Archive for December, 2012

The Sardine Strategy….to move as one!

December 31, 2012

For the last post of 2012 I have resurrected an older post which I believe is still extremely relevant. Before you embark upon any business improvement in 2013, make sure that you know where you want to go and understand the implications of your actions. Without moving as one, you will surely fail. Don’t lose direction!

What is the latest buzz in the supply chain world I was asked at a recent SAP Conference, I replied there is plenty of buzz in the SCM world but all this hype needs to be underpinned by a good solid supply chain strategy.

Have you heard of the “Sardine Strategy” ? the questioner looked perplexed at my question! I will elaborate for schooling fish, staying together is a way of life. Fish in a school move together as one, for schooling fish the “move as one” trait is innate. Separation means likely death!

For Global Supply Chain, misalignment – failure to move as one – means poor service, high inventory, unexpected cost, constrained growth and profits, finally resulting in loss or market share and possibly reputation. Once market share and reputation have been damaged they are difficult to repair.

So what are the common causes of misalignment – failure in supply chains to “move as one”?

I offer a list of some 15 common causes that have plagued companies for many years and still do today, I am sure that the list is non exhaustive, but I am doubly sure that the readers can equate to one or more of these businesses today.
1). Lack of Technology investment plan.
2).Little or no return on investment (ROI)
3).Isolated supply chain strategies.
4). Competing supply chain business improvement projects.
5).Faulty sales and operations planning.
6).Failure to meet Financial Commitments.
7).Lack of support and specialized expertise.
8).Mismatch between Corporate Culture and ERP.
9). Under utilization of existing technology.
10).Vaguely defined goals.
11).Impact of mergers and acquisitions.
12).Mismanagement and poor standardization of business processes.
13). Extension from supply chain to the value chain.
14).Running out of ideas for new improvement projects.
15).An organisation that defies effective and efficient supply chain.

We could discuss each of these in great depth, but space and time is limited, however if you want to discuss any of these causes you have identified just drop me a line

Planning and Scheduling in the Supply Chain

December 28, 2012

Before relying on an ERP system to manage planning and scheduling activities, all companies should first make sure that the right processes are in place, standardized and uniformly used across the enterprise. Robust processes and policies will allow the company to generate accurate and timely data. Only then will a company be in a position to use an ERP system to improve planning and scheduling activities.

Major companies have invested heavily in ERP implementations and have suffered business disruptions whilst implementations have taken place. Despite good intentions, most companies haven’t come close to realizing the value achieved by those featured in various ERP case studies across the globe. Revenues have not increased by 20%. Operating costs have not fallen by 15%. Finally, on-time deliveries have never reached record highs of 95%.

So what is stopping companies achieving ROI? In my mind it is very clear that companies lack understanding and commitment! Firstly, the understanding that business value is inherently linked to business change, not systems change. From the commitment side it’s all about executing a good plan. However, this is another story! What we are confronted with now is that we have an ERP that is implemented which may or may not have achieved its ROI. Now we have got to get down to the operational level and try and recover what may have been lost or disrupted during the implementation however long ago it was.

The opportunity we are now presented with covers the whole enterprise and should allow the company to gain post implementation value, this area I am referring to is the whole Supply Chain, starting at the front end with Planning and Forecasting all the way through to settlements (including cash flow management). The area that we will concentrate upon here of course is replenishment planning, which by its very nature covers nearly all aspects within Supply Chain Management. This is where a company’s supply meets its demand!

Companies that plan well are more likely to:

·         Anticipate demand and respond nimbly to unforeseen market shifts

·         Have higher customer satisfaction rates

·         Have less cash tied up in obsolescing inventory

It’s where forecasts are converted into purchase and/or production orders. Planning activities influence inventory levels and, by extension, cash flow. The sad truth is that most companies’ ERP systems issue poor planning recommendations – ones that, if acted upon, would lead to a huge mismatch between supply and demand. Because those system-generated recommendations don’t reflect true operating realities; planners, purchasers, materials managers, production managers and others often ignore system-generated planning signals and advice.

Almost always, however, poor planning advice has little to do with the software itself. Software is made up of a bunch of 0s and 1s, and simply generates outputs from formulae and rules. In all likelihood, the formulae and rules were programmed just fine. Rather, poor recommendations are usually the result of inaccurate and untimely base data.

The good news is that any company can significantly improve its planning and scheduling activities. And, if it does, it’ll go a long way to generating that seemingly elusive ERP-related business value. From a high level, there are three key success factor to planning. They are:

·         Accurate Item and Movement Data – The system needs accurate data to simulate a company’s operating reality. Key data requirements include item-level order modifiers), bill of materials and routings.

·         Accurate Inventory Data – If inventory counts and movements are not accurately reflected in the system, the planning engine will either make recommendations that cause the company to 1) prematurely order inventory or 2) deliver items beyond the due date. The former case constrains cash flow and unnecessarily increases the value of a depreciating asset class. The latter case leads to higher rates of customer dissatisfaction and turnover. In our experience, a planning engine will only be capable of issuing meaningful planning recommendations when a company:

o    Has accuracy rates of 95% for its on-hand inventory

o    Maintains accurate demand and supply forecasts

o    Knows its minimum inventory level requirements (safety stock)

·         Timely Recording of Material Movements – The status of purchase orders and production orders varies over time, as materials flow through supply chains and production. To ensure that planning signals and recommendations are meaningful, the company needs to update the system promptly. Businesses can choose to do this a couple of ways – through manual input or in an automated fashion.

