Category Archives: Sourcing Innovation

Platform iZombie, Part II

As we stated yesterday, we’re all zombies. Procurement is continuing along in the most undead fashion possible, going through the same motions day after day like a clockwork automaton of the 19th century. The platforms that the visionary consulting firms and platform providers were supposed to provide us by 2020 (less than 15 short months away) have not materialized and we are stuck in a tactical nightmare. Which is about the worst kind of nightmare.

We’re dead serious about that last part. If you consider the most common bad nightmares — being naked in public is only going to embarrass you at most once (and not at all if you are a nudist), a broken bone will heal, a fall just wakes you up, we’re all cheated, we’re all interested in the unknown, we probably know or believe ghosts aren’t real (or probably can’t harm us), many spiders are more scary than dangerous, teeth fall out when we’re young to regrow, danger is always present, we will eventually be late for something because Murphy’s laws tell us sh!t happens, people are always trying to steal our IP, we all fell like we’re drowning in the modern world (of work), it’s easy to be lost in the big picture, and we all get fed up of loved ones sometime — I think the living nightmare of doing the same thing day after day expecting a different result (which is the definition of insanity by the way) is the worst of all. And, remember, you can always wake up from a nightmare. You can’t wake up from the zombie state modern platforms have put us in.

But it could be better. In our last post we indicated how a modern platform could have saved over 80% of our time with simple capabilities that really should have been in every platform for the past five years.

But would this be the case in general? Would a modern platform really eliminate 80% of our entire workload? Let’s run through the rest of the day.

We return from lunch to our stakeholder meeting. Now, it’s true that no platform can eliminate the meetings and you’re still going to lose that time to a degree, but with the right platform, you can make meetings more productive.

With a good platform, the customer success rep would see that her peers were happy with the supplier’s performance and that it was improving and that her customers were next to get the replacements. She’d still be unhappy, but well informed and willing to wait until the next shipment before taking her final position.

The finance rep would already know why you disqualified the lowest bidders. Any discussion could thus be focussed on the question as to whether or not one of the lowest bidders could be improved to a level of acceptability over time versus an inquisition as to why the bidder was eliminated.

The engineering rep could see all the cost models and the savings projections over time and understand the issues everyone (else) has with the incumbent.

And the marketing rep would know that while you want suppliers with exciting features, there are critical requirements that need to be met in order to keep production lines going and shelves stocked. And those needs must come first.

Instead of thirty minutes of complaining, ranting, and basic Q&A before you can get down to meaningful discussions, since all the stakeholders have insight into all the facts, you can get down to real discussions and debates. It may not be productive, but at least you skip addressing the stuff you should already know.

And then there’s the issue of the meeting conclusion — more suppliers are needed and that’s another discovery project that you estimate at 20 hours or more. But if you had a modern discovery platform with deep intelligence and match capability, it would not be a 20 hour project, it would be a 2 hour project — at most. The first phase would be like 20 minutes, and you could slip out and do it on a break.

But anyway, because it’s not something you can make any progress on today, you move onto supplier emails and that’s where discover that your steel shipment didn’t ship yesterday and you need a replacement in 21 days or your production line is going down. And you spend an hour and a half trying to find a substitute. With a good platform, you know all of the suppliers that provide a similar or substitute product, which are under contract, and what the last bids were. You can start calling them immediately, and likely find a replacement supplier in three calls and 30 minutes, not 90 or more.

And let’s not mention the 40 minutes you waste reviewing emails that ask questions that could be answered in a good supplier portal or automatically answered by a chatbot.

It’s almost five before you get down to the project work. The platform won’t save you the time required to answer technical supplier questions, the time to manually score an RFX, or the time to figure out why suppliers aren’t bidding, but you’d get to it about 5 hours earlier in the day!

And when you accomplish something by noon, versus working to seven and accomplishing nothing, you find your headaches are a lot less and you don’t need to pop quite so many painkillers.

Platform iZombie, Part I

If you’ve been keeping up to date on our ongoing blog series, you know why we’re all zombies. The reason, simply put, is that, instead of Procurement recognizing that it was supposed to be dead and buried two years ago, and maybe rising from the ashes, it has instead continued along in an undead fashion. Each day, we go through the same motions, using the same processes, on the same old platforms. Platforms which, according to the visionary consulting firms and platform providers, were supposed to solve all our problems and release us from this tactical nightmare. Instead, they have done nothing to ease our woes and, in many situations, have made them worse!

