Category Archives: Supplier Management

b-Pack: Packing It In for A Brave New World, Part IV

Three weeks ago, in Part I, we told you how b-pack, hot on the heels of Ivalua, had decided to cross the Atlantic and join in the conquest to bring the bohemian revolution to the world of Procurement and P2P with their extensive solution suite that actually closes the P2P loop. Then, two weeks ago in Part II, and last week in Part III, we expounded on some additional capabilities, relatively unique in the marketplace, that extended the basic value offering beyond basic P2P. Today we’re going to address one of the advanced P2P capabilities, the tightly integrated document management feature, administration, and the supplier portal. But first, a quick recap of the story to date.

Part I described the base b-pack platform that takes you from the start of a traditional sourcing cycle (RFx), through a contract, to a requisition (which may be from a catalog), against a budget, to receipt of the goods (which can include asset tracking information), and the invoice, to payment, reporting, and supplier management. It covered the requisition, approval, receipt, invoice, matching, payment, and reporting cycle in detail as well as the solution delivery options that are available.

Part II detailed some of the integrated applications that build out the core capabilities to also provide the organization with expense and travel management, asset management, dispute resolution, and procurement business intelligence reporting and Part III addressed inventory management and its integration with asset management, budget management, fleet management, and internationalization.

Invoice management, which was initially discussed in Part I, is fairly sophisticated with a built-in invoice viewer (which can handle invoices in e-mail, EDI, and PDF formats, among others), auto-match capability (at the line-item level against original purchase orders), and multi-way match capability between purchase orders, contracts, and/or good receipts. The auto-match can be manually overridden (and maintains a running total of the reconciled amount against the entire invoice amount so the user can track her progress) and an invoice cannot be approved until it is fully matched against one or more purchase orders (at the line item level) and until all disputes against it are resolved. This goes a long way to insuring that incorrect and fraudulent invoices are never paid, which happens way to often when certain commodities, like office supplies, electronics, and storage space, are being purchased regularly and in large volumes.

Like reporting, document management permeates the system and allows each document to be tracked by way of associated meta-data which includes type, creation date, version, author, language, and other information relevant to the document type. In addition, (related) documents can be organized in a tree structure and a new document can be defined as sequential merge of a set of documents organized in a tree. Contract management is then built on top of this capability and allows contracts to be built up from component documents, where each component is a distinct section or clause, with its own meta-data information that aids in searching during contract construction. Through versioning, a user can quickly build a starting contract from standard clauses and then edit them accordingly using the built in word processor. The contract can then be output to PDF or Word, and if edits are made in the Word version (by the supplier), it can be imported back into the system as a successive version.

In addition, the document management system can store e-mail templates which are sent out when an action is triggered in the system, such as the transmission of a purchase order, the formal notification of a dispute, an automatic alert that inventory replenishment is required, and so on. These templates can be stored in multiple languages, and the proper version will be selected according to the language of the recipient. Furthermore, it’s integrated with the auto-translation utility which, although not perfect, gives you a starting template in another language, which can then be quickly reviewed and corrected by a native speaker.

Administration allows the user to define global display properties, procurement specific workflows, batch processes, usage rights by user, help file additions, and log access rights. Global display properties include price display rules, date rules, fonts, and themes. Procurement workflow properties include request limits, default payment modes, templates, and terms. Batch processes include data cache maintenance, undelivered e-mail management, user session management, database optimization, and invoice file management. The buyer can add specific information to the online help files for supplier use and for internal use. Finally, the administrator can also run data integrity checks, performance checks, link and reference checks, and database optimization.

Whereas some vendors build separate supplier portals for suppliers, which can greatly limit the functionality available to the supplier as most of the smaller shops can only devote so many developer cycles to portal maintenance, b-pack chose to build the supplier portal within the core application. The supplier portal is essentially the same application, but with access limited only to what the supplier is allowed to see and do. When a supplier representative logs in, she sees the same task manager that a buyer sees, which shows her to-do list, in-progress tasks, most recent system access, and available applications and allows her to access her reports, search for relevant information, and define the application settings she has control over. If she accesses the purchase order module, she sees the full workflow associated with the purchase order, but she is restricted to altering information related to acceptance and delivery, attaching notes, and initiating or responding to disputes — buyer side information is locked.

