What are the Key Ingredients to a Successful e-Sourcing Strategy? Part III Market Making

In Parts I and II we noted that that when it comes to e-Sourcing success, you need four main capabilities, or (true) success could elude you. Specifically, you need:

  1. A Process
  2. An e-Sourcing Platform
  3. Actionable Intelligence
  4. A Sourcing Sensei

The process is easy. In Parts I and II, SI outlined a generic lucky eight-step sourcing process, which is the basic underpinnings of just about every good sourcing process you are going to come across from a services, software, or solution vendor.

The platform is essentially an ubiquitous commodity these days — especially from an e-Negotiation (e-RFx, e-Auction, and e-Contract Management) perspective where you have dozens of options. (Just remember that not all spend analysis packages are equal. Some aren’t much more than pre-packaged reports and others are just visibility tools, since they allow you to see all your data, but don’t allow you to change the underlying cube and, thus, have limited analytics capabilities.)

Actionable intelligence, at least on a category basis, while not always embedded in the platform, isn’t too hard to obtain in most categories, as there are a number of vendors that package up market indices, trends, and market insight reports that can be easily consumed and applied.

However, finding a true Sourcing Sensei could be harder than finding the bronze coated needle in the industrial farmer’s haystack, and even if you manage to find that Sourcing Sensei, luring her to your organization can be a more significant challenge still. You might be forced to settle for some category-based expert consulting from your local niche sourcing specialty firm. There’s certainly nothing wrong with this approach, as this will allow you to draw from the best-of-the-best in each category and possibly save even more on some key categories than you could with an in-house Sensei who will generally only be an expert in a few categories, but this approach doesn’t necessarily help you with process implementation, and, more importantly, doesn’t help your team use the tools at their disposal to the full extent of their capability (as the category consultants are category experts, not solution experts on your platform).

In other words, you need more than a sourcing-platform and market-intelligence subscription — you need guidance on how to best use the platform and intelligence at your disposal in your (e-)sourcing projects. You need what MarketMaker4 calls Market Making.

Founded by veteran e-Sourcing professionals, formerly of e-Sourcing pioneers that include Trade Extensions, The Ops Cube, AT Kearney Management Consultants, and Archway Consulting who realized in their former roles that one of the biggest needs of an e-Sourcing team was project assistance, especially when it came to proper utilization of an e-Sourcing suite and the integration of market intelligence for category analysis and new vendor identification, they decided that a sourcing platform, even if market intelligence was built in, wasn’t enough. That’s why they built an on-demand SaaS solution platform that not only built in market intelligence and company intelligence, but 24/5 project support from an experienced sourcing professional who is an expert in the platform and who is always a quick chat or call away. (And they mean quick. Customers are guaranteed a response to a chat request by a live person in one minute, every support person has a direct line that can be requested at any time, and the user can switch from chat to phone support at any time*1 during the chat.) In addition, as these are real sourcing professionals who work for MM4 (and not a third party or outsourced call center), these support people have full access to the MM4 suite *2 and can even perform certain tasks for you if you get stuck.

MarketMaker4, which started this decade (in 2010) promises a completely next-generation e-Sourcing system, and that is what they deliver. In our next post we’ll dive deeper into the 4 distinct parts of their solution platform from which their moniker is drawn.

* Unless, of course, the support person is already on a call, in which case you’re next!
*2 MarketMaker4 is only offered as SaaS.

Top 12 Challenges Facing India in the Decades Ahead – 02 – Media

A Free Media is critical to a healthy first world economy. It is a Free Media that

  • reports on the true state affairs,
  • holds the public (and private) sector accountable for their actions,
  • presents ideas for improving the situation, and
  • ensures that the freedoms granted to the people are maintained.

A truly Free Press

  • paints a bleak picture when the picture is bleak, and doesn’t ignore the fact that at least a third of the country is in poverty,
  • exposes corruption on a daily basis when it continues to occur on a daily basis,
  • tackles the tough issues of health care and education and presents different options for improving the situation, and
  • fights for the poor as well as the middle (and higher) classes that can afford to support them in their efforts.

However, in India

  • the plight of the poor who live in slums without access to running water or even a sanitary toilet is almost completely ignored by the daily publications;
  • even the media is corrupt; as per this article over on Realpolitik, during the fifteenth general elections to the Lok Sabha took place in April-May 2009 a disturbing trend was highlighted by sections of the media, that is, payment of money by candidates to representatives of media companies for favourable coverage, or the phenomenon popularly known as “paid news”;
  • As per Dreze & Sen’s An Uncertain Glory, among more than five thousand articles published on the editorial pages of India’s leading English-medium dailies during the last six months of 2012, less than 1% of the total editorial space was dedicated to health-related matters; and
  • the rights of the poor to be treated fairly are almost never tackled; take the plight of the Dom community for example, as outlined by Dreze & Sen and referenced in our last post — twenty five years living next to the power plant that they work for without even a single electricity connection!

