Category Archives: Miscellaneous

Maximize your Marketing with Sourcing Innovation Sponsorships

Are you an innovator in the sourcing, procurement, or related supply chain space? Do you want intelligent, progressive, and innovative practitioners to know it? Do you believe that end-user education is the best way to attract and retain customer focus? Are you ready for the social revolution?

If you answered yes to these questions, have a desire to be recognized by the sourcing and procurement leaders of today and tomorrow, and want to be associated with a site that gets regular, repeat, visitors on a daily basis, then a Sourcing Innovation sponsorship is for you!

Not only is the blog becoming mainstream – but it is becoming the news feed of choice of many Web 2.0 / social networking converts. More and more, people are checking the daily blogs first for up to date news, commentary, analysis, and education. They’re becoming so popular now that a significant number of online trade publications and vendors have recently started their own blogs to try and catch a piece of the wave.

However, very few of these blogs have the following of Sourcing Innovation or Spend Matters who figured out a while ago that the only way to grow AND retain readership is to have fresh, informative, provocative, analytical, useful, and, most importantly, independent content on a daily basis. Collectively, Sourcing Innovation and Spend Matters are the only two non-vendor or non-trade-publication independent blogs focussed on the sourcing and procurement space that have been around for over a year and publishing on a daily basis. Sourcing Innovation is proud to be one of them.

Besides brand recognition, respect, lots of goodwill, and assurances that the the blog will continue to churn out volumes of content, a purchase of one of the four available Sourcing Innovation Sponsorship will also net you:

  • a linked company logo on the topmost section of the right hand side-bar of the Sourcing Innovation blog
  • a “sponsor overview” post and one “sponsor insight” post in each subsequent quarter (the doctor’s choice)
  • unlimited permission to reproduce unedited blog content, with citation, for marketing initiatives during the sponsorship period
  • attendance, and blog coverage, of one sponsor event per year in Canada or the US
  • assistance with webcasts or podcasts (with a minimum sponsorship term)

In addition, a sponsor can also choose to upgrade sponsorship to the sponsor advisory program, which also nets you:

  • off-site advisory services on a monthly basis
  • free on-site advisory services (with a minimum term)
  • invitation to any private event sponsored or co-sponsored by Sourcing Innovation
  • an affiliate content link in addition to your logo
  • one original vendor-independent thought paper at a deep discount

For more information, drop us a line at the contact information in the FAQ. Sponsorships are on a first-come, first-serve basis and, as noted above, only four are available.

Furthermore, the sooner you make a decision, the sooner the slots fill, and the sooner we get back to our regularly scheduled programming. After all, don’t you want to find out if The Vendor in Black Comes Back?

The 3rd Wave

No, this post isn’t about molecular diagnostics, feminist activists, or Toffler’s vision, but instead about Blinco System’s (now called 3rdwave) Global Commerce Management (GCM) solution or, more precisely, their approach to Global Commerce Management.

Billed as a solution that seamlessly fills the gaps left by SAP, Oracle and other enterprise IT solutions, and allows companies to manage all their global processes surrounding their products or services from “procure-to-pay” or “cash-to-cash”, what it really is, or wants to be, is an ERP-for-Distribution solution.

Noting that traditional ERP systems like SAP and Oracle are not appropriate for non-asset-based distributors, in addition to being prohibitively expensive for small and medium sized companies, and that many companies also have to buy additional sourcing and procurement and supplier relationship management (SRM) and customer relationship management (CRM) solutions, which are also expensive for small and medium sized companies, Blinco decided to try and rectify the problem with a single approach that tackled the unique problems associated with non-asset based distributors.

The solution is built around a Global Data Repository that tracks all data associated with a product or service from the time of the first requisition through product delivery to final payment and accounting. It can track sourcing related RFX information and bids, procurement related purchase orders and invoices, and accounting information and payments. Whereas an ERP system is traditionally inward-centric, focussing on the data you need to run your manufacturing operations, what a global company needs, especially one that is focussed on distribution, is an outward-centric solution that is able to track all of the information associated with import and export – purchase orders, insurance information, financing, trade documents, shipment information, goods receipt, invoices, etc. (For more information on global trade, and the import and export cycle, see the Global Trade Primer over on the eSourcing Wiki [WayBackMachine]).

I’ve only begun to investigate Blinco System’s GCM solution, but the approach is intriguing – especially for a smaller, mid-size, company that needs the latest in ERP, sourcing, procurement, and supply chain technology, needs it all integrated, but at a budget. Most smaller mid-size companies have a much greater need for solutions that cover the various supply chain areas – sourcing, procurement, SRM, CRM, etc. – than they do for best of breed solutions, as most of their spends are not large enough to warrant the extra investment. Even though best of breed solutions typically save more than average solutions, the few extra percentage points may not make enough of a difference relative to the cost of such solutions for most categories procured by your average mid-size company. Thus, a specially integrated solution might be the way to go.

