Another key innovation we focused on was the process to work out the ultimate user experience for the end consumer.  My experience with typical Ecommerce implementations is that a lot of time and energy is spent in putting together the user experience. It is one of the areas where a significant overlap occurs between the UX focused marketing teams and the technology enablers. This is not always the most productive or 'smooth' meeting of the minds. Gaps tend to emerge later on in the development and testing processes, because usability testing may bring about significant changes as also 'understandings' of features offered varies. This is further complicated by the demands of a packaged application to keep processes consistent and repeatable thus implying a 'reduction' in flexibility. We were able to overcome some of these challenges by using the Infosys user centered design methodology. This involved up front usability studies and walkthroughs of existing UX flows to allow all stakeholders to contribute their ideas and thoughts. These were then converted into 'to be' flows and wireframes with each element of functionality and data mapped out on the detailed wireframes. These wireframes e also took into account 'out of box' package features to retain high upgradeability. Clickable prototypes and visual designs made these screens real to all the stake holders. These visual designs after sign off were converted into code or html which were then used by the development team to integrate with the backend process flows.

You can find out more about my session here. Also Christian Wip, the eCommerce Director from Life Technologies talks about this initiative and its execution through a video.

A buyer’s buying behaviour is to look for ways and means to deride the “differentiators” projected by the suppliers and try and buy the products and services as “commodity” products and services. The yearly contract negotiations start with price and end with price. Taking the accounting route the objective of any buyer is to “chop off” the COGS and Inventory, to increase EBDIT and have a positive cash flow in their books. Since the procurement experts find it challenging to squeeze more out of COGS, so they have trained their guns on SG&A.

Let us take the case of marketing. The marketing professional is “glass full of ideas”. Their sole objective is to do something unusual to catch the eye of the person on the street. The five critical issues for success are differentiate, differentiate, differentiate, differentiate and finally differentiate….. Else the result is similar to the remakes of the epic movies, which have not lasted the test of time. Let us take the simple case of billboards spend. The location, the message, the colors, the depiction, the face and the expression on it….. these are more important success factors than simple buying fabric. Pepsi would go all out to have a blue attire for their brand ambassadors, what be the price.

So, if one starts probing into the cost structure of marketing spend and try to cut corners, one would surely find a lot of “scope’. But the fact remains that cost of innovation and creativity is simply….. priceless. Some organizations claim to have excelled in their art of procure-o-marketing. But behind the art lies a scientific classification of what is commodity and what is creativity. These organizations cut radically on commoditized products and services, but when it comes to creativity, they spend in millions to nurture it. That is what brand management is. It would be suicidal for organizations to jump onto the bandwagon of procure-o-marketing armed with scissors, if they have not yet mastered the art of classifying commodity and creativity.

We keep getting lashed by these heavy waves of destabilization at frequent randomness, from Katrina, to Avian flu, to global recession and while we were still struggling on these, as if not enough, now the Swine flu. The USP of all these are that we don’t know what, when and how this hit us, when we were least expecting. It takes a good toll of all of us. The good thing about this is that it wakes us all from the slumber and complacency to make us take note and innovate.

The current economic crunch is one such great "Tsunami "which has jolted all the greats and spared none.

To get our arms around this, let us start from where all these began on the Wall Street and how this has impacted. The Credit crisis is significantly testing organizations survival instincts across industries in all the global economies

Let us also appreciate that not all is grey about the recession for the supply management profession. Credit woes are giving buyers a chance to demonstrate the value of supply chain excellence

• Commodity price indexes show this is a Buyer’s Market
• With the oversupply of the raw materials, material prices are at their all time low. Oil and commodity prices have also dropped giving a chance for material cost optimizations
• Distressed sale of material leading to spot buyers market conditions
  

We agree that liquidity is the primary trigger for all the malaise. Free Cash Flow is a well recognized measure for organizational health, liquidity and shareholder value. This is a widely accepted tool forward looking tool for CEO’s and Executives for business decisions and has clear linkage to valuing a company.

Here is an attempt to analyze how the current liquidity crunch is impacting the value levers leading to the Free Cash Flow measurements

Response Strategy to "Unlocking this Liquidity Lock": Organization response strategies should be to relieve these stress points of economic recession (marked red arrows with the right acupressure techniques) while making the best of the advantage points (marked blue arrows). Suppose that should be an intelligent approach to tide over the situation and prepare for a better tomorrow that be what someone said – " a bull in the china shop " going all hog at cutting costs where ever possible . An appropriate response could be to identify, plan , implement and measure results of business strategies over this value trail all over this difficult phase till we see ourselves over the hurdle

The supply management teams can be the biggest influencers in this turnaround story with their given mandate on the majority of the organizational spend. Theoretically, a 5% reduction on cost of purchase (typically 55-65% of revenue in most manufacturing companies) can improve the bottom line by up to 30-35%).Who else is better positioned to lead the change.Probability and impact of operational disruptions due to supplier bankruptcies are at an all time high. Studies say at least 65% of the automotive supplier base are under heavy financial stress at this point. Supply Management is hence a major focus area for most organizations to survive and compete.

