Monthly Archives: August 2012

What the Heck is a Supplier SuperCycle?

A recent post over on Procurement Leaders chronicled the results of July’s Procurement Intentions Index graphs that record changes in CPO strategy intentions over time, based on a survey of their CPO panel. According to the post, their results show the clear intention of CPOs to consolidate their supply chains by reducing the number of suppliers they work with, while, at the same time, spending more time collaborating with those that remain.

Based on these results, the author believes that the supplier collaboration and consolidation results are part of a “super-cycle” and that we will see the Index positions of both of these remain broadly the same for months if not years to come. That is until future CPOs believe they have reached the perfect number of suppliers and want to increase price competitiveness by taking more on board.

I don’t get it. I do agree that a subset of Supply Management organizations will be focussed on supply base consolidation and that a further subset of these will be focussed on collaboration in the hopes of mutual innovation, but I don’t think this is a super-cycle. A supercycle is a long period, or wave, in the growth of a market, as described by the Elliott Wave Principle. By definition, a super-cycle has to be market wide, and include all Supply Management organizations in all stages of maturity, not just the ones that are smart enough to be involved with a leading Procurement organization and respond to their surveys. While I do think that this is a mini-cycle in the above-average supply management organizations moving towards best-in-class status, most below-average organizations are still focussed on cost-reduction at any cost (to justify further investments in technology and transitions to better processes), and this typically involves auctions and negotiations that open up the procurement process to new bidders in hopes of getting more-cost effective, or higher-quality suppliers, for the organization.

This does mean that, as some organizations advance up the maturity curve, the mini-cycle will repeat, but then, as the post points out, the organizations that have optimized their supply-base will begin to open it up to new suppliers in an attempt to get even more value. Thus, if there was a super-cycle, it would be an oscillating contraction/expansion cycle that would emulate the cyclic cosmological model — an infinite contract/expand loop.

Diverging thoughts?

Thirteen Years Later, And It’s Still All About the Pentiums

Rock on, Al Yankovic, Rock on!

Because It’s All About The Pentiums (Original Video!)

Al may have been Running with Scissor, but no one did a better job of predicting the future of the IT industry.

     
My new computer’s got the clocks, it rocks
But it was obsolete before I opened the box
You say you’ve had your desktop for over a week?
Throw that junk away, man, it’s an antique
Your laptop is a month old? Well that’s great
If you could use a nice, heavy paperweight

  It’s All About the Pentiums
    by “Weird Al” Yankovic (@alyankovic)

SCD’s Seven Habits of Highly Effective Supply Chains

A recent article over on Supply Chain Digest touted The Seven Habits of Highly Effective Supply Chains 2012 in honour of Stephen Covey, who noted that too many people focus on “urgent” and not what is “important” and that changes are required to reduce the need for “urgent” activities so that more time can be spent on the “important” ones. According to SCD, these are the seven habits of highly effective supply chains.

  1. A written strategy that is regularly updated
  2. Alignment with the business is a constant priority
  3. Focus on Talent Management
  4. Fact-based Cultures
  5. Savvy Users of Technology
  6. Smart about Collaboration
  7. Organized for Innovation

While it’s hard to whittle down supply chain best practices to seven, these are a great start. In fact, if you asked the doctor what the top seven priorities were for your supply chain, you’d get:

  1. Talent Management
  2. Innovation in Process and Product/Service Offerings
  3. End-to-End Technology Platforms
  4. Mid-Term and Long-Term Strategy
  5. Organizational Alignment
  6. Data-Driven Fact-Based Decision Making
  7. Cultural & Emotional Intelligence

The only real difference, besides the order of priority, is that the doctor thinks cultural & emotional intelligence (given the global nature of supply chains) takes priority over collaboration, because CQ and EQ will enable the necessary collaboration.

The SCD article, penned by Dan Gilmore, is a good one. Check it out.

We’re not mysterious. We’re Canadians!

I got a chuckle out of this recent article over on Inbound Logistics on “Ten Tips for Getting Shipments Across the Canadian Border” which said that businesses underestimate the complexity of the Canadian customs process because it can be very difficult before addressing the mysteries of the clearance process. Mysteries? Are they serious?

Let’s look at the arguments.

The Canada Border Services Agency continually revises compliance requirements
And the US doesn’t? And Europe doesn’t?

Hidden Charges
According to the article, unexpected and additional delivery charges are a significant issue for Canadian consumers. This has nothing to do with getting shipments across the Canadian Border, but everything to do with the importer doing its research beforehand.

