Category Archives: Marketplaces

O.M.G. R.O.T.F.L “D.T.I.:E.D.I.S.C.S.P.U.C.R.T.A.” … W.T.F? Y.M.H.S? *

* Oh My God! Rolling on the floor laughing! “Distinguishing the Indistinguishable: Exploring Differences in Supply Chain Software Packages Using Centering Resonance Text Analysis” What the f*ck? You mean he’s serious?

One of the presentations I just had to sit in on at the 5th Annual International Symposium on Supply Chain Management was called “Distinguishing the Indistinguishable: Exploring Differences in Supply Chain Software Packages Using Centering Resonance Text Analysis” because I had to figure out whether it was real, or the organizer’s attempt at introducing some comic relief into a symposium that can get a little heady without a break once in a while.

Here’s the abstract: Distinguishing among large supply chain management (SCM) software packages is difficult due to the complexity and breadth of the software. In this paper, we use text mining tools to perform a comparative analysis of documentation covering the seven most popular supply chain software packages (from SAP, i2, Oracle, PeopleSoft, Manhattan Associates, IBS, and Manugistics). Concept maps created for each of the packages indicate a high degree of similarity among the 20 most influential concepts, yet significant differences exist beyond the top 20 concepts. This suggests that any distinguishing features are deeply buried in the documentation, while at a surface level all seven vendors address the same concepts. The resultant concept maps contribute a more precise understanding of the similarities and differences between SCM software packages. Guidelines for using this knowledge to make more rational and informed software selection decisions are discussed.

Before continuing, you should read it again just to make sure you read it right. (Because I know you’re wondering if you did.)

Now you should take thirty to sixty seconds to process the shock of what you just read. The resultant concept maps contribute a more precise understanding of the similarities and differences between SCM software packages. I don’t know if I should laugh or cry. However, having attended the presentation, and, more importantly, found out that ( a ) this paper is getting published and ( b ) some of the audience members thought that this is a fantastic idea, I now know I should be instilled with fear!

The reality is that I can barely wrap my head around everything that is wrong with the abstract, let alone the presentation, and, more importantly, the paper that the presentation is backed on. However, knowing me as you do, you know I’m going to give it my best.

  • There is not necessarily any correlation between documentation about any given platform and the platform itself. The documentation could be help documentation, which might have a moderate correlation, but could just as easily be position papers, analyst reviews, or “what’s missing” analysis that does not necessarily have to have any correlation with the software.
  • Even if the documentation is limited to help documentation, the documentation is still going to focus on how to use the system and not how it solves your supply chain problem. Thus, the most common terms could be “drop-down” and “dialog” and “field” … not at all useful.
  • There is not a one-to-one correlation between a word and a concept or a concept and a word. Let’s take the word order. It could be referring to order placement or order management or order fulfillment or to the ordering of options in a text-box. Also, let’s take the concept of order fulfillment. It could be called order fulfillment or it could be called customer delivery.
  • There’s no guarantee that two products that implement the same features will document them with standard terminology, or even document the features at all! Thus, two products with high correlations in capability are not at all guaranteed to have any correlation at all in documented capability.

I could go on, but you can see that the statement that the resultant concept maps contribute a more precise understanding of the similarities and differences between SCM software packages is absolutely ludicrous, even if centering resonance text analysis did what many researchers claim it can do. (It really can’t, but hopefully the linguist at the conference who also had more problems with this presentation and paper than I can easily count will chime in with a comment on everything I missed.)

Now, apparently, after heated discussions with one of the researchers (and presenter) in question (who will not be named to protect the guilty), I have it all wrong, and what I’m assuming is being stated is not being stated at all, but I believe I have a relatively high degree of comprehension of the English language, and I just do not understand how any rational human being could interpret it in any other way.

“It’s the thought that counts … and so far I’m up to zero.”
  Stephen Colbert, The Colbert Report, Sept 25, 2007

Is the End of the Big Box Retailer in Sight?

Not that long ago, Strategy+Business ran a very thought-provoking article entitled Big Impact in a Small Format that noted that small format retail stores are gaining popularity and traction in Europe and Latin America where the popularity of the big-box store may actually be on the decline.

According to the article, smaller stores that cater to the needs of local consumers, such as Beaumont in the U.K.’s East Midlands that offers takeout meals as well as traditional grocery and sundries in small(er) sizes and Oxxo’s in Mexico that caters to the local neighborhoods, are gaining popularity. This may be due to the fact that the consumer experience in massive retail establishments is becoming increasingly unattractive. The amount of time it takes to negotiate the seemingly endless aisles is a drawback to harried shoppers – a drawback only made worse by the checkout lines where line-ups are often long and slow.

Consider Chris J. Abraham’s recent post over on @ Supply Chain Management about why he will not shop at Walmart anymore. He’s fed up of Walmart not because he’s a fan of small business, not because Walmart treats their employees “poorly”, and not because Walmart imports most of its stuff from China and other oversees locations, but because a weekly trip now takes almost two hours (60 minutes to find everything and 45 minutes to check out), employees are scarce and not very knowledgeable when you can find one for a question, and customer responsiveness is downright poor.

