Category Archives: Sourcing Innovation

The (Board) Gamer’s Guide to Supply Management Part IX: Small World Part 2

In Part V of our original series2, we introduced you to Small World, a delightful game from Days of Wonder (iOS Version available) that, in the words of Wil Wheaton, combines the military strategy of Risk with the delightful art and fantasy races of Cosmic Encounter. Except its more dynamic than Risk, and more variable than Cosmic Encounter, because while the races and powers are fixed, the combinations are not. [There are 14 races and 20 powers, or 280 different possible pairings. Plus, the pairings are ordered, and if a player does not select the pairing made available to him during his turn, he must spend 1 gold for each pairing, up to 5, that he wants to skip, which not only impacts his ability to accumulate the most victory points and win the game, but improves the selections available to the next player, who may gain one or more victory points by selecting a skipped pairing. So, if you do the math, there are P(20,14) possible power-race combination orderings, which is equal to 3,379,030,566,912,000 possible distinct games when orderings are taken into account!]

So what does this have to do with supply management? As per SI’s original post, Wil could just have easily have said Small World combines the military strategy of Risk with the marketing strategies of an MBA program. Whoever has the most money at the end of the year wins. We earn money by conquering and maintaining market territories. Empty, blue ocean, territories cost two units to conquer. Every competitor or obstacle in a territory costs one more unit to conquer. At the beginning of every game, each player will choose a primary market strategy, like brute advertising force, niche marketing, or price-undercutting, and combine it with a perceived marketing advantage such as a big war chest, coveted partnership, or new manufacturing process that allows production costs to be drastically slashed. The primary market strategy and perceived marketing advantages change every game. And therein lies the connection. Small World is a good introduction to how your supplier’s sales and marketing force is going to try and counter, and undermine, your every effort to procure and manage supply at a fair and sustainable price (as profit is the name of their game, not cost control). Today we are going to dive into the races and powers and solidify that connection.

The races1 in small world can be mapped to the different personality types in an organization that, directly or indirectly, support, or limit, the sales organization. Consider the following:

  • Amazons: A nation of all-female warriors in Greek mythology, these warriors seem to multiply in battle. They’re like the accounts receivables clerks who come out of the woodwork to descend on your deadbeat customers en-masse.
  • Dwarves: The mythical miners from the popular fairy tale, they’re the professional arbitrators who excel in dark rooms and endless negotiations.
  • Elves: The long-lived long-ears from the world of Tolkien who are almost immortal, they’re like the IRS auditors who never die.
  • Ghouls: Like the accounting trolls in Accounting popularized in Dilbert comics, they are the immortal accountants.
  • Giants: Like the feared giants of medieval times, the rich C-Suite, when they are on top, can conquer others with less effort.
  • Halflings: Like the burrowing hobbits, these 3rd party independent consultants pop-up out of nowhere and take over part of the project, and there’s nothing you can do about it.
  • Humans: Like the born-and-bred farmer who is a master of his fields, these account managers excel at up-selling your existing customers.
  • Orcs: Like the toll-extracting orcs of myth, these high-performing salesman excel at getting the big deal, by force if need be.
  • Ratmen: Think lawyers. ‘Nuff said.
  • Skeletons: Like mythical skeletons, these marketers multiply every time they conquer a new territory.
  • Sorcerors: Like real sorcerors, the members of your corporate intelligence team uses espionage and influence to convert insiders to win a deal.
  • Tritons: Like the legendary masters of the sea, these logistics managers rule the sea trade.
  • Trolls: Like the gate-keeping trolls, these on-site consultants — once they are embedded in your culture — are almost impossible to get rid of.
  • Wizards: Just like the wizards could conjure something out of nothing, these analysts can conjure actionable intelligence out of random data bits.

