Worldsourcing-made in this planet

Kudos to William J. Amelio  of Lenovo for coming up with, and promoting the concept of "worldsourcing". Today Business Week  carries a story and this earlier piece on BBC is also enlightening. Bill Amelio advocates lightening up on the "outsourcing" label and the superior attitude that prevails in the wealthier countries vis-a-vis the booming but earlier poorer countries,particularly of Asia. According to Amelio, thinking of the world as one market and therefore one sourcing point suddenly opens up great possibilities for both picking up innovative ideas and developing new markets with a global well oiled supply chain and distribution channel.

Jack Welch, in one of his books recalls how one of his senior managers in GE was disdainful of  his direct report Indian scientists for no other reason than their location as they operated out of the GE India facility. With "neutron" Jack, the manager off course, did not last long and GE went on to become a leader in what Bill Amelio calls "worldsourcing." Indeed, thinking of the world as one place and one opportunity suddenly changes the scene, not only for big business but for the smallest entrepreneur.Quite simply, some places in the world are booming as markets and excellent low cost suppliers are eager to serve your business from other parts of the world.More flexibility and openness is what is called for….
   

Booming choices in CRM,SCM,ERP- executing “benefit of the benefit”

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When I walked through the exhibitor booths at the ISM conference, I was struck by the rather large number of software vendors who were trying to explain how their software would "solve" the problems of procurement,bidding,contract,supplier relationship and add "visibility" to the supply chain. Many of these solutions could speak to your legacy systems and most of them were web based and did not involve buying software and all the challenges that are involved in getting a system started. This was a sudden but clear change from earlier exhibitions I have been attending where "mega" ERP companies would be intimidating visitors by the daunting task and budgets involved in actually getting these systems to work and realizing the benefits that the system promised.

And now I saw that there is one more CRM system launched. This one is from Sage Software and is aimed at the small and medium enterprise and does many ERP functions as well.

The question is : where does all this lead the manager of a large enterprise or the owner of a small one in these tight economic times ? Adoption of these systems should be much easier than the early ERP systems but a clear and compelling articulation, for every customer that adopts these systems, would help the customer in quickly capturing the cost savings or revenue growth that these systems promise. Does this happen during the sales cycle for the system? It probably does  in the presentation slides of the software sales teams – but the challenge for the buyer is to capture the "benefit of the benefit" during the sales and buy process of the software and try to articulate  it to the  functional goals of the "owner" department. The luxury of the disconnect between why you acquire a system and what you can do with it might be somewhat reduced this way.

The Conceptual Age – reporting from ISM 93rd Conference St. Louis

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Just returned from a wonderful conference – the ISM 93rd at St. Louis. St. Louis is a nice place and the conference center was great as was the metro train transportation which I used to check out a surprisingly great Indian Restaurant, Rasoi.

There were many great sessions throughout the conference and I will probably allude to them in future posts. However, Daniel Pink as the lunchtime speaker on Monday simply resonated with me and many other participants. Pink did not probably say something totally new but did manage to convey his message really well.

In a nutshell, Pink said that three things were changing our world, particularly in the developed West. These were Abundance, Asia and Automation.  His illustration of abundance was rather neat in that the rather new self storage industry is for the extra "stuff" we have gathered and the self storage industry exceeds 22 B $ and is larger than Hollywood. Asia  and the impact of China on manufacturing and India on services is well known as are the burgeoning markets and aspirations in these countries.  But it is automation that is the clincher of  the "conceptual age". If it can be codified and written down it will be either outsourced or automated, preferably automated. Interestingly, it is not Indian accountants that took over all the tax returns but the 29 $ software you can buy at Wal-Mart to file your taxes. Why would you pay 100+ $  to a tax preparer ??

This leads to Daniel Pink’s thesis that it is necessary to have a prepared left brain that is analytical, sequential and is geared to doing well in the SAT. However, the left brain alone is not enough because by definition what the left brain can do, can be codified,written down and then outsourced and finally automated. So beyond the left brain is developing the "conceptual" skills of the right brain that ‘s about synthesis, modeling and innovation in your field of expertise no matter what your "left brained" expertise is. Very interesting and provoking and so thought many of the participants I talked to.

