidizes the charity cases, which is what they are really about. They have used the combined volume leverage and scale to start making their own intraocular lenses and providing some lenses for $2, and they are now exporting these lenses to 120 other countries (Canada, Denmark, and Israel amongst them).

If all of this sounds like a classical supply chain/sourcing problem being solved — that’s because it is. They have applied a number of ideas from the business world to the non-profit world. So much so that they have also reimagined the traditional model of a charity organization always looking for a handout — they’ve planned half of their effort to be a commercial venture generating profits to pay for charity.

This is but one example amongst many:

  • GE’s portable EKG machine — developed in China
  • Boston’s PACT program — modeled after a program in Haiti
  • Kangaroo care — developed in Colombia
  • Pedialyte — developed in Bangladesh

And one of the biggest stories is Dr. Therdchai Jivacate (Thailand) who is providing artificial legs made out of plastic yogurt bottles for about $100 with a delivery time of 1-3 days compared to $10,000 and 7-10 days! Dude — don’t throw away that water bottle! And to lower the cost of labor involved in actually working with patients, he has trained local recipients of the artificial legs. He just broke the Guinness Book of World Records by serving 864 amputees in 13 days.

So before you pooh pooh those ideas from your colleagues from the developing world, you may want to keep an open mind and process them. You may want to actively seek innovations from your suppliers in the developing world. Remember — their context is different and context is very powerful and they are able to reimagine problems that we cannot because we cannot shake out of our context.

In the next post, we will continue this conversation about innovation and examine Atul Gawande’s suggestion of using the Cheesecake Factory (a place I’ve never been to) model to reimagine the healthcare system.

Why does everyone look to disqualify when they should be looking to qualify?


Rant on blogger, rant on along
Rant on buddy till the day is through
Rant on brother, sister too
Rant on momma like I asked you to do
And rant on fellow blogger, rant on (Rant On!)
 Disqualified!

Today’s guest post is from William R. Dorn Jr (Bill Dorn), the Vice President of Operations at Source One Management Services, LLC.

In the last year, I’ve been pretty active talking about one of my favourite topics, “What Not To Do” when conducting a strategic sourcing event. I’ve blogged about it on multiple sites, spoken about it on several guest podcasts, have a chapter in our book about it, and Joe Payne and I even lightly discussed the topic on a morning television news show in Arizona (which I doubt more than five people tuned in for). So when the good doctor told me he was inviting guest rants this month, I knew what I was going to scribble about. But then, I started to think about it a bit more. I think I’ve said enough on the topic, and I think there is an even more basic premise that deserves attention. That premise is: Why do people in business look to disqualify something when then should be looking to qualify it?

I’m sure we’ve all heard the following lines come out of our colleague’s mouths before: “We did that before it didn’t work“, “It’s always worked until now; why would we change it“, “Our staff doesn’t adapt well to change“, “Let’s just push this through for now and look at the alternatives another time“, “it wouldn’t work here“, “we’re not ready for that“, “it’s not really practical here“, “we don’t have the time“, “it costs too much“, “it’s not in this year’s budget“, “we’re too busy“, or the one I hate most “our company (or our requirements) is different“.

As consultants, there really is not a day that goes by that we don’t here at least one of these classic lines from one of our clients. As procurement or supply chain professionals, you probably have all heard one of those dreaded deal breakers right when you thought you had a really creative solution, technology, or vendor that could have helped your business.

But, did you realize that a large portion of you are doing exactly the same thing during your sourcing process? You probably aren’t aware you are doing it, as it’s not as direct as the examples above. And in many cases, it’s really not your fault; you’re just following a procedure, policy or e-sourcing software template that was written in stone before your time. What I’m talking about is a sourcing process that looks to disqualify instead of qualify.

