Category Archives: Best Practices

How Do We Drive Technological Advances? Part III

In our last two posts, which noted that an organization must master the three T’s in order to excel in Supply Management, and that a classic article in Chief Executive caught SI’s attention, because so few articles focus on the importance of technology to Supply Management success. This classic article was good, as it focussed on the importance of technology for a chief executive, but not great, as it didn’t really provide strategies for driving technological advances (as it promised), just advice that will help someone stay up to date on existing technological advances.

As SI noted in Part II, the key to technological advances is not just awareness, but acquisition and adoption – by all!

So how does an organization translate this awareness into acquisition and adoption?

First it has to acquire. Acquisition is tough, because it requires budget, which is something that the CEO doesn’t want to give and something that the CFO doesn’t want to give up. In order to get an acquisition approved, there has to be a benefit that the CEO or CFO wants. In other words, there has to be a quantifiably realistic ROI, visibility into data or processes that one of these individuals wants, or support for an organizational initiative (such as sustainability, home-sourcing, digitization, etc.) that the executive is championing. Hitting multiple buckets, of course, increases the chances.

The ROI doesn’t necessarily have to be 2X or 3X (although if the up-front price tag is big, or the technology falls into spend analysis, decision optimization, or SRM, it should), but it has to be there, and if it’s less than 2X, it should add a lot of efficiency.

One has to remember that technology tends to fall into two buckets:

  • efficiency
    where it streamlines time-consuming man-power based tactical operations like invoice processing, project time tracking, or RFX-like data collection)
  • effectiveness
    where it advances the capability of the organization and delivers a fantastic ROI (like true spend analytics and real decision optimization that can deliver savings of 10%+ year after year after year)

If the technology falls into the efficiency category, then the ROI is not going to be huge, as its main benefit is to free up manpower for more strategic activities (that should be based on effectiveness oriented technologies) to find new sources of value. So an ROI of 1.5 to 2.0 is fine. But if the technology falls into the effectiveness category, the ROI should be a realistic 3X … otherwise, it’s not really that effective, is it?

Thus, to pass the acquisition threshold, it’s critical the technology can be properly bucketed and a realistic ROI model, and justification therefore, be presented to the CFO and the CEO.

But that’s the easy part. The hard part is the adoption, and, in advance, convincing the sponsors that adoption will happen. Since adoption is highly dependent on adoption en-masse by the workforce, that often has no input into selection, it can be tough to paint a realistic picture of this happening, but you can beat the odds that software will be adopted by choosing carefully (and even convey this during your supplication for silver).

How do you beat the odds? We’ll dive deeper into this in our next post, but some key points to address at a high level are:

  • process
    will the software support the necessary (and not the current) process?
  • platform
    will it integrate with related applications to allow users to effect the proper process
  • polish
    does it look “consumerish” with an interface that users are already familiar with
  • portal
    it must enable collaboration between all parties affected by the activity the software is automating

More to come …

On the Third day of X-Mas (2016)


On the third day of X-Mas
my blogger gave to me:
some Best Practice Posts
some Trend Bashing Posts
and some ranting on stupidity …

Best Practices – What Are They? … are they even what you think?

You Might Be Getting the Basics Right, but That’s Not Enough … you have to do better, much better

Ain’t Nothing Wrong with Being (or acting) White & Nerdy … especially if you want to excel at Supply Management

Informed Decision Making … it’s not what you think

Category Aggregation – How Far Do You Go? … do you dig in the mine the whole day through? Heigh-ho! Heigh-ho! It’s off to …

Platforms are Needed to Accelerate Procurement Agility — But Don’t Overlook the Offline Contributions … or the platform that was supposed to save you could be your downfall

If you want to stand out, don’t answer the top 10 procurement questions!
Part I
Part II

And, for those who don’t want the job, How to Screw Up a Procurement Job Interview and, finally, some

Tips to Advance Your Procurement Career

If AP is the Tax Department, Make Sure They Optimize Tax Recovery!, unless you like gifting various government agencies hard earned dollars you are entitled to! (They don’t mind, but you should.)

