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2013

I interviewed Dan Plute who discussed Indirect Spend Management.

 

 

 

 

 

 

Yes, my name is Dan Plute. I’m the CEO-owner of a company called Material and Contract Services. We specialize in providing project support, consulting, and outsource procurement services. Prior to starting my company, I worked for an international engineering construction company called Bechtel, Bechtel International. We’ve been a business for over 20 years and provide support mostly to the Western U.S. market. We have done work both in the private and public sectors.


What is spend management?


Spend management, to me, is the ability of an individual or a department to manage and control the dollars that are expended for the procurement of goods, services, materials, and equipment. And it’s the ability to manage the funds in a way that will save the company money and provide less risk and less volatility in selecting a domestic or international supplier or provider of their services.


There are various techniques that you use to manage the control of the dollars expended. Typically, you would do kind of a spend analysis. In a spend analysis, you would try to identify the major commodities that are purchased and major services that are purchased by the company. You break that down into segments by the same vendor or same commodity and try to leverage the dollars spent and get better volume procurement agreements in place.


How do you propose and prepare an RFP for construction work?


I think the key element for an RFP document is the ability to be able to add it to the ascribed, the scope of work that’s going to be required for the contractor to perform. The scope of work can be broken down into phases, anywhere from, you want to start off with one phase, the second phase, or whatever it should be.


But you clearly define the work elements that will be required to perform for the work element. You break it down into categories, you could break it down into labor elements, such as groundwork, permits, structural steel. You could break it down into interior work, roofing, plumbing, electrical, heating. You try to break it down into elements that will be able to identify the total number of labor hours and the labor cost to provide the support for the various phases.


I think the second most important element in the RP process is the deliverable statement. The deliverable statement will define what you expect the contractor construction company to perform for you. Again, it’s linked in to the scope-of-work statement; and, again, you can identify the phased-in approach, where you identify a certain amount of work to be performed. At the end of that phase, you see significant progress. You can link the phases into a payment schedule, as an example, and say once you complete the cement work or the groundwork and you approve that work element, then you go ahead and authorize payment.


I think the third phase of an RP for construction work would be what I call the contract completion. Again, the contract completion clearly defines what you expect the contractor to do for you, for the work that you have paid for. You may have some holdback clauses into the contract closeout that will assure that the plant or construction work is built to your specifications before you finalize the payment.


Also in the contract closeouts, you have certain methods that you have to review the completed work, and you would expect them to provide you, the contractor, documentation on the equipment that was purchased, put together, kind of the phased-in approach to the warranty. How did you do the warranty? The contract closeout could have startup conditions and terms into it which says that you’ve got to prove that the plant will operate to capacity or how to present capacity, say, within a 30-day time window. If not, there may be some holdback clauses in the contract closeout to protect your interests.


Again, the three main elements of what I call a construction contract would be to scope work statements that define what you want to do. The deliverable statements are basically what the contractor is going to do for you, and it provides the various levels of cost for the various phases. And the third element’s what I call the contract closeout.


Who needs to know how to do this?


I think you're looking at a procurement contrast professional; they’re generally very closely linked in to your engineering-construction group or the design engineering individual who would be laying out the whole construction project. I think the important thing, then, is to be able to go out to the marketplace and identify who the key players will be to perform the work that you're looking for.


I think in that particular phase, you’ll spend quite a bit of time looking at their qualifications, how long they’ve been in business, relative past experience providing the construction work that you’re looking at. You probably do a due diligence on them, do a D&B report or other various means to determine their financial strength. You’d look at the key players that would be linked in to provide the work for you. You’ll probably have some project completion terminology in there so that the key people have to stay in the project until it’s over with.


I guess the key thing is, again, you really do your review and qualify the contractors. If there’s going to be subcontracting, you try to get some terminology in there that protects you from the prime not paying the subcontractors. Again, the key people that you’d be looking at for the RP would be the contract administrator, procurement professional, and somebody within your engineering construction department that would link the two together to be able to finalize the agreement.


Again, Dan Plute. Thank you.



About Dan Plute


 

Dan Plute

CEO at Material and Contract Services and Owner,

Procurement Services Associates

LinkedIn Profile

I interviewed Jose Vitorelli who discussed Latin American Supply Chains.

 

 

 

 

 

It’s good to speak with you today, Jose, and I look forward to hearing your views on Latin-American supply chains. Can you first provide a brief background of yourself?

 

First of all, Dustin, I would like to thank you for this opportunity. I think it’s important to share with the audience about such important information on Latin America. To introduce myself, I am Jose Vitorelli. I’m a professional of the supply chain and logistics industry. Currently, I’m dedicated to develop solutions and innovations for global accounts in Latin America for DHL. DHL is part of the Deutsche Post DHL (DPDHL)

 

What is the current growth in Latin America?

 

Okay, thank you for asking, Dustin. Based on many information we gather on the source of the media, United Nations, these reports of the United Nations and Economic Commission for Latin America, we expect GDP growth of approximately 2.6, but we expect that for 2014, these numbers will go to 3.2 percent growth. That means that although it’s not a huge number, but we have to consider all of these effects that Latin America suffers from Europe situation, also U.S. Still, we are going to a positive growth. It’s expected 3.2 percentage on the GDP, which will be good. Some of the countries in Latin America are above the average. In terms of average, we have Argentina, we have Brazil, we have Cuba, some of Central America, but also, we’re going to have countries, small countries but with significant growth expected for 2014.

