Category Archives: Supplier Management

SIM? Is It Old News or a Shiny New Pair of Shoes? Part I

Supplier Information Management, also known as SIM (but which has almost nothing to do with your Subscriber Identity Module card in your cell phone), is not new. The early leader in this space, Aravo, which boasted the likes of GE and CISCO as clients, was formed in 2000 and followed not only by a slew of companies trying to be best of breed in SIM (including AECSoft, now owned by SciQuest, Hiperos, and Lavante, to name a few) but by a slew of suite vendors that began to implement enhanced SIM into their platforms (including Ariba, Iasta, and Zycus).

And most of the basic features are now commodity. Try to find a vendor that sells SIM that doesn’t track all headquarter location, financial, core product, service, insurance, and third party risk information associated with a tier 1 supplier. Most of the good vendors also track third party credentials, compliance information against all relevant laws and directives, internal performance metrics and third party ratings, and even integration with third party supplier directories and databases.

And the uses are well known.

  • Where are the bulk of my suppliers located?
  • What is the financial health (risk score) of my top 100 suppliers?
  • Are any of my products out of compliance with regulations in one or more countries?
  • Do all of my suppliers have their relevant insurance certificates up to date?
  • Who are my riskiest suppliers?
  • Have all of my suppliers verified their primary contacts in the last six months?

And the more mature companies, to try and maintain an edge, maintain their customer base, and expand into new companies and additional verticals have started to integrate additional, and related, functionality. Aravo evolved into a full Supplier Lifecycle Management solution that balanced compliance, performance, and risk management. Hiperos is focussing on Third Party Management and on Compliance and Risk Management in particular. For example, their compliance management solutions include code of conduct, diversity management, insurance attestation, social accountability, and sustainability. Lavante is focussing on on-boarding and integrating SIM with audit recovery services.

When all is said and done, SIM seems like a mature space that is old news in Supply Management. And betting on it probably musters the image of an old gambler clutching dice in one hand and his last dollar in the other mumbling “baby needs a new pair of shoes“. But is it a bet you would lose?

What are the Retail Keys to Success?

Retail is hard. Really hard. Razor thin margins. Demanding customers. Unpredictable trends. Unreliable carriers. Financially unstable suppliers. The list goes on. But there are steps a retailer can take to make sure their odds are better than their competitors. Specifically, they can take steps to strengthen their supply chain — and a recent article over on Supply Chain Digital on untangling the retail supply chain with real-time analytics outlines four steps a retailer can take to strengthen their supply chain.

1. Obtain an end-to-end transparent view of the supply chain across both traditional and online business units.

You can’t run brick-and-mortar and online stores as separate business units. They are one brand and your customer expects one experience. If it’s in the warehouse, it needs to be available to customers who frequent your store as well as to customers who visit your online storefront. Moreover, pricing needs to be comparable. If you charge significantly less online than in the store for the same product, then why should your customer come to your store? Especially if you’re offering free shipping to build your online presence?

2. Implement the capability to identify bottlenecks and problems in real-time and the agility to take corrective action before the customer experience is impacted.

Your end-to-end view needs to go beyond simply identifying inventory levels across the organization, but expected delivery dates, ship dates, and late shipments / deliveries that will increase stock-outs and impact your ability to serve your customers.

3. Integrate once diverse and siloed sources of data across the business units to offer coordinated and quality service levels for the omni-channel shopper.

You need to not only offer superior service, but service your online customers in your stores and your store customers online, because, online or offline, you’re one organization, one brand, and you need to offer one consistent quality of service to maintain that brand.

4. Leverage historical data to set baselines and then analyze data against those baselines on a regular basis to make more reliable and timely predictions and better manage the business.

Past purchase patterns are just that — past purchase patterns. As tastes and trends change, so do purchase patterns — and the sooner new patterns are detected, the sooner inventory levels can be modified to prevent stock-outs of popular items and expensive over-stocks of items in disfavour.

It’s not a complete list of actions retailers can take, but it is a good starting list.

The (Board) Gamer’s Guide to Supply Management Part XVII: The Village

Life is tough in Competitive Co. Global growth is slowing with the economy. Your products are no longer the most wanted in the marketplace. And at the end of every quarter, the employees who fall in the bottom 10% of their performance reviews get axed. Plus, you just found out that the CPO has been lured away to Big Money Co., one of the Directors is getting promoted, and it’s likely that the next Director will be promoted from within. You want that job, because it significantly decreases the chance that you will be cut when your next annual performance review comes up.

