Category Archives: contract management

Promena’s Upgraded Platform Packs a Rich Caffeinated Turkish Punch

Promena is a two-decades old company (founded in 2001) that has been offering e-Sourcing (and, more recently, source-to-contract) solutions to Turkish enterprises to major enterprises in Türkiye that you likely never heard off on this side of the world until their coverage over on Spend Matters in 2019 (Vendor Analysis Part I and Part II by Nick Heinzmann, Pro/ContentHub subscription required), if you’ve heard of them at all.

However, they are another mid-market source-to-contract (with some e-Procurement capability) that you should be aware of, as they are a two-decade old company with an annual transaction volume nearing 3 Billion that is now expanding throughout the European market and into North America (mainly through partners for integration and services). The solution is solid, time-tested, modular, multi-lingual (13 languages at the present time), being improved annually (with new capabilities in development for late Q4 and 2024 release), and offered at an affordable price-point for mid-markets. In this article, we will overview the main components of their solution and highlights. (We’ll refer you back to Nick Heinzmann’s Vendor Analysis on Spend Matters for a deeper dive as well as Xavier Olivera’s 2022 Update, especially if you want analyst commentary. Note that a Pro/ContentHub subscription will be required for all of these.)

The typical entry point into Promena for most buyers is e-Sourcing project creation, which allows buyers to define an e-Sourcing project (with basic meta-data like name, department/child company, owner, description, etc.), define the RFX and Auction events that will constitute that project (so you’re not mixing categories, creating projects where only a subset of suppliers can bid on each item or lot, and balancing the need for detailed RFX events for strategic or high value products or services with low-value/non-strategic products or services that can be sourced through a quick-hit auction), define the project milestones and project tasks, and create the team (which will allow different team members to be responsible for sub-events, milestones or tasks). Overarching documents can also be attached at the project level. Note that the platform also supports a Gantt chart view of a project if the milestones and tasks are given start and end dates and tasks associated with the milestones.

RFX functionality is more-or-less what you would expect from a mid-market sourcing platform. You can attach any RFI/RFP/Qualification survey forms that you want the suppliers to fill out (that can be constructed in the internal form builder), select the products from the internal product management functionality (which we’ll cover later) or define new product/service requirements free-form, define the quantity, select the suppliers who you want to invite (from the built in supplier management functionality, more on this later), and immediately send it off. Once the bids are returned, the associated team members can score each supplier-product or supplier-service combination based on the qualification surveys and then see the total price for each supplier-product or supplier-service combination, with the lowest price for each pairing highlighted. In addition, it will show you the lowest bid by supplier across all products/services as well as the savings if you cherry pick the lowest bid for each product or service. Also, the user can, at any time, pop up a complete bid change history for every supplier, which is incredibly useful if you’re doing a multi-round RFX and/or want to see the drop between current system price and the new bid price. Note that, currently, it only supports unit prices (and calculates total prices based on demand), but the 2024 roadmap includes the ability to breakdown the unit price by primary component type (item, freight, interim storage, waste, etc.).

e-Auctions are similarly easy to set up. Simply define the products / services, indicate the quantities, define the auction parameters (starting prices, weightings, start and end times, bid requirements [equal allowed, min/max changes, auto extension, etc.]), invite the suppliers … and go! As with all auction tools, you can see the bids change (graphically) in real time, and suppliers can see where they stand by rank, or, if you so choose, rank and distance to next competitor. It’s important to note that they support Dutch as well as English/standard reverse auctions as not all platforms support Dutch auctions.

Once RFX events and auctions are complete, awards can be defined in the system through the creation of award document. These award documents can then be used to kick off contract creation. In the current release, contract management is foundational and is essentially a searchable electronic filing cabinet that stores meta-data indexed executed contracts with complete pricing information (extracted from the award documents), but a new version with negotiation support is currently in beta and final (security) testing and should be released by year end.

For every contract, you can define system-wide foundational meta-data fields, additional fields that may be specific to that contract, or the product/service category the contract falls under, parties (and who signed on behalf), associated documents and addendums, add it to a group, and break out the price for every product or service in the contract for easy access.

The next major area of the system is supplier management. Supplier Management in Promena is essentially information, relationship, and baseline performance management. Supplier management starts with basic profile creation (company details, HQ address, and third party identification numbers) and onboarding. Onboarding asks a supplier to identify the products they provide, their banking information (for payment), and additional information (through buyer defined forms) specific to the organization’s need (which could be around ESG, product reliability metrics, etc.). Individual forms can be assigned to different individuals in the organization to review and approve (as the platform allows for approval flows across each major platform area, which will be discussed later), and suppliers onboarded (and approved) as soon as all information is completed and reviewed. Once a supplier is onboarded, it’s quick and easy to access all of this information and maintain it going forward.

One differentiating feature of the supplier information management module is that the supplier suitability score for specific products and services is continually assessed through supplier responses to the buyer’s form-based questions using the company’s pre-defined weighted criteria. This score, while providing insights to the buyer during the onboarding process, is kept continuously updated through subsequent sourcing events, contracts and addendums, and development projects.

Moving on to the relationship management, that is primarily accomplished through Action Management, where a user can make a CAPA (Corrective Action/Preventive Action) request, assign an owner/reviewer, send the request to the supplier, and then evaluate and either accept or reject the response from the supplier. A request consists of defining information (name, reason, category, supplier, product, required completion date), a detailed overview of the problem and the resolution needed, any associated (e-)documentation (which could consist of multimedia files), and the log of all accesses/activity on the action. It’s also really easy to search for actions, which can be queried by id, name, status, category, supplier, assigned supplier rep, assigned team member, reason (which is limited to a standard list, which the buying organization can configure in the company settings upon implementation), date range, and/or success status. It’s also easy to use this capability to find all actions associated with a supplier, product, or individual, by status.