The media in India is failing. The plight(s) of the poor, and even the (lower) middle class, go unchallenged, the accountability of the public sector goes relatively unchallenged, and the media itself is often corrupt. Unless the media stands up and insists on what’s right, what’s wrong will continue to flourish and all of the problems plaguing India will continue unabated.

4 Strategic Sourcing Mistakes Businesses Should Avoid Courtesy of the Strategic Sourceror

The best way to get out of trouble is to avoid trouble in the first place. In a recent blog entry on the Strategic Sourceror on “4 strategic sourcing mistakes”, it outlined four common mistakes that a company can avoid to minimize poor spend management and operational efficiency.

Overlooking the Importance of Supplier Visibility

Having a clear understanding of supplier practices is essential in evaluating the risks and possible sources of disruption that are inherent in sourcing partnerships. Blindly entering a relationship with a supplier may result in a procurement strategy that is misaligned with business goals, and this could result in slashed profits in the future. For example, the strategy could be high quality to support the brand, but the end result could be poor quality and the resultant impact to the brand from the high defect rate could result in lost sales and slashed profits.

Failing to Emphasize Results

Because Procurement resides in the back office, it is often tempting to think of it as a service function and not a driver of productivity and profit. It’s critical to focus on real, measurable, and substantial results and communicate the message to the rest of the business. Like any business process, procurement management needs to impact the bottom line. When it does, and the message is communicated, Procurement, unlike Rodney Dangerfield, will get more respect.

Overlooking Contracts

Without written contracts with specific language, businesses won’t have adequate protection if a supplier relationship goes sour. That’s why contracts should be reviewed by a corporate lawyer before being signed. But just getting the contract right isn’t enough. It’s also important to make sure the terms are followed, rebates and discounts are collected, and contracts are renegotiated and not allowed to go evergreen.

Permitting In-House Inefficiencies

An inefficient internal procurement process can limit firms’ ability to obtain the goods and raw materials they need in a timely fashion. Be sure to install the appropriate e-commerce tools that will help a company identify potential suppliers, execute RFxs, conduct auctions, optimize awards, and strategically manage the maximum number of categories.

220 Years Ago Today, Congress Banned US Vessels from Supplying Slaves to Other Countries

However, slavery was not banned in the US until 1862, 68 years later! It’s unfortunate that while the Congress of 1794 was enlightened enough to ban the spread of slavery, they were not progressive enough (or should I say benevolent enough) to ban slavery outright. The sad truth is that the forefathers of the robber barons new that cheap labour was the key to building their empire, and didn’t want to ban slavery as the cheapest labour was free labour.

And the lust for cheap labour continues until this day. The abolition of slavery didn’t do much to increase the average person’s quality of life as there were no minimum wage law until 1933 and no minimum wage law between 1935 and 1938 (as the first law was struck down by the Supreme Court). As a result, only those lucky enough to be protected by the unions in the mid-to-late 19th century had any guarantee of a decent wage until the minimum wage act came into force.

And what happened when the minimum wage reached its highest purchasing power ever in 1968? The new robber barons of the 1970’s started to look abroad for cheaper labour and by the early 1980’s, the biggest organizations were starting to outsource to China, Vietnam, and other low-cost locales. (And when those locales got expensive, outsourcing spread to other locales like India, Malaysia, and the Philippines and a blind-eye was turned when the supply chain used child labour.)

The lesson here is that 220 years ago the Congress of the United States embarked along the right path with a very ethical decision to ban US ships from supplying slaves to other nations, but didn’t follow up with an across-the-board ban on slavery. As a result, slavery endured for three more generations and gave the US a black eye from a historical human rights perspectives that it need not have gotten. Similar tardiness with respect to unions’ rights legislation, minimum wage laws, equal rights laws, and child labour laws have also resulted in black eyes either for the nation or some of its biggest corporations that spread its image around the world.

There’s no need for any of this, especially today when your organization can control its fate and its image (and have a positive effect on the image of its country). It’s time for you to put an end to “just do as I say, don’t do as I do” in your supply chain and take proactive efforts to make sure you’re socially responsible across the board and across the supply chain. Stand up and make the US a leader in global human and worker rights initiatives. Show the emerging markets what they have to achieve if they truly want to be a first world super-power. It’s not just about GDP.