But how do you progress up the corporate ladder? Where do you focus your efforts? Even though you’re required to be a jack of all trades as a Category Manager, you can’t focus on everything, and if you’ll try, you’ll be a master of none and one of your category management rivals will be picked instead of you. Looking around, you see that people who get promoted to Senior Management positions tend to be those who either excel in timing the market and locking in contracts and/or spot buys at the perfect time, forging new markets, managing supplier relationships to optimize production, embedding themselves in standards organizations, or mastering the politics of the workplace to advance despite their lack of skills.

It’s not much different than trying to progress up the social ladder in the typical medieval village. If you were unhappy with the simple life of a farmer (like in Agricola) or a fisherman (like in Le Havre or Rouen Upon a Salty Ocean), then you either have to make your life as a merchant in the market and learn how to profit on every trade, travel to strange new lands to find new and valuable goods for trade, become a master craftsman and produce the ploughs and carriages needed by the farmers and traders, take the religious path and join the church and try to become a monk and work your way up the pecking order, or, if you were lucky to be living in one of the early commonwealths or states, where leaders were elected, become a politician and try to work your way up the ranks in the city council to eventually become elected (or appointed) as the representative of your city.

In other words, things haven’t changed much in 300 years. If you want to get ahead in the world, you either master trade, travel, craft, religion*, or politics. And that’s what you have to do in The Village.
In The Village, you win by controlling the family that achieves the most prestige by the end of the game. Prestige is gained by traveling to new cities, occupying the council chamber(s), progressing through the ranks in the church, succeeding in trade at the market, amassing wealth (in the form of gold coins), and getting your family members recorded in the village chronicle (for their deeds) on their demise. (Unlike the other worker-based games we have covered so far in this Board Gamer’s Guide to Supply Management, where you either have a constant number of workers, or a slowly increasing number of workers as the game progresses, in this game, you lose workers as the game progresses as actions have a time element, and you only get so much time per worker. This adds a new dimension of complexity as you have to be balance worker acquisition with worker loss, just like in the real world where workers retire, defect, or, occasionally, drop dead at their desks.)

As with most worker placement games, the game is round-based and each round consists of a number of actions. In each round, there are a fixed number of birthing, grain harvest, craft, market, travel, council, church, and well actions and players take turns until all the actions have been taken or the end-game has been triggered (in which case each player takes one more action). The birthing action adds one family member (worker) to your family; the grain harvest allows you to take 2 (3, or 4) bags of grain (if you have a plow and a orse or an ox); the craft action allows you to either produce or trade for a scroll, plow, or wagon, mill grain and sell it for gold, or work or trade for a horse or ox; the market action allows you to trade goods (and acquire prestige for your trading skills); the travel action allows you to visit a new city if you have a wagon and the resources to do so; the council action allows you to place a member in the council if you have a scroll or the influence (resources) to do so or, if you have a member in the council, advance him through the ranks if you have the scroll and/or influence (resources) to do so and gain rewards for doing so; the church allows you to enroll one of your family members in the clergy in the hopes that they will be selected for advancement at the end of the round (which will give you prestige if you have the most family members in the clergy); and the well action allows you to acquire a resource (needed for travelling, council advancement, goods, etc.).

The difficulty is in balancing your actions so that you always have the resources and time to advance. For instance, you can’t take too many time-based actions until you have expanded your family as you lose one family member after you have taken actions that require 10 time units in total, and, because this game takes place during the time of the plague, you cannot add more than 7 family members over the duration of the game. Many of the actions, such as travel, advancing through the council chamber, trading in the market, milling grain for gold, and working for scrolls, ploughs, wagons, horses, and oxen, require time. Depending on the action, it can require anywhere from one time unit (to enter the council chambers for the first time) to six time units to produce your first plough (as it takes 3 time units to learn the trade and 3 time units to build a plough). Just like in the real world, it takes time for your workers to learn their jobs and then time to produce results. That’s why you often buy or outsource, trading money and material (in The Village, resources) for goods and services you need instead of trying to acquire the talent and build the product yourself. Some competencies (like category management) you invest in and others (like production) you outsource. Sometimes you keep a superstar on your team, and advance them through the ranks (like you advance them through the council or the church in The Village) and sometimes you let them go (or, in The Village, let them expire to be recorded in the Chronicle for prestige).

