Category Archives: Market Intelligence

Technology Has Improved, But It’s Still Not Solving Fundamental Problems!

In a recent Procurement Insights posts, THE REVELATOR tells us that a 2007 challenge is finally being addressed in 2025, and he’s right in that it’s being addressed, but parts of the problem are still not being solved. But before we can dive in too deep, let’s review the four points from his 2007 post on the Change Management Myth.

The core of his eighteen year old post was the statement that many failures stem not from resistance to change itself but from deeper systemic issues in how technology is deployed, which is often the case because, when the system selected is the one with backing from the core team, there is obviously some desire to change, but something is preventing that change from happening. Based on interviews and discussion with third parties, including one with a professional who had over a decade of public sector Procurement system implementations at the time (remembering that the first procurement system only went live twelve years before his post eighteen years ago), he identified four key reasons why automated procurement systems fell short and resulted in poor adoption and outcomes.

These four reasons were:

  • lack of technical savvy and cultural understanding
  • procurement module was an ERP afterthought
  • lack of process mapping/improvement before automation
  • discrepancy between promises and delivery

While technology has improved greatly, as far as I’m concerned, two of these still aren’t being solved because the technology that is addressing the issues are not solving the fundamental problems. In THE REVELATOR‘s post, he points to an AI-powered “digital team member”* agent solution (and one custom built for the SAP ecosystem) as an example of a technology that addresses the four problems (but we will not name it as we don’t want to be negative on a particular technology that does offer some value to customers in Ariba jail). Our goal of this article to address the statements he is making and the fundamental requirements to solve the problems that still plague our space).

According to THE REVELATOR, each of the problems are addressed for the given reasons:

  • lack of technical savvy and cultural understanding because these platforms minimize the need for advanced skills with conversational interfaces and email integrations that don’t require extensive training and that “implicitly teach the why” by delivering immediate value
  • procurement module was an ERP afterthought because this technology is purpose built for procurement, enhancing the across-the-board experience by implementing and supporting “best practice” out of the box
  • lack of process mapping/improvement before automation because it inherently improves processes by AI-triage, prioritization, and workflow embedding while analyzing data in seconds, eliminating manual entry, and supporting iterative testing
  • discrepancy between promises and delivery because seamless integration allows for instant impact, results, and measurable ROI

And each of these approaches is an approach that addresses the problem. However, it does not solve two of them, and that can lead to even worse errors being made then before. Namely, it doesn’t do anything for:

  • lack of technical savvy and cultural understanding because guiding a person through a process, which is the one statistically estimated (i.e. guessed) to be the correct one, does nothing to address their lack of technical savvy or Procurement understanding, and, in fact, if it makes the process too easy or, on the easy test cases, gets the process too right, it leads the user into a false sense of security, just like vibe coding (which results in over half of the code being produced having serious security issues) or vibe physics (which sometimes results in delusions and sometimes even early stage “ChatGPT” psychosis), except in this case the user will happily authorize a million dollar purchase for the wrong product if the system doesn’t detect it’s the wrong product
  • lack of process mapping/improvement before automation is not solved by slowly “learning” processes post implementation, and letting the system guide you on “corrections” because probabilities are not certainties, and if you don’t do pre-implementation process and data mapping, and understand the state of your data (and, if necessary, cleanse and enrich it), the system could make very wrong decisions (because it can only compute on the data it has, and if that data is bad, the recommendations will be very bad)

Not only does too much AI not solve the problem, but it actually exacerbates it. While we do want Augmented Intelligence, we want carefully designed, selected, evaluated, and implemented Augmented Intelligence where we can have very high confidence in everything it does because we pre-verified it, understand its limits, validated its data, and never apply it inappropriately. Plus, we want it to support our thinking and analysis, not have us support it when we have no clue where it’s coming from.

At the end of the day, we want better educated and trained personnel, because then they will know what tool to use where, how reliable the answer will be, and when a process can be fully automated vs. when you need manual checks. And then we want to give them the technology that makes them up to 10 times as efficient at their job by automating all of the tactical data collection, processing, analysis, and summarization so they can review everything they need to make the right decisions, select the right options in the system, and then have the system automate the tactical processes that come after. That’s not being guided by AI, that’s guiding the AI. That’s not just a semantic difference, it’s a significant process difference that can have a significant impact on Procurement efficiency and effectiveness.

* Let us remind you that AI Employees Aren’t Real!