Moving on to performance management, it’s specifically survey and KPI-based performance management. At the present time, they don’t integrate with third party data feeds to automatically bring in data that can be used to automatically compute KPIs such as on time delivery / average delivery time, average response time, defect rate (based on returns), etc. Thus, if you want this data included in a supplier performance scorecard, you have to define the KPI you want and the organization user who is going to provide it. But once the KPIs are defined, the relevant organizational users can be identified to either fill out (or validate) the data (if you are asking the supplier to provide metrics) and then you can see a summary by supplier in the performance management area or see a summary across suppliers / products / categories in the reporting section (which will be addressed later). Note that evaluations, and KPIs, can be defined for arbitrary periods, which means that you can collect and track KPIs over time (and the ability to display and analyze those trends in the reporting section is on the roadmap for 2024).

The platform also contains a section for ESG Management, but it’s just a named section for collecting surveys and centralizing KPIs related to ESG. It doesn’t specifically address Scope 2/3 carbon, integrate with third party data feeds (with audited data), or provide ESG best practices. In other words, it doesn’t contain any unique capabilities. However, for many firms that need to track ESG data from suppliers / for their associated products, it’s great to have a separate named section. Plus, Promena is in the process of integrating with third-party data providers to enhance data-driven decision-making and when those integrations are launched in 2024, the data will appear in this section (assuming the buyer licenses the appropriate data subscriptions).

Moving on to reporting, while the platform does not contain a full self-serve reporting engine or spend analysis capability, it does have a number of built-in drill-down dashboard reports built in Qlik Sense that provide the users with a lot of information. Standard reports (and more can be built by Promena or their partners using services) include Project Reports (across sourcing events) and Event (RFX/e-Auctions) reports, SRM reports (on supplier statistics, participation and performance), and Contract Reports. There are also reports on POs (for the purchase order capability we’ll define soon), and the ability to drill down to REQs (data related to individual purchase requests, which we’ll discuss later). When we say Project or Event reports, we mean that each of these groups contain one or more sub-reports (pages) that a user can drill into. For events, this includes category analysis, participant analysis, auction analysis, RFQ analysis, and authorized person analysis. Similar breakdowns exist for other reporting areas.

This more-or-less completes coverage of their Source-to-Contract capability, with the exception of configuration settings (that will be discussed later), so now we will move onto e-Procurement.

The first capability we will overview is the product management capability of the Promena platform. Within the platform, the buying organization can define its own category hierarchy, and once this is defined, an organization can define the products and services it needs (and buys) across the category hierarchy. Products can have all necessary meta data information (name, id, units, dimensions, etc.) along with associated prices by supplier, which can be defined for individual time frames (so if a contract has price escalation or de-escalation, the price table can be adequately captured), and images. The latter is important because the platform also supports catalogs.

The catalog functionality makes it easy for organizational end-users to purchase standard, approved, on-contract, products and services they need to do their daily jobs (such as office supplies, MRO, and repair services). The catalog functionality is standard and straight forward. A user can select a sub-catalog by supplier or category or simply search the integrated catalog (maintained by the buying department, it is not a supplier maintained catalog) by description or product number/code. When the user finds what they want, they can define a quantity and add it to a cart. Once they’ve found everything they want, they can “checkout” which will automatically create a PO and send it to the associated supplier(s) by default. Alternatively, if they are requesting a large quantity, they can create a REQuistion and send it to the supplier(s) who offer the product in hopes of getting a better price quote. When the REQuisition is returned, if the user accepts, it can be converted to a Purchase Order.

Purchase orders complete Promena’s e-Procurement capability. Purchase orders basically consist of order information against a catalog item, REQ, sourcing event (RFX, e-Auction) award, or contract and allow an organization to track orders, and spend, in the platform. This is useful because, for every category, the organization can define a budget, the platform can track PO-based spend against that budget, and prevent a PO from being issued (using rule configurations) without approval if the budget would be exceeded.

The final capability of the platform is the (self-service) configuration for user and platform management. We’ll start with platform management. The buying organization administrator(s) can define general company information, approved users, locations (for shipments from POs), organizational structure, default organizational currencies (which can be associated with different levels of the organization), units of measures (metric system used), standard organizational payment terms (for awards and POs), inco terms, any additional terms to be included in POs (such as delivery, invoice requirements, etc.), account codes for products and services, their category hierarchy, their cost centers, event settings, supplier search/internal discovery settings, and approval flows (for award creation from RFXs and e-Auctions, supplier onboarding, contracts, actions, REQs, and Purchase Orders). User definition is simply the user, organizational profile, and their platform roles (and thus permissions). Finally, the company settings area displays the Promena platform license the organization has acquired and when it renews (or expires).

Finally, while this is not platform related, we should also point out that Promena offers on-demand professional services. While the buyer can use the platform as a self-service solution, they can engage the Promena Account team to take over and manage end-to end sourcing activities on their behalf at any time. Their account teams currently manage more than 5,000 sourcing activities a year.

