Spend Matters welcomes a guest post from long-time contributor, Sherry R. Gordon.

Some excellent investigative reporting by The Boston Globe recently unveiled a new supply chain risk. The fish that Massachusetts residents have been eating is often not what it is supposed to be -- a real case of bait and switch. Apparently, some local restaurants have been serving what diners thought was local, fresh-caught cod turned that out to be frozen Pacific cod. Other restaurants were serving, for example, escolar billed as white tuna; farmed tilapia, ocean perch and sea bream for red snapper; and farmed white bass for wild striped bass. Among the violators were many sushi restaurants, including highly regarded and expensive ones.

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Spend Matters welcomes back long-time columnist Sherry Gordon.

It was the best of times. It was the worst of times. Chrysler went from being touted as having the best supplier management system in the industry and being written up in a June 1996 issue of the Harvard Business Review, "How Chrysler Created an American Keiretsu" by Jeffrey Dyer to a bankruptcy in 2009 that drove many of its suppliers out of business. Chrysler used supplier partnerships to revive itself in the nineties, then again was in the supplier relationship management doghouse after the merger with Daimler-Benz in 1998. Chrysler's famous, well-regarded SCORE program that rewarded suppliers for cost reduction ideas was dumped and supplier management went back to the traditional confrontational mode.

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At ISM, Sherry Gordon and I presented a session in the risk track covering "Core Risk and Performance Technologies You Can't Afford to Be Without" which we've been covering in a series of posts and will continue to plan to share insights on. But before even considering technologies in this area, we think it's critical that companies ask themselves a number of questions to know whether or not a focus on supply chain risk management technology will be worth it or not in the end after all the effort that goes into planning and rolling out such programs and systems. If you answer "no" to more than four questions in the list below, we recommend seriously revisiting your supply chain risk management deployment plan and reprioritize budgets/investment in other areas first -- or outsourcing the area to a third-party who can manage and take responsible for such initiatives for you. Without further ado...

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Click here for the first two posts in this series covering supplier performance and operational management fundamentals (Part 1 and Part 2). This series of posts is based on a presentation that Sherry Gordon and I gave at ISM in the risk track covering "Core Risk and Performance Technologies You Can't Afford to Be Without." SPM and related areas are Sherry's core expertise, and if you're looking for outside input in the area, I can't recommend her knowledge and skills enough. Now, back to the topic at hand...

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In the first post in this series, I shared some insights from a presentation I did with Sherry Gordon on "Core Risk and Performance Technologies You Can't Afford to Be Without" at the ISM event in Orlando. We framed our discussion around the key requirement of technology to drive efforts in these areas. In fact, I told the audience that I'd sooner do without e-sourcing tools than automated supplier management and SPM capabilities. Using the argument that "herculean efforts may be valiant, but like manual labor in developing economies, they often come up short of creating scale and sustainable results," we suggested, "there are simply things you can't do in an efficient manner when it comes to managing supply risk without technology." Yet simply diving head first into an automated approach to supplier performance and operational management is a recipe for technology that sits on the shelf.

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At ISM, Sherry Gordon and I presented a session in the risk track covering "Core Risk and Performance Technologies You Can't Afford to Be Without." For those who don't know Sherry, besides being an SPM pro -- probably the deepest expert in the world in the area -- she's a serious cyclist, albeit one that was recently swept off her bike by a falling tree branch. Yet Sherry pulled it together for ISM and is recovering extremely well from her nasty crash (as a former rider, stories like hers give me pause every time I think about getting back into riding and racing). She ended up leading a great presentation with me on the topic, putting SPM in the context of today's more risk-aware environment.

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In pursuing cost-reduction initiatives, senior management often looks to goods and services as an opportune area for cost reductions and bottom-line improvement. Reducing supplier costs has been enabled by sourcing technology. Firms who have wrung much of the cost reduction opportunities through sourcing initiatives can turn to supplier performance management as an effective way to uncover even more opportunities for improved quality, efficiency and cost. But how often do customer firms get beyond using the supply base as a piggybank and think of them as a source of big ideas for their own competitive and bottom-line improvements?

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Over the years, I've been a software seller, implementer and implementee. While software companies all use the phrase "driving adoption," sometimes the only ones driving anything are the software companies -- driving sales. Typically management at the customer buys the software with the goal of getting the software's promised ROI. Hopes are high that the software will solve a big business problem, but sometimes the implementation fails to achieve good adoption. User adoption cannot be ignored or the software's tenure at a customer will be short-lived. This creates the user phenomenon of "lie low and wait this one blows over." People do not like change, especially in the way that they do their jobs. Software requires both change and change management, and change is often resisted. Even if the change will mean better, cheaper, faster, and easier, it is human nature to try to resist and maintain the status quo.

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Spend Matters welcomes a new post from frequent contributor and SPM guru, Sherry Gordon ...

When managing supplier performance, firms are faced with the challenge of figuring out from what angle to view supplier performance. Should they look at the supplier as a whole? By product category? By part? By site? Ideally, you should be able to look at performance from any perspective. But that isn't always practical.

There are disadvantages to each of these perspectives. Ideally, you should be able to look at performance at the part level and roll up to the site. The challenge is that with multi-site suppliers, not all sites make the same product. And, even if several sites do make the same product, there can be vast differences among them. Sites may be located in different countries or regions, which can create varying supply chain risk factors, such as political, geographical, and logistics and have different impacts on performance. Obviously, one supplier site that makes ordnance and another that makes pipe fittings may use forging processes, but can't be consolidated to the overall supplier level for performance purposes without losing important granularity. Within the same site, if there are different product families, then a part-level quality problem in one line can impact one customer's shipments while another part problem may not. So part-level visibility can be useful in this case.

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