Author Archives: thedoctor

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.

The (Board) Gamer’s Guide to Supply Management Part : Agricola, Part II-B

Even after reading last week’s post, you still think you’ve mastered the basic game of Agricola, and that you can now manage the basics of an industrial farm at the back-end of your agricultural supply chain. With limited resources, you believe that you can deftly balance growing food with feeding your family (investing in crops versus paying your workers), expanding your farm and/or family versus maximizing the return from what you have (and trading off short-term gains today for long-term gains tomorrow), improving your infrastructure (by upgrading your buildings and making them more resistant to the elements and lowering their annual maintenance costs with some up-front investment) versus focussing on your fields (plowing and sowing your fields) versus raising and breeding animals (and the supply and demand dynamics of the meat-eating versus vegetarian marketplaces), growing grain versus vegetables (and the internal dynamics of the basic commodities market), and raising sheep versus pigs or cattle (and the various preferences of different locales, taking into account that Americans love their bacon and Hindus don’t eat their cows). You still think that because you were ending every friendly family game with a heavily utilized farmyard, a nice balance of crops and animals, a big family, and a better homestead than your peers that you have it all figured out. Think again.

Just like the real world agricultural supply chain isn’t this simple, neither is the full version of Agricola. Adding in the occupational and minor improvement cards adds a broad range of new elements to the game and greatly increases the complexity and available dynamics. Basic strategies go out the window as you try to find new and innovative ways to build a better farm than your rivals, who now have access to new skills, equipment, and innovations to acquire food, grow crops, and raise their animals. Just like every innovation in the real world pulls the rug out from under your proverbial supply chain feet, every occupation and minor improvement has the potential to completely change the balance of power, especially when these occupations are skillfully paired in a complementing manner.

There are 139 minor improvement cards, which include:

  • Loom: Your ability to weave wool into cloth, which you can sell, gives you extra food each harvest (just like farmers who can sell wool and meat versus just sheep can make extra money).
  • Canoe: You’re a more efficient fisherman, and secure extra fish (food) every time you fish as well as reed (for building).
  • Brewery: Your ability to convert grain into beer provides you with extra food during trade as everyone wants a piece of your production.
  • Spinney: You own the woodlot, so anytime another player uses the “take 3 wood” action, they must give one to you.
  • Water Mill: Your ability to covert grain to flour allows you a trading advantage and you can get 3 food for every grain.
  • Millstone: You are more efficient at milling grain into bread and can produce three times as much bread (food) in a single action.
  • Turnwrest Plow: Your bigger and better plow allows you to plow fields three times as fast as your rivals.
  • Carp Pond: You have your own private fishing pond that no one else has access to, can fish before and after your field work, and catch fish (food) every round.
  • Milking Shed: You can milke your livestock and get additional food every harvest.
  • Sawhorse: Your better-equipped work-shed maximizes your ability to build and place fences faster and with less raw-material (and you build every 3rd fence free).
  • Broom: You can clean house faster than your peers, and when you need to, you can discard all the remaining minor improvement options in your hand (that are available to you) and select seven new minor improvement options (that become available to you).
  • Cooking Hearth: While your rivals are struggling with a small fire-place, your state-of-the-art cooking hearth allows you to easily cook grain, vegetables, and livestock and produce a plethora of food with ease.
  • Fruit Tree: Your foresight to plant apple and pear trees allows you to produce extra food each round.
  • Wooden Crane: While your rivals with their pick-axes can only quarry a single stone at a time, your crane allows you to quarry two or, if you add a day-labourer at the cost of one food, three stones at a time.
  • Bookshelf: Your foresight to invest your spare change in a library allows you to not only learn new trades quickly, but excel in them (and earn 3 food every time you embark on a new occupation).

If you have the millstone or the water mill, you will want to embark on a grain-based strategy in the early game as it will guarantee your ability to feed your family (and pay your workers) later in the game. If you have the spinney and/or the sawhorse, you might want to focus more on raising animals as you can expect free wood or the ability to build fences and stables more efficiently than your peers. The turnwrest plow puts you on a more agricultural course as you can quickly plow and sow fields. The carp pond and/or the canoe makes fishing a part of your strategy because it’s cheap and easy food. The crane puts a focus on building and renovation as you can more quickly acquire stone than your rivals. And the bookshelf puts you on an occupational track as every occupation you learn feeds a family member.

And then the strategies become even more complex and dynamic when you try to balance the occupations and the skills they provide with the minor improvements and the equipment that they make available to you. For example, if you have the Turner Occupation, who builds furniture, you can trade 1 wood for food at any time, and this goes well with the spinney improvement as it pretty much guarantees you will get a lot of wood to turn into furniture which turns into food to feed your family. The spinney also goes well with the frame builder occupation, since the free wood reduces the amount of resources he needs to build clay structures even more. The organic farmer occupation and the sawhorse minor improvement go well together, since the first requires lots of pastures and the latter allows you to build fences quicker due to the reduced material requirement. The seasonal worker occupation goes well with the planter box minor improvement which, if your field is beside your hut, allows you to plant additional grain or vegetables, which the seasonal worker can easily harvest. And so on. Just like in a real supply chain, when the right skilled resource has the right tool, her productivity multiplies.

