Author Archives: thedoctor

London Bridge Has Fallen Down!

Back in October, in our post on how London Bridge is Falling Down, we brought to your attention a post by the public defender that discussed how The Garden Bridge was, again, put on hold, which it should have been given that a review did find major breaches of good procurement process. From allowing a supplier to submit a bid after the formal deadline, to a lack of documentation, to changing the evaluation process once bids were received, to treating suppliers differently – as we said, if any unsuccessful bidder had challenged in court there is no doubt that they would have won their case.

But now it seems, as per a recent post from the public defender, that we are now at the point where The Garden Bridge Loses Treasury Support and London Bridge has, indeed, fallen down. And maybe this time it’s for the best.

You Need a Supplier Network – But Not For the Reasons The Vendor Says!

Every vendor with a supplier network touts their wares, and usually does so quite loudly. They go on and on and on (and on and on) about how their industry leading supplier network:

  • makes it easy to find new suppliers
  • makes it easy to search those suppliers catalogs
  • makes it easy to send out RFXs
  • makes it easy to place orders
  • makes it easy to collaborate with suppliers
  • … and so on and so on and so on (and so on and so on) …

Now, these are valuable benefits, but they are by no means unique to a supplier network. Taking ‘em one by one (we’ll knock ‘em all down as the satellite circus won’t leave town) …

  • you can find new suppliers from online marketplaces, industry associations, co-opetition, and from within your own organization (through better data management)
  • a number of online marketplaces make it easy to search catalogs, and there are a number of suites with integrated catalog management that work quite well, no network needed
  • just about every sourcing, procurement, and related application (suite) has RFX functionality
  • dozens upon dozens of procurement suites, e-commerce applications, etc. make order placement a snap
  • e-mail, online screen sharing, online workplaces, embedded messaging, and so on make collaboration easy

In other words, no supplier network is needed. So why do you need a supplier network?

Could it be for supplier management? Some of the more advanced vendors will submit that with a supplier network will help you:

  • detect supplier performance issues early
  • initiate and manage corrective actions
  • manage innovation management

And it will, but:

  • good metric and performance tracking and regular score-carding can detect issues early just as well
  • there are a number of best of breed corrective action management solutions out there, and many good sourcing suites have this functionality built in
  • and there are solutions for innovation management, and most SXM solutions, which do not necessarily have supplier network capability, have these …

So why do you need a network? And, to be more precise, an open supplier network?

Because supplier information management solutions, supposed to ease the burden of information management, don’t really ease it — they just transfer it to the supplier (who is supposed to log into the portal and maintain it). This sounds great, but given that a given supplier will have hundreds (or thousands) of customers, each with their own sourcing / procurement / SXM solution, instead of one customer having to maintain thousands of supplier profiles, each supplier has to maintain hundreds of their own profile instances for their customers.

In other words, you’ve just transferred costs through the supply chain, shifting your overhead into your suppliers who will, surprise, have to pass that cost onto you. But if you have an open supplier network, a supplier only has to maintain one profile, either in the network, or in the system of their choice that is capable of exporting and updating their profile in a standard (XML) format to the open network as needed. Instead of shifting information management through the chain, and the associated costs, you’ve minimized it, and eliminated the majority of the cost.

ClientLoyalty – Ironic Name, Straight-Laced Solution

Supplier Relationship Management is quickly becoming the “hot topic” among progressive Procurement organizations that want to advance on their supply management journey, and materializing as a slew of checkboxes that are appearing on product selection and evaluation checklists. But Supplier Relationship Management, while a hot topic among buyers, and a hot topic among marketers, is not a hot topic among developers. While many suite suppliers have supplier management solutions, the reality is that the majority of these fall into the classic Supplier Information Management or the slightly more modern Supplier Performance Management buckets.

The reason that SRM is a “hot topic” but not a common offering is that to truly support the relationship “R” in SRM, the software has to go beyond simply tracking information, performance metrics, and action plans. It has to track, measure, and manage feedback — from the organization and the supplier, monitor measures that track the evolution of the relationship — and not just performance, and allow for the collaborative creation of action plans to improve the relationship.

While many platforms will track all relevant supplier information — such as locations, contacts, products; and all performance metrics — such as on time delivery, defect rate, and target cost performance; few will go beyond that. Only true best of breed SRM platforms will address the relationship aspect. One of these, and possibly the newest entrant to the SRM arena, is ClientLoyalty.

ClientLoyalty was founded with the desire to bring true relationship management to companies that realized that in order to get the most value for their money, and the best performance from their suppliers, they needed to actively measure, manage, and improve the relationship. Therefore, they built a tool that allows an organization to track, measure, and manage performance, experience, risk, and reputation and integrate this more holistic 360-degree view into a single relationship strength indicator using net promoter scores.

The net promoter score is a customer loyalty metric developed by Fred Reichheld, Bain & Company, ad Satmetrix Systems, and introduced by Reichheld in a HBR article in 2003. Calculated as the difference between positive responses and negative scores, the net promoter score is positive if the overall experience is generally positive and negative if the overall experience is generally negative. If the relationship is improving, then the net promoter score will improve over time and if the relationship is degrading, then the net promoter score will degrade over time.

The ClientLoyalty NPS Loyalty metric is the (possibly weighted) average of performance, experience, risk, and reputation. Performance is calculated using a net promoter score over hard performance metrics calculated and tracked by the organization and hard performance metrics submitted by the supplier. These metrics will generally differ as both parties will generally have different definitions and calculation parameters. For example, the buyer might define on time delivery as the truck in the yard at 8 am and the supplier might define on time delivery as the driver reporting a delivery on the same date. Because of this, the buyer might have an on time delivery rating on the supplier of 80% and the supplier might have an on time delivery rating for the buyer of 98%. In this situation, the supplier would have a negative NPS due to the buyer’s lower appraisal of the situation – and this discrepancy highlights an issue. In addition, the platform comes with over 90 built in KPI definitions that the organization can use to get started, and more appear with every release.

