Where should we be drawing the line between a logistics tracking app and cyber stalking? Turns out, the difference might be hard to pinpoint.
To watch the video version of this article, click here.
Here’s what a Logistics Manager needs to be aware of, and the boundary lines that he/she really shouldn’t be crossing.
Logistics tracking devices or Apps are nothing new these days, and anyone that has a smart phone and uses one of the various map apps is constantly satellite tracked. The stark reality is that both Google and Facebook know you better than your parents, partners, friends and loved ones!
As this technology has grown, many companies are now using it as part of their logistics tracking and customer service. Even small businesses, like your local plumbers, have them in their little white vans, so Cheryl the office manager can tell irate customers that Bob the toilet un-blocker is on his way.
But this usually works better when they’re less than 4-8 hours away!
However, one company in California took this all a step further and had a ‘staff tracking app’ installed on employees’ work phones. Nothing sinister about that you might think…
The apps are great for:
and a myriad other reasons.
However, the issue arose with a travelling female sales executive, whose movements were being tracked 24 hours a day. That’s right, 24 hours – covering both work and personal time.
The device had been set so that it was unable to be turned off during non working or “private time”. I mean who wants your boss to know that every Thursday night you attend Knitters Anonymous, or involve yourself in over 50s Morris dancing on Sunday mornings!
Anyway, the female executive decided to uninstall the app due to ‘privacy’ reasons. And got herself fired for doing so. This was even after her boss boasted about the ability to know how fast she was driving down the highway.
So what’s happening now?
She is taking him to court for alleged unfair dismissal and invasion/breach of privacy to the sum of $500,000 USD.
And the moral of the story? Staff tracking apps should only for work time management and security, not be used for following each and every move an employee makes. And also, organisations need to be very careful about employee/employer gender and power dynamics, and how they could be interpreted.
It might just make you think again when an app on your phone asks to access your location!
Now where’s my phone…
Productive Minds work with Managers and Supervisors of Supply Chain Companies, providing people management training and mentoring to help leaders manage change, manage work stress and inspire creative problem solving in their teams.
As B2B technology companies are beginning to realise the benefits of being easy to use, what changes do we think will happen? How do we envisage the B2B tech space evolving within the next 5-10 years?
Market Dojo put an article together examining what it would look like in 10 years time, and how it will have to adapt and change to remain ahead of the game.
With a focus on Market Dojo as an eSourcing company, we came up with a few conclusions, most of which can be applied not only to eSourcing, but to B2B technology companies as a whole.
The table below looks at different functions of technology and predictions on how they might change within the B2B landscape.
Whilst consumers are ever increasing their use of mobile tech, are businesses going to become more reliant on this in the workplace? The simple answer is yes. B2B companies need to be aware of becoming even more responsive, searchable and usable across the mobile technology of the future?
Google (power of the web/search)
Will this develop enough and become intelligent enough to make other applications obsolete? Such as developing more intelligent supplier search function and becoming the de-facto supplier database though their categorisation.
The ability to integrate between solutions is already possible, but in the future it is set to become even more simple. We expect it becoming ever easier to integrate with any (software) component through standard connectors, so that best of breed becomes as attractive or even better than ERP solutions.
Amazon/Google/Apple B2B platform
Established companies moving into other areas (E.g. developing eMarketplaces) and threatening the smaller providers with their ability to quickly develop technology. This is already happening.
Procserve, for example, have built links with Amazon for B2B purchasing. (See full article here.)
Eradicating the user interface
Moving from slick user interface to ‘no user interface’, as per this Coupa article.
A rather controversial idea, but we can see some logic that instead of having to log into a tool every day, instead it fits around your life so you can interact with it outside the tool via Voice Activation such as Google Voice, Siri, Cortana, etc.
The final stage of the technology lifecycle is commoditisation. (See Market Dojo’s video on the four stages of technological growth taken from a TED lecture.)
Integrated market information
How global news stories affect various aspects of your business and what technology can do to make companies more aware and faster.
Also how tech can keep companies updated with what’s being said about their brand. (Ref. Owler.)
More focus on AI & Automation/robotics
The software could take actions when it ‘thinks’ it is needed. e.g. within eSourcing – delay an auction due to lack of liquidity, or suggest a better lot structure based on the bids received.
