Category Archives: Miscellaneous

Don’t Forget About the (Sourcing Innovation) Resource Site!

NOTE: The resource site, which was maintained in archival mode since 2017, was permanently removed in 2024.

That’s right! the doctor also maintains a resource site (indexed as the first link on the right-hand sidebar) which, as far as he can tell, has more blogs, publications, societies, companies, and events indexed than any other site in the space! For example, there are currently over 100 events indexed for 2008 (yes, you read that right, over 100 events for 2008) – which is at least twice the number of events listed on the largest event calendar for the sourcing and procurement space that the doctor was able to find.

If you have never checked it out, or haven’t checked it out recently, the doctor strongly encourages you to do so. It’s nothing fancy, but it doesn’t have to be. It’s designed to be a starting point that you can use to find out what publications, societies, events, and other resources are out there to help you on your quest to become a better sourcer, or, if you will, sourcerer of your trade!

Also, the doctor asks that if you work at a supply chain company not on the list, are a member of a relevant supply chain organization not on the list, know of any open conferences or forums not on the list*, or are aware of any new publications that are relevant to the profession that are not on the list, that you send them along to him at the doctor <at> sourcinginnovation <dot> com so that he can add them during the next site update, as this will make the resource site better for everyone. (Regular updates take place every week to two weeks, so please allow time for your contributions to appear before resending them.)

In addition, if you could be sure to include the following information with each future site addition, it will greatly reduce the effort required and help get your contribution posted in a timely manner:

Contribution Type Information Requirements
Blog Name
URL
Author
Primary Focus
Company or Analyst Firm Name
Website URL
Brief Description
Event Date
Name
URL
Location
Sponsor(s)
Sponsor URL(s)
Job Site Name
URL
Publication or Journal Name
URL
Society Name
URL
Vendor Library Vendor Name
Library URL

To Your Future!

* Please limit contributions to conferences and forums, and not seminars, workshops, or training classes. the doctor is not implying that they’re not important, but as there are far too many seminars, workshops, and training classes offered by hundreds of consulting and training firms to index in a meaningful fashion on the current resource site, the doctor is sticking with conferences and forums for now. (Note that annual vendor user conferences are okay.) Thank you.

Consultants are Cheap!

Last month, over on the CNet blog, Steve Tobak posted a great entry on “when to hire a consultant”. However, instead of repeating all the reasons why you should hire a consultant, I want to echo his sentiment that too many executives still think that consultants are parasites that charge ridiculous rates, waste precious time, and present obvious conclusions when, in fact, good consultants can be the most cost effective business saviors you’ll ever have the good fortune to hire! But I’m not just going to do the traditional “soft-sell” and wave rhetoric. I’m going to put some hard numbers behind my justification of why hiring a consultant, even at thousands per day, is not only a great deal, but maybe even a better deal then what you get when you hire a senior director or vice president.

  1. A top performer demands a high salary.
    Usually 200K to 300K for a high-performer. Let’s say $250K.
  2. A top performer demands pricey benefits.
    Health insurance (10K+), life & disability insurance (5K), 401K matching (10K), and a performance bonus of at least 10% to 20% (25K to 50K) in a good year. This will cost you another 50K to 100K. Let’s be very conservative and say 50K .
  3. A top performer comes with overhead.
    First off, there’s all the standard overhead of maintaining the nice office, the telecommunications equipment, and the IT equipment. There’s also a share of an administrative assistant’s salary, a transportation budget, and a reasonable expense account. This could easily eat up 25K to 50K (or more). Let’s be moderate and say 30K.
  4. A top performer needs a decent vacation to recharge.
    Depending on how long this performer has been with the company, we’re probably talking 4 to 6 weeks. This is a hidden cost, as it means you’re only getting 46 to 48 weeks of work, at most.
  5. A top performer needs to keep his skills up to date, and this will require good training.
    You should allow at least two weeks for any employee. For a top performer, I’d highly recommend three or four weeks of training and education related activities. Let’s be conservative and say this person is an extremely fast learner and you can get away with two weeks. Now your top performer is only working 44 to 46 weeks, at most.
  6. Training costs money.
    Whether it’s courses, workshops, conferences, or self-study guides, expect to shell out for this. A couple of conferences and a couple of courses could easily run you 15K to 25K to keep your top performer at above average performance levels. We’ll be realistic and say 20K.
  7. There will be other costs that arise with respect to raises, promotions, recognition, and performance.
    However, since you can always make them next year’s budget problem, we’ll ignore them for simplicity.