While you may not find anything truly unique in the Promena platform if you compare it to high end suites (which come with high-end seven figure price tags), it’s a very solid platform for mid-market enterprises and one where the entirety of the source-to-pay workflow that is supported is tightly integrated, easy to use, and affordably priced (and supported, with 10 global partners for integration and support services). Given that there are only a few such platforms out there (due to all the M&A activity in the later part of the teens), Promena’s global expansion is definitely a welcome addition to the marketplace.

MarketDojo has stepped up it’s Mid-Market Game!

The last time we covered MarketDojo (which recently had a majority stake in the company acquired by Esker) was in 2016 where we noted that marketdojo opens the dojo to suppliers as well after introducing you to MarketDojo in 2014 back when it was a simple RFX/e-Auction platform with some category intelligence and SIM (in our posts on how you could walk your own way and plan your own path). Since then, they have improved the platform greatly. For details on some of these improvements, we recommend their 2016 Vendor Analysis on Spend Matters by Jason Busch (Part I, Part II, and Part III) and their 2020 Vendor Analysis on Spend Matters by Magnus Bergfors (Part I, Part II, and Part III) [Pro or ContentHub subscription required].

Today, we’re going to quickly overview the primary capabilities of the platform, and then focus in on the new and advanced capabilities added since our last review.

MarketDojo is primarily an e-Sourcing platform with foundational supplier management (information and relationship capabilities) and contract tracking (baseline governance). (They still have their categorydojo solution, where they identify current market opportunities that you may want to pursue, but that isn’t the focus of this piece, so we will refer you back to previous articles for details on that functionality.)

e-Sourcing primarily consists of (multi-round) RFX capability, lot-based e-Auctions, and quick quotes (for quick one-time buys/quotes where full sourcing events are not needed). e-RFX creation is quick and easy — define some basic meta-data under settings, add any necessary documents, create the specific questionnaires and additional supplier data collection forms, define the items (which can be lotted in RFX as well as Auctions), add the collaborators (that can be given full access or limited view access), and even invite new suppliers (which can be onboarded later if the responses to the survey forms look good).

The major improvements and/or differentiation since we covered them last is in the


event instantiation
they now support templates, with a library of out-of-the-box templates (for the categories they track in categorydojo and then some) for RFX and e-Auction as well as custom templates built by the organization
survey creation
(in beta) you can now use Bard to identify common questions / characteristics of a category or product/service and then edit the form accordingly [which is a decent use of NLP, gives you some good ideas you might miss but keeps you, the intelligent human, in full control]
lots
lots now support transformational bids (where bids can be marked up by a percentage or a fixed amount to implement switching costs or penalties for reduced quality/utilization rations) as well as bids in DPD (Dynamic Parcel Distribution), FOB (Free on Board), and EXW (ExWorks).
bids
bids can defined as a complex formula over an arbitrary number of bid components and they support a brand new formula builder
collaborators
collaborators weren’t part of the initial solution, and they didn’t have tiered access
bid ranking
easily see the top bid for every item in every lot in a default lowest cost award scenario and easily dive in to see all the bids for every item of every lot in rank order
bid component ranking
see how every bid component ranks against all supplier bids for an item; this helps you identify the cost components that a #2 or #3 supplier (that you want to do business with) is not competitive on (such as freight, overhead, etc.), which might allow you to work with the supplier to get those cost components down to make their bid more competitive
dynamic RFX round creation
you can easily create a new round and control which suppliers and collaborators from the current round get invited to a new round

And, of course, the quick-quote functionality is brand new. These are super simple. All that a requester has to specify is what do they want, when do they want it by, what requirements must be satisfied, what are the payment terms, and which (approved) suppliers should it go out to and off the quote request can go. They can also attach spec documents, add special instructions, and request physical copies, but that’s not necessary. And if they want a certain currency or quotes in a certain unit of measure, that can also be specified. When the quotes come back, they’ll see an easy-to-understand quote summary and can choose one for award. Easy-peasy and, most importantly, the spend is captured and can be managed.

The supplier information management primarily covers the onboarding of new suppliers, to ensure that the appropriate information is captured, and then supports ongoing maintenance of the data. Onboarding is quite simple. A buyer defines the basic supplier information (name and corporate e-mail address), adds any mandatory and optional tags (such as DPST Tier, ESG, Minority, specialized category, etc.), selects the questionnaires they want the supplier to answer (of which a default set will be automatically selected upon tag definition), identifies the business users, either by role or by name, that will approve the forms as the supplier returns them, and then the corporate/contact email the onboarding request will be sent to (and the language the request should be sent in — it’s relevant to note that MarketDojo now supports 23 languages in its platform, but if you want the forms in 23 languages, someone will need to translate them, unless you are using MarketDojo out-of-the-box forms where those forms have already been translated).

The relationship management solution is straight-forward as well and is primarily designed to track supplier contacts and organizational users, associated sourcing events (that they participated in, not just awards), onboarding status (by requested survey/form) and associated surveys, contracts, identified innovation opportunities, and activities. Activities have a type (such as call, task, objective, audit, review), an assigned organizational user who is responsible for ensuring the supplier completes the activity, associated documents, organizational (and user) notes, and possibly even an (optional) associated hierarchy of sub-tasks.

Reporting has been updated and is currently supported in PowerBI through MarketDojo’s OpenAPI (and it is also supported by MarketDojos partner SpendKey) and the default built in reporting suite is pretty decent for a Sourcing platform with click-through dashboards on contracts, sourcing events, suppliers, overall spend, spend by category, spend by supplier, spend by country, spend distribution, PO (vs non-PO) Analysis, Compliance, and even Supply Chain Geographic Coverage. While not a full-fledged analytics platform by any stretch of the imagination, it’s enough to give buyers some insights as to where they may want to begin their analytics efforts if they are looking to increase savings, increase diversity, increase compliance, or decrease risk.

