Category Archives: Procurement Innovation

Expert Purchasing Management, A Review, Part I

Recently, I reviewed the on-line course “Expert Purchasing Management”, the latest offering from “Next Level Purchasing” (now the Certitrek NLPA). The course, designed for new and existing purchasing managers struggling to balance the many demands of their leadership role and get the most out of their department, is designed to teach a purchasing manager evolving best practices, new technologies, and the policies and procedures they’ll need to take their purchasing department to a new level of success.

According to NLP‘s website, those who take the course will learn

  • How to report purchasing performance metrics to senior management
  • Four things about the purchasing environment that you need to assess right away
  • How to develop a purchasing customer service survey
  • Tips for improving purchasing staff productivity
  • The secrets for involving internal customers and establishing a successful Purchasing Advisory Board
  • The most important things to consider when naming your purchasing department
  • Five common purchasing department structures and their advantages and disadvantages
  • How to prioritize commodities that the purchasing department will source
  • Four indicators that you should look for to identify non-traditional areas for potential savings
  • Three different ways to assign buyer responsibilities
  • The types of various purchasing profit center models and the dangers of choosing the wrong one
  • How to staff your purchasing department with the right people
  • How to create a Purchasing Dashboard
  • How to set the perfect purchasing department goals
  • How to develop purchasing policies and procedures
  • How to establish a standard sourcing process
  • Strategies for using templates to improve productivity and reduce problems
  • Best practices for making recommendations to senior management
  • Three ways to reduce the tactical purchasing activity under your management
  • Five steps to take to ensure that you don’t do buyers’ work
  • How to improve compliance with purchasing initiatives
  • The essentials of launching a purchasing department Web site
  • How to assess the available purchasing technology by watching video demonstrations of leading software from Ariba and Zycus
  • Ten keys to eSourcing success

But of course, like the four courses I previously reviewed here on Sourcing Innovation (links below), it not only lived up to its promises, but also:

  • Covered the basic performance measurements and how to differentiate good metrics from bad
  • Discussed the five common organizational structures for purchasing departments as well as the associated advantages and disadvantages
  • Included a three-stage plan for long term purchasing development
  • Discussed eight types of policies and four types of procedures you should consider defining and implementing if you haven’t already
  • Discussed best practices for creating RFX, Contract, and Analysis templates
  • Highlighted the point that while ERP systems are very strong in terms of their database functionality and integration of data across the enterprise, they tend to be very inept when it comes to supporting world-class purchasing practices.
  • Provided some basic patterns for successful spend analysis.
  • Compared the traditional RFX process with the eSourcing RFX process step-by-step to ensure the advantages and efficiencies of best practice eRFX use are crisp and clear
  • Highlighted that when it comes to eSourcing applications, sometimes less is more and that its best to figure out the basic capabilities you need and simply compare such systems to a capabilities checklist because companies often reap great results when using less expensive eSourcing systems.
  • Discussed and differentiated the different types of pricing models being used by eSourcing providers as well as the advantages and disadvantages of each model.

Thus, I’d have to say that this course is definitely worth it. However, unlike the previous courses, which have been under continuous improvement for a couple of years now (since NLP collects all feedback and questions and makes it a point to update each course at least once a year), I did find two minor issues. Not that anything was wrong, just that I disagree.

The first issue is that Next Level Purchasing defines eSourcing as as the use of the Internet to automate several tasks associated with an RFP process. As regular readers know, I define eSourcing as the full eSourcing cycle from spend analysis through contract creation and management, following the spend analysis, supplier qualification, RFX, auction and/or negotiation, decision optimization, award and contract creation and subsequent management process that is currently outlined in “Strategic e-Sourcing Best Practices” over on the e-Sourcing Wiki [WayBackMachine]. As far as I’m concerned, Charles definition is that of the executable eSourcing Cycle which starts with the pre-RFX supplier qualification and ends with the post-RFX auction phase. That being said, everything the course covers about RFPs and related activities is correct.

The second issue is that the course does not devote a section to explaining the differences between traditional installed behind-the-firewall enterprise applications and on-demand applications, and the various models for on-demand delivery as well as the advantages and disadvantages of each. Although this is partially covered in the section on pricing models, there’s a lot to be said on each side of the fence and I feel that a good understanding of the issues can make the difference between selecting an eSourcing suite that’s good for the organization and an eSourcing suite that’s great for the organization. Of course, this wasn’t designed to be a technology course, so my point might not be valid. But you should know by now I am picky.

