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News For Electronics Purchasing And The Supply Chain
Live Chat 10/31: Don’t Be Scared of Strategic Sourcing
Hailey Lynne McKeefry has spent more than 28 years writing about technology and business. She began her career as an editor at such periodicals as Macintosh News, EBN, and Windows Magazine. After more than 16 years as a freelance journalist, she has written about a broad variety of technology topics, with a focus on supply chain, components, security, storage, healthcare, and SMBs. Living in the heart of the Silicon Valley, Hailey has written for many top business-to-business publications and Websites including EDN, EETimes, Information Week, CRN, eWeek, Channel Insider, Channel Pro, Redmond Channel Partner, Home Office Computing, and TechTarget. She graduated from the University of California at Santa Cruz with a BA in literature. Follow her on Twitter @HaileyMcK.
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In general Gather report is very accurate in “prediction” and I think we will see all the above. I just want to mention the number 10 3D printing as this technology will shake the whole market and the supply chain in particular.
I am at the Electronic Component Industry Association (ECIA) executive confernce and one speaker today made a list of the top 10 disruptive technologies (markets with exponential growth over the next decade). Many are on your list. There are some others that maybe we should think about adding: robotocis, wearable technology, nanotechnology, storage, and sensors (smart buildings, for example). all of these are going to change the way we look at hte supply chain.
3D printer is really something we all are excited about. The potential are limitless and it make technology exciting again. Thinking of building products at home or atleast customized product is cool.
All the tech trends expcept one is realted to IoT. Internet seems to be playing a huge role all the tech trends be it smartphone or cloud. I think faster, omnipresent and cheaper communication will be at the heart of all this.
Some of the most interesting things that may be dominating the technology of tomorrow are: 3D printing, IOT and Home automation. The 3D printing has uses and abuses (like the printing of the handgun), so in order to prevent these abuses, some rules and regulations need to be followed. As the market grows, people will be educated about this new technology. Another such technology is the smart home, which will track the movements of the people that reside in it; it will also record their activities and psychological pattern and adjust accordingly. If somebody with a smart home ever has a heart attack or a break in, the smart home will be calling the ambulance or the police, or both.
I heard a guy from Intel speak on IoT, and he said that there are 1.5 billion devices connected to the internet today that are not tablets, smart phones, PCs or wearaable computing. That's a huge number of things–and yet only about 1 percent of things in teh word are connected to teh network he said. (He got these numbers by bringing together data from a variety of sources). What that translates into is a huge arena for innovation and sales. this is going to be very hot.
@anandvy, teh home automation piece is really interesting. Today, i can control teh lights and heat of my home from my iphone. Tomorrow, perthaps, my refrigerator will realize my milk is old, warn me to throw it out and order that new milk be dleivered. This is a hot market because people can imagine a future that's different. The Jetsons anyone?
“All the tech trends expcept one is realted to IoT. Internet seems to be playing a huge role all the tech trends be it smartphone or cloud. I think faster, omnipresent and cheaper communication will be at the heart of all this.”
Himanshu, you are right. All the devices are going to connect or communicate to some networks, irrespective of whether it's an automated one or an IoT based. So networking and communications channels are going o be the back bone of all these process.
@Hailey: Products to build a smart home seem to be a popular area for innovation these days. Just recently I read about a company building a smart kitchen sink that washes the dishes as you place them in the sink. You don't need to have a dishwasher separetely and you save on a lot of space and time.
Jacob, this is good for semiconductor industry. All the network gears and equipments will need high-tech chips so if IT&S is new happening field then there will be opportunities for semiconductor companies to improve the sale and profit.
Perhaps I'm “that guy” in this instance but I'm more wary of the IoT than excited. We already complain about invasion of privacy as it is now. Can you imagine the level of spying the NSA could do with sensors connected to the internet in our homes, offices, cars, beds, toilets, etc… it just leaves a very high tech 1984 feel in my mouth.
