Category Archives: Supplier Management

What’s the ROI of Online Collaboration and Communication Technology?

It’s hard to say, as it depends on what the technology is, what it can do, and how readily (and often) it’s embraced by your people, but it’s probably worth it. Video conferencing reduces travel (which not only takes up time, but costs money at an average of over 1,000 a trip per person), online document sharing reduces wait-times (when you have to rely on mail or courier), and online inter-enterprise information sharing reduces issue resolution time (as compared to phone and fax tag).

If the tools enable collaboration, and you use them with the intent of collaboration, they certainly have ROI, as evidenced by this recent article in Talent Management on “What’s Your Return on Collaboration?”. According to the article, an implementation of an online meeting and conference solution at SAP generated the following returns for the company:

  • a reduction of the average meeting time by 20% which reduces the average amount of time an employee spends in meetings each week by over an hour and a half
  • a reduction in meeting start-up time by over 85% which can save another hour a week if an employee has to attend between 7 and 10 meetings
  • a reduction in travel costs by over 33% which is generally more than what you will save if you just negotiate better rates
  • a 4-fold increase in collaboration attempts — when it’s easier to try and work with someone than work alone, collaboration happens

Now, this is only one case study, but it’s still impressive. Make it easy for your employees to work together, and they will.

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Good Supplier Performance Management Starts With Performance Analysis

As per a recent article over on ChainLink Research, a diversified international manufacturer discovered that real improvements happened once it made performance information available quickly and easily to both buyers and suppliers, and then based buying decisions on that data. This was accomplished through a centralized tool that supported real data analysis. Every week the tool pulls all of the relevant data from the manufacturer’s various systems (ERP, MRP, factory management, etc.) into a single repository where it is mapped against a common data structure that can be sliced and diced as required by a commodity manager that needs to see productivity, quality, delivery performance, and spend data for the supplier by site, part number, or business unit, etc. This allows the commodity managers to see if they have been rewarding suppliers who were easy to work with but performed below par, or not rewarding suppliers who were perceived as not being easy to work with, but performing above par. As a result, behaviour changed quickly.

And once you have all of the relevant data available in an analysis tool, you can find unconventional uses that can benefit the organization. One example given in the article is when the CEO of the diversified manufacturer was negotiating with a senator. The tool allowed the CEO to quickly find out how much business was being done in the senator’s state and put together an argument regarding the firm’s contribution to the economy and local business. This is powerful information when lobbying for loans, tax breaks, or other economic incentives, which are often necessary when trying to expand the business in a rough economy.

The Enterprise 2.0 Emperor Has Nice Looking Threads …

… but they might not keep you dry and warm if a storm blows in!

Allow me to explain. Intelligent Enterprise recently asked if “the enterprise 2.0 emperor has no clothes” because, when it comes to collaboration:

  1. it’s already going on in enterprises, just as it always has and
  2. it’s not that interesting if it doesn’t impact the core business processes of the intended users.

The new tools may look great, and may streamline the processes with their aerodynamic properties, but the fundamental fact remains that if the users aren’t using them regularly with the intent to collaborate, then the tools won’t help when it comes to identifying small problems that can quickly escalate into full blown supply disruptions, or when it comes to working together to make sure the disruptions never happen. Just like a stylish polyester jumpsuit isn’t much help when a cold, heavy, rainstorm blows your way.

So before you go buying an Enterprise 2.0 solution (like those offered by Hiperos, Rollstream, etc.), make sure you have your processes and culture in order. Otherwise, you’ll never realize the benefits that these systems have to offer (which, if you’ve read the SI reviews, can be numerous) and are better off sticking with your tin-can communication system as modern technology is useless if you aren’t ready for it and won’t use it properly.

