Category Archives: Technology

Putting McKinsey’s Business Technology Trends into Practice Part I

The McKinsey Quarterly recently published an article on “eight business technology trends to watch” that was not only quite good, but a good summary of the trends that you should be implementing, appropriately, in your supply chain. In this two part series, we are going to review each of the trends and give you some examples of how you can apply them to improve your sourcing and supply chain practice.

Distribution of Co-creation

In more innovative sectors of industry, companies routinely involve customers, suppliers, small specialist businesses, and independent contractors in the creation of new products. Today’s technology allows companies to delegate substantial control to outsiders by outsourcing innovation to business partners that work together in networks. By distributing innovation through the value chain, companies may reduce their costs and usher new products to market faster by eliminating the bottlenecks that come with total control.

If you’re not already doing this, you can start by adopting one or more collaboration platforms that allow you to work with your supply chain partners. Not only can you enable engineering and production by helping them work with partners to design cost-out before you even have to source the goods, but you can work with your suppliers to identify optimal supply networks that keep transportation costs down and raw materials that you could procure on their behalf cheaper than they could procure them.

Using consumers as innovators

The more innovative companies are looking upon consumers as potential sources of innovation. Companies that go out of their way to engage with customers in design, testing, and marketing and to find out what they really want get better insight into customer needs and behavior and often reduce the cost of customer acquisition, retention, and development. As long as the company is careful to focus on the immediate needs of the majority of customers, as opposed to the long-range needs of a vocal minority of customers, it increases its chances of meeting the needs of its customers when compared to its competition.

In sourcing, your customers are the other groups in the organization – engineering and production that need the raw materials, marketing that has to market the finished product, finance who needs reporting and justification that the money you’re spending is on compliant goods, and sales that has to sell the finish product. A good sourcing and supply chain organization forms cross-functional teams that involve each group early in the sourcing effort to insure that the award that is finally made is appropriately balanced to meet the needs of each internal customer, but a great sourcing team asks each organization for ideas that could help them increase profitability, efficiency, and / or quality. Not all ideas will be winners, but you never know where the next gem of an idea is going to come from.

Tapping into the World of Talent

Thanks to recent advances in collaboration and communication tools, companies can outsource increasingly specialized aspects of their work and still maintain organizational coherence. Furthermore, top talent (like the doctor) can be found anywhere. The best person for the job might be a state, country, or even continent away. Innovative companies are building capabilities to engage best-of-breed talent or contracting with talent aggregators that specialize in providing such services. The competitive advantage will shift to companies that can master the art of breaking down and recomposing tasks in ways that can take maximum advantage of best-of-breed talent.

The best sourcing and procurement groups are those that assume that they don’t know how to be the best at everything and aren’t afraid to engage consultants and thought leaders to show them how to do things better. The great thing about this trend is that it’s easy to start with – you identify your largest gaps and weaknesses, or your most significant technology and process needs, and then bring in best-in-class talent to help you fill those gaps and needs and take you to the next level. Most importantly, you find the best-in-class talent that will help your people achieve this next level after the the foundation that is required to get you there is implemented. Helping you select and implement a new platform or process is good, but helping you learn the new platform or process and get the most out of it is better.

Extracting More Value from Interactions

As the article points out, the application of technology has reduced differences among the productivity of transformational and transactional employees, but huge inconsistencies persist in the productivity of high-value tacit interactions which involves negotiations, knowledge, judgement, and ad-hoc collaboration. Improvement is more about increasing their effectiveness by focusing on interactions in a context that create value than it is about increasing their efficiency.

The key to good interactions is high EQ and efficient access to the right knowledge at the right time. You can increase your team’s EQ by giving them access to the training they need, and, preferably training that will take them down the certification path (towards the CPSM or SPSM, for example). You can begin your effort to make sure that your team has the knowledge they need, when they need it, by developing a knowledge management intranet site that uses content management, wiki, and forum technology to capture all of the relevant information that flows through your organization – from your employees, contractors, and partners.