Not only are the majority* of platforms still based on last decade’s processes, but they aren’t even making them easier. In essence, they are fueling the Procurement zombie nation and they should be ashamed of themselves.

To understand how, let’s consider our average Monday morning, as documented in iZombie: A Prelude Part I, and how a modern platform would have prevented us from wasting four hours of our day.

First of all, it takes you five minutes just to judge how many emails are from each type of project stakeholder. A good platform with integrated communications would give you that information in 5 seconds, with communications already arranged by urgency and seniority (based on your organizational structure and derived from your typical review patterns).

Secondly, the modern system with the integrated cognitive monitor would immediately detect that an email didn’t go out because it didn’t have the new SSL certificate, invoke the process to download the SSL certificate, and send the email again.

Thirdly, you never would have gotten that call from your widget supplier because:

  • as soon as the invoice was marked “DO NOT PAY”, you would have been alerted, known of the issue, and marked it for “monitoring”
  • as soon as it was past due, you would have followed up with Engineering, who would have said “yes, we got the shipment, it’s in the system”
  • you would have searched for all invoices with similar products, found one for the proper product, noticed the invoice ID was miskeyed, fixed it, and sent Finance an e-mail to remove the “DO NOT PAY”
  • the invoice would immediately enter the payment queue, and the supplier would be notified on their portal
  • it would have been paid on the next payment date, 7 days in the future, and 23 days before you got the angry screaming call

and all this would have taken you 10 minutes a month ago, instead of almost an hour now!

But now the biggie — because of your antiquated platform, it took you 3 hours to construct a project overview report that summarized the status on all the key projects, issues, and actual/projected vs. budget. A modern platform would automatically track all those metrics, allow you to record issues as they arrive and tie those metrics to issues, and then, when a summary report is created, automatically pull the issue summary and status into an appendix.

A modern sourcing platform would come with a customizable template that you could customize in 15 minutes and (schedule to) run, as needed, saving you hours of work compiling all the information that is already known, and linked. The only thing you should have needed to do was edit the executive summary to contain a few expert notes on the situation and expectations based on team dynamics and broader organizational knowledge the system didn’t capture. In other words, your three hour effort should have been a 30 minute effort that started with a 5 minute scan of the auto-generated report, a 20 minute edit and augmentation of the executive summary, and a final 5 minute proof.

In other words, the work that took you four (4) hours and 15 minutes should have taken you about 35 minutes. And that’s only because one of the reports was being presented to the C-Suite and needs a human touch and review.

But because the average amoeba has more “artificial intelligence” and “automation” than an average Procurement platform, you had the privilege of spending yet another half workday as a Procurement Zombie.

* A few providers are actively working towards the key next generation capabilities we outlined in our * series, but the majority of platforms on the market today are still based on processes and capabilities innovated a decade ago. In internet time where even the largest provider will roll out bug fixes, patches, and minor updates on a quarterly cycle, that’s a professional lifetime!

13 Reasons your RFP Scoring Sucks


Today we welcome another guest post from Brian Seipel a Procurement Consultant at Source One Management Services focused on helping corporations understand their spend profile and develop actionable strategies for cost reduction and supplier relationship management. Brian has a lot of real-world project experience in supply chain distribution, and brings some unique insight on the topic.

The most thorough, best designed RFP questionnaire counts for nothing if Procurement can’t interpret the results. Proper submission scoring is critical, yet many Procurement Pros commit at least a few mistakes that seriously damage their ability to assess RFP responses.

I’ve seen my share of such mistakes over the years, and work with clients to clear them up before it’s too late. I’ve included the worst offenders, “The Unlucky 13”, below.

How many did your last RFP fall victim to?

Evaluating Questions

1. Questions aren’t weighted (or aren’t weighted properly).

Not every question is created equal. Consider how important one response is versus another. Critical questions should receive the lion’s share of total weight. I recommend starting at a high-level, assigning weight to each category of questions. Once done, delve into each category to distribute this weight to each individual question.

