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2016

I interviewed Graham Newland who discussed Managing and Leading Supply Chain Teams.

 

 

 

 

 

 

Could you first provide a brief a background of yourself?

 

Yes, thank you Dustin.I've been working in the supply chain now for some 35 years globally.I've worked in a range of industries, specifically around retail, e-commerce, wholesale and many manufacturing companies worldwide for many of the leaders.Today, I'm actually the Chief Customer Officer for a Swedish company who focus very much on providing supply chain improvements and supply chain technology globally, but I also run a consulting practice that looks at how to make supply chain improvements and how to make your supply chain more effective.As over the years,I’ve run supply chains as a chief operating officer and a supply chain director for a number of leading retailers and wholesalers.

 

Can you talk about what is involved in managing and leading supply chain teams?

 

In doing this, I think it's really, really important to actually have very good leadership, very clear vision of what you want to achieve, and to actually manage and to lead supply chain teams effectually now, you really have paint a great picture of what good looks like, which is normally focusing on your customers and what value means to them, what is important to them.Listening to that customer, and then being able to coach your team, who are often distributed over many locations, often over many geographies to be focused on that clear vision and that clear goal and what success looks like.And to work at that absolutely every day and every week in terms of making that effective by listening to the customer, taking feedback, measuring success through very clear, key performance indicators which are relevant to your customer, relevant to your strategy, and making sure that you’re always striving to get better and if there are any problems to understand the root causes and very quickly manage those and get better.And I always find if you've got the right talent and the right people and that right communication, if you get can vision and the measurement right, and measure in process as you go forward, you've got yourself a pretty good foundation to be successful.

 

How is it done effectively?

 

In terms of making this effective I think there are many aspects.One very key aspect is getting the right people onboard.And when I interview, I very much look at attitude because I think if you get the right attitude, you can always train and coach people around skills and what success looks like.So I like people with a range of skills.They care.They care about performance and customers.They're respectful, so they can be very diplomatic, but at the same time they're always looking to do better, to get things right the first time, they challenge the status quo and get their sleeves rolled up as part of a team, to achieve the success as we go forward.And that team means they work with their colleagues, they work with customers, they work with suppliers, with common objectives, common language and always looking at what the vision and what those KPIs that we've signed up to, which are very customer focused are doing.

 

They have great judgement, and great decision making, and I often use techniques like using the judgement index to make sure I'm getting the right kind of people who are able to make decisions under pressure and also looking at the across the whole supply, rather than their particular area.

 

To summarize, you're looking at great talent, great communications, people who collaborate really well, build bridges, but are also very analytical.That way they can look at demand, they can look at their projected performance, they're always forward looking, 30, 60, 90 days ahead for example.And I think when you've got that, providing you've got that framework of coaching and mentoring from the leadership with clear vision, and clear feedback, clear measurement which is looked at and acted upon, frequently, so at least weekly.Then I think you build momentum, and you build a high performing team, even if they are distributed over many locations.So all of those are the key ingredients for me, Dustin.

 

Can you share any success stories or examples of success?

 

bbb: I've been involved in a number of areas, so for example, just a short while back, acting as chief operating officer and supply chain director at The Liberty Group, that's an internationally famous retailer, wholesaler of high quality products and also a manufacturer.By working together with our partners overseas, by working together with people in different countries in our operation...we had people in Brazil, America, Japan, China, Italy for example.By taking that approach we more than double our gross margin.We doubled our customer service for our major customers.Customers, we improved our on time, we cut our lead times by over 50%, and with our suppliers, we took away the standard contracts and introduced our KPIs and SLAs, and performance and quality went up because they understood what was important to our customers, what was important to us.

 

And so we were sharing information and collaborating very well, and that transformation took place in very, very short period of time.And that was a very powerful example of what you can do by bringing together a range of talent in different countries, clear vision, and collaborating well together and always looking challenging that status quo and working with people to identify how can we do it better.An area of continuous improvement, so that I think is a very good example.

 

In addition, not to long ago, I was actually working for a very major conglomerate in Europe.I'm not sure I can say their name for you at this particular moment, but working across 73 distribution centers, 19 countries and over 12 lines of business, just by mapping out what was good, what was the key objectives, working back from the customer who just wanted one voice, one delivery, and delivery on certain timescales for all products within the group.

We were able to move back working with a very strong team, as we implemented cells and operations planning, to just focus on what that goal should be, and how we could achieve it.And once again, we managed to reduce lead times by over half.We improved the profitability significantly, and in addition, we pleased the customer, who didn't want 12 deliveries.They wanted one consolidated delivery behind their store, or their warehouse as appropriate.And I think that listening to the customer and the whole team working closely together, saying, "Well, how do we do this?And how can we make it easier to do and to get right time?” harnessing all of that talent and having that attitude to make it want to happen.That was another significant success.

 


 

About Graham Newland

 

 

 

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Graham Newland

 

Business leader; supply chain, retail and commerce

 

LinkedIn Profile

I interviewed Carl Fransman who discussed Predictive Maintenance.

 

 

 

 

 

 

Can you first provide a brief background of yourself?

 

Good morning, Dustin.Yes, my name is Carl Fransman, I live in Belgium, and my background is mainly in software, dealing with aftermarket spare parts planning and optimization or any predictive processes associated with aftermarket.

 

What is predictive maintenance?

 

Very good question and actually a point of confusion for many people.A lot of people confuse, first of all, preventive maintenance with predictive.Where preventive is more like a pure insurance policy, you just try to determine normal failure rates and then you just set fixed time stamps or cycle stamps to perform interventions.Think of it like maintaining your car every 10,000 miles.That's preventive maintenance.An improvement on preventive maintenance is condition-based maintenance, where periodically, you're going to check on the actual condition of the asset or parts of the asset, and based on the check, you determine whether or not a maintenance is required.Some people confuse that and predictive maintenance, and it's not yet predictive maintenance.

 

Predictive maintenance will look not just at condition of the asset but also much larger.It'll even look outside the asset for any condition that may influence the future state of the asset.If I can be more clearer, let's say you want to predict the failure of an engine, and that engine sits outside.It's quite understandable that weather may play a role, but weather is not just temperature.It's also humidity, it's wind strength.What could also play a role is the load that's being put on that engine, so gathering all data together with the data collected on the engine allows us to do predictive forecasting, predictive analytics which then drive predictive maintenance processes.

 

It's quite a complex process.First, you have to forecast the future state of the equipment.Is it going to be good, or not good?And depending on that forecast, you have to determine whether or not you will intervene.Do I do a maintenance before it was planned, because I expect a failure to happen, or not?All that is risk mitigation.Your forecast, your prediction is what it is.It's just a prediction.It tells you there's so much chance that the machine will fail, but even at a 99% chance, you still have 1% chance it doesn't fail, so even in that case you have to weigh the costs of the intervention versus the potential cost of a breakdown, and that cost may be purely financial, it may include safety issues, what have you.So, it's much more complex than meets the eye, but the opportunities, done well, are huge.

 

Can you talk more about how it's done effectively?

 

Yes.Everybody has read about internet of things, machine-to-machine communications. This is the first condition.You need to be able to monitor the state of the equipment and, as we said before, of anything around the equipment that could potentially influence the equipment.So we need digital information on the status of the asset.This is now possible.What is also possible is to deal with the amounts of data that this generates.Big data technologies are readily available.We still have to be picky, because we need the performance that's required to do predictive is much higher than just business intelligence, for instance.These are the first conditions, so they are purely technical.Another condition is to really understand the business, meaning you have to understand what the costs and opportunities are in order to create a model that then allows you, with the predictions, to draw the right conclusions.

 

We see a lot of projects being done which focus solely on proving that prediction can be made.Well, not much surprise there.We can make predictions, and some are better than others, but making the prediction is not the hardest part.It's making the prediction operationable that's hard, so you have to interpret the meaning of the prediction in light of your business.And that's where a lot of work needs to be done still today.

