Discuss, debate and exchange ideas on latest trends and opportunities in the Business Process Management (BPM) landscape. Deliberate on adding “business value” to clients, vendors, employees and various other stakeholders to enhance customer satisfaction and sustain long term partnerships.

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January 30, 2014

Outsourcing Sourcing - How does it impact you as a Category manager

At an organization level, outsourcing benefits span across cost arbitrage, automation, compliance improvements, savings commitments, but how does it benefit you as a category manager?

If you are a category manager in an organization and have wondered how outsourcing of sourcing activities can directly impact you, this blog is for you. At an organization level, outsourcing benefits span across cost arbitrage, automation, compliance improvements, savings commitments, but how does it benefit you as a category manager in your day to day operations, is what is discussed ahead.

As a category manager, you would want to spend your time on building category strategy for your portfolio of categories, study the market trends and incorporate them into your category plans, manage a robust supplier management program, build on stakeholder connect and get involved in the strategic aspects of key sourcing events. Instead you may be spending more than 70% of your time in managing sourcing events, handling ad-hoc sourcing requirements, query handling, conducting SRM & SPM exercises and handling escalations. Sounds familiar? With sourcing outsourced, you can experience the following benefits directly impacting you:

  1. You can outsource all the small value ad-hoc sourcing requirements that come unannounced and take away a lot of your time. You would need to hand hold the outsourced team for the initial couple of requirements, but after that they would be fairly independent and you would be required to only do dipstick checks.
  2. For large sourcing events, you can out-task activities, depending on the sourcing plan. The activities may include market research and supplier long listing, suppliers capability assessment, preparing RFX pack, conducting RFX event online, building supplier assessment criteria, drawing technical and commercial comparatives, performing bid analysis etc. So, while you focus on overall managing the sourcing event, laying the ground rules, managing cross functional teams, draw an overall plan and tollgates, and taking key decisions, the outsourcing team can support with all the documentation, coordination and analysis.
  3. An outsourced provider has a team of sourcing resources supporting your organization. As a process, they mostly discuss the sourcing requirements and so it's a collective knowledge of a lot of sourcing professionals which helps in building and running a sourcing event. You get access to multiple thoughts and ideas by just reaching out to one contact point in the outsourced provider's team.
  4. The outsourced team may not have handled the type of sourcing event for your organization that you want them to conduct. This brings in fresh perspective to the event and often very useful new ideas to view the whole project in a different light. 
  5. Several outsourcing providers have a central pool of category experts, who stay abreast with category trends, and offer their expertise across sourcing projects for multiple clients, for e.g. Infosys BPO Center of Excellence and Commodity councils. You get access to all that knowledge and expertise as a part of your partnering. Owing to attritions and job rotations in organizations, it is highly practical that you are handling a particular category for the first time and are not really an expert on it. This is when the access to the outsourcing provider's knowledge pool is very useful.
  6. You want to manage a strong SRM / SPM program, but often fall short of time and resources. You are not to be blamed. While the concepts, the plan and the methodology of SRM/SPM does not take long, it is the implementation which is highly cumbersome and time consuming. Preparing questionnaires, getting data from systems and compiling, sending questionnaires to respondents and seeking responses, compiling information and arriving at performance scores, collation of data for periodic reviews etc. are the activities that require tremendous amount of effort. Unless you have a centralized SRM support from your organization, all these activities take a lot of your time. However, you can get all this done through an outsourced team.
  7. Sourcing processes in most organizations are governed by a set of rules and guidelines. Often, while running multiple events, compliance to rules and guidelines gets compromised, sometimes inadvertently. An outsourced partner, however, is driven by KPIs and 100% compliance to the process guidelines is critical. So, you can be rest assured that the process compliance would be taken care of, the audit trail would be maintained and documents repository would be in place. 
  8. If technology support is a part of the offering from the outsourced provider, you get access to state of the art tools, making your work simpler and smarter. Infosys BPO for example offers Sourcematix (in alliance with Newpoint consulting), a category management & strategic sourcing tool which provides a structured workflow, decision support and expert guidance on process steps.

If you are a category manager and have started experiencing outsourced support on sourcing, I would be anxious to know your views.

January 22, 2014

Collective Intelligence and Analytics

 In today's collective economy where we see diverse applications and heavy information consumption, it is imperative that we seek patterns and linkages in data.

In the last few years, our ecosystem has experienced massive changes owing to the collective market forces getting stronger. Malcolm Gladwell established the flat world; Zuckerberg established a highly networked one! And I couldn't agree more on how networked, collective and multi-dimensional our lives are today! Look around you within your respective zone of operation to see if you mirror these seemingly non influential impact waves such as bulk download of mobile applications as guided by friends, "liked" more than ten posts a day on social sites, have been bombarded with emails and newsletters, have reviewed more product portfolios, you are "the collective atom" (as I call it) of the social era.

