Daily Archives: November 25, 2019

Virtual Procurement Centers of Excellence: Will We Ever Realize Them?

Three years ago we told you that Virtual Procurement Centers of Excellence where The Next Level of Complex Direct Procurement and that your sourcing platform should enable this.

But it’s three years later, and we still only have a handful of S2P platforms that can properly support bill of materials for direct sourcing. (In fact, you don’t even need all your fingers!)

Add this to the fact that either ERP integration is minimal, that support for modification and should-cost modelling is limited, or there is no support for integrating price indices or market intelligence, and it’s still a pretty sorry state of affairs.

Especially since true value is only going to be realized not only with proper insights into bill of material costs, but what the bill of materials should look like. (Maybe the steel being used is inferior, the rare earth metal component could be reduced with a better design, etc.)

In other words you need a platform that not only supports full ERP integration, BoM modelling and management and deep should-cost modelling but also up-to-date market intelligence. This should not be limited to commodity feeds (as these are not global or available for all commodities), but should also use community intelligence, especially around labour rates and energy costs in a region.

But we only have one S2P platform with real budding community intelligence, and it’s support for direct is relatively non-existent compared to some peers.

So the question is, are we ever going to realize them? For all of the reasons we gave three years ago, and then some, we need Virtual Procurement Centers of Excellence for Direct, backed by Market and Community Intelligence, but they still seem to be in the distant future.

So what do you think? Are the current S2P players going to up their game to where we need them to be? Or do we need a new breed of players to come out of the shadows and show the market what is needed.