This dialogue occurred on Friday, January 31, at 2:00 p.m. EST.

Supply chain practices need to catch up with the new reality of a global supply base. We'll be chatting with guests Rob Schoenthaler, chief customer officer at E2open and Pierre Mitchell, chief research officer at Spend Matters, to explore how to close the gap between current practices and the demands of today's business climate.
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Last word...   THANKS

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Thanks to both our Guests! Have a great weekend and a Super February!!!

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@Pierre, if you have any other thoughts that are burning, we'd be glad to let you have the last word!

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Thank you all!

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Thanks for having us.  Hope it was useful to the participants.

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@Hailey-With Analytics and Hadoop you have to clear-cut about what u want.Too much Garbage in can lead to total Nonsense on the way out.

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And thanks everyone for great questions. This link will remain live so share it with friends and colleagues. there's a lot of great info captured here

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OK, I'll shut up now.  Enjoyed it guys!  :-)

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@Rob-Travel can be a critical and underestimated Component of the Whole Supply Chain /Procurement story.

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I think they are ready, but we need to play nice in the sandboc together to collectively solve it.  Taylorism has problems in a complex global highly matrixed supply network.

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I'd like to thank our guests, Rob and Pierre for taking time to be with us. I hope you'll come again!

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Analytics would be good...and big data thrown in for good measure.

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@Rob, it will be interesting to see what that looks like in a few years.

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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

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@Pirerre-So Basically people are'nt ready for the Whole Supply Chain experience yet?

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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.

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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....

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We'll have to have another chat. :)

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not every good tools for indirect services either.  yes, you can go to eLance/oDesk/etc, but people are not catalog items.    this is a whole separate topic!

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Let me ask one more question: Let's look into the future. What's on the horizon, the next big change, for procurement?

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Services are highly variable!   especially complex ones.  not just form fit function attributes for a component

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Flex is massive - and a good case study on many things.  Every company has strengths and opportunities.

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Hey, all, we are at the 45 minute mark and i want to respect your time. Feel free to post last thoughts and questions for our guests!

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@Pierre, what makes services so much more challenging? We're going to have to get on the ball with services since everything is *aaS now!

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@Pierre-Do you think Flex is a good case to study?

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Most progressive Procurement groups have CoEs that do KPI definition, benchmarking, Lean-Sigma, training, tools, etc. 

I did a study on this topic a few years ago.

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It will be either that or a massive Devaluation of the Yuan.Not pretty.

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@mktgworkshop We have plenty of guac left. Help yourself on the table at the back

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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?

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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.

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@Hailey-thanks, glad to be here. Please pass the virtual guac!

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@SC Girl - I have seen it more at the "Supply Chain" level lately, not just "Procurement", which I take as a sign of the times.

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@Rob and @Pierre - thanks for those comments. Do we see any industries/competitors taking that approach with CoEs?

 

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@Jbosavage, great to have you with us!

 

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Does procurement have its own COE in companies you talk to?

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@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.

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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!!

 

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@Savage-its true.Let me dig up the Link for your reference.

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@Savage-Thanks to the Fed Everyone's a speculator now.

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I cant believe it now costs them the same amount in Labor to manufacture in China as in the US.

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@Pierre-Fair enough comment to make.

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anandvy That is a great point. Too few "investors" these days.

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@Mktgworkshop, glad you could join us! and great question...

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I was reading about Foxconn-Apparently it now costs them the same amount in Labor to manufacture in China as in the US.Is that to do with Supply Chain issues as well?

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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.

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@tech4people not all the companies are paying dividends. For example Apple never used to pay dividends instead it concentrated on building more innovative products.

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Time is very much of the essence here unftortunately or not.

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Is this where centers of excellence can take a role and focus on the skills needed for real supply chain leadership in the new paradigm?

 

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@Rob, well, maybe this conversation will help keep the ball roling in that direction!

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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.

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@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.

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The kind of evolution you are talking about takes time. Are there certain sectors that are doing a better or worse job of making the shift? How would you say the electronics industry rates?

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@SCGirl-For that u need more Investments in SUpply Chain.Most Companies are simply wasting Funds by Returning them to Shareholders in the form of Dividends instead of Reinvesting it back in the Business.Sad but true.

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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.

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Can we get companies to value getting procurement out of fire fighting and into more strategic activities?  

 

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Thanks for that link.

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@rob, it takes a much more global approach. I wonder if those in school are being taught more about strategy. I hope the incoming folks are trained in this new stuff!

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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.