Contract management is baseline. It’s basically a searchable meta-data index of contracts, which can be associated with suppliers. However, for smaller mid-size organizations, that might be all they need.

MarketDojo is a great mid-market SIM-powered sourcing platform at an affordable mid-market price point.

SourceDogg dogs the Sourcing Process so You Don’t Have To!

SourceDogg was founded over a decade ago (in 2009 in Ireland, with the UK subsidiary opening a decade ago in 2013) by founders from the construction industry who decided they just didn’t have any good tools for sourcing products and managing suppliers. Since then, it has evolved into a full indirect Source-to-Contract application for requesting (intake support) and sourcing products (and services) (through traditional RFX and e-Auction), managing suppliers (with information, relationship, compliance, performance, and development support), and managing contracts for customers across a wide range of industries, including a strong customer base in manufacturing, pharma / health-care, and CPG/F&B.

Like the majority of modern Source-to-Contract applications, it is a fully SaaS-based product that can also be integrated with your organization’s ERP to pull supplier and product data, especially on initial product deployment. And, like the majority of modern Source-to-Contract applications, it has a fully functional Supplier Portal that allows suppliers to fully interact with all of the sourcing, management, and contracting processes employed by the organization.

The process starts with intake, where an organizational user can request a product or request a supplier. When a user needs a new product, they can go to the web portal and select the appropriate option (by clicking on the appropriate tile) that lets them do a general product request or a request in particular categories defined by the organization. When they make a general request, the application walks them through the process (using wizard-like functionality) to collect the appropriate information on category, volume, expected cost, requirements, etc. so that a buyer can kick off the appropriate sourcing process. Category specific requests function similarly, but are designed to minimize the process steps and information required for commonly requested categories. Now, if you’re using our core requirements for intake, as defined in Part 37 of our Source-to-Pay+ series Investigating Intake – Diving in to the Details, it’s not quite a full intake platform as there’s no budget tracking and process visibility (and in-process messaging depends on whether or not the requester is made a member of the sourcing event team), but it’s better than what many traditional sourcing platforms offer with respect to intake (if they even offer intake at all). Plus, SourceDogg is continually improving their product and we do expect their intake capabilities will continue to improve over time.

From intake, we move onto sourcing which supports full, multi-round, e-RFX and e-Auction with all of the typical functionality that you expect. One thing that stands out is their ability to include matrices (and built-in formulas) in not only the quotation fields, but all forms and elements of the process, allowing the organization to collect matrix options for product/packaging configurations, team configurations (on services), compliance/certification options, and so on.

As expected, setting up an event in SourceDogg is super easy. You define the typical sourcing event meta data (name, description, products, team, internal budget estimates, scoring system, etc.), create the content (forms and bid matrices), invite the suppliers (who need to already be defined/onboard in the core supplier management module), create the FAQ (which can be extended as needed during the process), and release it into the wild. (Suppliers can then login to their portal upon receiving the notification and fill it out within the designated window. If the bid sheets or data collection forms are complex, they can be output or collected using every Purchaser’s favourite tool and format, Microsoft Excel.) When the event concludes, the responses can be viewed, various side-by-side reports generated (and output to multiple standard formats including DOCX, PDF, and, of course, Microsoft Excel), responses scored, and final decision(s) recorded in the tool (and an email auto-generated and sent to the winning supplier[s] if desired). There is also the ability to capture notes at a question level (by individual who reviewed/scored the response), the supplier level, and the project level.

e-Auctions are setup similarly, and, as expected, run for a much shorter time. The degree of feedback presented to the suppliers depends on the configuration. Upon event completion, the platform automatically generates reports ranking the bidders on cost or, if the event was preceded by an RFI/RFP with a qualitative component, on a weighted score. (And, of course, the buyer can always go in and view the complete bid history.) Note that the Q&A feature can be used to post updates during the auction to all suppliers, a supplier group associated with a lot, or just a specific supplier who asked a question or obviously needs guidance.

Supplier Management consists of four primary modules: Supplier (Information) Management (SIM), Supplier Relationship Management (SRM), Supplier Performance Management (SPM), and Action Plans.

Let’s start with Supplier (Information) Management. The system tracks all the core supplier meta-data you would expect as well as all associated contacts, product data sheets, RFX and other data from specific collection effort (from SRM, SPM, or Development Actions) responses, certifications, contracts (including full version history support), other relevant documents (the organization wishes to track), and any critical notes. It also maintains a full-history of interaction with the supplier that can be viewed and queried as well as allowing the supplier to be tagged using category and location tags (that can be defined by both the buyer and supplier.

The Supplier Relationship Management module allows the organization to define supplier reviews, track the results of those reviews, and define actions to be completed by the supplier and followed up on by buyer personnel when the supplier indicates the action has been taken. It’s nothing fancy, but it gets the job done efficiently, and that’s what’s important.

The Supplier Performance Management module allows the organization to design and track KPIs and supplier scorecards in support of processes to measure, analyze and manage supplier performance. The scorecards can be simple or complex across a wide range of metrics and categories. It really depends on what data the organization has and is willing to collect (through surveys) or enter into the application. (At present, it does not integrate with risk/etc. data feeds out of the box, but if these feeds are pushed into your ERP and associated with suppliers and products, that data can be pulled in.) Creating a Performance Review is easy. Once simply creates an instance, and a record for every area, sub-area, and rating that one wants to record. The review can then be sent to as many team members as you want and they can be limited to rating specific areas, sub-areas, or records, as appropriate.

