Monthly Archives: October 2023

SourceDogg dogs the Sourcing Process so You Don’t Have To!

SourceDogg was founded over a decade ago (in 2009 in Ireland, with the UK subsidiary opening a decade ago in 2013) by founders from the construction industry who decided they just didn’t have any good tools for sourcing products and managing suppliers. Since then, it has evolved into a full indirect Source-to-Contract application for requesting (intake support) and sourcing products (and services) (through traditional RFX and e-Auction), managing suppliers (with information, relationship, compliance, performance, and development support), and managing contracts for customers across a wide range of industries, including a strong customer base in manufacturing, pharma / health-care, and CPG/F&B.

Like the majority of modern Source-to-Contract applications, it is a fully SaaS-based product that can also be integrated with your organization’s ERP to pull supplier and product data, especially on initial product deployment. And, like the majority of modern Source-to-Contract applications, it has a fully functional Supplier Portal that allows suppliers to fully interact with all of the sourcing, management, and contracting processes employed by the organization.

The process starts with intake, where an organizational user can request a product or request a supplier. When a user needs a new product, they can go to the web portal and select the appropriate option (by clicking on the appropriate tile) that lets them do a general product request or a request in particular categories defined by the organization. When they make a general request, the application walks them through the process (using wizard-like functionality) to collect the appropriate information on category, volume, expected cost, requirements, etc. so that a buyer can kick off the appropriate sourcing process. Category specific requests function similarly, but are designed to minimize the process steps and information required for commonly requested categories. Now, if you’re using our core requirements for intake, as defined in Part 37 of our Source-to-Pay+ series Investigating Intake – Diving in to the Details, it’s not quite a full intake platform as there’s no budget tracking and process visibility (and in-process messaging depends on whether or not the requester is made a member of the sourcing event team), but it’s better than what many traditional sourcing platforms offer with respect to intake (if they even offer intake at all). Plus, SourceDogg is continually improving their product and we do expect their intake capabilities will continue to improve over time.

From intake, we move onto sourcing which supports full, multi-round, e-RFX and e-Auction with all of the typical functionality that you expect. One thing that stands out is their ability to include matrices (and built-in formulas) in not only the quotation fields, but all forms and elements of the process, allowing the organization to collect matrix options for product/packaging configurations, team configurations (on services), compliance/certification options, and so on.

As expected, setting up an event in SourceDogg is super easy. You define the typical sourcing event meta data (name, description, products, team, internal budget estimates, scoring system, etc.), create the content (forms and bid matrices), invite the suppliers (who need to already be defined/onboard in the core supplier management module), create the FAQ (which can be extended as needed during the process), and release it into the wild. (Suppliers can then login to their portal upon receiving the notification and fill it out within the designated window. If the bid sheets or data collection forms are complex, they can be output or collected using every Purchaser’s favourite tool and format, Microsoft Excel.) When the event concludes, the responses can be viewed, various side-by-side reports generated (and output to multiple standard formats including DOCX, PDF, and, of course, Microsoft Excel), responses scored, and final decision(s) recorded in the tool (and an email auto-generated and sent to the winning supplier[s] if desired). There is also the ability to capture notes at a question level (by individual who reviewed/scored the response), the supplier level, and the project level.

e-Auctions are setup similarly, and, as expected, run for a much shorter time. The degree of feedback presented to the suppliers depends on the configuration. Upon event completion, the platform automatically generates reports ranking the bidders on cost or, if the event was preceded by an RFI/RFP with a qualitative component, on a weighted score. (And, of course, the buyer can always go in and view the complete bid history.) Note that the Q&A feature can be used to post updates during the auction to all suppliers, a supplier group associated with a lot, or just a specific supplier who asked a question or obviously needs guidance.

Supplier Management consists of four primary modules: Supplier (Information) Management (SIM), Supplier Relationship Management (SRM), Supplier Performance Management (SPM), and Action Plans.

Let’s start with Supplier (Information) Management. The system tracks all the core supplier meta-data you would expect as well as all associated contacts, product data sheets, RFX and other data from specific collection effort (from SRM, SPM, or Development Actions) responses, certifications, contracts (including full version history support), other relevant documents (the organization wishes to track), and any critical notes. It also maintains a full-history of interaction with the supplier that can be viewed and queried as well as allowing the supplier to be tagged using category and location tags (that can be defined by both the buyer and supplier.

The Supplier Relationship Management module allows the organization to define supplier reviews, track the results of those reviews, and define actions to be completed by the supplier and followed up on by buyer personnel when the supplier indicates the action has been taken. It’s nothing fancy, but it gets the job done efficiently, and that’s what’s important.