Supply Chain Performance

December 27, 2012

In recent months I have been asked to define Supply Chain Management for people that still do not really understand what it is and what I do as a supply chain management consultant, so for your benefit here is a brief explanation and how it drives all businesses today. Without a good Supply Chain Management Strategy in place there is a distinct risk of misalignment or failure of the overall business.

Supply Chain Management encompasses the planning and management of all activities involved in sourcing and procurement, conversion, and all logistics management activities. Importantly, it also includes coordination and collaboration with channel partners, which can be suppliers, intermediaries, third-party service providers, and customers. In essence, supply chain management integrates supply and demand management within and across companies. Supply Chain Management is an integrating function with primary responsibility for linking major business functions and business processes within and across companies into a cohesive and high-performing business model. It also includes all of the logistics management activities, as well as manufacturing operations, and it drives coordination of processes and activities with and across marketing, sales, product design, finance and information technology.

Having looked at the Supply Chain management model, one has to ensure that it is performing as well as it can, therefore Performance Monitoring is an absolute must in businesses today! What do I need to look at to ensure my Supply Chain is performing?

There are predominately five Supply Chain performance attributes: Reliability, Responsiveness, Agility, Costs, and Asset Management. Consideration of these attributes makes it possible to compare an organization that strategically chooses to be the low-cost provider against an organization that chooses to compete on reliability and performance.


The Reliability attribute addresses the ability to perform tasks as expected. Reliability focuses on the predictability of the outcome of a process. Typical metrics for the reliability attribute include: on-time, the right quantity, the right quality. Reliability is a customer-focused attribute.


The Responsiveness attribute describes the speed at which tasks are performed. Examples include cycle-time metrics. Responsiveness is a customer-focused attribute.


The Agility attribute describes the ability to respond to external influence and the ability to change. External influence include: Non-forecasted increases or decreases in demand; suppliers or partners going out of business; natural disasters; acts of (cyber) terrorism; availability of financial tools (the economy); or labor issues.  Flexibility and Adaptability can be included as KPI’s. Agility is a customer-focused attribute.


The Cost attribute describes the cost of operating the process. It includes labor costs, material costs, and transportation costs. KPIs include Cost of Goods Sold and Supply Chain Management Cost. These two indicators cover all supply chain spend. Cost is an internally focused attribute.


The Asset Management Efficiency (“Assets”) attribute describes the ability to efficiently utilize assets. Asset management strategies in a supply chain include inventory reduction and in-sourcing vs. outsourcing. Metrics include: inventory days of supply and capacity utilization. KPIs include: Cash-to-Cash Cycle Time and Return on Fixed Assets. Asset Management Efficiency is an internally-focused attribute.

Supply Chain Relationships

December 26, 2012

Over many years in Supply Chain Management I have had to understand how supply chains are actually structured, there is a clear similarity across all the supply chains irrespective of the industry being researched. I have spoken with many CEO’s, CPO’s and CFO’s and they have all told me “in our industry we do things differently”. I am sorry to say that this is not the case! So we have pretty much a situation where every industry does the same thing and has standardization in processes, so what makes things different? The main difference is each of the supply chains are the strategies we use and our relationships with our supplier base. How we choose a strategy and how we work with our suppliers defines who we are as a company and how the supplier network regards us.

Success in our supply chains relies heavily on the relationships with our partners. How well do you work with your suppliers? Contract manufacturers? 3PL and 4PL partners? These relationships hold the key to a well made product or service delivered to your customer on time and within cost.

The first step in this journey is to understand which suppliers you need to have strong relationships with. Just as in our social and professional lives where we know many people but spend most of our time with a few select friends and colleagues, your business has many suppliers but only needs close relationships with a few. So where should you develop your close relationships? The answer lies in your business plans and supply chains. Look for those suppliers that represent a significant portion of your spend, provide critical components, or support strategically important product or service lines. These are the companies that you want to be close with.

Close relationships don’t just happen, and they do not just involve your procurement personnel and their sales force. Relationships should begin with product or service design, making sure that the supplier’s role in producing the product or service is clearly understood and fully integrated with the overall product/service design and specifications. There also needs to be a shared understanding of the production and supply chain objectives as well as roles and responsibilities. Finally, a good relationship relies on communication, including understanding who to call and making sure the phone is answered. Open communication is built on trust and respect. In every supply chain, things go wrong, working with partners means understanding that and working together to resolve the minor issues that arise. Penalties should be reserved only for the major transgressions.

So, how are your supply chain relationships? Spending your resources and time with the partners that will generate the most benefit is critical to improving your supply chain and delivering better products and services to your customers.

Mobile Learning (Mlearning)

December 24, 2012

Today’s knowledge society, people are connected almost 24 x 7 x 365 to their mobile devices. E-mail, voice mail, instant messages, and video conferencing are all available with the touch of a button almost everywhere across the globe. No matter what business or industry you’re in, people need to be connected. As a consequence of the need for connectivity, more and more people are leveraging mobile devices, in more ways than one. Additionally, because of the wide adoption of social networking, these types of devices have become more affordable and thus more readily available to the global population.
However, it’s not a new phenon at all the use of mobile devices, it’s just that technology has and is still rapidly advancing. Years ago I wrote an article about replacing your laptop with a mobile device, the article ‘How to lose 12 kilo’s in 15 minutes’ ( showed that it was possible to go on a trip and stay connected with a mobile device and be enabled to do business whilst on the move. Today’s road warrior is no different, but the underlying technology and devices are much smarter, more powerful and far cheaper than ever before.
Salespeople away from their offices have instant access to vendor information, numbers, pricing, etc. Area supervisors can easily access information about the employees they manage in various geographical locations. C-level managers travelling on business can easily manage their agendas.

