Category Archives: Supplier Management

Catching up with Ketera

During my recent trip to the San Francisco Bay Area, I had a chance to catch up with Ketera (acquired by Deem), who have been working hard on improving not only their next generation spend analysis solution and on integrating their solution with Hyperion, as discussed in my March post, but on improving their catalog management, contract management, and invoice management integration, their reporting capabilities, and their supplier enablement solution.

Although they have one of the larger supplier networks, with over 115,000 users, it was a breath of fresh air to find out that Ketera understands that a supplier network in itself has no inherent value and that the real value is in supplier enablement. After all, if you’re a fortune 3000 company that’s been in business for tens or hundreds of years, you know who your suppliers are and who their competitors are and the supplier discovery mechanisms touted by supplier network providers really aren’t all that valuable to you. The value of a supplier network is the ability to electronically communicate with your suppliers, automatically send and receive purchase orders, goods receipts, invoices, and payments, and enable your suppliers to new levels of integration and productivity. Thus, the maximum value is obtained when all of your key and large-volume suppliers are connected to the network, and this requires a solution that is standards based, open standards browser compliant, easy to use and adopt, and capable of supporting the information that both you and your suppliers need.

To this end, Ketera is working on improving its supplier on-loading processes and solutions, adding interfaces to common back-end systems used by its customers (to complement its newly acquired SAP Netweaver Certification), and streamlining it’s document exchange protocols, mechanisms, and management tools. Ketera is also working on extending it’s catalog capabilities and punch out support and integrating price cross-checking with its contract management solution to improve compliance across-the-board.

Although I don’t expect any new releases or major announcements from Ketera until the fall, they’re certainly a company to keep an eye on. Not only are they one of the few companies in the space to offer integrated sourcing and procurement solutions on-demand, but one of the few companies that understand the benefits of helping their customers with whatever solutions they need and playing nice. For example, although they offer best-of-breed spend analysis, RFX*, and contract management solutions, their event management solution is weak and they don’t offer modern reverse auctions or decision optimization and they recognize that some customers will need these solutions. To this end, they partner (and re-sell) Iasta‘s solution to insure that customers that need the full range of eSourcing tools have them at their disposal. Combined with their fairly extensive e-Procurement offerings (which, from a basic cycle perspective, is only missing direct integration with leading payment providers and tax reclamation software integration), this provides users with one of the most extensive solutions in the marketplace from an integrated end-to-end e-Sourcing and e-Procurement cycle perspective.

Furthermore, I expect that before the end of the year, they’ll reach a point where they could start working on some very advanced and very interesting predictive cost baselining and modeling solutions that can only be built once integration is achieved to the point where holistic analytics become a possibility. This would allow companies that don’t have the extensive data required by Akoya (acquired by I-Cubed) or the physical process planning knowledge required by Apriori to tackle cost modeling and cost estimation in a way that they are unable to today. In other words, there’s still room for lots of innovation in the space, and Ketera is one of the few companies that I’ve talked to that might really break it open in the next few years by introducing new capabilities that can be used by the masses.

* Please read the comments! This was a typo. When their RFX capabilities are augmented with Iasta’s through their partnership reselling agreement, they compete with best-of-breed RFX solutions but, as Jason Busch points out, they do not on their own. My apologies.

Informance: Manufacturing Performance Management in Disguise

Last week I re-introduced you to Aravo, a hidden gem in the supply chain space with their mastery of Supplier Information Management (SIM) that goes so far above and beyond what you get with traditional packaged e-Sourcing suites that even Oracle, one of the few companies that not only eats its own dog food and drinks its own champagne but also tries fervently to have it for every meal, and Google, one of the few powerhouse research labs left in existence thanks to the short-sighted venture craze and short-term return strategies of the last decade that saw the likes of some of the greatest labs (like Xerox Park, Bell Labs, etc) more-or-less disappear from existence, have decided to adopt the solution.

This week I’m going to introduce you to another hidden gem in the supply chain space that you might not notice otherwise – and it goes by the name of Informance (acquired by Epicor). Although I did introduce them to you back in this post in January, I doubt you took much notice as I didn’t go too much beyond the press release and web-site in my introduction as I was still struggling to understand where the true value of their solution lies.

