Category Archives: Sourcing Innovation

The Future is Coming!

As my loyal readers will know, I started the “Future of Sourcing” craze right here on this blog last August. By bringing all of the bloggers together and focussing them on one topic, I’ve managed to organize over two dozen of the leading minds in the sourcing space on one very important issue – your future. And when that many thought leaders speak out, it’s bound to be noticed. (As the bandwidth stats for this blog will confirm!) And then when it happens again, as it did again this fall, people start thinking. And once you start thinking, if you’re like me, you can’t stop.

And if you’re inspired, you’ll want to publish something about it – just as the Supply Chain Management Review did – twice! That’s right – they were so inspired, that not only did they publish Robert Monczka and William Markham’s “The Future of Supply Management – Part I: Category Strategies and Supplier Management” back in September, but they also published Joseph Carter, Thomas Slaight, and John Blascovich’s “The Future of Supply Management – Part 2: Technology, Collaboration, Supply Chain Design” last month. Looks like I’ve started a trend that you’re going to benefit from!

Anyway, in their paper, Carter, Slaight, and Blascovich predict that in the sourcing world of tomorrow, demands will be more diverse and complex, companies will have multiple – complex – supply chains, internal and external collaboration will be more important, and technology will become a key enabler in managing diversity and complexity. And you know what – they’re right.

Let’s face it – today’s average purchaser isn’t sourcing staplers, iron ore, and drums of bleach. They’re sourcing iPods and servers and GPS controllers and temporary labour services. Demands are becoming more diverse and complex everyday and you have to be ready. Furthermore, it’s not just the inbound supply chains that are important, but the outbound supply chains, because you have to be ready for reverse logistics when products break and you have to take them back and either fix them or dismantle them and then charge your supply base according to warranties and agreements in place. When most of the work is done by contract manufacturers, internal collaboration with the R&D team and external collaboration with supply partners become more critical. And with product life-cycles shrinking every year, technology is going to become critical to managing the complexity.

The article points out that, in the sourcing world of tomorrow, competitive advantage will require agility and supply chain excellence will be defined by the ability to:

  • anticipate changes in customer requirements, product offerings, supply conditions, regulations, and competitor actions
  • adapt to changes by deftly reconfiguring existing supply chains
  • accelerate implementation of change to capture new opportunities

When it comes to collaboration:

  • internal collaboration and integration must advance further if companies are to capitalize on future needs
  • external collaboration will signal a shift from pure competition to partnership for some segments of a company’s supply base
  • technology will be required to enable an increase in collaboration
  • the tension between the potential for strategic advantage through supplier collaboration and the concerns about managing risk and protecting IP will not be resolved easily

As for technology, the authors asked what supply executives wanted, and what they answered was ease of access, both internally and externally; visibility through web-based tools; collaboration platforms for everything from product development to operations to schedules, tracking and simulation; newer and more powerful tools for risk, compliance and supply market analyses; and user interfaces that can be grasped as intuitively as they experience personally as consumers. Not a bad start.

Richter’s Key Features and Directions for Supply Chain Software Solutions

In the spirit of our recent cross-blog series on The Future of Sourcing (recap I and recap II), I’m going to wrap up coverage on the 5th International Symposium on Supply Chain Management with a presentation from RSM Richter Consulting on key features and directions for supply chain software solutions.

The presentation overviewed seven major directions for supply chain software solutions, which started, peaked, and ended with some of my favorite topics:

  • Collaboration Among Trading Partners
    • Systems that will integrate with supplier, customer, and other provider systems
    • Transactional integration and visibility / inquiry
  • Demand Planning
    • Inventory requirement forecasting tools
    • Detailed planning by market, by customer, by location, etc.
    • Support for more complex lead time configurations and optional supply sources
    • Incorporation of customer sales history and forecasting
    • Dynamically updates as customer information is updated
  • Inventory Visibility
    • Inventory visibility from cradle-to-grave: on-order, in-transit, received, in-process, on-hand, on-delivery, etc.
    • available-to-promise at point of order entry or earlier
  • Logistics & Freight Management Tools
    • Planning and coordination of transportation with providers
    • Generation of all required documentation
    • Visibility of, and status on, the movement of goods from supplier to customer
  • Complete Integration of Functionality
    • An ideal integration of depth and breadth
    • Elimination of “islands of information”
  • Vertical, Industry-Specific Applications
    • A shift from generic tools to deep industry functionality
    • Without losing the underlying fully integrated suite
  • Optimization of Business Processes
    • tools for workflow and collaboration
    • geared to provide standardization and efficiency
    • automation for business processes
    • consistency in documentation

