Category Archives: Procurement Innovation

iZombie: A Prelude Part I

8:00 am – You arrive in the office and head straight for the coffee station.

8:02 am – You pour a coffee and head for your deck

8:06 am – You scan your e-mail … 30+ from suppliers, probably all complaints … 20+ from project stakeholders, probably all demanding results without providing any additional information … half a dozen or more from executives asking for update … at least one from your boss and …

8:11 am – Your boss charges in demanding the historical spend report for the sourcing event that’s about to start

It’s in the system, but the system didn’t automatically e-mail it on schedule due to a failed update to of the SSL certificate, but it’s three levels down and requires the application of custom filters which, apparently, only you can find

8:21 am – You’ve finished re-running the report and exporting it in PDF and Excel formats with all the raw data and e-mailing (yes, e-mailing) it to your boss

8:22 am – Back to the e-mail queue … you’re about to open the first one from your boss, just to make sure the report will satisfy her for now and …

8:23 am – Your strategic supplier for a key widget calls … you recognize the number … you have to pick up … they are screaming that their invoice, due 30 days ago, still hasn’t been paid and AP won’t give them any answers … you promise to look into it and get back to them within an hour just so you can put the phone down

9:21 am – You call the supplier back and explain you spent the last hour tracking down the issue. AP refused to talk to you because the head of Finance marked the invoice “Do Not Pay” because Engineering refused part of the shipment and said not to pay until the shipment was replaced. The replacement shipment came with a separate invoice, and although it had the same invoice ID, that was miskeyed to a separate invoice — so AP had no clue the shipment was replaced and Engineering never cleared the issue. But the invoice has been deleted, an accepted shipment been rekeyed to the original, and it’s now in the payment stream to be paid on the next processing date in 5 business days with your boss’s approval. (And she is not happy that you interrupted twice in an hour with the management meetings coming up and her not prepared.)

9:22 am – Back to e-mail. The first e-mail you check was from your boss indicating she needed the spend report first thing this a.m. and the second email indicates she needs a progress report on all of your active sourcing projects by noon. Sh!t!

12:15 pm – You finish that progress report, which first required constructing an updated historical spend summary of the historical spend summary across half a dozen key projects to verify the savings projections against the most up to date spend and current market projections; then required running the metric reports to show that 7 of the 11 projects are on time; then it required that you dig into the final 4 projects and call half a dozen stake holders to find out what the delays were; and then summarize the status, and reasons for, of the final four by hand, compile all the information, and hand craft the one page executive summary that is the only thing all of the C-Suite, will read. (However, the CFO’s underling will spot check 25% of your work, and you don’t know what. So all you can be confident of is that two of the last three hours were wasted.)

You have a team meeting on the new cog project at one, so you decide to duck out to the Taco Truck for a quick bite and some fresh air before the usual screaming match between marketing and manufacturing erupts …

2020 Is Fast Approaching — Better Get on Your Tech Capabilities Part IV

Last week we asked what would you accomplish by 2020, which is less than 16 months away. Between 2008 and 2013, all the big analyst firms and thought leadership vendors painted a glorious picture of where Procurement would be by 2020 — a picture which isn’t even close to being a reality. Simply put, the vendors haven’t advanced technology to the point where it was supposed to be and, as a result, while you got more integrated, streamlined, easier to use platforms with friendlier, and sometimes even mobile, interfaces, you haven’t really obtained new functionality.

By 2020, our software was supposed to be smart. It was supposed to be doing most of our work for us. Tactical procurement was supposed to be a thing of the past. Paperwork was supposed to be over and done with. Data processing and verification automated. And Sourcing was supposed to be smart … not just more functional. But that’s what your average S2P platform is. More functional. All of the great advances we were supposed to have in the average platform aren’t there.

But, fortunately, if you’ll step outside the S2P marketplace and look at the best of breed players, across the entire space, you’ll see that most of the functionality you were promised is there, just in bits and pieces across a dozen or so best-of-breed players. So in addition to:

  • Invoice Automation
  • Supplier Identification
  • Automated Supplier Discovery
  • RFX Process Automation
  • Should Cost Modelling
  • Guided Workflows
  • Automated Spot Buys

What else is there?

