Category Archives: Technology

A Couple of Surprises in the Supply Chain Strategy Survey

A cooperation between the Cranfield University School of Management and Solving Efeso that resulted in the publication of Supply Chain Strategy in the Board Room (based on a survey of 181 senior logistics and supply chain executives) between July 2009 and January 2010) had a couple of surprises in the top ten findings, at least to me.

While the following findings made sense:

  • The most important supply chain performance drivers are cost focus, customer lead-time and customer quality but these vary by sectorUnfortunately, supply chain initiatives are still primarily focussed on cost and not the overall value supply chain can deliver in terms of risk mitigation, service level improvements, and innovation.
  • Customer service issues and cost issues are the main triggers for strategy reviewReviews are usually reactive and not proactive.
  • Supply chain strategy implementations are not straightforwardThe supply chain affects all areas of the business and multiple systems in sourcing, procurement, logistics, warehouse, and trade management are needed to address the supply chain end-to-end.
  • Successful supply chain strategy implementations have top level supportGreat results typically require significant changes to systems and processes, which just don’t happen without support and leadership from the top.
  • Cross-functional accountability and a balanced combination of several key approaches and techniques also improve the likelihood of successAll of the affected parties need to collaborate. This will generally only truly happen if they are all held responsible for the success or failure of the initiative.
  • Development of the supply chain strategy is largely internalisedEven though most corporations don’t truly understand how to revolutionize the supply chain, those that embark upon defining a supply chain strategy generally try to do it themselves without the help of an expert guide from outside the organization (even though Consultants are Cheap).
  • Of the many barriers to success, the major ones are company culture, lack of leadership and poor supply chain visibility. Barriers are predominantly people-related, rather than technical.Implementations may be difficult, but with the right guidance, support, and elbow grease, they can be done relatively quickly and efficiently and, depending on the system or process in question, sometimes be completed in a few weeks. Most of the solutions are fairly matures these days. As a result, any hiccups are generally caused by humans and not hardware.

The following findings are a little shocking:

  • Supply chain is recognised as an important part of the businessWhile I hear a lot more talk these days about how important supply chain is to the business, I still don’t see a lot of action. It’s shocking how many mid-market companies still don’t have basic e-RFX/e-Auction platforms even though affordable solutions have been available for years! As far as I’m concerned, it’s Action, Not Words, and until I see more action, I won’t believe it.
  • Service and corporate strategy are key driversNo, cost is. While 10% of the true innovators might have moved onto service and strategy in an attempt to generate long term value, 90% of the time it’s cost, cost, cost. (If you get any other response is just lip-service.) While it should be value, it’s still cost.
  • Review of supply chain strategy is highly cross-functional and in many cases, a continuous process with regular monitoring and continuous adaptation according to circumstances. Well, at those few companies that actually have real supply chain strategies, review is likely to be cross-functional (as these are the few companies where the CSCO/CPO will actually have a seat at the table), but at the vast majority of companies monitoring is irregular, adoption is haphazard, and cross-functional participation is still a pipe-dream. Sorry, but this is either wishful thinking on the part of the survey respondents, or the survey sample was very skewed towards the 10% of true innovators. If review and monitoring was continuous, you wouldn’t have 40% to 60% of negotiated spend unrealized at the average company, because maverick spending would be caught and eliminated, overcharges would be caught and never paid, and off-contract shipping options avoided in all but true emergencies.

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B2B Connex: Automating the End-to-End Purchasing Process

When we introduced you to B2BConnex last December, we told you about their e-Document Management Solution for Small & Mid-Size Manufacturers that is a great fit for all types of small and mid-size manufacturing organizations that need simple e-Sourcing and e-Procurement functionality at a low price tag (which starts as low as $30,000 / year, plus 20% annual maintenance for a small operation, and isn’t much more than $100,000 a year for a mid-sized operation).

