Category Archives: Market Intelligence

15 Years Ago Today, The Internet Rocket Begins to Run Out of Fuel

15 Years Ago today, the Dow Jones Industrial Average closes above the 10,000 mark for the first time during the height of the Internet boom. It was the beginning of the end, which started a year later after the NASDAQ peaked at an all-time high of 4,048.62 on March 10, 2000. It was all downhill in the dot-com bust from that point on. But what can you expect from a frenzy that results in an online property spending $188 Million in a mere six months in an attempt to create a global online fashion store?

The lesson here is that if something looks too good to be true, it’s probably too good to last. If a supplier is significantly undercutting the market in their bid to win your business, it’s a desperation move and cutting prices to levels that are barely at, or below, cost is not going to improve the supplier’s financial viability. If your newly launched product is commanding a considerably larger share of the market than you expected, the market was probably a blue ocean and your lead will only last until a rival launches a similar product with new features and more marketing dollars behind it. If everything has been going smooth in your supply chain for the last year, given the current rate of supply chain disruptions and the ever increasing frequency of black swan attacks, your luck is probably about to run out. So be prepared for the unexpected. It’s bound to happen eventually, and likely sooner than you think!

MarketMaker4: A Great Foundation for Successful Sourcing in the Mid-Market

Our last post in our four-part series that posed the question as to what the key ingredients to a successful e-Sourcing strategy are ended with an introduction to Market Making and MarketMaker4, one of the newest arrivals to the e-Sourcing party. However, unlike a number of vendors that sprung up during the latter half of the last decade, their solution is more than another me-too sourcing platform with modules and features almost indistinguishable from the platform that came before.

MarketMaker4’s new and distinct platform is buit around 4-key solution elements:

  1. State-of-the-Art e-Sourcing Platform,
  2. Integrated Company Intelligence,
  3. Integrated Market Insights, and
  4. Market Making.

This is because MarketMaker4 believes that all of these components are vital to a successful sourcing event, and it is not alone in this belief. Despite the fact that the solution was only launched a few years ago, MarketMaker4 already has over 75 global clients! Not bad for a new e-Sourcing start-up that was bootstrapped by its founders until it was acquired by Xchanging last year, which, realizing its significant potential, intends to keep MarketMaker4 as a standalone holding.

MarketMaker4’s modern e-Sourcing Platform is focussed on e-Negotiation support and the core functionality is e-RFx, e-Auction, and Reporting, with all of the standard features you’d expect from such a platform plus a few enhancements compared to the base platforms of the noughts. The most significant of these are the matrix-style bidding, which allow bids to be placed across three dimensions (such as lot, item, and [ship-to] location) and analyzed across different metrics (best price, best price by lot, best total price, best total price by lot, best weighted price, best weighted price by lot, etc.), and the custom weighting formulas that allow a sourcing manager to create custom rankings that can take all elements of a supplier’s bid into account — base cost, transportation, turn-around times, etc. — and all elements of a buyer’s assessment — quality, reliability, brand value, etc. — into account when calculating a total cost of ownership or bid ranking, by item, lot, or auction.

The platform is easy to use and integrates wizard-like walk-throughs for setting up new events. If a user is setting up a (reverse) auction, it walks the user through general settings, matrix design, uploading file attachments, design of the pre-event RFI, initial supplier identification, bid invite creation, and event launch. Progress indicators are included on each step (so a user knows how much is left to do), and all settings are defaulted whenever possible — allowing small events to be setup in minutes. When designing an auction, users have full control over the time and time extension rules, post negotiation override settings, minimim bid increments, ceilings and floors, bid notifications, the matrix view, displayed graphs, and the amount of competitor information displayed (and whether or not it is masked). Creation time can be streamlined by starting with one of the built in auction topics for common categories or by copying an existing event (for a similar category or the same category the last time the event was run).

The integrated company intelligence, which builds on a D&B license for detailed company intelligence through the MarketMaker4 tool (and which will soon be augmented with additional data from Lexis Nexis), allows a company to search for new suppliers in the MM4 database that could meet their category and product needs and then view detailed data that includes company data, financial data, key employees / managers, and contact information. It’s like a supplier network on steroids, as not only do you have a large list of suppliers, but you have aggregated, researched, third-party data on the suppliers, which even includes corporate citizenship ratings (for the sustainability-focussed). It’s easy to use, and allows you to do competitor searches on any company, which makes it really quick to find potential sources of alternate supply to invite to a sourcing event.