Who is a "Collective Atom"?
We all derive intelligence in multitude and magnitude by viewing content on Facebook, newsletters, updates from LinkedIn, advertisements on apps and the web, HD television, newspapers etc. We do not necessarily seek this information yet receive it from various sources in various formats. A collective atom is a system that is a receptor, filter and influencer of information. Collective atom is free to respond positively or negatively to every binary that is consumed. Everyone's responding, observing and influencing- I like / I dislike/ I post / I share. In other words, we all are collective atoms. We are constantly connected on LinkedIn or Facebook. "Someone posted a picture of a dress - I like it too, someone shared a song but was not my type, a new game has 200 good reviews and so I need to download it too, lets attempt this online shopping, the movie got boring towards the end, Gangnam video is fantastic" and so on. Information is flowing everywhere and one seems to be influencing the other! But not all of it seems applicable and relevant. There is loads of data out there that need not make sense to one, but is extremely critical for the other, thus making data subjectively intelligent.

Derived intelligence
A friend of yours "likes" an advertisement of paintball on Facebook. What does that tell you? Does he like "the paintball as a form of entertainment" or does he like the "advertisement"? Do you want to gift him a coupon for a paintball event on his birthday or do you want to share similar whacky advertisements with him to please him? However, if I choose to go through his earlier posts, I realize that he has already shared further similar posts about the game. Now this gives me the confidence to decipher that here is a fellow with similar liking for paintball as mine. I "derived" this intelligence and used it to my benefit when the two of us had a gala time at the sport later.

While the above is a very tactical example; the same is applicable in our areas of work as well.

Recruitment is one space in an organization where we see loads of information seeping in. The top of the funnel is always heavy. Recruiters typically download at least around 2000 candidates and add them to database every other day in large organizations across the globe. An Applicant Tracking System (ATS) is then used to filter duplicate entries from this bulk download and remove them. This clearly is very basic information. However, analytics enabled ATS should have derived intelligence that tells us for example that a candidate is a duplicate entry (basic input), rejected earlier (basic input), rejected due to reason (basic input), yet, is a good candidate due to reason and can be considered for another role (detailed input), and as an organization, we already have x% candidates who are duplicate entries, yet, highly probable candidates for future requirements. Having this input, recruiters need not download and reprocess resumes on daily basis. Advanced analytics and derivations from recruitment systems through Big Data should enable organizations to:

  • Reduce the spend on time and effort to source from job boards for each new position by highlighting candidates in existing system
  • Predict joining probability of candidates there by reducing cost of hire
  • Establish indicators on market demand of the organization by tracking number and quality of applicants; and many other indicators linking data points to establish structure and impact organization effectiveness.

Another example in effectively driving employee value proposition through analytics and derived intelligence is that of a talent management helpdesk. We have all seen dashboards that give operational data points like: # of employee queries received v/s answered; First time resolved v/s transferred; Net Promoter scores etc. If the same system is equipped to classify and link data points like: Employee named Nick raised a repeat query on career progression and role change in 5 different organization forums, across the last 4 months, followed by requests around exit policy, then as Nick's manager, I can fairly establish a deduction that he is keen on career progression or external movement. Such a data point can help managers plan and manage career progressions better.
However, today this information remains scattered across employee helpdesk, HCM, Talent management software. There are several such data linkages that can be established within systems to convert data into intelligent systems and influence organization effectiveness.

In today's collective economy where we see diverse applications and heavy information consumption, it is imperative that we seek patterns and linkages in data. Impactful analytics has huge potential to drive derived intelligence. Human resources function needs to evolve to establish these data patterns and create newer, finer systems.

January 21, 2014

Make your assumptions "SMART"

During the stage of business solution conceptualization, assumptions become a subject of primary importance owing to their contribution to the building blocks of the solution framework. Hence, it is imperative that a careful diligence exercise is carried out while selecting them out from a whole list of available options.

Assumptions are very basic ingredients in every business solution; particularly during the stage of its conceptualization.  Practically speaking whenever an opportunity is being targeted or being developed for positioning a solution offering, the constraint of non-availability of relevant information (in terms of business operating model, resource structure, volumetric data etc.)  is always present . Hence in almost all cases the solution framework is built by setting some assumptions in place so that an approach is established first which can later be verified and aligned with the real scenario as and when the opportunity moves towards maturity.

