Category Archives: Knowledge Management

After Two Series on the Future of Procurement – What Have We Learned II

In our first post we noted that, after two series, fifty (50) posts, and almost seventy five (75) pages on the “future” of Procurement, we learned that while the majority of trends being positioned as “future” trends weren’t future trends at all, they were trends that your organization will encounter as it matures and grows and the sooner your organization ploughs through them, the sooner it can get to the real future trends.

We then reviewed our series and noted that most of the requirements for dealing with these trends fall into a baker’s dozen plus one of high-level categories. Today we will break the first seven categories down into the most important sub-categories:

Cost Control

  • Life-cycle Costs need to be modelled and true TCO understood because all that is accomplished with T-CAP modelling is opportunity capping
  • Should Cost Models need to be developed for all custom manufactured products so that an organization can do a proper bid evaluation
  • Optimization needs to be done for any buy of any complexity as costs and opportunities often mix in unexpected ways
  • Supply Chain Finance with respect to DPO vs Discounts vs. Alternate Value for Money needs to be understood

CSR

  • recycling, design for since rare earth minerals are becoming expensive and hard to acquire and dangerous materials in some countries have to be safely recovered by your organization by law
  • renewable energy as energy costs are going through the roof and coal and oil generates too much pollution
  • renewable materials whenever possible to keep long-term costs down
  • responsible supply chain from a people and environmental perspective
  • waste reduction where natural resources and food are concerned (especially given recent all-time lows in global food reserves)
  • workers’ rights as no supply chain should contain slave-labour conditions

Home vs Near vs Out Sourcing

  • product development / production which has to consider the best decision given transportation and time-to-market options as well
  • procurement, back-office, and front-office functions which has to be balanced against cost-savings, expertise, knowledge, and reaction-time

Knowledge Management

  • Capture because knowledge can’t retire with your employees
  • Distribution because everyone needs to be able to tap into organizational knowledge
  • In/Near/Out Sourcing Management needs to be knowledge based
  • Master Data Maintenance as good decisions require good knowledge and good data
  • Value Generation as the IP is an asset that should be tapped into

Market Knowledge

  • New Emerging Markets because it’s not the BRIC anymore, it’s the MIKTS
  • Emerging -> Emerged Markets as every BRIC country is now a top 10 country with respect to total GDP
  • Hyper Competition in Developed Markets due to high jobless rates, slow GDP growth, and other factors that are making for intense competition in traditional / home markets
  • Opportunity Identification in different markets from a source/sell perspective as the markets arrive
  • The New Silk Road because the new China – Germany – Russian trade partnership is a game-changer and if the EU goes all-in, that’s over 40% of Global GDP participating in a new, non-North American trade partnership

Market Intelligence

  • commodity market data as this greatly influences should-cost models
  • consumer & public markets as this provides the baseline for off-the-shelf CPG and services spend
  • labour rates as this greatly influences should-cost models
  • energy rates as this greatly influences should-cost models
  • supply vs demand as this influences sourcing decisions
  • should cost models to understand what the organization should be paying
  • trends to understand if prices have been rising or falling
  • predictive analytics to take different factors into account and predict future prices and availability of labour, materials, and energy

Organizational

  • Center Led / Control Tower / COE to make sure the organization is on the path to being Best-in-Class
  • Stakeholder/Shareholder Management to keep stakeholders happy and the shareholder monkeys off your back
  • Strategic Focus to make sure the organization is aligned on the right way of doing things
  • Transition Management to take last year’s processes and technology to next year’s processes and technology

Tomorrow we will break down the remaining seven.

After Two Series on the Future of Procurement – What Have We Learned I

After two series, fifty (50) posts, AND almost seventy-five (75) pages on the “future” of Procurement, what have we learned? Besides the fact that most futurists are backwards-looking attention-seeking historians who will happily sell you snake oil past its expiration date, we’ve learned that they are able to sell this snake oil because they are addressing issues that not all organizations have encountered yet.

Recognizing that certain issues and trends are only encountered when an organization reaches a certain level of maturity and/or size, these futurists have figured out that when they target those organizations that are below a given level of maturity and/or smaller than a certain size, they look like they are visionary when, in fact, they are just selling knowledge they acquired by keeping a close eye on the leaders.

In the end, what we learned is that the trends they are telling us about are the trends that, if they haven’t hit you yet because your organization hasn’t matured or grown enough, you have to plough though in order to get to the true future trends.

