Category Archives: Sourcing Innovation

The (Board) Gamer’s Guide to Supply Management Part IV: Castle Panic


Some games are so fiendishly clever, so devilishly difficult, the players must join forces and fight against the very game itself … because, in the end, we will either all win, or we will all be sitting on the couch of shame.

I’m euphoric to continue this one-of-a-kind summer series that will help you whether you are just interested in finding out about this new and exciting career opportunity, or ready to take your Supply Management career to the next level. Not only is it more fun than watching the defragmentation bar in Windows 95 on a 386 with 4 MB of RAM and an almost full 1 GB hard drive (which boots up in a day and a half), but when you can grasp a lot of the basic concepts by playing the right mix of strategic (and sometimes tactical) board games with your friends, it’s two blasts and a half!

While we still have to tackle the economic games (like Puerto Rico) at some point, we’re going to make use of the fact that, thanks to unprecedented generosity of Wil Wheaton (@wilw) and Geek & Sundry, we have another fantastic TableTop episode where Wil Wheaton introduces us to the game. Until we run out, we are going to take advantage of the priceless gifts that Mr. Wheaton has granted us with this series.

Wil Wheaton gives us a very succinct introduction to Castle Panic, a classic castle defence game (of which there are thousands on the internet and at least dozens for your iPhone) turned into an exceptionally well crafted team-based board game:


The board is divided into three areas called arcs. There’s a blue arc, a green arc, and a red arc. Each arc is further divided into three zones that are targetable by archers, knights, and swordsmen. … The bad guys are trolls, orcs, and goblins. They’re coming out of the forest, advancing towards our castle, trying to ruin our lives. Every turn, the active player will draw cards and then trade a card with another player so that they’re in a position to fight the bad guy most effectively. This is how we work together. We have to get useful cards to the active player so they can target one of the guys coming in to knock down one of our castle walls. After all that happens, the bad guys will advance towards the castle and then we will do the entire thing all over again. … If the bad guys come in and knock down all of our towers, we lose the game. If we manage to defeat all the bad guys, even if there is only one tower left standing, then we win the game.

In TableTop Episode 6, we learn that Castle Panic teaches cooperation, not co-opetition, in the face of almost insurmountable risks as a result of unexpected disasters. Think of goblins as environmental disasters, orcs as socio-technological failings, and trolls as geopolitical-economic crisis that could smash your supply chain into pieces if not properly addressed. And just like in reality, depending on what the risk is, and where it is, only a certain type of mitigation can be brought to bear. An environmental disaster that destroys a production plant and wipes out a source of supply can only be countered by finding a new source of supply, which, in supply chains, may often mean trading with your competition who has locked up excess supply but needs something else that you have more immediate access to. Similarly, in Castle Panic, staying alive often means trading archers, knights, swordsman, heroes, and even barbarians with other players to insure you have the resources you need to take out the immediate threats.

Just like each monster begins with a different number of hit points in castle panic, each disaster has a different degree of severity and requires and may require multiple actions to resolve. If a geopolitical uprising or economic sanction all of a sudden makes your suppliers in Vietnam inaccessible, whom you were depending on for raw materials and production, you will have to find a new source of raw material supply and a new manufacturing partner.

In Castle Panic, just like in your supply chain, the risks, and the disasters they represent, keep coming. At the end of very turn, players must draw 2 tokens from the monster pile (until all 49 are exhausted). These may be run of the mill goblins, trolls, and orcs or they may be special tokens that move monsters around the board; advance them closer to the castle you have to protect (such as the Orc warlord or Troll Mage); force you to draw additional monsters (including the Goblin King); kill your defenders (by way of plagues), or that unleash a giant boulder that, while having the benefit of squashing all monsters in its path, doesn’t stop until one of your walls or towers are destroyed. (The same way that a new piece of legislation, a trade barrier, or other unexpected turn of events can cut off a market for your organization.)

Furthermore, in Castle Panic, just like in your supply chain, your resources are limited. Players draw to replenish their 5-card hand at the beginning of their turn, and once those resources are spent, they are not replenished until the beginning of their next term (just like your budget is only replenished once a year). While most cards take the form of defenders (archers, knights, swordsmen, barbarians, and heroes), some are special cards that will allow a player to draw 2 extra cards, rebuild a wall (with brick and mortar), slow monsters down (with tar), drive monsters back (into the forest), or even scavenge the discard pile and reuse an already played card.

It’s a great team-building game, and one you should play internally with your cross-functional teams to get them thinking strategically and to help them understand that you stand together, or you fall together. Because, just like in real life supply chains,

we will live together, or die alone — in Castle Panic.

The Category Sourcing Scorecard – An Essential Tool for Collaborative Category Sourcing

Collaborative Category Sourcing is the foundation for eSourcing 3.0, whatever that happens to be. Why? As pointed out on SI, it is the only way to achieve savings above and beyond the limits of spend analysis and/or decision optimization, which max out at an average of 11% and 12% respectively, and this is especially true when the category has been strategically sourced (repeatedly). And the savings can be substantial. As pointed out in SI’s recent white-paper (sponsored by BravoSolution) on the “Top 10 Technologies for Supply Management Savings Today” (registration required), if the right combination of technologies are applied in the right way, they can often deliver 15%, 20%, 30%, and even 40% savings on hundred-million plus categories which were heavily scrutinized in the past and where little or no savings are expected. That’s why collaborative sourcing — which works best when it’s category focussed — is needed.