Let’s really look at your sourcing process, whether it’s the Supplier Discovery, RFI/RFQ/RFX/Reverse Auction, or whatever you call it. Does it have questions that really serve any purpose other than to disqualify? Why are those questions included? Chances are, they are simply there to help take a long list of potential suppliers down to a really short list, in order to make the review, selection and award process easier and quicker. Well, we all know that easier and quicker is not always better, but this often gets ignored when it comes to doing work. Here are just some examples of what I’m referring to:

  • Is your company ISO certified? Questions like these (the hard YES/NO), especially used in conjunction with automated rating and scorecarding tools in e-sourcing systems are a huge pet peeve of mine. First off, is the ISO certification even relevant to what’s being sourced? In most cases, it’s not. Secondly, it leaves no margin for answer. What if you are going through the process but will not be certified until next month? What if you are not ISO certified, but are certified by a similar industry specific association, like QS? “Well, we didn’t ask that. You’re disqualified.”
  • We recently responded to a large RFP that had a short deadline. One of the requirements of the RFP was that the response was received electronically and in hard copy, no later than 2:00 PM on a certain date. The company we responded to acknowledged receipt of the submission, but FedEx was actually late in delivery of the hard copy, 2:37 PM to be precise. The prospect promptly rejected the delivery and entirely disqualified us from the bid, even though they already held the electronic copy. They never even opened the bid. We’re not the only ones either; I talked to others who responded that had the same thing happen, all because of a storm that delayed FedEx by a few minutes. In this case, a ridiculous policy had a company throwing away potentially the best possible suppliers without even reviewing their submissions. In other words, “Oh, you’re human and a small mistake happened? You’re disqualified.”
  • We frequently see RFPs that have a “deadline” for submitting questions. Many of those companies refuse to answer any new question you may have after that deadline date. What does that lead to? Well, it forces suppliers to guess at what they THINK you may need, often missing the mark and often submitting a proposal that doesn’t really address the buyer’s needs appropriately. It’s not that they couldn’t support your need; they just simply misinterpreted your requirements and did not have a fair opportunity to present a proper solution. “You couldn’t read our minds, You’re disqualified.”
  • Do you have on office within 25 miles of our location? Well, no, we don’t but the work is being done remotely, so that should not have any impact on our level of service or price … “Too bad, You’re disqualified.”
  • Here’s a 43 page RFP where every answer is a long-form answer and half of the questions don’t apply to this initiative. You have until Friday at 5 to answer it. “That’s not enough time? You’re disqualified.”
  • You must agree upfront that you will use my procure-to-pay punch-out catalog ordering system. Oh, and the software company that runs it gets a piece of every single transaction. But I still want the best possible price. You want more information or are concerned about digging into your margins? “I don’t understand why you could give me a better price if you didn’t have to pay an intermediary too. You’re disqualified.”
  • We’ve got this great opportunity to ask questions for you. We call it a bidder’s conference. You’ll sit around a table with your competitors and must introduce yourself so that everyone knows who they are competing with. “What do you mean you are uncomfortable doing that? That’s what I want. You’re disqualified.” (This is providing that they don’t drop out themselves as most suppliers do after they have to sit through a circus like a bidder’s conference).
  • “Do you have substantial experience supplying the nano-microorganism plating industry? Provide me with 5 references. You sell office supplies? I don’t see how that is relevant to the question. Do you supply other nano-microorganism plating companies or not? No? You’re disqualified.”

I could go on and on with dozens of examples of poorly written questions or poor methodologies that serve absolutely no purpose other than to disqualify, but I’m already over the doctor’s budgeted word count (I hope he doesn’t disqualify my post for it).*

Now, I’m not saying that some questions and some responses shouldn’t be grounds for immediate dismissal, and I understand that you have to find an appropriate balance of how many suppliers you can review for a spend category, but sourcing and procurement folks really should take a hard look at their processes and really look at themselves to see if they are just as guilty as the naysayers throwing around clichéd business brush-offs like the ones I wrote about above. Are you really offering a warm invitation to suppliers to help improve your business, or are you just schlepping through a dreaded process just to tell your bosses that you “went to market”?

Thanks, Bill! You’re really helping me with my point that many RFX processes are not implemented correctly, especially in technology acquisition at large companies!

*To be precise, Bill is over my suggested word count, which I’m happy to ignore as long as the rant is raving and engaging!