Category Archives: Sourcing Innovation

If It Takes 5 Pages to Explain e-Sourcing Is Easy, You Are Doing It Wrong!

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Last week, SupplyManagement.com published a 5-page article on “E-Sourcing Made Easy”. Done right, e-Sourcing IS Easy, and if it takes 5 pages for you to make that point, you’re doing it wrong. Especially when you spend 5 pages explaining that:

  • among some people, e-Sourcing has a bad rap you’ll need to overcome
  • that you should start small and manageable and work your way up
  • that you should have buy in from key stakeholders before proceeding with an e-Sourcing event
  • that marketing spend is a prime candidate for cost reduction, but that you’ll have a turf war if you don’t approach it carefully and collaboratively
  • that temporary labour is another prime candidate for cost reduction, but that you’ll have to do a lot of preparation to understand the category before you can proceed with an event
  • that health care buying is another prime opportunity, but that you might get push back from professionals worried about quality
  • that many areas of professional services, such as legal, are also ripe

which I just explained in a paragraph, and then proceed to spend no time at all on the actual implementation steps that make it easy. So here is a simple 5-step process to make e-Sourcing easy:

  1. Identify your biggest opportunities.
    Bring in a consultancy that is an expert in spend analysis to help you identify where you have the most cost reduction potential.
  2. Identify the negotiation processes likely to give you the most savings.
    Multi-round sealed bid e-negotiation? Open Auction? Decision Optimization? e-Procurement with price enforcement?
  3. Select a best-of-breed SaaS provider that has those capabilities.
    And insure that it is supported by third party consulting firms with category experts.
  4. Bring in a cost reduction consultancy with category experts.
    Contract them to manage the projects for your top five savings opportunities and have them train you on how to use the system to implement the proper processes as the projects progress.
  5. Retain the consultancy in an advisory role on your next five to ten projects.
    That way you can be sure you learn the system, and processes, right.

That’s it. Then you’ll be ready to run your own projects and save every time.

Don’t Fall For The Innovation Myths

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An article this past winter from Industry Week that astutely pointed out that “industrial companies are not innovating enough” also pointed out that many companies believe the following innovation myths that are, of course, not true.

  • Myth 1: Innovation only applies to technology and products
    Don’t forget process, customer service, and the consumer experience! There’s lots of room for innovation there.
  • Myth 2: Innovation is a long-term project. Innovation really is about creating and capturing new kinds of value in whatever way is most relevant to a particular industry over a range of timeframes. While some innovation projects will take time, some will happen quickly.
  • Myth 3: Innovation happens by chance. While innovation sometimes happens by chance, it is, in fact, a discipline and not a random chaotic process or black box.

Now is the time for SMBs to invest in Supply Chain Technology

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I have to agree with a recent article in the Supply Chain Digest on why “SMBs should invest in Supply Chain Technology” now because it echos what I’ve been trying to say for over a year now … it could save your company a lot of cash. As Dr. Norek notes, on-demand supply chain solutions change the financial dynamics and may help improve cash flow right away. e-Sourcing helps you negotiate more savings. e-Procurement cuts your transaction costs and, integrated with e-Contract Management, helps you realize your negotiated savings by preventing maverick buying and flagging invoices not at contracted rates. e-Supply Chain Finance Solutions streamline invoice processing and help you get paid on time, especially if they support dynamic discounting. And so on.

You need to spend a little to save a lot and make a move while others stand pat and, right now, I can think of no better investment than supply chain technology which can deliver ROIs of 3:1, 5:1, 7:1, 10:1, and more (especially if you invest in the right spend analysis and decision optimization solutions). And if you can find a True SaaS solution that meets your needs, the up-front costs are minimal, and the continuing costs extremely affordable, especially compared to the continuing ROI that accompanies some of these modern supply chain technology solutions.

During these difficult times, well-planned and executed supply chain technology investments can allow SMBs to grow and save costs while many of their bigger counterparts are shrinking. So make a move … the market is yours for the taking!

The New Role of the Global Sourcing Manager

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A recent article in Global Services had an interesting article on the “roles sourcing managers play” in today’s global sourcing organizations. Whereas traditional managers were more focused on:

  • setting directions and goals,
  • communicating policies,
  • motivating the team,
  • monitoring and analyzing progress,
  • rewarding and punishing, and
  • reporting up the chain;

today’s global sourcing managers need to focus on:

  • a goal-orientation,
    that navigates the political currents and allows sourcing relationships to thrive,
  • process & domain expertise,
    that is backed up with hands-on operational experience,
  • entrepreneurialism,
    that perceives risk, understands the different functional areas, and builds cross-functional teams to help mitigate that risk,
  • global strategy,
    that takes into account cultural nuances, regulatory requirements around the globe, and the macro-economic factors that impact the supply chain,
  • integrity,
    that imparts credibility inside and outside of the organization,
  • negotiations,
    that lead to win-win relationships for long term success,
  • and the future,
    that allows the sourcing manager to adapt and respond to the dynamically changing global environment.

This is because, as outlined in the article, the responsibilities of today’s global sourcing manager transcend different functional areas beyond sourcing, procurement, logistics, and supply management, which include:

  • governance methodology
  • forecasting & resource deployment
  • contract review & change management
  • technology environment & improvement
  • reward and recognition programs
  • transition management
  • production planning
  • reporting & communication
  • disaster recovery & business continuity
  • financial performance

And to wear all of these hats, today’s sourcing managers have to be:

  • flexible,
  • contract oriented, and
  • governance aware.

Are Today’s Global Sourcing Objectives Really Disparate?

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A recent article in Industry Week asked if today’s “five disparate global sourcing objectives present a conundrum”. These days, global sourcing organizations need to:

  • be efficient and innovative,
  • master balancing insourcing, outsourcing and captive offshoring,
  • minimize risk while maximizing savings,
  • transition quickly with minimum disruption, and
  • accelerate results without a learning curve.

And some people might be tempted to argue that you can’t be efficient and innovative, that you can’t minimize risk while maximizing savings, that you can’t transition quickly without causing disruption, that there’s always a learning curve, and that you can’t insource and outsource and get results.

But one can also argue that true innovation increases efficiency, that true long term savings come from good risk mitigation, that good planning allows a quick transition with minimum disruption, that a learning curve can be minimized with a good training plan, and that you can insource and outsource by looking at functions, and not business departments.

In other words, it’s only a conundrum if you make it one.