But how do you select the right category to start with? It’s certainly not as simple as selecting the category with the largest spend, the category with the least recent sourcing exercise, or the category coming up for renewal in six months. There are a number of internal, market, supplier, buyer, and category-specific factors that need to be taken into account — and this recent post on The Category Sourcing Scorecard over on CPO Rising did a great job of summarizing the vast majority of them.

Internally, the right category is the one with a contract maturing at the right time (which is typically three to nine months in the future, depending on the time it will take to do the sourcing project right), a documented sourcing history, a number of concerned stakeholders — who are willing to be engaged, and an accessible spend history (which, although not clear from the summary, should also contain usage, return, and inventory history).

From a market perspective, there should be enough competition to make an event worthwhile, the availability of one or more substitutes (if the current product has one or more patented, single-source, components), some bargaining power for the buyer, and barriers to market entry for both the product the buyer is producing and the capabilities offered by the suppliers (as, otherwise, new suppliers could set up shop overnight, sell to new buyers at cut-rates to establish business, and hurt your entire supply chain). In addition, the supply/demand (im)balance, which factors into the buyer’s bargaining power, should be known and relatively predictable.

From a supplier perspective, it should require some specialization (that the supplier can use to set itself apart), provide for profit margins, contain value-add components (valuable to the supplier and your customers), and a level of technical excellence. In addition, there should be suppliers who are financially stable, innovative, and willing to work with you to find substitute raw materials, components, designs, or production processes that will take costs down and push quality up.

From a buying perspective, there should be the potential to achieve some supply assurance, minimize production impact, save money, and require a production volume that will be attractive to the suppliers. In addition, there should be some signs that costs and risks can be reduced significantly enough to make the project worthwhile. This could take the form of falling raw material prices, the recent introduction of innovative new manufacturing technologies, or increased market competition.

From a category perspective, impact, complexity, and lead time will definitely be key factors, as noted by the post, but so could organizational importance, sustainability, and C-suite support. This will often be the hardest category to judge and score.

Which brings us to the following question – how do you score the scorecard? Do all the categories have equal weight, or are some more important than others? Making them all equal is certainly a valid starting point, as it will let you quickly eliminate categories that are really bad (with low scores in multiple categories), but may not be enough to let you choose between a category which scores great except for market factors, another which scores great except for supplier factors, and a third which scores great except for category factors.

In reality, the right scoring framework will be dependent upon the ultimate goal. If the ultimate goal is (still) to reduce cost, then the market factors should get the most weight. If supply assurance is the most important goal, then the buying factors should get the most weight. And if innovation is the desired outcome, the supplier factors should likely get the most weight. While it’s hard to make a hard and fast rul, here’s a good starting point for weighting.

 

To Focus On: Put a Higher Weight On:
Cost Market Factors
Supply Assurance / Risk Mitigation Buying Factors
Innovation / Value-Add Supplier Factors
Stakeholder Inclusion Internal Factors
Organizational Strategy Category-Specific Factors

 

The (Board) Gamer’s Guide to Supply Management Part I: Ticket to Ride

I’m excited to introduce this brand-new summer series. Running once every week or so, this series will help you understand

  • what Supply Management is, if you want to know about this new and exciting career and you are an avid (board) gamer
  • how to take your Supply Management game to the next level, if you are new to the job and are having difficulties understanding some of the basics across the many areas that you have to master, and
  • how to hone your analytical skills in your-off time to do a better job and, ultimately, master many of the nuances of supply chain management and optimization.

And I know what you’re thinking. Those of you who are avid gamers are saying, “Cool! Not only do I get to put those countless hours mastering Settlers of America, Puerto Rico, and Steam to use, but I finally get an introduction to Supply Management that isn’t as exciting as watching paint dry!” and those of you who (think you) are expert practitioners are saying “Has the doctor finally flipped his gourd? Has he finally downed one pan-galactic gargle blaster too many (while trying to work his way through all the earthly equivalents, given the difficulty of obtaining an Algolian Suntiger tooth) in the presence of the Sourcing Maniacs?” (Keep up, they’ve been missing since leaving for an extended [European] vacation in January of 2010.) To the gamers, I say game on and to the rest of you, I say not yet. Bear with me and you just might learn something. Or at least have fun trying.

Even though (The Settlers of) Catan is the classic board game that is typically used to introduce newbies to the genre of strategic games, and the second game used by Wil Wheaton In Exile in TableTop to introduce you to the world of recreational board gaming, we’re going to start with Ticket to Ride because it’s about the easiest game out there and a great way to introduce you non-gamers to gaming (and you gamers to Supply Management).

As explained by Wil Wheaton in TableTop Episode 4, Ticket to Ride is
so elegant and so simple [that] you can teach it faster than it takes to set it up. You can even convince your wife to play it with you. And even better, if you don’t know anything about Supply Management, you can learn some of the important principles that will stay with you throughout your Supply Management Career.