We’ve mentioned three. We’ve discussed the Top Ten Trends for 2015. And maybe, if the LOLCats let us, well discuss a few more future trends. But for now, we need to focus on the trends that won’t end and what your organization needs to do to get these trends under control and out of the way. If we review all of the trends, we find there are a (core) set of (common) categories of common and related issues that must be addressed to deal with the trends. The fourteen categories that are the most important with respect to the futurist anti-trends that we examined are:

  • Cost Control
  • Corporate Social Responsibility
  • Home / Near / Far Sourcing
  • Knowledge Management
  • Market Assessment
  • Market Intelligence
  • Organizational Insight
  • Regulations
  • Risk Management
  • Supplier Development
  • Supply Chain / Inventory Flexibility
  • Talent
  • Technology
  • Transportation

In our next post we’ll break out the sub-requirements in each category as they provide a guide that helps you target your learning and organizational advancement.

Integration Point: A Global Content Provider

When we last covered Integration Point (in 2008 and 2010), we discussed their solutions for customs, security, and product classification; for free / secure trade zones and for regulatory compliance.

We talked about how their SaaS solutions helped companies with product classification under HS codes, advance notification (as required by 10+2), denied party screening (through integration with the US denied party lists), free trade / special economic zones (and identification of associated agreements), and the creation of necessary documents as well as the creation of surveys to determine if the supply base was compliant.

It was a good all-around solution, but it wasn’t a one-stop shop. While the import and export management solutions were extensive, the supply chain compliance solutions were limited; free trade was primarily ECCN, entry visibility, and country of origin; there was no automatic HS or country of origin classification; and content was primarily limited to HS/HTS codes, common import documentation, custom compliance documentation, and FTA summaries.

However, recognizing that their entire solution was dependent on good content, Integration Point, which now has twenty (20) offices across six (6) continents (and which promises an Antartica office as soon as the penguins start trading), started working on a Content Repository ten years ago and over the last decade has grown that content repository into a Global Content Repository with relevant trade data for over 185 countries. This include HS Codes, Tariff Schedules, Import/Export documentation requirements, rulings, free trade agreements, free trade and special economic zones, customs compliance programs, denied parties, sanctions and embargoes, and relevant trade acts, such as Lacey. The repository, which is maintained by a team of over 200 people globally, contains millions of base documents and millions of codings and mappings and is updated daily.

Daily updates is a critical part of a trade content repository. While some countries only update their tariff schedules a few times a year, others update their schedules monthly, and some update their schedules weekly (or more as Brazil once updated its schedules 80 times in one year). In addition, as trade relations improve or break down between countries, new trade restrictions / sanctions / embargoes are created almost overnight, denied parties get added to the list daily, and new regulations and rulings also come out on a daily basis. Correct classification, coding, and documentation is the difference between trouble-free trade and having your shipment held up for days, weeks, or months. And not shipping a restricted product to a denied party is the difference between smooth sailing and being federally investigated and fined millions of dollars. In both cases, your logistics and trade managers can only insure properly documented, legal, trade if they are on the ball with up-to-date data.

Since Integration Point has a global team, Integration Point, which sells access to its content repository as well as its trade management solutions on a subscription basis, is able to keep its repository current, which is no mean feat considering there have been over 2M updates to HS classifications alone on a global basis so far this year and over 1M updates to the import / export document database were required to capture regulation updates, trade agreement updates, form updates, and new rulings.

Integration Point now has one of the best and most complete Global Content Solutions out there and should be included in your list of content solution providers as you endeavour to get your compliance under control because Content is a Cornerstone of Compliance.

Plus, based on this content, Integration Point is now able to offer innovative solutions around country of origin determination, product classification, tariff analysis, and supply chain costing. We will cover these in future posts in early 2015.

Procurement Trend #27: Inter-Departmental Collaboration

Twenty-four trends remain
Together they bring disdain
We’re trapped in the mundane
They are Lucifer’s bane
… and we cannot rest until they are slain!

We cannot give up. We cannot give in. We must shed light on the darkness that each and every false prophecy brings. Only then can we move forward.

The journey is long and hard, but at the end of this thirty part series, you should not only understand why so many historians are still talking about the false trends we debunked in our Future of Procurement series, what you need to do to prevent staying in the past with your organizational “peers”, but what you need to do to not only stay in the present but start marching towards the future, which is coming faster than you think.