 

As an example, Chile. Chile expects a growth of 4 percent; Colombia, 4.5 percent; Costa Rica, 4.0; Ecuador, 4.5. It shows that Latin-American countries will keep growing, the consumer market is stronger, and we expect that most of these manufacturing companies like U.S., Europe, and Asia will include Latin America as one of their main destinations. As a consequence, we have to consider supply chain connectivities. We know that Latin America, because of an emerging region, requires a lot of investment in terms of airports, roads. We still suffer a lot in some of the countries of the failure of these infrastructure investments. We have up from and consider that 2014, as an example, we’re going to have the World Soccer Cup. This World Soccer Cup means a lot of tourists coming to Latin America, which will also impact the transportation networking, so we expect an increase of the rates.

 

Normally, we have the peak season, Dustin, as you know. In Asia we have this peak going the second semester of the year, but considering this World Cup, there is an estimation of a big slew of tourists coming, which will impact the space of the aircrafts. We’re going to have some impacts on the prices, and, as a consequence, this will impact, also, the flow of the airports from the normal flow in the ports. We expect to have a huge impact on that. The challenge, now we have some investment in countries like Mexico, some of the ports in Brazil. We are having investments in Argentina, in Colombia, in Panama; Panama also has been a great investment for all of the companies coming from Asia and using Panama as a port for redistribution into Central America and South-American countries. We expect that ports will be good in a couple of years. If you consider the movement from the ports to the main cities because of this effect of consumer and urbanization processes, we still have a big gap that also impacts the costs, like the road from port to the main cities.

 

The supply chain in these countries are not totally integrated, which means we have isolated operators and carriers. Some of them have their own autonomy, but we need to have more connectivities in their supply chain. It is still a challenge for all of the professionals in supply chain in the region. We’re probably going to have to look for alternatives. We do have alternatives. We have agreements. Some of the shippers normally try to negotiate directly with carriers, so they don’t have a good 3PL, for example, to monitor them. We are still in this process to integrate 3PLs, shippers, and carriers. That’s probably the biggest challenge we’re going to have, Dustin.

 

Did you mention everything about the infrastructure challenges?

 

Oh yes, as infrastructure challenges, I think the main problems are related to the move. We need to invest in more roads for the domestic distribution. We still have a gap for warehousing to move cargo until the endpoint, so there are needs to be invested in the infrastructure. Countries are starting, but as you know, infrastructure cost requires heavy investment from the government with long-term visibility. Because of the characteristics of Latin-American governments, some of these governments don’t prioritize these investments, so we still have some gaps. As an example, we have small countries like Peru, we have Venezuelan, we have Ecuador. These countries are still suffering, even Argentina. There is a need for these governments to invest more in long-term infrastructure. Also, for the other countries like Brazil, Mexico, Colombia, we already have investments, but it requires these long-term until we have more roads, more warehouses, and an overall infrastructure ready to support this supply chain.

 

Do you have any recommendations on things to consider in supply chain planning over the next few years?

 

That’s a good question, Dustin. I think, as a professional in the supply chain industry, the forecast planning is a key point. But also forecast considering not looking for Latin America as a whole, but looking for each of the target countries and it’s characteristics. For example, because we talked about infrastructure, this is also important, but as you are planning to go and expand into these markets, it’s important to take into consideration that each of these countries in Latin America, they have specifics on their customs regulations, for example. We mentioned the infrastructure, which is key, but also, customs regulations takes a big role when you’re planning to put your products, competing directly with the local market. Considering the customs regulations, how you calculate defined prices, considering the local-domestic distribution, I would say this is very important. Basically, of course, try to have a good communication process with the countries, because each country has its, although it’s Latin, we have different cultural aspects which should be considered. For example, in terms of entering into the market and understanding the consumer minds or the way you act into the local distribution. These are the main points I would consider, Dustin.

 

Thanks, Jose, for sharing your views on Latin-American supply chains.

 

Oh, this was very important. I really appreciate your attention. I thank you very much also, Dustin, for speaking with me about Latin-America and the challenge of the supply chain. If any of your audience has questions, I’ll be more than happy to answer. Anyone can find me on LinkedIn.

 

Thank you.

 

Thank you, all the best. You guys have a great 2014.

 

About Jose Vitorelli


 

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Jose Vitorelli


Customer Solutions and Innovation

- Regional Customer Manager

LinkedIn Profile

I interviewed  Koshy Samuel who discussed 'Re - framing Leadership Inside Out in a New Environment - Network Leadership'.

 

 

 

 

 

It’s great to speak with you again today, Koshy, and I look forward to hearing your views on new topic of about re-framing leadership of inside and out in a new work environment of were gonna talk about the rise of network leadership. Can you first provide a brief background of yourself?