And the powers can be mapped to different skills that can give your race an advantage:

  • Alchemist: In the old days, these magicians turned metal into gold just like your smooth-talking salesman turn feature requests into profitable change orders.
  • Berserk: Just like these warriors sometimes gained sudden bursts of strength before every battle, your evangelists can sometimes beat the competition even when the odds aren’t in your favour.
  • Bivouacking: Just like invading armies would sometimes build encampments to fortify their defenses, your account managers are masters at placing on-site consultants to fortify yours!
  • Commando: Like the marines, your analytics team, with more training than your competition, can beat the market hands down with fewer resources (allowing you to outperform your peers).
  • Diplomat: Your customer relations are so good, no one can encroach upon your customer base! Your smooth-talking sales team should be in public office!
  • Dragon Master: One of your CXOs is a legend in the space, and never loses the one battle he chooses to engage in, just like the mythical warrior who rode the dragon never lost.
  • Flying: Your command of the air, also known as your no-limit travel pass, gives you a larger territory in which to trade.
  • Forest, Hill, Swamp: Just like certain people are suited for certain terrains, your sales team does better in certain verticals than others (and makes a lot more money from a lot less effort).
  • Fortified: Just like conquering armies would sometimes build an almost impenetrable fortress from which they could rule their newly conquered land, you can dedicate your efforts on a marquis account and become so embedded therein that the account becomes almost impossible to steal.
  • Heroic: Just like mythical heroes could’t be conquered, the efforts of your two best sales teams, and their House of Lies, are unparalleled and can’t be challenged.
  • Merchant: Like the great merchants of legend, you make more profit on every sale than the people you are trading with.
  • Mounted: Just like a mounted army was more effective than one on foot, your big data advantage crushes the uninformed competition.
  • Pillaging: Just like the Vikings would loot, when you conquer an account you always find integration and data maintenance efforts that double your profit.
  • Seafaring: Just like the most successful merchants in ancient times always rules the seas, your command of the sea allows you to trade where others can’t.
  • Spirit: Just like spirits never die, your on-site consultants are so knowledgeable in their domain that even when a competitor manages to sell their product, your consultants are still maintained for their expertise and you play on.
  • Stout: Just like the army of anubis never needed rest, neither do your sales team who can swoop from one deal to the next without need for a recharge. They live on caffeine, adrenaline, and victory!
  • Underworld: The domain of the lawyers. ‘Nuff said.
  • Wealthy: Just like the tomb raiders of old, you come into sudden wealth when that one client decides to shift all its consulting to you.

It’s a small world
But it’s the only one we’ve got
Huey Lewis

1 For this post, we are limiting ourselves to discussion of the 2nd Edition of the original Small World and not Underworld, Realms, or the various expansions such as Cursed and Be Not Afraid!

2 The original series:
Part    I: Ticket to Ride
Part   II: The Settlers of Catan
Part  III: Munchkin
Part  IV: Castle Panic
Part   V: Small World
Part  VI: Zombie Dice, Tsuro, and Get Bit!

… and the new series to date:
Part  VII: Upon a Salty Ocean
Part VIII: Agricola

The (Board) Gamer’s Guide to Supply Management Part VIII: Agricola


It’s 1671, the plague that has raged for the last 323 years has finally been overcome, and you and your spouse are a simple farming couple living in a two-room hut somewhere in (very) rural Austria. Your goal is to improve your quality of life by improving your home, expanding your fields, and multiplying your animals (to sell in the nearby markets).

In Agricola, you do this over a 14-round game where each of your family members can take exactly one action (that has not yet been taken) in a round. In this round you can acquire resources such as wood and clay, harvest your crops, acquire livestock, or expand your family. Each of these actions will need to be taken, but must be timed appropriately You cannot expand your family before you can house (and feed) another mouth (or one or more family members will have to beg), but you cannot plant and harvest more crops without more family members. As a result, some actions will almost need to be paired and you will have to plan action sequences in order to not only survive the game, but win. The winner is the player who builds the best overall farmyard (which is judged on a variety of factors which include fields, pastures, stables, crops, animals, homestead, and improvements).

In this post we will discuss the basic “family game” play, which leaves out some of the more advanced components, as you will need to master the basic game before moving on to the more advanced one. (Just like you have to master the basics of multi-round sourcing sourcing negotiations before trying to do real-time optimization-powered auctions after a multi-round RFX to qualify the final bidders.) The difference is that occupation and minor improvement cards are left out and only the major improvement cards are used.

