Category Archives: Knowledge Management

How to Deliver Superior Customer Service

A recent article over on Chief Executive had some great tips on How to Deliver Superior Customer Service that apply equally well to Supply Management as Service Delivery. These tips are important because if you figure out what your customers want and how you can adapt your offerings to best serve their needs, you will raise your profile in their eyes. Since the lifetime value of their support is much more than that of your average supplier, this is a good thing. So what was their advice?

  1. Always Ask What You Can Do Better
    More feedback means more opportunities for improvement, from the first consultation to the final delivery of product. Remembering that the best way to reduce spend and increase value is to be involved from the time of product or service design, and not after the requirements have been locked in leaving you nothing to do but run a bid between the only two suppliers who can meet the demand, you need to figure out how you can provide value as early as possible — just like a consultant trying to maximize an engagement who knows that a smart customer only keeps her around as long as she provides value. For some customers who understand your value, it might be introducing them to multi-round bids and optimization as an alternative to auctions. For those new to Supply Management, it might be showing them how to speed up information gathering with RFIs. And for those who think Supply Management only comes into play when the need is met, it might be educating them on cost and how you can take cost out. And for those who need to work with a preferred supplier (do to long term contracts or very special needs), it might be teaching them the basics of SRM so they can get more out of the relationship.
  2. Bottoms Up
    Customer driven organizations understand and embrace the idea that their success depends solely on the customer’s satisfaction and must be willing to do whatever it takes to deliver on the promise. This means listening, and responding, to the needs of the client organization. If a certain organization makes a request for help on an RFx every six months, have it at the ready when they come back to you at the expected time.
  3. Win Back At-Risk Customers
    Sometimes a business unit is going to have a “bad experience” no matter how much good effort you put into helping them. They might come to you with expectations of double digit cost savings in a market where commodity costs are skyrocketing and suppliers hold all the power. They might get the rug yanked out from under them because the new supplier you helped them find suddenly goes out of business when a natural disaster wipes out their primary plant. And so on. Even if this only happens one in one hundred events, these internal customers are at risk because the bad experience will be ten times as memorable as the best experience to date. So even if the overall value the business unit gets is high, there’ll still be some animosity due to the failure if you don’t go the extra mile to make them extra happy on another equally important project. As long as there is lingering animosity, you risk resistance on any future project that brings back memory of the failure. This could hinder your success in the future.
  4. Make Your Intentions Clear
    Let them know that even though corporate has given you a mandate to cut cost, your number one concern is to provide them with value, and that since you understand total cost and total value models, you know that if you don’t at least maintain quality and service, overall costs will go up year-over-year even though unit costs go down. As a result, you are there to get them value first and any actions you take or requests you make will be to help the organization get that value, even if sounds like you may be putting your organization or goals first.

It’s great advice, and it only missed one important point (which is as true from a Supply Management perspective as it is from a Customer Service perspective), and that’s:

  • Your definition of value is not necessarily your [internal] customer’s definition of value.
    As Lamar Chesney, CPO of SunTrust pointed out in his presentation on Value Perspectives at the Next Practices Xchange* this spring (as summarized in SI’s post that wanted to know whether you are really focussed on value), what often takes place is an exchange, but never an interchange, of words [that] is fragmented and restricted [in] expression because both sides talk past each other because our view of value (as Supply Management Professionals) is not their view of value (as Finance, Manufacturing, Logistics, Marketing, etc. Professionals). Make sure you understand their definition of value before promising that you can help.

* The Fall Next Practices Xchange takes place at the Oak Brook HIlls Marriott, in Oak Brook, Illinois on Friday, November 4, 2011.

Better Data On Its Own Will Not Ensure Success

A recent post over on the HBR Blogs by Daryl Morey that stated that “Success Comes From Better Data” is on the right track, but not quite right. Better data is a necessary condition for success, but not a sufficient condition. In order to make good decisions, you need:

  1. Better Data
  2. Better Tools
  3. Smarter Analysts

When Daryl says that you need raw numbers, not the people and programs that attempt to make sense of them, he’s missing the point that raw numbers need to be distilled into information through the use of good tools that can be distilled into knowledge through smarter analysts. Without the right knowledge, a business leader will not be able to make the decisions that lead to success. While it is true that real advantage comes from unique data that no one else has, this data must be transformed into knowledge. It’s a Knowledge Economy, not a Data Economy.

It’s a Knowledge Economy – Are You Ready?

Today’s economy is a knowledge (driven) economy, “one in which the generation and the exploitation of knowledge has come to play the predominant part in the creation of wealth. It is not simply about pushing back the frontiers of knowledge; it is also about the more effective use and exploitation of all types of knowledge in all manner of economic activity“. Very little has changed since the Department of Trade and Industry of Great Britain penned these words in 1998.

In fact, the importance of knowledge in wealth creation is accelerating by the day now that global trade, information technology, new media, and, in particular, the social web is increasing in innovation, size, and market penetration on an exponential basis. Leading organizations now “follow the sun” and operate core business processes 24/7/365 on a global basis. Product and service pricing are increasingly being driven by value first and cost second. Organizations have to either accept the new economic reality created by the knowledge economy or fall further behind their peers in sales and market size.

