Category Archives: Compliance

Is it Time to Get Hip with Hiperos?

Share This on Linked In

Hiperos is a relatively new entrant in the space focussed on what they call “Extended Enterprise Management”, which is their term for what you get when you amalgamate (what I call) Enterprise Contract Management, Compliance, Performance, and Sustainability into a single 360° solution platform.

The goals of the platform are to provide you with:

  • Supplier Information Central
    • collect all supplier information in one application
    • allow it to be entered and reviewed by suppliers, third parties, and internal staff, according to roles and permissions
    • allow for the creation of quick and easy monitoring reports that can be displayed in a dashboard
  • Cross-Enterprise Supply Chain Risk Assessment
    • allow risk to be evaluated against any supplier or service provider
    • allow risk to be evaluated by category / product line
    • allow risk management programs to be created based on whatever supplier / risk segmentation criteria you select
  • Supplier Performance Management
    • allow for the easy definition of surveys and scorecards
    • allow suppliers to be evaluated based on the type of product being delivered or service being performed
    • allow for internal and external feedback, subject to approvals
  • Regulatory Compliance Management
    • support any and all compliance regulations your organization is subject to (RoHS, HIPAA, ITAR, etc.)
    • allow requirements to be easily communicated to suppliers
    • monitor responses and flag non-compliance for exception based monitoring and resolution
  • Sustainability Initiative Support
    • allow sustainability guidelines to be captured
    • allow them to be communicated across the supply chain
    • monitor adherence to implemented programs

For those of you in a rush, I’ll tell you right now that the application (which is now on R3) does precisely what Hiperos says it can do, that it’s relatively easy to configure and use (and a couple of clients have self configured it without any help at all), and that it can be configured to report on precisely what you want it to report on, and display this information in real time on every login. Furthermore, if you use it’s capabilities to augment data collected internally with data in your other entprise systems and external data sources and integrate 3rd party risk and financial data, such as what you would get from Equifax, Lexis Nexis, or D&B (using their new “D&B Inside” offering), you can truly get a 360° view. Furthermore, if you define your risk assessment and monitoring metrics accordingly (and / or select the right templates for your vertical and organizational risk management needs), my assessment is that you can be just as confident in the risk assessments as you would be if you outsourced it to a specialist consulting firm (especially if you bring one of them in to help you define your risk assessment program and insure you set up the feeds, applications, and reports appropriately).

The application allows you to define what fields you want to track, what metrics you want to use, the calculations that define those metrics, and the reports the metrics appear in. It also allows you to define as many roles as you need (buyer, manager, approver, CPO, third party auditor, supplier, etc.) and define access permissions and capabilities based on those roles. In addition to the standard supplier, contact, contract, and (enterprise) program entities, it also allows you to define “relationships” and define the data you want to capture, track, and measure against those relationships. For example, a relationship will be with a supplier, managed by a local account manager and supplier account manager, against a program type and have it’s own status and risk measurements. Collectively, these measurements and statii can be rolled up to give an overall status and risk picture, which, of course, can be drilled into at any time. You can also define as many levels of details as you need in your surveys and scorecards, which, of course, frees you from the limited capabilities of a 3-dimensional spreadsheet workbook. And it comes with template libraries for standard compliance (HIPAA, RoHS, REACH), risk management, and sustainability (carbon tracking) initiatives that can be used to jumpstart configuration for your enterprise.

The one weakness is that while the application has been configured to be extensible and accept an unlimited number of external data sources, at this point in time, only RSS Feeds and a couple of 3rd party financial feeds are configured out-of-the-box. This means that you will have to do some integration with appropriate 3rd party data sources to get a 360° view, which is vital because, if you don’t have someone on the ground, or a good relationship with a 3rd party auditor you can trust, you can’t trust self-submitted supplier surveys alone. (And, these days, some of the best leading indicators are those you get from financial risk data consolidators like D&B — who acquired Open Ratings — and Equifax — who acquired Austin Tetra — and from import/export visibility companies like Zepol, Import Genius, and Panjiva.)

The application is one that is definitely worth looking at, because the only other providers offering integrated solutions of the same breadth are Aravo, CVM Solutions, and, if you’re in the health-care industry, Vendormate.

Competitive Advantages of Contract Management Solutions

A recent article in Material Handling Management provided a good overview of why “contract management is a critical competitive advantage” for today’s supply chain centric organizations. When you consider that a typical fortune 1000 company cannot locate over 10% of its 20,000 to 40,000 active contracts at any given time, the importance of a good contract management application should be immediately clear. But just in case it’s not, here are seven more reasons a contract management solution is important, as covered in detail in the article:

  • Standard Contract Templates
    This can help to insure consistent contract creation across departments using standard templates with standard terms and conditions sanctioned by the organization’s legal department.
  • Organization-Wide Visibility
    This allows all departments easy access to contracts created by other departments. Sourcing can immediately query existing logistics contracts, R&D can review existing sourcing agreements, etc.
  • Status & Metric Tracking
    Certain conditions, such as automatic renewal dates, spend tolerances, limit quantities, and pricing need to be tracked and monitored for compliance. In addition, certificates of insurance, price adjustments, and escalator clauses need to be monitored.
  • Maverick Spend Control
    With a contract management system that maintains a centralized contract repository, it’s easy to determine if a contract exists for a given good or service, who the suppliers are, what the prices are, and what any associated conditions are. There’s no excuse for off-contract buying.
  • Compliance
    All your contracts in one place make it much easier to comply with operational policies, regulatory requirements, and corporate performance requirements.
  • Internal Controls (SOX)
    SOX requires that signing officers are personally responsible for establishing and maintaining internal controls designed to ensure material financial information is known to those officers. Contract Management helps a company meet that requirement.
  • Competitive Advantage
    For each dollar earned, as much as eighty percent is lost to procurement costs. As most of these costs are external expenditures, the strategic importance of good contract creation, execution, and monitoring cannot be underestimated. A good contract management system will reduce costs, improve compliance, and rope in maverick spend … giving you an edge over your competition.

