subscribe: Posts | Comments | Email

Supply Chain Matters Conversation with ClientLoyalty- Interactive Supplier Performance Management Technology


When this industry analyst attends technology and industry conferences, I attempt as time permits, to seek out what I believe our technology vendors that are providing unique or different technology approaches to business process needs. When attending ISM 2016, the annual conference of the Institute for Supply Management (ISM) held in May, this industry analyst had the opportunity to speak with B2B relationship and supplier performance management technology support provider ClientLoyalty, Inc., specifically Chairman and CEO Kent Barnett.

Essentially, ClientLoyalty technology collects operational metrics, direct feedback and social sentiment information regarding suppliers. After successfully spending over a decade transforming the field of human capital analytics with cloud-based technology, the founders of ClientLoyalty’s turned to developing cloud-based software to improve buyer/supplier relationship management using analytics, benchmarking and credible methodologies.

However, the uniqueness is in the concentration on business or professional services providers. For example it could be marketing services or public relations, consultants, or logistics and transportation services.

Within the software, information is synthesized and benchmarked in the form of alerts, dashboards, and reporting tools to ease the complexities of relationship management using what is described as a practical and pragmatic approach. Users have the option to share non-sensitive data with partners as a part of a transparent service level agreement process while keeping confidential the critical data needed to track and monitor internal supplier relationship management and monitoring needs.

During my visit to the ClientLoyalty booth, I was provided a demonstration of the software.

What impressed me was the breadth and clarity of the information, the flexibility of the software, and the intuitive usability features that should allow any user to be able to quickly come up-to-speed with features. Information on key performance indicators can be collected and inputted plus suppliers themselves are allowed the ability to input information relative to their customer’s actions in the relationship, in-essence, fostering a two-way information lens. That, by my lens, is area that should have more practice by procurement professionals, an understanding that perceptions run in either direction and it’s important to key-in on the ones that could lead to added tensions.

One cool capability was the ability of either party to share videos or photo images, perhaps a photo of the service created or a video of a problem area that needs attention. While such capability can also be done in texting or email, having the ability to tag, archive and log these events can be of-value. There is also the ability to scan social media channels for evidence of positive or negative sentiment. I kidded with my host as to wht6her that included specific Supply Chain Matters commentaries.

Finally, ClientLoyalty is one software company that is willing to share pricing on its web site. The Enterprise version of its software is currently available for $99 per user, per month.

We found ClientLoyalty technology to be one that we wanted to make visible to our readers who may be seeking a different option for managing supplier relationships and performance for business services providers.

Bob Ferrari

© Copyright 2016. The Ferrari Consulting and Research Group and the Supply Chain Matters® blog. All rights reserved.


Visibility to Wal-Mart Business and Supply Chain Strategies Again Front and Center


Wal-Mart, the world’s largest retailer held its annual meeting at the beginning of this month, and business and general media has provided lots of subsequent news coverage.  Wal_Mart Store

During the annual investor meeting held on June 2nd that included upwards of 14,000 attendees, Wal-Mart CEO Doug McMillon urged employees and investors to reimagine the future of the retail landscape. He further added that the retailer is picking up the pace of change, and from the overall supply chain lens, winds of significant change remain evident for many months to come. Such a change will place added burdens on suppliers to insure that Wal-Mart maintains both its global leadership role but also its needs to added profitability.

Many published reports related to Wal-Mart over these past two weeks point to the retailer as being at an important crossroads in terms of its long-held dominance in pricing and convenience. We call particular reader attention to a published Economist article: Walmart- Thinking Outside the box, (Paid subscription required) which provides an in-depth perspective on strategies and business needs.

From an online perspective, Amazon continues as the dominant online retail platform, providing online shoppers with both competitive price and convenience.  With further expansion in household consumables, grocery and other foods, Amazon will increasingly encroach on the Wal-Mart customer. Wal-Mart itself has invested a reported $10.5 billion within new information technology to enhance its online web presence and fulfillment capabilities.  In January, both existing IT groups were also merged together into one singular group. Yet, industry media reports that online sales slowed to a 7 percent growth pace during the first quarter, below company and investor expectations.

