A couple times, I have taken a moment to bring attention to the growing adoption and usage of E-Sourcing Forum as a valuable resource for sourcing professionals. Since blogs are viral in nature, the growth and exposure is usually driven by people discovering and returning to the source. We have seen a large amount of this but we have room for more on the wagon! If you have associates that you think would benefit from a learning center devoted to e-Sourcing, please let them know. Thanks again to everyone for reading and your continued support, this has been a fun process to build and develop.
On April 6, Paul Levesque, CEO of Customer Focus Breakthroughs Inc. released a mini-whitepaper on CRM Today entitled “The 5 Biggest Customer Service Blunders of All Time” where he, as indicated by the title, discusses 5 blunders to avoid.
The most interesting aspect about this article is that all five blunders would be avoided by anyone well versed in good strategic sourcing principles.
The five blunders, which we’ll discuss in detail, are as follows:
Making Customer Service a Training Issue
Blaming Poor Service on Employee Demotivation
Using Customer Feedback to Uncover What’s Wrong
Reserving Top Recognition for Splashy Recoveries
Competing on Price
In the first case, businesses invest huge amounts in training programs that identify the behaviors and processes workers are supposed to engage in, in essence dictating what a CSR should do to please the customer. The end result is a mechanized and insincere process that at it’s best can barely be considered satisfactory, and at its worst is a complete failure if the user has a problem that is not dealt with by the script.
***Senior Sourcing Professionals know that there is no one formula that always works. Prices and supply fluctuate, market dynamics change, customer needs mature, and product technologies innovate. A good sourcing professional needs to have the skills and knowledge to adapt to the dynamics of every sourcing event and cannot be bound by a one-size-fits-all solution.
In the second case, businesses assume poor service is due to employee demotivation and look for ways to increase motivation instead of searching for the root problem.
***Senior Sourcing Professionals know that high costs aren’t necessarily the result of supplier mark-ups – especially if the supplier is a strategic partner or a low bidder in a sourcing event. They look for problems with the process and try to fix the root problems.
In the third case, businesses use surveys and feedback mechanisms to try and identify the source of customer problems and constraints. Employees perceive these as formal exercises in finger-pointing, blame assignments, and witch-hunts for scapegoats in the worst cases. Instead, business should be looking for what is being done right, recognize employees for their successes, get to the root of those successes, and replicate whatever works across the organization.
***Senior Sourcing Professionals know that looking for problems does not get results and that you need to look for solutions. They identify best practices and find ways to replicate them across the supply chain to improve processes and reduce costs.
In the fourth case, after something goes terribly wrong and a dedicated employee goes to tremendous lengths to make it right, the employee receives special recognition for their efforts. The blunder? When these catalysts become the primary form of employee recognition, foul-ups become a good thing from a worker’s viewpoint as they create one of the few opportunities for an employee to be recognized.
***Senior Sourcing Professionals know that good performance from comes from dedicated motivated people who are recognized based on their accomplishments in process improvement, cost reduction, and customer (which, in sourcing, are the other business units) satisfaction – not from people who merely respond to a crisis. Moreover, this is the foundation for growth and prosperity.
In the final case, the business makes the most common mistake in business – competing on price.
***Every sourcing professional knows that price isn’t everything – it’s the overall value that results from a purchase that is important. Quality, Availability, Dependability, On Time Delivery, and Overall Service are also important.
In short, CRM needs to take a lesson from Strategic Sourcing.
Last night I got the opportunity to have a 3 hour dinner with Dave Stephens, who has his own blog: Procurement Central. Dave spent 10 years at Oracle, mostly running the Procurement Applications area. Oracle still has releases in the pipeline that come from Dave’s original plans - pretty impressive.
Oracle’s significant loss has been my significant gain. There is no way we would have met had he not decided to go his own route. It was a tremendous amount of fun to share stories from both sides of the fence and learn how a big company works compared to a small company. Most of all, I respect Dave’s opinions and we spoke extensively about the Iasta plan and position in the marketplace.
He shared many stories from the old days at Oracle which I will leave to him to post on Procurement Central, there are some good ones. I left the dinner feeling very good about our position in the market hierarchy and that our plans going forward were going to be effective. Starting Iasta, we knew no one in the industry, had no friends in high places to provide revenue and had no Board or investors that could give direction (that was probably a good thing). I see Dave as a new friend and my own personal Consigliere. Its time to go to the mattresses!
