Category Archives: rants

Praise for Purchasing’s Paltry Precise of Payment Partitioning? Puh-leaze!

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I was going to just pretend that Purchasing never published its “guide to spend analysis”, but then a fellow blogger decided to praise it and now I just can’t keep my pen down (or, in my case, MacBook Pro off).

Now, don’t get me wrong. While I don’t read it very much, I do like Purchasing Magazine. They’ve been doing a fine job lately of covering the basics, and if you don’t know the basics, there’s no way you can tackle the more advanced and in-depth topics covered in the Supply Chain Management Review (which is personally my favorite traditional supply chain publication and home of one of my favorite supply chain bloggers, Robert Rudzki).

But this “guide”, which amounts to not much more than a screen scraping of 16 different vendor web-sites is pathetic. It doesn’t do an in depth review of any product. It doesn’t offer any meaningful apples-to-apples comparisons. It isn’t even “comprehensive”!

It only lists 16 vendors. Namely:

 

Ariba
Basware
Bravo Solution
CVM Solutions		 Emptoris
Enporion
Field Glass
Global eProcure		 Iasta
IQ Navigator
Insight Sourcing Group
Ketera		 Oracle
PNet Software
U.S. Bank (Access Online)
Zycus

 

What about?

 

AECsoft
BIQ
CODA		 IQ West
Moai Technologies
Ocean Software		 Oco
Perfect Commerce
Power Advocate		 SciQuest
Spend Radar
Synertrade

 

And that’s just off the top of my head!

And what about advice on how to evaluate, compare, and make a decision? And what about some background? Like the fact that the Emptoris product is still largely based on the defunct Zeborg offering? That the Ariba solution is still not a unified best-of-both worlds solutions (as they are still working on their “9S5” suite that takes the best of the Procuri offering, which was based on TrueSource). That Ketera is based on MicroStrategy. Or that four (4) of the above solutions are based on BIQ. And so on.

Basically, I think it would have been more useful if they’d just posted a complete list of vendors. Because you can’t trust what you rip off the website. Many of the solutions are good solutions … but the marketing spin they cut-and-pasted won’t tell you which solution is right for you!

One More Step To Go and Maybe CFOs Will Finally Get It Right

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A recent article in the Supply Chain Management Review notes that, for CFOs, these days, “Survival Trumps Profits”. This is a step in the right direction as it’s not all about the almighty dollar, and, more specifically, how many of those almighty dollars you can bring in this quarter, it’s about doing good, doing right, and being around for the long term. After all given the choice between 1,000,000 in profit this year, and potentially going out of business tomorrow, or 500,000 this year and at least 500,000 a year for the next ten years, I’ll take the 500,000 a year because no investment vehicle is going to quintuple my investment in 10 years.

The article, which summarized a recent study commissioned by Basware and produced in cooperation with Indiana University’s Kelley School of Business and the University of Navarra’s IESE Business School, noted that most corporations these days are doing one of the following:

  • relentless restructuring
    slashing expenses, massive layoffs, and other drastic measures
  • cash flow
    cracking down on late payers, reducing customer payment terms, and extending supplier payment terms
  • the “holistic” approach
    integrating with procurement, eliminating siloes, and making operations transparent

But only one of these is the right approach. Can you guess which one puts you on the right track to building a long-term success story and, in comparison, which two put you on the fast track to failure?

If You Really Want To Fix Executive Pay, Decide Who NOT To Pay

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A recent blog post over on the Harvard Business Review site on the issue of executive pay, which stated that “whom to pay is more important than how much or how”, made a good point — that the fundamental issue is to ensure that CEOs and other leaders make the greatest potential contribution towards building lasting greatness. In the author’s viewpoint, that means you need to be paying the right people.

Furthermore, while a star blue collar worker on a traditional assembly line would be 40% more productive than a typical worker, that performance advantage can be 240% for a star insurance salesman, and more than 1,000% for star workers in more complex jobs such as a computer programmer or an account manager of a professional service firm. This indicates that CEO performance, given the complexity of the job, can have a huge spread.

So it’s definitely important to be paying the right people. But, in my experience, it’s even more important NOT to be paying the wrong people. You can have a star CEO and still have her fail if she’s surrounded by useless blow-hard suck-up yes-men who can do nothing but produce hot air eight to twelve hours a day. Nothing ensures a bad quarter, and ultimate failure, faster than an over-paid, under-performing nincompoop who constantly interjects nonsense, demoralizes the team, blames everyone else for his failure, over-promises and under-delivers to your most important customers, stumbles into meetings late, leaves early, and constantly acts as if the entire company would fall apart without him when, in fact, it would reach entirely new heights. So if you really want success, the first thing you need to do is weed out and fire these bad apples because, then, it will only take one or two star performers to turn a slightly above average team into a superstar organization. Then it won’t matter how much you pay since your superstar team will always be delivering value relative to how much you incentivize them.

Musicians Beware: United (Airlines) Breaks Guitars

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Dave Carroll, of the Sons of Maxwell, decided to recount his unfortunate story about his trials and tribulations on a United Airlines trip last year the way a musician does best: in song. Even if you think the style of music isn’t your style, the video (and song) is definitely worth checking out all the way. Trust me. (And give a local boy some support.)

United Breaks Guitars

Was China Ever Worth It?

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A recent article in the Supply Chain Management Review covered a recent AMR survey across 133 manufacturers and retailers with over 5 Billion in revenue each and asked them about their sourcing plans from China. The survey found that manufacturers, who believe China contributes the most risk in 12 of 15 categories, are now 2-3 times more likely to decrease sourcing in China.

Nothing against China, but it’s about time. I’ve been against needless global sourcing since day one. Most of the time it just adds time, cost, risk, and, because of the dismal state of pollution control in the ocean shipping industry (which accounts for 4% of all emissions that contribute to climate change globally), pollution. And it wastes limited petroleum reserves. (The stuff takes millions of years to form under the earth’s surface, thus, at any point in time, the total amount available, even if we don’t know how much there is, is limited.) We can get the same quality of VCR or DVD player from Mexico, quicker, with reduced costs in a number of categories, with less risk, and less pollution.

Now, I’m not against global sourcing … some raw materials just aren’t available in sufficient quantities on all continents, each continent has a different growing season (and greenhouses aren’t as cheap or green as you think they are), and sometimes there are only a few places that can produce a new product. In these cases, you should definitely be global sourcing. But you shouldn’t be global sourcing just because it’s the lowest cost today … you should be global sourcing because it’s the best option, and value, over the long term.