Monthly Archives: November 2023

A CPO Leading a Spend Management Strategy is a Key to Organizational Success

Not that long ago, the doctor gave you THE SIGN that you need a CPO which, directly put, was that your organizational spend was over 10 Million a year. No ifs, ands, or buts about it! Not long after, he found this article over on CXOtoday.com which pointed out that empowering business success was The Art of Mastering Spend Management. This article stated that companies should consider implementing a spend management strategy, regardless of their size and it made him happy (even though the article looks like it was written by a junior copy-editor* who just cut and paste standard spend management summary sentences from generic spend management publications as it was not very deep or specific) because CXOs need to hear this at a high level over and over and over again until they get it. (Note that the doctor doesn’t get happy often. Most articles just make him angry. Sometimes very angry, especially when the conscientious invoke their right to dare to be stupid and embrace artificial idiocy, but that’s a rant for another day.)

The article starts off by clearly stating that a spend management strategy plays a vital role in today’s economic reality as it enables companies to control costs, boost financial efficiency, and make informed decisions. It ensures resource optimization, agility, and long-term stability, enhancing competitiveness and adaptability in a rapidly changing business landscape.

This is most certainly true. And all one has to do to see that it is true, and it would have been so much better if the article said this, is remember the first formula they teach you in business school:
Profit = Revenue – Expense

Since Spend Management allows you to minimize expenses, this helps you maximize profit. And when you consider that
Margin = Sale Price – COGS      and that
Margin % = (Sale Price – COGS) / Sale Price      and that
Margin % for most industries <= 10%

This says that every $1 saved in expense generates at least as much profit as every $10 increase in sales. As a result, spend management is at least ten times as effective as sales or marketing and key to get a grip on early, even before you can afford the full time CPO. The CFO and COO should develop best practices for any decisions that result in spending, monitor the decisions, ensure corrections are made (and employees [re-]trained) when mistakes are made, and baselines generated for all recurring costs. Even though they might not realize the same level of success as an experienced and dedicated CPO, the baselines they generate and the knowledge they capture will be key when the CPO starts as the knowledge will allow them to dive in quickly and find near-term and mid-term opportunities for improvement (and cost reduction) and the benchmarks will allow them to not only prove it, but ensure that all bids received are competitive.

The only thing we want to note is that the important aspects of spend management, especially for smaller organizations, are:

  • strategy,
  • process (that implements the strategy), and
  • governance (that ensures the process is followed and the strategy implemented)

Technology is not critical (or even necessary), and only technology that supports the process (and collects the appropriate data) should be implemented.

This is important to note because this article is sponsored by a particular vendor in an effort to promote a particular product (which is only good for T&E spend, not all organizational spend) and you don’t necessarily need that technology (or any other instance of that technology) to have a spend management strategy and do proper spend management, especially if you are a smaller organization. (However, larger organizations do need good T&E spend management, and spend analysis, because flowers should not be $5,000 unless it’s a greenhouse.)

* but what should one expect considering it was sponsored by SAP to promote SAP Concur (and routed through their PR Agency)?

It’s Vendor Day … Again!

Last Updated: August 6, 2024

Back in the day when Sourcing Innovation was publishing five-plus (5+) times per week before the doctor became Spend Matters Lead Analyst for Advanced Sourcing Tech in 2017 (through Sept 30, 2022), Sourcing Innovation covered a lot of vendors. It focussed on smaller, innovative, or lesser covered vendors in particular. And every once in a while, it indexed the posts for quick access and discovery. This classic Vendor Day Reprise

indexed all vendor coverage up until June 6, 2016. (Vendor coverage on Sourcing Innovation was sparse from 2017 through 2022.)

From 2017 through 2022, most vendor coverage the doctor did was for Spend Matters and you can find all of it in one of the Spend Matters Content Hubs (2023 subscription required), even if no longer (co-)attributed to the doctor (as the migration from Pro to ContentHub on the new platform seems to have lost co-authors on a number of series, which may or may not be corrected by the time you actually reference this post, which will be available as long as Sourcing Innovation remains online).