Of course, knowing the perfectionist that Charles Dominick is (the President of Next Level Purchasing), I’m sure these qualms will be addressed in spades in the very near future.

So if you’re looking for a professional certification, I still believe that the “Senior Professional in Supply Management” is likely the certification for you, and that if you have the SPSM and are looking to maintain it, then this course is worth your time and dollars. But if you still don’t believe me, be sure to read part II where I dive into three topics of interest.

It’s … It’s … It’s … Coupa-sonic!

The press-release hits the wire later today, but ISM started yesterday, and thus your chance to see the new version of Coupa‘s Enterprise Procurement Platform is here! It’s not only Purchasing Simplified, it’s the next evolution of on-demand procurement for the small and mid-sized enterprise.

The enterprise version of Coupa not only supports the procurement cycle from end-user requisition through delivery confirmation, but also supports approval hierarchies, attachments and automatic PDF creation, punch-out support, asset tagging, multi-way matching, and even RFQs! (I know, I know … everybody and their dog supports RFQs these days, but how many people include this basic e-Sourcing functionality inside an e-Procurement system at no-extra cost? And how many are designed with the straightforward needs of a SME in mind? And how many are easy to use?)

Based on Coupa’s underlying open-source Coupa Express platform, the industry’s first freely downloadable eProcurement solution, a company can be up and running on Coupa almost immediately. According to Lynell Rogeri of Cantaxx, Coupa Enterprise was delivering results within 24 hours of installation and the simple, ‘clean’, screens allowed them to be much more productive than they could have been with traditional procurement software. Furthermore, Coupa offers the breadth of functionality that gives them exactly the business process support they need.

As per the press release:

Small and mid-size companies that want a simple and affordable solution to automate their purchasing, invoicing, and eRFQ processes can now choose Coupa eProcurement Enterprise. Delivered as On-Demand or On-Premise software, Coupa eProcurement Enterprise includes full product support and offers a total cost of ownership that is 10 to 20 percent of what companies pay for traditional eProcurement solutions.

So, if you’re in Vegas, be sure to check out their ISM booth! If you weren’t able to make it, attend their webinar and check out the new Coupa website!

And if you missed any, here are the previous posts on Coupa’s product:
More Than Coupacetic
Riding the Rails with Coupa
Coupa Charges Ahead
Coupa Cabana Cafe: Open For Business
Procurement Independence at the Coupa Cabana Cafe

As well as the Coupa production chant in
Davie and the Coupa Factory

After all, It’s Coupa Time!

Critical Purchasing Officer

In a recent CAPS Research publication “Supply Leadership Changes” they point out that few decisions that affect the success of supply in an organization will have more impact than the decisions regarding who will be the CPO and to whom he or she will report.

The report had some interesting findings:

  • There were a total of 73 CPO changes and 75 reporting line changes in the 30 companies studied over a 10 year period.
  • There was a total of 29-first CPO appointments in the 30 companies studied over the 10 year period.
  • The centralization of supply at a firm was typically triggered by a simultaneous corporate strategic change and move towards centralization of many functions, and trigged the establishment of the fist CPO in 22 of 29 instances.
  • In 5 of 29 cases, the first CPO was established when the executive team recognized that centralization of supply would gain the corporation a variety of benefits.
  • Initial CPOs and replacement CPOS are typically found within the company more than they are not (62% and 73% of the time).
  • When a CPO was recruited outside the company, the CPO came from a supply position.
  • An internally recruited CPO with a supply background had an average tenure of 4.3 years while an internally recruited CPO without a supply background had an average tenure of 3.5 years, but first-time CPOs with a combination of supply and non-supply experience had an average tenure of 5.5 years.
  • CPOs leave their position for a variety of reasons, the most common being promotion to another position. Other common reason are major corporate strategic and structural change and a major corporate strategy strange.

These findings, and other, have some interesting implications:

  • Leadership in the top supply function is in a state of constant flux and getting a running start at the position is important.
  • The trend toward the appointment of non-supply managers to the CPO position is continuing and a significant burden of education and support falls upon the shoulders of the senior supply managers with supply experience.
  • Individuals aspiring for the CPO position need to move to a corporate supply position.
  • The CPO and the person to whom he or she reports forms a powerful team within the organization.
  • A new CPO must create a plan of action.

