Category Archives: Sourcing Innovation

On the Seventh Day of X-Mas … (Strategic Sourcing Success Strategies)

On the seventh day of X-Mas

my blogger gave to me
strategies for winning,
tactics for saving,
five golden rings,
four little words,
tri-focal lens,
two boxing gloves
and a lesson in strategy.

Seven strategies you can use to increase your sourcing success are:

  • Spend Visibility
  • Supplier Performance Monitoring
  • Smart Country Sourcing
  • Collaboration with Strategic Partners
  • Innovation on Demand
  • Empowerment
  • End-to-End E-Procurement

Spend Visibility

It’s not how much you spend, how you store it, how you cube it, or how you report on it – it’s how much you get, how you profit from it, and how you improve on it. (Remember, Spend Matters Not.) It’s all about value, profit, and continual improvement. And that requires visibility — otherwise, you don’t know what you’re getting, whether you’re profiting from it, and what you need to be improving on.

Supplier Performance Monitoring

Supplier Performance Management (SPM) is a business practice that is used to measure, analyze, and manage the performance of an organization’s performance in an effort to cut costs, alleviate risks, and drive continuous improvement. The ultimate intent is to identify potential issues and their root causes so that they can be resolved to everyone’s benefit as early as possible. It’s critical because companies with formal performance measurement programs greatly improve supplier performance across the board. Consider the recent Canada Post case study which found supplier improvements across the board, even in a public sector organization where past performance can’t be used to disqualify future bids in public competitions.

Smart Country Sourcing

It’s not low cost, best cost, or near cost – it’s smart cost country sourcing, which includes home cost country sourcing whenever there is a justifiable value proposition to doing so. Don’t go half-way around the world for something you can get down the street when a single fluctuation in raw material costs, transportation costs, or exchange rates can wipe out a year’s worth of savings and lead to significant losses in the long term.

Collaboration with Strategic Partners

Remember, Collaborate, Collaborate, Collaborate, Collaborate (I, II, III, IV, and V) because two heads are better than one.

Innovation on Demand

Innovation-on-Demand, as summarized in my post on e-Sourcing Forum, is a great way to increase your sourcing success. Enable it by way of collaborative PLM technologies that integrate design-centric technologies like those offered by Akoya, Apriori, and Co-exprise.

Empowerment

And I mean real empowerment, not just lip service. If you’ve focussed on hiring real talent with real EQ, you’ll do better letting them take the initiative than limiting them to only that which you know.

End-to-End E-Procurement

End-to-End e-Procurement, the implementation of e-Procurement technologies that support each step of the various procurement cycles of your organization in a tightly integrated fashion, enables the benefits that early procurement technologies promised, but never delivered, which include:

  • elimination of invoice overpayments
  • transparent organizational costs
  • regulatory compliance
  • increased visibility into supplier performance
  • significantly reduced maverick spending

and 15 more! So, if you haven’t already, download the jointly-authored Sourcing Innovation Whitepaper today!

A Field Guide to Green Sourcing II

In our last post we noted that environmental responsibility is no longer merely a regulatory burden, but a business imperative. As noted by Earl Sun, Jayanth Iyengar, and Max Goralnick of Deloitte Consulting in their “Practical Guide to Green Sourcing”, recently published in the Supply Chain Management Review, not only can going green can save you green when your sourcing process capitalizes on sustainability opportunities, but it can make you a leader in the eyes of the self-conscious consumer who cares about sustainability.

