Category Archives: X-Mas

On the Seventh Day of X-Mas … (Strategic Sourcing Success Strategies)

On the seventh day of X-Mas

my blogger gave to me
strategies for winning,

tactics for saving,

five golden rings,

four little words,

tri-focal lens,

two boxing gloves

and a lesson in strategy.

Seven strategies you can use to increase your sourcing success are:

  • Spend Visibility
  • Supplier Performance Monitoring
  • Smart Country Sourcing
  • Collaboration with Strategic Partners
  • Innovation on Demand
  • Empowerment
  • End-to-End E-Procurement

Spend Visibility

It’s not how much you spend, how you store it, how you cube it, or how you report on it – it’s how much you get, how you profit from it, and how you improve on it. (Remember, Spend Matters Not.) It’s all about value, profit, and continual improvement. And that requires visibility — otherwise, you don’t know what you’re getting, whether you’re profiting from it, and what you need to be improving on.

Supplier Performance Monitoring

Supplier Performance Management (SPM) is a business practice that is used to measure, analyze, and manage the performance of an organization’s performance in an effort to cut costs, alleviate risks, and drive continuous improvement. The ultimate intent is to identify potential issues and their root causes so that they can be resolved to everyone’s benefit as early as possible. It’s critical because companies with formal performance measurement programs greatly improve supplier performance across the board. Consider the recent Canada Post case study which found supplier improvements across the board, even in a public sector organization where past performance can’t be used to disqualify future bids in public competitions.
For more information on supplier performance management, see the wiki-paper.

Smart Country Sourcing

It’s not low cost, best cost, or near cost – it’s smart cost country sourcing, which includes home cost country sourcing whenever there is a justifiable value proposition to doing so. Don’t go half-way around the world for something you can get down the street when a single fluctuation in raw material costs, transportation costs, or exchange rates can wipe out a year’s worth of savings and lead to significant losses in the long term.

Collaboration with Strategic Partners

Remember, Collaborate, Collaborate, Collaborate, Collaborate (I, II, III, IV, and V) because two heads are better than one.

Innovation on Demand

Innovation-on-Demand, as summarized in my post on e-Sourcing Forum, is a great way to increase your sourcing success. Enable it by way of collaborative PLM technologies that integrate design-centric technologies like those offered by Akoya, Apriori, and Co-exprise.

Empowerment

And I mean real empowerment, not just lip service. If you’ve focussed on hiring real talent with real EQ, you’ll do better letting them take the initiative than limiting them to only that which you know.

End-to-End E-Procurement

End-to-End e-Procurement, the implementation of e-Procurement technologies that support each step of the various procurement cycles of your organization in a tightly integrated fashion, enables the benefits that early procurement technologies promised, but never delivered, which include:

  • elimination of invoice overpayments
  • transparent organizational costs
  • regulatory compliance
  • increased visibility into supplier performance
  • significantly reduced maverick spending

and 15 more! So, if you haven’t already, download the jointly-authored Sourcing Innovation Whitepaper today!

On the Sixth Day of X-Mas … (Cost Reduction Strategic Sourcing Strategies)

On the sixth day of X-Mas

my blogger gave to me
tactics for saving,

five golden rings,

four little words,

tri-focal lens,

two boxing gloves

and a lesson in strategy.

Six tactics that you can use to save in today’s marketplace are:

  • Reverse Auctions on Commodity Categories in Competitive Markets
  • Sealed Bids on Strategic Purchases of Custom Goods or Services
  • Decision Optimization on High Value Goods
  • Process Re-engineering with Strategic Partners
  • Lane Optimization
  • Distribution Center Optimization

Reverse Auctions on Commodity Categories in Competitive Markets

A recent post on Supply Excellence asks if you are not sourcing, why not? … and it’s a good question. Many key commodities that go into the parts you buy, and the energy your suppliers are using to convert raw materials into finished goods, recently hit two, three, and, in some cases, four year lows thanks to the recent decline in global demand. For some categories, it’s the best sourcing market we have seen in years as far as reverse auctions are concerned. So review the reverse auction selection criteria over on e-Sourcing Forum, where you can also find details on reverse auction strategy and reverse auction basics, brush up on the key steps to successful e-auctions, and get sourcing!

Sealed Bids on Strategic Purchases of Custom Goods or Services

If the category is strategic, and you can not use a reverse auction or open-bid methodology and have suppliers compete solely on price, because quality will be just as important, use a sealed bid.

Decision Optimization on High Value Goods

As outlined in my recent posts on e-Sourcing Forum and here on Sourcing Innovation where I asked if you can really afford to leave millions on the table, strategic sourcing decision optimization typically saves you 12% above and beyond what you will save with your best reverse auction, and, even today, still saves you up to 40% on some categories … which is an awful lot of bling if we’re talking about a 100 Million category. So review the decision optimization wiki-paper, select an appropriate solution, and start saving.

