Category Archives: Miscellaneous

Getting Ready for the Recovery … Whenever It May Be

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Industry Week recently ran an article on “repositioning your business for the recovery phase” that noted that it could be years before volumes return to the near record highs of 2007 and that many companies will need to restructure their operations if they wish to return to profitability. Specifically, companies need to focus on activities that are not dependent on volume to be profitable. The article recommends the following:

  • Design Cost Optimization
    Focus not on the design process but on design changes that can reduce production costs. This will reduce costs across the board.
  • Make vs. Buy Decisions
    Rethink what you make vs. what you buy. Now might be a good opportunity to offload non-core product design, process engineering, and quality control activities that are inefficient and costly for you but more efficient and affordable for a (new) strategic supplier.
  • Fixed Asset Productivity
    Optimize the effectiveness of your fixed asset portfolio. Increase equipment utilization and effectiveness, decrease required warehouse space, and get rid of, or lease out, unused or unprofitable assets.
  • Reduce Working Capital
    Up to 83% of working capital in your supply chain is needlessly tied up longer than it needs to be. It will take you a while to identify and make the necessary improvements to make your efficiency, so start by making sure you’re not paying more interest and fees and working capital loans than you need to. If you’re not sure how good your bank’s offer is, try The Receivables Exchange and see if you can get a (much) better offer.
  • Re-Analyze Your Business Model
    What was your optimal business model last year might not be your optimal business model this year. Re-analyze your products, markets, and regions and change your strategy accordingly.

Which is a great start, but don’t forget the basics:

  • Analyze Your Spend
    Do a real spend analysis, possibly with the help of a leading spend analysis consultancy, to find out not just where you’re spending money (direct, indirect, operations, etc.) but where you have the biggest cost savings opportunities.
  • e-Source
    e-Source those direct and indirect categories with the biggest cost savings potential.
  • e-Procure
    implement e-Procurement to save time and money … a good solution can automatically insure that you don’t pay more than the contracted price or miss an early payment discount you intended to take advantage of

Agile Goes Global (in Your Supply Chain)

As noted in a recent Baseline Magazine article on “Building an Agile Organization”, agile organizations have processes and structures that enable them to know what is going on both internally and externally, as well as to provide the mechanisms needed to act quickly on that knowledge. This agility not only helps them to respond to changing market conditions, and survive tough times, but also helps them in their global expansion and global sourcing efforts.

As per a recent article in Global Services on globalization & agile, the key principles of agile, which is not just for software development anymore, provide us with the cornerstones of global sourcing. Specifically:

  • Collaboration and CooperationAgile requires a higher level of collaboration and communication across cross-functional teams than exists in an average organization. Done right, agile drives the formation of relationships, problem resolution, decision making, consistent delivery on (global sourcing) projects, and faster time-to-market than other approaches.
  • IT & Business AlignmentIterative refinement of requirements and project plans allows the stakeholders to buy into a new system or software acquisition sooner and to adapt to changes that support market conditions and trends quicker.
  • Risk MitigationWith an agile mindset, plans and proposals are analyzed for potential problems and risks sooner, allowing them to be addressed, and mitigations to be devised (and, if necessary, incorporated into a contract) before a project is completed or a contract is signed. Risk is controlled, managed, and communicated continuously.
  • Financial ManagementAgile focusses on managing project value, continuously monitoring estimated costs and expected returns, and insuring the ratio is sensible and profitable to the business.

In other words, an agile mindset goes beyond simple software selection, development, and implementation to the core of a new global sourcing strategy that allows you to be more productive and more effective in your global sourcing efforts.

What If Your Supply Chain Software Vendor Goes Bust?

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A recent article in Logistics Viewpoints, the ARC Advisory Group Blog, asked a very important question given that many of the smaller vendors in this space are not on the solid footing they once were — What If Your Supply Chain Software Vendor Goes Out Of Business?

It’s a good question, especially since you’ll be in bad shape if you haven’t negotiated perpetual rights to not only the application but the code-base if you’re using a hosted solution and the vendor goes under or if you haven’t negotiated 24/7/365 full data access if you’re using a SaaS solution with mandatory notices before ceasing of operations, as I have noted you must do on several occasions.

In the first case, unless you happen to have an A1 development team in-house who can maintain the code base and customize it to your liking with little impact to your overall IT budget (which is likely not the case for 99% of non-IT supply chain companies), you’re going to have to migrate to another solution. If you suspect your vendor is going to go bust, and see the gradual warning signs of multiple layoffs, lack of solution updates, increased turn-around time on issue resolution, lack of insight into the roadmap, and the run-around when you try to inquire into their financial health with (what’s left of) senior management, then you need to start evaluating your options. If you start early, you can analyze your options, find the best one, and develop a staged migration plan that will minimize interruption to your day-to-day operations. If you don’t, you’ll be relying on expensive third party maintenance and prayers to keep you running until you can accomplish a stressful, organizational wide, all-at-once changeover.

In the latter case, you still have to migrate to a new solution, but if you negotiated full data access in a standard format, it’s just a matter of selecting the next best SaaS solution, loading all of your data, and then hiring a third party integrator to re-create any linkages to your current applications for automatic data exchange. You’ll have extra work while you manually export and import data until the new linkages are live, but since you’ll (again) negotiate full data access and the ability to export and import what you need, when you need it, with a bit of training and documentation, the interruption to your staff’s daily routine should be moderate at most.

Keep Your Hands Really Still!

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Editor’s Note: Today’s post is from Dick Locke, Sourcing Innovation’s resident expert on International Sourcing and Procurement. (His previous guest posts are still archived.)

I’ve got incredible respect for bloggers that post daily. I’m trying for a bi-weekly schedule and trying to keep the posts newsworthy. Not much happened in the last two weeks except for the possibility that the new US energy bill might include new trade barriers. I’ll need some time to get my head around that one. Right now all I know is pollution bad, free trade good.

So let’s go with a lighter note. And a test. Here are three pictures of hand gestures to avoid when traveling internationally.

Can you name some countries where these gestures would be considered rude, crude, or obscene?

Answers (in the comments) in a few days.

Big O

Thumbs Up

Thumbs Up

Dick Locke, Global Procurement Group and Global Supply Training.

Would This Be The End of Wall Street?

Louis Gerstner recently said that “short-term investment gains should be taxed at 80%”. It’s one of the most logical things I’ve ever read. But such a logical plan to fix what’s wrong with our greedy economy by taking us back to good old-fashioned long term thinking would likely be the end of Wall Street.

But would that be a bad thing?