Category Archives: Technology

Sustainability Should Be Soldered Into Your Platform

I think we can all agree that sustainability is important – very important. You might be in business to make money, but the only way you’re going to make money is if you stay in business. The only way you’re going to stay in business is if you’re sustainable, because, otherwise, you risk running out of resources, money, or, and I’m not kidding, customers. The earth is finite, so it stands to reason that there is only a finite amount of any resource. A company has a finite amount of money, and wasting it is the quickest path to going out of business. Today’s consumer is concerned about the environment – harming it will drive them away, and with no customers, you have no business.

So how do you achieve this magic of sustainability? Well, you can achieve it the same way you achieve everything else in business – hard work, perseverance, and ingenuity. But the real trick comes in sustaining sustainability – and the best way to do that is to have not only supporting processes and methodologies, but a supporting platform as well.

A supporting platform can help you keep track of your initiatives which can range from your office recycling program to your global waste reduction initiative. Recycling efforts within a single large office building can save hundreds of thousands of dollars. As noted in “Building the Green Supply Chain”, the Boulder Community Hospital reduce, reuse, and recycle program saved the hospital $600K a year. On a global scale, Walmart saved 2.4M in shipping just by reducing packaging requirements. And Interface Inc, in their effort to move to a zero environment footprint, have saved more than 260M in the first decade of their sustainability program.

More importantly, it can also help you get control of your global sustainability initiatives when it comes to environmental impact reduction, social responsibility, and prevention of animal cruelty. Unlike internal waste reduction initiatives, which often do not exceed the complexity of making sure the used toner cartridges were shipped back to the manufacturer, global sustainability initiatives require you to also insure your supply chain does not violate the initiatives you commit to. Just because you don’t have a sweatshop, pump out toxic emissions in excess of the Kyoto protocol, or skin cows alive does not mean that your suppliers do not.

In order to insure that you have a supply chain in compliance with your initiatives, you have to track relevant information from your suppliers and have them track the corresponding information from their suppliers. This is an insurmountable challenge unless they can provide you with the information you need directly into your systems, as the average large company has dozens, if not hundreds of essential tier 1 suppliers and thousands of less critical suppliers. This requires a web based platform capable of securely collecting, storing, indexing, aggregating, and unifying all of the relevant information from each supplier.

Furthermore, depending on where you want to do business, sustainability might be more than just an initiative – it might be a fact of life. If you want to do business in the EU, you need to comply with REACH and RoHS, and possibly half a dozen other directives. California has introduced its own green legislation, and parts of Asia, suffering from severe pollution as a result of the rapid build up of manufacturing capability over the last few decades to meet the demands of American and European multinationals focussed on low cost country sourcing, may not be far behind. You have to not only maintain all of the documentation necessary for compliance purposes, but have to be at least 99.999% certain you are in compliance before making a shipment into the region. If even the tiniest removable part of your electronics system, such as the removable power cord, is not in compliance, your entire shipment could be blocked, seized, or destroyed.

This dictates the need for a platform that tracks not only all information related to your sustainability programs, but all product related information from raw materials through final production. This is the only way to minimize your risk of non-compliance. That’s why Aravo is Sourcing Innovation’s Vendor of the Week. As one of the first companies to offer a Sustainability Management Solution (SMS) tightly integrated with a Supplier Information Management (SIM) solution, I think they deserve to be recognized for tackling such an important problem.

Algorhythm and the Optimization Rhythm in India

Recently, I had the pleasure to have a couple of conversations with Ajit Singh, the Founder and Director of Algorhythm, a company in Pune, India that has significant expertise in Optimization and Supply Chain Modeling. The have their own optimization engine, a set of front-ends for different types of supply chain models that can be used by anyone with modeling skills, and significant experience in helping large global multi-nationals with significant supply chain network design and optimization problems. Basically, they’re India’s CombineNet, but with a slight distinction – every model they build, including custom models, can be executed and modified completely by the client through an extension of their easy-to-use windows-based front end – you are not tied to their services. In comparison, although CombineNet has done a great job over the past few years of actually building stand-alone products and interfaces, it’s still often the case that custom models are only available through their services model.

Algorhythm has the capabilities to attack both strategic and tactical supply chain problems from an optimization and simulation perspective. They have sophisticated models for strategic planning that include inventory optimization, distribution network design, manufacturing network design and for tactical execution that include production planning, logistics planning, and supply network execution.

