Category Archives: CSR

(Supplier) Diversity is Dead!

Editor’s Note: This is an extended version of a comment that was made in response to an inquiry by THE REVELATOR on LinkedIn about the progression of supplier diversity.

The simple fact of the matter is thus: diversity threatens fascists who want authoritarian dictatorships. This means that as long as far right wing agenda politicians keep getting elected in first world countries (which has been happening more than not over the last decade), not only is DEI (Diversity, Equity, and Inclusion) not going anywhere, but it is going to be rolled back, and done so faster than most policies that came before in countries which equated diversity progress with measurable outcomes.

The sad reality of the situation is that as soon as the board/chief/president of an organization or governmental department concluded that you were not diverse if you did not have x% of whatever minority the board/chief/president thought you should have x% of by time y, and started equating diversity success with measurable outcomes, we went from a situation where “equal opportunity” was replaced with “minority designated role”. And instead of being a further step in the right direction, it was often a step backwards. Under equal opportunity, if two candidates were roughly equal for a role, the role is to go to the minority candidate. And that’s a good thing. However, under “minority designated role”, non-minorities are banned from consideration, and this is not a good thing if there are no qualified minority candidates available for the role. A senior role that should demand a full University degree (Bachelor’s or higher), a decade of experience, and one or more certifications may end up going to someone who just has a 2 year associates degree, only 3 years of work experience (barely relevant to the role), and no certifications as that is the most qualified person who applied.

What many firms fail to take into account when considering diversity mandates is the number of qualified candidates in the minority who are actually in the vicinity of, and who are then actually interested in, and willing to take on, the position. For example, if you were to demand that half of your coding team need to be women, good luck with that when only 25% of STEM graduates in North America are female. (So if you did get 50%, a lot of other companies wouldn’t get any female hires.) Or if you demand that ¹/_5^th of your workforce be hispanic, to mirror the US population distribution, but it’s an in office job in a major city in an expensive neighbourhood where 95% of the local population is white, good luck with that. You might meet your quota, but you know that the vast majority are not going to be qualified for the role.

And DEI didn’t stop there at some organizations and institutions in North America. As soon as people figured out that a DEI program or a particular minority designation could be used to exclude people of certain religion(s) they didn’t like, it went from a tool of inclusion to a tool of subversive discrimination. (So much for equity and inclusion!) Then came the backlash; the labelling of anything even remotely related to DEI, equal opportunity, or humanity as woke; and a full on assault by the fascists and authoritarians.

More specifically, in countries where they have enough power in the government, the authoritarians are dismantling any and all programs they have control over, barring any third party organizations with such policies from doing business with their government, and doing whatever they can to overturn all DEI and Equal Opportunity legislation they can, as far back as they can.

Moreover, given that these far right wing parties are being well funded by donations from the tech bros who spend more time meddling in global politics than running their own ventures, there are not many options for progression of ANY diversity on the global stage.

Sustainability ONLY Exists In the Supply Chain

Furthermore, simply switching suppliers does not make you more sustainable no matter what you may think or what those overpriced third party ESG / Scope 3 reports may (or may not) say. Switching suppliers to a supplier approximated to be more sustainable is not increasing sustainability, because if you take someone else’s supplier, then they are just going to end up with yours. It may be a temporary net win for your company, but it’s a net loss for another company, and that doesn’t really help anyone as sustainability was not actually increased overall.

Sustainability only comes from net improvement. The reason it only comes from the supply chain is because the products you buy come from the supply chain. The energy you use comes from the supply chain. The water you use (and drink) comes from the supply chain. The services come from your partners (in the supply chain). The transport to you (and/or to your customers) is the supply chain. Everything comes from the supply chain. The only way you can increase your sustainability is to reduce the energy, water, and products you use and the travel you undertake. For most companies, this is a negligible part of the supply chain … sometimes so negligible it rounds to zero.

So how do you increase sustainability in your supply chain? You start by helping your suppliers be more sustainable, which, believe it or not, starts with you being a better buyer and a better partner. Sustainability requires investment, and when they are operating at slimmer margins than you, significantly smaller bank accounts than you, and a lot more uncertainty than you, it can be hard for them to invest in new technology or processes when they don’t even know if they can invest in next week’s payroll.

