Survey Says . . .

Supply chain information may be growing on trees, but is it relevant and accessible? Purchasers and enablers share their insight on supply chain data now and in the future.

[From iSource Business, March 2001] Data, data everywhere, and not a snippet to understand. No matter how wired a world we weave it still seems as though there's either not enough data to do a particular job, or so much data that it's comparable to filling an espresso cup with a water main. We're afloat in a digital sea and there's no cognitive landfall in sight. It's a matter of intelligence, not just information gathering.

Luckily iSource Business is here to throw out the lifeline to those floundering about, information-wise. We spoke with both purchasers and enablers to see what the data needs are, what capabilities there are, and what we can expect in the future. (For a list of those interviewed, see the box on page 79). Both groups addressed three questions. We asked buyers:

  1. What information/intelligence do you need to do your job effectively?

  2. What intelligence would you love to have?

  3. What do you expect from today's systems in the area of data collection?

We asked enablers:

  1. What information do you think B2B buyers need to do their job effectively?

  2. What do you offer?

  3. What will you offer in the future?

Here's what we found out.

The Supply Chain Professionals

1. What information/intelligence do you need to do your job effectively?

David Hearn, director of global procurement for Sun MicroSystems, explains that in his area of concern (indirect spend), "You're not doing material requirements planning or any of that work, so really what we're focused on is the ability to do automated requests for quotations, reverse auctions and, obviously, end-to-end electronic e-commerce with our supply base."

Square D's Wesley Hawkins, vice president of purchasing and logistics, needs information on "supplies, availability within the specific commodity group, and general discussions on the state of the economy  possibly by specific industry or section of our economy. Also trends in purchasing in general, particularly in the area of e-commerce."

Bill Michels, C.P.M. with ADR International, gives this view of what his purchasing and supply chain clients want: "When clients are working in a very large company that has multiple divisions they really want to get down to the level of the plants and the plant capacity. They want to know what level of volume they have and how much that impacts capacity, because that's going to impact cost. They're also looking for data on markets, for data to develop cost analysis because they want to know what's the material in the supply chain, the material cost, labor cost, overhead cost and the profit margin structure of the industry."

Arizona State University's Director of Purchasing and Business Services Ray Jensen gives the view from the halls of academia. "In an institution that is fairly decentralized in terms of determining its needs, which is very different from a manufacturing environment, we need to know what goods and services are needed by the client group we serve. And that works on both the industrial and institutional side. On the industrial side, once you know what your sales and production forecasts are, you've got a pretty good idea of what your needs are going to be.

"On the institutional side it's very different. Some are predictable but there are a lot of things we acquire that are difficult to predict."

TRW's Charles Heckrotte says he needs to know what supply sources are available. "We have particular quality requirements that others don't have. We're putting things into space and it's got to work, and it's got to work the first time. I'd like to be as peopleless and paperless as possible so that I can use the people for the important things. I'm trying to buy more of their time during the day to focus professionals on things like negotiating, source selection, and more data research on the Web. But when we get wrapped up in the rigors of transactions, we have a choice. We can transact or we can research. I'd rather have them researching. I don't want to have less people; I just want to have them working in different ways."

Tom Meisel, e-procurement manager for Eastman Chemical Co., needs to know how much his company is spending and from which suppliers the company purchases. Of this data he says, "You can split that a number of different ways, but I like to see dollars and pounds and things like year-to-date and 12-month data. Another thing I like to see is the percentage of on-time and good quality shipments."

2. What intelligence would you love to have?

Although some purchasing professionals take a traditional approach to this question, their answer might come in the form of the new UDDI listings that promise to easily categorize almost everything. Many would like a listing, by category and by name, of phone numbers. (It's true that there are industry-specific directories and search engines, but ask anyone who's ripped through a phone book looking for "Clothes" only to find it listed as "Apparel" and they'll tell you there's still a lot of "lost" information out there.)

Hawkins would like to be able to digest, or manipulate, cumulative data. "Certainly, if I look at the specific commodity, I'd like to be able to summarize all of our buy in all of our plans and actually look at it from a global perspective, since we're a global company."

