The New Supply Chain Manager – Global and Local

Supply Chain Digital recently published an interesting piece on three core trends impacting UK supply chain skills in 2014 where they noted that, even across the Atlantic, globalization is taking a new spin.

According to the article, complex supply networks are now deployed to offset inventory risk, balancing low production costs of far away places with short-lead time replenishment from factories closer to market. This allows for an initial order to be made in the Far East and then supplemented by more local sources if sales demand. This allows the buyer to balance cost vs. lead time / stock out / quality risk and indicates that, like the US, the UK is now focussing more on total cost of ownership and optimizing the total supply chain cost and not just the landed cost (even though the transportation costs from Eastern Europe and parts of Asia are much less for them then the transportation costs their North American counterparts need to bear). It’s a good sign, and SI has always maintained that the right sourcing methodology is best-cost country sourcing, and that often means, when the full life-cycle cost (and risk) is analyzed, home-country sourcing is the way to go.

The need to be local is further emphasized by the evolving purchase patterns of the local consumer. E-commerce is being widely adopted and the Amazon effect is taking hold. Consumers want to shop at home, get the goods delivered to their homes, and if something is broken, return the goods from their homes. This is forcing retailers and distributors to adapt to complex and challenging operating models as they need to not only manage the home-delivery process but the home-return process, often getting products back to the factory from which they came for repair, refurbishment, or recycling (as strict laws in the EU, such as RoHS and WEEE, often prevent outright disposal of anything with electronic components).

Finally, it all comes together in the last trend which revolves around the need for a broader skill-set to manage the broad nature of today’s Supply Management initiatives — initiates that are hugely complex in nature and require Supply Management professionals to know how to manage suppliers, production facilities and freight movements across a multitude of countries and time-zones. It’s not easy, but it can be fun!

15 Years Ago Today, The Internet Rocket Begins to Run Out of Fuel

15 Years Ago today, the Dow Jones Industrial Average closes above the 10,000 mark for the first time during the height of the Internet boom. It was the beginning of the end, which started a year later after the NASDAQ peaked at an all-time high of 4,048.62 on March 10, 2000. It was all downhill in the dot-com bust from that point on. But what can you expect from a frenzy that results in an online property spending $188 Million in a mere six months in an attempt to create a global online fashion store?

The lesson here is that if something looks too good to be true, it’s probably too good to last. If a supplier is significantly undercutting the market in their bid to win your business, it’s a desperation move and cutting prices to levels that are barely at, or below, cost is not going to improve the supplier’s financial viability. If your newly launched product is commanding a considerably larger share of the market than you expected, the market was probably a blue ocean and your lead will only last until a rival launches a similar product with new features and more marketing dollars behind it. If everything has been going smooth in your supply chain for the last year, given the current rate of supply chain disruptions and the ever increasing frequency of black swan attacks, your luck is probably about to run out. So be prepared for the unexpected. It’s bound to happen eventually, and likely sooner than you think!

The (Board) Gamer’s Guide to Supply Management Part III: Star Trek Catan


Space, the final frontier. These are the voyages of the interstellar supply fleet. Their interstellar mission: to find new sources of raw materials, to build new outposts and new star-bases, to build new supply routes where no supply routes existed before!

So, it’s been a while and you’ve progressed to the point where you’re now Master of Catan. Always the first to build outposts, transform them into cities, build new supply routes connecting them, and amass the largest armies to protect those supply routes, you think you’re a master of supply as you deftly conquer the ports to secure the trade advantage, always outsmart the pirate, and never allow your rivals to secure a longer route. Maybe you are the Master of the lonely isle of Catan, but are you ready to supply the final frontier?

In Star Trek Catan, you’re settling the final frontier – space. You are a merchant selected by the Federation to build supply outposts to supply the different federation members. Instead of building roads, you are building starships; instead of building settlements, you are building outposts; and instead of building up those settlements into cities, you are building those outposts up into star-bases. Just like roads, settlements, and cities required resources that could only be collected from regions that neighboured your existing settlements and cities, starships, outposts, and star-bases require resources that can only be collected from nearby planets. (Wood and brick are replaced by dilithium and tritanium, and sheep, wheat, and ore are replaced by food, water, and oxygen.) You still have development cards, but instead of soldiers that build your army, there are star-fleet interventions that augment your security, and the progress and “victory point” cards have been appropriately updated as well. But the biggest difference is the introduction of support cards. In regular Catan, all you could do was build, trade, or play a development card. In Star Trek Catan, you always have one support card which gives you a unique advantage and the choice of when to play it (which is important as any given support card can only be used twice).