These are all great topics – and right now companies like Arena, Blinco [rebranded 3rdwave], Co-exprise [rebranded DirectWorks, acquired byIvalua], Enporion [acquired by GEP], Iasta [acquired by Selectica, merged with b-Pack, rebranded Determine, acquired by Corcentric], MFG.com, Provade [acquired by Smart ERP Solutions], TrueDemand [acquired by Acosta], and VerticalNet [acquired by BravoSolution, acquired by Jaggaer] are cheering – since they’ve understood at least some of these points for quite a while now. (It’s unfortunate for some of them that it’s not coming through loud and clear in their messaging.)

However, regardless of which points you agree with and which points you don’t, the proper implementation and use of more advanced supply chain software comes with some significant benefits, including:

  • increased supply chain efficiency through improved information flow
  • reduced inventory, and related costs, through better management of demand, purchasing, production, and delivery
  • faster and more accurate visibility on inventory and availability
  • improved collaboration with trading partners with whom information can be shared for better decision making

… and all of this leads to improved efficiency and cost savings!

Sourcing Lifecycle Management II: Enter Co-exprise

In yesterday’s post I introduced you to Sourcing Life-cycle Management (SLM), a new dawn for aerospace, automotive, defense, medical device, and high-tech / electronic manufactures with complex direct sourcing problems. SLM is the integration of the supply chain centric business processes of sourcing, procurement, PIM, and supplier management that were always meant to be together.

In today’s post, I’m going to re-introduce you to Co-exprise [rebranded DirectWorks, acquired by Ivalua], I company I first introduced you to in A Kick-Ass Direct Sourcing Solution for Manufacturers: Part II.

In my last post, I indicated that they were building a new-type of direct sourcing solution that integrates RFx, auctions, project management, collaboration, PIM, dashboards, and tree-based navigation as well as enhanced security, contextual-awareness, supplier qualification, and enhanced meta-data capabilities. But as I’ve come to understand it better, I’ve realized that it is the first solution on the market to make a serious, honest, effort to address the complex direct sourcing problems that other systems cannot handle because these types of problems are unique and require a distinct solution.

However, the real power of the Co-exprise platform is that all of this is built on a number of basic building blocks, including workflow management, business process rules, collaboration technologies, a centralized repository, project management, cBOMs (collaborative Bills of Material), cost models, and analytics, that are inherent to, and invasive across, the platform. This means that all of the technologies are integrated into one collaborative workflow where common data is always accessible and analyzable.

This allows the platform to offer benefits to its target verticals that go beyond standard solutions in the areas of productivity, implemented cost reduction, and compliance. Productivity increases start back in NPI (New Product Introduction) as the engineering team can load and track all designs in the system the minute the project starts and continue through to post-award contract management as delivery, quality, and SCOR (Supplier CORrective Actions) can be tracked against each order against the contract. As the system captures and tracks all of the orders and integrates contract management, the system is able to achieve fully implemented cost reductions. Finally, Co-exprise’s unique Secure Digital Forms Technology, which includes a unique ID in every form and allows the form to be completed and uploaded by suppliers off-line, can be used to create mandatory forms that ensure compliance with environmental regulations such as REACH and RoHS.

Now I’m not saying the platform is perfect. For example, it doesn’t have supplier side EIPP capabilities (a very useful part of e-Procurement which facilitates n-way matching and charge error detection before the supplier even sends the invoice), decision optimization (which would allow what-if scenarios to be created and analyzed on make-vs-buy decisions), or a mature spend analytics 2.0 offering (even though the initial spend analytics 2.0 offering they do have now puts standard analytics 1.0 offerings from traditional vendors to shame, and contains some advanced capabilities that are similar to capabilities only found in BIQ). However, it is the most complete platform I’ve encountered for the problem they’re solving, they can integrate with e-Procurement platforms like Ariba that handle EIPP, and they are still working on their new spend analytics offering, which could likely become one of the best analytics tools on the market for the direct sourcing problems they’re solving next year (and what they have now is nothing to scoff at).

For picking up the SLM gauntlet and bringing to market a solution that addresses the complex direct sourcing projects that have been largely ignored until now, Co-exprise is my vendor of the week. (A SI exclusive until year end or sponsor #2 signs up, whichever comes first.)

