Category Archives: Best Practices

Five Easy Mistakes Source-to-Pay Tech Buyers Can Avoid

For every win you hear about (usually in the form of some ridiculous “we saved X Million thanks to Big S2P Suite Installation“, but that’s a rant for another day), there’s always someone muttering under their breath how their Source-to-Pay module or suite was a partial to complete failure. The reality is that any tech solution, no matter how good it may be for someone else, can be a dud for you if you aren’t careful about selecting the right type of solution from the right vendor.

That’s one of the reasons we are doing a large (initially 33 part) series on Source-to-Pay right now, so that you get an understanding of what each core module should do, and could do, can figure out what modules you need now, and identify the core features that are a must have. This isn’t the full picture, and we can’t provide the rest of it in just a single post (and have written dozens on the subject in the past), but we can outline five mistakes that, if avoided, greatly increase your chances of (great) success.

Lack of understanding of the real value proposition from tech

This is probably the biggest, and the main reason we indicated that, once you have a solution in place that captures all of your spend data (i.e. e-Procurement baseline), you should do a spend and opportunity analysis to understand where the real cost control opportunities are. (Notice we are saying cost control, not savings, as you don’t get savings until you have processes and technology in place to actually capture the savings you identify. Otherwise, you identify the possibility, but don’t actually capture them. But don’t get us wrong, your costs will go down, sometimes significantly, but properly selected and implemented source-to-pay technology should deliver two rounds of cost reductions — an initial round when you start capturing all of the opportunities you previously identified, and then a second round when you are able to start using it to identify new cost reduction opportunities.)

The key here is to understand, for a given solution, how much cost reduction you can reasonably hope to capture in years one, two, and three (given that you will likely have to sign at least a 3 year subscription agreement to get a decent subscription rate), and what the total cost of ownership is going to be over those three years. (It will be more than just subscription cost, there will be implementation and integration costs, training costs, and internal costs when your IT team is working with theirs to make it work.) If the total cost reduction that can be reasonably (read: conservatively) expected for the first three years is not at least five times the total cost of ownership (with at least a 20% buffer), chances are that either the value proposition is NOT there (or you don’t really understand what it is yet and should either research further, find a different vendor, or, most likely, move on to another module).

Not knowing your true numbers — for spend, suppliers, contracts, orders, invoices, etc.

This is kind of intertwined with our first mistake, but needs to be called out on its own. When doing the potential ROI analysis, you can’t make rough assumptions on how much spend by supplier/category (you’ll always be off, and sometimes considerably), how many suppliers (which will be way, way more than you think), how many contracts (which will always be too low, and you probably won’t be able to quickly find a significant number of those contracts if you don’t have a SaaS contract management solution), how many orders (and you’ll be low here as well), or how many invoices (which will be way more than orders as some suppliers will partial ship and partial invoice, may invoices will come in without POs, etc.). Get your numbers, then do your analysis.

Overvaluing the tech (and AI)

This is the biggest mistake you can make, and goes hand-in-hand with not doing the homework required to work out the real value proposition from the tech. Whenever you hear “we saved X Million with Big S2P Suite Installation” you should immediately ask all of the following questions in order:

  • how much of that was truly do to tech vs. actually instituting a process that the tech enforced (i.e. the implementation of a new supplier management platform also instituted a process that ensured all suppliers were properly qualified before being onboarded, which minimized future event time and, more importantly, prevented orders to unreliable, poor quality, and even fake suppliers and considerably reduced organizational loss due to bad suppliers — most of those savings were due to the process, not the platform; the platform would be correlated with the development processes it was then used to manage after the suppliers were onboarded)
  • of what was actually tech, how much of that was due to baseline capabilities, and how much due to advanced capabilities (that are semi-unique to that supplier’s tech and not widely/otherwise available); for example, if the tech in question was e-Sourcing, and the vendor was one of the few that offered decision optimization, how much of that was achieved just with the baseline RFX/Auction capability (i.e. best bids and standard award methodologies, lowest bid by supplier, lowest total bid by category, etc.) and how much additional savings was from decision optimization once ALL constraints were taken into account.
  • how much more the organization paid for that advanced capability and how often it was actually used / required to get savings [if it was only used 10% of the time, and only identified considerable savings half the time it was used, is it really worth it? or should the organization just do a one-off services project when those categories come up]
  • how much the savings actually relied on ML/AI, vs. just providing a fancy NL interface (when the same result could be accomplished through submenus or a few filter definitions / selections);
  • and if any savings can actually be tied to ML/AI (vs. good process and more predictable technology), what the risks of failure are here!! [i.e. if the savings were due to reduced stock-outs as a result of the “AI” doing auto-replenishment orders as needed to adjust to demand fluctuations, what happens if there is a temporary, extreme, demand spike due to a near end-of-life sale, will the algorithm assume that is a sign of demand resurgence and fall prey to the bullwhip effect, sticking the organization with tens of thousands of units it will never sell without a fire sale?