How about Mobile learning, or m-learning as it is termed, focuses on the mobility of the learner, allowing him/her to interact with portable technologies and take in bite-size portions (called nuggets) of content, learning bits at a time. M-learning is convenient, as content is accessible from virtually anywhere. And the lightweight portability of the device removes the need for learners to carry around books and notes.
M-learning, like e-learning, is also collaborative. The Learner can easily share advice with or ask questions to others using the same content. This leads to instant feedback from peers, co-workers, managers, etc. On a recent visit to a training company (who will remain nameless) I witnessed to my horror that still today binders were being produced when updates occurred in the area of compliance monitoring. Nobody whoever takes the course can carry all the binders around with them to allow them to get updates on the processes.
Teaching experts have known for years that repetition is one of the two best ways to ensure that what we’re learning about sticks in our memory; the other is relevance. With nearly everyone carrying a portable device these days, mobile devices have become the perfect tool for providing regular reminders to help individuals remember and retain information. In a past project, in fact the implementation of SAP in a Aluminium Smelter M-Learning would have been the perfect tool to train staff in the smelter, however, Mobile devices cannot be used in a smelter so in this case a pocket book was developed. But where there is the opportunity and safety is of concern, companies should look at the possibility of the use of this technique.

This all sounds wonderful, doesn’t it? But are there some possible downsides to mobile learning? Let’s take a look at some of the questions this fast-growing trend has raised.
What types of learning can I access through my mobile device?
• compliance training
• performance support
• policy/regulation updates
• testing and quizzes
• job aids and training
• surveys and polls
• checklists
• … and more
How Effective Is M-learning, Really?
Learning experts have known for years that repetition is one of the two best ways to ensure that what we’re learning about sticks in our memory; the other is relevance. With nearly everyone carrying a portable device these days, mobile devices have become the perfect tool for providing regular reminders to help individuals remember and retain information. But how effective is m-learning, really?

One of the keys to successful training is creating the proper learning environment. Can mobile learning be part of that success? I believe it can. The bite-size portions that learners take in via their mobile session can help increase their level of understanding—for one thing, they’re not bombarded with information overload. Moreover, the effective and efficient advantage of ubiquitous learning means learners are ready at any time (and from anywhere) to take a course, survey, or quiz—they don’t have to wait for the class to begin or until they get home to log on to their desktop computers.

But, because mobile learning is still in its infancy, it is very difficult to gauge its use and effectiveness once deployed. As such, this greatly limits the ability for learning administrators or instructors to gain executive support on such an initiative.

What Can M-learning Do for Me?
Through mobile learning, organizations can communicate with their mobile workforce as well as engage employees in rich learning content that is specific to their jobs.
What type of mobile device can I use for learning?
• mobile phone
• smart phone
• Blackberry
• Android
• iPhone/iPad/iPod Touch
• Pocket PC
• Netbook
• tablet
• … and more
Mobility allows learners to do the following:
• access information from different locations, through different wireless capabilities
• use audio/video (streaming technology) to enhance their learning experience
• manage and track their course enrollment and progress
• access and manage their learning in the format that best supports their needs, accessing course content through either a dedicated application or a device’s browser
• learn easily on the run, through the ubiquitous nature of the mobile device
• review information quickly and easily, rather than engage in a prolonged or deep type of learning—10-to-15 minute chunks of learning, at most, are recommended. Unfortunately, people don’t sit still long enough to take in more than that on a mobile device

What about Technical Issues?
In the past, learners, developers, and administrators faced plenty of technology, usability, and organizational challenges that prevented the widespread commitment to and adoption of mobile learning. These are some of their concerns:
• Security—Proprietary content needs to be secure. Because of their size and portability, mobile devices are easy to lose, subject to damage, and more likely to be stolen than desktop systems, increasing the possibility of exposing confidential company data.
• Content presentation—A lack of technology consistency exists among devices, preventing content, such as video, from being properly displayed, and forcing organizations to dedicate valued resources to reconfiguring content for multiple devices.
• Screen size—Most mobile devices are quite small (except for the recent entrant iPad), making it difficult to view full screens of data without the need to scroll. Picture resolution can also be a factor; graphics should be in PNG format, rather than BMP format, which is smaller for better viewing.
• Usability—As most mobile devices use touch-screen technology, information needs to be organized and easily navigated with the touch of a finger. The interface between screens needs to be quick, otherwise learners will lose interest very quickly.
• Bandwidth—The richer the media, the more likely to be download and bandwidth issues. When people experience slow data exchange, they have difficulty absorbing what they’re learning.
• Support—Mobile learning programs often require new staff and/or skills to integrate and operate. Specialized development tools are also needed, requiring considerable training to develop content.
With the addition of new technologies (e.g., information receivers, cameras, radio-frequency identification [RFID] readers, etc.) and more stringent company policies on the use of portable devices for work purposes, some of these technical challenges are beginning to dissipate. I believe the bigger challenge lies in the global adoption of this technology in business. Many organizations are still unsure of how mobile learning will affect their bottom line.