Sourcing Lifecycle Management I: The Direct Sourcing Cure

Strategic Sourcing is great. Technologies that enable it greater still – since even an across-the-board 5% reduction in spend can have more of an impact on the bottom line than a 25% increase in sales. And with the right tools and techniques, the former is a lot easier to achieve. However, today’s strategic sourcing applications, while working wonders on indirect, MRO, service, and commodity spend for vendors across the board, sometimes fall short when applied to custom parts and raw materials in the manufacturing verticals such as aerospace, automotive, defense, medical device manufacturing, and parts of the high-tech and electronics sector. If you look at the mega-success stories, many are with CPG companies, Food Service providers, Retailers, and standard-component device manufacturers in high-tech and electronics. There aren’t a lot with custom defense providers, medical device manufacturers, or sophisticated consumer device manufacturers. That’s why something else is needed. But to see why, we’ll have to discuss current technologies and where they fall short.

First, there was the ERP. By integrating MRP, HRM, accounting, simple e-commerce, accounting, and some basic CRM, it enabled better processes, quicker reporting, and more efficient operations. But it had a fatal flaw – it was designed to run a business within the four walls of an enterprise. There was no concept of external supply partners collaborating with internal cross functional teams to source goods and services. A purchaser entered an order into the system when it was made, accounts payable entered an invoice when it was received, and then entered the payment when it was authorized. That’s it. Modern ERP systems have improved, and some have add-on procurement modules, but the fundamental system is still flawed from a supply chain perspective.

Then came e-Sourcing technology to address the more strategic aspects of sourcing. e-Sourcing vendors delivered RFX, on-line reverse auctions, decision optimization, spend analysis, and contract management solutions that have worked well with unsophisticated spend. However, being optimized for simple commodities and services that can be costed using a single price-per-unit bid, they fell short for products that could only be accurately costed using a combination of fixed set-up costs and variable production runs and couldn’t handle complex assemblies that required multi-level collaborative bill of material descriptions at all. Finally, most e-Sourcing technology does not adequately begin to address the most difficult problems associated with direct-sourcing – project management, design and specification management, and collaboration.

This led some vendors to develop web-based Product Information Management (PIM) systems to manage all of the designs, schematics, and documentation related to a project. A specialized extension of traditional Product Life-cycle Management (PLM) solutions, they were designed to complement existing sourcing solutions and provide the badly needed design and specification management capabilities. Problem is, most don’t support complex assemblies or multi-level collaborative bills of material (cBOMs) and trying to find the right component specification in a given project is like trying to find a needle in a haystack, as complex specifications can contain hundreds of parts, each with multiple description and specification documents, and have thousands of associated documents. Plus, project management is only complicated by having to switch between two systems and PIM does not enable e-Procurement.

e-Procurement, designed to handle the requisition, order invoicing, and payment aspects of the traditional procurement cycle, delivers significant improvements in productivity, and drastically reduces invoice processing costs (up to 90%), but the real cost savings potential is in strategic sourcing and capturing all of the data needed for meaningful spend analysis. However, when dealing with custom manufactured parts and service, savings are only realized if the contracted rates are adhered to, the parts are delivered on time, and the quality levels are acceptable. e-Procurement only deals with with the transactions, not the post award performance management.

Now we also have the trifecta of supplier management technologies: Supplier Relationship Management (SRM), Supplier Performance Management (SPM), and Supplier Information Management (SIM). While SRM tries to manage communications and agreements; SPM tries to manage performance by way of quality tracking, improvement initiatives, and balanced scorecards; and SIM just focusses on managing all data related to the supplier, its products, and existing agreements. These are all great technologies, but performance management really needs to be tracked against orders and contracts and actions defined within the context of post-award management of a sourcing contract.

In other words, whether deployed on their own, or as a group, neither stand-alone ERP/MRP, basic sourcing, PIM, e-Procurement, nor supplier management technologies hold the key to successful, productive, streamlined direct sourcing projects. That’s why Sourcing Life-cycle Mangement (SLM), which integrates the supply chain centric business processes of sourcing, procurement, PIM, and supplier management into one coherent platform customized for the direct sourcing of custom parts and materials for manufacturers, is needed.

What Does the doctor Do?

Note: This is written as a narrative and contains a lot of background on the doctor. Although the doctor believes that this information will help you put what he does into perspective, he understands that you might be time constrained and / or be more interested in a straight-forward listing of the services he offers. If that is the case, please refer to What Does the doctor Do? … For Executives instead. Thank you.

Pre-script: This post deals with the sustainability issue most important to me – me!

