Category Archives: Sourcing Innovation

Sourcing Innovation Welcomes Vinimaya as New Lead Sponsor

Sourcing Innovation is pleased to welcome Vinimaya, an innovative provider of e-procurement catalog and marketplace solutions, as its newest lead sponsor. Vinimaya, which represents The Next Wave in Product Catalogue Management (PCM), has been adding new functions, new offerings, and new clients since I first blogged about them back in 2007 (shortly after they were named a Cool Vendor by Gartner).

Unlike other providers, who only support catalogs, marketplaces, punch-out, or punch-out 2.0 (where the vendor maintains a cached copy of the supplier catalogs to simulate simultaneous searching and comparison of supplier products), Vinimaya’s Virtual Internet Supplier Network solution (VISN, as in “vision”), supports simultaneous, or federated search directly from whatever catalog format your suppliers have in place — be it punch-out, on-line catalog, storefront, marketplace, database, or flat-file. Whereas most solutions force your supplier to adapt to the vendor’s format, Vinimaya’s agent-based architecture adapts to your suppliers, which is why it’s a low-cost solution for you and for them.

The proof that Vinimaya’s offering, which revolves around their SmartSearch Catalog software product, actually works is in the adoption level. Vinimaya’s client base, which includes mostly well-known, brand name, global companies from almost every vertical market, have executed over $1 Billion in online orders over the past 12 months alone. Delivered SaaS with the ability to “plug and play” with just about any e-Procurement system (e.g. SAP, Ariba, Oracle, Peoplesoft, etc.), once installed, the system not only allows you to find the product you need simply and efficiently, but also verifies that you’re paying at the contracted rates. Vinimaya’s clients sit back and watch their negotiated savings materialize with every purchase.

SmartSearch Catalog also comes with a number of unique features that enhance your efficiency and savings. The unique features include true side-by-side comparison shopping across suppliers, price audit (which will alert you whenever a price has changed or diverged from the contract price), supplier self-service catalog management (which allows your suppliers without any online capabilities to either maintain a catalog for you or create a punch-out site), and inventory checking (which checks that the item is in inventory before sending the order to the supplier). It even offers some capabilities specific to certain procurement systems (e.g. SAP Item Master Check). In the coming weeks, I plan to review the new version of the SmartSearch Catalog (a.k.a. the B2B Search Engine), as well as some of their new offerings, and if I can track down the Sourcing Maniacs, see if they have any insights from their last site visit.

Vinimaya’s bent toward innovation is no surprise when you look at the management team. CEO Gary Hare, who recently penned a piece on B2B e-Commerce right here on this blog, Orville Bailey and Richard Waugh have been thought leaders in the e-procurement space since its inception.

So please join me in welcoming Vinimaya. It’s innovative companies like them that keep this blog going.

Service Leaders Speak: Kris Colby of Ariba on “Time for Sourcing 3.0”

Today’s post is from Kris Colby of Ariba.

In keeping with the Back to School season, best-in-class Sourcingprofessionals are quickly realizing that they need to move into”advanced placement” classes if they’re going to stay ahead of thecompetition. Doing so requires embracing a new definition ofworld-class sourcing capabilities and adopting the tools and processesnecessary to deliver them.

Over the past 20 years, the Sourcing discipline has seen two periods ofdramatic evolution. First was the widespread application of StrategicSourcing practices starting in the late 80s which instituted a rigorousand prescriptive approach to what had frequently been a less scientific,ad-hoc and back-office activity. Second was the introduction of new technologies such as e-Sourcing, starting around 2000, that enabled increased competition, transparency and efficiency. While each of these developments brought substantial improvements in both efficiency and effectiveness to the world of sourcing, they were limited in their ability to access external resources, content and expertise. This in turn limited the knowledge and capability of an organization to what was housed inside the four walls, plus what was picked up at the sporadic trade conference.

The next wave in Sourcing (conveniently labeled Sourcing 3.0) buildsupon the process developments of Strategic Sourcing (Sourcing 1.0) andthe technology enablements of e-Sourcing (Sourcing 2.0) by adding twocomponents always in short supply but critical to maximizing results:Agility and Information.