Basically, at the end of the day, more often than not, when a customer says “we saved X Million with Supplier’s Spectacular Solution“, you would gain at least 80%, if not 90%, of those savings by implementing any any other solution with the same baseline capabilities that enforced the same processes be followed. (And this is the best argument ever NOT to overpay. Paying 5X to 10X for an incremental 10% is usually NOT worth it unless your organization is a F500/G3000 with over 1 Billion in annual spend. Again, it’s all about that ROI calculation.)

Misunderstanding the SaaS provider’s viewpoint

Not the salesperson’s viewpoint (which is to sell, sell, sell and match you with the solution they think is the best fit so you will be enticed to buy), but the SaaS provider’s viewpoint. Regardless of what terminology the SaaS solution provider is using:

  • what are they actually selling now
  • what are they currently working on that you can expect to be completed before an annual roadmap revisit
  • where are they going with the tech (i.e. they are AP/Payments — are they doubling down and adding support for global payments and clearance in more countries, or are they just sticking to the basics [and only good for post-audit countries] and working on expanding into broader P2P or the new intake-to-pay/procure/process trend)
  • what is their support and training philosophy — all in-house, hybrid in-house and third-party (and you can/can’t choose), or all third party
  • what is their target market — preferred customer size, preferred industries, etc.
  • what is their philosophy on working with customers — do they take input? hold working groups? or do they just develop the features they believe are most likely to fill gaps or increase efficiency with little to no input to keep development rapid and costs down?

At the end of the day, if you don’t understand this for each provider you are considering, you won’t know if they will be the provider for you.

Failing to find the right relationship

This happens more often than not, partly due to not understanding the most appropriate tech requirements for your organization at the present time, and partly due to not really understanding both the culture of the provider and it’s viewpoint. True value materializes when you find the right tech from the right provider that will not only work with you to ensure you get that ROI, but has a vision that is congruent with where you want your organization to go.

Are these all the mistakes you can make or all the mistakes we’ve seen? Of course not, but these are some of the biggest, and if you avoid these, your chances of success shoot up considerably.

Stop Sanctifying Savings, Recognizing ROIs without Research, or Seeking Solutions Solely in Software

If you’ve been reading the doctor for any length of time, you’re probably a bit confused about the third part of this title — as the doctor is one of the biggest proponents of sustainable software solutions that cover the extended Source-to-Pay process and enable next generation Sourcing and Procurement. However, just because he believes you should have an appropriate software solution for every stage of the source-to-pay process, that does not mean he believes all of the solutions are in software alone. Some are in systems, which are composed of talent, technology, and transformation(al processes).

Sometimes the solution to a challenge isn’t (just) a better system, it’s a better process. Take invoice overpayments, common in large organizations due to over-billings, duplicate billings, and even fraudulent billings. The current “solution” is to use a recovery firm who will take 1/3 of what they “recover” for you as their fee, but they won’t recover everything (since anything off contract is hopeless, as is any fraud that slipped through — the perpetuators are long gone, and even if the authorities find them, by the time you get a judgement in court, they’ve spent, laundered, or transferred the money to somewhere you can’t touch it). This is not much of a solution, because if only 50% of the overspend is addressable, and you lose 1/3 of that in fees, you’re only recovering 1/3 of your overspend. Ouch!

The solution here is better process enabled by technology. When an invoice comes in, the system auto-processes it and auto-matches it a purchase order and a goods receipt. If there is no PO, and it’s not a pre-defined monthly billing, it’s marked as no-pay until manually verified by the buyer that a) the invoice is for goods that were ordered and b) all of the units / services are the agreed upon prices or rates. And even then it’s held for payment until the goods are marked as received or the services delivered. If there is a PO, it must match all of the yet unmatched units (if multiple shipments, and thus invoices, are made against the PO) and each unit must be billed at the approved (contracted rate). If not, it’s flipped back to the supplier for correction. If the supplier won’t correct, possibly because the order was expedited at managerial insistence and the supplier agreed only if a premium could be charged, then it needs managerial approval before a payment can be issued, and if that is not given, it needs to enter a dispute process. In other words, no invoice is paid until matched, verified correct, and, when necessary, granted managerial approval — and the entire invoice management function is governed by a well thought out, defined, and detailed process (with flow-charts that govern process flows) that ensures every invoice is processed correctly in every situation (based upon whether or not the goods and/or services are under contract, PO, cyclic billing agreement, ordered from a catalog, requisitioned at a defined rate scale, bought in an e-auction, etc. In other words, the process comes first, and the technology enables it.

This means that while the software should enable as much of the process as possible, you shouldn’t look to the software, or even the vendor, to define the process for you. The vendor should have best practices, and should provide you with sufficient configuration options to make it work for the process you need, but you need to understand what you need before you select a solution. Some solutions on the market will be really rigid, and others will expect you to configure it to your needs. In other words, software can provide you with what you need to complete the solution, but software alone is not a complete solution — you need the right process and the right people using it. So don’t look to a software provider as the solution, look to a provider to provide software that will provide the software part of the solution.