Let’s face it, with everyone joined at the fingertip to their mobile device, it only makes sense to make use of a growing trend and add learning to our already favorite pastime of mobile computing. The use of mobile devices seems a natural fit for distributed learning and field activities, as handheld technology can not only accompany the learner virtually anywhere, but also provide a platform that is always connected to data sources.
The popularity of mobile technology makes this an option worth exploring in a company’s training strategy. Today’s organizations should feel confident in developing and deploying mobile learning programs that support their key corporate initiatives. Remember, however, that mobile learning should not be a replacement for other modes of learning, but simply an extension.
I’ve just scratched the surface on the topic of mobile learning in this post; there is a lot more to be said about this rapidly growing trend.
For further reading on the subject of m-learning and mobility, I recommend the following two books:
The Mobile Learning Edge: Tools and Technologies for Developing Your Teams
Portable Communities: The Social Dynamics of Online and Mobile Connectedness

Legacy sourcing activities still prevail…..

December 21, 2012

While these objectives may sound logical, many sourcing teams defeat their efforts to identify and select the optimal supplier by reverting to some bad habits. Those bad habits include:

1). Preventing personal dialogue between prospective suppliers and decision makers
2). Sending RFP’s that require an extremely time-consuming first response

Why do sourcing teams have these bad habits in the first place? What are their underlying interests?

First, the prevention of personal dialogue has a few elements to it. One element is that procurement professionals always strive to ensure a “level playing field” equitable treatment and a fair process for all suppliers. Procurement ethics dictate that one supplier should not be given information that is not made available to all other suppliers because, then, it would appear that someone in the buying organization is trying to facilitate a pre-determined “favorite” supplier being selected. Another element is that prevention of personal dialogue is designed to protect the time of executives within the buying organization. These are busy people, naturally, so the tendency is to block anything from being added to their already full plate.

Second, the voluminous response RFP has its rationale as well. Sourcing teams have the desire to minimize the number of steps required to get from Point A – issuing an RFP – to Point B – selecting a supplier. So, the tendency is to want to capture all of the required information in one fell swoop.
While those are noble interests, the execution of processes to support those interests is flawed.

Here is why.

In terms of preventing personal dialogue, sourcing teams are failing to realize how personal dialogue is an enabler of sourcing success, rather than a hindrance to it. A conversation can be held professionally without tarnishing a fair process or creating a perception of an ethical breach. Actually, preventing personal dialogue can be perceived as an ethically-shady practice. While procurement professionals commonly feel that not permitting conversations between suppliers and decision-makers preserves the perception of an ethical sourcing process, the opposite may be true. Suppliers would argue that not permitting such conversations perpetuates the perception of an unethical sourcing process where the successful bidder is pre-determined, other bidders are being “used” solely to drive down that supplier’s price, and the sourcing team is steadfastly trying to hide that.

There is another flawed line of thinking with regard to preventing personal dialogue during the sourcing process. That line of thinking relates to the interest of protecting procurement executives’ time. Simplified, it is a procurement executive’s job to build the strongest supply chain possible for his or her organization. By refusing to talk to qualified prospective suppliers and, thus, discouraging them from participating in sourcing processes a procurement executive is failing to fulfill his or her duty of building the strongest supply chain. Yes, time is scarce and must be managed wisely, but attracting a strong supply base is a wise investment of time.

Finally, while minimizing the number of steps of the sourcing process may have good intentions, efficiency should never trump effectiveness. Let’s compare two scenarios.
In Scenario A, an RFP was sent to five carefully-selected suppliers. That RFP required a 50-page response. Only two suppliers responded and neither of those suppliers had a reputation for being one of the top two suppliers in the industry. The other three suppliers felt that a 50-page response was too much work for a process with an uncertain outcome and declined to respond.
In Scenario B, an RFI was sent to five carefully-selected suppliers. That RFI required a 10-page response. All five suppliers responded. The sourcing team then sent an RFP to the four suppliers who had the most attractive responses to the RFI. That RFP told the suppliers that they were receiving the RFP because they were shortlisted based on their response to the RFI. The RFP required a 40-page response. All four suppliers responded. Because they had been shortlisted, they each believed that they had a legitimate chance of winning the business. This two-step process took an additional week compared to Scenario A. But was it worth it to have more competition, more options, and more highly-qualified suppliers to choose from? Most procurement professionals would argue that it was indeed worth it.

Vendor Rating and Management

December 20, 2012

Vendor rating is the result of a formal vendor evaluation system. Vendors or suppliers are given standing, status, or title according to their attainment of some level of performance, such as delivery, lead time, quality, price, or some combination of variables. The motivation for the establishment of such a rating system is part of the effort of manufacturers and service firms to ensure that the desired characteristics of a purchased product or service is built in and not determined later by some after-the-fact indicator. The vendor rating may take the form of a hierarchical ranking from poor to excellent and whatever rankings the firm chooses to insert in between the two. For some firms, the vendor rating may come in the form of some sort of award system or as some variation of certification. Much of this attention to vendor rating is a direct result of the widespread implementation of the just-in-time concept  and its focus on the critical role of the buyer-supplier relationship.

Most firms want vendors that will produce all of the products and services defect-free and deliver them just in time (or as close to this ideal as reasonably possible). Some type of vehicle is needed to determine which supplying firms are capable of coming satisfactorily close to this and thus to be retained as current suppliers. One such vehicle is the vendor rating.

In order to accomplish the rating of vendors, some sort of review process must take place. The process begins with the identification of vendors who not only can supply the needed product or service but is a strategic match for the buying firm. Then important factors to be used as criteria for vendor evaluation are determined. These are usually variables that add value to the process through increased service or decreased cost. After determining which factors are critical, a method is devised that allows the vendor to be judged or rated on each individual factor.

