Category Archives: Technology

Societal Damnation 47: XaaS (Part II)

In our last post we introduced you to XaaS, Everything as a Service, and told you that this latest craze is going to cause your Supply Management organization nothing but suffering and pain. Why? Because even though, historically, the transformation of a non-core but essential function or utility to a service was a good thing that made your life easier, like all good things, there is an end to the goodness. Taken too far, nothing but chaos will result by handing over a function to a third party that is not well equipped to handle your service needs because they do not have the expertise, cannot achieve the necessary economies of scale, or just can’t be managed effectively.

For example, let’s say sales and marketing decides that IT just isn’t cutting it and decides to outsource IT support for marketing to a third party, and the organization is a CPG company that depends on all communications, orders, and marketing deliverables being properly archived in the ERP and Marketing Procurement system for compliance, cost management, and post-campaign/event analytics. This brings with it a host of problems. One, the systems are not being managed by IT or the support organization IT recommends. This increases 3PM overhead, causes the organization to lose out on better rates that come with more volume, and could result in core systems being bypassed (if the provider is inept and can’t figure out how to push critical data into the core systems). Two, it sets the organization up for a compliance nightmare down the road (when audit trails go cold due to missing data). Three, it opens the door for over billings, duplicate billings, and even fraudulent billings when AP can’t find all of the associated PO and contract data to m-way match an invoice. Four, instead of providing Supply Management with an opportunity to determine why IT isn’t meeting Sales and Marketing needs (which could be due to a misunderstanding, lack of staff, or other issue that could be easily solved by Supply Management) and identify a solution that would benefit the entire organization, it instead opens the door for each OU to hire their own provider (since Sales and Marketing did it), and burden the organization with a 3PM nightmare in IT.

And this is just the tip of the iceberg, as IT has been commoditized for over a decade now, and there are methods to manage this madness. The real problem is when different Business Units decide that anything they don’t feel is critical to manage in-house should be a service and the marketplace adjusts to that mindset. Product Design as a service. (R&D) (Hey, all we need to do is approve a design since we just need something to sell, right?) Supplier Management as a service. (Engineering) (We’ve approved the design, who cares who builds the product and how they do it, right?) 3PL Transportation, Inventory, and Distribution Management as a service. (Logistics) (Who cares how it gets to the shelves as long as it eventually gets to the shelves, right?) Campaign Management as a service. (Marketing) (Once we’ve defined the message we want to get across, we can just hand it off to a local marketing management firm to best tailor the message to the region and produce the ads, right?)

Each of these services can lead to massive headaches, fines, and reputational damage if the service provider does not understand the needs of the organization, does not employ proper processes and procedures necessary to ensure quality and reliability, does not have the right certifications and insurance, does not have a proper focus on sustainability and Corporate Social Responsibility, and does not ensure fair and equitable treatment to workers throughout the supply chain. For example, a design that does not adequately consider product safety and results in an electrical appliance electrocuting a consumer during normal use (due to lack of safeties and blowout circuits) will result in massive lawsuits. Poor supplier management could result in missed deliveries, poor quality, high defect and return rates, and even the inclusion of banned chemicals or compounds in the product which will result in costly recalls or border seizures. Poor logistics management will lead to high stock-outs on the shelves, and lost sales, which, if significant, could make the difference between profitability and impending bankruptcy for the organization. And a poor marketing campaign, that includes phrases or images offensive to members of the local community, will result in a media onslaught that will result in massive damage to your brand. And that’s just the beginning.

Services are good. But Everything-as-a-Service is a ridiculous concept and any organization that buys into it is just asking for trouble.

Societal Damnation 47: XaaS (Part I)

XaaS, short for Everything as a Service, is the latest craze that is going to cause your Supply Management organization nothing but suffering and pain. While it sounds really cool, because, historically, the transformation of a non-core but essential function (legal, accounting, etc.) or utility (water, electricity, waste disposal, etc.) into a service made your life easier, as with any good thing, it’s always possible to have too much. (A glass of red wine a day is a good thing, unless you are an alcoholic, but the same cannot be said of a bottle. A couple of aspirins are a good thing if you have a headache or a mild heart condition, but a bottle can kill you. Recruiting firms are a good thing, but imagine the chaos if you had to hand over all hiring to a third party who knew nothing about your corporate function or talent needs. Think about that for a minute.)