Public Sector Procurement
A big shake-up in the public sector software market to disrupt the legacy tools with their complex workflows and procedures to be a slick tool that people enjoy using. E.g. Matrix SCM
IT involvement & Security barriers
IT’s function is changing from an in-house design/build/implement function to a strategic business partner who guide business stakeholders in the selection of appropriate SaaS systems.
How will people find us in the future, compared to how they find us now?
How will the power of search change in the future?
At the minute, the focus is on Content Marketing, but what next?
More personalised, more interactive marketing?
As you can see, we expect the Market Dojo platform to become more intuitive and user-friendly over the next few years. Is this true of all business softwares? Will we (realistically) be able to prioritise usability and design over functionality and features?
The authors have pondered long and hard the question of when the B2C approach will catch on in the B2B World. We think it is progressively changing, but will, for the reasons listed in previous articles, take some time to change.
New suppliers with easy to use solutions are coming to the fore, Coupa and Egencia come to mind. But we postulate that it will be a slow change process, with perhaps another 5 years before the whole B2B solution market feels like today’s B2C environment – at which point the B2C landscape will possibly be different again!
To stay at the forefront of technology, can B2B companies look to B2C arena as a gauge of what’s to come?
A thriving small business community is a sign of a prosperous economy. In South Africa, a new network has been launched to help build engagement with these enterprises.
Procurement on-line portals that efficiently link prospective buyers with qualified small enterprises are the next big thing.
Technology is now available that allows us to quickly and smartly facilitate business transactions for mutual benefit, why are we not doing more to support Small, Medium and Micro Enterprises (SMMEs)? Central and local government departments spend billions; some of this procurement expenditure can be channelled in to the development of the SMME sector.
Some ‘portals’ exist primarily to deliver advice and guidance, that’s useful but it’s not enough.
Why is developing SMMEs important?
A thriving and growing small business community is a sign of a healthy economy. One main objective across Africa is to stimulate economic growth and create jobs; this is one way to do it.
Public sector bodies in South Africa have been urged to ensure their purchasing strategies “explicitly recognise the significant benefits of procuring from local small businesses”. The Minister in charge of small business development said that small businesses have been “historically shut out as a result of bureaucratic and costly procurement practices which favoured big suppliers”.
Developing the SMME sector solves many challenges for governments and for companies that have diversity or enterprise development targets.
South Africa’s initiative
South Africa has a fully functioning SMME solution that has now been in operation for five years. The Supply Chain Network (SCN) came about by necessity. Organisations are required by government to assist in creating jobs for the lesser skilled and unemployed sectors of the population. This portal is made affordable by the support of big businesses and especially by one of the major banks.
It works for the seller by…
Providing a profile page with all key information about the seller
Showing the seller’s credentials, certifications and trade references
Providing a platform for advertising goods and services using an e-catalogue with images
SCN provides a verification service that allows the approved seller to get a priority listing in search results. Sellers with a high profile score have a better chance of attracting bigger and better clients.
A great feature is easy access to tenders. Available tenders are interrogated using a powerful search facility which all allows for setting up alerts using key words. Tenders can be accessed in summary form or in full detail, saving time and effort for the seller.
Better still, it works for the buyer…
SCN manages vendor certification renewals so that all credentials are current, including Tax Clearance and Company Registration
Buyers can use verified information to update their master vendor files
Due diligence is simplified, as buyers can rely on the integrity of the profile information
The search function uses standard industry terminology (UNSPSC) and smart filters
The SCN system also provides an eRFQ facility with built-in rules. Suppliers can upload all their attachments electronically as part of the response. It is an on-line paperless solution that includes automatic notification to suppliers of any changes, updates, withdrawal, regrets and awards. Particularly useful is the full audit trail on all sourcing activity.
Supply Chain Network in South Africa is a low-cost solution that aims to promote the objectives of growing a healthy small business community. Why can’t it work in other emerging markets?
You can find out all you need to know about the Supply Chain Network on its website.
The popularity of Big Data is growing as organisations begin to understand how to effectively utilise the volume of information available to them.
The buzz around Big Data is undeniable. Regardless of the size of the organisation, managers can use this information, to help drive better, more effective organisational decision making, as a result of accurate analysis.
But how? Below are seven ways how effective utilisation of big data could become a boon to your business.