They also have specialized solutions for oil, steel, and packaging as well as having a considerable amount of experience in creating models for manufacturers and distributors. Major clients include Unilever (Hindustan Unilever, Unilever Plc. UK, and Unilever China), Thyssen Krupp, Hindustan Petroleum, and Parle Products among dozens of others. Their manufacturing and distribution network design models often save their clients 3-5%. Remember that we’re talking production models here – not sourcing models, so this is actually quite good. In terms of efficiency, their production planning and scheduling models often halve throughput time and inventory carrying requirements – which is also very good. Furthermore, we’re not talking small models here – Parle, for example, ships 50K trucks per year per SKU from hundreds of factories to thousands of wholesalers.

It’s quite easy to build a model in their products, which they call Prorhythm (for production-planning based models), Netrhythm (for network-planning based models), and Logrhythm (for logistics planning models), and which run on top of their Xtra Sensory optimization engine. They’ve thought through what the model is, what the core elements are that make it up are, what the costs are, and what measures you might want to optimize. Building a model is simply defining all the relevant entities (which are factories, lines, outputs, inputs, etc. in production planning), the associated costs (material, labor, overhead, etc.), the measure(s) you want to optimize (cost, throughput, etc.) and their priority / weighting if multiple, and the constraints. It assumes all relationships between related entities are valid unless you specify them as invalid (and permits groupings for easy constraint definition). It also groups constraints in a “constraint file” so you can easily run the same model against different constraint sets. Basically, it’s built to build models the way the doctor would build it.

Since there is no “one” optimal solution when you’re optimizing against multiple objectives, as it’s almost always impossible to precisely normalize each measure to a uniformly distributed 0-1 interval that can then be weighted according to the weights you want, they also support simulation. You can tell the optimizer to construct a set number of models equally distributed around the desired optimization point and it will automatically create and run all of the variants which you can then compare to see how slight changes impact solutions and goals.

It’s a great offering, and the people are quite knowledgeable. If you have a tough optimization problem, be sure to check them out. They might surprise you.

Vinimaya: The Next Wave in Product Catalogue Management (PCM)

A little over a week ago, in Networks are ok. Catalogs are Good. Punch-outs are Better. But Agents are King!, I introduced you to Vinimaya [rebranded Aquiire, acquired by Coupa] – a little known company from Shelton, Connecticut (apparently, it’s not a total wasteland) that may be the only company in the space with a real answer to the Supply Network 2.0 Challenge.

Billing themselves as a Supplier Enablement Solution for e-Procurement with their Catalog Integration System based on distributed search technology, their product truly does allow an e-Procurement system to access supplier web-sites, online catalogs, and internally managed catalogs concurrently from a single user interface.

Unlike today’s supplier networks which only support hosted catalogs and punch-out enabled sites, constitute a large expense for the buyer and the supplier, have a long enablement cycle, and provide the buyer with almost no control over access, Vinimaya’s new Product Catalogue Management (PCM) solution, which they sometimes call a Virtual Punch-out or Virtual Supplier Network (the VSN), supports ANY site (be it a punch-out, catalog, market-place, or plain old web-site), does not cost the supplier anything (as any solution that charges the supplier only adds to the buyer’s cost as the supplier has to raise their prices to compensate for the cost), can be enabled in a day, and gives the buyer total control over access, view, and pricing with their local pricing and audit engine capabilities.

Furthermore, they can easily enable standard and custom terms and pricing to each buyer. Since most suppliers plugged into a supplier network accomplish this through a separate, protected, landing page that contains pricing customized for a particular buyer, all Vinimaya has to do is program that link (and the login) into the agent instances used by that buyer, and, presto, the buyer gets standard terms and conditions and – more importantly – gets those terms and conditions in the standard view which allows them to compare the terms and conditions across all products from all suppliers that meet the identified need. Alternatively, if the supplier cannot do this, the buyer can create discount rules or override SKU prices on a supplier (by supplier) basis in the local pricing and audit engine. No need to have a third party involved, as all the third party does is take a cut of the transaction and significantly raise the transaction cost by performing a service that the buyer can easily do on her own.

And the system works. They already have over 12M skus from over 150 leading suppliers in a single instance (with over 200 suppliers enabled for general use), and the interactive distributed search works in a couple of seconds for a new query, and under a second for a query that is similar to, or a repeat of, a previous query (as the system caches relevant results). It’s also very scalable – in their five largest implementations, they support over 30K users and hundreds of suppliers. (And, as indicated in my last post, they can quickly enable new suppliers by extending and customizing existing agents in their database. On average, they can enable a new supplier in a couple of hours, and have found that over 75% of US suppliers fall into this “quick enable” category. Furthermore, when they encounter a supplier that uses a non-standard web-site design or custom protocol, do to the distributed nature of the technology, they find that, on average they can still enable the supplier in about a day.)