As the article states, creative leaders can use a broad spectrum of new, technology-enabled options to craft their strategies. These trends are best seen as emerging patterns that can be applied in a wide variety of businesses. Leaders will reflect on which patterns may start to reshape their markets and industries next – and on whether they have opportunities to catalyze change and shape the outcome rather than merely react to it. As the doctor has demonstrated, each of these trends can be co-opted by your sourcing and supply chain organization to literally get more for less. Check back tomorrow for the next four trends that you can use to improve your operations!

IQ-based Navigation of Contingent Labour Sourcing

One of the subjects that is important to discuss from time to time on a sourcing blog is the subject of services sourcing. I’ve discussed the subject of Strategic Service Management a few times on this blog, along with the service management capabilities of Servigistics and Provade, but I’ve never dived into the subject of contingent labor force sourcing.

Although it may not be as universally applicable as the sourcing of marketing, print, and legal services, which every company needs, if you’re a call center, drop shipper, retailer, or seasonal manufacturer, for example, contingent labor services can be a very significant part of your budget. Furthermore, if left unchecked, these costs can not only soar out of control, but lead to significant losses through uncaught over-billing (and by the time you caught them in a properly executed spend-analysis project, it could be too late to get a refund if you’ve switched vendors).

That’s why, if you fall into one these categories, you really should have a good labor sourcing and management solution. One such solution that I would consider is the one offered by IQ Navigator.  I recently had a chance to walk through and discuss their SaaS-based services management solution in length, and while, like a few other offerings, it is flexible enough to handle multiple services category, it is particularly well suited to contingent labour force sourcing and management.

Contingent labor is a complex category. Sometimes you’re hiring by the hour, sometimes by the day, and sometimes by the week. Sometimes you’re hiring one person for a job, sometimes twenty. Each position has a different job description, and different requirements. And, each HR person usually has hundreds of jobs across dozens of positions across multiple locations to fill simultaneously in your typical multi-national. Furthermore, multiple documentation requirements, including resumes, need to be maintained for each potential resource.

IQ Navigator’s solution not only allows each job requisition to be customized by type, requirements, and process flow, but it supports the entire process from job definition, advertisement distribution to staffing agencies, resource resume review, resource selection, time and rate approval, project tracking, billing, matching against approved rates, and alerts if a resource comes close to their approved hours. It also supports job type templates, project and process templates, and calendar based definition of resource requirements. This last capability is well thought out and rather unique – it allows a supervisor to load up a single monthly-calendar based screen, and, for each job, specify how many resources are needed for each shift in that month. All the supervisor has to do is enter numbers – and the system enables the HR manager to take care of the rest – automating the distribution of the advertisement to staffing agencies, the collection of resumes, and the matching of experience and certifications against job requirements.

IQ Navigator’s product is also quite configurable. It supports the definition of projects with multiple statements of work (SOW), where each SOW has multiple deliverables, and every SOW can have different terms and rates, tied to a contract, which can be incorporated as a key field or as an attachment. It also allows mass approvals, which can be done by e-mail or mobile device by a busy manager in the field.

And it works. IQ Navigator has over 50 clients, including a couple dozen Global Fortune 500s, processes over 50,000 thousand contractors weekly, from over 4,700 staffing agencies in over 15 countries which represent over 3 Billion in spend under contract annually. Furthermore, over one quarter of spending by its global multi-national clients is outside of the US.

Is This The Year Austin Tetra Breaks Out?

Austin Tetra has been relatively silent since their acquisition by Equifax a little over a year ago. And it’s not because Equifax is in a hurry to dissolve the name (unlike D&B who appear to be trying to dissolve the Open Ratings brand as soon as possible), but because they want their new division to be well prepared with a solid offering for the B2B and B2C communities before they re-launch the service offering.

the doctor had a chance to catch up with the business leaders of Austin Tetra, Equifax’s commercial business unit, last month and it sounds like they have been making a lot of progress over the last year. They’ve been busy helping Equifax build a unique global identification system that will compete against the as-to-now relatively unchallenged DUNS # of D&B and Austin Tetra has been making good progress integrating the US, Latin America, European, and other global databases in Equifax’s arsenal into one universal database with one universal classification scheme – a task they expect to complete in the first part of this year.