1. Improve Business Intelligence
Business Intelligence is a process of analysing data which helps managers and corporate executives make more sound business decisions. So if you try to put in some extra effort to ameliorate your organisation’s business intelligence, it will result in a more accelerated decision-making process, optimised internal business processes, increased operational efficiency, generation of new revenues, and identification recent market trends.
2. Practical Business Decisions Based On Customer Behaviour
Big Data contains a wealth of information about the way customers of a particular organisation act and behave, like their interests, habits, and demographics in some cases. By analysing sales, market news and social media data, organisations may collect and analyse real-time insights of their customers.
Better marketing strategy can be devised through a careful watch over the customer’s needs, taste, and behaviour.
3. Build Trust Among Customers
It is a well-known fact that the more customer trust and satisfaction an organisation has, the more profit it is likely to generate. Feedback from customers gives organisations the key information to make improvements in products and services.
Organisations can use the information gathered from customer feedback in order to make changes to products and services, showing that they listen to customers, and generating further customer satisfaction.
4. Risk Assessment
Big Data houses a vast amount, and variety, of information which could be used as part of risk assessment activities.
Data from sources like mobile devices, social media platforms, and website visits, and information about credit, legal, e-commerce spendings and other online activities, of a particular person reveals hidden consumer behaviours that may not be otherwise known.
This is advantageous for the banking industry, as big data can help in fraud detection through the use of pattern recognition and by comparing internal and external data of the customers. Organisations like MasterCard already use Big Data to assess whether a certain transaction is legitimate or fraudulent.
This information can play a major role in managing risks and making judgments about credit approvals and pricing decisions, before moving forward with the customer at both an individual and product level.
5. Predictive Personalisation
Predictive analytics creates a huge opportunity for behavioural segmentation of the consumers. It analyses personal information of people on websites, their behaviour, their social data and their browsing data.
Content similar to their interests is then catered to the users, giving them their own personalised space to explore and use the services. In this way, you customise your website to suit the requirements of the individual customers based on their demographics and interests which makes them distinct from the crowd.
There are many companies, like Spotify, who are targeting their customer base providing personalised products as per their needs.
6. Tailor-Made Products and Services
Through big data, we have access to all demographic and personal details of the customers. By matching consumers with the similar products, and the content they have already viewed, personalises their experience on a website.
This method of providing tailor-made services, where customers are connected with exactly those products and services in which they’re interested, may also be known as Digital Hospitality.
This often takes customers by surprise and makes them feel special. However, it would be best to ask for the customer’s consent before using their personal information, as this will make it appear less intrusive.
7. Cost Reduction
Big Data can also be used for automated decision-making systems, where managers can get regular alerts about maintenance support systems and cost cutting opportunities in their business.
For example, Tesco used Big Data to cut its annual refrigeration cooling costs by 20 per cent across 3000 stores in UK and Ireland. Business operations can be optimised without compromising on the quality standards of products.
Since Big Data is, by its essence, huge, taming it can be quite a difficult task because of the continuous generation of data from different platforms in all realms of the world.
With the efficient utilisation of information received, a huge difference can be made to the business operations of an organisation, provided that the information is critically analysed such that it can be transformed into profits.
For this purpose, a good project management tools platform may come in handy for organisations, as managers will be able to keep an eye on the projects concerned with Big Data extraction.
Swati Panwar is a content writer and tech blogger. Writing is her passion and she believes one day she would change the world with her words. She is a technical writer by day and an insatiable reader at night. Her love for technology and latest digital trends could be seen in her write-ups. Besides this, she is also fond of poetry. She’s extremely empathic towards animals and when not writing, she could be found cuddling with her cat.
Most organisations know that they should be aiming towards best practice processes – but what does it really mean – and can something as diverse as accounts payable ever be constrained to a simple set of rules across all organisations?
If we’re talking about specifics, the answer is probably no. But the general framework and methods of working can be aligned in a way that can be translated across AP departments regardless of size, and to some extent industry and internal culture.
The opposition can come from those who decide to carry on working in a manner which they feel has served them well enough in the past. Others may simply not have sufficient resources to implement the practices which management are asking them to do.
Three results of Bad Practice
Ignoring best practice in any environment, but especially in AP, can have catastrophic consequences for the organisation. There are three very tangible results from an organisation where the operation is overly flexible and unstructured.
The most obvious one is that inefficient organisations cost more to run. Financially crippling as this may be in the long run, often this area should be the least of your worries.