The Supplier Performance Management module allows the organization to design and track KPIs and supplier scorecards in support of processes to measure, analyze and manage supplier performance. The scorecards can be simple or complex across a wide range of metrics and categories. It really depends on what data the organization has and is willing to collect (through surveys) or enter into the application. (At present, it does not integrate with risk/etc. data feeds out of the box, but if these feeds are pushed into your ERP and associated with suppliers and products, that data can be pulled in.) Creating a Performance Review is easy. Once simply creates an instance, and a record for every area, sub-area, and rating that one wants to record. The review can then be sent to as many team members as you want and they can be limited to rating specific areas, sub-areas, or records, as appropriate.

The Action Plans module allows for the creation of specific improvement plans and non-conformance reports for a supplier that needs to improve generally or specifically on one product. The Action Plan modules supports multiple default plans (called forms) that can be used to quickly an initiate a new action plan. The forms can be used as is or modified to the appropriate situation, and the monitoring team can include as many organizational personnel as required. Once a supplier responds, the team can then accept or reject the response, and once all responses have been accepted, the response can be approved and archived. If performance slips or the issue comes up again, an action plan can also be “reactivated” and parts, or all, of the plan kicked-off again.

Layered on top of all of the supplier related modules is a supplier visualization dashboard for non-procurement organizational users and executives that make it really easy to get statistics on organizational suppliers (total, approved, by-size [SME, MM, Large], by type [Product, Services, Subcontractor]) and filter down by category & sub-category, status, and other key identifiers as well as see the (subset of) suppliers on a map. From this primary visualization screen, the user can jump into individual supplier records (with key performance dashboards also displayed)

The contracts module, which revolves around contract governance, is very straight-forward and easy to use as well. Contracts can be grouped by area for easy human location, searched on key metadata and tags, and viewed within the tool. The default meta data is fairly extensive (and can be extended by the organization on implementation) and should capture all of the key information necessary to locate a contract, track expiry, track key terms, and track key clauses. While there’s nothing fancy about the contracts module, we want to re-iterate just how straight-forward it is for an average user to add a contract (addendum or updated version), define or edit the metadata, and locate any contract in the system quickly and easily. Some of the more advanced CLM tools focussed around negotiation support or analytics lose sight of the fact that the average person who needs to retrieve a contract is not a Procurement or Legal or Technology super user and just need a system that follows the KISS principle.

The entire suite also contains a fully modifiable tile-based entry dashboard that allows an average user to define the parts of the application they use, as well as any customized intake forms or application modules, organize them by frequency of access, and see which modules have updated information or new actions assigned to them.

This fully modifiable tile-based entry dashboard with alerts is also the first thing a supplier sees when they login to the platform (and, to complete the tri-fecta, a non-Procurement organizational stakeholder who needs to make a Procurement request, review an RFX, or participate in a supplier development initiative). While simplistic, this is a key feature as you can ensure that supplier or organizational users are not overwhelmed with over-crowded dashboards or 40 menu items they will never use (and likely never understand).

The application is also highly configurable by the client admin who can define the organizational profile and branding, the settings, the certifications it requires from all its suppliers, data-sheet categories, security settings, users and user categories, guides (which can also have an access tile on a main dashboard), default fields for core system objects (requisitions, auctions, supplier profiles, contracts, action plan forms, etc.), supplier onboarding workflow, tags and tag groups, SourceDogg Connect (for ERP and/or organizational data feed pulls), etc. Plus, the SourceDogg team can make additional customizations across the product during implementation and support initial data loads as required.

Finally, they have extensive support guides and courses on their customer web site to help you extract maximum value from the platform. (And those constant iOS/Android action required alerts will dog you through the process of getting things done.) If you’re a SME or MM company looking for a modern best-of-breed S2C (Source-to-Contract) suite (especially in construction/facilities, manufacturing, pharma / health, O&G, CPG, and F&B) to get the job done, SourceDogg is a platform we suggest that you check out.

Will a Circular Economy Work with Leakage?

Sustainability is one of the big buzzwords, and the biggest verbal pushes, in today’s Procurement. (In practicality, most organizations won’t put their money where their mouth is and if the more sustainable solution is more than a point or two more cost-wise, environmentally damaging sweat-shop production, here we come!) We need to get there, because only an idiot would deny global warming (the last 13 years have seen 10 of the hottest year on record), and no one can deny the correlation between carbon emission, atmospheric carbon increase, and global warming. (You can argue just how much is due to carbon emission and how much due to other factors, many of which are indirectly caused by warming, but not that carbon is a problem.) Thus, even though we don’t know how much carbon reduction will help, we know it will, so we need to get there.

