Category Archives: SaaS

Transcepta : Global e-Invoicing with Dynamic Discounting Support

Transcepta is an eleven year old company that provides a global supplier network for fast supplier on-boarding and e-Invoicing. Whereas many supplier networks are setup for supplier discovery, and most support e-Invoicing, not many are set-up for straight-through processing and industry-leading auto-match capability.

In addition, most of the solutions that support e-Invoicing are limited in terms of the way invoices get into the system and many can only support invoices through the portal, delivered in a specific XML standard, or pushed into the ERP system the network is integrated with. For mid-size operations, this is typically good enough, but when you work for an organization that has a very large supplier base with thousands (or tens of thousands) of suppliers that use a dozen or more different formats (PDF, virtual printers, EDI, XML, cXML, Oracle Network, etc.), it typically ends up being the case that only 60% to 80% of invoices flow through the e-Procurement application automatically and the rest have to be manually entered or converted through OCR, which just adds more invoices to the exception queue for manual review. That’s where network-based e-Invoice automation solutions come in, and the best ones can easily plug-in to your current infrastructure (through the ERP). Transcepta is no exception to this rule.

Transcepta, recognizing that if you want to achieve a maximal throughput through an e-Invoicing platform, you have to support all of the standard formats used throughout your supply base, has built a platform that not only supports just about every EDI and (c)XML format that you can think of, but also supports Oracle validate integration, virtual printer drivers (that print direct to the platform, which was not a common feature of network platforms when Transcepta first offered this capability), and advanced PDF processing capability. If the invoice PDF is created from QuickBooks (or other supported standard accounting applications), the Transcepta platform will dissect and extract the electronic properties of the PDF to obtain as much information as possible about the supplier, associated purchase order or contract, and items being billed to automatically identify the supplier (from a standard database, such as D&B), and the purchase order in the organization’s ERP.

The strength of the platform lies in it’s advanced auto-match capability. It’s a reasonably well known statistic that invoice error rates are in the 10% to 15% range. SI and SM have quoted multiple studies from Paystream, Aberdeen, etc. over the past few years that consistently report numbers in this range. As a result, most e-Invoice automation solutions will bounce 10% to 15% of invoices back to the supplier or to an AP clerk for review upon first submission. This is a rather high error rate when many of the exceptions are not a result from price or order receipt discrepancies (when the invoice should be bounced back to the supplier with a clear explanation of the necessary adjustments for [automatic] approval and payment) but from missing supplier, purchase order, or line item information that is available somewhere in the organization’s e-Procurement systems.

In their effort to increase straight-through processing, Transcepta has developed advanced PO cloud-match software that implements automated reasoning, statistical matching, and other “AI” technologies that allows the organization to upload every PO and relevant piece of supplier information for processing by an advanced matching algorithm that is able to evolve over time. Using this extra data in conjunction with advanced algorithms, Transcepta is able to match about 80% of invoices that are rejected by traditional matching algorithms. One customer that received 45K to 50K invoices a month saw an 85% improvement in straight through processing from this algorithm, going from an average initial reject rate of 15% to 2%. That’s a lot of man-hours on exception processing saved.

As hinted at in the introduction, Transcepta has a number of other strong capabilities in supplier on-boarding and dynamic discounting, and for more information on these, see the recent and upcoming pieces on Spend Matters Pro (membership required) by the doctor and the prophet.

FusionOps, Supply Chain Intelligence in the Cloud

FusionOps, a supply chain intelligence company that recently raised 25M, was founded in 2005 in Sunnyvale, California (the birthplace of Ariba) to automate ERP-based business processes (like direct materials Procurement and supplier collaboration) that could not be effectively accomplished using the stand-alone sourcing and procurement solutions of the day. However, around 2009, they switched directions and started amalgamating “big data” from ERP, MRP, and other Supply Chain and Supply Management systems in an effort to extract actionable intelligence for their clients.

As part of this evolution, they realized that in order to amalgamate the data that was required to compute metrics that would lead to useful, actionable insights that would guide enterprises in cost reduction, efficiency improvements, and customer service improvements, they would have to extract “big data” from a MDM solution. But most companies do not have a MDM (master data management) solution, “big data” scientists to work on the data, or the know how. As a result, FusionOps realized that they had to focus on “big data as a service” though a “supply chain intelligence cloud” which provided their clients with the metrics and models they need for diagnostic, predictive, and even prescriptive analytics.

