Monthly Archives: October 2016

No Environment is too Challenging or too Unique for Procure to Pay

Pete Loughlin recently penned a great post over on the Purchasing Insight blog that asked “Is This the Most Challenging Environment for Purchase to Pay” where he discussed whether or not the entertainment industry (and movie making in particular) was the toughest environment for Purchase to Pay there is.

As per Loughlin’s post, where he quoted Bogdan Tomassini-Büchner from digitalpurchaseorder.com, on a movie set it’s complete chaos. You’re hiring lots of people for a short time at short notice, there’s no time, there’s no money — even for multi-million dollar projects — buying stuff is a nightmare. There’s no time for a requisition approval process — the stand-ins, the set, the food is needed now. But with the right system, all purchases can be put through (approved) and all spend can be tracked.

Regardless of whether or not cost is critical, or incidental (because the biggest profit potential is in increased revenue and not cost reduction), cost still needs to be tracked, understood, and opportunities for significant savings identified. For example, even in entertainment, if, at the end of the year, the same provider is providing a significant amount of product across multiple sets or budgets, the parent company can negotiate an across-the-board discount off of the standard rate sheet for the following year (and all purchase orders to the vendor can automatically use that rate).

The same situation exists in the hospitality — or tour — industry, especially when products or services have to be acquired, or re-acquired (because the restaurant was closed for a health violation, the bus broke down, etc.) at the last minute. But all costs needs to be tabulated, tracked, reported, and when possible, appropriate taxes reclaimed.

However, the biggest challenge is in an old-school manufacturing or logistics company where everything is paper and fax and e-mail based, the process has to be “done this way”, and no Procurement system meets the need. If a vendor is trying to go into one of these environments without a highly configurable, adaptable, customizeable workflow — they will be as challenged as a first generation procurement system in the high-speed hospitality and entertainment industries.

However, as Pete has pointed out, there is no environmnt too complex for a highly configurable, adaptable, customizeable workflow. So if you don’t have a good P2P system, there is no excuse not to get one.

What Procurement Processes Should Be Automated?

The big push in Procurement Automation is typically the automation of invoice processing: automatic matching, verification, and when possible, payment because paper-based invoice processing in an average organization can cost $30 or more (with some estimates that paper-based invoice processing can cost an organization as much as $60). But when an organization switches to automated invoice matching, processing, and payment with a best-of-breed system that can automate processing the 85%+ of invoices that are problem free can reduce invoice processing costs to somewhere between $3 and $8 an invoice, depending on the system and the overhead costs.

And while this cost savings is great, it shouldn’t distract from the other cost savings opportunities that can come from automating other procurement processes, which eat up valuable time and resources. In this post we will discuss three other areas of Procurement that should be automated.

Requisition Approvals

Not every requisition needs a manual review. A requisition for a standard office supply reorder from the office manager, a requisition for a standard setup for a new hire, or a requisition for standard travel expenses for a pre-approved conference can all be automatically approved if the expenses are within the expected range and budgets are not exceeded. A requisition system that supports the definition of rules that can allow requisitions to be auto-approved can save the organization a lot of time and resource energy.

Automated MRO re-orders

A system that can support the definition of minimum stock levels, maximum stock levels, and perfect re-order levels can allow stock to be automatically re-ordered when a threshold is met. This negates the need for an MRO clerk to regularly check inventory levels and compute re-order levels.

Supplier Profile Maintenance

Supplier profiles need to be kept up to date to enable the organization to contact the right people, select the right locations, keep track of current products and services, and make payment. People change roles, and jobs, office locations move, products get discontinued, and so on. Keeping this information up to date takes a lot of time and effort – with a good portal, that reminds suppliers of their need to auto-update, suppliers can maintain their information, upload insurance certificates and certifications, and provide the organization with requested information on an as-needed basis.

Good Procurement systems automate the tactical and allow procurement professionals to focus on issues, not paper pushing.

Intenda – A Trusted Platform for Public Sector Procurement

Intenda is another name you might not know, as they are a South African Enterprise whose primary global customer base centred around South Africa, the UK, and Australia, but they are a very strong provider of Source-to-Pay in the public sector with tens of thousands of users across multiple global sites that collectively serve customers in over 30 countries.

