Category Archives: Supplier Management

Decideware: An End-to-End Agency Lifecycle Management Solution Part II

In our last post, we re-introduced you to Decideware, global providers of an end-to-end Agency Lifecycle Management (ALM) solution, with offices on three continents (in Sydney, San Francisco, and London). We quickly overviewed the five core modules of the integrated ALM solution that they offer, and indicated that we would dive into them in the next two posts. So without further ado, here we go.

Capability

The capability module walks you through the six-step process of gathering appropriate information and approving the Agency as a potential supplier to the organization.

  1. Entity
    The first step is to gather the firmographic data, including the geography, the number of employees, the administrative and legal contacts, the revenues, the primary office locations, and vendor status information
  2. Type
    The next step is to determine the primary, secondary, and tertiary type of the agency. Is it creative, digital/interactive/social media, planning, relationship marketing, public relations, branding, investor relations, etc? An agency can only have one primary focus, and that focus must contribute to 50% or more of revenues to be primary. Similarly, it can only have one secondary focus, and that focus should contribute to 25% or more of revenues. Any additional focii are tertiary.
  3. Specialties
    In this step, a more complete picture of the Agency capability is created through the gathering of supporting data related to market segments, experience, media creation, etc. to fill in a more complete picture of the suitableness of the Agency for the company.
  4. Conflicts
    The next step is to determine if there are any potential categories of conflict for the company. If you’re in Pharma, and they are currently working on a campaign for a new heart disease prevention drug for your competitor, then you don’t want them working on a campaign for your heart disease prevention drug.
  5. Engagements
    What engagements for your company has the Agency worked on, and what engagements is the Agency currently working on? (It’s not uncommon to find out that another Marketing division in another geography is already using another office of the Agency for their campaign!)
  6. Approval
    Once all of the data has been gathered, and an individual with decision authority has decided that the Agency is qualified to work on (select) marketing campaigns for the organization (subject to no conflict), the Agency is approved as a potential vendor.

Scope of Work

The scope of work module walks you through the six-step process of creating a scope of work and approving the scope of work for execution by the Agency.

  • Scope
    Defines the scope of the project being undertaken – duration, geography, contractual details, and summary.
  • Objectives
    What are the objectives? More visibility? Market share? Better brand ratings? And how will they be measured.
  • Work
    The specific deliverables – tv commercial, print advertising, radio segments, etc.
  • Staffing
    The staff available to work on the projects.
  • Costs
    The costs, according to the costing model specified. This is one of the highlights of the Decideware Scope of Work solution. With a custom Excel-like spreadsheet interface, costs can be captured by resource, by function, by campaign, or by deliverable to the desired degree of detail. This not only lets the organization get a grip on what the main cost components are, but how one agency compares in fees and rates to another.
  • Approval
    Once all of the data has been gathered, and an individual with decision authority has decided that the scope of work is complete, a contract is cut and the work can begin.

Briefing

One of Decideware‘s newest Agency Lifecycle Management module, this module is designed to capture the day-to-day interactions with the Agency. It’s like a Community Communications Management and Balanced Scorecard rolled into one. Since this is still in beta with select customers, we’ll cover it at a later time once the first version is finalized and we’ve dived deeper into the nuances of Agency Relationship Management.

Tomorrow we’ll cover the Evaluation and Dashboard modules and talk about some unique capabilities of the Decideware platform.

Decideware: An End-to-End Agency Lifecycle Management Solution Part I

In our last two posts we discussed Agency Lifecycle Management (ALM), the criticality of such to Marketing, and the need for Supply Management to support (ALM) end-to-end if Supply Management wants to get the sacred cow Marketing spend under management. We also outlined the four fundamental phases of Agency Lifecycle Management, key requirements of each phase, and the capabilities that Supply Management has to bring to the table to get a seat at the table. We concluded the post by noting that if Supply Management doesn’t have the requisite processes and technologies at its disposal, it should get them and that there were solutions out there.

One of the leading solutions in Agency Lifecycle Management is Decideware. Decideware, which was first covered on Sourcing Innovation back in 2010 (in this post), started out with the goal of building a SaaS Supplier Performance Management system to allow organizations to get a grip on strategic supplier management. However, in the process, they discovered that Marketing, in particular, was significantly underserved. So they started to build specific features, and then modules, for Agency Performance Management. However, the deeper they went down the rabbit hole, the darker they found it to be. Marketing desperately needed an end-to-end Agency Lifecycle Management solution, but at the time, no one was offering it. So they built one. Then they discovered, now that they had a light to guide their way, that they rabbit hole was far deeper and far darker than anyone thought. So now they are extending their ALM solution, considerably. And Marketers are doing the dance of joy*.

