Last week we asked what would you accomplish by 2020, which is less than 16 months away. Between 2008 and 2013, all the big analyst firms and thought leadership vendors painted a glorious picture of where Procurement would be by 2020 — a picture which isn’t even close to being a reality. Simply put, the vendors haven’t advanced technology to the point where it was supposed to be and, as a result, while you got more integrated, streamlined, easier to use platforms with friendlier, and sometimes even mobile, interfaces, you haven’t really obtained new functionality.
By 2020, our software was supposed to be smart. It was supposed to be doing most of our work for us. Tactical procurement was supposed to be a thing of the past. Paperwork was supposed to be over and done with. Data processing and verification automated. And Sourcing was supposed to be smart … not just more functional. But that’s what your average S2P platform is. More functional. All of the great advances we were supposed to have in the average platform aren’t there.
But, fortunately, if you’ll step outside the S2P marketplace and look at the best of breed players, across the entire space, you’ll see that most of the functionality you were promised is there, just in bits and pieces across a dozen or so best-of-breed players. So in addition to:
- Invoice Automation
- Supplier Identification
- Automated Supplier Discovery
What else is there?
RFX Process Automation
Most RFX processes have embedded workflows, but when it comes to automation, it’s about as automated as a mechanical cash-register. You have to select the categories. Select the products. Define the lots and bid matrices. Upload the specs. Identify the suppliers. Select the qualification surveys. Invite the suppliers. Monitor their gated progress. Review their responses. Approve them for bidding. Collect and verify the bids. Evaluate the bids. Select an Award. Present a contract. And so on.
The software should present the categories needing events. It should put the products front-and-center for selection. It should use past events and category knowledge to auto-generate starting lots and bid matrices. It should be able to find the specs in the integrated ERP systems and attach them automatically. It should identify all past suppliers and bidders and all suppliers who have since (self) registered that have been associated with the product or service and present the suggested supplier list. It should identify the right surveys and qualification requirements based upon products, raw materials, geographies, regulations in force, etc. It should auto-invite the suppliers when the supplier list and surveys are locked down. It should be able to monitor their progress, send reminders, and alert Sourcing professionals when a supplier might need help. Bids should be verified as complete and within expected ranges on submissions, automatic comparisons should be generated, and lowest cost awards automatically identified. And so on. It’s not hard.
But if you consider how many platforms have even basic project management, it’s not a surprise that this basic capability just is not there. But that’s where the new breed of providers are coming in. Not only are the new breed of home-grown, single code base, S2P providers (namely Ivalua and Synertrade) working on improving this, but we have best-of-breeds sprouting up solely to offer this missing functionality. One example is Per Angusta, an open sourcing project management platform that focusses entirely on the workflow and allows any platform out there to integrate with it.
Should Cost Modelling
Theoretically, all Sourcing and Procurement software platforms should be leading edge in should cost modelling given that this is something Operation Research experts have been doing for decades upon decades, long before they had software. Engineers responsible for bills of materials know how to do this well. So why can’t our software? There’s no good reason. So why the dearth of good solutions?
Simply put, because most of the platforms were designed by simple Procurement folk for simple indirect purchases. All they were concerned about was a unit bid, a transportation cost, maybe a switching fee, taxes, and tariffs. No thought about a bill of materials or the should cost model that would correspond to it.
And among the platforms that support a bill of materials and corresponding should cost models based on the constituent raw materials, required production process (overheads), labour rates, and energy rates in the production region, most of them require manual input of all of the data — which is readily available (with conversions) from market feeds.
But, fortunately for us, a couple of providers have seen the light. Both Synertrade, the only S2P platform with mature, native direct support (but Ivalua is making progress), and Allocation, a mature direct Sourcing and Supplier Management platform with some of the best should cost modelling support on the market which has just started extending their open API capability to make it easier to integrate market feeds of all types and automatically populate should-cost models.
And that’s not all. Stay tuned for a review of additional Best-of-Breed players who can help with your S2P platform upgrade needs.