Monthly Archives: August 2012

Best Practice Technology Vendor Selection for True Multi-Nationals Part III: RFX – You’re Missing the Most Important Point!

In this post we continue our series on best-practice vendor selection for your enterprise e-Procurement and e-Sourcing solution. As per Part I, this series specifically relates to the selection of technology(-based) vendors for your enterprise software needs, and e-Procurement and e-Sourcing solutions in particular (as reiterated in Part II).


What is the ultimate goal of your organization’s technology acquisition project? To get an e-Procurement/e-Sourcing system? No. To increase efficiency / save money / get more spend under management? No. To get satisfaction? No.

The ultimate goal is your organization’s success. That’s the only metric you care about when initiating the technology acquisition project (TAP) dance . And if your organization is a global multi-national, then your organization’s success depends on the vendor’s ability to deliver globally. Not how many boxes the vendor can check on some random feature / function check list. Because, as we discussed in our last post, where large-scale roll-outs are concerned, there are only a few standalone best-of-breed sourcing and procurement technology vendors that will make the shortlist for a given organization.

One thing that your organization needs to be aware of is that this is not 2002, this is 2012 and both e-Sourcing and e-Procurement functionality is more-or-less commoditized among the established vendors. Sure, some will have features G, H, and I while others have features J, K, and L, but they all have critical features A through F. And as for features G through L, if they are valuable, the other vendors will catch-up, and the time it will take them is usually less than six months nowadays, and if a feature is made a contingency of a deal, the catch-up time is probably shorter still!

Another thing your organization needs to be aware of is that starting with a short-list of vendors that it is fairly certain can meet its needs will not only significantly reduce the length of the evaluation process (as it is no longer a question of “can the vendor meet my needs” but a question of “is this the best vendor to meet my needs”), but also significantly reduce the organization’s risk. If the organization needs to operate in forty countries and twenty languages, and doesn’t do it’s homework, it could end up wasting six months evaluating three vendors who don’t have a reference outside of the US and UK and who don’t support customers in a language other than English. If it has a deadline of nine months, what does it do? Either it takes the last vendor in the pipeline, if any are left, or rushes out to find another one, with no time to consider how appropriate the vendor it is for its needs or its organizational culture.

Which is another point that is often missed in the traditional implementation of an RFX cycle. Cultural considerations are typically ignored in technology selection, ignoring the fact that people have to use these systems — people who work, think, act, and like to conduct business in a certain way (and like to interact in a certain way with technology and technology / service providers). As a result, good technology selection is not just a matter of check-the-box when a strong vendor interaction is required. If two or more vendors are more-or-less equal from a functional/process selection, the tie-breaker should be cultural alignment. Does the vendor have the same goals? Work to the same metrics? Conduct itself in a similar manner? Give your customers and suppliers the same respect? These are important, but often overlooked, questions. Don’t forget them.

In our next post we will dive into more best-practices to truly take your technology acquisition project to the next level now that your RFX process is back on the rails.

A Shipper’s Right


Rant on blogger, rant on along
Rant on buddy till the day is through
Rant on brother, sister too
Rant on momma like I asked you to do
And rant on fellow blogger, rant on (Rant On!)


Today’s guest post is from Leigh Merz, a Project Analyst at Source One Management Services, LLC.

In late 2009, both UPS and FedEx announced a change in policy when working with third party consultants, basically negating any future negotiations or direct communications with these service providers. This mandate limited shippers to only work with either FedEx or UPS directly as the carriers did not want their so-called proprietary information shared.

UPS and FedEx claimed this change would be in the best interest of both themselves and shippers. In 2010, a parcel consulting firm, AFMS, LLC (“AFMS”), began its fight against this new policy. They argued that both suppliers “colluded to avoid revenue dilution”. In addition, they discussed other antitrust violations that would impact shipper’s abilities to compete its business including:

  1. Suppressed competition among and between FedEx and UPS
  2. Diminished freedom of choice for shippers
  3. Suppressed competition among and between third party consultants
  4. Shippers are forced to pay higher prices

Let’s take a step back. Third party consultants work as an extension of a customer’s purchasing team and do not share any information pricing or other terms with the marketplace. Businesses look to these professionals for market intelligence, assistance in negotiations, to determine if the offer being presented is competitive and fair, and to manage their logistics spend overall. They are not used to ‘beat up’ incumbents or play suppliers against each other and are able to bring the facts to the table.

How long will UPS and FedEx continue to exclude third party consultants? They are positioning themselves as squelching the small parcel consulting and negotiation services market. Also, their unwillingness to play nice only gives leverage to regional players and potential growth opportunities for competitors like USPS. These companies understand businesses needs and rights to engage the experts in negotiations. They are willing to participate in RFX processes and work with whomever the client assigns as their spokesperson. The result is usually an increase in revenue and a commitment for a long-term relationship. UPS and FedEx are encouraging a decline in revenue and potential relationship termination.

Third party consultants are willing to work with UPS and FedEx and will allow them to compete for business fairly and without bias. They will offer insightful information into the customer’s spend profile without sharing confidential information or asking for unrealistic pricing and terms.

On a side bar, AFMS continues to stand its ground waiting for the projected trial in 2013 for a jury to hear its complaint.

Thanks, Leigh.

The Seven Deadly Supply Chain Sins (Repost)

Originally posted on April 20, 2008, something tells me it’s time for a repost …

Over on the World Future Society, there’s a great piece in the President’s Web Log where he recounts a creative interpretation of the sins of the future. What really got my attention is how each of them have their supply chain equivalents, and how the first five in particular require very little modification. So, without further ado, here are the seven deadly supply chain sins.

