Category Archives: Best Practices

Any Blogger Can Benefit Your Brand — But It Takes a Great Blogger to Benefit an Organization!

Late last year, Apparel ran a good article on How Bloggers’ Influence Can Benefit Fashion Brands that is worth a read by all Supply Management Professionals because blogs can be used to influence more than just consumer trends in brand preference. They can be used to influence trends in technology, transition, and even talent management — the three T’s of the modern Supply Management organization. How? We’ll get back to this — first we’ll discuss the article.

The article notes that leading creators and distributor of fashion are working with bloggers big and small in both traditional media (TV, Radio, etc.) and new media to get their brands out there. Why? Because, despite the rumblings that “blogs are dead” now that we have the Twitter-Generation who believe that conversations can happen in 140 characters (and to whom I respond ha ha ha Ha ha, ha ha ha Ha ha, ha ha ha Ha ha, heh-heh-heh-heh-heh-heh-heh-heh-heh), they are doing better than ever. The links have shrunk (thanks to temporary link shortening services), the virtual access locations have changed (as many people read them in a central online access point like Google Reader or their own RSS feed manager), and the promotion strategies have shifted (from SEO and sites like Digg to Facebook, LinkedIn, and Twitter promotion), but blogs are stronger than ever. Established authorities are read day-in and day-out and draw a more regular audience than some newspaper columnists as more and more people go on-line for their daily dose of content. Plus, since bloggers have more freedom to choose whom they do and do not work with, and what they do and do not promote, than advertisers, readers can trust that the blogger is promoting his or her opinions and not that of the company (unless the two happen to sync up).

And the proof that blogging is mainstream is in the pudding — if there are agencies that can make a profit simply through the promotion and management of independent bloggers, willing to work with companies and brands they identify with, that shows the acceptance of the medium. No one stays in business supporting a medium that isn’t supported. And since more of these firms are popping up, it’s obvious that blogging is mainstream — even if it isn’t on Facebook.

But the real point is that many people trust independent blogs for advice more than they trust mainstream media, which needs to be heavily supported by advertisers to stay in business, and, in essence, often needs to promote some of those views and products whether or not the media outlet personally supports or identifies with the views and products it is promoting. This is what gives blogs power of influence, and that power of influence is not limited to brand. It extends to technology, transition, talent management, and other forms of thought leadership. An idea astutely put forward on a blog can often take hold faster than an idea put forward by a vendor who obviously wants to promote a product or service. And that’s why organizations need to work with great bloggers to advance the level of practice in their industry. Unless the blogger can put forward the idea in a clear, well-thought out, and defended manner, the message will be lost and the organization will be better off focussing on brand (and sales) than thought leadership.

But fortunately for Supply Management organizations, product, and service providers, there are a number of great bloggers in this space. And if these organizations are as great as the bloggers, they will learn to make better use of them both as outlets for best practices and inlets for thought leadership in their organization.

That’s my virtual 2 cents. Any differing opinions?

Want Supply Management Pros? Avoid the Culture Clash!

Chief Executive recently ran a good, but short, article on Talent retention that said “More than Money: Culture is the Key to Employee Retention” that is worth a read by every Supply Management Director looking to recruit and retain talent, which, due to a lack of talent development programs, is in short supply at many Supply Management organizations.

Noting that in this economy, however, companies can’t afford increased salaries and lots of perks for employees, the article also notes that, however, that though employees do care about how much they’re making, there are many other things that you can do to keep employees engaged and motivated, which includes corporate culture.

Quoting a USA Today article that covered GreatPlaceToWork.com’s list of the 25 best multinational workplaces, the article noted that companies with exceptional workplaces have three things in common:

  • employee trust in management
  • pride in the company
  • camaraderie with colleagues

This is because everyone wants a positive work environment. The article points out the obvious when it notes that you should treat your employees with respect, and that employees who have pride in what they do can make up for other organizational shortcomings, and misses the obvious that employees want to feel empowered, want to feel like they are contributing, and want to look forward to getting up and going to work in the morning. This requires all three of the elements of culture outlined above, and, in the doctor‘s view, also requires

  • employee accomplishment

A dedicated professional wants to feel, at the end of the day, that he or she accomplished something and made a difference. This is why your talent must be trusted by management to work on meaningful tasks, empowered to do so, given the support they need to succeed, a peer group that has common goals, recognition of their results, and pride in their work. Hit these nails on the head and your chances of recruiting and retaining top talent go up a notch or three.