I’m not going to go so far as to recommend their solution at this point, as I have to learn more about it, and you won’t be able to maximize it’s potential until they correct for a few deficiencies (which they’re working on, but it will probably be nine months to a year before the next version that addresses them is released), but it’s certainly worth looking into if you are in the market for an ERP and a sourcing or procurement solution, as it may be able to fill both of those needs. Furthermore, since the due diligence required in the selection of an ERP system is not something that can be performed over night, by the time you made a selection, completed your implementation plan, and got started, they might be pretty close to what I’d like to see for the type of solution they are expanding. (Which, by the way, is proven with more than one multi-billion dollar company.)

The 2nd Sourcing Innovation Series: Trading on the Spot Market

Last summer, as part of the Sourcing Innovation sponsored cross-blog series on The Future of Sourcing, Jason Busch theorized over on Spend Matters (in Sourcing Innovation Securitizing Direct Materials) that securitizing direct materials and capacity was in sourcing’s future and that suppliers would benefit from the model as well as buyers.

Under the securitized capacity model, suppliers would be able to forward sell capacity and realize cash flow to fund investments in equipment and labor. They would also benefit through an improved understanding of market price for capacity. Buyers would benefit through an ability to balance reserved capacity and spot-buy capacity to handle demand spikes and to do so at true market prices. They could also take a more active role in acquiring the underlying commodities that go into finished parts from suppliers, reduce risk and variability of supply markets pricing, and avoiding escalation / de-escalation clauses entirely. In addition, if they were not happy with the current market price for capacity, they could try a direct negotiation technique, or they might hedge their bets by buying a “call” on future capacity rather than the underlying contract itself. And if they know the supply market well, perhaps they might even become a trading party, buying and selling capacity for profit based on their analysis of the market.

And now we have some proof that Jason might be right. According to a recent study by Haim Mendelson and Tunay Tunca at Stanford’s Graduate School of Business, “strategically using both fixed-price contracts and open market trading, supply chain participants can create greater efficiencies” (Business Wire). Furthermore, both consumers and supply chains as a whole will benefit from these efficiencies.

Given that availability, costs of raw materials, and consumer tastes fluctuate, shorter-term spot trading is appropriate to handle these fluctuations. Furthermore, just as the stock market summarizes many pieces of information about the performance of a company, business-to-business spot markets can provide up-to-date information about the availability of raw materials, the cost of production, and consumer demand for the end product. Because all of this happens much closer to the time that the end product ships to the consumer, supply chain participants can update their plans to take into account real-time information.

However, it’s important not to overuse the open market, as that can have its drawbacks. Haim and Tunay found that the more you trade, the more you drive the price against yourself. For example, a manufacturer may want to buy 10,000 computer chips at $1 per chip, but trying to buy twice that amount may force the manufacturer to pay twice that amount as cheaper suppliers become exhausted. Thus, buying only in the on-the-spot market raises the risk that you’re going to spend more than you would have in a fixed-price contract made six months ago. On the other hand, you have a better idea of actual need, and may end up spending less by not overbuying. Suppliers face similar risks and benefits, and so may also benefit from both early contracts and spot-market trading. Thus, the best balance between long-term contracting and the spot market depends on the liquidity of the spot-market in the industry a company is buying in.

A good spot market creates efficiencies not only in the spot market itself, but also reaching back to the long-term contract stage. Furthermore, suppliers will anticipate when a well-functioning spot market is rising – where information about supply and demand is current – and price will become competitive early on. This makes the supply chain more efficient and increases the total profit potential while also benefiting consumers, as a more efficient supply chain translates into lower retail prices.

Exercising Common Sense (in Business Transformation)

Strategy+Business recently published an article by the same name that contained a 10-point checklist that leaders of large-scale transformation can use to put their wisdom into practice. Considering that managerial delusions are often rampant, that the Home Bias effect is often in full force, and that What Got You Here Won’t Get You There, any process that imparts a little common sense is a good thing.

As the article states, “successful transformation requires the common sense of experienced management. Unfortunately, the ability to apply that common sense, especially over the long time frame of a serious change in organizational culture, is all too rare”. To do so, a CEO needs to keep in mind at least 10 critical factors – and use a lot of uncommon concentration and awareness to put them all into practice.

