Archive for the ‘Personal’ Category

Easter weekend and belgian cobbled climbs

April 1, 2010

Stateside, belgian cobblestones are something that goes in and out of vogue for home owners who want to add some classisism to their gardens and driveways. For me belgian cobbles carry another type of grandeur.

Because this weekend – apart from being easter – is also the center piece of the northern classics seasons: the Ronde Van Vlaanderen. In it’s 93rd edition, this classic cycling race features 15 brutal climbs with up to 23% grades laid with belgian cobbles to make matters worse. In rainy conditions it’s like trying to ride up a tilted and bumpy ice hockey rink.

Tom Boonen

Many of the climbs; such as the Koppenberg and the Muur-Kapelmuur are so deeply lodged in the mythology of belgian cycling that there have been great protests when municipalities have proposed to pave the roads with asphalt. In recent years, a few of the climbs have been restored as they had become in all aspects unridable. Talk about a one-time sourcing project; restoring a 100 year old cobbled farm road. In one case – the Paterberg – the climb was built specifically for the race by a itself by a jealous farmer who wanted to have the race go through his front yard.

Sourcing belgian cobbles for cycling racing purposes might be a very regional category in terms of procurement but take a look at any indirect materials and services supply chain and you’ll discover a uniqueness and seasonality that often hinders standardization and volume aggregation initiatives. The devil may lie in the details; but the details is also what makes the world of procurement such an exciting arena.

The end of the long hot summer

August 12, 2009

Just to clear things out a bit; I’ve spent the past six weeks chopping wood, painting old windows, doing yoga and being generally lazy.

Now, I might have noted this beforehand and I’m sorry if this has caused any confusion. In any case, Purchasing Transformation is now officially back from summer vacation.

Should ethics play a part in global sourcing?

June 3, 2009

Tomorrow marks the 20th anniversary of the culmination of the Tiananmen Square protests (and massacre). Though reforms have come into place and much has changed in China since then – some aspects of what most of us in the west consider fundamental rights are still not respected by the Chinese government namely:

  • Human rights issues
  • Freedom of speech
  • Censorship

Though economic development (and the current situation) might offer reasons to do otherwise I still believe that it might be time to reassess global sourcing strategies from an ethical and moral standpoint.

If not just to honor the memory of the man who in vain tried to stop tanks from leaving the Tiananmen Square the day after the massacre; to this date his identity has not been revealed nor has any information about what happened to him after he was pulled away by police officers.

Successful spend management – big and small

June 1, 2009

Booz&Co. Strategy+Business provided a set of downturn toolkits (distributed by e-mail but available online at the Booz&Co. website) to their subscribers over the weekend and for purchasing professionals Booz&Co. had packaged an leaflet-like memo to the CPOs along with a free digital download of their recent book Sourcing Reloaded: Targeting Procurement’s New Strategic Agenda. Good stuff for anyone willing to get some external input into their current struggles.

On the other end – the smaller scale if you will – let me share the recent downturn and spend management development of Lux Stockholm, one of only 14 restaurants in Sweden with Michelin stars. Lux Stockholm is just a stone’s throw away from both my apartment and office (midway to be precise) located on the diminutive Lilla Essingen in Stockholm. Now, Lux Stockholm isn’t exactly cheap – and the Michelin star does somehow explain that one shouldn’t expect it to be. As one of the leading restaurants in Scandinavia one might also suspect that they don’t cut back on spend much even in the face of recession.

So deem my surprise that as I rode my Pinarello up the street I passed a photocopied A4 poster taped to the garage elevator door (punk-rock-stylee) advertising Lux Stockholm’s waterfront grill patio. Now some might think this is below par what might be expected out of advertising from a restaurant whose dishes start at €20 and go up, but I beg to differ.

Lux Stockholm has just taken Booz&Co advise for CPOs just a tad bit further (though I suspect that the staff at Lux Stockholm have no clue about even the existance of Booz&Co. or any of their insights). Number one on the Booz&Co. CPO memo list is: Aggressively negotiate lower pricing and improved terms in nonstrategic spend categories.