Happy Earth Day -“Green” Value Chain and Clorox

Today is "Earth Day" and here is to wishing readers a very happy earth day! The Earth day movement has an interesting timeline  and there is much to celebrate in terms of the progress we have made globally. However, much needs to be done. I had written about how B2B folks can help with greening the supply chain. Essentially consumers have a preference for "green" today if prices are comparable. Marketing and Sales Managers being closer to their own customers can start with one product and work with their supply management and supply chain to introduce green. Many organizations in the grocery business are doing exactly that.

An  intriguing example corporate green initiatives is the "Green Works" initiative from Clorox. Green_works_clorox_3
One would think that Chlorine is bad for the environment but the company has gone natural and here are their definitions. I have not got around to using their "green " products but I am sure impressed by the competitive prices and great in-store displays across different segments of retailers from Home Depot to Wal-Mart.

Are P-Cards abused ?

Some years ago I wrote a paper on P-Card users doing maverick purchases.  Generally, I thought the issue was resolved till the recent GAO report, much discussed in the popular media.

P-Card  use  in Government, according to the report, has  grown from 3 billion dollars in 1996 to over 17 billion dollars in 2006. This growth has resulted in over $1.8 billion in savings in various transaction costs,compared to centralized purchasing and all the associated paperwork of small value "C" class purchases.

Interestingly, my quick reading of the GAO report suggested that the troubles are with mainly the purchases over $2500 that are 3% of transactions but 44% of the dollar value. Proper authorizations
( "control") are lacking and called for. The sampling of abusive use made for salacious headlines in the popular media.

I suppose much research on P-Cards need to be still conducted, but I think one finding from my own paper , is pretty applicable to the GAO report.  That is:

  • Train P-Card users to be careful, particularly above the micro purchase threshold of $2500. Get approvals  soon after your purchase if you can’t get approvals before buying, particularly if you are a Government employee or your organization rules have a P-Card per transaction limit. Also facilitate this by asking the card companies to report all buys above  your  threshold so that the very next month all approvals are sorted out. Should not be too difficult as only 3% of the transactions are over the limit of $2500.

Doing so would deter P-Card misuse (if you need to face your boss either immediately before or after  a dubious purchase, you’d think twice)  but, on the downside,would also make the GAO report less  colorful!

Tata Nano and now Tata Jaguar and Land Rover

Tata_nano_2Tata had announced the $2500 Nano Car (left with Chairman RatanJaguar_land_rover
Tata)  to much applause. There are no dearth of buyers at this price point in Asia,Eastern Europe, Africa and Latin America . But have you ever heard of a company operating at both ends of the market ? In fact, the Tata’s have created the entire possibility of a $2500 car and now they are buying the Jaguar and Land Rover. The Nano is for the "Bottom of the Pyramid" while the Jaguar starting at $50,000 ( or 100 times the Nano) is for the super-rich. Are they capable of operating at both ends of the the market? Yes, I think so having worked with Tatas’ as customers for several years. They are  great employers  with a  history  of  caring for employees,customers,suppliers and stakeholders far ahead of their location (India) and  times. Luckily, the Jaguar and Land Rover Union does not have to worry about jobs as this report suggests. Also, if Ford can focus on its core brands and turn things around, the auto industry will see better times.

Upcoming KPO/BPO learning opportunities in Florida and New York

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I am really glad to see the surge of recent interest on knowledge process outsourcing and the shared service domain. End of March you have the Orlando Florida event where you have the eminent strategy guru Ram Charan  leading the proceedings.  On a more applied and "what I can I do with this KPO thing specifically"  note is the nice event at New York on April 29 and 30 .

The KPO summit is chaired by the noted Duke University Professor Arie Y. Lewin . Talks include  financial sector KPO by Andy Eftathiou ; types of KPO including business,investment and legal research by Suresh Yannamani ;the India advantage by Ron Somers, and a KPO best practices panel discussion  with Vasant Bennett , Ken Cutshaw EVP and General Counsel of Church’s Chicken and Ranjit  Dua of  Dua Associates.

