Category Archives: Technology

Insufficient Sleep is a Public Health Epidemic – Don’t Let Your Supply Chain Give You Insomnia!

As per this feature on the Centers for Disease Control and Prevention website, insufficient sleep is a public health epidemic, which shouldn’t be surprising given that over one third of the US adult population gets less than 7 hours of sleep a night, when the average adult needs 7 to 9 hours a night. (Source: National Sleep Foundation)

Why? There’s a plethora of reasons. Overwork. Stress. Late Night Talk Show Addictions. Facebook and Twitter Addictions. And Insomnia. However, Supply Chain Insomnia should not be a reason.

According to this ridiculous article (on causes of supply chain insomnia identified) over on Supply Chain Digital, the following 10 issues are keeping supply chain leaders up at night and giving them insomnia:

  1. Collaboration
  2. Inventory Management and Planning
  3. Demand Management and Forecasting
  4. Supply Chain Network Optimization
  5. Supply Chain Risk Management
  6. Training and Development
  7. Sales and Operations Planning
  8. Material Purchase Price Reductions
  9. Performance improvements in warehouses and RDC’s
  10. Supply Chain Segmentation

There’s no excuse for any of these issues to be keeping you up at night. There have existed great Best-of-Breed technology solutions that have enabled an organization to solve the following issues for years, many of which have been profiled on this blog:

  • Collaboration
  • Inventory Management and Planning
  • Demand Management and Forecasting
  • Supply Chain Network Optimization
  • Sales and Operations Planning

The following can be appropriately addressed with the right mix of talent, process transition, and technology:

  • Supply Chain Risk Management
  • Performance improvements in warehouses and RDC’s
  • Supply Chain Segmentation

And the following is easily solved by actually putting money back into the training budget and letting your people go on courses, instead of taking money out of the training budget to increase CXO pay while working your talent half to death:

  • Training and Development

Which leaves only one issue to worry about:

  • Material purchase price reductions

But when you get right down to it, we’re in inflationary times and everyone knows it. Prices are going to go up and people are going to grudgingly pay reasonable, minimal, price increases. So the issue is not price reductions, but cost containment, and this is easily accomplished with

  • market intelligence and an understanding of what the real price currently is,
  • process improvement that takes price out of raw material acquisition, product production, and logistics, and
  • creative re-design that reduces the need for costly raw materials and production processes.

And all of this can be accomplished if you have the right talent with the right training. So invest in your talent*, give them the right technological tools, and let them transition your processes to where they need to be. Then you won’t have to worry about any of these problems.

*It’s not like the 95% investment in the top 1% has done any good! (Source: UC Berkeley Study)

Supply Chain 2020 – What Will It Take to Get There?

I’ve been noticing an uptick in Supply Chain 2020 discussion and blogging lately, despite the fact that 2020 is only 7 years away. Why do I say only? While 2020 may be 28 years away in ‘Net Time, given the pace at which the average Supply Management Organization moves, that’s breakneck speed! (It shouldn’t be, but it is. That’s why, despite the fact that it’s 2013 and e-Invoicing is old enough to drink, approximately 90% of invoices are still paper-based.) Furthermore, most prognosticators want to make predictions that are far enough away that either their prediction will almost guaranteed to be a reality by that time or everyone will have forgotten completely about their prediction by then. (Given the rate of increase in ADD/ADHD in recent years, that might be long enough for all of us to have forgotten everything from today, but I’d like to think that some of us may still have a long-term focus, and a longer-term memory, in 2020.)

A lot of these discussions are focussing on what the Supply Chain is going to look like in 2020, what technologies are going to drive it, and how the Supply Chain is going to run. These discussions are interesting, because we all want to know what tomorrow is going to look like today, but it’s not 2020 — it’s 2013. And whatever vision you have of 2020 is not going to become a reality without a plan to get there. That plan will, of course, depend on your vision and your end goal, but regardless of the plan you choose, there are three elements that will be required to get there.

What are these three elements? The Three Ts of Strategic Supply Management, of course!

  1. Talent
  2. Technology
  3. Transition

No innovation, or renovation, will succeed without these 3T’s, and an alignment thereof.

Despite the need for transportation, Supply Chains don’t run on trucks and trains — they run on Talent. Talented people identify potential suppliers. Talented people run strategic sourcing events. Talented people negotiate and execute contracts. Talented people collaborate with supplier personnel to ensure quality, on-time delivery, and quick issue resolution. Talented people deliver to Sales and Marketing what the consumers want.