Agility: With the over-used “do more with less” mantra only acceleratedby the recent economic downturn, it’s increasingly difficult to supportkeeping in-house a host of different resources that, while valuable, mayonly be needed sporadically. Instead, organizations need to be able tohave “on-demand” access to additional resources (human, knowledge andtechnological) to deal with new categories, event-driven projects,spikes in workload, and internal knowledge gaps. By maintainingcost-effective access to the incremental help your organization needs,you can have the tools you want at the price you need.

Information: The dramatic swings in most commodity markets over thelast twelve-plus months are only the most visible reminder that all thetechnology and process in the world is no match for understanding wherea market is going. Rather than quarterly market reports that areout-dated before their ink is dry, Sourcing Professionals need to tapinto the many online resources available to track markets, get strategyadvice, find new suppliers, and generally stay on top of things. Thesecan range from standard commodity market trackers (e.g Chemdata) toonline professional communities (Linked-In) and broader networks fordiscovery (e.g Ariba Supplier Network). This information enablesdifferent strategic approaches to categories, stakeholders and supplybases.

Combining this on-demand access to both information and agile resourceswith their existing capabilities in both technology and process,best-in-class sourcing organizations can create the opportunity to driveadditional value on every project and maintain their lead over the competition.

Thanks, Kris!

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Duh! Supply Chain Headlines of the Week

Earlier this week I stumbled upon three headlines in particular that conveyed messages that were completely obvious to me and, hopefully, completely obvious to anyone in the supply management space. They were so obvious that the only way you wouldn’t already be aware of these no-brainers is if you didn’t have a brain! Since I literally found all three in a short time-span of about five minutes, I felt the need to share the cluster to find out if anyone else has had one of these anti-climactic realizations that sometimes the art of short headlines leaves much to be desired.

These are the headlines (which were attached to articles which were better than the headlines, by the way) that made me go Duh!

  • Bad Metrics Can Doom Your CRM Project (CIO)
    Bad Metrics can doom ANY project — sourcing, procurement, ERP — not just CRM!It does have a good point on how weekly indicators that sound meaningful usually aren’t — over measuring can be even worse than under-measuring.
  • Supply chain innovation is important (Purchasing)That’s why this blog is here!
    You have to get leaner and meaner and there are limits to how much you can reduce cost through negotiation, spend analysis and decision optimization if you can’t find fundamentally new ways to take cost out of the supply chain.
  • Investment in Procurement Technology Continues (SC Digest)
    Given that properly applied procurement technology always increases efficiency, decreases (transactional) cost, and makes it easier to stop maverick spending in it’s tracks (which can often eat up 30% of savings, as Bernard Gunther pointed out earlier this week in his post), investment in this technology is going to continue to increase until the market is saturated — especially now that there are a number of low-cost options on the market.

Anyone want to share their favourite Duh! headlines of the week? Maybe we can start our own weekly mini-FARK dedicated to sourcing and procurement! It might even coerce the satirical sourcerer out of his slumber! (It’s been a long time since our last weekly Supply Chain Humor post!)

Change By Design, A Book Review

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Although he was the engineer’s engineer, Brunel [who designed the Great Western Railway] was not solely interested in the technology behind his creations. While considering the design of the system, he insisted upon the flattest possible gradient because he wanted passengers to have the sense of “floating across the countryside”. He constructed bridges, viaducts, cuttings, and tunnels all in the cause of creating not just efficient transportation but the best possible experience … Brunnel was one of the earliest examples of a design thinker.

A purely technocentric view of innovation is less sustainable now than ever, and a management philosophy based only on selecting from existing strategies is likely to be overwhelmed by new developments at home or abroad. What we need are new choices — new products that balance the needs of individuals and of society as a whole; new ideas that tackle the global challenges of health, poverty, and education; new strategies that result in differences that matter and a sense of purpose that engages everyone affected by them.

Only gradually did I come to see the power of design not as a link in a chain but as the hub of a wheel. … I also noticed that the people who inspired me were not necessarily members of the design profession; engineers such as Isambard Kingdom Brunel, Thomas Edison, and Ferdinand Porsche, all of whom seemed to have a human-centered rather than technology-centered worldview.

The natural revolution from design doing to design thinking reflects the growing recognition on the part of today’s business leaders that design has become too important to be left to designers.

