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Live Chat 10/31: Don’t Be Scared of Strategic Sourcing

124 comments on “Live Chat 10/31: Don’t Be Scared of Strategic Sourcing

  1. Hailey Lynne McKeefry
    October 31, 2013

    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.

  2. Hailey Lynne McKeefry
    October 31, 2013

    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.

  3. Hailey Lynne McKeefry
    October 31, 2013

    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.

  4. Hailey Lynne McKeefry
    October 31, 2013

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

  5. Hailey Lynne McKeefry
    October 31, 2013

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

  6. rwaugh
    October 31, 2013

    Richard Waugh, VP Corporate Development, Zycus has joined chat

  7. Hailey Lynne McKeefry
    October 31, 2013

    Hi Richard, so glad to have you hear with us! We may already have lurkers, and i'm sure others will join us very soon!

  8. Hailey Lynne McKeefry
    October 31, 2013

    And welcome everyone…Happy Halloween! Tell us what spooks you most about strategic sourcing apps and we'll do our best to cam your fears. 🙂

  9. Hailey Lynne McKeefry
    October 31, 2013

    Richard, as a place to start, can you say something about the current state of strategic sourcing apps? Who is the sweet spot user for these? What pain points are they trying to addresss?

  10. jbond
    October 31, 2013

    Hi! This is Jen. Mmm Guac sounds good. 🙂

  11. Mitch Wagner
    October 31, 2013

    STRATEGIC SOURCING?! PRETTY SCARY!!

  12. rwaugh
    October 31, 2013

    absolutely – sweet spot for strategic sourcing apps is for those enterprises that have high volume, long-cycle and or complex sourcing processes

     

  13. Hailey Lynne McKeefry
    October 31, 2013

    Hi Jbond, glad you are here… Guac is on the table in teh back and the corn chips are orange and black in honor of the day! (well blue corn but i tried)

  14. Hailey Lynne McKeefry
    October 31, 2013

    Mitch, welcome to the party!

  15. rwaugh
    October 31, 2013

    take for example manufacturing companies – they may have very large RFP packages consiting of k's of line items and 000's of suppliers

     

  16. Rodney Brown
    October 31, 2013

    Howdy folks.

  17. rwaugh
    October 31, 2013

    we have enabled high tech manufacturers and others to conduct these complex sourcing project and analyse the total cost models across all these dimensions in record time – 1 month vs. 7 months

     

  18. Hailey Lynne McKeefry
    October 31, 2013

    Can  you give us some examples of how an electronics business might change and improve using this type of application?

  19. Nemos
    October 31, 2013

    I am already scared from the title 😛

  20. Mitch Wagner
    October 31, 2013

    Sorry if this has already been asked, but what are the risks of strategic sourcing? What can go wrong?

  21. Hailey Lynne McKeefry
    October 31, 2013

    Welcome Rodney and Nemos… guac and chips on the table in teh back, please help yourself. There might be a hershey bar or two.

  22. Hailey Lynne McKeefry
    October 31, 2013

    @Mitch, good questions…and we haven't hit that yet, so very timely.

  23. rwaugh
    October 31, 2013

    of course not all use cases are this complex – sometimes the value is more focused on standardizing the process and simplifying supplier collaboration to enable higher throughout and greater velocity of sourcing projects to generate more savings faster

     

  24. Nemos
    October 31, 2013

    Hey to all ,thanks Hailey I will grab a beer 😉 

  25. rwaugh
    October 31, 2013

    risks of strategic sourcing don't change with a software tool – just easier to analyze them

  26. jbond
    October 31, 2013

    IN addition to Mitch's question I am curious if shorten the time frame from 7 months to 1 month causes any risks?

     

  27. rwaugh
    October 31, 2013

    risks are:  can supplier deliver?  can we assure supply?  do we know the market well enough to know we are getting best total cost?

  28. Hailey Lynne McKeefry
    October 31, 2013

    @Rwaugh, are these types of solutiosn pretty broadly deployed in the larger supply chain organizations? If not, what's the holdup?