On April 30th we have Julio Ramirez  on finance and accounting KPO, Marcia Mcleod of Williams Energy on contracting, Lawrence A. Schultis  on risk management in contracting, Jack Diggle    of Prince OMC   on managing human resources in KPO,  A group  from CPA Global  ( Bhaskar Bagchi, Inder Duggal and Susan Hanstad) with an operational KPO  case study; comparing India,Ghana,Philipines and Eastern Europe for KPO with Harry van Geijn of Fortis Insurance International; a case study of managing the "stay behind" workforce by Steve Hosle of AOL followed by Fauzia Zaman Malik  of Accenture  on captive vs build operate and transfer (BOT) models and finally  Frank Cocuzza of Penske (check out this story here) on relationship governance for KPO. Those new to BPO and KPO might like to attend the pre-conference sessions by  David Perla of Pangea3 LLC to prep for the main event.

KPO has indeed  come a long way from my various efforts since  2005 on "Global Outsourcing of Knowledge Based Services"!    

Michigan Auto Industry is changing

Somehow Michigan fascinates me for its auto industry and what it has given to the study of management,innovation and the wrong way to manage buyer seller relationships. When I heard on the radio about the leading rate of job losses and foreclosures in Michigan, I felt bad for the folks in Michigan. But this may be changing……

The news report that "suppliers learn collaboration and innovation" gave me hope. However, it is not the suppliers who need to learn collaboration but the auto industry who need to. In fact this blog has commented on the difference between US and Japanese auto and the long but vain scholarly research that has brought this out to an unresponsive auto sector.

But now, suppliers are no longer willing to cut prices to oblivion but are diversifying their customer portfolio and are not totally depending on the Auto industry but trying out opportunities in office furniture,food and appliance where a reverse auction type of mentality has started changing several years ago. Now the auto industry is changing, rationalizing the supply base and becoming more collaborative and driving innovation with its suppliers. I was particularly impressed with the take of Amerikam CEO Stephanie Leonardos on how long and painful this realization has been for Michigan Auto. But read the last few paragraphs of the interview here.

You don’t repeat reverse auctions!

Reverse auctions are controversial. Suppliers bid their lowest rates on-line and prices keep going down and the buyer’s organization is happy. Inefficiencies in the supply chain reduce, transparency increases and suppliers are on their toes. Sounds not very collaborative and that’s what I had though so far till I went yesterday to the CAPM Seminar "Sourcing the Pfizer Way".

The seminar was held at the Global R&D center of  Pfizer,Groton  and was kindly organized by Mary Kachinsky of Pfizer and participants learned a great deal  about sourcing particularly  in a knowledge intensive environment where all your internal clients are highly qualified  scientists and physicians involved in drug discovery.

I had missed Sam Dowell’s great presentation at NECON 2007 where I had presented as well. The "aha" moment came for me, when I realized (after a question) that you don’t repeat reverse auctions. You do them initially to rationalize your supply base and also when you are checking out overseas suppliers for price. You invite bidders after a thorough pre-screening and always invite several suppliers in multi-country reverse auctions so that there is enough "same country" competition. And most important, you do not necessarily go with the lowest bidder and make that very clear, upfront. But once you decide suppliers you try to make the relationship work …

GNHCC Business Expo 2008 with AMA-CT ,Google and Seth Godin

Last year (2007) I had spoken at the GNHCC Business Expo and the expo  was great. This year I was unable to attend but requested my Internet Marketing and E-Commerce class to attend and also help out with the AMA-CT booth. It was really nice of the students to attend the expo and also listen to the excellent  talk“Web 2.0: Trends in the Digital Landscape” by Mandy Gardiner, Team Manager Google Inc.

[ Note: This post from February 24, 2008 was updated for formatting issues on May 31, 2021]

Clearly, the organizers of the Expo have moved into Web 2.0 marketing as they had got Seth Godin, Web 2.0 Marketing Guru to be the lunchtime speaker. Tod Kallenbach the AMA-CT President gave me Seth’s new book “Meatball Sundae” and I just finished reading it. Fascinating……

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