OK, I'll give you an important area: optimization. Extended SC Network design that includes complex sourcng needs more advanced analytic tools - optimization based ones and predictive ones will be increasingly important. maybe a follow up on analytics would be good
As we look to the future of Direct Procurement, I expect we will see a major change in the objectives for the function. We will see a shift away from a focus on lowest price and TCV to highest value, cost effectiveness, quality and flexibility to meet the needs of the particular business they support. Cloud capabilities are now accepted by companies as secure enough for mission critical enterprise systems like procurement and supply chain – and almost all supply chains now have elements of outsourcing. As such, I see some game changing opportunities for procurement to become more and more virtual, and companies starting who offer best in class direct procurement for strategic categories to customer, not just things like travel.
For procurement, the biggest challenge is changing from owner of purchased cost reduction to that of an advocate and enabler of suppy performance. job is to safely tap supply market innovation - not just reduce costs. I know - it's an old problem - but....
I was wondering what happens if all those Manufacturing JObs in China do move back to USA;what do all those Chinese do? War seems like a good option.
Is it any coincidence that their Sabre-rattling with all their Neighbours has started aggressively now?
Rob - Yes! The parallels in the business services value chain is very similar to the high tech supply chain a long time ago. Managing services is a challenge. We manage services at 2 sigma when we manage materials at 6 sigma. For example, the subcontractor issue at Flex was a good example. I just picked Flex - there are many other examples.
@MktgWorkshop – Centers of excellence are a great way to help with the shift. I see many large companies establishing them internally across divisions to accelerate the adoption of best practices, and of course the consulting firms create them too. In some industries, I think there are valuable opportunities for competitors to come together and create centers of excellence that can raise the performance of their entire industry value chain – especially since there can be a lot of major suppliers who are still being treated like "vendors" by all the key customers.
CoE's are critical! We highlighted this in report. HP is good example. Procurement CoEs are great, but it's broader CoEs that are key to designing your internal processes with same rigor as all the supply chain processes. It's about industrializing the internal business services and building them out like any third party services provider. need to elevate your internal game before the invisible hand and make/buy decision comes knocking on our area!!
electonics industry is on the vanguard of lots of things. CPG/Retail is similar. Automotive does a few thigns well. some process industries do some neat things. there is no one industry and certainly no one company is is best practice in all things.
SC girl, first get yourself out of firefighter role. You might be 'hero' - but it's waste.
Lean out your personal role-based processes. What are the errors. what is cost of them? what is rot cause? what are thy bigger indicators of? it's hard. lot's of it is systemic - a la Deming.
But also use tools where you can to push controls to right folks and use rule-base alerting to help. still, tools, are just one small part of bigger picture.
@Hailey - There are a variety of surveys that discuss executive concerns over the scarcity of talent in Procurement and Supply Chain. I think what they are really getting to is a scarcity of talent that know how to manage supply chains in the new world of global supply AND demand, leveraging all the new capabilities that are out there. Part of the fix can come from universities adapting their programs, but we also need a major overhaul of the current workforce, too.
Hailey, it's a big nut to crack! You need lot sof stuff in terms of org, metrics, process, data, etc.
Biggest is probably the org/metrics/process linkage. "You get what you measure"! After that, you need good resources - best peopl - best tools.
There's a lot of specific strategies/tactics in the direct procurement paper that you mentioned.
Rob, great point, whether you are BPO provider, a supply chain network solution, or an enterprise, it's important to teach the 'apps' to learn the reptitive stuff to free you up for more strategic stuff that only a human can do.
For those who want to read Pierre's whitepaper on this topic, it can be found here: http://info.e2open.com/rs/e2open/images/E2open_Study_Re_inventing_Direct_Procurement_2013_09.pdf
@Hailey - Yes. The old school analogy is setting the dials on your MRP run so you tune out the noise of recommended changes in the results. Now think about doing that across your entire supply chain (ncluding multiple tiers). That what we do for our clients. Being able to define and tune fine grain exceptions to look for in the data becomes a core competency in the new world of direct procurement.
Rob is right, cloud-based analytics can definitely help manage this problem - because they have to do it on a one-to-many basis. But the enterprise needs to define what they REALLY need for information and then work backwards. Focus on the "I" in IT for the decisions you strategically need to make, not just on the "T" plumbing in IT. You'll lost in the big data forest very quickly!
@Halley - part of our philosohy is that as you add data streams, you ALSO need to help the humans in the process be able to separate the wheat from the chaff. If you can have tools help you mine through the data streams to look for the problems and higlight them, then don't ask for more data.
