As per our last few posts, ERP used to be sexy, but hasn't been that way in a while. That needs to change, because ERP should be sexy. Fortunately for us, BizSlate has decided to do something about it. They agree that ERP should be appealing, exciting, glamorous, trendy, and just a little risqué and are doing something about it.
Built from the ground up to be 100% web-based SaaS, and taking lessons from best-of-breed SaaS e-Supply Management solutions, which themselves took lessons from best-of-breed B2C consumer e-Commerce solutions, the system is friendly, streamlined, easy on the eyes, and useable. Realizing that success stems from use and use stems from desire to use and desire to use stems from knowing it's easier, and more satisfying, to use the system than to bypass it (which is a common problem among all types of systems in a modern organization), BizSlate put a lot of effort into designing a system that was not only easy to use, but that a person who needs an ERP would want to use.
New catalog season used to mean new headache from hell. As per our recent post on how It's Time to Bring Sexy Back to ERP!, if your new product line contained 20 pairs of footwear in 7 different sizes and a minimum of 2 colours each, and each needed its own SKU, that was at least 280 products you needed to create one at a time! With all of the coding and cross-coding required, it was probably 15 minutes a product, or 30 products a day, or two weeks of data entry for some poor intern just to create a starting product catalog! But not with BizSlate. With its batch create capability, you define a template, define the characteristics that define the variations, define the different instantiations of those characteristics (e.g. size, 6-13, and colour, black and brown), define the starting SKU, define the ending SKU pattern, and press a button and -- BAM! -- it generates all 280 draft product entries. If you're happy, press another button, and -- BAM! -- 280 products created and added to your ERP. If not, go back, alter the template, characteristics, and variation rules and go again. If there are custom values that need to be defined, you can populate just those fields in a spreadsheet view during the validation step. Retail and distributor customers that used to spend weeks and weeks creating new product entries for new product lines now spend a few days and generate hundreds of entries in just a few hours. It's an exciting development in ERP usability.
As per our last post, traditional ERP is unsophisticated. This means a number of things. First, as per our last post, if you wanted to define multiple, sophisticated, commission plans for internal and third party sales people based on category, product, volume, and stock-type, you had to buy an ERP from Imaginationland, because that was the only place an ERP exists where such a task is possible. But not with BizSlate -- they've thought through this need and built a commission definition and management system to support even the most demanding client. But this isn't the only feature that makes this modern take on an ERP glamorous compared to the dinosaurs it is competing against.
Traditional ERP is quite dumb. Typically it's not even as smart as the relational database it is built on. For example, let's say the value list for shoe sizes is the same as the value list for sneaker sizes, think you can abstract that list and re-use it? Not a chance -- create it every time you need it, buddy. Building a goods receipt and the value is already in the purchase order and want to re-use it? Copy and paste.
And that's just the tip of the iceberg. Want to re-use similar types of reporting structures or entry forms, because you use the same data in inventory management, order management, invoice management, etc. and don't want to re-invent the wheel? Fat chance! Rebuild for the use-case and repopulate as above.
But not with BizSlate, who have built their streamlined ERP around repetitive mechanisms. Value lists, forms, and report components are all implemented as reusable components that can be reused wherever they are needed. Need that size list across your clothing line? No problem. Need that discount percentage by spend across your electronics category? No problem. Want to re-use the same entry form template for entering order details for your suppliers and invoice details for your customers? No problem. Repetitive Mechanisms take the repetition out of your job and allow you to focus on the job and not the data. That makes ERP glamorous.
BizSlate, first introduced to you on SI back in September, 2012 in our post about an ERP for the Small to Mid-Size Distributor, and covered again last February when BizSlate Released its ERP for Mid-Sized Distributors and Retailers to the Masses, has decided that it's time to bring sexy back to ERP.
BizSlate, who, like the doctor, noticed a void in useable and affordable modern ERP solutions for the mid-sized distributor, retailer, and manufacturer, decided that they needed to do something about it and built a new ERP from the ground-up, that is custom-designed to meet the need of the mid-market distributors, retailers, and manufacturers that are under-served, and released it last year. But working closely with their initial customer base, they noticed a few things that typical ERP and implementation providers overlook. Among other things, they noticed that:
In other words, BizSlate realized that ERP was ugly, boring, unsophisticated, out-dated, and non-disruptive and that it shouldn't be this way. So they've spent the last year streamlining and improving the core of the new ERP that they've built to make it appealing, exciting, glamorous, trendy, and just a little risqué. Because that's what ERP should be. As per our last post, we have to remember:
ERP used to be sexy. It's time to make it sexy again!