One big way to reduce carbon is to reduce production, which can done by reducing waste, which can be done through more refurbishment, repair, re-use, recycling, and reclamation — which are all part of the circular economy. Which is where we really need to get to (because waste is a problem — in addition to overflowing landfills that can pollute nearby water suppliers and make nearby land unfarmable, and even uninhabitable, think of the great pacific garbage patch and the containers of e-waste being sent to India, which has been a problem for well over a decade, see this 2010 article on the Times of India, and you start to get a grip on the magnitude of the problem).

But how efficient does the circular economy have to be to be effective? Theoretically, anything more that we do is one step better than what we are doing today, but, given that most products weren’t designed for recycle and reclamation, technologies for recycling and reclamation are immature and possibly carbon/generating themselves (especially if the answer is extract what we can, bury or burn the rest), and that there are breaks in the chain, is this leading to new waste that could possibly offset (or exceed) the expected (carbon) savings?

It’s a question Karolina Safarzynska, Lorenzo Di Domenico, and Marco Raberto recently tackled in an open-access paper on how the leakage effect may undermine the circular economy efforts available on nature.com. In the paper, the authors examine the impact of the circular economy on global resource extraction by way of an input-output analysis using an agent-based model of the capital sector. Through a detailed analysis they find that an appropriately structured circular economy economy can significantly reduce the extraction of iron, aluminum, and nonferrous metals if
implemented globally but the leakage effect may also cause some metal-intensive industries to relocate outside the EU, offsetting the circular economy efforts because an overlooked requirement for the circular economy is not just a reduction of waste, but a reduction of transport as transportation (air, rail, truck, and ship) contributes a significant amount of global carbon. In fact, if you go to Our World in Data, in the United States, the transportation sector accounts, like the energy (electricity and heat) sector, for approximately 30% of transportation emissions. The statistics right now are similar for the EU (24% for transportation and 28% for energy). So, if all of a sudden products need to be shipped halfway around the world to be recycled and reclaimed and the core materials shipped back, transportation-based emissions would increase significantly and possibly even overtake the extraction and raw material processing emissions!

In all fairness, we should note that the paper is pretty technical and metric heavy, and this is a bit of a simplification, but it’s the core idea we need to be aware of. It’s not an improvement if the carbon you take out of one segment is exceeded by changes in another. Just like we need to home/near-source for anything we can grow/mine/make at/near home, we also need to home/near reduce/reuse/refurbish/remanufacture/recycle whatever we can. It might be that the rare earths can only be mined in certain areas, but that doesn’t mean they have to be reclaimed and re-used there.

Gartner Inadvertently Makes the Case for NO AI in Supply Chains (which includes Source to Pay)

Gartner, which promotes the use of Generative AI in customer service, even though it did place Generative AI on the Peak of Inflated Expectations on the Hype Cycle for Emerging Technologies, just inadvertently made the best case for never, ever, ever using AI anywhere in the supply chain, including Source-to-Pay, and we love it!

In a press release on their newsroom in late September, where Gartner Says 80% of Supply Chain Not Accounted for in Current Digital Decision Models, the subheading clearly stated that Digital-to-Reality Gap Shows Current Technology Use Fails to Improve Outcomes for Supply Chain Decision Makers.

As a result of this “digital-to-reality” gap, Gartner’s research, based on an analysis of 600 survey responses of supply chain decision makers, not only found that current use of digital models to analyze trade-offs made no meaningful impact on the rate of good decision outcomes but actually found that slightly more bad decisions were made with the use of digital tradeoff analysis than without and marginally increased the percentage of bad decision outcomes. Moreover, More than half of supply chain leaders reliant on digital technology to make a recent strategic decision told us that they felt they would have landed on better decision outcomes without the use of their models, and our analysis suggests that they are correct.

In other words, if source-to-pay and supply-chain decision makers cannot even make decisions when relying on traditional, focussed, machine learning and modelling technology, there’s no chance an unpredictable probabilistic incarnation of Artificial Idiocy that randomly changes its output by the millisecond is going to make good decisions. And the reason is the same — just like traditional (guided) (machine learning) models require good data and a digital representation that covers the majority (if not the entirety) of the process and relevant variables, so do Generative AI models and, in just about every organization on the planet, this necessary digital representation DOES NOT EXIST!

As a result, applying AI without the data it needs to have even a snowball’s chance in h3ll to make a decision is pretty much guaranteed to lead you to worse decisions than you, or any other intelligent human with a decent understanding of the situation, will make without the use of any technology whatsoever.