This might imply that:

  • A supply manager should constantly be improving herself. Continuing education and awareness is critical. ( Blogs contribute to awareness. )
  • A supply manager should be ready for increasing responsibility.
  • Corporate supply is where it’s at.
  • If you want to be a powerful CEO, get a great CPO.
  • A good plan is important.

More Than Coupacetic!

Every now and again, the oompa loompas leave the big-screen TV unguarded and the Wii unlocked (“WII: Lessons for Enterprise Software Companies” on Procurement Central [WayBackMachine]). During such a time, it’s often possible to sneak past the grunka lunkas and get a demo of the latest development cut of the forthcoming Coupa Enterprise 1.0 release.

And I must say, it’s coupendous. Coupa is moving up the ranks and setting their sights on the minor league championship – the sweet spot for any small and mid size company that wants to stop living in the stone-age with the Flintstones and join the Jetsons in the future. (Now, I love the Bedrock Anthem as much as the next blogger, but I’d much rather you follow the first rule of cost avoidance.)

They’ve been working really hard at Coupa since their enterprise beta release and the number of features it supports has been Coupa-sized. The world’s simplest purchasing tool is not just for requisitions anymore! Look for a major announcement before ISM hits.

In the meantime, I can tell you that they’ve improved the application end-to-end with UI updates, improved search and filter functionality, and improved support for document management across the board. In addition, they’ve also implemented some internationalization support, including multi-currency.

Stay tuned. I should have more details within the week on this coupacetic application.

A Conversation with Ketera

When I was down in the valley, I made a point to visit Santa Clara to catch up with Ketera (acquired by Deem) who recently announced their next generation spend analysis solution, which I’m not going to spend too much time talking about (even though they are getting a good reception and a lot of customers because of it).

I did get a chance to see it recently, and it’s quite good. It’s not the absolute best in any regard (automatic classification, reporting, flexibility, etc.), but the overall solution puts it in the short stack of solutions you should definately be including in your review process. They have a two-tier classifier, which starts off with what they call a high-confidence classifier (which, you guessed it, is based on the old GL Codes, Vendors, GL Codes and Vendors mapping) and a trio of lower-level lower confidence classifiers (that use various rules and external sources) to try and collectively get a high confidence match. Failing that, they have manual classification and a rules engine to automate the match in the future. They also have a tierd knowledge base: global, industry, and organization to allow for multi-level rules and classification. Their reporting solution is now based on MicroStrategy, which, besides giving you standard best of breed reports, allows a user to fairly easily build basic BI reports and drill down within current reports. And it’s on-demand. (So, in recap, they potentially have one of the best classifiers, one of the better reporting front-ends from a usability perspective, and it’s on-demand.)

My interest, and the focus of my California conversation was what they were doing with their e-Procurement, Invoice Management, and what they are doing to enable the Procure-to-Pay (P2P) cycle; their recent partnership agreement with Hyperion (which was just acquired by Oracle) and their progress towards delivering operational Business Intelligence capabilities; and their supplier enablement (and catalog hosting) services and solutions.

At the moment, their procurement solution is one of the better enterprise solutions out there – it’s usable and it interfaces with their Invoice Management Solution and Supplier Management Portal. They have a two-level checkout process, basic and advanced, since most organizational users will use the system ony once a month and need a simple solution, and they have integrated document management. Furthermore, a future release will include Hyperion reporting.

My rationale for this interest is that it appears that there are significantly fewer general-purpose e-Procurement solutions than general-purpose strategic sourcing solutions (even though there are a lot of niche offerings, especially in the Software-as-a-Service arena); even though there are a lot of Business Intelligence solutions and a lot of dashboard solutions, not many attempt to tie together operational metrics with their financial impacts; and even though there are a growing number of supplier management and supplier information management solution, not many support the quick enablement of a large number of suppliers and I wanted to know how close Ketera had come to achieving each of these goals. That’s why I was glad to hear that they were working on tieing in their invoice management and procurement solutions with their contract management solutions, that they were working on Hyperion integration, and that they have a few other surprises for the year ahead. After all, once you have this, you just add better integration with spend analysis, and you have a great start at an integrated procurement and sourcing application that would be a great solution for many underserviced mid-market firms.