However, thanks to a concerted effort by their new Chief Marketing Officer, the infamous Sudy Bharadwaj (who temporarily replaced Tim “Mr. Perfect” Minahan at Aberdeen before the arrival of Vance Checketts after market-making stints at MindFlow and i2), their messaging (and website) has been considerably cleaned up and clarified and their knowledge center has exploded. (Their recent series of benchmark studies, reminiscent of Sudy’s record-breaking research performance at Aberdeen of 5 studies in 7 months, is particularly enlightening as to the importance of the type of solution they offer.) After reviewing the cleaned up messaging, the new materials, and a few discussions with Sudy, I’ve finally figured out what Informance really does and how it goes beyond traditional manufacturing solutions to allow centralized operations and contract manufacturing customers to improve their distributed and outsourced manufacturing processes.

In a nutshell, even though they are currently advertising their solution as Enterprise Manufacturing Intelligence (EMI, not to be confused with the EMI Group), what they are really doing is Manufacturing Performance Management (MPM) – which could be explained as next generation Supplier Performance Management (SPM). In Supplier Performance Management (as promoted by Ariba (acquired by SAP), Emptoris (acquired by IBM and sunset in 2017), and Ketera (acquired by Deem), among others), you collect, analyze, and disseminate relevant supplier performance metrics to determine where your suppliers are performing well and where they are performing poorly. You then use this information to optimize your supply base, identify your strategic suppliers, and collaborate with them to root out identified performance issues and develop processes for improvement.

Manufacturing Performance Management (MPM) takes supplier performance management to the next level by not only identifying where performance is lacking (relative to best-in-class) at the plant level but also by providing actionable information upon which you can base performance improvements. By tapping into bi-directional information flows, what-if scenario analytic capabilities, six sigma, lean, and TPM knowledge bases, and heuristic improvement strategies, the system can not only tell you that production is down, but it can pinpoint the specific manufacturing line within the specific manufacturing plant that is not producing its fair share of units, determine the reason for the decreased production (breakdown, lack-of-inventory shutdown, labor shortage, etc), and provide you with a solution to fix the problem (increase safety stock, redesign your transportation network to prevent delays, increase staff levels, etc).

The importance of being able to go beyond identifying a problem to identifying one or more potential solutions in your manufacturing and contract manufacturing operations cannot be over-stressed. Just one of the benchmark studies I referenced above serves to highlight the drastic performance gaps between laggards and best-in-class performers. The Food and Beverage benchmark study found that best-in-class performers have 6,800% fewer process failures (0.25% vs 17%), 828% fewer equipment failures (1.69% vs 14%), and 33,333% fewer shutdowns (0.03% vs 10%). In addition, best-in-class have 10,909% fewer changeovers (0.11% vs 12%), 1,145% less operational downtime (0.96% vs 11%), and over 60,000% fewer production adjustments (0.01%, rounded up, vs 6%).

In addition to the bi-directional information flows, what-if scenario analysis, and actionable insight, Informance also offers real-time performance monitoring, proactive before-the-fact notifications, and multi-level dashboard monitoring that starts at the plant floor manager and goes all the way up to the COO. This is not to downplay their plant solution, which I’d still consider labelling EMI (Enterprise Manufacturing Intelligence), since contract manufacturers can also proactively use this solution to improve their operations and become supplier of choice to their customers, but merely to note the extent to which their enterprise solution goes beyond traditional EMI into the beginnings of true MPM. So be sure to check them out, and their expanding knowledge center in particular.

The Arrival of Aravo?

I was going to wait until Jason posted the follow-up to “Aravo Tackles the Supplier Information Management Challenge Part 1″* on Spend Matters before doing my post (as I did meet with them last month), but Tim’s post on “Do You Know Who Your Suppliers Are?” on Supply Excellence [WayBackMachine] has provided me with perfect timing.

In his post? Tim asks:

  • How clean or accurate is your company’s vendor master?
  • When was the last time it was updated?
  • Does it provide complete and detailed insight into supplier capabilities, health, and performance?
  • And how many vendor masters does your company use?

