Category Archives: Knowledge Management

There’s No Intelligence Behind a Spreadsheet

Not even of the artificial kind. So please, kill those electronic cockroaches now before the infestation becomes so big that the only way to remove it is with enough C-4 to totally obliterate the entire office building.

So what set off this latest rant? Rich Wilson’s comment at the CPO Agenda roundtable in London this May on “budgeting for a wider influence” where he said:

We developed these powerful analytic capabilities that we have applied to high spend categories, but people weren’t using it. So what we have today is a device called RFxpress, for taking an ordinary Excel spreadsheet that is fed into the front end of our application and configuring it. In essence, it enables the user to have the full power of our analytics to invite suppliers at the push of a button and conduct bids over the internet.

BULLCRAP!

Spreadsheets are NOT an analytics tool. They’re a ledger, which can be used as a poor man’s tool for data capture, but not for manipulation, sharing, or collaboration. Why? For starters:

User Entry Can’t Be Controlled

Sure Excel allows a user to define the type of a field and even lets a user define a few macros to check and format data, but considering that another user’s environment might have macros disabled (and, like Office 2008 on Mac, might not even support VB macros) and that any user can override cell types, a user can literally enter anything they want if they have even one iota of technical proficiency.

Cells and Computations Can’t Truly Be Hidden

A…C…K? Better unhide those columns in case they are important! Hmmm … that calculation looks wrong. I don’t really understand it, but I’ll change it anyway.

Application Configuration Can’t Be Controlled

VB supported? Maybe, maybe not. Analytics add-on pack? Maybe, maybe not.Third party optimizer? Maybe, probably not. Etc.

Good Data Goes Bad And Nothing Can Be Done About It

Just like every cell division results in some sort of degradation, be it a shortening of telomeres, an RNA transcription error, or the wrong number of chromosomes, every time a spreadsheet is copied or propagated, new errors are introduced. (That’s why 80% to 90% of spreadsheets have serious errors!)

Freshness is Fleeting

Like a loaf of bread, a static spreadsheet goes stale and gets moldy quite quickly.

Version Control is Impossible

The organization can define all the naming conventions it wants, but people are human and even if they try to follow the standard, they’ll screw up and the repository will degrade quickly. Plus, what happens when two people work on the sheet at the same time and upload a new version at about the same time. Whose is right?

The Sheet Is Not Even Guaranteed to Load

The MS add-in interface is poorly specified and that add-in could easily blow up the sheet, and if the user is unlucky, her installation.

In other words, SPREADSHEETS = FAIL. Is that clear enough?

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Why You Should Use a Consultant

Editor’s Note: This post is from regular contributor Norman Katz, Sourcing Innovation’s resident expert on supply chain fraud and supply chain risk. Catch up on his column in the archive.

Over the years I’ve come to realize that clients rely on consulting services for two reasons:

  1. Because they don’t have the personnel
  2. Because they don’t have the personnel

The difference between the two reasons is that clients either don’t have enough warm bodies to throw at a problem and they need an extra one in the interim or they don’t have the specialized talents and expertise the consultant brings to the table.

Those are two pretty good reasons for organizations to use a consultant — especially one who is willing to transfer knowledge which enables them to take ownership of the projects that they work on jointly with the consultant. For short-term projects of a few weeks or a few months it usually does not make sense to hire an employee when using a consultant is actually a more effective and efficient answer.

So how do you find the right consultant?A great consultant strides to distinguish herself from other consultants by not offering commodity products and services, even though it can be a double-edged sword at times. Let’s face it: a great consultant’s bag of mixed tricks is somewhat specialized and can be a little difficult to explain. Her best “elevator pitch” is likely reliant on the elevator getting stuck between floors for an hour or so. But then again, if a consultant can provide you with their full value proposition in a minute or two, how much do they really know?

But there’s third reason — and a really good one — to use a consultant. And this aspect is what can even separate specialists from being viewed as valued advisors: a good consultant is professionally “out there”.

Aside from reading a daily newspaper or two and approximately a dozen or so various business publications (supply chain, manufacturing, technology, financial, fraud, security, etc.) each month, a good consultant will attend conferences and informational networking events and be on top of current trends and best practices. She will then relay this information to her clients when she learns something she thinks they should know — and do so in a timely fashion. (And, unlike a lawyer, won’t charge a minimum hourly fee to do it!) And the client stays on the ball without having to fork out tens of thousands of dollars to an analyst firm whose reports are stale as soon as they are published.

So hire a consultant today. It’s the best investment you can make with your money.

Norman Katz, Katzscan

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Does your Global Trade Management Platform Have Content and Connectivity?

A recent article in Industry Week on “The Role of Content & Creativity in Global Trade Management” by Adrian Gonzalez of ARC Advisory Group noted that compliance is only one component of a best-in-class global trade management solution: content and connectivity are also critical. According to Adrian, companies must have accurate and complete trade content for every country they operate in and trade with in order to successfully comply with trade regulations and prevent customs clearance delays because a GTM solution without a comprehensive and continuously updated trade content database is only marginally useful.