KPIs To Ask For By ProcureTech Module: Part III

In our last series on Why Your Tech Selection Should be KPI, and not Bell-and-Whistle, Focussed if you are not technical, we reviewed Tanya Wade’s 21 KPIs that are a great start if you’re looking to put some KPIs in place to properly program and percolate procurement. Not all of these were (the most) appropriate for all modules, but if you don’t know your tech, they were a great start.

In this mini-series, we’re partitioning the performance indicators by ProcureTech module as well as indicating a few more you should be asking for. We’ve covered the core Source-to-Contract modules, and today we are concluding with the Procure to Pay Modules of e-Procurement and Invoice to Pay (Accounts Payable).

e-Procurement

Tanya Wade’s Performance KPIs

  • Supplier Performance:Supplier Lead Time
  • Compliance & Risk:PO Compliance
  • Operational Efficiency:Procurement Cycle Time
  • Operational Efficiency:Automation Rate
  • Spend Analysis:Tail Spend

For details on these, see our prior series.

Key Module KPIs

  • Compliance & Risk:Maverick Spend Reduction – maverick spend is out of control in most organizations without good (e-)Procurement systems; it is important to know what is the average improvement from implementing the provider’s system (no matter what metrics the vendor throws at you, if this isn’t substantially increasing, the system is NOT being adopted)
  • Compliance & Risk:Preferred Supplier Spend (Improvement) – how much of the off-contract spend is with preferred suppliers, and by what percentage is preferred supplier spend expected to increase
  • Compliance & Risk:Avg Improvement/Time-to-Value in Discount/Rebate Acknowledgement – many traditional savings in office suppliers / MRO are offered in the form of rebates if a volume is hit (because the provider knows it won’t be because all organizations without good e-Procurement/Contract Management have high levels of maverick spend and they know they can often substitute SKUS due to “temporary stockout” and the buyer won’t notice and this will help ensure that the volume is not hit)
  • Operational Efficiency:Automated Inventory Re-Order % – for regular inventory/MRO restocks or predictable volumes based on the manufacturing plan, the e-Procurement system should be able to submit the POs automatically
  • Operational Efficiency:Repeat Order Cycle Time Reduction – for standard orders such as employee onboarding kits, monthly storeroom re-orders where the amounts need to be human verified/input, etc., on average, how much faster can these be placed vs. pre-module implementation
  • Operational Efficiency:Quick-RFP / RFQ % Reduction – by what percentage does the e-Procurement system, with its integrated catalog and quote management functionality, reduce the percentage of quick RFP/RFQs that the organization needs to issue for non-strategic purchases
  • Operational Efficiency:% (Increase) Spend on PO – by what percentage is on-PO spend increased

e-Procurement is all about getting Spend Under Management, ensuring contracts and included pricing are adhered to, and using preferred suppliers (and products) as much as possible (to help with standardization). This requires making it easy for requisitioners/buyers to find what they need, buyers to issue POs, and on-contract/preferred supplier spend to be easily tracked. Metrics should be in place to make sure all of this happens.

Invoice-to-Pay / Accounts Payable

Tanya Wade’s Performance KPIs

  • Operational Efficiency:Procurement Cycle Time
  • Operational Efficiency:Automation Rate

For details on these, see our prior series.

Key Module KPIs

  • Operational Efficiency:Invoice Cycle Time Reduction – by how much, on average, do clients see invoice cycle time reductions
  • Operational Efficiency:Straight Through Processing Percentage – what percentage of invoices are able to be processed straight through (with m-way match) without human interverntion
  • Operational Efficiency:Average Dispute Resolution Time (Improvement) – what is the average dispute resolution time in the platform and what is the improvement over the average time reduction versus pre-system implementation
  • Operational Efficiency:Early Payment Discount Opportunity Improvement – percentage-wise, how many more invoices eligible for early payment discounts can now be paid early (that couldn’t before due to processing delays), allowing organizations to improve their working capital management

Invoice to Pay is all about invoice processing automation and minimizing the amount of time that a human needs to manually review invoices for completeness and correctness and (automated) payment according to pre-defined terms. Make sure the metrics you choose reflect this.

We don’t claim this is a complete list, or every KPI that you can, and possibly should, ask for, just that if you are non-technical, and can’t judge a solution on its technical merits, if you can at least get these KPIs and force the vendor to prove them to you, then you will at least get a solution that is bound to provide you with some improvement and that, because of the real improvement potential, may actually be used.

The best solution is to hire an independent third party who is an expert in ProcureTech and who has no stake in any provider or implementer and is solely interested in doing Project Assurance for you, but if you can’t get that, at least get something which has a history of delivering measurable value to similar organizations.