In this post, we’re going to review the six-step green strategic sourcing process being advocated by Deloitte. It’s very similar to the traditional sourcing process, but each step has been modified to take into account relevant green criteria. The revised process is as follows:

  1. Spend Analysis & Opportunity Assessment
    In addition to a review of material and logistic costs, direct and indirect environmental costs are also considered. It’s important to understand volatility and trends of green cost drivers — such as the impact of recycling, industry demand expectations, and technology shifts. Be sure to go on “energy hunts”, because, in some types of manufacturing, energy is the most significant cost and even a small reduction will have a big impact on total production cost.
  2. Internal Supply Chain Assessment
    In addition to a mapping of current processes and an identification of process opportunities, environmentally sound products and services are identified and compared. Be sure to define specifications that call for reduced raw materials and/or energy requirements. Don’t forget to include regulatory and disposal costs in your assessment. Set goals – such as a minimum of 90% recyclability, more than 25% recycled content, or 0% waste.
  3. Supply Market Assessment
    In addition to the identification of potential sources of supply, an intense effort is made to identify and assess vendors who specialize in sustainable products and services. Don’t overlook the smaller, nimble, vendors, as they are often innovation leaders on the forefront who can offer insights into the latest technologies, methods, and processes above and beyond what your large, legacy, manufacturers may be able to provide.
  4. Sourcing Strategy Development
    Desired outcomes are defined and the corresponding process is identified. Sustainability considerations are included in the identified process, be it an auction, RFX, or optimization. Be sure to gather feedback from the entire stakeholder group before committing to a process and sending out an RFX package to insure all business requirements are satisfied.
  5. Strategy Implementation
    The analysis quantifies the cost/benefit of sustainability attributes and selects the best buy from a total value management perspective, where a value is placed on environmental friendliness and sustainability directives.
  6. Strategy Institutionalization
    Sustainability attributes and metrics are closely tracked as part of supplier relationship and performance management. Identifying the right set of metrics might be a time-consuming process the first time around, but since choosing your metrics appropriately is key to your success, take the time to get it right.

Simply put, it’s your traditional sourcing process, but green costs and benefits take center stage. As such, it shouldn’t be hard to transition to. So consider making the modifications offered up by the article. It’s the right thing to do.

A Field Guide to Green Sourcing I

Environmental responsibility is no longer merely a regulatory burden, but a business imperative. As noted by Earl Sun, Jayanth Iyengar, and Max Goralnick of Deloitte Consulting in their “Practical Guide to Green Sourcing”, recently published in the Supply Chain Management Review, going green can save you green when your sourcing process capitalizes on sustainability opportunities. Energy and commodity costs may be soaring, but there are new product opportunities out there that save energy, water, and raw materials — and companies that use a green strategic sourcing process can not only identify these opportunities, but also achieve their margin improvement goals.

In their paper, the authors present a six-step green sourcing approach that is specific, actionable, and measurable in achieving financial objectives. The approach is not only designed to reduce costs, but to enhance a company’s image — which can result in increased sales from green-conscious consumers. Costs are reduced by replacing inefficient equipment and processes that, when combined, reduce energy, water, and input requirements at each step of the production process. Sales are increased by aligning a company’s corporate sustainability policy to what consumer’s want — “green” products and sustainable business practices.

According to the authors, the key to success is to translate the six-step strategic process for green sourcing into a sequence of tactical steps that can be executed successfully by your organization. This requires a focus on the keys to green sourcing, which they define as:

  • a broad focus on sustainability across all affected stakeholders
  • a recognition that complexity may increase and that the initial payback period may be longer in the short term
  • a data-driven cost-and-benefit modeling approach is required

The result of this focus is a green sourcing process that can create sustainable wins for your organization, which will result in (drastically) reduced costs in the long term, like those achieved by companies such as Adobe, Honda, HP, Interface Inc., Toyota, and Walmart. (See previous posts on Sourcing Innovation as well as Supply Excellence and 2 Sustain for details.)

Blogger Relations Part II: Fire Your PR Company!

A few months ago, over on the Silicon Alley Insider, Jason Calacanis wrote a phenomenal post “On How To Get PR For Your Startup: Fire Your PR Company“. It’s the post I probably should have written for Part I of Blogger Relations. It’s that good.

