Category Archives: Event

Influential Damnation 99: Conferences

After SI’s recent posts that asked Are Conferences Perpetuating Supply Chain Stasis? and made A prediction from the doctor with regards to Big Procurement Events, you might have been expecting conferences to make the list of damnations.

If you were, you get a virtual fortune cookie. If you weren’t, better luck next time.

The reality is that conferences are damning for all involved parties except one. They are damming for you the attendee. They are damning for the presenters trying to educate you (or not). They are damning for the vendors trying to demo their wares. They are damning for the analysts and bloggers trying to take something away to share with your peers. The only people they are not damning for is the organizers fattening their pocket books at the expense of vendor and participant alike.

As a practitioner, you are damned because the organizers are most concerned with making the event a success, which, in their book, is profitable. As a result, if there are not enough presentations of high caliber, they will take proposals of moderate caliber, and if there are not enough proposals of moderate caliber, they will take proposals of low caliber. And if their focus is Sourcing, they will take Sourcing vendors as lead sponsors and exhibitors first, but if there are not enough Sourcing vendors, they will take Procurement vendors. And if there are not enough Procurement vendors, any Supply Chain vendor with supplier data collection capability makes the cut. And so on.

As a vendor, you are damned because some of these events can cost you upwards of $20,000, with no guarantees. There’s no guarantee that the attendees are going to be interested in your product. Even if they are, there’s no guarantee that they are of the right seniority or have any ability to make a buying decision. There’s no guarantee you’re going to get a booth in a high traffic area. And if you get a presentation slot in a multi-track conference, there’s no guarantee anyone is going to show up.

As an analyst, there’s no guarantee the presentations are going to say anything new (worth reporting). (This blogger knows for a fact that some presenters on the junket circuit give almost the same presentation year after year after year.) There’s no guarantee that the vendors are going to be presenting technologies you expect to be covering. And there’s no guarantee that the attendees are going to be willing to share anything worth covering either.

In the end, only the organizer is guaranteed to win.

Are Conferences Perpetuating Supply Chain Stasis?

It’s conference season, and you know what that means. Thousands of people flocking to ISM next week to hear about the “state-of-the-art” practices and technologies that will revolutionize your supply chain, take you into the modern age, and prepare you for what comes next. Except they won’t.

For the average organization that still hasn’t adopted a modern e-Sourcing or e-Procurement system, the technologies being presented by even the vendors who haven’t updated their core platforms since last decade will still be revolutionary and for the average organization that is just dipping their toes into the waters of modern supply management processes, the talks will be inspirational and progressive and, for all practical purposes, look like a transition from the industrial revolution to the information age. (And, for some organizations, it will be. But it won’t prepare you for what comes next.) It will be like seeing the world through rose coloured glasses for four days straight. By the end of the conference, the average attendee will be in awe of the possible and leave in a state of hippie bliss (until he gets back to the office and crushing reality cracks his lenses and he’s forced to again see the cold and depressing blue sky, the blood red losses, and the blackness of the bottomless pit that new ideas get tossed into).

But for a leading organization, the majority of technologies will be outdated, the practices insufficient, and the talks sleep inducing. That’s because, for the most part*, it will be the same vendors as last year, the same practices that were being presented as revolutionary five, if not ten years ago, and different speakers giving the same scripted success talk that you have heard from the leaders who have used these technologies and processes for the last five years.

the doctor downloaded the thirty-four (yes, 34) page “brochure” for ISM and didn’t see one new idea in the entire publication. Not one. Moreover, while a few of the topics only became trendy in the last few years, there appear to be only two talks focussed on TCO (Total Cost of Ownership), one on integrated supply chains, and zero on supply chain modelling.

