Author Archives: thedoctor

Sixteen Hundred and Ninety One Years Ago Today …

Constantine’s Bridge was officially opened in the presence of emperor Constantine the Great (who ruled Rome between 306 and 337 AD when he was acclaimed emperor after his father’s death). This was a 2,437 m Roman bridge over the Danube, 1,137 m of which spanned the riverbed, that is currently considered the longest ancient river bridge and one of the longest of all time — especially considering it was a wooden arch bridge with wooden superstructure (with masonry piers). [The longest pure arch bridges today barely exceed 500 m’s in length.]

While it only lasted four decades (which is still impressive given its mostly wooden construction), it is still a feat of ancient engineering and an accomplishment in logistics as it allowed for horse and cart delivery of goods (and men) in place of boats.

SIM? Is It Old News or a Shiny New Pair of Shoes? Part II (Updated)

As per our last post, SIM (Supplier Information Management) is a very mature and stable technology with a large number of software vendors not only providing the tools and best practices to manage supplier life-cycles, but to manage risk, compliance, receivables, and even spend repositories for spend management. And now that every suite vendor has built, or acquired it, the technology is almost a commodity in the Supply Management Space, and an acquisition thereof is not likely to get baby that new pair of shoes anytime soon. Or is it?

As great as they are, most SIM products —- stand alone best-of-breed or integrated suite offerings, have at least one weakness —- and often two. In particular, the data model and the workflow. Just like early spend analysis solutions were often tied to one, rigid, UNSPSC-based data model, most current SIM solutions are also tied to one, rather rigid, data model. In addition, most of those solutions with some SLM (Supplier Lifecycle Management) also have rigid workflows.

This worked well when business processes were predictable and stable and corresponded to products with long life-spans. But the times they-have-a-changed. These days, product life-spans are measured in quarters, and not years, if we are lucky. Associated processes change to not only accommodate the new product demands but to adapt to new technologies and new business requirements. If the workflow can’t adapt, the capability, and overall usefulness, of the tool is limited.

A SIM product that could not only allow a user to define, and redefine, data models as necessary but define, and redefine, workflows as necessary would offer more value than current SIM platforms. And if that product could also maintain full audit trails, which not only track data changes but model and workflow changes, and insure that old records and workflows can still be seamlessly accessed when the data model or workflow changes, then that would be even better.

And if that SIM product went even further and allowed for dynamic organizational, supply base, and user-defined hierarchies, that would be icing on the cake. Supply Chains are not boring because they are not static. They are constantly changing. The supply chain can not only change from product to product, but batch to batch as a primary raw material or part supplier runs out of material, becomes unreachable due to a political or natural disaster, or simply gets greedy and forces the higher tier supplier to find a new source. A good SIM solution will allow the supply chain map to evolve in real-time as the supply chain evolves. Moreover, with acquisitions, mergers, and spin-offs being the normal modus operandi for many businesses, a SIM solution that can easily adapt the organizational data model is also required. Finally, for maximum productivity, a user needs to be able to maintain their own view of the supply chain, back and front, relevant to them. They need to maintain their view of the relevant multi-tier supply base and the relevant hierarchies in their organization that they have to report to and serve.

In other words, a SIM tool that allowed for a truly dynamic data model, workflow, and supply chain organization map could bring a new wave of value to a modern Supply Management organization and the individual with the foresight to acquire such a tool might just get baby a new set of shoes. But is this available? And is it becoming common place?

SIM? Is It Old News or a Shiny New Pair of Shoes? Part I (Updated)

Supplier Information Management, also known as SIM (but which has almost nothing to do with your Subscriber Identity Module card in your cell phone, which is what you probably think of when you hear SIM), is not new. The early leader in this space, Aravo, which boasted the likes of GE and CISCO as clients, was formed in 2000 and followed not only by a slew of companies trying to be best of breed in SIM (including AECSoft, acquired by SciQuest which is now Jaggaer; Hiperos, now owed by Coupa; and Lavante; now owned by PRGX to name a few) but by a slew of suite vendors that began to implement enhanced SIM into their platforms (including Ariba, Iasta [now Determine], and Zycus).

And most of the basic features are now commodity. Try to find a vendor that sells SIM that doesn’t track all headquarter location, financial, core product, service, insurance, and third party risk information associated with a tier 1 supplier. Most of the good vendors also track third party credentials, compliance information against all relevant laws and directives, internal performance metrics and third party ratings, and even integration with third party supplier directories, databases, and or networks.

And the uses are well known.

  • Where are the bulk of my suppliers located?
  • What is the financial health (risk score) of my top 100 suppliers?
  • Are any of my products out of compliance with regulations in one or more countries?
  • Do all of my suppliers have their relevant insurance certificates up to date?
  • Who are my riskiest suppliers?
  • Have all of my suppliers verified their primary contacts in the last six months?

