Category Archives: Procurement Innovation

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

the doctor’s Guest Posts: The Year in Review

Over the past year, I’ve blogged a number of guest posts over on eSourcing Forum, including forty posts last summer as part of the weekend series. For new(er) readers to the blog, here is a list of all guest posts over on eSourcing Forum with direct links.

Weekend Series Posts on e-Sourcing Forum [WayBackMachine]

Purchasing Innovation I: An Introduction
Purchasing Innovation II: TRIZ
Purchasing Innovation III: The Verifier Approach
Purchasing Innovation IV: Innovation Continued
Purchasing Innovation V: Sourcing the New Organization
Purchasing Innovation VI: CrowdSourcing
Purchasing Innovation VII: The Road Ahead
Purchasing Innovation VIII: Transforming New Product Development
Purchasing Innovation IX: The Purchasing Evolution!

On Demand I: The Good
On Demand II: The Not-So-Bad
On Demand III: And the Coming Pretty …

Cost Reduction and Avoidance I: An Introduction
Cost Reduction and Avoidance II: Metrics
Cost Reduction and Avoidance III: Incentivize for Success!

Supply Risk Management I: An Introduction
Supply Risk Management II: Risks and the Need for Resilience
Supply Risk Management III: Managing Risk

Supplier Performance Management I: An Introduction
Supplier Performance Management II: The Road to Success
Supplier Performance Management III: Best Practices

Demand Driven Supply I: An Introduction
Demand Driven Supply II: Stages and Implications
Demand Driven Supply III: Challenges and Implementation

Center Led Procurement I: An Introduction
Center Led Procurement II: A Center of Excellence
Center Led Procurement III: Best Practices

Procurement Outsourcing I: Is it right for you?
Procurement Outsourcing II: Selecting a PSP
Procurement Outsourcing III: Getting the most out of your PSP

Optimization I: A Powerful Tool
Optimization II: Why it was Relegated to the Shadows
Optimization III: Why it’s time is finally here
Optimization IV: POE or BoB?

Six Sigma I: An Introduction
Six Sigma II: Innovative Quality
Six Sigma III: Value Based Strategic Sourcing

Weekend Series Wrap Up I: Process and Technology
Weekend Series Wrap Up II: Supply Chain Management
Weekend Series Wrap Up III: The Innovation Revolution

Miscellaneous Posts on e-Sourcing Forum [WayBackMachine]

* Lead Time Optimization: Groundbreaking New Technology or just Applied Total Value Management-based Decision Optimization in Disguise?
* Sustained Sourcing Success
* Are there any limits to procurement’s role?
* Outsourcing Gets Tough
* Design for Supply
* The Benefits of an End-to-End e-Sourcing Suite
* Accelerating Value with On-Demand: An Aberdeen Perspective
* Supplier Enablement Enables Savings

And just in case you missed it, here’s a link to the chaos-causing post on Emptoris’ optimization over on Spend Matters:
The Doc’s Perspective on Emptoris’ Optimization*

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

Ariba + Orbian = ?

The Ariba (acquired by SAP) – Orbian partnership is something I expected everyone and his dog would be picking up on and writing about, but with the exception of Mickey North Rizza’s (AMR, acquired by Gartner) and Jason Busch’s (SpendMatters) analyses (LIVE Dispatch: Ariba and Orbian Partner to Take on the Banks), I haven’t really found anything of note, which is surprising given the potential significance of the partnership (if Ariba pulls it off right).

Ken Roche, CEO of Orbian, notes that By providing low-cost receivables financing and certainty of payment timing and amount to suppliers, buyers are able to achieve cost savings or better trade terms. Additionally, suppliers generate incremental free cash flow, improving their [days sales outstanding (DSO)] metrics and capital efficiency, by gaining access to the entire value of the receivable, at a low cost.

According to the press release, The ASN (Ariba Supplier Network) serves buyers and sellers in 115 countries and has combined transactions exceeding $95B annually. The ASN lets the buyers trading the $95B approve the invoices and notify Orbian. The suppliers view and Orbian provides payment within 48 hours of the decision to the supplier. This slashes the model to 2 days from the previous 30.

Mickey notes that:

  • Ariba is for many others a best-of-breed suite that is wrapped around their ERP system, such as Oracle or SAP. And while the two systems, Ariba and ERP, may work together, this presents an even greater opportunity for ERP-centric companies to tie into the ASN and take advantage of the Ariba partnership for greater working capital.
  • The partnership [also] moves Ariba ahead of its competition by offering three
    opportunities to improve working capital for the buyer and suppliers: earlier payment with electronic invoice presentment and payment (EIPP) and cards, dynamic discounting, and a third-party supply chain financing opportunity.
  • The Orbian strengths are in its diversified pool of investors that provide
    liquidity outside of the traditional bank credit line. With a low cost, plenty of capacity from investors, and a tiered structure, the opportunity is vast for immediate cash flow improvements. This is a huge differentiator for CFOs, treasurers, and CPOs who need additional resources that won’t adversely affect their balance sheet debt.

