Category Archives: Market Intelligence

Influential Sustentation 95: Competitors

I know this appears to be an oxymoron, but competitors do sustain you. Without competitors, there is no validation for your product, your market, and even your existence. But this isn’t a blog about Sales, this is a blog about Procurement. Believe it or not, competitors also help to sustain your Procurement practice. And we’ll get to that, but first we need to discuss the damnation that competitors can be.

Competitors are an outright damnation to the whole organization. Marketing makes an announcement, your competitors try to one up. Sales signs a great customer, your competitors try to weasel into the customer’s good graces through the backdoor. Your R&D makes a great discovery, and here comes the corporate espionage. But from a Procurement point of view, they are also damning.

  • They compete for limited supply and drive prices up.
  • They compete for limited talent and drive prices up.
  • They compete for limited expert (technology) resource time.

Ouch! How can they possibly be a sustentation. Well, this is an example of where when the going gets tough, the tough gets going.

Your Procurement can wallow in self-pity every time the competition scoops up a limited supply at a great price before you, steals the talent you want, or gets the top expert at the systems integrator to work on their project first, or you can recognize that anything they can do you can do better. And here’s where you start.

  • Monitor the market constantly, on-line, and in real-time to not only detect the rare occasions when forward auctions get listed (because a competitor went out of business or overbought and has to dump), but to detect events that could impact supply. If a natural disaster wipes out a significant portion of supply, then the market is just going to get tighter and having advance knowledge of the pending crunch can allow you to stock up on inventory early and cut your competitor off, or at least get pre-crunch prices locked in.
  • Invest in and understand the talent market, what each generation wants, and put together comprehensive work-life balance packages that will be more attractive than a competitor who merely promises a slightly above market salary (and nothing else).
  • Make sure to negotiate up-front sufficient access to any resources you will need, guaranteed milestone dates on the integration project, and penalties for non-performance.

There are other things you can do, but if you start here, you will suffer less supply crunches, attract more talent, and get your projects done on time. And this is a great start.

There’s Nothing Wrong with a Paid Pilot – As Long as it’s a Real Pilot

Over on Spend Matters, the analyst team has been posting their thoughts on the market outlook for the next three years (instead of making pointless predictions like their peers, and we all know what the doctor thinks of predictions, which was reiterated in this post), and most of them are logical and expected. However, one in particular needs to be addressed, and repeated. And that’s the fifth of the prophet‘s predictions in his “E-Procurement Market Outlook” on Spend Matters. In particular, the prophet‘s prediction that

Paid Pilots [will] Become More Frequent

There are two types of pilots. The kind where a provider takes data from a past event or project, runs it through their system, and provides you with a report of what they would have done and the results they would have achieved and you compare it to the results you achieved to see if it’s worth considering the system in depth.

Then there is the type of pilot where you try out the system on a live event or real data, replace your current system with the new system temporarily, or deploy the system for a specific project or division to compare operation and results side-by-side with the live system.

Before an organization invests a large amount of money or a large amount of effort to switch to a new system, and after it runs an initial pilot on historical data to determine that a full pilot is worth it, this is a great idea as the organization should be sure that the system will work as intended before it implements the system to support critical functions, but the pilot will only be effective if both parties take it seriously and make their best effort to get the best, and most realistic, results.

Even if the platform is a true SaaS solution that runs on the cloud where the provider can instantiate a new instance simply by clicking a button that creates a new, default, private instance and can make it available by simply creating a user name and password, configuring it for your use will take a lot of effort on the part of both parties. Even if everything in the Admin section and MDM control panel can be 100% user driven, until you have sufficient training and experience with the platform, you’re not going to be able to hook it into your ERP and existing supply chain / Sourcing / Procurement platforms, configure the workflow, create the secure user hierarchy, and complete other configuration tasks. Moreover, you’re not going to know the unique features, the features that can generate the most value, or the best practices. For best results, the supplier has to be actively engaged.

And in the business world, clients come first. If you’re not a client, while the sales and account teams will do their best to make you successful, they have paid clients to support. If those clients need help, they come first. Plus, at any time, they have other organizations they are trying to sell, as any sales person or account manager that doesn’t spread the risk across multiple potential client organizations is not a sales person or account manager that is going to keep their job very long.

However, if you pay for the pilot, the provider’s costs, and risks are covered and the provider can dedicate the resources that you need to get the most that can be obtained from the platform. If every pilot is paid, the provider can hire more resources that can be dedicated to pilot success.

In other words, if success is desired, then the organization should pay for a pilot – as long as it’s a real pilot to support a real project (and not a demo analysis on historical data, that should be free), the provider treats the organization as a real client for the extent of the pilot, and, the provider is not profiting off of the organization. The pilot should be priced to cover cost, nothing more, nothing less.

And, as the prophet points out, done right, the benefits of a paid pilot include tactical ones such as building support for the cost/benefit analysis of different roll-out options (e.g., standardization vs. customization) as well as broader organization involvement in the overall selection of a solution (which will pay dividends in frontline adoption during a full scale deployment). And you can have confidence the solution, and solution provider, will work for you before signing a multi-year deal — all for the cost of a short consulting engagement (which will likely bring more results than a typical consulting analysis will).

Outside-In Issues are Shaping Modern Procurement — Is Your Organization Ready?

Last year, the doctor and the maverick identified twenty issues that were occupying a CPO’s mind in our post on “what is top on a CPO’s mind” on Spend Matters, from overarching issues affecting the organization — such as economic instability, globalization, innovation and corporate reputation — to value creating methods that can increase the overall value of Procurement — like category management, supply base redesign, lean and six sigma and total cost modeling.