Process Re-engineering with Strategic Partners

Streamline processes and increase productivity. This allows you to increase spend under management and the savings you can generate. And if you’re worried about resistance, check out this post on overcoming worker resistance in process improvements.

Lane Optimization

Make sure you are using the right lanes at the right service levels from the right carriers. Otherwise, you could be considerably overspending on your transportation. As Dan Kowal pointed out in his recent Supply Excellence post, the Baltic Panamax Freight Index has dropped 90% since May of this year. The market is rife with opportunities.

Distribution Center Optimization

An inefficient distribution network is costly. Save big by optimizing your network. For details on how, see my post on Bob’s Unique Talents.

On the Fifth Day of X-Mas … (Supply Management Takes Center Stage)

On the fifth day of X-Mas
my blogger gave to me
five golden rings,
four little words,
tri-focal lens,
two boxing gloves
and a lesson in strategy.

Five Golden Rings

Legal.
Finance.
Sales and Marketing.
Product Development.
Human Resources.

Supply Management continues to sit at the intersection of these departments. Supply Management must work with Product Development to understand their needs with respect to quality, reliability, and functionality. Supply Management must work with Sales and Marketing to understand what product characteristics can be expounded upon to generate buzz or increase value (and, ultimately, the sale price). Supply Management must work with Human Resources to understand organizational values, look for strategic partners, and source temporary and contract labor. Supply Management must work with Finance to understand working capital requirements and preferred payment terms. Supply Management must work with Legal to create the best contracts for the organization and ensure that they appropriately protect the organization against all foreseen risks.

That’s why the sourcing organization needs to form cross functional teams consisting of representatives of each department that are involved with each and every sourcing project from the get-go. This not only streamlines the process, but increases your chances of success. During RFP formulation, Legal and Finance will help you nail down the terms and conditions in the template contract to streamline signing down the road. Product Development and Human Resources will help in supplier pre-qualification. Sales and Marketing can assist in the RFP evaluations. And with everybody’s help, you’ll ultimately make the right decision every time and maximize the value of each and every sourcing effort.

On the Fourth Day of X-Mas … (Collaborate)

On the fourth day of X-Mas
my blogger gave to me
four little words,
tri-focal lens,
two boxing gloves
and a lesson in strategy.

One of my favorite presentations from the last few years is Coca Cola‘s presentation on “Winning Together” from eyefortransport‘s Supply Chain Directions Summit back in 2006.

The presentation, which described Coca Cola’s big push to improve its supply chain through collaboration and information sharing, noted that success depends on:

  • relationships,
  • communications,
  • commitments, and
  • visibility.

These little words have a meaning that’s just as big today as it was two years ago. They’re still the blueprint of success between you and your supply chain partners. Although important, the keys to sourcing success are never canned processes or over attention to metrics, but working as an extended team with your supply chain partners and focussing on the customer. This means communicating to them early when a shipment is in danger of being late, working with them to find alternate sources of supply if the primary source dries up, and suggesting material and design changes that will reduce costs and improve quality. Strong relationships are the key to success and sustainability — take the time to get it right.

Furthermore, it’s important to remember that, when you get right down to it, very little information is truly confidential, and the best way to resolve issues and collaboratively improve supply chain performance is often to put everything on the table. It’s important to share all relevant information with your partners, and give them whatever they ask for if it will help them help you. Remember, there’s a big difference between sharing information with a trusted partner and blasting it all over your corporate web-site. You can always enter into two-way protection agreements if need be, but you can’t collaborate if you don’t share.

On the Third Day of X-Mas … (Three Sides to the Supply Chain)

On the third day of X-Mas
my blogger gave to me
tri-focal lens,
two boxing gloves
and a lesson in strategy.

When coming up with a good strategy for your supply chain, one of the very first things you need to understand is that there will always be three views of the best decision: the procurement view, the logistics view, and the executive view. Your number one challenge could easily be the transformation of these viewpoints to a common viewpoint that permits a common solution.

This will probably require a lot of good negotiating skills, good listening skills, and innovative problem solving skills to propose designs and solutions that can appease everyone’s desires. This is where Jason’s Emotional Intelligence (or EQ) really comes into play. You have to see their viewpoints, understand their perceived problems, get to the real issue, and come up with solutions that will simultaneously meet your needs and theirs.

Management will typically want the solution with the perceived lowest cost or highest profit, or both; logistics will typically want the solution that makes their life easiest; and you should want the solution that meets the needs of your stakeholders – engineering, marketing, etc. – while keeping your costs down. A narrow focus on lowest cost can lead to quality issues, a narrow focus on the easiest solution (local sourcing enabled by a national carrier that can meet all of your shipping needs) can overlook lower cost or higher quality sources of supply, and a narrow focus on minimally meeting your shareholder’s needs in a cost-controlled manner can overlook opportunities for innovation.

So not only do you need to be able to understand each of these viewpoints, you need to be able to see their strengths and weaknesses so that your team can collaboratively design an over-arching supply chain strategy that exploits all of the supply chain strengths available to you while blocking out the potential weaknesses.