And it requires more than a piece of paper from you saying you’re going to award them two years of business after a multi-round RFP when you’re a first time buyer. Because they know that while you may have the wherewithal to enforce a contract in another country half a world away, they often don’t. And they know how many times they’ve been screwed in the past when they were told they’d get 100,000 units, but COVID hit, the market crashed, or the transport lanes (ports, borders, etc.) closed down and the orders never came.

You need to develop a true partnership, work with them, build up shared trust and commitment, stick to your promises, help them with their processes so they become more efficient, identify efforts they can make to significantly increase sustainability, and then make the long term commitment they need from you (and other major customers) to invest in better technology, build their own renewable energy grids, etc.

Why are we bringing this up? Because a recent article in VOGUE Business that asked if fashion’s buying practices are really improving had a very good point. While fashion brands make strong claims they are investing in longer-term strategic partnerships, and big consultancies like McKinsey quote impressive statistics (such as an increase from 26% to 43% over the last 4 years) on how the percentage of CPOs reporting longer-term strategic partnerships (which just translates into longer term contracts, but not necessarily guaranteed awards over the long term, as there are usually so many out clauses the contracts mean nothing), the reality is that when you ask the suppliers how things are going, it’s a completely different story. As the Vogue Business article point out, this year’s Better Buying Partnership Index saw just a one point increase in the garment industry’s buyer-supplier partnerships score. Just one point! That could be a rounding error.

Despite all the lip service, there has been no improvement in the fashion supply chain because, at the end of the day, as Lindsay Wright was quoted, simply claiming you have good partnerships with your suppliers isn’t going to cut it. If you want an honest picture of what’s really happening on the ground, you need to be asking suppliers, because they’re the only real arbiters of whether purchasing practices are improving.

And this holds true across supply chains. Partner with your suppliers on long term contracts and work on development initiatives with them if you want to increase sustainability. Otherwise, the best thing you can do is to just shut the f*ck up because you’re only contributing to the hot air.

Sievo is Still Constantly Sieving Your Data For New Opportunities

While the doctor has never covered Sievo on Sourcing Innovation, he did cover them in depth at Spend Matters, and, if you have appropriate Content Hub access, you can find the last 3-Part in-depth Vendor analysis here in Part I, Part II, and Part III.

A Quick Recap

Sievo was founded twenty years ago in 2003 in Helsinki, Finland and is probably the oldest remaining standalone spend analytics player, as a significant portion of all of the M&A that occurred in the 2010s was on leading spend analytics players. (The next oldest standalone vendor is likely Rosslyn Analytics founded in 2007.) While it started as a standard service-based spend analytics offering, by the time of the doctor‘s in-depth update on Spend Matters in 2020, Sievo had moved well beyond basic spend analysis and centered much of its value proposition on driving savings and improvement (as Sievo is not just limited to spend data and can also process compliance, risk, and ESG/GHG/Carbon data, for example) program identification (through automated insights), measurement and management across the full spectrum of spend, where they do the data management services, the foundations for savings and improvement program management, and even the meta-data management to power advanced organizational initiatives.

With regards to data management, it handles all of the system integrations; refreshes on your schedule; does all the classification (working with your team to build the classification you want); cleanses, normalizes, and enriches your data; and rolls out (customized) market and category intelligence to your organization.

With regards to classification, they use a mix of (black-box) AI and human (re-)classification and review, guaranteeing 94% accuracy, and usually achieving 98% to 99% accuracy. They use multiple techniques including customized in-house LLMs, DeBERTa Large v3, BERT, evolutionary algorithms, and NER models, with and without feedback. (And while the doctor knows most of you won’t understand any part of that sentence, it means their AI/ML team actually knows what they are doing and they are not just a bunch of college drop outs randomly feeding open models with random data and assuming anything that appears to give them 90% accuracy is good. Which happens quite a bit in “data science” consulting shops. See the doctor‘s post about how to do Analytics and AI Right.) Mappings, especially for low confidence, high spend, and new categories/customers are also manually reviewed on a regular basis, corrected, and the models retrained. In addition, a user can request a reclassification at any time, and once a customer admin approves, the data is reclassified (in an override) and the model retrained.

With regards to integration/refresh, they’ve integrated with over 100 ERP/AP/data systems and dozens upon dozens of market, risk, and ESG feeds that they can use to enhance your data and typically refreshes massive data sets daily (but can do faster or slower depending on the desires of the organization).

With regards to traditional analytics, the platform has the standard set of modern drill down dashboards, support for user-defined calculated/derived dimensions, and incredibly powerful filters that support functions that can be used on any dimension (base or derived) which collectively allow a user to break out, and drill into, any subset of data of interest.