It’s another great game for testing your Supply Management muster, with the unique twist that you not only have to balance resources with growth, but you also have to balance trade with workforce output, because, just like in real life, if you burn out your workforce, they expire. Do you have what it takes to be master of The Village. Why don’t you find out? Maybe you’ll even figure out where to focus your efforts to advance your own Supply Management Career!

* Some standards have as many zealots as recognized religions!

The Board Gamers Guide to Supply Management Part XV: Le Havre Part II

After being introduced to Le Havre last Friday, you played all weekend as the subtle complexity and inherent trade-offs challenged you to prove that your intuition and strategic reasoning skills could not be matched. You bested your team-mates, and after one play each night of the simple game in the iOS version, where you beat the Admiral Sabine AI on your 4th try, you think you’re ready for the full base game. But are you?

In the simple game, only 19 of the 33 buildings are used — typically these will be the Abattoir, 2 Building Firms, Bakehouse, Bank, Brickworks, Charcoal Kiln, Clay Mound, Cokery, Colliery, Construction Firm, Fishery, IronWorks, Marketplace, Shipping Line, Smokehouse, Steel Mill, Tannery, and the Wharf. With the exception of the marketplace and the bank, each of these was covered in our first post. In addition, you start off with one wooden ship, 5 francs, and 12 resources: 2 fish, wood, coal, iron, and cole and 1 cattle and hide. You are guaranteed of being able to feed your works and build something first round. Not so in the full base game (which goes 6 extra rounds). In the full base game, you start off with five francs and one lump of coal. No ships, no food, and no resources to build. And the marketplace, which gave you four goods in the base game, gives you only 2. You have to wheel and deal your way just to survive (and victory is a long way off).

The challenge of Le Havre, where you not not only have to balance food production (to pay your workers) with resource acquisition (to build your products), energy production (to power your manufacturing plants) and ship production (to distribute your goods for sale), is that you also have to build at the right time, use the buildings at the right time, and trade appropriately. If you’re too early or too late to the market with your goods, no one will buy them. If you don’t take advantage of opportunities, your competition will. And if you don’t secure transport during peak Christmas season, well, then, you’re just dumb. Furthermore, in the game of Le Havre, just like in the real world, only one player can use one building at a time, take an offer from the harbour and the resource type associated with it, or get points for a particular building or action. And the increasing food costs (payroll as your organization grows) make the game quite challenging if you don’t adequately prepare for food production (cash flow) from round one.

And when you scale up to the full base game, a lot more trade elements enter into the picture. Consider the following buildings not typically used in the simple game:

  • Arts Center: Each player occupying (using) one of her buildings receives 4 Francs from the treasury.
  • Black Market: A player visiting the black market may take 2 of each good whose offer space (in the harbour) is empty.
  • Bridge over the Seine: The player may sell as many goods as he wishes at the rate of 1 Franc for each upgraded good and 1 Franc for any combination of 3 standard goods.
  • Business Office: The player can exchange any four goods of his choice for one steel or one good of her choice for 1 charcoal, leather, or brick.
  • Church: It’s a miracle! Walk in with 5 loaves of bread and 2 fish and walk out with 5 more loaves of bread and 3 fish.
  • Dock: At the end of the game, the player who owns the dock receives 4 Francs for each ship.
  • Grocery Market: Receive 1 cattle, meat, fish, smoked fish, grain, and bread from the supply!
  • Hardware Store: Receive 1 wood, brick, and iron from the supply.
  • Local Court: Return 1 or 2 loan cards for free!
  • Sawmill: Build any building that requires wood for one less wood.
  • Storehouse: At the end of the game, the player with the storehouse receives francs for his unsold goods.
  • Town Hall: At the end of the game, each other public building owned by the player increases the value of the hall by 4 Francs.