Given the nature and application of the scenario in question, assumptions become a subject of primary importance owing to their contribution to the building blocks of the solution framework. Hence, it is imperative that a careful diligence exercise is carried out while selecting them out from a whole list of available options, so that only the ones having the "highest probability" of application in the scenario in question gets recorded. In fact in many cases these are required to have a direct relevance to the contract agreement clauses, so that during the stage of negotiation going forward it is capable of providing a level playing field against the party on the other side of the table.

The task of framing these assumptions or "assuming" to build a solution is not easy; and it requires the right mix of domain expertise and suitable experience to take a deep dive into the existing dimensions of the opportunity / opportunities and translate or align the possibilities towards realities. During the stage of setting assumptions it is always important to keep in mind the element of risk involved against the particular assumption and also analyze the impact of those risks on the overall effort, schedule, resources, process complexity and the budget.  In any case the "assuming" task actually becomes a "real task" for solution development and follows more or less a fixed pattern of first identifying the uncertainties, next assessing them for impact, and finally incorporating them to create the baseline for the solution.

So the assumptions being the foundation of identifying and incorporating uncertainties should also find a way of reducing or eliminating the impact of risk which may set in during the course of the actual execution. This should clearly have both the context of the situation and also a roadmap to handle the contingency by creating the ground of negotiation. In one word assumptions should be "SMART" enough to bring out the most probable outcomes in the situation by being:

S - Specific to the situation/ context and not generalized, for e.g.:  " the average handling time for international freight bill processing is 15 minutes from the time of receipt of the bill"  rather than "average handling time for invoices is 15 minutes"

M - Measurable, for e.g.: "90 days of warehouse storage considered" rather than "warehousing storage considered for the period of execution"

A - Appropriate to the solution by mentioning basis, for e.g.: "the order volume(s) considered is based on 1 PO = 1 sales order with exclusions of bulk order scenarios" rather than just stating the volumes

R - Risk Mitigating to accommodate any impact due to market factor dependency, for e.g.: "the international freight is inclusive of fuel surcharge as per FSC index published on xx month/year and valid till xx month/year", rather than indicating the FSC amount

T - Time bound to accommodate market and situational changes, for e.g. mentioning the validity period of the assumptions which is mostly applicable for labor, infrastructure related rates OR like adoption of some new technology that transforms the process itself etc.

It is highly probable that if you assume what you wished for as happening, the "improbable" becomes a reality; but if you are SMART enough to judge the probability of the wish and its relevance to happening, it is probable that you may eliminate the "improbable".

January 13, 2014

Secrets of building an agile and future-proof procurement function

There is a new breed of organisations that are building a procurement function which is ever ready for change and transformation is a part of everyday life. Observing some of these organisations, it emerges that there is a design and plan which is enabling them to build such a culture.

We have heard so many times that change is the only constant and that business environments have become dynamic like never before. Topics like transformation and change management are commonplace on meeting room whiteboards and presentations. In most organisations, such programs are deemed complex and difficult to execute and typically communication and training are considered the key foundations of such programs. However, there is a new breed of organisations that are building a procurement function which is ever ready for change and transformation is a part of everyday life. Observing some of these organisations, it emerges that there is a design and plan which is enabling them to build such a culture. Let us look at some of the key initiatives that they have adopted:

Active awareness of best practices and new ideas in procurement, from both within and outside the industry
It is well-known that exposing individuals and teams to best practices and new ideas motivates them to think on similar lines for their organisations. This can be done by:

  • participating in procurement conferences/ seminars with a large cross-section of the procurement team being present and not limited to token participation. The procurement team has a budget for such participation and this is done as a program rather than on an ad-hoc basis.
  • holding workshops with consultants and service providers to keep abreast of new developments in strategies, processes, tools and technologies
  • subscribing to various procurement journals/magazines online and off-line and having a mechanism in place so that the relevant content/articles from thought leaders and other companies is made available to the procurement team across all levels at periodic intervals
  • institutionalising formal discussion groups which meet at periodic intervals to brainstorm on best practices and ideas emerging from the above. This ensures that it doesn't get limited to only a few individuals who are interested but rather the entire department is involved and discussing these at various levels

Ongoing evaluation of activities associated with roles and responsibilities
In most organisations, there are periodic assessments on the roles and responsibilities of individuals and teams. However, in almost all cases there is no elaboration of the activities associated with those roles and responsibilities. Organisations seem to miss out on this important aspect which determines whether individuals and teams are able to direct the right focus on value adding and core activities. More often than not, when individuals and teams complain about challenges in meeting objectives, it is more to do with their preoccupation with non-core activities than lack of skills or capabilities. An annual exercise to evaluate the activities associated with roles and responsibilities of individuals and procurement teams and enabling them to focus on core and value adding activities helps in building a culture of transformation.