And what do these talented people use to accomplish their tasks? Technology. Real-time communication with suppliers around the globe requires modern technology. Value-generating strategic sourcing events require good strategic sourcing technology. Contract generation, management, and supplier performance management requires good collaboration technology. And the list of technological needs goes on.

However, the technology that is required, for most organizations, is not the technology that the organization currently has. In order to acquire and implement this technology, the organization will have to transition appropriately. This will involve mapping current processes, mapping desired processes, identifying technologies that can appropriately support the desired processes, and putting together a transition plan, that takes into account the needs (but not necessarily the wants) of all of the stakeholders and that is supported by the appropriate executive(s) in the C-Suite, that will get the organization there.

So if you want to get to 2020 in style, first get to 2014 in-style and focus on the 3Ts. This is one best-practice that is year-independent.

While You Were on Summer Vacation, Vendor Posts, Part II

While you were on summer vacation, SI was powering away with daily posts and continuing to cover some of the leading vendors in the space, presenting a number of deep dives on their technology platforms. Here is a short recap of some of the coverage you might have missed!

Trade Extensions

In our post on Trade Extensions (TE), where we noted that there is still no rest for the wickedly powerful, we told you that their coders never sleep (or at least not very often) and that, since SI’s last coverage in 2011, they have added more powerful fact sheets, enhanced browser-based reporting and visualization, and a formula analyzer – that pacts a much bigger punch than you’d expect. It’s often the case that a user has no clue why one model solves in a second and an almost identically sized similar model is still being processed an hour later. This is because the more complex the models get, the harder it is to pin down why they aren’t quite doing what they are supposed to be doing. The TE formula analyzer allows a user to analyze a formula and see how it is defined, how long it is taking to calculate with respect to the other formulas in the model, and what is affected by the formulas or changes to the formula. In addition, if they exist, it can suggest formula modifications that would allow the model to solve faster. However, just knowing where the problem lies is a great help if a model is solving slow.

Coupa

In our post about how it’s 24/7 for Robbie and the Coupa Factory, Part III, we noted that Coupa had completed Release 9, were on their way to finishing Release 10 (now available) by the end of the quarter, and had just released a new e-Sourcing module, which made them one of the first providers to offer an integrated end-to-end e-Sourcing and e-Procurement solution. Their new sourcing offering, which is e-Sourcing 1.0 with RFPs, RFQs, RFIs, basic reverse auctions, and basic project management and not much more than you’d find in any basic e-Sourcing suite, is still enough for an average mid-market company and impressive in that it’s as easy to use as the rest of the platform. It’s a quick way for a company using Coupa that does not have a sourcing solution to transition from Procurement to Sourcing. Plus, when you add the new expense management capabilities and catalog functionality, it’s a very quick way for a mid-market organization behind the sourcing and procurement curve to get closer to where they need to be quickly.

Kinaxis

In our posts about Kinaxis and their new paradigm for real-time end-to-end supply chain management (Part I, Part II, and Part III), we described how this extremely unique Supply Management vendor offers a single platform to take your Supply Management Operations to the next level once you have implemented e-Procurement and put your spend under management, optimized your strategic sourcing, mastered e-Transportation and Trade Management, achieved e-Visibility to manage your risk, and optimized your network design. This platform, which is successfully used by product, risk, and change managers in Supply Management to manage demand, do S&OP, undertake supply & capacity planning, do production benchmarking and scheduling, manage inventory, handle new product introduction (NPI), perform order analysis and planning, manage supply, improve profitability, and collaborate with suppliers, among other things, is designed to allow supply management professionals to get answers to strategic planning questions like the following in real time:

  • what is the impact of a supplier shutdown due to a fire in the plant?
  • how can I launch a new product a quarter early?
  • what if a user mistakenly changes an inventory parameter?
  • what would happen to our ability to fulfill demand to our other customers if we accelerate fulfilment of an emergency order for a preferred customer?
  • how can we effectively reengineer our planning processes

The Kinaxis solution supports very complex, but easily generated, what-if scenarios that will allow a user to ask these questions and get an answer in a few hours, as compared to the days, or weeks, it would have taken them in the past.

Come back Monday and we’ll tell you about three more recently covered companies you might have missed!

