Supply Management Mastery is an elusive goal. As SI has been documenting for years, in order to master supply management, you have to manage a slew of Source to Pay processes as well as related Operational, Finance, and Risk processes.
But this is not easy when you consider the many steps involved in even source to pay. Spend Analysis. Opportunity Analysis. Requirements Definition. e-Negotiation. Strategic Sourcing Decision Optimization. Contract Negotiation Management. Catalog Creation. Guided Buying. Purchase Order Management. Invoice Management. Supplier Management. Risk Management. Product Management. And so on.
You have to master all of them, but you can’t work on them all at once. You have to make priorities, and eliminate all but the top three (3). And even then, you might not be able to tackle all three if each would require a separate system.
So what’s your priority?
Spend Analysis gives you insights, but you have to be able to act on them. That requires e-Negotiation, SSDO, contract management, etc.
Opportunity Analysis goes beyond just spend to determine if your opportunities are spend related, supply base related, process related, or otherwise.
Requirements Definition helps crystalize organizational needs and helps the buyer zero in on what really matters. But then it has to create good contracts and statements of work.
e-Negotiation helps capture all of the back-and-forth between both parties so that the organization can build supplier profiles and take advantage of that. Provided the organization has deep supplier master data management.
SSDO can find the optimal cost allocation across suppliers, products, and carriers and delivers an average savings year over year that exceeds 10%. But it requires deep models and lots of data. And where does that data come from? Typically from e-Negotiation.
Contract negotiation management is great for creating great contracts. But you need product details, SOWs, risk management and liability clauses, and other data.
Catalog management software is great, as long as you have a supplier management portal to manage the supplier the catalog comes from.
Guided buying is even better, but only if you have the solutions to guide the buyer to that captures the majority of organizational spend. Guided buying that only works in an incomplete catalog is more of a frustration than a solution.
Purchase Order Management can eliminate a lot of paper, provided there are catalog, sourcing, etc. systems to integrate with to auto-generate those POs on buyer actions.
Invoice Management systems are great, as long as you have POs, contracts, goods receipts, and other documents to m-way match against! Otherwise, they just collect e-paper that still has to be manually reviewed. (And in the average organization, that still typically results in them being printed.)
Supplier Management is great for managing information, relationships, and performance, provided their are networks and portals to collect the data from, and internal systems to create and manage scorecards to define performance improvements on.
Product Management is key to understanding the product and category dynamics, but then you need category management strategies to map to.
And, these days, instantiations and realizations of risk can wipe out the savings from 10 sourcing projects, so risk management is paramount, but detecting and monitoring for risks requires a slew of systems internal and external and lots of data.
In other words, every system is great, but generally only if you have one or more systems to collect the data it runs on or supplement key functionality.
Which again begs the question, what are your priorities? Otherwise, you’ll never know where to start.