 

My name is Koshy Samuel, I work for Schlumberger, I have 30 years of career experience, started 1984 in U.A.E working for electro-mechanical company.  I worked with top management teams all over.   In 1987, I worked with a company called Gearhart. 1988 to 1991 I was with a company called Costain International, one of the biggest infrastructure bridges, roads and building company of UK and from 1991 onwards I have been with Schlumberger in different  department working with management level people and since the 2005 until now I have been in Schlumberger here in Saudi Arabia working for a segment called Well Completion Products where we do a lot of products and services and direct sales to one  the  biggest client in the world called Saudi Aramco Gearhart. So that is something on my background. Talking to you about my education a highlight is my MBA which I completed from Dubai/Glasgow in 2002. Talking about my skills I demonstrate a clear leadership and networking skills and a global skill connected with two minds in the industry inside outside on a broadly diversified based on expertise of people. So here's Dustin that's the most of my background.

 

 

What is network leadership?


Before I start about network leadership let me talk about re-framing leadership and the business theories and models, change leadership and network leadership. When we talk about change leadership its all about most of what we have leading is changing rapidly for the very big challenge ahead of us -- change in leadership. Management is having great difficulty in coping with this kind of a situation. When you talk about thought leadership its all about thinking new ideas. Leadership is available for everyone and every level and every kind of organization. Anyone can simply enclose the question next to them to include someone else. We believe that to live is to make an impact on the world around you. When it comes to the rise of network leadership, that is the purpose of re-framing leadership in the new work environment.

 

Is there anything more that you can add why is it important?

 

Yeah, let me talk about how network leadership is highly important because today we are faced with the changes involved in collaborating. This type of leadership is more about networking knowledge and transfer. A lot of companies come with a forum, meetings and planning. Companies now gather to find new ways of working. Both business leaders realize that they need answers to the sustainable local working environment.

 

Can you have some more about and how it is done?

 

This is not easily done because today a lot of leaders in our organizations are not ready for this kind of new initiation. Although there are new requests to comply a different mix of competencies and to demonstrate your behaviors many have are ready. There is a company called C.E.B (Costain International Corporate Executive Board of USA) they have done a very big study on several senior executives and leaders in our different organizations. They have discovered very interesting statistics that show that only a small percentage of people are already to take this lead and get more. This is because today the leadership roles are change leadership, thought leadership, and the rise of the network leadership.  Every greater net leadership would require a new set of reviews and adjustments and how the organization developments and manages its leaders.


Where can you see it possibly working?

 

This kind of network leadership has to work in the future in every kind of organization. It is all about collaboration, leadership networking and knowledge sharing because the  organization learns new things and works with social media and the other channels. There are a lot of new things happening which can help a company become highly successful if they pursue a lot of leadership initiatives.

 

Thank you, Koshy for sharing me this views on the re-framing leadership and the rise of network leadership.

 

 

Thank you, Dustin for the call.

 

 

Thank you.

 

 

 

 

 

About Koshy Samuel


 

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Koshy Samuel

Reinventing business management models & Reframing Leadership Inside out - the Rise of a Dynamic Network Leader

LinkedIn Profile


I interviewed Becky Partida who discussed Supply Chain Talent Management.

 

 

 

 

 

Can you start by providing a brief background of yourself?

 

Sure. My name is Becky Partida. I’m a research specialist at APQC, which is a nonprofit research firm focused on bench marking and best practices. APQC’s research aims to identify and share those best practices and benchmarks so that companies can make more informed business decisions. I’ve been with APQC since 2011, and my focus is on conducting and disseminating the results of our supply chain management research projects.

 

What is the current state of supply chain talent management?

 

Well, managing talent within the supply chain discipline is a critical issue that’s of great concern to senior-level executives at many companies. This is increasingly true as supply chains become a more strategic function within the enterprise and many senior supply chain professionals plan to retire. Companies are looking for employees who can meet the demands of a complex global economy, and many companies may not be able to retain the skills that they need through talent recruitment alone. At APQC we recently conducted a study on recruiting and developing talent in the supply chain, and we surveyed individuals from 167 companies in more than 40 different industries. We found that only have half of the 167 companies in our survey have formal supply chain talent-management programs. Among those that do, 81 percent agreed or strongly agreed that talent management is a top priority for their company. Only half of the organizations without formal supply chain talent-management programs consider talent management a top priority for them. This difference is rather alarming because it means that a significant subset of companies is failing to recognize talent management as a top priority.

 

How prepared are supply chain job candidates?

 

Well, as part of our study, we asked our participants to rate how prepared previously interviewed supply chain job candidates were with regard to various areas of the supply chain discipline. We found that the candidates were rated most prepared for more technical areas such as procurement, inventory management, and supplier management. On the other hand, candidates were rated least prepared in more strategic areas such as research, financial management, and international experience. This is interesting given that the skills that organizations consider most important for supply chain employees tend to be in the more-strategic area. We asked our survey participants to rate the importance of more than 30 different skills in the supply chain, and the participants considered softer skills like business ethics and problem-solving to be the most important, not the more technical skills that supply chain job candidates were best prepared for.

 

Which supply chain jobs are hardest for organizations to fill?

 

We asked our survey participants to rate how hard it was to fill several operational, technical, and strategic job-level functions, as well as how hard it was to keep employees in these roles. The results that we got were similar to those regarding job-candidate preparedness. Overall, the survey participants rated strategic-level positions as the hardest for recruitment and retention. On our survey those positions included supply chain strategists, logistics managers, and supply chain network designers. On the other hand, operational positions were rated easiest for recruitment and retention, and we recruited a included procurement staff and transport planners in those positions.