With regards to out-of-the-box reporting and analytics, Sievo has over two-dozen out-of-the-box dashboards that provide deep insight into spend by category, PO, invoice, supplier, emission, cycle time, tail, geography, etc. There’s also pre-built insight dashboards for savings opportunities on price (variance), payment terms, currency exchange, and efficiency/cycle-time improvement.

With regards to savings tracking and management, Sievo includes a realized savings dashboard that can automatically compute the spend difference period-over-period, currency fluctuations, and changes due to changes in market indices (where a contract price is tied to a market index). It provides insight into spend that results from non-performance and allows Procurement to pinpoint the exact reason for deviation from a plan. Note that savings tracking is very extensive in the platform and users can define budgets, demands, expected trends, milestones, approvals, etc. and track each initiative as a separate project in the platform.

It also supports forecasting/budgeting, contract metadata management, and price benchmarking based on over $1 Trillion of customer spend (and their customers now represent 1% of global GDP) mapped to a common internal schema and with their deep knowledge of direct material pricing (from indexes, etc.), they can help customers benchmark down to the material level in a BoM.

So What’s New? (Since 2020.)

Since 2020, Sievo has made a number of platform improvements and included a number of new offerings in the spend analysis platform. The most notable of which are the following:

Integrated Actions

In addition to supporting (savings) action plan, some associated actions can now be initiated within the system (with more being added with every release). Email contacts relative to supplier performance / sustainability can be initiated with the system, automated negotiations through Pactum can be kicked off within the system, and Ecovadis requests (detailed below) can be kicked off within the system. A user can also access the Sievo Academy, Sievo Support, reclassification requests, associated contracts (not just metadata), and roadmap suggestions/product feedback directly through the platform.

Integrated Sustainability and Third Party Dashboards

When we last covered Sievo, it had an Ecovadis integration and could pull in select data for enrichment dimensions or measures, but, if you have the subscription, they now maintain all Ecovadis data natively in their platform and have a new Sustainability dashboard where a user can dive into the different Ecovadis scores (Global, Labor, Ethics, Environment, and Sustainable Procurement) by category, material, supplier, etc. and see the global score, assessed suppliers (as not all suppliers will be assessed by Ecovadis), assessed suppliers, score by top 100, score by category, score by organization, global score heatmap, etc. A user can drill down to an individual supplier (by category and material) and see all of the Ecovadis details natively in Sievo. If a supplier has not been evaluated and the organization would like it evaluated, they can even initiate a request directly in the Sievo platform. (Alternatively, if you have other sustainability/risk data feed licences, including [but not limited to] SupplierIO, RiskMethods, D&B, etc.] all of that data can now be brought in and maintained natively as well.)

CO2 Analytics

There’s also a new set of CO2 Scope 3 Emission management dashboards that can, at a category, material, and/or supplier level, summarize total CO2(-equivalent) emissions, related spend, intensity, carbon price amount, with breakdowns by category, GHG protocol category, organization, region, supplier country, share of emissions per higher level category/supplier, etc. A user can dive in and see the Unit of Measure (UoM) conversion rates, inflation rates, mapping quality, and types of estimates used at the meta-leval and the mapping source, emissions factor, validity dates, and associated backup (attachments, etc.) at the mapping level.

One unique feature of the Sievo platform is that the CO2 can be used as a second currency alongside spend and allow users to see the spend/carbon trade off of different decisions. (For example, switching to supplier S for Product P can save D Dollars but cost X emissions.)

Curated Data, including Science-Based Target Initiative (SBTI), Support

Sievo has not only started tracking supplier ESG and net-zero status data, but also correlates an organization’s spend against SBTI records and summarizes percentage of spend with SBTI suppliers (who have set a target), percentage of spend with SBTI suppliers with near-term targets, total spend with net-zero targets, and percentage of de-listed suppliers as well as spend by top 100 suppliers and net-zero status, spend by category and net-zero status, and spend by organization and net-zero status. It’s a great way to see SBTI spend coverage at a glance.

At a finer grained level, for each supplier, it summarizes the supplier’s general status, number of commitments, number of targets, net zero status & target year if committed, near term target status (targets set or not), long term target status, company temperature alignment, spend, sector, org type, region, location(s), etc. and all data can be accessed by a drill in to the supplier level.