The things to remember are that we don’t need a separate “network”, we have one already, it’s called the internet; we already have all the content we need on supplier websites (the supplier doesn’t have a web-site you say?* that’s okay, the supplier network 1.0 options are still available); and web-services allow a lot more functionality than some of the big dogs (who haven’t innovated in ages) would have you believe.

I applaud Vinimaya for cutting through the noise and offering the direct-connect solution that probably should have been designed in the first place. The reality is that today’s supplier networks are nothing more than bad implementations of what is fundamentally a really good idea. The technology has to use what’s there, bring it all together, and do it quickly in a seamless fashion. Otherwise, your procurement department will be spending too much time on the tactical when they need to be focussing on the strategic.

* If the supplier isn’t on the web, then all of the supplier network 1.0 options are still available: the supplier can upload the catalogue using excel or use an e-form. If the supplier doesn’t have web access, then either Vinimaya or the buyer can load the catalog on behalf of the supplier. (But if the supplier doesn’t even have web access, then I think you have to ask if you’re sure that you’re using the right supplier.)

Networks are ok. Catalogs are Good. Punch-outs are Better. But Agents are King!

Let’s start with some clarifications.

A Supplier Network is simply a single point of integration that provides a many-to-many connection between buyers and suppliers, allowing them to transact in real-time. The major selling points are large numbers of pre-enabled suppliers and the ability to find new suppliers quickly for a given product or service. However, the reality is that unless most of your competitors are already using the network, most of your suppliers will not be enabled when you join up. Furthermore, despite hype to the contrary, if you ask purchasing, they know who they’re doing business with for the majority of products and services, even if its not captured in the system.

An online catalogue is simply the electronic equivalent of the old Sears catalogue that used to come in the mail. It contains a complete listing of all of the products a supplier has for sale as well as list prices and, in a good electronic catalogue, any discounts offered by the supplier or negotiated by the buyer. If it’s maintained by the supplier, it’s good for the buyer, but only if the catalogue is compatible with the system that the supplier uses to maintain the catalogue in house. Otherwise, they would have to maintain dozens or hundreds of copies, one for every buyer, and this is prohibitive.

A punch-out is a technology (based in XML) that allows a buyer to shop on the supplier’s e-commerce site but add the products to the shopping cart in their e-Procurement system. It’s better than a catalogue because it allows a supplier to maintain one version of a master catalogue for all of their buyers (as the buyer’s system can store discounts), but falls short in that a buyer cannot compare products across suppliers side by side.

A software agent is a mini-program used by a larger program to accomplish a specific task subject to a particular request. The agent is capable of acting autonomously and the controlling program can deploy multiple copies of the agent simultaneously in a distributed fashion if required. An example is a search agent. Search engines like Google will employ multiple agents simultaneously when a multi-part query is entered to find all pages that each satisfy a part of the search, and then use an intersection agent to find all pages that satisfy all parts of the query. Index agents are another example, one instance is deployed on each page being indexed for future search.

Agents are critical as the right set of agents can be used to overcome the shortcomings of traditional supplier networks, electronic catalogues, and punch-outs to build a Product Catalogue Management (PCM) system that enables an organization to achieve total control over its general purpose indirect, MRO, services, and commodity spend.

With the right set of agents, you can build a Product Catalogue Management (PCM) system that allows a buyer to access up-to-date catalogue and pricing information from any supplier in real-time over the internet from the supplier’s site – regardless of what technology or in-house system the supplier uses. This can be augmented with buyer pricing rules and audit engines to make sure you always see, and pay, the agreed upon price. Furthermore, the right set of agents can even support various “pass through” levels to the supplier’s e-commerce site even if punch-out is not enabled.

This why Vinimaya [rebranded Aquiire, acquired by Coupa] – and not Ariba – is the next generation of Product Catalogue Management (PCM). It’s based on a distributed agent platform that allows it to integrate content from traditional ERP APIs (Enterprise Resource Planning / Application Programming Interfaces), EDI (Electronic Data Interchange), XML (eXtensible Markup Language), and various web-site APIs into a single, consistent, coherent view in real-time using the basic internet technology that has been working fine for the last ten years or so.

