Category Archives: Miscellaneous

(AT&T is) Junking the Jack

Yesterday, CNN reported that AT&T is beginning to extinguish the brand of cellphone operator Cingular and that it will launch a campaign Monday to mark the change.

Furthermore, AT&T’s name and logo will eventually replace Cingular in a process expected to take several months. And I don’t know if I should laugh or cry.

First of all, it shouldn’t take more than a few minutes to cut and paste one logo or name in place of another. Even the great incompetent PHB would realize that a simple change such as this shouldn’t require more time than it takes the magic paper machine to spit out a number of pages equal to the current number of pages with the wrong logo. Updating a TV add with today’s media editors is just a matter of cutting out the old animated logo and splicing in the new one, and making a few tweaks. Maybe a day if your Media PC Guru is a perfectionist.

I know, I know – the real issue here is the brand, and I recently told you Don’t Buck the Brand – but when you get right down to it, that’s exactly what this multi-phase multi-month multi-multi-million dollar effort is doing – bucking the brand. After all, their number one goal is to squash it like a bug. So why spend tens of millions of dollars of advertising a joint brand just to spend tens of millions of dollars again in a few months to advertise a single brand? Why spend millions of dollars on new uniforms just to toss them all into the incinerator in a few months? Why pay outrageous maintenance fees to update all of your software to automatically include two logos on all printed materials just to pay those outrageous maintenance fees again in a few months to print one?

There’s smart procurement, there’s dumb procurement, and then there’s just truly wasteful procurement. And that will likely be the next year at AT&T.

And all for no good reason. Unless they think that either (a) we’re too dense to understand a straightforward announcement that says “We, AT&T, bought Cingular. You are now an AT&T customer. We pledge to give you the same great quality of service. Your bills will now come from AT&T – here’s what the new bill will look like. For questions, see our website or call.” or (b) we’ll leave in despair because we believe that AT&T will not offer us the same quality of service – in which case their multi-month, multi-multi-million dollar effort to convince us AT&T really is Cingular will simply delay the inevitable – since if we really do believe that it’s the bouncing jack logo that symbolizes quality, then we’re still likely to leave when it disappears. Either way, they’ll be wasting hundreds of millions of dollars when all is said and done – hundreds of millions of their customer’s money – and for many of you, your money – since it will be their customers, and maybe you, who will end up paying more for the same service in the end.

So, even though I want to laugh at the idiocracy, all I can do is cry.

Catching up with Aberdeen

When I was in Boston, I took the time to visit with some of the Supply Space Focussed Aberdeen folks to talk about the sourcing & procurement space and what the year ahead had in store for us. (Since I have been told by ex-analysts that their CEO despises us blogger types, even those who generally say good things about the quality of content coming out of Aberdeen, I will not give names, dates, or conversation specifics to protect the innocent, but simply say they are really great, smart, people.) If you’re interested in the nitty-gritty, you can always start by downloading their research agenda, but I can tell you that their plans go well beyond that.

First of all, they plan to continue the aggressive research schedule institutionalized by The Great Sudy in his short tenure (who averaged close to one major study a month) across each of the channels that they address. Secondly, they plan to augment those major benchmark studies with a significant number of shorter insight and thought pieces focussing on specific issues and / or best practices that you can use to improve your overall supply chain operations. (Apparently their goal is 10/month. Wow!) Thirdly, they plan to delve into a number of the insights that came out of the CPO conference in November and break ground in the relatively untouched areas of supply chain finance, next-generation supplier performance management (SPM), and non-traditional industry verticals. All I can say is that if they do all this, AMR will have some serious work to do keeping up.

Now I know that some prominent individuals have questioned Aberdeen’s relevance in the mid-market at one time or another, and some have even had some valid points, but the following truths hold: (a) if its good for big business, then some elements will certainly be good for medium-sized businesses, since it is essentially impossible for a business with poor practices to get large or stay large in today’s ultra-competitive market and (b) the data is based on your responses and any survey with a large number of respondents is going to contain a relatively significant number of responses from the mid-market. Yes, you might need to take some of the results with a grain of salt, or, more appropriately, with some good consulting advice from those companies that have helped similar companies undertake similar initiatives, but it’s much better to have valid data and supported conclusions to start with then to start with no data at all. So I say: Go Aberdeen Go! and continue to break ground in the analyst space. Right now, the issues need all the attention they can get – and given that the current talent pool, although not as well known, is more talented than they are being given credit for, one can be sure the research is only going to get better and better.

