Category Archives: Miscellaneous

Aberdeen Takes a Tip from Madonna (with their Direct Materials Sourcing Study)

According to a recent brief from Aberdeen, at least when it comes to Direct Materials Sourcing, we are all “Living in a Material World”. The rest of us have known this since 1984 … so what’s the word?

Well, they are currently working on a Direct Materials Sourcing Study (and interested enterprises can take the survey. It seems that even though previous research found that over half of the enterprises indicated that an automated and standardized company-wide direct materials sourcing process is required, only 17% of enterprises have achieved such a level of standardization.

Aberdeen’s current hypothesis is that effective direct materials sourcing should include the following business processes:

  • Standardized Strategic Sourcing Initiatives Company Wide
  • Cross-Functional Procurement Teams
  • E-Sourcing and E-Procurement Solutions
  • Procurement Involvement in Product Development
  • Leverage of Outsourcing

And I have to agree. It also posits that Low-Cost Country Sourcing (LCCS) is a key strategy for effective direct materials sourcing. Here I have to disagree. I could be persuaded to accept Best-Cost Country Sourcing (BCCS), but since there are risks and disadvantages to low-cost country sourcing, and since some low-cost countries are not all that low cost, I believe a more objective, well-rounded total cost of ownership vs. value calculation is required.

Still, it will be interesting to see what they find out.

Gartner’s Global Trade Management Checklists

In the not too distant past, Gartner’s C. Dwight Klappich put out an article on “Developing an End-to-End Global Trade Management Functional Map” which, although not long enough, in-depth enough, or complete enough for the topic they were tackling, did contain a number of good check lists that you should review while putting your global trade plan together.

The check lists cover trade functions, trade compliance, movement of goods, and trade finance. Furthermore, they discuss global trade planning, monitoring and evaluation and indicate that global trade is a source of competitive differentiation.

Trade functions are defined as extensions to common business activities to recognize the nuances of conducting trade across borders. Major functions are:

  • Sourcing
  • Selling
  • Export (customer) orders
  • Import (purchase) orders
  • Collaboration
  • Product Management
  • Vendor Management
  • Document Management

Trade compliance functions address the activities that ensure that international transactions comply with and adhere to the rules and regulations of importing and exporting countries and the activities that involve insuring reporting, documentation, and financial obligations are met in a timely fashion.

  • Preferential Trade Agreements
  • License Determination
  • Document Management
  • Document Filing
  • Product Classification / HTS (Harmonized Tariff Schedule)
  • Customs Declarations
  • Import Rules
  • Export Rules
  • Duties / Taxes
  • RPS (Restricted Party Screening)

Move functions refer to all the activities needed to ship goods internationally.

  • Carrier Booking
  • Global Logistic Execution
  • Shipment Planning
  • Multimode Transportation
  • Shipment Consolidation
  • Shipment Routing
  • Carrier Communication
  • Global Visibility
  • Landed Cost Control
  • Shipment Documentation

Trade finance functions refer to determining the true total landed and delivered costs for trades, the calculation of duties/tariffs/fees/taxes, duty drawbacks, and collaboration with financial institutions for letters of credit, invoicing, and settlement.

  • Letters of Credit
  • Settlement
  • Reconciliation
  • Invoice Management
  • Payment
  • Insurance
  • Trade Finance

The also recommend evaluating the performance of your global supply chain from a trade management viewpoint regularly by way of scorecards, performance indicators/metrics, and analytic reports to diagnose potential problems early and determine remedial actions. Considering an interruption in your supply chain could lead to a major disruption, this is sound advice.

Democratizing Innovation vs. Crowdsourcing

Crowdsourcing, as I noted in CrowdSourcing (Purchasing Innovation VI over on e-Sourcing Forum [WayBackMachine]) and Cambrian House: Crowdsourced Software, which can be defined as the process of delegating various tasks for which you do not have the manpower or expertise from internal production to external entities or affiliations of networked persons with the expertise, access to, or raw capabilities that you require, allows you to accelerate product development lifecycles and innovation by taking advantage of the masses.

Democratizing Innovation, the title of a book by Eric von Hippel, is when users develop solutions and manufacturers base their new product ideas on the examination of user-developed solutions as well as their needs. It is the intersection of the emergent-solution and emergent-market model where individuals innovate for themselves (with steadily increasing quality and steadily decreasing cost using steadily improving tools that are becoming cheap and ubiquitous) and manufacturers learn to rely on users for innovation prototyping and the collaborative filtering efforts of user communities as the basis of their marketing research.

The concept of Democratizing Innovation is discussed in an interview between Eric von Hippel and Tom Austin of Gartner (on Gartner’s site), that, unlike most of Gartner’s offerings, is free for anyone who wishes to read it. The interview, which is quite lengthy, discusses various aspects of Democratizing Innovation, and includes references to open source and user-centered innovation (which are fundamental components of crowdsourcing), but the most interesting aspect is the reference to a concept of an “intellectual commons”.

Eric von Hippel states that he believes that many fields are on the way to building an intellectual commons, which is increasingly becoming a viable substitute for intellectual property protected by patents and copyright and that, over time, information protected by intellectual property law as a monopoly will only survive in increasingly isolated corners of the economy since intellectual commons will eventually dominate. Interesting proposition. I hope it happens … which should not be a surprise since I am all for the abolishment of software patents as well as much stricter controls on the patent process. (For example, I would argue that a patent should not be granted unless a panel of experts in the field agreed that the invention contained within was indeed innovative. Considering Genrich Altshuller, the founder of TRIZ, found that, on average, only 20% of patents have somewhat inventive solutions, only 4% of patents contain a new concept and 1% a revolutionary discovery, it should be obvious that at least 75% of patents granted should never have been granted.)

But I digress. We’re talking about crowdsourcing and democratizing innovation – two concepts that look eerily similar – despite the fact that the Gartner interview does not even mention crowdsourcing. After all, both are based on user-centered innovation, and the emergent properties of a social collective which will slowly redefine productivity and innovation in this modern era.

We’ve left the world of Marshall McLuhan where The Medium is the Message and have entered the world of William Gibson where it’s impossible to move, to live, to operate at any level without leaving traces, bits, seemingly meaningless fragments of personal information. But that can be a good thing. We can leave more than traces and meaningful fragments of non-personal information as well. Others can do the same. These fragments can be combined into pieces, pieces into images, and images into collages that can be used as the foundation for new innovations. The future is here. It’s just not widely distributed yet.

You Know Your Recession Is Over When …

Your idea of a relaxing drink with your significant other at the end of a long day is a $15,000 Diamond-Tini at the Ritz-Carlton.

The Diamond-Tini, a cocktail with a hint of lime and chilled Belvedere vodka over a 1.06 carat stone, is Japan’s answer to Manchester’s slightly more expensive Diamond Cocktail which uses a 1/2k pink tourmaline and diamond ring set in 18k white gold, which averages around $30,000 a pop.

My only question is what’s next? A solid-gold sundae dish that doubles as a crown?

Desert Chocolate

Although some Oompa-Loompas have forsaken the ways of their forefathers and now blend code instead of chocolate, others still work in the chocolate although it’s not your fathers chocolate they blend these days.

Armed with chemistry, biology, and nutrition expertise, they have developed a new vitamin-packed super form of dark chocolate that will last for years and not melt even in desert heat. Now when you’re vacationing in the South American Jungle, the deserts of Egypt, and on Ayers Rock down Under, you’ll be able to take your chocolate with you – after all, what could you possibly want more in 48C weather under a blazing hot sun?

Kudos to The Cynical Sourcerer for the assist.