I actually did not miss Andy Bartels, as I was able to have dinner with him last night. Since Minahan ran off for the quick strike in Atlanta (did I say that out loud?), Andy is one of the premier analysts in the space now, even if he splits time with IT requirements. He was very good to speak with and we had an in depth conversation about the value of contract management to different companies, in addition to a number of other topics which were very insightful including his opinion that best of breeds will always co-exist with the 800lbs gorillas (see Oracle-SAP) in this space.
Another interesting event was my informal single malt scotch session with the Ketera brass, all of whom have deep pedigree in the NoCal heyday. Can you say hayseed? I may have looked like them and talked like them but I have absolutely no idea what it is like to have been in meetings with Mark Andreessen or Scott McNeely. I was fascinated by the discussion of how Netscape people were the antithesis of AOL people and how billions of dollars were shifted around in perceived value with no true substance. Silicon Valley is like no other place on Earth, I firmly believe that. Even today, when most businesses here are somewhat grounded, the stories that live on are incredible, especially for some one that went 24 months without salary to build a company.
Overall, I leave this event with the strong feeling that Iasta needs to launch a similar user conference undertaking. We have just as many clients and for a couple years have taken on requests to sponsor such an event. Now that I have been to a few, I have seen what works and where the attendee value lies. Iasta WorldSource…I wonder if that is available?
This is also the only day, for me at least. I will miss Andrew Bartels tomorrow unfortunately but business opportunity beckons, so I will sharpen up for Bay Area traffic.
As I mentioned previously, Ketera did a nice job with the set up of the event, venue chosen and topics covered. Steve told me that in previous years Ketera Connect was done in the conference room, so this is a huge step up in event planning. I was impressed with the number of attendees and companies represented. Ketera works with some pretty big companies and I am quite sure people would be surprised at some of our joint clients (for those that do not know, Iasta provides the sourcing platform for Ketera clients).
I did my presentation on strategic sourcing and e-Sourcing from the functional and industry overview perspective. I saw a lot of nodding heads and got no heckling so I had to assume my topic was sufficiently covered and explained. I followed Kulvir Gill from Barrick Corp in Toronto, who spoke from the user perspective of Spend Analysis. He did a great job and had many interesting perspectives from the trenches, specifically about how there is still a lot of work to do, even after it goes live, but is worth it to have visibility into the spend. Following him was a good idea, since you will not get much benefit out of e-Sourcing without first identifying what you are buying. I was told after my portion that there was a very good reception and interest in learning more about e-Sourcing. Most of the attendees were not active users.
After I wrapped up, I was able to have lunch with Steve Savignano - Chairman of the Board, Tom Foody - CFO and Burton Goldfield, the newly appointed CEO. It was good to be able to spend some time with the Ketera brain trust as they definitely have big plans. Ketera has multiple “on-ramps” into to client needs which go well beyond the Iasta standard fare including: invoicing, e-proc and spend analysis. Ketera has some interesting ideas for revenue generation which I will keep to myself as I am not sure what parts of the lunch conversation were market knowledge.
Speaking of Steve, I was personally curious about last week’s press release regarding the appointment of Burton. I made a point of deciphering what was going on to make sure this was not another revolving executive door like ebreviate. Burton comes from Hyperion and took personal risk to leave that position to lead the efforts at Ketera. The way I understand things, Steve is more of a visionary and strategist and Burton has the operational disciplines to execute the current plan in place at Ketera. Steve had always intended for this and personally led the search for a competent CEO. Some may think it is spin, but I think it was part of the plan.
I guess that is about all I can remember, I hope it lives up to jbusch’s pressure cooker expectations even though I chose not to make sophomoric quips like Category in the Tank or emPtoris, speaking of which…exactly when will they announce what everyone knows?
Nothing going on yet, but first impressions are very positive from a location standpoint. Ketera chose a hotel in San Jose called Hotel Valencia which is very nice (I figured out this morning why everything smells orangey, I am smart like that). The area is a little like a California high rent version of Bourbon street except replace Pat O’Briens and The Dungeon with Borders and the Cheesecake Factory. I am looking forward to getting into the presentations and meeting the people, hopefully I get to learn some things.
I have already seen that Ketera has changed their logo and tag line to - The Proven Spend Solution and would imagine they have some plans to launch a pretty aggressive campaign in the Spend Management space.
I just got back to the office from an offsite meeting where I serve as Chairman of the Business Advisory Council for a local college which has approximately 124,000 students across the State of Indiana. It was an interesting meeting and has been nice to see the progression over time of the formal maturity of the meetings and the material that is prepared as such. This time, I was handed a very nice custom 3-ring binder which covered past, current and future agenda items.