 

Where have you seen some success?

 

We've seen success across different sectors.Now, in our case, we focus on heavy equipment, so we focus on that type of equipment where the pain is the highest, so where you absolutely want to avoid unplanned downtime.And we've seen success in sectors like aviation, like rail, automotive, industrial equipment.So in essence, the science is sector agnostic...and what's really—again, and I cannot stress this enough—we're really...the potential is realized is in the translation of the prediction to an operational action, and that is variable depending on the sector.If I tell you a train may have a failure on one of its breaks, does that matter?Yes, it matters, but it doesn't matter as much as if I said on an airplane, "Your engine going to fail."So there a lot of things that we have to take into consideration before we just jump to conclusions based on the predictions.

 

 

About Carl Fransman

 

 

 

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Carl Fransman

 

Managing Director EMEA at Predikto

 

LinkedIn Profile

I interviewed Ori Zik who discussed Data Transparency in the Food Value Chain.

 

 

 

 

 

 

Can you provide us with a background of yourself?

 

Sure, so I'm the vice president of analytics here at Lux Research.  About a year and a half ago Lux bought a company that I founded called Energy Points.  Energy Points was focusing on collecting information on natural resources such as energy, land, water, greenhouse gas emission, nitrogen and so on.  And providing this daytime analytics as service especially to fortune 1000 companies.And Lux is a company that specializes in science based innovation.And together we're building data platforms that allows people to make better decisions when it comes to technology, natural resources, and how to integrate more science based innovation into their operation.

 

One of the things that interests us is the supply because our customers take a growing interest in their supply chain in terms of not only the time and cost, and quality, but also the environmental impact.  We started to provide the value on these questions.

 

What is data transparency in the food value chain?

 

So this is really interesting.  If you buy food in the grocery store, rarely you know where the food actually comes from, and what is the environmental impact of this food.  Now, in some case,s even the companies that produce this food have such a complex supply chain that they also don't know where it actually comes from and what is the environmental impact and what are the risks. Obviously, food companies are very careful to monitor things like health and safety and definitely cost, but the environmental impact becomes more and more important.

 

Most of it depends on collecting data on the farm level.  This is very hard because farmers are busy enough without collecting data and reporting it.So there aren’t many initiatives to do that.  The food industry is now dependent, especially in the west, on the three elements —trust, transparency and traceability.And these elements are tightly connected to the datatransparency on the supply chain...from the entire supply chain.  As a concrete example, think about buying an egg.  So when you buy an egg, you actually also buy the chicken feed that fed the chicken that laid the egg, and this might be corn and dependent on corn.And this corn might use a large quantity of water, and this large quantity of water might be in a place which is water scarce, and that increases the risk profile of your product.And this is something that you would like to know about from the risk sustainability and also future cost perspectives.

 

How is data transparency done in the food value chain?

 

It's currently a rapidly evolving trend.  The organizations, a lot of non-profit organizations and some for profit that are charted to collect the data on the farm level, because most of the impact, as we said, is on the farm level.  Organizations like field-to-market and other initiatives in the US are...that's what they do.  A lot of non-profits like the worldwide life fund are interested in being part of this conversation and provide risk sustainability and formation and metrics to large companies.  The standard, in terms of how to measure and how to aggregate and how to normalize the data, is not being defined yet, so there's a lot of conversations going on. There's a lot of things that are inherently difficult from the scientific perspective.  For example, how do you quantify things like biodiversity or eco toxicity, which can be impacted by your farming operation.  In world which is resource scarce and suffers from climate change, these become acute issues.  So currently, as we speak, there's a lot of initiatives and work done in order to collect the data and standardize it.

 

Why is data transparency important?

 

Well, just last week there was a bill passed in congress to label GMO, for example, in food, so this is not directly sustainability.But it shows that customers are now interested in where the food comes from.  If you follow this literature and the interviews with the CEO like from Unilever to other companies, it really talks about the fact that some of the customers find it critical for their buying decision, to know where the food comes from and what is the sustainability impact.  So food companies realize that if they don't integrate information from the entire supply chain, and are not transparent and clear about how they manage this supply chain, they will lose market share.  This is a huge concern.

The food industry is always changing.  People tend to prefer more healthy food, more organic food, more local food and sustainability plays a key role in it, and companies that are funded by hundreds of millions of dollars,startups like Hampton Creek or Impossible Food on the premise that they can grow food with a cleaner supply chain — not dependent on this, not dependent on livestock at all.And again, hundreds of millions of dollars are pulled towards more sustainable food.  That's a major concern for food companies and this is why it is important to them.

 

What are the key challenges?

 

The key challenge is collecting the data on the farm level and then sharing it.  Many companies started with sheer data collection. People don't know it, but the average age of a farmer in the US is 65.  So you expect the 65 years old farmer finishes a very hard day in the field, starting dealing with data and this, by itself, is a significant undertaking. And then the issue of data transparency, if a company collected this data, why would they share it?  So the biggest challenge is collecting the data and then sharing it.

 

What do you see in the future, in the trends that you see?

 

It's interesting, I think that this is like unstoppable train by now.  There's more and more demand for transparency, and more companies are talking about being transparent with their data and creating benchmarks and giving access to them.  I think that technologies like block chain and the verification technology behind the bitcoin, will allow in the future—and this probably the far future—will allow some validation of sustainability data.  I think that the trend is to more and more open data, more and more access to this data, and more and more consumer involvement and investor involvement in the interpretation of this data.

 

 

 

About Ory Zik

 

 

 

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Ory Zik

 

VP Analytics at Lux Research Inc.

 

LinkedIn Profile

I interviewed Tom Craig who discussed The New Supply Chain - Out with the Old, in with the New.

 

 

 

 

 

 

Can you first provide a brief background of yourself?

 

I'm president of LTD management.We are consulting firm that specializes in logistics and supply chain management.Our people all have worked in logistics and supply chain management.That enables us to deliver solutions that work, as we say.

 

Why are there excess inventory problems?

 

Excess inventory, there certainly has been, because companies have difficulty in what to do with inventory and how to allocate it and that.The fact right now, what you have with Omnichannel, that's the buzzword that deals with having stores and online, all the ways you touch customers, is that it's two different sales channels now.Two different ways to reach the customers.Stores have traditionally shipped pallet loads and truckloads of product and now with e-commerce,it's shipping eaches direct to customers.As a result, retailers have had difficulty knowing what to do with inventory.So the amount of inventory to deal with the two channels...they've had more trouble so you end up being inventory rich.They have too much inventory, or they have the wrong inventory.It’s tied up their liquidity, so they're struggling with the reality that there are now two supply chains because there are two ways of retailing.As a result, there is an inventory problem.

 

Is there anything more you can talk about?The different ways of reaching customers?

 

Well the main way, traditionally is they were in the stores.You can have other ways with catalog people or with kiosk involved, things like that.But the turnabout, the blowout,has been the e-commerce side, whether we call it the Amazon effect or the Alibaba effect.That's just made a whole new retailing way that's very different.Let's just take one minor example. Wal-Mart is the biggest retailer in the world.They have a lot of stores.Their online sales are maybe 15 percent of Amazon's, and if you look at Alibaba, they may be, next year, the biggest retailer in the world.So this whole e-commerce is changing the paradigm of how to retail.Traditional retailers with stores are having a difficulty transitioning to the new reality.

 

What are the elements of the new supply chain?

 

The new supply chain—a lot of it deservingly so on certain points, like the need now for fulfillment warehouses, not just retail. Retail warehouses were the ones who were shipping the pallet loads and caseloads of product to stores.They were not able and designed to handle fulfillment orders of individual items, eaches .So, two sets of warehouses have been developed.For retail stores and for direct customers, and this has made a whole new idea of where do I line my warehouses with my different types of customers.And the change here again—we'll call it the Amazon effect here—is deliver orders within two days or less.That's created a whole new paradigm of where warehouses should be located. So you get a lot of traditional, you get a lot of talk about what they call the last mile.That last bit of delivery to the customer, and the costs of that.That has gotten a lot of attention.