They’ve also been making great strides in their service offering that pulls business and consumer data together for businesses that need to deal with small businesses on a regular basis and need to determine the risk, especially where the financial stability of the business often comes down to the financial stability of the owner. They can now, for a given small business, pull together the credit history of not only the business, but the owners as well and give you a combined risk or credit score where they have the data integrated.

They’ve also been making strides in compiling their supplier master and customer master databases where, for any given business, they can give you its performance history both as a supplier and as a buyer, as well as their employee master, where they can tell you how much the individual earned at his or her last job if his or her previous employer submitted information to the TALX database (another recent Equifax acquisition) – which has income, salary, and compensation information on approximately 150 M employees in the US.

They’ve also made great strides in their balanced scores, which aren’t just about diversity anymore. Their blended financial / risk scores now take all of the following information into account:

  • public filings (which they monitor and append regularly)
  • denied / debarred party tracking
  • blended score on individual & business credit history for small, private, businesses
  • customer credit risk based on past payment trends
  • diversity information
  • predictive supplier business failure score
    the chance of failure over the next 12 months using all available information

In addition, they’ve been extending their web services platform to make the data instantly available through customers’ current platforms and their current customers are now able to access all this data through multiple platforms that include Oracle, Siebel, and SAP.

In other words, now that they have the support of a 20B business behind them, they’ve been making great strides. However, given that they still believe in the “crawl-walk-run” philosophy when it comes to development and release cycles, they believe that it will likely be the middle of the year before everything is complete and tested (by current customers) to their liking, and hence likely the summer or fall before they attempt to make a big media splash. But that doesn’t mean that, if these are the types of solutions that you need, that you can’t start talking to, and evaluating, them now – or that, if these are the types of solutions that you might need down the road, you can’t keep a watchful eye out to see what they announce this year. Regardless of what happens, now that D&B is about to have a major competitor, I bet you’ll see a lot more innovation in this space over the next few years as the new contender in the space begins its fight for dominance – and that’s a good thing.

Sustainability 2008: The Early Birds

In addition to Eric Strovink’s guest post this morning, a few bloggers have been quick out of the gate in their efforts to contribute to the first cross-blog series of 2008.

Dave Kuketz over on the Business Memory Blog was so inspired by the topic, that he couldn’t wait to get his entry up and posted it shortly after he received the invite two weeks ago. According to Dave, sustainability is about caring for the environment, about being green, about conservation, carbon credits and your carbon footprint, and the carbon footprint of your vendors; its about dangerous chemicals in toys or in consumer products, in our foods, in our skin care products; its about the humane care of animals; its about awarding business to those businesses who deserve it most because they follow the same principles you do; its about social corporate responsibility and making the world a better place. Furthermore, good clean data is the fuel that enables strategy and decision-making and analysis, good data enables change, (and) good data can … help companies strive toward their sustainability goals. Enter the age of e-Sustainability.

Brian Sommer of Services Safari was also quick to the draw with his post on a sustainability case study. According to Brian, sourcing of the capital equipment for the new facility [being constructed by his client] has also taken a green and sustainable approach and almost all of the equipment being installed has been from secondary markets … sparing landfills and junkyards from further (and unnecessary) debris. Furthermore, much of the discussion involving the feedstock for this facility centered around possible use of alternative technologies that would permit greater utilization of recycled materials. Brian also notes that many traditional sourcing techniques are not used frequently in the acquisition of alternative or recycled assets, and a special set of skills is required by these professionals. Thus, a sustainability mindset will require more than just training, but a new skill set as well.

Then, still not content that he had made a significant enough contribution to this very important cross-blog series, he followed it with a second post on sustainability vs. durability over on Services Safari. In it, he noted that while previous generations of cell phones were long-lasting with a high degree of interchangeable parts, today’s cell phones don’t hold a candle to their predecessors. They aren’t made to be durable or lasting, and, just like our laptops and desktop computers, failure and / or planned obsolescence is running at an ever increasing pace. The throwaway nature of today’s technology is clearly running counter to the concepts of sustainability and corporate social responsibility. Technology manufacturers need to do more when it comes to extending the lives of the products they sell and recycling technology that is no longer useable. As Brian points out, technology manufacturers should be focussed on creating products that can be easily upgraded (and, in this instance, Apple is doing a poor job with the iPhone and MacBook Air – the fact that you can’t even replace the battery is why, despite the fact that they are in many ways superior to competitor’s products, yours truly won’t buy them, even though he uses a MacBook Pro as his primary machine), that are durable, and that are supported for 10 years – not 10 months! (And, they should design for recycle from the outset!)