Jason Calcanis, who has the best, and shortest PR philosophy I’ve ever read, says that you just need to be amazing. be everywhere. be real. It’s the last two words in particular that get my attention. Be Real. A PR firm with a lackey parroting a press release is not real. A media monkey with some sound-bites who cares more about your monthly cheque than your product is not real. A voice who never wavers from a script is not real. And, if you haven’t guessed already, I don’t give a r@ts-@ss about press releases (don’t ask me where you can put them — just don’t), sound-bites, or scripts. I care about products. I care about solutions. I care about results. And, above all, I care about openness, honesty, and a commitment to the customer. If you don’t have that, in all honesty, regardless of the size of your corporate bank account [and at this point I know I should be sticking both feet in my mouth or shooting them off with a shotgun], I don’t give a r@ts @ss about you either.

This blog is about innovation. If you’ve got that, and want to talk about it, you’ve got my attention. As Jason says, You don’t need a PR firm, you don’t need an in-house PR person and you don’t need to spend ANY money to get amazing PR. You don’t need to be connected, and you don’t need to be a “name brand.” You just need to be out there, open, honest, and willing to make a connection. That’s it. And if you don’t get it, Jason has 10 tips that you can use to do PR at your startup — or — small company, that I will summarize (and then elaborate on as it pertains to this blog), but I still strongly recommend you read Jason’s post. (Just reading it will improve your credibility factor!)

  1. Be the Brand
    Us bloggers are overworked underpaid masochists who survive on caffeine, adrenaline, supplements, and sheer stubbornness. If you’re not in love with your brand and inspired by your brand’s mission, and if you don’t *really* believe in your product on a deep, intrinsic level, it’s going to come across *immediately* to the bloggers you’re pitching and I’m going to use the call time as nap-time.
  2. Be everywhere.
    Talk to people outside your company regularly. CEO also stands for Chief Education Officer. You’re the face of your company, so show it!
  3. Always pick up the check — always!
    As Jason notes, PR Firms … who, in my view, do nothing for you … cost $5,000 to $15,000 a month. Buying dinner for a group of people at a conference ten times a year will cost you about one month’s worth of PR … and those bloggers will remember an inspired face and a dynamic voice, not a PR drone from the Sirius Cybernetics Corporation. And remember, even those of us that make a few dollars from sponsorships are still relatively poor — every hour we devote to learning and spreading knowledge is another hour we’re not working or looking for work. (I’m sure I could go back to a CTO role and make twice as much. And my fellow blogger could probably make considerably more as a partner in a large consulting firm.) Just remember … we want to spread the word, but we can’t go broke doing it.
  4. Be a Human Being
    Journalists hate PR people and they hate being pitched. It’s the only thing I hate more than a company who raises the drawbridge and arms the guards. Just tell me what you’re doing, why, and what you hope to achieve … and I’ll ask the questions that need to be asked.
  5. Form a Bond
    Realize that journalists and bloggers are constantly getting banged by lazy, clueless PR folks who fire first and don’t understand what the word “aim” even means. Take the opportunity to cut to the front of the line by spending just 30 minutes researching the journalist or blogger you want to pitch. Not only is it courtesy and good manners, but it helps you understand what the journalist, or blogger, looks for and how to best convey your story … often in less time than it would take to convey your PR drone’s script! (And I make it easy for you. Check out the About post and the What Does the doctor Do? post and then a sampling of random posts.)
  6. E-mail a Journalist in Your Voice
    Journalists and bloggers are very busy and PR people are, by and large, considered an inefficiency in the system by them. (And that’s putting it nicely. I’m more likely to label them a clog.) If you say “Let’s do a call about your blog and interests and I can put you in touch with the right person …” I hear “blah blah blah … I’m a moron … blah blah blah“. If you won’t talk to me, why should I talk to you? So talk to me, and when you do, say something (intelligent). (And get bonus points if you get to the point quickly.)
  7. Speak to the Journalist Intelligently
    And find out his preferred way of getting quotes if he wants them. Call recording? Good old-fashioned note-taking? Or a (follow-up) e-mail interview where you can respond to direct questions in your own voice. Make it easy for the journalist/blogger, and chances are you’ll get preferred coverage in the future.
  8. Invite People to “Swing By”
    Your office. Your trade show booth. The lobby of the hotel you’re staying at for a business meeting. Relationships help. More than any PR Firm EVER will.
  9. Attach Your Brand to a Movement
    Welcome your competitors to the race, because no one is going to tune into a one-horse race. In other words, don’t tell me you’re the only company with a solution for X when I know damn well there are at least five other companies out there that have a solution for X. It’s okay to have a unique take on X (and if you don’t, I probably won’t cover you), but acknowledge the market you’re competing in. Bloggers HATE B.S. (Well, good bloggers anyway … )
  10. Embrace Small Media Outlets
    Jason makes two very, very good points:
      a) Small publications have more time for you
    b) Big publications troll the small publications for stories
    To which I’ll add one more, that might shock you:
    c) I am personally familiar with a number of companies that have gotten more press, more leads, and more sales as a result of a single post on Sourcing Innovation than they got by sponsoring an Analyst white-paper, than they got from buying a booth at a trade-show, and than they got from taking adds out in magazines like Purchasing. (So for all you marketing types out there, imagine for a second how well my blog, Illumination, and white-paper sponsors are doing. Just imagine.)
      Niche publications like Sourcing Innovation are the future.
    The sooner you accept it, the better off you are.

