Category Archives: Knowledge Management

Ariba Vision 2020: Tomorrow’s Shoes (Part I)

This is the first of two posts that address the fourteen predictions that were dead on in Ariba’s “Vision 2020 – The Future of Procurement” report. Any Supply Management organization that recognizes the truth of these predictions is well on its way to formulating a plan to be a leading Supply Management organization in the decade ahead.

01. Everything is automated

This prediction is dead-on. Next Generation Supply Management shops are investing heavily in technology to automate all non-strategic and low-value supply management activities, leaving the sourcing professionals to focus on strategic and high-value categories where they can extract the most value for the organization.

07. Spend management shrinks

I’ve said it before, and I will say it again: Spend Matters Not. It’s not how much you spend, how you store it, how you cube it, or how you report on it — what ultimately matters is how much you get from it, profit from it, and derive value from it. Next Generation Supply Management organizations are focussed on improving business outcomes, not cutting costs until quality and stability of supply suffer. Spend Management will shrink as true Supply Management focussed on value takes its place.

09. Service providers excel

Given the increasing cost of outsourcing complex and strategic functions to emerging economies where labour rates are rising exponentially, in order to maintain cost competitiveness and deliver value, the service providers will provide service that constantly improves in efficiency and execution.

13. Let’s get financial

Since overall financial success will still be the ultimate measure of value generation in public enterprises, Supply Management will revolve around the financial supply chain and will be heavily involved in optimizing cash flows, working capital, and financing programs from NPD through return and disposal.

14. SM pros get sophisticated

Supply Management professionals will definitely be much more sophisticated in 2020 than they are today. As the secret agents that essentially drive all aspects of the business, their business savvy, analytical capabilities, relationship skills, and overall execution abilities will be, for the most part, a level above where they are today.

15. Supply pros expand expertise

This is the obvious result of a supply managmeent professional getting more sophisticated. It should not have been included as a separate prediction because it’s impossible to get more sophisticated in Supply Management without expanding depth of expertise in key areas.

16. Strategy scope widens

One does not get to the next level by maintaining a narrow focus, so it should also be obvious that the scope of strategy addressed by an average Supply Management organization is going to expand as well. The strategy will be more closely aligned with the needs of the organization’s end customers and be more cognizant of the needs of the current, and future, customer base. Supply Management will be increasingly called upon not only to analyze merger and acquisition possibilities, but to lead the initiative as success will depend upon succesfull integration of the end-to-end supply chains. And it will be involved in all NPD from day one to help identify customer needs and supplier capabilities before any decisions are made.

The next post will address the other seven predictions that were dead-on.

Apprenticeship is the Answer

Back in March when I asked if we can fix supply chain education because academic programs, third-party programs, private programs, and vendor programs are, for the most part, not meeting our needs, I pointed out that the answer was to go back in time to when apprenticeshipos were common. When students studied on the job under the guidance of a master who prepared them for the job they had to do, not to advance an understanding of purely intellectual pursuits devoid of a real world application.

While I didn’t get much of a public reaction, I did get some very positive feedback from some old-school folks who have tried everything and realized that work-alongside training is the best answer. But a few old coots, as brilliant as they may be, do not deliver enough critical mass to get the idea out there. However, it seems that India is proving my point. As per this recent article over on Global Services that asks if “everything we know about offshoring innovation is wrong”, not only does an appropriately designed test prove to be a better indication of ability than a University degree, but intensive on-the-job training under a skilled expert tends to produce a better worker in months than is typically produced by years of higher education.

In other words, apprenticeships are the answer.

Elements of Leadership

A recent post over on ChiefExecutive.net on The Four Elements of Leadership had four great tips for helping you manage your top talent. In brief, they were:

  • Understand Your Role
    You’re a leader, not a manager. As a result, you direct, you don’t control.
  • Unify the Team
    Don’t divide the team, don’t add members that will divide the team, and if the team begins to divide, align them against you if need be (on a temporary basis).
  • Deference is for Managers
    If you get too accustomed to having people defer to you, you stop growing as a leader. The team should be empowered to make their own decisions, should know that you’re not the only expert, and should know that you don’t have all the answers and don’t expect that you do.
  • Deal with Differences
    Learn how to identify them, respect them, use them appropriately, and find a common language when not everyone thinks the same.

