Category Archives: Miscellaneous

CombineNet IX: Interlude – We Can Optimize Anything

CombineNet is on a quest to conquer the Optimization World! Hopefully I’ll be able to post more details soon, but for now, let’s just say that it sounds like their new slogan is “We Can Optimize Anything“. To that end, I hereby proffer* the following for their new theme song (assuming, of course, that they can get the musical rights from the Tragically Hip for Blow at High Dough).

They had a problem once … in my home town
Everybody affected … from miles around
Energy crisis … not enough silver bling
Well we ain’t no day traders, but we can optimize anything

Get it out .. get it all out
We’ll stretch that bling
Make it last, we make it last
To well beyond the market bell rings
Well the stock-car driver likes his rhythm,
never likes the stops
Throes of passion, Throes of passion
When something just throws him off

Sometimes .. the faster it gets
The less you need to know
But you gotta remember
The smarter it gets, the further it’s going to go
When you optimize so
When you optimize so

Whoa baby you’ll feel fine
You can trust that it’s genuine
Dollars and Cents, Saves Dollars and Cents
Yeah, Every time you optimize
Nobody solves it as good as we do
It is one kick-ass tool
‘Cause we solve so fast, solve so fast
Makes everybody drool

Sometimes .. the faster it gets
The less you need to know
But you gotta remember
The smarter it gets, the further it’s going to go
When you optimize so
When you optimize so

Out in the market, same Elvis thing
But they can’t catch us, ’cause we can optimize anything
‘Cause we can optimize anything

Sometimes .. the faster it gets
The less you need to know
But you gotta remember
The smarter it gets, the further it’s going to go
When you optimize so
When you optimize so

Out in the market, same Elvis thing

* Copyright 2007. All rights reserved.

Getting Fit With T.G.I. Friday’s

Whereas most restaurants believe, like the American School System, that when it comes to calories, the more the merrier, T.G.I. Friday’s, as noted in a recent Knowledge @ Wharton article, realizes that when it comes to healthy eating it is the right portion of the right food at the right price, not calories, that counts. As a result, they have introduced the “right portion, right price” menu where they have added six new smaller entrees to their line up that offer approximately one-third less food at one-third less cost.

Even though such a move has failed for other restaurants in the past, giving the nation’s well-recognized obesity problem, as partially documented in Super Size Me and Fast Food Nation, and the fact that Friday’s is reducing prices as well as portions, there’s a decent chance that such an initiative could work out well for Friday’s, especially since they are still offering regular sized offerings at the same price.

Besides, when you note that eating is both a taste sensation and a visual experience, there is a good chance that you can always counter the American belief that “more is better” with an appropriate presentation, as some of the finer restaurants do in bigger cities. After all, recent studies (referenced in the article) have dictated that the environment (or the amount of food served) plays a large role in how much we choose to eat, so serving the right amount with the right presentation might actually work. Regardless, it’s interesting.

Demand-Side Innovation Requires Supply Innovation

Earlier this year, Optimize Magazine ran the article “Demand-Side Innovation: Where IT Meets Marketing” that noted that How companies market their offerings – online and offline – has as much to do with their success as the products themselves and that unless consumers can find our brands, share them with one another, and make our brands their own, we may wind up with the wrong markets, the wrong buzz, and the wrong mousetrap. Furthermore, they state that technology, not marketing, has created this new reality and that it’s technology executives, in conjunction with their marketing counterparts, who can effectively address the new market requirements.

I disagree. I do not believe that technology and marketing alone can fully address the new reality. But before I discuss why, let’s review the article in more detail.

The article indicates that a variety of forces are contributing to this new reality where a better mousetrap without a better marketing plan is like a tree falling in a forest, and highlights the following six:

  • Social Media is Increasingly Predominant
  • Online Connectivity is Critical to Offline Community
  • Online Transactions are Small, but Their Influence is Big
  • Social Networks are Critical New Channels of Media Distribution
  • Broadband is Making Online Media More Engaging
  • Immense Virtual Environments are Taking Hold

The article also discusses three business activities whose continual transformation has profound implications for businesses today.

  • Product LocationAmazon.com may not be viewed as a community site, but much of its value derives from collaborative filtering (through user reviews and ratings).
  • Product Shaping and BrandingMajor brands are not having much luck tapping the power of social networking – word-of-mouth marketing is still the most effective promotional medium that money can’t buy.
  • Product Development Consumer co-creation and peer-production of products and services is becoming more common.

When you consider these three activities, the common theme is really product (or service) management, not the underlying technology. Good Product Management is at the intersection of all of the business functions, right where supply management lives. Furthermore, in some organizations, a best-of-class supply management organization is likely to have the most experience with collaboration and networking solutions, even if they don’t know it. Current sourcing, procurement, and supply chain management is built on visibility and collaboration. Thus, supply management is very likely to understand these concepts. Furthermore, the best demand-side management is worthless if the organization cannot meet the needs of the marketplace. Involving supply management from day one greatly increases the likelihood that an organization will deliver the right product at the right time in the right manner to maximize success.

Got Talent?

Noting that it has been a while since my last Talent post, I went trolling for good articles. On the CPO Agenda site I found not one, but two great articles on talent development. “Deep Sea Fishing” by Adrian Done and “Nurturing Talent: A Numico Case Study” by Haide Villuendas from last fall’s Autumn issue.