Let’s break this down:

  1. Aggressively negotiate lower pricing – using the company photocopier for advertising is as close to free as you’re going to get, so it’s aggressive alright. Taping the ads to public buildings using staff (I suspect, some of them live in the neighborhood) is probably the cheapest distribution method available. One out of three.
  2. and improved terms – talk about print on demand. The distribution is also taken care of. Two out of three.
  3. in nonstrategic spend categories – one can argue about the strategic nature of advertising, but since Lux Stockholm already received their star in Guide Michelin, most of the strategic advertising and brand awareness could be seen as taken care of. Strategic spend categories for Lux Stockholm is with high probability food related and by cutting down on the costs of nonstrategic categories the staff probably still use the best sources available. Three out of three.

Posting flyers on lampposts and in public places might not be what is expected from luxury restaurants but from a spend management point of view it’s spot on.

When suppliers are not (the only ones) to blame

February 17, 2009

Sometimes I wonder if the complete failure of certain supply chains isn’t for the better.

Recently the Chinese ministry of commerce announced that 922 toy exporters in Guangdong province closed shop in 2008, out of the 3,089 toy exporters in 2007. While there are many reasons for this (India recently imposed 6 month ban of Chinese toys come to mind); let me offer this particular anecdote.

My 10 month old daughter received an electronic toy penguin from a friend of the family a few days ago. It has a couple of buttons on its stomach which when pressed causes some lights to flash as it plays a random melody. All in all; it’s a pretty average example of what can be found in any Toys’R’Us across the globe. Of course, it was manufactured in China. Now to the peculiarities:

  • It can’t be turned off. To paraphrase a well known tag phrase; it’s a gift that keeps giving (parents a headache).
  • And so far, the most frequent of the random melodies played is “Take me out to the ball park”. And let’s just clarify one thing; it’s a traditional toy penguin, bearing none of the trademarks of the Pittsburg-based baseball team.

So here I am; with an electronic toy that can’t be turned off, which plays “Take me out to the ball park” if anything moves in its vicinity. And this profanity (for lack of better description) is sold in Sweden – a country with little more than 800 registered baseball players – so the potential target audience who might enjoy a penguin which can play “Take me out to the ball park” is limited, to say the least.

Yet someone, somewhere, has made a business decision that there is probably a market for this toy and set about to source a supplier who can produce it; a distributor who can distribute it; and organized a sales force to bring it to the public.

With the toy in hand; the whole set up seems like a really stupid idea to me; unfortunately I doubt that this sentiment is shared among the workers that now struggle to find work in the affected regions.

Give a Little Bit by Going Red

November 28, 2008

With the holiday season approaching I thought it would make sense to promote the spirit of giving, even though giving is not something that is usually associated with purchasing in a positive way.

I recently went to market to acquire a new shirt. A seemingly simple purchase – but also one where personal preference and quality (TCO) plays a big role (not unlike buying a pair of shoes). With a professional background in purchasing I consider myself a rational agent and based on previous experience I had the specifications ready:

  1. 100% Cotton, 2-ply
  2. Business-friendly color (no extremes)
  3. Figure sewn
  4. Straight collar (suits the four-in-hand knot best)
  5. French cuffs

Prior to the industrial revolution the choice of supplier would have been reasonably simple: The local tailor. In the 21st century however, its a completely different market. Of course there is still the possibility of approaching the (perhaps now only somewhat local) tailor – but with a self-imposed spending limit of around 50 euro that is not really an option.

Although not contractually bound I do have a list of preferred local suppliers so I started my search there. This was perhaps the first non-rational (albeit comfortable) choice as a more thorough analysis might have shown that e.g. quite a few excellent online suppliers exist.

Reasonably well-prepared though, I now faced the oldest enemy of purchasing: The sales person. Retail is usually a fixed-price environment but that advantage is quickly lost to accessory bundling, volume aggregation offerings and specification obfuscation or override (I was on my own – if you bring your special someone you can add buying authority bypass to the list).