From a supply chain vantage point, not only have the last twenty-five years produced an explosion in the application and availability of computing and communications technology in all aspects of life and business, which was only hastened by the wide-spread adoption of the internet, but they have also produced a revolution in supply chain theory and best practices. In lockstep we’ve gone from MRP to MRP II to ERP to a mix of Best-of-Breed Supply Chain and Global Trade solutions on the technology side to decentralized tactical buys based on hardball price negotiation to centralized global strategic supply negotiations on the process side.

In today’s fast-paced knowledge economy, only the strong survive, where the strong are those organizations with modern processes and technology and the wherewithal to use them. The question is, does your organization belong to this group?

To find out more, download the latest white paper by the doctor of Sourcing Innovation, sponsored by BravoSolution.

Is Your Supply Management Organization Ready for Gen-Y?

Hopefully, now that you understand that Supply Management is the solution to the woes of the company as well as the country, your organization is ramping up, hiring, and looking for new talent. At approximately 70 Million strong, Gen-Y, also known as the Millennials, will soon become the largest generation in the workforce. As a result, they will soon represent the largest talent pool available to your organization. But is your organization ready?

The Millennials are not like the Baby Boomers, who looked for long term job stability and growth. Whereas your average baby boomer might take a job with the intention of staying with the same company for her entire career, a recent survey conducted by the Australian Experimental Learning Centre found that 64% of Gen-Y employees intend to stay less than two years with their employer. Current estimates are that most members of Gen-Y will have 20 to 25 jobs in their lifetime.

This poses three major challenges for your organization:

  • Recruitment
    Gen-Ys are always looking for the next great opportunity. Why is your opportunity the next great opportunity?
  • Training
    Given the average lifespan of a Millennial in your organization, you will need to get Millennials up to speed quickly and efficiently in order to maximize the value you get from them before they move on.
  • Knowledge Capture
    You will need a great Knowledge Management Program that captures, indexes, and makes available all the knowledge they bring to, and create for, the organization. Otherwise, each new Millennial will have to start the cycle anew.

Is your organization ready?

Is Your Supply Management Organization Being Held Back?

A recent article over on the CPO Agenda on “Fresh Thinking”, which noted that Procurement must be bolder in bringing about wholesale change that delivers effective results for the business, highlighted a number of areas that could be ripe for change. These areas need to be looked at carefully because their current state could actually be holding the Supply Management organization back. In order to advance, Supply Management cannot accept the status quo when the status quo is an outdated, ineffective, and or costly way of running the business.

The following five areas are ripe starting grounds for a Supply Management organization that wants to take its operations to the next level.

  • Organizational Rules
    Are organizational rules limiting opportunities for efficiency and effectiveness? There are a number of ways organizational rules could be impacting the Supply Management organization, including, but not limited to:

    • Diversity/Buy American Mandates
      While it’s often a good idea to diversify spend and buy at least some products or services at home (to address offshoring risks), excessive diversity or buy american mandates can severely limit options and have a dramatic impact on efficiency and effectiveness.
    • Payment Terms
      If finance is imposing egregious payment times on suppliers (of 90 days or more), this will limit the supply base that is available to the organization as some suppliers won’t stand for such BS.
    • Approval Chains
      If Procurement has to get a sign-off from each affected organization before every buy, and executives for buys over a certain dollar limit, they will be spending more time trying to get signatures than doing their job. Sign-offs should only be required for critical buys or very high dollar buys, not for office supplies or temp services.
  • Specifications
    The specifications could be outdated, non-standardized, or overly specific and all of these can add cost and drain efficiency.

    • Overly Specific
      If the specifications call for specific components from specific suppliers that are essentially commodities, they are overly specific and limiting competitiveness.
    • Non-Standardized
      If each department has their own specification for a workstation with a different configuration, this can limit leverage — especially since it’s very easy to standardize on an office workstation configuration for business people and one for technical people.
    • Outdated
      If the specs are calling for components that are now only being manufactured by a 10th of the total supply base or using materials that are no longer in common use, then the specs are outdated and should be refreshed.
  • Marketplace
    The marketplace could be holding Procurement back by holding on to outdated products or insisting on a wide-diversity of products when only a few should be required. For example, customers may love the old, regular un-concentrated laundry detergent which costs more to package and transport and is less environmentally friendly than the new concentrated formula or may be split between six scented varieties of your dish detergent. In the first scenario, Procurement will need to work with Marketing to push the new, environmentally-friendly, product while phasing out the old product and in the second, Procurement may have to work with engineering to find a way to mass produce the base detergent and mix the scent in later to avoid six low-volume, high-cost production runs.
  • Perception
    If the rest of the organization thinks of Procurement as the back-room, paper-pushing organization where careers go just before they are put out to pasture, it is going to be challenging for Procurement to gain respect, exert influence, and get a majority of spend under management. Procurement will have to work on its image first, get some quick successes, and leave major organizational change to later.
  • The Ideal Solution
    If the concept for the “ideal solution” is outdated, then Procurement’s efforts will be outdated. Before effecting significant change, Procurement has to know what the optimal state is and why.