Category Archives: Sourcing Innovation

Visibility is Key to Managing Suppliers

For the first part of this week, we have been talking about the significant overlap between sourcing and supplier management and the necessary platform elements needed to support both. Key elements included performance, relationship, and risk management, because all are necessary for sourcing and supplier success.

Spend Matters recently ran a 3-part series on a sub-set of the issue, based on a recent interview with Ecovadis, that talked about how Visibility is Key to Managing CSR Risks in Indirect Spend (Part I, Part II, and Part III). But visibility is needed for more than just addressing risks in indirect spend. It’s also needed for addressing risks in direct spend.

Direct spend has all the same risks, they just aren’t one step removed through an intermediary. And you have to trace all of the products down to the raw materials to identify not only in your supply base, but your supplier’s supply base, their supplier’s supply base, and their supplier’s down to the mine, the farm, or the harvester.

But it’s not just the suppliers you need visibility into, it’s the environment that surrounds them. After all, a natural disaster can cut them off. An economic downturn can render them bankrupt if the currency they do business in (and keep the majority of their cash on hand in) crashes. A geo-political uprising can cut them off at the border. A port strike can cut off their primary shipping routes. And so on. You need a full 360-degree view around the supplier to ensure success.

But how do you get that? You can’t watch everything everywhere, and when you consider the extent of the global supply chain, you almost have to.

That’s why it’s key to have a platform that can integrate with 3rd party sources as you will need to integrate dozens, if not hundreds, of data sources to keep on top of all of the data you need to populate the models to evaluate and track the risks.

And that’s why two of the key elements we look for in a platform are integration and dynamic data model extensibility. You never have enough data. Without the right data, you don’t have the visibility, and that’s key to success. Or at least to preventing major unexpected disruptions.

Digging Into Significant Sourcing Supplier Management Synchronization Part II

Earlier this week we started to describe the second most significant change to the upcoming Q2 Release of the Spend Matters Solution Map, and that is the introduction of a new common sourcing – supplier management section because you can’t do sourcing without suppliers and you don’t manage suppliers without the ultimate goal of doing business with them

This new section contains the following common sub-categories:

  • Enhanced Information Management for discovery and onboarding
  • Performance Management for tracking performance
  • Relationship Management for managing the relationship
  • Risk Management for keeping tabs on, and managing, the risk
  • Enhanced Portal for information management and collaboration

Our first post explained why these sub-categories were relevant. In our last post we covered the first three sub-categories. Today we’re going to start discussing what’s important to consider in the remaining two categories.

So what are the key capabilities we’re looking for in the risk management and enhanced portal sub-categories?

Risk Management

  • Assessment because if you can’t assess a risk, you can’t properly identify the magnitude of the risk and the need to monitor it
  • Mitigation Planning because credible risks need to be planned for and mitigated
  • Model Definition to allow you to quantify both the likelihood of the risk and the expected cost should the risk materialize
  • Monitoring & Identification to allow for the events that could (potentially) materialize to be monitored for and detected
  • Regulatory Compliance to quantify the extent to which the platform can track compliance requirements and a supplier’s ability to conform to them
  • Supplier Risk Management to model overall supplier risk based on assessment, models, external monitoring, third party data, compliance, and performance

Supplier Portal

  • Information Management to allow a supplier to maintain, or at least comment on, their data (and data related to them)
  • Performance Management to allow a supplier to respond to their performance review’s and conduct 360-degree reviews on the buyer
  • Relationship Management to allow the supplier to raise issues, respond to issues, and collaborate on corrective action plans
  • Collaboration to allow full interaction and feedback

These are also all key capabilities for sourcing and for successful supplier management.

Digging Into Significant Sourcing Supplier Management Synchronization Part I

In our last post we started to describe the second most significant change to the upcoming Q2 Release of the Spend Matters Solution Map, and that is the introduction of a new common sourcing – supplier management section because you can’t do sourcing without suppliers and you don’t manage suppliers without the ultimate goal of doing business with them

This new section contains the following common sub-categories:

  • Enhanced Information Management for discovery and on-boarding
  • Performance Management for tracking performance
  • Relationship Management for managing the relationship
  • Risk Management for keeping tabs on, and managing, the risk
  • Enhanced Portal for information management and collaboration

And our last post explained why these sub-categories were relevant. Today we’re going to start discussing what’s important to consider in each of these categories.

Enhanced Information Management
There are three main categories of functionality we are looking for:

  • Discovery and the ability to find suppliers beyond the platform
  • On-boarding Support and the ability to get new suppliers quickly into the platform
  • Supply Base Profiling and the ability to create holistic supplier profiles

Performance Management

  • KPIs and the ability to define and manage them
  • Preferred & Blacklisted Suppliers and the ability to define and manage them appropriately

Relationship Management

  • Issue Management and the ability to define, track, and manage issues
  • Plan Management and the ability to define, track, manage, and resolve plans to manage and resolve issues

These are all key capabilities for sourcing and for successful supplier management. Tomorrow we’ll review the last two joint categories.

