Category Archives: Market Intelligence

The Three Secrets of Successful Salespeople

A recent post over on the HBR blogs on the “persuasion tactics of effective salespeople” did us all a favour by highlight the three fundamental principles, drawn from socio-, psycho-, and neuro-linguistics, that persuasive salespeople use to break down our procurement barriers. By understanding these “heavy hitters”, we can keep our guard up and be more objective in our procurement processes.

They speak in our language.
Successful salespeople understand that each customer (organization) has a unique language and they take the time to learn that language. This helps them “fit in” and leads us to believe that they must have a better solution, even if all they have is a better means to communicate with us.
They talk about our problems, goals, objectives, and values.
Whereas most salespeople will spend as much time as you will allow them talking about how great their company is, how great their product is, and how great their service is, successful salespeople talk about how important your problem is, what the best way to solve it is, and the value you will get from the right solution (which, by the way, just happens to be theirs).
They converse with you as if you are a friend
and not a sucker they are going to take for as much as they can get (even if that is their ultimate goal). They spend time forging a personal connection with you so that you will want to do business with them, regardless of how good their product or service is (which you will already believe in after all of the talk about your problems, goals, objective, and values).

So next time you start feeling too comfortable with a salesperson, step back and objectively judge the situation. What hard data did the salesperson give you? How does it compare with the competition? What level of service will you really get? And should you maybe be conducting (part of) this event through an e-Sourcing platform so you can focus on the relative value of the offerings to insure that you are only spending time in negotiations with providers who can truly solve your problem at a reasonable price point. And while a good relationship with the supplier will often be important to your success, a good relationship alone is not enough if the supplier doesn’t have the products or services you need.

For Real Value, You Must Own the TCO

CRM Buyer just published one of the best articles I’ve ever stumbled across. In TCO, ROI, and the Difference Between Price and Cost, the author makes a point that is overlooked far too often by far too many buyers when they are shopping for new supply chain solutions:

Customers must be sure that THEY own the definition and calculation of TCO and don’t allow the vendor to drive the agenda.

As the author clearly states, vendors will try to manipulate and obfuscate the true TCO of their solution and it will be different for each installation. Plus some of the costs, like risk and opportunity, are nebulous and hard to define. Vendors will try to make other vendors’ solutions look risky when, in fact, for you they might be less risky.

That’s why, on multiple occasions, I’ve tried to lay out the true, long term, costs of supply management solutions, as I did in this post in Uncovering the True Cost of On-Premise Sourcing & Procurement Software, in this post The Total Cost of Ownership Equation in a Green Economy, and this post on Know Your Software TCO & TVM, for example. The true, long term, cost is always more than you think and much more than the vendor will let on. It’s like the car example given in the article. If you’re going to sell after five years, the total cost is the price plus five years of maintenance and repairs (and insurance and gas) minus the expected selling price, and when everything is factored in, a more expensive car that costs more but retains its value might be worth more than a cheap car that loses the majority of its value and costs four times as much to maintain.

Before you make a decision, you have to determine the total cost of each solution over the intended lifetime. Only then you can decide if the solution with the greater (annualized) cost truly brings more value. If a solution costs 20% more but increases productivity by 40% or decreases risks by 30%, it might be worth it. However, if a solution costs 100% more but brings no additional value of any kind, it’s not worth a second look. And this is not something you will know until you slice through the vendor obfuscation and normalize the costs, which is something you can only truly do if you own the calculation.

How Important are MiniTrends?

A recent book review of Minitrends: How Innovators & Entrepreneurs Discover & Profit from Business & Technology Trends over on the World Future Society site, which introduced the “minitrend” as any trend — technical, social, economic, demographic, legal, etc. — that is just beginning to emerge, although not yet acknowledged by the media or the marketplace, states that the early identification of emergent long-term trends poses such enormous marketplace value, it seems not improbable that traffic in minitrends will become a significant online phenomenon during the next two to five years.

As per the authors’ website, Minitrends go hand-in-hand with Megatrends. For example, within the Megatrend of an aging population are the Minitrends of people remaining active in the workforce for longer periods of time and increasing movement of elderly individuals to smaller nursing centers. And while some Minitrends will have little or no relationship to a Megatrend, they will have relevance to wider audiences.