So why do so many historians keep pegging this as a future trend? There are a number of reasons, but among the top three today are:

  • Stakeholders are multiplying
    as Supply Management spreads
  • Stakeholder review and participation is increasing in importance
    as more knowledge work is being outsourced
  • Fiefdoms still exist in large(r) corporations
    as many organizations still measure your worth by the number of people under you or the budget you control and not the value you bring to the organization.

Multiplication of Stakeholders

Team management skills are now at a premium. A Supply Management leader not only has to manage a cross-functional team to be successful, but a team where each department being represented is typically at odds with each other and itching for a full-contact rugby match. (It wouldn’t be unrealistic to suggest that your organization might want to start by bringing in a career kindergarten teacher.)

Project Management skills are also becoming more important by the day, as the Supply Management team will need to maintain appropriate focus in each of the cross-functional team members to insure that things get done when they need to get done to keep each sourcing event and procurement project on schedule.

The Knowledge Economy

While often overlooked, knowledge management and collaboration portals will soon become a key part of your organization’s technology infrastructure. Your organization needs to capture all input and organizational knowledge (before it walks out the door), track all relevant issues, and make sure all of the relevant information not only gets in the hands of who needs it, but when external parties are involved, capture their knowledge, decisions, and processes (and not just output) as well in case it needs to be reconstructed or redeployed later on.

Fiefdoms

Off with their heads! Well, figuratively at least. If your organization has one or more fiefdoms, then your organization has someone unwilling to relinquish control, even if that is what is required for the greater good. In this case, your organization has to fight the urge to try and fix the problem with more training or yet another reorganization (which is typically very, very disruptive) and simply do what the kings of old did when they had problems with the dukes — and take off their heads!

If, and only if, the leader can be reformed, give her another management position within the company (and possibly initiate some inter-departmental collaboration at the same time as she will more than likely be more than willing to work with her old department). But if he’s stuck in his ways and can’t be reformed, bite the bullet, give him a fair severance package, and push him out into the outside world. Just like a ship that’s dropped anchor can’t sail, a company with a lead filled sandbag can’t rise above the clouds, no matter how much hot air that individual puts out on a daily basis!

Have You Mastered the 4th T of Tracery?

Regular readers will know that the time of PPT — People, Process, Technology — has long passed. In today’s fast paced world where product life-cycles are sometimes over as soon as they hit the market, and where your competitors are constantly striving to outpace you in both sales and supply management, you can’t live on processes anymore — they go stale almost as soon as you’ve got them figured out. And in a knowledge economy, just having a butt in a seat or a worker at an assembly line isn’t enough to succeed — you need a worker who, at the very least, is smarter than the average worker and, preferably, smarter than the worker employed by your competitor. And your technology cannot get out of date.

That’s why SI has been promoting the 3 T’s for years — Technology, Talent, and Transition. You need a solid, regularly updated, technology foundation upon which to build your modern Supply Management Organization. You need talent to put together good operating procedures, properly use the technology, and to constantly identify new opportunities for cost reduction or value generation. And you need great transition management as even best six sigma process today won’t cut it tomorrow when you need to upgrade your product offering, switch suppliers, change distribution methods, and make sure your product is Designed for Recycling from the get-go as new regulations are forcing you to take back your product at end of life and recycle it as you are using chemicals and / or rare earth minerals that are heavily regulated.

But while these are necessary conditions for Supply Management success, they are not necessarily sufficient. While it is true you will not succeed without a mastery of technology, talent, and transition management, as per our first post on Project Assurance, organizational success also depends on selecting a superior strategy and seeing it through until the desired results are achieved (or the organization changes its strategy, which hopefully wasn’t done arbitrarily on the whim of a CXO after talking to a buddy on the golf course). However, in order to properly implement a strategy, you have to not only see it through from start to finish, but you have to make sure all of the process streams necessary for success are both completed and properly synched. Just like the key to a good weave, as one might find in Egyptian Cotton, is a skillful interleaving of the thread, the key to a good strategy, is a skillful interleaving of the process strands into an effective transition plan from where you are to where you need to be.

And this, dear readers, is Tracery — the “delicate, interlacing, work of lines as in an embroidery”, or, more modernly, “a network” — the glue that not only binds the Technology, Talent, and Transition Management that your Supply Management organization needs to succeed, but that interleaves these threads in a way that causes each of them to reinforce each other and make a stronger whole.