Cognitive Buying

This was the holy grail we were promised, but not the holy grail we were delivered. Instead of AI helping us buy better, we are running on glorified decades old tech that just helps out collect data and do tactical paperwork processing faster, but we still have to do all the data collection and review all the paperwork. Even dumb tactical work hasn’t been eliminated in the average platform. It’s no wonder that most people don’t even know what cognitive is.

But there are so many low-value, minimally strategic purchases that need to be properly sourced, and which take up way too much buyer time for the value that is delivered. But if a sourcing system could not only automate most of the work, but make rather obvious decisions based on simple process rules, that could eliminate most of the manual effort. A buyer would only have to review the suggested decisions at key points where there is a shadow of a doubt.

And even then, if there is a high probability a buyer would make a certain decision, why shouldn’t the system make them automatically if the dollar value is low enough, the strategic importance is low enough, or the risk is low enough that the decision doesn’t really need to be analyzed when the confidence factor is high enough.

So how much would you really need to make this happen? Not as much as you think. The core capabilities are:

  • Rules-based workflow
    that allows the sourcing process to be well defined with gated decision-based branching points
  • Should-Cost Models
    that allows the program to compute precisely what the average / expected market cost for the product / service should be
  • Risk Models
    that capture both a product-based risk profile and a supplier-based risk profile
  • Market-Data Feeds
    that contain current raw-material, energy, labour, and average mark-ups for the industry
  • RPA
    that can automate execution of the rules-based workflow based upon automatically derived (and human initiated) decisions
  • Behavioural Modelling
    that can monitor human decisions and actions and learn what a buyer would do under atypical or borderline circumstances
  • Machine Learning
    that will take the outputs of behavioural modelling and human decisions and derive modified rule-based workflows, risk models, and automations to allow more fully automated processes in the future

And if you’ve been following along, you’ll know that there are a number of new best-of-breed systems out there with much of this capability, albeit most providers don’t have this in one system. However, as per yesterday’s post, Xeeva is pretty close. With the exception of behavioural modelling, Xeeva is pretty much there.

But if you happen to be a lucky buyer in electronics, you have a solution that meets all the criteria that goes by the name of LevaData. It’s one of the handful of providers trying to take Sourcing where it needs to be. Like every solution provider mentioned in these posts, they’re another company to keep an eye on.

And this is where Sourcing should be. So why isn’t it?

2020 Is Fast Approaching — Better Get on Your Tech Capabilities Part III

Last week we asked what would you accomplish by 2020, which is less than 16 months away. Between 2008 and 2013, all the big analyst firms and thought leadership vendors painted a glorious picture of where Procurement would be by 2020 — a picture which isn’t even close to being a reality. Simply put, the vendors haven’t advanced technology to the point where it was supposed to be and, as a result, while you got more integrated, streamlined, easier to use platforms with friendlier, and sometimes even mobile, interfaces, you haven’t really obtained new functionality.

By 2020, our software was supposed to be smart. It was supposed to be doing most of our work for us. Tactical procurement was supposed to be a thing of the past. Paperwork was supposed to be over and done with. Data processing and verification automated. And Sourcing was supposed to be smart … not just more functional. But that’s what your average S2P platform is. More functional. All of the great advances we were supposed to have in the average platform aren’t there.

But, fortunately, if you’ll step outside the S2P marketplace and look at the best of breed players, across the entire space, you’ll see that most of the functionality you were promised is there, just in bits and pieces across a dozen or so best-of-breed players. So in addition to:

  • Invoice Automation
  • Supplier Identification
  • Automated Supplier Discovery
  • RFX Process Automation
  • Should Cost Modelling

What else is there?

Guided Workflows

In our last post, we addressed the issue of RFX Automation, how simple it is, but how very few providers have anything close to RFX automation. So you can imagine how much worse the state of affairs is when it comes to guided workflows across S2P. But when it comes to contract negotiations, the back and forth process is quite well defined, the need to automatically compare versions and identify redlines and analyze deviances from the norm is automatic. When it comes to SRM, evaluation processes, disputes, corrective action management, innovation challenges, etc. the processes are all well defined.

But yet, in just about every suite you log into, the guidance is limited to dashboard summaries, task summaries, and alerts. Two decades old technology.