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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

 

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@Pierre, in your study you defined "higher capability firms" and demonstrated that they outuperformed average firms by 25 percent. That's a pretty amazing figure. Can you say something about the path tobeing high capability?

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@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.

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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!

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@Rob, that's a good point. It's always a combination of technology, policy and training in the end isn't it?

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@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.

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On NPI, does procurement really care THAT much about good cost data?  If you do too good a job on cost take-out durcing concept, there's no favorable PPV left!   This is the problem with PPV and other narrow metrics.

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When some of our customers start really understadnign the variabulity on the data they send to their suppliers weeks over week (but still expect them to deliver on time), they realize the problem is in the mirror.

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@Rob, it seems as if there are more and more data streams every day. I guess technology will be more and more important in terms of managing data to avoid problems?

 

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@tech4people - you are right, but MOST people aren't using cloud based platforms where you can actually analyze the data.  We have been doing it for years.

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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.

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@Steven - We see the "Bad data" issue all the time.  A huge area of bad data for NPI comes from the "as-designed" vs. as-built" version of the BOM when you outsource manufacturing.

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@Pierre-By Standardize do you mean Easily "Replicable"?

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Makes sense Rob. The more points at which to grab metrics the better.

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@Rob-Measuring such On-time Details maybe beyond all except the Best Pros today.

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also, standardize you "palette" of KPI categories and the KPIs themselves, but let the BUs, functions, roles, suppliers have the targets be set appropriately

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Welcome Stephen Powers, we're glad to have you with us

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I know from your survey that risk is top of the list in terms of concerns around multi-tier supply chain. can you speak to how purcahsing working well with partners can mitigate taht?

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@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?

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Rob can answer of E2.  Generally though, tools include meaningful role-based dashboards with alerts, decent BI environments to sit under the dashboards, etc.

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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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It sounds like a lot of this is getting everyone on the same page. Agreed upon metrics and measurable results.

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Having a shared vesion of the truth for all the parties in a procurement realtionship to use to track activities and make day to day decisison on is the foudation for "partner" oreiented analytics.

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Rob, are there any tools in this direct procurement future that helps that measurement process?

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wc procurement performance is what makes your supply performance and supply chain worlf class - ofr your customers!   one size does not fit all!    Amazon is different than Apple is different than Exxon.

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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.

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@Pierre-Sounds Fascinating! Please do Keep us posted and more informed on this topic.

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yup, garbage data/info in leads to bad analysis and decisions.    similarly, garbage assumptions will also be a problem!  :-)

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@SCgirl-Nope We Don't usually.Thats the difficulty.

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@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.

 

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@Hailey-Actually there is'nt.If you don't feel like Making the Impulse Buy;Amazon will give them to you for Free anyways(in about half the cases);the rest will have to return them back.

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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.

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@SCGirl, glad to have you with us!

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Isn't one of the biggest problems having the right info to make the decision?  Do we all have that as a starting point?  

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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.

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Rob, is there any easy way to characterize the outcome of that shift? Is the purchasing agent role less needed with more process automation, or more needed with more rapid procurement?

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This may be hard to quantify, but how automated is today's supply chain (how much does it still rely on a human sitting there making decisions)?

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Sorry guys:

D = Define 

M = Manage

A = Analyze

I = Improve

C = COntrol

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@Tech4People, I find the idea of this "push" selling from amazon pretty intimidating. I hope there's an Opt out!

 

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analytics are about turning data/info into intelligence to help you better run and improve SC.

 

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BTW: We have a great infographic on some of this research so take a look: Closing the Direct Procurement Gap

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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. 

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@Kim, analytics is a fascinating part of this question. If its' not real now, it should be soon.

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It's a major culture shift, and requires a lot of thradtional change mangment analysis of roles & responsiilties, metrics and skills

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@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].

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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.

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@Rodney – You hit one of the key elements for the "re-invention" of direct procurement. 

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Glad to have you with us Rodney!

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A lot of goes back to getting away from "Penny wise, pound foolish" purchasing...

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@Kim-Absolutely! LOng-term Customers are worth much-much more than Short-term ones.

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How real is the use of analytics to manage the supply chain, or is it just something we hear a lot of buzz about?

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Howdy folks. Does the needed changes require a change in the nature of the purchasing agent or buyer roles in a company?

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Glad to have you with us, Kim. We've got fresh guacamole and chips on the back table. Pull up a chair! We're talking about how to really build strategic partnerships across the supply chain.

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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

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For example, in a partnership, I see the CUSTOMER being just as hard on themselves about their performance as they are on the supplier for theirs

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Are there some mis-allignments that are pertty common or does it really change from organiatoin to organization?