In Deep Sea Fishing we are warned that purchasing functions often make the mistake of adopting a catch-all approach to competence development and that those organizations that fail to apply sufficient thought to developing appropriate deep sea purchasing competencies are destined to stay splashing in the rock pools; or worse, find themselves dangerously out of their depth in ill-conceived quests for the bigger fish.

According to the article, the key to success is the development of appropriate contextually-specific competence configurations that drive specific strategic competitive priorities in the most crucial areas. This is accomplished by formulating an appropriate framework for the dimensions of purchasing competence (which can start with the basic framework provided) and determining the impact of each of the purchasing competence dimensions upon performance.

Although blatantly obvious, step two is often easier said than done. Just because company A did X and experienced Y does not prove that X actually causes Y or that what will work in company A will work in company B. Although you can hypothesize there is a correlation between action X and effect Y, you cannot scientifically draw a far-reaching conclusion from a sample size of one. In order to determine the effect of a competence dimension, you need to establish appropriate objective and subjective measurements and take multiple measures. Then you will know for sure how important a given competence dimension is for your organization.

Of course, when designing, or re-designing, a purchasing function, you will likely not have the measurements you need to determine the appropriate competence dimensions. In this case, you can still proceed scientifically to arrive at a hypothesis of the appropriate dimensions. Conduct a study of what other organizations are doing and measuring and review the relevant literature. If you find two or three dozen studies and articles from reputable sources that all indicate a given competence dimension is relevant in your type of organization, than, chances are, it is not only relevant but will be relevant to your organization. Furthermore, if it is has been shown to impact one or more of the most common purchasing metrics, including the seven important metrics described in the article, it’s likely a sure thing. (The metrics listed are quality, on-time delivery, accuracy, cycle time, commodity knowledge, professionalism, and negotiating ability.)

By now you’re probably asking, just what is this competence dimension you keep referring to? A competence dimension is simply a meaningful measure of competence relevant to a purchasing department. The article lists six basic competence dimensions as part of their framework:

  • Employee CompetencePersonnel are well trained and have the ability to apply innovative ideas.
  • EmpowermentPersonnel are involved in key decisions, have autonomy, and have job security.
  • Internal InteractionPersonnel regularly collaborate and share knowledge with each other and with other departments.
  • Product/Service DevelopmentPersonnel communicate regularly with product and service development departments and assist in the early phases of new product development.
  • External InteractionPersonnel collaborate and share knowledge with suppliers, do joint production and delivery planning, and share risk.
  • IT CompetencePersonnel use IT to achieve company-wide visibility on spend, use eSourcing to get the best value, and make continuous improvements to the procurement cycle.

Nurturing Talent tells us that it can be difficult to attract and retain top purchasing talent and that any organization that wants to do so needs to make a serious effort in terms of time, resources, and commitment. But more importantly, it also spells out what talent looks like to Numico and what talent should look like to you. Talent consists of three broad attribute categories:

  • Attitudeetiquette, passion, and EQ: emotional intelligence
  • Brainpoweranalytical thinking, structured reasoning, and creativity
  • Knowledgegeneral knowledge, qualifications, and relevant experience

Furthermore, attitude and brainpower are given priority – since purchasing specific knowledge can be taught as long as the person has enough brainpower and the right attitude, as could be evidenced by a university degree and a desire for continuous learning.

The article also provides some good advice for growing and retaining talent.

  • RenumerationGood buyers spend the bulk of their time asking what a product or service is worth – it’s only natural they’re going to ask what they’re worth.
  • Learning on the JobNot only does it give your organization a competitive advantage, but it gives a purchasing professional a sense of accomplishment and, when done right, fun!
  • Career PathGood procurement personnel are ambitious. They want to know that they can advance over time.
  • MentoringThis can make both the mentor and the mentored feel valuable and maintain your competitive edge as relevant knowledge is passed on within your organization.
  • Team DiversityBusiness is Global – and Procurement even more so. Encourage and support diversity on your team, who will enjoy learning about other cultures.
  • Say Goodbye with GraceYour top talent leaving can be a good thing! A recently departed employee can be an ambassador for your firm – promoting it to potential future employees and customers. Furthermore, if an ambitious employee left because your firm didn’t have the appropriate position for her at the time, there’s no saying that such employee would not be interested in returning in the future when such a position opened up. Since there is nothing more valuable than a dedicated employee who brings back knowledge of best practices from other companies, it’s important to make sure they leave on the best of terms.

Tough Times for the Oompa Loompas

Hershey is closing its last Canadian Factory, laying off 580 workers before year’s end, as well as plants in Reading, PA, Naugatuck, CT, and Oakdale, CA. At least in the latter case, maybe a few of the more energetic can go back to school and learn to sling code.

Times must be tough for The Hershey Co., especially since they are launching a suit against Kenneth Affolter for selling marijuana-laced chocolate candy, with names like Stoney Rancher, Rasta Reese’s, and Keef Kat whose packaging was similar to their own, for a mere $100,000 in damages. I find this laughable. I don’t think any one is going to confuse marijuana munchies with plain old candy bars – unless Hershey is planning on launching their own brand of Jamaican Jollies.

More kudos to The Cynical Sourcerer for his enduring efforts to make sure these sugary stories don’t get overlooked!