The Action Plans module allows for the creation of specific improvement plans and non-conformance reports for a supplier that needs to improve generally or specifically on one product. The Action Plan modules supports multiple default plans (called forms) that can be used to quickly an initiate a new action plan. The forms can be used as is or modified to the appropriate situation, and the monitoring team can include as many organizational personnel as required. Once a supplier responds, the team can then accept or reject the response, and once all responses have been accepted, the response can be approved and archived. If performance slips or the issue comes up again, an action plan can also be “reactivated” and parts, or all, of the plan kicked-off again.

Layered on top of all of the supplier related modules is a supplier visualization dashboard for non-procurement organizational users and executives that make it really easy to get statistics on organizational suppliers (total, approved, by-size [SME, MM, Large], by type [Product, Services, Subcontractor]) and filter down by category & sub-category, status, and other key identifiers as well as see the (subset of) suppliers on a map. From this primary visualization screen, the user can jump into individual supplier records (with key performance dashboards also displayed)

The contracts module, which revolves around contract governance, is very straight-forward and easy to use as well. Contracts can be grouped by area for easy human location, searched on key metadata and tags, and viewed within the tool. The default meta data is fairly extensive (and can be extended by the organization on implementation) and should capture all of the key information necessary to locate a contract, track expiry, track key terms, and track key clauses. While there’s nothing fancy about the contracts module, we want to re-iterate just how straight-forward it is for an average user to add a contract (addendum or updated version), define or edit the metadata, and locate any contract in the system quickly and easily. Some of the more advanced CLM tools focussed around negotiation support or analytics lose sight of the fact that the average person who needs to retrieve a contract is not a Procurement or Legal or Technology super user and just need a system that follows the KISS principle.

The entire suite also contains a fully modifiable tile-based entry dashboard that allows an average user to define the parts of the application they use, as well as any customized intake forms or application modules, organize them by frequency of access, and see which modules have updated information or new actions assigned to them.

This fully modifiable tile-based entry dashboard with alerts is also the first thing a supplier sees when they login to the platform (and, to complete the tri-fecta, a non-Procurement organizational stakeholder who needs to make a Procurement request, review an RFX, or participate in a supplier development initiative). While simplistic, this is a key feature as you can ensure that supplier or organizational users are not overwhelmed with over-crowded dashboards or 40 menu items they will never use (and likely never understand).

The application is also highly configurable by the client admin who can define the organizational profile and branding, the settings, the certifications it requires from all its suppliers, data-sheet categories, security settings, users and user categories, guides (which can also have an access tile on a main dashboard), default fields for core system objects (requisitions, auctions, supplier profiles, contracts, action plan forms, etc.), supplier onboarding workflow, tags and tag groups, SourceDogg Connect (for ERP and/or organizational data feed pulls), etc. Plus, the SourceDogg team can make additional customizations across the product during implementation and support initial data loads as required.

Finally, they have extensive support guides and courses on their customer web site to help you extract maximum value from the platform. (And those constant iOS/Android action required alerts will dog you through the process of getting things done.) If you’re a SME or MM company looking for a modern best-of-breed S2C (Source-to-Contract) suite (especially in construction/facilities, manufacturing, pharma / health, O&G, CPG, and F&B) to get the job done, SourceDogg is a platform we suggest that you check out.

Prices too High? Take a Leaf from the Green Cabbage!

Green Cabbage, formerly known as PAAS Advisors (which stood for Product Analysis and Strategy), is an interesting spend analytics offering as it is both a product and a service advisory practice. The platform provides unequalled insights into the indirect technology, contingent workforce, and clinical categories; deep invoice analytics down to the line item; market intelligence theses (MITs) on very specific indirect technology, contingent workforce, or clinical sub (sub) categories that are far deeper and fresher than any peers; and a third party negotiation (support) service (where they will negotiate at the Senior Executive/C-Suite level) to help you get the best contracts possible on key high-value contracts. That’s a lot to digest, but we’ll tackle each point in this write up.

Let’s break down the “practice and platform” part first, starting with their pricing model. Their pricing model is a variation of standard percentage of savings model — it’s a subscription model with a savings target and a guaranteed savings of at least 3X, which is better than just a straight cut of savings for you. If they don’t help you hit the savings target they promise, you will get a discount, or an extension to your subscription, but if you blow way, way, past the target (like many of their clients do), instead of paying more than 3X what you would have otherwise have paid through pre-negotiating a fixed fee for unlimited use of the platform, you pay the pre-negotiated subscription fee.

It’s important to understand their pricing model, as it drives the unique approach they take in their practice, which is designed to deliver savings to the clients that engage them for software and services as fast as possible. Most spend analysis companies start by attempting to load, cleanse, classify, and enrich all of an organization’s spend data before attempting to do any analysis or identify any savings opportunities. This can take weeks or months, which means its weeks or months before the first opportunity is identified. To allow them to start pursuing, and capturing, opportunities in just a few weeks, Green Cabbage starts by loading all of an organization’s contracts, starting with the Indirect Technology Human Capital, and Clinical Supply contracts, because the most immediate opportunities are where contracts are needed ASAP (because the organization allowed them to expire) or in the short term (as they are coming up for renewal), and in those categories where Green Cabbage are experts in finding cost reductions quickly.

