High-Definition Sourcing: Category Excellence Moves to the Next Level (Repost)

This post originally ran on February 14, 2011. However, it is still as relevant today as it was then and, for those of you who did read it before, not too much of a distraction to you as we approach the World Cup Final 😉

Today’s guest post is from Paul Martyn, Vice President of Marketing for Bravo Solution.

the doctor — along with many others — has been advocating for “next-generation sourcing” for some time. I couldn’t agree more that modern supply management organizations must take sourcing practices to the next level if they are going to continue to distill value from the discipline and practice.

But like most New Year’s Resolutions, while the aspiration to improve may be great, the effort may be too much for even the most committed. I see this a lot, especially when it comes the challenges of sourcing strategic, complex categories. Not without reason of course, but more and more I also see that the benefits of mastering the art of sourcing these challenging categories far outweigh the difficulties of the actual process.

Strategic categories mean different things to different businesses. For one company, the category may be transportation; for another, packaging material. The common denominator: the business can’t succeed without it, and can’t afford to over-pay for it.

To make decisions based on the most strategic objectives of the business, sourcing teams need to integrate many dimensions of information from areas well outside their domains. For example, if non-price factors like diversity or sustainability are part of the company’s corporate social responsibility initiative, those factors can — and should — be part of sourcing strategies.

As a result, the volume and the sheer variability of the information render common e-sourcing tools or Excel spreadsheets useless for collecting and evaluating proposals. That’s where high-definition sourcing — which combines technology, expertise and process — delivers the goods at the lowest total landed cost, and aligned with the greater organizational strategy.

So how do you know if high-definition sourcing can turn even the most complex categories into real value for your organization? There are generally three scenarios where the opportunity to apply this discipline will help you capture meaningful and sustainable savings

  1. The category leader is frustrated with traditional sourcing techniques
  2. The category is avoided by the faint of heart
  3. Sourcing alone will not deliver the value

Sound familiar? Odds are good that at least one of these reflects what’s happening in your organization. Regardless of which situation you face, there are immediate opportunities to be gained with high-definition sourcing

  • Use technology to design and execute more sophisticated proposal collection and analysis, including the ability to use “what-if” scenarios.
  • Build supplier performance monitoring and triggers for re-evaluating supplier selection into your category management solution
  • Partner with suppliers to drive costs out of the system and strike the perfect balance between suppliers’ pricing and capabilities with buyer business constraints and preferences
  • Tap domain and process experts to bring market and industry best practices to bear on your own sourcing process

The results will be well worth it. Best-in-class companies make the connection between complex categories and the business’ charter. Lowering initial costs is a given. More importantly, these leaders make better decisions based on capabilities and price and secure meaningful — and sustainable — savings.

Thanks, Paul!

Looking Behind the Knowledge Network Curtains (Repost)

This post originally ran on November 19, 2010. However, it is still as relevant today as it was then and, for those of you who did read it before, not too much of a distraction to you as we approach the World Cup Final 😉

Today’s guest post is from John Shaw, the Director of Education Services for Supply Management at BravoSolution.

In a recent post, the doctor asked, “Where is the Knowledge Network?” and “What is an aspiring supply management professional to do?”

Our industry is offering a growing list of online resources and supply management organizations. We can use these resources to augment the knowledge we gain through our professional activities and personal networks. As the doctor stated, each of these resources takes time and effort to build, so naturally, the goals and objectives of these networks are aligned with those individuals who invest in building each network in the first place.

Our challenge as supply management professionals is to navigate this forest of information in a way that maximizes our personal development. To do so, we need to understand where our personal objectives align with those of a knowledge network. The better we understand how each network’s objectives align with our own, the more value we will receive out of the limited time we have to invest in them.

So as both a consumer of these networks and a developer of some (see discloser below) I’d like to offer some questions for you to ask when trying to determine if participating in a particular knowledge network would be valuable to you:

  • Does the intent of the network align with the needs of the membership?
    The Network Guidelines should clearly state the audience, and the types of information exchange the network facilitates. If they are not stated, or they do not align with what your current development needs, your time may be better invested elsewhere.
  • Who are the thunder lizards?
    Look to see who the most active participants are. The most active people in a community will steer its direction. If these people are your peers, or better, if they are in roles that you aspire to, look further into participating.
  • Who is in charge?
    Successful communities are driven by the membership. If enough thunder lizards march in the same direction a community will move and take a life of its own. The builder can find him/herself in the passenger seat. In the best scenario, you’ll find that the thunder lizards are your peers, and they are in charge!