Intenda is one of the unique, odd-ball, providers in the Source-to-Pay world. Like b-Pack (now part of Determine) and iValue, it’s development was heavily influenced by its initial customer base and in addition to standard S2P functionality, it also has

  • inventory & asset management,
  • GRC (governance, risk, and compliance) and Traceability, and
  • GPO / central service centre support.

From a Source-to-Pay (S2P) perspective, the strength of the platform lies primarily in its Purchase Order (PO) and invoice management capability and secondarily in its sourcing management capability. The requisition management capability is among the most powerful and most flexible on the market. Not only can requisitions be very detailed with complete part information (if known), multiple lines, cost breakdowns, detailed headers for proper (approval) routing and budget assessment, but different requisitions, with pre-defined headers, processing, and routing information, can be created for each type of purchase, each business unit, each geography, and each special case that the organization needs to support.

The system also supports detailed RFQs/RFBs, the ability to compare them side-by-side using multiple weighting schemes, and do calculation scenarios on sub-bids using any set of filters or restrictions that are required. The platform also supports basic e-Auctions for those clients that want it, but this feature is optional. A user can create an extensively detailed requisition, flip it to a (senior) buyer who can use it as the basis for a detailed RFP, get quotes, and then run an auction and/or make an award.

But the biggest strength of the platform is the audited and government approved security. The solution supports defense clients and revenue service clients in multiple countries, and has gone through just about every security and certification test that one can think of for a SaaS based solution. The solution, which supports fine-grained role-based security, heavy encryption, and multiple levels of authentication, including LDAP integration, if required, has been verified as secure by the most demanding of organizations. Very few platforms have gone through the level of security validation that Intenda has.

If you are a public sector body, or a large multi-national private sector organization that needs an inclusive S2P platform, Intenda is another platform you need to know about. For a detailed review, check out the recent Spend Matters Pro series (membership required) by the doctor and the prophet (Part I). The insights are worth it.

How to Keep Print Costs Manageable — or Find a New Printer if Your Old One Can’t Part II


Today’s guest post is from Brian Seipel, a marking project expert at Source One focussed on helping corporations achieve both marketing and procurement objectives in their strategic sourcing projects.

In Part I, we noted that the printed materials that accompany products are an important part of any business. Yet, despite the slipping quality or rising prices, it is all too easy to stick with the same print shops year after year to fulfill this need, never pushing back, even when the cost savings can be substantial. In our last post, we addressed some ways to control costs without changing suppliers. Sometimes they are enough, but if they are not, then you go back to market.


Taking a Look at New Suppliers

For every good relationship between a printer and customer, there are plenty of bad ones as well. With a long-term relationship, it is easy to hold a supplier less and less accountable — Quality issues may arise more often, SLAs may be ignored more frequently, and pricing could easily become less competitive if you aren’t challenging your incumbent. For any of these reasons, it may be time to start looking for a new supplier.

So, what are the most important factors when searching for viable alternates? See the list below for just a few key criteria:

  • Start your search with shops that specialize in your specific type of job.
    Would a digital print shop be more viable than an offset printer? Are you looking for single pages of print or full color, bound product manuals? Do you have a need for variable-data printing for labels?
  • Evaluate shops in terms of their capacity.
    Is there facility and staff large enough to complete your jobs? Is there enough storage space to handle the capacity you are bringing to them?
  • Keep an eye on deadlines.
    Make sure all shops can describe their turnaround time and on-time delivery rate guarantees.
  • Quality control is key.
    You’ll want to be sure to learn not just about QC programs in place, but how the shop responds to drops in quality and the escalation procedures they follow to get things back on track.
  • Identify distribution centers and map them against your final destination points.
    Other logistics concerns, like multi-point shipping, inventory management, warehousing, and kitting services may also be key to your relationship.

These are all excellent points to cover when vetting potential partnerships, but it isn’t enough to take their word for it. The proof is in the pudding, and you’ll want any shops on your list to back up their claims:

    • Bake key promises into SLAs.
      When shops make promises around any of the points above, be sure to get them in writing. Codify not just the promises made, but also any related KPIs, penalties for not living up to expectations, and a clear plan for escalating and rectifying problems should they arise.
    • Schedule facility tours.
      Take a look around the shops, themselves, and consider whether the capabilities and capacity visible match the company’s claims.
    • Ask for references, and follow up.
      Tours provide a snapshot of what a shop can do for you, but you will need some history to understand if a prospective alternate is a viable long-term partner. Ask about consistency in quality and ability to hit deadlines. Find out how shops perform when something goes awry, and how they managed to fix the issue.