The Case for Onshoring … Is A Damn Good One!

Upon a closer look, offshoring is not always the right answer for all products, especially those sold in America. For one thing, labor costs in general are shrinking as a share of the total cost for many items. Moreover, average factory wages in many developing countries are rising, as is the demand for America’s sophisticated just-in-time, cost-saving, logistical systems. When common shipping problems are added into the mix — natural disasters, security threats, political instability, theft and other risks — more manufacturers are concluding that the savings offshoring had promised are just not there.
Guy Morgan, BBK Managing Director
from “The Case for Onshoring” (Industry Week)

You’d almost think he was trying to get in the doctor‘s good book! Truer words could not be spoken and I could not have said it better myself.

And these words are true whether you are talking manufacturing, software development, back-office functions, or call-centre outsourcing. We’ll review some high points of the article and then discuss these other points.

I think the author is right when he quotes Harry Moser, retired chairman emeritus of GF AgieCharmiles, who argued that many companies began moving production to low-cost countries mainly because they thought everyone else was. The worried that a competitor might gain a cost advantage; and, in the process, they put a limit on their thinking by fixating on a component’s sticker price rather than considering its total cost. But this leads to problems, especially since as per a 2009 analysis by Archstone Consulting and Duke University, most manufacturers use “rudimentary total cost models” that ignore 20% of the offshoring’s cost. And when you add to this the fact that the prices for Asian manufactured products have risen 15% to 20% in the past 4 years, there aren’t that many cost advantages.

And then, as the author astutely points out, you need to factor in excess inventory to replace poor-quality products and insure against late shipments, stolen intellectual property, rising fuel costs, environmental impact and more … which all adds up to more cost!

Add it all up, and it’s often cheaper to produce your product in North America. And this is sometimes the case even if you have to produce it in or near a major city that you would normally consider to be a high-cost locale!

It is time for the home-shoring renaissance that the doctor has been predicting since 2007 (which is well before the Boston Consulting Group figured it out, as mentioned in the article, but we’ll forgive them because they’re still ahead of the curve). What everyone is forgetting is that, despite higher labour costs, good ol’ (North) American ingenuity and innovation always leads to much higher rates of productivity and lower component costs in the end that always more than cancel out the labour costs. The proclamation that some U.S. states will become among the most cost-effective locations for manufacturing in the developed world is a correct one and it will happen. The only question is will your organization be one of the few who will lead the way and reap the greatest rewards?

And if you want to get an idea of how big those cost savings associated with onshoring could be and you’re in manufacturing, checkout the FREE TCO Estimator associated with the Reshoring Initiative over on ReshoreNow.org. It’s not perfect, but with 29 cost factors, it’s a good start.

As for the other industries I mentioned, you’ll save money bringing those back as well.

If your software development is outsourced to India, there are big savings to be had. Labour costs are still rising and the average skilled worker now costs (at least) 40% as much as his American counterpart. You might say that he’s still cheaper even after communication, remote management, and reduced productivity costs are factored in, but, if it’s innovative development, he’s not — especially if you reshore to Canada. Up here, we have the Scientific Research & Educational Development tax credit which can refund you up to 75% of approved research and development costs. And if you need money up front, it can always be stacked with the National Research Council’s Industrial Research Assistance Program. And since, up here, a software development resource costs at most twice as much as a resource in India, after these programs are applied, our world-class developers, who speak your language in your time zone and understand your business, cost half as much.

With respect to back-office functions and call-centres, there are a large number of small, rural, towns with low costs of living that would thrive off your operation and staff it at very affordable rates. And while the North American minimum wage might be three or four times as much as a prevailing wage for an English speaking call center or back office resource in Asia, when you consider that many calls will be resolved significantly faster as both parties will understand, and be comfortable, with each other from the first “hello” (as many North Americans aren’t comfortable with Asian call-centre support and have problems understanding their accent), the higher labour cost is negated with higher productivity. Plus, and this is key, no long-distance costs, no remote infrastructure costs, and significantly lower training costs (with much lower turnover). Win, win, win.

Bring the work back home. Unless you’re a Fortune 500 (like Apple) with demand for your product so big that it has to be made in a city (like Foxconn), and in the top 0.01%, it will be more cost effective to do so. And the higher quality and lower risk will make it all worth while.

