Category Archives: Supply Chain

Winning the Battle on Risk: Information and Technology

Today I’d like to welcome back Jim Lawton, VP and General Manager of Open Ratings, a D&B company, back for a follow-up on his “Five Types of Supply Risk” piece and the role of information and technology in risk mitigation.

Let’s face it – the single best way to reduce your exposure to risk introduced by suppliers is to know them. And I mean really know them. For any of the five types of risk we identified last time, it means having insight well beyond what you track today. Not only how much they cost you, but also how much they cost your competitors – and how well they perform for your competitors. It means knowing about everything from EPA and OSHA violations and changes in their leadership to their growth plans and whom else they do business with.

Some great sources of information into just how well your suppliers are doing, include things like:

  • Real estate transactions
  • Legal actions
  • ITAR filings (esp. in the case of dealing with overseas suppliers)
  • SEC filings
  • Tax returns

At its worst, it means knowing things about them that they aren’t likely to tell you. So you need to go out and find it.

Sure. Given the likely state of your procurement operations – more suppliers, not less –

in spite of rationalization; suppliers 12 time zones away operating in countries with much more lax reporting regulations and fewer resources to actually manage all of this, odds are good that right now you are asking “how much time does this guy actually think I have to spend investigating every little bit of data and figuring out if it matters to me!?!”

The good news is that you don’t have to do. Technology makes it possible. Think about it: Intelligent systems are everywhere. Your car tells you when it needs service and books an appointment at the dealer; your GPS system gives you an up-to-the-minute way to navigate out of a traffic jam; your house knows when you are home and turns the lights on just as you move into each room.

So why shouldn’t it be possible to apply smart solutions to make your life easier – and shrink the risk factor.

Today, data aggregation solutions are able to do what you would do, if you had the time: scan thousands of sources – regulatory agency sites, financial and credit reports, news releases, tax and real estate filings, competitors’ internal systems and much, much more. With a million documents on your desk, you’d pick out what matters and analyze it within the context of your own business. Using your years of experience and deep knowledge about the supplier, you’d decide to act on it if needed. You might switch suppliers or intervene to shore up a critical supplier.

Information, technology and you. Risk on the run. Life is good.

It’s the new age of the D-D-S-N!

To the tune of Y.M.C.A. by the Village People.

Young man, there’s no need to feel down.
I said, young man, pick yourself off the ground.
I said, young man, there’s no need to frown.
We have a new name for the problem.

Young man, there’s a term you should know.
I said, young man, when you need to save dough.
Look into it, and I’m sure you will find …
It will turn water into wine.

It’s the new age of the D-D-S-N.
It’s the new age of the D-D-S-N.

It has everything young techs need to enjoy,
New systems that run on new toys …

It’s the new age of the D-D-S-N.
It’s the new age of the D-D-S-N.

You can pride yourself on being one with the crowd,
You can shout it out loud …

Young man, I said are you listening right now?
I said, young man, do you want to know how?
I said, young man, it’s the future of tech.
But you’ve got to say what the heck!

No man does it all by himself.
I said, young man, put your pride on the shelf,
And just move on, to the D-D-S-N.
It will solve your problems today.

It’s the new age of the D-D-S-N.
It’s the new age of the D-D-S-N.

It has everything young techs need to enjoy,
New systems that run on new toys …

It’s the new age of the D-D-S-N.
It’s the new age of the D-D-S-N.

You can pride yourself on being one with the crowd,
You can shout it out loud …

Young man, I was once in your shoes.
I said, I was down and out with the blues.
I felt no one understood supply chain.
I felt the whole world was inane …

That’s when someone came up to me,
And said, young man, here’s an answer for thee.
It’s a movement that’s called D-D-S-N.
It puts you in control again.

It’s the new age of the D-D-S-N.
It’s the new age of the D-D-S-N.

It has everything young techs need to enjoy,
New systems that run on new toys …

It’s the new age of the D-D-S-N.
It’s the new age of the D-D-S-N.

Young man, young man, there’s no need to feel down
Young man, young man, pick yourself off the ground

It’s the new age of the D-D-S-N.
It’s the new age of the D-D-S-N.
Young man, young man, it’s the future of tech.
But you’ve got to stand and say what the heck!

D-D-S-N
Put your faith in the D-D-S-N
No man, young man, does it all by himself
Young man, young man, put your pride on the shelf

D-D-S-N
It’s time to choose the D-D-S-N
D-D-S-N
Young man, young man, I was once in your shoes
D-D-S-N
Young man, young man, I am now over the supply chain blues.
D-D-S-N

Servigistics – Tomorrow’s Strategic Service Management Today

In yesterday’s post, Strategic Service Management, I talked about the importance of making the customer efficient while maintaining a profit – something you are likely to only achieve in today’s highly competitive marketplace with strategic service management – a proactive approach to service management that balances service strategy, resources, commitments, and pricing that supports the integration, optimization, and efficient management of core business processes, adds to your overall business solution, and differentiates your offering from that of your competitors.

Why is it important? Despite the huge investment in IT to support the front end of the sales cycle (which can consume up to 85% of the IT budget in some organizations), in today’s competitive market, you can still see declining sales without the right strategy – which today needs to involve services. After all, in a well run services organization, particularly in the durable goods and consumer goods verticals, post sales service can provide a nice margin of 20% to 50%, which not only turns service from a cost center into a profit center, but increases your profit while decreasing your costs (since you simultaneously optimizing your resource allocation).

