Monthly Archives: February 2011

For Successful e-Sourcing, Put the Supplier First

An article in a recent SIG Newsletter on “eSourcing from the Supplier’s Perspective: Improving Bid Submissions and Event Outcomes”, that was contributed by Denali (who deliver) made a couple of very good points if you want a successful eSourcing event. These points can be succinctly summarized as “design the event from the suppliers’ perspective”. If it doesn’t work for the supplier, it isn’t going to work for you.

As the article states, while many benefits are usually touted to the supplier to get their participation in an eSourcing event, at best, the supplier typically only realizes two benefits: fair(er) competition and an easy(ier) quote process. As a result, the supplier gets discouraged by the whole process and, if the supplier does not win a (significant) award, the supplier is unlikely to participate in future events.

Basically, you have to avoid “the reality chain” that is repeated over and over again as more and more companies hop on the eSourcing bandwagon unprepared for the journey ahead. In “the reality chain”

  1. Supplier begins with little or no knowledge
  2. Supplier reaches out, but receives no guidance on requirements or evaluation criteria
  3. Supplier submits a bid that does not meet the buyer’s need
  4. Supplier receives no feedback as to why
  5. Supplier is discouraged

As a result, not only is the buyer’s event only moderately successful at best, but the buyer’s potential supply base for future eSourcing events has shrunk. However, if the buyer had considered what suppliers want and supplied:

  • detailed RFX requirements
  • post-bid feedback
  • well thought-out RFX
  • more stakeholder communication
  • opportunity to provide alternative solutions
  • evaluation criteria

Even if the supplier lost, the supplier would be encouraged by the process (since the supplier would know why the lost and what they need to improve next time) and the buyer would not only have a successful event, but lay the foundation for successful events for years to come. In other words, if the buyer designs the event from the suppliers’ perspective, success is much more likely.

For more details on how to achieve the level of success required, check out “eSourcing from the Supplier’s Perspective: Improving Bid Submissions and Event Outcomes”.

It’s Darwin Day!

Darwin Day is a global celebration of science and reason held on or around Feb. 12, the birthday anniversary of evolutionary biologist Charles Darwin, who is best known for the classic work On the Origin of Species in which he proposed natural selection, the basis of the modern evolutionary synthesis.

Darwin Day should not be confused with the Darwin Awards which salute the improvement of the human genome by honoring those who
accidentally remove themselves from it that are currently open for voting. (And while they do little to advance the state of science education, they are, in their own way, so sad that you have to laugh so you don’t cry.)

A Great Case Study on Spend Analytics in Healthcare

Health Leaders Media recently ran a great study on Spend Analytics that is a must read for any (health care) organization that doubts the savings opportunities that a good spend analysis tool can discover. In “elevating the spend analysis” function, the author clarifies that when it comes to effective capital management at your hospital, a spend analysis is the under-utilized tool that can transform your bottom line and bolster the strategic vision of the hospital.

The case study, about the Mount Sinai Medical Center in Miami Beach, FL, demonstrated how the project management office was able to employ spend analytics to quickly transform a an operating loss of 15.7 Million (in 2008) into a net surplus of 14.5 M (in 2009). What was a negative operating margin of 3.2% quickly became a positive operating margin of 2.95% for a total improvement of 6.15% in operating margin, which is very significant in a trouble economy. Plus, continued use led to even better results in 2010,when the hospital posted a 9.3% operating EBITDA margin.

For more details, see the case study on elevating the spend analysis function, but the message is clear. Spend analysis saves.

Sustainable Transportation, It’s Harder Than You Think

Material Management & Distribution recently published an article that asked if “your international shipments [could] be more sustainable”. It’s a good question since not all modes of transportation are equally damaging to the environment, but the issue, as the article attempts to point out, is not as simple as carrier selection. Consider the following factors put forth:

  • ocean vs air freight
    while air shipments can emit up to 35 times more carbon than ocean container shipments, let’s not forget that a single giant container ship can emit the same amount of cancer and asthma-causing chemicals as 50 million cars and that the ocean shipping industry is responsible for 6,000 times the emissions of every single automobile on the planet — many of the older container ships in operation are the dirtiest modes of transportation on the planet
  • container size
    bigger is better if the port and the trucks can handle it, but you have to service the lowest common denominator in the supply chain
  • fuels and fuel treatments
    biodiesel blends are better, provided the equipment is built for the blends and the blends deliver sufficient octane; otherwise, the savings are minimal if the switch doubles the amount of fuel that is required
  • speed
    slower-moving vessels will consume less fuel if they are moving in the range of optimum performance; too slow will just increase fuel requirements
  • “electric” ships
    a ship that plugs into a grid only reduces its carbon and GHG footprint if the grid’s primary energy source is cleaner than the ship; if it happens to be a brand-new ship that uses low-sulfer fuel, catalytic converters, and particle traps and the grid’s primary power source is a dirty coal plant, plugging in isn’t that much greener
  • trains vs trucks
    trains are better than trucks, but the carbon savings only kick in if you use less trains than you would need trucks; if the dock is a primary distribution point and load sizes are small, it might be better to send a truck or two to five geographically dispersed DCs then to load one train with five cars that have to split off to five different trains at the closest yard
  • gate and container yard operations
    trucker friendly is good, but the whole operation needs to be efficient
  • efficiency of inbound routes
    optimization is key
  • location of production
    choosing the right location (even overseas, if it’s close to a port) has a significant impact on overall carbon production

Sustainable transportation is important, especially with impending energy and carbon costs, but getting there won’t be as easy as selecting the right carrier. A detailed analysis of the end-to-end distribution chain will be required.