Managing Indirect Spend: An In-Depth Review, Part III

In our last post, which ended the review of Part II of Managing Indirect Spend, a new book by William (Bill) Dorn and Joe Payne of Source One that takes you on an excellent adventure through the world of indirect sourcing (that they have been living in for the past two decades, well before Strategic Sourcing and Supply Management became cool), we discussed the non-software tools at a sourcing professional’s disposal, Procurement Services Providers (PSPs), and the (common) mistakes that can kill a sourcing project. This wrapped up our discussion of the capabilities at a sourcing professional’s disposal. Today, we’re going to discuss Part III, Examples from the Field, and focus on some of the results that can be obtained when applying the best practices discussed in the section.

The examples focussed around the gains that can be achieved by collaborating with suppliers, leveraging supplier feedback, and analyzing data — which, as SI outlined in Spend Visibility: An Implementation Guide, we know to be significant even before the application of additional tools and techniques. We’ll start with supplier collaboration.

As Bill and Joe point out, collaborating with your suppliers can produce surprising and profitable results. In fact, collaborating with your entire supply chain (including your suppliers’ suppliers) can often produce sustainable results that equate to large cost savings opportunities. Plus, it encourages partnerships with your suppliers, which may lead to your company being the first in line for new product developments or other supplier benefits.

Consider these examples from the text:

  • specifying printer models and toner requirements, instead of brand name toner cartridges, generally leads to savings north of 50% when suppliers are asked to propose low-cost (non-OEM) solutions
  • the cost of a simple chemical compound was reduced 39% when the buyer worked with the supplier to jointly source expensive regulatory valves at a higher volume
  • the willingness to work with a new supplier that produced a required solvent at an insufficient level of purity (and guarantee them a reasonable amount of business under the right circumstances) if the supplier was willing to refine their manufacturing process to get to the required level of purity convinced the supplier to make the infrastructure investment and saved the customer a considerable amount of money now that a third, lower-cost supplier, had entered the market

In addition to collaborating with suppliers, you can use the information they provide to your advantage. By leveraging the information that your supply chain provides, you can actually achieve deeper discounts in the products or services you are buying, and improve the overall relationship and integration with each of your suppliers. This can lead to results like the following:

  • by working with suppliers to find out what was possible, the buyer was able to approach the incumbent and ask for a new type of telecommunications infrastructure that reduced organizational cost by 35%
  • by working with the supplier to find out when the supplier wanted to make a sale, and the supplier representative, who was quite eager to make a bonus target, the customer was able to get a software product (only available through resellers) at cost with terms of net 30 days, allowing it to delay the purchase to the following quarter (while still allowing the supplier, and the representative, to recognize the sale this quarter)
  • a buyer which needed specialized multi-million dollar computer equipment that could only be supplied by one supplier was able to reduce its costs and get millions of free marketing by allowing the supplier to use its logo in its advertisements (which the supplier promised to spend millions on if the buyer allowed the use of its logo)

Lastly, there are great opportunities to be had through data analysis, including:

  • a detailed line analysis that will often identify a significant number of (secondary) phone lines that are not required that are costing the organization hundreds (or thousands) each
  • the appropriate segregation of MRO spend into the right buckets that will allow suppliers to be more competitive on the categories they are strong in, as this will decrease overall cost significantly
  • the identification of non-compliant spend and the top offenders as a few choice words from the CFO to these individuals (or their superiors) will considerably decrease maverick spend quickly increase realized savings 20% to 30%

There are plenty more examples, but considering that SI essentially co-wrote a book detailing what they are and how to find them in Spend Visibility: An Implementation Guide (free download, no registration required), we’re not going to go into them any further in this post, especially since the important lesson is that you should be leveraging the information provided by the supply chain (for analysis) and then working with your suppliers to implement the best solution(s) you identify.

Stay tuned. After another break, SI will conclude it’s review of Managing Indirect Spend later this month with Part IV: How to Do It.

Series to date:

How Do We Drive Technological Advances? Part III

In our first post, we noted that an organization must master the three T’s — talent, transition, and technology — to excel in Supply Management, and lamented that an average organization has not yet (truly) mastered any of the T’s, with technology often being the T in which the organization is the furthest behind in. We lamented on the lack of advice on what to do to drive organizational advancement and dove into a recent article from Chief Executive on “Seven Strategies for Driving Technological Advances” in the hopes that it might provide a guide for an organization wishing to catch up on the technology curve.

Unfortunately, after reviewing the piece, the verdict was not very good. While the article was well intentioned, and gave SI hope that the adoption problem was understood, the advice contained within really wasn’t that good. While it would certainly encourage a progressive leader to be more receptive of new technology, it’s not going to encourage the organization as a whole. So what is a Supply Management Leader to do?