ERP, Enterprise Resource Planning, used to be sexy. Designed as an extension of MRP (initially Material Requirements Planning but later Manufacturing Resource Planning), it was designed to automate the back-office functions that did not directly affect customers and the general public and also include product planning, manufacturing control, and distribution in addition to the basic inventory control and production planning capability that was found in the precursor MRP technology.
But that was in the early days back in the nineties when design, manufacturing planning, and distribution planning was still largely paper-based. Then came the noughts with e-business, e-commerce, CRM, SRM, and e-Sourcing. Then ERP became boring old back office software that no one wanted to talk about. If you could afford the new fangled front-end systems, you were a Fortune 500 / Global 3000, you already had ERP, and there wasn't much to talk about.
But now things have changed. The prices for e-business, e-commerce, CRM, SRM, and e-Sourcing have come down, the mid-market is starting to become saturated with basic "e-" functionality, and the new mid-market manufacturers and distributors need an ERP to take those orders, send those invoices, and manage the inventory they need to produce to meet your JIT inventory requirements. But, until now, they've had two choices -- either fork out high six-plus figures for a stripped down version of Oracle or SAP (and the expertise to get it installed and integrated) which likely won't meet all of their needs, or a custom implementation of an open source package such as Compiere, which probably won't meet all of their needs either (but at least won't cost them the virtual arm and leg). And neither solution is sexy.
As per SI's recent post on how Mid-Market Manufacturers and Distributors Need an ERP That Works!, the solution needs to support the needs of the mid-market manufacturer, distributor, and even retailer. These needs include the need to deal with electronic purchase orders from customers, real-time demand planning and order management when customers inquire about availability and ship dates, inventory management, electronic purchase orders to your suppliers, automated invoices from your suppliers, and automated invoices to your customers. Without an ERP that gives them these capabilities, mid-market manufactures and distributors are left in the dark ages.
But if an ERP is to truly be effective, it not only has to provide you with these capabilities, but it has to be easy to use, which would make it appealing, and eliminate a lot of the manual data processing and tactical processes that organizations with traditional ERP systems tend to drown in, which would make it exciting. And if you want to get the new ERP system widely adopted, it should be glamorous, trendy, and even a little bit risqué. And that is the very definition of sexy.
Will ERP be sexy again? Stay Tuned!
But will it?
As per these recent articles in the Economist on Cartels: Just One More Fix and Boring Can Still be Bad, competition authorities have uncovered several whopping conspiracies in recent years, including one in which more than 20 airlines worldwide had fixed prices on approximately $20 Billion of freight shipments. (In 2010, the European Commission fined 11 Air Cargo Airlines €800 Million for operating a worldwide cartel which affected cargo services within the European Economic area - namely Air Canada, Air France-KLM, British Airways, Cathay Pacific, Cargolux, Japan Airlines, LAN Chile, Martinair, SAS, Singapore Airlines and Qantas.)
In addition, investigators are still unravelling a huge network of cartels among suppliers of a wide range of car parts, including seat belts, radiators, and foam seat-stuffing. And the European Commission recently fined five marks of automative bearings $1.32 Billion and raided a number of manufacturers of car exhaust systems. On the other side of the Atlantic, Brazilian prosecutors have charged executives from a dozen foreign train-makers accused of rigging bids for rail and subway contracts in the country's main cities.
This is despite the fact that enforcement has gotten tougher, smarter, and more coordinated, the fact that firms can expect staggering fines, and bosses can go to jail ... unless they are in the United States. As the latter article states American courts, only too ready to lock up other types of miscreants for a long time, have rarely jailed egregious price-fixers for anything like the maximum of ten years that the law allows. But what do you expect from a country that won't even jail executives who got caught knowingly laundering Billions for Mexican Narco-Terror Cartels? As per this recent article on BoingBoing, on HSBC Settlement Approved, there were no criminal charges, only 5 weeks' profit in fines, and deferred bonuses for laundering Billions for Narco-Terrorists. That's right, they still got their bonuses! (But whatever you do, don't feed the birds, since you go to jail for feeding birds.)
Until significant mandatory jail sentences are enforced for all executives involved in price-fixing, given the still-low risk of detection, collusion pays. After all, best case is you succeed undetected and make a few Billion. Worst case is you get caught, pay some of your ill-gotten gains in fines, and go back to business.