And, more importantly, don’t accept the promised ROI without doing your own research. Most providers will promise you an ROI of 5X to 15X in an effort to convince you that NOT buying their solution wold be the stupidest thing ever as every day you’re not using their solution you’re flushing money down the toilet. And if the ROI of a solution is that high, you should definitely have a solution — but the solution that gives you that ROI might not be the one that promises it. Remember, ROI is realized return / total solution cost, and depending on how good you were doing before buying the solution, the current market conditions, your industry, and the ancillary costs of the solution (implementation, integration, training, etc.), the ROI for your organization could be drastically different than their average ROI for their average customer. For example, while the vendor’s average customer might see an ROI of 5, you might only see an ROI of 2.5, and at a multiple of less than 3, it’s likely not the solution for your organization. (Unless it’s the only solution and you need a software solution, but it’s rare that there’s only one software solution that would work.)

If you’re given an ROI, ask for the calculation the vendor uses and how you would calculate it for your own organization and do it yourself. Add padding into the price, and when you have an expected range of savings and/or cost avoidance, err on the side of caution (the lower end). That’s the number you use when considering the value, not the vendor’s number. Every situation is different, and you need to understand how different your situation is from their average customer.

However, the most important thing to understand is that you need to stop sanctifying savings and believing that the savings numbers provided by a vendor are a result of their solution. Or that you will achieve anything similar. Remember, “savings”, which is usually just “unnecessary cost avoidance”, is a function of how much the organization is spending across its addressable categories, how much overspend is across those categories, and how much was able to be captured — and this is dependent on organizational size (annual revenue), industry, and spend profile. If your organizational spend is considerably smaller, your addressable spend is less than industry average (long term locked-in contracts, etc.), or your overspend in high volume / dollar categories is less than industry average (either because you had good negotiators, or you cut the contracts at the most opportune time), then your expected “savings” will be considerably less than their average customer savings they are presenting to you. In other words, like ROI, the advertised number may not be what you get. Specifically, your savings might not be anywhere close to their advertised number.

But that’s not the most important reason you need to stop sanctifying savings — the most important reason you need to stop sanctifying savings is that there is absolutely no correlation between the savings numbers and their software. Let’s repeat that. There is absolutely no correlation between the savings numbers and their software. Why? The same reason you should not seek solutions solely in software.

The reality is that, depending on the situation at hand, sometimes most of the “savings” or “cost avoidance” results from a better process alone and has nothing to do with the software solution whatsoever. Also, sometimes the solution that is needed is simply a workflow that enforces a process, a RFX solution that collects comparable information, an e-procurement solution that supports contracted rate catalogs and rate cards, etc. These standard solutions are offered by dozens of vendors and if the majority of the “savings” or “cost avoidance” comes from a baseline solution, it literally doesn’t matter what vendor’s solution you use! Literally. So if the vendor with the significant savings number is asking 1M annually in license fees and a smaller vendor offers a solution with all the necessary baseline functionality for 120K annually, you could get the same savings for 1/8th of the cost (which would significantly impact the ROI).

In other words, when you are given a savings number, you have to do your research and figure out

  • what percentage of those savings results solely from the fact that the implemented solution enforces a proper process
  • what percentage of those savings results solely from the baseline functionality that is available in at least 3 to 5 other solutions (at a lower annual license cost)
  • … and what percentage of those savings result from advanced features found only in that solution

For example, if only 5% of the savings results from advanced functionality and your estimated annual savings from addressable spend for the first 3 years is only 10M per year, are you really willing to spend 8X as much in license fees for an incremental savings of 500K? The answer here should be a resounding NO as that incremental savings is less than the incremental solution cost! But if you’re a multibillion dollar corporate, that could save 50M a year for three years, with a 10% incremental savings from the advanced functionality, then you would be saving an extra 5M per year at an incremental cost of 800K (which is a 6X ROI) AND have advanced functionality that could be applied to all categories that might squeeze out an extra percent here and there.

In other words, what solution you should buy depends on which solution you expect will give YOU the greatest ROI based upon YOUR calculation, not the vendor’s customer averages (or outrageous quotes from multinationals who spend 10X what you do). Furthermore, don’t misread the title — you do need software to enable your Sourcing, Procurement, and Supply Chain, but the software is not the total solution — which requires the right process driven by the right people. So don’t expect the vendor to solve all your problems, just the software portion (which you should only buy after identifying what you need, and the vendor you should choose should be that which has the greatest expected ROI for your organization, as calculated by you).

Source-to-Pay+ is Extensive (P20) … And Supplier Management Very Extensive … So Here Are Over 100 Supplier Management Companies to Check Out!

And now the post you’ve all been waiting for! A partial, starting, list of over 100 supplier management companies that may (or may not) meet some, or many, of the core baseline capabilities we outlined in the last four parts of this series (Part 16, Part 17, Part 18 and Part 19) as we discussed the A, B, C, and D sides of Supplier Management today (with more sides emerging, as we still haven’t discussed ESG and Diversity, to name a couple of topics, as those providers are mainly data providers today, which you integrate into your SIM, SCM, SUM, or SRM solution today).

