In the video I have brought here in this post, Forrester Research Vice President John McCarthy looks at some best practice case studies for vendor management (Forrester Sourcing Forum, November 9, 2007 in Orlando).

Traditionally and still today, the bulk of what most of today's vendor management groups do is contracting and pricing. However, the most successful VMOs have cracked the code on vendor governance - tiering suppliers, building executive relationships, and reviewing vendor performance systematically beyond the base line SLAs.



McCarthy explains how some of the companies have used SAP implementations, organizational changes and new strategies have acted as a catalyst for starting initiatives in VMO area. Hope you enjoy!

Brightstar Corp., a provider of customized distribution and integrated supply chain solutions for the wireless industry, announced last week the appointment of Professor Charles Fine of MIT to its board of directors.

Professor Fine, a leading expert in supply chain management, currently teaches operations strategy and supply chain management at MIT's Sloan School of Management & is the author of Clockspeed: Winning Industry Control in the Age of Temporary Advantage, among a host of articles about quality management, flexible manufacturing and operations strategy.

R. Marcelo Claure, president & CEO of Brightstar said, "We are thrilled to have one of the brightest minds in supply chain help us set the strategic direction of our integrated supply chain solutions organization. Professor Fine will further enable Brightstar to bring our customers the most innovative ideas and key insights from across sectors to help them drive their business."

"I am delighted to join Marcelo Claure and the Brightstar leadership team, who have led the company's evolution from a distribution company, to also become an industry-leading global supply chain organization," said Professor Fine. "With a focus on their customers' success and investment in top talent like Harry Lagad, they will continue to revolutionize supply chain in the wireless sector."

Measuring the success of a supply chain initiative during and after the project is a crucial task and goes beyond the timeliness and cost effectiveness of the project itself. It may be the case that the project is totally on time and has absorbed less money that it has been accepted but it doesn't satisfy the strategic goal of supply chain. Therefore, even though it might seem very basic, I decided to bring some of the common KPIs used to measure the success of the supply chain projects over here. Some of the common KPIs include:

- Inventory Value
- Inventory Turn
- Delivery Lead Time
- Cast to Cash cycle
- On Time In Full Deliveries
- Asset Utilization

The tricky point to remember here is the link to ROI. The simplest calculator for determining the effectiveness of an initiative is ROI. What we have to do is to measure indicators which are related to ROI such as the ones above (or the other ones which might be more relevant) and also make sure that they have a positive effect on the return on investment.

One of the methods which is used to make a roadmap of possible dominant technologies and trends in innovation area is Scenario Planning. The method was originally invented by the oil company Shell (I believe around 30 years ago) and now is used extensively by innovation managers in global companies.

In the scenario planning process, companies try to identify the possible trends in the market and new product (e.g. Children are spending more time working and playing with PC), the impact of such trends (They do less physical exercise and become fat) and the associated opportunities (Gym market will be booming, there will be a need for healthy products & related medicines); the innovation and technology planners do this for various scenarios and then allocate new product budget based on the output of such exercise.

In the supply chain world, as the uncertainty is rising more than ever, a similar approach can be adopted for the long range planning of the value chain investments; that's basically what a group of researchers at MIT are doing: There is a new project going on at MIT with the theme of "Future Focused Supply Chains" which is using the same approach use by new product development experts in supply chain.

Their approach consists of three main steps:

1. Scenario Thinking: where they create various scenarios and simulate possible outcomes through scenario planning. The main output of this phase will be the identification of trends and market developments that the company should be monitoring.

2. Strategy Alignment: In this phase, the focus is on aligning the responses derived from the scenario thinking exercise with the company's strategic goals.

3. Implementation and Development: An at the end, Supply Chain Managers look at the nuts and bolts of implementing the strategies they have decided to follow as a result of the previous two steps.

The important consideration which is derived from new initiatives like this one is that supply chain professionals have to change the way they approach uncertainty. No company can be in complete control of its commercial destiny, but with a future-focused mindset that can become more adept at navigating change.

Waukesha Tool & Stamping, LLC, an international full-service metalforming manufacturer, has awarded a contract to Plexus Systems to manage its tool design and build, engineering and metalforming operations, SCMR reported.

Waukesha Tool & Stamping said it required a complete system to manage all aspects of its operations, integrate its business data from multiple locations, and facilitate more sophisticated and complex financial reporting. Plexus Systems will maintain Waukesha Tool & Stamping's data and provide the software, hardware and services to support the Sussex, Wisc.-based operation and a new McAllen, Texas, operation.

"We are confident that Plexus will give us more reliable data on our costs, save time in the customer service area, streamline purchasing and planning, and manage manufacturing and quality," stated Nancy Nyhan, Controller, Waukesha Tool & Stamping, LLC. "We'll also be able to accelerate our shipping and receiving operations through the use of bar code scanner technology."

Plexus Online is an on-demand solution that builds on the software as a service (SaaS) model. Plexus Online offers over 350 functional modules, providing companies access to information and management functions using a Web browser. The on-demand solution features enterprise resource planning (ERP) functions such as accounting and finance modules, customer relationship management (CRM) features such as order entry and tracking, manufacturing execution systems (MES) functions such as production scheduling and machine integration, and supply chain management (SCM) functions such as supplier quality and traceability.

"This contract with Waukesha Tool & Stamping gives Plexus the opportunity to expand its reach in the metalforming industry, and it offers Waukesha the ability to maintain the high quality of its products and to streamline its business and financial reporting functions," said Thomas Mackey, executive vice president, Plexus Systems, Inc.

According to a new report from Diamond Management & Technology Consultants, companies that take a holistic view of their supply chains and incorporate environmentally-friendly principles at key points along the way will create opportunities to increase shareholder value.

"Becoming green is no longer an end in and of itself, but the byproduct of optimizing a supply chain," said Mark Baum, a partner at Diamond who leads the firm's Consumer Packaged Goods practice. "At the same time, transitioning to a Green Supply Chain while also maximizing efficiency is not a clear-cut process."

The report, entitled "The Case for a 'Green' Supply Chain: Turning Mandate into Opportunity," provides a set of recommendations for a Green Supply Chain framework. A company should continually evaluate and prioritize green investments in the supply chain based on their returns -in both financial and non-financial terms according to the report. "When prioritizing potential opportunities, it is important for companies to keep in mind that not every initiative will have a positive return on investment," said Baum. "Therefore, it is essential to think about all green initiatives together as a balanced portfolio, with some initiatives being done on an investment basis."