An operation where internal controls are lax is leaving itself open to fraud. An enterprising individual can take advantage of such an organisation with relative ease, and as long as they’re not too greedy, their fraudulent activity can go unnoticed for a very long time – perhaps forever.
None of us like to think that any of our colleagues would behave in a duplicitous fashion, but the sad truth is that, in all probability, some of us already have.
Lastly, the third most tangible effect of not adhering to a code of best practice is the existence of duplicate payments within the accounting system. The Institute of Internal Auditors have found that duplicate payments make up between 0.05 and 0.1 per cent of annual invoice payments.
This may not sound like a lot, but if your organisation makes £50 million in annual invoice payments, you are likely to be paying out £50,000 or more in duplicate payments every year. Unfortunately many people assume that if a vendor receives payment twice for the same service or product, then he will simply return the payment. However this is seldom the case.
Quick Solutions to Common Failures
Current Practice: Many people can input invoice numbers and can make changes to the Master Vendor File. Best Practice: Restrict this to just one or two key personnel – preferably those who do not approve invoices.
Current Practice: Invoices arrive, are approved and paid in a variety of locations. Best Practice: All are dealt with in one centralised area, preferably by specified employees.
Current Practice: Issuing travel and entertainment reimbursement cheques. Best Practice: Include payment along with monthly salary.
Current Practice: Petty cash box which anybody can access. Best Practice: Don’t have one.
Current Practice: Urgent cheque request. Best Practice: Don’t allow rush cheques.
Current Practice: A long winded paper trail of invoices and reconciliations. Best Practice: Automate the 3 way match.
Current Practice: Time consuming duplicate payment retrieval. Best Practice: Implement duplicate payment prevention technology.
Current Practice: Long processing and approval times – no early payment discount capture. Best Practice: Implement AP automation solutions, including automated dynamic discounting.
Even if your organisation is unable to implement some of the more costly changes, by changing even just a few of the more minor ones, your organisation will see both a rise in productivity and, over time, this will generate an increase to the bottom line.
However, it’s good to bear in mind that best practice should be something which is constantly evolving. It’s no good to slavishly adhere to outmoded working methods. Ultimately, departmental success will depend on the ability to work within given boundaries, while keeping an open mind, receptive to change.
Purchase to Pay Network® (PPN) is a trusted information base with direct access to 14,000 key decision makers in the finance sector across a variety of different industries.
Is the concept of ethical fast fashion an oxymoron? Do we as consumers have a good enough grasp of the ethical considerations?
Today’s typical fashionista has high expectations. She, or maybe he, wants to buy cheap and affordable trendy clothes in the latest styles straight off the catwalk.
Never mind that an item is unlikely to last more than ten washes. Fast fashion is getting faster and cheaper, but what is the real cost to society and the environment? We may have an uneasy feeling about the issues, but generally have a poor grasp of ethics.
How important is this industry?
The direct value of the UK fashion industry to the economy is around £26 billion and growing fast. Average spending on fashion in Europe is about €700 (>£500) per person per year. Italy, Germany and the UK are Europe’s largest fashion markets in terms of consumption.
Fashion’s total economic contribution is much more if we include activities in indirect and related industries. We may be feeding the economy with our purchases, but we are also harming the environment. Shipping, transportation and logistics are energy demanding, time consuming, and pollution-spewing.
The formula for success in this industry was always to give the customers what they wanted: trendy garments at the right price, of acceptable quality, in the right place, and with a dash of speed. In the last five years there has been a concerted effort by some retailers to become more ethical buyers, employing better human resources policies and safety practices.
Ethics in Fast Fashion
Do procurement teams harbour concerns about sweat shops or care about child labour or manage waste disposal? Or is it more important to buy cheap to satisfy the consumer who just wants to pay £3 for a T-shirt?
Paul Brownhill, Group Chief Executive at Britannia Garment Packaging, says that although the majority of consumers want quick access to the latest trends at an affordable price, they are now also seeking assurances about the way these items are produced. He notes that consumers are increasingly concerned about the quality, safety and environmental impact of the clothes they buy. Is this really true?
The University of British Columbia recently researched this issue and came to the conclusion that, theoretically, young consumers place an importance on sustainability but have a blind spot when it comes to fashion.