Currently, the Decideware solution has one module for each of the core phases of Agency Lifecycle Management plus a dashboard. The core modules are:

  • Capability
    which acts as the main interface to the underlying AIM (Agency Information Management) system that underlies all of the modules and allows information on Agencies to be entered, maintained, and searched
  • Scope of Work
    which is used to capture the complete scope of work in a methodical process that can support multiple workflows depending on the fee type (function, resource, deliverable, or agency) and project
  • Briefing
    which is used to capture the interactions with the Agency during each phase of the relationship
  • Evaluation
    which is used to record actuals, cost details, and approvals

and

  • Dashboard
    which provides a unified interface to all of the modules and functionality contained in the system; from the dashboard, the user can search all of the Agency data and retrieve lists of agencies by geographies, capability, scope of work, and other relevant criteria

The system is tightly integrated and fits together quite nicely. From any point in the SaaS solution, a user can drill into the information at hand and quickly get to the information she needs. And if she doesn’t know what to do next, each module has a well-defined step-by-step workflow that will guide the user to optimal results. In the next two posts, we will dive into the Decideware solution in more detail.

* and I’m told it’s a sight to see 😉

What Costs Your Supplier More? Their Warehouse or Your SIM Practices?

I know this question is a little out of left field, but it’s an interesting question in that both are costing your supplier money and, therefore, both are costing you money (as all costs get passed up the supply chain in the end).

According to an article in DC Velocity last fall on how distribution centers lose thousands of hours a year on unproductive workflows (Nov 29, 2012), each worker loses an average of 15 minutes of productivity in an eight-hour shift due to process inefficiencies. Assuming these are union workers who get an hour for lunch and thirty minutes for breaks, that says that almost 4% of the work-day is being wasted. In a warehouse with 50 workers, it adds up to about 500 days of lost productivity, which is significant as this equals the salary of 2 workers, which costs the average company about $60,000 annually in the US.

Gartner estimates a typical company spends an average of $1,000 in supplier management costs annually per supplier. Part of this cost is Supplier Information Management, and, specifically, the (initial) creation and maintenance of supplier profiles consisting of contact information, insurance certificates, compliance tracking, and product catalogs, just to scratch the surface. While the amount of time to create and maintain this profile, and thus the associated costs, vary, on average it can be estimated to be about $700 as all of the major vendors and analysts seem to agree that a good SIM solution reduces supplier management costs, on average, by 70%.

Now, at this point, you’re probably asking what’s the point of this article as 60,000 is clearly much greater than 700 and there seems to be no comparison — but hold on! You have to remember one very important point — you’re not the supplier’s only customer. The supplier has other customers who, if they are implementing SIM, will also be delegating this work to the supplier who will have to create another, almost identical, profile, and upload all of the relevant information, etc. And today, you can assume that any major customer of the supplier is implementing at least some basic level of SIM given that they will be sued and/or fined seven ways from Sunday by the U.S. Government if they don’t insure the organization is not on a watch list, that payments are properly reported, etc.

If the supplier is a small contract manufacturer who only has 50 customers, then the supplier would be spending $35,000 just creating and maintaining SIM profiles. That’s one person’s salary. But if the supplier is a large office supplies vendor with 500 customers, that could theoretically be $350,000 worth of man hours to properly maintain all of the requested profiles. Ouch! (Needless to say, not all profiles are going to be accurately maintained in this instance!)

In other words, a sudden surge in the popularity of SIM combined with the slew of systems (not all of which are created equal) that are now available and being implemented by various companies will add a costly burden to your suppliers, as you don’t all use the same SIM solution and, even when there is overlap, not all SIM solutions allow a vendor to create one master profile and share the relevant information with each supplier who wants access to the profile. Done right, SIM is a great technology, but the problem with a lot of the (second tier) solutions is it’s not done right. Many of the solutions are built for the buyer and the supplier is a bit of an afterthought, resulting in a solution where a supplier needs to create and maintain an instance of their profile for each buyer. As a buyer, it’s imperative that you don’t buy, and encourage, such a solution because all this does is shift the burden to your already stretched supplier and doesn’t help anyone.

It’s important to make sure that any SIM solution you buy allows a supplier to define a master profile and share the relevant data with all relevant buyers on the platform with just a click of the mouse and allows the supplier to reuse pre-existing information whenever relevant. A supplier should never have to enter the same piece of information more than once. Otherwise, you’re wasting his time and your money. (A really good SIM solution would allow a supplier to import a profile he already created in a competitive product, but SI hasn’t seen that ability in the SIM solutions of any of the major players yet.)