From just the contracts, using their deep community intelligence provider benchmarks and market knowledge, they can identify the best opportunities to go after immediately in indirect technology, contingent workforce, and clinical supply categories. They can even negotiate on behalf of the client and often get savings better than their client would on their own due to their deep domain knowledge and years of experience analyzing and negotiating in these categories, usually with senior executives in the supplier organizations.

Once the contracts are loaded, only then will Green Cabbage begin to load and classify all of the organization’s spend data into their One Workspace Spend Analysis platform, which can be provided to them as flat file exports or loaded through an API. The organization can define their own categories and Green Cabbage will map the organizational spend to those categories. Once the spend has been loaded into One Workspace, the organization can build some basic spend reports to do some basic spend analysis on their own, export the clean categorized data to Excel files for local spend analysis, or use the customized workspaces with deep pre-built custom dashboards for Indirect Tech, Human Capital and Clinicals.

The Indirect Tech module is designed to help a buyer identify the current and upcoming projects based upon expired and expiring contracts that need to be renewed to support their organization. The main dashboard shows the buyer the YTD savings, the upcoming renewals by contract, the top suppliers by spend, key category metrics, and the primary actions that can be taken (such as upload a contract or request a MIT). From here, the buyer can click into the suppliers dashboard or straight to an indirect technology supplier dashboard that summarizes key metrics (last year of spend, lifetime spend, estimated spend this year, next key [contract] date, relationship length, agreement gaps, etc.), contracts, and visual timelines. From there, the buyer can click into a contract and see associated details or kick off a project.

In addition to the supplier dashboards, there are also spend analysis, renewal, project, and MIT dashboards. The spend analysis dashboard allows the buyer to create custom reports to slice the data by different dimensions. The renewals dashboard in the Indirect Tech Module summarizes the status of contracts coming up for renewal (queued, in review, out for sourcing, terminating, etc.) as well as the category breakdowns, spend by stage, and timeline summaries. The projects dashboard allows contract renewal projects to be created, assigned, and tracked while providing a summary view of all current projects. It also supports savings tracking by agreement. From a project, the buyer can click into the renewal details and access the current (draft) version of the contract for review, the reviewers, see any notes or documents they uploaded, and the activity log.

Finally, the MIT — Market Intelligence Thesis — dashboard allows the buyer to quickly access the completed MITs, month-over-month and year-over-year savings from projects based on the MITs, and key MIT metrics (in process, completed, estimated savings available, % discount from baseline, etc.). The Green Cabbage Market Intelligence Thesis is much more than just a benchmark, it’s a detailed sub-category analysis on a specific product or service of 1 to 2 pages done in near-real time by expert advisors that augments the benchmark data with deep vendor insights into the SKUs being purchased, market conditions, and negotiation strategy. The MIT is offered at three different levels:

  • lightweight: basic MIT as described above
  • comprehensive: lightweight MIT as well as a detailed analysis of standard/available terms & conditions
  • competitive: competitive MIT as well as a detailed analysis of top 3 competitors across similar SKUs and similar terms and conditions, with appropriate negotiation strategies and expected savings under different conditions

Unlike some providers which simply do this every quarter (Denali, SpendHQ, etc.) and provide this as a reporting service, or others that do fully automated real-time augmented benchmark production based on current data, trends, and standard practices based on the trends and current market conditions, Green Cabbage does a custom, semi-manual, MIT upon request within three (3) business days, and usually within one (1) business day, on every request to make sure the client always has the most up-to-date information appropriate to that client’s situation. They can do this because their platform automates the benchmark computations and their advisors are experts in the indirect technology and human capital categories and are analyzing and negotiating in the categories on a daily basis. As such, their analysts can turn around a custom analysis specific to a client’s situation in an hour or two.

However, as per our intro, Indirect Tech is not the only area they go deep. They also go deep in contingent workforce/staffing agency in their Human Capital module that more-or-less mirrors the Indirect Tech module with a main dashboard and dashboards on contingent workforce suppliers, human capital spend analysis, renewals, projects, and MITs. The main dashboard summarizes savings to date, percentage from baseline, forecasted spend (vs. actual for historical), top agency relationships, expiring contracts, and key metrics. The other dashboards are similar in purpose to Indirect Tech, but customized to Human Capital.

The main difference is in the MITs, where a contract owner / project owner can benchmark as many positions as they want in a sub-category or category for a given provider (should they be looking to renegotiate) or a small set of providers (should they be looking for true market intelligence or looking to negotiate with multiple providers and trying to figure out how to best split demand). The benchmarks are similar, wth all the benchmark data (which shows the low/medium/high averages, the service locations, the expected savings at each level) auto-generated. The only exception is the additional market/negotiation notes at the position level that is manually generated on top of the basic thesis information. Note that there is a limit to the number of positions if you want the guaranteed turnaround time, but if they have a few extra days, they have done detailed benchmarks of over 1,500 positions in the past, and with their deep insights, expertise, and negotiation skills obtained savings percentages typically only seen by providers who offer deep multi-level decision optimization across multiple national and regional contingent workforce providers. (We’re talking 30% range in some cases.)

(When you have deep benchmark data and powerful spend analytics, you can quickly divide contingent workforce needs among the providers best suited to offer those positions at a lower cost, use this data for fact-based volume-based negotiation, and shave off almost as many points as the best optimization engines without any mathematical modelling whatsoever, and not have to worry about if the split between the providers is one you are comfortable with.)