The FusionOps solution s a pure SaaS-based solution with an open API that can be used to integrate with any supply chain / supply management solution that can import or export data. Out-of-the-Box it can integrate with over a dozen platforms including SAP, Oracle, Infor, JDA, Microsoft Dynamics, IBM, IFS, Kinaxis, and QAD. The solution is implemented as an application suite that combines S&OP, Procurement, Finance, Inventory, Quality, Production Planning, Sales, and Customer Service data into a cohesive whole across 50+ built-in models that cover over 1,000 KPIs across the inbound, internal, and outbound supply chains.

From this data, the platform can create customized reports, dashboards, and even infographics, which can be easily extended, modified, and enhanced by the user. This makes it easy for the system to be used for day to day tactical operations planning, reporting, executive briefings, and strategic planning. Many of their larger clients use the system in C-Suite briefings and Board briefings, as the reports and graphics can be configured to use company colours and templates.

For a deep-dive on the solution — including the three-main dashboard, report builder, and reporting solutions — check out the doctor and the prophet‘s deep dive over on Spend Matters Pro (membership required) which will dive into the strengths, weaknesses, and unique capabilities.

Sourcing Adoption Addresses Key Procurement Priorities

Earlier this year, the Hackett Group released it’s Procurement Executive Insight on “The CPO Agenda: Reduce Purchase Costs, Improve Agility, and Become a Trusted Advisor” that summarized the Hackett Group’s annual key issues study that was undertaken to define the top issues that would shape the procurement executive agenda for 2016.

As a result of this study, Hackett identified two major facts:

  1. The Top Four Priorities are, bottom up:
    • improve agility
    • increase spend influence
    • become a trusted advisor
    • reduce and avoid purchase costs

    which is bad, because costs should be well under control by now and Procurement should be seen as a trusted advisor by those that spend the most and

  2. Procurement’s Operating Budget is expected to grow by a mere 1.1%which is worse because most Procurement departments are under-staffed, under-resourced (technology wise), and under-funded (even though they can often make the greatest contribution to the bottom line of any department in the organization).

It’s another year of doing more with essentially less (as 1.1% budget increase doesn’t even cover the cost of inflation), which means that you have to be more efficient, and effective, than ever. You need to push your Procurement Value Engine into overdrive.

How do you do that?
(Hint:  It involves heeding the advice in Higher Adoption is Where True Value Lies, and we’ll get to that.)

There are a number of ways to do this, but probably the most critical thing to do is start at the beginning and get your Strategic Sourcing under control, especially for any non-direct category where you are not locked into a very small group (sometimes a very small singular group) of suppliers. And how do you do this? You get your optimization-backed sourcing platform adopted throughout the organization. (Don’t have an optimization-backed sourcing platform, than maybe you need to talk to one of the sourcing samurai.)

The reason Procurement is still in the “dark ages” in most organizations is because less than half (40%-) of organizations have any sort of platform. Of those, some have Sourcing, some have Procurement, some have Contract Management, some have Supplier Management (SIM/SPM/SRM/SxM), and some have another point-based solution that solves one particular pain, but leaves most of the pain of the Procurement organization unaddressed.

The most common solutions are either e-Procurement platforms, typically with some sourcing capability (namely, RFx), or e-Sourcing platforms, typically with Spend Analysis, Contract Management, and/or some procurement capability (usually order or invoice management). However, just because these solutions are in place, it doesn’t mean that they are used. In many organizations with a sourcing platform, only a small team of senior buyers working on the most strategic or highest dollar categories use the tool. This is costing the organization a lot of money, as the opportunity cost of not applying the platforms across the board (and identifying cost savings or cost avoidance across the board) is huge.

Consider our recent post on Why You Need Mass Adoption of an Optimization-Backed Sourcing Platform, a traditional organization without an optimization-backed sourcing platform will typically only source, at best, 9% of spend strategically with optimization and 18% of spend strategically without using the platform, for a total throughput of a mere 27%. For an organization that sources 50% or more of its spend every year, that’s half of its straight-to-the-bottom-line savings opportunity up in smoke!

But if the organization doesn’t use an optimization-backed sourcing platform, instead of an average of 1/4 of spend being strategically sourced in one way, the fraction decreases to 1/5 (or even 1/6). Think of the opportunity costs! Instead of losing 3% against the bottom line, the organization is now losing 5% or 6%! The reason for this is that the sourcing platform is always in the hands of the few. Why? Sometimes it’s a lack of licenses, but often it’s the complexity of the solution, which is seen as too complex by the majority of the buyers who have to push through volume, complex requirements, or special situations that are, in their view, easier to deal with outside of the platform.