In addition, the supplier (vendor) master is tightly integrated with the core platform and allows the buyer to add and deactivate suppliers as required. For each supplier, the buyer can define basic identifying information, contacts, catalogues, currency, a description of the supplier’s product and/or service offerings, and portal access. The administrator can not only grant access to one or more supplier representatives, but choose what authorizations each representative is granted (in terms of invoice management, dispute management, catalog management, packing slip generation, invoicing, etc.).

In summary, the b-pack platform, which has been under development for ten years and which is very well thought out with respect to its goal of optimizing your back office procurement, provides a comprehensive P2P e-Procurement solution that also includes some very useful capabilities above and beyond the basic procurement cycle requirements that can provide significant additional value to many buying organizations, including the invoice management, document management, and supplier management capabilities described in this post.

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What is The Price of Flexible Supply Chains? Part V: Eternal Vigilance

In this post, I’m going to discuss highlights from the CPO Executive Debate on “the price of flexible supply chains” and focus on why you have to be eternally vigilant.

Getting straight to the point, in response to how does emergence from the recession affect supply chain flexibility, Andrew Vaughan noted that there is a dynamism in the whole supply chain piece and therefore you have got to keep reviewing it constantly. Raw material shortages can bring an end to a product’s life, earthquakes can take out factories, and bankruptcies can take out suppliers literally overnight. One day your supply chain is running like a well-made Swiss timepiece … the next day it’s brought to a screeching halt as your fine tuned Ferrari slams into a brick wall.

Even if you, as Colin Davis points out, maintained a reasonably broad supply chain during the recession and maybe compromised some of the commercial advantages you could have taken in those situations so that you can then call on people as you go forward, if your suppliers or partners are in worse shape than you are, despite their good intentions, they might not be able to respond to the call. The safety net you think you have can be taken down at any time. Just like that information flow you painstakingly set up can disappear over night if you built it on a proprietary copper network which was just dug up and sold for scrap.

Furthermore, you need to keep an eye on the entire supply chain, which, as Andrew Vaughan points out, doesn’t necessarily end when you get the product delivered to the installer or customer. For many products, there is also the service chain to consider. Whereas many customers will just as happily trade up to a new model when their current cell phone dies, most customers want to keep their cars and high end (Apple) computers for a few years (or more). You need to be able to provide them with parts and services quickly when they need maintenance or repairs … because it all affects your image as a provider of quality goods and services.

Furthermore, not only do really advanced procurement supply chain organisations understand today the ripple effects that a natural disaster, or an epidemic, has on their overall supply chain, and take immediate preventative action even though only a sub-tier supplier to their main supply base is directly affected, as Martin Hogel notes, but these organizations also know that a ripple effect can start anywhere … even in the retail stores. For example, retailers can notice that product sales for a new category of product, like e-readers, is heating up across the board. They place orders into distributors for more product, who place orders into manufacturers for even more product, who place orders into component suppliers for much more flash memory, which is in limited supply. In this classic bullwhip effect scenario, the flash manufacturers will quickly sell out of all available inventory, and an artificial shortage will be created in the market. Those manufacturers who are not vigilant will not be among the first to get their orders in, their products will be delayed, and this will likely result in lost sales.

All in all, the need for eternal vigilance — in addition to strategy, customer obsession, and a strong supply base — is pretty clear and the debate (on the price of flexible supply chains) was quite an interesting one. If you haven’t yet done so, and can spare the time, I’d strongly recommend that you check the entire debate on the price of flexible supply chains and join in the discussion. It’s your supply chain on the line.

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What is The Price of Flexible Supply Chains? Part IV: Active Supply Base

In this post, I’m going to discuss highlights from the CPO Executive Debate on “the price of flexible supply chains” and focus on why you have to include the supply base.

The reality is that, no matter how much you try, only so much innovation and flexibility is going to originate from within your four walls. Most of the innovation, should you be ready to accept it, is going to come from your partners, and your supply base in particular. Furthermore, an A+ supply base can revolutionize the way you do business and significantly increase your profit potential. Consider the case of Zara, as discussed by Martin Hogel. Zara sells 85 per cent of its store stocks on initial price and the average in the clothing retail industry is 60-70 per cent. Zara’s on-target price:sales ratio is clearly an effect of a well-crafted and executed supply chain strategy … a strategy that is significantly increasing it’s revenue, and profit, by enabling it to outsell it’s competitors on an additional 15% to 25% of its product offerings.