“All the network gears and equipments will need high-tech chips so if IT&S is new happening field then there will be opportunities for semiconductor companies to improve the sale and profit”
Himanshu, we can say it's good for electronic industry in total. I don't think there may be separate requirement for chips and i feel that a general purpose microcontroller can be programmed for serving the purpose.
“Can you imagine the level of spying the NSA could do with sensors connected to the internet in our homes, offices, cars, beds, toilets, etc… it just leaves a very high tech 1984 feel in my mouth.”
RynaL, personally I feel that, we haven't much worry about such spying and data breaching because we are not celebrities or distinguished peoples. We are just common citizens and no use in spying our activities.
@Ryan: I get your point but do you think spying is good and needed at this moment ?
@Himanshugupta: Yes indeed as long as you capture everything and the usage will be done in a very wise manner, things will make you or gain you the revenue you require.
@Taimoor: I think it's the same process that an Auto- Washing Machine does isn't it ? Good to have such technologies creeping in to simplify the work load of the people.
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This will be a fun, fast, and friendly conversation, so please do not hold back with your comments or questions. There are no dumb questions and we value everyone's point of view.
Questions, theories, ideas, real world experiences and even friendly rants are welcome here.
And always, please announce your arrival so we can give you a warm EBN welcome and offer you some virtual guacamole. 🙂
Richard Waugh, VP Corporate Development, Zycus has joined chat
Hi Richard, so glad to have you hear with us! We may already have lurkers, and i'm sure others will join us very soon!
And welcome everyone…Happy Halloween! Tell us what spooks you most about strategic sourcing apps and we'll do our best to cam your fears. 🙂
Richard, as a place to start, can you say something about the current state of strategic sourcing apps? Who is the sweet spot user for these? What pain points are they trying to addresss?
Hi! This is Jen. Mmm Guac sounds good. 🙂
STRATEGIC SOURCING?! PRETTY SCARY!!
absolutely – sweet spot for strategic sourcing apps is for those enterprises that have high volume, long-cycle and or complex sourcing processes
Hi Jbond, glad you are here… Guac is on the table in teh back and the corn chips are orange and black in honor of the day! (well blue corn but i tried)
Mitch, welcome to the party!
take for example manufacturing companies – they may have very large RFP packages consiting of k's of line items and 000's of suppliers
Howdy folks.
we have enabled high tech manufacturers and others to conduct these complex sourcing project and analyse the total cost models across all these dimensions in record time – 1 month vs. 7 months
Can you give us some examples of how an electronics business might change and improve using this type of application?
I am already scared from the title 😛
Sorry if this has already been asked, but what are the risks of strategic sourcing? What can go wrong?
Welcome Rodney and Nemos… guac and chips on the table in teh back, please help yourself. There might be a hershey bar or two.
@Mitch, good questions…and we haven't hit that yet, so very timely.
of course not all use cases are this complex – sometimes the value is more focused on standardizing the process and simplifying supplier collaboration to enable higher throughout and greater velocity of sourcing projects to generate more savings faster
Hey to all ,thanks Hailey I will grab a beer 😉
risks of strategic sourcing don't change with a software tool – just easier to analyze them
IN addition to Mitch's question I am curious if shorten the time frame from 7 months to 1 month causes any risks?
risks are: can supplier deliver? can we assure supply? do we know the market well enough to know we are getting best total cost?
@Rwaugh, are these types of solutiosn pretty broadly deployed in the larger supply chain organizations? If not, what's the holdup?
sourcing tools help manage supplier risk and gain market insight to assure supply and best total cost
I think I need a definition of strategic sourcing that makes it stand out from simply “smart shopping.”
if we have to describe in one phrase what is strategic sourcing which one should be ?
these solutions are becoming more widely deployed – usually replacing spreasheet based tools which break down at higher volumes
Happy Halloween everyone!