Periodic comparison of existing versus available tools and technologies
For the procurement function to be best in class it is essential that it leverages the best tools and technologies that are available. In the last several years, procurement tools and technologies have rapidly and radically improved to be almost called revolutionary. In fact, leading organisations are now collaborating with technology providers to develop procurement platforms of the future. These organisations review the procurement technology landscape every 2 to 3 years to explore the possibilities of adopting new tools and systems towards transforming the function.

Benchmarking- to know what needs to change
If you don't know where you stand in comparison to your peers, it is quite likely that there will be no imperative to think about change. Best in-class organisations benchmark themselves annually. Benchmarking is done across regions, across business units and using internal as well as using third-party benchmarks like Hackett, IQPC and others. This exercise also reveals whether the right metrics are in place and are comprehensive enough to align with the procurement function's objectives.

Introspection based on feedback from internal and external customers to provoke the change agenda
One of the key drivers for building a mind-set for transformation is feedback from stakeholders. At an individual level it probably does get addressed in performance appraisals but more importantly it needs to be done at the team level. On an annual basis, the procurement function takes feedback from its internal customers and external customers like suppliers on areas of improvement and change, and, targets are set for improving the feedback scores. This motivates a positive thought process towards change.

Knowledge of the organisation's competitive business environment
Providing the procurement team with visibility to the macro business environment of the company so that the imperative for change is clearly understood by everyone in the light of competitive pressures being faced by the organisation across the globe or within particular regions. Knowledge of the product and service strategies being deployed in the market by competition helps to build a better appreciation of the need for change in the procurement function and the roles that various teams would play in that.

Would you like to share any secrets from your organisation?

January 8, 2014

Crystal gazing into procurement 2014

While there have been and there would be predictions at a strategic level, let us look at some of the more operational aspects of procurement and what are likely to be the trends for 2014.

It is that time of the year when it is very tempting to make predictions for the New Year. While there have been and there would be predictions at a strategic level, let us look at some of the more operational aspects of procurement and what are likely to be the trends for 2014. I have tried to put together a few indications based on conversations with procurement managers and the requirements that are coming across :

  • Savings: whatever else will happen, savings will always remain the key focus and expectation from procurement. While the usual focus on big-ticket areas will continue to be maintained, in 2014, it is the unaddressed spend which will be sharply in focus. That includes areas like tail spend, maverick spend, non-contract spend etc.
  • Compliance: new programs like no PO no pay, larger spend going through existing, compliant channels and tools, larger involvement of procurement in controlling unaddressed spend and maverick spend. New tools and platforms required to achieve this will be requisitioned
  • Skill and capability enhancement: with procurement's role getting a more strategic focus, the imperative to train and upgrade the procurement team's skills and capabilities will translate to advanced training programs being rolled out for procurement
  • Simplified processes: while this has been an ongoing area of priority in the last several years, it would acquire a renewed momentum in 2014 with organisations looking at technology options to simplify procurement processes especially for end-users.
  • Technology consolidation: over the years procurement teams have accumulated diverse sets of technology tools for e- procurement, contract management, e-sourcing, PR to PO, etc. Several of these are stand-alone, not integrated with each other or the in-house ERP creating challenges of data consistency, uniform flow of coherent and consistent and meaningful information that enables decision-making. To enable procurement to focus on the strategic areas, organisations would look for platforms that integrates all internal tools, which fill in the current gaps not covered by existing tools and have a simple common interface across the organisation

Well... that's quite a list! Is it exhaustive? Not at all... Have I missed a few things?.. Maybe.. Why don't you help me to make it more comprehensive... look forward to your predictions!

January 7, 2014

The rising star - Insurance Loss Control Engineering services

Emerging industry trends will push Loss Control Engineering into prominence, and carriers will leverage loss control services to create market differentiation.

Loss Control Engineering (LCE), services have been around since the early formative years of insurance in the form of fire protection surveys. The objective has evolved over time to what it is today, i.e. insurance providers sharing their collective risk management experience to the insured with the aim of loss prevention rather than loss restoration. In return, insurance carriers have greater visibility into risk and can ensure mutual transparency.

Loss control consultants (engineers) or risk consultants are professionals practicing the art / science of safety engineering and risk management, working with insurance carriers. They survey insured for risk exposures, identifying exposures to loss and how the insured can proactively manage these exposures. They investigate various factors (such as nature of business, scale, existing loss prevention etc.) and submit a loss control report to either the underwriters or the clients directly, which will influence underwriting decisions.