CEO McMillon observes that his team has paid very close attention to current retail industry trends including the growth of online, and that his firm will dominate by executing a strategy that leverages the combination of online as well as physical distribution and retail store presence. Stores will serve both as a retail destination as well as an extension of online in customer pick-up and returns.

Within physical stores, the retailer has invested $2.7 billion in higher wages and employee training, but at the same time, consolidated its physical retail footprint by closing 269 stores. Efforts are once again underway to spruce-up stores, clean-up aisle clutter and include more fresh produce offerings. The retailer further announced that over the coming months, Wal-Mart will return to an aggressive pricing strategy, promising to once again reduce prices on a number of offered items.

This leads to the supply chain challenge that is currently underway, namely, to compensate for all of the added investments in operations and online capability, suppliers will have to divvy-up additional cost and price savings. In a sense, this is nothing new for Wal-Mart’s suppliers; however it appears as though it is taking on more aggressive dimensions. We initially highlighted stepped-up supplier pressures in April of last year, and consequent supplier push-back attempts in September.

One of the largest and most loyal suppliers to Wal-Mart has been global consumer packaged goods producer Procter& Gamble.  The business relationship has extended for decades and today, P&G garners in excess of $10 billion in revenues from Wal-Mart alone.

Today’s edition of the Wall Street Journal features a front-page article: Wal-Mart and P&G: A $10 Billion Marriage Under Strain (Paid subscription required) that provides added insights into supplier relationships with the retailer. Over year ago, Supply Chain Matters highlighted a similar WSJ report on the intense competitive pressures of both firms, when the retailer elected to offer Persil, a European branded laundry detergent alongside P&G’s Tide branded detergent across Wal-Mart’s retail stores.

This latest report indicates that both firms: “are increasingly butting heads as both try to wring more revenue out of their slow-growing businesses.” The retailer in-essence is pressuring for reductions in prices for best-selling goods as it furthers efforts to invest in new capabilities, while P&G is attempting to protect both volume and profitability of its largest brands.

One other revelation brought out was that unlike all other suppliers, P&G does not have a contract that governs supplier agreements. Rather, both parties rely on in-person relationships, emails and handshakes to address supply programs and other particulars.

Returning to the broader Wal-Mart supplier community, the retailer’s new U.S. chief executive is reportedly spoke directly with suppliers in February and delivered a stern message concerning needs to work more on inefficiencies. The WSJ cites indicates that several people that attended indicated that the retailer expects “healthy tensions” will suppliers and will be “maniacal about managing costs.” The U.S. CEO is further pushing his procurement team to fight more aggressively in negotiations with suppliers and all buyers are now required to attend a workshop conducted by a U.K. based negotiations consultancy.

We suspect that some of our readers who reside in supplier organizations doing business with Wal-Mart may have already encountered the effects of this renewed supplier management efforts.

Thus is the evolving strategy of Wal-Mart, evolve quickly in the new era of retail by leveraging all existing assets, fight for every consumer in price and convenience, invest aggressively in needed new capabilities and garner any and all compensating cost reductions and efficiencies from existing suppliers to meet required financial bottom-line outcomes.

In some sense, the more things change, the more an organization can revert back to prior methods. In the end, we continue to question whether pounding suppliers is counter-productive, since process, cost and product innovation comes from all tiers of any supply chain in joint collaboration efforts.

