So here we are again, the world’s best athletes competing against each other at the Olympics, hosted this time in a city with one of the most stunning backdrops in the world, Rio de Janeiro. Each athlete has undertaken years of training with the sole aim of winning that elusive Olympic medal. Over the years many performance improvement based management theories have been developed but one stands out as having a direct impact on the performance of an Olympic team, ‘Marginal Gains’ theory.
The theory was originally conceived by Sir Clive Woodward who took the British Rugby team to victory in the 2003 Rugby World Cup. The theory really went mainstream when Dave Brailsford adopted and expanded the theory to take the British cycling team to victory at the Beijing Olympics in 2008. Marginal Gains theory has been increasingly associated with Brailsford in recent years and has been adopted in other sporting disciplines such as yachting and Formula One racing.
In summary, Brailsford said that if you could improve every variable underpinning or influencing your performance by just 1% then taking the aggregation of these 1% improvements would provide a significant overall performance improvement. The British cycle team examined everything that impacted the bike speed and systematically looked to make improvements to equipment, technology, rider preparation, fitness, rider mindset, coaching and so the list went on. The difficulty is being able to identify all these key variables and then from a Marginal Gains point of view being able to act on them in some way so as to improve the performance of the team, ie they are continually improving the performance of the team.
The theory of continuous improvement went mainstream in the 1950’s when Toyota introduced their production system. The ‘Kaizen’ process of continuous improvement, similar in nature to Marginal Gains, was introduced to transform Toyota’s production facilities and every step in Toyota’s production process was analyzed and improved to drive significant operational efficiencies. Just-in-Time production and lean manufacturing were both introduced by Toyota and this underpins the production operations of most of today’s global car manufacturers.
Now what if you could apply the Marginal Gains theory across your B2B environment? After all most companies are not able to implement a fully featured B2B platform from day one. Implementing a B2B environment across potentially thousands of trading partners can be a lengthy and complex process. Taking a step-by-step approach to deploying a B2B platform can bring significant benefits. Establishing a B2B environment can be broken down into a number of key steps, let me now highlight six of the key steps involved and how OpenText can help at each stage of establishing your B2B environment.
Improving Transaction Automation – this should be the primary goal of a procurement department, to ensure that their trading partner community is 100% enabled, in other words it is possible to exchange business documents electronically with every trading partner. For example this could mean replacing paper based documents with electronic information submitted through web forms.
OpenText offers a number of solutions to help ‘B2B enable’ 100% of a trading partner community. This includes tools such as Fax2Edi, Web Forms and portals, and even Microsoft Office-based tools that effectively shield small suppliers from the complexities of sending information electronically via EDI.
Improving Trading Partner Engagement – by simply having all supplier contact details in a central location will make the day-to-day management of a trading partner community much easier. Traditionally, supplier contact details may be held in different business systems, spreadsheets or even paper-based filing systems. Simply having a single and centralized repository of trading partner contact details can improve trading partner related people-to-people communications and collaboration activities. This becomes even more important during a period of supply chain disruption when alternative suppliers may need to be contacted for alternative supply of goods.
OpenText offers a number of community management tools and from a collaboration point of view OpenText™ Active Community can help improve the day-to-day, people-to-people collaboration across a supply chain. It is quite surprising how many companies do not maintain a central record of all supplier contact details, Active Community achieves this and more by hosting a central hub of supplier contact details that can be used for engaging with suppliers on a frequent basis, but in a more controlled manner. With many companies operating on a global basis now, improved collaboration should be at the top of most companies agenda when thinking about how to improve operational efficiencies across a supply chain.
Improving Customer Service – by ensuring that Advanced Ship Notices, for example, are able to be delivered within specific time windows as defined by customers. If customers know when shipments are likely to arrive at warehouse docks then they can be better prepared for the onward distribution to retail stores for example. Ensuring that ASNs are delivered to customers electronically allows suppliers to meet their customers’ tight ASN delivery service level agreements.
OpenText offers quality improvement solutions such as Active Intelligence that can check the quality of all inbound transactions to ensure they are accurate and not missing important pieces of information. Whether invoices or orders, ensuring that these documents can be processed efficiently can make or break the smooth running of a supply chain. Anything that can be done to minimize the manual rework of these documents helps to save time and money and also helps to ensure that suppliers get paid more quickly as part of the overall process.