Michels explains that his clients are sometimes promised that they will get the information they need, only to find that the existing tools don't produce what they claim. "In terms of process clients want programs that reduce complexity, things that help them integrate the supply chain, and they want help at not just being efficient. A lot of the current e-models are driven to create efficiency, but that doesn't necessarily make them effective. It takes the processes they have now and streamlines them, but it really doesn't do a re-engineering of the processes to make them efficient."

e-Procurement Manager for direct raw materials and energy at Eastman Chemicals Tom Meisel has a data wish list focused on contract management issues. He explains, "I'd like to be able to get my hands around managing contracts that are within my office  things like dates when you have specific things completed, if you need to roll over a contract or expire a contract that is about to roll over, and what dates you need to send that information to your suppliers. That information is available but I certainly would like to have easier access to it and a little bit better capabilities around it."

3. What do you expect from today's systems in the area of data collection?

Michels expects the ability to plan for future supply chain contingencies. He explains, "One of the processes we use with our clients is what we call a source planning process, which is really a three- to five-year view forward on the supplier and the supply chain to create a strategy so we can manage the supply chain more effectively."

As befits someone at a university, Jensen's expectations are also high. "I think that obviously we're not going to get anything out of it that we don't put into it. As we work with our suppliers to make sure we have good, accurate information in the catalog files that we're going to use, I expect that our professional buying is going to have better sourcing tools."

Heckrotte expects data collection tools to give him a "pressbox view" of the supply chain landscape. "I need to know how the industry partners, the folks I do business with, are performing. I know how they're performing on business I'm doing with them in terms of quality, delivery performance and cost, but I need to know what their competitors are doing." This need to see the performance of non-partner companies is necessitated by the rapidly changing e-business world because a good deal today may equal a total rip-off tomorrow price-wise.

Meisel states his requirements pointedly. "Speed and flexibility. Those are the two keys. I want data fast, and I want to able to get the data sliced and cut the way I need it to make a particular decision. And that slicing and cutting could be different every time I'm looking for almost the same piece of data."

And Now for Something Completely Different: The Enablers

Now that we've gotten the view from the supply chain professional's side, what about the sellers/enablers? What do they think the market needs are, and how do they plan to meet those needs?

1. What information do you think B2B supply chain professionals need to do their job effectively?

Alphadog Procurement Management Inc.'s CEO Jeff Helfer says supply chain professionals need to know two things. "The first thing is what you're supposed to be doing and what your objective is in each category. The second is the data necessary to measure whether in fact people are actually doing it." He explains that the necessary data comes from several sources. "It's not just pricing data, it's service levels. Let's say you source office supplies. If you order the office supplies by 4 p.m. you're going to get next-day, desk-side delivery. Does the supplier actually do that? Is there a way to capture the information that shows whether those orders show up the next day? In the typical procurement methodology there would be no way a company could actually hold that supplier accountable for meeting that service level because they'd have no way to capture that data."

eDynamis Solutions' Michael Deering, principal and senior vice president, says that if you're looking at specific buys and their buyers you need to divide buyers into three types, each with their own information needs: Raw materials buyers, MRO buyers and "other services" buyers. Helfer elaborates by saying that raw materials buyers need "the visibility to spot-buy, prices, quantities, open orders, product specifications, quality information, and delivery expectations." MRO buyers need "classical catalog information  product description, price, availability, quality ratings, alternative products; things that you would find in a catalog." Deering says that from his viewpoint the area of the "other services" buyers is where the most interesting action is taking place. Helfer says that this category is driving a lot of the change in the B2B marketplace. "These are things like content, engineering, patent information, designs, parts specifications, and different types of research."

John Hutchinson, managing partner of, says, "B2B e-commerce is all about saving money. As long as supplier spending is 40 to 50 percent of revenue, companies need rigorous strategic sourcing to drive double-digit productivity. To drive strategic sourcing they need ongoing, multi-dimensional baselines for vendor spending and payment. Unfortunately you can't get baselines from traditional tools like ledger or the ERP. We address this need."

Director of product marketing for John Proverbs divides information into two aspects: internal and external. He defines managing internal information as "the ability to leverage and have knowledge management for all the information that's spread around a corporation. That's very difficult to do today because it's all harbored in different systems or in people's desks or in people's heads." Proverbs says external information is "data that you would think of as best-practice content or market intelligence so companies can make informed decisions with respect to the marketplace, in addition to the information they have internally."

Eva Mineva, vice president of marketing at Webango, says, "There's a big need out there for aggregated information, for people to know not what happened this one time, but what happens across time or across projects."