While the obsessive customer focus discussed in the last post is critical, as Austen Bushrod notes, you need to get the supply base involved in that too because you truly need to have every stage of your supply chain involved to maximize your success. Even if it means, as Michael Walsh points out, that you have to nurture the supply base where they are struggling. After all, if you help them, they’ll remember that in your times of distress and help you. While there may be a few sociopaths in the business world, most people in business want to do what’s right, and that generally means helping you when you help them.

So how do you get there? As Guy Allen noted, you start with a transparency of information flow, then you, as noted by Colin Davis, cooperate, and finally, when it comes time for negotiations, leave the gun, take the cannoli. And before you’re done, you should, as Martin Hogel puts it, have a really good understanding of the structure of your supply base: which are strategic suppliers, which are, let’s call them preferred suppliers, and which are commodity suppliers or vendors. Then you can work with your strategic and preferred suppliers to come up with products and services that are truly value add to the customer, which, as per our last post, should be your obsession.

In our next, and final post, we’ll talk about how the final price of a flexible supply chain is eternal vigilance.

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Would Guanxi have saved Alcatel?

A recent article in the April 17th Edition of The Economist in the special report on innovation in emerging markets noted how Li & Fung, a Hong Kong-based company, has long been a pioneer, working closely with a network of about 12,000 companies operating in more than 40 countries. It puts together customized supply chains from its vast network of associates and keeps an eye on quality and order fulfillment. Similarly, Dachangjian, a motocycle-maker in China’s Guangdong province, works with hundreds of parts suppliers.

Specifically, it noted how these post-modern guanxi have several powerful qualities. For instance, they can contract or expand with demand. As a result, Li & Fung and Dachangjian seldom have problems with excess capacity when times are hard or with waiting lists when times are flush. Furthermore, they can be turned into engines of innovation. Li & Fung relies on its partners to help solve problems, not just fulfil orders. Dachangjiang provides its suppliers with rough sketches rather than detailed blueprints and encourages them to innovate.

Guanxi, the linking of two people in a relationship of mutual dependence, is common in Chinese business. While it has its downsides, as every gift of significant value will soon be followed by a request for a huge (personal) favour, it also has its upsides. Your partners stick by you in your times of need because you stick by them in their times of need.

I can’t help but think that if Alcatel had more of a guanxi relationship with their suppliers and kept track of the basics, as noted by Dick Locke in his recent piece, that they wouldn’t be blaming their suppliers for their recent 10% sales decline. But I’m not the expert, so I asked Dick Locke (SI’s resident expert on global trade) to elaborate on the advice he provided and whether guanxi would help Alcatel. This is what he said:

 

Well, doctor, sometimes I think we’re doing point-counterpoint. I didn’t see Alcatel blaming suppliers and I can’t imagine they could. I don’t know where their supply base is so let’s not put a country-specific name into the conversation. Let’s just call it “relationships”. But yes, they would have done better in their upturn if they had done something different. It could be maintaining better personal relationships, it could be a better matching of business strategies and it could be the existence of better contracts.

 

I’m not sure where they fell down. I do know that the telecom industry tends to see supplier relationship management as primarily a contractual issue. In my seminars, I usually ask how many people work at a company that ever took a supplier to court. About the only companies that say yes tend to come from the telecom world. Maybe it’s a legacy of being in a regulated industry. If Alcatel’s supply base is in Asia, most companies there value relationships over contracts. If it’s in Germany, it’s contracts over relationships.

I was bothered by the Li & Fung story. Suppliers able to contract and expand on demand? The economist made a nice assertion, but there was nothing to back it up. And putting a middleman between buyer and seller? How can you ever develop relationships? In a world where a toy manufacturer’s paint supplier’s pigment supplier can cause millions of dollars of expense and an an untold amount of reputation damage, buyers need to meet, understand and build relationships with several layers of their supply chain.

 

I did note that Li & Fung’s primary market was fashion and consumer goods. Clothing is built to old fashioned quality standards, with AQL plans still the norm for quality mangement. Buyers are willing to accept lots with 10’s of thousands of out of spec goods per million. That method of quality management isn’t adequate for most other industries.