Bob Ferrari

New Study Finds Social Responsibility as Part of the Business Sustainability Agenda


In prior Supply Chain Matters blog declarations, this Industry Analyst has declared a belief that the recent ground breaking Paris COP21 Agreement on stemming global climate change provides both a profound call to action as well as a significant opportunity– an opportunity for bolder collaboration and joint goal-setting to not only address greenhouse gas reduction imperatives and to saving our planet, but the imperative of sustainable business itself.  Paris_COP21

After receiving a direct Tweet from consulting firm BearingPoint regarding the latest results of its 5th Supply Chain Monitor survey on sustainable supply chain efforts, this analyst remains even more convinced on the need for moving such initiatives beyond functional to line-of-business level efforts.

According to the BearingPoint survey summary, Sustainable is the new green for supply chain.

To cite a specific finding:

In 2015, the green supply chain is widely seen as a strategic priority: if it isn’t already, it will be in the next 1-3 years.

Having a green supply chain is now high on the agenda for 59 percent of European companies, and for 51 percent of U.S. companies. Considerably more U.S. companies (2 percent compared with 6 percent of European companies) see it becoming an important priority in the short term (the next 1-3 years), as they strive to close the gap and bring their activities in line with Europe.”

The report notes that European supply chain respondents indicated they have already harvested most of the low-hanging fruit of carbon reduction initiatives. The study authors indicate that the data suggests that in the post COP 21 period, they perceive a revival of green awareness that includes more social responsibility efforts in overall supply chain sustainability plans.

Consider that according to this study, 70 percent of European based companies currently view the social aspects of supply chain as a strategic priority in their supply chain management efforts with an additional 12 percent indicating that would be the case in the next 1-5 years. The report further observes that the U.S. has raised its social responsibility game, which is attributed to the fact that U.S. activity has also lagged European efforts by a visible margin.

Regarding the notion of raising sustainability efforts towards a broader objective of sustainable business, there was an interesting finding:

Although CSR (Corporate social responsibility) departments exist in many companies now, they don’t necessarily have the broad view or the decision-making power to move things forward to the degree needed.”

The authors go on to note that companies now need to implement professional management concepts to plan, execute and control their extended sustainable supply chain management activities to include internal and external incentive systems required to drive change.

That is encouraging data to state the least. Including social responsibility under the sustainability strategic umbrella adds a broader strategic mission implying higher organizational and executive level stakeholder interests.

The data is quite interesting and reinforces that industries are indeed approaching another crossroads in the COP 21 era of global climate change and sustainability efforts.

Is your supply chain organization, or better still, are your company executives taking this view?

Readers can download the full BearingPoint study at this 5th Supply Chain Monitor web link.

Bob Ferrari


There’s a High Visibility Supply Chain That Can Also Move Supplier Fortunes

1 comment

Readers of this blog are well aware of the power and consequences of supplier visibility that is attributed to the Apple supply chain.  Knowledge of supplier contributions to Apple’s product value chains can literally make fortunes or cause significant financial harm, depending on the news or developments, whether real or rumored.

It now appears there is a new contender on the scene, that being Tesla’s supply chain.

This week, the Wall Street Journal highlighted evidence to this effect.

Recent rumors were that battery manufacturing firm Samsung SDI, a component-making division of diversified electronics manufacturer Samsung, was in-line for a new procurement contract for lithium-ion batteries to power the newly announced Tesla Model 3 vehicle. Keep in-mind that Tesla partnered with Panasonic to build the giant battery manufacturing gigafactory located in Nevada. That partnership required Panasonic to pony-up a considerable financial sum to help in building this new facility as well as incorporating advanced manufacturing processes.

Tesla founder and CEO Elon Musk took to Twitter to clarify that Tesla was indeed working exclusively with Panasonic on the Model 3 electrical power needs, and that news articles claiming otherwise were incorrect. According to the WSJ, that one tweet caused Samsung SDI market capitalization to drop by $580 million while the market cap for Panasonic jumped $800 million in the same day.

The report notes: For investors chasing buzz, the electric-car maker has increasingly been a driving force among shares of automobile-component suppliers in Asia, akin to what Apple news does to electronic-parts makers.”