  29. rwaugh
    October 31, 2013

    sourcing tools help manage supplier risk and gain market insight to assure supply and best total cost

  30. Rodney Brown
    October 31, 2013

    I think I need a definition of strategic sourcing that makes it stand out from simply “smart shopping.”

  31. Nemos
    October 31, 2013

    if we have to describe in one phrase what is strategic sourcing which one should be ?

  32. rwaugh
    October 31, 2013

    these solutions are becoming more widely deployed – usually replacing spreasheet based tools which break down at higher volumes

  33. Tom Murphy
    October 31, 2013

    Happy Halloween everyone!

     

  34. Hailey Lynne McKeefry
    October 31, 2013

    Hey Tom, pull up a chair. I've got orange and blue corn (couldn't really get black) chips to go with the quac.

  35. rwaugh
    October 31, 2013

    strategic sourcing goes well beyond smart shopping – it involves a lot of homework before the negotiation event takes place on line – analyzing the supply markets and assessin supplier capabilities for instance – negotiation price is last step in a rigorous evaluation of total cost

  36. Nemos
    October 31, 2013

    Hello Tom 

     

  37. Hailey Lynne McKeefry
    October 31, 2013

    In case folks are interested, here's a link to Gartner's latest report on this marketspace: https://www.bravosolution.com/cms/nl/resource-library/industry-reports-1/2013-gartner-magic-quadrant-for-strategic-sourcing.  You can see with a quick glance that it's  a crowded market. Richard, any advice on how organizations can identify a solutoin that is best firt for their needs?

  38. Hailey Lynne McKeefry
    October 31, 2013

    @Rodney, to your question, these are powerful Enterprise apps  that offer a variety of capabilities, including e-sourcing, contract management, supplier base management (SBM), and spend analysis. Some vendors add additional capabilities: category management, supplier directories, commodity risk management, and business services, for example. It lets you track negotiations and purchasing agreements and do very deep analysis on procurement. I hope that helps.

  39. rwaugh
    October 31, 2013

    another way to look at strategic sourcing is that the sourcing professional is a “category manager” – like a brand manager in retail, the Sourcing or category manager needs to know everything going on in the supply market – capacity, pricing trennds, new technologies etc.  – too much info to track without a sophisticated process and tool

     

  40. jbond
    October 31, 2013

    What are the newest tools available?

  41. rwaugh
    October 31, 2013

    there was a question about risk with shorter cycle times – risk is actually in not realizing cash flows generated from savings sooner due to time value of money

  42. Hailey Lynne McKeefry
    October 31, 2013

    @Richard, can you quantify in general terms what measurable value or changes your customers report when comparing pre- vs. post deployment of these kinds of tools? I know the automation and analysis capabiliies have to hit the bottom line.

  43. rwaugh
    October 31, 2013

    after the sourcing project is done and negotiations complete – there is still the implementation pahse and tracking supplier performance to ensure quality

  44. Rodney Brown
    October 31, 2013

    @Richard, maybe it's just my cheap Yankke background, but it sounds like that should be SOP at any business that deals with suppliers. So, that begs the question, how rare is strategic sourcing that it needs to be encouraged? How much money are companies leaving on the table by not using it?

  45. Hailey Lynne McKeefry
    October 31, 2013

    You also mentioned in our previous conversation that these tools allow the purchasing organization to more clealry demonstrate their value to the organization, which I found very interesting.

  46. rwaugh
    October 31, 2013

    newest tools take holistic approach – a full suite with an integrated dashboard view across Spend Analysis, Sourcing, Contract Management, Supplier Management, and Financial Savings Tracking

  47. Hailey Lynne McKeefry
    October 31, 2013

    Welcome Rich…

  48. rwaugh
    October 31, 2013

    demonstrating contributed value to the orgnaization is where Financial Savings Management comes in – getting procurement and finance on same page as to benefits REALIZED through sourcing, not just IDENTFIED savings at the end of s sourcing negotiation

  49. Nemos
    October 31, 2013

    Welcome @Rich  I didnt get it what you mean ?

  50. Hailey Lynne McKeefry
    October 31, 2013

    @Rich, to your point, i don't think this one is an either/or debate. You could do both! Or maybe you could argue that the tools would free you up adn give you more time on your language studies.