But the best platforms, including a few leading S2P platforms, are allowing buyers to not only build event templates, but embed those templates with rule-based workflows. One of the S2P providers with a single code-base that we have already mentioned a few times, Ivalua, is one provider going down this road. But another provider that has made in-roads is a mid-size best-of-breed provider by the name of Keelvar that is not only one of the handful (less than ten) of providers that offer optimization, but one that is also investing heavily in AI as well.

Automated Spot Buys

How many times do we go to market for a one-off product, service, or temporary provider replacement for a product that is not strategic, a service that is low value, or a new relationship that could be fulfilled by a dozen different providers. And how often is the product or service a commodity, for which market (should) costs are known? And how often do we have approved or pre-qualified suppliers, or processes for automatically approving suppliers? Often.

But this shouldn’t be hard. For commodities, MROs, and standard services, the organization has well defined requirements, known suppliers, should-cost models, market costs, and current supplier risk profiles. And there are well defined processes and rules that the organization follows. And it’s obvious which supplier has the best products, which supplier has the best prices, and which supplier represents the best award under the organizational goals.

So why can’t spot buys be completely automated? There’s no reason they can’t be. The right workflow automation, the right rules, and the right real-time market data is all that’s really needed … because that’s all that an average buyer uses to effect a low dollar or low strategic buy when there is a well-defined process to follow.

But for those organizations that want to take this low-value tactical procurement off of the table and allow their people to focus on higher value strategic activities, there is an answer. One such answer goes by the name of Xeeva. A lesser-known P2P provider that just raised 40M, Xeeva already had the platform, and experience, doing this across a wide variety of low value / non strategic product categories. And now that they have been well funded, this is one provider that should be taking things to the next level.

And that’s not all. Stay tuned as we review our final missing technology and vendor.

2020 Is Fast Approaching — Better Get on Your Tech Capabilities Part II

Last week we asked what would you accomplish by 2020, which is less than 16 months away. Between 2008 and 2013, all the big analyst firms and thought leadership vendors painted a glorious picture of where Procurement would be by 2020 — a picture which isn’t even close to being a reality. Simply put, the vendors haven’t advanced technology to the point where it was supposed to be and, as a result, while you got more integrated, streamlined, easier to use platforms with friendlier, and sometimes even mobile, interfaces, you haven’t really obtained new functionality.

By 2020, our software was supposed to be smart. It was supposed to be doing most of our work for us. Tactical procurement was supposed to be a thing of the past. Paperwork was supposed to be over and done with. Data processing and verification automated. And Sourcing was supposed to be smart … not just more functional. But that’s what your average S2P platform is. More functional. All of the great advances we were supposed to have in the average platform aren’t there.

But, fortunately, if you’ll step outside the S2P marketplace and look at the best of breed players, across the entire space, you’ll see that most of the functionality you were promised is there, just in bits and pieces across a dozen or so best-of-breed players. So in addition to:

  • Invoice Automation
  • Supplier Identification
  • Automated Supplier Discovery

What else is there?

RFX Process Automation

Most RFX processes have embedded workflows, but when it comes to automation, it’s about as automated as a mechanical cash-register. You have to select the categories. Select the products. Define the lots and bid matrices. Upload the specs. Identify the suppliers. Select the qualification surveys. Invite the suppliers. Monitor their gated progress. Review their responses. Approve them for bidding. Collect and verify the bids. Evaluate the bids. Select an Award. Present a contract. And so on.

Why?

The software should present the categories needing events. It should put the products front-and-center for selection. It should use past events and category knowledge to auto-generate starting lots and bid matrices. It should be able to find the specs in the integrated ERP systems and attach them automatically. It should identify all past suppliers and bidders and all suppliers who have since (self) registered that have been associated with the product or service and present the suggested supplier list. It should identify the right surveys and qualification requirements based upon products, raw materials, geographies, regulations in force, etc. It should auto-invite the suppliers when the supplier list and surveys are locked down. It should be able to monitor their progress, send reminders, and alert Sourcing professionals when a supplier might need help. Bids should be verified as complete and within expected ranges on submissions, automatic comparisons should be generated, and lowest cost awards automatically identified. And so on. It’s not hard.

