Category Archives: Services

Head2Head for the Supply Chain Nail

During my last Toronto trip, I had the chance to sit down with Wayne Burgess, Head2Head’s Supply Chain practice lead and discuss Head2Head’s rather unique supply chain recruitment solution. Head2Head was founded in 2000 by two guys in a basement who thought an innovative approach was required in recruitment. Today, they have roughly 30 employees and are still growing.

Starting in Human Resources, they soon found out that their clients tended to have specialized needs in two disciplines, Procurement and Information Technology. To that end, they sought out practice leads and starting building specialized capabilities in supply chain and IT, but I’m going to focus on supply chain – since, in all honesty, specialist IT recruiting shops are still a dime a dozen, whereas specialty supply chain recruitment firms are still quite rare, especially north of the border.

The Head2Head approach is to augment the client’s human resources and / or recruiting team with one of their own experts on the client site on an as-needed basis. Furthermore, whereas most recruiting firms force you to completely outsource the recruiting process, and keep all the resumes and data gathered once a candidate has been placed, a Head2Head recruiter works as an extension of your team, on your own site, and you get to keep all the data gathered when the Head2Head recruiter leaves. Furthermore, whereas most firms work on a contingency fee, which usually falls in the 20% to 30% range, and higher for key positions, they work on a flat fee basis, based on the amount of time you want one of their recruiters to augment your team. This can represent a large cost savings if you need to hire multiple supply chain professionals to help you with your supply chain transformation, which can all be sought at the same time. Instead of paying 100K to 150K in contingency fees for five hires for two to three months of work, you can instead pay 30K to 50K, for a 3X to 5X cost savings. Furthermore, if you need multiple positions filled across your organization at various stages, you can bring in multiple recruiters and scale the team size up and down as needed.

One of the things they’ve found is that many companies have a hard time identifying what makes a good sourcing professional, as they often have trouble understanding what supply chain is. As a result, they work hard on explaining to HR and internal recruiters what supply chain is, what makes a good supply chain professional, and how you go about landing one. To this end, they maintain and produce newsletters and other materials for their clients on a regular, monthly, basis.

They also provide traditional, tactically focussed, Vendor Managed Services where they will manage your entire contingent labor force, and typically save their clients 10-15% when they do so. They also support a “marketplace”-based vendor management approach to help their clients get the best value for their money. Finally, they also provide market intelligence and data mining solutions. However, it is their specialist supply chain recruiting division that, in my view, sets them apart.

Archstone Actualizes

Continuing in my effort to overview the smaller specialty service firms in the sourcing and procurement space in addition to the product companies with some of the more innovative offerings, even though I wasn’t able to connect with Archstone in their San Francisco office last month, I made a point to track Bob Derocher, partner and head of their operations and procurement practice, at my earliest opportunity.

Archstone Consulting (acquired by The Hackett Group) was founded in June 2003 by senior, experienced, consultants from the likes of A.T. Kearney, BearingPoint, Booz Allen, Cap Gemini, Deloitte and PWC who wanted to form a different kind of consulting company that focussed on high value independent advisory services from a technology-agnostic and partner-agnostic viewpoint. In less than four years, they’ve grown to 235 consultants, 7 global offices, and have served over 25 of the Fortune 100 and 65 of the Fortune 500.

Like Denali, whom I overviewed a couple of weeks ago, they primarily hire experienced sourcing professionals with deep expertise in the service areas they practice in, and deep process and category expertise in strategic procurement practices. This is to ensure that they can maintain a flat organizational structure where all of their professionals, including their most experienced principals and partners, are able to work with clients on a day-to-day basis and consistently deliver value.

What I like about Archstone is that they take a client-centric viewpoint on each project and understand that good category sourcing is a combination of strategic sourcing, cost management and control, and supplier relationship management. They don’t have a set solution for their service, like a good consulting firm they work with the client to figure out what the client really needs, and they know that one approach doesn’t fit all when it comes to getting the maximum value on a category. They’re also comfortable on a wide range of projects, anything from helping you with your one-off category project to helping you build a global strategic sourcing function from scratch. I also like the fact that, like many of the good specialty firms popping up these days, they focus on making their clients self-sufficient and continually work on knowledge transfer and change management so that when the sourcing project ends, the client will continue to succeed. And they are comfortable on small to mid-size projects that only require 3-5 consultants and 3-5 months.