So begins Tim Brown’s new book Change By Design (available September 29) that tackles the myth of innovation that brilliant ideas leap fully formed from the mids of geniuses while exposing the reality that most innovations stem from rigor and discipline … the kind that comes from the application of proper design thinking. Design thinking, a process for practical, creative resolution of problems or issues, attempts to match necessity to utility, constraint to possibility, and need to demand to meet end-user need and drive business success. The ultimate challenge for a design thinker is to help people articulate the latent needs they don’t even know they have. Fortunately, the search for insight — in contrast to the search for hard data — is that it’s everywhere and it’s free. You just have to open your eyes and look at what people are doing.

For example, when IDEO was hired by Zyliss to design a new line of kitchen tools for the home, they started out by studying children and professional chefs. While neither was the intended market, both yielded valuable insights. A seven-year-old struggling with a can opener highlighted issues of physical control adults have learned to disguise and the shortcuts used by a professional chef yielded insights into cleaning requirements. The exaggerated concerns of people at the margins of the market led the team to abandon the idea of a “matched set” and create a line of products with the right handle for each tool. The end result was a product line that flew off of the shelves. [Proving one of my favourite points: just because you’ve been doing it that way for years, it doesn’t mean you’ve been doing it right!]

The Zyliss success story happened because the willing, and even enthusiastic, acceptance of competing constraints by the design team is the foundation of design thinking. The first stage of the design process is often about discovering which constraints are important and establishing a framework for evaluating them. Constraints can best be visualized in terms of three overlapping criteria for successful ideas: feasibility, viability, and desirability. A competent designer will resolve each of these three constraints, but a design thinker will bring them into harmonious balance. The popular Nintendo Wii is a good example of what happens when someone gets it right.

For those trying to wrap their minds around design thinking, the basic innovation rules that Tim outlines in chapter 3, A Mental Matrix, are a great place to start because they’ll put you in the mindset required to grasp the key tenets of design thinking.

  1. The best ideas emerge when the whole organizational ecosystem has room to experiment.
    And room to fail! The greatest successes will often emerge after you get the false starts and failures out of the way (and make an effort to understand why you failed).
  2. Those most exposed to changing externalities are the ones best placed to respond
    and the most motivated to do so.
    Furthermore, if you have someone who thrives in that sort of an environment, make sure she’s on the team!
  3. Ideas should not be favoured based on those who create them.
    The most successful individuals are often those who latch on to, and promote, good ideas.
  4. Ideas that create a buzz should be favoured.
    Nothing’s better than viral marketing!
  5. The “gardening” skills of senior leadership should be used to tend, prune, and harvest ideas.
    Not to create them.
  6. An overarching purpose should be articulated.
    You’re looking for new ideas to solve a problem that people want solved.

And you want to grasp design thinking, because it works. Probably the best example is that of “Cool Biz“, the imaginative program from the award-winning Japanese advertising agency Hakuhodo designed to help the Ministry of the Environment in Japan get people moor involved in meeting Japan’s commitment to the greenhouse gas reduction goals of the Kyoto Protocol. Within a year of the launch of this program, the slogan “Cool Biz” was recognized by a staggering 95.8% of the Japanese market. Can you imagine the boost to your corporate brand if 95.8% of your potential market recognized your corporate offerings?

For more information on design thinking, which is becoming more necessary by the day in a world where constant change is inevitable and everything is a prototype, see the Design Thinking blog, IDEO’s website, the The Harvard Business Review article on Design Thinking, the Innovation 100 Interview with Tim Brown on YouTube, the Design Thinking video (extended version) on YouTube, and the Global X Interview with Tim Brown on YouTube.

And if you’re still not convinced you should buy the book, consider the following quote which literally made my day:

Business school professors are fond of writing learned articles about the value of brainstorming. I encourage them to continue to do so (after all, some of my best friends are business school professors, and it keeps them busy and out of my way).

e-Leaders Speak: Chris Newton of Ketera on “e-Sourcing: Access for all”

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Today’s guest post is from Chris Newton of Ketera.

At Ketera, we think of sourcing as the activity of getting suppliers together, letting them know what you need, and then having them provide you with the best possible solution (product or service or a combination of both) at a price that is competitive in the market. Everybody does this, right?