Hey Tom, pull up a chair. I've got orange and blue corn (couldn't really get black) chips to go with the quac.
strategic sourcing goes well beyond smart shopping – it involves a lot of homework before the negotiation event takes place on line – analyzing the supply markets and assessin supplier capabilities for instance – negotiation price is last step in a rigorous evaluation of total cost
Hello Tom
In case folks are interested, here's a link to Gartner's latest report on this marketspace: https://www.bravosolution.com/cms/nl/resource-library/industry-reports-1/2013-gartner-magic-quadrant-for-strategic-sourcing. You can see with a quick glance that it's a crowded market. Richard, any advice on how organizations can identify a solutoin that is best firt for their needs?
@Rodney, to your question, these are powerful Enterprise apps that offer a variety of capabilities, including e-sourcing, contract management, supplier base management (SBM), and spend analysis. Some vendors add additional capabilities: category management, supplier directories, commodity risk management, and business services, for example. It lets you track negotiations and purchasing agreements and do very deep analysis on procurement. I hope that helps.
another way to look at strategic sourcing is that the sourcing professional is a “category manager” – like a brand manager in retail, the Sourcing or category manager needs to know everything going on in the supply market – capacity, pricing trennds, new technologies etc. – too much info to track without a sophisticated process and tool
What are the newest tools available?
there was a question about risk with shorter cycle times – risk is actually in not realizing cash flows generated from savings sooner due to time value of money
@Richard, can you quantify in general terms what measurable value or changes your customers report when comparing pre- vs. post deployment of these kinds of tools? I know the automation and analysis capabiliies have to hit the bottom line.
after the sourcing project is done and negotiations complete – there is still the implementation pahse and tracking supplier performance to ensure quality
@Richard, maybe it's just my cheap Yankke background, but it sounds like that should be SOP at any business that deals with suppliers. So, that begs the question, how rare is strategic sourcing that it needs to be encouraged? How much money are companies leaving on the table by not using it?
You also mentioned in our previous conversation that these tools allow the purchasing organization to more clealry demonstrate their value to the organization, which I found very interesting.
newest tools take holistic approach – a full suite with an integrated dashboard view across Spend Analysis, Sourcing, Contract Management, Supplier Management, and Financial Savings Tracking
Welcome Rich…
demonstrating contributed value to the orgnaization is where Financial Savings Management comes in – getting procurement and finance on same page as to benefits REALIZED through sourcing, not just IDENTFIED savings at the end of s sourcing negotiation
Welcome @Rich I didnt get it what you mean ?
@Rich, to your point, i don't think this one is an either/or debate. You could do both! Or maybe you could argue that the tools would free you up adn give you more time on your language studies.
gloabl sourcing menas tools need to be multi-lingual, multi-currency – especially for suppliers in low cost cost countries, including parts of the Far East
Richard: Would you please give us a couple of real-world examples of your strategic sourcing clients? Are we talking consumer electronics maker, for example? I can imagine the benefits of this in, say, producing a next-generation mobile phone…
most global buying organizations are comfortable in English – not necessarily so their suppliers
Almost everything now tends to be multi-lingual, multi-currency
consumer elecctronics is a great example – where the short product cycles out a premium on process acceleration
but the examples go across industries
hmmm Thanks @Rich
includes higher education where a college or university needs to to source a variety of materials ot services and may also have large constrcution projects for building new classrooms or a new stadium
of course multi-lingual and multi-currency is available for the buyers as well, need just more acute in supply base
@Richard, do you find that the ability to look at different areas of the supply chain and sourcing shifts the way these organizations appraoch business? By that i mean, do you see them cutting back on teh partner rosters, enforcing adherence to using contracted suppliers, etc. happen more often?
one important consideration is how to find and prioritize sourcing opportunities
best practice – start with rigorous spend analysis with accurately classified spend data to spot opptys.