“They may care deeply about eating organic foods, but fast fashion consumption is exempt from such moral decisions. This approach can in part be explained by the fact that youthful consumers may fail to fully grasp issues of sustainability, in particular the disastrous future environmental risks associated with unsustainable production.”
Other similar studies demonstrate little evidence that ethical issues have any effect on consumers’ fashion choices or that they are likely to sacrifice their own personal needs for the greater good.
Some Bright Spots
Leading retailers like H&M, Gap and Zara have all signed a pledge to improve factory conditions. H&M, whose tag line is ‘Fashion and quality at the best price in a sustainable way’, was recently named one of the world’s most ethical companies by the Ethisphere Institute.
One of its claims to fame is that it is the number one user of organic cotton in the world. H&M, with 3,900 stores in 61 markets, is also one of the first and largest fashion companies in the world to make its supplier factory list public.
Louis Vuitton Moet Hennessy, (LVMH) a corporation comprising over sixty luxury brands, has been auditing its carbon footprint since 2004. Tiffany & Co. produces a Corporate Responsibility Report, which touts their support of human rights, anti-corruption practices, and commitment to responsible mining. This is all very commendable if it is more than just words on the page.
Fast Fashion and the Ecosystem
For those that do care about the future of our children and damage to the environment, there are a couple of other options. Buyers can check questionable supply sources, read every label, and buy only locally produced items, but this may come at a cost.
What about sourcing second-hand or hardly used items? Re-purposing items creates a positive ethical and environmental impact and can be both cost-effective and trend-setting – it even has possibilities in the commercial environment.
Landfills are full of synthetic material. Cheap clothing goes out of fashion and people end up with a lot of unwanted items. UK consumers ditch more than a million tons of clothing every year.
In poorer countries the problem is less noticeable; items get handed down and re-circulated until they totally disintegrate. In developed countries, they may end up in the rubbish bin.
What can we do to help?
We could support ethically sourced products from brands that have committed to best practice
We could create more awareness among commercial buyers about poor labour practices and sustainability
We could buy fewer higher quality garments to reduce the environmental impact of fast fashion.
The campaigning organisation Labour Behind the Label provides information on what brands need to do to up their game and move closer to employing ethical sourcing practices.
Suppliers are anxiously trying to satisfy the market’s needs for speed and price, at what cost? Is “ethical fast fashion” an oxymoron?
If procurement technology is stuck in the stone age, what do we need to do to modernise? We take a look at some B2C examples for inspiration.
So far in this series, Market Dojo and Odesma have discussed whether procurement technology is stuck in the stone age, and why B2B software isn’t keeping up with its B2C counterparts. This article examines some B2C companies getting it right.
Slowly but surely, not only do we see B2B companies adopting B2C ideologies, but some B2C companies are jumping in and filling the gap left by B2B providers. Granted, the complexity of B2B companies isn’t completely covered by the consumer oriented companies, so they are aiming more at the smaller companies. But all the same it still highlights a shift in the market.
By taking a couple of examples, we can see where these changes are happening and examples of B2C solutions doing it right.
Uber and Freight Brokering
The transportation networking company Uber originally focussed on the B2C space by bringing together people looking to travel in the same direction, aggregating the demand and sharing out the cost of the journey to charge a lower price.
Targeting those traveling for personal reasons and commuters, they are paying special attention to the business sector with their latest development of business profiles.
More recently, focus has shifted to the freight industry where they hope to achieve similar by introducing mobile-based freight brokering technology. Not only will there be a reduction in number of ‘empty miles’ travelled, mobile-based freight brokering technology can help lower operating costs, improve fuel efficiency, boost asset utilisation and enhance resource productivity.
Benefits which Uber have been reaping since they formed in 2009.
Amazon touch briefly on the B2B side with Amazon Business. With benefits like integration with purchasing systems and order approval workflows, they have adapted Amazon to create Amazon for business.
This could have extreme effects on the the current technology providers, should Amazon develop an eSourcing/eAuction aspect. It would not be that difficult for them to make the shift.
Another area in which Amazon has moved to a B2B focus is with their hosting options. This isn’t an adaptation of their B2C offering, but an entirely new market for them.
Software as a Service
Airbnb, for example, provide a marketplace that allows one to search for and/or offer accommodation. Their sleek design, mobile-optimisation, carefully thought-out filters, and simple sign-in methods are something to be rivalled. Having relied heavily on investment, they have been able to afford the development costs and created a really neat SaaS product.