It could be numeric rating or a Likert-scale ranking. The individual ratings can then be weighted according to importance, and pooled to arrive at an overall vendor rating. The process can be somewhat complex in that many factors can be complementary or conflicting. The process is further complicated by fact that some factors are quantitatively measured and others subjectively.

Once established, the rating system must be introduced to the supplying firm through some sort of formal education process. Once the buying firm is assured that the vendor understands what is expected and is able and willing to participate, the evaluation process can begin. The evaluation could be an ongoing process or it could occur within a predetermined time frame, such as quarterly. Of course the rating must be conveyed to the participating vendor with some firms actually publishing overall vendor standings. If problems are exposed, the vendor should formally present an action plan designed to overcome any problems that may have surfaced. Many buying firms require the vendor to show continuing improvement in predetermined critical areas.


Vendor performance is usually evaluated in the areas of pricing, quality, delivery, and service. Each area has a number of factors that some firms deem critical to successful vendor performance.

Pricing factors include the following:

  • Competitive pricing. The prices paid should be comparable to those of vendors providing similar product and services. Quote requests should compare favorably to other vendors.
  • Price stability. Prices should be reasonably stable over time.
  • Price accuracy. There should be a low number of variances from purchase-order prices on invoiced received.
  • Advance notice of price changes. The vendor should provide adequate advance notice of price changes.
  • Sensitive to costs. The vendor should demonstrate respect for the customer firm’s bottom line and show an understanding of its needs. Possible cost savings could be suggested. The vendor should also exhibit knowledge of the market and share this insight with the buying firm.
  • Billing. Are vendor invoices are accurate? The average length of time to receive credit memos should be reasonable. Estimates should not vary significantly from the final invoice. Effective vendor bills are timely and easy to read and understand.

Quality factors include:

  • Compliance with purchase order. The vendor should comply with terms and conditions as stated in the purchase order. Does the vendor show an understanding of the customer firm’s expectations?
  • Conformity to specifications. The product or service must conform to the specifications identified in the request for proposal and purchase order. Does the product perform as expected?
  • Reliability. Is the rate of product failure within reasonable limits?
  • Reliability of repairs. Is all repair and rework acceptable?
  • Durability. Is the time until replacement is necessary reasonable?
  • Support. Is quality support available from the vendor? Immediate response to and resolution of the problem is desirable.
  • Warranty. The length and provisions of warranty protection offered should be reasonable. Are warranty problems resolved in a timely manner?
  • State-of-the-art product/service. Does the vendor offer products and services that are consistent with the industry state-of-the-art? The vendor should consistently refresh product life by adding enhancements. It should also work with the buying firm in new product development.

Delivery factors include the following:

  • Time. Does the vendor deliver products and services on time; is the actual receipt date on or close to the promised date? Does the promised date correspond to the vendor’s published lead times? Also, are requests for information, proposals, and quotes swiftly answered?
  • Quantity. Does the vendor deliver the correct items or services in the contracted quantity?
  • Lead time. Is the average time for delivery comparable to that of other vendors for similar products and services?
  • Packaging. Packaging should be sturdy, suitable, properly marked, and undamaged. Pallets should be the proper size with no overhang.
  • Documentation. Does the vendor furnish proper documents (packing slips, invoices, technical manual, etc.) with correct material codes and proper purchase order numbers?
  • Emergency delivery. Does the vendor demonstrate extra effort to meet requirements when an emergency delivery is requested?

Finally, these are service factors to consider:

  • Good vendor representatives have sincere desire to serve. Vendor reps display courteous and professional approach, and handle complaints effectively. The vendor should also provide up-to-date catalogues, price information, and technical information. Does the vendor act as the buying firm’s advocate within the supplying firm?
  • Inside sales. Inside sales should display knowledge of buying firms needs. It should also be helpful with customer inquiries involving order confirmation, shipping schedules, shipping discrepancies, and invoice errors.
  • Technical support. Does the vendor provide technical support for maintenance, repair, and installation situations? Does it provide technical instructions, documentation, general information? Are support personnel courteous, professional, and knowledgeable? The vendor should provide training on the effective use of its products or services.
  • Emergency support. Does the vendor provide emergency support for repair or replacement of a failed product.
  • Problem resolution. The vendor should respond in a timely manner to resolve problems. An excellent vendor provides follow-up on status of problem correction.

In an article produced by Supply Management states that while pricing, quality, delivery, and service are suitable for supplies that are not essential to the continued success of the buying firm, a more comprehensive approach is needed for suppliers that are critical to the success of the firm’s strategy or competitive advantage. For firms that fall into the latter category performance may need to be measured by the following 7 C’s.

  1. Competency—managerial, technical, administrative, and professional competence of the supplying firm.
  2. Capacity—supplier’s ability to meet physical, intellectual and financial requirements.
  3. Commitment—supplier’s willingness to commit physical, intellectual and financial resources.
  4. Control—effective management control and information systems.
  5. Cash resources—financial resources and stability of the supplier. Profit, ROI, ROE, asset-turnover ratio.
  6. Cost—total acquisition cost, not just price.
  7. Consistency—supplier’s ability to exhibit quality and reliability over time.

If two or more firms supply the same or similar products or services, a standard set of criteria can apply to the vendor’s performance evaluation. However, for different types of firms or firms supplying different products or services, standardized evaluation criteria may not be valid. In this case, the buying firm will have to adjust its criteria for the individual vendor. For example, Honda of America adjusts its performance criteria to account for the impact of supplier problems on consumer satisfaction or safety. A supplier of brakes would be held to a stricter standard than a supplier of radio knobs.