The integrated market intelligence is a combination of market intelligence (like you would get from a Mintec or Denali subscription) augmented with category briefs, a currency heat map (that lets you quickly identify the relative strengths of different currencies and trends, as historical currency data is tracked by MM4), and market indicators. The commodity indices cover North American, South American, Western European, Middle Eastern, and Asian marketplaces and more are being added this year.

And, finally, as introduced in our last post in our four-part series that posed the question as to what the key ingredients to a successful e-Sourcing strategy, Market Making is 24/5 project support from an experienced sourcing professional who is an expert in the platform, and the sourcing process it supports, and who is always a quick chat or call away. These professionals, based in North America, Europe, and Asia, are always there and always able to help you in one of the thirteen*1 (13) languages that MarketMaker4 supports.* Furthermore, since an online negotiation tool is useless if suppliers don’t use it, your suppliers also have access to full MarketMaker4 support — at no charge — in addition to bidder training sessions and monthly seminars.

MarketMaker4, which started with a belief that it’s not just what to source, but who to source from (Company Intelligence), when to source it (Market Intelligence), and how to get it right (Market Making), held on to that belief until they built a solution that realized their vision of what modern e-Sourcing should be. And it works. Their customers’ average savings is north of 10%, even without decision optimization (which demonstrates the power of integrated and properly applied market insight) and their average number of e-Sourcing projects is more than three times what it was before their acquisition of MarketMaker4). MarketMaker4 is another great option in what was becoming a dwindling e-Sourcing marketplace with all of the recent solution provider acquisitions.

*1 MarketMaker4 currently supports English, Mandarin, Portuguese, Spanish, French, German, Japanese, Vietnamese, Italian, Polish, Russian, Turkish, and Korean. In addition, because the platform is a modern platform that supports the full Unicode character set, new languages can be added quickly.

*2 While MarketMaker is able to offer support in each of the 13 languages it supports in the product, not all languages are supported 24/5. 24/5 support is only available for English and any language specified in your solution contract.

What are the Key Ingredients to a Successful e-Sourcing Strategy? Part III Market Making

In Parts I and II we noted that that when it comes to e-Sourcing success, you need four main capabilities, or (true) success could elude you. Specifically, you need:

  1. A Process
  2. An e-Sourcing Platform
  3. Actionable Intelligence
  4. A Sourcing Sensei

The process is easy. In Parts I and II, SI outlined a generic lucky eight-step sourcing process, which is the basic underpinnings of just about every good sourcing process you are going to come across from a services, software, or solution vendor.

The platform is essentially an ubiquitous commodity these days — especially from an e-Negotiation (e-RFx, e-Auction, and e-Contract Management) perspective where you have dozens of options. (Just remember that not all spend analysis packages are equal. Some aren’t much more than pre-packaged reports and others are just visibility tools, since they allow you to see all your data, but don’t allow you to change the underlying cube and, thus, have limited analytics capabilities.)

Actionable intelligence, at least on a category basis, while not always embedded in the platform, isn’t too hard to obtain in most categories, as there are a number of vendors that package up market indices, trends, and market insight reports that can be easily consumed and applied.

However, finding a true Sourcing Sensei could be harder than finding the bronze coated needle in the industrial farmer’s haystack, and even if you manage to find that Sourcing Sensei, luring her to your organization can be a more significant challenge still. You might be forced to settle for some category-based expert consulting from your local niche sourcing specialty firm. There’s certainly nothing wrong with this approach, as this will allow you to draw from the best-of-the-best in each category and possibly save even more on some key categories than you could with an in-house Sensei who will generally only be an expert in a few categories, but this approach doesn’t necessarily help you with process implementation, and, more importantly, doesn’t help your team use the tools at their disposal to the full extent of their capability (as the category consultants are category experts, not solution experts on your platform).

In other words, you need more than a sourcing-platform and market-intelligence subscription — you need guidance on how to best use the platform and intelligence at your disposal in your (e-)sourcing projects. You need what MarketMaker4 calls Market Making.