• Are we still in time to discuss this and look for solutions to successfully impact businesses?
• What are the various strategies and models deployed by the successful organizations?
• How have organizations fared in the past recessions? Who were the winners?
• What were the success platforms then and the learning’s to take?
• What are the success stories now and the critical success factors? Anything stopping all other organizations to lead / follow?
• When and how do we get over this? Who will survive?
  

There are quite some questions on all our minds.

All of us have a task cut out to come with the best answers for this challenge thrown at us in the best possible way and help ensure a better tomorrow. We see job losses as major recession metrics doing the rounds and wonder if pink slips are the best strategic responses with a long term view. Often frantic measures go beyond rationale and emotions when it comes to a need of survival. It will be great if together we can come to some right answers.

It would be great if all of us hear your views, experiences and references of the pains and the results of the response strategies deployed . Each one of them matter to the community now.

…..Hope we will have enough interests for a followup series to take this discussion forward to capture the learning’s  from the discussion and debate on the best solutions.

Shuttling through sessions while trying to schedule / unscheduled multiple meetings and ad-hoc discussions, the few thoughts that struck me included the whole concept of going On-Demand. With eyes on ATT’s (parent company) muscle power to host/manage/sell such a solution, Sterling is going ahead with a strong on-demand focus as part of their product plan for the next couple of years. However, I personally am still struggling to get convinced if on-demand order management could ever be an enchanting alternative for large organizations especially retailers for who OMS is bread & butter. On abruptly throwing this question to Ian Finley (VP, AMR Research) during our luncheon, the response was that it could be a parallel revenue stream for SMBs but will take a while to catch on with large corporations. If you add the perspective that unlike TMS, which does not have any direct consumer involvement till the time they get the product delivered fast and cheap, OMS / ecommerce has a huge consumer experience aspect of it which could be a do or die for several retailers and hence could be a strong deterrent. The other key theme from the product road map was to enhance the user interface trying to better integrate the selling suite with capabilities of business administration functions being enabled through the UI. This would be a right move from a purview of customer experience with Web 2.0 features but the concept of business users managing the content as well as configuration seem to be somewhat contradicting the on-demand theme where you’d be using it with minimal control.

To conclude, I’d say that Sterling Commerce is definitely living up to their promise of integrating applications with their base technology platform (BIS) which they made while acquiring Yantra Corp. How far will they be able to take the concept while continuously trying to keep a Oracle or SAP to run it over, will be an interesting journey to observe…

Author - Gurpreet Kalra, Industry Lead - Supply Chain Management

On the MCF side of the house, one key theme was around 'Multi Tenancy'. As a practitioner, I and my team when working in multi channel implementations have constantly faced the challenge of balancing out 'how much should be common' and 'how much should be kept separate' given the disparate nature of the selling channels. The benefits of keeping configuration and code common are obvious. The more common the processes and interfaces, the easier it is to ensure smooth cross channel operations. There is also significant lowering of TCO by having a common operations and support team. The disadvantages are loss in flexibility, potentially sub optimal processes for a particular channel and potentially longer and more expensive regression test cycles. In the case of Sterling being used in a 3 PL like scenario, there are also customer privacy imperatives where data and processes must be completely siloed while allowing ease of administrative maintenance.

Thus the move to support multiple entities on the same or multiple instances while maintaining the flexibility to have common configuration and integrations has great potential. The Sterling product has tried to enable this for some time for e.g. the choice to inherit configuration, the ability to setup enterprise specific event handlers etc. in the newer versions of the platform. During this conference they also spoke about how they are investing in enhancing this capability so that enterprises could even maintain different data schemas thus allowing more secure separation. However I perceive a gap at this point in time. As I have explained above, with the increased emphasis on multi or cross channel retailing, there is great benefit in keeping processes and integrations common across enterprises (say Retail and Direct). Thus a multi tenancy solution will not be complete if it does not address how the benefits of keeping processes common can be realized without the downside of longer testing and implementation timeframes (since a change in one flow requires regression testing in all other flows).
 