AI-Extended Supplier Profiles with Feedback and Human Validation Available

In addition to spend benchmarks powered by community intelligence on well over One Trillion Dollars of spend mapped to a common, centralized, taxonomy, they have also been building a common supplier database which currently consists of over 6 M suppliers (with the goal of 10M by EoY 2024) with enhanced supplier profile data around geography, categories and materials, CO2/GHG and sustainability, SBTI, and other relevant data from a spend analysis perspective. In addition, they have been augmenting it using customized AI/NLP/LLM that uses web-based data (from the supplier’s web site, Wikipedia, supplier intelligence platforms, etc.) to provide a more complete picture in order to provide clients with deep embedded supplier insights, which will eventually support deep discovery in a future release.

Sievo manually validates a subset of high-spend suppliers for every client and every user can provide feedback on supplier data they feel is incorrect and request validation on a supplier if desired. Suppliers whose profiles have been manually validated are marked as verified (and data is not changed without human verification if such data comes from a data feed where the provider, such as Ecovadis, has manually verified the data).

Extended Supplier 360 Dashboard and CraftBoards

The dashboard summarizes total spend (for the given time range), it’s spend rank, PO coverage, avg invoice, spend share by category, by organization, by ERP supplier (instance/subsidiary), by payment terms, invoice-to-due days, due-to-pay days, [local] price [consolidation] opportunities, price opportunities vs. best price from a different supplier, top insights (from the new insights dashboard, discussed below), and, if desired, key metrics from the new SBTI dashboard (summarized above).

Since our last update, Sievo has also added CraftBoards, which allows users to build their own dashboards on any data subsets they like. Sievo can process and display any type of data, and the user can build cubes and dashboards on any data source they like.

Adaptive Insight Recommendation Engine

Sievo has doubled down on identifying all types of savings opportunities across price (variance), payment terms, process optimization, risk and compliance, and the (supplier) tail. Sievo has also doubled down on a new insights overview dashboard that currently summarizes system-identified opportunities across almost twenty (20) types of analysis across those five categories (with more coming in future releases). With regards to price optimization, it will summarize price (variance) opportunity and high price impact. With regards to payment terms, the outlier opportunity, the early payment impact, and overall consolidation opportunity as well as (interest/penalty) losses due to critically late spend. With regards to process, it summarizes order consolidation spend, hidden tail spend, non-PO outlier spend, and after-the-fact spend that is likely ripe with opportunity. With regards to risk and compliance, FX exposed spend, outlier sustainability spend, single sourced material spend, and hidden locally sourced high risk spend. Finally, with respect to the tail, they break it down by category, material, new supplier, new supplier non-PO, and supplier count increase which is super rife with opportunity. It’s super easy to drill into each dashboard metric, see the breakdown by supplier, category, or location, and quickly identify the top opportunities for savings. And, of course, dive into the suppliers with the highest opportunities as the Sievo platform was designed to automatically bubble up insights from the data in a manner that is relevant and actionable.

For each area, there’s also an insight dashboard that summarizes the total number of insights identified, and the breakdown by open, assigned, completed, and removed. One major difference in their platform is that a human user can identify when an insight is immaterial or non-actionable and the system will not only hide it, but learn from the feedback, and not show the insight again. For example, a payment term rationalization across a supplier’s location will not be possible if the average payment term is longer than legally allowed in France or the UK (as a result of recent laws designed to ensure [small] suppliers are paid timely). Note that insights can be assigned for action to a user and, once assigned, generates an action plan in the Sievo system.

The individual opportunity dashboards are incredibly detailed, and you can see prior coverage or a Sievo demo for details. For example, the payment terms consolidation dashboard, which allows you to dive into a category (as most contracts are category based), allows you to pick a supplier, see the supplier spend and summary, spend by payment terms, spend development opportunities by payment terms, totals by ERP supplier instance, best payment terms, overall working capital opportunity by ERP supplier, etc. etc. etc.

New Widget-Based Insights-Oriented Home Page

The main dashboard can summarize the top insights (as per the insights discussed above) across each area analyzed by the platform and provide quick links into each insight area and bubble up insight while also giving users quick access to:

their current/open initiatives
their bookmarked dashboards
their current/open reclassification requests
recent bulletins
quick links to relevant courses in the Sievo Academy
top CO2 emitters
other widgets the user wants on their home page

Extended Do-it-Yourself Self Service Report Creation

Not really new, but as they have added dimensions and measures, they have all be included in the self-service dashboard (and organized by measure type such as spend, payment term, supplier, invoice, PO, material, category, etc. for quick location). Similarly, as new chart types have become available, they have been included as well. (And you are not restricted to traditional bar, line, pie, and table charts — full featured pivot charts, scatter plots, and mekko charts are also available in self-service).