  1. The CEO makes a strong case for change by clearly and persuasively articulating the factors that are driving it.
    “If you’re the leader, you’ve got to define the problem, no matter how brutal, and you’ve got to use honest and unambiguous language. Your staff can’t do it. Only you can tell people about the reality you are facing. If you don’t, they’ll never accept it.”
  2. Senior leaders set an aggressive, enterprise-wide target.
    Big goals are the key to driving big actions. An audacious, market-mandated target sends the message that transformation is not a matter of incremental changes.
  3. Senior management is firmly aligned.
    Every individual on the leadership team needs to have a stake in the transformation effort as a whole, rather than focusing only on the piece related to his or her business or function.
  4. An integrated enterprise-wide program for change is put in place.
    Cross-functional business solutions enable people to live out the new business model instead of remaining locked in the concerns of their day-to-day responsibilities.
  5. Senior leaders focus on augmenting capabilities along with cutting costs.
    The prospect of working to create a better future is highly motivating for most employees … thus … efforts to massively change the cost structure of an organization must always be set within the positive context of building new skills. An organization that fails to develop a positive and forward-looking future vision is likely to shrink under the pressure of simply cutting costs.
  6. “Moments of truth” are recognized and shared in order to demonstrate commitment.
    A “moment of truth” highlights precisely what needs to change in an organization.
  7. A detailed plan provides the blueprint.
    Leaders must develop a comprehensive guide to the changes ahead. The blueprint must specify the steps that will enable the organization to meet its targets, set aggressive yet achievable timelines, address the change management issues that occur at every stage, and identify new roles for people throughout the organization.
  8. Enabling triggers are built in from the start.
    The detailed map for the transformation should identify in advance triggering events that will clearly be important in moving the process of change forward.
  9. Communication is proactive and ongoing.
    Internal communications should be blunt and realistic about the market imperative driving transformation. External communications to Wall Street analysts, governing structures, and the board must not only be consistent with the transformation’s goals, they must be proactive and aimed at aligning these key constituents with the goals of the transformation.
  10. The results of change are sustained.
    New capabilities for achieving accountability, distributing benefits, allocating incentives, and tracking results must therefore remain in place even after financial targets are met.

Head2Head for the Supply Chain Nail

During my last Toronto trip, I had the chance to sit down with Wayne Burgess, Head2Head’s Supply Chain practice lead and discuss Head2Head’s rather unique supply chain recruitment solution. Head2Head was founded in 2000 by two guys in a basement who thought an innovative approach was required in recruitment. Today, they have roughly 30 employees and are still growing.

Starting in Human Resources, they soon found out that their clients tended to have specialized needs in two disciplines, Procurement and Information Technology. To that end, they sought out practice leads and starting building specialized capabilities in supply chain and IT, but I’m going to focus on supply chain – since, in all honesty, specialist IT recruiting shops are still a dime a dozen, whereas specialty supply chain recruitment firms are still quite rare, especially north of the border.

The Head2Head approach is to augment the client’s human resources and / or recruiting team with one of their own experts on the client site on an as-needed basis. Furthermore, whereas most recruiting firms force you to completely outsource the recruiting process, and keep all the resumes and data gathered once a candidate has been placed, a Head2Head recruiter works as an extension of your team, on your own site, and you get to keep all the data gathered when the Head2Head recruiter leaves. Furthermore, whereas most firms work on a contingency fee, which usually falls in the 20% to 30% range, and higher for key positions, they work on a flat fee basis, based on the amount of time you want one of their recruiters to augment your team. This can represent a large cost savings if you need to hire multiple supply chain professionals to help you with your supply chain transformation, which can all be sought at the same time. Instead of paying 100K to 150K in contingency fees for five hires for two to three months of work, you can instead pay 30K to 50K, for a 3X to 5X cost savings. Furthermore, if you need multiple positions filled across your organization at various stages, you can bring in multiple recruiters and scale the team size up and down as needed.

One of the things they’ve found is that many companies have a hard time identifying what makes a good sourcing professional, as they often have trouble understanding what supply chain is. As a result, they work hard on explaining to HR and internal recruiters what supply chain is, what makes a good supply chain professional, and how you go about landing one. To this end, they maintain and produce newsletters and other materials for their clients on a regular, monthly, basis.

They also provide traditional, tactically focussed, Vendor Managed Services where they will manage your entire contingent labor force, and typically save their clients 10-15% when they do so. They also support a “marketplace”-based vendor management approach to help their clients get the best value for their money. Finally, they also provide market intelligence and data mining solutions. However, it is their specialist supply chain recruiting division that, in my view, sets them apart.