Push Your Suppliers to Do Better

Some printers, recognizing their role as a partner and not just a supplier, will approach clients with ideas for process or product improvements, and recommend cost savings strategies that alleviate budget pressure without reducing quality. Many other printers — don’t.

When was the last time your printer came to you with a great idea to achieve any of these goals? If it’s been too long, or never happened in the first place, now is the time to push them to prove why they’re the best shop for the job. If they can’t, it may be time to see what else the market has to offer.


Thanks, Brian.

How to Keep Print Costs Manageable — or Find a New Printer if Your Old One Can’t Part I


Today’s guest post is from Brian Seipel, a marking project expert at Source One focussed on helping corporations achieve both marketing and procurement objectives in their strategic sourcing projects.

The printed materials that accompany products are an important part of any business. Yet it is all too easy to stick with the same print shops year after year to fulfill this need, never pushing back against slipping quality or rising prices.

This is a mistake — Reexamining these relationships offers a great opportunity to identify best-in-class suppliers, learn about innovations that could better serve your needs, and ensure market competitive pricing.

Too often, however, organizations go to market with a sole focus on just that last point: price. This is a common strategy when searching for printers, and is just as much a mistake as not going to market in the first place (if not more so)… You don’t have to look far for horror stories about the bargain basement print supplier who held up a new product launch because they couldn’t keep up in terms of quality, capacity, or both.

So, how should Procurement proceed? What can we do to ensure our incumbent suppliers are pushing themselves to remain competitive and, if they aren’t, what is the best strategy for identifying a new supplier that can meet our needs?


Cost savings without changing suppliers

First and foremost, let’s discuss incumbent suppliers and what we can do to determine if any production improvements or cost savings can be found in these current relationships.

Review what your current supplier offers, and compare to what your needs are today — things might not align as well as they once did. A shop may have been brought onboard to fulfill a printing need that no longer exists in your organization; newer jobs could be getting shoehorned into presses that aren’t really suitable for your current-day needs. Ask your supplier what their forward-looking plans are for business — what is changing in the world of print, and how are they seeking to adapt? What new technologies may address quality or process problems that they have, and how can they use them to improve the relationship?

As long as you’re still happy with your incumbent, and aren’t at a point where you need to jump ship due to quality problems, a few methods can be used to achieve savings:

  • Drive savings by streamlining business processes.
    This tends to be a soft dollar savings, but can easily add up. Step back and consider how much time is spent on managing print on your end — from placing an order to handling the PO process to delivering files and finally reporting. An inefficient process can drain hours out of your week. Review each of these steps with your supplier — What steps can be automated? If a step cannot be automated, can it be streamlined by removing excess information collection? Can templating be put in place? Can the supplier provide data back in a way that is more conducive to your reporting needs?
  • Consider the impact of larger print runs.
    The cost savings impact of larger print runs is immediate. Larger run jobs are cheaper, because the setup costs are spread over a larger number of prints. However, it would be short-sighted to leave it at that. If you aren’t able to make use of a larger run quickly, storage costs come into play. Worse, a larger run of product manuals relegated to a warehouse may be made obsolete by a new job, or if the associated product is discontinued. Examining inventory levels and turnover is key to achieving savings here.
  • Cut costs by reexamining your specifications.
    A word of warning: Changing up specs won’t lead to an apples-to-apples cost savings over your current print spend, and making a move based solely on price can be a disaster in terms of quality. However, analyzing the materials used can easily cut costs dramatically. Paper weight, for example, can easily be over-specified compared to need.

Unfortunately, there could be a quality problem or a lack of effort on your supplier’s part to help you reduce costs. If this is the case, it would serve you well to look into the market for either negotiation leverage with your incumbent or to identify a suitable replacement.

Tomorrow, in Part II, we will address the issue of the best way to go to market.


Thanks, Brian!