You don’t need AI, you need end to end process modelling, data collection, data enrichment, data validation, and the ability to use those end-to-end digital tools, interpret the data and recommendations, and make good decisions off of that. And since, with the current rate of digitization, it’s unlikely the majority of organizations will go from 20% supply chain digitization to 80% supply chain digitization (which is the minimum level of digitization you should have before even considering any AI, even for inconsequential decisions) by the end of the next decade, you should not even have AI for decision making on your future roadmap before the next decade rolls around.

the doctor doesn’t say this often, but thank you, Gartner. (Because it really is the case that stupid is as stupid does.)

ERP at the Center of Sustainability and Human Impact?

ERP Today recently ran a brief editorial insight entitled ERP at the Center of Sustainability and Human Impact which caught my eye because ERP is generally not at the center of anything that is not manufacturing but yet should be at the center of sustainability data because it’s the ONE system that should be accessed, or at least be accessible, organization wide. However, in most organizations, all it stores is the manufacturing / order data, purchase orders, and invoices.

The article states that, within some organizations, they are providing the financial clarity to drive meaningful environmental and human impacts, however it only lists TWO (2) (Blue Marine Foundation and Oracle), and the doctor‘s experience, which is similar to other analysts he’s worked with, is that, for the vast majority of companies, this is JUST not happening.

Why? A few reasons, but the main ones are:

  • most ERPs don’t store complete financials; they’ll store POs and Inventory, but the complete financials will be in the organization’s AP/I2P/P2P systems
  • most ERP’s don’t store/calculate ANY sustainability data and
  • most ERP’s weren’t/aren’t configured to store ANY sustainability data

This means that, for an ERP system to provide financial clarity around meaningful environmental and human impacts, an organization needs to

  • integrate it’s accounting systems with the ERP and push all invoices and payments into the ERP
  • get subscriptions to third parties with the sustainability data and push that into the ERP after
  • updating the ERP configuration to store all of the relevant data around sustainability and responsibility that the organization wants to track

And while this will be doable with most modern ERPs, it could be expensive and force an organization to use another platform, such as a modern SRM (Supplier Relationship Management) platform as its core sustainability and responsibility platform instead. But it would be nice if the ERP could be the one platform that at least stores all of the organization’s golden records, because data warehouse, lakes, and lakehouses aren’t the answer (as all they do is duplicate data and make it harder to find the single source of truth) — the answer is a central source of sustainability and responsibility data that is, or could be, accessible organization wide so everyone can know the impacts of their (financial/supply) decisions. And while it could be the ERP, given the sheer cost of any customization work on any of the big ERPs, the doctor doesn’t think it’s very likely.

Procurement Performance is Relative …

… and, specifically, good Procurement performance is relative to how bad you’d be doing without a good Procurement department.

A recent article on the Supply Chain Management Review on how Procurement Costs Increase, But Top Performers See Increased Advantage which quoted a recent study from The Hackett Group, really drives the point home.

The recent Hackett study, which found that Procurement costs did increase in 2023 and now comprise 74% of total spend, as compared to 69% in 2022, for Digital World Class organizations, also found that these organizations did much better compared to peer organizations where costs increased from 89% of total spend in 2022 to 93% of total spend in 2023. In other words, Hackett found that world class organizations spend less overall while also operating at 21% lower cost than their peers and 32% less staff.

In other words, a good Procurement department staffed with educated and experienced buyers will save the organization more than it spends on the Procurement department, while keeping its overall costs below its peers. This means that any organization with a world class Procurement department can not only keep its prices below its peers in a cost conscious consumer environment, but also increase its organizational sales while its peers struggle to hold onto an existing customer base.

It may be hard to see the value of a leading Procurement department when you don’t have one, but these Hackett numbers should make it abundantly clear. 21% lower cost, and spend, on average than peers is substantial. This means that even though your spend will go up year over year in an inflationary environment, the rate of increase will be much less than your peers, giving you a significant advantage. Furthermore, if your organization acquires and installs the right affordable tools, as chronicled in our series on how much should you pay for Source-to-Pay, including our article where we explicitly said Yes Mid-Markets, 120K is More Than Enough for Source-to-Pay!, you can see multi-million ROIs in the 8X to 26X range, depending on your annual spend and Procurement maturity level (that determines how much spend you can push through the platforms).

In other words, while you can never put an absolute value on cost and Procurement value as that depends on constantly changing market conditions, you can put a relative value on best-in-class Procurement operations, and that value is 21% better than peers. Twenty One Percent. Think about that the next time Procurement asks for more senior buyers to put more spend under management or better platforms.