Archive for November, 2012

Risks in eAuctions

November 30, 2012

Today I want to continue on the theme of eAuctions, this has been a topic of mine for well over a decade since I first introduced the concept into the Shell Group of Companies in Oman. Still today eAuctions are not widely understood in terms of the risks involved to both the buyer and seller, however. with careful planning and engagement between the parties and stakeholder engagement the eAuction tools and techniques can be a win win situation for both parties. As an implementer, executor, researcher, mentor on the subject of Sourcing I have highlighted what I consider to be some of the most critical issues to consider when embarking on the eAuction journey.

1. Incomplete Evaluation Criteria.

No two auctions are the same, even if they are for the same good or service. Market conditions change over time which affects the evaluation criteria; therefore it is important that you engage with potential bidders well in advance of the planned event to ensure that all the factors and weightings are complete and appropriate.

2. Understanding of the Bid Rules.

Well before the event and once the Strategy, event type and evaluation criteria have been established, each bidder invited to participate in the event should clearly understand the bidding rules. This will avoid complications either during or after the event. Many companies who engage in eAuctions now require that the invitee sign and return a bid acceptance showing that they understand the bid rules completely to the event administration coordinators.

3. Stakeholder Politics & Policies.

It is important to engage at the most senior level to ensure that stakeholder politics or policies do not disrupt the event or the use of eAuctions in general. This is not only true for the buyer side, but also for the seller side. Many CEO’s on the sell side only see half the story about the use of eAuctions and in many cases will go out of their way to get the event changed back to a more traditional process. There is a fear that they will give away their competitive advantage in an eAuction. The only way to address this is by education and engagement at the most senior levels ensuring that they understand the benefits for both Buyer and seller alike. This is also true for Government tender Boards as well.

4. Minimal Engagement.

All too often companies are in a rush to get the good or service procured to meet a customer demand and therefore forfeit investment in time to engage properly with the community. Buyers will often select a short list of people to get the job done quickly, this poses a risk to the buyers in that they are favoring a restricted group of bidders. The result of this action is that the rest of the community will disregard future request and possibly boycott the whole eAuction process in the future.

5. Education and Training.

This is an important Critical Success factor for any eAuction provider or Client who are administering auctions themselves. It is perceived that the low adoption of eAuctions across the Globe is due to not enough education and training even at the most senior levels right down to ground level of buyers and sellers alike. Solution providers do not provide enough expertise in the use of eAuctions which is based upon their lack of understanding of the business in general. Continuous training and education is missing in many of the solutions being provided today.

6. eAuction Administration.

In many instances there is a perception that the eAuction administration is collaborating with the buyer and placing bids behind the scene in order to drive the prices down. It is important the administration of the auction is seen as completely neutral and serving the best interests of the buyer and seller alike.

7. Backup Process

Where auctions are being run in remote area or in areas of low infrastructure, there is a risk of the auction failure. Adequate provisions and procedures should be employed to ensure that the auction can continue. In the bid rules backup procedures and processes should be spelt out and agreed.

8. Bidding Strategy (Supplier).

The supplier (bidder) should have his own strategy when going into the event. He should understand his own supply chain and the costs involved in order that he will know when he has placed his final bid, unable to go lower. This will ensure that a fair market price is obtained for the good and service rather than just the lowest price. Without this strategy there is a risk that the supplier will not actually be able to execute the good or service without claiming additional funds after the award.

9. Event Feedback.

Once the event has been concluded and a subsequent award to the winning bidder, feedback should be given to all that participated (winners and losers). This will show that the event was fair and open and the losers will see what they have to do in subsequent events. This is a critical success factor in maintaining supplier confidence in the process.