PrimeRevenue: Priming Your Financial Supply Chain for Success, Part II

In Part I, we discussed how PrimeRevenue, a provider of Supply Chain Finance solutions that provides supply chain finance solutions to over 12,000 customers, including a large number of Fortune 500 and Global 3000 companies, in 40 countries and that processes Billions of dollars of transactions each year, provides a supply chain financing solution that goes beyond just providing a platform to sell receivables and includes an analytics component that helps a buying organization figure out how to best meet its working capital needs.

In particular, as part of their platform, they provide a module by the name of SCiMap that provides a consolidated and classified analysis of your spend, enriched by insights from PrimeRevenue’s global database, based on detailed and updated market intelligence that allows you to make better buying decisions as well as negotiate optimized payment terms, putting the power to improve your working capital in your hands. It does this by analyzing all of your spend data, presenting you with potential opportunities for payment term extension, and providing you with a what-if analysis platform that allows you to tailor a plan to meet your needs in a manner that is consistent with your level of risk.

The potential opportunities for working capital improvement are summarized on the unique SCiMap dashboard that summarizes:

  • Commodity Standard Opportunities
    for which commodities are you paying faster than market average?
  • Vendor Standard Opportunities
    which vendors are you paying faster than your competitors?
  • Parent Standard Opportunities
    which vendors are you paying faster than the average time in which their parent or sibling organizations are paid?
  • Country Standard Opportunities
    which vendors are you paying faster than the average DPO for the country?
  • Cost Neutral Opportunities
    which vendors could be paid later with no impact to their finances? (e.g. they
    are cash rich while you are cash poor or they are financing at 90 days and you are
    paying at 60 days)
  • Discount Opportunities
    which vendors could you convert from early payment discount terms (that they are
    unable to effectively take advantage of) to standard terms?
  • Inventory Turnover Opportunities
    which terms could be extended to match inventory days and associated carrying costs?
  • Buyer Standard Opportunities
    which vendors are you paying faster than your average payment terms?
    (note that if your average payment terms are worse than market averages, these may
    not be real opportunities)

From this dashboard, that will typically identify hundreds of millions of working capital that could potentially be freed up in a typical multi-billion dollar company within a matter of weeks, a senior Supply Management analyst can dive into each pot of opportunities, identify the commodities and vendor in question, access the credit-rating and average finance rate for each vendor, and determine if the opportunity is real or not. SCiMap can even do program design to help procurement determine what suppliers will be targeted first based on different criteria to maximize the opportunity.   From here, the buyer can identify the real opportunities for working capital improvement that will not endanger the vendors or increase the overall supply chain cost to the end consumer. The Supply Management analyst can then create a term extension model that will benefit the organization without hurting the supply chain.  Then in SCiMap procurement can report what actually happened in execution to see where the model was successful or had challenges.

This is important because, despite the best efforts of your accounts receivables department, receivables collection will only take an organization so far, which means the organization will have to hang on to cash longer to improve working capital at some point. Inventory optimization will help, but if the Supply Management organization is mature, inventory will have been optimized long ago and there will be no more opportunities to improve working capital. Furthermore, during periods of prolonged recession, you know that Treasury is going to demand term extension as a way to improve the cash position of the company, and you have to be prepared for this because you know better than everyone that you can’t just increase payment terms from 60 to 90 and not negatively impact your supply chain. Not only will some suppliers be unable to bear the term extension, others will take back the benefits that you negotiated in exchange for faster payment. Preferred customer status and order fulfillment during a supply shortage? Forget it! Faster-than-guaranteed response times on service? Dream on! Marketing perks? Ha ha! And let’s not forget the fact that if you are already paying some vendors slower than market average for the commodity, vendor, or country, you might be paying more than you have to and speeding up those payment terms might decrease your overall costs – not having to pay at all improves working capital much more than paying late.

The SCiMap solution, which is unique, is a must-have for any organization that wants to truly optimize it’s working capital in a way that won’t come back to bite it in the @ss at contract renewal time, especially when you consider the fact that PrimeRevenue has analyzed trillions of dollars in spend and will only present you with opportunities for consideration that are real for at least one group of companies in the global supply chain. While all the opportunities may not be real for your organization, you won’t waste time analyzing commodities or vendors that obviously cannot handle a term extension. This gives you the ammunition to push back on Treasury or the C-Suite when they get the hair-brained idea that just because their competitor was able to increase payment terms by 30 days and get away with it that your organization can too.