  • Earthism
    Holding humans superior over all other life-forms, and putting our needs over the needs of the other species we share the planet with. This can take the form of plotting a sea-lane through areas wales like to call home or of a new highway through areas of woodland where animals on the precipice of the endangered species list live.
  • Harmful Technology Replication
    The reproduction of environmentally dangerous means of production, power, and transport when greener, friendlier methods have been identified.
  • Innovation Theft
    Stealing your competitors innovation and calling it your own.
  • Online Misbehavior
    Misrepresenting yourself and your capabilities on your website, in electronic negotiations, in electronic marketplaces, and anywhere else in the virtual world created by the internet.
  • Transportation Recklessness
    Use of highly expensive, environmentally damaging, and resource-intensive fuels to ship functionless trinkets and knick-knacks halfway around the globe or to travel halfway around the world to play golf with your counterpart at a supplier.
  • FTZ and STZ exploitation
    Regularly shifting your base of operations to take advantage of Free Trade Zones and Secure Trade Zones to avoid paying taxes and your debt to society.
  • Bribery
    Bribing public officials to change the laws to your corporate advantage … be it a reduction in environmental regulations, a reduction in safety regulations, or a reduction in social welfare and employment regulations to increase corporate profits at society’s expense.

Engaging Stakeholders – It’s as Easy as Corralling Cats!


Rant on blogger, rant on along
Rant on buddy till the day is through
Rant on brother, sister too
Rant on momma like I asked you to do
And rant on fellow blogger, rant on (Rant On!)


Today’s guest post is from Joe Payne, Vice President of Professional Services at Source One Management Services, LLC.

A few weeks ago I was giving a debrief to the Manager of Indirect Spend for one of our customers. The engagement was winding down, and I asked the manager if there were any other categories they needed help with that we hadn’t already looked at. “No” he said, “I think we’ve covered everything.”

Up to that point, I knew we hadn’t worked with their IT department at all, so I asked about potentially discussing telecom or managed services. “Oh, I stay away from that side of the building”, he exclaimed. “Those guys don’t even speak the same language.”

As more and more CFO’s and CEO’s realize the value in creating sourcing departments to control indirect spend, sourcing teams are finding more and more end user resistance to their involvement in the supplier selection and supplier relationship management process. In nearly every organization I’ve worked with, there are groups or divisions that don’t want help from sourcing and prefer to manage supplier relationships on their own. Getting stakeholders to engage can be difficult, but is it really as hard as corralling a cat? Well, let’s look at the similarities:

Cats don’t want to be corralled. Stakeholders do not want to be engaged.

“Sorry I missed your call, please leave a message…”

When you begin to corral a cat, their first instinct will be to cautiously avoid you – but they probably won’t run away. When you first attempt to engage a stakeholder, they will do the same.

“I’d love to meet to discuss my requirements; unfortunately I have a full plate this summer. How does next year look for you?”

When you show a cat you are not going to give up until they get corralled, they will become finicky and potentially aggressive. When you continue to pursue an end user, they will attack.

“What makes you think you can do a better job than I did? What do you even know about this subject matter?”

Lastly, just because you are successful in corralling the cat does not mean they are going to cooperate. Give them any opportunity, and they will escape. Once a stakeholder agrees to proceed (usually after being told to by their boss), you can expect:

“Sorry I missed your call, please leave a message…”

Which takes us full circle.

So, what is the value that sourcing can bring to stakeholders and end users, and why is it so difficult for them to recognize that value?

First you have to remember that practically no one in IT, Marketing, or HR was hired based on their ability to run an RFP, write a contract, or perform a negotiation. They were hired to ensure infrastructure uptime, get the company’s message out, or keep employees happy, respectively. They aren’t focused on cost and most of the time they don’t care about cost. There is no question that lack of training, lack of time, lack of market intelligence and lack of focus will lead to higher price – sourcing brings these tools to the table.

Second, stakeholders typically don’t properly manage vendors, track spend or validate compliance. Without a watchful eye, suppliers either get demotivated or greedy. This leads to either very upset or very rich suppliers. Sourcing offers a clear process and communication hierarchy, the ability for incumbent suppliers to expand services or solicit feedback, and spend consolidation and rationalization opportunities – it improves supplier relationships while keeping costs in check.

Third, even when a stakeholder is upset with a supplier, they will continue to use them. When speaking to end users, I am often surprised by how much they dislike an incumbent, but still continue to work with them. Sourcing brings an independent (and objective) third party to the table that can act as the “bad cop”, pushing a supplier to improve or else replacing them with someone better suited for the requirement.

So if sourcing can bring all this value to the table, why do stakeholders often fail to recognize it?

The answer to that question can be a little more complex, but for the most part it boils down to one thing – purchasing is a personal subject! Think about it – whether you are at home or at work, you want to get a good deal. When you buy a new car, you aren’t going to tell your friends and family how you got ripped off – you are going to tell them you got a great price, and you are going to hope that is true! The same can be said, and normally is exacerbated, in business. If you are responsible for managing a million dollar plus budget, the last thing you want is for people in the company to think you are paying more for goods and services than you should. Having a sourcing group come in and save 30% is the same as having your brother-in-law swing by the car dealer and get the same car for $5K less – it hurts.

Sourcing organizations now have a unique challenge. The thing they were hired to do – get savings – tends to be the easy part of their job. Competition always exists and technologies are always improving – finding a lower price is not difficult. The hard part is finding a stakeholder in the organization that recognizes sourcing is just as valid to them as any other support service, and has the wherewithal to use your group effectively.

To date, I’ve never seen it happen without a strong top down mandate, and it is costing companies millions every day.

Corralling Cats

Thanks, Joe!