Category Archives: Miscellaneous

Keynotes: The Good, The Bad, and the Horrific

As those who have been paying attention will know, I was at the 5th International Symposium on Supply Chain Management last week in Toronto. This conference simultaneously had one of the better keynotes I’ve heard in a long time and what is definitely the worst keynote I’ve ever attended. Before I cover the content of the good keynote, I’d like to take a stab at differentiating what makes a good – or great – keynote from what makes a bad – or awful – keynote.

In a good keynote, the speaker is, simply put, energetic, engaging, and engaged. She is passionate about what she’s speaking about, allows her energy to flow from her to the audience, makes eye contact, moves around, and speaks from her head and her heart. Her notes and slides are merely centering points, not the focus. You want her to stay on the stage.

In contrast, in a bad keynote, the speaker is as lifeless as a lump of clay, as unappealing as a puddle of mud, and as uncommitted as today’s pop star is to sobriety. He is passionless about the subject matter, cold as a lump as ice, and as monotone as a metronome. His eyes are glued to his prepared speech, his stance as a rigid as a statue, and his words as disembodied as whispers in the breeze. His paper is also his paperweight, and all you can hope for is that someone has the energy to lift up the vaudeville cane and yank him from the stage.

IBM’s David Swiggum, who had the first keynote, did a great job of demonstrating what a good keynote is all about. It wasn’t the best keynote I’ve ever heard, but it was unarguably pretty damn good and compared to the other keynotes, it was a blinding ray of light in an otherwise dark, dank, and gloomy cave deep in the earth. (The only other speaker that matched David in energy and heart was Jon Hansen. This isn’t to say that there weren’t other great speakers at the conference this year, but that just about every presentation I decided to attend this year was at least a bit of a letdown, at best.  There were three parallel tracks, and I think I picked the wrong one just about every time since I was more impressed with the speakers last year.)

In his keynote, David discussed IBM’s supply chain transformation over the last decade where IBM has transformed itself from a laggard to leader, bringing a company that was barely surviving in 1993 (profit at about 4.5% and dropping) to a company that is thriving, largely in part to the 6.2B in cost savings the integrated supply chain practice saved IBM last year.

David’s presentation was jam packed with great facts, great statistics, and great advice – too much to cover in a single blog post – so instead I’m going to share three key takeaways: IBM’s shared measurements for success, IBM’s rules of change sustainability, and IBM’s list of “Cost Takeouts” that you should be focussing on daily.

IBM’s shared measurements for success fall into three categories: financial, operational results, and client-facing results. They are summarized as follows:

Financial Operational Client-Facing
Cost Reduction Demand/Supply Synchronization Client Satisfaction
Cash Generation Cycle-Time Ease of Doing Business
Quality of Installation Unleashing Sales Force Productivity

With respect to driving change and sustaining results, David offered up the following tips:

  • transform and strengthen the supply chain function while building end-to-end capability
  • reduce fixed costs and drive flexibility in infrastructure
  • implement truly global processes and technologies
  • apply governance, performance goals, and reporting disciplines
  • tend to the culture, emphasize talent, and improve skill-sets

With regards to the cost “take-outs” you should be focussing on each and every day, David offers up the following:

  • Parts & Services
    • year over year price mark downs
    • cost avoidance
  • Design Efficiencies
    • utilization of standard parts
    • common systems platforms
  • Manufacturing Effectiveness
    • outsource for flexibility
    • low cost / tax jurisdictions
    • process improvements
    • leverage fixed capacity
  • Services & Central Procurement
    • leverage software
    • supply base rationalization
    • focus on core suppliers
    • global leverage
  • Customer Fulfillment
    • common processes and tools
    • “touch-less” processes
    • free up sales reps for customer service
  • Integration of Acquisitions

In comparison, Ariba’s representative delivered the absolute worst keynote I’ve ever heard – with the utmost emphasis on the delivery. I have no idea what his keynote was about beyond the abstract that was given. I know he was speaking English … I know I understood all the words … but … it was just … so … so … stupifyingly comatose and exanimate, that all I wanted to do was drop into a coma and end my suffering. I tried to take a few notes … but … all I managed to jot down was a few meaningless phrases that aren’t even as meaningful as what the Dilbert Mission Statement Generator spits out. His delivery was every bit as lackluster as the textbook definition of a bad keynote and then some.

All I have to say is that next time anyone wants Ariba’s help in putting together a keynote is that they should go to the guy Ariba goes to when they want a good keynote at their conferences – Jason Busch of Spend Matters. You could sleep deprive this guy for a week, OD him on valium, and give him a set of cement shoes and I guarantee he’ll still have more energy and passion than anyone else in the room — and that’s what a great keynote is all about.

And if you’re curious about the other keynotes, they weren’t that great either. (Nowhere near as bad as the Ariba representative’s, but not great.) Mr. Mikell is a really smart guy and a great researcher, but ( a ) you can’t cram more concepts onto a slide than the average genius can understand and get away with it unless you’re Pierre Mitchell and ( b ) I kept wondering if he was really an accountant or tax lawyer when he was up there. As for Mr. Johnson’s, it was also half decent, but it was missing a hook – I just didn’t understand why it deserved keynote status and why it wasn’t relegated to a regular presentation.

Vendor of the Week

Vendor of the Week is a SI exclusive that runs through the end of the year, or until the first two sponsors sign up, whichever comes first.