Tim then stated that if you wavered on any of these questions, you are not alone and that if you didn’t, you’re probably lying to yourself. He ended his post by stating that effectively selecting and managing suppliers in today’s fast-paced and global supply chain, requires a more accurate, current, and holistic view of suppliers – from basic contract information to capabilities and attributes to active contracts and performance data. It also requires a new approach to gathering and maintaining the supplier record … and this new approach can best be described as Supplier Information Management.

Procuri’s [acquired by Ariba, acquired by SAP] Supplier Management solution, and it’s a good start (and you could include Emptoris’ (acquired by IBM, sunset in 2017) Supplier Performance Management in this category, for example), but if you really want a supplier information management solution that will allow you to shout an emphatic yes to the above questions and

  • Let you query how many suppliers you are actively sourcing from at any time.
  • Let you query what parts you’re sourcing from any supplier at any time.
  • Let you query whether or not you have current copies of compliance and insurance certificates for any supplier that requires them at any time.
  • Let you query which suppliers are carbon neutral at any time.

then you want the solution the big guys use, which include Oracle and Google, and that’s Aravo. One of the pioneers of Supplier Information Management (having just released their 4.0 version this year, as noted in my March post), Aravo has been building, extending, and revamping their solution from a simple central supplier information repository that tracks everything you ever needed – and wanted – to know about your supplier to a solution that lets you not only proactively manage your suppliers but proactively manage your supplier initiatives – including your Corporate Social Responsibility initiatives.

Despite having an industry leading solution, Aravo has not really received their fair share of press. This is probably due to the fact that information management is not sexy. E-procurement is sexy – the ability to automatically receive invoices, match to purchase orders and receipts, and automatically make payments when everything in line is sexy – it’s fast, efficient, and saves you money. E-sourcing is sexy – the ability to streamline everything from the initial RFI through the final award in an open format over the web with your suppliers half-way around the world and get it done faster, quicker, better, cheaper is sexy. Managing your virtual file cabinets – that’s not sexy.

However, what the media has overlooked is that in today’s corporate environment, the trend is moving to sustainability and social responsibility – and this is just not something you can keep on top of if your virtual filing cabinets are in general disarray. So even though Aravo’s solution may not sound sexy, what you need to realize is that what Aravo’s solution enables is sexy.

With their new focus on Simplifying Sustainable Supply Chains, Aravo’s goal is to give you an information management platform that you can use to manage your global supply chain for your sustainability initiatives while managing the dizzying array of new industry regulations popping up around the globe. Their solutions is configurable, scalable, and comes with a full set of dashboards that provide visibility at multiple levels of detail. The solution enables on-time completion of initiative programs since visibility is available to executives on a daily basis. It is worth checking out.

* All posts prior to 2012 were removed in the Spend Matters site refresh in June, 2023.

the doctor’s Guest Posts: The Year in Review

Over the past year, I’ve blogged a number of guest posts over on eSourcing Forum, including forty posts last summer as part of the weekend series. For new(er) readers to the blog, here is a list of all guest posts over on eSourcing Forum with direct links.

Weekend Series Posts on e-Sourcing Forum [WayBackMachine]

Purchasing Innovation I: An Introduction
Purchasing Innovation II: TRIZ
Purchasing Innovation III: The Verifier Approach
Purchasing Innovation IV: Innovation Continued
Purchasing Innovation V: Sourcing the New Organization
Purchasing Innovation VI: CrowdSourcing
Purchasing Innovation VII: The Road Ahead
Purchasing Innovation VIII: Transforming New Product Development
Purchasing Innovation IX: The Purchasing Evolution!

On Demand I: The Good
On Demand II: The Not-So-Bad
On Demand III: And the Coming Pretty …

Cost Reduction and Avoidance I: An Introduction
Cost Reduction and Avoidance II: Metrics
Cost Reduction and Avoidance III: Incentivize for Success!

Supply Risk Management I: An Introduction
Supply Risk Management II: Risks and the Need for Resilience
Supply Risk Management III: Managing Risk

Supplier Performance Management I: An Introduction
Supplier Performance Management II: The Road to Success
Supplier Performance Management III: Best Practices

Demand Driven Supply I: An Introduction
Demand Driven Supply II: Stages and Implications
Demand Driven Supply III: Challenges and Implementation

Center Led Procurement I: An Introduction
Center Led Procurement II: A Center of Excellence
Center Led Procurement III: Best Practices

Procurement Outsourcing I: Is it right for you?
Procurement Outsourcing II: Selecting a PSP
Procurement Outsourcing III: Getting the most out of your PSP

Optimization I: A Powerful Tool
Optimization II: Why it was Relegated to the Shadows
Optimization III: Why it’s time is finally here
Optimization IV: POE or BoB?