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Phishing for Business

November 29, 2012

During any period of economic downtown Phishing has found a breeding ground for new socially engineered attempts to defraud individuals, businesses and consumers alike. The potential impact on business is huge, whether it’s an individual employee, business or customer. Phishing is the process of luring unsuspecting users into providing sensitive information for identity or business theft. In the last decade since Phishing arrived on the scene it’s been rapidly growing, therefore organizations need to keep abreast of the latest methods employed by the cyber criminal and proactively take steps to prevent this type of fraud.
Spear Phishing is a targeted version of Phishing, which unlike the more common phishing techniques actually targets known individuals of Banks, Financial institutions or other types of Organizations. Corporate employees are also being targeted by cyber criminals to provide company banking information, vendor and customer databases and other information to facilitate cyber crime. Business services phishing which has recently started to target businesses using Yahoo and Google Ad Words are receiving emails encouraging them to login to the system and update their accounts and provide updated credit card details. In some attacks, to enhance their success rate the cyber criminal is using an e-Card which comes via email and seems legitimate and will take the user to a website whereby a Trojan can be downloaded to the user’s computer for the keylogger to subsequently access company information, user id’s and passwords.
Phishing knows no limits; the cyber criminal is also now using the Mobile Phone and SMS Text messages to Phish for business. This is known as Smishing! The most common technique is to send a text message to the mobile phone stating that the bank account, ATM or Credit card has been compromised and subsequently has been blocked. The message asks that you call a specific number or visit a website to reactivate the account or card asking for the Account number and pin number.
While the financial industry seems to be the most prominent target and continues to be so, others like auctions sites, payments services, retail and social networking sites are increasingly coming under attack.
There is no 100% sure fire way of preventing an attack but there are technologies available to assist, implementation of Secure Socket Layers (SSL) and Extended Validation (EV) Secure Socket Layers are critical in the fight against phishing and other methods of cyber crime. In addition to technologies that assist with prevention of attacks employees, businesses and customers need to be educated in safe internet practices and how to avoid cyber crime. Teaching of how recognize the signs a phishing attempt such as Misspellings, generic greetings instead of a personal one, urgent calls for action, requests for personal information and fake domain names and links.
Without doubt Phishing will continue to evolve and will take advantage of human behaviors such as compassion, trust and curiosity (as witnessed in the Haiti Earthquake disaster). Protecting yourself, a business or a customer relationship requires diligence and education to prevent losses to fraud.

The Accelerated SAP (ASAP) Methodology

November 27, 2012

I have been asked again what is ASAP (Not, AS SOON AS POSSIBLE), but ASAP in the context of a SAP implementation and roll out. The SAP ASAP methodology is a proven tool and technique for implementation of SAP, but unfortunately there are still some that resist it’s use and end up with problems and issues once live. If the methodology is followed and you have strong project management in place you will succeed. The following is just a brief overview of the phases in a project using the ASAP methodology.

The implementation of your SAP System covers the following phases:
1. Project Preparation
In this phase you plan your project and lay the foundations for successful implementation. It is at this stage that you make the strategic decisions crucial to your project:
o Define your project goals and objectives
o Clarify the scope of your implementation
o Define your project schedule, budget plan, and implementation sequence
o Establish the project organization and relevant committees and assign resources
2. Business Blueprint
In this phase you create a blueprint using the Question & Answer database (Q&Adb), which documents your enterprise’s requirements and establishes how your business processes and organizational structure are to be represented in the SAP System. You also refine the original project goals and objectives and revise the overall project schedule in this phase.
3. Realization
In this phase, you configure the requirements contained in the Business Blueprint. Baseline configuration (major scope) is followed by final configuration (remaining scope), which can consist of up to four cycles. Other key focal areas of this phase are conducting integration tests and drawing up end user documentation.
4. Final Preparation
In this phase you complete your preparations, including testing, end user training, system management, and cutover activities. You also need to resolve all open issues in this phase. At this stage you need to ensure that all the prerequisites for your system to go live have been fulfilled.
5. Go Live & Support
In this phase you move from a pre-production environment to the live system. The most important elements include setting up production support, monitoring system transactions, and optimizing overall system performance.

Are you a group or a team?

November 24, 2012

A group is a gathering of people, each with their own established roles. As companies grow large, practicality dictates that responsibilities must be divided up. But this is the point at which many employees begin to think that their job is just fulfilling their own individual roles. Some even go so far as to think that stepping outside their established roles is wrong. This is not a team. This is group. Indeed, this is a herd of sheep. It will never be successful.

To be a team, each individual in the organization must act beyond their own responsibility and in the furtherance of others. For each individual on a team, every job is a kind of war, every job is a competition. Unless you win, nothing has meaning. To be successful, each member of the organization must cultivate the mindset that they alone hold the fate of the organization in their own hands.

Only a group of people sharing that mindset can be a team.

Procure-to-Pay, tips for the Enterprise

November 12, 2012

As more companies are seeking to move beyond procurement into fully deployed supply chain systems, a key challenge for many companies is in the area of improving efficiency in their procure to pay cycle for many of their contracted services, especially in the area of facilities maintenance and on-site contract management. There exist multiple challenges in environments where field associates are working from manual or electronic systems, requisitioning on-site services for maintenance or other activities, and ensuring that this information is captured effectively. In addition, there exist significant challenges to ensure that the proper service level agreement is fulfilled, the correct price is charged, the purchase order is transmitted correctly, the invoice matches, and finally, that the supplier is paid the correct amount for the actual services delivered. While many enterprise systems claim that these elements are simply defined within their structural logic, the truth is that there are plenty of opportunities for error, and that without a planned process for managing the procure to pay cycle, the organization may be bearing significant costs due to non-compliance to system or process requirements.