If the minitrend is the leading indicator of an emerging megatrend, then it is probably quite important as it is signalling the state of things to come. If it’s a short-lived trend that’s here-today and gone-tomorrow, then any thought applied to the matter is a waste of time.

So what would a minitrend look like in supply chain? And how would you tell if it’s important? It could be a switch to a new technology platform, a switch to a new energy source, or a switch to a new form of payment. It would be important if the technology started to gain critical mass, if the energy source was cheaper and/or more sustainable, or the payment methodology preferred by your financial institutions.

So how do you detect a minitrend? Good question. According to the authors, you:

Follow the Money,
Follow the Leaders,
Take Note of Demographics,
Analyze Frustrations, and/or
Search for Convergences.

A good start, but I’m not sure it’s the secret sauce. But I’m not sure what is. Anyone have any ideas?

Where Are The Intelligent Networks?

In a recent piece from ChainLink Research on “Remapping the Supply Chain Universe”, the author suggests that there are intelligent networks [that] are truly unique, yet little understood. What I’d like to know is, where are these intelligent networks. As far as I’m concerned, an intelligent network is as real as a griffin or a chimera.

The author suggests that they are a trusted source to synchronize the mutual data and processes between trading partners using a shared model based on agreement in policy, process, [and] security. Supposedly they separate the physical supply from the logical supply chain to enable mobility by providing peer-to-peer access and a single version of the truth.

Working backwards, the only system I’ve ever seen give a truly single version of the truth is a spend analysis system after an expert has merged all of the disparate data sources using hand-mapped rules. (Now, there are half-a-dozen companies running single instance Oracle systems that also provide a single version of the truth, but since these white unicorns are rarer than black swans, we might as well pretend they don’t exist.)

Peer-to-peer access has been around for decades, and hit the mass market on the web back in 1999 with Napster. Don’t tell me that was intelligent.

Every system separates the physical supply chain from the logical one. After all, software is an abstraction. And it’s not intelligent. It’s just code.

Marketplaces have been providing a shared model based on agreement in policy, process, and security for over a decade as well. It’s framework, not intelligence.

Finally, there’s no connection, or even correlation, between a “trusted source” and intelligence.

Plus, if you look at today’s “social networks”, there’s a good chance that you’ll wonder if there’s even any intelligence in the user base!

The reality is that “intelligent” networks don’t exist because “intelligent” systems don’t exist because there’s no such thing as “artificial intelligence”. Take it from a CS PhD who knows. If someone is trying to sell you an “intelligent network”, they are bs-ing you. Don’t fall for it.

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What is the Net/Net of the Network?

If you thought the noughts was the decade of the network, think again. At this point, every sourcing vendor and its mascot either has a supply network or is in the process of creating one. We’re long past the point where the only network you could get aribaed on is the ASN. We have the Ketera Network. We have the Coupa Supplier Network. We have the SciQuest Supplier Network. We have the OB10 Global e-Invoicing Network. And two more Bay Area companies are in the process of releasing (or, depending on the timing of this post, have just released) their own supplier networks. It’s the age of the supplier network. But what’s the net? Is it worth it?

Should we, and by we I mean the little guy who’s going to ultimately end up paying the price (as networks, like most other systems of taxes, are the ultimate means of quickly and efficiently pushing the cost down upon us little guys), embrace the new networks with open arms? Should we do whatever we can to resist their adoption? Or should we take a neutral wait-and-see stance.

To answer this question, let’s examine each of the “selling points” of today’s supplier networks from both the buyer and supplier perspectives. (Although we ultimately care how the networks impact us, we also have to understand how they affect the buyers in order to make an informed decision. We have to consider the net/net, because even if the networks are detrimental to us, if the benefits to the buyer far outweigh the detriments to us, we can’t outright reject them if the buyer could pass some of those benefits to us. I know it’s a big if, but we have to be fair!)