Six Sigma I: An Introduction
Six Sigma II: Innovative Quality
Six Sigma III: Value Based Strategic Sourcing

Weekend Series Wrap Up I: Process and Technology
Weekend Series Wrap Up II: Supply Chain Management
Weekend Series Wrap Up III: The Innovation Revolution

Miscellaneous Posts on e-Sourcing Forum [WayBackMachine]

* Lead Time Optimization: Groundbreaking New Technology or just Applied Total Value Management-based Decision Optimization in Disguise?
* Sustained Sourcing Success
* Are there any limits to procurement’s role?
* Outsourcing Gets Tough
* Design for Supply
* The Benefits of an End-to-End e-Sourcing Suite
* Accelerating Value with On-Demand: An Aberdeen Perspective
* Supplier Enablement Enables Savings

And just in case you missed it, here’s a link to the chaos-causing post on Emptoris’ optimization over on Spend Matters:
The Doc’s Perspective on Emptoris’ Optimization*

* All posts prior to 2012 were removed in the Spend Matters site refresh in June, 2023.

Purchasing’s Tips for Supplier Relationship Management

A recent article in Purchasing entitled “Supplier Relationship Management: Pathways to Convergence” offered up a few tips on Supplier Relationship Management, complete with case studies, that could be useful. The article, which notes that, At the heart of any good supplier-relationship management (SRM) process is a belief in exacting metrics, open communication and a laser-like focus on finding and nurturing suppliers who are willing and able to bring new technologies and other innovations that have a positive impact on the bottom line of both companies.

Tell Suppliers What You Expect : Pitney Bowes
“We’re like any technology company in recognizing that our suppliers and partners will play an increasingly more critical role in our business strategies,” says Michael Dempsey, Vice President of Global Direct Procurement.”SRM provides the enabling mechanism for selecting, developing and leveraging the supplier capabilities we need to deliver superior customer value today and, more important, tomorrow. It’s vital to our success.”

Pitney Bowes segments its supply base, forms relationships with the top level of management in the top 5% of its supply base, and holds formal periodic business reviews. This feedback allows Pitney Bowes and its suppliers to work together towards one common goal.

Suppliers must ‘enhance’ customers’ experience : Fedex Express
Fedex Express in Memphis, Tenn. “depends on our suppliers to provide products, services or solutions to us that enhance our customers’ experience,” says Mary H. McDaniel, Vice President of Material and Corporate Sourcing. “Our customers depend on us to perform for them. We depend on our suppliers to perform for us.”

At Fedex, SRM is built into their four-step strategic sourcing process (assess, validate, source, manage), requirements are communicated to suppliers through Aeroxchange, and scorecards are used to track supplier performance. The results of the scorecard are used to develop action plans which are reviewed with suppliers during semi-annual meetings. In addition, the company holds a global supplier symposium every other year for its top 50 suppliers.

Suppliers should understand end customers’ needs Procter & Gamble
P&G uses a rigorous SRM methodology. “It starts with purchasing leadership involvement in relationships with strategic suppliers, and is focused on creating joint value for suppliers and our business,” says Mary E. Kostolansky, Director of Marketing Purchases at Procter & Gamble in Cincinnati. Furthermore, she states that “Our suppliers are an integral part of how we do business and we take a long-term view of these relationships to drive sustained results,” says Kostolansky. “We believe our suppliers can be a critical component in our ability to innovate and deliver sustainable value.”

P&G spends more time than ever ensuring suppliers understand retailer and end consumer needs and involves representatives of R&D, marketing, engineering, and other functions in the SRM process. Furthermore, P&G focusses on growing its business with top suppliers and on eliminating poor performers that are not adding value.

All-in-all, a good article on the basics. So heed the advice and don’t be in the 51% of Companies that Don’t Understand Risk.