Category Archives: Technology

Supply & Demand Chain Executive Helps You Get a Better Deal

You can use a recent article on “the top 10 margin-killing myths about B2B pricing” in Supply & Demand Chain Executive to get a better deal from your vendor. Just like B2B companies must aggressively counter the closely held beliefs that are holding them back, B2B buyers must aggressively counter the closely held beliefs that are holding them back as well. Dispel the corresponding buyer myths implied in the article and you’ll be on your way to great deals.

  1. Myth: The Market Controls the Price
    You Control the Price. The vendor sets the list price, and you decide whether or not you’re going to pay it. The market doesn’t set the price, the contract you sign does.
  2. Myth: You Have More Important Things to Worry About
    Whether or not you buy a solution should ultimately boil down to expected annual ROI, which, simply, is your expected annual savings divided by the annualized software cost. If the price is too high, then the ROI will be too low, and you should not buy.
  3. Myth: Commodity Solutions Can Not be Price Differentiated
    Since different solutions can be expected to return different ROIs depending on how well they integrate with your business and how effectively they tackle your biggest problems, you should expect to pay less for a solution that offers less value.
  4. Myth: Price Improvement Puts Savings at Risk
    Remember, it’s not “savings” until you actually save the money. And if you spend more on software then you save from its application, there are no “savings” at all. While you shouldn’t quibble needlessly about a price that gives you an expected 20X ROI if it’s in market range, you should definitely negotiate hard on a price where you only expect a 2X ROI.
  5. Myth: Experienced Buyers Know How to Price
    Not necessarily. They know how to negotiate. Not how to price software, and definitely not how to get the best deal from an unfamiliar vendor. That’s why you have Deal Architects.
  6. Myth: Compensating on Technology Savings Ensures Good Buying
    It’s not about how much you can save on the IT budget, but about how much you can save using the IT you buy. Not buying an industry leading strategic sourcing decision optimization suite which can save you an average of 12% above and beyond the best reverse auction because it costs an extra 100K is just stupid if you spend over 100M annually. The software will pay for itself on your first big sourcing event!
  7. Myth: Pricing Has to Be Simple
    No, it has to be such that value is delivered. And sometimes, per CPU hour is the best price you’re going to get if you don’t use the software extensively for long periods of time between major buys. And thanks to modern software, it’s simple to calculate.
  8. Myth: Strict Compliance to Buying Rules Ensures Good Pricing
    And bad software. Comparing two software suites is often like comparing apples to oranges. It can be done, and you’ll find similarities, but there’s often a qualitative aspect to a preferred solution that can’t be quantitatively measured.
  9. Myth: New Solution Buys Require the Most Attention
    Really? So you’re going to stand for 22% maintenance on your ERP shelfware?

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Does That Report Deserve To Be Stuck Where the Sun Don’t Shine?

Then Oriental Co has the perfect solution for you! Appropriately named White Goat, this new office device can take regular letter-sized paper or shreds, including the last strategic plan from your boss that you cursed until you were blue in the face, and transform it into nearly pristine rolls of white toilet paper.

As seen in the video below, it’s quite simple to use. Plug it in, add paper and water, and about 30 minus later, remove the roll of toilet paper. While the hefty price tag of about 100K means it would take years to recoup the cost, as this CNet Review points out, what price is too high for the pleasure of wiping your butt with your boss’ memos?

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The Elusive Right Path to Engineering Offshoring

A recent article in Strategy+Business attempted to address The Elusive Right Path to Engineering Offshoring. They proposed a five step plan to making it work, and while the advice was okay, I think the article missed the point. In my view, the right path to engineering offshoring is not to do it at all if you are developing products for the local marketplace.

While I will freely admit that there is innovative talent in the outsourcing hotspots of India and China, it’s not necessarily the right innovative talent for you. As a for-profit enterprise, an innovative product alone is not enough — you need an innovative product that will sell in your target market, and, frankly, just because something is hot in India or China does not mean it’s going to be hot in North America (and vice versa). In terms even a layman could understand, just like most of the population in India would not buy a Big Mac, most of the population of North America would not be that interested in a McVeggie or a Lamb Maharaja Mac (although the doctor would prefer if his local MacDonald’s served a cheese-free Chicken Maharaja Mac instead of a Big Mac and a McAloo Tikki Burger instead of a Junior Hamburger).

Taking a more technical focus, while sales of a low-cost affordable car like the Tata Nano will probably skyrocket in India, such a small, cheap car would never even leave the showroom for a test-drive in North America as long as fuel prices are half of what they are in Europe. And clone merchandise will never reach the mass market in North America that it has in China (and not just because of much better intellectual property laws, but because of the high status North Americans bestow upon to brand name goods).