Good point on how the KPIs need to cascade back from the customer. This is the 'art of translation' from customer to product type (and supply chain type - i.e., ETO/MTO/CTO/MTS etc.) and then back to supplier type (i.e., spend category) and finally to supplier. there is a process translation of the KPIs and also the org translation from EVP SC to CPO to cat mgr to buyer.
@Rodney - I'll give you an example.
Traditional procuement might measure on time delivery as part of a supplier scorecard,
But what if you could measure that on-time delivery against cutomer driven PO changes within the agreed upon lead time?
Can we take the example from SC Girl and relate to the idea of New Product Introductions? Aligning cash with response can be a real hassle which almost sounds like Bad data creates more bad data. How can Procurement Organizations adapt?
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@Kim and @SC Girl – one of the challenges that has been around for a long time is a lack of shared data to use for decision making, or to perform the analytics on. Many E2open customers use our SC collaboration platform at a "single version of the truth" for their collaboration and the information about their Supply Chain.
@Rodney – I guess the simplest way to characterize the outcome of the shift would be what a world class purchasing agent is measured on. We need to look at the total cost of the relationship with their suppliers (including cost), as measured against a balanced scorecard of quality and services levels.
There is still a lot of human decision making. Not always a bad thing. If you can automate it, terrific, but just make sure that your decision heuristics continue to make sense. It's like setting a re-order point and forgetting to update it - need to be informed by what's going on in the supply chain. Rob, you can probably add a few things on how you do this - pretty cool stuff.
DMAIC comes out of six sigma, but it's a simple way to also manage your biz, sc, category, supplier etc.
so, Define supply scoreacard, Measure where you stand, prioritize gaps, make Improvements, and put controls to hold the gains.
analytics are huge, but need to use them properly.
Put "A" in DMAIC at the center of your DMAIC process for managing business, sc, and suupliers. I did an article on SCMR on "Analytics - an overlooked opportunity" that dives into supply-side analytics.
@Kim-Analytics (especially Real-time Analytics) works effectively.Look what Amazon is doing with it today.They are going to Deliver Stuff to Users even before they order them!!![In the hope that they may make Impulse buys anyways].
pretty common mis-alignment themes. Don't have functions only own their siloed part of scorecard. i.e., purchasing = PPV. quality = PPM. logistics = OTD. innovation = engineering.
Need to work in team based environment where folks held more jointly accountable for holistic supply (and suppleir performance).
also problem when SC perf metrics don't link to category metrics to supplier metrics etc.
need good segmentation. good supply base strategy and category strategy. can't partner with 5000 suppliers. only the critical. still need to manage the rest, but true partnering is about 'friending' your truly strategic partners
Prior to joining E2open in 2007, Rob was the Managing Vice President of the High Tech industry segment at Hitachi Consulting. In this role, he led the firm's national High Tech efforts covering solutions portfolio definition, delivery, and customer satisfaction. Rob also spent several years as Vice President at BearingPoint, where he helped lead their Consumer, Industrial, and Technology practice. Rob has more than 20 years of experience in operations strategy, supply chain, enterprise resource planning (ERP), and large-scale program management. He began his career at Andersen Consulting (Accenture).
Rob Schoenthaler, Chief Customer Officer, E2open
In the early 2000's, Pierre was the first supply chain practitioner to become a procurement "industry analyst" as the VP of supply management research at AMR Research (now part of the Gartner Group) where he provided trusted counsel to procurement executives, business leadership, IT, and the solution providers who serve them. Most recently, he was the head of procurement research and adjunct business advisor at The Hackett Group, where he helped expand Hackett's procurement benchmarks and research studies while growing the Procurement Executive Advisory Program into a gold standard membership-based procurement advisory service in the market today.
Pierre has 25 years of procurement and supply chain industry and consulting experience, and is a recognized procurement expert specializing in supply processes, practices, metrics, and enabling tools and services. He is a regular contributor to business publications, a frequent presenter at industry events around the world, and counts himself fortunate to have served and interacted with so many CPOs and future CPOs. Prior to his positions in research and advisory, he led numerous operations and systems transformations at Fortune 500 organizations. Industry positions include manufacturing project manager at The Timberland Company, materials manager at Krupp Companies and engineer at EG&G Torque Systems.
Pierre Mitchell, Chief Research Officer, Spend Matters
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So Microsoft has a new CEO it seems-Satya Nadella;Very Interesting.
What I find most fascianting he's a Hard-Core Techie not a Marketing Guy Perse.
Its good to see Microsoft going hard-core Techie ,Now the Techies can combine together to deliver Good Products at MSFT.
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