Category Archives: Compliance

How Do You Improve Supply Chain Compliance in Developing Countries on a Budget?

As per this recent article in Industry Week on “improving supply chain compliance in developing countries”, many enterprises can improve environmental practices and worker safety very quickly, using the money, staff and local know-how they already have. All they have to do is the following:

Form a Sustainability Improvement Team
from local talent. The local resources know the operations best and are in the best position to figure out what can be done.
Give them a deadline
for a short term deliverable. The article suggests 100 days, which is not unreasonable if the team is allowed to set their own stretch goals.
Give them access to all the resources at their disposal.
Any resource the company has should be made available to the team.

and, most importantly, and this is one point I would have liked to have seen made,

Don’t forget the engineers!
Responsible for every technical advancement of the last century, they will be responsible for every technical advancement of the next one as well. And the application of technology to better the world for humanity is a goal of engineers worldwide. (For more information, see the IEEE Humanitarian Technology Challenge.)

BravoSolution: Making Spend Analysis More Useful to the Average Supply Management Professional, Part II

In yesterday’s post we discussed how, for one reason or another, spend analysis is not used enough in the average organization. But, as I said before, this doesn’t have to be the case. Spend Analysis can continue to deliver value year over year if it is properly integrated into daily supply chain activities. And the key to making this happen in your average Supply Management organization is integrating spend analysis not only into the (e)Sourcing process but the e(S)ourcing suite.

In BravoSolution’s Collaborative Sourcing Suite, Spend Analysis is integrated into the Contract Management, Compliance (& Spend) Management, and Performance Management solutions and will be integrated into Risk Management in the next version of the solution that is currently under development. In todays post, we will discuss the benefits of integrated spend analysis and what is available in BravoSolution’s suite.

By integrating Spend Analysis into the Contract Management solution, BravoSolution assists an organization in achieving a global view of sourcing and spend. From day one, an organization can not only track the contract details, but can track forecast data (total spend, cost reduction, demand management, etc.) and spend on an on-going basis by business unit and time-period (by setting up the periods for which spend is to be tracked). Then, on a regular basis, current and forecast saving reports can be (re)run with the click of a mouse button. For selected contracts, the actual savings report will summarize forecasted spend, actual spend, spend variance, expected savings (to date), actual savings, and variance, and the forecast savings report will summarize cost reduction, demand management, process savings, cost avoidance, cost increases, and total savings.

By integrating Spend Analysis into the Compliance Management solution, and matching all the way down to the unit level to find variance from contracts, Spend Analysis can help the Supply Management organization quickly pinpoint negotiated savings leakage and stem the losses. More importantly, the reports can be configured to report leakages and variances by supplier and contract (against the contract value and invoiced cost). If the variance calculations factor in discounts, rebates, and pricing tiers, then actual losses can be quickly computed. Then the recovery process can begin. BravoSolution’s suite, which includes integrated messaging for supplier performance tracking and hooks into performance management, includes the ability to track amounts paid and overpaid by supplier and contract to assist in recovery.

By integrating Spend Analysis into Performance Management, not only can spend be tracked by supplier, but spend can be broken down into high, average, and low performing suppliers. These reports can be high-level, based upon overall performance scores, or by individual KPIs from supplier scorecards. In addition, trends can be analyzed and the organization can determine whether spend to high performing suppliers is increasing, holding steady, or decreasing and whether or not action has to be taken. These trends can be plotted or (spider) graphed automatically, and benchmarks can be built and tracked over time.

And by integrating Spend Analysis into Risk Management, Risk Management can be taken to the next level. But that’s the subject of a future post.

So how successful can you be if you integrate Spend Analysis into Contract Management, Compliance Management, and Performance Management? Theoretically, the sky’s the limit (as spend analysis is now doing more than just measuring spend). Practically, the results are looking very promising. While BravoSolution only finished the initial integration of their core suite components with Spend Analysis last year, BravoSolution’s first four case studies are looking quite promising.

After an initial 3 month roll-out to a handful of advertising and marketing groups in a large media organization, the organization decided to roll out the contract and compliance management solutions to all 30 of its global groups. A second organization was able to get 50% of its spend in a compliance program in less than six months. A third organization was able to develop a performance management solution that it could roll out to thousands of franchisees to determine the appropriateness and effectiveness of its global contracts. And while the final savings numbers won’t be known for a while, the savings are tracking in the range enabled by High Definition Sourcing, 10% to 30%.

S. 510 Is Days Away From Becoming Law – Is This The End Of The Farmers Market?

I must admit that I have been a little remiss where S510 is concerned. I thought it was just another bill designed to improve labelling and traceability through the supply chain and that its net effect, if passed, would be to simply increase costs for any growers and manufacturers who didn’t already have modern systems in place to document and track every step of the agriculture-based supply chain — from farmer’s field to store shelf.

(I know that most manufacturers don’t have these systems in place, but since the technology has existed for quite some time now, I don’t have a lot of sympathy for them. Given the US crackdown on everything import, export, and supply chain related over the last few years with the threats of terrorism and all the tainted food scandals, there’s no way a food and beverage manufacturer could not claim that they did not know it was coming eventually. Plus, there are quite a number of low-cost SaaS and open-source systems out there that can do the job for a fraction of what a good ERP/MRP would have cost ten years ago when the costs were truly prohibitive.)

However, after reading this recent piece by Sam Osborn over the VBS.TV blog, I’m a little worried. Sam is calling it “The Most Dangerous Bill In The History of America”, and if he’s right, he’s not far off.