The right services can provide an organization with considerable advantages that include, but are not limited to:

  • Expertise
    that the organization might not have
  • Cost Reduction
    from economies of scale when all the service provider does is a certain function (and can amortize solution and personnel costs across multiple clients)
  • Efficiency
    that comes with best practices and the focus of personnel on homogenous tasks in an efficient manner (under the right, lean, six-sigma optimized, virtual production line model)

provided the organization does not have the economies of scale, dedicated personnel, or expertise in house. However, the wrong services will burden the organization with a number of considerable disadvantages that may include, but are not limited to:

  • Cost Increase
    as cost reductions only materialize if there is enough work on which to achieve a cost reduction (through the provider’s economy of scale) that covers the incremental overhead and management cost that goes with outsourcing a function
  • Efficiency Decrease
    since the management and administrative overhead of handing over a small amount of work is more than the efficiency savings achieved by the third party when there is not enough work to take advantage of an economy of scale
  • Loss of Control
    which is critical if the task is critical to organizational success (which is the case if the task supports the core business function of the organization)
  • Third Party Management (3PM) Nightmare
    if the provider is difficult to work with, in a time-zone that is opposite to normal working hours or the time-zones under which most other third parties operate, or has management requirements that are unduly burdensome to an organization already stretched thin with regards to third party management requirements

And if different business units decide to start outsourcing what they perceive as non-core functions (which are in fact core to the business or which should be managed by Supply Management or a different business unit), functions for which the service provider cannot achieve economy of scale, or functions that have not been optimized for outsourcing (which will result in an efficiency decrease as a best-practice provider will not be able to optimize inefficient workflows) willy-nilly, Supply Management will have quite a third party management mess to deal with.

How so? Come back for Part II.

Statess Wants to Stabilize Your State of Flux Part III

In our last two posts we introduced you to Statess and their SRM solution. With eleven years of SRM consulting behind it, and six years of Global SRM research, the platform hits the mark and provides the solution that many companies need to manage their supplier performance, development, and relationships. In today’s post we’re going to cover some of the key features of a few of the core platform modules.

As indicated in our last post, the platform is easily configured to provide a 360-degree view of a supplier and from the supplier homepage, a user can quickly access the overview report, profile data (which can be used to build a complete Supplier Information Management, or SIM, solution), performance data (collected internally and from third parties), the risk profile, associated contracts, tracked innovation efforts, Corporate Social Responsibility efforts undertaken by the organization and/or the supplier, current projects, supplier accreditations, 360-degree surveys (by the supplier of the organization), existing reports, and all dashboards that correspond to the supplier. In addition, if available (via 3rd party plugins), the buyer can also access trading information related to the supplier and its products, news feeds on the supplier, and the supplier’s media portal. Whereas some SRM solutions scatter supplier data throughout the different modules, the Statess solution, which allows for data entry and maintenance throughout the different modules, allows for the easy creation of centralized views by supplier so the organization, and a buyer, always has all of the relevant information through one common access point.

The system supports very extensive supplier profiles. In addition to basic HQ, Finance, and Contact information, the system can also store information on the supplier’s organizational structure as well as information on the supplier’s mission, vision, corporate objectives, and sustainability commitments (used in the CSR module). Furthermore, it can store extensive governance information that includes all of the individuals responsible for the relationship on both the supplier side and the organizational side, a complete stakeholder map, necessary actions, governance plans, planned meeting dates, and the minutes and reports associated with those meetings. Actions are implemented as project tasks and have owners, states, and status. This, in turn, provides a strong foundation for performance management and development programs.

At its core, the platform supports a very powerful generic survey mechanism that, like a good RFI solution, allows multiple types of surveys to be built with multiple sections, different response types (checkbox, numeric fields, free text, etc.) for each question, and automatic weighting mechanisms. This allows the organization to prepare the appropriate internal performance surveys and external 360-degree surveys that form the basis of good performance, CSR, Risk, and Relationship management programs.