Author - Guneet Paintal, Principal Consultant - Supply Chain Management

We hear from our customers again and again that they need to quickly improve their supply chain performance.  However, customers with large ERP and legacy system investments have difficulty responding to critical business initiatives in a timely and cost-effective fashion.  These projects can take 9 to 12 months and cost over a million dollars.  No supply chain executive or CIO who values his or her job would dare take this traditional mega-IT project to the CEO for approval in this market. 

Microsoft has built products and solutions that are easy to use, quick to deploy, simple to maintain, leveraging existing investments. For example, one of our fastest growing enterprise products is SharePoint.   SharePoint provides a proven, low cost, intuitive, easy to use collaboration and Web 2.0 desktop work place for employees.  Most companies already own many or all of these capabilities and are beginning to leverage this desktop for deploying "role-based" dashboards for performance management and streamlined, simplified, lean business processes. 

Having such a platform in place can be particularly useful when a customer needs to quickly deploy a new business process to improve performance, to achieve cost savings, or meet revenue growth goals.  The great part about this platform is that most companies already own many or all of its elements and are beginning to leverage this Microsoft platform for deploying "role-based" dashboards for performance management and streamlined, simplified, lean, “real-time” business processes. 

So, what does this platform have to do with helping our supply chain executive and CIO out of their “do more with less” dilemma?  Let me tell you about a customer I personally worked with to help get a solution like this in place:
One customer with over $1 Billion spend annually on direct materials had buyers who spent a large portion of their day searching 24 separate screens in their standard ERP solution for the information they needed to process a routine purchase order for direct materials.  This included looking at supplier, material, quality, and other records in the ERP system.  One of the top 3 business initiatives of this customer was to reduce raw material costs.  The customer was also under pressure to significantly reduce their overall Information Technology budget.  The customer had both ERP and Microsoft capabilities to take advantage of to improve their business processes.  The customer needed a "low-cost" quick time to value solution which allowed their buyers to more quickly process purchase orders and have the “real-time” visibility needed to reduce purchase price variance.  The Vice President Supply Chain had hard dollar cost savings targets that were going to be very difficult to meet without a simplified business process and KPI's to track performance improvement.  A Six Sigma team identified what the "role-based" dashboard needed to look like to implement a lean business process.  The customer selected Microsoft SharePoint versus typical options other customer might use like: (1) a custom ERP development effort; (2) purchase and roll out of the SRM ERP module; or (3) purchase of a SRM module from another vendor.  The customer now has a project underway to deploy a "Buyer Workbench" using the Microsoft platform with a 12 week implementation plan for a production roll out seamlessly integrated with their ERP system of record. The customer already owned the Microsoft licenses so the only costs for this project were the time of the internal project team and the supporting Microsoft Global System Integrator partner services.  This customer has also selected Microsoft's for their enterprise Business Intelligence solution on top of ERP and other legacy systems.  They are now able to role these capabilities out to their employees across various functional areas providing a simple, intuitive “role-based” dashboard for their role in the organization.

One of Microsoft’s key Global Alliance partners, Infosys, has created a “role-based” performance management workbench offerings (Supply Chain Visibility) that can easily connect to a customer’s legacy systems like Enterprise Resource Planning (ERP) systems to enable “real-time” exception based Key Performance Indicators (KPI’s).  Infosys has created these “Role-Based” desktops for various functional roles in an organization such as Procurement, Manufacturing, Materials Management, and Service Management.  Infosys was selected to provide the "Buyer Workbench" mentioned in the paragraph above.   Infosys has developed an offering which allows customers to get a "fast start" on a project to support their key business initiatives in streamlining work processes and improving "real-time" exception based performance management.  This includes a data model, best practice KPI’s, templates, reports, and dashboards.
 
I am seeing a large pick up in these kind of “quick hit” projects with our customers.  The biggest challenge Microsoft faces right now is helping customers become more aware of how they can leverage these capabilities that they typically already "own."  I talked to a Chief Information Officer at the recent AMR Supply Chain Executive Conference; he was considering looking at an ERP solution for pricing analytics and procurement.  These were two key business initiatives at his Company.  He was not aware Microsoft partners like Infosys had solutions in the same space.  He was very pleased to find out there were Microsoft based solutions since they run a tight ship and can’t afford multi-million ERP based software and services projects.

Join tomorrow when Infosys, Microsoft and AMR Research will present a Webinar  to understand how organizations can harness the value of their supply chain data towards improved performance using visibility and collaboration.

Siemens looks at procurement to improve its fortunes. Siemens continues to focus on procurement to improve its competitiveness and their purchasing managers will be measured against savings targets.