Designed to fill the niche in the small and smaller mid-sized market left by the big end-to-end e-Sourcing and e-Procurement suite vendors whose big footprint solutions come with an equally big price tag, the B2B Connex solution allows for easy management of a slew of e-Documents — including RFQs, purchase orders, kanban orders, advance shipment notices (ASNs), payment inquiries, invoices, and sales orders, which enables an organization to efficiently conduct its transactional back-office procurement operations (especially since it integrates with a dozen ERP/MRP systems with minimal or no configuration).

Since our introduction to B2B Connex last year, they have been quite busy upgrading their platform and adding new functionality. They’ve improved their integrated scorecard capability, added more customer branding capability (which allows a customer to define their own logos, colours, fonts, etc), streamlined Excel integration for data import and export, and launched a new customer portal that not only streamlines the transmission of purchase orders, outbound RFQs, ASNs, and inbound shipment inquiries, but also contains a new shopping cart application that runs on a catalog that is customized for the customer.

The new portal application allows the manufacturer to tailor a catalog for each customer. For each customer, the manufacturer can specify what items are visible, what the price is for that customer (based on markups, contracts, or discounts), and any restrictions on purchase (minimums or maximums, manufacturing plants & shipping locations, etc.). Since the customer catalog is implemented as a view on the manufacturer’s full catalog, only customer specific information has to be defined for each product. It also contains embedded search functionality which makes it easy for the buyer to find what they are looking for and the manufacturer to find what products they want to make visible to the customer.

The cart works like your standard one-click e-Commerce cart, but instead of asking for payment information on submission of an order, it generates a purchase order that is automatically incorporated into the manufacturers back-office system and forwarded to the appropriate warehouse(s). Billing and shipping address, billing and shipping contact, invoice and ASN recipient, and (default) shipment method are all automatically filled in based on the customer representative’s profile, but can be manually overridden as required. Once the order is manually reviewed and accepted, a purchase order acknowledgement is automatically sent to the buyer. Once it is ready to ship, the buyer receives an ASN, which the warehouse personnel can generate in a single click (as it is automatically generated from the PO data and the shipping clerk’s profile). Once the order ships, an AR rep. can automatically generate and send the invoice (which also flows through the customer portal) in a single click (as all of the information can be pulled from the ASN and the WMS [Warehouse Management System]). The entire system has been designed to streamline the tactical parts of the purchasing process and eliminate duplicate data entry [which is the most common cause of errors and lost time in the tactical purchasing process].

The platform is multi-lingual and currently supports five languages: English, French, German, Italian, and Spanish. It’s also compliant with EDI standards and allows the customers to define their own menus, which can be used to include information about their own specific processes, requirements, and specifications. And the next major release, expected sometime this fall, is going to have scorecard (based) correction action reporting (SCAR) capability, which will be available through the portal and integrated with the scorecard capabilities.

At this point, with respect to the basic process they are trying to automate, about the only noticeable weakness is the lack of a bid analysis capability to complement their RFQ module, which would round out their e-Negotiation capabilities and enable them to provide a solid sourcing offering in addition to their solid purchasing offering for small and mid-sized manufacturers who don’t need sophisticated e-Sourcing platforms. But it looks like they won’t have this weakness much longer, as they indicated that as soon as SCAR is in general release, bid analysis is the next project in the queue and they plan to have a first release in the first half of next year. All-in-all, B2B Connex offers a very good solution for the price tag.

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Ecovadis: Ecovating the Globe

When we introduced you to Ecovadis back in 2008, we pointed out how this European start-up was building a sustainability solution for evaluating and monitoring suppliers in a manner that would help companies meet and exceed the emerging green and sustainability regulatory requirements. Fully compliant with GRI G3 (Global Reporting Initiative) standards and the ISO 26000 CSR Guidance with their solution that tracks metrics across 23 green/sustainable criteria for the 150 procurement categories they support, it provides a very extensive CSR scoring mechanism across environmental, social, ethical, and supply chain issues.