Founded by veteran e-Sourcing professionals, formerly of e-Sourcing pioneers that include Trade Extensions, The Ops Cube, AT Kearney Management Consultants, and Archway Consulting who realized in their former roles that one of the biggest needs of an e-Sourcing team was project assistance, especially when it came to proper utilization of an e-Sourcing suite and the integration of market intelligence for category analysis and new vendor identification, they decided that a sourcing platform, even if market intelligence was built in, wasn’t enough. That’s why they built an on-demand SaaS solution platform that not only built in market intelligence and company intelligence, but 24/5 project support from an experienced sourcing professional who is an expert in the platform and who is always a quick chat or call away. (And they mean quick. Customers are guaranteed a response to a chat request by a live person in one minute, every support person has a direct line that can be requested at any time, and the user can switch from chat to phone support at any time*1 during the chat.) In addition, as these are real sourcing professionals who work for MM4 (and not a third party or outsourced call center), these support people have full access to the MM4 suite *2 and can even perform certain tasks for you if you get stuck.

MarketMaker4, which started this decade (in 2010) promises a completely next-generation e-Sourcing system, and that is what they deliver. In our next post we’ll dive deeper into the 4 distinct parts of their solution platform from which their moniker is drawn.

* Unless, of course, the support person is already on a call, in which case you’re next!
*2 MarketMaker4 is only offered as SaaS.

Top 12 Challenges Facing India in the Decades Ahead – 02 – Media

A Free Media is critical to a healthy first world economy. It is a Free Media that

  • reports on the true state affairs,
  • holds the public (and private) sector accountable for their actions,
  • presents ideas for improving the situation, and
  • ensures that the freedoms granted to the people are maintained.

A truly Free Press

  • paints a bleak picture when the picture is bleak, and doesn’t ignore the fact that at least a third of the country is in poverty,
  • exposes corruption on a daily basis when it continues to occur on a daily basis,
  • tackles the tough issues of health care and education and presents different options for improving the situation, and
  • fights for the poor as well as the middle (and higher) classes that can afford to support them in their efforts.

However, in India

  • the plight of the poor who live in slums without access to running water or even a sanitary toilet is almost completely ignored by the daily publications;
  • even the media is corrupt; as per this article over on Realpolitik, during the fifteenth general elections to the Lok Sabha took place in April-May 2009 a disturbing trend was highlighted by sections of the media, that is, payment of money by candidates to representatives of media companies for favourable coverage, or the phenomenon popularly known as “paid news”;
  • As per Dreze & Sen’s An Uncertain Glory, among more than five thousand articles published on the editorial pages of India’s leading English-medium dailies during the last six months of 2012, less than 1% of the total editorial space was dedicated to health-related matters; and
  • the rights of the poor to be treated fairly are almost never tackled; take the plight of the Dom community for example, as outlined by Dreze & Sen and referenced in our last post — twenty five years living next to the power plant that they work for without even a single electricity connection!

The media in India is failing. The plight(s) of the poor, and even the (lower) middle class, go unchallenged, the accountability of the public sector goes relatively unchallenged, and the media itself is often corrupt. Unless the media stands up and insists on what’s right, what’s wrong will continue to flourish and all of the problems plaguing India will continue unabated.

The (Board) Gamer’s Guide to Supply Management Part : Agricola, Part II-B

Even after reading last week’s post, you still think you’ve mastered the basic game of Agricola, and that you can now manage the basics of an industrial farm at the back-end of your agricultural supply chain. With limited resources, you believe that you can deftly balance growing food with feeding your family (investing in crops versus paying your workers), expanding your farm and/or family versus maximizing the return from what you have (and trading off short-term gains today for long-term gains tomorrow), improving your infrastructure (by upgrading your buildings and making them more resistant to the elements and lowering their annual maintenance costs with some up-front investment) versus focussing on your fields (plowing and sowing your fields) versus raising and breeding animals (and the supply and demand dynamics of the meat-eating versus vegetarian marketplaces), growing grain versus vegetables (and the internal dynamics of the basic commodities market), and raising sheep versus pigs or cattle (and the various preferences of different locales, taking into account that Americans love their bacon and Hindus don’t eat their cows). You still think that because you were ending every friendly family game with a heavily utilized farmyard, a nice balance of crops and animals, a big family, and a better homestead than your peers that you have it all figured out. Think again.

Just like the real world agricultural supply chain isn’t this simple, neither is the full version of Agricola. Adding in the occupational and minor improvement cards adds a broad range of new elements to the game and greatly increases the complexity and available dynamics. Basic strategies go out the window as you try to find new and innovative ways to build a better farm than your rivals, who now have access to new skills, equipment, and innovations to acquire food, grow crops, and raise their animals. Just like every innovation in the real world pulls the rug out from under your proverbial supply chain feet, every occupation and minor improvement has the potential to completely change the balance of power, especially when these occupations are skillfully paired in a complementing manner.

