Category Archives: Technology

How Do You Find an Innovative New Vendor?

Brian Sommer over on ZDNet just ran a great post on how to easily identify the up and coming innovative vendors in the space. All you have to do is look at who the big established players are trash talking! After all, if the company isn’t innovative, they have nothing to fear from the competitor, and will say something like “yes they also have a solution suite that could potentially help you, but” … “they are missing these key features that we have found to be instrumental to customer success” or “we have done more implementations in your space” or “we have a more mature professional services organization” or “we fit better with the platforms and processes that you have in place” or “we are more committed to customer success” or “we have won more awards proving the maturity of our solution” and just shrug them off. But if the company is innovative and poses a real threat, they will try to trash-talk it out of your candidate pool. And they will use predictable language like “what they are offering is a cool feature, not an application” or “they’re inconsequential” or “their solution is immature and / or will never catch on“. These phrases are your first clue that this is a vendor you should be looking at. It might not be mature enough to meet all of your needs today, but maybe if you can bolt on the innovative new features they are offing to your existing ERP, you can, with a little elbow grease, extract more value and, as the company grows, be the first to take advantage of their new features and applications as an early adopter preferred customer.

And not only did Brian do a great job of pointing this out, he also created a great table that summarizes all of the common phrases an established, fairly un-innovative, company will use to trash talk an innovative startup in its infancy, a rapidly growing new competitor, and an upstart that’s all grown up now. And then, to complete the picture, he also points out what they say when the decide to acquire the grown up upstart because it has a more innovative solution.

Click on the image to be taken to the full table, and click this link to read Brian’s full post on the Software Smack Talk Playbook. It’s awesome.

 

What Elements Are Truly Necessary To Prevent Missing Links in Your Supply Chain?

A recent article in Canadian Transportation & Logistics that asked “where the missing links in your supply chain are” did a great job of of pointing out that when it comes to supply chains, what you see is what you get. And it often is the situation that the more you can see into the chain, the more benefits you can receive.

It also hit the nail on the head when it noted that the ability to view timely, accurate information from the beginning of the chain to the end is essential for:

  • reliable forecasting
  • accurate decision making
  • minimizing risks
  • optimizing inventory turnover
  • reducing days and costs in supply chain cycles
  • healthy cash flow and profits
  • customer satisfaction
  • competitive advantage

But when most companies rely on a patchwork of systems and software to address supplier management, purchase order processing, receipt of goods and inventory management, did it have the right checklist of critical system and software capabilities required to avoid the critical missing links that are currently present in most enterprises that are not Supply Management Leaders?

The article identified these necessary elements, which we’ll take one by one:

  • Real-time detailed visibility into every key juncture
    i.e. demand, procurement, production, transportation, and inventory and accounts payable (to make sure the invoices match the order), market data (to make sure quotes are reasonable), risk data (to detect potential volatility or issues as soon as the signals appear), and trade data (to inform you on issues of regulatory and customs compliance)
  • portals connecting the entire supply chain from order through deliver
    what year is this? 2002? there has to be e-integration all the way down through you supplier, and their suppliers, to raw material providers for key or scarce raw materials, but it doesn’t have to be a portal; heck, it could be as simple as the pull of a daily update EDI file from a secure FTP server or as complex as real-time asynchronous communication between multiple databases in a replication configuration
  • collaboration capabilities that allow stakeholders of the chain to readily share information on supply and delivery
    and communicate with each other, in real time, when they are both online
  • ability to integrate varying information formats from various supply chain partners
    which is a given and should be automatic; again, it’s 2012, not 2002
  • open-endedness with flexibility
    enabling easy modifications and integration with other systems and this is a definite must — avoid any system with proprietary integration methods
  • capability of generating alerts of events that require attention
    throughout the supply chain as most day-to-day management should be exception based, with the exceptions defined on your rules (and not the vendor’s)
  • ability to create “dashboards” that enable consolidate viewing of information from multiple sources
    in a manner that focuses on problem areas identified by missed metrics, bad data, missed data, or declining trends — generally speaking, you don’t care about the green, only the red

These were quite good, but it’s also very important not to overlook:

  • sourcing, procurement, logistics, and global trade solutions
    this could be one solution with dedicated sourcing, procurement, logistics, and global trade modules (or views) or multiple solutions that are interconnected — you need end-to-end sourcing to identify the right deal, procurement to secure it, logistics to get it delivered on target, and global trade to make sure there are no costly, disruptive snags
  • an analytic solution
    that lets you analyze trends and predict demand levels, market cost changes, and potential disruptions
  • out of the box ERP support
    because chances are that a number of supply chain partners are going to have one of the big ERP solutions and be relying on it at least partially
  • security
    as there will be a lot of sensitive data flowing back and forth — make sure it is encrpted and only accessible by authorized parties
  • adoption
    how many companies are currently using the solution, how big are they, how much third party support is there and what is the long term outlook for the solution

But if you can meet all of these requrements, and the collaboration flows, the the solution is probably going to prevent many of the critical missing links in many of today’s supply chains.

SAP bought Ariba. What Should You Do?

 

Don't Panic

 

With one hand, pick up your copy of The Hitchhiker’s Guide to the Galaxy, with your other hand grab a Pan Galactic Gargle Blaster, have a seat, and read a few random entries while you have a nice relaxing drink. And definitely don’t panic.

In fact, don’t even give the acquisition a second thought right now. Why? Despite what every e-Procurement, e-Sourcing, and Supplier Network vendor seems to be implying with their comments (as summarized by Peter Smith over on Spend Matters Europe), press releases, etc., the reality of the situation is that, for the time being, nothing is going to change and you don’t have anything to worry about.