According to Adrian, trade content should include:

  • denied parties
  • embargoed countries
  • harmonized system chapters and descriptions
  • license codes, descriptions, & requirements
  • document templates
  • duty, value added tax, excise taxes, and seasonal taxes

When you think about it, Adrian is right. Without proper tax rates, you could pay the wrong duties and get hit with fines and penalties. Without harmonized tax system data and license codes, you could mis-categorize your shipments and have them seized. And, without denied party or embargoed country lists, you could risk criminal charges. You need content. And if your platform provider can’t provide it to you, you need to get it from third parties, just like you’re probably doing with your supplier data.

Plus, sourcing in a trade data silo can have serious and costly consequences. Purchasing managers must take into account duties and taxes in total landed cost calculations, as well as countries of origin. Are there currency exchange risks that need to be estimated? Additional transportation costs? Preferential trade agreements, or a lack thereof?

Sourcing professionals will not be able to get this data without connectivity, which is also of critical importance because a cross-border shipment typically involves the exchange of information with about 25 external parties, including custom agencies, freight forwarders, brokers, banks, regulatory agencies, transportation providers, and suppliers. Thus, it’s important to make sure that the solution you select integrates with key external systems and supports open standards for information exchange.

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Purchasing 0.3

Is Purchasing Magazine trying to give me a heart attack? Isn’t it enough that they refuse to acknowledge the presence of Sourcing Innovation (which, as you know, is one of the few blogs that brings you real supply management content you can use day-in, day-out six days a week, every week) which they dropped from their “News from the Web” feed years ago (when I first ripped apart one of their sloppy articles)? After reading a few of their recent articles, my blood is boiling!

That’s right! That bullcr@p that Spend Analysis is expensive (see last Thursday’s post) is just the tip of the iceberg. And even though many of the quoted individuals had good advice to share, in the end, Purchasing’s recent article on “Purchasing 3.0” is just as bad and filled with absurdities … which start on the first line! (If Purchasing had their way, we’d regress to Purchasing 0.3!)

Have you used Social Networking to build supplier relationships?
I Hope Not! Since all Facebook is good for is Facebook parties that result in “Million dollar homes being trashed” (Metro.co.uk) …
If you want to build drinking buddies relationships, yes, Facebook will work great … but what you want is productive and professional relationships where you can work together to make each of your businesses better.

Are you sure you’re using Excel effectively?
You can’t use Excel to manage your supply chain! How many fracking times do I have to say it? Spreadsheets are bad strategy, prevent innovation, and cost you billions! You’re better off using an etch-a-sketch like the dork in It’s All About the Pentiums (2:54 mark). (And just because it’s still all about the pentiums, baby, that doesn’t mean it should be!)

Do you, uh, Tweet?
Are you kidding me? Hasn’t Twitter Turned Too Many Into Twits already? It appears that Twitter has already made twits out of at least 3 in 10 students! The only things that should go “tweet” are Tweety Bird bird and Rockin’ Robin (Muppet Version).

With the prevalence of ERP systems in large companies, more purchasing professionals … should be focusing on developing advanced database skills.
Uhhm, no. Purchasing professionals should be focussed on learning advanced data analysis skills. This is not quite the same as learning advanced database skills. Purchasing managers don’t need to know how to configure, manage, scale, back-up, restore, and replicate databases … that’s what DBAs are for. Purchasing managers know how to use today’s spend analysis tools, which require them to learn how to build and manipulate cubes through dimension-driven UIs, not how to optimize 4 level nested SQL statements … that’s what the tools do! (And frankly, even your average CS graduate would have a hard time optimizing 4-level nested SQL statements across multiple tables, if they could even write them in the first place!)

The article also promotes the new Microsoft Online Services
which will only work if everyone on the team is using a supported version of Windows. And even then, it might not work. (Furthermore, even though they claim that LiveMeeting works on Safari and Firefox on Mac, even if your system meets all the requirements listed, it often doesn’t.) Mac is around 15% of the market and growing, Linux is on the rise (especially in Netbooks), and a number of organizations still use AIX and UNIX based platforms (which could become popular again if thin-client desktops [e.g. SunRays] take off). Not everyone is in the Microsoft eco-system anymore. (And the majority of supply management systems are NOT built on .NET.)

And then the last paragraph indicates that mobile devices are the answer to requisition approval (to keep projects moving), commodity price updates, and procurement communication!
This is probably the most dangerous message of all, because now we’re in Yes, … but territory. Not all requisitions can be approved on a 3×5 screen. What if there are 20 (or more) line items? What if your system flagged 5 as off-contract? What if it’s an unusual request for a significant amount? You’re going to need more data to make the right decision than you’re ever going to fit on that itsy bitsy teeny weeny tiny Blackberry Storm or Curve. It’s one thing to approve a new laptop or mobile phone for an employee that needs it right away to continue working, but another to approve an order of 10,000 units of SKU XYZ123, when the contract is for ZYX321! Why is the order off contract? Oversight? Have requirements changed? Or is your supplier out of ZYX321 and you need an acceptable substitution right away? And what good is a commodity price update if you can’t see the history and the trend graphs. Unless you’ve already done the analysis and figured out that you should buy when it hits 75 or sell if it hits 100, because you’re hedging risk on the commodities markets, that update is useless. And communicating in 140 byte tweets? That would just make you a Twit!

Let me finish by saying that I’m so glad that you, dear reader, are an educated, informed, and intelligent individual who would drop this blog from your feeds faster than a hot potato if I ever published anything as ridiculous as what Purchasing and other publications are getting away with these days!

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