The reality is that if Procurement’s value is ultimately derived from the extraction of value from supply markets, then, by definition, the CPO Agenda is driven heavily from an outside-in perspective. This value starts with assurance of supply, and continues with innovation, market penetration, reputation, and regulatory compliance. In other words, the days of focussing on supply assurance, cost reduction, and demand management from a pure supply standpoint alone are long over for any company that wants to survive the 21st century and the many damnations it brings to Procurement (see the 100 Damnations index).

One has to remember that stagnant GDP growth, rising inflation, steady or increasing unemployment, rising inequality between the rich and poor and an increasing need for resources in greatly limited supply are creating a perfect economic storm that will sink any company not ready to compete in the global marketplace that has taken hold in most large economies. Value chains are becoming bifurcated and turned on their heads. Consumers want local and they want global on demand. Products need to come from everywhere and go to everywhere, be compliant with local and foreign regulations, be produced in a socially responsible fashion and be sold through the appropriate digital channels. And this all has to be done by Monday morning at 9 am.

Because, today, a CPO has to deal with half-a-dozen overarching issues that are shaping the course of supply management before she can get to the nine (or so) issues clouding her agenda and the dozens of value drivers at each layer of the hierarchy of supply. Over the next few months, over on the Spend Matters CPO site, the doctor and the maverick will be chronicling these issues, agenda items, and value drivers in three 10+ part series that have been in careful development for a while now, to, finally, give a CPO a complete overview of the mad, mad world they have to survive in.

The first post, on “CSR, Environmental Stewardship, and Sustainability” is up and ready for your reading pleasure. Check it out.

Is it time to Plus-size?

By now, you’ve probably noticed that the doctor has been contributing on a regular basis to Spend Matters CPO and Spend Matters PLUS, the first of which, like SI and Spend Matters classic, is free, and the second of which is paid (and costs 19.99 / month).

You’re probably wondering why, as SI has always been, and has always been free, as Spend Matters basic, and the doctor will not promote any blog that is not free, because of his belief that if you’re going to have a blog with the intention to inform and educate, you make sure its accessible to all.

However, Spend Matters PLUS (a subset of their PRO business offering) is not a blog, and, sometimes blogs are not enough. Why?

Unless a blogger has a large amount of sponsorship money, or is independently wealthy, (s)he can only spend so much time on the blog on a daily basis, and only impart so much knowledge and wisdom to you. (And if a blogger does generate such a significant income from sponsorships, you have to question how complete the material is as many sponsorships come with a high price tag*.) But, as SI has clearly explained over the past year, you are in Procurement hell, facing dozens of damnations on a daily basis, and the knowledge and wisdom you need to get smarter and more efficient is much, and the amount any one blogger can impart is minimal.

When it comes time to select a new solution, define a new process, or define the next challenge, you need a lot of knowledge and a lot of wisdom, and the chances that any single blog, or blogger, will have recently written everything you need is slim.

You could go to a big analyst firm or a niche consultancy to get a customized report or recommendation, but that costs a lot of money, and if you’re not sure what you need, it could be a waste of money. But if you have more knowledge and insight on the topic, you can narrow in on what you need and if you do need to hire an analyst or a consultant, you can focus them in on your needs, spend less, and get more.

Over on Spend Matters PLUS, the prophet has assembled a team of experts who are contributing detailed pieces on technology, process, and relevant topics that you as a Procurement professional will need deeper insight on, at some point over the next year, on a regular basis. In addition to the prophet, who is an expert on P2P, marketplace analysis, M&A, and solution evaluation, you have regular contributions from:

  • the maverick who is the top analyst and supply management framework developer in the space,
  • the anarchist who is one of the leading operations research, supplier management, and process evaluators in the space, and
  • the public defender who is an expert on procurement process and public sector procurement and an international correspondent

among other experts who chime in from time to time. And the articles are deep. The average length of the articles that the doctor has been contributing on are 4 pages. That’s about 3 times the average length of an SI post. And most of the articles are part of in-depth multi-part series that give you more information on a topic than most analyst firms will.

Now, is it right for you? That depends. If you are a lucky one who works for a progressive Procurement organization, then you might have subscriptions to analyst firm research and market intelligence firm publications or training academies that provide you with a wealth of knowledge and not need much more. But, if you work for an average organization which frowns on you taking the time to even fill out a subscription for a free publication, it’s more than you could ask for given the price.

SI’s recommendation is that it’s worth it. And the recent series the doctor has collaborated on, including multi-part series on Contract Lifecycle Management (platforms), Supplier Relationship Management (platforms), Marketing Spend Management, Direct Material and Commodity Spend, among others, are among the most in-depth and encompassing series on the subjects you will find anywhere. It’s not a replacement for SI or Spend Matters (CPO), but a resource that fills in the gap when your organization won’t pay for the knowledge you need and you’re forced to acquire that knowledge yourself. As this is only the second paid resource SI has ever recommended (the first being the NLPA for new Procurement professionals who still need the foundations), you know there has to be something there.

* It’s sad to say, but some companies won’t sponsor unless they get one or more of the following: final say over what is said about them, final say about what is said (or not said) about their competition, the right to guest post whatever they want on a schedule, the right to whatever marketing or registration lists you have, and/or the right to write their copy and have you stamp your logo on it (and both SI and SM have seen examples of this on “blogs” in the past — sometimes the copy wasn’t even edited and was clearly written by an internal PR person of the company the “brief” was about who couldn’t even run a simple spell check), etc. Finding sponsors who will support pure education, and not request anything more than a simple fact check on pieces on them, is a lot harder than a reader or aspiring blogger might think.