Now that the doctor is no longer an analyst for Spend Matters and Sourcing Innovation is back to publishing five-plus (5+) times per week, and covering vendors on a regular basis (2023 goal is 3 to 4 a month, on average, from May onward), it’s time to index all of the new vendor coverage. This post will index all new vendor coverage from 2023 onward (or until the doctor decides to split the article and start a new index once the first set of articles are deemed no longer significantly relevant an unknown number of years in the future).

Vendor Post
AdaptOne (2024-04-15)
A Dynamic Adaptable Provider Tool of Network Enablement: Supplier Management for Utilities, Construction, and Other Complex Industry Management
Airflip (2024 Jul 17)
Flip it to the S Side
AkiroLabs (2024-08-21)
Craft category strategy like a chief with AkiroLabs
Anvil Analytical (2023 Nov 12)
If you need to bring the hammer down, make sure you have an anvil!
(2024 Jan 04)
Free Commodity Market Data Service
AnyData (2023 July 28)
Your Mid-Market Best-of-Breed Analytics Solution …
AthingZ (2023 July 21)
A Logistics-as-a-Service Provider …
BedRock (2023 Dec 14)
Is Your Supplier Management Built on BedRock?
BlueBean (2024 May 21)
Instant Coffee for Mid Market Tail Spend Procurement
Brooklyn Solutions (2024 Jan 10)
An Answer to Your Third Party Compliance Management Challenges
Buynamics (What’s the Price) (2024 Jan 11)
Are Vendors Demanding Ridiculous Cost Increases due to “Inflation”? Maybe you should tie them to an index when you ask What’s The Price!
Canopy (2024 Jan 29)
Don’t Have Your Supplier Information Covered? Maybe You Need a Canopy.
Coupa (2024 Jan 22)
Centralized Optimization Underlies Procurement Adoption
(2024 Apr 01)
Comprehensive Optimization Underlies Procurement Assurance
Curtis Fitch (2024 Jun 24)
CF Suite for Your Consumer Friendly Source to Contract Needs
Darkbeam (2024 Feb 12)
Shining a Light on Your Supply Base Cyber Risk
DeepStream (2024 Mar 14)
Is Your Strategic Operational Sourcing Not Succinct Enough? Maybe You Need a DeepStream.
Eyvo (2024 Aug 14)
Off To Procure We Go
FairMarkit (2023 Nov 02)
Bring a Fair Market Price to Your RFQs
FocalPoint (2023 May 15)
Do You Have a Procurement Focal Point?
Graphite Connect (2024 Jan 16)
Need a Strong Supplier Management Solution
Green Cabbage (2023 Sep 20)
Prices Too High? Take a Leaf …
Ignite Procurement (2023 Aug 09)
Spark Your Sourcing Success with Actionable Analytics
Interos (2024 Mar 28)
Interrupt that Risk Event And Sustain Stable Supply Chains
Keelvar (2023 Nov 20)
Not satisfied with the hill, it’s trying to climb the mountain!
Kodiak Hub (2023 July 26)
Supplier Relationship Management for Sustainability
Logility (2023 Oct 31)
The Real-Time What-If Supply Chain Network Modeller …
LUPR (2024 Feb 15)
Close the Supplier Loop
MarketDojo (2023 Oct 26)
Stepping Up Its Mid-Market Game
Mercanis (2024 Jan 16)
A Mission to Bring Deutsche Bahn Efficiency and BMW style to Source-to-Contract Part 1
(2024 Jan 17)
A Mission to Bring Deutsche Bahn Efficiency and BMW style to Source-to-Contract Part 2
Merlin Sourcing (2024 Jul 02)
A Platform with a Twist
mysupply (2024 Feb 26)
Take the Tedious Out of the Tactical Tail and Autonomously Avoid Overspend
OneMarket (LogicSource) (2024-04-10)
Sources Your Contracts with Insights In Its New Integrated Source to Contract Portfolio
(2024-04-17)
Continues to Power Your Procurement With Its Procure-to-Pay Solution
Opstream (2024 Jun 20)
Taking the Orchestration Dream Direct
Oro (2024 Feb 06)
Orchestrate and Solve Your Source to Pay Plus Challenges
PaymentWorks (2024-Aug-06)
Vendor Onboarding for Payment Assurance
Procurant (2024 Apr 08)
Keep Your Procurement on PACA with FSMA
Promena (2023 Nov 07)
A Rich Caffeinated Turkish Punch (for Sourcing)
Scalue (2024 Mar 12)
Scale Up Your Strategic Procurement with Strategic Spend Analysis
Serex Procurement (2023 Aug 28)
Easy e-Auctions for the Small Enterprise
Sievo (2024 Mar 04)
Still Constantly Sieving Your Data for New Opportunities
Simfoni (2023 Oct 02)
Ascending the Scales in Spend Analysis
(2023 Oct 03)
Bringing the Orchestra to e-Sourcing
SmartCube (2024 Apr 03)
Putting a Nice Box Around Industrial MRO for Commissioning and SPIR
SoureDogg (2023 Oct 24)
Dogging the Sourcing Process So You Don’t Have To
SourcingShark (2023 Oct 11)
Sourcing Insights to Take a Bite Out Of Your Sourced Spending
Spendata (2024 Mar 21)
The Power Tool for the Power Analyst
(2024 Jul 01)
A True Enterprise Analytics Solution
SpendHQ (2023 Apr 06)
Now that Per Angusta is Going Away …
SpendKey (2024-09-03)
Your Solution Oriented Key to Spend Insights
State of Flux (2023 Aug 16)
Do the Oscillations Resonate? (In SXM)
Supplhi (2023 Aug 08)
A Best-of-Breed Supplier Management Platform for Industrial MRO
Supply Risk Solutions (2023 May 29)
Taking Transparency to Thwarting
Tealbook (2023 May 22)
Laying the Groundwork for the Supplier Data Foundations
TenderEasy (2023 Sep 05)
Easy Breezy Beautiful Freight Quotes
Tonkean (2024 Mar 18)
Making Enterprise Procurement Work Part 1
(2024 Mar 19)
Making Enterprise Procurement Work Part 2
Trademo (2024 Feb 19)
Need to Trade More Confidently? Monitor Your Supply Chain
Vizibl (2023 Nov 09)
The Collaboration Platform for True Supplier Innovation
Vroozi (2024 Mar 25)
Address the Bluesy with a Solution Doozy and Approved by the Choosy Part 1
(2024 Mar 26)
Address the Bluesy with a Solution Doozy and Approved by the Choosy Part 2
Zip (2024 Jan 24)
Does Your Procurement Process Take Too Long? Maybe You Need to Zip Through It!
Zivio (2023 May 08)
Services Struggles? It’s Apropos!