And stiffer fines aren't the answer -- if fines inflict so much damage on guilty companies, they will undermine competition as new entrants will be afraid to enter the market in fear that their efforts to keep costs in line with the competition will be seen as price fixing that could net them fines that would put them in bankruptcy.
The only answer is stiff prison sentences against executives, and the only major country that is unwilling to pursue them is the country that controls 25% of the global GDP - the US. So while you can do a lot to detect price-fixing and, if possible, avoid it by way of big data, statistical tests, market research, and collaboration with authorities - until the US DoJ and Courts step up and do the right thing, price fixing will likely remain a major problem.
Some other time, some other place
We might not have been here, with egg on our face
I just wanna tell you, made up my mind
You know I can't help the way I feel inside
Oh, this heart's on fire
Right from the start, it's been burning with rage
Oh, this heart's on fire
One thing buddy, spam fills it with rampage!
And 20 years ago today, Laurence Canter and Martha Siegel unleashed the "Green Card" spam upon the world. While this was not the first instance of Usenet spam, it was the first instance of commercial Usenet spam and, quoting Wikipedia, its unapologetic authors are seen as having set the precedent for the modern global practice of spamming.
Canter and Siegel sent their advertisement, with the subject "Green Card Lottery - Final One?", to at least 5,500 Usenet discussion groups, which was a huge number at the time, posting it as a separate posting in each newsgroup so a reader would see it in every group they read. Their internet service provider, Internet Direct, received so many complaints that its mail servers crashed repeatedly for the next two days! You have to remember, this was back in the time of dial-up and the highest speed modems available at that time were fax-speed 14.4K modems, with most people still on 2,400 baud modems! But this effort, and their subsequent efforts through Cybersell, which was a "spam-for-hire" company, ushered in the age of spam that we are still dealing with to this day.
After being introduced to Le Havre last Friday, you played all weekend as the subtle complexity and inherent trade-offs challenged you to prove that your intuition and strategic reasoning skills could not be matched. You bested your team-mates, and after one play each night of the simple game in the iOS version, where you beat the Admiral Sabine AI on your 4th try, you think you're ready for the full base game. But are you?
In the simple game, only 19 of the 33 buildings are used -- typically these will be the Abattoir, 2 Building Firms, Bakehouse, Bank, Brickworks, Charcoal Kiln, Clay Mound, Cokery, Colliery, Construction Firm, Fishery, IronWorks, Marketplace, Shipping Line, Smokehouse, Steel Mill, Tannery, and the Wharf. With the exception of the marketplace and the bank, each of these was covered in our first post. In addition, you start off with one wooden ship, 5 francs, and 12 resources: 2 fish, wood, coal, iron, and cole and 1 cattle and hide. You are guaranteed of being able to feed your works and build something first round. Not so in the full base game (which goes 6 extra rounds). In the full base game, you start off with five francs and one lump of coal. No ships, no food, and no resources to build. And the marketplace, which gave you four goods in the base game, gives you only 2. You have to wheel and deal your way just to survive (and victory is a long way off).
The challenge of Le Havre, where you not not only have to balance food production (to pay your workers) with resource acquisition (to build your products), energy production (to power your manufacturing plants) and ship production (to distribute your goods for sale), is that you also have to build at the right time, use the buildings at the right time, and trade appropriately. If you're too early or too late to the market with your goods, no one will buy them. If you don't take advantage of opportunities, your competition will. And if you don't secure transport during peak Christmas season, well, then, you're just dumb. Furthermore, in the game of Le Havre, just like in the real world, only one player can use one building at a time, take an offer from the harbour and the resource type associated with it, or get points for a particular building or action. And the increasing food costs (payroll as your organization grows) make the game quite challenging if you don't adequately prepare for food production (cash flow) from round one.
And when you scale up to the full base game, a lot more trade elements enter into the picture. Consider the following buildings not typically used in the simple game:
When these buildings are added into the mix, there are more ways to get (valuable) goods (since each unit of steel requires 5 energy to produce), much needed food (as the grocery market yields the equivalent of 8 food units on a single visit), and money (especially at the end of the game). Trade becomes a much bigger part of the game, in terms of resources and buildings (as it is often advantageous later in the game to sell buildings acquired earlier in the game for those that give you monetary advantages at the end of the game). And the balancing act becomes tougher. (In fact, for those of you who acquired the iOS version, don't be surprised if Admiral Sabine starts kicking your @ss again until you not only figure out that trade is the name of the game and what that means in the town of Le Havre.)