 

Are organizations working with universities to help prepare supply chain professionals?

 

Oh, absolutely. As we all know, more and more colleges and universities are offering undergraduate- and graduate-degree programs in supply chain management. This is creating the need for companies to work with universities to ensure that recent graduates have the skills that they need to jump into the supply chain field. Some companies are working with colleges and universities through traditional internship and rotational programs, but we found that others are providing sponsored projects and consulting assignments to university programs, and these projects provide students with more hands-on experience in the different areas of supply chain management. These efforts may play a role in how organizations select supply chain employees further down the line, but, currently, there hasn't been a significant effect on hiring practices, so many companies are not hiring as many people with supply chain degrees. In our survey, more than half of the participants indicated that 25 percent or less of their new hires have degrees in supply chain management. This could be due to organizations looking for supply chain professionals with more hands-on training in multiple areas of supply chain management. Many universities’ supply chain-management programs haven’t prepared candidates in multiple areas of supply chain; instead, they’ve given students experience in a particular focus area, like procurement or logistics.

 

How are organizations developing their supply chain talent and reducing the potential for skills loss as the senior employees retire?

 

Well, we did find that organizations are creating formal supply chain talent-management programs, and these provide the supply chain functions of organizations with a more integrative integrated approach to tasks such as workforce planning, staffing, training and development, performance management, rewards, and the retention of talent. Companies can enhance these programs by setting objectives regarding talent management in the supply chain function. However, it’s worth noting that to truly be effective, those objectives must align with the overall organizational objectives. The use of workforce-planning exercises at companies has helped many of them to identify talent gaps for critical positions, and it’s also helped them generate strategies to develop or recruit talent to fill those gaps. Other methods that we found for developing talent and reducing the potential for skills loss include the use of on-the-job- and rotational-training programs, as well as mentoring programs. In the mentoring programs, senior supply chain executives can be paired up with newer supply chain employees. These programs help engage both the mentors and the mentees by providing opportunities for growth and connection. In our supply chain talent research, we found mentoring programs to be a key method of transferring and developing soft skills. These programs also support knowledge transfer, which helps ensure that organizations retain the vital know-how and expertise that may leave when employees leave or retire. However, it’s worth noting that despite the internally developed programs that many companies have done, it’s important for companies to collaborate with the universities to help them establish curricula that will better prepare younger supply chain professionals to enter into the field.

 

Thanks, Becky, for sharing your views on supply chain talent management.

 

Thank you.

 

About Becky Partida

 

 

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Becky Partida

Research Specialist at APQC

LinkedIn Profile

I interviewed Richard Markoff who discussed 'The Challenge of Creating Supply Chain Standards in Large Companies'.

 

 

 

 

 

Can you start by providing a brief background of yourself?

 

All right, I work for L’Oreal cosmetics in our corporate supply chain. I’m a chemical engineer with an M.B.A. in supply chain. I’m Canadian; I’ve been with L’Oreal for 20 years in different production and supply chain roles. Now I’m our corporate supply chain standards and audits director.

 

What are the challenges of creating supply chain standards in large companies?

 

In very large companies, supply chains are global; their reach is from the customers all the way to our vendors. It’s very hard for large companies, I find right now, to create the right governing structure for their supply chain to be clear who is in charge of what, what the reporting structures are, to even be sure who decides who we’re supposed to work. Even before we write any standards, I’m finding that in a lot of large companies, it’s not clear who should be writing them at all and who is responsible. We could have demand planning or customer care that might be a great market-oriented structure all the way to the relationships with materials suppliers, which might be more of a manufacturing structure. It’s very hard, I find, for companies now to have the overall view of things in order to even begin writing standards. That’s the first challenge.

 

Can you talk a little bit more about why it’s a challenge?

 

In order for a system of standards to be successful, I think that it has to have enough of common core that it applies to everybody. In large companies, there are different business units and different concerns, and everybody has to believe in it and everybody has to buy in to it; otherwise, there won’t be any compliance. It’s very hard to set these compliance structures. If the governance of the supply chain isn’t clear and there isn’t a clear sponsorship from everybody on the importance of the standards and to comply to the standards, it’s going to be hard for the initiative to have any success.

 

How can the challenges be overcome?

 

Well, it starts with a clear mandate, how we want to govern our supply chain structure, who works for who, what lines are solid, what lines are dotted. And after we have that, I think it’s important for big companies now to have a strong center of excellence. There’s no way to get around it anymore. A strong global center of excellence spans across business units and gives this mandate to create the standards to that COE. That’s the way to break through and get started.

 

Thanks. Did we cover all the points you wanted to make about creating supply chain standards in large companies?

 

There are a few things I’d like to mention as well. If we take a reasonable scope of supply chain and we look at the S&OP process, the plan and the move-and-deliver, freight, and warehousing distribution parts of the supply chain—if we try and create standards on these, I’ve found that another challenge to think about is that these standards have to interface with other standards in large companies. Most large companies today already have policies and standards in place for health and safety; they probably do for their product quality and certainly for their finance, their internal control for stock takes or for fraud control and that sort of thing. I think it’s very important when we’re trying to write supply chain standards to be flexible enough to apply to all business units and to be adaptable enough so that it integrates well into the other standard systems that companies are setting up. It’s important to bear that in mind.

