Want to Know How Well You’re Doing – Ask Your Suppliers

A recent piece over on SupplyManagement.co on “commit to canvass” reminded me that sometimes the best way to figure out how well you’re doing is to ask your suppliers. While benchmarking is critical, it won’t always give you the full picture.

For instant, just because your benchmark says you “order on time 99% of the time”, that doesn’t necessarily mean you’re doing a bang-up job of getting your orders in on time in the supplier’s view. For example, let’s say the contract says you’ll endeavour to get your orders in 14 days early, but “rush” orders can be put in with only 7 days notice. Well, just mark every order “rush” and make sure it’s in 7 days early and you’ll hit your on-time order target. But if the contract says that you only expect 10% of orders are going to be “rush” but 70% of orders are “rush”, how happy do you think your supplier is going to be with you?

And how will you know if the supplier thinks your “cooperative” problem sessions are delivering value? For instance, if you have team members who always end up doing what they decided before the joint session anyway, it won’t be “cooperative”, the supplier will see no value, and they’ll be upset at you for wasting their time.

You need to ask your supplier how you’re doing once in a while. And, to get brutally honest answers, you should make an anonymous survey a regular communication mechanism. Thanks to modern technology, they are cheap and easy to design, administer, and amalgamate. So ask you’re supplier how you’re doing. I guarantee you’ll be in for at least one surprise.

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The Time for One Vision is … Not Any Time Soon

 

Today’s guest post is from Eric Strovink of BIQ.

 

 

the doctor has asked “Has the time for one vision arrived?” The point of his post is contained in the last paragraph1, and boils down to whether “Best of Breed” solutions in the supply chain space are “good” or “bad” from an “integrated data” perspective.

It is certainly the case that there are a lot of software solutions that boil down to nothing more than a custom database fronted by a UI and a report writer. Such systems are rather easy to build; in theory, they can be built (as the doctor has pointed out in jest previously) using a VBA programmer and a Microsoft Access database. Jesting aside, home-brew solutions can exceed both the functionality and usability of so-called “enterprise” solutions. For example, Access-based 1990’s-era spend analysis leave-behinds from consulting organizations such as the old Mitchell Madison Group are still running in some large companies today, and, I daresay, are still superior to many current solutions.

Since there’s a pretty low technical bar to producing YAS (Yet Another Solution), there are grounds for hand-wringing when trying to keep track of them all, and of all the disparate data they are managing.But it really doesn’t matter whether a software product is built by in-house resources using Access and VBA, or by an international team of professional programmers using J2EE/Flex/Silverlight/Ajax/etc. and delivered via the browser, because the answer to the doctor’s question is simple:

Until there is a major, earthshaking change in the technology of database systems, the notion of an “integrated” enterprise-wide data store is pure fantasy.

Why? Because, as the post points out, “each data source [is using] a different coding and indexing scheme, [and] there is no common framework that connects the applications.” And that’s all she wrote, folks. You can’t store egg nogg in a fruit basket. It’s just not going to work.

Now, kudos to Coupa and others for “opening their API” (meaningful for programmers, not so much for ordinary humans) and so forth, but there is at present no way to integrate disparate, unrelated data into some centralized data store, without losing all the detail in the process. I don’t care if it’s all “spend” data, either. Slapping a label on something doesn’t make it homogeneous. I’m a bit of an expert on spend data, and I can assure you that spend data comes in all shapes and sizes and is certainly not homogeneous, whether you run an e-procurement system or you do not.2

And, of course, both old and new database vendors have been claiming for years to be able to integrate disparate data sources across the enterprise. Sure, if you want to join a few records across disparate databases that share common keys, there’s demo-ware that they can show you. It works great. But try a multi-way join across millions of records across disparate databases, and I’ll join you for a beer in the year 2025 when the query finishes.

So, I’ll steal the thunder from the “future post” mentioned by the doctor and jump right to the conclusion:

  1. Don’t worry about “integrating” data, because it’s not going to work the way you hope it will. At best, you will end up with inadequate compromises and uselessly generic data, like a design-by-committee spend cube that is shelf-ware after six months.
  2. Do worry about being able to move data easily in and out of the systems that you have. Don’t allow vendors to “lock up” your data; you should be able to change platforms easily, whenever you want to.
  3. Do worry about flexibility and adaptability in your analysis system. You should be able to operate it yourself, for example. If your data is locked up behind some SQL database that only IT drones can access, it isn’t doing you any good at all.
  4. Do worry about being able to move data from [anywhere] to your analysis system, quickly and easily.3

Let’s see what the doctor thinks, when he gets around to it.

1Apparently the doctor has never taken Journalism 101. But we can forgive him, since he doesn’t pretend to be a journalist.

2There are new ideas like “semantic database systems”; but a quick glance at recent history will show how well that works out in practice (Jason Busch over at Spend Matters, for example, made the mistake of drinking the semantic search Kool Aid with the now-defunct Spend Matters Navigator).

