Archive for May, 2008
May 16th, 2008
David Bush - Iasta
Its been a long week, so I will fall back on a little “local kids make good” story. Only took the Star 8 years to notice we were here. Although it is impressive that there can be so many factual errors in a 223 word blurb. I will give the reporter a break though, it is very tough to continually understand new businesses and industries when you have 15 minutes to get briefed and 15 more to write.
I only have two words, if this sourcing thing doesn’t work out…Sears Catalog
Entry Filed under: General
May 15th, 2008
David Bush - Iasta
There is no way I can keep up with Spend Matters type coverage of our conference. Just way too much else to do, and besides, does any one want to read me Twittering about myself?
D Bush is taking the stage to welcome to give the Iasta SOU
- about 30 minutes ago
Damn, that guy is good looking, stage presence like pro! - about 30 minutes ago
Yep, still profitable, new book, blogs, wikis..blah blah - about 28 minutes ago
Uh oh, his computer sucks, looks like Melissa forgot to disable the anti virus deep scan. - about 24 minutes ago
He’s announcing new products and service offerings, exciting stuff!! - about 20 minutes ago
I think he’s closing with a joke and dropped in a s*x reference - eeeee! - about 15 minutes ago
Whew, he pulled it off! - about 14 minutes ago
Nope, I don’t think so. Even though that is not going to add much value, our speakers did.
- F500 construction and engineering firm, Fluor Corp, spoke about how they successfully rolled out SmartSource to a large group of users over a period of 2 years. In the process, Fluor built an internal sourcing community and knowledge center.
- Our team gave multiple examples of how sourcing optimization should be used in every day sourcing projects. Truly opened some eyes and showed the power of post bid optimization with constraint scenarios.
- VP Procurement from a global transportation company gave a great overview of how they utilized SmartSource during a very complex merger, and subsequent cost reduction mandate over 6 months. Savings target of $43mm, actual $54.4mm.
- Charles Dominick, of Next Level Purchasing, spoke of the value of purchasing certifications. Specifically, he brought attention to the idea of raising the knowledge as a team, more than the traditional outlook of certifications being for the individual.
- Infosys discussed principles of global sourcing and how things like outsourcing and offshoring can help a company in their supply chain strategy.
Every one really did a great job. Infosys had some of the most content packed, dense PowerPoint slides I have ever seen. It was some what remarkable that some one was able to design a slide like that!
I am looking forward to seeing the feedback from the attendees. I think we took a lot of the feedback from last year and improved every where. Now, its sleepy time..zzzzz.
Entry Filed under: General, Spend Analysis, Supply Management Best Practices, Technology
May 13th, 2008
David Bush - Iasta
During our training and workshop day, I co-presented with our COO, Jason Treida, on user adoption. We feel this is a critical topic that impacts every single user of sourcing technology. Not every company/user will have usage of functionality like reverse auctions or project management or optimization. However, every company will need to address the challenges of user adoption. Hence, our workshop was heavily attended.
To begin, it is important to realize that eSourcing tools are being implemented at an accelerating pace and,
**75% of respondents to a Purchasing Magazine survey in Nov 2006 said their organizations did not provide the training and help to ensure competency with online sourcing tools and techniques.
**Also, it was stated that CFOs were expected to increase the investment to eSourcing applications and in turn expected greater adoption and savings.
In our opinion, these facts mean that every company needs to invest in training and roll-out plans. Too frequently, it is thought to be “good enough” to just get web based training in the first month. This will only work out well, if your organization is deeply staffed with people that have eSourcing experience to go with the executive backing.
There are a variety of ways that companies can successfully roll out eSourcing. Most of which are provided by the eSourcing company, but are not required to come from the vendor. They can also be done by consulting companies or by internal teams. The key is to realize that someone needs to do it and manage it. Train the trainer, managed implementations and category management + training are successful strategies that are critical to success for different profiles of organization.