 

What we're saying, with the new supply chain besides that, is you've got to look upstream. You've got to extend the supply chain upstream.A lot has been on the downstream side, and the end result is with that limited focus, problems are not being fixed, like the inventory.You're going to have to move up the supply chain.Because the reality is the supply chain is complex. I’ll use the example of the Mississippi River, United States —one long river from Minnesota all of the way down to New Orleans.But in reality the Mississippi is made up of 700 streams and rivers.That's how the supply chain is.It has that kind of complexity and that kind of branching out and reaching out.That's where you're going to move your supply chain —up.

 

If you really want to take control of the inventory problem and the time problem of delivering faster and faster and faster without being buried in inventory.We're looking at things like, you've got to compress time. You're going to have to take inventory to inventory velocity.Inventory velocity squared.It's going be faster and faster and faster, and the secret sauce to doing to the time compression and the inventory velocity is extending the supply chain upstream.

Tied with all that would be integration — advanced integration of the process and the technologies to do it.But mainly the key thing, keeping moving it upstream.Putting your supply chain into your suppliers.Compressing that time...go ahead.

 

Do you have any recommendations, then, for organizations that want to move into a new supply chain?How can they get started?

 

The main thing is to recognize the reality of the supply chain duality, the two supply chains.Let's start saying what do I do.Their doing a lot like I say on the downstream side.They've got to look now at the upstream side.That's the area that's ripe for improvement.That’s the area to deliver all of the downstream requirements they need. So that's the question.Sit down and instead of saying to my suppliers and stopping it, you've got to go beyond that.Think of it like this, what I'm saying about moving upstream, it's like a defacto vertical integration.So you’ve got take your supply chain and move it up.Upstream.It doesn't stop at the supplier.

 

Do you have any examples of success that you've seen with this new change?

 

No, I haven't with that part.No, because I hear conferences and everything else and articles and it's the same old, same old.They're dealing with realities of new fulfillment centers and things like that, but they still struggle with the inventory, because they still talk about suppliers.They don't talk about their supply chain.It hasn't reached the point of making the change.

 

Thanks, Tom, and how can people get in touch with you to learn more?

 

Well, the easy way is email.Email is tomc@LTDmgmt.com.

 


About Tom Craig

 

 

 

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Tom Craig

 

Leading global logistics/supply chain management consultant who develops and implements solutions that work/ LTD Management

 

LinkedIn Profile

I interviewed Jon Kirkegaard who discussed The Untapped Potential of Supply Chain Solutions.

 

 

 

 

 

Can you first provide a brief background of yourself?

 

Sure, Dustin.First, a quick background of DCRA, Inc.We're a firm founded in 2000 focused on strategic supply chain solutions, including patented sales and operations planning technology in real time.  Sales and operations planning as well as very discrete and very pragmatic consulting methodologies to create real economic value-add and ROI from applying supply chain concepts to broader business success.  My background personally is kind of a lineage of starting from engineering school and mechanical and manufacturing engineering and spending a few years in industry supply chain work, migrating to Booz Allen and doing strategy and consulting, after getting a master's degree in finance.

 

Finding supply chain approaches is a great way to drive value-add. Traditional consulting would get bogged down in politics. Our approach basically that revolves around finding ways to see where real financial flows take place.  I started DCRA to focus on real solutions, not just technology and not just management consulting,kind of the best of both. Recently in the last few years, we've created an operating division that applies our own solutions to remanufacturing classic cars and classic car parts and shipping them, building to order all over the world.

 

Can you talk about the state of supply chain solutions technology and compare that versus what is possible?

 

Thanks, that's a great question, and it's one that I think about all of the time, and to quite honestly I guess I have real high expectations of what can be accomplished using a great supply chain strategy that really drives and runs adjacent to or even in front business strategy, in a way.  I've personally been pretty disappointed since 2000, 2001, that the application of technology hasn't really focused on the root opportunity of flowing inventory, building more things to order, of mass customization of product, creating jobs.  It seems like it's been stuck in silos of ERP type of dedicated technology, and quite honestly, just too much of a genericization of the term supply chain.  It almost doesn't mean anything more.

 

I tend to focus more on sales and operations planning, and can I make what I sell?  Can I sell what I make?  And creating the real balance of flow of goods and minimum consumption of working capital and high cash flow.  So speaking of supply chain in terms of real financial gains, not functional —  Can I store more things in a warehouse? Can I take orders across multiple systems?  But really, looking at supply chain strategy as a way to sell more with less exposure, less risk and less capital.

 

Can you elaborate on what you mean by inventory?

 

The flow of inventory, the measurement of inventory, both on hand  inventory and other people's inventory and what I call future inventory, mass production schedules and to be produced inventory and goods, I think really tells the story of the health of a business and the effectiveness of a business far better, far earlier, than financials. It is solely underused in designing a business, measuring of businesses...and I would love to see it more exploited.

 

Therefore, supply chain solutions that focus on as such, which I think that the best example of that is sales and operations planning which is trying to look at current inventory in transit, other people's inventory, mass production schedules and then demand and how show you shape demand based on lead time supply.  Lead time and price, I think, is really the healthiest strategy that companies can take on.

 

It's not a software solution, which is I think is where people get confused.  It's really a solution that uses all sorts of enabling technologies to cut the cycle time and improve it.  But to make my point about inventory as clear as I can, I had a couple interesting insights over the decades, trying to solve clients’ problems.  Starting with a professor in engineering school who was one of the leading work methods experts around the world and he came into class one day, and said, "Gentlemen and ladies, you're going to get thrown into a problem as young professionals.You're not going to know where to start.  Start with the inventory,” because it's going to tell you what's happening in truth beyond what is said, what is tribal knowledge, and it's going to get to the truth of what's really going on whether it's a plant or whatever.

 

Then along comes my work and Booz Allen strategy and supply chain. Supply chain is really looking at flows of inventory across enterprises and how its consumed and how it’s made. The measurement of that is really what drives truth and value much better than gap financials, IFRS financials, or even cost accounting type financials.  Another example of that is when I was at Booz Allen I worked a lot with Manugistics on other days and was one of references to the public, and I spent some time with Bill Gibson talking late at night time, implementations and asked him what time what inspired him as far as Manugistics, and he said he'd seen a lot of distortion of financials in companies, but what he found was that it was really hard if not impossible to distort the measurement of inventory, and therefore if you focus on where inventory you could really get to the heart of the problem and solve things.

 

So now we flash forward to 2016 and in reference back to your first question on what is my perspective on the state supply chain technology and supply chain solutions...I'm personally very disappointed because the technology leaders, the business leaders, the customers asking for what they need haven't really driven out what I think they really should be asking for, which is how to make inventory transparent no matter where it sits.  Because today, inventory sits across enterprises more like enterprises, more like if we were going to book an airline flight to London tomorrow.

 

When you made a phone call on the internet, it looked at what inventory levels were last year this time and you should be able to show up and get a seat on the flight. The way airline systems really work is they have peering asynchronous systems that look like synchronous real time systems that tell you up to the second of what availability is and the system's price inventory, generally higher and higher as less of it's available.

 

In today's world, whether you're selling auto parts or you're distributing furniture or your retail goods or you're a chemical plant with polystyrene and rail cars, there's really no transparency of inventory between enterprises.  There's some latent ways that shared the EDI, there are some efforts to share inventory, but the lack of that inventory being available to examine on a pricing model, on available to promise perspective is really sad.

 

Compound that with, there's very little sharing of what I'd call future inventory or mass production schedules, so in short to answer your question, I think the future of inventory and supply chain solutions will be to make that inventory widely available at different levels of security based on who you are and what's your relationship with the enterprise.And one way that will happen is through pricing, whereas potentially for many goods pricing will be lower if you can plan ahead.  So if I can plan six months ahead that I need a new mattress for my house, I get a better price than if I walk in to the room store tomorrow and buy one off the shelf.