Since no one else is going to spell it out for you, the doctor is.

  • Ariba was the largest pure-play vendor in the Sourcing/Procurement space
  • SAP is one of the largest ERP vendors in the space
  • Large Companies are slow moving
  • Large Companies have high overheads
    (and can’t afford to sacrifice revenue streams without replacements)
  • SAP has a Fusion road-map through 2020

When you put all this together, and consider what has happened with past acquisitions in both companies, the following picture quickly emerges:

  • SAP is going to slowly merge Ariba products into its suite(s) through Fusion
    but this is going to take years and in the meantime
  • SAP is going to continue to sell and support Ariba as-is in the interim
    because it needs to not only make its money back, but support the high overheads until it is in a position to absorb Ariba into it’s core platform and do away with needing to maintain a separate suite.

In other words, you have a few years to come up with a backup plan if the way SAP merges Ariba’s suite into their platform isn’t to your liking or if the renewal costs when it happens are too rich for your blood. The only people who need to panic now are SAP partners where a significant percentage of their business came from SAP referrals as SAP will no longer be referring anyone with Sourcing, Procurement, or Supplier Network needs to third parties. (Companies like Hubwoo might be in this boat.)

Now, depending on where you are in terms of a renewal, or how much data you have in the system, or how much you use the system, you might not want to wait a few years to start thinking about moving off of the platform if you are worried about it meeting your future needs, but you don’t have to rush into a decision. And you certainly don’t have to panic. Time is on your side.

What is Visibility?

Supply Chain Visibility is a hot-topic, and, as reported in this article in Logistics Management on Defining Visibility late last summer, was the hottest project in 2011 according to a Capgemini Consulting study. Fast forward to 2012, and visibility is a term I’m hearing from at least every other vendor as a selling point of their supply chain services and solutions.

Thus, at this point, I have to ask — what, pray tell, is visibility? When we look up visibility, the first definition returned from dictionary.com is the state or fact of being visible, which isn’t very useful since visible is defined as that [which] can be seen. So what do we have to see?

Well, if you talk to a software-based solutions vendor, we have to see the data. Specifically, data on where your order is in terms of production, shipment, or delivery. And this is good, but it’s not enough. While this will tell you that production on an order is three (3) days behind, it won’t tell you why. Is the plant recovering from a backlog, and about to put your order into overtime production tomorrow? Are they suffering from a worker shortage, or strike, and your order is delayed another week? Or have the components and/or raw materials not yet arrived? And if it’s the latter situation, why? Is it a transportation delay? A production delay? Or a raw material shortage that may take months to correct? So you need visibility into the status of your order and all of your supplier’s orders that impact your orders. But this isn’t always enough.

While it would be great to know as soon as a delay occurs that could potentially impact your supply chain, and give you more time to respond and potentially create and/or implement mitigations and counter-measures (such as finding an alternate source of supply or stepping in to help the supplier solve the problem), this still doesn’t give you any indication of problems that could be brewing. That’s why other vendors try to sell you risk-focussed data solutions such as financial viability reports (from credit-based data) and activity reports (from import/export data). But these solutions only allow you to judge supplier viability, they don’t allow you to determine if an external event in the supplier’s locale (such as war breaking out or a likely natural disaster) could take the supplier out even if they are financially viable and low-risk from a business perspective. So other solutions try to sell you country-based risk assessment solutions with data on each of the locales you are doing business with. And this is a type of visibility. As are sustainability tracking solutions which track sustainability data (with regards to environmental, legislative, and other types of compliance data) to try and predict current and future supplier health based upon a sustainability score that goes beyond pure financial data. And this is another type of visibility.

And if you had all these solutions, you could certainly argue that you had supply chain visibility, but the question is, how complete is it? How much do you need to see to be confident that the chances of an unpredicted event are sufficiently low and/or the chances of you not knowing about an unpredictable event soon enough to implement mitigations are sufficiently low? It’s hard to say. It probably depends upon your operation, your risk exposure, and the strength of your supply chain and supplier relationships.

Regardless, visibility is a concept that is hard to narrow down and no one approach completely solves the problem. Keep that in mind when evaluating solutions on the strength of their visibility.

No Interface, No Delay?

Apparently, according to a recent article in Inbound Logistics that proclaimed All In One, a good reason for buying an integrated ERP / SCM solution is the fact that if the solutions are integrated, then there is no interface between two separate systems that could cause problems or delays. An interface is another piece of software that, like the ERP / SCM solution, could have its own set of issues. And it’s another piece of software that has to be maintained.

However, this applies to integrated systems as well. Most integrated systems are composed of multiple modules, each of which has their own interface. As a result, the no interface, no delay argument doesn’t have a lot of merit. If there’s a bug in the internal API, then there could be a system failure in the sole-source system just as easy as there could be a system failure in an interface or a third party system.

The proper rationale for selecting an integrated solution is because it:

  • has all of the key features that are required,
  • meets the needs of the organizations and the users,
  • and brings the right value to the organization.

You don’t select an integrated solution because it:

  • is cheaper,
  • minimizes the number of suppliers you need to interact with,
  • or minimizes interfaces.

It’s not about cost, it’s about value. It’s not about supplier count, but what the suppliers can bring to the table. And it’s definitely not about the number of interfaces, but about the stability of the interfaces and whether or not they enable access to the right data. The short story is that you can make arguments for and against either solution, but it all comes down to the merits of the solution with respect to your organizational needs, not a generic pro/con checklist.