The support cards, which are, of course, modelled after original Star Trek characters, give you special abilities on your turn or in certain circumstances. Eight of the abilities can only be activated on your turn:

  • Uhura:Forced Trade You have the upper hand and can force up to two players to give you a resource type you desire in exchange for a resource type you do not.
  • Scott:Starship Building Miracle When building a starship, you may replace 1 dilithium or 1 tritanium with any resource of your choice.
  • Sulu:New Heading You may move any starship on the board at the end of one of your supply routes to the end of another one of your supply routes.
  • McCoy:Development Specialist When buying a development card, one resource of your choice can be replaced with another resource of your choice.
  • Chekov:Klingon Decoy Move the Klingons to the asteroid field and take 1 resource of the type produced by the planet the Klingons left.
  • Rand:Free Trading Outpost Receive one resource of your choice and perform one or more border trades with that resource type at the 2:1 trading outpost for that resource type.
  • Chapel:Liberate a Resource On your turn, after the production roll, take one resource of your choice from a rival with more victory points than you.
  • Sarek:Swords to Plowshares You may discard one Starfleet Intervenes card to build an outpost for the same cost as a starship.

The final two abilities are activated on production rolls:

  • Spock:Resource Compensation On any non-“7” production roll where you receive no resources, you still get to take one resource of your choice.
  • Kirk:Protection from Klingons When a “7” is rolled, if you have more than 7 resources, you may use this ability to prevent resource loss or, if you have 7 or less resources, to take a resource of your choice.

These abilities, which encapsulate some of the different skills deft supply managers may possess, can completely change the game dynamics. Think you’ve done a good job acquiring a monopoly on water or air? Think again. An opponent with the Spock or Uhura support card can still acquire those resources from you or the main supply. Or use Scott or McCoy to substitute another resource for that resource. And it changes the dynamic for you too! Once you’ve deftly placed those star-bases and are acquiring resources faster than you can build, if you can secure it, you can use Kirk’s special ability to keep those Klingons away and achieve victory even faster.

And if you play your cards right, you’ll always score two (of the needed 10) victory points for the Longest Supply Route.

Could there be a better game for a budding Supply Manager to cut his teeth on as he takes up the art of strategic board-gaming to refine his supply mastery skills? the doctor, who believes we should all be preparing for Extra-Planetary Supply Management, thinks not!

 

The original Board Gamer’s Guide series:
Part    I: Ticket to Ride
Part   II: The Settlers of Catan
Part  III: Munchkin
Part  IV: Castle Panic
Part   V: Small World
Part  VI: Zombie Dice, Tsuro, and Get Bit!

… and the new Board Gamer’s Guide series:
Part  VII: Upon a Salty Ocean
Part VIII: Agricola
Part    IX: Small World Part 2
Part     X: All Creatures Big and Small
Part    XI: Agricola Part II-A
Part   XII: Agricola Part II-B

Want Lean Success? Get Lean With Your Lean!

Inbound Logistics recently published a short article on How to Deploy a Successful Improvement Program that chronicled the advice of APL Logistics’, who saved 30M through continuous improvement initiatives, foremast Lean/Six Sigma/JDI professional that had some really good advice.

To summarize, the article outlined a five-step method for deploying a successful improvement program.

  1. Choose One Quality Discipline and Focus On It
  2. Choose And Deploy Your Preferred Training Model
  3. Select the Right Members For Your Project Teams
  4. Choose the Right First Projects
  5. Continuously Improve Your Odds of Program Success

Two of these tips in particularly are especially poignant. In particular, tip #1 and tip #4. The secret to success is focus, focus, focus. Don’t try to adopt too many initiatives at once and don’t try to take on too many projects at once. Just like too many cooks spoil the broth, too many initiatives spoil the effort.

Lean projects, like any other type of improvement project, take effort to accomplish, and there is only so much effort that can be applied to any project. Thus, undertaking multiple types of improvement initiatives splits the effort that can be applied to each, and reduces the chances of success.

Similarly, undertaking multiple projects simultaneously reduces the effort that can be applied to each project, and extends the amount of time required to complete it. If a project takes too long, the chances of it being cancelled before it is completed increase, and, thus, the chances of failure.

When a new effort is undertaken, success often depends on a quick win, and a quick win depends on selecting a project that can be completed in the effort available — and focussing all of the effort available to make it a success. This means that the last thing you should do is start a second effort half-way through the first in an attempt to duplicate a success you do not yet have. Get one success, then start another project. Get another success, start a third project. Once you have a pattern of success under your belt, you’ll get more support (in the way of effort available) and then you can start multiple projects. Until then, get lean with your lean initiative.

MarketMaker4: A Great Foundation for Successful Sourcing in the Mid-Market

Our last post in our four-part series that posed the question as to what the key ingredients to a successful e-Sourcing strategy are ended with an introduction to Market Making and MarketMaker4, one of the newest arrivals to the e-Sourcing party. However, unlike a number of vendors that sprung up during the latter half of the last decade, their solution is more than another me-too sourcing platform with modules and features almost indistinguishable from the platform that came before.