Back in 2008, all they had on the technology side was the core supplier assessment module for the buyer — which was built around a “dashboard” that provided a snapshot rating of a supplier on each of the key categories with drill down ability into the scorecards for each rating, cross-industry benchmarking, and integrated news feeds (with human reviewed articles, relevant legislation, etc.), and a supplier portal — which allowed the supplier to log in, answer questions, provide relevant data, and see their scorecard. On the services side, they had the ability to arrange and verify audits on your behalf, scan and classify relevant documents automatically, and support suppliers in five languages even though the platform only supported English and French. And when SI last covered them, they had only three public customers.

Flash-forward to 2010, and they have made considerable progress on the technology, services, and customer front. On the technology front, they have made significant updates to the core supplier assessment platform (the newest of which are in beta testing now and will be in general release at the end of the quarter / start of next quarter), released an audit module, released a new risk analysis module, and improved the multi-lingual capabilities of the platform. On the services side, their partnership with SGS, the largest certification company with over 1500 auditors certified in CSR auditing, allows them to do 2nd party audits on your behalf on your suppliers anywhere in the world and they have added a few more languages to their back office. On the customer front, they have increased their customer base tenfold, with 30 public customers that include 10 companies in the Global 500 who are in the top 10 in their vertical (including the largest construction company, the second and third largest insurance companies, the third largest building materials company and the third largest industrial manufacturer), with a few more big names to be announced soon. These customers represent over 2,500 users that collectively track CSR data on over 4,000 companies across 40,000 sites in 80 different countries with a 94% adoption rate among suppliers.

The upgrades to the core supplier assessment module include an improved UI, feedback capability within scorecards, guidance for buyers and suppliers on how to improve ratings and the most critical weaknesses that need to be tackled, and a new corrective action plan capability for suppliers to allow them to propose corrective action plans and collaborate with buyers on their design and implementation. The guidance highlights key issues across each of the 23 categories, primary weaknesses, (upcoming) regulations and initiatives of import, policy recommendations, and proposed actions.

The Risk Analysis module, designed to allow all users to perform a quick check of the potential CSR risks associated with a specific supplier profile, and identify those suppliers which should be subject to a formal assessment or audit, is pretty simple, but it’s a great start considering that most organizations don’t have any tools at all. (Plus, you can’t automate risk analysis — this will always require human interaction. Software is not intelligent and can’t identify unknown threats — only humans can.) Basically, the user fills out a (proposed) usage profile (direct or indirect, country, turnover, categories, branding, influence, etc.) which can be uploaded from an Excel file, the system extracts the CSR profile of the supplier and all of the related data, and an automated analysis engine determines the primary potential risks, the probable degree of supplier CSR risk relative to buyer CSR exposure on a nine-by-nine grid (which goes from low to high as you progress from the lower left [green] zone to the upper right [red] zone), and the action you should take (which is either no action, assessment, or full audit). While not perfect, it will quickly identify the majority of the company’s riskiest suppliers, which is where the company should start its risk management efforts.

The real value in their solution to procurement is in the massive cost savings it enables. CSR is important, but we all know that North America tends to follow the mantra of Gordon Gekko and that, unfortunately, when times get tough, the mighty dollar trumps everything else. Companies like to feel good, but they like to profit more. These days, profits come not from sales (which are sluggish), but from savings that come from cost reductions and risk avoidance. Ecovadis’ platform assists you on both accounts. Without the platform, buyers are wasting a lot of time and money chasing suppliers, who are fatigued from answering the same damn survey over and over again, for data, analyzing that data, and shelling out for expensive benchmarks from high priced consultants to put that data into relative light — data that might be suspect to begin with. Similarly, suppliers are wasting time cutting and pasting data instead of providing the buyer with the products and services the buyer needs, which drives up costs for both parties, and not even getting any decent feedback in return that they could use to improve their operations. But with the centralized sustainability marketplace Ecovadis provides, suppliers only have to answer a question once, they only have to suffer a time-consuming and costly audit once, and they get a scorecard which not only rates their performance, but benchmarks them against their peers and identifies areas for improvement. Buyers get up-to-date reliable data and actionable scorecards which they can use to leverage suppliers and make better decisions. Everyone wins. Plus, if the buyer has a SPM tool (like that offered by Ariba, Aravo, Hiperos, SAP, etc.), Ecovadis’ can plug their platform into the tool and greatly simplify the CSR SIM that the buyer would likely have to do manually.