As with our lists of e-Procurement Companies (in Part 7), Spend Analysis Companies (in Part 12), and Sacred Cow Companies that do, or support, customized “spend” analysis on Marketing, Legal, and SaaS (in Part 13), we must again give our disclaimer that this list is in no-way complete (as no analyst is aware of every company), is only valid as of the date of posting (as companies sometimes go out of business and acquisitions happen all of the time in our space), and does NOT include any companies that just (or primarily) do ESG data collection (or carbon calculators), diversity data enrichment, or other emerging areas of supplier management not in the ten (10) areas we’ve covered so far (for which there are actual solutions that do more than just supplier record data enrichment) in our expository on the CORNED QUIP mash of Supplier Management.

Furthermore, as we’ve said before, not all vendors are equal, and we’d venture to say NONE of the following are equal. The companies below are of all sizes (very small to very large, relative to vendor sizes in our space), cover the baseline differently (in terms of percentage of features offered, the various degrees of depth in the feature implementations, and differing levels of customization for a vertical), offer different additional features, have different types of service offerings (backed up by different expertise), focus on different company sizes, and focus on different technology ecosystems (such as plugging into other platforms/ecosystems, serving as the core platform for certain functions or data, offering a plug-and-play module for a larger ecosystem, focussing on the dominant technology ecosystem(s) in one or more verticals), etc.

Do your research, and reach out to an expert for help if you need it in compiling a starting short list of relevant, comparable, vendors for your organization and its specific needs. For many of these vendors, good starting points might be found in the Sourcing Innovation archives, Spend Matters Pro, and Gartner Cool Vendor write-ups if any of these sources has a write-up on the vendor.

Finally, a second reminder that inclusion on this list DOES NOT imply Sourcing Innovation is recommending the vendor.

COMPANY LINKEDIN
Employees		 HQ (Country)
State		 C O R N E D Q U I P
Achilles 757 United Kingdom N I
Advanced 2769 United Kingdom R U I P
apexanalytix 411 North Carolina, USA D U I
Aravo 117 California, USA C R U I P
Arcus (Trade Interchange) 27 United Kingdom C I P
Avetta 833 Utah, USA C R N I
Axiscope 13 France C R Q U I
Basware 1575 Finland N I
Bedrock 78 Florida, USA R I
Beroe 660 North Carolina, USA O D U I
Brooklyn Solutions 24 United Kingdom C R U I
Canopy 14 United Kingdom C R U I
Claritum 7 United Kingdom I P
CMX1 75 California, USA C R Q I P
Corcentric 601 New Jersey, USA R I
Coupa 3687 California, USA R N U I
Delta eSourcing 206 United Kingdom I
Dun & Bradstreet (D&B) 5569 Florida, USA C U I
eBidToPay ?? Germany R Q I
Ecovadis 1418 France C U I
eCratum 12 Germany N I
ECSourcing (Simfoni) 11 New York, USA C R I
Everstream Analytics 183 California, USA O U I
FullStep 130 Spain U I P
GateKeeper 101 United Kingdom C U I
GEP 4803 New Jersey, USA R I P
GHX 1394 Colorado, USA C N I
Globality 178 C R D I
GraphiteConnect 62 Utah, USA R E U I
GRMS 29 California, USA U I
Hellios Information 74 United Kingdom N I
HICX 117 United Kingdom C R I
Ignite Procurement 65 Norway R U I P
Informatica 5992 California, USA I
IntegrityNext 61 Germany C R U I
Intenda 109 South Africa I
Interos 254 Virginia, USA C O D U I
Ion Wave 22 Missouri, USA R I
IS Networld 1007 Texas, USA C N I
ISPnext 59 Netherlands U I
Ivalua 900 California, USA C R U I P
Jaggaer 1313 North Carolina, USA R N U I
K2 Sourcing 10 Wisconsin, USA I
Khareed ?? Pakistan I P
Kodiak Hub 40 Sweden R U I P
LexisNexis 10348 New York, USA U I
LGX Corp ?? North Carolina, USA I
LiveSource (Blume Global) 8 Georgia, USA R E Q I P
LUPR 5 New Jersey, USA R U I P
Market Dojo 34 United Kingdom R I
MarketPlanet 72 Poland R I P
Matchory 12 Germany D I
MCO (My Compliance Office) 188 New York, USA C U I
Medius (Wax Digital) 568 Sweden R I
Mercell 462 Norway R I P
MeRLIN (Rheinbrucke) 172 Germany R I
Meshworks 18 Ohio, USA R Q I
MFG 468 Georgia, USA D I
Newtron 54 Germany R N Q U I
Oalia 24 France I
Oboloo 6 United Kingdom C I P
Onventis 147 Germany R N D I P
Open Windows Software 29 Australia C R I P
OpusCapita 474 Finland N I
PratisPro ?? Turkey I P
Proactis 566 United Kingdom R N I
ProcessUnity 143 Massachusetts, USA R U I
Procurence 9 Poland C R E Q U I
ProcurePort 8 Indiana, USA R I
ProcureWare >?? Washington, USA R I
Prokuria 8 Romania I P
Promena 18 Turkey R D I
Prospeum ?? Germany I P
QAD Allocation ?? California, USA C R Q I P
QMSC 15 Texas, USA Q I
Raindrop 29 California, USA R I
Resilinc 299 California, USA O U I
Ready Contracts 243 Australia R I P
RizePoint 62 Utah, USA C Q I
SAP Ariba 3009 California, USA R N D U I P
ScoutRFP 44 California, USA I P
SourceDogg 31 Ireland R I
Sourcing Force 4 Ontario, Canada C R I P
Sphera (riskmethods) 125 Germany U I
ScanMarket (Unit4) 61 Denmark C R U I P
Scoutbee 102 Germany D U I
SourceMap 95 New York, USA O R E U I
Suppeco 10 United Kingdom R I P
Supplhi 12 Italy C O R D U I
supplier.io 92 Illinois, USA O R D I
SupplierSoft ?? California, USA C R Q U I P
SupplyOn 239 Germany C R E Q U I P
Supply Risk Solutions 5 California, USA O U I
Synertrade 185 Germany R U I P
State of Flux 62 United Kingdom R E U I P
Tealbook 143 Ontario, Canada O D I
Trade Interchange ??