Many buying firms utilize awards and certification programs to rate vendors. Attainment of certification status or an award serves as an indicator of supplier excellence. Certification and awards-program recognition represents a final step in an intense journey that involves rigorous data collection under the total-quality-management-rubric as well as multitudes of meetings with suppliers and purchasing internal customers. Serious buying firms view these programs as an integral part of their overall efforts to improve the total value of the company.

The attainment of a supplier award usually serves as an indication that the vendor has been rated as excellent. Intel awards their best suppliers the Supplier Continuous Quality Improvement Award (SCQI). Other firms may utilize a hierarchy of awards to indicate varying degrees of performance from satisfactory to excellent. DaimlerChrysler awards its best suppliers the Gold Pentastar Award. Several hundred vending firms receive this award per year. However, only a handful (less than a dozen) of DaimlerChrysler’s vendors are good enough to garner the Platinum Pentastar Award.

For other firms, supplier certification is desirable. Supplier certification can be defined as a process for ensuring that suppliers maintain specific levels of performance in the areas of price, quality, delivery, and service. Certification implies that participating firms have reached a level of excellence that other firms were unable or unwilling to achieve. For example a quality certified firm maintains a level of quality such that customer-receiving inspection may be utilized with decreasing frequency up to the point where it is eliminated altogether. Theoretically, this will ensure that all of the supplier’s products meet the customer’s product specifications. In this case, the goal of supplier certification is quality at the source.

While it is uncertain whether individual firms are consistent in the manner in which they certify vendors, a quality certification would likely require that the vending firm be part of a formal education program, utilize statistical process control (SPC), and have a quality assurance plan (set written procedures).


Benefits of vendor rating systems include:

  • Helping minimize subjectivity in judgment and make it possible to consider all relevant criteria in assessing suppliers.
  • Providing feedback from all areas in one package.
  • Facilitating better communication with vendors.
  • Providing overall control of the vendor base.
  • Requiring specific action to correct identified performance weaknesses.
  • Establishing continuous review standards for vendors, thus ensuring continuous improvement of vendor performance.
  • Building vendor partnerships, especially with suppliers having strategic links.
  • Developing a performance-based culture.

Vendor ratings systems provide a process for measuring those factors that add value to the buying firm through value addition or decreased cost. The process will continually evolve and the criteria will change to meet current issues and concerns.

For example, today the supplier evaluation must now reflect the strategic direction of the buying company’s environmental initiatives. As a result, some firms have recently developed supplier evaluation systems that place significant weight on environmental criteria. It is now an important criteria for the evaluation of suppliers that they have firm CSR programmes in place and that they are observant of governmental rules and regulations.

Malware Explained, A followup to Phishing for Business!

December 18, 2012

Malware is a general term for malicious software, and is an ever increasing problem across the Internet. Cyber Criminals install Malware by exploiting security weaknesses in a web server to gain access to a web site. Malware includes everything from adware, which displays unwanted pop-up advertisements, to Trojan horses, which can help criminals steal confidential information, like online banking credentials.

To infect a computer through a web browser, the cyber criminal must accomplish two tasks. First, they must find a way to connect with the victim. Next, the attacker must install Malware on the victim’s computer. Both of these steps can occur very quickly and without the victim’s knowledge, depending on the cyber criminal’s tactics.

The following are some of the more common delivery methods of Malware:

• Software updates: Malware posts invitations inside social media sites, inviting users to view a video. The link tries to trick users into believing they need to update their current software to view the video. The software offered is malicious.

• Banner ads: Sometimes called “malvertising,” unsuspecting users click on a banner ad that then attempts to install malicious code on the user’s computer. Alternatively, the ad directs users to a web site that instructs them to download a PDF with heavily-obscured malicious code, or they are instructed to divulge payment details to download a PDF properly.

• Downloadable documents: Users are enticed into opening a recognizable program, such as Microsoft Word or Excel, that contains a preinstalled Trojan horse.

• Man-in-the-middle: Users may think they are communicating with a web site they trust. In reality, a cybercriminal is collecting the data users share with the site, such as login and password. Or, a criminal can hijack a session, and keep it open after users think it has been closed. The criminal can then conduct their malicious transactions. If the user was banking, the criminal can transfer funds. If the user was shopping, a criminal can access and steal the credit card number used in the transaction.

• Keyloggers: Users are tricked into downloading keylogger software using any of the techniques mentioned above. The keylogger then monitors specific actions, such as mouse operations or keyboard strokes, and takes screenshots in order to capture personal banking or credit card information.

Because of the potential damage caused by malware, Google, Yahoo, Bing and other search engines place any web site found with Malware on a blocked list, or “blacklist.” Once blacklisted, the search engine issues a warning to potential visitors that the site is
unsafe or excludes it from search results altogether. No matter how much search engine optimization you do, if your web site is blacklisted the impact to your business could be devastating. This blacklisting can occur without warning, is often done without your
knowledge, and is very difficult to reverse. Taking the proper measures to prevent search engine blacklisting is critical to the long-term success of any web site.

Business to Business (B2B) and Business to Consumer (B2C) has grown tremendously over the last decade. However the increasing use of the internet in everyday life has given the cyber criminals the opportunity to thrive. Malware is becoming more pervasive and jeopardizes the growth of e-commerce by fostering fears of compromised personal information. This leads to trepidation and sub-optimal results for online businesses. There needs to be an effective means to combat the use of malware if e-commerce is to reach its full potential.

CSF’s for ERP Implementation, Survivors experience !