Actually, it’s perception vs. reality. Point vs. CounterPoint is when there are, theoretically, two equally valid ways to approach a public issue. What we’re doing is addressing a perceived reality and either affirming it or denying it, so that, at the end of the post, a buyer can make not just a truly informed decision, but the right one. (Which, in this case, is a focus on the core principals of supply management: better strategy, better contracts, and better relationships.)

Thanks, Dick! (Global Supply Training)

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b-pack: Packing It In for A Brave New World, Part I

Who says the French aren’t revolutionary anymore? Last year, Ivalua decided to cross the Atlantic to try and conquer the North American procurement market. Now, short on their heels, b-pack, a company that’s also been around for 10 years, and which also has a large number of clients (across 20 industries they have over 80 clients), has also made the crossing in their effort to conquer what they call the “purchase-to-pay and process optimization” marketplace. But, most importantly, like Ivalua, b-pack also has one of the broadest e-Procurement suites on the market.

Just when you thought the e-Procurment market was getting stale (and with the exception of Coupa — who seem to have their head in the clouds lately, it has been pretty unexciting for the past year or two), along come the French who are determined to bring another bohemian revolution to the world of Procurement and P2P with extensive solutions that actually close the loop!

Realizing that it’s more than just requisitions, catalogs, and invoices, and that standalone systems that do not take you from procurement through purchase through receipt, payment and supplier management to begin the cycle anew, offer little in the way of value, b-pack brings with it a suite of solutions that take you from the start of a traditional sourcing cycle (RFx), through a contract, to a requisition (which may be from a catalog), against a budget, to receipt (which can include asset tracking information), and an invoice, to payment, reporting, and supplier management. And it has a number of supporting modules that are unique compared to most of the competition (but that will be the subject of the next post).

The solution can be delivered as a traditional behind-the-firewall solution, as a traditional hosted ASP solution, or as a cloud-based service (new version only) and can be deployed out-of-the-box or it can be custom configured (and extended) by b-pack, who have designed the solution on top of a configurable workflow management engine and who have a decade of experience customizing solutions for their clients, which include La Poste and Danone (Blédina).

We’ll start with the foundational modules — catalogs, requisitions, budgeting, receiving, invoicing, and reporting — since that’s the functionality that you need day in and day out, and since everything else depends upon the raw data collected in the basic P2P process. All of the functional modules are tightly integrated and accessed through the user’s home page, which maintains the user’s to-do list.

Requisitions are straight forward. You create a new document, give it a priority, define a needed-by date, select the company, cost centre, and ship to location, and then select your items. Items can be selected from commodity catalogs, custom catalogs, or user defined entries, and can be bought against a contract in the system or off-contract. If the requisition is within the buyer’s spending limit, a purchase order is automatically generated, if not, it goes to the designated approver. Once approved, a PDF purchase order is created which can be automatically sent to the supplier if e-orders are permitted, and, if not, printed and faxed. If the supplier is e-enabled, the system will automatically record the supplier’s confirmation of receipt. When the goods arrive, receipt can be recorded against the purchase order, and when all the goods have been received, the purchase order can be marked as closed.

When the invoice is received, it is recorded in the system. It can be received electronically if the supplier supports the right protocol, or manually entered by the recipient. The invoice is then automatically matched against the PO, and if discrepancies are detected, the user is immediately notified (who can initiate a dispute to correct the invoice). If not, the invoice can be marked for payment, and once paid, closed.

Once a payment is made, the user’s budget totals are updated, which tracks the total amount the user has spent, invoiced, ordered, and requested against her budget for the period. All of this information is immediately available to the user and her supervisor(s) through the budget reports.

Reporting allows the user to query purchase orders, invoices, budgets, and contracts (which are indexed by metadata and record relevant product and service information) at any time (and for any time period, or set of) at user, department, and company level. And in addition to tracking all of the users, departments, and company units (NA, Europe, Asia, etc.), the system also maintains all of the relationships which allows it to automatically generate workflows (for approvals and routings) and rollups for financial reporting purposes.

In other words, the foundations are precisely what you’d expect from a modern P2P solution that attempts to close the loop. In the next post we’ll dive into b-pack’s supplementary models that offer some more powerful, and unique, features that bring value above and beyond that which is normally offered through a basic P2P platform.

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