Category Archives: Knowledge Management

Is Your Supply Management Organization Ready for Gen-Y?

Hopefully, now that you understand that Supply Management is the solution to the woes of the company as well as the country, your organization is ramping up, hiring, and looking for new talent. At approximately 70 Million strong, Gen-Y, also known as the Millennials, will soon become the largest generation in the workforce. As a result, they will soon represent the largest talent pool available to your organization. But is your organization ready?

The Millennials are not like the Baby Boomers, who looked for long term job stability and growth. Whereas your average baby boomer might take a job with the intention of staying with the same company for her entire career, a recent survey conducted by the Australian Experimental Learning Centre found that 64% of Gen-Y employees intend to stay less than two years with their employer. Current estimates are that most members of Gen-Y will have 20 to 25 jobs in their lifetime.

This poses three major challenges for your organization:

  • Recruitment
    Gen-Ys are always looking for the next great opportunity. Why is your opportunity the next great opportunity?
  • Training
    Given the average lifespan of a Millennial in your organization, you will need to get Millennials up to speed quickly and efficiently in order to maximize the value you get from them before they move on.
  • Knowledge Capture
    You will need a great Knowledge Management Program that captures, indexes, and makes available all the knowledge they bring to, and create for, the organization. Otherwise, each new Millennial will have to start the cycle anew.

Is your organization ready?

Is Your Supply Management Organization Being Held Back?

A recent article over on the CPO Agenda on “Fresh Thinking”, which noted that Procurement must be bolder in bringing about wholesale change that delivers effective results for the business, highlighted a number of areas that could be ripe for change. These areas need to be looked at carefully because their current state could actually be holding the Supply Management organization back. In order to advance, Supply Management cannot accept the status quo when the status quo is an outdated, ineffective, and or costly way of running the business.

The following five areas are ripe starting grounds for a Supply Management organization that wants to take its operations to the next level.

  • Organizational Rules
    Are organizational rules limiting opportunities for efficiency and effectiveness? There are a number of ways organizational rules could be impacting the Supply Management organization, including, but not limited to:

    • Diversity/Buy American Mandates
      While it’s often a good idea to diversify spend and buy at least some products or services at home (to address offshoring risks), excessive diversity or buy american mandates can severely limit options and have a dramatic impact on efficiency and effectiveness.
    • Payment Terms
      If finance is imposing egregious payment times on suppliers (of 90 days or more), this will limit the supply base that is available to the organization as some suppliers won’t stand for such BS.
    • Approval Chains
      If Procurement has to get a sign-off from each affected organization before every buy, and executives for buys over a certain dollar limit, they will be spending more time trying to get signatures than doing their job. Sign-offs should only be required for critical buys or very high dollar buys, not for office supplies or temp services.
  • Specifications
    The specifications could be outdated, non-standardized, or overly specific and all of these can add cost and drain efficiency.

    • Overly Specific
      If the specifications call for specific components from specific suppliers that are essentially commodities, they are overly specific and limiting competitiveness.
    • Non-Standardized
      If each department has their own specification for a workstation with a different configuration, this can limit leverage — especially since it’s very easy to standardize on an office workstation configuration for business people and one for technical people.
    • Outdated
      If the specs are calling for components that are now only being manufactured by a 10th of the total supply base or using materials that are no longer in common use, then the specs are outdated and should be refreshed.
  • Marketplace
    The marketplace could be holding Procurement back by holding on to outdated products or insisting on a wide-diversity of products when only a few should be required. For example, customers may love the old, regular un-concentrated laundry detergent which costs more to package and transport and is less environmentally friendly than the new concentrated formula or may be split between six scented varieties of your dish detergent. In the first scenario, Procurement will need to work with Marketing to push the new, environmentally-friendly, product while phasing out the old product and in the second, Procurement may have to work with engineering to find a way to mass produce the base detergent and mix the scent in later to avoid six low-volume, high-cost production runs.
  • Perception
    If the rest of the organization thinks of Procurement as the back-room, paper-pushing organization where careers go just before they are put out to pasture, it is going to be challenging for Procurement to gain respect, exert influence, and get a majority of spend under management. Procurement will have to work on its image first, get some quick successes, and leave major organizational change to later.
  • The Ideal Solution
    If the concept for the “ideal solution” is outdated, then Procurement’s efforts will be outdated. Before effecting significant change, Procurement has to know what the optimal state is and why.

Some Great Ideas to Revitalize the Innovation Engine, Part II

In yesterday’s post, we discussed some of the suggestions from Henry Nothhaft’s recent book, Great Again, on “How to Revitalize our Innovation Engine”. These suggestions included the liberation of entrepreneurs and start-ups from start-up killing taxes and regulations, the restoration of the VC engine to an earlier design where it worked well, and ending the indifference to domestic manufacturing. These are all great suggestions, but probably the most important suggestion Henry makes is to:

  • Fix the Busted Patent System
    It’s an IP economy and (legitimate) patents are critical for a successful innovation economy, especially since investors (and VCs) want to see IP and protection for that IP before (continued) investing. However, the patent office has a backlog of 1.2B that is growing daily, primarily because, what should be one of the few self-funding agencies is being treated as a petty-cash drawer by the politicians, who have cut 150M in funding this year alone. The patent office needs to be fully funded, needs field offices where patents are filed, needs to modernize, and needs to be able to price with the market (including fast-tracking pricing options).

About the only thing I’d add to Henry’s suggestion list is to:

  • Abolish sotware and business process patents
    The EU has it right. Software should not be patentable and business processes have existed since the day after the invention of money. All these types of patents do is clog up the patent system, enable the patent pirates, and stifle innovation as funds that should be spent on innovation get spent on overpriced lawyers instead.

