For months now, economic prognosticators have been sending mixed signals on the potential global economic recovery. Recent stock market volatility has only added to this uncertainty. Yet, a new Saugatuck-BusinessWeek study of more than 400 global C-level executives  shows clear signs that most businesses are optimistic about economic growth.

The study, Shifting C-Level Business Priorities as the Recovery Takes Hold, boldly states that “…we are solidly entering a new business cycle: expansion after the tough 2008/2009 meltdown.” This conclusion was fueled by the majority of CEOs, CFOs, COOs, CIOs, and CMOs surveyed who have made “Sales/Revenue Growth” and “Reaching New Customers” their companies’ top priorities, followed closely by “Increasing Market Share.”

Such sentiment is in stark contrast to the past two years when “decrease operational expense” — including cutting headcount — was job #1 for most top executives. Yet, there is evidence that most businesses are still cost-conscious, as execs kept “Increase Profit Margins” among their top priorities (see below figure)

Despite the generally optimistic report, researchers careful to point out that, while “growing C-level confidence and commitment that [they] can again drive the top line,” there are nuances to the recovery:

• Global GDP is expected to climb 3.1% this year and another 3.3% in 2011, reversing two years of decline.
• The rebound will be led by Asia and Latin America, fueled by hyper domestic demand and growing exports.
• The US economy has entered a phase of sustainable — albeit tempered — growth, with hiring and housing both expected to rise. Growth in the States will be fueled by continued business investments in industrial equipment and technology, predominantly to replace or upgrade outdated software or IT equipment.
• Unfortunately, Europe lags the rest of the global economy, with current growth supported by inventory replacement and government stimulus.

Upshot: While it’s not full-steam ahead, C-level execs are cautiously optimistic about the recovery. They will be looking to make calculated investments and strategies to drive profitable growth. We will examine the key strategies C-level execs have planned for growth in a future post. In the interim, access a complimentary copy of the Saugatuck-BusinessWeek study here.

Related Post: C-Level Executives: Four Strategies for Growth

We know our customers pull data from a variety of sources. But with our 10s2 release, we're helping automate this process with the introduction of Custom Fact Tables.  This new feature will allow you to define your own custom fields and automatically send your data to the fact table for reporting.

What this means for customers, from a business case perspectives, is that you will now be able to stop sending surveys for data which is located in some other system.

In this short video, I walk through the new functionality. Have a look and of course, if you have any feedback on how this may (or may not) help with how you use the Commerce Cloud, please post it in the comments.

I know from my conversations with customers over the years that supplier information management and improving supplier performance is a major priority, the success of which can make or break budgets and careers. And in the current market, that Supplier Information and Performance metrics  information is ideally being drawn upon to predict and mitigate supply risk.

This week's Knowledge Nugget is on Supplier  Performance Management. In part 2 we covered the first step in the program - the need to view your supplier management as a program not just a scorecard. This is part 3, where the second step of the program is discussed. Links at the  bottom of this post will direct you to the other segments of this  discussion. Enjoy!

How are you managing suppliers today?

The forces of globalization are fundamentally changing the way that companies operate and compete, offering both business opportunities and challenges. The quest for lower-cost sources of supply and the promise of new markets are driving organizations of all sizes—from large, Fortune 50 enterprises to small Midwest manufacturers—to venture into the global economy. At the same time, increased competition from emerging markets, a sagging U.S. dollar and tightening supply markets are quickly erasing the lines between local and global supply chains.

Even as companies seek to sell, compete and secure supply in far-reaching corners of the world, they also must contend with challenges inherent to the global supply chain. Longer lead times mean that supply chain executives are recalculating the balancing point between “too Lean” and “too much inventory.” Supply uncertainty is forcing a greater emphasis on supply chain risk management as a discipline. And the need to negotiate and govern business contracts across multiple jurisdictions is adding new complexity to the supply management process and prompting procurement executives to reexamine the skills necessary for managing a global supply base.

The second step in the program is to set measures and targets that will tell you whether you are creating value and achieving the strategy:

Key Performance Indicators (KPIs)
KPIs are quantifiable performance measures developed to monitor the progress towards the achievement of strategy and the creation of value

Common Language
KPIs are the primary means for communicating business results

Targets
Targets are set for KPIs to ensure focus on continuous as well as breakthrough improvement

Four Inputs into the Target-Setting Process

On a going basis, the metrics begin to have power when:

• It is based on analysis, hard data, reality
• When everyone in the organization understands how key metrics link to overall procurement and corporate objectives
• When the targets set are credible (no point insisting on 99% on-time delivery when bulk of the reason for late delays are due to recognition problems in your receiving docks – sometimes refining the definition of on-time delivery where the goal is within the control of the supplier makes more sense)
• To this point, target setting for suppliers have to be incremental – reviewed on a consistent basis

Performance Management is a business process and needs an owner

• Oversee, maintain and improve PM processes
• Support users and resolve issues

Each scorecard has an owner

• Responsibility, authority and accountability for results
• Achieving/ influencing results is within their span of control

Most successful programs also have a strong executive champion

• Active top-down support is critical to establishing new programs and driving needed changes

Links to the rest of this topic below:

Supplier  Performance Management Part 1: Intro to Supplier Performance Management

Supplier  Performance Management Part 2: The Supplier Management Program

Supplier  Performance Management Part 4: KPI Targets, Monitoring &  Evaluation, Behavior  Encouragement

This  has been another Knowledge Nugget post brought to you by Beverly Dunn.