Procurify is another such example of improved, B2C-esque usability. They aim to provide P2P technology without the presumed “boring” grey-scale colour scheme and clunky design that we have seen (and expected?) for so long. They have responsive design and mobile applications available. With their bright colours and simplistic design, they are very appealing.
But will this new technology, mainly adopted by new companies, only appeal to the millennials of today? Will previous generations appreciate this or seek their old faithful, familiar, providers.
The concept is brilliant – provide companies with an internal social platform to share company news and collaborate. However the user interface still leaves something to be desired. Granted it’s one of the best on the market, and I am in no way criticising them specifically, but overall, there is still a lack of ease-of-use in B2B social platforms in comparison with B2C.
Is this because we expect it, because more complexity is required, or because the design needs to remain colourless and simple?
LinkedIn have recently redesigned their ‘groups’ making them more user-friendly and appealing, so increased usability is something which they pay attention to. But the creativity of design is definitely lacking in the B2B world. Why does business have to be so boring?!
The procurement community is lucky to benefit from the industry specific, social platform Procurious, which, with its bright colours and easy interface has a very B2C feel – which differs greatly from LinkedIn.
In the picture on the left, you can see crowded text and pictures with no clear direction of what to look at next with a few small tabs at the top to interact with.
On the right the information on the profile page is broken down into tabs and the contact information on the left-hand side makes it easy to see details of an individual.
It seems that Procurious, being a more recent development, has taken learnings from other solutions (in its space) to create a more user friendly social media platform. Whilst LinkedIn (above left) is busy and cluttered, Procurious provides a more simplistic, clearer view. If you haven’t done so already, definitely recommend getting involved there and signing up to the tool.
Alibaba provides an online platform for global wholesale trade. They launched in 1999 and attempt to make sourcing of goods and suppliers more simple for businesses, working with millions of suppliers across the globe.
Within the tool, they have a categorised search option for buyers with the ability to ‘get quotations’ from the approved supplier list within Alibaba (AliSource Suppliers).
So how will B2B software and technology evolve in the next decade? Make sure you read the final part of this series to see what we think.
Using reverse auctions opens up a wealth of benefits for procurement professionals. But it’s important to fully understand when and how to use them.
Reverse auctions have been around since the late 1990s, and have been regularly used as a tool by procurement professionals to obtain better pricing and lower supply costs. The use of reverse auctions can benefit companies of all sizes, but it really comes into its element when used by professionals within the procurement industry.
In an ordinary auction, buyers would compete with each other to obtain a product or service, yet in a reverse auction, the roles of the buyer and seller are reversed, and involve sellers competing to supply goods or services to a buyer. Over time, the price in the auction will start to decrease. Think of it like an eBay for the supply chain.
For procurement professionals who still haven’t started on the reverse auction or e-auction game, we’ve taken a look at how some of the finest procurement professionals use reverse auctions in their daily lives, and what benefits there are to using the service.
Time is of the Essence
When it comes to reverse auctions, as the supplier does most of the work, one of the greatest benefits is that the procurement professional can save time.
In the case of a traditional contract, businesses send out a request for a proposal which would have to be completed by the seller. The business would then sort through the proposals to make a qualified decision. The process of a reverse auction means that the whole process can be done online, cutting the requirements for manpower and time, with a decision being made much quicker.
Most reverse auctions won’t last longer than an hour either, meaning that the actual process can be wrapped up quicker, and both business and supplier can get on with what they do best.
Money can be Saved
Many companies these days are under economic pressure to become more streamlined and to reduce costs. In 2014, it was reported that the DLA, the U.S. Defense Logistics Agency, had found that by using reverse auctions they were able to save around $1.6 billion in a year – with $400 million coming from three auctions alone.
Whatever the size of your business, reverse auctions can be a great way of saving lots of money. Pitting suppliers directly against one another will mean that the lowest prices will be offered, and you be able to purchase services at a highly competitive price. Many companies will also tend to buy in bulk, meaning that even greater savings can be made to the bottom line.
The net will be opened up
Reverse auctions provide a great opportunity for smaller and lesser known businesses to get involved, and compete for something they may have otherwise never have had the opportunity to. Depending on the situation, the process can help to create new, long-lasting relationships between the business and the supplier.