So here are a few tips that should help

• Develop common processes and procedures for the P2P process, and roll-out training at site level to ensure that people are comfortable with the approach. Be prepared to modify minor elements the process to accommodate site-level requirements, but keep the essential elements of the process flow intact. Emphasize the importance of this approach to the entire P2P cycle, including accounts payable, invoicing, and blocked and parked invoices. Explain the impact of lack of adherence to process – and that the supplier will not be paid in a timely manner for their work if errors occur in the process.
• Improve master data robustness and integrity. Whether this involves ensuring proper audits of external vendor catalogs, or internal content management, clean master data is a mundane but critical element to supply management and P2P best practices. Minimise opportunities in the P2P process for keystroke and free text errors to occur, by error- proofing the system and mapping the process to identify where errors are occurring. Recurring training will also ensure that errors are reduced.
• Explore punch-out roundtrip and other approaches to exploit external content management approaches. This is especially important to ensure that the most efficient buying channel is selected.
• Exploit the use of procurement cards for high transaction volume, low transaction value purchases. Pcard technology has evolved significantly, and companies need to identify opportunities for hard dollar savings through this approach via rebates.
• Be sure to update master data and pricing rates on an on-going basis. In particular, attention should be paid to units of measure, appropriate industry-standard nomenclature, updating of labor rates based on market conditions, and on-going clarification of requirements against existing contracts.
• Establish how you are buying products and services, and document the buying channels through which these purchases are occurring. Inevitably, you will discover that purchases are occurring through improper or less- efficient channels, which is detracting from your team’s ability to engage in strategic value-added approaches. Get out of the transaction management business! To do this, you need to establish standard processes and procedures, and commit to a change management plant to ensure that people are using the right buying channels for the different types of spend.
As technology and business requirements evolve, the P2P cycle will certainly need to be re-visited from time to time to ensure it is meeting the needs of internal customers, and that suppliers are satisfied with the system.

Supply Chain Management and “The Wisdom of Bees”

November 10, 2012

Michael O’Malley’s intriguing analogy between business organizations and beehives provides delightful entertainment and clear instruction, which can be appreciated by business people and laymen alike. In twenty-five brief chapters, the reader will come to understand how and why an enterprise succeeds or fails using the immagination and science of bees at work for guidance.

On closer evaluation bees were working on the very same kinds of problems we are trying to solve. How can large diverse groups work together harmoniously and productively? It seems to me that we could take what the bees do so well and apply it to our enterprises.” When Michael O’Malley first took up beekeeping he thought it would be a nice hobby to share with his ten-year-old son. But as he started to observe these industrious insects he noticed that they do a lot more than just make honey. Bees not only work together to achieve a common goal but in the process create a highly coordinated efficient and remarkably productive organization. The hive behaved like a miniature but incredibly successful business. O’Malley also realized that bees can actually teach managers a lot about how to run their organizations. He identified twenty-five powerful insights such as: * Distribute authority : the queen bee delegates relentlessly and worker bees make daily decisions based on local cues and requirements. * Keep it simple : bees exchange only relevant information operate under clear standards and use straightforward measures and feedback to guide their actions. * Protect the future : when a lucrative vein of nectar is discovered the entire colony doesn’t rush off to mine it no matter how enriching the short- term benefits. Blending practical advice with interesting facts about the hive The Wisdom of Bees is a useful and entertaining guide for any manager looking to get the most out of his or her organization.

In subsequent posts I will try and give more examples of how this book, in it’s 25 chapters has had an influence on me in my work and in organisations that I have been associated with in the field of supply chain management. As I mentioned in the pervious post relating to keeping things simple, removing complexity in our business is one of my own key challenges.

Keep Processes Simple, reduce complexity – The Wisdom of Bees!

November 5, 2012

For the last couple of years I have constantly carried a book with me which fascinated me from the first time I read a review of the book and subsequently bought it. The book in question is called “The Wisdom of Bees”, written by Micheal O’Malley Ph.D. So what has this book got to do with Supply Chain Management? And in particular my blog about The supply chain management world. Basically the book is about what the hive can teach business about leadership, efficiency and growth! Every time I pick up the book which I have read now cover to cover many times, I find something new or related to my work within the supply chain management field.

For the last twenty plus years I have been involved in implementations of SAP ERP and over the last decade been involved in eBusiness implementations, which are about streamlining, standardising and simplifying the business! However, the message of “Keeping things Simple” still seems to thwart enterprises.

All to often enterprises introduce a level of complexity into their processes or products that inadvertently undermines efficiency and effectiveness. That is, over time, corporate operations and goods become “Rube Goldberg” creations. Rube Goldberg was an American cartoonist best known for his drawings of complicated machines that performed simple tasks. Even today we still honour him through the many engineering contests held in his name. Individuals or teams receive awards for building the most convoluted contraptions to achieve simple outcomes such as turning on a light or breaking an egg. Although we might not all win a Rube Goldberg award, we unnecessarily complicate our work in many ways. I will briefly describe three of the major ones here, but keep in mind that this by no means exhausts the possibilities.