 

That makes total sense, if you're a manufacturer and you've ever tried to plan production and slot assets and capacity and plan for workforces in the future.  So those are some snippets in what I think should happen, and quite honestly I'm sure it will happen, I've been doing this long enough what will happen but never good enough to know when the market will be smart enough to move aggressively with their own interests.

 

What about assemblies?  Can you talk about what you mean by assemblies?

 

Well, I have done some philanthropic work with the State of Texas and the department of commerce and some other workforce boards and being asked to use supply chain knowledge and design to help create jobs and US competitiveness and North American competitiveness. I guess my answer will revolve around a tactical application of my last answers to the questions, the last answer.  And this question is I think there could be a lot to gain by many products and many firms adopting what I call assembly coordination strategies in their supply chain.  Whether it's a postponed manufacturing concept or it's just importing key components of a finished good and then assembling to order or assembling to various markets.

 

I think there's a lot of wins for everybody involved.  There are wins for the company because it dramatically reduces working capital and greatly increase the varieties and different customizations of the product.  There are wins for government because it can create protection of intellectual property and reduce stress on courts and size of transportation networks.  But what I find most opportunistic is it could be extremely beneficial for workforces, where when goods are sent off via design to be made in far off lands, there's a middle ground of making it, assembling it, that gets lost, which is a big feedback loop to design, and it creates lots of jobs.

 

There are lots of opportunities for people who can start with value-add assembly manufacturing jobs that can move into more important roles as they apply themselves, but if you lose that middle ground you lose the opportunity for those that they don't get the privilege of getting an engineering degree or some advanced degree to participate in manufacturing in a meaningful way, and therefore the GDP.

 

So I think my answer is applying the sales and operations planning concept, having a component of your fulfillment strategy where you don't try to predict how many DSL modems or cable modems can be made in red versus blue, but you keep the components and then change the case based on the order.  As one example, we did that kind of strategy for a big client, can be very simple in concept, but have profound impacts on financials, on the workforce, on a lot of the topics that we hear in the news today.  I think it's a real applied concept that I think can do a lot for just about any industry.  Even process industries generally will put their goods in a package, and that packaging approach or that packaging step generally is the constraint, the Herbie, if you've read the book "The Goal," that bottlenecks a lot of their manufacturing flow.  Go ahead.

 

What does the future hold?

 

Well I think I touched on a bit of that in the last few questions, but I'll come back and summarize it and try to tell what I try to tell you and see if it makes sense.  I think the future is somewhere along the line, supply chain technology will be as effective as Google is for doing a search.  We did this 10, 12 years ago.  We patented real time cells and operations planning that works much like Google to go out and find pools of inventory, pools of production...order similarities and aggregate that information in a less precise but more accurate way, and then as you become more and more communicative and common X amount or JSPs or whatever your communication form is with your network it becomes more and more precise.

 

It doesn't take a genius to say there's got to be something that's going to be a breakthrough in multi-enterprise technology, which works more like how Google works and less like looking down rifle barrels of discrete single enterprise information.  Who knows what happens first?  Is it the application that uses that information that drives the sharing of the data?Or is it the sharing of the data that drives the applications?  We'll personally believe and put our money where our mouth was.  2003, 2004 to 2008 we invested heavily in these patents and applications that make the data more transparent and visible. And we quite honestly thought by now most companies would have their supply chain execution [inaudible 00:12:00] that would be available for themselves, and they can turn on and off firewalls to share with their trading partners and share what they want to share with the extended enterprise to make sales happen.  We call this application order commit.

 

In our experience in trying to help clients turn around businesses and improve businesses, we found that there's always resistance.  The least resistance is when you can say it can serve the customer better.  You can say to leadership that you will help create the incremental order, which creates incremental ROA on the assets that are already spent.  So, I believe that that is the future.

 

I'm in almost disbelief that in the last ten years we haven't seen the explosion of the application of these concepts to multi-enterprise manufacturing, GDP inventory, mass customization and building of things.  We've seen an explosion of this kind of technology to sharing pet videos on social networks, and I can almost assure you that the impact on GDP of applying this thinking to supply chain is the most impactful thing to GDP that could happen, and it's going to happen.  Why it hasn't happened, you could probably spend hours debating who's interest it's been to stay in the status...I personally believe that gap accounting and IFRS accounting are as much of the problem as the solution.

 

There's so much pressure for financial control that systems developers build systems around control, not around revenue and flow of inventory and serving the customer.But there are phenomenal exceptions, and so I think future can be seen and really if you dig down deep of the market leaders in probably every industry from Amazon to Wal-Mart to how Coach handbags to how Dell Computers are sold...I think you'll see in almost every SIC code that the leaders in those industries have created systems that work out front of the gap accounting and the ERP systems to drive behavior and culture around these concepts.

 

All of the varying degrees and all are still just marginally better than their competitors, but just a small margin — two to three percent better at this than your competitors— can mean enormous gains in profitability and market share.  I think if you study the facts today, I think you find that the future is here.  The future is being practiced, but it's still, I think, held as a close competitive trade secret by these firms.  That's a lot of what our firm has been and focused on, is bringing those concepts down to small and medium businesses and businesses of all sizes because, quite honestly, we believe that the leverage of these concepts is actually easier as a small business than a larger business.

 

About Jon Kirkegaard

 

 

 

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Jon Kirkegaard

 

President founder DCRA Inc.

Supply Chain Solutions & Select Classics DCRA's Automotive Manufacturing Division

 

LinkedIn Profile

I interviewed Charles Dominick who discussed Procurement Talent Management.

 

 

 

Can you first provide a brief background of yourself?

 

Sure, Dustin.It's great to speak with you today as well, and thank you very much for this opportunity.Background of myself, for the past 16 years, I have been leading the Next Level Purchasing Association in providing training and certification to procurement departments and procurement professionals throughout the world.

 

Can you talk about what is procurement talent management about?

 

Sure, I mean, to concise about it, procurement talent management is recruiting, training, and retaining good folks to conduct procurement activities for an organization.

 

How is it done effectively?

 

Well, that is probably an eight-hour conversation in itself, but I'll try to be as concise as possible.And really when I talk about doing procurement talent management well, I like to break it down into those three groups because they're really three different focus areas that require unique approaches.So, first, with recruiting.Recently as we've been evaluating procurement talent management, we've seen kind of a radical new approach emerge.So, there has always been traditional approach to recruiting, where you're looking for procurement professionals who have experience in the industry of your organization, that they had procurement experience, and they had experience buying the same products and services that they would be buying in the hiring company.And that approach, obviously, had its advantages.If someone is loyal to an industry, that's fantastic.You have good chance of having them be excited about the job and staying in the position for a long period of time.There's less risk of mistake if someone has procurement experience.It's one of those fields where you often learn as you go.

 

There's lots of land mines and so forth that you can run into, so if someone is experienced in procurement, chances are they'll know how to avoid those landmines.And then there's a shorter amount of time to being independent if they've already purchased a category.They don't need to learn who the supply base is.They don't need to learn what countries the suppliers are, the technical differences and stuff.They already know that.

 

So, the traditional approach was very convenient, but also, in the fast paced business world of today we're looking to our talent to really break through with innovations and new ideas.And the traditional approach didn't always lend itself to that, and combine that with the fact that millennials are entering the workforce, makes this a very interesting time for change.So the radical approach to recruiting procurement talent is where instead of just looking for those characteristics that I described in the traditional approach, now hiring managers putting more emphasis on finding people who have personalities that fit the corporate culture.

 

People that have influential charisma, since, in many cases, procurement is a center for transformation, and an organization that looks to build consensus, and that they have intellectual potential.You want people, even if they've never had procurement experience, to be able to learn procurement and learn procurement quickly.That's a radical approach that we've seen taken.

