Monthly Archives: November 2018

It’s NOT the Marketplace or the Network … it’s the Facilitation!

Ten years ago SI ran a piece on how it’s not the portal or the network … it’s the facilitation in response to a piece in Global Logistics & Supply Chain Strategies, now on supply chain brain, that asked if supplier portals were so great, then what went wrong?

The article concluded, somewhat correct, that most suppliers who originally embraced the “portals” pushed back because they quickly realized that a “portal” offered little value and was just another way for a buyer to boost a discount. But more accurately, it turned out to be yet another system they had to access to receive orders and send invoices in a buyer’s own custom format, and instead of having to deal with a common XML or EDI format, they now had to deal with dozens. It was an amplified nightmare, even more so when they not only had to deal with a different portal for each customer, but multiple instances of each customer’s portal as early portals didn’t even have the decency to provide suppliers with centralized access to their customer requests — they had to log in separately to check the status of every customer!

The article also claimed that the survivors have evolved into networks with real value, which SI questioned, and still questions, as many networks were just searchable supplier directories with the ability to send electronic communications, and did not really enable any value for the supplier. They would have to enter their profiles in multiple networks, hope to get discovered, check and answer queries in each network and then, when selected for a contract award or PO, they would have to … you guessed it … use the portal associated with whatever Sourcing or Procurement system the buying organization used to submit the signed contract or order acknowledgement, submit the invoice, and generally interact with the buying organization.

So why are we bringing the subject up again? Because marketplaces and networks are on the rise again. With respect to marketplaces, we’re not sure if it’s because a number of the instigators see the recent M&A frenzy as an opportunity to fulfill a need and are thus trying to bring marketplaces back or if there are actually silent screams from pending customers that a select few hear. But in the case of networks, it seems that all the S2P players either believe that they need a network to compete with Ariba or that it will make their platform a lot more valuable.

We don’t agree with either. Marketplaces didn’t really work before, so there’s no reason to think that they’ll work now if nothing changes. And we don’t see anything changing. And another network doesn’t add value just by its existence as it’s just another copy of the half dozen that came before it.

If you’re going to build another marketplace or network, please, please, please remember the following:

  • no one cares about a marketplace or a network anymore, they care about doing business
  • the platform needs to make the supplier’s life easier — it should be less work to communicate, interact, and process e-documents
  • the platform should be differentiated and probably industry focussed — not another generic be-all end-all consumer-like marketplace (that’s what Amazon is for, right)

Because another copy-cat platform is just going to follow it’s brethren to the bit-bucket. That’s just the reality.

Finding Wealth in the Year of the Pig

In yesterday’s post we noted that next year is the year of the pig, and that it could bring greed and obnoxiousness to Procurement, as per the western stigma, or it could bring wealth and good fortune, as per the eastern stigma, but that your fortunes all depend on whether or not you make the effort to acquire a next-generation best-of-breed system. If you acquire a next-generation best of breed system that uses analytics, optimization, advanced modelling, machine learning and/or AI, you can realize value and wealth. If you don’t, well …

So what should you look for? As per our upcoming series on AI in Procurement Tomorrow on Spend Matters Pro [membership required], there are a number of advanced functionalities coming your way that will add value. These include [but are not necessarily limited to]:

  • Overspend Prevention
  • Invisible Buying (of all types of MRO products and services)
  • Automatic Buying (including basic sourcing)
  • Automatic Opportunity Identification
  • Automatic Category Analysis and Emergent Category Identification
  • Procurement Method Identification

To convince you of the need for advanced (AI-based) applications to find the wealth you need to make Procurement profitable again, and the importance of reading the doctor‘s in-depth thought leadership pieces (if you have Spend Matters Pro membership), we’re going to give you a preview of the power of a platform with invisible buying capability.

While current systems can automatically re-order MRO and stock room items when minimum inventory levels and EOQs are defined, the reality is that MRO and stock room items change over time as old products are retired, new products are selected, and organizational needs change. And it can be a lot of work to maintain these items accurately over time.

But why should you have to? After all, the system can infer when a product is retired … as orders stopped being placed. The system can infer what product replaced it, as it’s not only in the same sub-category but ordered when the previously item would have been ordered by the same department and stocked at the same location in a similar quantity (under an appropriate metric). And so on.

But a modern Procurement platform, with augmented intelligence technology, can:

  • Auto-detect regularly needed items through repeated orders
  • Auto-compute usage schedules by tracking inventory levels and computing trends
  • Auto-predict best order quantities based on projected trends, re-order times, shipping costs, and inventory costs
  • Add the items to the MRO repository with minimum stock thresholds and projected EOQs
  • Use the embedded assisted intelligence to re-order the MRO items on schedule
  • And re-calculate the inventory levels and EOQs on a monthly basis using actual usage data to update the trends

And you don’t have to do tactical inventory review and re-ordering when that time can be better spent on value-generating strategic sourcing events.

So keep your eyes open for the doctor‘s upcoming series on AI in Procurement Tomorrow over on Spend Matters Pro [membership required] and, if you haven’t already, read the doctor‘s series on AI in Procurement Today (Part I and Part II) if you haven’t already.

The Year of the Pig

While us westerners tend to give pigs a bad stigma — they are lazy, filthy, obnoxious, greedy, and ugly — and even use their name in vain — calling those we feel are lazy, filthy, greedy, obnoxious, and even (sexually) predatorial pigs, in eastern mythology (and Chinese culture), they are the symbols of wealth, and those born in the year of the pig are supposed to have a beautiful personality and be blessed with good fortune in life.

So what is 2019, the year of the pig, going to bring us in Procurement? Is it going to bring wealth and good fortune from the East or greed and obnoxiousness from the West?

The sad reality is that it’s going to bring both, but unless you’re one of the lucky ones, you won’t see the wealth … or at least not enough to make the greed and obnoxiousness worthwhile.


Because we’re still in the age of iZombie-enabling platforms that cost too much, and often return too little. But that doesn’t mean you have to be free of return. You live through the pain (of Procurement systems that haven’t kept up), you should get the gain.

So how can you do that?

Acquire point-based best-of-breed solutions that can augment your existing platforms and make use of advanced modelling, analytics, market intelligence, machine learning, and even optimization to find ways to save more than you spend on the platforms you have and more than you lose on the manpower time it takes to do all the tactical processing the systems force on you.

This blog has covered a lot on analytics, optimization, and advanced modelling over the years, and for more insights on what machine learning / AI will do for you, keep your eyes peeled for the doctor‘s upcoming series on AI in Procurement tomorrow over on Spend Matters Pro which will help you identify next generation systems that can take your Procurement up a notch. (While no system will have all the capabilities we describe for a while, there are a few systems with fledgling capabilities that will give you value today and take you into tomorrow.)