 

Thanks again for sharing your views.

 

My pleasure, Dustin. Do you have any other questions or points?

 

No, I think this is good.

 

All right. If you have any follow-up questions, you be sure to let me know, will you?

 

Yep, thank you.



 

 

About Richard Markoff


 

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Richard Markoff

Corporate Supply Chain Standards & Audits Director at L'Oreal

LinkedIn Profile

I interviewed Gerald Abrahamson who discussed 'Treating Inventory As An Investment Rather Than Something You Just Buy'.

 

 

 

 

 

 

It’s great to speak with you today, Jerry, and I look forward to hearing your view today on the topic of treating inventory as an investment rather than something you just buy. Can you start by providing a brief background of yourself?

 

My background has been primarily in manufacturing, both in the U.S. and overseas, but I’ve also been involved in sales and profitability, and I’ve primarily worked with upper-level management. I’ve primarily been brought in to fix problems management has been unable to resolve. In applying what I use, I’ve been able to take businesses that were losing money or that were having problems and turn them around and make the business profitable or even make them more profitable, and that’s something that management really appreciates.

 

Can you talk about the reason inventory should be treated as an investment?

 

Well, generally, management runs the business as an investment of their own. That says that they want to get money out. In order to get money out, you have to basically create a profit. How do you create a profit? Well, profit is defined as the difference between revenues and cost. Therefore, if you minimize your cost—in this case we’re talking the cost of inventory—then give them the same revenue, you have a greater profit when you have a lower cost in your invested inventory. Management should be looking at inventory not as a drain on the company, but rather as a way to be able to meet both current and future demand such that when they have the proper inventory mix and the proper volumes, what happens is, they have the lowest cost of inventory at the moment, not meaning absolute but in relative terms. What happens is, when they make sales over time, they’re not repeating themselves over and over again and buying the same items very frequently but are buying it at such a point that the lowest cost is where they’re buying it. That’s what’s important to their business. Generally, the way I look at it is it’s kind of an economic order quantity type of thing, but that only works for smaller volumes—i.e., 10, 20, 50—where it makes a difference. When you start getting involved into higher volumes, the marginal costs are so tiny, and the volumes involved are so large that an economic order quantity is impractical or even unfeasible. Therefore, there needs to be some kind of control switch on what I call the volume that’s being bought, and as demand changes, you're able to change your supply in accordance. That will help control expenditure for inventory. That will also increase profitability of the business in a reasonable time period.

 

Can you also talk about how this can be done?

 

Pretty much there are two types of inventory. One type of inventory is a purchased item—nuts and bolts, screws, washers, this kind of an item. We can just walk out and buy it from anybody in a reasonable quantity. It’s already made in volume, you don’t have to worry about is this item going to meet my specifications or not. It’s a general part; you just bring it in. One reason you would be worried about it is if, as a business, you're buying such very large volumes that, realistically, you had a concern about being in a shortage position where, for some reason, it wouldn’t be enough parts available to meet a demand. In that case you're looking at having an outside contractor basically supplying your needs. Again, you're not talking about having things custom-made for you; you're just buying a stock-standard item, and all you're doing is having somebody else put it on your shelf for you; you're not doing it yourself. The other type of inventory is proprietary inventory—i.e., items that are not generally available in the marketplace, i.e., your own proprietary, bespoke, or custom-made item. Generally, people recognize this as motherboards, cars, airplanes; these kinds of things all have custom items in them that simply are unique to that particular product. This is throughout industry and this is where the company has the best ability to control their inventory. Because they have a general position forecast of what they expect to sell, they can look back at their own history on that particular item and see what they’ve been doing over a reasonable time period in the past, say, the past three years or five years. They can see how this item has moved in terms of volume. Has it been spiking high, spiking low? Is it widely variable or is it fairly constant over time? Given this, the company can then examine the various options available to it to meet expected demand but also recognize where the company gets the actual lowest cost. At that point, the company is then able to determine where they should be buying, from whom, and at what kinds of volumes. Then they can move ahead and then start planning production for the business. And because they have controls on the contracts with their suppliers, as things move up or down as the economy changes, they are able to adjust what they receive based upon actual results. You can’t do that very well if you're not in good control of your inventory system and your suppliers.

 

Is there any more you can say about where you have seen some success?

 

