Category Archives: Product Management

Per Angusta: Purchasing CRM

Per Angusta is an interesting SaaS company in the Procurement space. While most Procurement companies focus on the Sourcing or Procurement process, or supplier management, Per Angusta focuses on the workflow that ties it all together — a workflow that is typically managed in Microsoft Excel Spreadsheet Hell.

In particular, Per Angusta is a SaaS platform built to manage sourcing pipelines, track savings for organizational validation, and make Procurement’s impact visible to the organization — which, as per Sigi Osagie (the master of Procurement Mojo), is the key to building your Procurement Brand.

One of the unique things about the Solution is that the Sourcing Project Management Tool is not only designed to manage the sourcing workflow, but to integrate with your best-of-breed sourcing and procurement tool either out of the box (and, out of the box, integrates with Rosslyn Analytics, HICX, Market Dojo, and other Per Angusta partners) or through the API that is being released shortly.

The solution contains all of the basic project management capabilities you would expect, as well as a few unexpected ones including, but not limited to, deep configuration capability, a supplier data repository, and even Slack integration. Moreover, the strengths of the solution are exactly what you need — flexible project definition and the ability to track deep negotiation details. The platform can track projects of different expense types, document proposed negotiation strategies, and document the requirements of each stage: need definition, sourcing, negotiation, and signature. This is a very powerful capability as it allows the Procurement team to demonstrate that over 80% of the costs are locked in during the design and sourcing phases, and that very little savings can be obtained if the stakeholder waits until the (end) of negotiations and the contract phase to engage Procurement.

The Per Angusta platform is one that is worth exploring in detail, and for a very in-depth review, you can check out the recent piece over on Spend Matters Pro co-authored by the doctor and the prophet.

Organizational Damnation 53: Engineering

So far in our series, we’ve addressed Marketing, Legal, Logistics, and Human Resources. However, as you might have guessed, these are just a few of the organizational damnations Sourcing has to deal with on a daily basis.

Today we add Engineering to the list of organizational damnations that Sourcing has to deal with on a daily basis.

Why Engineering? Why is a department staffed by Engineers and Scientists who, unlike Sales and Marketing aren’t inclined to stretch the truth beyond all recognition; unlike Legal, are inclined to speak plain English; and, unlike HR, are not inclined to find new and innovative ways to suck the life force out of you, a source of eternal Procurement damnation?

Engineers are rigid stubborn perfectionists.

Let’s break this down.

Each engineer has a process, a design, a set of approved raw materials, and that is the process, the design, and the set of approved raw materials. Trying to convince them that there is another process, an alternate design, or other raw materials that might be usable is like trying to force molasses to flow up a glacier. Like doctors, who only want a specific operating tool from a specific supplier, they are rigid.

This is because they are also stubborn. In order to accept new processes, new designs, or alternative raw materials, they would have to accept that there are better processes, better designs, and better raw materials, and that they exist today. If they believe that they are at the top of their game, they will believe that better processes, better designs, and better raw materials have not been discovered yet and even if they are discoverable today, it won’t be by Procurement or the supplier Procurement is bringing for joint innovation, at least not without a lot of time and effort on their part — that they don’t have. Don’t read this to imply that they are arrogant, because they don’t mean to be (unlike ivory tower PhDs), it’s just that good engineers and scientists invest the majority of their time keeping up with their field and honestly believe that they have a much better idea than you, and they are usually right in that assumption. Since it’s not often that Procurement will actually stumble across a better way, and, moreover, since the past track record of Procurement and suppliers — before Procurement was seen as a strategic department and top talent brought in to staff the department — was poor, Engineering will naturally assume that Procurement’s zany idea of the day will be another dead end and will be stubbornly resistant to it.

And, finally, they are perfectionist. The cost model might say 98% reliability is good enough because, in practice, only 1% of units will break down before the warranty period expires and the cost of flat out replacement will have little impact on profit margin, but Engineering will say otherwise. They will insist on selecting the supplier with 99% reliability even though that will increase costs 30% and it makes no sense because it is a consumer electronic device which will cause no injury when it fails and which will have little negative impact beyond temporarily inconveniencing the consumer who will have to call in, get a replacement shipped, and send back the defective unit in the box that arrives. An Engineer takes pride in producing the best quality product possible, even if that would bankrupt the organization in the process.

Their insistence on being the best will be one of the worst damnations Procurement has to face. After all, how can you fault someone for wanting the best? And you can’t even dislike them because, unlike some departments, Engineering is not filled with blood-sucking leeches, sociopaths who figured out how to screw people legally, or evil creatures that take pleasure in your pain. But yet they will cause you anguish in every sourcing project you undertake.

As each and every post in this series explains, Procurement is truly corporate damnation.

For those of you new to the profession, welcome to hell. (And enjoy the archive knowing that we’re only halfway through our journey.)

Societal Damnation 52: Project Management

I’m sure you’re asking — what’s damning about project management? Isn’t good project management the key to success? After all, without good management, the chances of a project over-running its resource allocation (of time, people, and money), if not failing, increase significantly. Well, yes, it is. Provided you can manage the project.

One has to remember that project management has evolved over the last six decades or so to manage traditional types of projects that produce structures and goods against well-understood designs and project plans, starting with the need to effectively manage complex engineering projects in areas that include construction, defence, aviation, and shipbuilding.

When project management was being defined, the ENIAC was still in operation, Procurement was placing an order against a printed catalogue, and a company imported a small number of commodities in which they had contacts and expertise. There were no complex software projects, no complex Just-in-Time supply chain projects, and no automated factory mega-projects (which resulted in some of the biggest supply chain failures in history).