This is a serious problem. We’ve reached the point where supply chain success for the average organization is becoming dependent on preventing supply chain disruptions and failures. Supply chains span the globe, lean is the name of the game, JiT is widespread, disasters (natural and man-made) are on the rise, margins are thin, and customer loyalty and patience is thinner. It doesn’t matter how well you source if you can’t execute. It doesn’t matter how well you procure if you can’t control your costs. The best laid risk avoidance and mitigation plans are worthless if you can’t monitor for risks and implement mitigation plans at appropriate times. The best spend analysis system in the world is useless if the data is incomplete or too dirty. You can’t optimize what you can’t model. And so on.

Moveover, every savings opportunity you identify at one stage of the supply chain or management process can result in a larger loss at a different stage if the opportunity is not analyzed appropriately. Sure you can save money by consolidating supply, but if a single source is unable to deliver and the organization has to buy on the spot market at the last minute, the 5% savings could be a 10% loss. Reducing inventory can significantly reduce the 25% inventory overhead cost, but could result in stock-outs that lead to million dollar revenue losses if the organization runs too lean and a transportation strike cuts off the just-in-time supply. Better supplier oversight and management can certainly increase quality and reliability, but is the additional cost of the SRM systems and staff to manage the relationship less than the additional value generated?

True value comes from looking at an integrated supply management process, which might take the form of a full category management lifecycle or a complete strategic sourcing execution lifecycle, modelling the physical supply chain and associated costs, and computing the full total cost of ownership of the current scenario and an expected improvement.

But good luck finding anyone who looks at the supply chain as a whole from this perspective, especially when few people will even address the subject.

And this is why the doctor does NOT attend ISM. When you’re trying to identify the next evolution of supply management, or even if you are a true leader, unless you enjoy preaching from the pulpit, it’s a little depressing.

* There will be some exceptions.

A prediction from the doctor with regards to Big Procurement Events

In a recent post over on Spend Matters UK on eWorld Procurement and Supply by Peter Smith, he made a number of observations on the event that happened last month. A few of these might have been unexpected by the average practitioner, but are not really surprising when you think about it. First we’ll cover them and then we’ll discuss why the doctor does not think these observations to be all that surprising.

Mr. Smith’s observation number two: There was also a good number of suppliers, although there seemed to be quite a few of the bigger software firms missing this time.

Mr. Smith’s observation number three: The standard of the presentations is still highly variable.

Mr. Smith’s observation number four: The other thing that might help on that would be a little more detail on the content in the programme.

Mr. Smith’s observation number seven: Ultimately, there is considerable value to delegates in eWorld, particularly if you are smart / lucky enough to choose the right sessions ….

Let’s start with observations number three and four. When you have an event that relies on lots of vendors forking over lots of dollars, you can’t always be that fussy when it comes to whose dollars you accept. And since those dollars come at the price of a presentation, it’s obvious that since vendors are of various quality, the presentations, as well as the descriptions of such presentations, will be of various quality. And as a result …

Mr. Smith’s observation number seven is a logical consequence. As a result, the value to delegates will be entirely dependent on those delegates choosing the right sessions, which, with limited information, will depend as much on a delegate’s luck as the delegate’s skill in picking the right presentation to attend. But the most important observation is …

Mr. Smith’s observation number two — the lack of bigger software firms. Not only does the doctor not find this surprising, but expects more and more absences from the leading firms in the year to come. Why? The ROI of this event for a leading provider is less and less every year. The more providers who are present, the less mindshare each provider gets. The bigger the event gets, and the more practitioners who get to go at little or no cost, the more the vendors have to pay to attend. In other words, vendors end up paying more for less every year. Especially when the practitioners who are attending the big events not only range in seniority from Junior Buyer, with no buying influence, to CPO, with ultimate buying authority, with the majority being on the Junior Buyer side of the scale.

And if you are a large, best-in-class, vendor, with a decent education budget, you have enough to finance and attend a much smaller event with a larger percentage of Director’s, VPs, and CPOs, where you are not only going to get more mind-share, since there will be fewer vendors at this smaller event, but more potential marketshare, since every individual that shows interest is one with actual buying authority.