The following vendors have been selected as vendor of the week:

Week Vendor
October 22, 2007 Coupa
October 29, 2007 Provade
November 05, 2007 Co-exprise
November 12, 2007 Vinimaya
November 19, 2007 Aravo
November 26, 2007 Next Level Purchasing
(now the Certitrek NLPA)
December 3, 2007 Global Data Mining
[acquired by CUSTOMS Info,
acquired by Descartes)
December 10, 2007 BIQ (acquired by Opera Solutions,
rebranded ElectrifAI)

Vendors of the Week are selected randomly at the sole discretion of the doctor. The vendor of the week is a company that is doing something the doctor considers to be truly innovative and relevant to sourcing and procurement.

Forecasting, Part III

In Forecasting, Part I, I pointed out that accurate forecasting is a complex and challenging problem but that it is generally still possible to create good forecasts through the proper combination of judgmental and statistical methodologies. Specifically, manually adjusted statistical forecasts by an expert who has “inside” information, is aware of “one-time” events, and / or who is responsive to the latest environmental changes can often (dramatically) improve forecast accuracy, provided human bias does not creep in. (Thus, only practitioners with domain knowledge should adjust statistical forecasts using a structured process and only do so when there are known changes in the environment that the statistical model wasn’t really built to handle.)

Then in Forecasting, Part II, I pointed out an article in Purchasing that noted that when it comes to commodity forecasting, judgmental forecasts by experts have the best accuracy on record, demonstrating that expert human judgment applied to good statistical models with solid historical data that also take into account market intelligence and global economic trends are the way to go.

Now I am going to draw your attention to a recent white paper, sponsored by Supply Chain Consultants, by Tom Wallace and Bob Stahl titled Forecast Less and Get Better Results that demonstrates that the conventional wisdom that companies need to project forecasts and plans far into the future at a highly granular level is not necessarily right. Specifically, it points out that detailed forecasts and plans are normally only needed inside of what the authors call the Planning Time Fence or the point in the future when the cumulative lead time to acquire the material and build the product is only a short time away. They argue that outside of this planning time fence, you should only be concerned with aggregate volumes.

Specifically, they argue that up until it’s time to plan a production run, you should only be concerned about forecasting the aggregate volumes required for raw materials beyond the average planning time fence. After all, if you’re a large fast food chain, chances are you can predict with a fairly high degree of accuracy how many burger patties you are going to need over the next year, even if you can’t predict exactly how many Big Burgers, Bob Burgers, or Bo Burgers you are going to sell in any specific week. And if you are a toy manufacturer, chances are you can predict roughly how much plastic you are going to require over the next quarter, even if you don’t know precisely how many units of Dolly House or Trixie Truck you are going to be asked to manufacture. Attempting to forecast to a granular level too far in advance will just mean you’ll constantly be revising your forecasts and wasting time and resources, instead of focussing on what’s truly important for sourcing – the raw material aggregate volume, since that’s where your leverage is.

I’m sorry, but “I’m not omnipotent” just doesn’t cut it anymore!

Good Morning USA!

To the tune of Mark & Bob Mothersbaugh’s American Dad TV theme.

Good Morning USA,
I got a feeling that it’s gonna be a wonderful day
The sun in the sky has a smile on his face
and Stephen Colbert is in the presidential race!
Oh boy, it’s well to say: “Good Morning USA.”

What? You got a better candidate?

Why Spy When You Can PI? (Another Competitive Intelligence)

Recently, SupplyManagement.com ran an article on how competitive intelligence can be a huge benefit for buyers. It had some great advice, but since nothing’s perfect, I’m going to add a few tips of my own. But first, “Spies Like Us” should cover the basis.

According to the SM.com article, “Competitive intelligence” (CI) isn’t about code names, tapped phone calls or fake beards, but is a legal and ethical process that is fast becoming an essential part of a business’s operations. CI focuses on collecting and interpreting information about organisations, market trends and industry developments, to help companies foresee risks and opportunities. By analyzing competitors, firms can realize their strengths and weaknesses and make more informed decisions.

Furthermore, it’s useful to supplier analysis. It can be used to validate a supplier’s claim before a contract is awarded. Analyzing a supplier’s cost structure will help assess the reasonableness of prices suggested by the supplier’s agents during negotiations. CI can also create an early warning system on potential difficulties a supplier may have. Also, information on current or potential suppliers may also turn up details on the competition where there are common suppliers.

Start with the international media – which often have huge searchable databases. Then move on to external sources – such as academics who have worked with the company, software firms that have installed systems, customers, partners, sub-contractors, suppliers, or individuals who have studied the organization. Then, if need be, move to within the company … but remember, the more likely an individual is senior and knows the answers, the less likely they are to talk.

Don’t overlook forums, conferences, and networking – and the power of sharing. A little can often go a long way. Work with non-competitive similar goals … the old the enemy of my enemy theory. There’s also outsourcing, but that can easily cost in the six figures.

The article concludes with the following tips:

  • Bypass voicemail and switchboards
  • Call from abroad; you’ll be perceived as less of a threat
  • Harness the power of the female voice
  • Use native language speakers
  • Avoid the words “research”, “survey”, and “questions”
  • Never expect to get too much out of any one respondent

I’d add, or emphasize, the following:

  • Watch what your target does until you understand who they are
    A good PI is a master of surveillance and follows his target until he understands what his target does on a daily basis. Who are they dealing with? What are they getting from the relationship?
  • Target those with a valid need for the information you need
    It might be unethical to try and extract the information you need from your target under false pretenses, but it’s not unethical to chat up their partners and ask for it in casual conversation. After all, they might already have the information you want and be willing to discuss it over a bottle of well-aged Cabernet Sauvignon.
  • How is the product made?
    You can’t construct a good cost model if you don’t know what to put in it.

It is always awkward doing business with an alias.

Sherlock Holmes
The Adventure of the Blue Carbuncle