And Jason Busch notes that:

  • The real advantage for the original parties is that involvement with Orbian does not detract from the commercial paper pricing for suppliers. In other words, it’s a legitimate form of off-balance sheet financing which does not limit the ability to borrow in other ways.
  • I’d speculate that the global supply chain finance market opportunity will top a trillion dollars annually in the next decade (in deal volume).

But Supply Chain Finance goes well beyond just EIPP, early discounting, and third party financing. It also includes, among other aspects, virtual consignment financing, true optimization of working capital, increased analytics capability, and real-time visibility into program activity and the status of each customer. And this partnership could allow customers to take each of these aspects of supply chain finance to the next level as well.

For example, the platform could be used to facilitate greater virtual consignment financing, where the buyer buys the raw materials with added leverage and sells them to the supplier at cost, since buyers could also take advantage of this third party financing and still get the supplier a better rate. If the supplier needs to borrow anyway, when you consider the buyer could negotiate a better rate on both financing and on the raw material cost, this will still save money.

The platform can also be used to better optimize working capital – which goes beyond just early payment discounting. A supplier can calculate how much money it needs in any given week and optimize which payments to take early, which payments to take on schedule, and, which payments to accept late – offering yet another form of financing, but this time to a buyer.

And the platform can be used to give each supplier greater real-time visibility into the financial activity and status of each customer, giving them visibility into the financial side of their supply chain they may not have had before. It also gives the buyer better visibility into not only the financial status of their suppliers, but how much a buyer is willing to accept on an order to get paid quickly. This not only helps buyers manage risk, but could help sourcing teams negotiate better deals if they could turn around payments faster.

In other words, this is a partnership that could significantly advance the supply chain finance side of e-Procurement if done right … but only time will tell.

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

Expert Purchasing Management, A Review, Part II

To emphasize my point that I believe Next Level Purchasing’s new course “Expert Purchasing Management” is worth your time and dollars, with kind permission, I am going to dive into a few topics covered in the course that I believe illustrate the expert advice contained within the course.

The course begins by noting that there are four critical areas to the success of a purchasing department.

  • Organizational Perceptions of Purchasing
    if you’re not perceived as effective, your internal customers will try to bypass you instead of working with you
  • Purchasing Performance Measurements
    since management often only cares about metrics
  • Purchasing Staff Skill Levels
    since purchasing today requires top notch skill sets
  • Purchasing Staff Morale
    as a happy employee is a productive employee

It provides methodologies to gather intelligence on organizational perceptions and paint a clear picture, to determine how purchasing is measured and how well it is performing, to determine current staff skill levels and gaps between what the skill levels should be, and to improve morale.

A little over halfway through the course in lesson five it points out that a purchasing manager must act independently. A purchasing manager must be a leader and not a doer and not fall into the trap of doing the buyers work for them – as this will ensure the manager never has time to focus on department strategy, improvements, and cost savings and reduction innovation. It provides some good tips to help purchasing managers from falling into the trap of doing a buyers work for them, which include:

  • adding “works independently and solves problems with a minimum of management assistance” on performance evaluations
  • holding weekly meetings to encourage buyers to share challenges and solutions with their colleagues
  • encouraging buyers to think through situations and develop several potential solutions on their own – they should only come to you for advice on choosing the best solution

Finally, near the end (in lesson seven) it notes that, when it comes to eSourcing systems, sometimes less in more and when evaluating such systems you should only use a basic capabilities checklist and not detailed specifications (even though the sponsors of the Sourcing RFP Template might disagree). Specifically, detailed specifications have the following disadvantages:

  • specifications can be slanted to a particular provider
  • strict specifications may penalize more cost-effective software which actually does 90% of what you want and 99% of what you really need
  • strict specifications could result in a provider adding functionality that could then become a foundation for a patent dispute, which could be a problem for you if you are using the only instance with that customization

Finally, the course provides you with a starting capabilities checklist that you can use when evaluating eSourcing solutions.

I hope this has given you some more insight into the importance of continued education and appropriate courses for your professional development and why I believe the “Expert Purchasing Management” course and the “Senior Professional in Supply Management” certification is most likely worth your time and investment as a procurement professional.