And this is just the beginning of the complexity. In addition to the full set of base buildings, you are also presented with 5 special buildings, put up by the town, that can be bought in each game. These are randomly selected from the set of 36 special buildings and include: 6 craftsman's buildings, 14 economic buildings, 6 industrial buildings, 4 public buildings, 5 non-buildings, and a ship. The craftsman's buildings, like the brick manufacturer or steelworks, give the player resource-based economic advantages. For example, the steelworks allows one iron and 15 energy to be exchanged for 2 steel (instead of the one-to-one conversion enabled by the steel mill). The economic buildings, like the guild house and mason's guild, give players economic advantages during the game or at game end. For example, the guild house gives its owner 2 Francs for each economic building owned by the player at the end of the game. And the luxury yacht, which can be swapped for an iron ship, has a value of 20 Francs!
Le Havre really is a great game to test your supply management mettle. While it will take you a few hours to get through an intense four (or five) player session and prove your strategic supply management dominance, it really puts your thinking skills and your ability to balance supply with demand with opportunity to maximize the overall value generated to the test. Give Le Havre an honest go. You might just advance your strategic thinking and planning skills more than you bargained for. (And if you haven't checked it out yet, don't forget to try Le Havre on iOS. Remember to start with the tutorial, and then move on to the simple version of the 2-player game before moving on to a full 2-player game, and, finally, a full multi-player game.)
Today's guest post is from Gert van der Heijden, the Executive editor of Spendmatters.nl, and is the English translation of his post, indirecte inkoop met catalogi, waar te beginnen?, that originally ran on March 27, 2014.
Organizational buyers are accustomed to thinking in Pareto analysis. This is because buying is an area where the 80/20 rule applies: 20% of the suppliers do 80% of the sales, and therefore these 20% of suppliers deserve the focus. As a result, when Procurement is designing solutions to improve compliance, they often end up with a solution that is inconsistent with what a buyer wants. One area where this often occurs is in the e-Procurement implementation of catalogs. From a Procurement perspective, it might make sense to get the spending under control, but for the end user in the organization, the critical issue is completely different.
An e-Procurement catalog implementation is only successful if the end user is lured to the catalogs and wants to use them without being forced. Compliance is only truly achieved when users follow processes of their own free will. Furthermore, one has to remember that it is the 20% of the suppliers who produce 80% of the invoices who have the most operational customer contacts and it is these 20% of suppliers who are most likely to disturb, and try to circumvent, the process. If the buyer doesn't like the process, or it's not easy for him to use, he will be easily swayed by the supplier (offering to make it easier with a direct order) to side-step the process and this will severely hinder your compliance effort.
A smooth process for the purchase of common items, like office suppliers, IT, and food in hospitals (for example), will provide the end user an optimal customer experience and an appreciation for the process. Only once these common, but critical categories, are fully implemented and meet the users needs, should the organization turn its attention to other, less common, categories.
One has to remember that success in e-catalog implementation and roll-out also comes from a proper application of the Pareto principle -- focus on the categories that represent the majority of the user's purchases first, and make sure the users want to use the system for these categories, and only try to go end-to-end once the staple categories are well in hand. That's because when it comes to e-catalog success, the key is efficiency. That's how you become truly effective with your efforts.
As per our recent posts, Decideware are the Agency Performance Management Experts, having brought end-to-end agency lifecycle management (Part I, Part II, and Part III) to your agency-based supply chain.
Agency-based spend is an often overlooked spend category because it's creative (and marketing doesn't want to give it up), outsourced, and typically hands-off (because all marketing wants is the end product -- print, radio, tv, or web advertisement, campaign, etc.).
However, ignoring this spend is costly, especially if you are doing a lot of production work -- because the amount that is being spent through your agencies on production is often a lot more than the creative agency fees. But this is just the tip of the iceberg. When you drill down, you often find that if you are using a lot of different agencies for your different marketing initiatives, there will often be overlap not only in the types of production companies your agencies use to create your advertisements and campaigns, but in the actual companies themselves. This means that if you can identify common tier-2 providers used by your agencies, and identify potential preferred providers, you can negotiate with those providers for preferred rates to be on your preferred provider list that you provide to the agencies (who can be told that they can only use providers for identified services from your list).
Plus, because Decideware's new Production Management Module allows you to track all costs down to the individual project and provider level, you can make sure that the preferred rates are actually being offered to you. And if the project is large enough, or the volume of work increases, you can ask for an additional discount and track the negotiated savings as well. It's a great way to identify cost-savings opportunities when you don't need the absolute best provider. After all, just about any print house can do a print job and any production studio can film an advertisement. This allows you to save on the "commodity purchases" and spend those dollars on the "creative" side instead, where you are likely to receive the most value for your money.