Near-Term Roadmap

Community Data

Sievo users will be able to benchmark their data against anonymized data from other Sievo companies’. For example, a company will be able to gain insight into its payment term competitiveness with respect to market average. A variety of pilots are ongoing to determine the most useful data, but these insights will extend the value Sievo can bring to its users.

Index-based Price Forecasting

In the materials forecasting module, more functionalities are being integrated to ensure a deep understanding of future budgeting and spending and simplify usability. Soon (in Q2 2024), forecasting based on indexes will become available, making the process even smoother and accurate for Sievo users.

Supplier Portal

ESG emissions in the supply chain are largely related to those from suppliers, and thus collaboration with suppliers is a must for emission reduction. A new supplier questionnaire and supplier portal enables users to ask suppliers for information related to their emissions, sustainability initiatives, and more.

In conclusion, if you are looking for a Best-of-Breed spend analysis solution, Sievo continues to be among the best in the space and should be on your RFP short-list.

Open Gen-AI Isn’t Just Dumbing Your Business, It’s Killing the Planet!

Open Gen-AI is not just one of the most dangerous technologies we’ve ever invented^* (as it lulls the uninformed into a false sense of security who will depend on it to make increasingly more critical decisions that could have increasingly more disastrous consequences), it’s also about to pose the biggest threat to planetary survival!

As it is, an average Data Center requires at least 10X the energy consumption of an average American home per square meter, with Open Gen AI data centers (which require ultra dense servers with cores running flat out all the time) requiring even more energy than that. However, whereas traditional AI models, including traditional Deep Learning Neural Nets which can be optimized post-training to often 10% of their original size using techniques developed by MIT researchers (including those described in this article) are now smaller and more stable than they used to be, these models just keep expanding exponentially in a futile quest to have them do more and now require models thousands of times bigger (and more energy intensive) than traditional models, often to generate output that wouldn’t even net a C grade in a high school class!

Think about that and read this article by Kate Crawford on Nature on how AI’s environmental costs are soaring (which notes that even OpenAI’s CEO has finally admitted that the AI industry is heading towards an energy crisis as there just isn’t enough power to keep up with the exponential energy demands [with ChatGPT already requiring more power than 33,000 average American homes … think about that, if you shut down just TWO Open Gen-AI models, you could power an entire small city]) before needlessly throwing a solution you don’t understand at a problem you don’t even have (when a better process would eliminate that problem and replace it with a smaller, different, problem that traditional technology and a human with just a bit of training could completely solve).

Because Open Gen-AI is just NOT ready for prime time, and just because these companies raised Billions of dollars on false promises that it would be ready years or decades sooner than AI development has traditionally taken, that doesn’t make it our responsibility to adopt the technology before it’s ready.

^* And if a man afraid of nothing acknowledges this, we really should listen! (See this article.)

Source-to-Pay+ Part 10: Over 55 Supply Chain Risk Vendors to Check Out

Last quarter, we ran a 9-part series that served as An Introduction to Supply Chain Risk where we introduced you to the risk elements not covered by traditional supplier management platforms (which we covered in our 39 Steps … err … 30 Clues … err … 39 Part Series on Source to Pay where we listed over 90 supply management companies of which over 1/3 claimed to have some degree of “risk”, which we dub supplier “Uncertainty”, management).

In our series, we focussed heavily on corporate risk, third party risk (which included ESG, Human Rights, Regulatory Compliance), supply chain risk (including transparency, traceability, and multi-tier tracking), transport risk, cyber risk, and analytics. We also noted that our next instalment would provide a starting list of vendors that you could check out to meet (some of) your supply chain risk needs.

This is that instalment. Hopefully this starting list will be useful to you. In the months that come, the hope is that some of these will be covered

Legend

3P	3rd Party / TPRM
S/V	supplier risk / verification
SCT	supply chain transparency
T/L	transport / logistics
MT	multi-tier
C	cyber
ESG	Environmental, Social, Governance
HR	Human Rights
RC	Regulatory Compliance
BoM	Bill of Materials (Direct)
DX	Discovery
TX	Traceability