The purchase itself went rather smooth actually – an inexperienced sales person was no match for my mitigation by budget strategy. However, while closing the deal I was caught off guard by what I now realize was the equivalent of the ‘candy near the counter’ technique – A stand with Red Cross logo-shaped cuff links and the slogan: Give a little bit. Non-rational choice #2 but it felt great.

I got my shirt and I gave a little bit to a good cause in the process. The cuff links are surprisingly good as well – It is not Sterling silver but they are functional and anything else really does not matter or change the statement wearing them makes. I think it is a well-executed campaign (a brooch alternative exist for women) – priced at around 5 euro it is also an offer that is very hard to refuse:

Red Cross - Give a Little Bit Campaign

Red Cross - Give a Little Bit Campaign

So, with the holiday season closing in – move focus from the current recession for a bit and consider replacing (or re-instating?) your holiday presents for employees, clients or key suppliers with charity donations. Most charities will help you make a statement as well, by providing gift cards that describe the charity or cause you can distribute in a holiday season equivalent of ‘Going Green’ – let us call it ‘Going Red’.

To help promote the Going Red initiative I will pick the 3 best comments with suggestions for similar initiatives or references to this post on other blogs and send the author a pair of above mentioned cuff links (or brooch, your choice). I will announce the winners here in an update within a few days.

Make or Buy, the Effects of Competition in the Supply Chain of Hits

September 19, 2008

Norman Whitfield and Barrett Strong
Are here to make everything right that’s wrong
Holland and Holland and Lamont Dozier too
Are here to make it all okay with you
Billy Bragg, Levi Stubbs’ Tears (1986)

Norman Whitfield supplied hits to Motown Records. He didn’t sing, he didn’t perform, he sat in the basement of Motowns Hitsville U.S.A office and supplied The Temptations, Gladys Night and Mavin Gaye with hits. He is generally acknowledged as being a key figure in the creation of the Motown Sound.

You see, Berry Gordy’s Motown Records took the “make” path to success.

Motown had an inhouse songwriting staff that included Norman Whitfield, Barret Strong, Lamont Dozier and brothers Brian and Eddie Holland. They resided in the basement of the Hitsville U.S.A studio with the so-called Funk Brothers (keyboardists Earl Van Dyke, Johnny Griffith, and Joe Hunter; guitarists Joe Messina, Robert White, and Eddie Willis; percussionists Eddie “Bongo” Brown and Jack Ashford; drummers Benny Benjamin, Uriel Jones, and Richard “Pistol” Allen; and bassists James Jamerson and Bob Babbitt).

This approach to supplying the sound of young America (such was the Motown motto) earned the label 110 top ten hits in the US alone from 1961 to 1971.

While this was going on in Detroit, out on the east coast, record producers were taking the “buy” approach to hit creation.

In 1962, 165 music businesses were crammed into the Brill Building on Broadway in New York City. It was a one-stop shop where you could match the songwriting power of Lieber and Stoller (Stand By Me/Jailhouse Rock), Goffin and King (The Loco-Motion), Greenwich and Barry (Be My Baby/(And) Then He Kissed Me), Mann and Weil (You’ve Lost That Lovin’ Feelin’) and Bacharach and Hal David (Walk On By) against one another by just walking down the halls of the office building asking for a hit record.

“Every day we squeezed into our respective cubby holes with just enough room for a piano, a bench, and maybe a chair for the lyricist if you were lucky. You’d sit there and write and you could hear someone in the next cubby hole composing a song exactly like yours. The pressure in the Brill Building was really terrific — because Donny (Kirshner) would play one songwriter against another. He’d say: ‘We need a new smash hit’ — and we’d all go back and write a song and the next day we’d each audition for Bobby Vee’s producer.”
Carol King quoted in The Sociology of Rock by Simon Frith (1978)

Competition is truly one of the great driving forces for innovation, and as purchasers, the job is to see to it that this comes to the benefit of the company. But as the example of Motown shows, this doesn’t mean that you automatically lose out by taking the “make” approach.

Sad to say, Norman Whitfield one of the creators of the Motown Sound died on September 16th 2008. I’m going to put “I Heard It Through The Grapevine” on repeat this afternoon to honor his memory.