  51. rwaugh
    October 31, 2013

    gloabl sourcing menas tools need to be multi-lingual, multi-currency – especially for suppliers in low cost cost countries, including parts of the Far East

  52. Tom Murphy
    October 31, 2013

    Richard: Would you please give us a couple of real-world examples of your strategic sourcing clients? Are we talking consumer electronics maker, for example?  I can imagine the benefits of this in, say, producing a next-generation mobile phone…

  53. rwaugh
    October 31, 2013

    most global buying organizations are comfortable in  English – not necessarily so their suppliers

     

  54. Nemos
    October 31, 2013

    Almost everything now tends to be multi-lingual, multi-currency

  55. rwaugh
    October 31, 2013

    consumer elecctronics is a great example – where the short product cycles out a premium on process acceleration

  56. rwaugh
    October 31, 2013

    but the examples go across industries

  57. Nemos
    October 31, 2013

    hmmm Thanks @Rich

  58. rwaugh
    October 31, 2013

    includes higher education where a college or university needs to to source a variety of materials ot services and may also have large constrcution projects for building new classrooms or a new stadium

  59. rwaugh
    October 31, 2013

    of course multi-lingual and multi-currency is available for the buyers as well, need just more acute in supply base

  60. Hailey Lynne McKeefry
    October 31, 2013

    @Richard, do you find that the ability to look at different areas of the supply chain and sourcing shifts the way these organizations appraoch business? By that i mean, do you see them cutting back on teh partner rosters, enforcing adherence to using contracted suppliers, etc. happen more often?

  61. rwaugh
    October 31, 2013

    one important consideration is how to find and prioritize sourcing opportunities

  62. rwaugh
    October 31, 2013

    best practice – start with rigorous spend analysis with accurately classified spend data to spot opptys.

  63. Hailey Lynne McKeefry
    October 31, 2013

    How do these apps help find sourcing opps?

  64. rwaugh
    October 31, 2013

    spend analysis can highlight categores where supply is fragemented and can be rationalized to gain volume leverage – can't do it without granular (category and item level) spend viz

  65. Hailey Lynne McKeefry
    October 31, 2013

    @richard, i was too quick..you had just answered. 🙂

     

  66. Tom Murphy
    October 31, 2013

    Richard: in consumer electronics — which is a hot topic area here at EBN — I know produce lifecycles can be as tight as one-year, or 18 months, for devices like mobile phones, tablets, and notebooks.  In that context, your example of cutting sourcing time from 7 months to 1 would be a godsend. 

    But why can't companies do strategic sourcing themselves?  Don't they have the expertise and incentive to make this a top priority?

  67. rwaugh
    October 31, 2013

    yes, trend in Supplier Management is to forge closer partnerships with fewer suppliers

  68. rwaugh
    October 31, 2013

    strategic sourcing is a methdology for determining the best suppliers to partner with

  69. rwaugh
    October 31, 2013

    best-in-class electronics and high tech bcompanies are using sourcing and sourcing automation as a competitive advantage – AMD for example

  70. rwaugh
    October 31, 2013

    those that aren't may lack category expertise – but technology is not a barrier – tools are easy to use and becuase of Saas model, pretty easy to own

  71. Hailey Lynne McKeefry
    October 31, 2013

    With the concern over conflict minerals, knowing where not just components but minerals in the components come from and proving you've spoken to all yoru suppliers down the chain about it is going to be the requirement. Can these apps help with some of that work?

  72. Rodney Brown
    October 31, 2013

    Recently, Samsung announced that it had bought part ofCorning's glass for its displays. They make the scratch proof gorilla glass. I'll bet they had some great strategic sourcing activity going on over there. It will be interesting to see how that's going to impact APple's strategic sourcing of glass.

  73. Nemos
    October 31, 2013

    hmm a lot of interesting questions I think he need some time 

  74. rwaugh
    October 31, 2013

    yes these apps help find new innovations (cell phnes with imaging device) and manage compliance with Conflict Minerals

  75. jesse_securecomponents
    October 31, 2013

    @Richard – as an independent supplier who is certified to the AS6081 counterfeit avoidance standard and is approved to the DLA's QTSL standard the subjects of quality and counterfeit mitigation is near and dear to my heart. Can you talk a bit about how strategic sourcing and associated apps/technologies take the threat of counterfeits into account?