In other words, leaders lead, they don’t micromanage; they build a team, they don’t just put bodies in seats; they empower the team and acknolwledge their own limitations, they don’t see themselves as superior; and they understand.

It’s a good article with good advice.

A Streamlined Supply Chain Is Integrated

I was pleased to see this recent piece on “Making It Right” over on Stores.org that quoted Brandon Arbiter, the Business Intelligence Manager for FreshDirect LLC, who said that we are operating three businesses simultaneously and that to execute each of these on a daily basis, every department needs to use the most up-to-date information and have that information at their fingertips.

Just like FreshDirect is simultaneously a grocer, an online merchant, and a transportation company, an average CPG supply chain is a manufacturer, a broker, a transportation company, and a bank that has massive amounts of data that needs to be managed in the physical, financial, and information flows. The business operations of manufacturing, brokering, transporatation, and finance cannot be conducted independently if the supply chain is to be successful. Otherwise, goods will be produced too fast or too slow, or they will get held up in customs somewhere, or they will sit in a warehouse for too long, or they won’t ever leave the factory because the last order wasn’t paid for on-time. That’s why a successful supply chain has to be integrated, and also why it’s the only way to arrive at a streamlined supply chain that has to simultaneously minimize the physical, financial, and information flows that need to be in lock-step for success.

Furthermore, not only are the operations and data flows integrated, but so are the metrics. Instead of metrics like shipped complete and on-time delivery, you have metrics like perfect order that say right product at the right time at the right price that integrate all of the operations. So take a lesson from FreshDirect and integrate your supply chain operations.

IP Good, Knowledge Better

I enjoyed this post over on the HBR Blogs that said you should “stop obsessing over intellectual property rights” because what inevitably happens when companies obsess over IP rights is patent frenzy, and that just results in patent pirates plundering. And if that isn’t bad enough, since the full text of your patent is only a click away on the USPTO site, your secret sauce can easily be copied by any set of eyes with interest, and if their country isn’t very protective of IP rights, and they don’t try to sell into your home country, they can profit off of your IP royalty free and you have no recourse.

That’s one reason I’m not a big fan of patents in general, and think that North America should follow the EU and ban software patents specifically. There’s not much value in patenting “processes” that have existed since the dawn of civilization (and we have records of “auctions” going back thousands of years) as the patent can be easily knocked down, and there’s no value patenting a technology “invention” that is based almost entirely on open source, as a simple substitution of a few pieces, a few changes to the integration strategy, and a few new steps makes it a different invention — which means that someone else can use your publicly available blueprint to create their own “invention” with very little effort. Plus, the process is very time consuming and expensive in terms of dollars (as patent lawyers aren’t cheap) and time (as the documentation and questions from the lawyers and USPTO will take up a lot of time). And you can’t defend them unless you’re cash-rich, making them weak defenses if you’re cash poor.

I’m not saying IP isn’t important, it is, and, fortunately, it is protected under copyright law and other laws if you keep it trade secret. I’m just saying that IP isn’t everything. As the post points out, it’s what you do with the IP that matters. And effective use requires effective knowledge management. As the post points out, pursuing IPR (IP Rights) entails structuring and documenting knowledge, and the irony is that this very structuring allows diffusion to other firms who get access to it and either work around the IPR or eventually imitate it — so if you don’t effectively manage your knowledge, you lose it, or at least the benefits of it.

However, since a powerful strategic opportunity lies in binding your tacit knowledge assets to your structured knowledge, proper knowledge management can lead to significant market advantages and revenues, and make you a thought leader, like it did for Adobe, McKinsey, and Bloomberg.

So how do you create a knowledge management strategy? The authors suggest that you start by mapping your knowledge assets against a codification/diffusion grid that separates them into core compentencies, patents & copyrights, industry wide principles, and industry conventional wisdom, using the process described in this post on “are you wasting money”. Each type of asset requires a different strategy where protection and revenue generation are concerned.

In the end, legally owning your knowledge pays off only if you’re cash-rich enough to monitor and enforce the IPR. For most organizations, what ultimately drives performance is the organization’s possession of deep, tacit knowledge and its ability to identify, construct, and exploit knowledge networks using that knowledge to generate continual revenue streams.