The issue of Supplier Risk Management has been in the news recently. In January, Wal-Mart released its 'Ethical Sourcing Update,' wherein it announced, amongst other changes, a new zero tolerance policy for suppliers that used unauthorized subcontractors. The new policy was in response to the fierce criticism that Wal-Mart received in November 2012 after a fire in a Bangladesh garment factory claimed the lives of 112 workers. In that case, Wal-Mart claims that the factory in question was used without its knowledge and that it had stopped authorizing production there. The rise of highly fragmented and global supplier networks has necessarily lessened the amount of control that any company has over its supplier network. Accordingly, Supplier Risk Management is a growing discipline that is receiving increased attention. Current globalization trends only serve to reinforce the need for a dynamic, fluid and strategic Risk Management program. A recent but already classic example of poor Supplier Risk Management involved the hard disk drive industry. The industry was highly concentrated in Thailand, with over 1,000 factories operating in the sector. In late 2011, the country experienced a particularly strong monsoon season that caused widespread flooding. The flooding set back hard disk drive manufacturing for months and caused global prices to increase approximately 10%, affecting PC sales worldwide. It was almost a full year before production returned to pre-flood levels. The classic methodology utilized in approaching Risk Management hinges on three core work streams: Risk Analysis, Risk Assessment and Risk Mitigation. At the highest level, the goal is to determine the probability of a negative outcome, determine the impact of such an event and introduce measures which will lessen the impact.
Patrick Reymann, Director, Strategic Sourcing Operations, Corbus
Who's watching you? What do they know about you? Are you worried your record in the Big Data database is wrong? Would you correct it if you could? What if you had a tool to manage your big data like you manage your spend? Around SIG, we've been talking a lot about Big Data, as you can tell from Sarah's two posts (which you can access here and here) and my earlier post on the topic. This morning I started a firestorm of emails when I blasted the team with a note about a new tool I just discovered. Although in beta, Acxiom, a company that supplies marketing data to organizations, has published an online tool that allows you to access your personal "Big Data" record. I decided to try it. For a few moments, I stared at the screen, convincing myself to input the necessary information required to produce my report. Naturally suspicious when prompted to enter any kind of sensitive information (from weight to address to social security number), I hesitated to experiment with the tool. I decided I wasn't giving up any personal information that wasn't already public, and for the sake of this blog, I'd try it. After a very quick login, the tool presented me with several categories of information, including data on my characteristics, home, vehicle, economic, shopping, and household interests. Once I click on these categories, I can view the data that this company has about me, and I can actually edit it. For example, I can change my gender, and then configure my data record so that my gender characteristic will be excluded.
Mary Zampino, Senior Director of Global Sourcing Intelligence, SIG
Don't let anyone tell you differently. To be great in a sourcing role, you need a special combination of skills. Good sourcing professionals have the unique ability to execute flawlessly, and the personality to sell their ideas internally. Back "in the day" people thought of procurement/sourcing professionals as order takers. Never mind the fact that that description was never accurate...but it is most certainly not true now. Today's sourcing person must be passionately interested in learning. They must be full of curiosity and very observant about the world around them. Current events are filled with things that impact the supply chain—crowd sourcing, the cloud, conflict minerals, sustainability in Asia...every one of these things can have an effect on a sourcing person's role. At SIG we see hundreds of sourcing professionals every year in person. It is very obvious why some of them are successful and why some of them are not. If I were writing a job description for a new sourcing person, I would look for someone who is flexible, passionate about learning, interested in mentoring and very intelligent. In the past, people "fell into" sourcing careers. Today, they are highly-sought after and people often enter them from the most unlikely of paths. We have lawyers, accountants, engineers, and many other hard science professionals that have moved into sourcing by choice. This unique hard science background combined with the other talents seems to be the most successful combination for sourcing leaders. While an engineering or law degree is something that anyone who successfully pursues one can get, coupling that degree with interpersonal skills produces a special breed of person that is not that common. You can't underestimate the importance of being "a people person." Although it seems counterintuitive, this is one area that I feel can actually be taught. When I went into sourcing I was a CPA with a Masters in taxation.