In the past, companies may have felt limited to choosing suppliers local to their area. Nowadays, thanks to the growing reliance of technology, this is no longer a major issue. The net has been opened and allows businesses around the world to compete, which in turn allows both the buyer and supplier to network and build connections.
Reverse auctions are not for everyone
However, reverse auctions are not for everyone. It’s important that procurement professionals are able to determine when it’s right to use the service.
As it is a service that is mostly fixated on providing the lowest price, it can be hard to determine the level of quality or service that will come with that low price. In many cases, the lowest bidder may not necessarily be able to provide the highest of quality, and this can end up having a knock on effect on other aspects of the business.
To tackle this issue head on, Market Dojo believes you should use price as a stepping stone only, and not a set rule. Obviously, you want to be able to pay as little as possible, but if you factor in levels of quality and the reputation of the seller, then you are more likely to make a better buying decision.
Ultimately, reverse auctions are a great tool for the procurement professional in today’s technology-focused climate. The buyer can spend less resources on purchasing decisions, whilst new suppliers can take part in sales that they wouldn’t otherwise.
To be effective at buying goods through the reverse auction medium, those in the procurement industry need to remain vigilant and try not to focus entirely on price. High quality goods and delivery times also need to be factored in order to make the process efficient and cost-effective. Otherwise, you may just end up paying out more.
About the Author: Adam Maidment is a Content Writer for Portfolio Procurement, specialists in the recruitment of experienced procurement professionals throughout the UK.
‘Pop up Warehousing’ and ‘Dynamic Warehousing Networks’ are new terms hoping to provide dynamic solutions to solve an old problem – large fluctuations in stock.
Whether predictable or unexpected, most businesses have had to deal with stock maxing out their facilities from time to time. Moreover, as managing average or normal stock levels has become more sophisticated and accurate, the effect of the pinch points becomes more acute.
Of course, any predicted overflow can be accommodated. However, just because it is predictable (for example, seasonal storage gluts), doesn’t mean its impact, or the challenge of solving it, is reduced. Furthermore, not all stock excess is predictable – far from it! Taking advantage of bulk purchase opportunities or running promotions make good business sense, but often create storage headaches.
Historically, the solutions that companies resort to cost money and may adversely affect operations. They may rent additional warehousing to accommodate extra stock, or find themselves involved in costly shuffling of inventory across locations, both existing and new.
Outsourcing – getting a third party provider to pick up the slack – is the obvious course to follow, but has traditionally suffered from a lack of transparency and the sense that a better solution might have been missed. After all, an emergency is not always the moment to run a tender process!
However, the growth in dynamic solutions such as Pop-up Warehousing (the colloquial term for on-demand storage space) is now set to change the game.
This ability to quickly identify available warehouse space and pricing on the internet, represents a step-change in how to deal with over-spill. It means that solutions can be found locally or in strategically relevant hubs – dependent on the user’s need – and that rates are benchmarked by the market.
On top of the transparent pricing and availability that these dynamic solutions provide, they also facilitate a direct dialogue with providers across the country. This means that users can identify, secure, and make use of available warehouse space immediately.
This level of choice can mean the economic benefits of bulk buying or customer promotions are not diluted further down the P&L, and the added flexibility can also allow companies to be more daring in their development – testing new products, markets or distribution strategies with less inherent cost (and risk) and modelling the impact of more permanent solutions to their business without making significant investments or sweeping changes.
Speed and Flexibility
The ability to quickly react and adapt can be particularly beneficial to fast growing or new e-commerce businesses. These business are often unclear about what mid- or long-term capacity they need, and the resources required to support fixed logistics costs.
Dynamic warehousing allows them to upscale logistics in line with their growth rate, without overwhelming resource and cost implications, nor the distraction and risk of running a fast-growing logistics function.
With end to end logistics costs averaging 12 per cent of sales value, not doing it as efficiently as possible can make a material difference to competitiveness. For a third party logistics provider, that 12 per cent is their 100 per cent, and they have the vertical and horizontal experience of logistics to build skills and capabilities from shared experience. Outsourcing logistics can, therefore, make a lot of sense for younger companies – as long as the most appropriate providers can be found easily.
Whilst outsourcing is not a new concept, the catalyst for the recent upsurge in interest has been the development of interactive online platforms by companies such as Flexe Inc in the US and, more recently Zupplychain in the UK.