I’ve used this concept in several different businesses. I did it with heavy industrial manufacturing in the United States; built machine tools. The company didn’t have really an idea what was going on, so I took this concept and I applied it based upon what was going on with the business in general. Overall, I was able to reduce the actual cash investment and inventory by approximately 30 percent, possibly more. More importantly, the amount of cash that was invested in inventory was invested in the products that had a reasonable turnover, so we were able to keep turning the money over and making profit on the invested cash and pulling out some of that profit, whereas the actual cost of the inventory was able to be turned over and over and over again. I applied the same concept in a nanotech manufacturing facility. They built machinery that was used in semiconductor manufacturing. The machine needed to function properly, but the company was essentially sold out for six months. And by changing the way I purchased the inventory for that time period, I reduced the cost of virtually all the parts by approximately 20, 30 percent. The most important one came up when I was managing hardware for the company. The company used to spend approximately $125,000 to $175,000 a year on things such as nuts, bolts, screws, washers, and so on, you get the idea. Not fancy stuff, just mundane products that would constantly be bought regularly at all times. I received the annual projected usage and I then went to the supplier and I said, “Here’s our specific usage for the next one, two, three, four years.” They came back with a bid of being able to meet not only the, they delivered the entire first year’s inventory needs for hardware for under $50,000. That resulted in, what, a two-thirds reduction or more depending on how you look at it. That’s a real-world example of what can be realized when * (13:54—unclear) applying the analysis of what you need, how you get it, where you get it. In that $50,000 were some items that actually did go out two, three, and four years because they were only used at 50 a year. But if you’ve got two hundred of them, hey, that’s four years’ supply. And it worked. After that they didn’t have anything for me to do; they had to let me go. What can you say?

 

Well, this is a fascinating topic, and it’s great to hear your real-world experience on the topic. Did we cover all the points you wanted to make?

 

Pretty much, yeah. A good manager is going to look at the past in order to look at the future, and this is the important point, because you’ve got to be able to sell management on the concept of investing in the inventory in order to get the lowest point, the lowest cost point. Doesn’t have to be the absolute lowest, but the one that makes the most sense in terms of what your expected demand is. You're not going to buy gold today because the prices are just wild, and they change so dramatically so very quickly. Similar to computer memory. Again, you’re not going to buy it unless you're actually going to use it, in which case, no problem, you just sign a contract for it. If it goes down in price, you’d better have something in the contract that allows you to bring the price down so you're not overpaying for something you're not going to actually be able to use or that you are not actually paying too much for something that you really don’t want to pay that much to get.

 

Thank you again for sharing.

 

Okay, you’re welcome. I think I got most of what I wanted to get in there. It’s not a hard concept. The company needs to look at it, and you need to be a good manager to understand it. It does require time and money to be spent by management, but what it does do is, it maximizes the short- and long-term profitability of the business, and that’s what makes a company survive.

 

Thank you.

 



About Gerald Abrahamson


 

Gerald Abrahamson

Parts/Machinery/Mfg Professional

LinkedIn Profile




I interviewed Bennet Bayer discussed 'Supply Chain Management and How Cloud, Hybrid Tools, and Social Platforms Can Improve Supply Chains'.

 

 

 

 

 

Can you start by providing a brief background of yourself?

 

Sure, Dustin, glad to. Currently, I am the chief marketing officer and vice president of strategy for cloud computing here at Huawei. Previous to this, I’ve served three tenures as CEO with mobile operators. I ran a division with British Telecom and another British division with Unisys. I’ve had fairly extensive supply chain   experience, both in my business and helping many of our customers manage their supply chains, as well as their partner ecosystems.

 

How can cloud hybrid tools and social platforms improve supply chains?

 

It’s, I think, one of the more exciting topics in IT, Dustin. Let me work in reverse order. I think enterprise social platforms, and specifically looking at IBM connections—Teligent, Jive Software, Moxie—these are, think of it as a Facebook for your business. Emerson was one of the first adopters of this. We used this EC extensively and IBM and Hewlett Packard and the way they interfaced their channel partners and their supply chain. It’s all about communication. If you imagine a Facebook capability for you and your business partners in your supply chain, as well as having access to SharePoint for specific projects, to help govern the overall relationship. It’s that kind of communication that, I think, is going to be the future of supply chain. Now, if we expand on that and look at cloud, I think community clouds are what I’m seeing a lot more of.

 

An example: In Africa we put together a content cloud for 18 countries. The National Broadcasters and 18 countries in Africa are all on one cloud now. All the content providers, their supply chain—and right now there’re just ten thousand different content-provider sources in this ecosystem. It’s all being managed, but the result is improved time and efficiency. They’re able to share content between countries, which reduces their cost, it reduces their dependency on suppliers from, say, the U.S. or the E.U., and they’re able to focus on building ecosystems within Africa, which, again, is better for the local economy and more efficient for the Broadcasters. Coming in to this is a suite of hybrid tools, as hybrid cloud because in many different industries—vertical industries, manufacturing, health care, retail, even financial services—you have to provide different levels of security, you have different issues around providing an audit trail for government regulators, so you have to have a separate suite of tools to manage this. Because everybody has different systems—you might have Juniper, Cisco, Huawei, EMC, NetApp—but you want to have a single, unified view to look at these things. These are some of the issues that we’re seeing and see being implemented around the world today.

 

As far as improving supply chains using these tools to improve supply chains, can you talk about the approach that should be taken?

 

Yeah, Dustin. Early in my career I had a lot to do with unified communications, and I’m seeing the same things with big data as a topic. Supply chain is very similar, I think. We coach organizations to take small, quantified steps where you can have a measurable impact in ROI within, say, 60 days so that you don’t spend 10 or 20 million dollars on these. You want to spend a smaller amount of money. You develop your goal and what you want to achieve over, say, a five- to ten-year timeframe, but to implement you want to talk about two- to five-man teams working on a 60-day deliverable, and you move in small steps. That way you're able to show the C-suite a quantified ROI, and then they’ll give you more funding and it makes it much easier to proceed forward toward your goal. And that’s the approach we’re seeing that’s probably the most successful.

