Category Archives: Miscellaneous

Bugs and Cecil Predicted the Current State of Affairs 60 Years Ago

In 1941, Tex Avery directed a Merrie Melodies animated short starting Bugs Bunny and Cecil Turtle called Tortoise Beats Hare. A new twist on the classic tale of the Tortoise and the Hare, it had a pretty simple message buried within:

You snooze, you lose.

And that’s precisely what will happen if you fail to constantly improve your supply chain.

Implementing VFS: A Beginner’s Guide, Part II

In yesterday’s post, we discussed CAPS’ Value Focussed Supply (VFS) and how it represents a valid methodology for taking supply management to the next level. Given that many leading organizations are seeing decreasing returns in their supply management efforts, it is becoming clear to leading analysts, providers, and thought leaders that this decade needs to see the introduction of Next Generation Sourcing and Supply Management Techniques if Supply Management (and Procurement) are to have a hope of getting, and keeping, their seat at the C-Suite table.

In addition to discussing the four levels of VFS in their recent report on “Linking Supply to Competitive Business Strategies”, the report outlined a high level process that can be used as a starting point. As noted in our last post, this process can be broken down into a seven-step program that will get a company on its way. Specifically:

  1. Understand Customer & Supplier Markets
  2. Identify Directional Changes
  3. Link Insights into Directional Changes to the Business Strategy
  4. Evaluate the Company’s Strategic Options
  5. Set Holistic Value Focussed Goals
  6. Evaluate and Select Strategic Supply Options
  7. Identify and Implement Levers

To understand this process, we’ll start with an example that’s easily understood. To do this, we’ll have to travel in time and space and go back to Cupertino circa 2006. Apple, having just conquered the mobile music device industry with the iPod, is looking for the next market to conquer. They make computing hardware, the iPod was a natural progression, and they are looking for the next killer product. Where should they go?

  1. Their suppliers are great at supplying leading-edge computer components for compact and mobile devices and good at innovation.
    Their customers are interested in cool gadgets and entertainment and keeping in contact with their peers.
  2. These two observations quickly lead the organization to two potential markets, gaming platforms, which was a very lucrative market for Nintendo and Sony and which their competitor (Microsoft) had entered five years previous, and smartphones, which was a quickly growing market as cell phones were already in the hands of 1/3 of the global population.
  3. The business strategy was continued growth and market leadership in any computing device or mobile market that was entered. Both the gaming marketplace and smartphone marketplace had a number of big players with well established market share, including Sony, Nintendo, Microsoft, and Sega in gaming and Nokia, Motorola, RIM, Samsung, and LG in smartphones. Both could be hard to break into, but ( a) the mobile market is more fractured, ( b) there are more similarities between smartphones and iPods then between generalized computers and specialized gaming systems, and ( c) the market for smartphones is growing rapidly with projections that half of the global population will have cell phones within two years.
  4. The strategic options are to fight it out in the mature and relatively flat gaming market and go head to head with their main competitor on another platform, or fight it out in the growing smartphone market where platforms are not as mature and there are more opportunities for innovation.
  5. The obvious goal is to enter the smartphone market with an innovative new product and capture a leading market share, especially among current, discerning, Apple customers.
  6. Apple evaluated it’s supply chain and locked in a sufficient supply of strategic components to ensure it could meet projected demand.
  7. Knowing that a phone was useless without a carrier, Apple signed a strategic agreement with one of the largest carriers who would see the 3 years of exclusivity it was granted as a way to significantly grow its own market share and, in turn, aggressively promote the new product for Apple.

Now, we’ve made a few assumptions and taken a few liberties, but it’s easy to see that Apple obviously used some type of VFS strategy when they decided to introduce the iPhone and enter the mobile market, because, within 2 years, they were the top selling mobile phone on the market.

In our next post, we will begin to dive into the steps in more detail.

Could Word Smarts Get You That New Supply Management System Sooner?

You’re an ambitious Supply Management Professional who wants to do the best job you can. (That’s why you read SI everyday.) However, it’s tough to be the best when you don’t have the best tools at your disposal, as it limits your productivity and savings potential. You know you need that new system (be it spend analysis, decision optimization, or next generation supplier information management) and the sooner you get it, the better you’ll do.

However, you know that the company still has tighter reins on spending that are tighter than a prairie dog’s butt in a dust bowl. You need to get around them. Your boss has to want to buy that new system if you have any hope of getting it. How are you going to make that happen?

Ask smart. As per this recent post in the Harvard Business Review on “why it’s better to be smart and wrong than just silent”, if you ask smart, even if you’re wrong, you impress your boss and make it easier for her to help you. Similarly, if you ask for a new supply management system smartly, it will be easier for the boss to agree with you and fight your case.

Which is more likely to get the boss’ support?

I’ve been doing my homework and I think our best chance of hitting that 15% savings target is to identify the categories with the biggest savings potential, not the categories we spend the most on. We’ve been hitting those hard for the past two years and I don’t think there are much savings to be had in them at this point. If we procured a modern spend analysis system, we could quickly rank our categories by total spend and then compare the prices to index prices for the categories using these indexes I’ve identified. A single report would identify our most likely opportunities. Furthermore, we could use the tool to compare our purchase order totals to invoice totals at the end of every quarter and make sure the supplier isn’t overcharging us. And that’s just the beginning of what we’ll be able to do.

or

I don’t know how we’re going to save 15%. Maybe we should buy some consulting services from Supply Management Vendor XYZ and then buy whatever new-fangled tool they recommend.

I don’t know about you, but I think one way is superior.

And if you can spin it in a way that will let your boss take all the credit, then you’ll probably double your chances of success.

What do you think? Can you apply psychology to this situation or not?

What’s the Secret Sauce to Good SPM?

SupplyChainBrain recently published a piece by APQC that outlined 10 Steps to designing an effective supplier relationship management program. It had some good tips, and was dead-on when it said that successful programs have four major components — methodology, collaboration and supply chain synchronization, technology processes, and measurement and rewards — but it overlooked the fact that not all components are created equal.

Methodology, Technology, and Measurement are all necessary conditions, but without collaboration, none will be sufficient. But collaboration is not an instant cure. As the article states, strategic relationships require time, trust, mutual understanding, regular and consistent communications, and mutual commitment to establish a long-term relationship. Collaboration will make the difference between good results and great results, but the great results won’t happen over night. They will only happen after the relationship has had time to simmer. Collaboration is the secret sauce, but it’s not a sauce that can be brought to a rapid boil and served.

Is Your Cat a LOLCat?

Curious to find out? Run its photo through the automatic LOLcat detector.

As this image shows, it works pretty good!

LOLCat detection

Now we just need a cat to LOLCat English translation engine, and then you’ll be able to upload a picture of your cat and automatically create images of its greatest quotes!