Find a supplier. / Find a customer. Like any buyer worth her salt doesn’t already know who her suppliers, and their competitors, are? (Heck, all you have to do to find out your supplier’s top three competitors are is to ask them why they’re better than one and the salesman will start to ramble about how they’re better than competitors A, B, C, etc. until you cut him off!) And as a supplier, you definitely know who your top customers are, and it’s pretty easy to find out who their big competitors are with Google. No real value here.
Electronically receive purchase orders and send invoices. How long have we had secure FTP? And what modern e-Procurement platform doesn’t do this? And how many freeware programs / (HTTPS/SSL) websites exist that let you do this? (More than I can count!) No new vaue here either.
Automate and Streamline Processes. And how is this different from every other supply chain tool? Marketing gibberish. For value, we have to keep looking.
Grow your business. Sorry, but I just don’t believe this. Exposure != Award for a supplier and using a back-end tool does not guarantee a front-end sale for a buyer. Besides, what B2B / B2C technology provider doesn’t make this claim?
Get paid (or make payment) faster. Maybe, maybe not. That depends on whether or not the buyer has the appropriate systems in AP and on their internal policies. If the buyer believes in waiting until the last possible day to pay an invoice (or has an internal policy that they won’t pay an invoice any sooner than the “net” date), the supplier won’t get paid any faster. Besides, how much faster is this than the e-cheque, ACH, e-mail, or wire transfers we all have access to through our online banking? It all goes over the wire, and all packets transmit at the same speed. So, technologically speaking, there’s no gain here either.
Participate in / run events. Every sourcing tool allows you to do this through your browser. In fact, there are a number of free tools (including WhyAbe) that buyers and suppliers alike can use to solicit, and conduct, business on-line. Another claim filled with empty calories.
Automated “lead” alerts of new RFX opportunities. Okay, so you can’t get this if you’re not on a network, but I’d argue that at least 99% of these alerts aren’t real “leads” anyway. If a supplier hasn’t contacted you directly, how likely is it that they are going to award you the business? More importantly, how likely is it that you can even meet the demand? Just because a dumb keyword matching algorithm (and let’s face it, since software is not intelligent, most searching algorithms are pretty dumb) detected that the buyer wanted processors and you manufacture processors doesn’t mean you have the right equipment to make the custom processors the buyer wants. Sorry, but the web isn’t semantic yet, and even if it was, you’d still get more false positives than real “leads”! So we have negligable value here.
Market Intelligence. Okay, so you can see who’s out there, who’s bidding, what they’re bidding on, and, to some extent, what they are being awarded, but you can get most of this intel from most reverse auction platforms if you regularly participate in on-line events. Of course, as a network member on an appropriate network, you can have access to all data from all events, which can be quite useful as you can make an informed decision as to whether or not its worth your time to participate in an event before you do so. This, in turn, allows you to focus on events where you have a reasonable chance of winning the bid. So, there is some new value in terms of market intelligence. As to how much that value is worth, that’s highly dependent upon how many users the network has, how much business is flowing through the network, and how much of that business is relevant to you. If the network is small, if it’s mostly used for “listings”, or if most business ultimately happens offline, the value could be quite minimal.
Benchmarking. This is about the only argument I’ve seen that actually has real, undeniable, merit. While many on-demand / SaaS / Cloud providers collect data and aggregate benchmarks, most are restricted to their customers and, furthermore, most don’t have enough customers to reach the transaction and spend level required to truly allow the derivation of meaningful metrics that can be defined relative to a specific category in a specific vertical. After all, most benchmarks defined at the global level are not that meaningful when each industry and category has its own individual nuances. But when all of the data across a large network is available for aggregation and analysis, the market intelligence becomes meaningful and usable by each and every member.

So what’s the net/net? There is undeniably some value in a supplier network, especially if it has a large number of members and an annual transaction volume in the Billion plus range, but the value provided is, at least for the time being, no where near as great as most of the providers claim it is. As a result, if you’re paying a lot for the pleasure of being a member, at least for now, you’re more likely to get aribaed then you are to see a profit. That may change in the near future, but make sure you go in with both eyes open and do the cost, and value, calculations before you make any long-term, big-dollar, commitment. And if the fee structure of the network model is designed to push all of the inflated costs and fees down upon you, the little guy, you should put up all the fight you can muster, because you’ll only end up getting aribaed if you don’t!