 

Can you talk about where you have seen some success?

 

Well, probably the most visible in the recent economic downturn, I think Nissan and the way that they manage their supply chain. They were probably the only auto manufacturer that didn’t get themselves into trouble. The African Broadcasters, which is a different one. I think in the United States, you see health care, Cerner, McKesson, and Cardinal, who each manage large networks, thousands of hospitals each of them. They manage all the IT for these medical centers, and they’re able to manage the entire ecosystem and patient records. You're talking hundreds of thousands, if not millions, of different sources within that supply chain, and they’re able to manage that all for better efficiency. Again, the approach that we advocate is similar to what I helped do earlier in my career. Those are just some of the success stories we’ve seen around the world.

 

Thank you for sharing these views. Did we cover the main points that you think are important for the supply chain professionals?

 

I think so, Dustin. I think going enterprise social is a trend that organizations should look at for their supply chain improvement. The way you use cloud and, I think, sometimes your community clouds, which sometimes means that your competitor is actually your best friend to engage—and banking is a great example of that for utilization of cloud—and the use of hybrid tools really has been very effective as long as you take very measured steps in your approach.

 

And thanks again for sharing.

 

My pleasure, Dustin, thanks so much.

 

 

 



About Bennet Bayer

 

 

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Bennet Bayer


Cloud, Mobile, ICT / IDC & Related VAS Executive;

CMO & VP Strategy @ Huawei

LinkedIn Profile

I interviewed  Koshy Samuel who discussed Reinventing Management.

 

 

 

 

 

 

 

It’s great to speak with you today, Koshy, and I look forward to hearing your views on reinventing management. Can you start by—?

 

 

That is my pleasure because I like to share a lot of global insights and knowledge based on my 30 years’ experience with multinational companies here in United Arab Emirates and Bahrain and Saudi and places like that, a little bit in India.

 

Can you provide a brief background of yourself?

 

My name is Koshy Samuel. I’m from India. I come from a place which is at the southernmost tip of India. In 1984, after my graduation, doing my B.Sc., I spent a little time working as a trainee in India. I then traveled in 1984  to United Arab Emirates where I was in charge of working for a construction electromechanical company. I spent two or three years in that company. Recently, my work has been with Schlumberger Oilfield Services where I started in 1991 in the Dubai region headquarters working in different departments at different top-level management positions and in different business segments of the company.

 

I have great exposure to speak on any management topic, supply chain topic or oil-field topic and I will be able to share my insights and knowledge with people who like to have a talk with me anytime. I share a lot of networking and connectivity with people all over the world in different industries, with different skills, all top-level presidents and owners and founders and companies. I currently work for Schlumberger where I have been working in Saudi Arabia from 2005 onward. I have been in Saudi now for eight years. I work for a business segment that selss a lot of oilfield equipment for Saudi Aramco, one of the world’s biggest oil producers here. That is my brief background I can give you.

 

My first question is: What is the problem or what is happening with management today?

 

Overall, there is a great difficulty with explaining management in the sense that we almost see bad management; good management probably is very difficult to find. The most important thing is people today, employees of companies, of organizations are not even aware of how to come up with good management. Why is good management is so difficult? A lot of management gurus and professors of Harvard and London Business School and other great universities have done research for a couple of years, four years, five years, ten years, to come up with so many business models and management models reinventing, rethinking, providing their insights, but until today it’s still an issue. A large company like Schlumberger, which is all over the world having about 200,000 employees in about 60 countries, still has a big management problem.

 

Can you talk a little bit more about why management should be reinvented?

 

Management should be reinvented considering this situation because the world today has failed, especially when you consider the financial businesses as an example. Some of the organizations have failed. Most of the organizations are still using the traditional way of doing business, and they have not even reinvented or rethought about how an efficient shaped management model should be and how it should work and how it will change in the next five years.

 

Can you talk about how this can be done? How can management be reinvented?

 

Reinventing, rethinking management comes from a lot of insights and study and business-model comparisons to be done depending on the situation, depending on the changing perception of management, employee, and the world as a whole. Reinventing in the sense that when you compare a business model and a management model, first of all, the basic business model considers how the source of revenue, cost structure, make-and-buy decisions, how to make a profit. Business model is a hard skill, actually. It’s just a traditional way of doing business for decades. It has been going as it is.

 

Management of companies has not really revolved, rethought about for inventing another model  because the issue is, they are afraid from moving from traditional to the new alternative methods or alternatives principles. When you say “management model,” it starts with defining the object. It is more of a soft skill or an intrinsic way of thinking about it. It considers defining objectives, motivating employees, making the right decisions at the right time and coordinating activities to make it highly efficient and lean, green - using technology and networking and collective wisdom. All these are the soft skills which have come in to play with developing of this Internet and the people, mind-changing, contributing and connecting all those things. The companies have to now think how to develop the proper management model depending on their particular business and the situation and the external factors that affect the business. If the companies are not going to think, invent this management model, there is a strong issue for the business to survive, difficulty to manage a future.

 

Did we cover all the points you wanted to make? Do you have any final recommendations?

