Daily Archives: September 19, 2018

2020 is Fast Approaching – What WILL You Accomplish? Part III

Last week we noted that 2020 is fast approaching and asked what you had accomplished, especially given all the 2020 predictions that were made five to ten years ago.

But then we didn’t wait for the answer, we gave it to you because, simply put, most of the vendors haven’t advanced the technology to where it was supposed to be and, as a result, you haven’t really obtained much in the way of new functionality.

We were told that, by 2020, software would be smart. It would do most of our work for us. Tactical would be a thing of the past as process, and, most importantly paperwork, would be completely automated and electronic. But, alas, we’re still in the situation where you not only have to manually build cost models over and over, but even manually populate them. And even then you can’t automate the RFX/Auction process when the best option is, well, completely obvious. Why? Twenty years after the introduction of this technology, why?

So, what can we get?

Continuing on yesterday’s theme, more than we expect if we are willing to go best-of-breed along-side our primary S2P, get good at integration, and better yet at value identification and management. We do have the ability to do the following, with specific platforms in specific circumstances.

Smart Cost Modelling
Here’s the deal, we’re at the point where we have well defined bills-of-materials in an ERP for just about every product ever manufactured. So we know what goes into the product, how much, and key elements of the production process (as well as estimates of energy requirements). We know how much we paid, how much average labour rates are in the locales we produce in, how much energy costs per kWH, and can estimate the remaining overhead and margin.

So, if we know all this, why can’t the system automatically create a cost model, automatically populate it with relevant (and current market) costs, and give you an accurate true should cost model that can be used to accurately identify which suppliers are on the mark and which aren’t. There’s no reason it can’t. The reality is that most systems just don’t.

Automated Spot Buys
Most of our RFIs, Auctions, and even spot-buys are small and/or for non-strategic products and services, many of which are one-time or MRO buys. The vast majority of the time all we need is the lowest cost product or service that meets our need that can be obtained in the required time frame. But still we have to spend hours and hours and hours setting up the RFI, inviting suppliers, verifying the products or services are acceptable, getting bids, comparing them, identifying an award, making the offer, getting a signed contract, and sending the PO.

But if we have approved suppliers, detailed requirements that can be qualified and quantified, gated workflows to make sure only those that meet all the requirements can bid, cost models to verify that costs are in-line with expectations, the ability to capture and verify delivery times, carrier costs, canned terms and conditions, the ability to force a supplier to agree to the conditions up-front, integrated e-signatures, and auto e-Document distribution and management, why can’t the system just run the process, make the award, get the contract, and send the first PO fully automated? There’s no reason. None at all.

And this is not the end of the road … but it’s definitely the case that not all of this is in your average S2P platform.