That’s why you not only need adoption, but you need a platform that can, and will, be adopted by all of the buyers so that 90%+ of sourced spend goes through the platform. This will not only increase savings, which addresses the top priority of Procurement executives, but also addresses the priorities of spend influence and agility. How? A good platform allows a sourcing team to move faster, and speed up events by weeks or even months, and it allows the organization to tackle critical projects within different organizations that can increase Procurement’s influence.

So to find out how to get your Sourcing Platform adopted, download Higher Adoption is Where True Value Lies today and find out the tips and tricks that will make your sourcing a success.

Claritum – Medicine for the Procurement Soul, Part II

As per part I, while Claritum might sound like the latest miracle drug for the sinus, it’s really the latest miracle drug for Procurement — and when SI says miracle, it’s because, properly used, it really does work.

So what does Claritum cure? As per Part I, Claritum is the cure for SOOM. (SOOM, not VOOM.) Spend Out Of Management. How does it cure this? By providing a platform for spend not typically captured by the traditional Sourcing or Procurement platform so that the spend can become spend under management. This way, unless it’s spend that has to be made off site (at an event, during travel, etc.), or the buyer wants to keep the spend out of the system (because he doesn’t want the preferred product or wants to hide what the spend truly is for as long as possible), it can be made through the system that supports a process to get the right product or service at the right price.

Claritum provides a consumer shopping site solution that can be offered by the organization’s Procurement department, their service provider, or GPO. This shopping solution offers the traditional product catalogs that you will find on consumer sites like Amazon and competing provider catalog sites. It also contains standard rate-card service requisitions that you will find on (contingent and service) labour management platforms. Plus, it contains (the ability to create) template requisitions for all standard tail-spend categories, which can be searched and added to the “cart” as easy as standard catalog items. And, as expected, it contains free-form RFX ability for buyers to requisition anything not already covered. Basically, everything that can be bought through a platform can be bought through the platform and the only spend that should not be captured is on-site T&E spend (tickets for travel can be requisitioned through the platform, and the senior buyer responsible for T&E can process the request, create the PO, and then there is a PO to match the p-Card payment to) and on-site event spend, which should be a very low amount of tail-spend.

Now, this might not sound that special, as providers like IBX and Deem offer a lot of this capability, but this is just the surface of the Claritum platform. First of all, the Claritum platform was designed with multi-organizational use in mind and can be administered by a GPO who manages contracts for multiple clients, who can customize the catalog and offerings to the need of each client individually. Second, the RFX management process, which is tightly integrated into the catalog, is very deep and the requisitions can be set-up to make sure the right requests go to the right buyers and then the right approvers, and the right buyer can select the right suppliers, manage the process, select the winner, and send it back to the requisitioner who can then complete the process (and confirm the need) by adding the award to the cart, and checking out, which sends the request to the proper approver(s). Third, the API allows the platform to be integrated with all organizational ERPs, AP systems, and supplier catalogs, to make sure the right data gets into and out of the system. And fourth, and this sets it apart from all its competitors, it has the ability to manage stock inventory within the platform. Items come from the stock-room (or supplier store-room) first before requests for new shipments are made. And that stock-room inventory, including automatic replenishment rules, can be managed by an internal inventory manager, the GPO, or the vendor, depending on where the stock is located and who is (contractually) required to manage it.

Considering that many big organizations use GPOs or service providers for at least a portion of the tail-spend, it only makes sense to have a platform that can be managed by those same providers for the portion of tail-spend they manage. The Claritum platform is the only one that SI has seen that truly has these three components. The buyer store. The deep sourcing and procurement platform (which can be internal to Procurement, external in the GPO, or managed jointly). And the full featured supplier portal.

So if you want to get your tail spend under management, the doctor recommends that you check out the Claritum platform today. It really is worth a close look, even if you already have a S2P platform, because the extensive API will support integration and the ability to capture organizational spend outside of Procurement is the next big savings opportunity in many organizations. And if you have the choice of platform, Claritum is the one that should be Stuck With You.

Claritum – Medicine for the Procurement Soul, Part I

While Claritum might sound like the latest miracle drug for the sinus, it’s really the latest miracle drug for Procurement — and when SI says miracle, it’s because, properly used, it really does work better than expected.