However, on the flip-side, if you are trying to create innovative products for international markets, you should certainly, at the very least, augment your R&D organization with a local-team on the ground in the target market. An experienced engineering or development shop in China or India would be much more adept at producing killer products for the local market than you would be thousands of miles away in the midst of a different culture. In this circumstance, the advice of the article applies, and I encourage you to read the article and take its advice.

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2010: The Year of CUTS?

According to a recent piece over on Supply Chain Digest that chronicled the Supply Chain Guru Predictions for 2010, this will be the year of CUTS:

  • Consolidation,
  • Uncertainty,
  • Training, and
  • Specialization.

In other words, the year will be pretty bleak. We’re already at the point where, with the exception of BIQ’s inclusion of a new Computed Measures Language as part of their spend/data analysis package , I haven’t seen anything truly innovative on the technology side in over a year.

I’ve seen lots of great stuff, but almost all of it falls into the better, faster, cheaper category. For example, the recent upgrade to Trade Extensions’ platform, which can now handle Billion-dollar sourcing projects with over 60,000 lanes and 400,000 bids in a single model, is incredibly powerful and really (really) cool (because even five years ago it was hard to imagine being able to solve such a problem on anything less than a supercomputer), but it’s still just a (large) incremental improvement on fundamental technologies and capabilities they’ve had for a few years. Rollstream’s enterprise community management application, built on the better principles of social networking, is really slick, but not a fundamentally new idea. And SupplierSoft‘s integration of their full SRM platform into SalesForce, which gives customer organizations a 360° supply chain view through a single platform, is a unique implementation, but P2P, SIM, SRM, and (Environmental) Compliance solutions are not new.

Now, you might say that the fact that organizations are finally expected to focus on training is a good thing, because it makes your people more productive and, in supply chain in particular, can deliver amazing ROI, but most companies are not going to do it out of respect for their employees. They’re going to do it because they think it will allow them to shovel even more work onto their already overworked employees, delay hiring, and continue to contribute to the jobless recovery in a negative fashion.

And when you dig deeper into the predictions, you see that consolidation is referring primarily to consolidation of supply chain assets, which sounds good at first (more use, revenue, and thus profit per asset), until you realize that having all assets almost 100% utilized allows no room for growth. And you see that uncertainty means that no one is willing to step up and say “this is the year we’re going to recover, economy be damned” which means another year where the majority of companies are going to just hunker down and hope “magic happens” before they go broke. And while specialization, or, in the words of Art Mesher, selective specialization, sounds great, since that presumably means that supply chain systems will get better and better, until we have an open source standard for supply chain data interchange, the visibility nightmare is going to get worse before it gets better.

All I can say is that it’s time to Shape Up or Ship Out, and by that I mean either get on with your business or shut down operations and make way for someone who will. Magic isn’t going to bring the economy back, hard work and forward momentum is, and someone has to start it. Due primarily to the large positive impacts that Supply Management has on the balance sheet, it has the potential, but only if it’s willing to step up, use it, and drive the business.

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What’s New in the Lift Truck Marketplace?

A recent article in Logistics Management titled “2010: Loads of Innovation” chronicled some of the new lift truck product introductions on the slate for 2010. Now, lift trucks might seem like a pretty boring topic, but they are the little workhorses of your physical supply chains, and if any of the improvements can improve efficiency, then they’re worthwhile.

So what improvements are coming?

  1. Better Information Management
    More monitoring devices tied to better fleet management systems that track numerous metrics on lift truck utilization that can be used to create better fleet allocations. The systems also track driver certifications and operator checklists to ensure that trucks are only assigned to personnel certified on the trucks and that all daily operator checklists are completed and captured electronically on a daily basis.
  2. Improved Safety Systems
    Mitsubishi Caterpillar Forklift America is adding presence detection as a standard feature on CAT trucks. If an operator leaves the seat, the transmission automatically disengages to halt travel or hydraulic movement.
  3. Better Internal Combustion Engines
    Models are now available with oil pressure management, on-demand cooling and self-clearing, which can remedy an issue that can cost operators up to 4,800 a year if they’re always blowing out the radiator. Other models track fuel utilization and allow operators to choose between economy and productivity modes. The trucks are being built to last longer.
  4. Powerful Electric Engines
    A new generation of 80-volt trucks, which have been employed in Europe for years, are coming to North America. These trucks can easily handle up to 10,000 pounds with a much better battery life.
  5. New Hybrid Engines
    For example, the new hybrid from Toyota Material Handling USA that uses a battery to power all drive and hydraulic functions will cut your emissions in half and be twice as efficient as traditional IC trucks.

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