Dear Reader: Is your favourite vendor missing? Or, more importantly, a vendor you want to know more about? Let them know! Although the doctor is more than happy to speak with new, innovative, and smaller/lesser-covered vendors and review their solutions at his earliest opportunity, like many of his blogger and analyst brethren, he doesn’t have the time to be making random calls all day trying to chase down elusive (or E-CHAOS) vendors. He reaches out to them as soon as he finds out about them, but many newer/smaller vendors don’t understand the importance of objective, independent, third-party, unpaid coverage and ignore him until you tell them you want an independent review and an independent verification that they have a real, valuable, solution.

Dear Vendor: If you have been covered on Sourcing Innovation after April 1, 2023 but before the date of last update given at the top of this post, and are not on the list (or a post in the aforementioned time frame covering you is missing from the list), please let the doctor know (and send the permalink), and accept his sincere apologies, and the post will be added to the list on or before the next regular update.

Do you want to get analytics and AI right? Don’t hire a F6ckW@d from a Big X!

Now, I’m going to upset a lot of people with this, but I don’t care because the linked article below is literally the best article I ever read on why you should NOT hire F6ckW@ds from Bg X Consulting Firms who claim to be analytics and AI experts when they don’t actually know

  • the difference between a mathematical formula to calculate the center of gravity of a falling object and to calculate the median spend in a category
  • proper software architecture
  • proper compute resource allocation
  • your business
  • the difference between real ML technology, RPA and a few formulas, and the current Gen-“AI” where the “AI” stands for artificial idiocy

because

  • you’ll spend 3 years and millions of dollars to implement something that should take 3 to 6 months
  • you’ll spend hundreds of thousands on big vendor software licenses you don’t need
  • you’ll spend hundreds of thousands on compute power you don’t need

After all, these guys and gals get paid by the hour and the commission on the resell license is a percentage of the total price they sucker you into buying it for. So, the longer the project takes and the more licenses and compute power they sell …

Read the linked article. Twice. And then tape it up to your fridge. The situation described in the article is NOT the exception. As a former CTO and 25 year consultant/analyst, I know this is the norm!