For  more information or details please feel free to contact me!

This week's Knowledge Nugget is on Supplier Performance Management. This is part 1 of a multipart post. Links at the bottom of this post will direct you to the other segments of this discussion. Enjoy!

     In order to mitigate risk in your supply chain, it is now more important than ever to effectively manage the performance of your existing and new suppliers. Performance management gives an organization the capability to effectively communicate strategy and to ensure that business processes are aligned to support the deployment of that strategy. A management process using Key Performance Indicators (“KPIs”) grouped into scorecards can be also be used to monitor and manage the performance of a process or organization to achieve certain objectives.

     Performance management can be addressed at the enterprise level (ESM) of your organization as well as at the supplier level (SPM).

At Ariba, we view performance as a system, not just a scorecard.

The Performance Management Process

Definitions:

• Performance  Management - a comprehensive management process which  systematically links a company’s strategy, resources, and processes.
• Key  Performance Indicator (KPI) - a quantifiable performance  measure developed to monitor the progress towards the achievement  of strategy and the creation of value. Evaluated on a regular,  frequent basis to manage the business.
• Operational  Statistic - A measure of performance referred to  periodically to give diagnostic insights but not used to manage  the business.
• Performance Measure - an indication of  the work performed and the results achieved in an activity or a  group of activities; a measure of how well an activity meets the  needs of its customers.
• Balanced Scorecard - A collection  of KPIs and targets, balanced across several categories  (cost, quality, timeliness), which together determine the overall  degree of success at achieving strategy and creating value.

The first step in the program is to effectively articulate your strategy:

Strategy

• Depicts what your organization wants to achieve

Clarity of Purpose

• Developing and communicating clear and concise strategic objectives will ensure that the appropriate direction is set for the organization
  

Clear Linkage

• The strategy should facilitate the link from the corporate level to the objectives of each work group in the organization

Links to the rest of this topic below:

Supplier Performance Management Part 2: The Supplier Management Program

Supplier Performance Management Part 3: Measures and Targets

Supplier  Performance Management Part 4: KPI Targets, Monitoring &  Evaluation, Behavior  Encouragement

This has been another Knowledge Nugget post brought to you by Beverly Dunn.

For more information or details please feel free to contact me!

Coming out of the global economic crisis, a new business climate is taking shape that will permanently change the way organizations need to deal with Buyer-Supplier Relationships. The old normal was a world where credit was freely available. In the new normal credit will no longer be easy and we’re going to face an inflation risk. This has driven many suppliers to choose which customers they want to serve. So now is the time for many Buying organizations to become a “Customer of choice” since it might be too late when markets become tight and are forced to line up with other buyers to get suppliers attention.

Best-in-class companies leverage collaborative Supplier Management as a means to mitigate Supply Chain Risk and also use as a competitive differentiator to drive substantial bottom-line revenue growth and profitability. But the path to a successful Supplier Management initiative requires not only a world-class web based technology and tools but also structured processes, expertise and access to a networked community to succeed.

Top “Lessons Learned” for enhanced Buyer-Supplier Relationships in the “New Normal”:

1. Learn to operate in the “New Normal” - Agility and information are the keys to success
2. Supplier Collaboration is the new way to work with suppliers in the new normal. Collaboration jumpstarts Innovation
3. Suppliers can pick customers they serve and it is imperative for buying organizations to become “Customer of Choice”.
4. Suppliers in all industries and geographies are in a very different position than just two years ago
5. Supplier Management don’t have to be a complex, laborious undertaking with “no light” at the end of the tunnel (can be turned into a competitive advantage using a structured approach to manage suppliers)
6. Total visibility in the supply chain and suppliers substantially improves efficiency and competitiveness in organizations
7. Supply Risk is not going away just because the economy is getting better

I have been asking myself this question for the past three years as I have been researching Supplier Management with companies.  The term is very broad and used differently  depending on who I am talking to.  Therefore I thought I should define how I have defined Supplier Management based on all the interactions I have had with customers on this topic.  To give Supplier Management a definition and space you must define the business problems you are trying to solve, but I will save those for a different post as I think everyone has their own set of problems depending on what type of company you are and who you are in the organization.

When I say, "Supplier Management", I am really thinking about the following elements:  Information Enrichment; Information Management; Supplier Diversity, Sustainability, and Corporate Social Responsibility; Supply Risk Management; Performance Management; Unified Reporting and Analytics; a Unified Connected Network; and interoperability with existing infrastructures.