 United Kingdom I P
Transparency-One 23 Massachusetts, USA C O N U I P
Trust Your Supplier 15 North Carolina, USA C U I
Vendorful 15 New York, USA C R U I P
Vizibl 49 United Kingdom R E I
VORTAL 195 Portugal R I
Zumen 66 California, USA R I P
Zycus 1540 New Jersey, USA R N U I P

Continue to Part 21 where we continue our review of Source-to-Pay.

Source-to-Pay+ is Extensive (P19) … Time to Break Down the CORNED QUIP of Supplier Management, D-Side

In our last post, we “flipped it to the ‘C’ side, finished with the ‘B’ side , nothin’ on the ‘A’ side, so tired of the inside, to the ‘C’ side, to the ‘C’ side” (because, in the 80s, we knew that Cats Can Fly). This was because, while records have only A and B sides, we know that Supplier Management is not flat and is best described as a multi-surface convex polyhedral with many sides, including a C-side and a D-side.

While Part 16 and Part 17 focussed in on the more “classic” offerings in the SXM space which were very internally focussed, our last post, Part 18, focussed outward on supplier discovery and network management, because supplier management is pointless if the organization does not have the right suppliers. We also pointed out that once you have identified the right suppliers, in addition to managing them, you need to outreach and enable them to do better, so today we move on to the last side of supplier management, appropriately named the D-Side as many buyers still think of the supplier as the dark side of the force, when, in fact, the supply base is just the dark side of the moon, ripe with opportunity for discovery if we’d just make the effort to get out there and explore.

So, in our final attempt to dissect the CORNED QUIP mash, we will dive into Supplier Orchestration (SOM) and Supplier Enablement (SEM) and outline the remaining capabilities you should be looking for in a Supplier Management Solution if these capabilities are important to you (and they should be).

Now, we get that “the suppliers aren’t paying for the solution” and, as a result, most buying organizations (that aren’t forward thinking enough in our view) don’t care enough to pay for supplier-focussed functionality, and that this means that most vendors just aren’t bothering to build these solutions. However, industry leading buying organizations are waking up to the fact that you can’t employ all the best people and thus the organization needs to take advantage of all the intelligence in its supply chain. Similarly, thought leading vendors are working on solutions to enable the supplier to do more, which really isn’t hard to do as they built most of the communication and collaboration mechanisms into classical onboarding and collaboration and project management, and just didn’t bother opening these capabilities up to the supplier in the past. Today, the best vendor platforms are making the functionality ubiquitous between parties, and those are the platforms we think that you should be looking for.

Orchestration Management. (or Onboarding + Multi-Tier/Multi-Supplier capability)

Classical supplier management was designed to support management of, and visibility into, an organization’s first tier suppliers because that was thought to be enough to minimize risk, reduce cost, and ensure smooth sailing on calm seas in the days ahead. For a while, that was enough, but as the pandemic demonstrated more clearly than any event before, not having deep insight into the deeper tiers of the supply chain can result in significant disruptions across the organization’s operations, not just point based disruptions from the odd supplier failure or (increasingly occurring) natural disaster. Thus, newer solutions are supporting multi-tier supplier management through cascading invitations, onboarding, and management by the tier above and visibility down to the source material.