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SI’s Policy: No Time Limit and No Fixed Schedule on Briefs

One week ago today, Spend Matters (“SM”) announced (in its Friday Rant) that it was limiting briefings to a one-hour-and-twenty-minute interval on Thursdays and a two-hour-and-30-minute interval on Fridays. SM stated that briefings would be limited to 40 minutes, including 10-15 minutes of introduction/background, the remaining time to be spent on “the presentation or announcement”.  SM further stated that it requires reference contacts for a follow-up call, and that it is limiting follow-up demos to 30 minutes.

While it is not Sourcing Innovation’s place to comment on the policies of other blogs in the space, the doctor would like to take this opportunity to make SI’s policies, most of which are very different from the above (and laid out in the FAQ), very clear.

  1. SI will schedule briefs at times of mutual convenience. If this means after hours, that can be arranged.
  2. Although initial demos are usually limited to 60 or 90 minutes, SI does not impose time limits of any kind on briefs. If a brief needs to be continued, then it will be, for as long as it takes. SI is interested in your solution. Very interested.
  3. SI is not interested in “announcements” or “presentations.” Rather, SI wants to see your solution in action. Plan on a deep dive into your solution, followed by an intelligently-written post, assuming that the doctor believes that your solution solves areal problem in our space. Note that the doctor is very respectful of any software solution that solves a real problem, because he knows what it takes to bring such solutions to market, having done it himself on multiple occasions.
  4. SI is generally not interested in making reference calls*, because the doctor doesn’t care about your Marketing department’s ability to find customers who think your solution is the greatest thing since sliced bread. He is interested in your solution, not third-party opinions about your solution. This is not People Magazine or Gartner, so the opinion of a random “celebrity” customer, regardless of how prestigious his or her corporate logo may be, is irrelevant here. Lemmings are plentiful, and they come in all sizes.

Finally, SI sees no issue in trying to “keep up with” vendor products and announcements. Although many vendors make routine “exciting” announcements about new functionality and so forth, in practice these announcements are usually just marketing noise, having little to do with important functionality changes and enhancements. SI is confident of its ability to cover real enhancements and real innovations when they really occur, and can see no immediate danger of running out of cycles to do so.

For vendors who require a Non-Disclosure Agreement (NDA) before providing a demo, SI is not interested in reviewing your solutions. the doctor’s assumption is that organizations requiring an NDA before doing a deep dive for a reviewer are irrationally hiding functionality that is released and in the public domain anyway, so their motives for trying to conceal that functionality are suspect.

Thank you for your attention.

* The exception being when you make a strong claim about savings, ROI, etc.

Saving on Systems Integration Costs

If you’ve ever bought an enterprise system, you know that the sticker price is usually only a small fraction of the total cost of ownership and that the implementation and integration costs can dwarf the sticker price by an order of magnitude. As a result, integration costs often present supply management with an opportunity to save six or seven figures. But how? Especially when 70% of enterprise projects fail to deliver on their initial promise?

In a word, planning. According to several experts in the field, the most common problems that arise when companies set out to integrate procurement, distribution, warehousing and communication systems come not in executing their plans, but rather in conceptualizing them. The reality is that if your plans are good enough, you can get a junior team fresh out of an India technical school to implement them successfully*. But if the plans aren’t good enough, you might as well take that money to Las Vegas, because those 10% odds of success are better than the odds of your project succeeding.

Not only do you need a shared view of success at the enterprise level, as discussed in this article on “drawing the lines on system integration”, but you need a detailed plan that describes what systems will be integrated, what modules will be linked, what data will be exchanged, what functionality will result from the integration, and what success cases look like. Coding is rarely the challenge. It’s usually knowing what to code.

* Unfortunately, the doctor has never seen plans this good. It is possible to create them, but it seems that companies never spend enough time in the planning stage anymore …

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