Played properly, this game emphasizes the important relationship between the three T’s — talent, technology, and transition — because advantages come when you pair talent (occupational skills) with the right technology (tools granted to you by minor improvements) to allow you to transition your basic farming operation into a strategically designed one, where the focus of your strategy will transition over the game, from insuring you can produce enough food to feed your family (and pay your workers) in the early rounds to growing your family and plowing fields and building pastures in the mid-game to doing whatever it takes to maximize your agricultural output in the later rounds so that, by the end of the game, you’ve maximized your crop production, filled your pastures, expanded your buildings, and built the biggest, most profitable, and most cost-effective farmyard.

This game definitely requires you to put on your thinking cap and get comfortable in that thinking chair, because, just like when you sit down to analyze a potential supply chain configuration, you’re going to be in it a while as you put your supply management skills to the test.

Game On!

What are the Key Ingredients to a Successful e-Sourcing Strategy? Part II.2

In part II.1, we addressed the first four steps of our eight-step generic sourcing cycle and noted that we definitely know what we need to do and how to get started. However, we have yet to address the burning question as to whether or not we know what we need to do to get (each step of) the process right and achieve success. But before we can address that question, we have to first discuss the last four steps of the process (in bold):

  • Spend Analysis
  • Project Selection
  • Strategy Development
  • Supplier Identification
  • Bid Collection
  • Bid Analysis and Supplier Selection(s)
  • Contract Negotiation and Award
  • Post-Award Contract Management

Bid Collection is mainly collecting the supplier quotes and RFX responses for analysis. It can be done through an (e-)RFX tool, auction tool, or even spreadsheets. Whatever suits the strategy and floats the analysts’ boat.

Bid Analysis is simply analyzing the responses with respect to the project requirements and organizational strategy. Once all the suppliers who cannot meet the organization’s needs are weeded out and a short(er)-list of those suppliers who can meet the cost, time to value, and alignment threshold, all of the bids are put through, depending on the strategy and the tools at hand, a weighted cost or optimization analysis and a final ranking is generated. Then, depending on the strategy (sole vs. dual source, lowest TCO by category etc.), the top supplier or suppliers are selected and the project proceeds to the next phase.

Negotiation is the age old art of trying to get more for less. You want to pay less, your preferred supplier wants more, and you go back and forth until you cut a deal or walk away from the table (in which case you return to the previous step, identify the next supplier on the list, and start the process all over again). (Remember to haggle properly or risk insulting the supplier.) When the negotiation succeeds, a contract is awarded and the procurement part of the sourcing-procurement cycle begins.

Post-Award Contract Management is where Procurement takes over. This is where you implement an easy-to-use organization wide e-Procurement system that everyone can use to place their goods and services requisitions and orders and that will tell them if something is inventory, if there is a product or service under contract that meets their need, and, if neither, if there are preferred suppliers or buying policies that must be adhered to for a fast approval or refund on your expense report. You implement a no-refund policy outside of the system without senior manager approval (one level above your boss), a no-PO no-pay policy across all suppliers, make it many times easier to use the system than to bypass it, and implement end-to-end automated invoice management with m-way matching . Then your spend is under management, your policies are followed, and off-contract purchases and expedited shipments are only made when there is a real need due to an emergency or unexpected surge in demand (against your forecast) and its more profitable to pay more than stock-out.

So yes, we, more-or-less, know how to do it — and we know that when we properly apply spend analysis and spend optimization techniques, we can expect year-over-year double-digit savings. But do we really know what we need to do it right and achieve success every time? Here the answer isn’t as crystal clear. In each phase, we know what we need — good, clean, fine-grained mapped data that we can cube, drill, and enrich until we find the savings opportunity in spend analysis, alignment measures for product selection, market intelligence for strategy development and supplier identification, etc. But what does good, clean, fine-grained mapped data look like, what capabilities must the spend analysis / visibility / reporting tool have, and, most importantly, how do we use the tool and read the reports? How do we determine which of our opportunities is most aligned to our current goals with an acceptable TTV and estimated savings? Where is the market intelligence we need, how do we access it, and how do we integrate it with our data to do a full analysis for project selection and supplier identification? Etc.

For an average organization getting started on the path, just knowing the process and having an e-Sourcing suite is not enough. The organization also needs actionable intelligence to help make the key decisions in each stage, and, in most cases, even if there was up-front training, help using the tool to use just the right functionality to extract the information required to generate actionable intelligence, because no training is complete and no one retains everything the first time through.

So how can the average organization successfully start an e-Sourcing journey? One way is to hire a seasoned pro who is knowledgeable in your key category markets and who has been through the journey before to act as your Sourcing Sensei. But given the high demand for such a sensei, as there are so few, this isn’t an option for everyone. So, if you can’t find, or afford to lure, such a sensei what can you do? Stay tuned!