The new Decideware Production Module is a great complement to their existing Statement of Work module (discussed in Decideware: An End-to-End Agency Lifecycle Management Solution Part II) and now, for the first time, you can truly undertake multi-tier end-to-end agency-based cost management and really get your advertising and marketing spends under control.
The Production Module, currently in beta and scheduled for full-release at the start of next quarter, is similar to the scope-of-work module in that it walks the user through the full production RFX and cost estimate workflow. After the user defines the project metadata (type, scope, timeframe, org unit, etc.), she selects the users who will participate (in editorial, view, or approval mode), defines the work products (and who is responsible for overseeing their definition), selects the vendors who will be allowed to bid, defines the desired cost breakdown (by phase and element), defines the contract terms, and then, finally, defines the approval process. Then the project is launched and vendors provide their bid package with the desired cost breakdown, which includes an identification of the sub-tier suppliers who will be used to complete the work.
It's an easy to use and well-thought out solution for getting your rampant advertising budget under control.
Today's guest post is from Joe Payne, Vice President of Professional Services at Source One Management Services, LLC and co-author of Managing Indirect Spend: Enhancing Profitability Through Strategic Sourcing.
In yesterday's post, Joe began to address the fact that despite the clear path laid out before them -- the path of "take a strategic approach, see positive results" -- many procurement groups are still falling behind and failing to do just this. He noted that while the reality of the situation is different for every organization, there are some trends that weigh more heavily than others and discussed two of these trends. In today's post, he discusses two more.
Lack of Skill Sets and Vision
While everyone might jump on board and say they do not have the proper resources, this reason is a little harder for some to admit. A large portion of procurement groups are operating without the analytical skills and foresight necessary to implement more strategic initiatives. While some might see this as the result, or the validation, of Jack Welch's infamous quote, it is also due to the traditional role procurement currently plays or has played for most of the department's existence.
In many companies, procurement is nothing but a rubber-stamp -- just another step in the issuance of a purchase order. In others, they may have implemented a three-bid process or another similar purchase control method to try and secure savings, at which point they become viewed as not a rubber stamp but as a hindrance -- not a step in the issuance of a purchase order, but a hurdle. And I will stop for a second and explain that procurement is not always pigeonholed into this tactical role because it is all they can do. This tactical limitation is often just as much an indictment of a failure by management to capitalize on the full abilities of all of its resources as it is a statement on the limited capabilities of procurement professionals.
Skills carried over from education and prior experience are not like riding a bicycle. These skills fade and fall away. This limited role, when performed for a long enough period, can limit the effectiveness of any prior analytical skills that fall outside the needs of the assigned role. Luckily, one of the benefits attributed to the rise of Supply Chain Management programs at major universities is the resultant increase in incoming supply chain personnel with college-honed analytical skills tailored to the procurement industry.
Procurement may soon be equipped with the skilled resources needed for strategic changes.
Management Is Not Interested
A final hurdle for procurement groups looking to make a strategic leap is disinterested leadership. Executive management, whose approval is and would be needed for a procurement group to "resource-up" and/or take on new challenges, might not think procurement is capable of such initiatives. Alternatively, leadership may be disinterested due to their inability to see the benefits to procurement taking on strategic endeavors. This can be frustrating, but it can be solved.
Disinterested management has to be persuaded, and the easiest way to persuade is through a prolonged effective internal marketing campaign. Reports should not be seen as an administrative chore, but rather as an advertisement for a procurement department. Operating transparently should not be seen as micromanaging, but as a way to actively show interested parties how effective the procurement department can be. Other successful procurement groups -- when they make the news -- can also be used as leverage to convince an otherwise-disinterested leadership group that strategic procurement endeavors can be worth the investment.
Additional marketing methods could include a training program designed to mitigate the frustration that comes from procurement's involvement with some stakeholders. One of the most effective methods is securing a "bell cow". A procurement department wishing to be given a more strategic role should identify an influential stakeholder and work to get that person onboard with their efforts. They should then use that person as a cheerleader for the group.
There is no single reason why procurement groups do not undertake strategic endeavors, just as there is no single party at fault. However, the evidence is mounting that those procurement groups that do not set themselves up strategically will face a widening gap between themselves and the best-in-class operations.
Thanks again, Joe!