According to the post, the basics of the bill grant the FDA supreme authority over every seed that will eventually grow into an American food-stuff and the supremacy of this power stretches to the inspection of growing, harvesting, sorting, and storage operations, minimum standards related to fertilizer use nutrients, hygiene, packaging, temperature controls, animal encroachment, etc. And the bill calls for the inspection of any purveyor of food, ranging from a farm corp beast like Perdue to your Aunt Maye who sells blackberry jam at the town fair. This would literally put farmer’s markets and most organic food producers out of business.

And it gets worse, according to Dr. Shiv Chopra, S.510 would preclude the public’s right to grow, own, trade, transport, share, feed and eat each and every food that nature makes. It will be unconstitutional and contrary to natural law. (Source: The World Prophecy)

And the bill, dubbed the Food Safety Act, passed the House of Representatives on December 21 with a 215-144 vote. All that’s left is for President Obama to sign it into law. Is this the end of the organic supply chain?

New Year. New Rules. Are You Ready?

It’s The New Year in the Gregorian Calendar (as opposed to the Julian Calendar or the Islamic Calendar), which means that it’s the new year in most English Speaking and/or countries where a branch of Christianity is the dominant religion, including the US and the UK. That means, for many of you, you have a whole new set of rules and regulations to deal with. Are you ready?

For example, the eight edition of the International Commerce Terms (Incoterms 2010) take effect today. For example, no longer can you use DAF, DES, DEQ, and DDU as they have been replaced with DAT and DAP. The Advance Cargo Declaration is now mandatory in the European Union, which now includes Estonia (not to be confused with Elbonia). Accounting reglations specified in the HITECH Act take effect today and affect suppliers in the US Health Services & Medical Devices supply chain. Minimum wage goes up in ten (10) different states today, and this will no doubt lead to increases in logistics costs for SMEs, who already have to contend with the increases in small package courier costs at FedEX and UPS coming into effect on Monday. And for those of you sourcing internationally to low-cost countries, let’s not forget that the GSP went away on January 1! (And now those low cost countries aren’t so low cost anymore!)

For those of you in the chemical industry, you have to deal with the new reporting and filing requirements for the classification, labelling, and packaging of chemicals in Europe, courtesy of the European Chemicals Agench. For those of you in the energy industry in India, you need to be cognizant of the new UK Renewable Energy Certificate Regulation, and be compliant if you want to take part in REC trading. And for those of you reading down under (or, from your perspective, up over) in the automotive industry, all new vehicles must be fitted with electronic stability control (ESC) systems. (Well, unless you’re in Victoria, then you have until November, but why be compliant in only one state when the other five will follow suit in 10 months?)

And I’ve only scratched the surface. It’s a new year, and it is bringing new challenges. Are you ready?

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Rolling Up Resolutions with RollStream

In our last post, we talked about Rollstream’s new workspace capability and how you could steamroll your compliance problems into submission. We also mentioned how Rollstream was in the finishing phases of a new dispute management and resolution solution, as part if it’s overall supplier development and performance management solution.

While the problem may sound simple, and while the solution isn’t all that complicated compared to other supplier management solutions, for a large Multi-Billion dollar company, the administrative costs alone to resolve disputes can exceed millions of dollar a year. (One of their beta customers, an 8 Billion dollar company, estimated that just their administrative costs were over 2 Million annually!) Add to this the costs associated with having to dispose of damaged inventory and the losses from overpayments if a loss is not appropriately tracked and billed back to the supplier, and disputes can cost a large company over 10 Million a year!

That’s a lot of money at risk, especially when a properly designed supplier management solution can easily identify, track, and streamline the resolution process and see the average dispute resolved quickly and easily. Plus, it helps the supplier. In the US, more than 61% of receivables remain open for over 50 days (and it’s worse in Europe). Considering that this type of solution can reduce the average resolution time from weeks to days in your average large company (as there’s no paperwork to lose and everyone gets promptly notified — through the system and e-mail — when they have to respond to a dispute or take an action), a supplier could see considerably more invoices paid on time.

While its primarily being used to resolve shipping disputes (overages, shortages, and damages) by the beta testers, it was designed to allow the community to track and resolve any kind of dispute, including cost, pricing, transportation, invoices, rebates, and contracts — and since it recognizes POs, invoices, and contracts (and their IDs), it can be used in conjunction with the full sourcing and procurement process.

The solution is fully integrated into the Rollstream platform and easily accessed from both the community (supplier) portal and the users you authorize to use the application. When the user logs in, they see all of the issues associated with them as well as their current status (pending, open, waiting on, [recently] closed, etc.) and can filter based on status, supplier, organization, creator, date, etc., or any other active field associated with an issue. The application is fully configurable and, in addition to the pre-defined standard fields (which can be renamed or removed), the user can define any text, date, numeric, or selection field they would like to track. In addition, if a number of disputes are related to the same shipment, purchase order, invoice, etc., there is also a bulk update capability that can be used to address them all at the same time. In addition, there’s an easy to use import and export function. You can import issues from a standard CSV file and export to excel. The import is well thought out and will automatically map input columns to application fields through a matching algorithm, which can be overridden by the buyer as needed. Finally, the dashboard reporting, which by default displays number of incidents by status, number of incidents by type, and average days to resolution, can be configured to track and report on metrics of interst to the buyer. Finally, when an issue is resolved, the application can be configured to track the relevant information related to reconciliation.

Considering the price tag for this solution starts in the five-figure range, and the manpower savings alone could be seven figures (as you’ll free up more resources to address other, more strategic, parts of the procurement and sourcing process), dispute resolution is definitely a solution that should be considered as part of your supply chain management platform — especially if you’re already using the Rollstream solution.