As time goes on, not only do I continue to spend a significant amount of time having what seems to be the same one-sided conversation explaining what I do, what I don’t do, and why I do, and do not, do what I do, or do not, I also find myself answering “uh, me” on a regular basis in calls with solution providers and other professionals in response to “Do you know anyone who does X?“. I know the one-sided broken-record is the curse of the consultant, but, even though I generally try to keep this blog not about me, or my company, I have come to the conclusion that a post might be a good idea as it could not only save a prospective client, or non-client, some time, as they can scan this post and determine whether or not I may be a good (first) contact, but it could also save the “Oh …” that often follows. And, if you don’t care about what I do, or do not do, then you can simply skip this post (which is a wee bit lengthy) and come back tomorrow where we will return to your regularly scheduled programming at the same-bat-time on the same-bat-channel.

In order for me to explain what I do, I need to give you a bit of background on what I’ve done, what has led me to where I am today, and why. Some of it you’ll find in the “about” posts, some of it you’ll piece together from comments on this and other blogs, and some of it you may infer from my writings herein. But nowhere have I made a concerted effort to try and explain what I do. My resume is long, and my formal academic CV longer, but I’ll try to keep it to the important points.

I started out by pursuing my graduate degrees in Theoretical Computer Science – Multi-Dimensional and Spatial Data Structures and Computational Geometry in particular – and teaching in Academia, but soon ventured off into industrial training, then consulting, and then IT R&D – first in e-Commerce, then in sourcing and optimization, and then into the broader supply chain from a process and modeling (especially for optimization and analysis) perspective. My academic background gave me a solid background in the fundamentals of computing, algorithms, and sophisticated mathematics – the keys to efficient software and complex modeling and problem solving. Five years of course development and delivery in academia (including internet and web technologies before they hit mainstream and object oriented technologies before they were the buzz word of the day) gave me a lot of teaching and training experience. My industry background forced me to become an expert in e-Commerce and Supply Chain processes and data requirements as well as the technologies that enabled them. I’m also an experienced software architect in both the (traditional) client-server and internet/web realms (who, given sufficient time and resources, can also code the back-end of just about anything).

This sounds diverse, but there are some common threads between everything I’ve done and what I now do – and these are a triumvirate focus on knowledge transfer, enablement, and innovation. And now you’re probably asking “What?“. However, before I can answer that, I need to get into a bit of the “Why“.

It wasn’t long into academia that I quickly lost interest in writing paper after paper (in the detrimental publish-or-perish mentality that has only compounded in recent years) that merely presented incremental improvements to a theory or a heuristic relevant to only one problem of a handful of practitioners in one or two obscure verticals. The anti-epiphany came after I had spent a few hours working through a dense 30-page paper in a well-respected journal only to realize that it was merely a simple and obvious extension of Theory T developed by Mr. X 20 years ago in the Y domain of computer science applied to the Z domain of computer science, which is almost the same, but just uses different terminology.

I also had no interest in writing papers whose sole purpose was to sit on a shelf and collect dust merely to build a publication record, which, these days, is not indicative of the relevance of the underlying work – especially since most administrators, whom I would swear do not know the difference between the front end and back end of a dog, only care about quantity, not quality. This is partially because it doesn’t take long to realize that a huge amount of great work is already sitting on the shelf ignored because most of the great academic researchers in any specialty have little or no interest in applying their work outside of the ivory tower. Great work, especially in computer science, should not be only great theory, but theory that has an application. Furthermore, although it’s rarely recognized as a worthwhile scholarly effort by the ivory tower inhabitants, I believe that working to take the best of what’s already known, to extend and modify it, and then to help someone design and build a great software application that will actually be used, and have an impact, is just as important as working on the next great theory – which the vast majority of pursuers will never even come close to. And this is why I developed a great interest in “knowledge transfer”.

Furthermore, I spent a lot of my early industry career working as a lead architect, R&D director, or chief scientist for what are now mostly unknown, and out of business, companies that produced solutions that were considerably ahead of what competitors had on the open market. Since it made no logical sense that the solutions should fail from a technology perspective, I spent more and more time asking myself why the solutions failed, since I refused to accept all potential clients were incapable of seeing the benefits, and discovered most of the time that the reason was the solution was solving the wrong problem (i.e. the business analysts, or, in most cases, the managers who assumed they knew what the problem was and skipped the analysis, did not do their homework), it wasn’t being marketed or sold properly (the salespeople were not properly educated and in a few cases just incompetent at that particular job), or the company was being poorly managed (and smart people could see it was not a wise investment from a long-term perspective).

