Monthly Archives: October 2011

High Definition Adoption Measurement Part VIII

Today’s guest post is from John Shaw (Senior Director, Adoption Services) of BravoSolution, a leading provider of spend analysis, (e-)sourcing, supplier performance management (SPM) and healthcare sourcing solutions and a sponsor of Sourcing Innovation (SI). It is the eighth and final part of an eight (8) part series, which forms a white-paper that BravoSolution is releasing to the general populace today.

Yesterday’s post (Part VII) provided a case study that describes typical challenges faced by a national provider of construction materials. In the case study, a 30,000-foot view might also show positive progression even though only 23% of forecasted spend is being sourced through the system and four (4) users have an average event size that is significantly lower than expected value.

Today’s post completes the series on High Definition Adoption Management by reviewing some best practices for implementation.

From 30,000 feet to Detail:

Best-of-Breed Sourcing isn’t conceptually all that much different then Best-of-Breed software adoption programs. A competent Sourcing Professional knows that an organization doesn’t operate based upon negotiated savings, but upon realized savings. It isn’t until an agreement is implemented and adopted by an organization that the contract yields value to the organization.

The same is true with the tools and process that you select for your sourcing team. The path to success lies in how your team adopts those tools and processes.

Whether you are managing a contract or managing an e-Sourcing implementation you can be infinitely more effective if you understand how it is being utilized by the organization.

If you are starting your journey towards understanding adoption in your organization, start at 30,000 feet. Stop, ask questions, find your initial opportunities and keep digging deeper. Adoption measurement is a journey and the end measurements tend to be different for every organization.

Don’t get lost in the woods!

Remember your business case. Yes, it will naturally evolve over time and those changes will need to be managed and communicated. Overall, it should serve as a compass for helping your Adoption Team navigate your organization, keeping them on track in guiding your organization towards superior performance.

Discuss, Commit and Revisit

Share your data, open a discussion with Category managers on what make sense for measurement in their Category and get a commitment from then on their targets. Make tool usage metrics a regular part of your team communications so the team knows it will remain a priority within the organization.

Now that the series is complete, please show your appreciation for this first-look by downloading the white-paper through this link or the big orange download button below. This will help to ensure that SI is able to bring you more educational pieces on a first-look basis in the future. Thank you.

Centralize or Not?

Badly judged centralization can stifle initiative, constrain the ability to tailor products and services locally, and burden business divisions with high costs and poor service. However, insufficient centralization can deny business units the economies of scale or coordinated strategies needed to win global customers or outperform rivals.
McKinsey Quarterly, “To Centralize Or Not To Centralize”

So how do you answer the question? Especially when none of the executives interviewed in 30 different global companies volunteered an orderly, analytical approach for resolving centralization decisions when interviewed. After all, benchmarks, politics, and fashion — the usual approaches — are not the answer.

In the above referenced article, McKinsey put forward a decision making framework based on three questions. According to the framework, centralization should only occur if at least one of the following questions can be answer affirmatively.

  1. Is it mandated?
  2. Does it add significant value?
  3. Are the risks low?

For the most part, SI agrees. The only disagreement is with the explanation of value. According to McKinsey, it should add 10% to the market capitalization or profits or be part of a larger initiative that will add 10%. Significant value is not always immediately quantifiable, especially where innovation is involved. Thus, SI would also recommend centralization if the following question can be answered affirmatively:

  1. Will it increase the chances of innovation without significantly reducing any of the benefits decentralization provides?

If, for example, the only downside to centralizing a certain buy is that you have to add more users to your online supply chain platform and buy a few more licenses, this would likely be a case where you would centralize the buy as it would provide opportunities to innovate in network design and inventory management.

High Definition Adoption Measurement Part VII

Today’s guest post is from John Shaw (Senior Director, Adoption Services) of BravoSolution, a leading provider of spend analysis, (e-)sourcing, supplier performance management (SPM) and healthcare sourcing solutions and a sponsor of Sourcing Innovation (SI). It is the seventh of an eight (8) part series, which, when complete, will form a white-paper that BravoSolution will be releasing to the general populace tomorrow.