Don’t be fooled, there is no SaaS
Part I
Part II

Also, Why You Need MROaaS … and if you don’t know the acronym, you probably need it more than you think.

Should All Service Spend Be Subject to Procurement?

Where Do You Start On Your Supply Management Journey? Inquiring minds should want to know!

Come back tomorrow for the fourth day of X-Mas.

For Most Organizations, Ain’t Nothing Wrong With Being White & Nerdy …

In a recent post over on Procurement World, the procurement dynamo asks if the Kraljic Matrix [is] Actually Becoming Obsolete? He notes that since Kraljic published his classic article 33 years ago, world trade has quadrupled, globalization has exploded, and Procurement is operating in a much faster, bolder, world than it was in 1983.
In this brave new world, Procurement has to manage ethical supply chains and practice good Corporate Social Responsibility, or its CPO could be personally convicted of criminal charges and end up behind bars. (While this is a great place for many sociopathic CEOs, it’s not where ethical and hard working CPOs deserve to be.)

the procurement dynamo notes that, in some ways, the Kraljic matrix still works well. The heart of the Kraljic matrix, segmentation into manageable buckets that can be addressed with consistent strategies, is still valid, but the degree of segmentation needs to be much deeper now than it used to be. However, even the concept of a 3-d Rubik’s cube doesn’t quite capture the level of segmentation required in today’s supply chain.

It used to be supply risk and financial risk was enough. Now there is information risk, sustainability risk, compliance risk, ethical risk. That’s significantly more than a cube can handle. (We’re at a six-dimensional hypercube, and we’re just starting.) That’s why we have to adopt Value Based Sourcing and replace TCO (Total Cost of Ownership) with TVM (Total Value Management), which is the root of all value models.

This is challenging, as the procurement dynamo points out, but not impossible, especially for the White & Nerdy. It doesn’t matter if they look like they are still in the 80’s, insist on riding segways down the hall, or shout blasphemies in Klingon while trying to solve the problem. As long as the problems get solved, which only the IQ and TQ-savvy white & nerdy can do, that’s the way forward.

ScoutRFP – Spreading their Silicon Sunlight from the Western Shore

When we last covered ScoutRFP back in 2014, they were hoping to help laggard Procurement organizations leave the dark ages (Part I and Part II) and enter the modern age. Launching with nothing more than an easy RFP solution (which was a 15 year old solution at the time), ScoutRFP has taken off like a rocket in those organizations that needed an easy, lightweight, solution for everyday events with a price tag they could afford.

The RFP solution was, and still is, 100% SaaS and designed to work with minimal inputs. It guided the user through a minimal workflow to create the RFX, select the suppliers, evaluate the responses, and make a decision. It was very flexible, allowing the user to create the RFX to the level of detail they wanted, or keep it high level (and cut and paste the instructions and questions from Word). And it gave the organization visibility into, and some control of, spend. The CPO could define a hierarchy and see what everyone was doing, the directors could see what their teams were doing, and the buyers would see their events — and all the reports could roll up as well. It was simple, but it hit the suite spot of low complexity and low price for organizations trying to crawl out of the unlit Procurement dungeons.

It was such a hit that, based on this capability and reception alone, ScoutRFP was able to secure $2.75M of funding in 2015 (from NEA, Zapis Capital, and Google Ventures) to extend the platform and raise an additional $9M of funding this summer in a series A funding round. And move west (to San Francisco).

Since then, ScoutRFP has added basic e-Auction capability, project management and savings tracking, Supplier Information Management, and an improved Supplier Portal.

The platform now has the ability to track all requested, current, and upcoming sourcing events and their associated status; categorize the events using any desired organizational categorization scheme; quickly initiate new events (RFX or Auction) from the pipeline; and even auto-include re-sourcing events when contracts are set to expire. Requested events can come from any organizational stakeholder with budget or spending authority, and all spend can be placed under (minimal) management.