Multi-Tier Network Linkages
A key requirement for multi-tier supplier orchestration is labelled bi-directional multi-tier network linkages that allow a buyer to trace their supply chain through a supplier down multiple tiers to the raw material suppliers when needed and monitor all of those producing critical raw materials, and critical components one level up, for potential risk or disruption. This is easier said then done because a buyer should only see the relationships that are supporting their products and services, not the linkages used by their peers, so the connections have to not only indicate who is using who, and for what, but also on behalf of who. Similarly, a tier 1 supplier should not know that it’s tier 2 supplier is also serving/servicing its competitor unless the competitor or tier 2 supplier chooses to make that relationship public, so now we have to consider relationship type, relationship purpose, relationship reason, and relationship visibility. It’s a lot to think through for a software developer, especially if you want to build an uncertainty management solution on top of that and calculate impacts of delays and disruption up the chains if a tier 4 supplier can’t deliver.
Cascading Onboarding Support
When a tier 1 supplier is selected to provide one or more products to a buyer, it needs to define the tier 2 suppliers it is using that need to automatically be invited by the platform to onboard to help the supplier maintain insight into its supply base and provide that insight to the buyer. Similarly, when those tier 2 suppliers onboard, they need to define the tier 3 component / material suppliers they are using to provide their products / components to the tier 2 suppliers. And so on.
And when another tier 1 supplier uses the same tier 2 supplier, it needs to be invited to just provide the relevant supply chain view to that new tier 2 supplier, with tier 3 only invited if they are new or providing different products than are already registered in the system. Unless, of course, a tier 2 (or tier 3) supplier chooses to become a customer, then they can manage their entire supply base through the solution (and not just that which supports the organization[s] currently paying for it). Like multi-tier network design and support, this is also a lot to think through for a software developer, especially one that wants to quickly bring a simple app to market as a “MVP” that it can sell for money.
Multi-Tier Supplier Support
The platform has to be more than simple visibility to be useful. It has to support messaging, and collaboration, down and up the chain to determine if early warning signals represent potential problems and, if so, allow for collaboration between the tiers to address those potential problems and proactively define solutions. It has to enable relevant supplier management functionality to all tiers of the chain to be truly useful to a buyer trying to manage a particular chain, but do so only for that buyer as the reality is that if no one is paying, the business providing that solution will not be able to stay in business. In other words, it needs to enable most of the core functions, but not provide any non-paying organization with any ability to add suppliers beyond those indicated to support a given chain.

Enablement Management. (+ Engagement)

Orchestration is great, and key to managing not just the supplier but the supply chain, but what’s the point of orchestrating if you’re not going to take it to the next level and enable the suppliers to better serve you. Being able to see where things are, send messages, and get responses is great, especially since it can provide early warning signals of issues that need to be dealt with, but the point of supplier management should be more than reactive issue resolution. Good supplier management should focus on proactive improvement. And, most importantly, that improvement should not just come from the buyer.

(Supplier-Led) Innovation Support
As an organization, your goal should be continual improvement both within your four walls and within the four walls of your strategic suppliers. Considering that most of your products and services are sourced, they will not improve if the suppliers do not improve them. Furthermore, given that your resources are finite, how much time will you actually have for innovating and improving the products you source to sell. Very little or none. It’s critical that most of the innovation come from your supply chain (as that’s where most of the manpower, and hopefully brainpower, should be). Moreover, you shouldn’t have to push for it. Your suppliers, when they find opportunities for quality or process improvement, or efficiency improvements, should be free, and even encouraged, to make those suggestions and kick off innovation projects (under your guidance, of course).

There should be full featured support for innovation. Multi-channel synchronous and asynchronous communication. The ability to whiteboard, design at a high level, and store prototype and related files and artifacts from design tools. Put together project plans — with milestones, tasks, and owners — and allow for tracking, change management, and commentary. It should also support tracking of quality data and quality processes as well.

Sustainability Guidance
Sustainability is more than a buzzword, it’s a necessity if your organization wants to not only thrive, but even survive. First of all, with regulations consistently popping up everywhere all at once, you need to get ahead of the curve. You can’t wait for a substance ban, a new GHG tax, or a new documentary requirement to pop up before figuring out its impact on your supply chain and what actions you will need from your supply base to ensure compliance. You need to start working on sustainability as soon as you suspect a regulation is coming. But figuring it out on your own with everything coming at you from everywhere all at once is just too much for an average organization to handle. A great enablement solution will not only help you keep tabs on current and potential sustainability requirements, but also give you guidance on how to be more sustainable, regardless of whether a regulation is enacted or not. Over time, sustainability will increase the longevity of your business and decease your costs. The sooner you increase your utilization of renewable energy and resources, and decrease your usage of finite resources, the better off you will financially be.
Integrated Supply-Centric Portal
An enablement solution PUTS THE SUPPLIER FIRST. Let’s repeat that for clarity. It PUTS THE SUPPLIER FIRST. The problem with every single supplier management solution on the market is that it was designed for the buyer and the supplier was an afterthought. For most solutions, the supplier interface is poor, limited in terms of available functionality, and definitely not single sign on (even if the supplier is also a client of the vendor — in this case they will have one sign-on where they can see all their suppliers, but still have to access a different view for each buyer they serve).