Sometimes, yes. But sourcing as an organized activity, built around applications and formal processes, has been typically limited to relatively few large companies. There are many other organizations out there (mid-market and large) that have yet to benefit from such solutions. In conversations with customers and prospects, we hear time and again of the same two blocking concerns. This first often boils down to inertia and fear of the unknown, while the second usually comes back to the cost to get started. Most companies find it easy to continue with their manual (primarily email centric) process of collating supplier responses and bids before arriving at supplier contracts, and many have been scared off by historically prohibitive costs to acquire new technology systems. We believe that more and more companies will start using sourcing solutions to manage their purchases more efficiently as sourcing solutions become broadly accessible – in terms of both initial investment and ease of use.

Why do we believe this will happen? We look at Google AdWords – when it started out, very few people knew how to use it. So, few companies invested in it, and even fewer did well. It seemed too technical and too complex to understand the demand for search words, then apply pricing and figure out what was working and what was not. And it looked expensive as an entirely new marketing budget line item with questionable benefits. When the results achieved by best practice early adopters became widely known, however, and new sources of information on search words, pricing, geographical information became broadly available, the use of Google AdWords exploded. Today, it’s becoming hard to find a company that doesn’t participate. By making such relevant information available, Google has taken the mystique out of the technology and made it friendlier and less scary for marketing folks to try these technologies.

We believe sourcing will follow a similar path of adoption once sourcing applications are viewed as having less to do with technology and more to do with helping a sourcing manager do their job efficiently and effectively. We think this will be driven by solutions which are available like any other instant online purchase – immediately, easy to use without any fear of complex technology or requiring intensive training. They will be fully integrated with a complete suite of spend management applications and based on a strong member community of buyers and suppliers. They will be truly affordable to companies of any size. And they will allow a continuum of behaviour, ranging from simple “strategic shopping” actions, through structured “RFx” interactions, to advanced “Auctions” and optimizations.

So why do so many folks think sourcing is complex and solutions are expensive? Because the enterprise software industry has trained them to think that. To successfully sign big contracts for software licenses and consulting services with large enterprises, it’s critical to provide examples and demonstrations that make sourcing appear very complex to justify the expense. Some companies have done this so well, that it’s easy to overlook the fact that only a small percentage of actual sourcing activities occur in such situations. Greater benefits are available to those that apply sourcing solutions and best practice processes more often, rather than in only the most sophisticated scenarios. This requires pushing these capabilities further out into the organization, which in turn drives the need for affordability and ease of use.

Real usability means no training required. Should you need training to do things online that you already do manually? Did you get trained on Amazon before you bought a book? Once unnecessary layers of complexity have been removed (and useful complexities have been set aside for power users), the objective of widespread usage becomes realistic. Step-by-step “wizards” that walk new or infrequent users through familiar processes can be just as effective an on-the-job trainer. (An example sourcing wizard.) New buttons in procurement applications that generate sourcing events in a single click mean that buyers no longer feel they must be locked into published prices or offerings. Use of familiar terminology and abundant online tips makes the browser interface comfortable. So comfortable, in fact, that we believe that many new companies trying out these solutions to run a few test events will find them so easy to use that organizational adoption goes viral. Usage mandates aren’t required when technology really make someone’s job easier and makes them look good at the same time. (With this adoption path, vendors will be well served to offer free trials of their solutions – a welcome alternative to countless sales presentations and follow-up phone calls for folks on both sides of the transaction.)

The previously cited hurdle around inertia and fear of the unknown also crops up beyond new software user interfaces in the realm of supplier management. Old supplier relationships are easy to rely on, but companies are often best served by extending sourcing events to enable a wider range of responses. Not just to extract a lower price, but also to collect more information about the products and services that you are buying. Researching new suppliers to participate need not be a challenge. We believe in creating a ready community of buyers and suppliers that build operational history, ratings, certifications and relationships over time. This large and growing (daily) network of actively transacting suppliers who work with many other buyers then quickly becomes a valuable resource. The community then becomes the foundation for ongoing business transactions and the integrated technology that supports them within established best practice processes.

We are now seeing many of our beliefs begin to prove out in the market as this example shows: A multi-channel home shopping leader conducted a free Google search for sourcing solutions, found the Ketera site, evaluated and then signed up (themselves … self serve … using a credit card) for our on demand sourcing application. They were able to search our network of 140,000 suppliers and within a few weeks had conducted a reverse auction event for freight services that will save them over one million dollars in the next year or two. All for $500 in annual subscription fees. We think this is just the beginning of the direction this market is headed.

Thanks, Chris.