Trade Agreements Offer Economic Incentives
Isn’t this a good thing? Yes, it takes some effort to navigate NAFTA, but it’s not that hard — and many customs brokers have it all mapped out.

Trusted Shipper Programs Speed Clearance Process
And isn’t this a good thing too? And easily understood! I’m confused? What’s difficult and mysterious?

Consolidation is key for smaller shipments
Yes, consolidated shipments clear the border as a single unit and can speed importation, but it’s not necessary. It depends on what you are importing and what you are importing it for. Especially since, for some importers, a full truck can be a “small shipment”.

Canada has gone (almost) paperless
And the fact that border clearance is largely conducted through web-based portals and online transactions is a great thing. It really speeds up, and clarifies, the process.
(But yes, you have to use that new-fangled computer thingie. But it is 2012, after all!)

Your government may pay you for shipping to Canada
The Duty Drawback program in the U.S. reimburses businesses for import fees paid on materials used in the manufacture of goods than subsequently exported. Nothing mysterious or difficult about this either — just a bit of paperwork that is, in effect, another good thing.

All provinces are not the same
Ok, so this adds a bit of spice to the process, but we’re talking about a country with only 10 provinces, not 50 states. And the only real issue is taxation. Some provinces use a harmonized sales tax that combines the federal goods and services tax with the provincial sales tax, while others keep them separate. Either way, it’s one tax, and one simple lookup table. The multiplication tables you learned in grade school are more complex.

Be sure you can reach your customers
Uhm, isn’t this a requirement wherever you import? It has nothing to do with Canada. Sure, we are the second largest country by area, but like the article says, 80% of our population lives within 100 miles of the US border, and everyone else knows that if you want variety, you make your weekly / monthly / annual pilgrimage to the closest city. (The 80/20 rule works great!)

Partner with an experienced logistics provider
Huh? And what does this have to do with Canadian import complexity? Nada, zip, zero.

So, final score:

Relevant Issues 3 (Compliance Requirements, Taxes, e-Filings)
Universal Issues 2
Irrelevant Issues 3
Benefits 2

Verdict? Joke!

Look, here’s what you need to know. We’re friendly. While that means we play nice with American and European security regulations in addition to global security initiatives, and that’s why we update our policies regularly, it also means that we’re an open book. Not sure, all you have to do is go to the CBSA website, which has everything you need. Don’t know where to start? Remember, we’re friendly — you can always send an e-mail or pick up the phone and ask. Our country was, and is, built on immigration and our prosperity is built on global trade. Just follow the process, you can rest assured that you can speed through our border clearance (except, maybe at the Detroit Windsor Tunnel which experiences some of the highest cross-border traffic volumes).

All Models Still Lead to Total Value Management

Not that long ago, Sourcing Innovation released “Taking the First Step on Your Next Level Supply Management Journey”, a white paper sponsored by BravoSolution that defined a simple 3-level maturity model that an organization can use to determine where it is on it’s Supply Management organizational journey. Noting that your organziation is either below average, above average, or best-in-class*, SI did not see any point in trying to be more complex (even though many industry associations, consulting firms, and analyst powerhouses will often proffer four and five level models).

And while the acronyms and acclamations — including VFS, Hi-Def Sourcing, Next Level Supply Management, Next Practices, and Value Chain Creation — will fly fast and furious, there is still one commonality among all leading models, including Gartners Global Trade Management Maturity Model, which is nicely summarized in this free white paper from Amber Road that offers “A Model for Value Chain Transformation”.

That commonality is something that the doctor has been prescribing for over five-years — Total Value Management (TVM). When you get right down to it, that’s what Strategic Business Enablement is all about. Maximizing value across the orgnization, end-to-end. In the sourcing process, the organizational model, the finance operation, the (information) technology platform(s), product management (& marketing), risk management, asset management, and relationships — the eight directions of the supply management navigator’s compass. QFD (quality function deployment), maximization of SUM (Spend Under Management), and end-to-end transportation management is all about extracting maximum total value for the organization. Demand creation, joint innovation, and new market entry is all about creating maximum total value for the organization.

And that’s why, if you’re not already there (above average and on the road to best-in-class), and more than half of you are not, you need to be moving to an advanced sourcing platform that supports in-depth spend-related analysis, decision optimization, collaboration, and market-informed category-based sourcing. These tools allow you to identify, maximize, extract, and retain value in your operations. For more information on these technologies, check out SI’s other recent white-paper, also sponsored by BravoSolution, on the “Top 10 Technologies for Supply Management Savings Today”.

*but not average as average can only be defined as an organization that is dab-smack in the middle of every other organization