For those of you looking for a specialist consultancy in sourcing and procurement, the industry segments in which they have expertise are the automotive, industrial, and high-tech manufacturing sectors; the apparel, CPG, and food and beverage industries; life sciences, pharmaceuticals, and biotech; and financial, consumer and entertainment services. They also have deep category expertise in dozens of categories, which include IT Hardware, Software, and Services, Marketing and Advertising, Overhead and Support, Retail Specific Items, Capital Expenditures, Facilities, Outside Services, and Direct Materials, and on hundreds of commodities within those categories. Furthermore, they’ve sourced over $15B to date with an average savings of 13% ( as they’ve saved over 2B ).

Denali Delivers

Recently I had the opportunity to sit down and talk with one of the partners and co-founders of Denali (acquired by WNS Procurement) in their new headquarters, one of the few boutique consultancies specializing in supply chain with over ten years of experience in strategic sourcing. I was impressed with what I heard. Although the Denali V4 (Volume-Velocity-Value-Vehicle) “triangle” may not go very far in conveying the value they offer, the customized category framework approach they take to sourcing assignments is one of the best approaches I’ve analyzed from a consulting firm.

Even though they have a very good sourcing cycle (essentially your five-step process), they recognized that successful strategic sourcing is about more than just e-Sourcing – sometimes its about supplier development. If you conducted a well-run strategic sourcing event in the last few years, if market prices have remained relatively stable, and if your suppliers are still delivering quality merchandise, then you might already have the right supply base. In this situation, the best way to increase savings is to develop your suppliers and split the savings. After all, there are costs associated with a sourcing event, both for you and your supplier, and any new supplier is going to factor in their amortized costs of always responding to e-Sourcing events in their price.

In addition to their five-step sourcing processes, they also have a six-step process for supplier development. Furthermore, they embed change management into all of their processes to make sure the results they achieve are implentable, manageable, and sustainable – which is key since negotiated changes don’t hit the bottom line until they become realized savings.

Furthermore, they understand that in order to be successful as a boutique, you need to be able to be profitable off of small engagements, especially with smaller companies. To this end, they only hire experienced, senior sourcing professionals and operate virtually to the greatest extent possible, with sourcing professionals scattered all over the U.S. This allows them to effectively tackle projects with teams as small as two-to-three consultants and service these projects successfully with a relatively local contact point. Furthermore, with a highly experienced staff in e-Sourcing, they can tackle very large projects with under ten professionals, whereas a Big-5 consultancy, bursting with newly minted MBAs, might need thirty professionals to do the same work. And since their virtual model means they don’t spend a lot of money on over-priced office space, their rates are still very competitive.

Furthermore, they’ve progressed beyond just a simple supply chain consultancy to a full-ranged operation that now offers their clients marketing intelligence, training, and staffing services – which means that they can leave your organization in an effective position to follow through and deliver the savings they negotiate after their engagement is over.

Just this year Denali launched their subscription-based service offering, Denali Intelligence, which consists of three levels of Total Sourcing Intelligence market research services specific to sourcing and sourcing professionals. Their category-specific marketing research consists of category market reports, updated semi-annually, monthly market updates for key market indices, and weekly updates that highlight relevant news and events – covering over 150 spend categories across nine different portfolios. They also offer supplier profiles and specialized market research services. All of this is available through their intelligence portal that users of subscribing organizations can log in to whenever they like.

Typical contents of a market report included commodity definition, supply category description & context, category overview & background, demand update, supply base characteristics, key cost drivers, price changes, trends, forecasts, insights, and best practices. More-or-less everything you need to do to augment your sourcing processing with the information you need to develop the right strategy, target the right suppliers, and negotiate the right contract. Some also contain information on industry regulation, risk outlook, and market news, where appropriate. The report I reviewed, on distribution transformers, also analyzed the supply category in the context of Porter’s Five Forces Analysis and included interest rate forecasts.

This Market Intelligence offering is in addition to their SupplyStaff staffing and recruiting services that they use to help their clients hire full time employees and short-term and mid-term contractors as well as augment their staff on a temporary basis for specific projects. Unlike other staffing services, like their consultancy, they only focus on supply chain staffing and this is a big plus for firms who need more than just someone who’s been processing purchase orders for the last twenty years.