Yesterday’s post (Part VI) provided a case study that describes typical challenges faced by an energy company in a (European) regulatory environment. In the case study, a 30,000-foot view would also show positive progression even though a number of users are not creating public notices or providing award notifications within the designated time window.

 


Today’s post provides another example of High Definition Adoption Management for a national producer of construction materials.

Company C: Measuring Efficiency

Our final company is a national producer of construction materials. The organization has recently created its first centralized sourcing team and that team is working diligently to bring more spend under management. The team knows there is an abundance of opportunities to provide value if they can simply find ways to be more efficient in applying their sourcing process to more spend.

When looking at sourcing efficiency, the organization is focused on the following areas:

  • Spend Volume:
    Measurements to track the amount of Spend being sourced through the system.
  • Event Size:
    Tracking how much spend is managed per event, a key indicator of efficiency.
  • Event Speed:
    Breaking the process down into its component steps and measuring duration.

These measurements help us to understand the speed and throughput of spend through the sourcing team.

Symptoms of poor adoption.
Part VIII, the final part of the series, discusses some best practices for progressing from the 30,000 foot view to a detail view.

Product Safety Challenges in European Business

A recent article over on Industry Week on “What [You Need] To Know About Product Safety Challenges in European Business” pointed out something very important that U.S. business that want to expand into Europe need to know — U.S. product safety regulations are not enough if you want to sell your wares over in Europe. As per the article, if you want to sell in the 27 member states of the EU, you need to meet the “made in Brussels” European legal regulations (that set an identical standard throughout the entire EU). Before a product can be sold in the EU, it must have a CE mark that verifies that the manufacturer has ensured that the product conforms with the essential requirements of the EC directives. It must also have a declaration of conformity that includes the manufacturer details (name, address, etc.), requisite EC standards and performance data, relevant id number of any notified body, characteristics of compliance, and a legally binding signature. And if the more stringent requirements are not met, your product cannot be sold.

High Definition Adoption Measurement Part VI

Today’s guest post is from John Shaw (Senior Director, Adoption Services) of BravoSolution, a leading provider of spend analysis, (e-)sourcing, supplier performance management (SPM) and healthcare sourcing solutions and a sponsor of Sourcing Innovation (SI). It is the sixth of an eight (8) part series, which, when complete, will form a white-paper that BravoSolution will be releasing to the general populace this Wednesday.

Last Friday’s post (Part V) discussed the importance of the category to High Definition Adoption Measurement (HDAM) and the process required to transition to HDAM given that understanding. HDAM is achieved when adoption measurement and adoption opportunity assessment have been aligned with organizational objectives and category-specific strategies.

 

Today’s post provides an example of HDAM for an energy company operating in a regulatory environment.

Company B: Measuring Transparency

Our second company is an energy company operating in a European regulatory environment. The organization receives funding from the government and has a legal obligation to follow public sector procurement regulations. These regulations focus heavily on creating a sourcing process that provides equal opportunity to all suppliers.

Whereas the previous private sector manufacturer (Company A) focused their e-sourcing tool on generating supplier value, this organization’s primary focus is:

  • Process Compliance:
    Specific timeline requirements for public notices and publications must be met.
  • Equal Treatment of Suppliers:
    Communications and Evaluations must be timely and fair.
  • Auditability:
    All supplier interactions must occur in the system.

As in our previous example, we can monitor system activities to understand how user behaviours roll up to this overall business objective.

As we change the focus of the analysis to transparency, the metrics we measure in the system also change.

Now we are looking to understand where system functions tie directly to regulatory compliance. Beyond looking for violations, this data also has the potential to serve a quantitate evidence of fair dealings with suppliers in the event of a supplier challenging an award decision in court.

Here are some examples of the types of data we might monitor and react to:

Symptoms of poor adoption.
Part VII will provide an example case study that describes some of the adoption challenges of a national producer of construction materials with respect to sourcing process efficiency.