KPIs To Ask For By ProcureTech Module: Part II

In our last series on Why Your Tech Selection Should be KPI, and not Bell-and-Whistle, Focussed if you are not technical, we reviewed Tanya Wade’s 21 KPIs that are a great start if you’re looking to put some KPIs in place to properly program and percolate procurement. Not all of these were (the most) appropriate for all modules, but if you don’t know your tech, they were a great start.

In this mini-series, we are partitioning the performance indicators by ProcureTech module as well as indicating a few more you should be asking for. In the first part, we addressed Spend Analysis and (e-)Sourcing. In this part, we are tackling supplier management and contract management.

Supplier Management

Tanya Wade’s Performance KPIs

  • Supplier Performance:On-Time Delivery
  • Supplier Performance:Supplier Fill Rate
  • Supplier Performance:Supplier Defect Rate
  • Supplier Performance:Supplier Rating
  • Compliance & Risk:Supply Base Risk
  • Compliance & Risk:% of Audited Suppliers
  • Sustainability & Diversity:Diverse Supplier Spend
  • Sustainability & Diversity:Sustainable Spend
  • Innovation and Collaboration:Joint Supplier Projects
  • Innovation and Collaboration:Idea Implementation Rate

For details on these, see our prior series.

Key Module KPIs

  • Supplier Onboarding:Average Onboarding Time – how long does it take to onboard a new supplier in the system; if you can’t get the suppliers in the system, it’s not very useful
  • Supplier Onboarding:Average Onboarding Approvals – on average, how many approvals are needed to onboard a supplier – every approval slows down the process, so they should be minimized and optimized
  • Supplier Onboarding:% Supplier Data Pre-populated – how much data is the provider able to import, on average, from existing systems and third party feeds to minimize the effort required by the supplier and the onboarding time
  • Supplier Onboarding:Average Supplier Data Accuracy – how accurate is the data that is used to initialize the system, i.e., on average, how much data has to be corrected
  • Supplier Discovery:Qualified Supplier Network Size (By Industry) – how many suppliers that the organization could reasonably use are in the supplier’s network; many companies will claim millions of suppliers because they index every single business in a geography, but (corner) drug stores, grocery stores, pizza shops, restaurants, corner stores, department stores, etc. etc. etc. are NOT suppliers you can use even if they are technically in the same vertical (pharma, food and beverage, CPG, etc.)
  • Supplier Discovery:Average Supply Base Net Change – after implementing and using the solution for a year, what percentage of suppliers, on average, are new in an organization’s supply base

Supplier Management is about the supplier lifecycle:

  • on-boarding,
  • buying,
  • managing,
  • developing, and
  • off-boarding.

As a result, it’s key that you have metrics that can gauge the efficiency of each stage of the supplier lifecycle until a supplier is deactivated and fully off-boarded.

Contract Management

Tanya Wade’s Performance KPIs

  • Compliance & Risk:Contract Compliance

For details on these, see our prior series.

Key Module KPIs

  • Contract Negotiation:Avg Cycle Time – what is the average time to negotiate and sign a contract in the system
  • Contract Negotiation:Avg Cycle Time Improvement – what improvement did the system bring relative to pre system contract cycle times
  • Compliance & Risk:Avg Negotiated Price Compliance Increase – what improvement is there in negotiated prices being realized on invoices as a result of the module implementation
  • Compliance & Risk:Evergreen Renewal Reduction – what percentage of (overlooked) evergreen renewals are eliminated with the module
  • Compliance & Risk:Contract Risk Score – can the system track risk scores by contract, category, supplier, and the organization
  • Contract Management:Contract Renewal Rate Change – what percentage of contracts are renewed in the system and what is the average (percentage) change vs. pre-system
  • Compliance & Risk:Obligation Rate Improvement – contract compliance is too broad, and might only measure if the contract was ultimately fulfilled; a good contract management system facilitates execution management at the milestone and associated deliverable level and tracks the rate of (on-time) milestone fulfillment to ensure contracts are managed effectively from the date of signing to the final deliverable, which could be years down the road

Contract Lifecycle Management (CLM) has three key stages:

  • negotiation and signing,
  • execution management (and compliance), and
  • renewal or termination.

Make sure you have metrics that measure the key processes and targeted results at each stage, or you’ll end up buying a very pricey, seldom used, virtual filing cabinet where contracts are stuffed and forgotten.

In our third and final part of this (initial) mini-series, we will tackle the last two primary modules of Source to Pay, the Procure to Pay Modules of e-Procurement and Invoice-to-Pay.