Traditionally during the soft markets, Loss Control Engineering (LCE) has been considered by insurance firms to be an auxiliary service. Carriers have taken very little interest in building in-house capabilities, robust processes or systems to optimize LCE. Now, with evidence of hardening in insurance markets (especially in P&C segment) and lower yields from investments, there is a clear shift towards stricter underwriting decisions and claims management. In these lines of business the onus is on carriers to help insured incorporate loss control programs, thereby making it a necessity than luxury. What will be of relevance is for insurance providers to utilize the ecosystem of service providers and technology innovations, thereby offering this as an integrated service offering to their clients.

We believe that the emerging industry trends will push Loss Control Engineering into prominence, and carriers will leverage loss control services to create market differentiation and customer perception as loss prevention partners.

January 3, 2014

Sourcing at Cloud Number 9

Many companies are getting on the bandwagon of cloud. But switching to cloud is a big change and with all the euphoria and excitement around it, sourcing and procurement function has to play an important balancing act to realize its true value.

"Well it's a long way up and we won't come down tonight
 Well it may be wrong but baby it sure feels right"

These lines from singer Bryan Adams' famous song "Cloud Number 9" aptly describe the fast paced evolution in cloud computing.  Many companies are getting on the bandwagon of cloud just because top management is very excited about it and feels like a right thing to do. No doubt that the cloud offers tremendous benefits and flexibility for business and there are enough success stories to prove that point. But switching to cloud is a big change and with all the euphoria and excitement around it, sourcing and procurement function has to play an important balancing act to realize its true value.

Let me compare the situation with the automobile industry (one that is close to my heart as I worked in this industry during the initial part of my career). When Ford started the production of Model T in 1900s, almost every component was manufactured in-house to keep a simple supply chain. The extent of vertical integration was such that they even used to the make the steel for the fabricated parts. However this method had to change due to pressure on cost and by the end of 1930s, two-thirds of components for Ford came from outside suppliers.  Post world war, more and more companies started outsourcing their manufacturing processes to business partners.  The roles of sourcing, procurement and supply chain became more important to manage the external supplier relationships and increasingly complex supply chain. Concepts likes APQP (Advanced Product Quality Planning) and PFMEA (Product Failure Mode and Effects Analysis) were introduced to make sure that suppliers provide the right quality products. Even today, automobile companies have one of the most mature sourcing and procurement functions as compared to other industries.

Introduction of cloud to IT infrastructure is quite similar to what happened to Automobile industry when it moved out the manufacturing of car components.  Learning from the past, here are a few key points the IT sourcing managers should consider if their organization is moving to Cloud.

  • Technical expertise in sourcing teams: The sourcing executives in automobile companies are mostly engineers and some are even transferred from the engineering division of the same company. This is done to ensure that buyers have the right technical competency necessary to understand the component and its cost structure.  Similarly, the IT sourcing professionals should have absolute knowledge about the current IT infrastructure and associated external and internal costs.  For example, if you are not clear about the size of data to be transferred to cloud during transactions then you won't be able to assess the required bandwidth and may end up paying more than what is needed. Also IT buyers  should have a very clear understanding of proposed service model (SaaS / PaaS / IaaS) and detailed cost breakdown (hardware,  software,  bandwidth,  power,  personnel cost)
  • Adopt the right pricing model:  In the automobile Industry, various pricing models are used to optimally manage cost of material. In cases, where initial capital is needed by the supplier for development of a custom designed component, the development cost is paid up front, so that the supplier doesn't amortize and include it in the per unit prices. This is due to the fact that for a large automotive company the cost of raising capital is generally less than that of a supplier organization.  Although "No upfront cost" is the first selling pitch of cloud computing but "Pure On-Demand" may not always be the best model. You can consider paying an upfront committed fee to negotiate a lower unit price, especially when the demand is sporadic in nature.  
  • Use volume to bargain: Typically the same functional components (e.g. car seats) for different car models are sourced from the same supplier to leverage volume.  It also adds benefits like standardization and maintaining right quality levels.  When going on cloud, large organizations should consolidate the IT requirements in all business units/geographies and bargain hard for a discount.  Consolidation will also help in identifying any regional / software specific dependencies and drive standardization. 
  • Last but very important, a thorough risk and security deep dive is a must before you sign any cloud deal, as information and data security are the top risk areas when  moving to cloud.  Here again you can take cues from very rigorous supplier qualification process perfected by automobile Industry to ensure the risk free operations of a lean supply chain.

There could be more such examples where IT sourcing professionals can take inputs from other Industries and make sure that cloud computing brings the right value to business.  Please add your thoughts and share feedback in comments. 

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