There are 139 minor improvement cards, which include:

  • Loom: Your ability to weave wool into cloth, which you can sell, gives you extra food each harvest (just like farmers who can sell wool and meat versus just sheep can make extra money).
  • Canoe: You’re a more efficient fisherman, and secure extra fish (food) every time you fish as well as reed (for building).
  • Brewery: Your ability to convert grain into beer provides you with extra food during trade as everyone wants a piece of your production.
  • Spinney: You own the woodlot, so anytime another player uses the “take 3 wood” action, they must give one to you.
  • Water Mill: Your ability to covert grain to flour allows you a trading advantage and you can get 3 food for every grain.
  • Millstone: You are more efficient at milling grain into bread and can produce three times as much bread (food) in a single action.
  • Turnwrest Plow: Your bigger and better plow allows you to plow fields three times as fast as your rivals.
  • Carp Pond: You have your own private fishing pond that no one else has access to, can fish before and after your field work, and catch fish (food) every round.
  • Milking Shed: You can milke your livestock and get additional food every harvest.
  • Sawhorse: Your better-equipped work-shed maximizes your ability to build and place fences faster and with less raw-material (and you build every 3rd fence free).
  • Broom: You can clean house faster than your peers, and when you need to, you can discard all the remaining minor improvement options in your hand (that are available to you) and select seven new minor improvement options (that become available to you).
  • Cooking Hearth: While your rivals are struggling with a small fire-place, your state-of-the-art cooking hearth allows you to easily cook grain, vegetables, and livestock and produce a plethora of food with ease.
  • Fruit Tree: Your foresight to plant apple and pear trees allows you to produce extra food each round.
  • Wooden Crane: While your rivals with their pick-axes can only quarry a single stone at a time, your crane allows you to quarry two or, if you add a day-labourer at the cost of one food, three stones at a time.
  • Bookshelf: Your foresight to invest your spare change in a library allows you to not only learn new trades quickly, but excel in them (and earn 3 food every time you embark on a new occupation).

If you have the millstone or the water mill, you will want to embark on a grain-based strategy in the early game as it will guarantee your ability to feed your family (and pay your workers) later in the game. If you have the spinney and/or the sawhorse, you might want to focus more on raising animals as you can expect free wood or the ability to build fences and stables more efficiently than your peers. The turnwrest plow puts you on a more agricultural course as you can quickly plow and sow fields. The carp pond and/or the canoe makes fishing a part of your strategy because it’s cheap and easy food. The crane puts a focus on building and renovation as you can more quickly acquire stone than your rivals. And the bookshelf puts you on an occupational track as every occupation you learn feeds a family member.

And then the strategies become even more complex and dynamic when you try to balance the occupations and the skills they provide with the minor improvements and the equipment that they make available to you. For example, if you have the Turner Occupation, who builds furniture, you can trade 1 wood for food at any time, and this goes well with the spinney improvement as it pretty much guarantees you will get a lot of wood to turn into furniture which turns into food to feed your family. The spinney also goes well with the frame builder occupation, since the free wood reduces the amount of resources he needs to build clay structures even more. The organic farmer occupation and the sawhorse minor improvement go well together, since the first requires lots of pastures and the latter allows you to build fences quicker due to the reduced material requirement. The seasonal worker occupation goes well with the planter box minor improvement which, if your field is beside your hut, allows you to plant additional grain or vegetables, which the seasonal worker can easily harvest. And so on. Just like in a real supply chain, when the right skilled resource has the right tool, her productivity multiplies.

Played properly, this game emphasizes the important relationship between the three T’s — talent, technology, and transition — because advantages come when you pair talent (occupational skills) with the right technology (tools granted to you by minor improvements) to allow you to transition your basic farming operation into a strategically designed one, where the focus of your strategy will transition over the game, from insuring you can produce enough food to feed your family (and pay your workers) in the early rounds to growing your family and plowing fields and building pastures in the mid-game to doing whatever it takes to maximize your agricultural output in the later rounds so that, by the end of the game, you’ve maximized your crop production, filled your pastures, expanded your buildings, and built the biggest, most profitable, and most cost-effective farmyard.

This game definitely requires you to put on your thinking cap and get comfortable in that thinking chair, because, just like when you sit down to analyze a potential supply chain configuration, you’re going to be in it a while as you put your supply management skills to the test.

Game On!