These websites provide a degree of aggregation and transparency that means all businesses, whether large or small, mature or a start-up, can benefit from a level of flexibility. This means users can be more responsive and make better decisions for the present and future health of their company.
Zupplychain employs algorithmic matching of customer’s search requirements to warehouse availability to show warehouse pricing, along with an automated and structured process to progress enquiries and a cloud based system to manage customer stock in provider’s warehouses.
Many companies still struggle with executing a strategic integrated business planning (IBP) process that effectively integrates demand planning, supply planning, and financial planning.
Most simply put, the process should drive decisions on how to best meet demand (customer/consumer sales for existing and new products) within supply constraints in order to optimise financial return. Yet answers to the questions of each planning component of IBP (See Figure 1) can be dramatically different, and lead to very different results if addressed in silos versus an integrated fashion.
Put more bluntly, companies that successfully execute IBP achieve greater operational and financial benefits than those that do not. A key requirement for that success is collaboration, including a disciplined, repeatable process that drives integrated decision making, and a balanced scorecard for performance measurement.
Figure 1: Components of Integrated Business Planning
Based on our experience, we at The Hackett Group believe unlocking IBP can deliver the following competitive advantages and benefits:
Visibility into the financial implications of decisions and actions related to demand and supply.
Significant cost improvements driven by a more efficient and effective supply chain.
Improved top-line revenue growth.
Inventory deployment improvements, e.g. “the right product in the right place at the right time” based on customer demand, which reduce excess deployment costs.
Increased customer satisfaction as a result of more accurate demand planning and inventory availability which reduce out of stocks and back order issues.
However, with all the evidence that implementing IBP leads to important benefits in an increasingly competitive environment, why do many companies continue to miss out on the potential rewards of IBP?
We believe there are five keys questions that companies can use to open the doors to an effective and efficient IBP process. The first two questions deal with the market place and competitive environment in which the business operates, while the final three questions help assess internal improvement opportunities based on best practices for process, people, and data, systems and technology capabilities tied to IBP.
What are the big-picture IBP trends in the marketplace?
Here are three examples of what leading companies are doing:
Streamlined annual planning and budgeting processes.
Balanced scorecards, with cascading metrics.
Unified data models and better integration of technology platforms to support advanced planning and analytic capabilities.
How do our supply chain cost and metrics compare to other companies?
Benchmarking can serve as a useful tool for measuring performance against the competition. Armed with valuable key performance metrics for cost, process and resources, supply chain leaders are equipped to make critical decisions and address areas of opportunity.
As an example, the metric “Demand/supply planning costs per $1000 revenue” is an excellent indicator of overall efficiency (see Figure 2):
Figure 2: Demand/supply planning costs per $1000 revenue across industries. Source: APQC
Are optimal planning processes in place throughout the organisation?
Establishing a best-in-class IBP process is the foundation for maximising the efficiency and effectiveness of any organisation. Example best practices include:
IBP goals and objectives are clear and well understood.
The IBP process evaluates gap resolution and business optimisation options.
Materials and reports supporting IBP are exception based.
Do we have the right people at all levels of the organisation, to own the plan, make decisions, and ultimately be held accountable for the plan’s execution?
Equally as important as the right processes, is having the right organisational talent and accountability mechanisms in place. Example best practices include:
Adequately staffed resources with required knowledge and skills.
Clear ownership and accountability.
Discipline to adhere to decisions made as part of the IBP process.
Finally, are we equipped with the appropriate technology (tools and systems) necessary to fully support integrated business?
To enhance supply chain technology capabilities that both support and optimise the integrated business planning process, best-in-class organisations successfully employ supply chain systems and tools to maximise their IBP process.
Importantly, the firm must have the tools and systems needed to bring together and reconcile demand, supply, and financial plans in order to identify gaps and imbalances.
Read the full Hackett Group Supply Chain Insight Report here to learn more trends, best practices, and metrics which help supply chain successfully transition to Integrated Business Planning
Hanna Hamburger, a Director in the Strategy & Operations practice at The Hackett Group, has over 25 years of industry and consulting experience. She has worked extensively with consumer products and retail companies as well as life sciences companies in the areas of sales, marketing and supply chain process, technology and tools, and organisation performance improvement. A longer version of this article is available on The Hackett Group’s website.