MarketMaker4’s new and distinct platform is buit around 4-key solution elements:

  1. State-of-the-Art e-Sourcing Platform,
  2. Integrated Company Intelligence,
  3. Integrated Market Insights, and
  4. Market Making.

This is because MarketMaker4 believes that all of these components are vital to a successful sourcing event, and it is not alone in this belief. Despite the fact that the solution was only launched a few years ago, MarketMaker4 already has over 75 global clients! Not bad for a new e-Sourcing start-up that was bootstrapped by its founders until it was acquired by Xchanging last year, which, realizing its significant potential, intends to keep MarketMaker4 as a standalone holding.

MarketMaker4’s modern e-Sourcing Platform is focussed on e-Negotiation support and the core functionality is e-RFx, e-Auction, and Reporting, with all of the standard features you’d expect from such a platform plus a few enhancements compared to the base platforms of the noughts. The most significant of these are the matrix-style bidding, which allow bids to be placed across three dimensions (such as lot, item, and [ship-to] location) and analyzed across different metrics (best price, best price by lot, best total price, best total price by lot, best weighted price, best weighted price by lot, etc.), and the custom weighting formulas that allow a sourcing manager to create custom rankings that can take all elements of a supplier’s bid into account — base cost, transportation, turn-around times, etc. — and all elements of a buyer’s assessment — quality, reliability, brand value, etc. — into account when calculating a total cost of ownership or bid ranking, by item, lot, or auction.

The platform is easy to use and integrates wizard-like walk-throughs for setting up new events. If a user is setting up a (reverse) auction, it walks the user through general settings, matrix design, uploading file attachments, design of the pre-event RFI, initial supplier identification, bid invite creation, and event launch. Progress indicators are included on each step (so a user knows how much is left to do), and all settings are defaulted whenever possible — allowing small events to be setup in minutes. When designing an auction, users have full control over the time and time extension rules, post negotiation override settings, minimim bid increments, ceilings and floors, bid notifications, the matrix view, displayed graphs, and the amount of competitor information displayed (and whether or not it is masked). Creation time can be streamlined by starting with one of the built in auction topics for common categories or by copying an existing event (for a similar category or the same category the last time the event was run).

The integrated company intelligence, which builds on a D&B license for detailed company intelligence through the MarketMaker4 tool (and which will soon be augmented with additional data from Lexis Nexis), allows a company to search for new suppliers in the MM4 database that could meet their category and product needs and then view detailed data that includes company data, financial data, key employees / managers, and contact information. It’s like a supplier network on steroids, as not only do you have a large list of suppliers, but you have aggregated, researched, third-party data on the suppliers, which even includes corporate citizenship ratings (for the sustainability-focussed). It’s easy to use, and allows you to do competitor searches on any company, which makes it really quick to find potential sources of alternate supply to invite to a sourcing event.

The integrated market intelligence is a combination of market intelligence (like you would get from a Mintec or Denali subscription) augmented with category briefs, a currency heat map (that lets you quickly identify the relative strengths of different currencies and trends, as historical currency data is tracked by MM4), and market indicators. The commodity indices cover North American, South American, Western European, Middle Eastern, and Asian marketplaces and more are being added this year.

And, finally, as introduced in our last post in our four-part series that posed the question as to what the key ingredients to a successful e-Sourcing strategy, Market Making is 24/5 project support from an experienced sourcing professional who is an expert in the platform, and the sourcing process it supports, and who is always a quick chat or call away. These professionals, based in North America, Europe, and Asia, are always there and always able to help you in one of the thirteen*1 (13) languages that MarketMaker4 supports.* Furthermore, since an online negotiation tool is useless if suppliers don’t use it, your suppliers also have access to full MarketMaker4 support — at no charge — in addition to bidder training sessions and monthly seminars.

MarketMaker4, which started with a belief that it’s not just what to source, but who to source from (Company Intelligence), when to source it (Market Intelligence), and how to get it right (Market Making), held on to that belief until they built a solution that realized their vision of what modern e-Sourcing should be. And it works. Their customers’ average savings is north of 10%, even without decision optimization (which demonstrates the power of integrated and properly applied market insight) and their average number of e-Sourcing projects is more than three times what it was before their acquisition of MarketMaker4). MarketMaker4 is another great option in what was becoming a dwindling e-Sourcing marketplace with all of the recent solution provider acquisitions.

*1 MarketMaker4 currently supports English, Mandarin, Portuguese, Spanish, French, German, Japanese, Vietnamese, Italian, Polish, Russian, Turkish, and Korean. In addition, because the platform is a modern platform that supports the full Unicode character set, new languages can be added quickly.

*2 While MarketMaker is able to offer support in each of the 13 languages it supports in the product, not all languages are supported 24/5. 24/5 support is only available for English and any language specified in your solution contract.