  76. rwaugh
    October 31, 2013

    starts with visibility – at mutiple tiers of the supply chain – tracking your supplier's supplier

  77. Hailey Lynne McKeefry
    October 31, 2013

    Hi Jesse…great to have you with us!

  78. Hailey Lynne McKeefry
    October 31, 2013

    @Jesse, interesting question…thanks for asking it.

  79. Tom Murphy
    October 31, 2013

    Richard: Say I'm using a company to help me with strategic sourcing, and they say that a given part meets the conflict mineral standards. And then I use it and later find out that wasn't true. Who's responsible when the government regulators come knocking at the door?

  80. rwaugh
    October 31, 2013

    Supplier Management includes not just negotating price with suppliers, but Supplier Development prograns with strategic partners to collaborate on technology innovations and share in the benefits

  81. Mitch Wagner
    October 31, 2013

    How much of this strategic sourcing capability is being moved to the cloud? 

  82. rwaugh
    October 31, 2013

    Supplier Management tools can be used to track which suppliers have certifications and which do not – giving preference to those which have worked hard to obtain them

  83. Nemos
    October 31, 2013

    propably the company @Tom

  84. jesse_securecomponents
    October 31, 2013

    @Hailey – glad to be here. Thanks for coordinating this chat.

  85. Hailey Lynne McKeefry
    October 31, 2013

    @Tom, not exactly to your point, but in that wheelhouse, I was talking to an industry veteran who said that the deadline for Dodd Frank Act is one thing, but that actual enforcement is several years away. We may need a crystal ball to answer your question! 🙂

  86. rwaugh
    October 31, 2013

    Zycus Sourcing is 100% cloud – as is the case with any n=most others  that would also be considered Magic Quadrant Leaders by Gartner

  87. Tom Murphy
    October 31, 2013

    Hailey: I agree with that idea that regulation could be years off.  Enforcement of this is going to be very hard for a government that can't quite seem to keep the big banks in line.

  88. rwaugh
    October 31, 2013

    key to keeping up with pending and future regulations is to gain visibility now

  89. Hailey Lynne McKeefry
    October 31, 2013

    @Tom, not to mention that this is a GLOBAL issue so that's a lot of different goverments having to collaborate and cooperate. Now that's a scary thought! and about as rare as a zombie. 🙂

  90. Nemos
    October 31, 2013

    @rwaugh how you can gain visibility now ?

  91. rwaugh
    October 31, 2013

    not enough companies have real visibility to their supply chains – who are they buying from?  what items? quantities? certifications?  risk?

  92. Hailey Lynne McKeefry
    October 31, 2013

    Maybe supply chain visiblity will no longer be an oxymoron.

  93. rwaugh
    October 31, 2013

    visibility means having a SIM (Supplier Information Management) repository centralized and tracking Supplier Performance Measurement against your KPIs

  94. Hailey Lynne McKeefry
    October 31, 2013

    Reposting Jesse's question so it doesn't get lost: Can you talk a bit about how strategic sourcing and associated apps/technologies take the threat of counterfeits into account?

  95. rwaugh
    October 31, 2013

    For exmaple, ERP systems have Vendor Masters – usually the minimum info just to pay an invoice thru A/P

  96. Tom Murphy
    October 31, 2013

    Hailey: Honestly, I'm still not sure how governments all over the world will collaborate on enforcing these rules involving thousands of vendores in scores of industries in hundreds of countries.  There is very little cooperation on that level, and typically it's reserved for major crime, terrorism, and — to a lesser extent — fair trade.  And major trade dispute almost always end in lengthy legal cases.  So I can't imagine one government asking another to fine one of its biggest comapanies because a part used in a laptop it sold for one year was produced by another company that allegedly violated the conflict mineral rules. 

  97. rwaugh
    October 31, 2013

    need to know a lot more about suppliers – including parent/child relationship to other entities

  98. rwaugh
    October 31, 2013

    technology can't legislate – but can help track certifiations to sort out the counterfeits

  99. Hailey Lynne McKeefry
    October 31, 2013

    @Tom, never a truer word has been spoken.