I Accidentally Saved Half A Million Dollars
 

Now, if you’re wondering how to tell who is a F6ckW@d and who’s not when it comes to analytics and AI at the Big X? It’s easy. (If they are there for more than a year or two) THEY All ARE! The real talent in tech and analytics don’t stay long before they move on to specialist firms where they are listened to and allowed to do it right. Tech/Analytics people take pride in their work (and not their title), and you need to remember this. Good tech/analytics people don’t contradict managers because they want to be important, they contradict because they want the job done right, and the reality is that …

Some of this stuff is literally so complicated that you need degrees in mathematics and computer science and sometimes a decade of experience to get it right! (It took the doctor two advanced degrees and building advanced analytics and optimization systems for multiple leading companies in the 2000s.)

In other words, it’s okay if you don’t really get it as a manager. Just find those one or two people who do who you can trust, pay them well, and let them do what they need to make your department look good (be it hire internally, choose a consulting firm you never heard of, hire former colleagues on short-term contracts, etc.). They’ll get the job done right and be quite happy to let you take all the credit IF you give them regular raises and a bonus any time they do particularly well. Just put your ego aside and let the people who get it make the tech/analytics decisions, and everyone will win!

Fail Fast And Forward? How About Not Failing At All?

A recent article over on The Sourcing Journal indicated that one should Fail Fast and Fail Forward When Implementing AI into Workflows. WTF? Why fail at all? Especially since if you’re using AI where you are expecting a high risk of failure, there’s no reason to expect that you’ll only fail once, or that you can actually fail forward.

Now, if we were talking traditional ML, where it’s just a matter of continually expanding and refining the model and training data, tweaking the parameters, and starting small, then fail fast, fail forward, get it working, use the spice weasel, knock it up another notch, and continue until you have automation across the platform in appropriate places, it would be good advice.

But when we are talking full fledged Gen-AI (which is the article’s focus) based on massively large and entirely unpredictable LLMs or super-sized DNNs, you can fail fast, but, with absolutely no way to control the models, you can’t fail forward. So while fail fast and fail forward is a good motto in general for technology, process digitization, and automation, as long as you take things step by step and control the risk, it’s not appropriate at all when we are talking about AI!

Fairmarkit wants to bring a fair market price to your RFQs

Fairmarkit, which claims to bring you from requisition to PO in as little as 5 minutes (or 5 seconds if you turn on full automation) is a provider of an autonomous sourcing solution for all tactical spend, and tail spend in particular (with more Fortune 500 customers using it for Tail Spend than any other tail spend provider). Founded in 2017 with the intent of solving the tail spend sourcing problem prevalent in the modern enterprise, it has grown from a point-based stand-alone simple tail spend solution to a fully integrated solution that can sit behind, and power, any enterprise sourcing or procurement application that is missing tail spend functionality, and does so for many of the enterprise customers that it has acquired in a mere six (6) years. Drilling in on that last point, Fairmarkit is fully integrated with Ariba, Coupa, Oracle, and ServiceNow and users can conduct tail spend events without ever leaving those platforms (should they choose) and can even setup the Fairmarkit platform to automate the entire event (and, should they choose, even the award according to well-defined rules).

For the average user doing an RFP or RFQ, who is not initiating the event from within a third party platform, the entry point to the platform is their new NLP-powered interface that allows a user to start the process by stating a request in Natural Language. Once the request is made, the platform does it’s best to extract all key details that will be needed by the buy-desk sourcing professional (for categorization, potential supply base, etc.) and then verifies its interpretation step-by-step with the user, asking additional questions as necessary depending on the category, etc. If, at any point, it determines that the amount is too small for an event (and should just be a P-card expense), then it will notify the user of such. If there are suitable products (or services) in a pre-loaded catalogue, then it will direct the user to the catalogue. If the budget or potential spend exceeds a threshold, it will notify the user that this needs to be a strategic event (possibly through an integrated platform) and/or that approvals will be needed to kick-off the project and make the award.