So what does this mean to your Supply Management operation?

It means that if you want to enable long-term success, you should:

  • help your company establish an innovation fund
    to fund innovative new start-ups that are working on technologies that could revolutionize your manufacturing or supply chain
  • source (some product) domestically
    as not only will this help insure supply if the overseas option(s) suddenly become(s) unavailable (due to political unrest, a shipping disruption, etc.), but it will give you ready access to another source of innovation that will complement your own and support the local economy (which needs to be strong to increase local sales)
  • NOT buy from companies that support patent piracy
    if a company is flooding the patent office with software and process patents, don’t buy from them. Period. They’re the reason we have patent pirates, and if they all go out of business, or change their ways to stay in business, things might get better.

Another Headline from the Land of D’oh: Knowledge Management New Source of Competitive Advantage

A recent SCMR blog post reviewed The New Edge in Knowledge by Carla O’Dell and Cindy Hubert of AQPC that describes the Knowledge Management (KM) concept and provides some real-world examples of leading companies that have mastered KM. The post, like the authors of the book, states that the right knowledge enables the right decisions that improves organizational performance. Well, duh!

Knowledge has been improving performance for thousand of years in all sorts of organizations — corporate, religious, government, and military. As Sun Tzu wrote, so it is said that if you know your enemies and know yourself, you can win a hundred battles without a single loss. Churchill said that battles are won by slaughter and maneuver. The greater the general, the more he contributes in maneuver, the less he demands in slaughter. And Hannibal said I will either find a way, or make one. Thousands of years, and thousands of miles, apart, and all of these great military leaders understood the importance of knowledge, and managing that knowledge, to achieve success.

Knowledge is arguably one of the two greatest sources of competitive advantage (with the other being innovation). But this is nothing new. So don’t get lost in the hype.

For A Believable Vision Of Procurement 2020, Head Back To 2008

Long Before Ariba published their 20/30 Vision of the Future of Supply Management and Aberdeen took us back to 1999 with their vision of the next decade of Supply Management, the leading Supply Management minds at Hackett sat down and came up with their vision of Procurement in 2020 which was a heck of a lot better than most of the stuff I’ve seen this year (with a notable exception being Bob’s Next Level Supply Management).

In Hackett’s 2020 Vision For Procurement: A Revolution Through Evolution of Capabilities and Value (which was released as their Procurement Executive Insight on April 15, 2008 and followed by their 2020 Vision: Delivering on the Evolving Value Proposition of Procurement which was detailed in their 2008 Book of Numbers), Hackett identified the emerging trends that will define tomorrow’s world-class performance and help an organization move up the capability path. Realizing that transformation in most organizations is evolutionary, and not revolutionary, Hackett’s leading minds lay out an evolutionary path that takes organizational capability from reactive to strategic in a four-step process that passes through planning and alignment along the way.

The authors note that while an average Supply Management organization starts out with the goal of assuring supply, this is a very reactive strategy. Supply Management has to get to the point where it is harnessing the power of supply markets to maximize the value it is getting from its spend, to enable business strategy, and to optimize its tactical execution. Along the way, Supply Management will progress through TCO and demand management. As it progresses to harnessing the power of supply management, the organization will continually expand its circle of influence, dig deeper into its customers needs, and provide better service as time goes on.

In addition, it will also need to acquire the following strategic capabilities:

Business Process Sourcing
Supply Management will need to become the starting point of BPS activities and skillfully integrate disparate methodologies surrounding core competency analysis, resource management, service delivery models, business process management, and portfolio management into its overall supply management practice so that it is the first business unit consulted, and not the last, in any conversation surrounding business process (out)sourcing.

Supply Performance Management
Supply Management will go beyond simply managing the inbound supply chain to shaping strategies, goals, and objectives for the business as a whole based on its knowledge of global supply markets for materials, talent and technologies. It will need to seamlessly integrate supply planning with financial planning and operational planning so that each decision is best for the business overall.

Knowledge Management
It will need to master content-driven analytics which integrate external data into internal data models for supply prediction, planning, and risk mitigation that will allow it to build robust and agile (virtual) supply models that can be redesigned as needed in response to significant events.

Talent Management
Supply Management will need to adopt a cradle-to-grave talent management framework that includes knowledge management and advanced training models that allow it to advance its personnel to the next level. The framework will need to contain an innovative “brand management” model that will differentiate Supply Management as the career path of choice for new talent.

New Product Development and Introduction (NPD/NPI)
Supply Management will have to include advanced design-for-supply support that incorporates multi-tier cost modelling, scenario
planning and optimization that will allow the organization to understand the critical relationships between requirements, specifications, costs and constraints and make the best design decisions for the business overall.

Supplier Management
Supply Management will have to proactively engage suppliers and extend internal competencies and knowledge into suppliers’ operations
to increase their process capabilities, financial health and goodwill toward the buyer. Supply Management needs to progress to the point where it is able to detect a potential problem before the supplier detects the problem, and then step in to help the supplier resolve it before it materializes.

Next Level Strategic Sourcing
Strategic sourcing has to advance well beyond TCO modelling and the application of the best e-Sourcing tools to the point where it is using deep supply intelligence to identify unseen risks and anticipate supply capabilities that can deliver breakthrough improvements in innovation, environmental sustainability, new market entry, brand enhancement and other key business strategies. It will utilize scenario planning on the extended supply network to provide visibility of opportunities and risks that will guide Supply Management to the right buy for the organization every time.