Other key features of the platform include:

  • Clinicals: which is their clinical supplies spend analysis module that is similar to their Human Capital Module (except the SKUs are clinical suppliers and not contingent workforce positions)
  • GC Legal: which maintains a standard set of Terms and Conditions clauses that specify exactly what different Ts and Cs means to the client (and helps the analysts do custom MITs and negotiation projects)
  • SKU Search: that allows the client to search for particular SKUs across their suppliers and contracts
  • Outside Data: that allows them to import additional data to augment their spend from third party products, with out-of-the-box integration options for a number of indirect tech (SalesForce, etc.) and contingent workforce (ServiceNow, etc.) providers
  • Invari: their invoices platform
  • End-to-End Security: all MITs, which are often based on organizational contracts, are done through the platform, where data is fully encrypted both in transit and at rest, and not through e-mail, FTP, or other unsafe data transmission methods employed by some other service/advisory firms

Let’s talk about Invari now. This is an analytics backed invoice management platform that allows an organization to upload, manage, and analyze invoices in real time. While it can support any category and supplier, it is designed to support their technology, human capital, and clinical supply categories and benchmarking in particular. When purchased, they request at least 3 months of invoices for all of your providers, and will accept up to 3 years of history if available in order to get enough invoices to allow them to train a custom model for every single provider so that, when an invoice is uploaded, it can be automatically parsed at least 95% of the time for immediate availability. Because models are customized per supplier per client, their system detects any issues and when the invoice cannot be parsed or key information cannot be found. When this happens, the invoice processing system kicks the invoice out to a manual processor who will fill in the missing information in under 3 hours and then update/retrain the model to prevent the same error from happening again.

In addition to allowing invoices to be immediately available for management and analytics in the future, these detailed models also allow the system to build up invoice profiles by supplier and the system can detect when an expected invoice is missing (because you always get a monthly invoice for a service by a certain date in the month), duplicated (because the spend profile is doubled in a month, etc.), or suspect (because it doesn’t fit the pattern).

The main dashboard provides an overview of key invoice KPIs (pending submission, awaiting approval, total count, unresolved, missing), an overview of missing invoices (so immediate action can be taken), a summary by providers, and a summary of top variances.

The approvals dashboard shows all of the invoices that need to be approved, along with variances from the best “prior” invoice, colour-coded on the green to red spectrum (so you can quickly see if there is a likely price issue even before drilling in to the invoice). On this screen, you can quickly pop-up the six-month history for more details on the variance and trends and pop-up the invoice summary window that summarizes billing arrangements (from the contract), line items, and sub-charges.

Fore more details on costs and variances, you can dive into the invoice analytics dashboard that provides a variance report across suppliers over the past X months (on a green – red spectrum that represents decreases to increases) that also clearly identifies new charges (in yellow) so you can see where regular billings start or change. From here, you can dig into a supplier and see the same breakdown by line item / SKU, and then, in that breakdown, you can drill into a particular line item / SKU and see the same breakdown across the sub-charges. For example, at the top level, you see all your providers. When you drill into Your-BroadBand-Provider, you see High Speed Service, Mesh Network Rental, Taxes and Fees. When you Drill into High Speed Service, you see monthly service fee, modem rental, and fixed IP lease. And, of course, you can also search across contracts for specific SKUs and set up alerts when new variances are detected off of new invoices.

At this time it’s worth pointing out that in Indirect Tech, Green Cabbage does true micro-SKU benchmarking, unpacks all of the different offerings in a SKU offered by a tech provider who might include multiple modules in a SKU or a broadband provider who will pack in rentals with subscription fees, and can tell when a provider changes a SKU description or composition. This allows it to do price benchmarking (or at least price range benchmarking) across individual products and services and provide more finer grain details and guidance than the majority of its peers, even in the specialized SaaS market.

And while Green Cabbage might not be a common name in S2P, or one getting a lot of buzz from the analysts, they are bigger than you think. Serving eight (8) of the top ten (10) private equity firms in the US and four (4) of the top private equity firms in Europe, global consultancies like KPMG and BCG, along with other big name Fortune 1000 clients, they have over 500 Billion of spend under management (which is sizeable when you consider that Coupa, that claims to have the most, only has about 4 Trillion in global business spend data), over 1.25 Billion data points, and over 13,000 benchmarkable suppliers in their categories of expertise. That’s very significant, very powerful, and allows them to identify large cost reduction opportunities and negotiate them for you at contract renewal time. (And if you don’t have the volume on your own for significant savings, they also have a group purchasing offering called Receptio that you can look into. Note that since this blog covers technology, we won’t be covering Receptio in this write-up.)

The main weakness right now is that the API is only for getting data in. They are working on extending it to get data out, but there is no timeline for that yet. This is critical for a number of reasons:

  1. their contract management is limited to file uploads and metadata and it would be very useful if they could push rates, benchmarks, and standard Ts and Cs to a contract management/governance platform to support creation, negotiation, and ongoing management of contracts outside of renewal projects
  2. spend export is limited to Excel / flat file dumps; while their tool is good, it’s not BiC for generic spend analysis, especially outside their core categories, and neither is their categorization knowledge beyond their core categories — depending on the spend, it’s not guaranteed to be accurate beyond level 2 or 3 (of a 4 to 6 level UNSPSC or equivalent hierarchy), so if the organization has some very specific or detailed indirect or direct categories it needs deep categorization for, this will have to be done in an external tool (where you can classify to a lower level, do more detailed analytics, and then push the refined data back) and you need Green Cabbage to be the single source of truth (because it allows you to do invoice management and deep invoice analysis and keep your spend data up to date)
  3. you can mark a category or contract as in Sourcing, but there is no connection to an external sourcing tool

We will note that they have indicated they are working on expanding the API for pushing/pulling data out, and that their first priority is to push appropriate data to a contract management platform to allow for contract creation, negotiation management, and governance (as all the platform supports around contracts is file-based uploads and meta-data). Hopefully they finish this by the end of the year and can start extending the API for export of all data in the first half of next year as an organization needs a single source of spend truth and there are lots of great DiY spend analysis tools (like Spendata) that could connect to the Green Cabbage platform for one-off category analysis where Green Cabbage doesn’t provide detailed benchmarks (or support easy/refined classification).

