Procure IQ

Performance measurement, the foundation of supplier performance management, scorecards, and outsourcing deals, is a key to supply chain success but, like everything else, it has to be done right. That’s why I enjoyed the article on the five traps of performance measurement (subscription required) that the Harvard Business Review published late last year. If you avoid your traps, you greatly improve your chances of success. Measuring Against Yourself While you should measure against past performance and goals to insure that you’re improving, what ultimately matters is how well you’re doing against the …

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In the recent webinar, Correcting Your Spend Vision with Visibility, Mickey North Rizza, research director with AMR Research, discussed implementing spend visibility tools to bring more spend under management, gaining competitive advantage through analytics.
During the webinar, we received three really great questions from our audience, and wanted to share Mickey’s responses covering maverick spend, data [...]

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When I say “casino”, what’s the first thing that comes to mind?
Probably for most of you, it’s money. Actually more like MONEY. Money being spent, won and lost at breakneck speed. And although you’ve possibly had trips to Vegas where you were up against The House (and ask a gambler, and they’ll always tell you [...]

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Is Purchasing Magazine trying to give me a heart attack? Isn’t it enough that they refuse to acknowledge the presence of Sourcing Innovation (which, as you know, is one of the few blogs that brings you real supply management content you can use day-in, day-out six days a week, every week) which they dropped from their “News from the Web” feed years ago (when I first ripped apart one of their sloppy articles)? After reading a few of their recent articles, my blood is boiling!That’s right! That bullcr@p that Spend Analysis is expensive (see last Thursday’s post) …

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Last month, I told you how BravoSolution Collaboratively Optimized Its Way onto the doctor’s Short List. Today, I’m going to discuss their (Spend) Analysis, Supplier Performance Management, and Contract Compliance Solutions to give you a broader view of their solution suite.To get straight to the point, their spend analysis (console) solution, which takes a standard reporting-based approach, and which includes over 60 standard report templates, is nothing special, but their analysis administration tool, the Transformation Designer, is one of the most powerful administration interfaces I’ve seen in a web-based analysis solution. Most providers tout their “leading auto-cleansing, auto-classification, …

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Coming out of the global economic crisis, a new business climate is taking shape that will permanently change the way organizations need to deal with Buyer-Supplier Relationships. The old normal was a world where credit was freely available. In the new normal credit will no longer be easy and we’re going to face an inflation risk. This has driven many suppliers to choose which customers they want to serve. So now is the time for many Buying organizations to become a “Customer of choice” since it might be too late when markets become tight and are forced to line up with other buyers to get suppliers attention.

Best-in-class companies leverage collaborative Supplier Management as a means to mitigate Supply Chain Risk and also use as a competitive differentiator to drive substantial bottom-line revenue growth and profitability. But the path to a success Supplier Management initiative requires not only a world-class web based technology and tools but also structured processes, expertise and access to a networked community to succeed.

Top “Lessons Learned” for enhanced Buyer-Supplier Relationships in the “New Normal”:

1. Learn to operate in the “New Normal” – Agility and information are the keys to success
2. Supplier Collaboration is the new way to work with suppliers in the new normal. Collaboration jumpstarts Innovation
3. Suppliers can pick customers they serve and it is imperative for buying organizations to become “Customer of Choice”.
4. Suppliers in all industries and geographies are in a very different position than just two years ago
5. Supplier Management don’t have to be a complex, laborious undertaking with “no light” at the end of the tunnel (can be turned into a competitive advantage using a structured approach to manage suppliers)
6. Total visibility in the supply chain and suppliers substantially improves efficiency and competitiveness in organizations
7. Supply Risk is not going away just because the economy is getting better

Sundar Kamakshisundaram is a Senior Solutions Marketing Manager for Ariba, a global provider of spend and supply risk management solutions.

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Innovation seems to be pouring out of the Tata Group at a very rapid clip. The Tata Nano, which relied heavily on the company’s suppliers for their cost savings and creativity, raised the proverbial innovation bar by dramatically lowering the cost of an automobile thus making them available to a larger portion of the Indian population (and perhaps the rest of the world in the future). Now the company is back in the headlines with a new, revolutionary, potentially life-saving product with huge demand. The Tata Swach is a low-cost water filter aimed at the HUGE number of people in India and worldwide who lack access to clean, safe drinking water.

I’ll let this CNBC video fill you in on the details of this low-margin, high volume (in terms of sales, not water volume) water purifier Tata want to have in 3 million Indian homes within the next 5 years.

The collaboration story thus far focuses on Tata Group companies. But I wouldn’t be surprised if the more in depth story on the life saving device (approximately 380,000 children die each year of diarrhea in India alone) actually tapped into their suppliers in order to keep costs down and innovation up. Given Tata’s success with that model in the past, it seems likely they’ve employed across much of the Tata Group, particularly when trying to achieve a game-changing design AND a low price point.

