Monthly Archives: July 2014

Why Are There No World Class Procurement Organizations in Asia Pacific?

A recent brief by Bain on Winning With Procurement in Asia, released last December, in which they summarize the results of interviews conducted with 60 business heads and CPOs throughout Asia-Pacific, stated that while many of these business heads and CPOs report their Procurement capabilities as fair, or even good, none report their Procurement capabilities as great. Why?

According to the article, procurement teams in Asia-Pacific often
(1) lack organizational support and prominence,

(2) tend to focus on short-term activities,

(3) rely on inadequate demand management processes, and

(4) struggle with underdeveloped supply bases and insufficient core procurement processes such as category management.

In addition, they lack

(5) systematic supplier management processes,

(6) reliable data systems and

(7) strong procurement talent. Moreover, even though some companies make a point of investing in procurement talent, they fail to take the critical move of defining a clear career path for procurement professionals.

In other words, it’s the classic Triple-T Problem — a lack of talent, technology, and transition management. If we go through the list, we see that (7) is the talent problem, (6) is the technology problem, and (1) though (5) are an example of a lack of transition management.

The lack of systematic supplier management processes in (5) is a result of not transitioning to modern supplier management processes driven off of modern supplier management systems.

As a result of the lack of systematic supplier management processes, which is a direct result of poor, or nonexistent, transition management, these organizations are (4) struggling with underdeveloped supply bases and insufficient core procurement processes.

As they haven’t transitioned to newer Supply Management processes, these organizations are still suffering from (3) inadequate demand management processes.

Furthermore, as a result of not transitioning to newer Supply Management processes, with a longer term outlook, they (2) tend to focus on short term activities.

And, finally, as they have not helped the organization as a whole transition to better supply-management inspired business processes, they still have to deal with (1) a lack organizational support and prominence.

At home or abroad, good Procurement and Supply Management starts with the 3 T’s — talent, technology and transition (management). Without meeting this necessary condition, an organization will never be great.

Are You Ready to Leave the Procurement Dark Ages? ScoutRFP Has a Simple Tool For You. Part II

In our last post, we noted that many organizations are still in the Procurement Dark Ages, conducting procurement using the age-old three-bids-and-a-buy technique and the fax machine running over a 64 kbit digital ISDN circuit. And that, in the low end of the mid-market in particular, this was the norm and not the exception. Scary!

We also noted that there were a number of reasons for this dismal state of affairs including, but not limited to, a lack of foresight and faith in Procurement by the organizations, the high price tag that used to be associated with these products, and the complexity of the suite solutions that were often thrust upon the technologically illiterate organizations that, sadly, were just not ready for sophisticated solutions.

Some companies need to take it one-step at a time, and like a kid on the beach for the first time, dip their toe in the open ocean before getting comfortable enough to walk, and eventually, dive in. To this end, Scout RFP has decided to launch a new RFP solution to help those companies, and other companies who are using RFP solutions that are overpriced or too advanced for their needs.

Does this make sense given that they are not the first company to offer a stand-alone RFX product, or at least a stand-alone RFX module, and that there are a number of companies on the market that have, or started with, this strategy? For example, EC Sourcing, ThomasNet, and PurchasingNet all offer low-end stand-alone RFX solutions that can be obtained at low cost.

Unless they do something different, definitely not. But the founders recognize this, and might find a way to brighten up the space just a little. (Time will tell.)

So what’s different about ScoutRFP? Especially considering the maturity of RFX technology? Not much, but when you consider the market they are going after, it probably doesn’t take much to make a difference to have an impact. (With the majority of players chasing the same Global 2000, there is still a big unexplored blue ocean when you move further down the corporate food chain.)

Scout RFP is currently focussed on differentiating themselves in the following ways:

1. Ease of Use

The solution is 100% web-based and designed to work with minimal inputs. Like all other modern RFX products, it guides the user through a minimal workflow to create the RFX, select the suppliers to receive the RFX, and evaluate the responses, side-by-side, when they are returned.

2. Flexibility

Whereas many solutions force the user to create an RFX section by section, question by question, the ScoutRFP solution allows the user to create the RFX at their desired level of detail. They can cut and paste entire sections from a Word document into an entire section, break it up into individual questions, or go somewhere in between.

3. Control & Visibility

It allows for the definition of hierarchical visibility and control that allows a CPO to view the work being done by his or her directors who can see the work betting done by his or her buyers.