 

But really what I feel that...to do things right you need kind of a hybrid approach between the traditional and the new, radical approach.They're not mutually exclusive.You can find people with the experience you need, with these kind of soft skills and characteristics in the millennial generation that you have.So that's the recruiting piece.In terms of training piece, a key to that is to really have a plan, and we see some organizations struggle with this because in the years past, procurement training was thought of as one day of showing someone how to create a purchase order in the computer system.

 

Procurement today is much more complex.There's a lot more competencies that someone has to master in order to achieve success.So we recommend having a plan identifying what the competencies that are needed are, identifying what the competencies that the talent has are, and determining a way to fill those gaps.And at the Next Level Purchasing Association, we do provide some tools to help identify those things.

 

And then finally, the retention model.Basically, as the millennial generation comes in, we're seeing and predicting a very mobile workforce.Folks who don't have necessarily a lot of loyalty to their companies, but people who want to move forward and move forward quickly.A procurement leader has to focus on things like having a compatible culture, or building a compatible culture, that kind of meets the needs of the organization and meets the needs of the talent.A job rotation program is very helpful.Today's millennial generation, they want to feel like they're always advancing, always on the move and maybe you can't promote them to chief procurement officer within a year, but a job rotation keeps them from getting bored in buying the same thing, working with people.

 

You know, you've got to have a balanced management style.Micromanagement, while in some cases may be necessary here and there, is not a way of doing business 100% of the time.So you've got to find the right balance between empowering management and knowing when that hands on management is required.You also have to focus on helping employees reach their potential.It's not just about getting the organization’s goals met.It's about getting the organization’s goals met by retaining the people and having that continuity of talent so that you can help the employees reach their potential while they're helping new organization reach their potential.

 

And then just praise is certainly important. People want more from their jobs today than just a paycheck.They want recognition, they want to be able to feel that they're leaving their company at the end of the day feeling good about what they've done and that can be anything from knowing that they've helped their companies to be socially responsible to just being recognized for doing a good job.I know that's a mouthful and a half but those are some keys to really achieving excellence in procurement talent management in 2016 and beyond.

 

Where have you seen some success?

 

Well, I don't know I can mention any of our clients' names here, but what I tend to see is a lot of success happening in the mid-market.Small companies obviously don’t have a lot of resources to dedicate to doing talent management in a robust way.And while huge companies, fortune 100 companies, do have those resources, often bringing about change in those organizations is like steering a tanker.It's a very slow process and there's a lot of political hurdles to overcome.Where we see people having the most success at making transformations, and incorporating procurement talent management is a big part of that, is those mid-market companies.Those companies between half a million, or I'm sorry, half a billion and three billion in annual revenue.These organizations have resources to do things right, and they're not so big that it takes an act of congress to make change.So that's we're seeing a lot of good things happening in terms of procurement talent management.

 


About Charles Dominick

 

 

 

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Charles Dominick

Founder, President & Chief Procurement Officer at Next Level Purchasing, Inc.

LinkedIn Profile

I interviewed Bonnie Nixon who discussed Supply Chain Sustainability.

 

 

 

 

 

 

It's great to speak with you today, Bonnie. Can you first provide a brief background of yourself?

 

 

Sure. Nice to speak with you as well, Dustin. Thanks for having me. Sure. I started working on environmental things very early on in my career. I actually went to Penn State during Three Mile Island, and that got me interested in environmental things.And then I worked on the Boston Harbor Clearnup Project. Soon after I moved to San Francisco and started Environmental Consultancy, communications and planning consultancy, where I worked on a lot of large-scale water, wastewater, transportation, hazardous waste, power, and energy types of projects.

 

It was at point I was tapped on the shoulder to help Hewlett Packard develop their supply chain, social and environmental responsibility program from the outset. And this dates to about 1997, '98. If you recall, the Nike incident that happened in ‘96 where they were attacked from children or child labor and sweatshop labor in some of their factories.And so that inspired the vice president that I was working for at Hewlett Packard to think about a program as they were beginning to globalize and move into Mexico and China with their manufacturing. And he wanted to make sure that the standards were not only in place and the tools were there for the partners and the suppliers. But he also wanted to make sure that they were enforced and that, more importantly, that we looked at our suppliers as partners in much the same way —when you go back to TQM, Total Quality Management, or ISO, or LEAN, or Six Sigma — when you go into the supply chains, and you really invest in a partnership.

 

And I think from the outset, we took an approach where we wanted to make sure that sustainability was something that they understood what it entailed — that it looked at water, wastewater, energy from the environmental perspective, that it looked at health and safety, and that it looked at human rights and labor practices, and then also ethical operations and ethical practices.And so that's all of the topics that are embedded within a good sustainability program.

 

And when you're proliferating it throughout a very large and very complex supply chain, each piece was $50 billion that they were purchasing of product around the world, then it meant that we were really looking at how these things differed among other cultures and how we could support and invest in these partners.

 

So, that was how I came into this field. And I did that for the better part of a decade when I then become the head of global sustainability and really helped the company become number one in sustainability and look at not just how they were making their products, but what materials were being used in their products, and how to start looking at things like cradle to cradle and recycling and getting the toxics and things like that out of plastics, and looking at the chemical makeup of things.

 

So, that's what I did during the period of time I was at HP. I was then brought into the Sustainability Consortium, which was a large initiative started by Wal-Mart, where they brought in their largest suppliers around the world, and they were looking at life cycle assessments of all of the product categories that they held within their stores.

 

So, if you look at someone like a Wal-Mart, they have a million SKUs. And Amazon has a billion SKUs. So, but even of that million SKUs, you've probably got — I don't know — somewhere on the order of seven, eight, nine hundred product categories, different categories. And what the challenge that we faced was, how can we provide the buyers, the procurement staff, with some sort of analysis on what conversations to have with the supply chain. Those included targets, metrics, and goals for how to minimize the environmental footprint of different product categories.

 

And also a social footprint to be looking at things [inaudible 00:05:23] minerals and the impacts that can have in places like the Democratic Republic of the Congo in Africa. And so, trace ability and supply chain social responsibility are also equally important.

 

I did that project for about a year, and then I joined Matte l where I worked for a period of time on their agreements with Rainforest Alliance on getting [inaudible 00:05:57] into their wood and paper products and all their packaging and looking at getting PVC out of their packaging and different chemicals.

 

And so, next I'll be joining a company called Environmental Resources Management, ERM, which is a very large company through the world. They have about 160 offices in 40 countries. And they do environmental audits and really they are the leading consultancy in sustainability. So, I am excited to join a team of more than 5,000 people who really look at scaling this type of work all over the world.

 

What are the biggest challenges that you face when you are implementing supply chain sustainability across such large organizations?

 

Well, across the large organizations, I mean, obviously, there's always this conversation on what is this business case, and can we include productivity. Can we save money? Can we generate revenues? Can we reduce the turnover in our factories that are manufacturing things?

 

So, again, the business people are looking for those real metrics via [inaudible 00:07:25]. I think that when you're actually out in many of these places around the world and you have such a large global organization, you have to be sensitive to the different cultures, the politics, the norms that are in these places. And one of the, I think, biggest challenges is often getting to the root cause. Like, what truly is the reason why a particular pattern may exist in a region or in a factory?And how do we spend the time and do the kind of training that we need to do to make real shifts happen?

 

So, I think that really is number one — really proving and demonstrating out that business case, and number two, it's focusing on the root cause and recognizing there are no silver bullets to that. You've got to do the work. You've got to go through an entire engagement process, which includes introduction and standards and risk assessments and auditing and questionnaires and training and communications and reporting. All of those elements exist and are a part of a good solid, rigorous program. And there are no shortcuts or silver bullets. And for sure, you can bring partners in who can design more efficient software tools. And I'm excited about what some of the future holds as we employ multi-media and the use of technology and gamification and [inaudible 00:09:26] activities that are done online.

 

I think there's tremendous opportunities for the future. Because so many of the people working throughout the supply chain in all the countries throughout the world are younger, younger generations, and guess what? They're all online, communicating with one another through their social media platforms and the use of games.