So participate in their surveys, get your free research, and make informed decisions. Furthermore, if you have ever attempted advanced sourcing, be sure to take their Advanced Sourcing Survey. Their last benchmark study in this area found that companies employing advanced sourcing techniques saved on average 12% more than their competitors who did not. This study is going to delve deeper into the issue and help you determine which technique will help you</> the most. It’s worth your time.

Don’t Buck the Brand

A few months ago, CPO Agenda published an article entitled Backing the Brand that stated aligning procurement and supply strategy with brand building and marketing is vital for long term success. A couple of weeks ago, the Frasers/PMAC Newsletter published the article Wising up to Marketing Costs that stated that marketing seems to be one of the final frontiers in strategic sourcing and that some companies are using sound strategies to save millions of dollars on marketing, without missing deadlines or diluting the creative intent. In other words, not only can the logic work with the magic, as outlined in my Magic & Logic Posts (Part I and Part II), but that Procurement can Back the Brand profitably.

Backing the Brand states that a successful brand can

  • differentiate a product or service
  • enhance a product’s competitiveness
  • influence the price-elasticity of demand
  • ease the introduction of new products and services
  • create customer recognition and loyalty
  • enhance leverage over upstream and downstream supply chain partners
  • create long term shareholder value

In addition, it states that even though procurement and supply chain may not always dictate a successful advantage on their own, it is clear that differentiation and customer retention might be impaired if they are not aligned with marketing and brand strategies and that only those organizations that can institutionalize continuous cross-functional implementation of a linked brand and sourcing strategy are likely to be successful in the future.

The article then goes on to offer five steps to successful alignment, as well as three case studies of organizations that have succeeded in successfully linking procurement and marketing and three organizations that have failed, but like other articles extolling the virtues of a procurement and marketing partnership, it skips over the simple first steps to success.

That’s where the article Wising up to Marketing Costs comes into play. It describes how your procurement department can make use of a category specialist model for buying and outsource acquisition of marketing categories such as print management that not only costs large organizations millions of dollars annually, but often costs those same organizations in excess of a million dollars of unnecessary spend. It also describes how the deployment of eProcurement solutions can save you money while giving Marketing the speed and flexibility they require.

So Back the Brand – and be the only department in your organization to have a double impact on the balance sheet. Make Charles proud.

Collaborate, Collaborate, Collaborate, Collaborate (II)

Collaborate, Collaborate, Collaborate, Collaborate

Collaborate, Collaborate, Collaborate, Collaborate

Collaborate, Collaborate, Collaborate, Collaborate

Collaborate, Collaborate, Collaborate, Collaborate

Yesterday we discussed how “Supply Is Where It’s At”, as per a recent issue of Inside Supply Management, that “Winning Together”, in the last issue of CPO Agenda is “Where It’s At” (as per the e-Sourcing Forum, [WayBackMachine]), and that “The Reward for Good Relations” (on the European Leaders Network [WayBackMachine]) is worth the effort, as described in a recent issue of the European Leaders Network. Today we are going to talk about flow, strengthening the weakest link, and how collaboration helps avoid the cost of inefficency.

Over the last few months, Supply & Demand Chain Executive has published a pair of articles that together serve to emphasize the importance of collaboration in sourcing. In “Applying Flow Principles to Collaboration”, we are told that improving supply chain performance is improved by focusing on improving flows – material, information, and money – throughout the supply chain, which is no longer bounded by the four walls of the enterprise. Collaboration is thus paramount due to the absence of centralized control.

The article recommends the creation of trust and interdependency at three different levels to get past the “us vs. them” mindset that is all to common in today’s relationships and detrimental to overall success:

  • operational: there should be a minimum level of coordination and visibility between stakeholders
  • tactical: there must be a basic desire to create a win-win relationship where value is created through shared processes with expanded scope
  • strategic: the highest level of collaboration where value is created results from the long term alignment of business strategy

In “Supply Chain All the Way: Strengthening the Weakest Link”, the notion that shared strategies, competencies, and trust, along with the sharing of information, can provide the edge required to ensure success in your efforts to aggressively capture market share and ward off competition in a tight market where success often depends on demand visibility and negating “the bullwhip effect“.