You start the game with 2 units of food if you are the starting player, and 3 otherwise. You can get more food from the harvest that comes at the end of rounds 4, 7, 9, 11, 13, and 14. (Just like in the real world, crops take time and you can’t harvest immediately after planting.) Food is produced from raw grain and vegetables, and grain and vegetables can be converted to food one-to-one at any time. (If you have a hearth, you can convert vegetables at better than a 1 to 1 ratio.)

Each round without a harvest has four phases:

  1. Begin: Flip over a new round card that makes a new action available.
  2. Replenish: Acquire new goods and food from any previous actions that have a recurring result.
  3. Work: In sequence, each player puts a family member to work by assigning an available action to them, which they will take. The action may yield an immediate or future result.
  4. Go Home: At the end of the round, the family members have finished their assigned tasks and go home.

If the round has a harvest, there are three more phases:

  1. Field: players remove one food unit from each sown field and places it
    into their personal supply
  2. Family Feeding: each player must feed each family member who was born in this round 1 food and each other family member 2 food; a player who does not have the food has to beg and borrow food, but that comes at a cost of 3 points (think 3 food units) in the future
  3. Breeding: any player with at least 2 animals of the same type may breed 2 animals to receive exactly one additional (baby) animal of the same type, provided there is space in that person’s farmyard for the animal

The following actions are always available:

  • Extend Your Hut or Stables : you can extend your wooden hut, ore renovate your wooden hut into a clay hut or your clay hut into a stone house if you have enough reed and wood, clay, or stone to do so. Alternatively, you can build stables to keep (more) animals
  • Extend Your Family: if you have more rooms in your hut than you have family members, and less than five family members, then you can add one offspring to your family (to put to work in later rounds)
  • Tend Your Fields or Bake Some Bread: you can plow an unplowed field, sow one or more plowed fields with grain or vegetables, or (if you have a fireplace, hearth, stone, or clay oven) convert grain to food
  • Raise Your Animals: in order to raise animals, a player must fence pastures or build stables (in a pasture),

Additional actions that may become available during the game (in the form of major improvement cards) include:

  • The Well: produces extra food (as your fields are better irrigated you produce more crop that becomes food)
  • Fireplace: allows you to convert grain, vegetables, and animals to food
  • Cooking Hearth: allows you to convert grain, vegetables, and animals to food
  • Basket Weaver: allows reeds to be converted to food
  • Stone Oven: bake bread from grain
  • Cabinet Maker: makes cabinets from wood that are traded for food
  • Pottery: makes pottery from clay that are traded for food

It’s just like managing an industrial farm at the back-end of agricultural supply chains. The amount of crop you can produce depends on how many fields you have, how many people you have working those fields, and how capable you are at optimizing the output, but the amount of fields you have available and the amount of people to tend those fields depends on how many of those fields need to be used for, or grow food for, the animals you are raising to supply meat to your customers who want grain, vegetables, and meat to stock their shelves and freezers. A field can only be used for one thing at a time, a person can only do one farm task at a time, and those farmhands need to be paid and fed. You have to balance supply with demand with profit and need. If you train your people, they can be more productive, but it costs time and money to do so (and maybe they’ll quit and go work for your competitor). And if you go into debt, the interest accumulates quickly because you’re essentially borrowing from legalized loan-sharks due to your low profit margins and limited clout.

And winning isn’t just profit, it’s sustainability and depends on a number of complex factors that influence your performance over time.

Are you the best agriculture supply chain manager? Play Agricola, challenge (up to four of) your teammates, and find out!

How Will You Tame the Tolls in 2014?

Costs are still rising in the average supply chain, and this situation is not likely to change during this decade. There are still many reasons for this, some obvious, some less so. Regardless of the reasons, these tolls are taxing on every industry and it’s still critical that an organization take action as soon as possible, as the chances of hyper-inflation, which has already occurred in categories such as palladium, cattle, and cocoa, are still high.