For services projects, if the user does not have an SOW, the platform will use GEN AI to automatically create an outline based on a repository of best practice SOWs. Once the outline is generated, the requester can then edit it as needed before sending it to the sourcing team for execution. The platform understands more than 100 categories and can generate SOW outlines for all common contracting categories.

Once the buy-desk receives the request, the buyer can

  • message the requester with any questions they need answered to fully understand the need
  • edit the request as required for clarity
  • turn it into a full-fledged RFP
  • create a quick-hit RFQ
  • archive the request (if inappropriate for a sourcing event)

Creating an RFP is easy-peasy as the process, and complexity, is completely defined by the user. Depending on the category, the user can:

  • create an RFP from scratch
  • create an RFP from a pre-existing template (which includes a library of defaults created in conjunction with SIG)
  • use the built-in AI to generate a suggested RFP

Regardless of the method chosen, at any time before it is released into the wild, the user can:

  • add, edit, or remove questions (or sections of questions)
  • add or drop existing (or new) suppliers to (or from) the invite list
  • define weightings for scoring
  • invite (internal) collaborators to the event (for review and scoring)

When the due date arrives, all invited collaborators can score the RFP, and when scoring is complete, the sourcing professional can go to the summary screen that shows, for each supplier, its score, diversity status, and internal (preferred status) as well as the cost of each supplier – line item pairing. The buyer can then award by supplier, or by individual pairing. The buyer can also pop-up the scorecard at the category level and drill in as needed. When the award is selected, the user can add notes to explain their decision, the day the contract or term will begin, any expected on-time costs, and the platform will compute the recurring costs and one-time savings automatically (and all of this information is logged and can be used to produce a report summarizing the full project history and decision criteria for any executive who asks).

RFQs are quick and easy. Define the items, select the suppliers, and send it out. And, as per our introduction, if Fairmarkit is integrated with another sourcing platform, RFQs can be fully populated through the API, automatically sent out, and even automatically awarded (for repeat buys for tactical products or services when appropriate rules are defined). For most RFQs, the buyer is just filling in missing information not passed from the source system and doing the final award.

In addition, Fairmarkit RFQs can also take advantage of the first industry integration of the new Amazon Business quoting module that allows a seller to offer different prices than what you see in the cart, guarantee those prices for 30 days, and even hold inventory. This, for the first time, makes Amazon Business a viable catalog for quick-hit RFQs for commodity purchases.

Supplier selection is quick and easy as the platform will automatically recommend suppliers based on the actual products and services being sourced (and not just the category) using a sophisticated AI algorithm that will match on all available details. If the user doesn’t like the suggestions, they can also quickly identify suppliers by category as well.

Finally, as expected, the platform also has some built-in reporting that can be used by the management team to track performance and progress over time. (It’s not a full analytics solution as Fairmarkit expects a client to use their own best-in-class spend analysis platform as the API allows all data to be extracted at any time.)

By default it will ship with the following dashboards (which can be tailored to your organization):

  • executive overview which summarizes overall platform utilization, event time, requests time, and platform-wide savings (which are averaging 11% across all events) as well as missed savings opportunities
  • buyer performance which summarizes the buyers by activity, savings, single vs. multi-sourcing, and other key attributes
  • buyer reporting which summarizes events and results by suppliers
  • supplier trends around bidding, response, and overall performance
  • RFQ Details which summarizes key RFQ statistics
  • Supplier Diversity (if there is supplier diversity data available, which can be obtained from a subscription to their partner supplier.io) by event, month, buyer, etc.

The platform is also highly configurable by the end user organization that can define

  • all company settings
  • users, requesters, buyers, and teams
  • suppliers and groupings
  • categories (and associated templates)
  • templates for RFPs
  • price books (which is their term for built-in catalogs)
  • project settings
  • API settings (and diversity)

Fairmarkit is a great platform for tail spend, and the proof is in the pudding. In September, 2023 FairMarket passed the 1 Billion mark for spend sourced. One Billion in quick-hit tactical RFQ across it’s enterprise customers that issue between 700 and 4,000 RFQs a month (because they are so quick and easy and save an average of 11% even in today’s turbulent times). Also, Fairmarkit is available in multiple languages and is being used globally in 72 countries and counting.