Finally, in “Avoiding the Cost of Inefficiency: Coordination and Collaboration in Supply Chain Management” from Knowledge @ Wharton, which tells us that supply chains in many industries suffer from an excess of products and a shortage of others owing to an inability to (accurately) predict product demand, you need to build a supply chain based on sound strategy, good consistent data, and empowered people and make sure it is comfortable with uncertainty and that this requires collaboration based on trust, not just information sharing. Furthermore, be sure to take a holistic view in your efforts since its the global optimum, not the local optimum, that counts.

Collaborate, Collaborate, Collaborate, Collaborate (I)

Collaborate, Collaborate, Collaborate, Collaborate

Collaborate, Collaborate, Collaborate, Collaborate

Collaborate, Collaborate, Collaborate, Collaborate

Collaborate, Collaborate, Collaborate, Collaborate

I said before that Collaboration is Key and then I said Collaboration is Key again. And now I’m shouting it, backed up by a chorus.

In the past few months, a barrage of articles have surfaced on the Inside Supply Management, CPO Agenda, Supply & Demand Chain Executive, European Leaders Network, and Knowledge @ Wharton publication websites promoting the benefits of collaboration.

According to the article “Supply Is Where It’s At” published in Inside Supply Management back in October, new forms of supplier collaboration are some of the last strategic forms of competitiveness left to exploit. Buyers should consider going back to the drawing board with supplier quality training, meetings of the mind, and “new” old approaches that fight price inflation and promote supply reliability tactics like those last used in the seventies. When you get right down to it, do you really want to be the next Ford or GM?

The article also highlights three key points for continued growth:

  • supply chain professionals need to enhance the organization’s overall performance, not perform narrow administrative buying services
  • contributions must be measured across a spectrum that includes price, wider margins, lower overhead, reduced cycle times, faster time to market, reduced asset bases, and collaborative value
  • supply chain professionals need to take the initiative to identify and seek mutual product or service enhancements and organizational performance improvement

The recent article “Winning Together” in CPO Agenda stresses that successful buyer-supplier partnerships require deep understanding and joint problem-solving and that it is collaborative partnerships that provide breakout results in procurement.

It also states that changing the classic approach requires a new paradigm that is based on concentrating efforts on making major improvements with a few, carefully selected, suppliers and on major development and transformation on a select set of smaller suppliers that have been identified as “high future potential” suppliers. Suppliers in the first group are usually large suppliers where improvements can be leveraged over large volumes and suppliers in the second group are typically good, low-cost production suppliers with restricted capacity, a high ambition to grow, and the right attitude.

The article puts forth a change management process that begins by selecting approximately five key suppliers and ends with agreements with your chosen suppliers that centers on shared objectives. The process contains the following five steps that are detailed in depth in the article:

  • Visits/Interviews
  • Questionnaire
  • Network Mapping
  • Summary
  • 3rd-Party Facilitator Workshop

The article concludes by noting the very important point that the maxim “the customer is always right” is just not so, and, more importantly, that suppliers are often reluctant to tell customers when they are wrong or be the messengers of bad news. Lean supply chains require that all problems be identified, acknowledged and addressed. Moreover, when the customer is willing to admit that they are perhaps responsible for at least half of the problems, the authors have found that there is a significant increase in goodwill and enthusiasm for collaboration and joint efforts from the supplier.

The European Leaders Network [WayBackMachine] published the outcomes of a recent SRM roundtable in their article “The Reward for Good Relations” which featured commentary from a number of industry professionals including Matthias Gramolla, Paul Lucas, David Marchant, Jim Robinson, Mark Simmons, and Phil Reeves. These commentators made a number of important insights that revolved around the importance of collaboration as a key tool to address supply risk management.

One of the key points in the article is that managing the health of the relationship is a bigger priority than managing the risks associated with the relationship – since this collaboration will allow you to identify, address, and solve problems much more quickly than in a relationship without collaboration. The partnership approach is critical, relationship skills are crucial, and success relies on an objective focus with clear roles, responsibilities and measurable goals.