However, hyper-inflation is not the only risk facing your supply chain in 2014. It’s not even one risk in ten. It’s one risk amongst a plethora of risk. But it is one of the biggest risks. SI’s new white-paper on the Top Ten Transitions To Tackle in 2014 to Tame the Tolls, discusses this risk in detail, as well as 13 more risks that could result in substantially increased costs to any organization’s supply chain. Risks that need to be addressed to keep organizational costs in line.

Fortunately, there are ways to address these risks. After identifying ten weaknesses in an average organization that are allowing these risks to take root and grow, the white paper identifies ten actions that every organization can take to strengthen its weaknesses and reduce the possibility of the identified risks wreaking havoc with its Supply Management operations. Risks that could increase organizational costs significantly if left unchecked.

The sequel to SI’s white paper on The Top Ten Things to Do in 2013 to Control Costs, this white paper looks at the state of the market one year later and provides you the foundations you need to attack the forthcoming challenges of 2014 head-on. So download the Top Ten Transitions To Tackle in 2014 to Tame the Tolls today (registration required), sponsored by BravoSolution, and get ahead of the game.

Supply Management Has a Long Way To Go To Get to The Top!

The ISM and BravoSolution (who want to align Sourcing with the rest of the organization) recently released the 2013 ISM Survey of Procurement Executives on “Procurement & Sourcing: Moving from Tactical to Strategic” which summarized the responses from 545 Supply Management executives at the Director level and above to a detailed survey created by BravoSolution and administered by ISM last July and August.

These executives were given a list of 24 topics identified to be of recent concern to procurement and sourcing executives and asked to identify their top organizational priorities in 2013. The top priority of improving cost reduction and savings should not be a surprise to anyone since most companies have been laser-focussed on cost-reduction and savings since the major financial crisis in 2007-2008, to the detriment of just about every other important goal. However, what should be surprising is that cost reduction and savings is not only the top priority in 60% of companies but still twice as important as the second most common business priority of revenue growth and profit improvements despite the fact that most organizations expect their cost reduction efforts to yield less than 10%!

The time of near-zero inflation is at an end and with hyper-inflation a strong possibility in many commodity markets and a few countries, and, despite the opinion of some experts, we could be looking at a return of stagflation in some global economies. And even if we don’t see stagflation, the rapid rise in costs across a number of raw material and commodity categories should be enough to convince the average Supply Management professional that savings will not be possible in many categories and the best one can hope for is cost avoidance — unless other opportunities for savings are identified. Opportunities that revolve around process improvement, raw material substitution, value-add, and non-value add service removal. This means that more effort should be spent on supplier collaboration and innovation, supplier performance and sustainability management, and raw materials, but the first two of these options were only listed as priorities by 19% and 23% of the respondents, respectively, and the third option didn’t even make the list of the 9 topics that were selected by more than 10% of respondents.

It was nice to see that 30% of respondents recognized that a key capability of properly performed Procurement is the delivery of revenue growth and profit improvement, but this doesn’t happen without the proper focus on efforts that can lead to revenue growth and profit improvement, which include efforts like the Procurement Perfect Order (which will make your organization a more attractive supplier), improvement of working capital (which will allow Finance to reduce interest and penalty payments, take advantage of early payment discounts, and possibly even earn money on short term investments), improving customer loyalty (as it costs less to keep a customer than to acquire a new one), improving the strategic nature of trading partner relationships (as this can lead to joint efforts to take cost out of products and services and increase sales), and more spend under management (which permits better spend and opportunity analysis). However, from this set up of options, only two — getting more spend under management and improving working capital — were selected as priorities by more than 10% of respondents. Without appropriate priorities, profit and revenue goals are just pipe dreams.

There’s a fair amount of analysis in the 23 page report, but the bottom line is that Supply Management has a long way to go to become the strategic powerhouse it should be. It’s just like Angus, Malcolm, and Bon said back in 1975 — It’s a Long Way To the Top (If You Wanna Rock ‘n’ Roll). A long, long way …

MarketMaker4: The Mid-Market’s Market Making Mezzanine

Some of you might say the e-Sourcing space is too crowded. And that certainly was the case in the mid-zeroes — platforms here, platforms there, platforms platforms everywhere. But then came the acquisition frenzy where mid-sized players swallowed smaller players and start-ups before getting swallowed up in turn by the dominant players who, in the last couple of years, themselves were swallowed up by the massive enterprise software providers. As a result, there is an opportunity, especially in the NA (North American) market for a couple of new players – provided, of course, that such players bring new and innovative solutions to the table (that address the needs of a considerable market segment).

