Will Active Supply Management Stick?
Last week, I had the chance to stop by an Apexon road show, as it stormed through the Chicago burbs. Sparsely attended, the number of participants did not do justice to the topic at hand. I'll leave an analysis of the excellent keynote presentation -- given by the one and only Colin Walker -- as a subject for another post. What I want to focus on here is the concept of active supply management, a phrase that Emily Liggett, Apexon's CEO, introduced in her talk at the beginning. According to Emily, active supply management is about proactively managing suppliers and supply processes in both a proactive and reactive manner. It aligns supply priorities with the business, using data and information to drive actions and break down functional barriers (both inside and outside the company). Above all, it helps companies focus on high impact actions, helping companies manage their suppliers in different ways, based on their profile and overall strategic impact to the business.
My question is this: is active supply management just another buzzword that expands the definition of supply performance management or is it pragmatic thinking that will catch hold across industries, creating a new category and class of solutions and capabilities that companies need? I'm not sure, but I do know one thing: Emily comes from the school of hard knocks. Her background suggests that she knows discrete manufacturing environments better than almost anyone I've met in the Spend Management technology world (although she is far too humble and soft-spoken to admit it). But I wonder whether the positioning of active supply management will allow it to become essential or just a nice to have. Obviously, the verdict is out, though I think the concepts it is based directly on what Emily and her team have observed over the years in the manufacturing world. What do you think: Is active supply management here to stay?
- Jason Busch
My question is this: is active supply management just another buzzword that expands the definition of supply performance management or is it pragmatic thinking that will catch hold across industries, creating a new category and class of solutions and capabilities that companies need? I'm not sure, but I do know one thing: Emily comes from the school of hard knocks. Her background suggests that she knows discrete manufacturing environments better than almost anyone I've met in the Spend Management technology world (although she is far too humble and soft-spoken to admit it). But I wonder whether the positioning of active supply management will allow it to become essential or just a nice to have. Obviously, the verdict is out, though I think the concepts it is based directly on what Emily and her team have observed over the years in the manufacturing world. What do you think: Is active supply management here to stay?
- Jason Busch
I have worked in manufacturing and have found in general that manufacturing companies are more advanced than services companies in their business practices and thinking around managing suppliers. Perhaps the impact of poor supplier performance on manufacturing companies is more obvious and visibly painful.
Certainly technology plays an important role in enabling and scaling the management of supplier performance, especially when used within the context of a well-designed business process. At Emptoris, we have found that technology scales the process and helps make it more consistent and transparent, enabling companies to measure more suppliers and uncover hidden cost drivers and risks.
Active supplier management, or whatever term you want to use, has existed for some time and is definitely evolving and attracting more interest. Now that many companies have negotiated with suppliers and driven down cost as much as possible, the next frontier is to address the actual cost drivers within the supply base via supplier performance management solutions. Currently, the ROI of this process needs to be better understood or at least better demonstrated to management so that they understand the huge potential impact that improved supplier performance can have on their companies. We’re finding increasing interest in this area, as companies are struggling to figure out how to measure supplier performance in a meaningful and actionable way.
The concept of Active Supply Management may have existed previously in the same way that the idea of hosted software/ASPs were around well before Salesforce.com. It just took the right company to catalyze the trend.