In addition to this new project management capability, the savings tracking capability can sum up all savings for a period of interest, in real-time, based upon (negotiated) price differentials and (expected/purchased) volumes, or savings numbers (to date) provided by appropriate Procurement or AP reps. The data is tracked in a drillable fashion and a manager can quickly see how the totals compare across categories, departments, and employees. This allows the manager to ensure that high-value categories get sourced first and that buyers who aren’t delivering value get training (or replaced).

The SIM functionality is basic. It allows the organization to track all supplier information of interest, tag the suppliers with key-phrases of interest (for quick selection by category capability, geography, performance, etc.), and build lists for quick selection in sourcing events. There’s no scorecarding or performance monitoring, but it can be used as a supplier master and it’s easy to get data in as supplier data can be loaded from existing platforms, and updated data can be pushed back out to existing platforms, using the API. And the platform makes it easy to track supplier activity — events they participated in, questions they asked, bids they made, and so on.

In the current version of the platform, suppliers can have their own portal where all of the bids they have been invited to by all of their customers are accessible through a single log in, or, if the supplier prefers [or customer(s) demand(s)], they can have a separate portal for each customer. The suppliers also have the same collaboration features available to the buyers and can invite their peers to collaborate on bids and survey responses.

The system is shaping up nicely and for an in-depth dive on ScoutRFP, and the platform, including its strenghts and weaknesses, see the recent Pro series [membership required] over on Spend Matters (Part I, Part II, and Part III) [membership required] by the doctor and the prophet.

Virtual Procurement Centers of Excellence: The Next Level of Complex Direct Procurement

We have already discussed Value-Based Sourcing in Complex Direct Supply Chains and how it can generate an ROI well beyond what cost-savings focussed Procurement can generate on its own. We also indicated that a key requirement of success for value-based sourcing was a platform designed for complex direct procurement, and outlined the basic requirements for such in previous posts.

However, the right platform not only allows Supply Management to extract more value from every event than it would otherwise, but, when properly implemented, also provides the foundation for a Virtual Procurement Center of Excellence — a VP-COE if you will. A VP-COE is the next phase of Procurement Evolution for leading Procurement organizations that have evolved from decrentralized models through centralized and center-led models but which now need another evolutionary transformation to excel in today’s increasingly sophisticated global supply chains.

Today’s leading Procurement organizations are center-led. These Centers-of-Excellence are focussed on the identification of appropriate supply chain strategies, strategic categories, best practices, and knowledge sharing and often leave individual buys and tactical execution to the individual units in an effort to get the best of both worlds.

These centers of excellence typically build cross-functional teams to tackle strategic categories that represent all of the key divisions and business units, allow for the creation of flexible supply chain processes and commodity strategies through collaboration, and find ways to fully leverage strategic category spend across the enterprise. They, theoretically, give the organization the best of both worlds and many organizations that employ this model have evolved to be leading Procurement organizations, often recognized in the Hackett Group Top 8%. But is this as good as it gets?

Not even close. The view painted by consulting organizations offering to transform your Procurement organization into a COE is one shared through rose coloured glasses. First of all only high dollar “visible” strategic categories will make the cut due to the limited manpower and additional time required to manage global communications and project teams. A lot of spend will go unmanaged, and a lot of opportunities left untapped. This does not sound like the definition of a true center of excellence to us. Does it sound like a true center of excellence to you?

The long and short of it is, in order to get all spend under appropriate management in a large, distributed, global organization, a virtual procurement center of excellence is required.

So what, precisely, is it and what, precisely, do you need to enable it? Good Questions! And you will find the answers in Sourcing Innovation’s latest white paper The Benefits of a Virtual Procurement Center of Excellence for Complex Direct Procurement, sponsored by Pool4Tool. Download Now! [registration required]