I see his points – and I think a lot of people do. I dread going to Walmart when I only need two or three things – since they are usually located at three opposite corners and it takes me fifteen minutes at a very brisk walk to collect them if I know where they are, and double that if I don’t. And then there’s the wait – the self-checkout lines that rarely work, or the too few lanes always filled with customers who have a full cart. Convenience isn’t just about size and selection – it’s about the speed at which you can find what you are looking for. Maybe if Walmart divided up it’s store into multiple stores – one per item type – such as clothing, media, electronics, furniture, bed and bath, etc. Oh wait, someone already did that – it’s called a mall! And, unlike a Walmart, they often exist in urban areas – and you only need to go into the stores that have what you need. Furthermore, each store has it’s own checkout and, much more often than not, the staff will actually help you.

Now I know this isn’t a retail blog, and that I shouldn’t dwell on good retail store design, but the article is very relevant to supply chain, and sourcing. It contains a number of lessons that your sourcing team should take to heart. First of all, if you’re sourcing everything under the sun, you’re likely not doing anyone a favor. Besides the fact that you could be sourcing products that no one is going to use, you should probably be looking for ways to reduce SKUs, identify standard components, and reuse these components across product lines. Secondly, you should be identifying the differences in needs between the different groups you serve, and cater your strategies appropriately if your success is tied to their success. Thirdly, don’t be afraid to innovate – it just might be what you need to take your sourcing to the next level.

Wired Crowdsourcing

Last week, Wired was on a Crowdsourcing kick that was pretty hard to miss if you were even a casual reader. Crowdsourcing, a topic I first tackled in Purchasing Innovation VI on e-Sourcing Forum [WayBackMachine], then in Cambrian House: Crowdsourced Software, and more recently Democratizing Innovation Vs. Crowdsourcing is the process of delegating various tasks for which you do not have the manpower or expertise from internal production to external entities or affiliations of networked persons with the expertise, access to, or raw capabilities that you require.

Wired’s crowdsourcing kick consisted of a series of articles that included Kristin Gorski’s “Creative Crowdwriting: The Open Book”, J. Jack Unrau’s “The Experts at the Periphery”, Derek Powazek’s “Exploring the Dark Side of Crowdsourcing”, Patrick Crawford’s “News the Crowd Can Use”, Sarah Cove’s “What Does Crowdsourcing Really Mean?”, Randy Burge’s “Using Crowd Power for R&D”, and Johannes Kuhn’s “Crowdsourcing Soccer in the U.K.”.

In “What Does Crowdsourcing Really Mean?”, Sarah Cove interviews Douglas Rushkoff, the New York based writer, columnist, and lecturer on technology, media, and popular culture, on crowdsourcing and related subjects.

Douglas Rushkoff, who is rubbed the wrong way by the term crowdsourcing, defines crowdsourcing as the corporatist framing of a cultural phenomenon. Crowdsourcing is a word. A company can look at [crowdsourcing] as either a threat – to their copyrights and intellectual property or as some unwanted form of competition – or, if they see it positively, as almost this new affinity group population to be exploited as a resource. When you call an open source, bottom-up effort crowdsourcing, clearly you are understanding it in a different way than open source communities might understand it.

In “Exploring the Dark Side of Crowdsourcing”, Derek Powazek interviews Ragnar Danneskjold of Subvert & Profit. Subvert and Profit is a web site that makes a business out of gaming the social media site Digg for paying advertisers – it serves the nice market for ‘darker’ crowdsourced actions.

In the article, Ragnar Danneskjold (an alias, of course) notes that the business is made possible by mixing the two quickly rising paradigms of crowdsourcing and undercover marketing and taking advantage of the fact that most Digg users understand that their community is a wild anarchy.

In “The Experts at the Periphery”, J Jack Unrau interviews Karim Lakhani of Harvard Business School’s Technology and Operations Management Unit.

In the article, Karim Lakhani notes that crowdsourcing is a great mechanism for knowledge transfer, or that, in certain cases, crowdsourcing helps connect people who have ideas and knowledge about certain ways to solve a problem to those people who need a problem solved but don’t have the knowledge and ideas. It allows us to enable experts on the periphery at the intersections of disciplines to come together and innovate in more of a systematic manner.

However, according to Karim, we on’t know what the limits are yet, i.e. under what circumstances do they work, under what circumstances will they not work, when is it more efficient and effective to do a distributed model versus a closed or centralized model. Maybe that’s why he believes that we do not want to think of crowdsourcing as a model by which someone can, or many people, can earn a living.

In “News the Crowed Can Use”, Patrick Crawford asks if social news sites can survive the very openness that makes them thrive.

According to the author, devotees of “crowdsourced” media sites love to equate social editing with democracy, and they’ve got at least one part of the comparison right: social editing is every bit as raucous, messy and enthralling as the electoral process. Social editing web sites allow users to source, debate and prioritize content without intervention from an editorial staff. And, more importantly, it appears, at least in some form, that they are hear to stay.

In “Using Crowd Power for R&D”, Rndy Burge interviews Alpheus Bingham, co-founder of Innocentive, about crowdsourced R&D.