So what are we to do? Unfortunately there isn’t a simple answer. Whether we are learning about supply management, following politics or trying to get the best advice online for fixing a leaking pipe, we need to look behind the curtains to understand our information sources

Thanks, John!

Thanks to U2, Everyone Remembers Bloody Sunday. But 80 Years Ago Today Was Bloody Thursday!

The Industrial Revolution was not easy. It was a difficult time in American History. It was a time when workers’ rights had not yet been formalized, when unions were being formed, and when America was working hard to become the world leader it is today. It was a period of progress broken up by turmoil when America was going through its growing pains.

Part of this turmoil took the form of regular labour strikes by newly formed unions trying to bring workers rights to hard labourers and some order to the chaos that accompanies rapid industrialization. This included the Wheatland Hop that occurred 101 years ago in Wheatland, California that resulted in 4 deaths and Bloody Thursday that occurred 80 years ago today as part of the 1934 West Coast Longshoremen’s Strike.

This strike lasted eighty-three days and began on May 9, 1934 when longshoremen in every West Coast port walked off the job. They were joined by sailors a few days later. It was a heated and aggressive strike on both sides. As per the Wikiepedia entry, the employers recruited strikebreakers, and in response to this, strikers attacked the stockade housing the strikebreakers on May 15. This resulted in employer’s private guards shooting and killing two strikers.

Due to the impact of the strike (as a significant amount of trade has passed through west coast ports for the last century, which is also why “Billions [are now] at Risk as West Coast Port Contract Ends” [ABC News]), the Roosevelt administration tried to broker a deal to end the strike, but the membership of the newly formed unions rejected the agreements brought to them twice.

This resulted in the employers deciding to force a reopening of the port in San Francisco on July 3, sending trucks through the picket lines which resulted in fights between police and strikers. Then, on July 5, eighty years ago today, the employer’s Industrial Association tried to force a further re-opening of the port. In this attempted reopening, which started in the morning, police shot tear gas canisters into the crowd of strikers, picketers, and supporters, and charged with mounted police. Picketers threw the canisters and rocks back. Both sides then suspended aggressive actives, refortified, and took stock.

But then hostilities resumed in the afternoon outside of the ILA strike kitchen. Eyewitness accounts differ in the exact accounts that transpired next, but the end result was that police ended up firing shotguns, striking three men, and killing two — and giving us Bloody Thursday.

At this point, the California Governor called in the California National Guard to patrol the waterfront and federal soldiers stationed at the Presidio were placed on alert. The picketers pulled back and trucks and trains were, after 58 days, allowed to move without interference. But the strike didn’t end. On July 8, teamsters in both San Francisco and Oakland voted to strike. Then, on July 14, the San Francisco Labor Council voted to call a general strike, and the Mayor declared a state of emergency. This was probably unnecessary, as the Labor Council strike only lasted four days.

When the Labor Council voted to end the General Strike, it also recommended that unions accept arbitration of all disputed issues. This resulted in the National Longshore Board making the same proposal that passed in every port except Everett, Washington. At this point, only one point and striking seamen were left in the lurch. This was the beginning of the end of the strike, and the arbitration award on October 12, 1934 cemented the ILA’s power, which still exists today in the ILWU, which was formerly known as the ILU which broke off from the ILA in 1937 and which covers the west coast district.

The ILWU continues to recognize this day by shutting down all West Coast ports every July 5. Let’s hope they, and the employers, never forget what happens if both sides don’t sit down for as long as it takes to resolve disputes and work out a deal.

It’s Been Eight Days Since the First Procurement Independence Day

Eight years ago, Procurement Independence was Declared at the Coupa Cabana Cafe. Since then, there has been a surge in Enterprise e-Procurement Applications on both sides of the Atlantic, and many can be deployed to all employees across the global organization to handle requisitions and procurements.

In other words, an average organization has no excuse to be a slave to old MRP and ERP systems and the slow and inefficient procurement processes they enforce upon you. But many organizations still are slaves to broken systems that cost them over $100 to process an invoice (compared to the $30 to $40 average and the $3 to $4 average for a modern e-Procurement system with end-to-end invoice automation) and 30% to 40% leakage on negotiated savings due to overpayments and maverick spend.

So this year, make an Independence Day resolution to achieve Procurement Independence. Then your organization will have a real reason to celebrate.