The platform also supports extensive document management capability. Users can upload and tag critical documents in a central storage system for easy search, reference, and tracking. Contracts can be specially tagged as contracts and additional metadata and tags defined for contract status tracking and monitoring. Attachments can be correlated as well.

It’s a rather unique offering as it appears to be the only one with true, 360-degree, NPS scores and a home-grown sentiment analysis algorithm that can monitor social media sources and news sites to identify relevant comments and stories and extract the sentiment from the sites and stories and integrate it into a consistent score and one of the first platforms built from the ground up with full data import and export capability through CSV, XML, and APIs and extensible document capability.

But, like any new platform, it does have its weaknesses. There is no out of the box support for major procurement and ERP platforms; no ability for automated meta-data identification and extraction; and no innovation management. An action plan is a corrective action plan, not an innovation management solution.

However, especially given the relative dearth of true SRM providers compared to SIM providers and Sourcing/Procurement suites, ClientLoyalty is still one to watch and one to likely put on the shortlist, especially in North America.

For a deep dive into this wily provider, check out the recent in-depth coverage by the doctor and the prophet over on Spend Matters Pro [membership required]. (Part I, Part II, and Part III)

Procurement-as-a-Service: High Priority or HYPE HYPE HYPE!

Next month, the public defender will be hosting a webinar on the evolution of procurement: alignment, flexibility, and Procurement-as-a-Service where he will be discussing whether Procurement-as-a-Service (PaaS) is high priority for your Procurement organization or just hype. Guess which way SI is leaning?

First of all, let’s define what Procurement-as-a-Service (really) is. Procurement-as-a-Service is the new name for the service you get from a Managed Services Provider that combines technology, personnel, and expertise to take over part, or even all, of your Procurement operations in a transparent and effective way. They use technology to identify what you are spending on, what you need, and where savings likely are; choose categories for sourcing and assign category experts; modern technology to do the sourcing and procurement; and track the purchases and payments and do m-way matching to make sure you only pay for what you get and that you get what you are supposed to when you are supposed to. They also make the process visible through, at a minimum, a reporting and progress portal, and may even give you some access to the analytics and procurement tool to run your own reports, record inventory, and upload payments.

Second, let’s break it down.

1. Technology

Nothing new here. Given that MSPs are typically using someone else’s tech, there’s nothing new here. In fact, they’re probably using inferior tech as they are looking for something that works best at managing multiple client procurement portfolios and not at conducting that best sourcing event, bringing the best analytics or optimization solution to the table.

2. People

Note that we are using people here, not talent. MSPs have people. A lot of people. Because they have to fill a lot of seats, but not all are talented, or at least not talented with respect to your business. And this is key. Talent is appropriately educated, experienced, and relevant to your business. This brings us to:

3. Expertise

While there will likely be a number of people at the MSP with expertise in your categories, this number could be a dozen or two among thousands. And you won’t likely get them working your account, nor are you guaranteed to even get the results you would get from a GPO (Group Purchasing Organization).

Third, let’s analyze what we broke down. No guarantee of even best of breed technology. No guarantee of the right talent for your organization (based on your categories or industry). And no guarantee of the right expertise, or sufficient expertise to go around.

So what is PaaS? In SI’s view it’s a quick-fix band-aid for those organizations without enough tech, talent, or transition management capability to handle its own Procurement operations. But for any organization with any capability to acquire and manage even basic tech, attract talent, and acquire and employ expertise, what does a PaaS provider offer, especially when there are GPOs, niche consultancies, and SaaS solutions that have been offering the same, if not more, for quite some time now? The answer: so far, nothin’.

So, in SI’s view, it’s hype, hype, hype. But it will be interesting to see what the public defender has to say when he goes head to head with Comensura‘s Jon Milton on March 7, 11:00 EST, 16:00 GMT.

A Properly Overhauled Visa Program Will Benefit Supply Chains

In yesterday’s post, we pointed out that a properly overhauled end-to-end visa program would be much more effective in implementing President Trump’s goals than a wall or any other initiative that President Trump has to-date proposed to keep people out and make foreigners pay for his program. But we also pointed out that this would have a number of positive side effects including, but not limited to:

  • An increase in STEM capability
  • An increase in American jobs
  • An increase in blue-collar and white-collar salaries

In today’s post, we’re going to focus mainly on the first benefit, as this is not just an American centric benefit, and the one that will most benefit the supply chain.

Supply chains are getting longer and more complex, product life-cycles are getting shorter, service requirements more varied, and supply chain pirates are getting much, much more sophisticated and capable of subverting all of the advanced tracking and monitoring technology that you can bring to bear.

As a result, you need smarter mathematicians to model the supply chain, smarter engineers to keep up with the shorter life-cycles (and get it right), smarter business and linguistic graduates to figure out how to deliver varied service requirements globally, and smarter techs to increase security to keep your products, and your supply chain, safe. Not a hundred thousand additional low-end programmers writing essentially the same old code, maintaining the same old installed systems, and doing other tasks that can be done by any run-of-the-mill programmer and even outsourced.

If the visa program is revamped, only these smarter mathematicians, smarter engineers, smarter business and linguistic professionals, and smarter technologists will get the visas. That will not only benefit the US, but the US-centric supply chains that effectively run most global supply chains.

Revamping the Visa programs will not only force IT outsourcers to think smarter and go global, but benefit supply chains as a whole.