KPIs To Ask For By ProcureTech Module: Part I

In our last series on Why Your Tech Selection Should be KPI, and not Bell-and-Whistle, Focussed if you are not technical, we reviewed Tanya Wade’s 21 KPIs that are a great start if you’re looking to put some KPIs in place to properly program and percolate procurement. Not all of these were (the most) appropriate for all modules, but if you don’t know your tech, they were a great start.

In this mini-series, we’re going to partition the performance indicators by ProcureTech module as well as indicate a few more you should be asking for (as well as the proof, which, as we all know, is in the pudding, which you cannot eat until they show you their meat, like Pink Floyd told us 46 years ago).

Spend Analysis

Tanya Wade’s Performance KPIs

  • Cost Management: (Avg.) Cost Avoidance
  • Cost Management: (Avg.) Spend Under Management Improvement (YoY)
  • Spend Analysis:All Spend Categories
  • Spend Analysis:Maverick Spend Categories
  • Spend Analysis:Tail Spend
  • Sustainability & Diversity:Diverse Supplier Spend
  • Sustainability & Diversity:Sustainable Spend

For details on these, see our prior series.

Key Module KPIs

  • Spend Classification:Typical Accuracy – especially if it’s AI-backed/first/powered/etc.
  • Spend Classification:Time to Accuracy – this is critical; if it takes 6 months, your tool will be DOA as no one will use it as faith will have been lost after 6 weeks
  • Spend Classification:Transactions Per Minute – you need a tool that can not only import new transactions in real time, but build and rebuild spend cubes in real time — the key here is CUBE there is no one CUBE (just like there is no one ring or one ping).
  • Cost Management:Year-Over-Year Decrease in Managed Categories – where the organization is spending more than necessary, how much has the organization saved by sourcing/renegotiating identified opportunities
  • Operational Efficiency:Total Captured Opportunity per Minute how much spend does the organization save and avoid w.r.t. the time the Procurement team spends building and accessing cubes, views, and filters

Remember, at the core, the entire point of spend analysis is to:

  • get your spend in order,
  • understand it, and
  • find opportunities in it.

So you’re looking for metrics that directly or indirectly measure

  • time to get your spend in order at the promised accuracy;
  • the efficiency in cube and view construction, updates, and filtering; and
  • the value the tool brings.

Sourcing

Tanya Wade’s Performance KPIs

  • Cost Management: (Avg.) Negotiated Cost Savings
  • Cost Management: (Avg.) Cost Avoidance
  • Operational Efficiency:Automation Rate

For details on these, see our prior series.

Key Module KPIs

  • Sourcing:Events Per Year – how many events per year are customers pushing though the platform on average
  • Sourcing:% Increase in Events Per Year – what percentage increase is this compared to pre-system implementation
  • Sourcing:Avg % Savings Identified – what is the average identified savings and, preferably, this statistic is available at the category level
  • Supplier Management:Avg % Increase in Invited/Qualified Suppliers – since the tool should allow more suppliers and bids to be considered in events
  • Supplier Management:Avg & Increase in Supply Base Diversification – as a result of events flowing through the system

You want a sourcing platform that

  • increases the number of events executed by the sourcing team,
  • increases the potential supply base you are able to engage, and
  • increases the cost savings and avoidance you are able to obtain.

Make sure you have metrics that allow you to gauge how well the modules you have selected will enable you to achieve the outcomes you are searching for.

In Part II we will continue with the primary Source-to-Pay modules of Supplier Management and Contract Management.

Procurement And Supply Chain are Drowning in Wannabes

We see it daily on LinkedIn.

Twenty-something founders on LinkedIn claiming their Configurable Agentic Gen-AI Enhanced Systems (CAGES) (with marketing messaging coming straight from the A.S.S.H.O.L.E.) will solve all your problems, although they don’t have a clue what those problems really are, and even if you told them, they wouldn’t have a clue themselves how to solve your problems because they have no real knowledge of, or experience with, Procurement or Supply Chain.

New-Age Influencers barely out of college giving themselves nicknames like the Supply Chain Sovereign or Sourcing Sorcerer and promising you best practices and deep insights in your daily email but who have never stepped foot outside of the big consultancy and don’t know anything beyond the 7 year old playbook they were given.

Advertisements from the Big X Consultancies or “Next-Gen Analyst/Services Firm” promising to replace your workforce with AI Agents, despite the 95% failure rate (as only 5% of AI projects have led to a return, which is 2.5 times worse than a traditional technology project, where a whopping 12% are now delivering a return), and somehow do so cheaper (despite the soon to be exponentially rising costs of LLMs as compute costs go through the roof due to a lack of energy to power them and water to cool them).