Significant Sourcing Supplier Management Synchronization

Over the last couple of weeks we’ve been laying the foundations for the significant changes coming in the upcoming Q2 release of Spend Matters Solution Map, with the new common-foundations and the Sourcing, Supplier Management, and Analytics Maps designed by yours truly, the doctor of Sourcing Innovation.

While the biggest change was the introduction of a new common platform section, which evaluates solutions based on the underlying platform (which is becoming more and more important now that more players are offering “suites” and the longevity of a platform without a good platform is limited), the next biggest change is the introduction of a new common section that overlaps sourcing and supplier management because you can’t do sourcing without suppliers and you don’t manage suppliers without the ultimate goal of doing business with them. (And while this is not yet common to e-Procurement, it may soon be a common requirement for any catalog providers as more and more such providers offer enhanced supplier management and interaction.)

So what are the common elements that one needs to consider?

  • Enhanced Information Management for discovery and onboarding
  • Performance Management for tracking performance
  • Relationship Management for managing the relationship
  • Risk Management for keeping tabs on, and managing, the risk
  • Enhanced Portal for information management and collaboration

And why are these important cross application elements?

  • Suppliers are the life-blood of your organization, but they don’t consistently perform over time and new suppliers are sometimes vital. That’s why discovery and on-boarding are so vital.
  • The key to good performance from your suppliers is monitoring and managing that performance.
  • The key to correcting performance and preventing problems in the first place is often the result of good relationship management.
  • The key to preventing unexpected supplier-based disruptions (which affect a significant number of supplier chains every year) is to keep a tab on risks and prepare for the significant ones with mitigation plans ready to go.
  • They key to keeping information up to date is to let the supplier help you with a portal that is built to do so (and that they want to use).

So what should you look for? While we won’t dive into every detail (but you will be able to with a custom Solution Map if you want to (just contact Spend Matters to find out more), we will highlight some of the more important details ( so you can know that when we evaluate a vendor’s technology, we truly evaluate the technology from the point of view of a technology analyst, not an industry analyst (see our recent post on Industry Analysts vs Technology Analysts) and this is absolutely critical if you want to select the right technology.

What is a Good Foundation for S2P Tech?

A couple of weeks ago in our posts on What Elements Should You Be Looking For In A Platform (Part I and Part II) we outlined some of the key platform requirements we are looking for in the new Spend Matters SolutionMap (where Sourcing, SXM, Analytics, and the vast majority of Common Platform requirements were defined by the doctor) to give you a hint, but it’s a lot to take in.

And might be more than you need today when you just need to solve a few major pain points and advance on your S2P journey, especially if you still don’t have any dedicated modern technology or are still on Procurement 1.0 when most of your peers are on Procurement 2.0 and the leaders are starting on the Procurement 3.0 journey. (As per another recent post, while there’s a lot of talk about Procurement 4.0, we won’t see it for another 8 years based on history. 1.0 started around 97 with FreeMarkets and the emergence of stand-alone players. 2.0 started around 2007 with the first mini-suites [S2C or P2P]. 3.0 began around 2017 with the rise of the true [mega] S2P suites and integration that allowed for the pursuit of value where the whole is greater than the parts. 4.0 will began around 2027 based on the rate of historical development.)

But it’s not necessarily more than you will need in time. Especially if you want to reach the height of Procurement 3.0 with your peers when it materializes later next decade.

But we do recognize that you won’t need it all today. So what do you really need to look for in the first go-round? Especially if you can’t have it all or can’t become enough of an expert to evaluate it all?

While the most important capabilities do depend on the specifics of the technology you’re buying and the problem you need to solve, there are a few general capabilities that need to be there regardless, and these * capabilities in particular must be there in every solution you buy if you want to have any hope of “future-proofing” your platform.

  • Configurable Workflow
    Preferably with RPA support. Let’s face it, whatever process you use today won’t be the process you use tomorrow, especially as you mature in your processes and best practices, the partners you work with change, and governmental regulations continue to change the way you have to report.
  • Open / Extensible API
    that supports both 3rd parties integrating with your platform and the development of interfaces to integrate with third party platforms through their open API. Your platform will never do everything, no matter how much you want it to. It’s software, not sorcery. So the ability to extend it with ease is critical.
  • Dynamically Extensible Data Model
    that you can do, not a third party or the provider. Because you never know every piece of data you’re going to need until you need it.
  • Globalization Support
    including the ability for a user to select their language and overrides, the organizing to define new currency exchanges and projections, and IT to define where the application instances are hosted and where the data is stored (which may need to be segmented for a global organization)

This is not to say that other technical requirements are not important, but that without these, the life expectancy of your platform is limited, to say the least.