Entry Filed under: General, Supply Management Best Practices
May 12th, 2008
David Bush - Iasta
Today, I am downtown with our users conference, so apologize for the short post today. I will be presenting with Jason, in a workshop on roll out best practices. This is in addition to numerous other break outs that will be going on simultaneously. These include training and coaching on bid management, contract management, decision optimization and data categorization to improve management reporting, among many others.
We have a good crowd for the conference this season, but I really hate doing it in May, when every other conference is happening and we are coming off Mothers Day. We have been forced into this week, because of practice schedules at the track and the ISM conference. I know it affects attendance, probably by as much as 50%. Next year could find us in Chicago, where we will not be able to keep our corporate suite at the worlds greatest race track, but other advantages will counter that.
Entry Filed under: General, Supply Management Best Practices, Technology, e-Sourcing Marketplace
May 9th, 2008
David Bush - Iasta
There is still time to sign up for the second annual user conference. That is, if you are an Iasta SmartX user. This year, will again be held in Indianapolis, for a 3 day span on eSourcing best practices.
The structure was overwhelmingly approved last year, and will be repeated and improved with the feedback we received. Monday is all day training with a large number of workshops to focus on particular functionality or strategies. Tuesday is a combination of round tables and presentations, which will include some great topics from outside speakers. Finally, Wednesday is a networking day out at the Indianapolis Motor Speedway. Fortunately, weather looks like it will be pretty nice, after a very rainy last few days here.
Two of the speakers that I am looking forward to include Infosys and Next Level Purchasing. Infosys will be discussing global procurement strategies and the values of outsourcing. Charles Dominick, of blogging fame, will be presenting about the value of purchasing certifications.
I will have a couple posts next week about these. I am looking forward to kicking this off, we have a lot of new faces in attendance this year.
Entry Filed under: General, Supply Management Best Practices, Technology, e-Sourcing Marketplace
May 8th, 2008
Sean Delaney - Iasta UK
Well I couldn’t resist this…especially since I was once one of these buyers. What is more interesting for me is that having crossed over to the “other side”, the negotiating styles used by the supermarket buyers (Tesco’s etc) certainly sounded very familiar.
When showing these tactics to Duncan Bullivant, the Chief executive of Henderson Risk Group, a seasoned hostage and kidnap negotiator, the article writes “even he was surprised”. Duncan then goes on to say ”not only do I recognise the phrases, I recognise all these tactics in every aspect of business I have done in the last few years.”
The tactics and behaviours during negotiations have evolved over the years from being more physical, to more psychological. For example, not long ago there was the story of one buyer, who used to attend meetings with a water pistol, and fire water, at the supplier, if the supplier didn’t meet his demands. Is this procurements’ equivalent to water boarding?
One strategy is called the “clock face” which involves 41 sequential steps as the buyer seeks to coax the best price out of the supplier. Tactics include threatening to de-list the supplier (which in reality could lead a supplier going out of business), threatening to go over their head to their bosses, play good guy and bad guy, deliberately misunderstanding something, and just when you think you may have made it, the final stage is the partnership stage. This is where suppliers may be deliberately left to feel the odd one out, before bringing them back into the fold.
Tired? Well, I certainly was after reading it! Quite clearly those more sophisticated suppliers will prevail and there is already evidence of this. Furthermore, as the supply base consolidates, and they become equally sophisticated, an impasse will inevitably be reached. With raw material prices rising so rapidly, I think this may be the final tipping point in relations.
However, back to negotiation techniques used, I can’t help feel that there is a serious case for the automation of the negotiating process. How much more sophisticated can one get? I would argue that in the future, it is imperative to keep it simple. Capacity constraints, and the securing of scarce resources, are going to be the key sourcing variables.
