Tag Archives: networks

To Appreciate the Value of Digital Networks, Look to the Skies…

How are digital networks providing greater visibility and helping to achieve savings by making risk more manageable? 

On route to a recent conference on how procurement networks are reshaping the aviation industry, I realised how amazing it was to be arriving in the historic city of Athens, the cradle of Western civilisation. My enthusiasm owes not only to the city’s timeless beauty, though that’s reason enough to visit. Athens, it turns out, is ideally suited for such a gathering because it holds a unique place in the imagination for all of us who’ve ever wanted to fly.

When you’re fortunate enough to have as many Greek family members as I do, you learn about the ancient legends. So the fable of Icarus is well known to me.

Icarus, of course, was an early aviator. He looked to the birds and thought, “Why not me?” So he constructed a set of wings using wax and feathers. But his father warned him not to fly too close to the sun as the wax would not tolerate the heat. As we all know, Icarus declined to follow his dad’s advice — and, as he soared skyward, his wings began to melt. Icarus crashed back down to Earth.

What’s the moral of the story? Some people say Icarus was too ambitious, too proud, too single-minded. They say he flew too high.

But I believe Icarus had a different problem. Now, I may not be an expert on classical antiquity. Yet I believe Icarus could have been much more successful — he could have built much stronger, sturdier wings — if he’d only had a better supply chain!

In all seriousness, when it comes to aviation in our own time, there’s no mythology about it: The industry faces immense opportunities but also enduring challenges. High demand and low interest rates have fueled significant growth in recent years. Air transport has doubled in volume every fifteen years, with no end in sight. Aircraft keeps getting more reliable, more efficient, more technologically advanced. But high fixed costs and fierce competition are facts of life for airlines.

That’s why controlling costs spells the difference between success and failure, in every economic climate. To control costs, airlines are turning to technology to improve operations and the customer experience in four main ways: increasing real-time visibility and control, optimising efficiencies across business functions, enhancing service offerings, and deepening customer loyalty through personalisation and rewards programs.

In aviation, we’ve moved from wax and feathers to variable-intake turbofan engines and intelligent avionics. Yet in other respects, the industry remains largely unchanged. After all, the very same factors drive profits year after year:

  • Revenue per passenger kilometer flown. How do airlines engage with customers to generate revenue premiums? Data, of course, plays a key role. What do they know about the passenger in seat 11C?
  • Load factor. How do airlines optimise their routes, aircraft and services to ensure maximum lift per weight? Here again, data proves essential.
  • Unit cost per available seat kilometer. How do airlines maximize efficiency and minimise costs? As with the other factors, the right data leads to the right outcome — for passengers, shareholders, and the environment.

Meanwhile, as airlines seek to optimise value, safety and support while improving the passenger experience, they need to be able to track and manage every part and every piece of equipment. Naturally, it helps to do so when airlines can also track and manage the suppliers of those parts and equipment.

In an industry like aviation, where risk management is so crucial — risks ranging from weather to regulation to commodity prices to exchange rates — savings become essential. Digital networks achieve savings by making risk more manageable. By providing visibility into the interconnected operations of airlines and their suppliers, cloud-based procurement platforms help to identify and resolve issues before they arise, aided by machine learning and artificial intelligence applications.

In addition, digital networks enable trading partners to collaborate on product design and service delivery, thus creating mutual value, extending competitive advantage for their organisations, and empowering them to reimagine not only the airline industry’s future but procurement’s role in shaping it. In the aviation business, real-time collaboration with one’s suppliers unleashes innovation and spurs growth. More often than not, success arises through partnership.

Seldom do we succeed when flying solo.

Continue reading To Appreciate the Value of Digital Networks, Look to the Skies…

Social Currency In Procurement: Do You Know Enough To Be Dangerous?

In recognition of how central social currency is, procurement pros are using their social networks to build, influence, and deliver results. The question is: do you know enough to be dangerous?

Connectivity is central to how we live and work in 2017. When something exciting or unexpected happens, many people immediately share the news, and a picture, on social-media. We read the updates shared by others and offer up our own. We like a post or status update to indicate support or show we are ‘in the know’ and watching important influencers. This constant sharing and consumption of information has become a global phenomenon.

Over time, these exchanges add up to a wealth of knowledge and connections that improve our decisions and elevate the weight given to our preferences – much like the exchange of ‘social currency.’

Social currency in procurement

A similar trend has begun in procurement and supply chain – perhaps in recognition of how central social currency is to us on an individual level. Procurement professionals have talked about supply intelligence for a long time, but now they are increasingly aware of how important their own social networks are to their ability to build, influence, and deliver results.

Professional social currency includes, for example, the recommendations, endorsements and likes that we assign as we go about our business online.  When combined, they create a level of trust, and contribute to organisational reputations of both buy and sell side organisations. When buyers trust that a supplier will be able meet their business needs, or when a supplier trusts that a customer is a good fit for their capabilities in both demand and culture, transaction costs are decreased and the total value potential increases.

The fact that both sales and procurement are investing in their social currency creates a unique opportunity for them to come together and leverage their collective knowledge for the benefit of both organisations.

Being Reactive Vs Pro-active

One of the strengths of social media is its timeliness. Trust is not just about the source or location where information is stored. The more real time information is, the more confidence it gives to decision makers. Having real-time access to information allows procurement to meet the businesses’ needs faster. Timeliness is also at the top of the stakeholders’ priority list when deciding whether or not to engage procurement. When procurement can provide information proactively in real time, identifying which suppliers stakeholders should look at or having the pulse of specific industries, it goes a long way towards demonstrating their value – and adding to social currency.

Having instant access to trusted information alters the range of project options available to a procurement professional. They are no longer in the position of having to be reactive, where the business comes to procurement and says, “We have these new suppliers that we would like to engage – NOW” forcing procurement to scramble, trying to vet them. When procurement has access to real time information, they can readily identify potential suppliers and quickly access industry peer endorsements on those suppliers.

Do you know enough to be dangerous?

Procurement professionals need to know enough to be ‘dangerous’. They should have a foundational understanding of the category or commodity they are supporting, and be able to translate business needs into procurement best practices. This way when they get a seat at the table with stakeholders, they are able to engage in intelligent discussions around what stakeholders are trying to do and what is happening in the industry. Having access to intelligence allows procurement to be the engine driving category or commodity strategy to achieve sustainable value for an organisation.

Today, people call or email each other for supplier recommendations. This manual way of accessing trusted “social currency” is not scalable or visible to the rest of the organisation. The procurement technology user experience has come a long way. With collaborative or social technologies, the data becomes smarter and benefits everyone today and in the future.

The concept of trusted data is not new… the same instant knowledge that allows people to prioritise news shared by their circle of friends or pick a restaurant that has been highly recommended by people with similar preferences… today, decisions are made faster and the outcome is often more successful as a result of social currency.

The insights in this article comprise one of the main takeaways of a supplier intelligence-focused Executive Roundtable Series hosted by tealbook which brought together over 40 forward-thinking procurement leaders from across the country.