Optimizing Your Procurement Technology Investments

The Sourcing Interests Group recently ran an interesting article on “optimizing your procurement technology investments in 2009”. Although it had some good suggestions, my top five suggestions would be the following:

  1. Get Visibility Into Your Spend (Spend Analysis)
    If you don’t know how much you’re spending on each category, sub-category, product, and service, who you’re spending it on, in what amount, by unit, you need to get this visibility. Get a good spend analysis solution and dive in!
  2. Take Your Strategic Sourcing up a Notch (with e-Sourcing)
    Start with the most attractive savings opportunities that were outlined in step 1. This is your best bet to negotiate big savings in this downturn.
  3. Focus on Contract Compliance (adopt Contract Management)
    You need to enforce hard-won savings by insuring that internal staff and suppliers are compliant with contractual agreements.
  4. Implement e-Procurement
    Done right, this will make it easy for your buyers to buy on contract.
  5. Get a Grip on Global Trade (adopt Trade Visibility solutions)
    Chances are your global sourcing endeavors are needlessly costing you more than you think! As per my recent Illumination on why you need trade visibility, you’re probably paying more than you need to on duty, using costly inefficient processes, paying unnecessary document preparation costs, and making costly errors that are costing you million of dollars a year.

Profiting from Environmental Regulation

A recent article in Industry Week on “the regulation opportunity” noted that companies with an environmental vision and plan can mitigate increasing environmental regulation and actually profit by improving:

  • Revenue
    Companies perceived as green by consumers have increased customer loyalty and attract higher rates of sale.
  • Cost Structure
    Companies that place importance on environmental compliance are generally better run and costs are more fully understood. Having an environmental strategy helps to trim the fat, reduce waste, and improve the overall operating cost structure.
  • Public Relations
    These days, many consumers will actively punish companies that they feel are environmentally irresponsible.
  • Government Relations
    You’ll garner regulatory “good-will” and be considered a key stakeholder who can help shape future regulations.
  • Employee Relations
    Gen-Y job seekers actively look for environmentally friendly organizations and actively shun those that aren’t. You’ve been warned!

Furthermore, you don’t need to wait for regulations to put a halt to current operating practices, you can improve them now and reap the rewards.

Supply Chain Challenges for 2009

Industry Week recently ran an article on the “top nine supply chain challenges for 2009”. Some were dead on. Some less so. But it got me thinking … what were the obvious challenges for 2009, and what were the challenges that were most likely to be overlooked.

The obvious challenges are getting their fair share of press.

  • Risk Mitigation
    Between risk of supplier financial failure; the volatility in the energy, commodity, and global financial markets; and the unpredictable nature of economic recoveries, every organization will have their hands full with risk mitigation this year.
  • Working Capital
    In a very short time-span, we’ve gone from a credit glut to a credit crunch, and chances are, unless you are among the small minority with flush bank accounts, you’re constantly facing working capital challenges.
  • Shorter Supply Chains
    Since you can no longer afford inventory, you have to move to a demand-driven pull-based model which requires a shorter supply chain to pull-off.
  • Renewed Focus on Safety
    After all of the recent salmonella, melamine, and lead-paint scares, there is a renewed focus on safety around the globe. You need to make sure your safety procedures and independent safety tests are in order, or risk massive fines and lawsuits.
  • Heightened Regulatory Compliance
    In response to the recent consumer product safety fiascos, many countries are stepping up import and export related requirements and introducing new documentary and testing procedures. Are you ready?

The most-likely-to-be-overlooked challenges, less so. But they’re just as important.

  • Technology Upgrades
    You have to do more with less, but your current, aging, software and hardware infrastructure won’t support it. You need new best-of-breed sourcing, procurement, trade, visibility, and analytic solutions as well as a new green infrastructure to run them. That costs money. And even though you can state case-study after case-study and customer success after customer success demonstrating the 2x to 5x ROI the upgrades will deliver, you’ll have trouble navigating the ridiculous obstacle course that the cost-focussed savings-blind CFO will force you through.
  • Sustainability
    Recession or not, the sustainability advocates are not going away. And neither is Generation Y. Since you have to redesign your supply chain anyway, you might as well make sustainability a core requirement.
  • Near Country Sourcing
    Shortening your supply chain is a good start, but you really need to find ways to take advantage of supply sources in your local geography if you truly want to win in the long term. LCCS regions come-and-go, but your neighbors will always be your neighbors. Find mutual opportunities for success and stick around for the long term.
  • Procurement Outsourcing
    Every procurement organization has functions and categories it does well, and functions and categories it does not. It needs to get a handle on the latter, figure out what needs to be done, and then outsource those functions and categories to a professional outsourcing firm that has the expertise to do those functions and categories well.
  • The Path to Procurement Mastery
    If you’ve been keeping up to date with the Hackett and Accenture research, not only do leaders do things different, but they structure their organizations different. In addition to adopting new technologies, methodologies, and supply chain structures, to truly overcome the supply chain challenges of 2009, you’ll have to restructure your organization and intersecting business processes as well. Change management is always a challenge.