As a result, even though the EU (European Union) vendors are starting to enter the sourcing market in a big(ger) way in NA, there is still an opportunity for someone new if they go about it the right way. So, despite the fact that many thought the market almost dead at the end of the zeroes, it was not completely crazy that a small team of e-Sourcing market veterans, including Mr. Alan Buxton who was the CTO of of Trading Partners back in their heyday, decided in 2011 to start a brand new e-Sourcing software start-up and build a new solution from scratch.

Two years later, MarketMaker4 is a strong offering for the mid-market that needs a new, modern, e-Sourcing solution. In particular, those mid-market companies that are late to the e-Sourcing game, those that are still relying on third parties to manage their sourcing events and are ready to bring those events in house, those that are trying to use ERP sourcing solutions, and those stuck on platforms that, due to acquisition, are stuck in integration limbo and haven’t been upgraded in a while.

So what is MarketMaker4? It’s a four-part sourcing solution that consists of:

  1. A modern e-Negotiation platform
    with a best of breed e-Auction and RFX solution
  2. with a built in supplier discovery engine
    built on the entire D&B database which is augmented with your own supplier database
  3. and market data indices that span commodities and currencies
    that let a buyer know current prices, historical trends, and relative market conditions (when the data is available)
  4. that is augmented with real-time product and sourcing support 24/7/365
    through online chat that connects all of the global support representatives around the world that are currently online.

The MarketMaker4 founders, who were involved in the space for over a decade and who worked for both software providers and services providers learned the following:

  1. While some companies will start with services to get going, these companies will eventually decide that pay per drink is expensive and look for software.
  2. The companies switching from services to software will typically select a best-of-breed software provider with little or no services or support beyond the product. As a result, due to limited sourcing and product knowledge on the in-house buying team, the product typically gets under-utilized and the company fails to achieve the ROI they expected.
  3. When the license expires, the company will typically revert back to a pay-per-drink, but limited to high-value categories, or put its faith in a good e-Procurement system, that will reduce maverick buying and, hopefully, with limited RFX capability, lead to better buying habits.
  4. But even if the company moves to a modern e-Procurement system, the company will typically have little insight into current prices or suppliers that they aren’t already buying from.

As a result, the team decided what was really needed for these types of companies was:

  • An e-Sourcing solution that was easy to use by the average buyer,
  • augmented with real-time support and guidance as new buyers get up to speed,
  • integrated with market index and currency index data (that could be linked into cost models), displayed in easy to understand graphical representations, that the buyer could use to understand current prices and likely trends, and
  • extended with a huge database of potential suppliers.

And that’s what they built. And in each component, they added some innovation to the mix.

  • The e-Auction product, which consumerizes the enterprise capability, is one of the most powerful on the market, with one of the most sophisticated, but yet easy to understand at a glance, interfaces out there.
  • While chat-based, they chose to build a support solution that connects all of their services and support personnel around the world who are currently available rather than use a call-center model. (And as they were just acquired by Xchanging, one of the big players in the Procurement market who are leaving MarketMaker4 as a stand-alone product and company, they now have a large network of support personnel around the world who speak multiple languages and can support their customers in their native language.)
  • Their market index solution is linked into the RFX/Auction module so that the buyer can see current component / raw material prices if there is a market index and can see current currency values as well as trends over the last year for every currency a supplier might bid in.
  • And they were the first e-Sourcing platform to integrate with D&B for the purposes of supplier discovery. Up until they did, most integrations were for risk data or data enrichment. As a result of their partnership and early efforts, they have one of the more powerful integrations and in addition to being able to search on name, location, etc. they can also filter on a variety of dimensions, including risk, size, diversity, etc. that even D&B can not filter on through their API.

MarketMaker4’s e-Auction product and supplier discovery products in particular are quite innovative, and SI will dive into them in more detail in the new year.