If the goal is to engage with the supplier to help them help you, the platform needs to not only enable the supplier to do that, but be a platform the supplier wants to use. A platform where they have to login to 20 different views to support 20 different buyers is NOT one they want to use. A platform that limits their ability to interact with you; denies them access the same features and capabilities in terms of creation, collaboration, and project management; doesn’t allow them to manage their teams and their workflows on their own; that doesn’t adapt to how they work is NOT only one that they don’t want to use, but also one that does NOT enable them.
The Supplier Enablement Platform should be so good that not only does every supplier want to buy it to manage their full supply base as a buyer, but one that they tell buyers without a good supplier-based supply chain management solution to look at because it supports them. This is where SXM platforms need to go if they want to be true enablement platforms, and the doctor will tell you that, despite all the marketing, he’s yet to see an engagement or an experience platform that does all this and puts the supplier on equal footing with the buyer across the platform and first for enablement. The first platform to truly do this will change the game, and change it in a way that will ultimately benefit the end buyer in the supply chain the most. (And who cares if the end buyer is paying for it at first, that buyer will reap benefits that will be many times the platform cost as their production costs predictably stabilize, the efficiency improves, their quality increases, and their sales go up as a result.)

This concludes our discussion of the D-side, the dark side, because, unfortunately, most Supplier Management (SXM) vendors still aren’t shining a light here and building the next generation capabilities these platforms truly need. A few are starting, but they have miles to go.

Next up, a partial list of SXM companies to look at in Part 20. (All do SIM to some extent. As for the rest of the CORNED QUIP, you will have to do your homework. None are SCORNEDQUIPM.)

Source-to-Pay+ is Extensive (P18) … Time to Break Down the CORNED QUIP of Supplier Management, C-Side

We know records only have A and B sides, but Supplier Management is not flat, it’s a multi-surface convex polyhedral and, as such, it has a C-Side. If today’s cat’s could fly, they would be “flippin’ to the ‘C’ side, finished with the ‘B’ side, nothin’ on the ‘A’ side, so tired of the inside, to the ‘C’ side, to the ‘C’ side“. (Confused? Back in the 80s, it was the case that Cats Can Fly.)

As discussed in Part 16 and Part 17, having identified Supplier Management as the next solution after Spend Analysis, we quickly realized that identifying the right solution would be difficult as supplier management has as many aspects on its own as Source-to-Pay (S2P) has. Not only do we have to decide upon which core capabilities in the CORNED QUIP mash are important to our organization, but we have to make sure that the solution covers the baseline requirements for each capability that is important. Our last two posts reviewed the more “classic” offerings in the SXM space which, as you may have noticed, had one thing in common — they were all internally focussed on supporting the buyer with managing the current supplier base in some aspect.

SIM was collecting the information and, hopefully, providing the SMDM foundations for the buyer’s S2P applications. SRM was managing the relationship for the benefit of the buyer, and while it may include collaborative elements, all were meant to serve the buyer, not the supplier, who would only benefit if the benefit served the buyer. SPM was managing the performance of the supplier using buyer-centric metrics. SCM was ensuring the supplier adhered to government, regulatory, and industry regulations. SQM was about ensuring the supplier met your quality requirements. And, finally, SUM was managing your uncertainty and risk as a buyer, supplier be damned.

And that’s why we need a C-side (and a D-side). First of all, as a buyer, you may not have the right suppliers for your organization. And if this is the case, there’s no point managing them when you should be finding, and managing, other, better, suppliers. Secondly, the best supplier performance results from the best plans and processes, which are those processes best suited to the supplier, and those are usually a result of supplier collaboration, interaction, and suggestion. Plus, relationships grow when both sides grow, and classic SRM solutions do not enable the supplier.

Today we dive into the two (2) primary C-side capabilities, Network (SNM) and Discovery (SDM) management, which are key to building a better base of suppliers (and supply).

Network Management.

We’ll admit that the concept of a “Supplier Network” is not new, as many providers have been claiming to have them for well over a decade, although we’d argue that the “networks” they were selling were not true networks as they were closed, still organized entirely for the buyer’s success, and extremely focussed on a single organization, or collective. It was not a “network” in any sense of the word except it was the word chosen by the marketers to massage their message into one that was hopefully mesmerizing to the marketplace. Network is much more than centralizing a bunch of suppliers in a directory and opening it up to an industry. Much more. And, unlike a decade ago, we’re happy to say that some vendors have decent capabilities as well as decent network sizes.