One common way that we over engineer products, processes or services is by feeling compelled to incorporate ideas of every conceivable constituency into the final design. The many quips about committees ( for example, the unwilling picked from the unfit to do the unnecessary) are nods to the ineffective solutions that many hours of group discussion can produce.

A second way to do ourselves in is by building on existing platforms that have inherent limitations, making it hard to do what you want! For example where I live there were plumbers working in the condominium, good people and true professionals. Some time ago there was a requirement to change pipe work ( originally done by different plumbers) and now certain parts of the system had to be changed. The supervisor explained that the original system would not be entirely compatible with the new requirements and new piping would have to be installed. If this was to be done it would introduce new routes of piping, some of which would have to be exposed, with different mechanisms to maintain the water pressure. This would be done over a period of weeks leading to disruptions and fussing around to get everything working in harmony. Ultimately, a decision was to taken to replace the old system rather than building on top of it and wind up with something that would not function properly. Obviously, the costs were a little higher for the new system, but there will not be extra to pay for endless work arounds and inevitable fixes and we have a system that runs smoothly.

Finally, we sometimes try to design for the exceptions, rather than create a product or process for the 99% of the people who are good law abiding citizens, we incorporate features that try and exclude or capture the 1% of users (abusers) who will circumvent our intent. I read a story a while ago about the State Liquor Control Board of Pennsylvania that was thinking about introducing wine kiosks at selected sites. It’s true that we do not want the intoxicated or under aged buying alcohol, so purchasers would have to would have to insert their driving licence and breath into a breathalyser to complete the transaction. The intentions are good, but the result is that you irritate the people that you want as customers while providing the under agers with a easy challenge.

So how is this relevant to Supply Chain Management (and what we can learn from the honey bee). When it comes to the hive, honey bees keep it simple. They get right to the point, concisely, clearly and without undue complications. There are several aspects of what they do from which we should learn. These will not overcome all potential barriers to simplicity, but keeping the following three maxims in mind will help.

Firstly, information exchange among bees is relevant. This way, the bee receives a signal, it knows it means something important. They do not communicate any more or less than is necessary. For example, there is no feedback signal in the hive that tells the bees to abandon a poor flower patch. That information does not help anyone. Bees working in the same patch already know the quality is poor and the information is not pertinent to foragers who work at who work at different patches. In addition, bees recruit unemployed foragers to good patches, it would not make sense to tell them about all the places not to go.

Secondly, Bees have clear standards that regulate their behaviour. The standards keep their mission on track and protect against wrongheaded commitments. When foragers return to the hive, they express their enthusiasm for the quality (example, the sugar concentration) of the nectar they have found through their waggle dances. As you can well imagine, if all the bees had a different idea of what constitutes a “Good” flower patch, then the colony could mobilise to the wrong place. An excited bee returns to the hive and recruits others to the site, some of whom then return to the hive to recruit more bees, and so on. Thus it would only take an errant few to get the hive going in the wrong direction. I have personally witnessed eager and enthusiastic authorities in enterprises mobilise people and resources around new processes that absolutely made no sense at all and, in retrospect, would have been difficult to justify had the definition of desirable patches of business “nectar” been clearly established from the start. The integrity of communication is possible because the entire foraging force has a common criteria and understanding about the true value of one of its chief products.

Third, there is an elegance and parsimony to what honey bees do. At times, this involves dodging solutions that seem logical but may not be. Honey bees, for example, do not cross train foragers and receivers so that one may take the place of the other. That is, they do not employ task switching to try and balance their work capacities, minimise queuing delays and maximise the import of nectar. Instead they elect to pull from a reserve workforce of foragers. For honey bees, bringing in more workers to Exploit a ripe situation is more important than keeping a fixed resource such as the proportion of foragers to receivers perfectly balanced. It is fairly safe to say that where trade offs exist in the hive, the colony will favour the equivalence of revenue intake over nifty accounting and administrative rigour.

The best plans are ultimately the simplest one involving clear, direct and uncomplicated communications and actions. Colonies execute with little waste in resources, communications and personal energy as possible. I grant you that the honey bee has had a long time to work things out, but their wonderfully successful society remains brilliantly straightforward.

Simplicity is a consequence of knowing what you are talking about, doing and want. In part , achieving clarity of perspective and direction depends on the use of a common method of analysis to examine problems. A standard approach provides organisational members with a mutual vocabulary and framework for defining concepts, proposing relationships, conducting tests, assessing consequences, determining goals, and, in turn, putting the proper mechanisms in place (example feedback and tracking).