December 18, 2012

The process of implementing a new enterprise resource planning (ERP) solution is challenging and will send your organization down a long road of beneficial, although sometimes demanding, change. There is good news however, if it is done correctly, you will gain lasting benefits for your company’s operations and growth. The key question then is how to do it the right way? Because there are sometimes overwhelming volumes of minute detail to be addressed during the implementation process, it is all too easy to lose sight of the larger goals of a successful systems implementation and positive organizational change. The key to doing it “right” is to stay focused on the big picture and staying focused involves following six important Critical Success Factors.

Key steps for Success!

Your company must take some key steps to ensure your organization’s system implementation produces positive changes and long-term benefits.

1. Understanding the true significance of the implementation experience.

Since the company has decided to implement an enterprise-wide solution, this will probably the last time you will replace your mission-critical business systems. Any changes in the future will most certainly be upgrades or enhancements to the solution you have chosen. Investing in an ERP or another enterprise solution is a major commitment. One way to look at it is to think of it as the partial delegation of your IT strategy to a software vendor you ultimately select to be your solutions provider. You will be both restricted and enabled by the future direction that is defined by the product you select, which means you must choose the correct solution for your entire organization. Factors such as cost and functionality are important and are probably the easiest to quantify. However, do not neglect to consider other vital factors, such as the direction and viability of the software provider you ultimately select.
Implementing an ERP system is a business project, not an IT project. As such, it requires strong business sponsorship and ownership. Many ERP projects struggle because they are perceived and handled as IT initiatives and fail to gain the necessary business support that is required to guarantee success. Enterprise-wide application implementation projects are typically vast and complex. It is important not underestimate the scale of the project and the impact it will have across the entire organization. The project is likely to affect every aspect of your business and every person in the organization. Remember that in order to realize the greatest benefit from the system, everything within your organization needs be open to scrutiny. Many projects suffer because of conflicting initiatives within the organization. Prioritize and coordinate initiatives to ensure that the ERP project is not adversely impacted.

2. Ensure full commitment of the right resources to the project.

Many enterprise projects run into difficulty because the wrong people within an organization are assigned to the project or the right people are assigned, but on a part time basis. The project team members must have knowledge of the business as a whole, but must also be creative and capable of challenging the status quo when required. Project and team management members need to be respected members of the organization whose decisions can be trusted. They must be empowered to make key business decisions, and your steering committee must have enough faith in the team members to permit them to operate without tight supervision.

An ERP project is an excellent opportunity to reorganize and streamline your business. In order to ensure success, the best people within the organization need to be assigned to the project (full time). If their involvement in this undertaking doesn’t have some sort of capacity impact on your business, then you have in all likelihood chosen the wrong people to be part of the team.

The people you have selected should know upfront how important their role is and must be given a clear vision of their future importance to the organization. The selection of project team members should be conducted at the steering committee level, ensuring that the best and brightest people from within the organization are included. Resistance from management can be expected, but must be overcome in the interests of the project.

Involvement in this type of project typically expands the horizons and capabilities of each and every team member. Many develop a broad and deep understanding of a wide variety of business processes. Their value to the company and to other organizations will, therefore, be greatly enhanced due to their involvement with this project. Experience shows that appropriate, proactive strategies need to be considered in advance to motivate and retain these team members within the organization.

3. Manage the changes fully and effectively, be prepared!

Many organizations underestimate the impact their ERP project will have on their people, roles, skill requirements, and company structural organization. Successful change management is one of the most important factors in determining the success of the project. Experience shows us it is usually not carried out effectively. Perhaps it is because many organizations are uncomfortable with the nature of change management and therefore do not give it the support that is actually required.
In simple terms, effective change management ensures that your organization and personnel are ready, willing, and able to embrace the new business processes and systems that are called for in an ERP implementation. More often than not, employees will resist change unless you give them a good reason not to resist it. In order to avoid this type of situation, various strategies may need to be designed to positively influence potential resistors. It is important to note that blanket approaches to communication are quick fixes to the problem and are often ineffective. The tactics used need to be varied according to people’s level of influence, as well as their ability to impact internal situations. A network of project representatives (Key Business Users) spread throughout the organization supports the most successful communication strategies. These people serve as two-way conduits of information, helping to distribute project-related information and material, while also providing valuable honest feedback to the project team regarding potential hot spots. The members of your change management initiative need to be respected and trusted at all levels of your organization and should be connected with a healthy inter-company personal network. They, along with the Project Manager, will play a major role in your company’s change management effort.
Outside of traditional user training, the change management project team should strive to provide training in a wider sense. The desired business objectives related to your new solution need to be outlined, and a thorough explanation of new business processes, people’s new roles, and all aspects of the new system should be addressed. Formal training sessions provide an important forum in which to communicate these objectives and to influence personnel in regards to increased acceptance of the delivered solution, but in reality is too often forgotten or too little too late due to the projects timelines and budget constraints.

4. Plan to manage and measure the benefits.

Most enterprise solution projects are founded on a business case that are researched and reviewed. Many times these documents are all but forgotten once the capital expenditure is approved. Project managers report in great detail on the cost and time parameters of the project, but very few report on the benefits attained. The business case should be treated as a living document that is used as an effective project management tool.

Scope management needs to incorporate the effect on benefits, as well as the effect on cost and time. Keep in mind that changes within the organization or environmental factors may positively or negatively affect the attainment of promised benefits. At major milestones of the project, the business case should be reviewed and evaluated and, if needed, the expected costs and benefits should be restated. For each major category of benefit you expect to attain, both the ownership and key factors that may impact the delivery of that benefit need to be clearly defined. In other words, the business case needs to form the foundation for a detailed benefit delivery plan with ownership and time lines clearly defined. Tracking and managing in this way until the end of the project ensures that the benefits are, in fact, delivered and truly attained.