Not every question needs to be scored – some are for information gathering only. However, if you notice too many unscored questions, evaluate whether they all need to be included in the first place.

2. “Kill switch” responses aren’t treated as such.

On the subject of weight, some responses are so heavy that the wrong answer can (and should) disqualify a participant out of the gate. If an unacceptable answer invalidates a proposal, don’t bother weighting it – call out the answer as grounds for dismissal.

For example, one critical question may ask for confirmation that a respondent can handle required volumes. If any responses indicate a supplier can’t, no amount of weight would suffice – they simply are no longer viable.

3. Scoring is overly simplistic.

True/false questions are easy to understand and score, but too many of these cause problems in the long run. Odds are your suppliers will end up looking too similar if the bulk of responses fall into simple yes/no buckets.

4. Scoring is overly complex.

On the other side, some scoring systems end up too complex to be reasonably applied. I’ve seen scores range from 1 to 20. On paper, this appears to allow fine-tuned scoring. In reality, I’d challenge anyone to properly differentiate a score of “12” from “13.”

Evaluating Responses

5. Questions from participants go unanswered.

Your questionnaire may seem clear to your team, but chances are good that one or more participants either don’t understand your intent or don’t have the background information from you to properly answer.

Every RFP should include chances for Q&A with participants. If you don’t provide this opportunity, responses will hinge on assumptions made by participants – enough assumptions, and the end result may not align at all with your requirements.

6. Questions to participants go unasked.

The same is true on the other end. If a response is unclear to the scorer, then clarification should be sought. Otherwise, the scorer is left to make assumptions in order to interpret a response.

7. The wheat wasn’t separated from the chaff.

Anyone who’s ever scored a Marketing RFP will be familiar with this concept. Ever read a 200 word reply to a question, only realize at the end that the participant never gave a direct answer? Quantity does not equal quality – a detailed non-response is still a non-response.

Evaluating the Scoring Process

8. Clear criteria aren’t provided to scorers.

Simply providing a scoring scale isn’t enough. If you ask for a score of one to five, be sure to provide concrete direction on what constitutes a one versus a five and every point between.

9. Too few scorers are included.

The more stakeholders involved in scoring, the less likely results will be thrown by huge score discrepancies. The team in charge of scoring should encompass any stakeholders who would interact with the supplier or the product/service in addition to Procurement.

10. Score results are averaged blindly.

As a counterpoint to the above, don’t simply average all scores together at the end of the initiative. Large discrepancies in scores may indicate that two or more scorers viewed either the question or response (or both) differently. Use big discrepancies as a flag to ensure everyone is on the same page and revise accordingly.

11. External factors influence results.

Score only what it within the questionnaire. Don’t award ghost points to an incumbent based on their years of service. Likewise, don’t give an artificial boost to a hungry alternate because they came in competitively on pricing. There will be time later to consider outside elements – for now, stay focused on specific questions and responses.

12. Internal factors influence results.

“What? Dave’s team gave these guys a ‘nine’?!” “Don’t worry about it – just give them a ‘two’ to even the score out.” I wish I made this example up. I did not. I’ve worked with stakeholders who doctored their own scores to offset other scores that they disagreed with. Needless to say, this artificial tampering helps nobody.

13. Scoring lacks consistency from one response to another.

Here’s a fun way to screw with your team. Give them a pop quiz by asking them to rescore one of their first questions right after they finish scoring all responses. I’d be willing to bet on the outcome – the scores won’t match. Maybe by a little, possibly by a fair margin. When we’re evaluating half a dozen or more participants by scoring potentially hundreds of questions… it’s easy to get fatigued or change your mindset midway through.

Many people like to score one participant fully, then moving on to the next. I recommend scoring on a per-question basis instead. Take a question, and score the response from each participant down the line. Repeat for the next question. So on, so forth. This way, you’ll be in the same frame of mind and consider each response on the same standing.

Do your RFP justice – you worked hard to develop it and marshal participants through it to the end. Before working through responses, sit down with your team and review your strategy for evaluating the results. And make sure everyone is on the same page when it comes to avoiding the mistakes above.

Thanks, Brian!

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.