In other words, if you care about your future, keep it in your hands.

Web 2.0 is Dead! Good thing B2B 3.0 Takes Business Intelligence Out of IT’s Hands and Into Yours

Loren Feldman of 1938 Media is right! Web 2.0 is Dead! Good thing there’s B2B 3.0 to pick up the slack!

Scanning through the past few months of ZDNet’s Tech archives, I came across this commentary by Sid Probstein, CTO of Attivio, one of the many companies popping up in the “semantic web” and “enterprise search” spaces that is likely a competitor to Endeca, a company you’ve probably read about on Spend Matters. While I’m not going to comment on either solution, both of which appear to me to be a merger of traditional OLAP BI engines with better rules engines (which give the user more flexibility in both the definition and application of business rules for data segmentation and reporting), I definitely agree with the premise of the commentary, that IT’s involvement in Business Intelligence (BI) will diminish in time as business users adopt new technologies to quench their thirst for information, and believe that it will happen as these users adopt more and more B2B 3.0 technologies.

I really liked how the article got straight to the point.

Today’s mainstay BI tools are extremely good at tracking raw transactional numbers like sales figures and profit margins. What they fail to adequately address are the root causes, or drivers, of trends in those numbers. Moreover, they are typically able to tell what happened — but not explain why (unless it is evident in some other numeric data), let alone alert the business as a change emerges. … Answering these types of questions with the average BI tool is challenging: at best, it takes a great deal of time to gain even one additional level of insight.

Furthermore,

The cost of these investigations is often high. Large numbers of IT staff must collaborate to extract, transform and load the data into a warehouse, update data dictionaries and then reconfigure the layers of OLAP, summarization, reporting and dashboarding. Despite these efforts and a slew of recent corporate acquisitions, many questions remain beyond the reach of such systems.

Thus,

To provide greater value, BI tools must evolve in two ways. They must enable users to answer deeper … questions about the enterprise. Then they must make it possible for general business users to easily obtain information.

Hear, hear! I couldn’t have said it better myself!

Real BI allows you to aggregate all of the relevant information that you need to make a decision into a single coherent view, just like Vinimaya (rebranded Aquiire, acquired by Coupa) does for procurement professionals who need a single integrated catalog; real BI allows you to build the spend cube you need, on the fly, with derived dimensions, on multiple data sources, in real time, just like you can with BIQ (acquired by Opera Solutions, rebranded ElectrifAI); real BI gives you access to the global trade rules and global trade systems in real time, like Integration Point (acquired by Thomson Reuters); and real BI lets you inspect, classify, and take actions on your transactions in real time based on rules you define, which the new search-based BI engines like Attivio allow you to do.

And finally, B2B 3.0 Simplifies B2B for Suppliers and this enables buyers!