Although not truly about sourcing (at all), they are beefing up the supply chain and logistics curriculum to make graduates more prepared for the local work landscape and the program appears to be growing well. More importantly, myself and others were given the opportunity to explain what makes a good member of a company which I believe is basically distilled into a good attitude/work ethic, problem solving skills and strong ability in technology. I think these skills translate to all companies as fewer people are doing more work in a globalized economy. I was especially pleased to see that one of my ideas for a specific class in entrepreneurship was actually adopted and built into the course curriculum since last year.
On a different note, I will be leaving Sunday for SFO and will be speaking on e-Sourcing at the Ketera users conference in San Jose and dropping in on a few clients while I am out on the left coast. Hopefully, I will get a chance to meet the new CEO of Ketera and have some feedback from the conference and topics covered.
2 commentsApril 20th, 2006Agatha Degasperi - Iasta Europe
How to conduct a supplier training:
Whenever possible, try to simulate a “real” event scenario. You can generally create copies of your original event to achieve this.
Schedule a date and time when you will guide the supplier through the system.
Leave a test auction available for a few days/weeks for suppliers who wish to continue practicing.
Take them through the system in a logical sequence:
o Logging on
o Accessing event data
o Important documents they need to be sure to reference
o Responding to an RFI (if part of the event)
o How to ask questions when they have doubts (e-mail, forum, etc…)
o Demonstrate the “live event” experience (whether it be an auction or sealed bid). Explain the event screen and all the relevant information. Give an example of what bidding is like by also connecting as a supplier – have them submit a bid to see what happens. Then you submit a bid so they see what that looks like. Explain the various feedback options they will likely see during the event (i.e. rank only, best bid only, etc…). Show any error messages they could get (i.e. trying to bid higher than their previous bid, etc…).
o Discuss communication options during the live event (i.e. how can they get a hold of somebody if they have issues).
o Discuss alternatives during an emergency (e.g. their technology goes down)
o End with important reminders: what is due when, when they should log on to the event, and any other relevant information.
Better one-to-one or group conference call?
This really depends. There are organizations that run group conference calls where multiple suppliers can connect via a web conference and take part in a training. The advantage is that this saves a lot of time and allows you make better use of your resources for other things. However, by making it less personal it also means that you don’t get a good feel for how comfortable, willing and/or interested a supplier is in taking part in the event. In an one-to-one scenario the disadvantage is that it is much more time consuming. However, it will give you a much better view into what the supplier is thinking, and how well they understand the entire process. They will also appreciate the extra effort.
To conclude, if you have the time and resources, I would opt for the one-to-one training option. If you don’t, at least conduct the group conference calls for the benefits sited above, but be sure to include a Q&A session at the end (via a chat feature for instance) just to clarify any potential doubts.
Add commentApril 19th, 2006Agatha Degasperi - Iasta Europe
Numerous organizations tend to underestimate the value of training suppliers to take part in an e-sourcing event. Now, while supplier training may seem like a minor part of the entire e-sourcing process, it is actually a much more critical part of the process than most think – read on…
What is supplier training? It’s the structured process of guiding a supplier through the tool(s) they will need to use in order to take part in an e-sourcing event, whether it be an RFI, RFP or RFQ.
What are the benefits of conducting a training?
Increase level of confidence on supplier’s side. The greater their confidence level, the more comfortable they will be taking part in the event.
Better preparation, which results in more accurate quotes. Leaving things ambiguous means pricing could be inaccurate (i.e. suppliers will over quote or under quote).
Increase understanding of true requirements: it’s amazing how much doubt/confusion/misunderstandings you can clear up through the training.
Humanizes the process. Sounds silly, but it’s true. Suppliers appreciate knowing that there is someone on the other side who actually is concerned and takes the time to guide them through the process. It helps them understand that it’s not just about the money. Often a barrier when trying to get “less enthusiastic” suppliers to take part in an event.
Add commentApril 18th, 2006Agatha Degasperi - Iasta Europe
Training is an integral part of introducing any new technology into an organization. Without it, large scale adoption will be slow and it will be nearly impossible to gain momentum around your corporate initiative.