 

And so, we need to learn to employ those tools and use them for the benefit of the planet — not only to protect the voiceless stakeholders, such as the animals and plants, but also the resources that are affected by all of the various raw material industries, like extractives and the fishing and the deforestation, the timber. So, how do we bring the reality to those people on what's actually happening and help them become part of the solution, help them.

 

I mean, if you think about a game, what does a game do?It's about problem solving. You've got this challenge you've got to overcome. So, let's make this a big game. How do we solve world hunger? How do we reduce child labor? How do we improve education? How do we stop overfishing our oceans? How do we deal with plastics in our oceans? How do we plant more trees? I think that you're going to see tremendous problem-solving ability is done increasingly online.

 

Have you used this strategy in the part, or do you have any examples of success with using social media to help motivate people to...?

 

Yeah. I think social media is a very powerful tool. I recently saw that the director of marketing, the chief marketing officer speak from REI, and it was astounding. He was talking about them having gone back to their roots to look at who they were as a company and how they evolved. Originally they were a co-op of just a few people who needed outdoor gear — you know, they were hammering nails into the bottom of their shoes to get traction of ice and making their own sleeping bags and things. And so they got together to create this outdoor industry and the equipment that they needed to be outdoors.

 

And now they have really been examing how outdoors is such an important part of the value system, and if they don't focus on sustainability, we won't have the outdoors to enjoy. And so that led them to a campaign called Opt Outside, where they shut the doors of all of their stores on Black Friday, which is the day after Thanksgiving, supposedly the biggest shopping day of the year. And that was a big risk. And obviously for... You know, their employees had never had that day off, and so they did it partially for that, to let their employees spend the day with family. And then they said to all of their customers and people out there, "Hey, instead of going shopping, go be your family on the day after Thanksgiving. You're already with them on Thanksgiving. Go outside for a hike. Go Opt Outside."

 

Well, the director of marketing said that the impression and the coverage that they got was similar to as if they were on the front page of the New York Times for eight years every day. So, if that's not telling, I don't know what else is. There's no party that could pay for that kind of coverage, and that's just conversations, impressions happening in social media.

 

So, I think social media is an amazing tool as well as gamification. What I've been doing is looking at all the games that are out there. And we're trying to have a social media environmental message. In fact, I spent a couple of days playing a game which really dealt with the Middle East crisis and put you in a place where you started to think about if I was an Israeli leader or the Palestinian leader, or a representative from the UN, I had five different avenues, directions I had to go given a particular scenario — maybe a bomb went off in a marketplace. What would I do? And how would I address that? And what decisions would I make? Would I use diplomatic means? Would I use military means?

 

And I played the game for quite some time, and I came away from it with what I believe was a very realistic perspective on how challenging it is to make the right decisions, that you always have tradeoffs. And some stakeholder group is likely to be unhappy. We can't be very Pollyanna-ish and always think there's going to be a win-win, that there are tradeoffs. So, that's the kind of thing that I think.

 

Imagine using virtual reality and bringing people into the rainforest, or bringing them into a mine in the Congo, and having them actually experience it and feel it, and feel what it's like to be there, and how what the connection is between the product they're buying — that phone or that car or that laptop with a rechargeable battery — it that comes from that region of the world. Just to know that connection. I believe that's going to be increasingly important.

 

And I'm living right now in Silicon Beach, and I worked for the better part of 15 years in Silicon Valley, and so it's nice to see the intersection. What you've gotten in Silicon Beach is the technology combined with the media industry that really knows — and the entertainment industry — know about storytelling, and they know about narrative and how to inspire and engage and get people to particular and how to activate people. And so, I think we're coming into some very exciting times. I'm very optimistic and hopeful that together we're going to solve a lot of the challenges that we're facing environmentally and socially on the planet.

 

Thank you, Bonnie, for sharing today on supply chain sustainability.

 

Thank you very much. I appreciate it.

 

 

About Bonnie Nixon

 

 

 

 

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Bonnie Nixon

 

Sustainability Strategy | Environmental | Human Rights | Stakeholder Management | Supply Chain | Ethical Sourcing | CSR

 

LinkedIn Profile

I interviewed Conrad Leiva who discussed Smart Manufacturing.

 

 

 

 

 

 

Conrad leads the Smart Manufacturing working group and is a board member of MESA, and he has also won MESA's outstanding contributor award. Conrad, can you first provide a brief background of yourself?

 

My name is Conrad Leiva, and I am VP of Product Strategy and Alliances at iBASEt. I am also aInternational Board member at MESA International and chair of the Smart Manufacturing Working Group. I have had a career in aerospace and defense, so I've been mostly workingon the shop floors with airplanes and big complex devices. Lately I've been focused on manufacturing ntelligenceand the integration of engineering and business systems with their plant floor.

 

What is Smart Manufacturing?

 

Well, that has really been the mission of the Smart Manufacturing Working Group. The initial goal was to define Smart Manufacturing—to explain what's going on in the industry with smart manufacturing. So, the timing for your question is great.

 

We came up with a one sentence definition for Smart Manufacturing. We define it as the intelligent, real time orchestration and optimization of business, physical, and digital processes — not just within our factories, but also across the entire manufacturing value chain.

 

There are some key ingredients in that definition. One is “intelligent” because we're moving beyond those passive systems that just collected the data and reported on the data. We want proactive systems that are managing and triggering behavior and automating processes on the shop floor. We want “orchestration” because we're not just talking about synchronizing machines. We're really talking about business processes. We're talking about the digital information that goes along with the physical product, and also the business processes that run the factory — all the way from engineering and design to the supply chain to get the parts you need and also run the shop floor. Even into the service lifecycle of some products that have a long service lifecycle.

 

How is Smart Manufacturing used?

 

Well, Smart Manufacturing is not a technology it is really a journey and endeavor. I equate it in some ways with LEAN manufacturing. It's a set of goals that we have set for industry with ways to connect and elevate connectivity and orchestration in the supply chain. So, you are going to see many different flavors of smart manufacturing for different kinds of industries and products. But at the end of the day, it's really about enabling new manufacturing business models. Not only manufacturing as a core competency, which a lot of companies have realized that is needed, and they're bringing back manufacturing and insourcing. They realize that it is a critical core competency for many companies.

 

But also, enabling new models, going beyond just selling a product and forgetting about it.We're really moving into an era of product-as-a-service, where people are more interested in leasing than owning, and manufacturers are more willing to sell the usage of their product and a long service lifecycle of that product as opposed to just putting it on the shelf.

 

And a lot more custom-made products, that's sometimes referred to as mass-customization, that we're building to order, building to the need of the customer and not just building a generic product that is going to go on the shelf.

 

Where have you seen success in implementing Smart Manufacturing?

 

There are several building blocks. The success so far is in putting the building blocks in place. We're going to see this as a 10 or 20-year journey to achieve the goals we have set. The MESA organization (www.mesa.org) has a lot of resources in this area for people that want to drill down further into it.

 

But in general, the building blocks are the Industrial Internet of Things (IIoT) and smarter machines with more digital output. Going beyond the old automation, that was very proprietary, and using more interfaces that are standards based so that multiple vendor solutions can be connected and some of the machine information can be standardized. Two-way interfaces, not just the machine putting out information, but we can send information for the machine back to the machine to adjust itself. We've seen some success in there with the use of OPC standards.

 

We've seen some success in the Digital Thread. There's still a lot of work ahead, but the digital thread between engineering, the supply chain, and manufacturing. Taking that engineering product definition and tying that to how the manufacturing processes definition. Leveraging the 3D models into illustrations, leveraging the product definition and PMI and the CAD models into inspection requirements so that we can put change management practices in place that automate and facilitate a lot of the changed management processes.

 

We've seen success in the application of Advanced Analytics that are starting to analyze things like warranty information, things that are not structured data, but unstructured data like customer feedback, issues, reports, and looking for patterns of where products could be improved based on this accumulated feedback from multiple sources.