About eighteen months ago, at the SIG Global Leadership Summit in Seattle, we concluded the event with an evening at "Lucky Strikes," an upscale bowling alley and billiards hall. For those of us who work for SIG, most of the heavy lifting for that event was behind us. It was Thursday night, which made it time to enjoy the fruit of our labors with our members. I don't know about most of you, but I for one become a better bowler as the night progresses. Liquid courage, perhaps...or maybe it's that I put too much pressure on myself to do well and if I don't, I embarrass quickly. Against my better judgment, I joined a few members and colleagues in a game. Yet, imagine my horror when in the first frame I threw not one gutter ball, but TWO. Mortified beyond belief, I removed my bowling shoes and walked away from the game without looking back, even with my colleagues encouraging me to stay. Having grown up with a pool table, I moved on to the billiards room where I knew I could build my confidence. After playing a few rounds, I went back to check on my friends who had continued bowling without me. One of our members — a fairly athletic guy, I might add — was not doing too much better than how I imagined I would have done if I'd had the courage to continue. And yet he did what I had been unable to do — he stuck with it and had fun despite his low score. Again I found myself being talked into joining a game one lane over. I did so fairly reluctantly, as I was still reeling from my earlier failure...but only agreed to play because the bowlers in that lane had the bumpers up, and I knew it would be nearly impossible to throw a gutter ball! With the confidence I had lacked in the game that I'd abandoned like a coward, I bowled my first ball straight down the lane, knocking down eight pins. Phew. The idea that I would fail again was looming over me, and yet I bowled not just decently, but with gusto, throwing spares, strikes and respectable scores frame upon frame.
Following the 2013 SIG Global Sourcing Summit in Amelia Island this past May, I was reviewing feedback from our breakout session attendees and read a comment that referenced the usefulness of the Duarte workshops with respect to presentation content, delivery and design. Usability and customer experience are both passions of mine and drive me when I am constructing guidelines for our Summit breakout session presenters and their slide decks. As a sourcing professional, I am sometimes hesitant to recommend a particular product, service, or provider. But, I can’t really keep quiet about this organization any longer. I attended the Duarte workshop and it was amazing. If you are someone who has to present things like business cases, market reports, research, spend category strategies, or if you have difficulty conveying your message, then this workshop should be part of your professional development. The two-day workshop took place in the Duarte headquarters in Sunnyvale, CA, where the facilitators immediately threw us off by asking us not to introduce ourselves with our name, company and role¸ but rather our name, company and favorite story. In each 5-10 second introduction, I felt like I already knew the person based on their story and their passion in conveying the story. During the workshop, we each built a presentation that addressed a real problem while in the session...but no PowerPoints were allowed...no computers or tablets at all! The presentations required agile development yet no particular expertise with design. We learned some excellent strategies for how to structure a presentation and watched guru Nancy Duarte map some really famous speeches (Dr. Martin Luther King's I Have a Dream, President Ronald Reagan addressing the country after the horrible Space Shuttle Challenger tragedy, and Prime Minister Jawaharlal Nehru speech on India's Independence).
Mary Zampino, Senior Director of Global Sourcing Intelligence, SIG
This post originally appeared in the Allegis Group Services blog, but is relevant and with a few minor edits, worth posting here as well. Lets face it...not so long ago, being in procurement wasn't seen as a very sexy occupation. Ok...I know some of you are chuckling thinking it's still not that exciting, but I beg to differ. And I'll give you five good reasons why you should give procurement and sourcing professionals more credibility and respect.
I just finished viewing insights from Risk Expert Joe Yacura of ISG, in the video, Supply Chain: Understanding The Risk Factors. This was an excellent, less-than-30-minute overview of supply chain risk management that I enjoyed with my bagel and tea. Joe discussed the critical nature of supply chains and the sources of risk, and he made some recommendations on how to harden the supply chain, specifically addressing cyber-attacks. A company’s supply chain and it's criticality to the company’s reputation is more evident as the sources and frequency of risk increase. Joe defines supply chain risk simply as "the disruption of the flow of products or services that meet the requirements [of the company]." Consumers and regulators alike want greater transparency into supply chains, with a better understanding of vulnerabilities, and as a result we are seeing an increase in mandates for company supply chains. Major sources of risk include weather, natural disasters, product reliability and consistency, counterfeit information and misrepresentations. Let's consider some of those risks: weather...who among us thought Manhattan could be so vulnerable until Sandy hit? How many of us, our hearts aching for the victims, were also concerned about our financial institutions and information, servers and files drowning in rancid water? Were there back-ups? Was my credit card statement floating in Battery Park or the basement of the bank I use? Cyber-attacks: wow, even the New York Times went down recently. If they can lose their bread and butter who else can be hit?