Like other modern tools, ScoutRFX also has a dashboard view, supplier response and status tracking, and side-by-side comparisons.

And it’s brand new. The company has not officially been around for a year, and has accomplished quite a bit of development in that timeframe as well as landing over a dozen customers in that time as well. So it’s very likely that the next year will see quite a bit of new development, the creation of a knowledge and template library, and other useful advancements to jump start your dark-age Procurement enterprise.

If you’re a mid-size company without an RFX solution, it’s worth checking out. It doesn’t have all of the bells and whistles of some more established solutions, but it doesn’t have the price tag either. And the founders, who know what it’s like to be stuck without basic tools to do your job, won’t beat around the bush or try to shovel you a side of bullcrap with a modules, services, or license seats you don’t yet need. (After all, when you’re selling enterprise systems in the low five-figures, you can’t afford to!)

Are You Ready to Leave the Procurement Dark Ages? ScoutRFP Has a Simple Tool For You. Part I

In yesterday’s post we noted that even though the Procurement profession has went from zero to hero in those leading organizations that were forward looking enough to let Purchasers gain influence in both the inbound and outbound supply chain and raise the profile of the organization in the eyes of both customers and suppliers, it is still only a select group of leaders that have truly embraced Supply Management and leaped the pond.

The remaining organizations are still in the Procurement Dark Ages, conducting procurement using the age-old three-bids-and-a-buy technique and the fax machine running over a 64 kbit digital ISDN circuit. And, especially in the lower end of the mid-market, this is the norm and not the exception.

To this end, a new company has hit the Procurement Technology marketplace focussing only on RFX. That’s right, RFX. You’d think that the market would be saturated by now, given that RFX solutions have been on the market for a decade and a half, but it isn’t. There are a number of reasons for this:

1.As described above, a lack of foresight and faith in Procurement has held Procurement, and Procurement technology, back in a number of organizations.

2. The high price tag that was associated with such technology in the past. This technology used to be six figure technology. It’s far from that today, but when many companies first investigated this technology, they got such a sticker shock that they decided it would be out of their reach for years, if not decades, as used to be the case with MRP and ERP technology.

3. The complexity of the suite of products that were often forced upon them. A number of early Sourcing and Procurement Technology providers tried to sell entire suites, insisting that individual products were not valuable on their own, and most companies, still using phone and fax, were not ready for the breadth of technology being thrust upon them and so retreated to their dungeons.

The companies at the low-end of the technology and innovation spectrum need to take things one step at a time, and get comfortable with basic technology solutions, like RFX, before moving on to auction and spend analysis and even, if we’re lucky, optimization. And they want to be able to acquire these solutions one at a time.

That’s why Scout RFP has launched a new RFX solution that attempts to provide these companies with a simple, starting, technology solution that these companies can use to dip their toe in the modern age of Procurement at a low cost with little to no risk.

Is it needed? Is it worth it? Stay Tuned for Part II.

Supply Managers are the Rock Stars of the Coming Resource Revolution … But

… the reality is that, in the majority of organizations, Supply Managers are still zeroes, not heroes, even though Professor Sheffi is taking the glass half full view in his article on how a profession went from zero to hero.

Supply Managers are only heroes in those leading organizations that were forwarding looking enough to let Purchasers gain influence in both the inbound and outbound supply chain and raise the profile of the organization in the eyes of both customers and suppliers. Their new practices, global view, and risk mitigation not only raised their profile, but also the profile of the organization as a whole. They were given more respect and authority, and soon after were the heroes of their organization.

But not every organization had the foresight of these leading organizations and, as a result, it is still only a select group of leaders that have truly embraced Supply Management and leaped the pond. Most organizations are still effectively in the dark ages and haven’t even embraced RFx or basic e-Invoice technology. While a considerable (but not necessarily a majority) of Fortune 500 / Global 2000 organizations have embraced Supply Management to some degree and some Procurement or Sourcing Technology, as you work your way down to mid-size and smaller organizations, the percentage of organizations that have embraced Supply Management and associated technology decreases dramatically.

Furtheremore, not only is there a huge number of organizations that have not adopted Supply Management, there is a huge gap between the enlightened and the ignorant. And the gap could mean the difference between uninhibited success and eventual bankruptcy.

So how do we spread the message to the masses and usher in the resource revolution?