How do these apps help find sourcing opps?
spend analysis can highlight categores where supply is fragemented and can be rationalized to gain volume leverage – can't do it without granular (category and item level) spend viz
@richard, i was too quick..you had just answered. 🙂
Richard: in consumer electronics — which is a hot topic area here at EBN — I know produce lifecycles can be as tight as one-year, or 18 months, for devices like mobile phones, tablets, and notebooks. In that context, your example of cutting sourcing time from 7 months to 1 would be a godsend.
But why can't companies do strategic sourcing themselves? Don't they have the expertise and incentive to make this a top priority?
yes, trend in Supplier Management is to forge closer partnerships with fewer suppliers
strategic sourcing is a methdology for determining the best suppliers to partner with
best-in-class electronics and high tech bcompanies are using sourcing and sourcing automation as a competitive advantage – AMD for example
those that aren't may lack category expertise – but technology is not a barrier – tools are easy to use and becuase of Saas model, pretty easy to own
With the concern over conflict minerals, knowing where not just components but minerals in the components come from and proving you've spoken to all yoru suppliers down the chain about it is going to be the requirement. Can these apps help with some of that work?
Recently, Samsung announced that it had bought part ofCorning's glass for its displays. They make the scratch proof gorilla glass. I'll bet they had some great strategic sourcing activity going on over there. It will be interesting to see how that's going to impact APple's strategic sourcing of glass.
hmm a lot of interesting questions I think he need some time
yes these apps help find new innovations (cell phnes with imaging device) and manage compliance with Conflict Minerals
@Richard – as an independent supplier who is certified to the AS6081 counterfeit avoidance standard and is approved to the DLA's QTSL standard the subjects of quality and counterfeit mitigation is near and dear to my heart. Can you talk a bit about how strategic sourcing and associated apps/technologies take the threat of counterfeits into account?
starts with visibility – at mutiple tiers of the supply chain – tracking your supplier's supplier
Hi Jesse…great to have you with us!
@Jesse, interesting question…thanks for asking it.
Richard: Say I'm using a company to help me with strategic sourcing, and they say that a given part meets the conflict mineral standards. And then I use it and later find out that wasn't true. Who's responsible when the government regulators come knocking at the door?
Supplier Management includes not just negotating price with suppliers, but Supplier Development prograns with strategic partners to collaborate on technology innovations and share in the benefits
How much of this strategic sourcing capability is being moved to the cloud?
Supplier Management tools can be used to track which suppliers have certifications and which do not – giving preference to those which have worked hard to obtain them
propably the company @Tom
@Hailey – glad to be here. Thanks for coordinating this chat.
@Tom, not exactly to your point, but in that wheelhouse, I was talking to an industry veteran who said that the deadline for Dodd Frank Act is one thing, but that actual enforcement is several years away. We may need a crystal ball to answer your question! 🙂
Zycus Sourcing is 100% cloud – as is the case with any n=most others that would also be considered Magic Quadrant Leaders by Gartner
Hailey: I agree with that idea that regulation could be years off. Enforcement of this is going to be very hard for a government that can't quite seem to keep the big banks in line.
key to keeping up with pending and future regulations is to gain visibility now
@Tom, not to mention that this is a GLOBAL issue so that's a lot of different goverments having to collaborate and cooperate. Now that's a scary thought! and about as rare as a zombie. 🙂
@rwaugh how you can gain visibility now ?
not enough companies have real visibility to their supply chains – who are they buying from? what items? quantities? certifications? risk?
Maybe supply chain visiblity will no longer be an oxymoron.
visibility means having a SIM (Supplier Information Management) repository centralized and tracking Supplier Performance Measurement against your KPIs
Reposting Jesse's question so it doesn't get lost: Can you talk a bit about how strategic sourcing and associated apps/technologies take the threat of counterfeits into account?