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I guess some customers are more right than others!

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Well, it's true that "partner" get's thrown around a lot, but there are some specific charactristics of a partnership  I see out there in Supply Chain

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mutual dependency helps.   more broadly:  'strategic fit'.

but also need the right metrics which starts with right category strategy to properly categorize suppliers and engage them properly.    

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new math is old math - start with biz metrics; translate to Supply chain metrics; and then translate to supply performance - e.g., cost, flexibility, speed, etc.    this wher mis-alignment will kill you

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@Pierre and Rob, we tend to throw that word partner around. How do we get beyond it being just a buzz word into the meat of real partnership?

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I like that term, customer of choice. (Does that mean that the customer is always right has gone out the window? :) ) What are the hallmarks that make an organization a preferred customer?

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definitely.  'partners' - not vendors.  

 

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For me, Old School is about Vendor Managment, vs. collaborative partnerships.

"Vendors" sell hot dogs, but partner work together to improve supply chain performance

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So that's the old math, eh Peirre? What's teh new equation that we need to use?

 

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CEO wants innovation and revenue - and so do suppliers.  grow the pie collaboratively w/ suppliers - don't just play zero-sum game.  be a 'customer of choice'

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PPV is a great way to build yourself a brittle supply chain.  better to focus on balanced scorecard of supply (e.g., TQRDCE), etc.

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And what are the drivers in the supply chain that make this older model less useful today do you think?

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Old school = PPV (purchase price variance).

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Today we're talking about the shift that purhasing organizatoins need to make in order to keep up with the changing supply chain. What does this old school model of purchasing look like?

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Welcome everyone one...it's  just about time to get started!

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Hi Rob, Hi Pierre

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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 received a Bachelor of Science degree in Mechanical Engineering from Northwestern University.

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Rob Schoenthaler, Chief Customer Officer, E2open
 
As Chief Customer Officer, Rob Schoenthaler is responsible for the complete, timely, and successful delivery of E2open solutions to customers. He leads the company's research and development (R&D) strategies and resources, as well as deployment operations, to provide a seamless customer experience from product inception to implementation.

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And welcome Rob!

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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.
 
He holds an engineering degree from Southern Methodist University and an MBA from the University of Chicago.

 

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Regarding the Current Topic-Its a Phrase I remember very closely-All Demand is Local while Supply is GLOBAL.

User Rank   Supply Network Guru

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.

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Pierre Mitchell, Chief Research Officer, Spend Matters
 
Pierre Mitchell leads Spend Matters procurement research activities and has broader solution development responsibilities for intellectual property creation and firm strategy as Managing Director of Azul Partners. This includes spearheading efforts to build new types of interactive and social communities of interest within the procurement profession including overseeing the evolution of spendmattersnet.com, Spend Matters PRO, MetalMiner, and other digital assets within Azul Partner's umbrella.

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Welcome, Pierre. Glad you made it! Let me introduce you for the group:

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All ready to chat, and virtually enjoy the snacks

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Is anyone Else looking forwards to the Microsoft CEO Transisition?I think it will be a very-very exciting Development to finally have an Old-Fashioned Techie in charge there.

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@Hailey-Sure! Thanks!

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Hey Tech4People, glad to have you with us. Can I offer you some virtual guacamole?

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Hi everyone

 

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Hi Kreuzer!

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Welcome, Kreuzer33 and Anandvy. We'll be starting shortly...feel free to queue up thoughts or questions> I'll be making introductions shortly.

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Looking forward to today's discussion.

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Hi

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Looking forward to participate in the chat.

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And always, please announce your arrival so we can give you a warm EBN welcome and offer you some virtual  guacamole. :)

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Questions, theories, ideas, real world experiences and even friendly rants are welcome here.

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This will be a fun, fast, and friendly conversation, so please do not hold back with your comments or questions.  There are no dumb questions and we value everyone's point of view.

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Second, if you have problems posting, we suggest trying a different browser.  IE9 is a popular choice, but sometimes find Firefox, Chrome, or Safari work better.

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We will be starting at 11:00 a.m. PST/2:00 p.m. EST sharp. First, though, there are two housekeeping notes:

First, please make a copy of your post before hitting the "post" button – just in case.  If the system "eats" one of your carefully crafted thoughts, please hit "Ctrl-Z" to recover it

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Welcome anandvy! We'll be starting in about an hour!

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hi

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Hi Tech 4People. Yes, 2PM sharp. Be there or be square!

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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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Hi!I just wanted to confirm.Are we definitely Going Live at 2PM EST???

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