Improving 360 Degree Visibility – This is a key goal of every supply chain and logistics team. From having end-to-end visibility of shipments moving across a supply chain, through to being able to introspect every business transaction flowing across a supply chain to identify operational and business trends. From an operational point of view being able to identify the volume of transactions by document type and most popular trading partners, and from a business point of view being able to analyze ASN timeliness or invoice accuracy. Having improved 360 degree visibility of a supply chain and being able to apply analytics to transaction based information flows allows more informed business decisions to be made.
Ensuring that you can have end-to-end visibility of transactions and shipments is a constant challenge faced by many businesses. OpenText™ Active Orders allows companies to keep track of the end to end flow of orders across your business. Comprehensive track and trace capabilities allow you to keep track of physical shipment flows and any delays experienced across the supply chain can be rolled up and a new expected time of arrival can be calculated accordingly. Finally, OpenText™ Trading Grid Analytics embeds analytics into the actual transaction flows so that both operational and business metrics can be measured with ease. Many companies are just starting to explore the use of analytics across the supply chain, and Trading Grid Analytics can help bring deep and meaningful insights across your supply chain operations.
Improving Regional Compliance – is a major initiative facing many of today’s businesses. Companies are constantly having to embrace new regulations, especially when trying to work with trading partners in different regions around the world. Whether embracing corporate social responsibility initiatives, embracing conflict minerals compliance in North America or simply meeting the different electronic invoicing regulations around the world. Electronic invoicing compliance is probably the most complex regulation to embrace, simply because nearly every country around the world has different tax laws, varying invoice archiving needs and digital signature requirements.
Ensuring that companies can trade electronically around the world is one thing, but being able to comply with a myriad of regional regulations is another level of complexity that can potentially be shielded from trading partners. For example OpenText™ Active Invoice with Compliance allows any supplier to exchange a fully compliant invoice virtually anywhere in the world, and OpenText can comply with electronic invoicing regulations in over 50 countries around the world, including Brazil and Mexico where the use of electronic invoices is mandated by local government. In addition, using OpenText’s Active Community platform highlighted earlier, you can quickly assess supply chains for regional compliance initiatives such as the conflict minerals reporting requirement mandated by all companies who file financial reports to the Securities and Exchange Commission (SEC) in North America. This is just one example of how a collaboration platform can help to adhere to regional compliance regulations and there are many other compliance examples out there in the market.
Improve Enterprise Integration – can bring many benefits to a company, whether simply integrating to an accounting package or an ERP system, ensuring that information from external trading partners can seamlessly enter enterprise systems can help to streamline information flows. A research study from OpenText demonstrated that over a third of information entering an ERP system actually comes from outside the enterprise. By integrating ERP and B2B systems together you can ensure that downstream production or retail environments are not impacted by delays related to manual rework of data.
Ensuring that high quality and accurate information enters back end enterprise environments is a constant challenge. If inaccurate data is allowed to enter SAP for example, and this information reaches downstream production environments then there is a chance that these production lines will be brought to a standstill. By integrating your ERP and B2B environments in the cloud you can check the quality of all information entering your ERP environment and at the same time ensure that these transactions are flowing across a highly available, cloud based infrastructure. OpenText™ Managed Services can provide this highly available environment, especially important when an OpenText sponsored analyst survey, that I highlighted earlier, said that over a third of information entering ERP actually comes from outside the enterprise. OpenText™ Active Intelligence can check the quality of all inbound transactions and this effectively places a firewall around your business applications.
OpenText recently undertook some research to calculate the 1% gain for each of the above six B2B improvement areas, let me give you an example relating to transaction automation. The findings from this research are available to download.
Most organizations understand the need for an effective B2B integration platform, however research undertaken by Stanford Global Supply Chain Management Forum showed that 50% of information being exchanged between trading partners still travels by fax, email or even phone. Simply automating more transactions will reduce cost, reduce errors while speeding the order-to-cash cycle and improving inventory performance. The 1% gain, when you exchange 1,000,000 documents a year, with paper documents costing $14 to process versus electronic being $7, trading just 1% more documents electronically could save your business $70,500 per year.
Now this is just one example and if you want to find out how applying B2B integration tools to the other five areas can potentially save your business over $1M per year then please visit the campaign site where you can view an on-demand webinar on Marginal Gains and download a white paper which goes into much more detail on how this performance enhancing theory can improve the efficiency of your supply chain operations.