In other words, if you are in an industry that makes heavy use of indirect technology (SaaS, Cloud, etc.), the contingent workforce, and/or clinical supplies and you want a service-based spend analysis offering that can help you find deep savings based on real-time competitive benchmarks and on-demand category analysis, and even use their manpower to capture those opportunities for you, you really should check out Green Cabbage. There’s really no one like them in their categories of expertise.

Three Critical Elements of a Good Procurement Contract

We’ve been seeing quite a few articles lately popping up randomly on LinkedIn, Procurement searches, newsletters, etc. around Procurement Contracting, and, as you’ve probably guessed, we’ve noticed that most of them aren’t great. Not to say they’re bad, they’re not, but usually they’re finely focussed on core clauses that should be in there to keep the lawyers happy, using standard templates for consistency, making sure you have Force Majeure or appropriate risk management clauses (which are important, but miss the point), or on particular specifications or appendices you need for services contracts, etc. Few are good across the board, and most miss the key points.

So, today, we’re going to overview key elements of a good procurement contract, be it for goods or services, that all buyers should be aware of. This is not intended to be a complete list, as every category is different, every company is different, and every scenario is different and no single generic checklist will cover everything that is needed, but one can distill a list of common requirements that will always be required regardless of the category, geography, company, or situation at hand. Logically speaking, these requirements will always be necessary, but may not always be sufficient.

1) As Dick Locke will tell you over and over again, if you want them to be good, then all of your contracts should be written in Plain English, not convoluted legalese, and should be comprehensible by someone with a high school education. Not all buyers will have a University education, or even a College education, and even if they do, it may not have been in English and/or English may not be their first language.

2) A good contract answers the 6Ws: who, what, when, where, why, and how.

a) what are the goods and services the organization is contracting for

b) who is the intended recipient of the goods or services (not just the company) who will be using the goods or services and signing off that they are fit for use

c) where are they needed (plant, warehouse, office, etc.) as this determines where they need to be delivered

d) why are they being used over another good or service, as this determines key features or functions or specifications that the organization needs to ensure are maintained

e) when are they needed, as this specifies delivery schedules that need to be met

f) how are the goods or services going to be used as this dictates what specifications must be met or certifications that must be possessed (and explicitly referenced in the contract)

3) A good contract addresses the actionable risk mitigations that are to be adhered to by both parties to minimize the chances of a risk event significantly impacting or disrupting the business, even if it’s just timely notifications of an event happening or not happening.

Shift happens, and then sh!t happens. It’s reality. Blaming someone doesn’t fix it. Nor does having an out when the supplier doesn’t deliver on time, because chances are, you still need the goods or services, by a certain time, or your business is going to end up in the sh!tter when you can’t deliver to your customers because you won’t get paid (best case), and might get sued (worst case). And even including a legal clause on damages that allows damages to be passed through is rather useless, because, chances are, your supplier is living order to order and couldn’t afford to pay your legal fees and/or any judgement against you, which still leaves you on the hook.

Furthermore, any Force Majeure that you include in your customer contracts won’t protect you if you didn’t make all reasonable efforts and/or only you were affected while your competitors served their customers with similar products and services just fine without interruption.

You need to understand not only what can go wrong, and if there’s anything the supplier can do to prevent it or deal with it when it does, but also how long it will take you to find another source of supply if the supplier can’t deliver and make sure you have enough notice to do so if that is the only option available to you.

For example, if you need a custom manufactured product where it takes a new supplier ten weeks to upgrade a production line because it takes six to eight weeks to get the equipment, install it, and then test it; and it would take you two weeks to go to the next best supplier, get a contract, and get started, then you need three months lead time if your current supplier can’t deliver. In this situation, you need your supplier to let you know of any potential delays as soon as they get foreknowledge, and then let you know as soon as they won’t be able to manufacturer. This means that you might need to specify in the contract that, as soon as one of the supplier’s key tier suppliers is a week late on notifying the supplier of a shipment, they notify you that they may not be receiving a critical part or raw material on time and may not be starting your production on time. This allows you to determine whether or not this could be a risky situation and whether or not you want follow up.

You’d also want a notification if production didn’t start within a certain period of time from the expected production date, as that will dictate a late shipment. And so on.

Same for services. If you need a consultant or contractor with a certain industry certification, and the supplier only has three, and all three on tied up on a contract where it is determined they won’t be finished by the due date and cannot be redeployed on the date they were initially promised to you, you want to know the day the service provider knows they will not be able to allocate those contractors or consultants to you, especially if you can’t wait to start your project. Then you can figure out how many resources you really need to start, and use the risk mitigation clauses to go find someone else from another provider.

Again, this is not everything a contract needs, but requirements that must be met by every contract.