So, how does Servigistics (acquired by PTC) tackle Strategic Service Management? Three ways: parts management, pricing management, and workforce management. What’s the difference?

Service Parts Management is the process of ensuring the right part is available at the right place at the right time. The alignment of planning, forecasting, and inventories, it makes sure you can respond to a customer need as it arises, without costly expedited shipping, unnecessary wait times, or financial losses (that can result from service level guarantees).

Service Price Management is the management and optimization of service parts prices by way of sophisticated pricing methodologies, advanced optimization techniques, and adaptive business logic to maximize revenue. Pricing is more difficult than you might think. It’s not about charging as much as you can – because that limits you to a few customers. It’s not about charging the most competitive price, because that might cut your margins to the point where sustainability is at risk. It’s finding the right balance that maximizes your customer base while maintaining profitability.

Workforce management is the process of optimal workforce scheduling to make sure that you have the right number of service professionals on duty and the right amount of service equipment (and vehicles) available to deliver committed levels of service 24 hours a day, 7 days a week, 365 days a year. This involves monitoring and adjusting your schedules on a continuous basis, optimally dispatching and routing service professionals as service calls come in, and aligning your workforce skill set to meet your evolving customer needs.

So, optimize the workforce to deliver the right part at the right time at the right price and you simultaneously minimize cost and maximize resource utilization and revenue opportunity. Does it address everything? Well, for starters, you still need a good strategy and product life cycle management tool to understand what might go wrong, when, and what you will need to fix it, so it’s not yet a panacea solution, but it is a great start. All you have to do is look at their customer list – a Fortune 500 who’s who of High Tech, Heavy Equipment, Automotive, and Aerospace – and the magnitude of savings a service management solutions suite has enabled for them. (As per a 2005 Business Week article, Avaya reduced service parts inventory from $250 million to $160 million, Sun Microsystems saved $40 million and Dell nosed out Hewlett-Packard for the top spot in the U.S. hardware support market, growing its service business unit by more than 20%.)

Strategic Service Management

As I’ve been mapping out the supply chain space, one of the oft-overlooked areas that I keep stumbling on is service management – and by that I am referring to customer service management, and not just outsourced services management. After all, I do preach Total Value Management (TVM), and unlike Total Cost of Ownership (TCO), TVM is concerned with all of the life-cycle costs associated with a product, and that includes servicing and customer returns.

I know I haven’t blogged much about this area in the past, in fact, my only post to date has been my post on The Art of Service Management back in November. In that post, I described P.T. Harker’s talk on the evolution of service management and how the new goal of service management is to make the customer efficient and how making the customer a part of the process helps to ensure that the product or service is what the customer wants, which in turn increases your chancing of selling the product or service to the customer.

But service management is about more than just making the customer efficient and sufficiently satisfied – it’s about making the customer efficient and sufficiently satisfied and making a profit at the same time. With enough effort, you can make almost any customer efficient and sufficiently satisfied, but if you spend more than you get, you will not stay in business very long.

How do you do that? Strategic Service Management. A proactive approach to service management that balances service strategy, resources, commitments, and pricing that supports the integration, optimization, and efficient management of core business processes, adds to your overall business solution, and differentiates your offering from that of your competitors. How do you get there? Well, as with any new initiative you find a partner to help you get to the next level. Who should you choose? That’s up to you, but one provider you should look at is Servigistics (acquired by PTC) – the second stop on my whirlwind virtual tour of Atlanta – and the subject of an upcoming blog post.

The New and Improved I2

During my whirlwind tour of North Dallas, I was lucky enough to be able to meet with both Sarinder Chhabra (Senior Vice President) and Manish Govil (Program Manager) of i2 Technologies to talk about what i2 has been up to lately and where they are going.

I’m sure many of you still consider i2 to be the gold-ring exclusive services provider to the top ten or top twenty aerospace, automotive, high tech, and chemical providers, with deep service offerings beyond your needs and capabilities, and price tags to match, but that’s the i2 of old. Having conquered best in class, they realized that they only had two options for growth: conquer new verticals or address a larger market-space. New verticals would be a great start, and their generic process solutions could be customized to the needs of just about any vertical, but the real market lies in the mid-market, where most companies reside. Therefore, they decided to entirely re-architect their software and solution offerings to address the needs of small and large alike! And it sounds like they got it right.

The following are seven key points that I took away from my discussions.

  • They’ve re-architected all of their modules and major sub-modules as Service-Oriented Architecture enabled components and developed a new AGILE business platform that allows them to integrate just the components you need.
  • They’ve enhanced their technology architecture to include best of breed third-party products, such as Endeca’s (acquired by Oracle) search technology and Denso’s OEM catalogue.
  • They have embraced Software as a Service principles and will offer hosted solutions or managed services as well as event-based offerings.
  • They have been working hard on a next generation supply management solution that integrates the software and services you need to be successful.
  • They have been actively creating and embracing partnerships, and will happily work with complimentary providers to provide you a full suite of connected and integrated products to give you an end-to-end solution for whatever part of the supply chain you are attacking.
  • They have been working hard to translate their broad in depth knowledge base of industry best practices into generic processes that can be built into your configured software solution.
  • They have been working hard to transform from a software provider to a solution provider – to offer you the services, be it generic software, custom software, consulting services, or managed services, in-house or through partnerships – you need to succeed.

I look forward to diving into some of their new offerings in the near future.