But if you consider how many platforms have even basic project management, it’s not a surprise that this basic capability just is not there. But that’s where the new breed of providers are coming in. Not only are the new breed of home-grown, single code base, S2P providers (namely Ivalua and Synertrade) working on improving this, but we have best-of-breeds sprouting up solely to offer this missing functionality. One example is Per Angusta, an open sourcing project management platform that focusses entirely on the workflow and allows any platform out there to integrate with it.

Should Cost Modelling

Theoretically, all Sourcing and Procurement software platforms should be leading edge in should cost modelling given that this is something Operation Research experts have been doing for decades upon decades, long before they had software. Engineers responsible for bills of materials know how to do this well. So why can’t our software? There’s no good reason. So why the dearth of good solutions?

Simply put, because most of the platforms were designed by simple Procurement folk for simple indirect purchases. All they were concerned about was a unit bid, a transportation cost, maybe a switching fee, taxes, and tariffs. No thought about a bill of materials or the should cost model that would correspond to it.

And among the platforms that support a bill of materials and corresponding should cost models based on the constituent raw materials, required production process (overheads), labour rates, and energy rates in the production region, most of them require manual input of all of the data — which is readily available (with conversions) from market feeds.

But, fortunately for us, a couple of providers have seen the light. Both Synertrade, the only S2P platform with mature, native direct support (but Ivalua is making progress), and Allocation, a mature direct Sourcing and Supplier Management platform with some of the best should cost modelling support on the market which has just started extending their open API capability to make it easier to integrate market feeds of all types and automatically populate should-cost models.

And that’s not all. Stay tuned for a review of additional Best-of-Breed players who can help with your S2P platform upgrade needs.

2020 Is Fast Approaching — Better Get on Your Tech Capabilities

Last week we asked what would you accomplish by 2020, which is less than 16 months away. Between 2008 and 2013, all the big analyst firms and thought leadership vendors painted a glorious picture of where Procurement would be by 2020 — a picture which isn’t even close to being a reality. Simply put, the vendors haven’t advanced technology to the point where it was supposed to be and, as a result, while you got more integrated, streamlined, easier to use platforms with friendlier, and sometimes even mobile, interfaces, you haven’t really obtained new functionality.

By 2020, our software was supposed to be smart. It was supposed to be doing most of our work for us. Tactical procurement was supposed to be a thing of the past. Paperwork was supposed to be over and done with. Data processing and verification automated. And Sourcing was supposed to be smart … not just more functional. But that’s what your average S2P platform is. More functional.

However, as per our posts last week, we were supposed to have:

  • Invoice Automation
  • Supplier Identification
  • Automated Supplier Discovery
  • RFX Process Automation
  • Should Cost Modelling
  • Automated Spot Buys
  • Guided Workflows
  • Cognitive Buying

And the reality is that we have most of this … across half a dozen or so different providers. But not in one platform, not even for one vertical. So what is there?

Invoice Automation
Nipendo has been doing a great job here for over five years. Easy integration with all electronic data streams, OCR and auto-processing, PO-flip, m-way match, auto-fill, and pretty much everything you were supposed to have. After proper implementation, integration, and training, auto-processing of 99% is not unrealistic.

And they’re not alone — a couple of years ago, Ivalua figured out what they were missing and now have built similar capabilities — integration with EDI, XML, and OCR streams. PO-flip and smart processing to detect missing data, needed data, and even expected data based on structure.

And then there’s Dhatim which is infusing Invoice Automation with AI to make sure that, over time, the number of invoices that need to be manually reviewed asymptotically approaches zero.

Supplier Identification
The best-of-breed supplier information / relationship platforms are adding advanced search capabilities across the board to make it easy to find suppliers that meet product/category requirements, organizational diversity and CSR requirements, and geographic preferences. For example, Apex Analytix makes it easy to identify suppliers in target regions with financial stability and other CSR indicators. State of Flux makes it easy to identify suppliers that meet any and all performance / risk metrics you want to define in targeted locations. ConnXus allows you to find diversity suppliers and monitor sub-tier diversity spending.

(Automated) Supplier Discovery
Lots of best of breed platforms support the identification of appropriate suppliers through advanced searches, as did lots of supplier networks, but until recently, true supplier discovery, based on the current capabilities of ML and AI was non-existent. However, now we have the likes of Tealbook which is bringing AI-based discovery to the masses.

And that’s not all. Stay tuned for a review of additional Best-of-Breed players who can help with your S2P platform upgrade needs.