Operationalizing the Pocket Cube for Exact Purchasing Part IV

A few weeks ago, we not only told you that Exact Purchasing is a Pocket Cube, but we broke it down and defined each octant for you, as well as indicating which categories of goods and services were most likely to fall in each octant (with the disclaimer that there is variation between industry and sometimes even companies in the same industry based on size and focus).

This was a great start, but once you understand the breakdown, the next step is understanding how you go about sourcing and procuring the categories in each octant. Today we conclude our deep dive into the core technologies you will use with the Governance focussed-octants.

High Complexity, Low Risk, Low Impact: Spend Governance

Low risk and low impact means it’s almost a prime category for automation, except that high-complexity requires a fair amount of human oversight as not just any product from a catalog (or any service from a random service provider) will do. However, as long as humans are in the loop to approve the providers and the products, this is another category where a lot of automation can be employed, especially if the right technology is available.

This is another category where decision optimization needs to be employed as part of the strategic sourcing process, where continual compliance (as well as risk) monitoring needs to be employed as well as manual verifications of all suppliers and products before they enter the autonomous sourcing process and of all specs and obligation requirements before the contract is inked.

  • (Strategic) Sourcing: Autonomous Strategic Sourcing with Decision Optimization that balances cost and compliance
  • Supplier Management: APLs and Compliance Monitoring
  • Catalog Management: AVLs
  • Contract Management: Auto-Creation, Human Review of Specs and Obligations, Auto-Sign
  • Procurement (Channel)*: Goods PO (Catalog), Framework PO, Consignment PO, Service PO
  • Monitoring: ACK, ASN, Receipt in the Procurement System; Lead Time, Delivery, Quality Trends in the Inventory Management and Production Systems;

High Complexity, Low Risk, High Impact: Relationship Governance

High complexity and high impact is tough. Not as tough as when risk is also high, and you need full supply chain architecture that you’re manually sweating through every step of the way, but tough enough because while shipments will mostly be assured, if they aren’t up to spec, that’s just as bad as a missed shipment.

This is another category where sourcing can only be semi-autonomous as you need to verify the model, employ multi objective decision optimization and award review, review the specification, obligation, and risk management aspects of the contract in detail, and monitor the compliance, quality, and timeliness of the delivery. And monitor the compliance continuously.

  • (Strategic) Sourcing: Semi-Autonomous Strategic Sourcing with Decision Optimization that balances cost and compliance with Award Analysis and Review
  • Supplier Management: APLs, Compliance and Performance Monitoring
  • Catalog Management: AVLs and regular review and approval of new product options and regular automatic identification of potential products for review
  • Contract Management: Auto-Creation, Human Review of Specs and Obligations, Auto-Sign
  • Procurement (Channel)*: Goods PO (Catalog), Framework PO, Consignment PO, Service PO
  • Monitoring: ACK, ASN, Receipt in the Procurement System; Lead Time, Delivery, Quality Trends in the Inventory Management and Production Systems; Financial Status, Litigation Monitoring, Sanction Monitoring, News, Event, and Sentiment Monitoring;

This concludes our initial series on operationalizing the pocket cube of Exact Purchasing!

* Unless the Channel-Master Joël Collin-Demers says otherwise.