Many training programs are short lived and fail to generate interest because it is often approached incorrectly. Take into account the following steps and you will begin to see the true value that can be added through training:
Determine if lack of adoption is really based on a training need. To do so there are 4 areas that must be addressed:
a) What are my goals/purpose (e.g.: start getting buyers to utilize e-sourcing tools for future sourcing transactions) b) Workflow/process: What work is done now to achieve this goal? What will need to be modified in order to make it happen? c) Support systems/tools: what support systems and tools are currently available to allow people to perform the skills? This includes facilities, technology, compensation, management, etc… d) People skills: what actual skills are needed to achieve the goals, use the tools and do the work? The problem is often not that people do not have the right skills, but rather they don’t have the right tools or processes in place or they aren’t clear. It is therefore important when introducing a training program to take all these elements into account. The first step is to formally train everyone in order to gain the necessary skills on how to use the technology, but then do you have the right processes, workflow, support systems, and corporate objectives to support the learning?
How comfortable are people learning a new skill? According to Harvard professor Chris Argyris, there are 2 kinds of learning: 1) Iterative – learning to do the same things better (high performers love this!) 2) Generative – learning to do something new (high performing adults & adults in general are much more nervous about this). There is a lot more resistance to learning a new skill then to give people the opportunity to improve on what they already know. Knowing this, you can take the right approach to introducing a “new technology” into your organization to avoid this type of resistance. Apprehension levels increase when changing the way people do things and imposing a new tool to do so. However, it needs to be clear that what people know will not change, the process of sourcing remains the same and the tool is intended to make them more efficient in what they already do well.
Practice makes perfect! When asking people to develop new skills in the workplace, give them something like a “rehearsal” period for practice, and when the results don’t really count. If you ask people to apply without practicing, they’ll go back to how they used to do things.
So does this mean you need to invest huge sums of money on e-sourcing training programs? Not at all! Do what is necessary to help people gain the basic usability skills, and then ensure the right systems are in place to support the learning and move your goals forward.
Below are a few tips if you are using Reverse Auctions:
Allow enough time for Suppliers to quote
Allow Suppliers to submit questions and possibly share that information with all bidders
Create demonstrations or mock events to allow suppliers visibility into what the real event will be like
Collect Preliminary Bids and review them to make sure you are satisfied with the number of bidders and the initial quotes
Keep the event under 10 Lots if possible or cascade the bidding times
Keep the event on the shorter side of initial opening time and allow for the appropriate time extensions depending on the complexity
Monitor the event preferably with Instant Messaging and heartbeat views to make sure the suppliers do not have any technical issues
Do not renegotiate final online submitted pricing and award the business!
If you are conducting an auction on a product or service that you have already auctioned in the past, try to offer something else to make this offer more attractive such as a longer award period or a larger award possibly combining with other items or services
Of course, this list is not comprehensive but a good representative sample of valuable tactics. A very obvious theme of simplicity and adequate communication with suppliers in one of the keys. The more they know and feel comfortable with the process, the better the results will be for all involved.
Its nice to see that all the hard work that went into the Iasta Benchmark Study is getting some love both domestically and globally. This, however, is just a fraction of what the inbound requests for information has been. We have had the opportunity to discuss the findings with a number of supply management professionals and journalists and the response has been quite positive. Iasta was very happy with the results/reaction to the report and with the growing buzz behind the scenes, I think we have uncovered some valuable information for vendors, analysts, journalists, and customers.
Currently, we plan to refresh the data with 2006 surveys for what is sure to be very interesting year over year benchmark information.
We can all agree that there’s no replacement for contract management capability from a compliance perspective. The recent Emptoris / DiCarta deal highlights this. But many procurement organizations often forget how implementing strategic sourcing and category management approaches through the use of e-Sourcing applications can help generate savings while ensuring that standard vendor management processes are adhered to in the contracting and negotiating process. But e-Sourcing applications not only enable standardized sourcing processes, but they also create an audit trail of activities throughout the qualification, negotiation, and contract award phases of working with suppliers. Given the ease of implementing on-demand / software as a service (SaaS) e-Sourcing platforms these days, there’s no excuse for procurement organizations to not take the first step towards an end-to-end procurement compliance strategy by starting with eSourcing.
Its finally official…a few little birdies left me voice mails and emails over the last couple weeks about this merger/acquisition but I left Spend Matters to be the official bean spiller. I only knew the basics anyway and Jason’s site is more for news of this matter. Well done - breaking this early, Jason and skewering the lazy reporting on the issue.
So, what does it really mean to e-Sourcing and the industry? First of all, I think this is a real shot over the bow to SAP. diCarta spent a lot of effort trying to stay off SAP turf, specifically in SRM. Uhh…not any more. I do not believe the NetWeaver integration is meant as a good thing for SAP, merely an easier path to use Emptoris over them. They are clearly moving into a huge solution package with a lot of horsepower.