This says that your 250K top performer, that you believe is only costing you approximately 1K a day is actually costing you over 1.6K a day in a conservative estimation, and possibly over 2.1K in reality. (350K to 450K+ over 220 days, vs 250K over 260 days)

Now, it’s still less than a consultant, but let’s not forget the following:

  • Your top-performer will have most of his or her time consumed with the tactical day-to-day operation of the business.
  • If your top-performer is struggling to complete two weeks a year of training or education related activities, he or she is not going to be up to date on new ideas, technologies, and movements within the marketplace.
  • If you’re starting to run into stiff competition or problems within your business, you can be too close to the problem to make good, objective decisions.
  • Even a top-performer can only be an expert on a handful of technologies, processes, or business functions. At least collectively, outsiders will always know more about the best way to run your business with today’s technology in today’s market than you do.
  • It’s an innovate-or-die marketplace out there today. And if we’re in a recession, that’s doubly true.

In comparison,

  • A consultant can focus purely on the strategic, and purely on the problems you need help with.
  • A consultant will spend a considerable portion of his or her time keeping up to date on new processes, technologies, and advancements. Their knowledge is there to be used.
  • A consultant can be much more objective. Furthermore, a consultant probably has a better comprehension of the state of the market you compete in than you do.
  • Even though, like any top performer, a consultant can only be an expert on a handful of technologies, processes, or business functions, you are free to pick the consultant with the skills you need to advance your business.
  • When a consultant puts in a day, a consultant puts in a day. Usually 10 to 12 hours, compared to the 9-5 with a 2 hour lunch an employee will often try to get away with when he or she can. Plus, a good consultant can’t stop thinking about your problem until she goes to sleep at night, and usually starts thinking about it the minute she wakes up.
  • Consultants live by the innovate-or-die mantra.
    and, most importantly,
  • When the project is over, you can cut the consultant loose without any additional cost. In contrast, it could easily cost you six figures to cut a top-performer loose. Furthermore, if you’re smart and do a short initial engagement with a new consultant before agreeing to a long term engagement, the loss associated with hiring the wrong consultant is next-to-nothing. In comparison, the loss associated with hiring the wrong person for a director or vice president job will be hundreds of thousands by the time you add up the losses with dismissing the current employee, finding a replacement, and getting that replacement up to speed.

So, given that a consultant can bring you the badly needed 1) expertise, 2) objectivity, 3) credibility, 4) leadership, and 5) time that you need to be successful, don’t balk at standard consulting day rates. It’s a bargain compared to the value they can bring, especially when you remember that it’s not tactical day-to-day operations that bring you substantial cost savings and new markets, but strategic improvements that consultants can bring with them.

Sustainability: The Bridge, Part II

Over on Spend Matters, Jason Busch gave us a teaser when he asked “how green / sustainable procurement will play in a recession”. According to Jason, while it would be easy to dismiss green and sustainable procurement practices as a luxury for companies to invest in when times are good, I actually believe that they could help organizations to buoy their top lines and pull up from a spiraling downturn or period of contraction. Whether it’s better marketing the benefits of green supplier practices to customers to spur pent-up demand or making investments in supplier development initiatives which reduce unnecessary packaging, supplier-focused sustainability initiatives have the potential to drive sales and reduce costs.

Over on 2sustain, Tim Albinson recounted the good news and bad news he took back from his recent trip to Washington, D.C. where he spent a day on Capitol Hill. According to Tim, the good news is that people are engaged in the environmental discussion, understand that action must be taken, and are preparing for a significant coming change with the new administration, but the bad news is that while the leaders may “get it” on an individual level, the institutions themselves seem incapable of doing anything in an expedited fashion. It appears that many deem a slow, methodical approach to legislation as appropriate. However, as Tim says, given the crisis nature of the current situation we face – melting ice caps, species on the brink of extinction, brutally over-fished seas, rampant global industrialization, etc – now is not the time for multi-year legislative cycles. It looks like it is going to be left up to industry and NGOs to pick up the slack.