For CPO and the sourcing and procurement team, over and above the targets, there are tough objectives to be met out there - increasing the amount of spend under management; improved operating efficiency within; enhancing the skills of the sourcing professionals; suppliers cannot be hammered too much; keep the internal stakeholder satisfaction and external supplier long term relationship running and evolving – definitely calls for a premium.

Hammering suppliers on price and payment terms “now” vs. “long” term relationship, is a very important aspect in risk management. When there is a financial crunch in the buying organization, their sales are hit and their bottom-line is impacted.... suppliers, as partners or extended community to their organization, are expected and should also be a part of this tough journey. (Hopefully, this is only for few more months) So "renegotiating price" and change in the DPO with the business partners are inevitable. But to what extend?

One small example of redefined win-win: why cannot both the organizations implement a tiered payment term? PO to suppliers would say, net 105 days or 2% discount - 70 days or 5% - 45 days. Now if my supplier is in real need of cash to run his business, they should be allowed to choose an option from the above example in his invoice and the buying organization should respect that. This is one way of managing this crisis.

Option 2- Customer receives single shipment – The alternate DC ships order lines to the Hub DC and order lines get merged and single shipment is sent to the customer

In case of Option 1, the customer will likely to get his order lines in shortest possible time. However in case of option 2, the order is likely to get delayed because one shipment needs to be first received at Hub DC from alternate before sending it to customer.  However, for the retailers’, option 2 may be cost effective because there may be regular transportation (trucks) between DCs that makes the cost of transfer negligible.

Consumers’ patience to wait for the order to “arrive” is an extraordinarily important parameter to take into account in cost savings. Just illustrate this with an example; let’s say customer gets both the shipments in 5 days in case of option 1 however option 2 may take as high as 10 days.  Hence there is a need to evaluate this option before making the decision on cost optimization. i.e. If the delay is more than certain threshold then I go with option 1, otherwise option 2. This threshold must be defined based on consumer patience to wait. A simple way to define this could be in terms of customer cost of delay per day.

To further optimize the cost of shipping Zone skipping and labor scheduling can be considered. In case of zone skipping, the retailers can delay a group of regional orders until they have enough orders to fill the trailer and then ships them directly to carriers’ regional distribution center. This will reduce the carrier charges. This is typically achieved by retailers having pre-existing relationship with consumer-direct shippers.  
Ensuring warehouse operations operate at peak during the normal hours of operations, thereby increase in labor utilization rates during this period instead of overtime. Extended warehouse operations by running sub optimal labor utilization will lead to higher overtime costs. However it should be noted that all the options described above looks at optimizing cost to the retailer but there is a cost of customer shipment delay. Consumer patience to wait for the shipments must be used to retailers’ cost advantage!

2.Understanding the role of data in supply chain
Supply Chains are getting more and more complex. With addition of each node in the supply chain network there is an exponential increase in available data. Top supply chain organizations understand the role of this data and have effectively harnessed this to their advantage.
Procter & Gamble, Pepsico and Johnson & Johnson all have built in processes and systems to sense changing demand signals and respond quickly. Their ability to analyze massive amounts of downstream data and create long term demand-sensing and demand-shaping strategies helps them to prevent stock-outs and excess inventory.
Wal-Mart closely monitors supplier performance on a wide range of metrics in  weekly intervals. Their ability to sense supplier risk and react quickly enables them to mitigate disruptions in their supply chain.
The RAM shortages of 2006 and battery plant fires from last year brought the entire notebook supply chain to a stand-still. Organizations that have invested in supply chain visibility and collaboration platforms are able to detect changes, disruptions & risks and react to these ahead of their competition.

On June 9th, 830am- 930am PST Infosys, Microsoft and AMR Research will present a Webinar to understand how organizations can harness the value of their supply chain data towards improved performance using visibility and collaboration. Join us..

Author - Krishnan Parasuraman, Principal Architect and Practice Leader at Infosys Technologies

The topic was Global WMS deployment and our experiences while doing such implementations. 

In the course of the session we talked about the challenges faced in WMS and we noticed that quite a few were more 'traditional' - pertaining to the standard challenges faced by any software that manages operations. Things like speeding up people's tasks, seamless interleaving of physical movement of inventory and systemic processing; however another interesting facet was the focus on being able to deploy quicker and faster with MORE site specific customizations.  More?

In the course of one more conversation, another customer wanted more control centrally while being able to allow site teams to manage site specific logic.

Overall the key needs were:

1. Ability to run multiple solutions and to seamlessly reconcile functionality across them.
2. Ability to add and remove sites without implementation projects.
3. Ability to customize labels and prints without the need for IT inputs.
4. Ability to map processes without the need for IT inputs. 
5. Ability to make UI behavior dynamic by site
6. Ability to run all this from a central location without the need for multiple deployments