Projects, which can correspond to the different types of efforts that can be managed in the system (including, but not limited to, risk management, compliance management, supplier development, innovation, and sustainability), can be associated with a business unit, optionally associated with one or more contracts or bids, and contain multiple stages or tasks, as they are defined in accordance with the traditional, well understood, project management methodology.

Performance reviews are built on KPIs (Key Performance Indicators), one or more KPIs can be built for each area (risk, compliance, CSR, contract, etc.) of interest, and the review can be broken down by key area. Year-over-year changes can be automatically calculated and the data can be imported from external systems or the ERP in supported data formats. Color-coding and drill-down views allow an organization to quickly pinpoint problem areas and then launch development initiatives off of the relevant area or KPI. KPIs have an extensive definition in the system (which includes categorization, associated business units, organization and supplier owner, input/import method, update frequency, default reporting frequency, tolerance levels, etc.) and, when properly defined, become a powerful performance measurement and management tool.

Risk tracking is also quite extensive, allowing the organization to categorize risks in different categories and track them using external data feeds (or manually entered data), define and store supplier contingency and business continuity plans, and integrate Lexis Diligence in real-time against the supplier and identified risks of interest.

Contract Management tracks all of the contract meta-data that you would expect, supports versioning, stores default templates, tracks contracting entities, and even allows for the definition of sibling (related) and child contracts so a buyer can not only quickly retrieve a contract for a product or service, but determine if there are any other contracts of relevance if she is sourcing a category or thinking of dealing with an entity wholly owned by the supplier.

The innovation module serves two primary functions. First of all, it allows an organization to centralize tracking and management of supplier projects focussed on innovating (a new product design or service). Secondly, it allows the organization to track public challenges that it issues on sites such as Innocentive. This is a useful capability that many software solutions overlook.

In summary, the new Statess solution is a very extensive SRM platform that makes a great entry point for any company wanting to get their SRM under control.

Statess Wants to Stabilize Your State of Flux Part II

In our last post we introduced you to Statess, a relatively unknown solution provider in the SRM space on this side of the pond even though they were conceived from State of Flux who have been producing leading SRM research reports for six years, in business for eleven, and are a leading provider of SRM consulting in the UK.

We discussed how they offer a SRM suite focussed on performance, contracts, risk, innovation, relationship, and sustainability management with over fifty sub-modules that address dozens of facets of performance, risk, and relationship management. We also noted how the platform could, if needed, be used for category management in addition to contract management, CSR management, and even the management of overall supplier development programmes.

The first thing to note about the Statess SRM platform was that it was designed to be modular, flexible, and adaptable. This means an organization can not only choose only the functionality that they want from such a platform, but can configure it how they want and even customize the terminology used in the UI. Even if an organization could use all of the functionality, sometimes a staged roll-out with limited functionality is best at first as this allows training to be focussed and prevents users from getting overwhelmed and avoiding the system. (And if the organization has systems with some of the functionality and wishes to keep using those existing systems, disabling duplicate functionality makes sure that the users don’t get confused.)

The next thing to note is that this web-based platform is highly configurable. Not only can the user define and customize reporting dashboards, as one would expect from any modern tool, but the user can design and customize their home page and the view for the entry point to every module they have access to. Basically, not only do all reports have overview widgets, but all action types have summary widgets, particular to what the user can see and do, that can be shown or hidden, rearranged as the user sees fit, and customized from a look-and-feel perspective. This allows the user to create a page that focusses on upcoming and overdue actions, quick access to artifacts (such as contracts, audits, certifications, etc.) stored in the system that they need to review on a regular basis, and entry points for key tasks that the user performs on a regular basis instead of just a shiny dangerous and deadly dashboard (which is where most systems stop).

