An upside of crisis can be the inevitable deep analyses that tend to follow. And the recent financial turmoil is no exception -- likely keeping the world's economists at near full employment. An adjunct phenomenon resulting from this process is that many of us have become Monday morning macroeconomic quarterbacks, playing with a minefield of data. In reporting on Federal Reserve figures released yesterday, this morning's WSJ has offered up a trove of new data and interpretation that would have seemed preposterous -- and may still be -- just a short time ago.

[More]

There's been a lot of chatter in the market these past few weeks about acquisitions. Some larger players are clearly headed to Costco to look for warehouse bargains (smaller formats and Ma and Pop shops aren't worth the time for these larger players, it seems). As someone pointed out to me the other day, Ariba has clearly spent quite some time attempting to clean up its top line to show higher-quality SaaS revenues--perhaps to argue for a higher valuation in the SaaS multiple range--while quietly pushing increased CD upgrades in Q1 to show the installed base is still alive. Might Ariba be on the shopping list for these larger players? I'd be surprised if wasn't, but then again, it has been for some time. It's just a question of valuation.

[More]

If someone pinned me down and asked my opinion about the broadest and most universal trends in procurement in recent years, I'd have to say that organizations of all sizes and sophistication are gaining access to an ever-increasing amount of information to make decisions. That being said, this information may be leading them to make the wrong decisions rather than the right ones. That’s because more information in and of itself isn't necessarily a positive thing. I've seen firsthand numerous examples of data that misleads companies and becomes a negative, disruptive force rather than a positive one. Does this mean that we should all go back to the stone Spend Management ages and continue to make decisions in a vacuum? Absolutely not. We owe it to ourselves, the business, our suppliers, and our shareholders to not only focus on gathering more information, but also to ask ourselves about its integrity, accuracy and how we can best act on it. Consider, for a minute, the following examples of how data can mislead an organization, potentially lending credence to the ignorance-is-bliss argument:

[More]

There's been much buzz in the Apple community about whether Apple will be able to meet initial demand for its new iPad. Many Apple enthusiasts would agree with the statement that Apple's new product supply chains usually take time to flex to keep up with order demand (not to mention early supply chain/supplier quality issues). When it comes to early defects, it feels like Apple sometimes sweeps issues under the screen, so to speak (when the 3G iPhone came out, someone close to my local Apple store told me to hold off on buying one until they worked out the supply chain kinks, because of overheating and battery issues). After reading stories like this, which suggest potential problems with iPad suppliers such as Foxconn (AKA: Hon Hai Precision), it would seem that the iPad may continue Apple's tradition of disappointing hopeful customers who must get in the virtual (and even physical) queue for the product.

[More]

The more I have the opportunity to see how companies are (or aren't) strategically sourcing indirect goods and services, the more I recognize that there are still huge benefits to be captured even in those categories of spend where companies have traditionally developed expert capabilities, whether they be internal or external.

Take energy, for example. Most companies have a dedicated expert who works to ensure that the appropriate hedging strategy is in place. Most of those folks were in for a rough ride the past few years and I know of a few casualties and early retirements that resulted.

[More]

You might have missed this announcement last week that there is a new force of nature in the boring and stodgy industry analyst world. My good friend Phil Fersht--he's only "good" when he’s buying the first round, mind you--has decided to leave the provider world and go back to his roots as an analyst. While one of the rumors surrounding his departure from Cognizant circles back to a rejection of a single malt on an expense report submission, I'd recommend you don't believe the hype. Phil, the analyst, is for real, and my guess is that every day away from the advisory world was one where he felt he was not fully leveraging his skills set--and above all, what he enjoyed doing most.

[More]

Yesterday, we reported that First Index, a sourcing marketplace for industrial parts and former consulting firm, had closed its doors earlier this week. My tip on the situation came from AJ Sweatt, a colleague and friend who serves as community and blog master for MFG.com Mojo. AJ's employer is a competitor to First Index so there was some obvious gloating in his tone, but I'm appreciative for the tip and also his connection to colleague David Landsman, another MFG.com employee, who had previously worked for First Index and shared a number of details and thoughts with me about their history.

According to David, First Index's final decline was very sudden. What's more interesting than how it ended is how it began--and what made First Index different. First Index hosted an online site where it facilitated the exchange of supplier information to buyers, but the primary core of the business remained offline, where groups of employees would cold call buying organizations to drum up RFQs which they could then provide to their active suppliers, in effect "making the market," just as a trader does on the floor of an exchange. Using this model as a foundation, First Index's core revenue generation came from selling subscription services to suppliers (for anywhere from $3,500 to over $10K per year), and in turn gave them access to buyer RFQs. The primary categories they focused on were a near carbon copy of the early target areas FreeMarkets (not Ariba) tackled from a strategic sourcing perspective as well: machinings, stamping, fabrications, electronics, plastic injection molded parts, etc.

[More]

Spend Matters would like to welcome Richard Rich back to our virtual pages to continue the conversation on supply risk management.

The Corporate Executive Board published what they consider the top ten risks facing corporate America as of January 2010. According to me, nine of these risks have a disrupting impact on a supply chain, though some are more apparent than others. All of them can stop a supply chain from functioning as an adaptive, smooth process, supporting the organization it serves. If my thinking holds logic, the supply chain is an enterprise (corporate-wide) risk.

Why is enterprise risk important? Because the risk mentioned, as it relates to the supply chain, impacts every part of the organization that buys, stores, and transports. Applying risk management tactics to the supply chain is a solution to the disrupting risks. These tactics will yield a mobile, adaptive, and light supply chain that reacts well to changing economic conditions, blips in markets and material shortages. The key is to recognize, analyze, and anticipate risks and make plans to mitigate them.

[More]

On Tuesday, March 9th, First Index, a supplier-pays marketplace and former direct materials sourcing and supply chain consultancy, closed its doors. First Index had received significant funding from LMS Capital, a UK-based firm, and Bessemer ventures. Earlier today, I called their headquarters (509-363-1997) and listened to a recording saying they had "ceased all operations" (hat-tip: AJ Sweatt). First Index's decline marks the end of a long struggle to build a business model that once saw them hit roughly 100 employees and over $10 million in revenue, but that eventually ended in failure as they spiraled through business models and got caught up in the manufacturing downturn.

[More]

I've been asked on more than a half-dozen occasions to spend a day with clients (both practitioners and vendors/services providers) to provide my view of the rapidly unfolding spend analysis landscape, discussing a diversity of approaches to identifying savings opportunities and reducing supply risk. The most recent extensions of my research in this area -- most of which I've not featured on Spend Matters, but which I plan to share in two upcoming Compass Series on the subject -- focus on the intersection of spend visibility, supply risk management, and supplier information management. I'll go many layers deeper than Purchasing's recent effort to look at the space.

An increasing number of companies also use spend visibility as a means to support other initiatives, including supplier diversity reporting, rather than have individuals and small groups tackle these processes independently through different platforms. (The exception to this is in the case of multi-tier reporting requirements, which few spend analysis platforms support without significant customization). If we look at spend analysis independently today, what is the best way to segment the landscape and the various providers within it? Whom should companies shortlist?

[More]