When these buildings are added into the mix, there are more ways to get (valuable) goods (since each unit of steel requires 5 energy to produce), much needed food (as the grocery market yields the equivalent of 8 food units on a single visit), and money (especially at the end of the game). Trade becomes a much bigger part of the game, in terms of resources and buildings (as it is often advantageous later in the game to sell buildings acquired earlier in the game for those that give you monetary advantages at the end of the game). And the balancing act becomes tougher. (In fact, for those of you who acquired the iOS version, don’t be surprised if Admiral Sabine starts kicking your @ss again until you not only figure out that trade is the name of the game and what that means in the town of Le Havre.)

And this is just the beginning of the complexity. In addition to the full set of base buildings, you are also presented with 5 special buildings, put up by the town, that can be bought in each game. These are randomly selected from the set of 36 special buildings and include: 6 craftsman’s buildings, 14 economic buildings, 6 industrial buildings, 4 public buildings, 5 non-buildings, and a ship. The craftsman’s buildings, like the brick manufacturer or steelworks, give the player resource-based economic advantages. For example, the steelworks allows one iron and 15 energy to be exchanged for 2 steel (instead of the one-to-one conversion enabled by the steel mill). The economic buildings, like the guild house and mason’s guild, give players economic advantages during the game or at game end. For example, the guild house gives its owner 2 Francs for each economic building owned by the player at the end of the game. And the luxury yacht, which can be swapped for an iron ship, has a value of 20 Francs!

Le Havre really is a great game to test your supply management mettle. While it will take you a few hours to get through an intense four (or five) player session and prove your strategic supply management dominance, it really puts your thinking skills and your ability to balance supply with demand with opportunity to maximize the overall value generated to the test. Give Le Havre an honest go. You might just advance your strategic thinking and planning skills more than you bargained for. (And if you haven’t checked it out yet, don’t forget to try Le Havre on iOS. Remember to start with the tutorial, and then move on to the simple version of the 2-player game before moving on to a full 2-player game, and, finally, a full multi-player game.)

Decideware: Taking Agency Expense Management to the Next Level!

As per our recent posts, Decideware are the Agency Performance Management Experts, having brought end-to-end agency lifecycle management (Part I, Part II, and Part III) to your agency-based supply chain.

Agency-based spend is an often overlooked spend category because it’s creative (and marketing doesn’t want to give it up), outsourced, and typically hands-off (because all marketing wants is the end product — print, radio, tv, or web advertisement, campaign, etc.).

However, ignoring this spend is costly, especially if you are doing a lot of production work — because the amount that is being spent through your agencies on production is often a lot more than the creative agency fees. But this is just the tip of the iceberg. When you drill down, you often find that if you are using a lot of different agencies for your different marketing initiatives, there will often be overlap not only in the types of production companies your agencies use to create your advertisements and campaigns, but in the actual companies themselves. This means that if you can identify common tier-2 providers used by your agencies, and identify potential preferred providers, you can negotiate with those providers for preferred rates to be on your preferred provider list that you provide to the agencies (who can be told that they can only use providers for identified services from your list).

Plus, because Decideware’s new Production Management Module allows you to track all costs down to the individual project and provider level, you can make sure that the preferred rates are actually being offered to you. And if the project is large enough, or the volume of work increases, you can ask for an additional discount and track the negotiated savings as well. It’s a great way to identify cost-savings opportunities when you don’t need the absolute best provider. After all, just about any print house can do a print job and any production studio can film an advertisement. This allows you to save on the “commodity purchases” and spend those dollars on the “creative” side instead, where you are likely to receive the most value for your money.

The new Decideware Production Module is a great complement to their existing Statement of Work module (discussed in Decideware: An End-to-End Agency Lifecycle Management Solution Part II) and now, for the first time, you can truly undertake multi-tier end-to-end agency-based cost management and really get your advertising and marketing spends under control.

The Production Module, currently in beta and scheduled for full-release at the start of next quarter, is similar to the scope-of-work module in that it walks the user through the full production RFX and cost estimate workflow. After the user defines the project metadata (type, scope, timeframe, org unit, etc.), she selects the users who will participate (in editorial, view, or approval mode), defines the work products (and who is responsible for overseeing their definition), selects the vendors who will be allowed to bid, defines the desired cost breakdown (by phase and element), defines the contract terms, and then, finally, defines the approval process. Then the project is launched and vendors provide their bid package with the desired cost breakdown, which includes an identification of the sub-tier suppliers who will be used to complete the work.

It’s an easy to use and well-thought out solution for getting your rampant advertising budget under control.