  100. Tom Murphy
    October 31, 2013

    Richard: Have to run, but thanks for the info.

    Hailey; Thanks for hosting.

    All ghouls and ghosts: Happy Halloween!

  101. rwaugh
    October 31, 2013

    buyers are more concerned with supply risk than ever before – they are not after the lowest price, in fact they seldom award to the lowest bidder – they are focused on TCO

  102. Nemos
    October 31, 2013

    😀

  103. Hailey Lynne McKeefry
    October 31, 2013

    @Richard, in terms of counterfeit parts, I would imagine that having a system that clearly outlines vetted suppliers and the like would help at least in getting adherence to approved suppliers in design and sourcing–and that would help address the counterfitting issue. Jesse, what do you think?

  104. Hailey Lynne McKeefry
    October 31, 2013

    Hey folks, we are hitting the 45 minute mark. Any last questions for our guest? I'm sure you all need to get back to the tricks and treats of your day!

  105. rwaugh
    October 31, 2013

    by collaborating with enginnering, procurement can esnure that suppliers meet design and qulaity stds before ever negotaitng the contract – so level the playing field 1st

  106. jesse_securecomponents
    October 31, 2013

    @Hailey – I think that would be a great first step. However, it is imperative that these strategic sourcing systems accurately reflect the certifications that vendors have. There is a big difference between a vendor saying they are compliant and a vendor actually producing a cert. Compliant vs. Certified is a big difference.

  107. Nemos
    October 31, 2013

    No question for the moment but I would like to see a blog post from Richard with all the terms he used be explained more 

  108. rwaugh
    October 31, 2013

    true – which is why a SIM (Suplier Information Management) component that tracks certs and nesures they are up to date is a key piece of the puzzle

  109. Hailey Lynne McKeefry
    October 31, 2013

    @Jesse, that's a huge one… Sourcing apps could certainly help track that, i geuss. We're going to be doing hopefully another chat on counterfeiting later this month so i hope you can come and weigh in.

  110. Ashu001
    October 31, 2013

    @Nemos-I would too! Sorry for joining in a little late!

  111. Hailey Lynne McKeefry
    October 31, 2013

    @Tech4People, better late than never… We saved some guacamole for you.

  112. Nemos
    October 31, 2013

    GG tech4us Never late than never 

  113. jesse_securecomponents
    October 31, 2013

    @Hailey – I'd love to. I'll keep an eye out for the next live chat. Richard, thanks so much for your time.

  114. Hailey Lynne McKeefry
    October 31, 2013

    #Nemos and Tech4People, we'll see if we can lure him inot it! 🙂

  115. Hailey Lynne McKeefry
    October 31, 2013

    Thank you so much for coming to join us today, Richard…I know we kept your fingers busy. We covered a lot of ground. But it really was a TREAT having you with us for this Halloween chat. We hope you'll come by again!

  116. Ashu001
    October 31, 2013

    @Hailey-Appreciate it!

  117. rwaugh
    October 31, 2013

    thanks – enjoyed the chat – next sourcing project: trick or treating

  118. Hailey Lynne McKeefry
    October 31, 2013

    And everyone else, thank you so much for joining us….Lots of great thoughts and questions. I hope to see you all again next time.

  119. Ashu001
    October 31, 2013

    @rwaugh-Whats with the SIM?Do you feel most Small Scale Manufacturers can do it?

  120. Hailey Lynne McKeefry
    October 31, 2013

    @Richard, gotta go to the houses wiht the best candy for sure. I believe there's an app for that. 🙂

  121. Nemos
    October 31, 2013

    @all see you all, bye Thank you Hailey

  122. rwaugh
    October 31, 2013

    full size vs. fun size

  123. Ashu001
    October 31, 2013

    @Hailey-Oh Yes! Halloween is always super fun! The Kids here have already started Partying!

  124. Hailey Lynne McKeefry
    October 31, 2013

    @Tech4People… I had to talk my 10 y.o. out of snickers bars for breakfast. 🙂

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