And not only is it one of the simplest games to start with, as Wil explains, Ticket to ride is the 2004 German game of the year. That’s sort of like winning the Academy Award for board games. It’s kind of a big deal.

So where do we begin? With the basic rules, of course. The best summary of those can be found in TableTop Episode 4. As explained by Wil, when we play Ticket to Ride

We are railroad barrons attempting to connect cities together across North America in the age of steam. At the end of the game, the player with the most points will be declared the winner. … To get those points, we can perform one of three simple actions on every turn. We can draw cards face up from the board or from the deck of mystery. We can cash in cards of the same colour to play a train down and claim a route. If a player is feeling particularly saucy, he can draw a ticket. If you complete the route outlined on the ticket before the end of the game, you receive bonus points. However, it’s a little risky. Because if you do not complete that route, those bonus points count against you in the final scoring. … Ticket to Ride is a modern day classic. You can learn it in minutes but you will be playing it for the rest of your life. All aboard.

So how does this help you learn, better understand, and master Supply Management? It’s simple.

If you are a gamer who wants to understand what the new and exciting field of Supply Management is,

  • In Supply Management, when shipping goods, you can use one of the carriers (in the face up cards) you have used in the past or try a new one (from the deck of mystery) who may (or may not) better serve your needs
  • When you need to ship something quickly and demand on carriers in the region exceeds available shipping capacity, you can use reserved capacity (in your claimed routes) to get your priority goods on time (and potentially sacrifice the ability to get future shipments on time)
  • Simply getting foreign goods onto sovereign soil is not success. If you cannot get the goods the last few miles from the dock to the warehouse or the last mile from the warehouse to the customer, you have not complete the route and have not succeeded in your task. (Just like getting four out of five tracks is not enough to claim a five track route.)

If you are a novice Supply Manager, the game helps you understand that resources and options are always limited and you are always jockeying for position against your competition. The reason that Ticket to Ride is hard to win (and hard to master) is that only one of the double tracks on a route can be claimed in a 2-3 player game, and there are only 2 tracks on a route in a 4-5 player game. You’re always competing against your opponents for tracks to complete your routes and, even worse, you don’t know what routes your opponents are trying to complete, just like in Supply Management. In Supply Management, if your competition knew your complete route, they would know what factory you’re sourcing from, what store/end-user the product is going to, and based upon knowledge about the factory (and supplier) and the store (and customer base), they would not only be able to extrapolate your supply strategy (which could be one of your competitive advantages) but also be able to predict what type of product you are sourcing (and possibly extrapolate your market strategy). That’s not what you want (especially if you’re Apple).

And if you are an expert, the game helps you hone your Supply Management instincts. Yes, you need instincts. When do you lock down a logistics / distribution contract? Analytics only takes you so far. At some point you have to lock the deal in, and if you’re spot-buying, timing gets you the best price. It also increases your observation skills. If you see capacity declining rapidly on preferred routes, you know you have to lock in. But if you can see capacity declining on nearby routes, then you know a spill-over is inevitable. (And in Ticket to Ride, the best players can see routes forming and lock in tracks that they need before their competitors.)

It’s a great starting point. And if you can’t wait to get started, I have great news! You don’t even have to wait until you get a chance to rush to your local game (and comics, if you’re in a small[er] town) store to pick up a copy. Since many of you have an iOS device, you can download Ticket to Ride for iPhone or Ticket to Ride for iPad right now! (Goal: Exceed 160 points.) Happy barroning!

Time to Take the First Step on Your Next Level Supply Management Journey

And download the new BravoSolution sponsored Sourcing Innovation WhitePaper on Taking the First Step on Your Next Supply Management Journey [registration required] today if you haven’t already.

The acronyms and acclamations are still flying fast and furious in the Supply Management space and phrases like VFS, Hi-Def Sourcing, Next Level Supply Management, and Next Practices aren’t going anywhere — and neither is your organization unless it’s on the road to improving it’s Supply Management practices (unless it’s in the Hackett Group 8% and has a solid plan to stay there).

Chances are that, right now, your organization is somewhere in the standardization and complexity reduction phase of maturity, and if you’re reading SI, approaching the phase of operational excellence. A few of you are in the operational excellence phase, and maybe even approaching the final phase of strategic business enablement, but given that excellence is a moving target, even if you’re lucky enough to be there, it’s going to take work to stay there now that you need to be an expert in QFD, CMM, TVM, KM, SRM, SIM, WM, GSM, NPD, IRR, ROI, ROIC, EBITDA, EV, EVA, NPV, TTM, and TTV! (Don’t know what these are? Read the white-paper!)

In order to advance, a Supply Management organization needs to master the nine axes of excellence, which are:

  • Sourcing Process
  • Organization
  • Finance
  • IT
  • Product Management & Marketing
  • Risk Management
  • Asset Management
  • Relationships
  • Metrics

These axes, along with some key achievements necessary to progress the next level ladder, are defined in SI’s new white-paper, sponsored by BravoSolution, on Taking the First Step on Your Next Supply Management Journey. Download it for FREE now [registration required].