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Great Tips for Supplier Performance Management

A recent article from ChainLink Research noted how never before have companies been so dependent on the performance of their suppliers as a result of today’s companies becoming so lean, fast, and outsourced that monitoring and responding quickly to deal with and continually improve suppliers’ performance has become a key determinant of success or failure. This article on “Supplier Performance Management” had a number of great tips for managing supplier performance, including the following:

  • Automatic Initiation of Corrective Action WorkflowsNot only must metrics be tracked rigorously, but they must be fed into monitoring systems that immediately notify the responsible individuals and start a corrective action workflow as soon as an issue is detected or a downward trend is identified. Hiccups must be addressed before they balloon into major supply disruptions, not after.
  • Reverse RatingJust thinking you’re a great customer doesn’t make it so. You might think that your performance exceeds the performance you expect from your supplier, but it might be the case that nothing could be further from the truth. The delivery might be late because your people kept the driver waiting for two hours while they prepared to accept the delivery. The shipment might be late because you only gave two days notice of significantly increase demand and not the two weeks you agreed to in the contract. Sometimes your processes are just not best practice … and sometimes your supplier knows ways you can improve them. Etc. Take your medicine and your overall supply chain health will improve.

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Rolling Up Resolutions with RollStream

In our last post, we talked about Rollstream’s new workspace capability and how you could steamroll your compliance problems into submission. We also mentioned how Rollstream was in the finishing phases of a new dispute management and resolution solution, as part if it’s overall supplier development and performance management solution.

While the problem may sound simple, and while the solution isn’t all that complicated compared to other supplier management solutions, for a large Multi-Billion dollar company, the administrative costs alone to resolve disputes can exceed millions of dollar a year. (One of their beta customers, an 8 Billion dollar company, estimated that just their administrative costs were over 2 Million annually!) Add to this the costs associated with having to dispose of damaged inventory and the losses from overpayments if a loss is not appropriately tracked and billed back to the supplier, and disputes can cost a large company over 10 Million a year!

That’s a lot of money at risk, especially when a properly designed supplier management solution can easily identify, track, and streamline the resolution process and see the average dispute resolved quickly and easily. Plus, it helps the supplier. In the US, more than 61% of receivables remain open for over 50 days (and it’s worse in Europe). Considering that this type of solution can reduce the average resolution time from weeks to days in your average large company (as there’s no paperwork to lose and everyone gets promptly notified — through the system and e-mail — when they have to respond to a dispute or take an action), a supplier could see considerably more invoices paid on time.

While its primarily being used to resolve shipping disputes (overages, shortages, and damages) by the beta testers, it was designed to allow the community to track and resolve any kind of dispute, including cost, pricing, transportation, invoices, rebates, and contracts — and since it recognizes POs, invoices, and contracts (and their IDs), it can be used in conjunction with the full sourcing and procurement process.

The solution is fully integrated into the Rollstream platform and easily accessed from both the community (supplier) portal and the users you authorize to use the application. When the user logs in, they see all of the issues associated with them as well as their current status (pending, open, waiting on, [recently] closed, etc.) and can filter based on status, supplier, organization, creator, date, etc., or any other active field associated with an issue. The application is fully configurable and, in addition to the pre-defined standard fields (which can be renamed or removed), the user can define any text, date, numeric, or selection field they would like to track. In addition, if a number of disputes are related to the same shipment, purchase order, invoice, etc., there is also a bulk update capability that can be used to address them all at the same time. In addition, there’s an easy to use import and export function. You can import issues from a standard CSV file and export to excel. The import is well thought out and will automatically map input columns to application fields through a matching algorithm, which can be overridden by the buyer as needed. Finally, the dashboard reporting, which by default displays number of incidents by status, number of incidents by type, and average days to resolution, can be configured to track and report on metrics of interst to the buyer. Finally, when an issue is resolved, the application can be configured to track the relevant information related to reconciliation.

Considering the price tag for this solution starts in the five-figure range, and the manpower savings alone could be seven figures (as you’ll free up more resources to address other, more strategic, parts of the procurement and sourcing process), dispute resolution is definitely a solution that should be considered as part of your supply chain management platform — especially if you’re already using the Rollstream solution.

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