Furthermore, since the even larger best-in-class vendors can host their own Procurement education days, with thought leaders, client case studies, and hands-on training sessions, these best-in-class vendors can get 100% mindshare for a limited time from every person who attends. So what’s the better value? A big event like eWorld or ISM where vendor capability ranges from simple e-Negotiation capability to full-fledged Source-to-Pay with little hope the average attendee will have time to figure out the difference? Or a smaller, focussed event, where the limited number of vendors have similar capability, more time to educate the participants, and a chance to educate more senior participants? Obviously, the latter, and, as a result, it’s only a matter of time before the number of absences at big events like eWorld and ISM from big, leading vendors increases. And that’s the doctor‘s prediction.

Source-to-Settle – The Sourcing and Procurement Kettle

Source-to-Settle is the end-to-end integration of sourcing and procurement, starting with spend analysis and ending at spend analysis. It is the integrated workflow that starts with sourcing event identification, proceeds through e-Negotiation and Award, and ends with the creation of a purchase order, the receipt of goods and an invoice, and the e-payment for goods received and includes everything in between.

There’s a lot involved in the source-to-settle process, and often a lot more than can be found in most sourcing and procurement modules and stand-alone best-of-breed suites. As indicated in our last post, there is the need for accuracy — to insure that savings are not lost and the right categories are identified. There is also the need for compliance — with insurance and regulatory requirements, with contracts and pricing, and, most importantly with SOX. And results only come from efficiency and performance — which requires integrated, streamlined processes, supplier performance management, and collaboration.

It’s a tall order, but an organization that doesn’t keep PACE never realizes the value that results when there’s one integrated workflow, one complete spend repository for spend analysis, and one, 100% accurate, view of the truth.

For deeper insight into how an end-to-end integrated Source-to-Settle solution can allow your organization to keep PACE and deliver value beyond what you may have thought possible, download Sourcing Innovation’s latest white-paper on how An Integrated Source-to-Settle Platform Brings Unparalleled Benefits to Supply Management and register for Ivalua’s upcoming webinar on how to Help Build Your Business Case Today on January 28 @ 11 PST / 14 EST / 19 GMT!

Source-to-Settle: More than Just a Set of Service Modules

Having Source-to-Settle capability involves having more than Source-to-Contract and Procure-to-Pay solution modules. As explained in our last post, if an organization wants to achieve the best results, just having both solutions is not enough. Certain categories of savings and value only materialize when the Source-to-Settle solution is integrated end-to-end.

For example, due to the existence of multiple, disconnected solutions which rely on multiple, disconnected databases, there are huge accuracy issues.

First of all, there is a proliferation of manual errors due to duplicate data entry. When data has to be manually re-entered into other systems, or selected for export and import to other systems, human error always creeps into the process. The average error rate for keystroke entry is approximately 1%, as tabulated by Raymond R. Panko at the University of Hawaii, and this human error can be very costly. For example, assume the contract pricing for laser cartridges has been erroneously entered into the Procurement system as $70 a unit when it should be $60 a unit. Further assume that the organization buys 1,000 of these a year and that the old rate was $69.95. If the Procurement system has a tolerance of error of 0.1%, then it will never detect if the Supplier continues to charge the old rate and the organization will overspend by $11,940. Now assume that the organization buys 10,000 units a year and all of a sudden the organization is out $119,400!

But this is just the tip of the iceberg. With multiple systems, there is no single version of the truth. So, if there is disagreement between the P2P and the ERP system, which system is correct? And which system do you run the analysis on to identify the target categories for sourcing? It makes a difference. The greatest value comes from identifying the category with the greatest opportunity. And that can only be done with complete, accurate data.

For more information on these missed opportunities, along with fourteen other opportunities that only materialize with an integrated Source-to-Settle solution, download Sourcing Innovation’s latest white-paper on how An Integrated Source-to-Settle Platform Brings Unparalleled Benefits to Supply Management and register for Ivalua’s upcoming webinar on how to Help Build Your Business Case Today on January 28 @ 11 PST / 14 EST / 19 GMT!