Next, I have heard good things about the Emptoris product. I also know diCarta to be a strong CM solution from people I know there and demos I have seen. Sounds like an awesome future for the industry as long as your name is GlaxoSmithKline or Boeing. You dont puff up to 320 employees and this much overhead to provide cost effective solutions (yes, I know about MSFT and Emptoris is not MSFT). This should be a very compelling piece of software, if you have the budget and resources to implement it.
There will be an interesting period that Emptoris will need to navigate during the transition. Of course, to the public it will all be sunny days and high fives, but I have seen many mergers and there is a lot of work to do, especially with technology integrations. It never goes as smoothly as planned and with two large scale, mature applications, the truly seamless nature of the solution is a ways out. I have heard about similar difficulties and talent departures regarding similar merger deals.
From my perspective: Does this effect Iasta? Well, of course it does, but I feel, in a positive way. The reason for this is because as more companies get pulled up into the large client profile, it leaves behind a growing vacuum of solutions that can be used by the masses. I can say for a fact that most $500m companies are not going to spend $250k for CM plus that much for SM. By creating this spend management “super company”, it will be very hard to make money in the lower markets. Hence…good for us with our considerably more reasonable price point and functionality.
It is all getting very interesting. SAP is the company that really needs to worry about Emptoris and Ariba. For that matter, will Ariba go acquire a CM company now? I know that they do not have comparable technology to diCarta and might be at a significant disadvantage now. For me, it is nice to just sit back and watch all the bloodletting. Those companies are making big bets with a lot to lose. There is plenty of room in the market for various strategies to be executed. I do not think either plan is wrong and both can be successful, but I do appreciate having virtually no competitors with the same functionality/price combination that we have and the growth potential that our position affords us.
Last Thursday, Supply Chain Manufacturing & Logistics Magazine ran an article discussing the city of New York’s recent announcement to issue a RFP today to identify a full-service express and ground delivery services provider and marketing partner to serve as the first “Official Express and Ground Delivery Services Provider for the City of New York”.
The article quotes Daniel L. Doctoroff, Deputy Mayor for Economic Development and Rebuilding, who states “This competitive bidding process will create revenue for the City and provide assistance for up to 200,000 New York City small businesses, while offering a powerful marketing opportunity for a global overnight delivery company.
A joint initiative of the Department of Citywide Administrative Services (DCAS), the Department of New York City Small Business Services (SBS), and the New York City Marketing Development Corporation (New York City Marketing), “this innovative procurement and marketing initiative provides an exciting opportunity to consolidate and centralize the City’s shipping services” according to Martha K. Hurst, Commissioner of the Department of Citywide Administrative Services.
One of the goals of the effort is to establish a delivery partnership that offers a customized low-cost shipping option for the small business customers of the NYC Business Solutions, the direct assistance program of the SBS, thereby increasing the competitiveness of the small business customers via lower operating costs.
This is a great idea. By leveraging economies of scale, NYC can lower costs. By forming a strategic partnership, NYC can improve service levels. By including NYC SBS members, they can fulfill their mandate to help local business by offering them increased service levels and lower costs through a larger organization then those business could get on their own.
I do not know about you, but I’m always annoyed when I see waste in public government agencies … especially considering they are being funded with my tax dollars! It’s great to see that at least one government agency is embracing some of the best practices of strategic sourcing and putting my tax dollars to work wisely. Let’s give them a round of applause and hope more government agencies follow their lead!
![[del.icio.us]](http://www.esourcingforum.com/wp-content/plugins/bookmarkify/delicious.png)
![[Digg]](http://www.esourcingforum.com/wp-content/plugins/bookmarkify/digg.png)
![[Facebook]](http://www.esourcingforum.com/wp-content/plugins/bookmarkify/facebook.png)
![[Google]](http://www.esourcingforum.com/wp-content/plugins/bookmarkify/google.png)
![[Reddit]](http://www.esourcingforum.com/wp-content/plugins/bookmarkify/reddit.png)
![[StumbleUpon]](http://www.esourcingforum.com/wp-content/plugins/bookmarkify/stumbleupon.png)
![[Technorati]](http://www.esourcingforum.com/wp-content/plugins/bookmarkify/technorati.png)
![[Windows Live]](http://www.esourcingforum.com/wp-content/plugins/bookmarkify/windowslive.png)
![[Yahoo!]](http://www.esourcingforum.com/wp-content/plugins/bookmarkify/yahoo.png)
![[Email]](http://www.esourcingforum.com/wp-content/plugins/bookmarkify/email.png)