Entry Filed under: Global Supply Issues/Risk, Optimization, Reverse Auctions, Sourcing News, Supply Management Best Practices, e-Sourcing Marketplace
May 7th, 2008
David Bush - Iasta
My final observations of this year’s conference is an extension of the previous posts. The number of attendees was lower (I heard under 2000), but the interaction was highly impressive. I think this might have been due to a couple factors. First, the economic pressures that companies are under are showing in the procurement department. Many of the people that I spoke to, had a very focused intent to their mission. There was very little curious banter, mostly just diving into very detailed conversations about bid management and process. Another possible reason..St Louis. I cannot help but think that the people in St Louis were there because they really wanted to discuss and learn about procurement. Vegas could have been an expensed holiday for many last year, which affected their ability to stay focused on opportunities on the floor.
Purchasing.com had a good summary page, which described some highlights of the conference. It seems to be a mixture of press releases and original content from participation. That is really nice to have actual interaction and some opinions embedded in the material. I can’t help but think that blogs have had an affected the way many of the publications produce their content now.
Finally, I want to give special props to Marty Rutkovitz, of Monsanto Co. He was the local chair person of the event and put in a tremendous amount of work with his team to organize this event. He did a wonderful job and everything was flawless. Now Marty can go back to his alter ego, as a television star!
Entry Filed under: General, e-Sourcing Marketplace
May 6th, 2008
David Bush - Iasta
As normal, Monday at the ISM conference is the heaviest day of attendees walking around. We had a large amount of traffic flowing through and, it did not hurt that Kaman had a magician across the aisle, which pulled in a big crowd of oozing with glee. Again, spend analysis was strongly sought out, but today brought in a number of high level F500 managers that understood and needed optimization.
I have had a nice chance to catch up with analysts like Andrew Bartolini and Mickey North Rizza, both of whom, I was able to speak with for extended periods of time. There was also a great number of ESF readers who came up and introduced themselves. I only wish more people would comment in the sourcing blogosphere, because some many people have great takes and deep understanding. This is a shadowy group, but does not mean they are missing the concepts.
Our biggest topic of conversation has been about the eSourcing Handbook, which is now available on Amazon. Many people have been incredibly impressed with the depth of content available in the book and downloads from our website have been incredibly strong (in the hundreds).
The beauty of it, is that we are giving it away! That is an offer too good to ignore. And if the reader likes it enough to keep permanently, there is always the hard copy available from our store front or Amazon.
Same story as yesterday, less people, but high value and we are scheduling more demos than any other conference I can remember.
Entry Filed under: General, e-Sourcing Marketplace
May 5th, 2008
David Bush - Iasta
One of the nice things about getting out to conferences, is gaging the pulse of what people are looking for, at this time. Not only are you hearing practitioners discuss what their companies are seeking, but you get the same conversation 10-15 times per hour. This year, its score carding / SPM and spend analysis. If a vendor showed up and wanted to build momentum on reverse auctions, the response will be much cooler. Although most of the attendees are very familiar with auctions, and many use or intend to use them, they do not want to talk about them a lot. It seems that they are expected and not worth long discussion. In other words, they have been commoditized.
This is fine, of course. Iasta made the commitment into the full sourcing lifecycle years ago and those decisions are paying off now, as we continue our strategy of innovation in some areas and fast followers, in others.
I think the exhibit hall on Sunday was fairly light on traffic, especially when compared to Las Vegas. However, out of the people I talked to, we generated 6 product demos, to be scheduled, in one session. I can see many of the attendees looking for very specific things with intentions of learning and acting. I will take quality over quantity any day.
This has definitely been a good start to the conference. St Louis has been a good venue, with everything tightly packed. That is, everything but restaurants, which are 9 blocks away. I have never been able to figure out the lay out of down town St Louis. Its a big city, but it is nearly impossible to find where the people are and where things are happening, outside of the one block Laclede landing area. I think there must be hidden spots that the locals do not want outsiders to know about. I bet there are beer pixies there, that keep every ones glasses full with Budweiser.