 

My recommendation is that every company has to move from a business model to a management model, because the expectations of the employees, the external factors, the technology, the process, all of those have completely changed now.

 

The bureaucracy has changed to emergence; the hierarchy has changed to collective wisdom; extrinsic factors have gone intrinsic; the alignment of the companies which they used to think have gone in to Obliquity. This is a word which some of the gurus have mentioned in the management model theory.

 



About Koshy Samuel


 

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Koshy Samuel


Global Leadership: Creating an Inspiring Business Vision for real-world success game changer plans knowledge insights

LinkedIn Profile


I interviewed  Tina Groves who discussed Big Data Innovations for Supply Chains.

 

 

 

 

 

Please provide a brief background of yourself


Certainly, and thank you, Dustin, for this opportunity to share with your listeners a bit more about Big Data. I’m Tina Groves. I work with IBM as a product manager. I’ve been with the company now for about 15 years. About a year and a half ago, I got involved with Big Data, and, man, has it been a great ride. Just to give a bit more background, I’ve been a consultant, I have a degree in computer science, I hold a couple patents, then started to getting in to some more authoring, an avid Twitterer, so I hope some of your readers will follow me shortly after this recording.

 

Can you talk about Big Data and some of the technologies that are enabling fraud detection?


Certainly. Fraud has been huge in the Big Data space, particularly for supply chain, for both the vendors, as well as government. One area that has been an interest is looking at advanced analytics on these vast stores of information to look for new patterns. Even for the data that is already being collected, looking at patterns and, for example, how prices are set. One of our customers at IBM is a medical supplier, and they detected price collusion amongst its vendors by looking at the timing between when contracts were sent out and the types of bids that were received. Another area is entity analytics; particularly, government’s looking at this for looking at relationships between members, whether these are gang members, family members, organizational entities; looking at these relationships to understand how companies are moving goods around, particularly across borders and between countries, looking at exports.


One government in Asia, for example, was looking at how groups of family members were traveling to particular countries and how they were declaring goods on their way back, those different customs duties levied, depending if those goods are being used for commercial use or personal use, and they were able to detect, for example, that these family members were bringing goods back for resale and not for personal use, as originally declared.


A third area is just to dupe itself. A dupe is providing a way of storing data in a very cheap way. When you think about how a dupe allows them for data to be dumped in a single spot and a mind for using these advanced analytics and predictive analytics allows supply chain vendors to then look at their supply chain horizontally. In particular, and get past just looking at financial metrics. You can learn to look at how, in pharma in particular, anything that’s been tampered with can be very easily detected right down to which retailer that the drug was sold from. Those are the three technologies: advanced and predictive analytics for pattern detection; entity analytics to see relationships; and cheap data storage in the form of a dupe.

 

3. How can processes be optimized in ways that were previously unattainable?


That’s a great question. Telematics has done a huge amount of advancement for helping organizations optimize their processes, particularly in supply chain, so this is really the culmination of several technologies. Seeing how RFID and sensors are now very cheap, they’re used extensively across many organizations, you add in cloud, the effectiveness of sharing information through the Internet and the security that now allows for that type of data interchange, and then you throw in Big Data, which has that combination of cheap storage, very fast processing with more advanced techniques.


You can get down to patterns, for example, that detect, think about a grocery-store chain and an ice cream supplier. When the freezers are set at a certain temperature for meat, for example, if there are freezer fluctuations, which can happen in their freezer, knowing that premium ice cream in the freezer versus some other type of frozen good can affect the quality of the ice cream. The ice cream supplier can then monitor how its ice cream is being maintained through a data interchange with the grocery supplier and then decide whether or not to, for example, validate a warranty. That’s just one type of process of assuring a quality throughout the supply chain. Another one is around transportation; that’s very common, are becoming more common.


Looking at telematics from the vehicles to optimize fuel usage and shaving off dollars by optimizing roots and orders by coalescing orders earlier so that drivers can pick them up. They sound like they’re minor changes, but these incremental changes all throughout the supply chain add up to hundreds of thousands, if not millions, of dollars for very large, larger logistics supply chain organizations.

 

4. What are your recommendations?


Well, if you're early in your process, earlier in your Big Data journey, we often—by “we,” my colleagues and I—often recommend organizations look for opportunities where there’s business process that is fragmented by different applications, different software applications, and look for opportunities, then, to combine the information flows so that you can have greater visibility from end to end of that business process.


Another one that I look at is if you're very, very early and analytics, for example, is not yet part of your organization’s DNA, look for opportunities where the people in your organization are picking up the phone to talk to people at other organizations just for simple like a status. “Tell me more about the status of this shipment. Where is it? How is it located? Why is the cost of this bill so high?” If those are the kinds of questions your organization’s asking, particularly of the same vendor or the same types of services, then there’s definitely an opportunity, then, for optimization.


If you're more advanced, you’ve had an opportunity to leverage analytics, you’ve got a very good sense of transparency throughout your supply chain, you’re now looking for something more innovative, then we recommend people look at the advanced analytics particularly around entity analytics. You can look at how various parts are put particular, how a system of parts or services are assembled, and look for optimizations, then, in those areas.

 

 

About Tina Groves


 

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Tina Groves

BI Product Strategist, Big Data at IBM

https://twitter.com/tinagroves

LinkedIn Profile