 

We've also seen a lot of progress and integration of engineering, manufacturing in the ERP systems. Those are just some of the dimensions that we've seen progress. So, it's becoming more commonplace that the leaders are putting into place a lot of these integrations and the integrations are more standards based. And we're really excited about this progress.

 

What can companies be doing to get closer to realizing Smart Manufacturing?

 

We recommend that companies start taking steps — that they don't just sit passively on the sidelines, that they get involved, that they start reviewing their business structure and their future market strategies and see if they want to adopt some of these new business models, like product as a service, mass customization. How are those going to impact their future business?

 

Then establish evolution milestones in that journey.What kind of system changes, connectivity changes, are going to be needed to connect their whole value chain that provides that new service to the customer?

 

Start building those relationships with their partners, with their suppliers, and start nurturing a new culture of collaboration. You know it's a different way to view these relations—not just as suppliers, but view your suppliers as partners. Start looking at the skills needed for that flexible workforce of the future. Start building up the skills in your workforce for the people that are going to be able to install, configure, maintain this more sophisticated equipment and all the connectivity needed between the systems and equipment. And evolve that information technology infrastructure that is needed for connectivity. Promote connectivity via standards, and work with your vendors that are supporting those standards. Those are some of the things that we recommend.

 

 

 

About Conrad Leiva

 

 

 

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Conrad Leiva

 

VP Product Strategy and Alliances at iBASEt

 

LinkedIn Profile

I interviewed Yann Teste who discussed Why Supplier Relationship Management is Essential to Your Business.

 

 

 

 

 

 

...who's going to talk about Why Supplier Relationship Management is Essential to Your Business. It's great to speak to you today, Yann.

 

Hello, Dustin.

 

Can you please first provide a brief background yourself?

 

Yes, thanks for inviting me for the speech today. Good morning, afternoon, or evening all, My name is Yann Teste, I am French, I hold two Master’s degrees, one in engineering and another one in Finance and Business Administration. I am working for Volvo Construction Equipment, a group which is a branch of the Volvo AB group. We manufacture and sell about $8 billion of construction vehicles per year.

 

I am located in the global headquartersin Brussels, Belgium and work as the Global Director of Purchasing and Supplier management for the powertrain and electromobility commodity.

 

I have a bit more than 18 years of purchasing experience for two different companies including Volvo. Among them are 16 years of leading and building purchasing teams including seven years in China as the Asia purchasing leader, and the last five years in Belgium as a global purchasing leader.

 

In terms of responsibilities that I have had in the last years have been including logistics, supplier quality development, international purchasing office management, managing international purchasing professionals and suppliers, but also starting up a company in China and being engaged in a joint venture due diligence and post-merger integration in China.

 

My current scope that I have is managing the purchasing strategy and the supply of [inaudible 00:01:52] which are engines, axles, transmissions, wheels, tires, and also gears, castings, or truck chains for excavators. And this is representing 600 suppliers, roughly $1 billion spent with a team of 40 people.

 

Thank you. And regarding supplier relationships. What would you like to share today about this topic?

 

That's the topic I have the pleasure to share with you today, is supplier relationship and supplier relationship management, as it counts. If we go into [inaudible 00:02:36] and internet, and you look at what is supplier relationship, supplier relationship describes all interactions with third party organizations that supply goods and/or services to an organization, interactions.

 

So what is supplier relationship management, also called SRM? Well this is the discipline of strategically planning for and managing these interactions in order to maximize their values, creating closer and more collaborative relationships with key suppliers in order to uncover and realize new value, and reduce risk of failure.

 

This is the definition that I think explains very well supplier relationship and supplier relationship meeting.And that's what I want to talk to you about.

 

So, why does supplier relationship management count?

 

Well, if you look at the business climate today, I think we can summarize it as follows. The speed of development is faster. It's increasingly faster. The business cycles are shorter and less predictable. The broad life cycles are the same. And global growth is slower. Investment capabilities are lower. Technical knowledge excellence is getting more and more specialized. You have more and more purchase components in the industry of for footprints of the businesses. And manufacturing footprints are becoming global. The customers are global. And finally, there is the internet of things that [inaudible 00:04:35] business in the industry of business or business to customers or business to business. And thinking about how are we going invest this and take value of this.

 

If you describe the business climate like this — the [inaudible 00:04:51] of companies are evolving and trying to [inaudible 00:04:56]. How can we manage successfully such a climate? Actually [inaudible 00:05:06] and [inaudible 00:05:07] is the team of business partners that we can call as our extended enterprise with, actually the stakeholders and people, all of your company and extended enterprise. This is actually your supplier base and your teams through a sound, sustainable and performing relationship.

 

This is the eco system that we are in. And when we say "we," this is our company and the companies that are working together with us, our supplier base.

 

And you know that to be successful in such a climate, you need to pay attention to the way this company [inaudible 00:05:50]. This is about managing the interactions.

 

So, what could be the qualitative relationship between your suppliers and your company, as a customer of choice?

 

First you should have access to innovation — faster and [inaudible 00:06:14]. And you know, innovation can be in several areas, can be in supply chain, can be servicing, can be in technology of tools, can be also in market intelligence or in market approaches or market penetrations.

 

It could also be tailored technical solutions for a functional purpose, or exclusivities on technical solutions. It could be also design to cost and design to manufacturing. And it can be also on business stability or finally lower interests. And this is where, actually, the best supplier relationship is, can probably bring you what we call and what we're all searching for, a competitive foundation.

 

Is there anything more you wanted to add about how supplier relationships should be managed?

 

Yes. I can share. I think it's for me, the first question is quite [inaudible 00:07:29]. It's basic. Do you and your management see the potential value in supplier relationship meeting? It [inaudible 00:07:36] everything.And if the answer is no, then I think it's worth investigating why. Is it actually relevant for your business? Do you and your management see some gaps towards your competition in some areas.What about [inaudible 00:07:57]? Do you think that you depend significantly on your supplier base? Do you see any potential here? That's the start.

 

If the answer is yes, supplier relationship management counts, it's seen by management to be something useful to be better than the competition. Then do you have the proper structure and teams to manage it?

 

Usually there's specific teams set up to manage the supplier relationship and it should have a specific focus and also a specific set of skills — skills related to purchasing, skills [inaudible 00:08:40] leadership skills.

 

Usually we call them category teams or sourcing teams, commodity teams, strategic sourcing teams, as you wish. And they focus on the sourcing strategy, supplier selection, supplier overall QDC and innovation performance. They manage the contractual [inaudible 00:08:40], did negotiation. They are also in charge, most of the time, of [inaudible 00:09:08], coordinating, and leading cost reduction, idea generations of projects, and of course, what is the most important, also, is to manage the interactions between the suppliers and your own business [inaudible 00:09:25] businesses. [inaudible00:09:25], marketing is marketing. Project management, purchasing, [inaudible 00:09:35].

 

At Volvo, these teams are managed, by similar functions as [inaudible 00:09:40], which is a global [inaudible 00:09:44] organization. In my case, possibly a strong alignment [inaudible 00:09:51] on the different technologies that we manage.

 

And then the second question is do you have the proper tools and methods to manage the supplier relationship. At Volvo, once again, we use what we call... It's a mix of a performance grid and a relationship grid, so in maps out where you... On the x-axis, you have the performance, which is basically usually QDC performance, based on very factual [inaudible 00:10:29]. Consequently, [inaudible 00:10:34].But we have been putting on the y-axis also a relationship measure that is transparency of [inaudible 00:10:49]...

 

Okay, and then my last question is can you share an example of supplier relationship management that has been successful?

 

When I took over this position, the first [inaudible 00:11:53] to fix several key supplier relationship issues. Those suppliers were smaller ones. Some were actually much bigger than our own business. With the background I had, the values that we have in the group, that was a [inaudible 00:12:15]. We needed to find a solution in order to create business [inaudible 00:12:20] for us, when we [inaudible 00:12:22] depend so much on some of our suppliers.