Entry Filed under: General, Supplier Performance, e-Sourcing Marketplace
May 2nd, 2008
David Bush - Iasta
I am leaving tomorrow for St Louis and this years ISM conference. This is one of the better conferences for procurement, with a large attendance and a traditional exhibit hall. Generally, there are about 2000 attendees and over 100 vendors. As in years past, eSourcing and supply management dominate the vendor capabilities. In years past, over 30% of the booths have been supply management software companies, this year is very much the same.
Obviously, there is a strong demand from both the attendees and the vendors in this space. The benefits are very tangible and desired, hence the continual presence.
Iasta has an exhibit booth (#328) and I look forward to meeting as many practitioners, as possible. Please make an effort to come by and introduce yourself to me or our other executive leadership.
Entry Filed under: General, Supply Management Best Practices, e-Sourcing Marketplace
May 1st, 2008
David Bush - Iasta
Recently, I wrote a blog about the up-swell of support for procurement to get involved with the legal spend. From the same publication that I found that article, there was a follow up, which added even more detail to the topic.
Fortunately, the author ended on a very high note with great analysis. In the first half, however, I had my doubts that it was going the right direction. There was repeated commentary which seemed to paint procurement as unsophisticated, not capable of understanding legal services.
As example:
“How do you measure the troubles the company didn’t experience?” says Hackett. “How do you prove the value of, ‘We didn’t have an SEC investigation this year’?”
Procurement or purchasing employees who are not part of the legal department may find it difficult to appreciate or even understand those values. They may also find it hard to differentiate between a straightforward legal task that could be performed by most corporate lawyers and one that requires involvement by a trusted legal adviser who may be familiar with the company’s legal needs or who has particular expertise.
Merely looking at costs is not always the best way to choose outside counsel, Hansen says. Procurement employees who don’t have a legal background are often unable to differentiate between attorneys and may ultimately outsource to a new attorney without the skills and trust required for the job, simply on the basis of lower costs.
“A procurement group is not capable of differentiating between top players,” Hansen says. “They don’t understand that their skill sets need to be separated, and are also incapable of differentiating between top and bottom players.”
Of course, we all know this is not the case and procurement has many very sophisticated methods of analyzing bids to make valid comparisons. If a company is large enough to have sourcing possibilities in legal services, they have surely heard of RFPs or eRFx technology (and probably use them). These concepts are easily accounted for by asking the questions and assigning the proper measurements. Weighing price and non-price factors are methods that have been used by sourcing teams for a long time.
Ultimately, the article takes a turn for to a very constructive discussion, with excellent tips for managing sourcing and legal teams as one.
“It’s clear that corporations are increasingly looking at ways to save money, and law departments are cost centers and need to be managed as cost centers,” Friedmann explains. “A forward-thinking general counsel should look to the purchasing department for help.”
While procurement or purchasing department involvement with hiring outside counsel can lead to tension, savvy general counsel shouldn’t ignore the purchasing department’s interest and expertise. Rather, in-house counsel should work together to balance the company’s cost-cutting needs with their preferences for outside counsel.
General counsel should look for ways to quantify legal services that will steer the procurement department toward measuring results, not just costs.
For instance, some law departments look at comparative savings in the industry in general or at outside counsel savings effected by better practices or better technology, Hackett says.
Some large companies even have created a position within the law department whose sole responsibility is to oversee outside counsel costs, retention rates and savings maximization. Such a position — particularly when filled by a member of the law department — can cut costs while ensuring that the company’s legal needs are adequately met and outsourced to the right people.
Unique and creative ways of procuring outside counsel services such as online reverse auctions and e-billing, both of which are slowly being introduced, might also help cut costs, yet can yield the same level of service to which law departments are accustomed.
As the article states, many procurement groups see a lot of juicy, low hanging fruit, when they peer into the marble floored legal offices. Handling these services correctly, is critical, but very possible and the results should be highly beneficial.
Entry Filed under: General, Supply Management Best Practices