And the more mature companies, to try and maintain an edge, maintain their customer base, and expand into new companies and additional verticals have started to integrate additional, and related, functionality. Aravo evolved into a full Supplier Lifecycle Management solution that balanced compliance, performance, and risk management. Hiperos, before its acquisition by Opus Global and then Coupa, focussed on Third Party Management and on Compliance and Risk Management in particular. For example, their compliance management solutions included code of conduct, diversity management, insurance attestation, social accountability, and sustainability. Lavante focussed on on-boarding and integrating SIM with audit recovery services and advanced to the point where it was acquired by the leading audit recovery services provider, PRGX.

When all is said and done, SIM seems like a very mature space that is very old news. Typically when a technology gets to a point that all the suite vendors are just gobbling up what’s left, there’s nothing new. And betting on it definitely musters the image of an old gambler clutching dice in one hand and his last dollar in the other mumbling “baby needs a new pair of shoes“. But is it a bet you would lose?

AI: Applied Indirection in Contract (Lifecycle) Management

Continuing our expose of why you should think “Applied Indirection” and not “Any form of Intelligence” when you hear AI, because most solutions claiming to be AI are really just dumb systems with RPA (robotic process automation) and classic statistical models from the 90’s, we move onto Contract (Lifecycle) Management which, like analytics, is almost universally touted to have AI, even when there isn’t even a shred of anything that comes close.

This doesn’t meant that there aren’t vendors with true AI, especially when you classify it as Assisted Intelligence (and sometimes even Augmented Intelligence), in the space, just that, as the buzz-acronym reaches new heights, there will be many more vendors claiming AI than those that actually have AI and you will need to do your homework to find out which is which.

Example #1 of Applied Indirection in C(L)M: Auto-Renewal Detection & Management

Yes, evergreen contracts can be a big problem in Procurement when they have outsourced their usefulness, but detecting and managing these is not hard, and certainly doesn’t require any AI whatsoever. All you have to do is specify the contract as “evergreen” or “auto-renew” by checking a box and enter a notice-by date (to prevent an evergreen renewal” as well as the start date and end date and most contract management platforms can alert you in sufficient time to take action, escalate to your supervisor if you don’t, and kick-off a termination process at the push of a button.

For anything close to AI, you require a system that can detect when a contract is evergreen or auto-renewing when there isn’t a spelled out and easily identified auto-renewal clause that can be found with a simple reg-ex search. For example, when a crafty supplier buries an auto-renewal requirement in the liability section under the notices subsection titled “methods for delivering official notices” which starts off “Official notices shall be sent by X, Y, or Z, to A or B and only treated as an official notice upon proof of receipt. This includes a notice of non-renewal, as the contract will automatically renew 30 days prior to expiry otherwise.” Even a good lawyer might miss that in a fifty page contract when it’s snuck in on the third revision.

Example #2 of Applied Indirection in C(L)M: Off-Contract Purchasing

Maverick purchasing is a big problem. But it’s not one that you need AI to detect. If you encode all the products, services, and / or categories that should be bought on contract, it’s pretty easy to identify when a purchase for that product, service, or category is not bought from that supplier. And if the contract only applies to a region, it’s pretty easy to encode that too and it’s just a simple check.

And even if you have two or three suppliers in a multi-supplier contract for risk mitigation purposes, then it’s just a matter of making sure at least one of the supplier got the purchase, and if each supplier had a geographic area, that the right one for the area. Again, simple rule checks. No AI needed.

The key is to detect when something is off-contract when it is not specifically coded to a contract, either because it’s a new product, missing a category designation, required to hit a volume commitment, and so on. And while this can often be accomplished by identifying the closest product or service (using a document likeness statistic or weighted field match), sometimes advanced NLP may be employed for better results (and this would constitute weak AI).

Example #3 of Applied Indirection in C(L)M: Clause Suggestion

On the surface, this sounds pretty smart … point out clauses that should be in my contract to protect me. Under the hood, in most CLM systems that include authoring, it’s basically a set of templates that are used to specify what to look for in a contract type, with additions or subtractions for well defined industries that the provider serves. It’s basically a check list. And it’s about as dumb as it gets.

Can it be smarter? Of course, but the smarts are more around proper contract identification than clause selection. Because the clauses that should be included generally depend first and foremost on the type of contract, secondly on the product or service, and thirdly on the regulations that affect the products and services in the origin country, the destination countries, and any points in between. Then, identifying which regulations come into play and which types of clauses will be needed. This requires good NLP, probabilistic selection, and, preferably, adaptive learning that learns over time when Legal or Procurement chooses an alternate clause over a standard clause. A system should have assisted intelligence here to be useful, and augmented intelligence to be truly useful. But few do.

Note that SI is not saying that systems with the non-AI abilities discussed above are not valuable, as any system that automates tactical processes and minimizes non-strategic busy work is valuable. We are just saying you shouldn’t pay for what you’re not getting, or overpay for what you are. Buy what you need, and pay accordingly.