The article further noted:”Tesla moves stocks, even if the news is hard to confirm.”

Two other examples were provided to reinforce this trend. Hankook Tire shares shot-up in May on news that it could become a Tesla supplier.  Similar news sent shares of battery producer LG Chem soaring last October. Taiwan based Hota Industrial Manufacturing; sole supplier of gearboxes saw it shares driven down in April amid rumors that Tesla was seeking a second supply source.

Thus, Tesla has obviously become another high-visibility global supply chain, one where supplier fortunes move on the slightest news, and one that will increasingly be subject to attempts to gain all forms of insider information.

There is of-course, another twist to this new high visibility supply chain. That is that automotive supply chains will increasingly shift toward more high technology components and software composition in the overall supply chain.  Then, there are the continually rumors that Apple maybe working on developing its own branded electric car.

So goes the new era of elite supply chains, those few innovative players that literally move financial markets on the basis of being the recognized market disruptor, where supplier contracts, news or supply chain hiccups determine financial fortunes.

Bob Ferrari

Survey Indicates Supply Chain Wide Information Security Remains Troublesome


Cyber security and protection from information breaches remains a top-of-mind concern for many firms, but it takes on special dimensions in the context of multi-industry supply chains.

Vulnerability to a third-party or supplier focused breach became evident in the massive credit card hack that involved retailer Target in late 2013, exposing upwards of 40 million credit card numbers to hackers. Subsequent investigations of that incident indicated that hackers gained entry via a refrigeration maintenance supplier’s login credentials to Target’s internal systems. A recent report from Industrial Safety and Security Source further provides amplification that the supply chain represents the greatest risk in industrial control systems.

Three year later, it would appear that not much has been gained in learning from that incident. Tripwire, a global provider of endpoint detection, security and IT compliance recently contracted for a survey to study of current information security practices. This study, carried out in December, included upwards of 320 IT professionals having visibility into the security of their organization’s supply chain.

Supply Chain Matters recently spoke with Tim Erlin, Director of IT Security and Risk Strategy at Tripwire regarding the results and implications of this survey.

The Tripwire study headline was that while 81 percent of IT professionals are confident in their ability to protect sensitive customer data within internal systems, nearly half are not as confident about the security practices of partners and suppliers. Less than half (44 percent) indicated that their organization’s require partners and suppliers to pass security audits before signing a contract. A quarter of the respondents indicated their organizations do not evaluate whether suppliers meet their information security requirements.

Other data indicated that 95 percent of IT professionals believe that a breach could indeed expose valuable data but such concerns are related to one’s own organization. Unfortunately, it would appear that other operational and overall cost concerns trump that of supply chain wide security. Other Tripwire survey data indicates that while certain industry areas such as retail finance or software related industries provide a stronger focus on broad value-chain security while other industries particularly manufacturing, energy related and others are less aware. While the majority of the security industry is aware that these information security incidents will continue to occur there is surprise as the lack of broader focus.

Erlin indicated that such results reflect on what IT professionals can directly control and have direct accountability vs. what ends up often being that related to influence. Many IT organizations have their own internal budget and resource constraints. However, Erlin stressed that organizations must invest in securing their points of information entry and interaction with partners. He further indicated that some initial Internet of Things (IoT) initiatives are currently utilizing rather old information service protocols that are highly vulnerable.

The obvious takeaway for the broader supply chain and procurement focused community is another wake-up call to increase diligence on potential information security vulnerabilities related to suppliers or trading partners with access to a customer’s internal systems. This includes periodic audits and checks that involve either your IT resources or those of your supplier.

Information security remains a supply chain wide threat, particularly as the new era of IoT enabled business models take hold. Information security needs to component of any supplier management plan involving a direct or indirect materials vendor with external access.

The financial and brand stakes involved in an information breach involving sensitive customer data can far outweigh budget constraints. It is also an area where two-way collaboration needs to occur.

Bob Ferrari


« Previous Entries