Mary Zampino, Senior Director of Global Sourcing Intelligence, SIG
Crowdsourcing is something that people fundamentally understand when it comes to things like getting something designed...but few people really get how procurement organizations can use it with some of their business processes. I decided I needed a little more firsthand knowledge, so I "applied for a job" as a "crowdsourcer." And wouldn't you know, as soon as my application for the job was accepted, I was almost immediately laid off. They had filled the position before I could even start the work! Imagine my surprise a week later when I got an email that the position had opened up again. I quickly accepted and then received some very very lengthy emails, essentially requiring me to sign my life away in order to register as an official "crowdsourcer." I was very impressed to be sent a video that walked me through all the documents I would have to complete for the registration process. I also received a short FAQ sheet, which I was told I had to review before sending any questions to the support desk. What with a few college degrees behind me I figured it was a straightforward process and I would complete it and get on to the testing quickly. Little did I know that the actual registration process was dramatically different than what the video explained. So after three hours on Saturday of Labor Day weekend, and referencing the FAQ many times, I finally broke down and emailed the support team. They made it very clear that any question submitted had to be concise and with screenshots. I carefully constructed my request asking where to find information so I could complete the registration process and begin my testing. My husband was surprised when he returned home from some Saturday afternoon fun, to find that I was still sitting at my computer some two hours later, still trying to simply register.
Two years ago, McKinsey & Company published an article on Big Data, calling it "The next frontier for innovation, competition, and productivity." I recently ran across the article and it struck me that in many ways it was spot on. Frankly, analyzing large data sets isn't a new concept...it just has a title now...Big Data. And now that it does, as I mentioned in my last Big Data post, I can't stop thinking about what it is and how it can be better used in the world of sourcing, outsourcing and supply chain. One of the things that really captured my attention in the McKinsey article was their reference to the issues that need to be addressed regarding Big Data, including privacy and security. Imagine the collective power of the information consumers give to various sources--banks, loyalty programs, online retailers, healthcare providers--most of the time, the information you provide in one place isn't meant to be accessed by another. We expect our information to be kept private and confidential. Disclosing personal data is a slippery slope. As Jeff Bertolucci recently said in InformationWeek, "...companies implementing big data strategies might consider this informal motto: 'Don't be sneaky.'" Be honest with how you plan to use the data you collect and don't share it without prior knowledge, unless you are ready for the mistrust that will follow. Ideally, Big Data should result in something that benefits both the company collecting the information and the consumer or organization providing it. Why else would people be willing to give freely of private information?
I have to admit, when I think about the power of Big Data, it is a little bit creepy. I mean think about it...it's a little like being stalked...and at times, by ourselves. I go to a website like Overstock.com and look at kitchen chairs. The next time I am on my personal email, an ad for those very chairs pops up. From a marketing perspective, it’s called “retargeting.” The chance of my purchasing those chairs increases when that same ad pops up again and again, following me from website to website. From a business perspective, it’s called Big Data. The company...in this case Overstock...can take the information that they’ve gathered on me, a consumer who is interested in purchasing chairs for my kitchen, and use it predictively.
By definition, Big Data refers to three Vs: volume, velocity and variety. But it’s what you do with all the data you have (volume), the speed at which you can access it (velocity) and the types of sources you pull it from (variety) that provides the real insight. One of the best known uses of Big Data analytics is Amazon...and they’ve been using it for years to suggest items you might want to purchase/read/etc., based on your search terms coupled with other people who viewed/purchased the same items. Sometimes I select an item just to find those that are similar. But Amazon goes one step further too and sends relevant emails down the road, just when you’ve nearly forgotten about that item. Talk about a good use of predictive analysis.