What’s the lesson here for other companies, that are striving for differentiated products at a lower cost than their competitors? Tata’s key to success seems to be … starting with a price point and product, then working backwards through the R&D process with a constant eye on the bottom line. And to get there, they rely heavily on their suppliers for innovation – in terms of specifications and process efficiencies.

Can you do the same? Are your suppliers ready, willing and able to help?

Justin Fogarty is Managing Editor of Supply Excellence. For any questions or feedback on the blog or its contributors, Justin can be reached at jfogarty[at]ariba.com.

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In the context of last week’s surprisingly positive job numbers (so surprising in fact that President Obama had to do a last minute rewrite to his speech Friday), two news stories have shared additional good news for US manufacturing. They’re largely anecdotal evidence, but perhaps they show a return of manufacturing jobs to the US for a number of reasons, including hedging against currency fluctuations and utilization of manufacturing capacity.

First, there was news that Daimler AG is moving some production of US bound Mercedes C-class cars from Germany to Alabama. Citing currency fluctuations as the key driver, Daimler officials plan to shift 20% of the production of their most popular model in the US to this Southern US state that is gaining traction in the automotive manufacturing industry. Interesting, the NPR report also points out that Alabama is a “right to work” state that requires far less vacation and other benefits than the 1,800 Stuttgart employees who are losing their jobs enjoyed.

The second story covered the emerging trend of jobs returning to historic manufacturing counties in the US.  The AP article focuses on the furniture industry in western North Carolina. The industry has seen a drastic turn-around in the last 6 months, with companies going from layoffs to aggressive hiring to keep pace with demand. In fact, it’s that demand and the lack of a ramped up workforce that proves to be the underlying lesson of the article. Were companies too quick to shed jobs in the last 18 months? Can they ramp up quickly enough or will their customers see shortages in their supplier’s capacity? And is that excess capacity in manufacturing centers enough to draw renewed hiring from domestic, foreign and globally based companies?

These stories probably stir up more questions than answers about the future of manufacturing in the US. For starters, are these just a nice anecdotal case (Daimler) and a statistical blip (manufacturing jobs) rather than the start of a strong, lasting trend? Will the new normal – in regards to global risk from currency fluctuations, shipping/commodity costs, and consumer demand – lead to more jobs being “onshored” to the US and other countries that had fallen out of favor for low-cost countries in recent years? And if we do see more manufacturing jobs in the US, will they last?

What do you think? Where are we headed? Insights, anecdotes and questions are welcome in the comments (leave them anonymously if you must).

Justin Fogarty is Managing Editor of Supply Excellence. For any questions or feedback on the blog or its contributors, Justin can be reached at jfogarty[at]ariba.com.

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For the past few weeks in the Strategic Sourcing & Procurement Group on LinkedIn, members have been debating:

“What direction do you think buyer-supplier relationship is likely to move in the future?”

Lots of perspective, opinions and advice. A few of the highlights …

Collaboration is key

“Collaborative partnerships of joint win / win. New study from Strategic Account Management Association (SAMA) that interviewed 178 Procurement Professionals found they received on average 41% more value from what they term collaborative partnerships; meaning TCO focused, not price / bid everything conflict oriented. Companies that are still around and that have made money in the past have realized that suppliers are a competitive advantage and that focusing on total cost reductions and partnerships is the only way to generate sustainable profitability. “

All suppliers are not equal

“While most buyers continue to adopt ‘Theory X’ assumptions about all their ‘vendors’, and inhabit a ‘critical parent’ ego state, a small but growing number of professional practitioners stratify their suppliers and attempt to build rapport with key suppliers based upon the adoption of an understanding of interpersonal processes.”

Process & technology help

“Supplier relation management is a key topic for most of the Strategic procurement and sourcing professional and this will help in building a more balanced relationship between Buyer and Supplier”

All categories are not equal

“Its all about Profiling the Category of Spend and the Supply base. Every Category is different and will have different attributes given the industry of the buying organization, spend levels, size of suppliers and market conditions.”

The common theme that ran through most of the responses was a dislike of overly generic, sweeping statements. In effect, most were saying that at some point, different categories, industries, suppliers and market conditions require different approaches.

Any predictions you’d care to add? Leave them in the Comments or join the Strategic Sourcing & Procurement Group and post them there.

Justin Fogarty is Managing Editor of Supply Excellence. For any questions or feedback on the blog or its contributors, Justin can be reached at jfogarty[at]ariba.com.

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Last year, the Sourcing Maniacs introduced you to SupplierSoft, a provider of Supplier Data and Process Management solutions as part of their vendor tour.SupplierSoft is a unique solution not only because they’re one of the few companies that understand the importance of centralizing all of the supplier process management solutions in a common platform (because supplier management is more than just supplier information management and supplier risk assessments, two prominent directions that their competitors are moving in), but because they decided to build their solution on the #1 CRM platform, SalesForce.com. As noted in the previous post, there is …

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