Category Archives: Miscellaneous

The Coupa Sunflower Starts to Blossom

Coupa, who just hosted their first webinar, is still heads down in their quest to make their enterprise e-Procurement application better and better by the day, and still succeeding. Now covering the full order management cycle from requisition to two-or-three way reconciliation, the only thing it doesn’t do yet, at a basic level, is payments. However, you can export your purchase orders, invoices, and goods receipts to an XML, or CSV, file and integrate into your e-Payment system that way. It even has the option to track tax codes, which will simplify you tax reclamation processes. They have begun directing mid-size organizations to their hosted e-Procurement application as well, as they build up to a rumored major announcement slated for early September.

For a product that’s been out of the gate for less than a year, it’s come a long way. With it’s built-in basic RFP capabilities, which will soon support direct supplier entry of relevant bid and product information in addition to the e-mail based interface it already supports, you have the option of starting with an RFX or a purchase order (template). When the order arrives, you can generate a goods receipt for three-way matching, and the system can be configured to automatically send the buyer a notice when an invoice is submitted if they haven’t confirmed receipt of the goods or service.

And you don’t have to take my word for it anymore – you can ask for
references from one of their clients if you feel it’s necessary. But with their low price point, you might just consider buying it to try it. Coupa has adopted the low-cost per-user model made popular by SalesForce, SuccessFactors (acquired by SAP), and others. Their ultimate goal, for larger organizations, is a price-point less than some organizations are still paying for their e-mail inboxes. Speculation on pricing from nervous e-Procurement competitors continues, but I have it on very good sources an average organization can expect per-seat pricing of slightly less than $40 per user per month (with a minimal commitment) – or not much more than the cost of hosted e-mail and calendar functions with IT support for many organizations – for a fully featured e-Procurement system.

Plus, unlike hosted behind-the-firewall solutions, you get updates and constant improvements for free. Coupa intends on releasing a series of minor updates to their solution between now and the fall, when the next major version of their enterprise platform will likely be released. What can you look for? Although an update schedule has not been finalized, since Coupa believes on implementing commonly requested feature first, you can expect streamlined payment system integration, more built-in reporting, and more pre-enabled punch-outs in the coming months. Add this to their newly completed filter-based budget reporting, enhanced approval workflows (with approval limits), tolerance-based invoice matching, multi-currency support (including the ability to integrate with the Bank of New York exchange rate web-service on a regular basis), improved survey and template creation, and extremely-fine grained roles-based security (with template support), and the solution footprint has considerably improved.

So, if you’re looking for an e-Procurement system, be sure to check it out. You might just find what you’re looking for. And when it comes to constant improvement, you can be sure they’re going to Coup-at-it

Two Great New Optimization Resources

For those of you looking for a good introductory overview of decision optimization for strategic sourcing, two new resources hit the bit-stream today.

First of all, there’s the 2-Part “What is Supply Chain Optimization?” podcast, part of the Next Level Purchasing’s (now the Certitrek NLPA) podcast series that features Charles Dominick (a Supply And Demand Chain Executive Pro to Know), President of Next Level Purchasing (a Supply & Demand Chain Executive 100 Company) and yours truly. (For more details, see today’s edition of the Next Level Purchasing newsletter.) Clocking in at just under an hour, we try our best to convey the basics of strategic sourcing decision optimization and why it’s important to you as a sourcing / procurement / supply mananagement professional. For those of you who find the podcast quite dense (it is!), and wish to review one or more sections, you’ll be pleased to know that a free transcript (basic or with editorial notes) is available, sponsored by Sourcing Innovation.

Secondly, over on the eSourcing Wiki [WayBackMachine] (which, as of today, has 18 wiki-papers on various topics relevant to you as a sourcing professional with more on the way), the Strategic Sourcing Decision Optimization wiki-paper is now available, sponsored by Iasta (acquired by Selectica, merged with b-Pack, rebranded Determine, acquired by Corcentric). Along with an introduction to optimization, including strategic sourcing decision optimization, it also overviews the benefits and ten strategies for success.

When you add both of these resources to the ever increasing archive of decision optimization blog posts here on Sourcing Innovation, I believe (or at least I hope that) you finally have the resources you need to start understanding what strategic sourcing decision optimization is, is not, and why it’s important. Especially when you consider that Emptoris (acquired by IBM, sunset in 2017) gives you nothing and CombineNet (acquired by Jaggaer) primarily gives you academic papers in their learning center, which, although great, are too advanced for those of you looking for an introduction that you can understand as a non-academic and non-optimization researcher.

Avoiding Risk Management Pitfalls

The Supply Chain Management Review recently posted an excerpt from an article by Jayashankar M. Swaminathan and Brian Tomlin that summarized six common pitfalls and strategies for avoiding them that’s worth a quick look. In “How to Avoid the Risk Management Pitfalls”, the authors summarized the following pitfalls and their mitigations:

  • Assuming disruptions can only occur when operating at normal strengths. Disruptions can occur at any time – even when you are in the process of recovering from a disruption. Human-caused disruptions in your supply base and natural disasters can happen at any time.
  • Assuming yours is the only company affected by a disruption. If the disruption is caused by a natural disaster, chances are other suppliers are also affected. For example, if a tsunami wiped out 25% of the cocoa crop along the west coast of Africa, then your back-up supplier is likely to have just as much of a problem meeting your needs as your current supplier and your emergency supply, if attainable, might cost considerably more than you originally planned for.
  • Ignoring the supply risk associated with demand-pooling tactics. Demand-pooling strategies might work great under normal circumstances, but they can lead to a false sense of security since they might serve only to understate the seriousness and immediacy of a disruption should one occur.
  • Ignoring demand risk when choosing a supply-continuity tactic. Just as you need to factor in supply risk when evaluating demand pooling, you need to factor in demand risk when evaluating supply-continuity because supply-continuity can seriously increase your demand risk. Insuring significant supply can be costly, and if the demand never materializes, this can result in a significant loss.
  • Allowing managers’ risk attitudes and timelines to determine strategy. Managers can vary widely in their tolerance for risk, from extremely lax to dangerously intolerant. Furthermore, even if a manager is willing to invest in supply-chain resiliency, a manager’s choice of tactics can be strongly influenced by his tolerance for risk. Good risk management entails having the right strategies in place for each identified risk, whose cost and effort should be dependent on the probability of the risk occurring and the financial damage that could be caused by the risk materializing.
  • Building short-term resiliency at the cost of long-term vulnerability. Supply risk management is not effective if only performed as an intermittent activity carried out every few years on an irregular basis. A good risk management strategy today might not be a good risk management strategy tomorrow. As the authors note, you need to be continually vigilant in scanning for changes in your operating environment that may necessitate adjustments to your resiliency strategy.

I summarized some good strategies and tactics to manage demand and compliance risk in this post back in April. Some of the better strategies and tactics include:

  • Supply Buffer Management
  • Cycle Time Reduction Strategies
  • Collaborative Processes
  • On-Going Screening and Quality Control Processes
  • Continual Training
  • Regular Supply Chain Audits

In addition, as I summarized in this post that summarized Aberdeen’s supplier performance and risk management benchmark report, there are a number of enablers that you can implement to improve your risk management program management. These include:

  • Supplier Scorecarding and Reporting
  • Automated Calculation of Key Supplier Performance Metrics
  • System Notification of Performance Issues & Disruption Events
  • Integration with Spend Analysis Tools
  • Reporting of Key Supplier Operational and/or Financial Risks
  • Web-Based Portal for Supplier Self-Registration & Information Maintenance
  • Insurance Solutions

Who Wants to Brief the doctor?

Just a reminder that if you’re interested in the chance to Brief the doctor to reach out using the contact information in the FAQ. (If we’ve already spoken, or you’ve already contacted me, then you’re on the list and I’ll contact you when I know I’m going to be in your city.)

So far this year, as astute readers will have picked up on, I’ve been in the following major cities: Boston, Chicago, Dallas, Indianapolis, San Francisco, and Toronto. Right now, I’m looking for (more) companies in Boston, Calgary, Chicago, Dallas, San Francisco, and Toronto, as I’m likely to be there (again) before the year is up, as well as Denver, Los Angeles, Pittsburgh, Phoenix and other large major Canadian and US cities that host sourcing and procurement conferences and events on a regular basis. (Also, if your sourcing or procurement product or service company is not on my master company list, last summarized in the Sourcing Innovation Mega Map, please drop me a brief note introducing your company with your URL and I’ll at least add it to my database.)

Unlike some analyst firms, this isn’t pay-to-play, so if you have a good story, if I can find the time, I’m happy to listen to it. (However, if you’re looking for a way to get some name, and brand recognition, and are innovative enough to understand the importance of web 2.0 social networking technologies, I would invite you to consider a Sourcing Innovation Sponsorship, which will not only insure that the blog keeps publishing content sourcing and procurement professionals can use on a daily basis, but help it to expand the depth, breadth, and regularity of such content.)

[Shameless Plugs Alert] Finally, while we’re on the subject of me, I’d like to remind you that I do make my living as an independent consultant, who specializes in helping product and service firms create better supply chain information technology solutions (products, processes, or services) as well as companies looking to select and implement such technologies through my consulting company. (And, like Azul Partners, who can help you market those better supply chain information technology solutions, please note that like Spend Matters (Sourcing the Sacred Marketing Cow*) my firm is not a commodity either!)  For more information, drop an email.

* All posts prior to 2012 were removed in the Spend Matters site refresh in June, 2023.

Managerial Delusions

I know this isn’t a management blog, but since the success of a sourcing team is considerably influenced by the quality of the manager running it, I don’t feel too bad about pointing out a recent article from The McKinsey Quarterly on “The halo effect, and other managerial delusions”.

I loved this article, and not just because just about every manager I ever worked for (during my days as an employee) suffered from at least a few (dozen) delusions. The article describes three common delusions that every manager should be aware of if they care about their performance along with three tips they can employ to help them think clearly.

Delusion #1: The halo effect

The halo effect refers to the tendency to make specific inferences on the basis of a general impression. Company performance, good or bad, tends to create an overall impression – a halo – that shapes how its strategy, leaders, employees, culture and other elements are perceived. Most everyday concepts in business – including leadership, corporate culture, core competencies, and customer orientation – are ambiguous and difficult to define and what we believe to be contributions to performance may actually be attributions. In simple terms, as the author points out, outcomes can be mistaken for inputs. Thus, it’s important that managers look for independent evidence that their company, when successful, has a visionary leader and superb customer orientation or that their company, when struggling, has a poor strategy and weak execution. Sometimes even a poorly run company can do well in a bull market and a well run company can do poorly in a market slump.

Delusion #2: Absolute Performance

Following a given formula can’t ensure high performance, and for a simple reason: in a competitive market economy, performance is fundamentally relative, not absolute. Moreover, whereas a given set of factors may appear to have led predictably to success, the reverse is more likely – it would be more accurate to say that successful companies tended to be described in the same way. The direction of causality is wrong.

Delusion #3: Lasting Success

The halo effect can lead to a second misconception about company performance: that they can achieve enduring success in a predictable way. Statistically, lasting success is an anomaly and, in reality, markets, and marketplaces, change daily. There is no reason to blindly believe that a strategy that worked yesterday will work tomorrow. Most companies that have enjoyed long-term success have generally done so by stringing together many short-term successes, not necessarily related.

Clear thinking tip #1: Recognize the role of uncertainty

Rather than search in vain for success formulas, business executives would do better to adjust their thinking about the context of strategic decisions. Strategic thinkers must recognize the fundamental uncertainty of the business world. This uncertainty is everywhere – customers, competitors, capabilities, technology.

Clear thinking tip #2: See the world through probabilities

This will help you improve your odds of success through a thoughtful consideration of multiple external and internal factors.

Clear thinking tip #3: Separate inputs from outcomes

Clear-thinkers understand that in an uncertain world, actions and outcomes are imperfectly linked. Just because a choice didn’t turn out the way you expected does not mean it was a mistake. Thus, it’s important to examine your decision process as well as your decision – good decision processes have a much better chance at arriving at good decisions.

There are, of course, many more delusions – and a more detailed description of a good decision making process could have been included – but it’s a great article, and great advice.