For exmaple, ERP systems have Vendor Masters – usually the minimum info just to pay an invoice thru A/P
Hailey: Honestly, I'm still not sure how governments all over the world will collaborate on enforcing these rules involving thousands of vendores in scores of industries in hundreds of countries. There is very little cooperation on that level, and typically it's reserved for major crime, terrorism, and — to a lesser extent — fair trade. And major trade dispute almost always end in lengthy legal cases. So I can't imagine one government asking another to fine one of its biggest comapanies because a part used in a laptop it sold for one year was produced by another company that allegedly violated the conflict mineral rules.
need to know a lot more about suppliers – including parent/child relationship to other entities
technology can't legislate – but can help track certifiations to sort out the counterfeits
@Tom, never a truer word has been spoken.
Richard: Have to run, but thanks for the info.
Hailey; Thanks for hosting.
All ghouls and ghosts: Happy Halloween!
buyers are more concerned with supply risk than ever before – they are not after the lowest price, in fact they seldom award to the lowest bidder – they are focused on TCO
😀
@Richard, in terms of counterfeit parts, I would imagine that having a system that clearly outlines vetted suppliers and the like would help at least in getting adherence to approved suppliers in design and sourcing–and that would help address the counterfitting issue. Jesse, what do you think?
Hey folks, we are hitting the 45 minute mark. Any last questions for our guest? I'm sure you all need to get back to the tricks and treats of your day!
by collaborating with enginnering, procurement can esnure that suppliers meet design and qulaity stds before ever negotaitng the contract – so level the playing field 1st
@Hailey – I think that would be a great first step. However, it is imperative that these strategic sourcing systems accurately reflect the certifications that vendors have. There is a big difference between a vendor saying they are compliant and a vendor actually producing a cert. Compliant vs. Certified is a big difference.
No question for the moment but I would like to see a blog post from Richard with all the terms he used be explained more
true – which is why a SIM (Suplier Information Management) component that tracks certs and nesures they are up to date is a key piece of the puzzle
@Jesse, that's a huge one… Sourcing apps could certainly help track that, i geuss. We're going to be doing hopefully another chat on counterfeiting later this month so i hope you can come and weigh in.
@Nemos-I would too! Sorry for joining in a little late!
@Tech4People, better late than never… We saved some guacamole for you.
GG tech4us Never late than never
@Hailey – I'd love to. I'll keep an eye out for the next live chat. Richard, thanks so much for your time.
#Nemos and Tech4People, we'll see if we can lure him inot it! 🙂
Thank you so much for coming to join us today, Richard…I know we kept your fingers busy. We covered a lot of ground. But it really was a TREAT having you with us for this Halloween chat. We hope you'll come by again!
@Hailey-Appreciate it!
thanks – enjoyed the chat – next sourcing project: trick or treating
And everyone else, thank you so much for joining us….Lots of great thoughts and questions. I hope to see you all again next time.
@rwaugh-Whats with the SIM?Do you feel most Small Scale Manufacturers can do it?
@Richard, gotta go to the houses wiht the best candy for sure. I believe there's an app for that. 🙂
@all see you all, bye Thank you Hailey
full size vs. fun size
@Hailey-Oh Yes! Halloween is always super fun! The Kids here have already started Partying!
@Tech4People… I had to talk my 10 y.o. out of snickers bars for breakfast. 🙂
Your information regarding the Tech trends shows you experties.For more info
@Himanshugupta: Well as long the market is there, there will be more and more opportunities for them. I think its always better to figure out an alternative since the technology gets out dated soon.
The technology that we see all around us may impress us, however we have to acknowledge that this is merely the beginning. We are only at the brink of what is possible, who knows what comes at us in the next thousand years. Even the next hundred years will be pure magic. For communication we are depending on technical devices, but there are investigations starting from the beginning of the last century that direct communication between people is a possibility without any technical devices like cell phones.
I wouldn't even go that far into the future. Things will be starkly different in the next 5-10 years. Think back 5-10 yrs & realize the things that exist now we didn't think possible.