Category Archives: Technology

It’s a Green World … Unless You Live in the United States

As you know, at least once a month, I like to talk about green – green suppliers, green strategies, green best practices, and any other green you can think of that benefits your business as well as the environment. And I’m not alone. This also appears to be a favorite topic of David Bush’s over on e-Sourcing Forum [WayBackMachine] (see “Will Kermit Change His Tune”?, for example) and of Tim Minahan’s over on Supply Excellence [WayBackMachine] (see “It Ain’t Easy Being Green: Ethanol Hopes and Woes”, for example).

Today I’m going to talk not about how going green is going to help you, but how not going green is going to hurt you. Whereas the United States has decided not to ratify the Kyoto Treaty, the rest of the world appears to be embracing it not only as a requirement, but as a way of doing business.

For example, the EU is trying to stimulate green public procurement for its own institutions and governments. See a recent article on EurActiv.com aptly entitled Green Procurement. Japan’s DENSO Corporation recently announced “New Green Procurement Guidelines for Suppliers” based on DENSO’s long-term environmental policy. The Recycling Council of Alberta Business Development Committee is preparing to sponsor research on green procurement to help Canadian companies find information on green products, services, and existing green procurement policies in Canada. Even Australia, after a recent Green Procurement Audit has realized the need for a sustainability charter to drive ecologically sustainable practices.

In other words, if you’re not green, you could find yourselves with significantly fewer customers in the near future.

On the green front, I’ve collected quite a few articles of interest over the last month.

Via Technologies, a Taiwanese manufacturer of motherboards and chips, has developed a processor, the VIA C7-D, that consumes a mere 20 watts. Now, it’s true that processors do not produce CO2, but the electricity they run on is often produced by methods that do produce CO2. By decreasing processing power requirements, and by contributing to reforestation efforts to counteract the small amount of carbon dioxide that will be produced in the production of the electricity required to power the chip, as calculated by carbon footprint, Via Technologies has taken another step towards making computing greener.

Cellex Power, General Hydrogen, and Ballard have teamed up to produce The hydrogen powered fork lift that runs on hydrogen rather than lead acid batteries. As the article says, it’s not glamorous … but considering how many forklifts there are out there, it’s significant.

Florida is building a $425 million facility that will use lightning-like plasma arcs to turn trash into gas and rock-like material. The gas will be used to run turbines and produce electricity, of which a third will be used to sustain the plant and the rest will be put back on the grid, and the material that results from the melted organic matter will be hardened into slag and used in road and construction projects.

Carbon Fiber, five times stronger and two times as stiff as steel, despite being lighter than steel, is now being used by a number of major manufacturers, including BMW. This allows for a significant increase in fuel efficiency in vehicles that require conventional fuel.

Germany recently dedicated the Gut Erlasse Solar Park, a 12-megawatt facility located near the Bavarian town of Arnstein that holds the distinction of the World’s Largest Solar Power Plant.

A number of fiber and fabric firms are launching green products, as described in this recent Apparel Magazine article. For example, Unifi has launched a polyester yarn made of 100% recycled materials, DuPont Sorona has undertaken an initiative to insure that at least 25% of its revenues come from products made of non-depletable resources, and Sole Custom Footbeds is using corn-based material in its NatureWorks PLA plastic packaging which will decompose naturally with no negative environmental impact.

Finally, GE and mtvU are sponsoring the Ecomagination Challenge where they are asking individuals and teams of college students from around the country to submit innovative, groundbreaking ideas for projects that would make their schools more environmentally responsible. The school with the best idea gets a 25K grant to bring the plan to life as well as an mtvU concert on campus.

Coupa Charges Ahead!

Yesterday I was fortunate enough to have a long chat with Dave Stephens, fellow blogger (Procurement Central, [WayBackMachine]) and founder of Coupa. We talked about a number of topics (and I’ll post more when I get the chance), including what Coupa is focusing on for their next enterprise release as they slowly grow (and set up shop in their new offices in Foster City, California).

Besides a lot of minor updates (which appear in both the open source and enterprise version), to appease the open source community at large (like better sorting and slicker interfaces), they are making improvements in three key areas – administration (much easier to use), buying templates and (visual) form construction (enterprise-only), and budget-based procurement (enterprise only) – probably the first “killer-app” for Coupa.

One of the problems with most approval-based eProcurement systems is that they don’t take budgets into account – which is very important not just in a budget-based shop where the approver would first have to log into another system to see how approving a large requisition would affect his budget, but in any business as a manager needs to see how an approval affects not only the total budget, but her unit’s spending to date. After all, you don’t want to overspend your (share of the) budget without a good reason, and you want to make sure that non-priority purchases are only made if it makes fiscal sense.