Thus, I came to realize that not only is knowledge transfer from academia to industry (as there is a lot of knowledge there to draw from if you know where to look) and knowledge transfer within the company (everyone needs to speak the same language, understand the same problem, and work towards the same solution) important, but so is knowledge transfer and understanding throughout the supply and demand chain. This requires each participant to speak each other’s business and technical languages, but each group (marketing, engineering, finance, etc.) to be able to understand each other. Considering that each discipline has it’s own dialect these days, and that many individuals who specialize in one discipline have no idea what individuals in other disciplines do, this is a challenge for most companies. And this is where enablement comes into play – it’s not just a matter of writing code, but building a solution that enables the people who need to use it in solving their problem (and not just what someone perceives their problem to be) and, moreover, makes them want to use it.

This challenge – speaking a common language to identify, understand, and solve a common problem – can really only be solved by having one or more individuals who can work across the business – from market research through to engineering – and do so with competency and guide a core cross-functional team towards identifying a solution. This is more than just saying “we need to do X” and selecting a suite of applications that “do” X, but understanding what X is, what processes it involves, why, what fundamentally needs to be done, how those processes can be streamlined, and what new processes and technologies can be brought to bear to make it better. And thus the need to be innovative.

So where does someone like yours truly fit into the picture when he has done research, teaching, training, educational and marketing material preparation, coding, architecture, R&D & Operations management, process consulting, operations research, optimization, analytics, and business consulting in various B2B, B2C, and C2C e-commerce and supply chain spaces (and done so in the last decade alone) but yet does none of these things while focusing on knowledge transfer (as exemplified by this blog and the eSourcing Wiki), enablement, and innovation? The answer, confounding to your average recruiter, is everywhere and nowhere. Simply put, the doctor does what most others do not.

Going back to one of my previous statements that the supply chain professional of tomorrow must be a jack-of-all-trades and master-of-one (as opposed to a jack-of-all-trades but master-of-none) – I broke the mold I endeavored to fit. But the trade I focus my mastery on is not one that can be defined in any traditional business terms. My focus is purely on innovation – where innovation is relative to where you are today – and helping an interested company take their capabilities and solutions to the next level. Although the Big5 would plug what I do into a business process consulting, change consulting, management consulting, and maybe even a scenario consulting practice where the end goal is to help you make your business more efficient, more profitable, or both by identifying efficiencies, new processes, or technologies that you can bring to bear based upon the best (or most in vogue) business practices of the day, and then bring in their six sigma black belts, lean experts, or kaizen kamikazes to help you accomplish your goal, what I try to do for my clients, although very similar, is a bit different.

Unlike your average consultant who comes with his or her firm’s “best practice proven methodology” with a specific goal of “streamlining your processes” to improve your operations and bottom line, I don’t subscribe to any particular best practice methodology, don’t assume that any (overly) specific endeavor will guarantee results, and, most importantly, I don’t just work out the business part of “X” and ignore the ramifications of the suggested change or the technology that will be required to achieve “X”.

Specifically, like some of your newer boutiques in the space, my goal is to understand what your problem is or what you want to do, what underlying restrictions you have in developing a solution (based upon budgetary restrictions, manpower knowledge, and technical restrictions of existing solutions and infrastructure), and then choose, modify, or develop an appropriate methodology for the project. I try to balance the process with technology in helping a client design or build a solution, versus selling one or the other as the magic bullet. I work across the chasm that often exists between the marketing, sales, and business development and the engineering team – to make sure that both parties converge on and understand what’s required, why, and how it needs to be done. But most importantly, I try to identify a path of innovation appropriate to you and help you walk down it. This could be as significant and complex as a R&D project to develop brand new technology with features and functions no one else in the world has, as mediocre as slightly altering one step in a seven-step business process that allows you to improve efficiency 50% with almost no effort, or as important as helping you nail down your positioning, strategy, and marketplace communications. It’s all relative, it’s all specific to you, and it requires someone who doesn’t fit in any of the roles on your organizational chart. It has to be someone external, someone capable of looking at the business from a different viewpoint, and someone capable of looking across the business, which today means understanding technology, processes, and business requirements on an equal footing and how they interconnect, someone with the ability to put that puzzle together in a (slightly) new way that is beneficial to you and your customers, and, most importantly, someone who can actually help you, or your team, as appropriate, do it. That’s my view, but maybe I’m paying too much.

In short, the doctor does Innovation for the Real World, whatever that happens to be. And if you still don’t understand what the doctor does, then maybe someone like the doctor is just what you need.