Over on Deal Architect, Vinnie Mirchandani reminds us that, unfortunately, despite the growing moral pressure for companies to adopt more environmentally friendly products, many companies are unfairly pricing green products at a premium, or greenwashing products that really aren’t all that green. Vinnie also says that even though we all want to do good by Mother Nature, it’s not fair to sucker the consumer into bearing all of the cost. Or, as in the example Vinnie gave, paying a markup that is well beyond the additional cost … to the point where it should be illegal (just like raising prices in a state of emergency is illegal in enlightened developed economies).

Sustainability: The Bridge

Alan Buxton of Where Next threw another post into the sustainability debate, reminding that auctions are only sustainable if used properly. Done wrong, they can force suppliers to lower their prices to such a degree that they risk being driven out of business (bad for economic stability) and incentivize suppliers to cut corners in order to deliver at such low prices (bad for social and environmental sustainability). However, as has been alluded to in the wiki-paper on the e-Sourcing Wiki [WayBackMachine], reverse auctions can be used sustainably. As Alan points out, the key is to weight the different suppliers so they are competing on a genuinely level playing field and to be prepared to award the contract to a supplier who provides best overall value for money rather than simply best price.

Jon Miller of Gemba Panta Rei asks what we can learn from Boeing’s lean supply chain stumbles. Was it poor planning, poor execution, or a combination of both? Regardless, any plan that does not consider risks and allow for contingencies is not a good plan. Jon also gives us three concrete actions to a better lean supply chain strategy. Develop a mindset of mutual trust and responsibility, organize your SPTT (Supplier Parts Tracking Team), and practice the skill of genchi genbutsu (where you go on-site and be hands-on with the supplier’s team) as a way of life, even in the best of times.

Over on SCM Pulse, Rink Ankrum points out that the Carbon Disclosure Project (CDP), a collaboration of over 315 institutional investors (including Goldman Sachs, Merrill Lynch, Allianz and HSBC) with assets under management of more than $41 Trillion (with a T), is now working with some of the world’s largest companies to help them assess greenhouse gas emissions throughout their supply chain. Furthermore, the CDP SCLC (Supply Chain Leadership Collaboration) now has members that include Dell, HP, PepsiCo, P&G, Nestle, and Unilever. It’s certainly nice to see more heavyweights enter the ring.

Sustainability 2008: Quick to the Draw

Another day, and another set of posts on sustainability for you to dive into!

Randy Littleson wrote about sustainability and the impact on supply chain responsiveness over on the Kinaxis Response Management blog. Randy notes that there are substantial regulatory requirements out there today and that this creates substantial challenges for supply chain professionals, especially since requirements differ across geographies. This means that if demand increases in one market, you can’t necessarily divert product from another market to meet it. However, if you take a global view on sustainability and drive it consistently across geographies to the greatest extent possible, you can get ahead of the curve and gain an advantage in your supply chain.

Alan Buxton contributed to the sustainability argument on Where Next by point out that there are two sides to every story. By contrasting two stories on Tata from The Economist and Private Eye, he pointed out that while firms like Tata are particularly active in providing basic services, such as schools and healthcare, for local communities, the selection of the site they chose for their factory tells a different story. The 997-acre site produced three crops a year and provided a decent living to more than 20,000 people. But when Tata picked it for its new plant in 2006 … the chief minister of West Bengal … announced that the land was to be forcibly acquired. Then there’s the tribals of Bastar in Chhatisgarh, fighting to prevent their ancestral lands being torn up for a Tata iron ore mine; and relatives of 13 tribal people shot dead by police at Kalinganagar in Orissa in January 2006, a village earmarked for a Tata steel plant. Where does CSR stop and sustainability start? How do you trade one for the other? When are you actually doing more harm than good? All important questions. Maybe Eric Hiller of Cost Cents will do a post on the True Economic Cost of sustainability!

Christopher Sciacca put reduced packaging into a bigger supply chain perspective over on Who Said Supply Chains Are Boring?. Christopher points out that the packaging volume for the new MacBook Air laptop has been reduced by 50% over the precious MacBook. Not only does this reduce waste, but the smaller and lighter boxes allow more product to fit on the same plane or truck. This means less trucks on the road, which means less fuel consumption, which means less CO2 emissions. Given the number of units Apple is likely to sell, this is significant.

And the next guest post goes up tomorrow morning!