I was fortunate enough to see the work in progress on the enterprise edition, and it’s looking really good. The admin functionality, and functionality in general, has advanced nicely since 0.1 (and to some degree, since 0.2) and the form-based templates, definable and customizable at will by the system administrators, will give Coupa a great boost as it will now be perfectly suited for not only your office supplies, spot buys, and other odds-and-ends MRO spend, but also for your services spend as well. One-time legal services or consulting project spend, special advertising, promotional, or print spend, and other odd purchases (such as visa or passport application fees) will now all be able to be processed through the same system. This is VERY SIGNIFICANT. After all, Aberdeen has found that MRO is 26% of the total spend of a company (on average), and can be as high as 63%! Even if you’re not able to negotiate significant savings into your contracts, the presence alone of an eProcurement system, like Coupa, will save you bundles of cash since you’ll be able to virtually eliminate maverick spending with the built in compliance – one of the most significant costs to your organization!

I’ll post more later when I have the time, including some of the benefits of their forward thinking architectural choices, but for now, I suggest you download it and check it out. It might still be a pre-release, but there’s enough there to start giving it serious consideration – after all, it’s the early supporters and adopters that will get to guide its development over the next year or two, since open source projects build their roadmap based on customer feedback, not what an arbitrary executive or investor thinks is the right solution for the marketplace. Plus, they have documentation now!

Managed Services

In Part XI of The Sourcing Innovation Series, John Martin of Building SaaS authored a guest post on “The Future of Sourcing … for Services” which I discussed further in Part XII where I indicated that I not only agreed with John in that services sourcing is going to become a major part of your future sourcing initiatives but provided you with the outlines of an approach that I thought you could use to start getting a grip on your services procurement today.

Little did I know how timely these posts would be at the time I was preparing them. It turns out that as John and I were collecting our thoughts, Aberdeen was releasing their Supply Chain & Logistics Market Alert “The Next Wave: Managed Services for Supply Chain”. In this market brief, Aberdeen indicates that in a recent benchmark of 180 companies, 58% indicate that they are highly interested in using at least one of the following managed services:

  1. Network design and strategic inventory optimization
  2. Supply chain execution
  3. Trade compliance
  4. Supply chain planning
  5. Periodic Operational Improvement Analysis and System Tuning
  6. Data Quality Monitoring and Cleansing
  7. Data Mining and Analytics
  8. Supplier On-boarding

The study also points out that midsize companies are most likely to be interested in exploiting the expertise and resources of their technology vendors to augment their internal staff, though large companies are highly interested in supply chain execution support.

However, one of the most interesting facts is that companies that view their supply chain capabilities as “above” average for their industry are twice as likely as their peers to be highly interested in wanting to use managed services to help in supplier on-boarding and they are also more likely to desire trade compliance managed services. In other words, top performers appear to want to take advantages of any services that can help them perform better.

Finally, I’d like to emphasize that managed services offer companies the flexibility of gaining additional staff resources and expertise without having to hire people internally or having to abdicate complete process control to a third party-organization. In other words, it appears that, managed properly as part of an overall supply chain strategy, managed services can effectively augment (but not replace!) your internal supply chain teams.

The Sourcing Innovation Series XIII: Part One Wrap Up

First of all, I’d like to thank all the contributors for their efforts and incredibly well thought contributions. It was a great series.

With commentaries ranging from technology through processes to services, from technological, business and even economic backgrounds, I think this first series brought a breadth and depth to the topic that even think-tanks would be hard pressed to match. Ranging from the down-to-earth predictions that the future will be forged from process improvements and enhanced corporate understanding of how to use existing technology (David) through evolutionary process improvements such as new hybrid sourcing models (Tim) to sky-high predictions that in the future capacities will be securitized and traded on the open market (Jason), this series opened our minds not only to the art of the possible, but the art of the probable. Given whom many of these predictions are coming from, I’d say it’s a safe bet that many of today’s predictions will turn into tomorrow’s technologies, processes, and best practices. So if you missed any posts, use the links above to catch up. And if you didn’t, use the links above to read them again. Considering what these guys can charge for their advice, and the very high caliber of the postings, I’d wring every idea I can get out of them. It might just give you the leg-up you need to surpass your competition.