All-in-all, they’ve got a great sourcing process and you should definitely consider inviting them to the table next time you are looking to take your sourcing to the next level. They’re just aren’t that many boutiques out there that compete on their level. If you’re in manufacturing, you’ve also got providers like Aptium Global and ThreeCore, if you’re in a services industry, you’ve got the Provade (acquired by Smart ERP Solutions) solution, but if you need help across the board, you just don’t have many choices. I hope to highlight more as the year goes on, but when you consider the relatively small number of experienced senior sourcing professionals and the very large need for these people (whether your company recognizes this need or not), you know there aren’t that many.

the doctor’s Guest Posts: The Year in Review

Over the past year, I’ve blogged a number of guest posts over on eSourcing Forum, including forty posts last summer as part of the weekend series. For new(er) readers to the blog, here is a list of all guest posts over on eSourcing Forum with direct links.

Weekend Series Posts on e-Sourcing Forum [WayBackMachine]

Purchasing Innovation I: An Introduction
Purchasing Innovation II: TRIZ
Purchasing Innovation III: The Verifier Approach
Purchasing Innovation IV: Innovation Continued
Purchasing Innovation V: Sourcing the New Organization
Purchasing Innovation VI: CrowdSourcing
Purchasing Innovation VII: The Road Ahead
Purchasing Innovation VIII: Transforming New Product Development
Purchasing Innovation IX: The Purchasing Evolution!

On Demand I: The Good
On Demand II: The Not-So-Bad
On Demand III: And the Coming Pretty …

Cost Reduction and Avoidance I: An Introduction
Cost Reduction and Avoidance II: Metrics
Cost Reduction and Avoidance III: Incentivize for Success!

Supply Risk Management I: An Introduction
Supply Risk Management II: Risks and the Need for Resilience
Supply Risk Management III: Managing Risk

Supplier Performance Management I: An Introduction
Supplier Performance Management II: The Road to Success
Supplier Performance Management III: Best Practices

Demand Driven Supply I: An Introduction
Demand Driven Supply II: Stages and Implications
Demand Driven Supply III: Challenges and Implementation

Center Led Procurement I: An Introduction
Center Led Procurement II: A Center of Excellence
Center Led Procurement III: Best Practices

Procurement Outsourcing I: Is it right for you?
Procurement Outsourcing II: Selecting a PSP
Procurement Outsourcing III: Getting the most out of your PSP

Optimization I: A Powerful Tool
Optimization II: Why it was Relegated to the Shadows
Optimization III: Why it’s time is finally here
Optimization IV: POE or BoB?

Six Sigma I: An Introduction
Six Sigma II: Innovative Quality
Six Sigma III: Value Based Strategic Sourcing

Weekend Series Wrap Up I: Process and Technology
Weekend Series Wrap Up II: Supply Chain Management
Weekend Series Wrap Up III: The Innovation Revolution

Miscellaneous Posts on e-Sourcing Forum [WayBackMachine]

* Lead Time Optimization: Groundbreaking New Technology or just Applied Total Value Management-based Decision Optimization in Disguise?
* Sustained Sourcing Success
* Are there any limits to procurement’s role?
* Outsourcing Gets Tough
* Design for Supply
* The Benefits of an End-to-End e-Sourcing Suite
* Accelerating Value with On-Demand: An Aberdeen Perspective
* Supplier Enablement Enables Savings

And just in case you missed it, here’s a link to the chaos-causing post on Emptoris’ optimization over on Spend Matters:
The Doc’s Perspective on Emptoris’ Optimization*

* All posts prior to 2012 were removed in the Spend Matters site refresh in June, 2023.

Getting Fit With T.G.I. Friday’s

Whereas most restaurants believe, like the American School System, that when it comes to calories, the more the merrier, T.G.I. Friday’s, as noted in a recent Knowledge @ Wharton article, realizes that when it comes to healthy eating it is the right portion of the right food at the right price, not calories, that counts. As a result, they have introduced the “right portion, right price” menu where they have added six new smaller entrees to their line up that offer approximately one-third less food at one-third less cost.

Even though such a move has failed for other restaurants in the past, giving the nation’s well-recognized obesity problem, as partially documented in Super Size Me and Fast Food Nation, and the fact that Friday’s is reducing prices as well as portions, there’s a decent chance that such an initiative could work out well for Friday’s, especially since they are still offering regular sized offerings at the same price.

Besides, when you note that eating is both a taste sensation and a visual experience, there is a good chance that you can always counter the American belief that “more is better” with an appropriate presentation, as some of the finer restaurants do in bigger cities. After all, recent studies (referenced in the article) have dictated that the environment (or the amount of food served) plays a large role in how much we choose to eat, so serving the right amount with the right presentation might actually work. Regardless, it’s interesting.