Martin Chatterton, director of business development and alliances for, says purchasers need "good, robust product descriptions at the SKU level. Meaning if they do not know what they need to buy, but they have a general idea, they're able to find it anyway. If they do know what they're going to buy they are able to find more information than they can in traditional ways. ... When people get on the Internet to buy, their expectation is that information is going to be more complete, better and more robust. Right now they're not seeing that."

2. What do you offer?

Alphadog's Helfer says, "We provide an outsource procurement management capability for indirect costs. The way we integrate information capabilities into our offering is such that everything a customer buys goes through our procurement management service. ... We include a transaction settlement capability, and then we do a reconciliation of the transaction settlement to the requisition. Then we get to the fourth key component, which is the data capture and the management reporting analysis, where we extract all the information from each of those steps to build a data warehouse and run business intelligence tools on that data."

Deering says, "We provide strategy, process and technology support to organizations in two specific service areas. We perform B2B integration, which, in our mind, includes the extended supply chain, the product development cycle and your forecast in planning procurement. We help organizations move their legacy supply chains to the new digital supply chain. How do you take advantage of Net markets? How do you integrate with suppliers? How do you integrate across your organization effectively using the Internet as an enabler?"

Hutchinson says his company provides "a hosted analytical solution that delivers ongoing, baselines for supplier spending and payment. Analyzed baseline and multi-dimensional data are delivered directly to the end-user's Web browser. There is no software requirement other than an Internet connection and a Web browser. There are no integration issues. If you can click a Web browser you can use the solution."

Mineva explains that Webango takes the text documents businesses create and makes them "intelligent." "What we've done in our system is to divide that text or make business objects and functional objects out of the sections of that text. When a buyer decides to create a requirement and ask for something, our system allows him to define what type of answer he's looking for, what to do with that answer, and how to evaluate it. And then we store that information in order to track it across time and across projects."

Chatterton says, "We are manufacturer- and large distributor-focused primarily. We provide an end-to-end solution that focuses on content creation, content management and content syndication. The three offerings that we provide are Content Center, Commerce Center and Professional Services. That includes anything from content creation to management to syndication to online commerce."

3. What will you give them in the future?

Of the future's information outlook, Helfer says, "It's just getting more powerful. When you start doing this and you take the process online you're just scratching the surface of where you can take this." He goes on to say that the opportunity exists to switch from ad hoc or fragmented purchasing and then to use that information to dramatically improve procurement procedures. "Our experience is that fact-based recommendations, in terms of making changes to procurement activity, are how you get organizations to commit to change. Capturing information as to whether they're making that change is the only way to ensure that change continues to occur."

Deering says, "What we want to do is build tangible value for our customers with emerging technologies. We continue to focus our efforts on technology such as wireless and the next release of the customer configurator tools that will enable virtual inventory environments, so that companies can integrate their suppliers directly into their customer interface and never take control of inventories."

Hutchinson says, "We will offer more hosted analytical solutions in the purchasing space. They will be built to accomplish a particular purpose well  nutcrackers versus generic ERP-style sledgehammers. They will be non-invasive, fast to implement and easy to use. The only software requirement will be a Web browser and an Internet connection. And they will be built from open-source tools, enabling an order of magnitude cost reductions versus alternatives based on the traditional software business model."

Mineva explains that her company's long-term vision is for the laborious request for proposal process to become less important. "The reason is that we have these objects, these little intelligent packs of information, that we can match between the requirement of the buyer and the features of a supplier. This isn't the simple matching you can see today in the trading exchanges. We're talking about very complex, big projects, such as the implementation of an SAP system. In those projects you can also identify the requirement and match between those requirements and the features and the capabilities of the supplier. So the RFP process will become really small, and people will go straight into negotiations and relationship management, which is really the long-term value of the interaction between a buyer and a supplier."

Chatterton says, "I think the next generation is going to be more interactive in the sense that our software and our solutions will provide more of an interactive experience with the buyer. It's kind of real-time now, but we will be able to give them more interactive content and more interactive services that will enhance the buying experience, such as 3D photos and video streams. The end-user technology has to catch up a little bit. They have to have the technology to use this. Right now companies such as ours have the technology to provide it, they just have to have the technology on the other end to open it."

The upshot? Supply chain professionals in the "buy" space have needs that are vastly different industry to industry, company to company, but also fundamentally similar. The key is to understand the specific information requirements then build technology to suit the need. And enablers seem to know those needs, and are attacking them in different (and ingenious) ways. The final chapter has yet to be written in "The Great Supply Chain Mystery" but, whatever the outcome, everyone involved stands to profit.
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