David Bush of e-Sourcing Forum jumped in with his warm-up post on carbon-neutral blogging where he noted that everyone these days seems to be jumping on the green bandwagon. He also brought up the question as to whether or not consumers would pay more for green products, which is important because consumers vote with their wallets, and if consumers don’t change their buying decisions, why should companies change their practices?

And the next guest blog goes up tomorrow morning! Stay tuned!

the doctor’s Not Going To Stop Until He Exposes All Of The Elephants!

Late last fall in the doctor wonders why the elephants in the room are often so hard to see and the doctor exposes the elephants in the room I exposed the elephants in the room that were hiding behind the blinds, couch, lamp, and projection screen. But this is a very big room – and it is jam-packed with elephants. So today, in addition to the optimization, compliance, analysis, enablement, contract management, and hidden cost elephants, I’m going to expose the elephants hiding behind the coat rack, the bar, and the water cooler.

We’ll start with an RFX elephant, who’d have you believe that the number of pre-configured templates in the template libraries are an important selling point of an e-RFX tool. It’s not. After all, every business is different and, in reality, you’ll probably have to customize every single standard template that’s provided to meet your business needs before you can use it. That tells you it’s the flexibility of the tool when it comes to RFX creation that’s important – especially since, no matter how many templates are offered, there’ll always be templates that are missing that you need to create yourself.

Now we’ll move on to the e-Payment elephant who will tell you it’s the platform that matters – and, believe-it-or-not, who provides it. Although it’s important that the company that provides the platform be financially stable, it doesn’t have to be owned by a bank or the biggest player in the space to be useful, because, when it comes to e-Payment, it’s not the payment platform that matters – but whether or not it enables your organization. Does it support the types of payments you regularly make? (If you do a lot of p-card and ACH, and it only supports wires and ACH, then there’s a problem.) Does it automate the capture and transmission of all of the payment details that are required by your e-Procurement / EIPP systems as well as your accounting systems? Does it simplify the transactional processing, freeing up manpower for exception handling and more strategic purchasing responsibilities? Because these are the things that matter!

We won’t forget about the technology RFP elephant though – because this big-daddy of elephants, who is often willing to provide us with RFP templates for any technology we might want to put out to bid, will have us believe that you should be evaluating a solution based on the number of (pseudo-) standard features it has, and not whether it has the functionality you need. This is absurd – especially when you aren’t familiar with the technology! After all, why do you care whether or not it has 300 features you probably don’t need? And how do you evaluate solution A with 350 features vs solution B with 315 features vs solution C with 385 features when the common feature overlap between all three solutions is only 60% based upon your unduly long, inept, and inappropriate RFP that this technology elephant gave you. You need a solution that has the functionality that supports the business processes that you need. To do this, especially when you are unfamiliar with the solutions you’ll be evaluating, you need to send out a rather open-ended RFI that describes the processes you need and the problems that you are having and that asks the vendors to describe how their tool solves these problems. Then, you take the top 3 – 5 RFIs, figure out what your minimal baseline is with regards to key capabilities, and send back a more detailed RFP that outlines the core functionality you need (and any industry standard features you’re aware of that are also required), additional functionality you’d like, and the timeframe you’d like to deploy it in and note that formal submissions will not be considered until you get a full demo (if you haven’t had one already). But still, it should be short. Closer to 60 questions than the 600 or so “feature questions” that I’ve been hearing about from some vendors lately if you’re really focussing on what you need and not the market mumbo-jumbo that the elephants are feeding you.

So take heed, elephants hiding in the closet, behind the door, and under the boardroom table – because you’re next!