And, more importantly, projects were focussed on the production, or acquisition, of a single structure, product, or report. They had a defined beginning, a defined end, used well understood resources, required people with well-understood skill-sets, could be scheduled with reasonable certainty, and required a comprehensible amount of money.

Where software development is concerned, there is a rough definition of what is desired, but the beginning and end is a best estimate that is no more accurate than a wild guess in some cases, the resources required (while defined as software architect, developer, network specialist, etc.) are not well understood (as a non-skilled software architect cannot define what makes, or identifies, a good software architect), and the amount of money required is relatively unknown (due to uncertain work effort requirements, unknown support requirements, etc.).

And that’s just software. When it comes to supply chain, the difficulty is intensified. There’s the management of the sourcing, the management of the negotiation and contracting cycle, and the management of the procurement. But before that, there’s identifying the right supplier, which requires detailed understanding of the product technical requirements and the supplier production capabilities. There’s identifying the expected costs, based upon understanding material costs, labour costs, energy costs, tariffs, and overhead. There’s managing the supplier relationship. There’s dealing with disruptions and disasters. And taking corrective actions.

In other words, supply chain projects don’t have well-defined beginnings. Don’t have well-defined endings. Don’t have well-defined workflows. Aren’t limited to a fix set of resources. Don’t always have a well-defined team. And don’t always have a well-known cost (even if there is a target one).

Project Management hasn’t kept up. Sourcerors are often making it up as they go. And they’re damned every step of the way.

CPO: Are You Ready to get Mean and Lean to the Power of Six!

Do you think that Lean is just for Manufacturing and Six Sigma is just for manufacturing process improvement? That it’s only relevant if you are making automobiles (like Toyota) or consumer electronics (like FoxConn)? If so, then maybe you need to get out of the eighties and back to the future (no flux capacitor needed). (After all, remember what happened to That Guy?)

Because the reality is that lean and six sigma is not just for all types of manufacturing processes, but operational processes in general, including supply chain — and supply management — processes. The whole point of six sigma is to improve the process in a way that reduces defects and errors. And when it comes to savings, the best savings are process savings as those recur year over year over year while negotiated savings are one-time and generally not repeatable (as inflation and continued depletion of natural resources generally ensures that production costs rise every year and that costs will go back up).

And, most importantly, the core DMAIC process of Six Sigma, where DMAIC stands for Define, Measure, Analyze, Improve, and Control, is easily adapted to Supply Management as the doctor and the maverick point out in our new series on The CPO’s Guide to Lean and Six Sigma airing over at the new Chief Procurement Officer where we are collaborating on a number of ground-breaking series over the next few months. These series, which include a massive 20-part series on The CPO’s Agenda, an upcoming series on tearing apart the CPO job description, and a deep dive into spend control, will go beyond the news and high-level puff pieces proffered up by other sites that care about your clicks more than your success to give you the information you need to succeed as a new (candidate for the) CPO (role).

So click on over to the The CPO’s Guide to Lean and Six Sigma and find out why you can use DMAIC 2.0 to Blow Up the N-step Procurement Process and find value that you never knew existing in your supply management processes. The bottom line (and even the CFO) will thank you for it.

Procurement Trend #08. Lifecycle TCO

Five anti-trends remain. We can count them on one-hand, but like LOLCat, we feel more compelled to provide stupid examples of how back-water the futurists really are when they provide us examples of trends that anyone who bothered to poke their head over their cubicle wall ten years ago would have noticed. However, we’ll leave their humiliation for LOLCat, who has obviously received very little enjoyment from this series, but still found time to point out how LOLCats have been sustainable at least since the first corrugated cardboard box was created and instead focus on blasting the myths the futurists continue to propagate.

So why do these Rip van Winkles keep pushing upon us trends from yesteryear? Besides the fact that some of them obviously spent the best part of the last few decades napping, probably because they look around, see the laggard organizations still caught in the muck, and assume they can still sell last decade’s snake oil in today’s marketplace. Why do they think Lifecycle TCO is today’s cure?

  • the supply management lifecycle in a typical company has been expanding
    for decades

    and cost models rarely keep up

  • once the margin has been taken out of the unit cost and the landed cost,
    the definition of cost has to expand to realize savings

    but most companies that claim to be looking at TCO are still looking at T-CAP

  • the most out-of-control costs are typically where you’re not looking

    and that’s the way, uh-huh, uh-huh, they* like it

So what does this mean to you?

Cost Models Have to Expand

Right now, most companies that claim to be focussed on Total Cost of Ownership (TCO) are really only focussed on Total Cost of Acquisition and Production (T-CAP). They are merely focussed on landed cost and costs associated with production (waste, etc.) and distribution and aren’t looking up the supply chain to energy, labour, and raw material costs and forward to maintenance, service, warranty and return costs or even further forward to reclamation, recycling, and disposal (related) costs. Every cost has an impact and any sudden increase or decrease can completely change the model.

Out of Control Costs Have to be Found

Wherever they are. Typically, a company heavily focussed on optimization will be focussed on T-CAP but not look at the expected warranty and return costs associated with switching to a lower-cost supplier or not break down the supplier’s quote to realize that the energy costs are much higher than expected and likely to rise rapidly in the region two potential suppliers are currently located in.

Cost Control Measures Have to Be Implemented

Once the cost models are expanded, the out of control costs are identified, cost control measures are defined, implemented, and performance against them is tracked. If the out of control costs are energy costs, then the organization might decide to implement its own renewable power plant (such as a solar farm or wind farm) for fixed plant energy requirements. A sourcing project is undertaken to source the plant and then, once its up and running, additional projects are undertaken to control maintenance costs, etc. Year-over-year costs are tracked to insure the realized savings on a production-cost-per-megawatt basis are realized so that the organization will see its ROI within a defined period of time.

Piece of Cake, eh?