 

And[inaudible 00:12:26] supplier, actually, the relationship was, I would say, [inaudible 00:12:31] around. [inaudible00:12:37]

 

This was a strategic relationship that was based on [inaudible 00:12:46] and [inaudible 00:12:49] that was actually a [inaudible 00:12:52]. So, the first decision that we took is [inaudible 00:13:01] meetings. The alignment meeting and put everything on the table. [inaudible00:13:07], engagement [inaudible 00:13:11]. And then go through the different alignment that we have. [inaudible00:13:22]...

 

I don't know if it is the same for you, but when [inaudible 00:13:43] to each other, it doesn't [inaudible 00:13:47] a very positive reason. So, we [inaudible 00:13:50] supplier and customer the same.And what we [inaudible 00:13:56] by putting on the table all those issues, [inaudible 00:14:05]...

 

And this was the first time [inaudible 00:14:12] turn around [inaudible 00:14:13]. What we have been putting [inaudible 00:14:18] alignment. It started in [inaudible 00:14:26]...

 

...That we can consider a competitive advantage.

 

So, overall, I would say that thanks to really refocusing on the better relation between the [inaudible 00:15:47], we finally [inaudible 00:15:54] relationship [inaudible 00:16:02]...

 

 

About Yann Teste

 

                              

 

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Yann Teste

 

Global Director Purchasing & Supplier management, Commodity Powertrain at Volvo Construction Equipment

 

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I interviewed Matteo Casarico who discussed Product Innovation And How Start-up Companies Can Ignite Creativity.

 

 

 

 

 

 

Brief background of yourself

 

My primary field of study was in Engineering and my professional background comes from a lengthy experience working for a leading multinational FMCG company where I operated as Extended Supply Chain Senior Manager. Here I had a variety of roles ranging from ICT to E2E Supply Chain with a focus on procurement; a particular requirement was scouting the market to find products or technologies required by the marketing function where the expertise was not readily available inside the organization itself.

 

This is a relatively new form of innovation identification which is becoming more and more relevant in big companies to speed up product's time-to-market, in parallel to the traditional internal, R&D driven, product research and development.

 

Recently I decided to exit the multinational world and I am now focusing again on Innovation but from a radically different point of view I would call "Bottom-Up Innovation".

 

My experience is then focused on product innovation or product-related innovative technologies.

 

Today I focus on this side of innovation although service-related innovation may have many points in common.

 

Where bottom-up Innovation definition comes from?

 

I would not refer to this a formal ‘definition’, rather a good way to clarify the concept.

 

A big company has a large number of people who look after new ideas and new products. They rely upon massive data from the past or from other teams operating in the same, or connected, field anywhere in the world.They have access to a large amount of differentiated information regarding products already launched, or marketing data and trends elaborated by specialised companies such as Nielsen or new medical studies from Universities.

 

Ideas usually come from marketing functions, where they observe that an unmet consumer need has a good enough potential on either global, regional or local base.Once identified, this concept is then processed by R&D to get to a product, and then by Supply Chain to make it a physical object to be placed on a shelf.This is, in a simplified manner, what I call "Top-Down" Innovation.

 

Approaching the product related Start-Up companies, you look to the same world but from an opposite perspective.Ideas are generated by a small number of people who realise on his/her own that "something is missing" and start to think about how to fill this gap. If these people have the right mindset and characteristics the idea is developed up to the point in which it needs some capital to progress, and this is the very first moment in which that idea becomes somehow visible to the world.

 

There is a lot of literature about this process so I will not mention any of it, what matters is that today, somewhere, there is the solution to a problem that quite likely big companies did not yet think about or, most likely, their people did not consider having enough potential to be cared about.

 

I can tell you this a frequent ‘hidden ideas selection criteria’ in many big companies, much more selective than the "not-invented-here" syndrome, another innovation killer inside many companies.

The wonderful aspect of the bottom-up innovation is that typically the people believing in their ideas do not easily give up and strive to make it happen.

 

You may be surprised by the large number of products, marketed today by big multinationals, coming from small or mid-sized Start-ups. Many companies are regularly monitoring Start-up incubators or related events to intercept ideas fitting their vision or strategy and many start-ups are strategically looking to be acquired or integrated in big companies.

 

It is pretty rare the case of “real” Start-Up companies, typically small and not properly structured to compete on a global scale, distributing massive volumes of product. Most typically the idea or the whole company is acquired by another bigger company having the scale to fight this competition battle.

 

I should also to mention that Start-up mortality is tremendously high, statistics state about 80% of Start-ups does not live more than their 12/18 initial months.

 

Why do you think bottom-up innovation is important?

 

There are many different layers to consider.

 

Finding real needs

If you look at the number of solutions provided by Start-ups, now owned and distributed by mid or big sized companies, you realise that this idea generation mechanism is really affecting everyday’s life and usually in the high quality of life direction.

This source of ideas is totally independent from any intellectual constraint a big company may induce in its development teams, there is no hierarchy to convince, no sponsors to find. This much higher freedom is clearly opposed by the limitation of resources but it is very important to state that this process is not “against” anything; it is a pure flowering of solutions to real problems people has.

 

Opening new markets

I believe, based on my experience, that there can be no conflict between new ideas from Start-up and new ideas from big and structured companies (of course exception made by patents, IPR and similar risky elements). This bottom-up Innovation can only be an idea fertilizer proposing new products and ultimately new markets.

 

Making a difference

Single persons cannot really influence big companies processes neither from inside nor from outside. A person in a big company can contribute to make something happen, I mean something really new, only in very special and rare circumstances. Engaging a Start-up idea that intrigues your mind and your heart allows you to put your energy, and maybe some money, to nurture it to the point it becomes a real thing.

You can personally really make things happen at this scale and you may be a determinant element for this to happen. That is the key attraction for me to get involved here.

 

Having fun in what you do

Forget about getting consensus, resources, sponsors, influencing internal stakeholders. Life is not simple nor easy, you will still need budget, but you fight your own battle and you chose your battlefield. You do things you believe in and share this with few motivated people sharing your same objective. At the end of the day you have fun in what you do.

 

Increasing employment level

Robust official statistics indicate “new companies” are decisively increasing employment level, in opposition to big companies releasing people.

 

Easy funding

Letting alone the “crowdfunding” option that is growing in relevance, in Europe there are EU funding mechanisms dedicated to “Innovative Start-ups” and many local governments are providing the same. As an example in Italy there are specific laws and funds to support this sector, stimulating and easing the creation of new economical entities. I still need to understand what impact will have the recent “Brexit” decision, I can assume UK will become more marginal in this area as well in the near future while now it is a real giant in terms of newborn Start-up companies (the single biggest contributor in Europe).

 

What is your role in this?

 

You probably already guessed it from the previous part of this speech.

 

What I am starting to do, supported by a young and energetic Italian company already operating in this arena and linked with the biggest Italian incubator, is to get into the Start-up world and to support some of them in their initial stages of life, typically, the first 12/18 months where ideas needs funds by a “Business Angel” to reach a “market-ready” stage. I provide the required structure, both organizational and documental, for them to be ready to approach the people that can provide them the required capital to progress their activity. This in their very initial phases or in a more mature scale-up one.

 

I, or people like me, can also directly contribute with a financial support as in the very beginning the capital intensity is generally low, you do not need to be a millionaire to contribute to ideas you believe are valid.I also plan to join the “right” Start-up company to make myself an active element of change from the inside.I believe this is an area under continuous development with a long-term opportunity window, a true opportunity to influence our future and to be an active element of change.

 

Ultimately Start-up real product is one of the most wonderful thing mankind produces since ages: New Ideas.

 

Thank you for your time and for this opportunity.

 

 

About Matteo Casarico

 

                                  

 

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Matteo Casarico

 

Start-up Mentor & Business Angel at MOB (My Own Business)

 

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