3Also, it’s important to clarify the notion that “real time” access to data is required for procurement decisions. No procurement decision needs to be made in real time. Is this a Hollywood science fiction movie where we need to dodge laser blasts from Tie fighters zooming in from all angles? No, it’s the real world, and decisions can and should be made thoughtfully and carefully. When the doctor says “real time,” I would hope that he means that there should be access to the data and answers to questions without waiting a week or a month for some analyst to write software.

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Even Starbucks has to Benchmark

Considering it’s benches are always full of hipsters sipping their half-caf low-fat moccachinos, you might think that Starbucks would have no need for benchmarking, as many of its benches already have permanent rear-shaped impressions from long-time customers. But that’s not the case at all.

In a great case study in DC Velocity on the Starbucks Supply Chain, we find out that, as of 2008, costs had risen faster than sales for three years running (since you can’t grow fast in a market that’s already near the saturation point), there were no metrics to measure service performance and, once measurement criteria were instituted, less than half of all store orders in the United States and Canada were delivered on time.

However, once the company started benchmarking and focussed on revamping the supply chain to improve its performance, in a mere two years, Starbucks was able to increase on-time performance to almost 90% and results are still improving. So if you want to improve your supply chain, it starts with a good benchmark.

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Cultural Intelligence X: Thailand

This series is edited by Dick Locke, SI’s resident expert on International Trade, author of Global Supply Management — A Guide to International Procurement (which was the definitive guide for almost a decade), and President of the Global Procurement Group and Global Supply Training which regularly gives seminars on International Trade and working with International Cultures.

As highlighted in last year’s post on Overcoming Cultural Differences in International Trade with Thailand, Thailand is is fiercely independent, astutely diplomatic, and a very distinct trading partner to deal with as over 95% of its population declare themselves as Buddhist, with the majority belonging to the Theravada school of Buddhism. As a result, in negotiations, which you cannot rush, you should be prepared to avoid direct confrontations at all costs.

With respect to Locke’s seven key cultural differences (first outlined as six in his classic text on Global Supply Management), power distance is high as they believe that authority and power are natural to the human condition and that hierarchy is good for you. Time is not just polychronic, but cyclical. As a result, there is no rush to seize an opportunity as it will come around again. And while many social researchers indicate that the buyer has a high rank, this isn’t really the case as buyers and sellers don’t have a status in the Thai belief system, only people. As a result, both senior negotiators will be equal, and there will be a desire to work together to create harmony, which is very important. Saving the face of others is very important, individualism is low, and uncertainty avoidance is high. Furthermore, with security before risk-taking and a belief that easy work for sufficient pay is better than hard work for high pay, there is a large reluctance to initiate change.

With respect to verbal communication, they are indirect, even though personal questions may be asked so they may understand where to place you in their hierarchy, as this is essential for them to “harmonize” with you. You must speak lowly and calmly and avoid confrontation at all costs.

With respect to non-verbal communication, your facial expressions and body position are more important than your words. You should keep your emotions in check, avoid waving your hands or making other large gestures when you talk, keep your hands out of your pockets, and never lay your arm over the back of a chair someone is sitting in. Personal space is very important to the Thai, so don’t stand too close, and you should avoid touching them. While limited touching between the same sex is okay between friends and colleagues (but never between strangers), touching the opposite sex is taboo. Finally, eye contact is common, as they want to put you at ease.

Meetings should be well planned in advance, but don’t expect them to get down to business until at least the fourth day, as they want to get to know you first. Negotiations will be slow, as decisions must pass through many levels, but they will progress if you are patient. Meals are also a part of the business culture, and cutlery is more common (although sticky rice may be eaten with the right hand), and the host always pays the bill. And while the Chinese might like it if you play fight for the bill, you should never offer to pick up or split the bill in Thailand.

Finally, greetings follow the wai.

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Webinars This Week from the #1 Supply Chain Resource Site

The following is a short selection of webinars THIS WEEK from the Sourcing Innovation Resource Site that might interest you:

Date & Time Webcast
2010-Nov-2

 

12:00 GMT/WET

 Agility in Consumer Goods Demand Driven Manufacturing

Sponsor: Supply Chain Digest
2010-Nov-2

 

11:00 GMT-07:00/MST/PDT

 Latin America as a Global Sourcing Destination: Lessons learned and the road ahead for nearshore delivery

Sponsor: Sourcing Interests Group
2010-Nov-4

 

14:00 GMT-04:00/AST/EDT

 Roadmap to a Source-to-Pay Center of Excellence

Sponsor: Ketera
2010-Nov-4

 

11:30 GMT-08:00/AKDT/PST

 Yardi Procure to Pay: Featuring Yardi PAYscan and Site Stuff

Sponsor: Yardi
2010-Nov-5

 

10:00 GMT-07:00/MST/PDT

 The Rise of the Small – How a small company is Rethinking Operations and gaining ground

Sponsor: Zyom

They are all readily searchable from the comprehensive Site-Search page.