Open
It’s not a network if it is restricted to the set of suppliers you are currently, actively, doing business with. That’s just a directory. It has to, at least, contain all the suppliers that you could be doing business with (as that’s a key capability for discovery, but note that a network is just a foundation for discovery and not everything you truly need for discovery). It also has to contain all the suppliers your suppliers are doing business with (as that is required for orchestration, a key emerging capability in supplier management). And, most importantly, it must allow new suppliers to join at their pleasure as well as yours. A closed network is not helpful. Plus, you have the foundations for a closed network already in your SIM (even if you don’t realize it).
True Bi-Directional Graph Support
The original “networks” were primarily designed for one-way communication from a buyer to a (potential) supplier. But that’s NOT a network. The definition of a network is a group or system of interconnected people or things that allows for bidirectional communications. That means two way communication! A modern network needs to allow any party to communicate with any other party. Suppliers should be able to find potential buyers as well as potential suppliers to them as well as potential partners who can help with services or even production augmentation.
Extensive Bi-Directional Search Support
The network needs to support extensive search across all fields of all entities and allow any entity to search for any other entity for any purpose of interest. Buyers should be able find suppliers that (claim to) specialize in carbon steel cladded pressure valves with thickness > 100 mm for heat transfer in hot water based heating systems and suppliers should be able to find buyers in the solar power heating industry. Detailed search by products, capabilities, location, and so on.
Anonymous Statistics, Classifications, and Reviews
The network should collect data on how many active relationships there are, how a supplier (and its products) have been classified by buyers, and anonymized reviews on performance and overall ratings. Similarly, it should collect data on how a buyer is classified by suppliers, and anonymized reviews on performance and obligation management of the buyer by (verified) suppliers.
Verification and Trust Support
The network must verify that entities on the network are real, and before reviews are allowed to be posted (and then anonymized into overall reviews and ratings), the other party (that must already be verified on the network), must verify the relationship. The network should require relationships to be disclosed when they begin, and must keep reviews completely private until the relationship is disclosed. To ensure honesty and transparency, the platform should limit access to certain functionality (e.g. ratings, project based collaboration, etc.) until a relationship is confirmed. The network functionality, and specifically the verification functionality, must be designed to engender trust and truthfulness on the network. A network that is not trusted will, ultimately, not be used.

Discovery Management.

Innovation, and even renovation, requires rejuvenation. An organization needs to regularly find new suppliers with new technologies, methodologies, and ideologies in order to constantly improve itself. As a result, discovery is critical. But unless you are part of a supplier network that contains suppliers you aren’t using, you can’t do discovery at all. But, and this is the kicker, no network will contain every supplier as most suppliers won’t join a network until “invited” by the buyer (and then only if the buyer mandates it for the supplier to do business with that buyer), and often the supplier that is missing is the one the buyer needs.

Location, Product, Capability, and Other Targeted Searches
Along with deep filter capability. Most networks support basic searches, but if there are hundreds to thousands of suppliers, a buyer can’t review, and thus can’t invite, them all just to find out that most of the suppliers aren’t (currently) right for the organization, so there is a need to do very precise, targeted, searches to uncover the suppliers that are most likely to be the most relevant to the buying organization today. Deep filters and drill downs on a result, and the ability to define similar or like searches, and filters, using existing top-rated suppliers, products, etc.
Open Search beyond the organization, the community, and the active supply base
If a network is built up only from the suppliers the buyer, or the vendor’s customers, are actively using, that’s not going to contain all the relevant suppliers out there and the likelihood of discovering new suppliers over time is going to quickly trend to zero. If it’s open, and suppliers can join on their own, that’s better in theory, but the reality is that there are so many “directories” and “networks” out there, the supplier is not going to join unless that supplier wants to do business with one of the buyers who only uses that network. As a result, the likelihood of finding a relevant supplier over time, while not zero, is close to zero. A discovery platform has to be constantly scouring business registries and relevant sites to identify new suppliers, collect the data, use various sources to cross validate the supplier’s existence and, if a beneficial owner or official email can be identified, invite the supplier to proactively register, verify, and enhance their profile WITH a sampling of relevant buyers to them on the discovery platform, where they would be presented as potential suppliers.
Proactive web-search and web-site monitoring
Not only should the discovery platform be regularly scouring registries and likely sources for new suppliers, but new website registrations (that might soon be backing registered businesses) and new websites to collect additional relevant data. Also, it’s important to keep the database up to date because you don’t want dead suppliers, which means that registries and websites should be checked at least annually for unused suppliers, and more often for regularly used / contacted suppliers as an out of date website, a significant employee count reduction on LinkedIn, and considerably less activity on social media could indicate the company is winding down or in trouble (well before it is marked as inactive in a registry, which tends to only happen on nonpayment if an official registry, and sometimes doesn’t happen at all in other registries).
(Anonymized) Statistics, Ratings, and Reviews
Anonymized statistics, ratings (even if Y/N for a capability), and reviews such as how often the supplier is selected for a shortlist, reviewed, awarded, and rated is very useful criteria for a buyer who is looking for a supplier that might be more appropriate or less risky. Ratings on skills, customer support, etc. would also be quite useful. Detailed reviews on capability, performance, product quality, and capability are also very useful. Buyers need to know more than just that the supplier exists and provides product X and service Y. They need deeper insight when given a bevy of options but no clear way to differentiate between ten potential suppliers that are new to them.

Also, as you may have guessed by now, the best discovery product is built on a network and two of the best uses for a network are discovery and collaboration. The two go hand-in-hand, because, frankly, the C-Side supports Collaboration.

But we’re not done yet! Come back for Part 19 where we flip it to the D-Side!