5. Embrace integration as fully as possible.

Many organizations resist the level of integration that is delivered and encouraged by enterprise systems. They attempt to retain the existing organizational structure, including the role of management and the roles and responsibilities of functional departments (remaining silo’s or islands of information). Integration, however, is going to challenge the boundaries between traditional, functional departments. As just a couple of examples, firstly placing information directly at the fingertips of operational staff will greatly reduce the reliance on administrative support staff, secondly, automation of business processes such as the procure to pay process will significantly reduce the numbers of administrative support staff, but will offer significant cost savings as well as opportunities for other processes to be enhanced. Roles throughout the company may need to be redefined, giving key individuals responsibility for end-to-end business processes. This may greatly change the roles of functional managers and even entire departments. Integration is also going to challenge the existing power bases within the company and change the very nature of some management roles. Significant changes to the entire organizational structure may be called for in order to extract the maximum benefit from your new ERP systems environment.

6. Planning for the end of the implementation project before you start.

Many organizations fail to consider the long-term implications of introducing an ERP system until the end of the project. If these implications are recognized and planned for in advance, the effectiveness of your project team will be enhanced and the overall benefits obtained from the project will be maximized.
Organizations need to consider how they will support their new system in the long term, which aspects, if any, will be outsourced, and what capabilities will be required in-house to maximize the return on the original investment. Your internal support organizations can become a key strategic facilitator for the company. Building internal centers of expertise can help to optimize your consulting investment in the future. If this sort of support organization is part of the project vision at the beginning, then the project management can start to position individuals for these key roles as the project progresses.
Other project staff may return to their old, perhaps redefined roles or may be suitable for other challenges within the company. It will help the project greatly if there is a clear plan for your project t team members’ transition back into the business. If people’s futures are not clearly defined, it will then become an issue at a very crucial stage of your project. Above all, you and your organization need to realize that the original project plan you start with is simply a springboard into a much larger process. The longer the project runs, the more your organization needs to embrace a continuous improvement mindset. Transitioning from a “project mode” into this structured business improvement phase is a hurdle for a number of companies and requires time and planning to address it properly.

What Next?

When you consider the internal and external forces involved in an enterprise solutions implementation, the path followed and ultimate results are never the same for any two companies. Hopefully, the steps described above will help improve the chances for success when the time comes for your company to implement its new enterprise solution. If your company is actively looking for a new solution or is planning on undertaking a selection process, your business will be best served by a system that is chosen based upon your particular requirements, and that is a whole different area to discuss, namely a Requirements Study.

Compliance, Compliance oh no!

December 18, 2012

It probably seems to you like every time you want to talk about compliance, everyone runs away and hides, they ignore you and hope you go away, or they fuss and moan. Compliance is a fact of business life, however. Your company must comply with:
Your customers’ requirements (quality, safety, performance specifications, quantity, price, prompt delivery, etc.);

Industry or other standards and guidelines (ISO 9001,IFRS, etc.); and/or Regulations (e.g., 8th EU Directive, Food Safety Modernization Act) in order to get or to keep business.

And therein lies the problem: compliance is like healthy eating or exercise. We know we have to, but well, it’s so hard to either make the time or get enthusiastic about it!

Why is it that “have to” and “want to” always seem to be inversely proportional to one another?

How do you sell yourself and your employees on the notion that compliance is something you want, not something you merely put up with?

How do you turn “got to” into “want to”?

First, you have to…

1. Sell yourself on the idea. You’ll find in life  that is, if you haven’t already that if you don’t have a deep and firmly held belief in your company, your product, or your people, you won’t sell your product or your service. If you lack enthusiasm, conviction, self-discipline, vision, perspective, and some of the other characteristics that define leadership, you won’t have many followers.

2. Your customers are your ultimate critics. If you don’t meet their requirements, you’re out of business. It won’t matter what other requirements you fail to meet if you fail to meet your customer’s. Have your priorities in order — listen to your customers first.

3. Include your staff in the development of Policies and Procedures that will ensure your company’s compliance, because: (a) you can’t do it all by yourself; (b) they know more of the day-to-day tasks, operations, and processes than you; and (c) you need to show that you value and trust their judgement if they’re to grow (i.e., micromanagers never win).

4. Give everyone in your firm the resources they need to do their jobs effectively.
5. Ensure that your employees are more than adequately trained and experienced. Make sure they know what they’re doing and why they’re doing it.
6. Keep the lines of communication open all the time. Communicate effectively and continually with all levels of your organization. Get out of your office! Regularly address your employees first hand, directly and openly.
7. Listen, then turn what you’re hearing into something your employees, and your customers want to act on.
8. Make a habit of meeting with suppliers, subcontractors, and everyone who has a hand in getting your product or service into the hands of your customers. You might not be able to do this often but you shouldn’t let a year go by without visiting with your valuable partners. Communication is key!
9. Look at failures as opportunities for improvement. Don’t go looking for the guilty party every time something doesn’t go according to plan! You want to keep failure to a minimum, yes, but keep things in perspective. Not every mistake requires Draconian countermeasures!
10. Share success. Compliance goes beyond merely observing standards or laws — compliance can help you win business! When it does, spread the wealth. Acknowledge the part everyone played in making your company a success, especially those who had a direct hand in your victory.
Sell yourself, then sell everyone else on the importance and value of compliance. Make them want it! Your customers do.