Lavante Connect – Streamlined Supplier Self Management

Lavante, a provider of Supplier Information Management (SIM) and SIM-based Recovery, has just released a new version of Lavante Connect, their supplier self-management solution.

Lavante Connect is one of the more powerful, and more streamlined, supplier information self-management solutions on the market. In the Lavante Connect solution, the supplier is walked-through the 3 to 5-step process of completing their profile and is updated with respect to their progress, and percentage of work remaining, after each step. In the Lavante system, the supplier goes through the following easy to follow process:

  1. Company Profile
  2. Legal Identification
  3. Certifications
  4. Payment Information (may be optional)
  5. Specific Information (may be optional)

Profile information walks the supplier through the definition of headquarters information, address information (notices, payment, warehouse, etc.), references, ownership, diversity, business structure, and contacts.

Legal ID walks the supplier through entry of business numbers, tax numbers, and other government identification in the countries that the supplier operates in. It also makes sure that the supplier uploads the appropriate documentation required by the customer, such as W9s in the US.

Certifications walks the supplier through the insurance and certification requirements of the customer and makes sure that the supplier specifies all of the relevant information and uploads the appropriate documents.

Payment walks the supplier through the specification of the payment types they accept (pCard, check, EFT, wire, etc.) and the specifications for each payment type.

Specific Information, of which there can be more than one tab, walks the supplier through the specific information requests unique to the client, such as required product and service information, sustainability information, etc. and the documentation that needs to be supplied.

The ease of use comes not only in the easy to follow registration, and profile completion process, but the fact that the system:

  • validates everything that can be validated,
  • eliminates duplication of data entry whenever possible, and
  • forces e-signatures and verification for all legal documents.

Not only does the system validate that all data entered is in a valid format, but it integrates with as many third party systems as possible to verify that the entered data is correct. Business numbers and tax numbers are automatically verified against government databases, address information is validated against address databases, bank and p-card information is verified through penny-transactions, etc. The system makes it hard for a supplier to make a mistake and harder for any errors to persist for more than a few days. It also alerts the supplier as soon as certifications or registrations are about to expire or information has to be re-verified (according to the customer’s schedule, where such customer may require re-verification of contact information every six months).

All address, contact, and similar data is automatically indexed and can be mapped to any other information requirement that makes sense. So, if headquarters also happens to be the payment and legal notice address, it only has to be entered once. Same for contact information.

For the most part, SIM isn’t complex, and neither are supplier portals, but few master the usability and simplicity required to onboard even the technology unsophisticated supplier quickly and easily with complete profiles, no errors in critical information, and fresh profile data. Lavante Connect is in this group.

How Do You Identify a Stellar Supplier?

Relating to Wednesday’s post where we asked what is necessary to get a grip on risk before outsourcing to a new supplier, you also want to know how you can identify who is likely to be a stellar performing supplier in the first place. This is also a difficult question, but if you approach the subject from a supplier performance leadership perspective, you have one good starting point, which is mentioned in this recent article over on SIG on “why supplier performance management should be supplier performance leadership” .

Specifically, you look for a supplier that actively self-manages. You want a supplier which measures and reports its own performance against SLAs and KPIs, identifies the corrective actions it needs to take, devises a plan to put those actions in place, and then promptly informs you when it has determined that it is not meeting its targets with an outline of the corrective actions it intends to take, when they will be implemented, when it expects to improve, and when you will get a follow-up report. The supplier should want to not only meet the expectations placed on it, but get to the point where it can exceed those expectations before the contract comes up for renewal. In short, a supplier that talks the talk when it comes to customer service is good, but a supplier that walks the walk is better.

Secondly, you should look for a supplier that wants to collaborate. While it’s great to have a supplier that will bend over backwards to give you anything you want, if what you want is inefficient and costly, it’s better to have a supplier who will work with you to jointly identify opportunities for efficiency improvements and cost reductions. You need to remember that most of the smart people are outside of your organization, no matter how big you are, and if you want to out-innovate the other guy, you have to use all of the know-how available to you up and down your supply chain. There’s a reason the big buys have set up innovation networks to tap external parties — they know they can only do so much. The real winners in today’s economy are not necessarily those that can innovate, but those that can identify the right innovations to incorporate into their products and services at the right times to maximize profit.

And while this may not be everything you should look for in a perspective supplier, if you want a supplier that will lead the pack, this is where you start.