So what does Claritum cure? SOOM. (Not VOOM, SOOM!) Spend Out Of Management. How does it cure this? Before we can answer that, we have to identify the main types of SOOM.

If Spend Under Management, SUM, is typically spend that is (strategically) sourced or requisitioned/ordered through the e-Procurement system (by way of a catalog, punch-out, requisition, or spot-buy) and tracked then SOOM is, simply put, everything else. What does this everything else look like?

  • maverick spend
  • one-time buys (for promotions, special projects)
  • print/packaging
  • Travel & Expense (T&E)
  • Event
  • MRO
  • Marketing Services
  • Uniforms and Apparel
  • Furniture
  • office products / consumables
  • low-dollar services and temporary labour
  • unique needs not met by current suppliers
  • misc. p-Card spend, including the strip club bill

Essentially, it is the “tail” spend of the organization (especially if it shows up on the p-Card of a certain executive or salesperson). In an above-average organization, this will typically be 20%-ish of spend. In a below-average organization, with a lot of spend managed by various departments and a lot of maverick spend, this could be 40%-ish of spend.

In other words, SOOM is everything Sourcing hasn’t sourced and Procurement can’t manage. Why can’t Procurement manage the spend? Let’s take the examples one by one.

  • one-time buys (for promotions, special projects)
    there is no RFX template, so the system is just by-passed
  • print/packaging
    thesystem isn’t set up to handle print jobs, so the staff just goes to staples or office depot
  • Travel & Expense
    there is no T&E platform support, so everyone just uses their own credit cards and expenses a month to three later because it’s easier
  • Event
    event management has unique requirements, and so is done offline
  • MRO
    service calls are unplanned, parts are bought as needed, and janitorial supplies are too insignificant for sourcing
  • Marketing Services
    marketing statements of work and account management requires special support, not in a standard RFX, so the tool is again bypassed
  • Uniforms and Apparel
    sizes, colours, etc. aren’t on the standard RFX, and it’s one time, and it’s easier to order through the supplier site, so that happens
  • Furniture
    it’s a one-time buy, so just go to the furniture store, put it on the p-Card
  • office products / consumables
    there’s no simple reorder form, so it’s simple to just have the accounts manager ship and bill you the monthly order and pay on the p-Card
  • low-dollar services and temporary labour
    it’s easier to call up the temp labour agency or the consultancy of choice, have them send the resource, and bill you later than try to go through the process
  • unique needs not met by current suppliers
    since the system isn’t set up for supplier discovery, you do the web search, have a few chats, find a supplier you feel comfortable with, have them ship the products, send the invoice, and then you instruct AP to pay it upon goods receipt
  • misc. p-Card spend, including the strip club bill
    for anything non-standard, if the p-Card is accepted, it is easier, especially if it’s spend you want to hide the spend until it’s too late for the organization to do anything about it (and there is a process that allows you to do so)
  • maverick spend
    for anything the buyer wants to break the rules for

In other words, the main reasons Procurement can’t manage the spend are:

  • the buyer doesn’t want the spend managed,
  • the process doesn’t support the spend, or, primarily,
  • the Sourcing and Procurement platform(s) don’t support the spend.

And that’s the kicker. Most platforms have been designed to capture the strategic or high-volume spend and customized to that, following the 80/20 rule under the assumption that most of the savings is in the top 80% which has the volume leverage and supplier relationship leverage. And while this is mostly true, especially since advanced sourcing can save an average of 10%, indicating that there is 8% potential savings, this 8% savings is only achievable over a 3 year timeframe, as most organizations only strategically source about 1/3 of their spend annually. In other words, an average organization repeatedly sourcing the same spend only saves about 3% annually. What goes unnoticed is the bottom 20% of spend which, due to lack of analysis and effort, typically contains an overspend of 10% to 30% (with an average overspend in the 15% range). This is significant. 15% of 20% is 3%, about the same as an organization pushes to the bottom line with strategic sourcing. And this spend is made every year, and this savings, if the spend could be managed, is available every year. If I’m losing out on 50% of my savings, I Want A New Drug!

So if you had a platform designed for this tail spend, which supported the right processes needed by the individuals who contribute to tail spend, most of this spend could be captured. And that’s what the Claritum platform is designed to do – capture all of the tail spend that buyers throughout the organization need to make. How does the Claritum platform do that? Come back for Part II.