After this, the next most important thing to note is that the user can create views from both an organizational perspective and a supplier perspective. The latter allows them to focus on a 360-degree view of a single supplier, as opposed to just an organizational view from a performance, relationship, or contract perspective and even replicate what the supplier will see based on what information they choose to share (with the supplier). Furthermore, from this view they can create or access any data or system artifact that relates to the supplier, regardless of the module it lives in as well as initiate new survey, innovation, or development programmes. The system maintains the necessary multidimensional relationships between the different data elements to enable the buyer to rapidly configure and access multiple views. Just like the best insights in a spend analysis project often come from looking at the data in unconventional ways, the best insights into supplier performance and, most importantly, development opportunities often come from looking at the supplier (data) from multiple perspectives. Statess realized this and built a tool that could support these multiple perspectives.

And the last point we are going to note in this post is that the platform, while quite extensive, is still looked upon as an early stage solution and is being actively, and aggressively, developed and more (and deeper) functionality will materialize over time, as well as more integrations to third party systems and data sources to shorten the average implementation timeframe and progress towards even more of an “out of the box” solution.

In our third, and final post in this initial series on Statess, we’ll overview some of the key capabilities of a few key modules.

Statess Wants to Stabilize Your State of Flux (Part I)

These days an average organization has a lot of uncertainty to deal with as a result of sustainability, regulatory, and risk headaches that plague it on a daily basis. These headaches range from paperwork headaches to regulatory migraines to minor delivery hiccups to major supply chain disruptions depending on whether an import form wasn’t received on time, certification requirements for key personnel were not completed, a strike erupted at a major port, or an earthquake destroyed a major production plant.

However, that uncertainty can be reduced with good planning, monitoring, and execution. Somewhat ironically, achieving this requires proper planning to identify the right processes and technologies that can be used to not only monitor the supply chain for events that can cause disruptions, but create mitigation and continuity plans that can be executed at the right time. And while it’s not always easy to identify the best processes, it’s a bit easier to identify the right kind of technologies. An organization that wants to reduce uncertainty needs to implement systems that monitor for events outside of its control that could increase its organizational risk and cause unexpected disruptions and it needs to implement systems that monitor for issues inside of its control that, if left unchecked, could increase risk or decrease effectiveness. One of the most important systems in this latter category is a SRM (Supplier Relationship Management) system because an organization’s suppliers, that often are the recipients of up to 80% of organizational spend, represent one of the biggest known, and manageable risks, to the organization.

While SRM solutions aren’t new, new SRM solutions are still being developed, and one such SRM solution that you likely haven’t heard of that could meet your organization’s needs is Statess. Although it’s a relatively new solution, it’s quite mature for its age as, unlike many solutions that first hit the market, it was not developed by a new software company but originally conceived of over six years ago by State of Flux, a mature, eleven year old provider of Supplier Management consulting, training, and research services (that recently rebranded their technology division as Statess). Even though you may never have heard of them, as they are on the other side of the pond, State of Flux is a leader in best practices and thought leadership for Supplier Management, and has been producing the “Global SRM Research Report” for the last six years. That’s longer than a number of self-proclaimed industry leading research firms on this side of the pond have been around!

As a result of this research, and the consulting they did for their clients, they not only quickly realized the need for a proper tool to manage supplier relationships, but realized that if the tool was not designed to streamline the common operations and adapt to the organization’s needs, it would not be effective. Based on this, they set out to design a tool that would work for the average organization it served and not end up as another piece of shelfware. Such a tool would not only have to help manage relationships and performance, enforce compliance, and mitigate risk, but also promote supplier development, allow for cross-organizational team collaboration, and, most importantly, go beyond just management to encourage true supplier innovation. In addition, depending on organizational need, the platform may need to support and manage contracts and categories, address sustainability and Corporate Social Responsibility (CSR), and manage overall supplier development programmes.

It’s a pretty tall order, but the new Statess supplier management platform meets the bill with core modules for relationship management, performance management, contracts management, risk management, innovation management, and sustainability with over 50 uniquely defined sub-modules that address different aspects of contracts, performance, risk, innovation, and relationships.

In our next post we will begin to discuss the capabilities of the solution in detail and how it addresses each of these core issues.