I’m not going to attempt to summarize the series in this post, since I spent nine posts trying to do just that as I offered my views, but instead note that I hope to make this a regular yearly series. Sourcing is always changing, and not just because of the rapid advancements in technology which have skyrocketed it, e-Procurement, e-Commerce, and supply chain forward in recent years. I think it will be very interesting to see not only where it is in a year, but how that changes our perceptions of where it is going and how fast it will get there. I hope my fellow bloggers and contributors agree, since they’ll all be receiving invitations, root* willing, next summer to contribute to Partie Deux!.

Back to the present. Given the recent focus on talent#, I would like to propose that as the second cross-blog topic. I know Charles, Tim, and David are quite interested in this topic, as well as myself, (as they blog about it regularly). I’m particularly interested in predictions on how companies are going to close the talent gap over the next twelve months – and, in particular, innovative techniques they are going to use to do it. What do you say guys — up for it? (Guest commentators — if you want your top-notch commentary on SourcingInnovation on this topic, feel free to contact us using the contact information in the FAQ.)

Thanks again guys! Fantastic job!

* Inside Techie Joke
! It just sounds better en francais.
# See the Talent category in the category archives, sixth component down on the right hand side of the page.

** All posts prior to 2012 were removed in the Spend Matters site refresh in June, 2023.

On Demand V: Preparing for the Transition

Earlier this month, Purchasing.com published yet another article about on-demand entitled “On-demand promises to hook savings” stating that on-demand software and technology is more than just software on someone else’s servers—it’s a delivery method that supporters say improves ROI. However, what caught my attention about this article was that it gave some suggestions on how to prepare for a switch to an on-demand solution, something we haven’t really discussed yet in this series.

The suggestions offered by the article are:

  • Know what you need! Develop a solid statement of expectation or long-term roadmap for the specific problems you’re trying to fix and/or the specific results you need to attain. (Note: Discuss this list with your prospective solution provider(s)!)
  • Talk to other users of on-demand technology. Get their perspective on what on-demand is doing for them. (Note: Any on-demand solution provider I’ve talked to is usually more than happy to provide you with a list of contacts in their customer base that you can call.)

In addition, I would suggest you also:

  • Identify what systems your data currently resides in and what systems you are going to need to export data from and import data to. Make sure the solution you select either interfaces with these systems or supports standard input and output formats that will allow you to import and export the appropriate data as needed.
  • Start with a pilot. The beauty of on-demand is that solution providers can literally set up pilot accounts at a flick-of-a-switch that you can use to try-before-you-buy. In addition, most providers will engage in a pilot project with you to prove their solution at very little cost to you. (The standard seems to be free access to the system for the length of the pilot if you cover reasonable consulting costs and expenses. Some eSourcing providers with analytic solutions will even do preliminary one or two day proof-of-concepts on existing data for free to demonstrate the power of their tool.)

Another good point made in the article is that moving to an on-demand solution is not an overnight process as it’s a change management process. The most successful projects transition small groups of power users at a time. These power users become the internal proponents, experts, and trainers and help bring the rest of the organization over to the new organization.

The article mentions how Cox Enterprises was up and running on Procuri’s (acquired by Ariba, acquired by SAP) on-demand solution in under 3 months and saved 2M in a 10M spend category on their very first on-demand sourcing event. It’s important to note that this is a typical result – initial projects using the latest sourcing technologies built into on-demand platforms typically save users 10 to 30% since they not only enable transparency in your market, but remove inefficiencies from the process. If you check out Iasta’s typical results, they are 17 to 26% in aerospace/defense and automotive, 19 to 27% in consumer packaged goods, 18 to 25% in electronics, and 14 to 27% in food processing and food service, for example. (And some of their results at some of their new Fortune 500 clients have been just as impressive.) Iasta (acquired by Selectica, merged with b-Pack, renamed Determine, and acquired by Corcentric) maintained a complete list of categories it has assisted clients. Procuri also had a page dedicated to Success Stories.

Another impressive point of note is that ServiceMaster now claims to have a 99% compliance rate as a result of switching to an on-demand solution. I guess the only thing left to ask is if you have not tried on-demand, why? With solutions that encapsulate the end-to-end executable sourcing cycle in a single, consistent, easy-to-use desktop application, and the cost of a pilot project less than what a big five consulting company would likely charge you to analyze your processes and installed applications and tell you that you should probably supplement their weaknesses with an on-demand solution, it seems like an obvious choice to me. So, like fellow bloggers David Bush of eSourcingForum [WayBackMachine] and Tim Minahan of Supply Excellence [WayBackMachine], I’m going to keep extolling its virtues. The on-demand story will continue.

You can find the previous parts in the series, which started on eSourcing Forum, here: