Category Archives: Procurement Innovation

Platform iZombie, Part II

As we stated yesterday, we’re all zombies. Procurement is continuing along in the most undead fashion possible, going through the same motions day after day like a clockwork automaton of the 19th century. The platforms that the visionary consulting firms and platform providers were supposed to provide us by 2020 (less than 15 short months away) have not materialized and we are stuck in a tactical nightmare. Which is about the worst kind of nightmare.

We’re dead serious about that last part. If you consider the most common bad nightmares — being naked in public is only going to embarrass you at most once (and not at all if you are a nudist), a broken bone will heal, a fall just wakes you up, we’re all cheated, we’re all interested in the unknown, we probably know or believe ghosts aren’t real (or probably can’t harm us), many spiders are more scary than dangerous, teeth fall out when we’re young to regrow, danger is always present, we will eventually be late for something because Murphy’s laws tell us sh!t happens, people are always trying to steal our IP, we all fell like we’re drowning in the modern world (of work), it’s easy to be lost in the big picture, and we all get fed up of loved ones sometime — I think the living nightmare of doing the same thing day after day expecting a different result (which is the definition of insanity by the way) is the worst of all. And, remember, you can always wake up from a nightmare. You can’t wake up from the zombie state modern platforms have put us in.

But it could be better. In our last post we indicated how a modern platform could have saved over 80% of our time with simple capabilities that really should have been in every platform for the past five years.

But would this be the case in general? Would a modern platform really eliminate 80% of our entire workload? Let’s run through the rest of the day.

We return from lunch to our stakeholder meeting. Now, it’s true that no platform can eliminate the meetings and you’re still going to lose that time to a degree, but with the right platform, you can make meetings more productive.

With a good platform, the customer success rep would see that her peers were happy with the supplier’s performance and that it was improving and that her customers were next to get the replacements. She’d still be unhappy, but well informed and willing to wait until the next shipment before taking her final position.

The finance rep would already know why you disqualified the lowest bidders. Any discussion could thus be focussed on the question as to whether or not one of the lowest bidders could be improved to a level of acceptability over time versus an inquisition as to why the bidder was eliminated.

The engineering rep could see all the cost models and the savings projections over time and understand the issues everyone (else) has with the incumbent.

And the marketing rep would know that while you want suppliers with exciting features, there are critical requirements that need to be met in order to keep production lines going and shelves stocked. And those needs must come first.

Instead of thirty minutes of complaining, ranting, and basic Q&A before you can get down to meaningful discussions, since all the stakeholders have insight into all the facts, you can get down to real discussions and debates. It may not be productive, but at least you skip addressing the stuff you should already know.

And then there’s the issue of the meeting conclusion — more suppliers are needed and that’s another discovery project that you estimate at 20 hours or more. But if you had a modern discovery platform with deep intelligence and match capability, it would not be a 20 hour project, it would be a 2 hour project — at most. The first phase would be like 20 minutes, and you could slip out and do it on a break.

But anyway, because it’s not something you can make any progress on today, you move onto supplier emails and that’s where discover that your steel shipment didn’t ship yesterday and you need a replacement in 21 days or your production line is going down. And you spend an hour and a half trying to find a substitute. With a good platform, you know all of the suppliers that provide a similar or substitute product, which are under contract, and what the last bids were. You can start calling them immediately, and likely find a replacement supplier in three calls and 30 minutes, not 90 or more.

And let’s not mention the 40 minutes you waste reviewing emails that ask questions that could be answered in a good supplier portal or automatically answered by a chatbot.

It’s almost five before you get down to the project work. The platform won’t save you the time required to answer technical supplier questions, the time to manually score an RFX, or the time to figure out why suppliers aren’t bidding, but you’d get to it about 5 hours earlier in the day!

And when you accomplish something by noon, versus working to seven and accomplishing nothing, you find your headaches are a lot less and you don’t need to pop quite so many painkillers.

Platform iZombie, Part I

If you’ve been keeping up to date on our ongoing blog series, you know why we’re all zombies. The reason, simply put, is that, instead of Procurement recognizing that it was supposed to be dead and buried two years ago, and maybe rising from the ashes, it has instead continued along in an undead fashion. Each day, we go through the same motions, using the same processes, on the same old platforms. Platforms which, according to the visionary consulting firms and platform providers, were supposed to solve all our problems and release us from this tactical nightmare. Instead, they have done nothing to ease our woes and, in many situations, have made them worse!

Not only are the majority* of platforms still based on last decade’s processes, but they aren’t even making them easier. In essence, they are fueling the Procurement zombie nation and they should be ashamed of themselves.

To understand how, let’s consider our average Monday morning, as documented in iZombie: A Prelude Part I, and how a modern platform would have prevented us from wasting four hours of our day.

First of all, it takes you five minutes just to judge how many emails are from each type of project stakeholder. A good platform with integrated communications would give you that information in 5 seconds, with communications already arranged by urgency and seniority (based on your organizational structure and derived from your typical review patterns).

Secondly, the modern system with the integrated cognitive monitor would immediately detect that an email didn’t go out because it didn’t have the new SSL certificate, invoke the process to download the SSL certificate, and send the email again.

Thirdly, you never would have gotten that call from your widget supplier because:

  • as soon as the invoice was marked “DO NOT PAY”, you would have been alerted, known of the issue, and marked it for “monitoring”
  • as soon as it was past due, you would have followed up with Engineering, who would have said “yes, we got the shipment, it’s in the system”
  • you would have searched for all invoices with similar products, found one for the proper product, noticed the invoice ID was miskeyed, fixed it, and sent Finance an e-mail to remove the “DO NOT PAY”
  • the invoice would immediately enter the payment queue, and the supplier would be notified on their portal
  • it would have been paid on the next payment date, 7 days in the future, and 23 days before you got the angry screaming call

and all this would have taken you 10 minutes a month ago, instead of almost an hour now!

But now the biggie — because of your antiquated platform, it took you 3 hours to construct a project overview report that summarized the status on all the key projects, issues, and actual/projected vs. budget. A modern platform would automatically track all those metrics, allow you to record issues as they arrive and tie those metrics to issues, and then, when a summary report is created, automatically pull the issue summary and status into an appendix.

A modern sourcing platform would come with a customizable template that you could customize in 15 minutes and (schedule to) run, as needed, saving you hours of work compiling all the information that is already known, and linked. The only thing you should have needed to do was edit the executive summary to contain a few expert notes on the situation and expectations based on team dynamics and broader organizational knowledge the system didn’t capture. In other words, your three hour effort should have been a 30 minute effort that started with a 5 minute scan of the auto-generated report, a 20 minute edit and augmentation of the executive summary, and a final 5 minute proof.

In other words, the work that took you four (4) hours and 15 minutes should have taken you about 35 minutes. And that’s only because one of the reports was being presented to the C-Suite and needs a human touch and review.

But because the average amoeba has more “artificial intelligence” and “automation” than an average Procurement platform, you had the privilege of spending yet another half workday as a Procurement Zombie.

* A few providers are actively working towards the key next generation capabilities we outlined in our * series, but the majority of platforms on the market today are still based on processes and capabilities innovated a decade ago. In internet time where even the largest provider will roll out bug fixes, patches, and minor updates on a quarterly cycle, that’s a professional lifetime!

iZombie … Why?

So, hopefully now you understand why we’re all zombies. Procurement was supposed to be dead and buried two years ago (search the archives), but instead of the Procurement Phoenix rising from the ashes and blazing a new course, nothing, and we mean nothing, has changed.

Day by day we’re going through the same old motions, using the same old processes, dealing with the same old issues, on the same old platforms.

Why?

First of all, why are we using the same old processes. While the intent of Procurement has not changed since the first Purchasing Manual was written back in 1887, the nature has. We’ve gone from vertically integrated companies with relatively local supply chains (where only raw materials were imported and only when necessary) to horizontally distributed supply chains where everything can be imported and exported through every step of the chain and where there can be three or four levels in the chain.

Secondly, why are our suppliers still okay with this? Presumably we’ve learned a few things in the past one hundred and thirty years or so? Presumably we have better processes for managing the entire source to contract to delivery to return to rinse and repeat cycle. And presumably we can use that knowledge in our dealings with them and make things better for them as well as us.

Thirdly, and most importantly, why aren’t we using platforms that enable these better processes both for us and our suppliers?

Well, unfortunately, we already know part of the answer here. As per our recent series on how 2020 is Fast Approaching (and that you better get on your tech capabilities), modern platforms are nowhere near where they were supposed to be. That does limit what you can do and the experience you can provide them.

But that’s not the whole answer. There’s also the fact that most of you aren’t on the best platforms you could be on, most of which are very limited in supplier relationship capabilities — which is key to building supplier relationships and making them want to use the platforms.

But you can’t put it all the vendors, as there’s also a third side to this story. You’re not insisting enough that your vendors get better. And you’re definitely not doing it from day one. Threatening to switch at renewal time isn’t much of a threat to the vendor when they know the sunk cost and the cost of change is high and that you’re not likely to be allowed to do it.

If you want to scare them, you have to take it up a notch. Threaten to tell the supplier the real reason their experience is so poor and all the faults of the platform you’re using — remember, your suppliers need platforms too. But that’s not the real answer (especially if you didn’t read the contract carefully and/or you agreed to a no disparagement clause).

The real answer is to make sure, at contract (renewal) time, you put a mandatory platform improvement clause in the contract with necessary features and functionality the supplier must deliver, on a schedule, or you get to either a) use the platform free until they deliver or b) leave at any time with no penalty and take ALL of your data with you, which they must output in its entirety in a well defined and documented database and/or (x)MXL schema that you can take anywhere.

Then you’ll get the platform you need to support more modern practices which may allow you to eliminate the same old — tactical based — issues, which result from poor platforms and poor processes.

Will it solve all your problems? Heck no. But maybe, just maybe, you’ll have a lot more time to focus on the real fires … instead of constantly having to deal with ventilating the smoke.

How? To be continued …

iZombie Interlude

In popular culture, a zombie is defined to be a person who has died and been reanimated in a manner that typically causes them to lose intelligence and, sometimes, even, sense of self. Sometimes its because a voodoo doctor or other evil personage re-animated them. Other times its because a virus, often created by a mad scientist, had a very adverse effect and created an infection that spread (like wildfire) and create half-living / half-dead creatures that are, for all intents and purposes, zombies.

But that’s not the only definition of a zombie. Another definition of zombie is a person held to resemble the so-called walking dead, included, but not limited to, an automaton. An automaton that is indistinguishable from a person that repeats the same well-defined tactical tasks over and over again, day after day after day.

A person that, with the right sustenance (brains in popular culture, or coffee and painkillers in others), can actually maintain semblance of self and intelligence, even if such semblance of self and intelligence is rarely seen during the day to day performance of their tasks.

A person that, in all likelihood, works in an organizational back-office job in an enterprise using outdated technology and inefficient processes, like your average Procurement organization.

So, when SI is saying that iZombie is a good name for our profession that was supposed to be dead and buried two years ago, but is still going … on auto-pilot. Automatons we are.

iZombie.

Why?

iZombie: A Prelude Part II

12:59 pm – You settle into your seat in the meeting room, in preparation for an hour of arguing, finger pointing, and general non-performance between the marketing rep, engineering rep, finance rep, and the customer success rep (that represents the account management team).

First off, the customer success rep is p!ss3d that the incumbent supplier, that is supplying four of their five top customers is being invited back as all of the customers are complaining about product quality. The supplier did send out a few bad shipments, but has since re-instituted the mandated quality assurance processes and allowed you to place a quality rep at their site that reports to your organization. Quality has increased to minimally acceptable levels on the last two shipments and things are on the up and up. (But since each customer only gets a shipment every three months, those four customers didn’t get their yet, scheduled for the next two batches.) And the customer success rep would know if engineering had a way to update them.

Next up, the finance rep wants to know why the two lowest bidders have been disqualified because the organization needs to lower costs by 10% and those are the only two suppliers likely guaranteed to do so on the project. It’s pretty obvious why based on the product ratings from engineering and customers and the historical quality ratings across projects, but apparently finance couldn’t be bothered to figure out how to run the reports.

Then the engineering rep wants to know why they can’t just keep using the incumbent, who has already agreed to a 5% price reduction to make up for their quality failure. Especially since Engineering put all this time into qualifying them and building the relationship. (Unaware that this supplier has also performed poorly across sister companies, which you are aware because the PE firm that bankrolls you collects cross-organizational data and builds it into the risk reporting feeds you get monthly — outside the platform.)

Finally, marketing is up in arms that you are not looking for suppliers that can deliver products with new and exciting features they can sell.

Thirty minutes of complaining, ranting, and basic Q&A pass before you can even get down to business.

The RFP was scheduled to go out today, on final review, but the supplier list has yet to be approved, hence the reason for this after-the-last-minute meeting. The incumbent supplier, three previous bidders, and six potential new bidders were invited to the RFI, two new bidders didn’t respond, and two didn’t meet the quality cut. You were ready to send it out to six, but customer success still feels their grievances haven’t been heard on the incumbent, engineering says they will disqualify the previously invited bidders for the same reason, and finance feels the two new suppliers, based on their bids in other projects, won’t be competitive.

Finance wants more suppliers, you need suppliers engineering will consider, and without at least one supplier that tickles marketing, you’ll hear nothing but moaning for months.

So you need to do another discovery project. There’s another 20 hours and 2 more weeks down the drain. And an addendum to the report you just gave your boss less than two hours ago – damn!

Anyway, that’s tomorrow’s project. The meeting has ended, and you have 30 supplier e-mails that you need to review today, or you know they will be repeated tomorrow — plus, one ranting and raving phone call a day is enough.

2:10 pm – Into your tenth supplier e-mail, most inquiring about invoices, event status, etc. — and other inane questions that could be answered through their supplier portal, as awkward as it may be, if they’d just learn to use it, you hit an e-mail from your key widget supplier informing you that the shipment that was supposed to go out yesterday is not complete as they have been waiting on a steel shipment for two weeks. Yikes! If you don’t get widgets in 21 days, your production line grinds to a halt! That will cost the company millions.

3:45 pm – After an hour and a half of frantic calls, you find another — off-contract — supplier that can supply a substitute shipment of widgets that, while not preferred, will work with a few minor production line tweaks and keep you going for six more weeks. If you can’t get regular shipments out of your supplier within that timeframe, you’ll be in trouble. But that’s tomorrow’s problem. For today, you still have 20 supplier e-mail and almost two dozen stakeholder e-mails to get through.

4:25 pm – The remaining supplier e-mails are not critical, a few require clearing up with AP and engineering, but that can be taken care of later in the week.

4:35 pm – Most of the stakeholder e-mails are answers to your inquiries, inquiries as to why Sourcing takes so damn long, or indicates of delay. The usual affair. Time to do a quick check on existing project status.

4:50 pm – Three projects need addressing in addition to the cog project. The axle project has questions from suppliers that need to be answered so they’ll bid. The cylinder project still needs RFI scoring from stakeholders so it can go to auction. The support team project needs more bids for key contingent workforce roles and you don’t understand why your chosen providers aren’t bidding. Fire-fighting for the next few hours.

7:15 pm – You finally get all the questions answered in the axle projects — and hopefully the suppliers will bid in the next few days; you send reminders to all the stakeholders and leave the ones who don’t read e-mails voice mails; and you call all of the contingent workforce providers in the earlier timezones where they are still in the office and discuss how important it is that they bid on the current project if they want to continue to bill you, and most agree to provide more bids tomorrow.

No real progress on anything, but you made it through today.

7:20 pm – You exit the building.

7:21 pm – You realize the headache you obtained during the stakeholder meeting this afternoon is now, as usual, unbearable so you pop a few extra strength Aleve so you can make make it home, have dinner, and rest up for another day … which likely won’t be that much different from today.