As so astutely pointed out by Mr. Koray Köse’s in his recent article on how our supply chains are literally drowning in wannabes who mistake theory for expertise, when the gap between their theory and reality could never be wider!

In theory, Procurement is easy. In theory, Supply Chains are smooth well oiled machines where I order X from you, and you ship it to me. In reality, nothing could be further from the truth!

Nothing makes the point clearer than when Mr. Köse points out that most of these so called “experts” could not pass his Economic Order Quantity (EOQ) exam question, which is totally correct, as I will dive into in a future post. (This is because, among other things, 1. the classic “textbook” formula isn’t always right, 2. doesn’t understand volume breaks and supplier economies of scale, and 3. requires you to be able to do actual math and logic to figure it out.)

Mr. Köse’s excellent article reminded me, as Bob Ferrari and I pointed out in a joint series in late spring on how Legacy Sourcing and Planning Solutions Struggle with Supply Chain Challenges, Direct Procurement is Failing. There are three big reasons for this:

  1. Direct Procurement CAN NOT be cut off from supply chains, as we outlined in detail in our 7-part series.
  2. Everything Mr. Köse’s addresses in his post!
  3. Most Analysts and Consultants fall into this fake “visionary” and “guru” category as well! (They’ve never worked in supply chain or worked hand in hand with experts with decades of experience trying to build useful solutions for those experts to use. One of the best example of this is when these f6ckw@ds use third party analyst firm studies to tell you that your headcount is too low or too high or your tech investment too low or too high without having an actual clue what your company actually does or what your Procurement and Supply Chain personnel actually do. [These Masters of Business Annihilation believe they can manage off of a spreadsheet when, again, nothing could be further from the truth. There’s a reason that the first Gilded Age was ruled by Engineers, they actually knew how to run a company! All today’s financiers can do is take a company with stratospheric profit potential and have it come-apart mid-flight, with Boeing being a prime example — if Engineers were in charge, planes wouldn’t be falling apart in the sky AND the revenue and profits would be a lot smoother!])

Over the summer, Bob and I reviewed over 40 recent studies from the past 5 years from big analyst firms and consultancies on the state of Procurement & Supply Chain — and they all have the same two things in common:

  1. they all tell you about the same barriers/roadblocks, risks, concerns/priorities, and talent gaps that are facing Procurement and Supply Chain
  2. they don’t tell you what to actually do to solve these issues (except, of course, “drop Agentic Gen-AI in” because that will “auto-magically solve everything“) because they don’t have a clue how to address these real world problems!

(Right now we’re trying to figure out how to write our next series, or maybe book, on how you actually address the issues with real process and real supporting technology to get results, assuming, of course, you have real talent that’s been-there, done-that and not these tech-bro AI hipsters that literally can’t create a PO [or even read a contract without putting it through faulty AI first]. It’s quite challenging because, apparently, no one has actually tackled writing something truly helpful before in our joint space and we’re struggling on how to make it useful and digestible in the age of marketing sound-bites!).

The reality is that, just like Procurement has not changed since the first handbook was published 136 years ago, neither has Supply Chain! While Mr. Köse doesn’t explicitly say this, he does allude to the fact that we’ve had global trade for THOUSANDS of years and we’ve always had the same challenges (that revolve around geo-politics, risk, cash-flow, and trust) — it’s just that we’ve replaced paper with digital bits and found new ways to make it more complicated. However, the processes, goals, and realities are the same — and you’d know that if you ever actually worked in or supported global supply chains (and not just pretended you understood what they were to try and sell your shiny new tech toy)! If you don’t understand this, you’re going to continue the 25 years of project failure (where the technology project failure rate is now at an all time high of 88%) and possibly be the next great tech-led supply chain disaster!

Finally, Mr. Köse was right again! Orchestration really is just clueless for the popular kids, selfies included!

P.S. If you haven’t figured out yet that you should be following Mr. Koray Köse on a weekly basis, then figure it out now. You might think that some of his forays into geopolitics or broader supply chain is not all that relevant to your daily Procurement tasks, but the reality is that if you don’t keep up with what’s going on in the world and how that could impact your supply chains beyond tier 1, you’ll be in for a real shock to the system. This is because, when you least expect it, a critical product or component won’t show up, the supplier will be unresponsive, and you’ll have no notice that you immediately need to find a replacement (but because that supplier controlled a significant percentage of market share, there won’t be one). Unlike Billy Idol’s shock to the system, yours won’t feel so good when this happens. (But if you keep up with major events, you can identify those that may impact your supply chain, verify or disqualify, and then start working on mitigations for those that might impact you significantly before it’s too late.)