Let’s face it – with agent technology, any company can enable hundreds of suppliers in a matter of days, especially if the provider has already customized agents for all of the common suppliers. Furthermore, if a supplier has agreed to custom pricing, it can integrate directly into that feed and, worst case scenario, a buyer only buys so many products and services from a supplier and it will not take very long to hand enter the agreed upon price for each relevant SKU in an audit engine. (Just like a knowledgeable purchaser can hand classify 95% of the transactions in even the largest of transaction stores for spend analysis in at most two days by hand with a good rules engine, and not the two months some providers would have you believe). (The average time for Vinimaya (rebranded Aquiire, acquired by Coupa) to enable a new supplier for a buyer is a few hours. It generally only takes them fifteen (15) minutes to one (1) hour to customize an agent and an hour or two to test and deploy the agent.)

I’ll be blogging more on Vinimaya in the weeks for come, but for now you can always check out their website.

O.M.G. R.O.T.F.L “D.T.I.:E.D.I.S.C.S.P.U.C.R.T.A.” … W.T.F? Y.M.H.S? *

* Oh My God! Rolling on the floor laughing! “Distinguishing the Indistinguishable: Exploring Differences in Supply Chain Software Packages Using Centering Resonance Text Analysis” What the f*ck? You mean he’s serious?

One of the presentations I just had to sit in on at the 5th Annual International Symposium on Supply Chain Management was called “Distinguishing the Indistinguishable: Exploring Differences in Supply Chain Software Packages Using Centering Resonance Text Analysis” because I had to figure out whether it was real, or the organizer’s attempt at introducing some comic relief into a symposium that can get a little heady without a break once in a while.

Here’s the abstract: Distinguishing among large supply chain management (SCM) software packages is difficult due to the complexity and breadth of the software. In this paper, we use text mining tools to perform a comparative analysis of documentation covering the seven most popular supply chain software packages (from SAP, i2, Oracle, PeopleSoft, Manhattan Associates, IBS, and Manugistics). Concept maps created for each of the packages indicate a high degree of similarity among the 20 most influential concepts, yet significant differences exist beyond the top 20 concepts. This suggests that any distinguishing features are deeply buried in the documentation, while at a surface level all seven vendors address the same concepts. The resultant concept maps contribute a more precise understanding of the similarities and differences between SCM software packages. Guidelines for using this knowledge to make more rational and informed software selection decisions are discussed.

Before continuing, you should read it again just to make sure you read it right. (Because I know you’re wondering if you did.)

Now you should take thirty to sixty seconds to process the shock of what you just read. The resultant concept maps contribute a more precise understanding of the similarities and differences between SCM software packages. I don’t know if I should laugh or cry. However, having attended the presentation, and, more importantly, found out that ( a ) this paper is getting published and ( b ) some of the audience members thought that this is a fantastic idea, I now know I should be instilled with fear!

The reality is that I can barely wrap my head around everything that is wrong with the abstract, let alone the presentation, and, more importantly, the paper that the presentation is backed on. However, knowing me as you do, you know I’m going to give it my best.

  • There is not necessarily any correlation between documentation about any given platform and the platform itself. The documentation could be help documentation, which might have a moderate correlation, but could just as easily be position papers, analyst reviews, or “what’s missing” analysis that does not necessarily have to have any correlation with the software.
  • Even if the documentation is limited to help documentation, the documentation is still going to focus on how to use the system and not how it solves your supply chain problem. Thus, the most common terms could be “drop-down” and “dialog” and “field” … not at all useful.
  • There is not a one-to-one correlation between a word and a concept or a concept and a word. Let’s take the word order. It could be referring to order placement or order management or order fulfillment or to the ordering of options in a text-box. Also, let’s take the concept of order fulfillment. It could be called order fulfillment or it could be called customer delivery.
  • There’s no guarantee that two products that implement the same features will document them with standard terminology, or even document the features at all! Thus, two products with high correlations in capability are not at all guaranteed to have any correlation at all in documented capability.

I could go on, but you can see that the statement that the resultant concept maps contribute a more precise understanding of the similarities and differences between SCM software packages is absolutely ludicrous, even if centering resonance text analysis did what many researchers claim it can do. (It really can’t, but hopefully the linguist at the conference who also had more problems with this presentation and paper than I can easily count will chime in with a comment on everything I missed.)

Now, apparently, after heated discussions with one of the researchers (and presenter) in question (who will not be named to protect the guilty), I have it all wrong, and what I’m assuming is being stated is not being stated at all, but I believe I have a relatively high degree of comprehension of the English language, and I just do not understand how any rational human being could interpret it in any other way.

“It’s the thought that counts … and so far I’m up to zero.”
  Stephen Colbert, The Colbert Report, Sept 25, 2007