What History Can Teach Us About Using Different E-Auction Methods

August 20, 2008

Alan Buxton recently posted a novelty bit on his e-Sourcing Place describing how Takashi Hashiyama, president of Maspro Denkoh Corporation, decided how to sell his company’s art collection. In the end he chose the classic children decision-maker paper, rocks and scissors and let the two competing suppliers duke it out playground style.

In the latest issue of Efficient Purchasing, IBX Andreas Bernhard recalled a similar historic moment; Johan Goethe using a second price auction to establish the value of his work:

An auction is basically motivated when you suspect lack of transparency. One of the most famous examples of getting more transparency by using an auction is the German author Goethe, who used a second price auction to establish his market value. In 1797 he wrote to his publisher Vieweg: “I propose to offer Mr. Vieweg an epic poem, Hermann and Dorothea, which will have approximately 2000 hexameters. (…) Concerning the royalty we will proceed as follows: I will hand Mr. Böttiger a sealed note which contains my demand, and wait for what Mr. Vieweg will suggest to offer for my work. If his offer is lower than my demand, then I take my note back, unopened, and the negotiation is broken. If, however, his offer is higher, then I will not ask for more than what is written in the note to be opened by Mr. Böttiger.”

The complete setting of this auction has been analyzed by the game theory experts Benny Moldovanu and Manfred Tietzel in “Goethe’s Second-Price Auction”. Pressure pays off, even in the eighteenth century!

Andreas full article describing different e-auction scenarios can be downloaded from the Efficient Purchasing website.

Euro2008 – The EUROPASS Supply Chain Impact

June 10, 2008

With the Euro2008 in full swing, football fans from all over Europe are flooding into Austria and Switzerland to see their faves duke it out on the pitch. But in the background an amazing supply chain has been processing stadiums, balls, trophies, mascots, fan-zones, and accommodations etc for years.

The revenues for this years event is expected to be up 50 percent from Euro2004 in Portugal, landing at an astonishing 1,3 billion Euro, most of which are coming from broadcasting rights,

The budget – or shall we call it purchasing volume – for the organizers were set at 147 million Euro; covering stadiums, fan-zones, mascots, promotions, logos, and – the always as controversial – a new ball: the Adidas EUROPASS.

Since every championship needs a sense of urgency and innovation – and with rules pretty rigid – organizers and suppliers often start to look at the details to develop the game. The Adidas EUROPASS was unveiled late 2007 and reactions from the players was skeptic, at best.

“Those balls are going all over the place, changing direction all the time, especially if fired from a distance,” Croatia goalkeeper Stipe Pletikosa said to India Times earlier this week.

“They are not designing balls for goalkeepers,” Netherlands goalkeeper Edwin van der Sar said in the same article, referring to the technological wizards at Adidas who designed the white ball with the black patches.

Although Adidas are keen to point out all the high tech features of the ball, as seen in this promo film there are still loads of manual labor involved; supply chain management at Adidas has to be top notch for the players to succeed.

The ball is also made in custom batches, with unique graphics for each game including the names of the opposing teams, group, date, city and stadium. The final is to be played with a special edition entitled EUROPASS Gloria.

No matter who actually wins the Euro2008 using the new features of the Adidas EUROPASS (my bet is Germany, consistency always pays off, and they’ve kept their world champ runner-ups from 2006 intact), one thing is certain; the ball is still round. But only just.

Tuesday Inspiration – Re-think your way of Powerpointing!

June 3, 2008

On recent ePurchasing conferences I attended a lot of presentations dealing with the topic of adoption – some good, some bad, some really excellent.

How can I transform my organization? How do I convince my people? How do I engage internal sharing of knowledge? Well, I guess we all agree that one of the keys to success here is obviously communication.

But I guess you already knew that and I guess you are already doing a lot of presentations promoting your internal programs and success stories, right? So “Communication to improve adoption” – checkmark – done!

Well, I think there is a lot of room for improvement in how we communicate and present. I recently read the book “Presentation Zen” from Garr Reynolds which I would like to recommend to you as a great source of inspiration to radically re-think the way you are presenting today.


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