Alpheus notes that crowdsourcing can often be used to address the aspects of your business that feel most broken, to help deal with risks. For example, if you had a core research group that consisted of only five scientists trying to completely cover the four primary disciplines you needed to adequately manage internal research, you might find that your researches are stretched, especially on key aspects of diversity. That’s where crowdsourcing can help you.

 

In other words, although it would appear that the definition of crowdsourcing is not yet completely understood or agreed upon, it seems that the experts agree that crowdsourcing – which can be positively used to tackle problems that can not be solved in house, or to socially select and edit news-worthy stories, or to find experts at the periphery – is, in some way, here to stay and those that find ways to take advantage of it could be in a better position to survive in this strange new distributed economy than those who do not.

Ariba + Orbian = ?

The Ariba (acquired by SAP) – Orbian partnership is something I expected everyone and his dog would be picking up on and writing about, but with the exception of Mickey North Rizza’s (AMR, acquired by Gartner) and Jason Busch‘s (SpendMatters) analyses*, I haven’t really found anything of note, which is surprising given the potential significance of the partnership (if Ariba pulls it off right).

Ken Roche, CEO of Orbian, notes that By providing low-cost receivables financing and certainty of payment timing and amount to suppliers, buyers are able to achieve cost savings or better trade terms. Additionally, suppliers generate incremental free cash flow, improving their [days sales outstanding (DSO)] metrics and capital efficiency, by gaining access to the entire value of the receivable, at a low cost.

According to the press release, The ASN (Ariba Supplier Network) serves buyers and sellers in 115 countries and has combined transactions exceeding $95B annually. The ASN lets the buyers trading the $95B approve the invoices and notify Orbian. The suppliers view and Orbian provides payment within 48 hours of the decision to the supplier. This slashes the model to 2 days from the previous 30.

Mickey notes that:

  • Ariba is for many others a best-of-breed suite that is wrapped around their ERP system, such as Oracle or SAP. And while the two systems, Ariba and ERP, may work together, this presents an even greater opportunity for ERP-centric companies to tie into the ASN and take advantage of the Ariba partnership for greater working capital.
  • The partnership [also] moves Ariba ahead of its competition by offering three
    opportunities to improve working capital for the buyer and suppliers: earlier payment with electronic invoice presentment and payment (EIPP) and cards, dynamic discounting, and a third-party supply chain financing opportunity.
  • The Orbian strengths are in its diversified pool of investors that provide
    liquidity outside of the traditional bank credit line. With a low cost, plenty of capacity from investors, and a tiered structure, the opportunity is vast for immediate cash flow improvements. This is a huge differentiator for CFOs, treasurers, and CPOs who need additional resources that won’t adversely affect their balance sheet debt.

And Jason Busch notes that:

  • The real advantage for the original parties is that involvement with Orbian does not detract from the commercial paper pricing for suppliers. In other words, it’s a legitimate form of off-balance sheet financing which does not limit the ability to borrow in other ways.
  • I’d speculate that the global supply chain finance market opportunity will top a trillion dollars annually in the next decade (in deal volume).

But Supply Chain Finance goes well beyond just EIPP, early discounting, and third party financing. It also includes, among other aspects, virtual consignment financing, true optimization of working capital, increased analytics capability, and real-time visibility into program activity and the status of each customer. And this partnership could allow customers to take each of these aspects of supply chain finance to the next level as well.

For example, the platform could be used to facilitate greater virtual consignment financing, where the buyer buys the raw materials with added leverage and sells them to the supplier at cost, since buyers could also take advantage of this third party financing and still get the supplier a better rate. If the supplier needs to borrow anyway, when you consider the buyer could negotiate a better rate on both financing and on the raw material cost, this will still save money.

The platform can also be used to better optimize working capital – which goes beyond just early payment discounting. A supplier can calculate how much money it needs in any given week and optimize which payments to take early, which payments to take on schedule, and, which payments to accept late – offering yet another form of financing, but this time to a buyer.

And the platform can be used to give each supplier greater real-time visibility into the financial activity and status of each customer, giving them visibility into the financial side of their supply chain they may not have had before. It also gives the buyer better visibility into not only the financial status of their suppliers, but how much a buyer is willing to accept on an order to get paid quickly. This not only helps buyers manage risk, but could help sourcing teams negotiate better deals if they could turn around payments faster.

In other words, this is a partnership that could significantly advance the supply chain finance side of e-Procurement if done right … but only time will tell.

* All posts prior to 2012 were removed in the Spend Matters site refresh in June, 2023.

Those China Pirates …

Ashton Udall has a good discussion on why the Chinese are likely to copy your products and steal your Intellectual Property over on the Product Global blog (which was inspired by a posting on “Why Does China Copy Designs” on the Design Sojourn blog). The great thing about the post is he breaks it down into two major themes, each of which boil down to the same basic theme: culture, which I have partially discussed in my Is Low Cost Country Sourcing to China really Innovative, my Can China Be Innovative, and my Supply Chain Top Three posts. For those of you considering a new sourcing venture to China, I would highly recommend you check the post out.