First we take a page from BravoSolution’s playbook on High Definition Adoption Measurement and Measure what the organization is using, and, most importantly, what the organization is not using relative to the organizational goals.

For example, if the organization obtained an e-Sourcing platform with e-RFx, e-Auction, and Decision Optimization a year ago, and 50% of the team is using the e-RFx, 25% of the team is using the e-Auction solution, and only 5% has ventured into Decision Optimization, there are obviously problems across the board. First of all, unless there is a really esoteric category where all of the suppliers are stuck in
That 70’s Show, just about every Supply Manager should be using the e-RFx. In addition, it’s likely that 25% of the categories could literally be set up on e-Auction auto-pilot and that the additional savings that may be obtainable on another 25% of the categories would be worth the extra effort, indicating that at least half of the Supply Managers should be using the e-Auction tool. And even if the team is not ready to trust allocations from a decision optimization tool, at least half of the team should be using the team to compute a minimal spend baseline to guide analysis and negotiations. This means that usage of each tool is at most 50% of what it should be.

The next step is to Identify the likely causes of non-use. Is it lack of awareness of the tool? Is it lack of awareness of the potential capabilities of the tool? Is it lack of awareness of the key features of the category that would make it suitable for e-Sourcing? Or is it, more likely, Fear of the Unknown?


Aware of what will hurt you
You’re prepared to remain this way
So sad yet safe with your afflictions
Afraid to start a brand new day

These words, writ and recorded by Siouxsie and the Banshees almost twenty-one years ago, are probably the best descriptor of the average pseudo-technophobe in a modern multi-national Supply Management organization. They know not using technology will hurt them, but they are safe with their affliction, and prepared to remain technophobic as they are afraid to start a brand new day — and possibly a brand new, technology enabled, career. And it’s completely illogical. It’s like


We all get the strangest feeling
When we’re standing mighty tall
To jump from seventeen floors
And crash into free fall

It just doesn’t make any sense. If this is the case, you have to identify it. Then, once you’ve identified the issues holding your team back, you have to Resolve them. Start by identifying common-sense resolutions that will be comfortable and affect the team on an emotional level, even if such resolutions are not the most efficient or logical. For example, if the issue is that a Supply Manager doesn’t think auctions are appropriate for a category that he can save 20% on simply by pitting the two leading office supply vendors off each other, you may have to ignore the fact that, if the volumes are high enough, this will enable suppliers with 3PL capabilities to also bid directly and all bids to be compared on landed cost and instead focus on how it will automate data collection and award and allow the Supply Manager to get the same result with much less work. This will in turn allow him to run more events, save more money, and maybe get a bigger bonus. And if it’s fear that the technology acquisition is an intermediate step to manpower reduction (once everything is automated), you have to demonstrate to the team that it can’t run on auto-pilot (even if it can for a few simple e-Auction categories) and that a human always has to drive the technology to get results (and disable any auto-pilot modes that may be built in). Once the team realizes that the tool is to enable them to do their job better, or that it is easy to use, then you can always turn on automation or incorporate advanced features.

Then, once the initial trepidations are overcome, you have to Train your team on the Technology. Start with a SWOT analysis viewpoint as the team has to understand the strengths, weaknesses, opportunities for cost avoidance and reduction it will enable, and the threats that the technology poses to the organization if your competitors use it and you don’t. Then move onto transition training and demonstrate how to move from current, mostly manual processes, to newer, mostly automated, technology-enabled processes that let the team focus on the strategic opportunities and leave the time-wasting tactical processes to the technology. Finally, focus on category specific training tailored to the use of the technology for strategic and high value categories.

Finally, you have to Hatch the organization out of its shell. This means getting off the egg and letting them break free. This will require Trust, Empowerment, Acknowledgement, and Mentoring on their terms, not yours. You have to trust them to their jobs and empower them to make decisions. You have to acknowledge that their will be mistakes and a learning curve, but with mentoring and guidance, they will be identified, corrected, and the organization will be better for them. In other words, you will have to rely on true TEAMwork. Not an easy task, but a doable one.

In other words, the key to Technology Adoption is MIRTH (Measure-Identify-Resolve-Train-Hatch). Furthermore, MIRTH is a suitable acronym because, when done right, and technological advances pervade your organization, there will be gaiety, jolity, and joviality — a state of affairs that is sadly lacking in many organizations today (that are not on the Top 100 employers list).